Focus on regional development at 2016 Sochi Forum

The 2016 Sochi International Investment Forum at the Main Media Centre of Sochi's Olympic Park in Sochi, Russia, September 29, 2016.

The 2016 Sochi International Investment Forum at the Main Media Centre of Sochi's Olympic Park in Sochi, Russia, September 29, 2016.

Alexander Ryumin/TASS Host Photo Agency
Officials plan to focus on new ideas for equitable regional development in the country at an international economic forum in Sochi, the home of the 2014 Winter Olympics. Analysts attribute this to the effects of recent State Duma elections.

Investment specialists from around the world are gathering in the Black Sea city of Sochi between September 29 and October 2, to discuss how best to improve Russia’s regional economies.

More than 7,000 people from 25 countries are expected to arrive for this year’s international investment forum at the Black Sea resort, Deputy Prime Minister Dmitry Kozak said, speaking on the eve of the Forum to the RIA Novosti news agency. Kozak said that 70 Russian governors have already confirmed their participation in the investment event, one of the country’s premier economic forums.

"Since the inception of the forum, the event has become well known not only as a platform for attracting foreign capital, but also as a convenient way to develop public-private partnership projects and attract funds from Russian investors," said Timur Nigmatullin, a financial analyst for investment company Finam.

At the previous Sochi forum, in 2015, a total of 417 agreements, worth 415 billion rubles, ($6.5 billion) were signed.

Restrictions imposed on access to Western financial markets have pushed Russian companies to look for alternative sources of funding, and the forum is a good place to begin this search.

"A key theme of the forum will be attraction of investment," said Sergei Khestanov, macroeconomics advisor to the CEO of Otkrytiye Brokerage.

Key features

The 2016 forum will be influenced by the recent elections to the lower house of the Russian parliament – the State Duma – and the related possibility of a shake-up of local government officials, Nigmatulin said. This uncertainty could affect the total number of submitted investment projects and the nominal volume of deals made in Sochi.

The Governor of Krasnodar, the region in Russia’s south where Sochi is located, said he would be presenting around 25 percent fewer investment proposals, compared to last year.

Russia’s major international economic forums, which take place in different regions of the country through the year, play an important role in bringing local business and regulation in line with global practices.

Following discussions at the St. Petersburg International Economic Forum in 2015, for example, the Russian government launched a project office to reform key sectors of the economy. The decision emerged from an experience shared at one of the sessions by former British Prime Minister Tony Blair.

"Usually, economic forums are focused for the most part on discussion of issues related to the development of the Russian and world economy, to the development and strengthening of ties between foreign and Russian participants," said Alexander Yegorov, a senior analyst with the TeleTrade group of companies.

Reliance on regions

The Sochi forum has traditionally focused on regional investment, and this year’s event is likely to be no different, judging by the participation so many governors.

"Despite the involvement of federal officials and international guests, the forum in Sochi is of a regional character," said Georgy Vashchenko, head of Russian stock market operations at the Freedom Finance investment company in Moscow, noting that the programme emphasizes on issues of importance to the regions.

The major task facing participants is finding ways to reduce the vast differences in the socio-economic development of Russian regions and between different social groups. The organizers and stakeholders of the forum hope to tackle this problem by increasing cooperation between regions and attracting new development to the poorer regions.

Other topics at this year’s forum are likely to include increased import substitution and the promotion of export potential, including in the field of tourism services, said Nigmatullin.

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