Where business is headed
In spite of the sanctions and challenges in the political and economic climate, foreign investors are interested in Russia
Russia has once again made it on the list of top European 10 countries leading in terms of foreign direct investment volumes. On EY’s 2018 Attractiveness Survey, Russia placed 9th among all European countries.
In 2018, foreign investors invested in 211 projects in Russia. Compared to last year, the number of foreign direct investments shrank by 11% (there were 238 projects in 2017). According to the report, this is in line with the general European trend of a reduction in projects and a drop and investment activity due to Brexit and the slowdown in European growth.
“The digital technology sector has tripled in size – the number of projects has increased from eight in 2017 to 24 in 2018. This is in line with a broader trend in Europe, where the digital sector is in first place,” said Alexander Ivlev, Managing Partner at EY Russia.
According to RIA Novosti, Moscow and Moscow Oblast, Saint Petersburg and Leningrad Oblast, as well as Primorsky Krai were in the top three leading regions in terms of foreign direct investments.
Last year, Moscow Oblast attracted 61 investment projects, Saint Petersburg and Leningrad Oblast attracted 25 projects, and Primorsky Krai accounted for 14 projects.
In Moscow Oblast, investors from the US were the most active, investing in a total of 11 projects. Machinery and equipment manufacturing was the most popular sector for investments. The agri-food sector, production of raw materials, and digital technologies all tied for second place.
In Saint Petersburg and Leningrad Oblast, Japan and the US tied for first place in terms of investment activity – each country invested in four projects. Machinery and equipment manufacturing was the most popular sector in this region.
In Primorsky Krai, the agri-food sector was the most attractive, accounting for 29% of foreign investments. One of the reasons for an increase in the number of projects in this sector is the proximity to the large Chinese market, where the high quality of Russian agricultural products is valued.
Overall, Russian projects received the most direct investments from US, German, Chinese, and French companies in 2018. The most popular sectors were the agri-food sector (32 projects), the machinery and equipment manufacturing sector (32 projects), chemical products manufacturing (19 projects), and plastic manufacturing (21 projects).
In December of last year, Prime Minister of Russia Dmitry Medvedev noted Moscow’s high investment volumes in fixed assets. This indicator in the capital is higher than in the country overall.
During a meeting with the head of the Ministry, Mayor of Moscow Sergey Sobyanin said that Moscow has overcome the crisis conditions of 2014 in almost all respects. The city’s economy has demonstrated the highest growth in years. The trend has been positive for the last few years, but it wasn’t as stable.
In 2018, Moscow was also in the lead on the national investment climate rating, which was presented by the Agency of Strategic Initiatives at the Saint Petersburg International Economic Forum. In the first quarter of this year, investments in fixed assets grew by 25 percent compared to the same period last year.
“We’re transitioning into a new era of manufacturing, investment, infrastructure development, and communications – we’re transitioning to a new economy. It’s incredibly important that our cities and regions are comfortable for people. Business goes where people go, and people go where they are comfortable,” Mayor of Moscow Sergey Sobyanin said.
Tatarstan ranked second on the list, and Tyumen Oblast came in third. Kaluga Oblast placed fourth, followed by Saint Petersburg in fifth place. Tula Oblast, Moscow Oblast, Belgorod Oblast, Leningrad Oblast, and Ulyanovsk Oblast also made it on the list of top ten regions in terms of the investment climate.