Having done business in Russia for over ten years, I would say that there are good opportunities, but nothing like the paper returns quoted above. On paper there may have been multi thousand percent returns, but this assumes the base was a real value. Foreign ownership laws prevented these firms trading at their real vaulue in the fledgling post-Soviet economy, leaving oligarchs able to buy them from their employees exceptionally cheaply. Secondly, political uncertainty leaves you wide open even if you decide to invest now; nationalist governments are pursuing a policy of crypto-nationalisation, aiming to return all assets to Russian, if not state, control. Thirdly an arcane legal system makes it overly expensive and difficult to compete there - even Alpari, a Russian FX broker, routes its Russian clients to it's FSA regulated subsidiary in London.
It's not a level playing field, so why invest?
Thank you for your post.
You are mostly right. But as for some aspects I don’t quite agree with you.
It is mpossible after the USSR collapse to change the country quickly over the European standards, and little that can be done at all. In Russia there is the special method of business conduct that I suppose you know but it seems at least unstable and inconvenient to you. However, the European values written in laws are executed in Europe... In Russia laws are executed by the population and legal entities ... with a changeable success. Not because they don’t want ... just because they didn’t live by the law ...
But if you know the pecularities of business conduct, I think you know how to be successful in Russia.
The political situation is stable ... it is my opinion. The country is governed in one course for 8 years – from the center... They even managed to set some control over the regions, that was not in the 90-th.
Do you doubt that the course will be continued? As for me I don’t doubt that the elections wins Putin’s successor.
Except for administrative resource, there is the strong population support that got used to the strong hand at power.
Medvedev (Putin’s successor) – is even a more liberal politician. We will look at his rule. It is possible to say that the same course will be next 8 years.
You talk about nationalization ... it proceeds only in the an oil and gas sector, but it is the non-Russian phenomenon ... The same is with the countries rich with hydrocarbons countries, all are controlled by governments. Is it really possible to give up such profits in budget?
Other industries can be named as private, extraction of minerals for example ... All large enterprises are private.
The state sells out its parts constantly. Those national corporations that are set up currently, amalgamate those branches of industries that are out of needed volumes in the state’s opinion. And what is important that the enterprises producing weapon are amalgamated.
I already read a lot of information that part of capital of almost all enterprises entering these public corporations will be given to private hands later.
And Russia earns much from the sale of weapon.
The Russian brokers work differently ... I know that there is a very conveniet scheme of work through Cyprus, for optimization of taxation. Maybe everything is complicated... but a competition among managing companies grows very quickly ...the large number of managing companies is set up.
