The future is with nanotech

The Foreign Investment Advisory Council (FIAC) is scheduled to meet in Moscow next month, providing an opportunity for the world's leading companies to share their innovative technology and experience. Alexander Ivlev, a partner at Ernst & Young and FIAC coordinator, elaborates on the specific topics to be discussed.

What investors want in any market is predictable rules of the game, and Russia offers that. Conflicts, if any, are always settled here. Despite the global economic downturn and significant declines in GDP across the globe, Russia has not lost its partners prepared to provide direct investment. New investment has almost halved compared to pre-crisis levels, but few investors have closed their Russian businesses. Investment plans are being restructured, and this is happening all over the world.

Russian leaders are calling for economic diversification and the development of hi-tech and innovative sectors. The fuel and energy complex remains the engine of the Russian economy, but we can see the government's efforts to lead the country onward to the sixth level of technology development (nanotechnology).

The agenda of FIAC's November meeting includes measures to improve Russia's investment climate, relying on the experience of the world's leading companies in related areas.

Economic modernisation requires solutions to some vital problems, including tax administration. Different departments interpret issues differently, which leads to conflicts and legal costs. Such problems are settled sooner or later, but it takes too long. Russia needs a clearer system of tax administration, so that at least federal agencies would not contradict each other.

As for innovations, not only must the official mentality change, but also better infrastructure and legislation are needed to enable the creation of an efficient system for implementing innovation. For example, if new light-emitting diode lamps are too expensive, it is necessary to find ways of cutting production costs, thus reducing the burden on consumers.

Many FIAC-associated companies use energy-efficienct technology. They can help implement such technology in Russia by sharing their experience.

Why isn't nanotechnology used in Russia? Because in Russia, including at the mentality level, an old system for implementing innovation remains. Inventors often do not realise the commercial value of their projects. In former times, innovations were primarily applied in the defence industry, while patents were framed and hung on the wall as a decoration. In some cases, investors offering to put inventors' ideas into practice in industrial production for 5pc of profit were rebuffed. The mentality was not to offer inventions for industrial use.

However, mentality is not the only problem, as the road from certification to implementation is also prolonged by administrative barriers. A whole set of permits is required to launch production. In Russia, even companies focusing on large projects may have problems. Here's an example: recently one company had to transfer land from agricultural use. It took one year. During this time, the same company built two similar plants in another country. This is not typical, but such things do happen, unfortunately. Therefore, one of the tasks of an efficient bureaucracy is to help foreign investors solve their problems quickly and professionally.

Prepared by Vladislav Kuzmichev

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