A row over Russia's FDI figures

By bne IntelliNews November 27, 2006

Ben Aris in Berlin -

A row has broken out between the bean counters over just how much foreign direct investment (FDI) is coming into Russia.

Total FDI stood at $35.4bn between January and September, according to the state committee on statistics, Rosstat. This is equivalent to about $240 per head per year after nearly a decade of per capita FDI in the order of $25.

No one disputes that Russia could do better: even this sterling result is still way behind that of Central Europe, where per capita FDI is regularly in four figures.

However, where they do disagree is on the actual figure of FDI. The Central Bank of Russia (CBR), which tracks FDI separately by looking at the amount of money that comes through accounts, rather than what is reported for tax purposes, came up with quite different figures for the first nine months of this year.

While Rosstat said foreign investment in Russia's economy grew 31.7% on year to $35.4bn in the first nine months, the CBR says FDI was closer to $20bn and portfolio investment was about $9.6bn.

No one is sure why there is a difference, although customs scams to reduce duty payments have long plagued the venal customs service.

The Kremlin announced reforms to the customs service earlier this year and intends to introduce new tracking software to stop the games that importers play. In the past, attempts to crack down on customs have failed because if one of the four customs posts in Moscow (at each of the cardinal points) refuses to take a bribe, businessmen simply go to the others until they find one that is prepared to reclassify something like "lady's shoes" to "essential medical equipment."

Rosstat also said that net FDI was only $800m as Russian companies continue to invest as much abroad as foreigners invest into Russia: Russians invested $34.6bn overseas over the same period.

The structure of foreign money suffered no material changes compared with last year, with foreign firms still favouring processing facilities ($9.1bn) and mining ($8.2bn).

Direct investments stepped up 55.5% to $10.3bn in the first nine months, and portfolio investments jumped 82.3% to $665m, according to Rosstat. Other investments (including commercial and other loans) widened 22.8% to $24.4bn.


Send comments to Ben Aris


Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Dismiss