Sochi Forum attracts just $11 billion for Russia, 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
A general drop in interest has been observed by observers in the international investment Forum held in the former host city of the 2014 Winter Olympics.

Russian companies and government authorities concluded 215 agreements totalling 704 billion rubles ($11.3 billion) during the 2016 Sochi International Investment Forum, stated Russian Deputy Prime Minister Dmitry Kozak, who oversaw the event TASS news agency reported (in Russian).

Speaking after the event ended, Kozak said the Forum, at Russia’s Black Sea coast, was attended by more than 4,000 professionals from 43 countries. However, experts point out, the forum in Sochi has lost its former popularity over the last year.

Fewer visitors, fewer contracts

Although Kozak regarded the just concluded Sochi investment forum as quite successful, a comparison with last year's forum clearly indicated to the contrary, said Alexei Kalachev, an analyst with Moscow investment company Finam. Around 9,700 people, including 265 foreign participants from 47 countries, attended the previous forum – meaning the number of forum participants had halved.

While the theme of foreign investment featured rather widely in the programme in 2015, this year 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, Daniel Russell, head of the U.S. Russia Business Council and a forum participant, told RIR, representatives of several U.S. companies, including the world's largest energy corporation ExxonMobil, visited the Sochi Forum.

Major international contracts were few, said Georgy Vashchenko, head of Russian stock market operations at investment company Freedom Finance. He said the regions need more 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, it is hardest to attract investment to this region.

"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 objectives, 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 the Russian broker TeleTrade.

Among them, he cited the construction of the country's largest grain terminal in the Rostov Region – a region located 650 miles south of Moscow – announced at the forum. The event also featured a meeting of a project office for reform in key areas of the economy, which has been 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 play a role in presenting venues for investment projects, and the Sochi forum coped with this role well enough, he said.

All rights reserved by Rossiyskaya Gazeta.

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

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

Accept cookies