British Minister of Trade and Investment Andrew Kahn
Photo: Kommersant
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British Minister: “Guarantee Protection”
// British Minister of Trade and Investment Andrew Cahn talks about the problems of British companies in Russia
British Minister of Trade and Investment Andrew Cahn arrived in Moscow yesterday for an official visit. He told Kommersant correspondent Alexander Gabuev why London is counting on increasing investment in Russia, in spite of a number of problems experienced by British companies.
What is the purpose of your visit?
I will meet with officials of the Finance Ministry and Central Bank and with members of the Russian business community, as well as with British businessmen working here. We hope to show that the economic ties between Russia and Great Britain are still developing dynamically.
Right now, a number of major British companies are experiencing serious problems, such as the situation with BP. Can that influence the investment attractiveness of Russia for British business?
I think it will not have a negative influence. BP and TNK-BP are having experiencing certain complications in Russia now, but they still have a profitable business here and they intend to stay in Russia. If we look at other sectors, not only oil and gas, the is a completely different situation. For example, one of the most popular chains of coffeehouses in Britain, Costa Coffee, recently opened its first shop in Russia and plans another 200. And where do Russian companies hold there IPOs? Seventy percent of them make their placements on the London Stock Exchange. So not all business has been dragged into political disagreements.
That is, there are political problems and they do influence business?
It is hard to draw the line between business and politics in the modern world. In recent years, Western companies have run up against a number of difficulties. The conflict over the Sakhalin projects may be recalled. Shell and BP were in the center of them. But those conflicts were settled finally, so I am hoping the current difficulties with TNK-BP will be overcome quickly. The main thing for us is that both companies are continuing to operate in Russia, and the Russian economy is receiving considerable benefit through the development of new deposits and the influx of investment and technology.
They say your ministry has giving active assistance to British companies working on the Russian market. What was that?
Russia is on our list of the world's ten most dynamically developing markets, and that is no surprise. We are certain that the number of business opportunities for British companies here will only increase. Our specialists are now providing various forms of consulting services, helping small and middle-size businesses on the Russian market to understand its specificities. I can say that the number of people consulting British businesses working on the Russian market has increased 70 percent lately. Now we are even transferring people here who were working in Europe until recently.
That is confirmation that it is hard for British companies to take hold in Russia. What are the specifics of the Russian market that are obstacles to Western investors?
In some Russian regions, there is still much to be done. For example, British investors would like to receive guarantees that their business and invested funds are protected by legislation and that Russian courts operate fully in the interests of the law and within the law. There are still questions about Russia in that regard. There are problems with the extreme bureaucratization of many processes and with corruption. Intellectual property is still a very painful question for many British investors. But I do not want to say that any of this is exclusively a Russian phenomenon. You meet the same problems in Brazil, China and India. I repeat, the problems that large British energy companies have at times cannot be generalized to all British business.
After the YUKOS case, many in Russia thought that only companies in the energy sector would have problems. But then the tax agencies began to press charges against small companies. Aren't you afraid that something similar could happen to British business in Russia?
Of course, Russia is a special market, with a high level of income and high level of risk. But if company is growing and ambitious, it should be represented in Russia, in spite of any problems. We are still convinced that the Russian market remains one of the most promising for British business. Otherwise, our companies wouldn't have come here. The main thing is that the settlement of the problems we have indicated here will be of benefit not only for foreign firms, but for Russian economy itself.
Interviewed by Alexander Gabuev
All the Article in Russian as of Apr. 15, 2008
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