Structure of foreign investment by its kinds in 2000-200 9

The situation with foreign investment changed significantly in the XXI century. An important break-through was British Petroleum’s decision to invest US$6.7 billion in Russia’s petroleum industry in 2003. Since then, the total amount of the investment grew steadily with very high rates.

Total foreign investment for 2004 was US$40.5 billion, with consumer goods and services and construction receiving the largest shares among the economic sectors. In 2005 the figure rose to US$53.6 billion, with the heaviest investments coming from Luxembourg, Cyprus, the Netherlands, Germany, Britain, the United States, and France (see chart 2). Foreign direct investment for 2005 was US$13 billion. Increases of 42 percent in overall investment and 44 percent in foreign direct investment, compared with the same period in 2005, were reported in the first half of 2006 (see chart 1). Moreover, by the end of September 2006 the amount of investment was 35323 mln $./5/

A very important issue is a change in target industry structure. The main matter is constant increase of investment in manufacturing structure and high decrease of investment in 2005 in resource extraction. Also there is increase in investment in wholesale and retail trade and repair sphere. This trend shows that the character of the investment was changing. There was a shift from resource-extraction oriented investment to investment in manufacturing, which was certainly better for the economy, as manufacturing sphere gives more opportunities for further development and makes the economy more competitive.

In January-September 2007, According to the estimates of the Federal Service of State Statistics the volume of foreign investments inflow into Russia amounted to 87,9 billion USD, that 2,5 times exceeds the value in January-September 2006.

The foreign direct investment (FDI) volume for the same period increased by a factor of 1,9 and made 19,6 billion USD. Loans received from foreign joint enterprise owners increased by a factor of 4,4 – up to 9,7 billion USD — and became the basis of FDI growth.

Foreign investors’ contributions to the share capital of Russian companies increased by a factor of 1,5 and made 9 billion USD.

At the same time, the share of FDI in the total amount of foreign investments inflow decreased from 29,1% in January-September 2006 to 22,3% in January-September 2007.

The amount of other investments increased by a factor of 2,7 and amounted to 66,7 billion USD in January-September 2007, and their share in the total amount of investments for the same period grew from 69% in January-September 2006 to 75,9% in January-September 2007.

The volume of portfolio investments went up 2,3 times compared to the corresponding period of last year to 1,5 billion USD, that is 1,8% of the total amount of investments.

Source: www.rosgosstat.ru

  Great Britain was the leader of investment inflow into Russia raising up investments by a factor of 3,8 (vs. January-September 2006) up to 20,7 billion USD, followed by the Netherlands (17,2 bln USD), Cyprus (11,9 bln USD), and Luxemburg (8,1 bln USD). The major foreign investors kept their ranking: Cyprus (19,8% of the total amount of cumulative foreign investments), the Netherlands (18,2%), Luxembourg (15,3%), Great Britain (12,2%). These countries provided for 65,5% of the total amount of cumulative foreign investments, including 72,3% of the total amount of cumulative direct foreign investments and 60,5% of other investments. /6/

Actually, the amount of the attracted Foreign Investment in 2007 in Russia was a record. The total amount of cumulative foreign investments in Russian economy amounted to 120,8 billion USD at the end of September 2007, that is 52,2% growth to the level of the end of September 2006. /7/

As of the end of 2008 (see appendices №1) accumulated foreign capital in Russia made 264.6 billion USD which is by 19.9% more compared to the previous year. The highest specific weight in the accumulated foreign capital falls on other investments made on the return basis – 51.6% (by the end of 2007 – 50.2%), the share of direct investments made 46.3% (46.7%), portfolio investments- 2.1% (3.1%).

Main investors in 2008 were Cyprus, The United Kingdom (Great Britain), the Netherlands, Germany, Luxemburg, France, the Virgin (British) Islands. The share of these countries made 77.0% of the total volume of accumulated foreign investments, 79.4% of total volume of accumulated direct foreign investments.

In 2008 Russian economy received 103.8 billion dollar foreign investments which are by 14.2% less than in 2007. In the first quarter of 2008 17.3 billion USD foreign investments came (by 29.9% less than for the corresponding period of the previous year), in the second quarter – 29.3 billion USD (by 18.0% less), in the third quarter – 29.2 billion USD (by 6.1% more), in the fourth quarter – 28.0 billion USD (by 15.2% less).                   

Russia saw an inflow of $54.7bn in foreign investment in the first nine months of 2009, 27.8 percent less than in the same period a year earlier. As reported earlier, the flow stood at $12bn in the first quarter of 2009, 30.3 percent below the previous year’s respective figure, at $20.2bn in Q2 (a decrease of 31.2 percent), and at $22.5bn in Q3 (a decrease of 22.9 percent).

Repaid foreign investment which Russia had received earlier stood at $50.6bn for 9M of 2009, 5.3 percent above the 9M 2008 figure. Of the total, some $12.1bn was repaid in Q1 (down 15.3 percent), $19.7bn in Q2 (down 1.2 percent), and $18.8bn in Q3 (up 36.2 percent from the previous year’s figure).

Accrued foreign capital in the Russian economy reached $262.4bn, up 4.4 percent from 2008, with the largest share claimed by the ‘other repayable investment’ category (55.7 percent against 50.7 percent as of the end of September 2008), with the proportion of direct investment at 39.7 percent (46.9 percent in 2008) and that of portfolio investment at 4.6 percent (2.4 percent).

From January to September 2009, the countries making the largest investments in Russia were also Luxembourg, the Netherlands, Cyprus, Germany, the UK, France, the United States, Ireland, British Virgin Islands, and Japan, together accounting for some 83.7 percent of the total accrued foreign investment./10/