(Moscow, 18 October 2010)
The 24th Session of the Foreign Investment Advisory Council in Russia was held in Moscow on 18 October 2010.
At the session, Vladimir Putin, Prime Minister of the Russian Federation, noted the important role played by FIAC in creating a favorable investment climate in Russia. Since its founding in 1994, recommendations, proposals and analytical materials prepared by FIAC bodies have been taken into account in developing draft laws and regulations which constitute the legal framework underlying the functioning and evolution of market relations in Russia.
In his address, the Prime Minister gave a general overview of the current state of the economy and outlined key trends of economic development. At present, having largely recovered from the main consequences of the global financial and economic crisis, the Russian economy is shifting to a track of a sustainable economic growth.
For purposes of modernization, diversification and innovation-based development of the economy, new, higher standards have to be met with respect to legislation, the level of state governance and the condition and quality of market infrastructure. In addressing these tasks, the Government of the Russian Federation has consistently focused on eliminating administrative barriers to business, including investment activity.
The past year was also a year in which FIAC started working in a new format, with two main work streams:
In the past year, 36 requests were received from foreign companies, of which 14 were resolved and 22 are being processed. The key issues are as follows: eight requests concerned administrative barriers (actions of local administrations, problems with connection to utilities), six concerned imperfections in customs laws, and four concerned discrimination against foreign companies (in disputes with Russian companies), and abuse of power by government authorities.
The decision made by the Government of the Russian Federation in 2010 to establish the institution of ombudsman to protect the interests of both domestic and foreign investors again demonstrated the government's commitment in this area.
The year 2010 saw an increase in the number of member companies. At present, FIAC comprises the CEOs of 42 major global companies and credit and financial institutions.
With respect to expert support for government priorities, FIAC was active in preparing legislative amendments designed to improve the conditions for the stay and hiring of highly qualified foreign specialists. Federal Law No. 86-FZ “Concerning Amendments to the Federal Law ‘On the Legal Status of Foreign Nationals in the Russian Federation’” introduced new, simplified rules for the entry, stay and work of foreign highly qualified specialists. Quotas and permits for hiring such specialists (approval by employment services) have been eliminated. The period required to obtain a work permit has been reduced to 14 days, and the period for obtaining a visa to 20 days. These procedures previously took over a year. Work permits are now valid for 3 years rather than 1 and are valid in all regions of the country in which a company is working on projects. The law also grants tax-resident status as soon as work begins rather than after 183 days, which is significant in view of the 13% flat rate of income tax in Russia.
It is important to note that the sole criterion for determining the high qualifications of a foreign specialist is the amount of his or her annual salary – two million rubles and up. The Government of the Russian Federation may lower this threshold for certain professions based on the economy’s development priorities.
Last year's major initiative affecting logistics was the launching of the Customs Union of Russia, Kazakhstan and Belarus. The positive perspectives clearly visible to foreign investors with respect to this initiative are that they will help to reduce market-entry and consumer-expansion costs, and will definitely result in higher investment appeal of both the entire region and the Russian Federation as its leading economy.
We would like to emphasize the importance of the expert activities undertaken by the Advisory Council with a view to facilitating sustainable cooperation between the business community and the government in tackling issues of technical regulation and elimination of excessive administrative barriers in the economy, and, particularly, the importance of the systemic analysis of the regulatory implications of the legal framework of the customs union, covering issues of sanitary and technical regulation, and measures aimed at enhancing the efficiency of statutory control and supervisory functions in the construction industry, as well as at issues of industrial safety and connection to infrastructure facilities.
During the 24th Session of FIAC, the CEOs of foreign member companies paid special attention to the changing business environment in the Russian regions, modernization and innovations, the Customs Union, opportunities and prospects of banking sector development, and energy efficiency.
In addition, the results achieved by the FIAC working bodies in priority areas in 2010 were reviewed.
The 24th Session of the Foreign Investment Advisory Council noted that the Russian economy has recovered faster and more confidently than many countries with which Russia had actively competed for direct foreign investments in recent years. However, the Council’s members are concerned about the fact that Russia’s image abroad is generally not consistent with the actual investment climate.
Obviously, additional efforts need to be made in this area.
ModernRussia.com, a new information tool, may be helpful to a certain extent as a platform for discussing investment-climate issues by FIAC members and senior executives of other interested companies and organizations. In addition, there is support for creating a series of thematic TV programs jointly with the channel Russia Today to ensure fair media coverage of matters affecting Russia’s investment appeal.
The following areas are suggested as the FIAC's priorities for the year 2011:
Members of the Foreign Investment Advisory Council expressed great satisfaction with the results of their cooperation with the Russian Government and will continue to seek every opportunity to continue and enhance positive dialogue in the future.