V.I. Resin, First Deputy Premier, Moscow City Administration
Russian-American Investment Symposium, 1999
(Harvard University, Boston, USA)
Distinguished ladies and gentlemen, Distinguished colleagues,
Attracting foreign capital and investments is one of the major areas of our municipal investment policy. This has become particularly important due to the recent economic problems resulting from the August decisions of the Russian government, of which you are aware, which complicated the financial situation in the country.
I should like to particularly stress that Moscow, as an independent subject of the Federation has not renounced its commitments and continues to be a reliable associate for foreign partners. Moreover, Moscow is producing its own plan for a favorable investment climate, taking into account the need for:
first: solid guarantees
second: the establishment of most favored nation conditions
third: simplification of the procedure for obtaining permission and documents,
and finally, sound business relations between investors and the city administration.
Any city which has begun to implement a plan for major changes cannot make do with only its own resources; it always needs external financing.
Investment activity in Moscow is high in terms of the country as a whole. In 1997 foreign investors invested 8.5 billion US dollars in the Moscow economy, which accounted for 66% of investments in Russia. The same level was true for 1998.
We understand that western investors are concerned about the degree of risk to their investments, and they are right in counting on a stable political situation in the country, on being guaranteed receipt of an appropriate return for their investments, on acceptable norms of legislation and insurance of their investments, etc.
There is every reason to assert that Moscow has resolved these issues positively, and this has been demonstrated by the experience of numerous foreign investors. Suffice it to say that in the last 10 years not a single foreign entrepreneur, foreign company or firm active on the Moscow market, particularly in the construction field, has
abandoned its efforts; rather there has been expansion of such efforts, despite the economic turbulence and political strife.
Confidence in the effectiveness of cooperation stems from these specific features and potential of Moscow.
Moscow is indeed a major metropolis by world standards, with significant potential in production and property. It has the largest proportion of investment activity in Russia. Despite the serious economic crisis which has overtaken Russia in recent years, in particular in August 1998, which was also felt in Moscow, and despite the substantial decline in production in all areas of the economy, the construction sector of the city has been functioning in a stable and productive manner.
The city is engaged in large-scale road building and transportation activities. There has been the start-up of a modern ten-lane ring highway, and work has begun on a third ring highway in the city. A major program of reconstruction of the city center worthy of the capital is underway.
But the most striking feature of our investment policy is not, I feel, what we are specifically building and reconstructing, but rather how and with what funds we are providing for speedy and large-scale construction in the difficult conditions of the present stage of the market economy.
Quite recently Moscow was virtually entirely financed from the state budget. With the shift to the market this formerly broad flow of state investments was reduced to a trickle, but the city is actively building. In such circumstances we are obliged to create new guidelines and approaches in our investment activity.
What does this in fact involve? First of all, realistic and balanced investment programs. Living within one’s means is today the basic law governing the economy.
Another approach is that of the diversification of sources of financing. After the termination of abundant centralized state investments and subsidies there was a stage during which credit resources were obtained from commercial banks, but experience has shown that this is an expensive way of doing things, and today we are extremely cautious in our use of credit.
Thus, the modern investment potential of Moscow now is marked by power and mobility, careful adjustments to market conditions, financial stability and openness to foreign investors and builders.
The fact that our city is the capital also creates advantages for enterprises. Today Moscow is unquestionably one of the leading world
business centers. Everything is right at hand: the authorities, and the leading banks of Russia, the countries of the CIS, and foreign banks. This is an enormous transportation and telecommunications hub. All these factors create a good basis for successfully undertaking any type of business dealings.
We see the involvement in our country of foreign investors as much more than a means for attracting additional financial and material resources, although this factor doubtless is important for us.