Russian Companies May Face Increasing Foreign Competition

Russian companies should now get ready for an increase in foreign competition, which the economy of Russia will begin to face at a higher level soon, Deputy Economic Development Minister Arkady Dvorkovich said a conference on corporate development today. He pointed out, "Russian companies continue to operate largely in 'greenhouse conditions' now, which are due to the currency policy and a large number of indirect subsidies (such as low fees for natural gas and electricity). "This situation cannot last forever, and it is not only a matter of Russia's membership in the WTO. The problem is that the elimination of indirect subsidies and bringing the exchange rate in accordance with economic realities are absolutely unavoidable," the deputy minister underlined. Nonetheless, he remarked that the process of elimination of indirect subsidies is likely to be rather long, taking 3 to 7 years. In the meantime, Russian companies should start preparations for these prospects, implementing energy saving programs and structural changes, closing non-competitive branches and developing competitive ones, Dvorkovich believes.