FDI & Foreign Trade
Russia’s Vedomosti newspaper has reported that the Russian government is planning the creation of two offshore financial centers (OFCs) with special legal systems in the Kaliningrad Region and the Vladivostok in Russia’s Far Eastern Primorsky Krai territory to support business and trade.
Kaliningrad is based in the Western Baltics and is a Russian enclave surrounded by the European Union. The OFC may be situated on its Oktyabrsky Island, to allow customs and financial operations to be physically separated from normal commercial applications at standard national tax rates. A similar plan is envisaged for Russky Island near Vladivostok in Primorsky Krai.
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Russia has begun making trades in cryptocurrencies, with trades beginning on a trial basis in Switzerland and an trade deal with Venezuela for Russian auto component parts being settled in Venezuela’s own national cryptocurrency, the Petro.
Russia’s Gazprombank, the third largest bank in the country, is planning to execute its first test deals with cryptocurrencies later this year via its subsidiary in Switzerland. According to deputy chief executive Alexander Sobol, the bank doesn’t currently have plans for massive introduction of the feature, but is looking into it due to existing demand from some of its major clients. “It’s going to be test deals. Not major ones, just for ourselves. Some of our major clients are interested in such services, so we are currently looking into the possibilities of how to organize it,” Sobol said.
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Russian Prime Minister Dmitry Medvedev signed an order this weekend to allocate funds for financing the priority activities of the program – “The Digital Economy of the Russian Federation”. The document was published on Saturday on the government website and can be found in English here. According to the document, US$53.14 million from the reserve fund of the Russian government has been allocated to finance priority activities of the program.
The funds will be used for the state digital programs – “Information Society (2011-2020)”, “Economic Development and Innovative Economy”, “Development of the Transport System”, and “Development of the Electronic and Radioelectronic Industry in 2013-2025”.
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Novatek Gas and Power Asia Pte. Ltd., Novatek’s wholly owned subsidiary, shipped to the Indian market its first cargo with LNG produced by the Yamal LNG plant, Novatek said in a press release published on Tuesday.
Yamal LNG’s shareholders are: Novatek (50.1 percent), Total (20 percent), CNPC (20 percent), and the Silk Road Fund (9.9 percent).
“One of our core priorities enumerated in the Company’s Corporate Strategy up to 2030, is the expansion of the supply geography and the growth of our presence in the key Asian markets”, Lev Feodosyev, First Deputy Chairman of Novatek said. “The first cargo delivered to the growing Indian market is an important development in this direction”.
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Russia has been experiencing a boom in the visiting numbers of Chinese tourists, according to Chinese Ambassador to Russia Li Hui, who said that 1.5 million Chinese nationals visited Russia in 2017.
“The number of Chinese tourists in Russia reached 1.5 million in 2017. This is the largest number among all countries for Russia. China, for its part, ranked second among the countries visited by Russian tourists,” the Chinese envoy said. Li was speaking at a board meeting of the Russian Ministry for the Development of the Russian Far East in Vladivostok.
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Russian exports of fine gold increased 2.5 times to 56.6 tons in 2017, compared to 22.4 tons in 2016, according to the Russian State Assaying Chamber, a division of the Russian Ministry of Finance.
In addition to the export demand, Russia’s precious metals refineries reportedly produced 306.9 tons of gold in 2017, some 6.4 percent more than 288.6 tons produced in 2016. 18.4 percent of the gold produced in the country was exported, while the balance of 224 tons of the metal were purchased by the Central Bank of Russia to add to the country’s gold and foreign currency reserves.
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Russia has just overtaken China as the world’s fifth-biggest holder of gold reserves. In January, the Bank of Russia boosted its holdings of the precious metal by almost 20 tons, reaching 1,857 metric tons, thus overtaking the People’s Bank of China, which reported 1,843 tons.
While both Russia and China have been buying gold on the open market, Russia has also been adding to its reserves from local producers. The country possesses the world’s largest known gold deposits estimated at some 12,500 tons.
The last time China reported topping up its gold was in March 2015, whereas Russia has topped its hoard every month since March 2015. It is worth noting that Russia is also the world’s third-largest miner of the metal, according to research firm Metals Focus, and it purchases mostly locally produced gold – something which allows for more independence from the U.S. dollar amid U.S.-imposed sanctions.
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Russia ranks sixth in the world in gold reserves, with the Russian Central Bank saying they totaled 1,828.56 tons in 2017, an amount that has been increasing at a rate of about 15 percent per annum since 2013. The Russian Central Bank is one of the world’s leading gold buyers, and over the past two years has purchased more than 20 tons of gold.
Russia’s gold reserves, though, have not always been so strong, and its use as a financial reserve has waxed and waned over the years. The Russian empire attained its largest gold reserves in 1894, when they amounted to 800 million imperial rubles. Until 1914, the gold reserves of the Russian Empire were the largest in the world, amounting to 1,400 tons. The vast quantity of gold allowed Finance Minister Sergei Witte to carry out monetary reforms, which resulted in the introduction of the gold standard in 1897. Upon the Revolution in 1917, the Bolshevik government quickly spent the Czarist gold reserves to buy food and industrial equipment, and by 1928 only 150 tons remained in the Soviet treasury. During Stalin’s rule, however, the country’s gold reserves grew substantially because the Soviet leader believed such reserves were an important pillar for the economy’s fast-paced industrialization.
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Despite Western sanctions over the 2014 reunification of Crimea with Russia, the peninsula’s economy has seen rapid growth both in terms of economic output as well as investments. This has left the republic with ambitious goals for its future development. According to the republic’s Minister of Economic Development Natalia Chaban, speaking at the recent Sochi Investment Forum, prognoses indicate that Crimea experienced 10 percent growth in gross regional product during 2017, with investments also surging. Andrey Nazarov, chairman of the board of the Yalta International Economic Forum Foundation, underscored Chaban’s sentiment, saying that there is a rapidly growing interest among Western investors to “fill the gaps” in Crimea’s economy, even before sanctions are lifted.
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By Dezan Shira & Associates
The demand for foreign products into Russia has been significantly increasing over the past 12 months as Russia both recovers its economy from the drop in global oil prices and sanctions, and is moving into positive GDP growth rates. Pent up demand and a large consumer class are making the country an attractive proposition to sell to.
Russia is also a member of the Eurasian Economic Union, which allows goods imported into any of the member countries (Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia) to be freely transported throughout these nations. In this article, we explain the import and customs duties procedures.
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Russia Briefing
Russia’s Vedomosti newspaper has reported that the Russian government is planning the creation of two offshore financial centers (OFCs) with special legal systems in the Kaliningrad Region and the Vladivostok in Russia’s Far Eastern Primorsky Krai territory to support business and trade.
