protesters interrupted a university of california border regions meeting to demand the school's severed ties with the nation's nuclear weapons program. within twenty four hours a day this is the top stories now this out the protests against big business began in new york and they've gone global as people in almost a thousand cities say a collective no to the culture of corporate control in rome italian police used tear gas and water cannons to disperse crowds some two hundred thousand people in march and then out. of the news the summer months mon revolt has divided syria as the regime's supporting capital says it's ready to wait for reforms while cities outside damascus want the president out. and ukraine's attempts to spruce up its

image ahead of its posting of the euro twenty twelve football championships come on the fallout from animal rights groups using the government including stray dogs a lovely. i'll be back with another summary on these stories for about fifty minutes from now in the meantime while europe is drowning in debt russia seems to be escaped the worst of the world's financial troubles now expected to melanie's guess whether it's the best time to invest in the country and the money next.

great. opening. comfortable. subject but the. moscow. hello and welcome to on the money with the business of russia is business i'm peter lavelle foreign investment has been identified as the key factor in helping drive russia's economy forward with a foreign investment advisory council tracking a raft of global business luminaries to moscow on the money look 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 glenn 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

a key 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 foreign capital must be just as if russia is to wean itself off reading. parliaments and governments on the horizon and thus there is. great progress it's quite clear that russia can no longer rely on orange with the machinery to change the market that you might. call priest investment restrictions stations are russia and also a great. business environment or should he global players in russia. and. the president. and the prime minister's foreign investment advisory

council as a result of see these two commissions. for business became more transparent many ministries are. different in russia. and russians because lesion became more aligned with european union. where our students are areas for improvement and rational solutions are constantly working. man's i mean. less aggressive investor profile remains challenge belleza positive sentiment based on reliance and red tape. more investor engaged and there is evidence of this it is still perception as much as local stuff that's going better is that needs to change that into undermining our. ok student if you go you first year nestle is obviously an international brand name

what is the company's experience here i mean from the very beginning and what's going on right now actually has been a very positive experience the company has been here hundred forty years and in the last fifteen years we've invested strongly in russia and it's been a very positive experience for us we've now got twelve plants ten thousand people and we're looking for to invest in the future as well because it is a very positive one when you say positive what does that mean i mean is it going well for an investor and you say you have had a good relationship with local authorities regional authorities federal authorities think in certain part of it was the first things we're looking at is is it a good business opportunity and we've seen we've seen good growth in russia and in the russian countries last year our business was up was up ten percent and it's clearly a very significant population we think the strategic future for russia is good too with the size of russia one hundred forty million in the rest of your asian on top of it so those who are 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 you're saying 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 per product we've seen. easier to get our specialists into the country in terms of in my gratian of specialists so we're making progress all the time. and i think that's what's the still a lot to do ok on that point there yes 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 that 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 in this regard again we've seen progress in the past four to five years russia currently is the only country without capital controls but on the other hand you do have things such as strategic reserve strategic enterprises strategic sectors there is 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 through us 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 we're going to 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 good as gold pointed out i mean how is exxon mobil because you just clinched a really big deal with the russian partner trump well we've been in brush twenty years and we have one of our largest projects in russia was struck on 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 the other x. on my projects is our best project in terms of safety record technology as well we've drilled the longest wells in the world in soccer. several of the a number of the top number of worlds including the longest we have on that one project we have the largest drilling rig there we have the largest. single point moring system that's that's the system that actually puts the oil onto the tankers

and currently where where we're constructing the largest platform. offshore platform in the world where we're building it is because he's a 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 rosneft. there are partners with the with an indian company and a japanese company on the on suppling one and that partnership is with ross and i have place 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 recently and that includes it's a global strategic. relationship with ross and if that 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 and russia also deep water another opportunity for us to

leverage our security technology but we're also bringing rosneft into projects globally in the united states in canada or in another big it's region is that you know russia is still very known very well known as being a critical dependent on export of resources like oil and other things where i mean if i could go to you i mean we just one gave us a really really in the end from what i know about it is true a good relationship that wrote 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 the really little sides of the story because the early pioneers if we may see saw of foreign direct investment in russia you know we heard in there there are people with the experience of the business is growing they see it all 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 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 of the red tape that are being decreased about 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 which happen everywhere but we don't hear a lot about the positive experiences that for example exon model his head in russia in building you know the longest twelve's in sa and we don't see the coverage that well. so you know maybe. second the second

tier companies that can potentially come into russia and not a little bit less about it will be quite honestly. are still law still afraid to make their that initial step ok in this example he's going to work it's very interesting coming back story i mean what is the we just heard perception here in the perceptions right it's off base here i mean where you could say would you agree with that i mean 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 white americans so i think there is a difference in perception there is a different perception if you look at the companies that are part of the full investment advisory committee which which works for the federal authorities that's 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 dar outside of moscow you've heard about exxon investing and pepsi in the food industry of ball then we'll down the road so they industries by the people who are part of that committee that got here early why 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 investment the very word investment implies risk and reward us for and i would say there we've balance the risk and reward the major companies i think other companies are coming with us if i look at one of the factories the coffee factory were hoping to machine it's got six hundred suppliers ok six hundred suppliers a big logistical hoshi exactly three hundred of those over three of those spots are local suppliers with another three hundred that are international and they're building facilities at the same time so as we move forward i think it will open up

the work that we're. on the phone a verse from our advisory committee also helps because it's not just about foreign 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. wealthy british. market. come to. find out what's really happening to the global economy with mike's culture are

a no holds barred look at the global financial headlines. the commission. couldn't take three years for charges three. major three. three. three. mostly broadcast live video for your media project a free car to calm. cool new the latest in science technology from around. the. time in.

moscow. welcome back to on the money i'm here a little reminder we're discussing foreign investment in russia. vladimir i'd like to go back to you here how well does russia sell itself i mean because we have individual companies i'm gentleman sitting with me here in the studio based really quite well does russia itself throughout. i think that the short answer is not to well. and 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 you can blame many people but of course it's 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 vast. with vast population it's a vast 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 foreign investment is actually welcome that red tape is being used it takes time it's a vast country takes time but it's happening that investment in infrastructure is picking up 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 ok here is what i am i to go back to you ellie kind of go continue the theme of what 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 pull on the thread is what i mean was mentioning what more should the state be doing to say come to russia as opposed to china or to venezuela or eccentric such as what does it need to do more. well i think it has to be more active and. showing its strength i think it has to be more active on the economic the conus the 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 in a 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 a 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 clued ing 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 by direct investors as well if you give me some examples with my if you were going to understand it because they were all not experts in your sector it

with can you give me examples of improvement that something will change for the better for a company like yours doing business in russia because as you said earlier in the program even a 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 your response was saying in corporate governance and things like that yes i mean. when we were up i was fully aware of the perceptions of russia but we take a very disciplined approach 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 to suck on one project we've been able to achieve what we've achieved with at the moment an eighty three percent russian workforce and working with russian companies two thirds of the contracts that we've awarded and that that's seven point seven billion dollars in contracts have been awarded to russian front 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 is 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 regulations so for example to have a product approved by the 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 are some concrete examples where things have got better for us and go easier for us the still some areas that need improvement if we try to build a site build a factory the still a lot of the minister of regulation in the permits in that needs to correct what do you do what do you do do you do you go to the advisory council do you go to work

oven or what do you do i mean you have to lobby these things i mean you do and when there is an ombudsman argue civil of those that on was one of the. for the government and he has solved a lot of these little issues there and it's solved the issue and i would say he solves it yes if it's for nestlé or for another company but i. actually it helps all that for all the companies that are operating in small and medium enterprises so we do get under lock some things between federal legislation local legislation so little glitches can get unblocked but the some other things are the per meeting is just actually 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 by just moving them together so it's not so difficult for us to cooperate and in these lower the cost of doing business here and what you lower the cost of doing business for the investment becomes easy to manage it's clear to see what the legislation is legislations with a lot closer to say european norms it's much easier for investors to see what to do

and that helps them that helps them invest obviously in the in the country and it's a journey the wrong is it is easy is other european no it isn't but it is getting better will she know what to do you not heard of act here if you can put you know we keep talking about perceptions then and how russia is viewed in the world because people you know in our context you're 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 bric countries. 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 cultural 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 all over all level of the inflows foreign direct investment inflows into russia it's still nearly fifty percent lower than pre-crisis levels. in terms of the scale of the cline that the stock market had during the crisis period in two thousand and eight russia southward a 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 the e.m.p. years this year it's going to post its lowest inflation level since one thousand nine hundred two in terms of growth in terms of. other macroeconomic macro economic indicators such as consumption investment it's doing relatively well i'm glad i mean frankly you know it's very interesting i mean even the word tsunami is used a lot these days and you seize it in a social sense political sense economic funny whatever you want to be a lot of the. they're happening in the world now these days they're 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 little a lot more tranquil than most of the world right now. yeah thankfully yes indeed is your as the who's talking to mark wikinomics environment is is relatively good i'm in everything is relative these days i need to be

a lot better and growth could be higher but. it's fine i think that the key question that has for all of us is russia is always important is the level of oil prices and they have been holding up pretty well despite the global fortuity which this time around tells me that rather them a lot of speculation would commodity prices that we had before the crisis this time it's probably the case of you know really supply be mum for your oil which means that prices would be would be decent and again this is this is good for russia on top of that we hear. the political issue all relatively transparent for the for the next few months when our decision has been taken and this gives it least our service to investors and predictability and i think you know in the end of the day investment needs stability and predictability above all and then and then everything else ok so the almost out of time here i want to go in

the last word here if it was one thing the government could do to attract foreign investment what would have been you got twenty seconds i think streamline more streamline the regulatory system i mean you know in our projects we have to get thousands of different licenses and permits and we're successful in doing that because we understand a system where 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 before also the fiscal regime for these offshore projects the government recognizes that the projects are not economic under the current regime and the prime ministers now are created a task force to look at that and to make some improvements that stream like to talk i want to thank my guests it take our viewers for watching us here on the money see you next time and state authorities.

home.