Russia attracts just $11 billion at Sochi forum as numbers fall

Russia Attracted $11 bln at the Sochi Investment Forum. Photo: Russian Deputy Prime Minister Dmitry Kozak (R) at the 2016 Sochi International Investment Forum.

Russia Attracted $11 bln at the Sochi Investment Forum. Photo: Russian Deputy Prime Minister Dmitry Kozak (R) at the 2016 Sochi International Investment Forum.

Yegor Aleyev/TASS
Observers note a general drop in interest in the international investment event held in the former host city of the 2014 Winter Olympics.

Russian companies and government authorities concluded 215 agreements totaling 704 billion rubles ($11.3 billion) during the 2016 Sochi International Investment Forum. This was announced by Russian Deputy Prime Minister Dmitry Kozak, who oversees the event, after its closure, the TASS news agency has reported (in Russian).

According to Kozak, the event on Russia’s Black Sea coast was attended by more than 4,000 professionals from 43 countries. However, as experts point out, the forum in Sochi has lost its former popularity over the last year.

Fewer visitors, fewer contracts

Although Kozak regarded the most recent Sochi investment forum as quite successful, a comparison with even last year's forum is clearly not in its favor, said Alexei Kalachev, an expert analyst with Moscow investment company Finam. The previous forum was attended by 9,700 people, including 265 foreign participants from 47 countries – meaning the number of the forum participants has halved.

Moreover, while in 2015 the theme of foreign investment featured rather widely in the program, in 2016 it was limited to the panel session "Russia-Germany: New Forms of Cooperation in a Crisis."

"In view of the apparent decline in foreign investments in the Russian economy, the forum participants were more focused on domestic subjects," said Kalachev.

However, as Daniel Russell, head of the U.S. Russia Business Council and a forum participant, told RBTH, Sochi was visited by representatives of several U.S. companies, including the world's largest energy corporation ExxonMobil.

Major international contracts were few, said Georgy Vashchenko, head of Russian stock market operations at investment company Freedom Finance. According to him, the regions need investments, but they are hampered by the economic situation, which is far from prosperous in many of them. Industrial production has fallen in almost a third of the regions over the year, by more than 10 percent in some.

The real incomes of the population and the index of industrial production have increased only in Crimea, but because of the sanctions, this is the region that is hardest to attract investment to.

"The budget deficit in some regions is as high as 15 percent," said Vashchenko, adding that investors are trying to choose the most prosperous regions.

Don’t expect immediate results

However, despite the relatively low visitor numbers, the Sochi forum has fulfilled its basic tasks, say observers.

"It was a discussion and demonstration of the experience of the advanced models in business, in projects of regional development", said Mark Goikhman, an analyst for Russian broker TeleTrade.

Among them, he cited the construction of the country's largest grain terminal in the Rostov Region – a Russian region located 650 miles south of Moscow – which was announced at the forum. The event also featured a meeting of a project office for reform in key areas of the economy, which was recently established in Russia.

"Business and government understand that it is necessary to move to project management and strictly balance costs and results to achieve key indicators of economic and social development," said Sergei Kalendzhyan, dean of the Graduate School of Corporate Management at the Russian Presidential Academy of National Economy and Public Administration.

However, Sergei Khestanov, macroeconomic advisor to the head of Otkrytie Brokerage, said that an immediate tangible outcome of the economic forum should not be expected. The main thing is that economic forums still have the role of venues for the presentation of investment projects, and the Sochi forum coped with this role well enough, he said.

Read more: U.S. and Europe scoop up $1.25 billion in Russian bonds>>>

Subscribe to get the hand picked best stories every week

All rights reserved by Rossiyskaya Gazeta.

More exciting stories and videos on Russia Beyond's Facebook page

This website uses cookies. Click here to find out more.

Accept cookies