The investors, who are working in Russia already, say it takes so much time to process documents in regions.
Photo: Alexander Miridonov
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The Missed Investments
Liberalizing currency legislation could be a new incentive to fuel the growth of foreign investments in Russia, said the report of Organization for Economic Cooperation and Development (OECD) dedicated to 2006 investment policy of the country. The usual condition for this advantageous growth is improving administration, the OECD analysts traditionally stipulated.
According to OECD, the index of restrictions on direct foreign investments was 0.318 in Russia vs. 0.167 on average for the OECD member states. The index ranges from 0 to 1, showing to what extent the regulatory actions of authorities hinder investments. In view of this index, it is not surprising that direct foreign investments accounted for just 2.6 percent of Russia’s GDP in 2004 vs. 4.9 percent in Poland. In 2005, Russia’s indicator slid to 2 percent.
Foreign investors have noticed certain improvement in Russia but are still concerned about the lack of transparency. The latter could be often blamed on the regional authorities, especially when it comes to releasing the employment permits, said the OECD report.
Moreover, Ernst&Young has recently evaluated the loss of investments due to bad administration. In 2005, for instance, Russia attracted only 3.6 percent of all direct foreign investments in Europe (vs. 4 percent in 2004) and was scored the ninth among European states. But the business says Russia should account for 5.5 percent of all direct foreign investments made in Europe (almost equal to Germany), according to the poll held by Ernst&Young among businessmen to measure their readiness to invest in this or that country.
So when it comes to definite projects, the investors’ desire to funnel funds to Russia is half as much, first of all because of administrative barriers. The losses incurred as a result are rather sizeable – from $7 billion to $7.5 billion past year.
www.kommersant.com
All the Article in Russian as of July 06, 2006
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