A socially oriented non-financial development institution and a major organizer of international conventions, congress, exhibitions, business, social and sporting, public, and cultural events.

The Roscongress Foundation is a socially oriented non-financial development institution and a major organizer of international conventions; exhibitions; and business, public, sporting, and cultural events. It was established in pursuance of a decision by the President of the Russian Federation.

The Foundation was established in 2007 with the aim of facilitating the development of Russia’s economic potential, promoting its national interests, and strengthening the country’s image. One of the roles of the Foundation is to comprehensively evaluate, analyse, and cover issues on the Russian and global economic agendas. It also offers administrative services, provides promotional support for business projects and attracting investment, and helps foster social entrepreneurship and charitable initiatives.

Each year, the Foundation’s events draw participants from 208 countries and territories, with more than 15,000 media representatives working on-site at Roscongress’ various venues. The Foundation benefits from analytical and professional expertise provided by 5000 people working in Russia and abroad. In addition, it works in close cooperation with 133 economic partners; industrialists’ and entrepreneurs’ unions; and financial, trade, and business associations from 70 countries worldwide.

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Long-Term and Affordable Capital for Investments: New Fundraising Opportunities
4 September 2019
10:00—11:30
KEY CONCLUSIONS
The Far East possesses enormous potential for development

The market of the Far East is enormous, and the Far East not only possesses stocks of raw resources, but is also crucial in terms of transport, with it acting as a bridge between Russia and Asia. <...> This all demonstrates clearly that the region has incredible potential for growth — Igor Snegurov, General Director, VIS Construction Group (VIS CG).

We have been working very closely with the Far East and Baikal Region Development Fund. <...> We have a lot of financial packages which we provided to promote Japanese investment and trade to the Russian Far Eastern District. <...> The Russian Far East can become a gateway from the Russian continent to other parts of the world, including Japan and other parts of Asia. In my view, the Russian Far East is, from a geoeconomic sense, a good location to be a hub of exports, or for an economic exchange of trade and investment with Asia and the Pacific regions — Tadashi Maeda, Governor of the Board of Directors, Japan Bank for International Cooperation (JBIC).

The government is taking active steps to support investment in the region

In terms of projects in the Far East, we can already cite a number of major infrastructure projects that VEB is involved in together with the Far East Development Fund. <...> These are obviously deals related to manufacturing. <...> One of the biggest deals in shipbuilding is a project at the Zvezda plant, in which we are financing 15 gas carriers. The deal is valued at a total of more than RUB 300 billion — Nikolay Tsekhomskiy, First Deputy Chairman – Member of the Management Board, State Development Corporation "VEB.RF" .

The Industrial Development Fund was launched less than five years ago, but in that time, it has already financed around 500 projects in the country. <...> Currently, we have just eight financing programmes in place. <...> Since the last EEF took place, we have doubled the number of projects in our portfolio for the Far East. Today, 12 projects have been approved, 10 have been financed, and work on another five are under way — Roman Petrutsa, Director, Industrial Development Fund .

Today, we have had seven major projects approved in our factory [for project finance, – Ed.]. These include the Udokan Copper Mine, a large project, the Nakhodka Mineral Fertilizer Plant, and an entire range of other projects which we have already announced. So clearly, our partners – commercial banks – are interested in the factory for its long-term and relatively cheap resources linked to the key rate. However, they are also covered with regards risk, i.e. they are hedged from the point of view of risk for our partner banks — Nikolay Tsekhomskiy, First Deputy Chairman – Member of the Management Board, State Development Corporation "VEB.RF" .

Russian and foreign investors are displaying interest in working in the Russian Far East

Today, the main specialization and focus of our private group is investment in infrastructure and managing investment projects at all stages of development. <...> The group is currently investing around USD 2 billion in the Far East across a range of projects. These include a very large project in Khabarovsk <...> and projects in Yakutia which today, together with those which have already been implemented, have seen around RUB 60 billion invested — Igor Snegurov, General Director, VIS Construction Group (VIS CG).

The economic growth we are witnessing in Primorye Territory and some other regions is important. It creates real effective demand which ultimately acts as a driver, while investments launch this spiral of growth. <...> In literally the last couple of months, we have completely reconstructed our bank’s offices in Sakhalin and Chita, we are opening in Kamchatka on Friday – a place where our bank had no presence previously – and in Yakutia by the end of October. This will mean that the bank will be represented in 72 regions across the country — Mikhail Zadornov, Chairman of the Management board of Otkritie FC Bank.

We will also develop in the east of our country. <...> By investing in Siberia and the Far East, SIBUR <...> will, I truly hope, be able to build highly competitive, highly profitable manufacturing facilities which take advantage of Russia’s raw resources and hydrocarbons — Sergey Komyshan, Member of the Management Board and Executive Director of SIBUR LLC..

India and Russia share a cordial relationship, and we are looking at various areas of collaboration in the Russian Far East region. The Russian Far East desk has been opened at Invest India to facilitate mutual investment and to share experience between Russian and Indian investors. <...> Supported by the investment-friendly Russian approach in the region, India is looking at collaboration in sectors such as diamond processing, rare-earths, petroleum and natural gas, pharmaceuticals, tourism, infrastructure, and agriculture — Sunita Sindwani, Chief General Manager, Export-Import Bank of India.

ISSUES
A deficit of long-term financing provided by commercial banks for major projects

Today, not a single commercial bank is willing to provide 30-year financing for a new construction project, for a fully-fledged construction project which has not been approved by a major expert evaluation. And of course, VEB acts here as a state development institution. Let’s say that it acts in such a way as to assume all the risk at the initial stage and participates in very close cooperation with the initiator in developing the project — Nikolay Tsekhomskiy, First Deputy Chairman – Member of the Management Board, State Development Corporation "VEB.RF" .

Entrepreneurs cannot achieve success purely through efforts by the government and state development institutions, <...> even by such a well-respected organization as VEB.RF, which possesses more than RUB 2 trillion in capital. Russia’s banking system has assets of over USD 1 trillion, i.e. 30 times more — Alexey Chekunkov, Chief Executive Officer, Far East and Baikal Region Development Fund.

Today, we have 18 partner banks in our factory [for project finance, – Ed.]. Naturally, we would like to see these banks play a more active role in our projects, alongside the three biggest banks. Of course, the biggest players in our factory are Gazprombank, Sberbank, and VTB — Nikolay Tsekhomskiy, First Deputy Chairman – Member of the Management Board, State Development Corporation "VEB.RF" .

Weak infrastructure development

In order to attract investors, there needs to be a well-developed infrastructure. There need to be roads, there need to be connections, there need to be utilities, there need to be airports and ports. This is a key prerequisite for <...> investors to then appear in other sectors — Igor Snegurov, General Director, VIS Construction Group (VIS CG).

The Russian Far East is less developed than the country’s European areas. The main obstacles to accelerated growth here are insufficient size of market, large distances, and the continuous population distribution pattern, so the government is now actively seeking investment here — Sunita Sindwani, Chief General Manager, Export-Import Bank of India.

Imperfect state support mechanisms for investors

One final remark <...> regarding the insurance coverage provided by EXIAR [the Russian Agency for Export Credit and Investment Insurance, – Ed.] for projects in the country – it is an important, necessary, and incredibly beneficial tool; however, it is limited exclusively to export-based projects. And the availability of insurance unfortunately does not reduce the cost of financing for the owner of the project, because regardless, it is Russian funding — Sergey Komyshan, Member of the Management Board and Executive Director of SIBUR LLC..

In addition, current Central Bank regulation does not make provide for preferential capital conservation rules for loans covered by EXIAR. Correspondingly, this financing will, a priori, be rather more expensive — Sergey Komyshan, Member of the Management Board and Executive Director of SIBUR LLC..

A lack of qualified personnel in the Far East

Lack of manpower and skill-development and capacity-building is one of the main problems faced by the Russian Far East. Here again, we could cooperate and collaborate in the areas of mechanical engineering and education — Sunita Sindwani, Chief General Manager, Export-Import Bank of India.

SOLUTIONS
Developing state support tools for investors at the national and regional levels

What VEB is doing at the moment through its Project Finance Factory is very interesting. It is a tool which is developing at a rapid pace. That said, I would like to note that financing is currently available only in roubles. <...> The second area where it seems to me, we could improve somewhat is developing financing for projects which are implemented or could be implemented in the future by Russian <...> engineering companies. In this instance, I am referring to state guarantees provided by various development institutions, such as the REC, EXIAR, and VEB.RF — Sergey Komyshan, Member of the Management Board and Executive Director of SIBUR LLC..

I believe that the Russian Far East, as a massive area, could also utilize this possibility [for private investment]. What we are trying to do now is set up different funds and get long-term capital — Bambang Brodjonegoro, Minister of National Development Planning of the Republic of Indonesia.

I would highlight the creation of our own regional industrial development funds. To date, 60 such institutions have been established in our country, and yet, in the Far Eastern Federal District, they have only been established in three out of eleven regions. Why is this important? “We provide 70–30 joint financing with regional funds under two of our main programmes. In addition to this, however, these regional funds are successful when they receive a direct assignment from a governor to attract federal funds to their region. This is primarily done through loans, including from national industrial development funds — Roman Petrutsa, Director, Industrial Development Fund .

Collaboration with partners from the Asia-Pacific

We would like to deploy cutting-edge technology and management know how by Japanese companies to create a niche, as well as very comfortable living standards in the Russian Far Eastern District — Tadashi Maeda, Governor of the Board of Directors, Japan Bank for International Cooperation (JBIC).

We have already established two mechanisms, including the Russia–Japan Investment Fund, which is a joint investment fund with the RDIF. <...> We have also established Japanese project promotion vehicles in the Russian Far Eastern District. <...> This facility has already got more than 16 contracts with potential Japanese investors, and it functions as a trouble-shooter and a facilitator – even if it is micromanagement, we can do it. <...> Tomorrow we are going to sign a contract with VEB – Vnesheconombank – on financing an agricultural project in the Sakha Republic — Tadashi Maeda, Governor of the Board of Directors, Japan Bank for International Cooperation (JBIC).

We are undoubtedly interested in attracting finance from our partners in Asia, and believe it is crucial to do so. Why? Because it is indeed difficult to find long-term financing, and long-term financing, long-term financing in roubles is a major challenge — Nikolay Tsekhomskiy, First Deputy Chairman – Member of the Management Board, State Development Corporation "VEB.RF" .

Expanding the range of financing instruments

There are three potential sources of long-term capital. The first is sovereign wealth funds, the second is pension funds, and the third one is life insurance. <...> We cannot expect too much from the traditional sources of FDI, meaning multinational companies or big companies, because they are struggling with this current weakening global growth conditions, trade wars, etc. <...> So, I believe that trying to get infrastructure for investment from this long-term capital, namely sovereign wealth funds, pension funds, and life insurance are the keys to our development in infrastructure — Bambang Brodjonegoro, Minister of National Development Planning of the Republic of Indonesia.

The material was prepared by the Russian news agency TASS