Russia may attract billions of foreign investment at APEC summit

The Asia-Pacific Economic Cooperation business summit opened in Vladivostok, the Far East of Russia, on Friday, September 7. Working sessions of the summit will take place on September 8 and 9. The business forum is held in conjunction with the meeting of the heads of APEC. Its main subjects include the economic integration, monetary policy, increasing the efficiency and reliability of logistics chains, food security, the problem of the shortage of infrastructure, etc.

On Friday, Russian President Vladimir Putin, who arrived in Vladivostok the day before, made a keynote speech and also held bilateral meetings with Chinese President Hu Jintao and the Sultan of Brunei Hassanal Bolkiah.

As a rule, no one expects any breakthroughs from APEC summits. The organization per se bears a consultative status, and the agendas of its forums can very often be too general. Russia's chairmanship at APEC takes place under the motto "Integration - for development, innovation and prosperity."

On the other hand, Putin's talks with hundreds of business leaders about the development of the economic cooperation between Russia and its partners in the region can be very fruitful. According to a recent survey conducted among CEOs of APEC companies, Russia holds the leading position as an object of their investment strategy for the next three or five years. The research conducted by a subdivision of Pricewaterhouse Coopers showed that China, the U.S., South Korea and Singapore lag behind Russia at this point.

At the summit, Russia has a chance to announce the plans of the new stage of development of the Far East and Siberia. However, the Russian administration has not developed a systematic approach to solving the problems of the Far East and Siberia. However, Viktor Ishayev, the minister for the development of the region, insists that the state has specific plans which will attract 3 trillion rubles of investments to the Far East in 2015, and 9 trillion by 2025.

Within the scope of the forum, Russian business officials proposed to develop alternative routes of delivery of goods between Europe and Asia. This will give  APEC countries and Russia an opportunity to save about $ 300 billion by 2020 in bilateral trade and about $ 370 billion in transit. In this case, each percent of trade between Europe and Asia that passes through Russia, will bring about $ 1 billion to the economy.

However, Russia would needs to upgrade its railroad infrastructure across the nation. Above all, the country needs to increase the capacity of the Baikal-Amur Mainline (BAM) and the Trans-Siberian Railway. Officials with Russian Railways evaluated the works at about 1 trillion rubles.

In addition, in the struggle for the transit of goods from Asia, Russia is ready to cut a new window into Europe via the Arctic. The time to deliver goods by the Northern Sea Route from the Japanese port of Yokohama to the Dutch Rotterdam makes up 15 days, while deliveries via the Suez Canal take a month. The Suez Canal is dangerous in terms of piracy. However, the Northern Route has a huge disadvantage. It can be navigated for only two or four months a year.  The lack of funding during the 1990s almost destroyed the system of meteorological services and closed the Arctic ports, where the towns of border guards are located.

The business summit also holds discussions about the availability and efficient use of resources to ensure sustainable economic growth. The participants discuss the availability of energy resources and energy efficiency constraints in the supplies of metals and other raw materials.

"The major resource projects focused on APR markets will become the centers of new economic clusters. Afterwards, there will be companies and services created. Combined with investments in infrastructure, this will turn the east of Russia into one of the key points of economic growth," says CEO of En+, Mr. Volynets.

However, things may turn out to be worse in reality. A week before the APEC summit, Gazprom said that the project to develop the Shtokman deposit, which is being implemented in cooperation with France's Total, would be postponed. China, which is interested in regular deliveries of Russian hydrocarbons at estimated prices, will be forced to seek alternative sources of supplies. In this regard, Beijing can turn to Kazakhstan, which is also interested in extending its pipeline to the Chinese border, a study conducted by Valdai Club said.

The Russian political elite believes that it is Europe and not Asia that should remain the main economic partner despite the crisis in the eurozone. Meanwhile, the center of gravity of the world economy gradually moves to Asia. Russia could use this to attract investment in infrastructure and the companies that make products of high processing.

Nonobvious prospects of the already announced projects to upgrade the BAM, the Trans-Siberian Railway and uncertainty in the development of the Shtokman field confirm the conclusions of Valdai's study about the absence of a specific plan for a new development of Siberia and the Far East.

All statements about the development of production in the region will be purely declarative, until the authorities make a decision to establish special industrial clusters in the Far East and Siberia, as it happens in China, experts of Valdai Club believe.

Subscribe to Pravda.Ru Telegram channel, Facebook, RSS!

Author`s name Dmitry Sudakov