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Boost for Medvedev’s Bid for Foreign Investment

585.jpgToday Russia has enjoyed the honor of overtaking China as ‘top BRIC’ in the Morgan Stanley investment model, Bloomberg reports.  Fortuitous timing, given that just this morning President Medvedev enticed potential partners at the St Petersburg Economic Forum with the prospect of tax breaks on foreign profits.  Josh Noble from the FT’s Beyond Brics blog analyzes the propitious moment:

Apt timing. This morning the Russian government ditched a tax on foreign profits in a bid to attract foreign investment. According to AFP’s report, Russia’s president Dmitry Medvedev told foreign business leaders in St Petersburg:According to AFP’s report, Russia’s president Dmitry Medvedev told foreign business leaders in St Petersburg:

“Investment activity is one of the factors for investment development and successful modernization of our economy,” Medvedev said. “Russia needs a real investment boom.”

The RTS index was up 0.4 per cent following the news, with the oil andgas sector – which could well be the target of any influx of foreigncapital, outperforming.

As beyondbrics reported earlier in the week, the BP oil spill couldwell be Russia’s chance to attract the investment boom it needs. Thegovernment is today sending a clear message that it’s ready to reduceits own involvement in the economy and encourage the private sector -both within and outside Russia – to take up the slack. Or, as thepresident put it:

“People often think that the person who picks apples does the main job,but in fact it is the one who plants the apple tree whose job iscrucial,” he said.

“The state should not always pick the apples on its own. In a freeeconomy there will always be people who will do it better and faster.”

Read thoe whole article here.