Russian bear faces the market test
Article Abstract:
Russia's current financial crisis reflects foreign investors' lack of confidence in its institutional and legal systems. Western companies are concerned about the government's slow implementation of its reform program and are likely to stay away until there is greater clarity regarding the future direction of the reform process. The Russian crisis affects ordinary citizens directly through job losses, skyrocketing prices and the scarcity of goods. In the financial markets, the turmoil is evidenced by the sharp decline in share prices, the disappearance of credit and the collapse of many financial institutions. Foreign companies have sustained huge losses, with US, British, German and Japanese banks estimated to have lost around $9 billion. It may take a while for foreign investors to consider opportunities in Russia and they may expect Western countries to help stabilize the Russian market.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1998
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Desperately seeking certainty
Article Abstract:
Pundits observe that Russia has the potential to become the next investment haven for foreigners interested in emerging nations. This could transform the country into a Slavic tiger economy. The newly elected government is committed to improving the investment climate for both local and foreign companies in the country. For example, it is campaigning for legislative reforms that would allow globally acceptable production-sharing agreements in the oil industry. However, some foreign investors are put off by the economic and political uncertainties that pervade Russia, encouraging them to set their sights on China and other Asian tiger economies. One of the areas of difficulty is the tax regime, which penalizes companies at will. However, the greatest challenge is the mental legacy left by Soviet rules, which is certainly unacceptable in a free market.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1996
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Red tape around Red Square
Article Abstract:
Russia's efforts to attract foreign direct investment (FDI) is being undermined by the country's high risks, political uncertainty and bureaucracy. The government has already lowered its expected FDI investment for 1998 from around $6 billion to $7 billion to just $4.5 billion. While Russia has immense potential and could capture as much as 10% of international investment inflows, investors are deterred by alarming indicators such as the country's overvalued currency, fiscal deficit and current account deficit. In addition, Russia has gained a reputation as 'the Wild East' due to the prevalence of crime and corruption. Investments are also insufficiently protected, particularly those of minority shareholders whose shares can simply vanish from the shareholders' register or whose presence at shareholder meetings is unappreciated.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1998
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