Survey of the FDI climate in Russia

Russia continues to be a massive draw for investments from across the world, Russia is now ranked the sixth-most desirable country in the world for Foreign direct investment (FDI) and the most attractive in the Commonwealth of Independent States (CIS)

Some of the key aspects that attract investors are Russia is:
• A huge consumer market
• Rising disposable income
• Growing middle class
• Cheap, however highly skilled, workforce
• Vast natural resource reserves

In 2012, Russia gained 128 FDI projects for the 2nd year in a row, jobs developed by these types of FDI projects increased by 60%. This meant Russia was the second largest market for job generation in Europe in 2012, up from sixth place in 2011.

Russia’s accession to the World Trade Organization, the development of the Common Economic Space with Belarus and Kazakhstan, along with a possible Eurasian Economic Union by 2015, this will further add to Russia's attractiveness for FDI helping to create a more positive impact on its attractiveness for overseas investors.

Acceleration in privatization efforts with a positive change in demographic profile are additionally anticipated to develop further  the investment climate in Russia. Of current investors, 68% intend to increase up their presence in Russia.

Nevertheless, challenges remain:

• Limited awareness among investors who are not yet established in the country
• Political, legislative and bureaucratic issues
• High levels of corruption
• Inter-regional disparities
• Over dependence on oil exports

Russia is currently diversifying its economy but it needs to do more work in this direction by, providing sustainable growth and promoting the broader usage of new technologies to help improve the efficiencies in its industries and businesses.

Minimizing administrative obstructions, multiplying its innovation capacity, boosting regional attractiveness as well as upgrading business education are some of the measures that investor suggest for future investment and growth in Russia.

Source for this article:www.emergingmarkets.ey.com
Source for image:www.dreamstime.com