Russia Must Tap Investment Potential – Putin

Putin was addressing a government meeting discussing Russia’s economic development to 2018, including measures to boost the country’s economic growth and reduce its dependence on raw material exports.

Russia has fundamental advantages as one of the largest markets in Europe and globally, with experts ranking it among the world’s top five most attractive countries for investment, Putin said.

"Our task is to turn this potential into a real inflow of investment and the creation of new jobs,” he said.

The government should have a clear idea of how to work with investors, Putin said.

"It is not enough to create conditions for investment, it is necessary to learn how to present this and sell it to investors, to persuade them to channel their capital toward our country,” Putin said.

The Russian government announced on Monday it had hired US banking giant Goldman Sachs to polish the image of the country’s investment potential abroad and lure foreign cash.

Under a memorandum signed with the Economic Development Ministry and the Russian Direct Investment Fund, Goldman Sachs will promote Russia’s contacts with international rating agencies, help organize roadshows, and bring together Russian officials with investors to improve the perception abroad of Russia's investment climate.

That image-polishing effort will not merely be a substitute for measures to improve Russia’s investment climate, as these processes should go hand in hand, Deputy Economics Minister Sergei Belyakov said on Monday.

Measures to improve the business climate, and remove administrative and corruption hurdles are at the top of the Russian government’s economic agenda, Putin said, adding he was concerned over slowing economic growth in Russia.

"If we want to be competitive and solve social tasks successfully, the Russian economy should develop faster than the global economy. In the past two quarters, however, we have seen a slowdown in the domestic economy. In particular, industrial production growth has slowed to below 2 percent in recent months and fixed capital investment declined,” Putin said.

A return to the growth model that existed before the global financial and economic crisis of 2008-2009 is impossible, the president said.

"It is obvious that the return to the pre-crisis growth model is impossible, which relates both to Russia and the world as a whole,” Putin said, without explaining why.

Before the crisis, the Russian economy showed robust growth based on the rising price of oil, the country’s key export commodity. Heavily reliant on raw material exports, primarily oil and gas, Russia has been attempting to achieve economic diversification for decades, with varying degrees of success.

Developed countries are trying to use nonstandard monetary policy measures and are printing money, Putin said, warning of the disastrous consequences of these policies.

The Russian government’s economic policies should take into account changes in the global economic environment, with the emergence of new regional markets, the shale gas revolution and technological changes, he said.

"We have no right to go with the stream and wait passively to see how global economic processes will develop. We need to work actively and seek new approaches,” he said.