Investment take-off depends on Russian reforms
Paris, 10 April 2000 - A huge pent-up interest in foreign investment in Russia could be released, provided the new Russian administration under President-elect Vladimir Putin creates favourable investment conditions.
Jeffrey M. Hertzfeld, an international lawyer who specializes in investment in Russia, makes this assessment in an article in "The new Europe in the World Economy", to be published at the ICC World Congress in Budapest on May 3-5.
Mr Hertzfeld says that Russia has much to make it one of the most exciting markets in the world - spectacular wealth in exploitable natural resources. a large skilled workforce and "nearly 150 million consumers whose needs are endless." Tens of thousands of new small and medium-sized enterprises now in their infancy could be natural partners for foreign direct investors.
Foreign direct investment remained a marginal phenomenon in Russia through the 1990s, amounting to a mere $2.2 billion dollars in 1999.
Mr Hertzfeld says that while the catalogue of difficulties facing investors in Russia is long, two big issues stand out. "The first is the need for a level playing field in the marketplace where investors may compete on a fair and equal footing.
"The second is the need, not merely for laws, but for the 'rule of law' which will give investors confidence their rights will be recognized and enforced."
Mr Hertzfeld, a senior partner in the international law firm, Salans Hertzfeld Heilbronn (Paris), says that Russia accomplished a truly remarkable legislative effort in the 1990s to address the rights and obligations of a market-oriented economy based on private ownership and profit. "The concerns of foreign investors today tend to relate less to the laws themselves than to the actual application of these laws."
During the Budapest Congress, the ICC World Council will rule on the formation of a Russian national committee of ICC, which would be made up of companies committed to maintaining high business standards. Senior executives from major Russian companies and business associations will be in Budapest to support the application.
ICC already has 25 direct members in Russia, including the Sibirsky Aluminium Group; Sberbank, the savings bank; UES, the electricity group; Vympelcom, the mobile telephone operator, and the Troika Dialog investment bank.
Jeffrey Hertzfeld's article is one of 54 on European and global economic issues appearing in "The New Europe in the World Economy", p
ublished jointly by ICC and International Systems and Communications Ltd of London to commemorate the 33rd ICC World Congress, Budapest, 3 - 5 May, 2000.
For permission to reproduce the full article either in print or on-line, please contact the ICC communications department. Tel: +33 1 49 53 28 22, E-mail: Click here to send a mail.
Full text of Jeffrey Hertzfeld's article on foreign direct investment in Russia
ICC's 33rd World Congress, Budapest, 3-5 May 2000