Investment vacuum: only 20% of Russian businessmen use development institutions to promote their businesses


1396435263_f12II All-Russian Forum of development institutions started its work in Yekaterinburg. The plenary session participants discussed the inter-layer cooperation between organizations whose activities are aimed at improving the investment attractiveness of Russia and its regions. Nevertheless, despite the fact that the total domestic capital of development institutions amounts to 2.3 billion rubles, only 20 % of businesses have used their support.

Today, in the regions of Russia there are about 70 development institutions working in the form of corporations and agencies. Most of them – 72 % – are registered as open joint-stock companies and 86 % are supervised by the regional authorities.

However, as the Director of JSC “Corporation of the Middle Urals Development” Georgiy Gemedzhiev noted at the forum, all entrepreneurs send their requests for support  mostly to the Agency of Strategic Initiatives, Vnesheconombank and Rusnano.

“Basically, the business expects development institutions to provide infrastructure and preferential connection to utility networks ,” – said Georgiy Gemedzhiev.

According to the Head of the Ministry of Regional Development of the Russian Federation Igor Slyunyaev, the quality of the projects that are presented to development institutions by entrepreneurs is often not so high.

“We used to have a “thrift-box” of 400 billion rubles, and we decided to use it to support the business on favorable credit conditions. However, from 1.5 thousand presented projects only 38 have been approved, “- said the Minister.

The Sverdlovsk Governor Evgeny Kuyvashev agreed with the Minister. According to Mr. Kuyvashev, in 2013 two thousand of small and medium-sized businesses in the region received state aid in the total amount of 1.7 billion rubles, but entrepreneurs themselves should be more proactive.

“Sometimes businessmen do not know that the regional authorities can provide some support. They also look at the representatives of development institutions as at aliens. Although there is a complete business support system in the region” – says Evgeny Kuyvashev.

The Deputy Chairman of the Board of Eurasian development Bank Gennady Zhuzhlev also mentioned weak initiative of entrepreneurs.

“After I Forum of development institutions, we noted some activity with regard to our proposals, but after a while all interest was gone. And as of today we have not implemented any project involving the regional development institutions, “- said Gennady Zhuzhlev.

The Chief Executive Officer of the National Investment Agency “Invest in Russia” Yury Voicehovsky believes that now there is a strong competition on the world market of attraction of investment, and he points to a perceived lack of coordination between the regional and federal development institutions.

“We’re not competitors to each other, – he said, – Therefore, we should coordinate our actions within the Association and regional development agencies to create a common priority in investment strategies”

Eventually the President of the Russian Union of Industrialists and Entrepreneurs (RUIE) Alexander Shokhin stood up for businessmen. According to him, nowadays there is an extensive system of development institutions in Russia. There are highly specialized organizations and those who act systemically. But only few business representatives are informed of it.

“While we are sitting here, some new organization is appearing, I am sure. However, the most known ones are “Skolkovo” and “Rusnano”. Our research shows that only 20 % of entrepreneurs in Russia enjoyed government support for business development and another 10% are thinking of such a move. Why? Because they have no idea about this possibility. Many simply do not meet the criteria of development institutions.  In turn, businessmen believe that they have bulky support mechanism, and a large amount of documentation is needed, “- said Alexander Shokhin .

He noted that regional investment funds were in demand for those businessmen who used their services. They solved the problem of lack of “long and cheap money”, especially for small and medium businesses.

The RUIE President also noted that seven years ago, in Russia they already created an association to coordinate efforts to invest in RF regions and nothing new is needed now but the updating of the problem. In addition, he emphasized that the development institutions will not replace by themselves the investment climate in the regions, and it’s the local authorities who are responsible for the climate.