Why it’s a good moment to invest in Russia. 2019

According to the Word Bank, Russia is not the easiest country to invest , you can compare it with the country tensions/easiness like France or Spain.

Russia stays also very attractive destination for investors and businessmen in terms of consumption power and grow potential.  

Ease of doing business Russia in 2019

Doing busines world bank report 2019

Russia, India and China—improved their average ease of doing business.

This year Russia took 38th place in the ranking: it’s not the easiest country to business with, but it stays very attractive destination for investors and businessmen in terms of consumption power and grow potential.

Foreign investors put up capital in 238 projects in 2017 – a record number for Russia since the launch of this survey of EY in 2010.

China became the leader by the number of FDI projects for the first time, with Japan and South Korea also among Russia’s top 10 investors.

Manufacturing is the leading industry. Manufacturing was the sector boasting the largest number of FDI projects.

The regions are becoming increasingly attractive to investors – rising FDI flows channeled to Tatarstan, Bashkortostan, Primorsky Krai, Lipetsk and Belgorod oblasts.

According to research of EY  foreign investors put up capital in a record number of projects in Russia in 2017 – 238, which was 33 projects more than the year before. This represents 16% growth, a striking improvement compared with only 2% growth in 2016.

Like in 2016, foreign investors focused on the construction of new manufacturing facilities in Russia (202 projects), rather than business expansion (36 projects).

Regions becoming increasingly attractive to investors

Moscow and Moscow Oblast remained the most attractive to investors in 2017, with 54 projects here (2016: 49). In 2017 a s ignificant number of those projects (10) comprised investments in the pharmaceuticals industry. The leader in investing in the Moscow region was Germany (10 projects) followed by China (six projects). US and Swiss companies invested in four projects each.

St. Petersburg and Leningrad Oblast are number two with 17 FDI projects vs. 15 projects in 2016. Of those, Finnish investors finance three projects. German, Israeli and US companies support two projects each.

Prospects

The Russian economy is on the road to recovery, aided by oil and rouble stabilisation. 2018 also proved a positive year with several rating agencies, including S&P Global, strengthening their outlook on sovereign credit for Russia. This is evidence that the country is on a stable footing and primed for foreign investment.

Russia has already ridden out the worst of the impact of the recent sanctions and, as these continue to ease, it will stimulate capital flow to both the real economy and financial markets.

By the end of the 2020 many Russian publicly traded companies will finish investment programs and enter the stage of >10% free cash flow yield. Already high dividends are projected to increase substantially up to double digit yields for the majority of stocks.

About the Work Bank report

World Bank  ranked 190 countries how easy is to do business there, taking into account 11 different factors including:

  • corruption,
  • freedom (personal, trade, and monetary),
  • workforce,
  • investor protection,
  • infrastructure,
  • taxes,
  • quality of life,
  • red tape,
  • technological readiness.

Sources: EY, Worlkbank, KPMG, Inverstment Europe