Stepping into the XXI century

A BAROMETER FOR THE GOVERNOR

Valentin Makarov,,
Head of the External
Economic Cooperation Administration
of the Committee for Foreign Relations

        - Valentin Leonidovich, it was quite natural to expect an abrupt slump in investments everywhere, including St. Petersburg, after the terrible crisis of August 1998. But something striking happened. Instead of a slump our city's economy received a sudden increase of new capital investments. During the crisis, investment growth exceeded 80 percent and it broke all records during the first quarter of 1999, reaching 350 percent. How do you explain this phenomenon?
        - In order to precisely estimate the factors that have influenced such a result, we must not forget that negotiations concerning investments usually begin long before an investor makes a final decision and real money resources begin to flow in to the accounts of partners. Consequently, investment growth in 1998 was as a result of efforts made in previous years.
        It is quite another matter, that, as a reaction to the crisis, our partners might have decided to freeze investments, break off the concluding of treaties, decrease their volume, or even leave the St. Petersburg market. But this did not happen. On the contrary, the volume of investments exceeded 400 million dollars, 300 million of which consists of investments that arrived from abroad and over 100 million from foreign companies with subsidiaries. If you think about it, this fact explains all the others. Indeed, if the biggest investors that have been working in our city for a number of years - such as Rothmans, Neste, Wrigley, Gillette, RGR Petro, and so on - investors familiar with the real situation in Russia, do not export their capital from Russia but rather go on investing and reinvesting the money they earn here, what possible conclusion can a potential investor draw? The game is definitely worth the risk. For our part, we are trying to do as much as possible for potential investors. As we all know, capital always seeks the most favourable conditions for growth.
        - And what is attractive in St. Petersburg's investment climate?
         - In brief, this attractiveness lies in international trust for St. Petersburg, in the city's guarantees that have acquired a rock-solid reputation due to the open budget policy of the city's administration, which is something governor Yakovlev set out to do from the very beginning. This policy, based on clear and exact calculations, has earned St. Petersburg the reputation of a reliable partner and a low investment risk area.
        Secondly, constant dialogue between investors, entrepreneurs and the city authorities is a must. Only constant and active mutual connections can ensure the necessary impulse and energy for investments.
        - How do such dialogues occur? There are thousands of large, medium and small enterprises of various types and structure in St. Petersburg!
        - Nevertheless, such a dialogue has become a reality. As far back as March 1997 after a very long discussion with people who represent business in St. Petersburg, the Council for Foreign Investment Assistance was founded under the control of governor Yakovlev. Heads of the municipal authorities and St. Petersburg representatives of certain federal organizations are members of this Council. Our Committee for Foreign Relations is among them, of course. But representatives of the St. Petersburg International Business Association of Joint Ventures, the Association of Commercial Banks, the Commercial and Industrial Chamber of St. Petersburg, the Union of Insurers, as well as other organizations, are also members of this Council. Work in this council makes it possible to eliminate all impediments to the investment process.
        The Council holds its meetings once every quarter. Questions are submitted to these business sessions only after a thorough preliminary discussion and by common consent of all those represented in the Council. The majority of the suggestions submitted to the Council are first discussed in the working groups and soon thereafter come into force in the form of concrete documents and are liable to execution.
        -Nearly two years of Council work are under your belt. Is the influence of the Council felt in the investment climate of St. Petersburg?
        - The Council has become not only a barometer of the investment process but its arbiter as well. Everything it does is important. The St. Petersburg government passed a program, making possible the creation of a system of zones of economic development and it became of paramount importance for enlivening the investment process. The government started to implement the program at once: such a zone is already functioning in Kronshtadt. The Investment Projects Centre was also formed and it supplies practically all the information necessary for projects from the very start.
        And, finally, for rendering investment support to production, the government of St. Petersburg sanctioned, back in March 1998, "The main Directions of St. Petersburg Government Activities for Support of Industrial Export." This list of urgent measures was a result of multilateral coordination between the authorities and exporters at the working commissions of the Investment Assistance Committee. It is impossible to overestimate the timeliness and value of this document.
        - Are there many industrial exporters of this kind in St. Petersburg nowadays?
        - There are more then 2000. Each of them deserves praise for making their way into an alien market, especially because they produce goods which are the result of processing, of work, of intellectual labour.
         - Has the program supporting industrial export already been implemented?
        - Certainly. High Technology Production Association was formed and together with the city it works on solving concrete problems for providing support to exporters, and developing the potential activities of the export infrastructure. The city exports has a steady growth potential.

Interview by Tatiana Zhuravleva