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tv   [untitled]    October 15, 2011 12:30am-1:00am EDT

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infrastructure construction the some are region special economic zone promises exceptional of the treaties for developing your business in russia will come to the smaller region for more information log on to the little bit of the invest in some are about all your. money back here with r t n let's take a look at the top stories dozens of new arrests across america has failed the stopping of the corporate office by the gather movement from swelling with activists saying it's now simply too big to fail war protests are planned across the u.s. and in dozens of cities worldwide. syrians are split over the seven month long uprising while the capital wants a president to be given more time to reform cities outside damascus are tired of the regime. cranes preparations for euros money twelve global championships are
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under pressure from animal rights activists accusing the authorities of burning three dogs along. this with top stories here in our team and on the body with you know about this next. great. thing. comes to. join the. soldiers of the. moscow.
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hello and welcome to on the money when the business of russia is business i'm peter little 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 businesswoman erisa 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 cook len waller here in the studio he is president of exxon mobile russia stuart irvin he is chief executive officer nestle russia eurasia we also have. he is chief economist at deutsche bank and vladimir he's deputy head of research department at a critter ok but first let's take a look at what's going on in russia's interest investment environment.
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challenge that foreign capital must be just that if russia is to wean itself off reading. parliaments and horizon and that's a result great progress so it's quite clear that russia can no longer rely. on it because she needs to change the law that you my. priest and that's what this participation by far. and also a great. business environment should he level players. and hollow their first of the presidential limousine. and the prime ministers foreign investment advisory council as a result of seems to commissions rules for business transparent many ministries are. simplified in russia. and russia's biggest mission became marline
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european union. there are students of areas for improvement and russian arsenal solutions are constantly working on proven and suddenly. less aggressive investor. challenge by less than positive sentiments these are reliance and rather see the brass at least they began more investor engaged and there is evidence of this it is worse that as much as the local stuff playing better is that the chains that entire song on demining artsy. ok studio to go to you first seriously 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 has been here a 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 we've now got twelve plants ten thousand people
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and we're looking forward to invest in the future as well but it is a very positive one when you see a positive what does that mean i mean is it been well for an investor out is that you have had a good relationship with local authorities regional authorities federal authorities in certain part of the was the 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 clearly a very significant population we think 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 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 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 look in to one permission per product we've seen. easier to get our
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specialists into the country in terms of in the migration of specialists so we're making progress all the time. and i think that's what's to still want to do ok got my point here is what 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 addressing issues such as corruption. 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 and that regard i think another issue is russia's overall openness to foreign investment and in this regard again we've seen progress
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in the past four to five years russia currently is the only bric country without capital controls but on the other hand you do have things such as strategic reserve strategic and surprises strategic sectors their 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 if that has clinched i think that would be a tremendous trigger for capital inflows into 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 there loosening up is going to slow pointed out i mean how is exxon mobile because you do sequential really big deal with the russian partners right where 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
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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 auckland. several of the 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 it work we're building in which is 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
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large companies we 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 an indian state company and a japanese tech company on the on site on 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 which 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 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 in canada or in other between the music you know. russia is still very known very well known as being a critical dependent on the export of resources like oil and other things but to me
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if i could go to you i mean we just one gave us a really easy picture in learn from what i know about it is true the relationship the rogue 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 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 the two thirds of the story a little of the early pioneers if we may say so or foreign direct investment in russia you know we heard it there there are people with the experience of the business is growing they see you know environment changing for the better the regulations the rate tape being reduced on the other hand clearly as you said not everybody's here saw 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
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think is one reason is indeed the bureaucracy of the red tape that are being increased about but not quite yet. russia always comes low in the rankings of ease of doing business and this has not improved a lot on the image that it 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 of on the positive experiences that for example exxon model has had 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 the second tier companies that can potentially come into russia and know a little bit less about it well be quite honestly. are still law still afraid to make their initial step ok and if something is going to work it's very
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interesting coming back to i mean what is the we just heard perception here in the perceptions right it's our base here i mean where you just heard latimer say would you agree with that i mean because there are so many success stories here people have come here stayed here i don't hear a lot of people actually leaving it's still people coming i mean considering the global environment i'm a lot of people are sitting on their money right now but would you agree or disagree to what you agree with what i mean to say i think there is a difference in perception there is a difference of perception if you look at the companies that are part of the fall investment advisory committee which which work for the federal authorities is 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 that are outside of moscow you've heard about exxon investing and pepsi in the food industry of ball then bill down the road so they industries by the people who are part of that committee that got here early on by other people i
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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 it's a you know investment the very word investment implies risk and reward us for and i would say that we've balance the risk and reward these major companies i think other companies are coming with us if i look at one of the factories the coffee factory were ripping into machines it's got six hundred suppliers ok six hundred suppliers a big logistical issue exactly three hundred of those over three of those was the local suppliers with another three hundred that are internet and they're building facilities at the sign time so as we move forward i think it will open up the work that. on the foreign investment and voluntary committee also helps because it's not just about foreign investment i think that this and these big multinationals then 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
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we'll continue our discussion on russia's investment climate stay with r.t. . to. the in. the sea of nature and discoveries being seen. the. communicate with the want to. test yourself and become free. to. see what nature can give you a non safe. area .
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just tell me. the. dynamic. welcome back on the money i'm peter 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 gentleman sitting with me here in the studio bay so russia really quite well does russia itself throughout. i think the short answer is no to well. and again this relates to what i've been talking previously you know
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this perceptions about russia are either neutral or usually you know on the negative side especially when it concerns 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 vast. with vast population surpass consumer market the biggest in europe with potential to take over in consumption. you know the other rich countries that we have in western europe their taxes are low that foreign investment is actually welcome that. is being produced 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
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investors direct investors look at when they consider where to invest their money and here is what i am i to go back to you kind of 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 poor on the thread is what i mean was measuring what more should the state be doing to say come to russia as opposed to china or to venezuela or etc etc what does it 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 the promus the front i think in all of the four that it participates it has to deliver a message that is coherent that is. that shows concrete
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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 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
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for for investors not just portfolio but there at investors as well if you give me some examples of my viewers can understand because there are not experts in your sector it with can you give me examples of improvement that something changed for the better for a company like yours doing business in russia because as you said earlier in the program you have extremely good working relationship with partners here which are some of those improvements in maybe kind of give a little bit more substance to what you were saying sorry one or pro-government something from yes i mean. when we were obviously aware of the perceptions of russia 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 my mention of stock on one 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 that's seven point seven billion
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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 it 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 by the authorities is taking less pieces of paper work than before so this is this is helping us to do things faster to lower our cost 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
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concrete examples where things have got better for us and go easier for us there's still some areas that need improvement if we try to build a so it's build a factory the still a lot of the minister of regulation in the permits in that needs to correct what do you do where you do do you do you go to the advisory council do you go to work governor what do you do i mean you have to lobby these things 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 is solves the issue and i would say he solves it yes if it's for nestlé or for another company but i. actually it helps solve it for all the companies that are operating these little medium enterprises so we do go it unblocks and things between federal legislation local legislation so little glitches can get unblocked but the some other things that are permeating it is 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
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operate i mean these lower the costs of doing business here and want to lower the cost of doing business by the investment becomes easy to manage it's clear to see what the legislation is the legislation is moving a lot closer to say european norms so 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 as easy as other european no it isn't but it is getting better will she know what to do you know i've heard of act here if you can 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 bric countries. again if you come back to the issue of
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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 some word. 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 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 suffered significant blow partly due to the dependency on world that
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is quite significant but russia is clearly doing a lot to address some of these ills in front of the macro economy russia looks very strong certainly significantly stronger than a lot of the developed countries than a lot of the 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 and it's doing relatively well i'm going to be a very very you know it's very interesting i mean even the word tsunami is used a lot these days and you can use it in a social sense political sense economic whatever sense you want to be allotted for . 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
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seems to be a little a lot more tranquil than most of the world right now. yeah thankfully yes indeed it is yes look who's talking to my crew canonic environment is is relatively good i'm in everything is relatively the same need to be a lot better and growth could be higher but it's it's it's fine i think are the key question the it for all of us is russia's always important is the level of oil prices and they had been holding up pretty well despite the global fortuity 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 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 have heard the political issue of relatively transparent order for the next few months we know what decision has been taken. in
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these 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 the almost out of time here i want to go in the last word here it was one thing the government could do to attract foreign investment what would have been a 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 have 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 minister is now created a task force to look at that and to make some improvements that streamline to ok i
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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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