metrical herdsman a renaissance hotel ok rules we take from pacific children resulting. in israel blue cheese available in some of the children of the areas some of them for children recent. column ask you what's going on r t these are the top stories dozens of new r.s.s. across america failed to stop the antics corporate occupied a get out of a movement problem so well and what activists saying it's now simply too big to fail protests are spreading across unless in dozens of cities worldwide. syrians are split over a seven month long uprising while the capital wants the president to be given more time to reforms and is outside the masses are tired of the regime you want to call it the down still and over three thousand. and ukraine's preparations for the euro

two thousand and twelve cold war championships are under pressure from camel rights activists using the authorities are burning stray dogs along. coming up next you know the bell and his guests discuss how russia aims to attract foreign investment on the money this year next. great. over the. cold war. soldiers of the. moscow.

hello and welcome to on the money where the business of russia is business i'm peter lavelle foreign investment is very dignified is the key factor in helping drive russia's economy forward with the foreign investment advisory council tracking a raft of global business woman in the moscow on the money looks at the progress russia has made and the issues russia still needs to tackle to boost its profile with international investors. to discuss the investment climate in russia i'm joined by good glen waller here in the studio he's president of exxon mobile russia stuart irvin he is chief executive officer nestle russia eurasia we also have you know he is chief economist at deutsche bank and vladimir he is deputy head of research department at a critter ok but first let's take a look at what's going on in russia is an investment environment. a

lonesome challenge the foreign capital must be just as if russia is to wean itself off. parliaments and government on the horizon and thus there is a great progress so it's quite clear that russia can rely. on trade because she needs to change the model that you my. priest does for peace participation in russia and also a great. business environment or should he level players in russia. including and hollow there first of the presidential limousine. and the prime ministers foreign investment. as a result of seized two commissions. for business became more transparent many administrative procedures for going russian. and russianness lucas lesion became

more aligned with european union. where our students are areas for improvement and rational solutions are constantly working one man's i mean. less aggressive invest their growth while remaining challenge belleza a positive sentiment based on reliance and read. it to become more investor engaged and there is evidence of this it is there still as much as local stuff that's playing better is that to change that it's a less of an undermining our. ok student if you go to you first earnestly is obviously an international brand name what is the company's experience here i mean from the very beginning and to what's going on right now actually it's been a very positive experience the company was being one hundred forty years but in the last fifteen years we've invested strongly in russia and it's been

a very positive experience for us and i got twelve plants ten thousand people and we're looking forward to invest in the future as well as it is a very opposed to what you say positive what does that mean i mean is it mean well for an investor and he said if you have a good relationship we'll call authorities regional authorities said look already in certain part of the lords and first things we're looking at ease is it a good business opportunity and we've seen we've seen good growth in russia and in the ration countries last year were business was up was up ten percent and it's played a very significant population within the strategic future for russia is good too with the size of russia one hundred forty million then the rest of your racial on top of it so that's what we're looking at first of all and we've seen the relationship with the federal authorities and the regulation improve over time so to less red tape or say less red tape less administration so in the last couple of years with the move towards the customs union we've seen. less regulation or more

streamlined regulation we're looking at one permission for a product we've seen. easier to get all specialists into the country in terms of in migration of specialists so we making progress all the time. and i think that's what's the still a lot to do ok point two units i want to go to you what has to be done still because we just had a really rosy picture from stuart here but i mean what needs to be done because i mean let's be honest here you know not every company in the world is flocking to russia why. well i think because there are still problems and the problems are still significant in terms of red tape i think there has been progress in addressing issues such as corruption such as the. level of bureaucracy at the regional level of the federal level but this is coming from a very high base so there is a lot that still needs to be done in that regard i think another issue is russia's

overall openness to foreign and. and this regard again we've seen progress in the past four to five years russia currently is the only bread country without capital controls but on the other hand you do have things such as strategic reserve strategic enterprises strategic sectors there are scope has been reduced but again this is something that still needs to be addressed in order for capital foreign capital to come more forcefully and to russia and then another issue finally i think w t o accession that his clenched i think that would be a tremendous trigger for capital inflows and for russia all right everyone seems to be going in the direction i want to go and i want to go to you because your company is in a strategic sector here what has been your experience because it we were very tight controls a few years ago now they're loosening up as you know so pointed out i mean how is exxon mobil because you did you just clinched a really big deal with a russian partner trap well we've been in russia for twenty years. and we have one

of our largest projects in russia the suckling one project. and we're very proud of what we've been able to achieve and it's been a very successful project you know exxon mobil in the industry in the worldwide has the highest has the best record on safety safety is our number one priority and the suck on one project even compared to other exxon mobil projects is our best project in terms of safety record technology as well we've drilled the longest wells in the world in succulent. several of the of the number the top number of worlds including the longest we have on that one project we have the largest drilling rig that we have the largest. single point moring system that's that's the system that actually puts the oil onto the tankers and currently we're where we're constructing the largest platform. offshore platform in the world where we're building it in the us or is it the partnership you have with russia is would you call it

a poster child relationship i mean how would you pitch this relationship to other large companies aren't here yet it's been extremely successful and in fact we've had a fifteen year relationship with russia's largest oil company. there are partners with the with the indian state company in a japanese company on the saturn one and that partnership has with rosneft has actually led to the deal that you mentioned that we just signed in august which is one of the biggest deals with we've actually entered into it recently and that includes it's a global strategic. relationship with rosneft it includes exploration up in the arctic sea which we think is one of the most prospective areas in the world down in the black sea in russia also deep water another opportunity for us to leverage our superior technology but we're also bringing rosneft into projects globally in the united states and canada and other big feature to me is that you

know. russia is still very known very well known as being a quote unquote dependent on export of resources like oil and other things vladimir if i could go to you i mean we just when he was really bruce you picture in learn from what i know about it is true that the relationship the rope russia has with oil majors and other energy companies are very good but let's step out of the energy sector right now what are some of the barriers still with the large companies or mid-size companies want to come here or they could have the same experience as a an energy company well i think we heard really little size of the story because of the early pioneers if we may see saw foreign direct investment in russia you know we heard it there and there are people with the experience of the business is growing they see you know the environment changing for the better the regulations the rate tape being reduced on the other hand clearly as you said not everybody's here are sold the problem is how to bring. those that are not yet in

russia to make them realize the opportunities that this market has. this i think is one reason is indeed the bureaucracy in the red tape that are being increased part but not quite yet. russia always comes low in rankings of ease of doing business and this has not improved a lot on the image that is being posted usually in western media is more focused on the negative occurrences which happen everywhere but we don't hear a lot about the positive experiences that for example exxon mobil's his head in russia in building you know the longest wealth in sally and we don't see it cover that well so you know maybe. second third or second tier companies that can potentially come into russia and not a little bit less about it. but honestly. are still law still afraid

to make their initial step ok in this example that means good work it's very interesting coming back story i mean what is the we just heard perception here and perceptions around it it's our base here i mean where you just heard latimer say would you agree with adam in because there are so many success stories here people have come here stay here i don't hear a lot of people actually leaving it's still people coming i mean considering the global environment to me a lot of people are sitting on their money right now but would you agree or disagree to what degree with what i mean to say i think there is a difference in perception there is a difference perception if you look at the companies that are part of the full investment advisory committee which which work for the federal authorities those forty major multinationals all of them are continuing to invest here so we're continuing to invest here we're just opening three factories this year one of them in to michigan crescent bar outside of moscow you've heard about exxon investing and pixy in the food industry of bull then we'll dandenault and so they industries

by the people who are part of that committee the goal here really i want other people i think there is a perception outside of that outside of russia that it's a bit of a black box they don't know what to do you know i would say you know investment the very word investment implies risk and reward us for and i would say that we've got the risk and reward the major companies are think other companies are coming with us if i look at one of the factories the coffee factory were opening to machinist it's got six hundred suppliers ok six hundred supply people just to go see exactly three hundred of those i would three of those spots are local suppliers or there's another three hundred that are international and they're building facilities at the signs are so as we move forward i think it will open up the work that we're. on the foreign investor nod advisory committee also helps because it's not just about fall investment i think that this and these big multinationals they're making it easier

as we move the regulations and you know the lay of the ground here all right gentlemen we have to go to one short break and after that short break we'll continue our discussion on russia's investment climate state party. just beginning to history. he was trying to stall. but sprung the traps they lay for. the radio we have the surge blogs around the. always from the always missing. one shot. at the close look at history's godfather became the most wanted trophy. that's. our.

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welcome back to on the money i'm here a little reminder we're discussing foreign investment in russia. i'm glad i'm here i'd like to go back to you here how well does russia sell itself i mean because we have individual companies and gentleman sitting with me here in the studio they sell russia really quite well does russia itself do that. i think the short answer is no to well. again this relates to what i've been talking previously you know this perceptions about russia are either neutral or or usually you know on the negative side especially when it concerns you know the west and. a clearly you know we can blame many people but of course it is the russian authorities and policymakers that you know have to have to think about it and work can be done to change the situation to tell that it's a country you know with us. we trust populations of mass consumer market the

biggest in europe with potential to take over in consumption. in all the other rich countries that we have in western europe that the taxes are low that that foreign investment is actually welcome that. is being produced it takes time it's a vast country takes time but it's happening the investment in infrastructure is speaking now and so on and so forth because these are the tick boxes that foreign investors direct investors look at when they consider where to invest their money and get here is what i am i to go back to you ellie kind of go continue the theme if i mean i was mentioning there is that you know we all know that it's a competitive world i mean there are a lot of places companies can go and invest in and there are choices out there in russia is one of many again the kind of poor on the thread is what i mean was mentioning what more should the state be doing to say come to russia as opposed to with china or to venezuela or eccentrics measure what we need to do more. well i

think it has to be more active in. showing its strength i think it has to be more active on the economic diplomacy front i think in all of the four that it participates it has to deliver a message that is coherent that is. that it shows a concrete examples of how things are changing and i think it is the quality of russia's governance that needs to be addressed here as well the quality of russia's economic diplomacy the concerted effort to show the strengths that are out there because you know quite frankly russia and some of the counts is very strong and you know whether it's the fundamental strengths that have to do with the scale of the market with the huge potential of human capital the education

levels the quality of human capital but also in terms of some of the policy advances that has to be delivered and cluing what is being done with regard to the dividends policy with regard to corporate governance i mean finally it seems in the past year that issues related to corporate governance to the level of the micro level of individual corporates this is starting to be addressed and this is very important for for investors not just portfolio but direct investors as well. to you give me some examples of my viewers can understand because we've got a role model experts in your sector it would give me examples of improvement but something has changed for the better for a company like yours doing business in russia because as you said earlier in the program we have extremely good working relationship with partners here what are some of those improvements in it maybe kind of give a little bit more substance to what you're saying in stories of corporate

governance and things like that yes i mean. when we we're obviously aware of the perceptions of russia but we take a very disciplined a players approach to our investments and we look at we look at the facts and we look at our own experience and our experience and i mention the soccer mom project we've been able to achieve what we've achieved with at the moment an eighty two percent russian workforce and working with russian companies two thirds of the contracts that we've awarded and that's that's seven point seven billion dollars in contracts have been awarded to russian companies and companies in joint ventures with russia so you know we see russian business as well now and i mention where we're building that huge platform in russia we see that russian business ease is is is improving and being able to meet the needs that we have in getting these very large projects going forward you see the same thing on in your sector we see better regulation all a small streamlined regulation so for example to have

a product approved broader authorities is taking less pieces of paper work than before so this is this is helping us to do things faster and lower our costs of doing business the customs union will also make sure that the the legislation is homogeneous between those markets and that really helps us in making sure that we can move our products freely across those those countries so those who call crete examples where things have got better for us and got easier for us there's still some areas that need improvement if we try to build the sites build a factory there's still a lot of the minister of regulation in permits saying that needs to create what do you do when you do do you do you go to the advisory council do you go to work open or do you do i mean you have to lobby these things you do and there is an ombudsman our visual of this that on was one of the. for the government and he has solved a lot of these little issues yeah is solved the issue and i would say he solved it

yes it's it's for nestlé or for other company but i. actually it helps solve it for all the companies that are operating the small and medium enterprises so we do go it alone block some things between federal legislation and local legislation so little glitches can get unblocked but the some other things are the permeating is just packed you have to look at the legal framework of the number of permits or you can make the number of sanitary inspections of plants a lot easier bra just moving them together so it's not so difficult for us to to operate and if these lower the costs of doing business here and once you lower the cost of doing business for the investment becomes easier to manage it's clear to see what the legislation is the legislation is moving a lot closer to say european norms it's much easier for investors to see what to do and that helps them and that helps them invest obviously in there in the country and it's a journey the wrong is it as easy as other europe because no it isn't but it is getting better will she know what to do get over go back here if you could put you

know we keep talking about perceptions then and how russia is viewed in the world particularly in our context here in business but how much different really is it from other emerging markets is it significantly different. i think still the perception of russia is i think worse than. some of the other countries including some of the other brooklyn trees. again if you come back to the issue of the quality of the investment climate and things such as capital controls all of the other bric countries have capital controls russia does not this is not really brought out under sward. by russia itself. and when you look at levels of foreign direct investment into the largest emerging markets you clearly see that russia still underperforms interims of the overall level of

inflows foreign direct investment inflows into russia it's still nearly fifty percent lower than three crisis levels. in terms of the scale of the decline that the stock market had during the crisis period in two thousand and eight russia suffered significant blow partly due to the dependency. on world that is quite significant but russia is clearly doing a lot to address some of these ills in terms of the macro economy russia looks very strong certainly significantly stronger than a lot of the developed countries than a lot of it. this year it's going to post its lowest inflation level since one thousand nine hundred ninety two in terms of growth in terms of. other macroeconomic macro economic indicators such as consumption investment it's doing

relatively well i'm going to be very you know it's very interesting i mean even the word tsunami is used a lot these days and you can use use it in a social sense political sense economic funny or whatever you want to be a lot of the. is that happening in the world now is there more of a perception now that russia is a place of predictability i mean it's a lot more stable here because if we look at what's going on. with the dollar with the euro and we have a lot of political issues around the world i'm thinking of the arab spring russia seems to be a lot more tranquil than most of the world right now. yeah thankfully yes indeed it is your us that was talking to mark wikinomics environment is is relatively good and everything is relative these days in the a lot better and growth could be higher but it's it's it's fine i think are the key question that the for all of us is russia's always important is the level of oil prices and they had been holding up pretty well despite third a global volatility which this time around tells me that rather them

a lot of speculation with commodity prices that we had before the crisis this time it's probably the case of you know really supply demand for the oil which means that prices would be would be decent and again this is this is good for russia on top of the three here for the political issue relatively transparent for for the next few months we know what decisions have been taken. and this gives it least unserviced to investors and predictability and i think you know at the end of the day investment needs stability and predictability above all and then and then everything else ok so that's the wrong side of it i mean i want to be alone the last word here if there was one thing the government could do to attract more investment what would have been that you got twenty second i think streamlined more streamlined the regulatory system i mean you know on our projects we have to get thousands of different licenses and permits and we're successful in doing that because we understand the system we've got some very good russian

nationals working the system but still it's time consuming and we are encouraged by the russian government's attempts to improve that system i think that is a very practical thing that can can do for also the fiscal regime for these offshore projects the government recognizes that the projects are not economic under the current regime and the prime minister is an hour created a task force to look at that and so makes an improvement that streamline to ok i want to thank my guests it take our viewers for watching us here on the money see you next time and state authorities.

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