"Denis Tyupyshev states: 'To regain what you owe, make up for the unpaid portion'"
Refreshed Analysis:
The Consultative Council on Foreign Investment (CCFI) recently dropped a study, based on a poll of international firms, focusing on the biz of foreign companies in Russia. How would you rank the authenticity of these findings?
Nearly 9 in 10 companies shared that they're keen on doing business in Russia and wish to continue their ventures. Moreover, they spot a decrease in risks related to Russian jurisdiction and are willing to return and intensify their activities, including investment. Of course, they mention recurring issues like workforce and logistics. However, generally, we witness a positive trend. Compared to the 2023 study, assessments regarding business conditions in Russia have shown improvements, albeit not remarkably significant.
Which nations and industries do these companies originate from?
Not all enterprises are forthcoming about their survey participation. Regarding their industry affiliation, prominent sectors include pharmaceuticals, industrial firms, consulting, and various others.
When it comes to business relations between the West and Russia, it appears that there's a convergence of views. Is this just rhetoric or are we moving towards genuine solutions for the restoration of economic ties?
I'd say this: the Russian Federation has never barred foreign companies from operating in Russia. If companies departed, it was either their decision or their government's. The Ministry of Economic Development promotes competition and supports firms registered in Russia, conducting activities within the country, and meeting requirements. Meetings are regularly held within the CCFI, even at ministerial and interdepartmental levels.
With those who stuck around or those who left?
Primarily with those who stayed. Some of the companies that emigrated have delegated certain functions to local representatives. We also maintain communication with them. As for those who've stopped communicating with us – well, that's their choice.
Which question does foreign business most frequently pose to the Ministry of Economic Development and the government, in general?
- One of their main worries is the conditions for their return. Those who stayed are usually curious about the conditions for dividend payments. These decisions are made by a special government commission on foreign investments. We promise to stick to the principle of parity: if we lift certain restrictions, then countries that imposed restrictions against us should also lift them. Dialogue will continue.
Another common concern is: on what criteria will we evaluate the comeback of companies that abandoned Russia? I'll answer: we will look at how the company parted ways, whether it maintained entrepreneurial activity within the nation via various formats, whether it retained its workforce and paid salaries, even if it ceased operations. Whether the company paid its debts, settled taxes, upheld commitments to counterparties, and whether the departure of individual companies impeded supply chains – all this needs to be considered.
- Did they, however, possess any outstanding tax obligations when they departed?
- Some companies abruptly shut their doors and left.
- But didn't they have any balances left in their bank accounts...
- I won't delve into the specifics, but there are legal mechanisms. We can't just seize everything.
Taking into account how companies departed, additional requirements will be in place regarding the localization of technologies, placement of server equipment, and software used on Russian soil, investment obligations they undertake. If you wish to return, firstly, compensate for what you didn't pay, and also invest in the Russian jurisdiction. However, I emphasize that first and foremost, we will prioritize the preservation of our sovereignty (financial, economic) and pay attention to how companies that surfaced and flourished in Russia during foreign business's absence are acting. We won't place them under undue pressure. Their support is our priority.
- Which countries and regions exhibit the most dynamic activity? USA, Europe, Japan?
American firms tend to approach issue-solving in a practical manner. Dialogue with them is also handled by AmCham, which operates in Russia. Politics is politics, but once political issues are settled, economic ones will follow. They are adept at establishing contacts. European business is also interested, but they're waiting for political changes. German business is ready: they say, as soon as there's movement, we'll immediately define a clear process for returning and deploying business in Russia. Asian countries are more cautious.
- Our market has undergone considerable changes in the business environment in recent years. For example, taxes have escalated. Does Russia still appeal to foreign companies?
- It does. Like mentioned earlier, nearly 90% of firms surveyed view Russia as enticing and express interest in it. Our companies, having filled certain vacancies left by “foreigners,” haven't addressed all needs. In general, the market remains vast.
- What do we expect more from the return of foreigners? Investments, technology transfer, or a boost in our jurisdiction's prestige?
- We advocate for enhancing the efficiency of the economy and labor productivity. This is most pertinent. Naturally, investments in fixed assets and the development of new production facilities will contribute to the growth of the supply economy. The issue of nurturing domestic production hasn't disappeared.
Theective industries involved in foreign businesses in Russia include pharmaceuticals, industrial firms, consulting, and others. The Ministry of Economic Development and the government often receive questions regarding the conditions for foreign companies to return and their criteria for evaluating companies that left. Additionally, foreign companies are interested in investing in Russia, transferring technology, and boosting the prestige of their jurisdiction.
