Where Is the Money?

President Putin said to welcome investments
Investments are still a vital topic regarding the reality of the Russian economy. Much has already been said about the problem; however, the situation hasn’t changed for the better. President Putin has decided to personally deal with the problem.

The results of the third All-Russian contest “Russian Organization of High Social Effectiveness,” which was organized by the RF government were summed up in the Kremlin Conference Hall today. President Putin greeted the finalists and organizers of the contest; in his report, the president paid special attention to the investment climate in the country. In particular, Vladimir Putin said that investments in the Russian economy must be taxed on preferential terms, The Russian news agency RIA Novosti informs.

The president is sure that it’s time for the government to think about preferential taxation. “We shouldn’t be ashamed that some things (decisions earlier) are working the way we had hoped,” “it’s necessary to think how to improve them.” At the same time, the president called upon the government for thorough control over investments in the country; the government must control how much and on what purposes this money is spent.

In fact, after this presidential declaration, the government must be obedient and immediately carry out all instructions, as the president is obviously dissatisfied with the work of the cabinet in the sphere of investment attraction.

The World Bank’s director in Russia, Julian Schweitzer, delivered his report in a tone close to that of the president’s. People working in the World Bank are clever enough to understand that the political support of high ranking officials is very important for any plans in Russia. That is why Julian Schweitzer supports the opinion of the Russian president concerning the problem of investments in Russia. He thinks that it’s actually very important to create “a climate that is friendly for small- and medium-sized enterprises in Russia.” This statement was made at the Second International Conference “Business Services in Russia in the 21st Century; Russian Investment”.

Julian Schweizer emphasized that “it is small- and medium-sized business that are the source and important branch of further development of the Russian economy.” However, the banker thinks that Russia’s large banks show little interest in small- and medium-sized business, and these enterprises themselves haven’t enough capital for self-crediting and development. However, the World Bank director warned Russian authorities against excessive concentration on foreign investments. He thinks that domestic investments must also play a significant role in the economy. Foreign investments must only supplement domestic investments, introducing new technologies and business development methods.

The World Bank director in Russia is sure that investment inflow in Russia is impeded by the low qualification of personnel in Russia; he also mentioned that present-day educational system in Russia doesn’t make for the increase of the level of Russian management. Thus, on the one hand, the foreign banker agreed with President Vladimir Putin concerning unsatisfactory work of the government, but on the other hand, he artfully hinted that Russian personnel isn’t skilled and qualified enough to receive large-scale investments.

PRAVDA.Ru reported several times about the troubles that foreign investors have to face in Russia; however, the situation remains practically the same after several years already. Investors would like to command their investments and property they purchase in Russia absolutely independently, the same way they do at home and in the “banana republics,” which means without any control from the RF Government. However, today, President Putin confirmed once again that this system won’t work in Russia. On the other hand, Russian officials who control the investment processes often try to transform their supervising functions in accordance with their own mercantile interests; they often represent, not the interests of the state, but of some political or economic clans, which drives investors into a corner. Then it’s no surprise that investments leave the country as quickly as they arrive here. And the process of investment withdrawal goes in two ways: money is taken out of the country by investors themselves, and by investment takers together with officials in charge of the investment supervision.

Following the complaints voiced by the World Bank director in Russia, Russian Deputy Minister of Finance Andrey Petrov reported actual sizes of capital outflow from the country. In his words, the outflow of private capital from the country made up 3 billion dollars over the ten months of the year; while the sum was 16 billion dollars in 2001 and 24 billion in 2000. Thus, as Andrey Petrov supposes, from year to year capital feels more comfortable in Russia. The Russian official thinks this fact proves that reforms of the government are correct and effective.

Tax burden reduction and the budgetary policy must meet the interests of the domestic and foreign business, increase the trust of foreign investors to Russia, the RF deputy minister of finance says. It is hard to say whether this opinion would be supported by those foreign investors who suffer considerable losses because of the imperfection of the Russian legislation and obstacles put by Russian officials and local authorities. But there were none of these investors at the conference in Moscow.

Kira Poznakhirko PRAVDA.Ru

Translated by Maria Gousseva