Foreign Investment Into Russia Unlikely To Recover In 2021 After Slump Last Year - AEB
The flow of new foreign direct investments (FDI) into Russia is unlikely to recover this year after suffering a record decline in 2020 against the backdrop of the COVID-19 pandemic, Tadzio Schilling, the CEO of Association of European Businesses (AEB) told Sputnik
MOSCOW (UrduPoint News / Sputnik - 17th February, 2021) The flow of new foreign direct investments (FDI) into Russia is unlikely to recover this year after suffering a record decline in 2020 against the backdrop of the COVID-19 pandemic, Tadzio Schilling, the CEO of Association of European Businesses (AEB) told Sputnik.
The flow of new FDIs last year amounted to $1.4 billion, which is over 20 times less than in 2019 when the figure stood at almost $29 billion. This is the lowest rate since 1994, according to the figures by the Russian Central Bank.
"Unfortunately, we all would want to speak about the post-COVID world, but we are not yet in the post-COVID world, we are still in the crisis. Therefore, the foreign investment flows in 2021 probably will continue to be affected by these negative trends as we still have travel restrictions, we still have lockdowns, and we still have an economy that has not yet fully recovered," Schilling said.
The flow of foreign investment last year fell not only in Russia but globally, by over 40 percent, as a consequence of the COVID-19 crisis, the executive noted.
However, the launch of vaccination programs and the stimulus measures, introduced by Russia and other countries worldwide, are encouraging optimism.
"We see some light on the horizon, for instance, the deployment of vaccination programs, the continuation of economic support, packages and stabilization measures.
Let's see where we land at the end, I hope it will be better than last year, but at the same time [the crisis] is not over," Schilling said.
At the same time, as Moscow is currently reviewing its double taxation treaties with a number of foreign countries, the AEB calls on the Russian government to take into account the interests of socially responsible investors, the executive noted.
"We strongly argue in favor of taking into account the equally legitimate interests of good faith foreign investors. They have made their investment decision on the basis of certain criteria including legal and fiscal ones, and they counted on the stability of these conditions. These genuine foreign investors are not only good faith taxpayers but also socially responsible companies and all we want is to avoid them becoming collateral damage of these very welcome and legitimate efforts to fight tax evasion," Schilling underlined.
The AEB is also taking note of the Russian government's efforts to improve the investment climate and welcomes the new law on protection and attraction of foreign investments, which is aimed at offering foreign investors stability of the legal and fiscal regime for a certain period.