Foreign Investment in St. Petersburg Reaches Record High
May 27 – Foreign investments contributing to the St. Petersburg economy reached US$1.35 billion within the first three months of this year, a figure nearly double that seen over the same period last year.
According to data from the city statistic office Petrostat, 88 percent of foreign investments were on bank credits, the volume which has grown 3.8 times compared with the first quarter of last year. About a third of all credits have been given to large trading chains.
“The crediting increase testifies to economy revival,” said Sergey Fivejsky, deputy head of Economic Development of the city’s Industrial Policy and Trade Committee.
At the same time, the volume of direct foreign investment to the city’s economy reduced to 36.7 percent and the volume of foreign shareholder credits also has fallen by 70 percent when compared with the first three months of 2009.
“Last year the economy experienced a really bad post-crisis shock. This year, banks are set up to hold some money, but investors are not rushing in to make direct investments, which consist of notable risks,” said the Principle of the Saint-Petersburg Branch of the Russian High School of Economy Alexander Hodachek, to Russian daily Vedomosti.
During the pre-crisis period, foreign investments into St. Petersburg’s economy grew by 6 to 20 percent a year, but last year the FDI volume decreased by 7 percent in comparison with 2008.
About 35 percent of FDI for the first three months of this year went on foodstuff, cigarettes and beverages producing, 17.5 percent on vehicles and equipment manufacture, and only 1.2 percent went to construction and real estate deals.
The city’s foreign investment champions are from Belgium ($337.9 million), Belarus ($161.7 million), Cyprus ($124.9 million), Sweden ($108.8 million), and South Korea (about $100 million).
The Korean contribution to the city’s economy will soon became more significant. Hyundai Motor Manufacturing Russia plans to start up a full production cycle car assembly plant in September 2010, while production itself is planned to begin in January 2011. Stamping line test operations started its test mode last week. German Bosch-Siemens Hausgeraete plans to open up a washing machine manufacture factory in the area by July 2010.