Zee Beam News

13.10.2006 MosNews - Russia’s “unpredictable” policy decisions are deterring investment and leaving the country far behind rival developing economies China and India in global competitiveness, the World Bank said on Thursday, Oct. 12.
“The investment climate in Russia has ameliorated considerably over the last several years, but it still has an unstable character,” it said in a new report that was quoted by the AFX.
“In Russia, one of the main problems, according to firm surveys, is policy instability... not knowing what policy changes are going to occur tomorrow,” said Raj Desai, one of the report’s authors, while presenting the report.
Regulations that are “interpreted inconsistently” and “selectively applied... can have a deterring effect on investment,” Desai said.
Moscow has rattled some of the biggest Western firms working in the country in recent weeks, including energy titans Shell, Total and ExxonMobil, with regulatory moves widely seen as a campaign to revise the investment terms it agreed with the companies in the 1990s.
Analysts have said that Moscow’s ultimate motivation is to increase the stake of state companies such as oil giant Rosneft and gas monopoly Gazprom in the country’s most valuable energy projects.
Adding to the unpredictability is “preferential treatment for some firms over others,” Desai said.
The author pointed to a new report on global competitiveness by the World Economic Forum, an independent Geneva-based economic group, that ranked Russia 75th out of 117 countries surveyed in terms of its regulatory atmosphere, with 117th being the worst. This contrasted sharply with China, which was ranked 48th, and India, which was 50th.
Also hampering Russia’s global economic competitiveness is far lower worker productivity than other developing states, the World Bank report said. “For one dollar of salary, Russia workers produce two times less products than an Indian or Chinese worker,” the report said.
Productivity in Russia’s manufacturing sector is rising more slowly than salaries, “which limits competitive capacity on the international market,” the World Bank said.