Russian Federation — Key Geographical Data

Russian Federation — Key Geographical Data
State border:
Capital — Moscow
Russia is located in the eastern part of
Europe and in the northern part of Asia
North-west — Norway and Finland;
Total area1 — 17,098.2 thousand km2 (as of
1 January 2010 agricultural acreage amounted
to 13% of the total area, forests — 51%,
surface waters (including marsh) — 13%)
West — Poland, Estonia, Latvia, Lithuania,
and Belarus;
South-west — Ukraine;
South — Azerbaijan, Georgia, and Kazakhstan;
South-east — China, Mongolia, Democratic
People’s Republic of Korea;
Population as of 1 January 2013 —
143,369.8 thousand people
East (maritime) — the USA and Japan
Density of the population as of 1 January
2013 — 8.4 people per km2
Longest rivers2, km:
Maximum length, thousand km:
Longitudinal direction — 4
Latitudinal direction — 9
Lena
4,337
Yenisei (with Angara)
3,844
Volga
3,694
Ob
3,676
Amur
2,824
Russia is surrounded by:
Largest lakes , thousand km :
Arctic Ocean (Barents Sea, White Sea,
Kara Sea, Laptev Sea, East Siberian Sea,
Chukotka Sea)
Baikal
31.5
Ladoga
17.7
Onega
9.7
3
Pacific Ocean (Bering Sea, Okhotsk Sea,
Sea of Japan)
2
Highest elevation, m:
Atlantic Ocean (Baltic Sea, Black Sea,
Sea of Azov)
Elbrus
5,642
Average temperatures:
Largest islands, thousand km2:
Novaya Zemlya Archipelago
82.6
Sakhalin
76.4
New Siberian Islands
38
Severnaya Zemlya Archipelago
37
January from 0°, -5°С (Northern Caucasus) to
-40°, -50°C (east of Sakha (Yakutia) where the
lowest temperatures can reach -65°, -70°C);
July from 1°С (northern Siberian coast) to
24–25°C (Caspian lowlands)
The Russian Federation has the largest land area in the world; it is eighth by population
globally4 and sixth by GDP denominated in USD at purchasing power parity5.
Source: Federal State Statistics Service
Data from statistical handbook of the Federal Agency for
Water Recourses
3
Source: Federal Agency for Water Recourses
4
According to preliminary results of the 2010 AII-Russia
population census
5
Source: World Bank 2011.
1
2
1st by total land area,
6th by GDP
1
2
MOSCOW
North Caucasian Federal District
Stavropol Region
Republic of Tatarstan
Togliatti
St. Petersburg
Lipetsk Region
Murmansk
Ulyanovsk
Moscow
Moscow Region
Kaliningrad Region
North Caucasian
Federal District
Ural Federal
District
• Port zones
• Tourist and
recreation zones
• Technology and
innovation zones
Republic of Buryatia
Republic of Altai Irkutsk Region
Altai Region
Tomsk
Far East Federal
District
• Industrial and
production zones
Siberian Federal
District
Sverdlovsk Region
Northwestern
Federal District
Volga Federal
District
Southern Federal
District
Central Federal
District
Russky Island
Khabarovsk
Region
Map of Russia
Special economic zones
www.russez.ru
3
Administrative Structure
Key Macroeconomic Indicators
EXECUTIVE BRANCH
2007
2008
2009
2010
2011
2012
8.5
5.2
-7.8
4,5
4.3
3.4
Production Indicators
President
Elected for 6 years by citizens of the Russian Federation
Head of State; determines the guidelines of domestic and foreign policies
Vladimir Putin
President of the Russian Federation
Government
Exercises the executive power in Russia
Consists of the Prime Minister, Deputy Prime Ministers and Federal Ministers
Prime Minister
GDP change (%), year-on-year
GDP per capita, PPP ($)
Nominal GDP per capita ($)
Industrial output, change (%), year-on-year
14 899 16 040 14 945 15 657 16 736 17 698
9 152 11 704
8 617 10 408 12 993 13 765
6.8
0.6
-9.3
8.2
4.7
2.6
10.5
0.5
-15.2
11.8
6.5
4.1
3.3
0.4
-0.6
3.6
1.9
1.1
22.7
9.9
-15.7
6.0
10.8
6.6
Deficit (surplus) of the federal budget,
(% of GDP)
5.4
4.1
-5.9
-4.0
0.8
-0.02
Federal budget expenditures, USD Bn
234
296
378
396
427
504
Public debt (% of GDP)
7.2
6.5
8.3
9.0
9.6
10.7
43.5
0.8
17.7
31.1
22.3
11.9
Appointed by the President with the consent of the State Duma
Dmitry Medvedev
Prime Minister of the Russian Federation
Deputy Prime Ministers
Cabinet of Ministers
Coordinate activities of various federal
executive power bodies, or all such
bodies in a specific area (economy,
social policy, etc.)
The Interior
Foreign Affairs
Agriculture
Some of the Deputy Prime Ministers
are simultaneously heads of particular
ministries
Defence
Sport
Justice
Transport
Healthcare
Finance
Labour and Social Security
Economic Development
Culture
Energy
Education and Science
Development of the
Russian Far East
Deputy Prime Ministers are proposed
by the Prime Ministers and appointed by
the President
Civil Defence, Emergencies,
and Disaster Relief
Natural Resources and
Environmental Protection
Industry and Trade
LEGISLATIVE BRANCH
The Federal Assembly
Consists of two chambers: the Council of
the Federation and the State Duma
The Council of the Federation includes
two representatives from each subject
of the Russian Federation: one from the
legislative and one from the executive
body of state authority
The State Duma consists of 450 deputies
(parties present in the current Duma are
United Russia, KPRF, LDPR, and A Just
Russia), and shall be elected for a term
of five years
Communications
and Mass Media
Regional Development
Coordination of Open
Goverment
JUDICIAL BRANCH
Constitutional Court (consists of two chambers,
represented by 10 and 9 judges respectively,
judges are selected by lot; main function is
checking the laws for consistency with the
Constitution)
The Supreme Court of the Russian Federation
is the supreme judicial body for civil, criminal,
administrative, and other cases under the
jurisdiction of common courts, shall carry out
judicial supervision over their activities and
provide explanations on the issues of court
proceedings
REGIONAL Government
4
Manufacturing, change (%), year-on-year
Extraction of mineral resources, change (%),
year-on-year
83 federal subjects ruled by Governors, who are proposed by the President and approved by
regional parliaments
Fixed capital investment, change (%),
year-on-year
Fiscal and Monetary Indicators
M2, change (%), end year/end year
Inflation (CPI), change (%), at year-end
11.9
13.3
8.8
8.8
6.1
6.6
GDP deflator
13.9
18.0
2.0
14.2
15.5
8.0
Producer price index (PPI), (%), at year-end
25.1
-7.0
13.9
16.7
12.0
5.1
Nominal exchange rate, average, RUB/USD
25.58
24.85
31.75
30.37
29.39
31.09
4.2
5.1
-5.6
9.6
4.7
2.4
137.1
60.5
25.4
25.2
62.1
Real effective exchange rate, change (%),
year-on-year
Reserve Fund, USD Bn, at the end of period
National Wealth Fund, USD Bn, at the end
of the period
Reserves (including gold), USD Bn,
at the end of the period
478.8
88.0
91.6
88.4
86.8
88.6
426.3
439.5
479.4
498.6
537.6
Source: Federal State Statistics Service, Central Bank of the Russian Federation, Ministry of Finance of
the Russian Federation
5
Key Macroeconomic Indicators (Continued)
Russia and ROW Comparison
Russia’s global ranking in production of select industrial and agricultural products
2007
2008
2009
2010
2011
2012
130.9
179.8
111.6
151.7
198.2
195.4
64.2
68.8
66.7
67.6
70.1
70.4
Balance of Payment Indicators
Trade balance, USD Bn
Share of energy resources
in export of goods, %
Crude Oil Production
2011
mbpd
11.2
Saudi Arabia
10.3
Russian
Federation
7.8
US
4.3
4.1
3.5
3.3
2.9
2.9
2.8
Iran
China
Canada
United Arab
Emirates
Mexico
Kuwait
Iraq
Current account, USD Bn
76.2
102.4
48.6
70.2
98.9
81.3
Export of goods, USD Bn
354.4
471.6
303.4
400.4
522.0
530.7
Source: BP Statistical Review of World Energy June 2012
Gas Production
Import of goods, USD Bn
223.5
291.8
191.8
248.7
323.8
335.4
Gross foreign direct investments,
USD Bn
54.6
75.2
36.3
42.9
55.6
46.7
Average export price
of Russian crude oil, USD/bbl
69.4
94.4
61.1
78.2
109.3
110.5
651.3
607.0
Financial Markets Indicators
US
Weighted average corporate loan rate, %
10.0
12.2
15.3
10.8
8.5
9.1
CBR refinancing rate, %, at the end of the
period
10.0
13.0
8.75
7.75
8.0
8.25
Assets of Russian Banking System, USD Bn
821
953
975
1 108
1 293
1 629
Stock market index (RTS, in RUB,
at the end of the period)
2.291
632
1.445
1.770
1.382
1.527
Capitalization of Russian stock market,
USD Bn
1 462
370
752
942
771
794
Income, Poverty, and Labour Market
Real disposable income, change (%),yearon-year
2.4
3.0
5.9
0.4
4.2
Average wages in USD
531.4
695.7
587.0
689.2
794.9
862.4
Unemployment rate, %
6.1
6.3
8.4
7.5
6.6
5.5
Russian
Federation
160.5
151.8
146.8
102.5
101.4
99.2
78.0
75.6
Canada
Iran
Qatar
China
Norway
Saudi Arabia
Algeria
Indonesia
Source: BP Statistical Review of World Energy June 2012
Coal Production
2011
MM tons
3,520
993
China
12.1
One of the leading
countries by crude oil
and gas production
2011
bcm
US
588
415
334
325
189
139
116
87
India
Australia
Russian
Federation
Indonesia
Germany
Poland
Kazakhstan
Ukraine
Source: BP Statistical Review of World Energy June 2012
Global Leader in Metal Reserves
% of total global reserves
14%
10%
Source: Federal State Statistics Service, Central Bank of the Russian Federation, RTS, Federal Customs
Service.
5%
Russia’s
ranking
6
1
Average weighted rate for RUB loans to non-financial institutions up to 1 year.
8%
2%
Iron ore
PGM
Gold
Nickel
Copper
3
2
3
3
7
Source: US Geological Survey, 2011
7
Russia and ROW Comparison (Continued)
Russian Exports
Wheat
Goods Export Structure
2012
MM tons
$524.7 Bn Volume in 2012
137,2
EU-27
117,4
China
86,9
India
56,2
Russia
54,4
USA
Other
15,7%
29,9
25,3
25,0
22,7
22,3
Australia
Canada
Pakistan
Kazakhstan
Ukraine
Source: FAO (Food and Agriculture Organization of the United Nations)
2012
MM tons
Metals
8,5%
25,6
16,4
Brazil
Crude Oil
34,5%
Machinery,
Equipment &
Transport
5,0%
Centrifugal Sugar
37,5
Fertilizers
2,1%
Coal
2,5%
India
EU-27
14,6
9,9
China
Thailand
8,0
6,0
USA
Mexico
4,9
Russia
4,7
Pakistan
4,3
Natural Gas
12,0%
Australia
Petroleum Products
19,7%
Source: Federal Customs Service
Source: USDA
Milk
Exports of Services By Direction of Trade
2012
MM tons
$46 Bn Volume (9M 2012)
UK
3,2%
140,0
90,6
55,5
EU-27 United States India
32,5
32,2
China
Russia
31,5
20,3
11,8
Brazil New Zealand Argentina
11,2
10,9
Mexico
Ukrain
USA
6,5%
Germany
6,1%
Ukraine
4,3%
Source: USDA
Poultry, Meat, Broiler
Other
60,6%
2012
MM tons
13,7
China
12,8
Brazil
Source: USDA
8
Cyprus
4,0%
9,5
EU-27
Switzerland
12,0%
3,2
2,9
2,8
1,9
1,7
India
Mexico
Russia
Argentia
Turkey
1,6
Kazakhstan
3,4%
1,5
Indonesia Thailand
Source: Central Bank of the Russian Federation
9
Russian Imports
Employment and Education
Distribution of Employed Population by Age in 20111
Goods Import Structure
$312.6 Bn Volume in 2012
Total
Men
Women
100
100
100
Employed — total
Including people aged, years:
Other
20,8%
Medicines
3,4%
Machinery,
Equipment &
Transport
50,3%
Clothing and
footwear
5,6%
Metals and
steel
7,0%
Food products
and agricultural raw
materials
12,9%
Less than 20
0.7
0.9
0.5
20–24
8.9
9.8
7.9
25–29
14.2
15.0
13.4
30–34
13.0
13.3
12.6
35–39
12.4
12.3
12.5
40–44
11.5
11.1
12.0
45–49
13.9
13.0
14.9
50–54
13.0
11.9
14.2
55–59
8.4
8.7
8.0
60–72
4.0
3.9
4.0
40.1
39.6
40.6
Average age of employed population, years
Source: Federal State Statistics Service
Source: Federal Customs Service
Distribution of Employed Population by Education in 20111
Imports of Services By Origin of Trade
$90 Bn Volume (9M 2012)
Total
Germany
6,4%
3,8% 0,3%
UK
5,2%
20,3%
Turkey
8,2%
Source: Central Bank of the Russian Federation
10
2,9% 0,2%
4,7% 0,4%
29,7% 23,2%
19,5%
26,4%
Cyprus
4,5%
Higner professional education
Secondary education
Ukraine
4,2%
Netherlands
3,0%
Women
17,2%
26,1%
33,4%
14,6%
USA
5,2%
Other
63.2%
Men
24.2%
21,4%
Secondary professional education
Primary education
31,6%
Primary professional education
No education
Source: Federal State Statistics Service
1
According to a random poll of the population on employment issues.
11
Economically Active Population
Eurasian Customs Union — A Large Addressable
Market
As percent of the total1
Economically Active
Population — total
1995
2000
2005
2006
2007
2008
2009
2010
2011
100
100
100
100
100
100
100
100
100
100
94.8
90.5
89.4
92.8
92.8
93.9
93.7
91.6
92.5
93.4
100
5.2
9.5
10.6
7.2
7.2
6.1
6.3
8.4
7.5
6.6
50
100
100
100
100
100
100
100
100
100
100
94.8
90.3
89.2
92.7
92.5
93.6
93.4
91.0
92.0
93.0
5.2
9.7
10.8
7.3
7.5
6.4
6.6
9.0
8.0
7.0
100
100
100
100
100
100
100
100
100
100
94.8
90.8
89.6
93.0
93.2
94.2
93.9
92.2
93.1
93.8
5.2
9.2
10.4
7.0
6.8
5.8
6.1
7.8
6.9
6.2
Including:
Employed
Unemployed
Men
Employed
Women
Including:
Employed
Unemployed
(in millions)
200
150
Including:
Unemployed
Population 2012
1992
Source: Federal State Statistics Service
-
143
Russia
169
16
10
Kazakhstan
Belarus
Total
Source: Global Insight
Nominal GDP 2012
($ in billions)
2,500
2,000
1,500
1,000
500
-
1 968
Russia
2 221
204
50
Kazakhstan
Belarus
Total
Source: Global Insight
Retail Market 2012
($ in billions)
800
600
400
200
-
673
612
Russia
40
21
Kazakhstan
Belarus
Total
Source: Planet Retail
According to the data obtained from a random poll of the
population on employment issues: 1992, 1995 — as of the
end of October; 2000–2008 — as of the end of November;
2009–2011 — average annual rate. Starting from 2006 data
includes the Chechen Republic.
1
12
13
Human Capital
Infrastructure Investment
Highly educated labour force.
Infrastructure Investment
One of the 7 leading countries by the number of Nobel Prize winners, most prizes awarded for
achievements in the field of physics.
US% Bn
High level of basic education.
Significant scientific research and technical resources base.
6%
Substantial human capital supporting favourable opportunities for innovative growth.
4%
Highest level
of educated
population among
BRIC countries
Level of Education: net enrolment ratio — BRIC Countries1
%
97%
90%
127%
113%
120%
85%
77%
117%
60%
0%
36%
25%
Russia
13%
China
Primary
Brazil
Secondary
50
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Infrastructure investment, % of GDP
0
Infrastructure investment, USD Bn (rhs)
Completed
78%
30%
100
2%
0%
%
150
Source: Federal State Statistics Service
98%
60%
India
Higher
Project
Budget,
USD Bn
Project Name
Sector
North Stream
O&G midstream
9.6
Sakhalin-KhabarovskVladivostok pipeline
O&G midstream
10.0
BPS-2
O&G midstream
3.2
Short Description
Two line 1,224 km 55 bcma pipelines from Russia (Vyborg) to Germany
(Greifswald)
Construction of 1,800 km Sakhalin — Khabarovsk — Vladivostok gas
transmission system
Construction of 1,000 km pipeline from Unechka on Belarus border to Ust
Luga port near St. Petersburg
Source: Broker reports
Source: Euromonitor, 2011
In Progress
Literacy Rate (% of population aged 15+) – BRIC Countries
Project Name
Sector
Bovanenko
O&G E&P
15.0
Construction of 572 km railway Obskaya-Bovanenko (almost complete) and
2400 km gas pipeline Bovanenko-Ukhta, Uhkta-Torzhok
Moscow-St. Petersburg
toll road
Roads
18.9
626 km 4-8 lane Moscow-St. Petersburg highway, of which the first 43 Petersburg toll road West km has been contracted
Boguchansk hydro power Energy
and aluminium plant
5.8
%
99,6%
95,0%
90,9%
63,5%
Russia
China
Source: Euromonitor, 2012
Gross enrolment ratio is the total enrollment in primary
education, regardless of age, expressed as a percentage of the
population of official primary education age. GER is higher than
the net enrolment ratio and can exceed 100% due to the inclusion of over-aged and under-aged students because of early or
late school entrance and grade repetition.
1
14
8%
Brazil
Development of Sochi
region (Sochi 2014)
Transport
Ust-Luga port
Water transport
India
Project
Budget,
USD Bn
31.7
8.1
Short Description
Boguchansk Dam in the middle of Siberia on the Angara river is one of the
largest. Planned capacity is 3000 Mv. Length exceeds 2.5 km, artificial lake
will cover 2,326 km2
Besides sport venues and supporting facilities construction, development of
Sochi area will also include gas pipeline construction, creating of area transport
infrastructure (widening of existing rail road, construction of roads on the shore
and in the mountains). More than half of the funds come from the private sector.
Harbour deepening, construction of quays, rail connections, and road
connections from Novgorod. Is one of the largest infrastructure projects in
Russia. Construction is planned to be completed in 2013.
Source: Broker reports
Russian infrastructure investment as a percentage of GDP has grown by over 3 % of GDP
over the last decade, and by about ten times in terms of US dollars, amounting to 7% of GDP
($134 Bn) in 2012E.
The Russian government seeks to increase the role of the private sector in building, operating,
and financing infrastructure projects.
15
Russia — Investment Priorities
Priorities in Modernization of Russia’s Economy
Diversification of Economy — Development Priority
Share of mineral resources sector in GDP and in export is still fairly high; however, specific
measures are being taken in order to diversify the Russian economy, this should have a
positive effect on Russia’s global competitiveness
Energy Efficiency
Main Objectives
 Reduce Russia’s energy intensity to GDP ratio by 40%
through energy saving, improving energy efficiency and
eliminating regulatory gaps by 2020
2012 GDP Breakdown
Public health and social work
3.3%
Other
Public administration
and defence, complusory
social security
5.6%
4.8%
Net taxes on goods
14.5%
Real estate, renting
and service rendering
10.1%
Agriculture, hunting, forestry,
fishing and fish farms
3.3%
Energy Intensity of GDP in 2011
USD per Rg of oil equivalent1
0.63
Mining and quarrying
9.3%
Financial activity
3.7%
0.44
Transport and
communications
7.0%
0.40
0.35
Manufacturing
13.0%
Wholesale and retail trade, repair of
motor vehicles, motocycles and personal
and household goods
16.9%
0.32
0.30
0.28
0.27
Iran
China
0.26
Electricity, gas and water
production and supply
Construction
3.0%
5.5%
Source: Federal State Statistics Service
Uzbekistan
Ukraine
Kazakhstan
Russia
Saudi Arabia South Africa
Kuwait
Key areas of diversification identified by the Russian President:
Source: Enerdata
— Energy efficiency;
— Nuclear technologies;
— IT and software;
— Space technologies and telecommunications;
— Medical technologies and pharmaceuticals.
The goal is to
modernize and
to diversify the
economy
1
16
In 2005 prices
17
Priorities in Modernization of Russia’s Economy
(Continued)
Priorities in Modernization of Russia’s Economy
(Continued)
Medical Technologies and Pharmaceuticals
Space Technologies and Telecommunications
Main Objectives
Main Objectives
Production of most medications and medical
equipment in Russia
Development and production of innovative medical
products, expansion of Russian manufacturers into new
markets
 Increase the efficiency and quality of information services
 Develop a modern information infrastructure in all sectors
of the national economy
Russia plays a
leading role in
space exploration
Number of Blast-offs
2012
23
20
0
Russia
USA
10
China
Europe
2
2
1
1
India
Japan
South Korea
Israel
3,533
Italy
Spain
20
18
Italy
17
7
Russia
China
USA
Europe
3
India
Japan
881
Brazil
Turkey
509
313
1 078
Turkey
1 034
763
LithuaniaUkraine
Kazakhstan
2010
425
India
Ukraine
256
China
31
241
India
20
0
18
16
Russia
USA
15
China
Europe
3
2
1
1
India
Japan
South Korea
Israel
16,2%
Brazil
15,8%
Turkey
13
12,9%
Brazil
11
Italy
11,1%
Lithuania
France
9,4%
India
UK
7,9%
Turkey
267
India
Spain
6,4%
Germany
United Kingdom
5,000
7,500
10,000
France
Italy
58
Source: Euromonitor
Germany
5 000
10 000
0%
11
10
10
5,9% 9
5,1%6
USA US
2,500
ium
13
China
3 023
0
6
18,5%
15
Russia
4 097
43
0
19,9%
16
Ukraine
Spain
142
Russia China
565
19
Kazakhstan
China
8 483
620
Russia
26
(%)
Lithuania
722 3 551
3 161
Kazakhstan
Brazil
4
CAGR 2000–12
Kazakhstan
4 531
3,087
France
Lithuania
United Kingdom
28
26
Russia
Total HC Spend per Capita, Growth
3,924
UK
USA
28
Ukraine
5,1222012
France
Total HC Spend per Capita
($ per capital)
4,628
Germany
Germany Spain
2011
0
7,536
US
19
13
One of the fastestgrowing health
markets
While Russia’s healthcare spending is still low, funding has
been increasing at a fast pace
0
4,8%
4,2%
8
15
23
30
3,4%
10%
20%
30%
19
Priorities in Modernization of Russia’s Economy
(Continued)
Priorities in Modernization of Russia’s Economy
(Continued)
Information Technologies and Software
Nuclear Technologies
Main Objectives
Main Objectives
 Develop a high-performance, application-oriented
computing systems
 Improve the efficiency and quality of information services
 Develop a modern social and industrial information
infrastructure
 Ensure overall and consistent development of the national
nuclear power potential
 Guarantee long-term supply of cheap energy
 Maintain Russia’s leadership on the global nuclear market
 Substantially reduce uranium consumption
 Mitigate environmental impact and nuclear proliferation risk
By international standards, current Russian IT spend is low, but growing fast
IT Spend
USD Bn, 2010–2015
IT Spend
% of GDP, 2012
Japan
7.6%
United States
7.5%
United Kingdom
7.4%
Sweden
6.3%
Russia
6.3%
Finland
6.0%
51
17
5.2%
France
0
4.5%
Germany
0%
5%
26
19
5.5%
Denmark
43
18% p.a.
34
10%
4
4
11
2010
CAGR %
9
19.0
9
18.1
The Safest Nuclear Technology
2
5
5
25
16
2012
12
Hardware
2015
Software
Services
Source: Gartner, Global Insight, IDC
Containment is a double leak-proof envelope
that protects the reactor from outside impacts,
both natural and technogenic
17.4
World
IT
Market Growth
2015:
in 2010–15:
6%6%
1
A four–physical
barrier defence-indepth system that
prevents the potential
release of radioactive
emissions outside the
power unit
3
A safer two-loop steam
cycle of the reactor
that precludes the
potential release of
radioactive substance
outside of the reactor
hall
Number of households with Internet broadband access per 100 households
50
40
30
20
20 Source: MED
2008
2011
4
There are passive and active (power supply-dependent) safety
systems in place at all the reactors, which, in combination, ensure
the highest level of safety in all contingencies
21
Incentives for investment projects
Russian Inwards FDI Structure
Russian Direct Investment Fund (RDIF)
By Country of Origin
The RDIF is a $10 billion fund established by the Russian
government to make equity investments primarily in the Russian economy.
In all of its investments, the fund is mandated to co-invest alongside some of the largest
and most sophisticated global investors — thus acting as a catalyst for direct investments
in Russia.
Cyprus
24.4%
Rest of world
24.7%
RDIF invests between $50 and $500 million in equity per project. The fund targets
company ownership of less than 50%.
RDIF has already invested $2 billion, of which the fund has directly contributed $480
million and $1.5 billion came from international co-investors.
RDIF has also attracted $1.5 billion of foreign capital into the Russian economy through
long-term strategic partnerships:
Kirill Dmitriev
Director of RDIF
Germany
4.0%
• RDIF and China Investment Corporation ($410 billion under management) created the Russia-China
Investment Fund with expected capital commitments of up to $4 billion (CIC and RDIF have committed to
invest $1 billion each, while another $1-2 billion may be attracted to the Fund from Chinese institutional
investors)
Luxembourg
7.4%
• RDIF has also set up an Automatic Co-investment Fund that enables international investors to automatically
participate in all of RDIF transactions. Kuwait Investment Authority (KIA, $296 billion AuM) became the first
investor in the fund. KIA will provide an initial investment of $500 million, while up to $2.5 billion may be
invested by other participants
• RDIF and leading global investors represented by BlackRock, Templeton, Goldman ESSG have created a
Pre-IPO Consortium that will invest only in Russian companies planning to hold an IPO on MICEX-RTS, which
will boost the liquidity and appeal of the Russian equity market
Netherlands
13.2%
Sweden
4.0%
Ireland
9.5%
British Virgin
Islands
12.9%
Source: Central Bank of the Russian Federation
• Additionally, RDIF has established partnerships with State Bank of India, Germany’s Committee on Eastern
European Economic Relations (CEEER) and France’s Caisse des Depots to actively promote mutual
investments between the two countries
Transactions since inception:
• Investment in the IPO of the Moscow Exchange where RDIF attracted leading international co-investors
from the US and China. Prior to the IPO, RDIF brought other investors to the Exchange, including China
Investment Corporation, Blackrock, the European Bank for Reconstruction and Development and Cartesian
Capital
By Sector
Other
14.8%
• Acquisition of a 26.43% stake in ENEL OGK-5, one of the leading power generating companies in Europe
(together with AGC Equity Partners, Macquarie Renaissance Infrastructure Fund and Xenon Capital Partners)
• Investment in MD Medical Group (MDMG), market leader in private network of perinatal clinics in Russia, as
part of the company’s IPO (together with BlackRock and other international institutional investors)
• Investment in Karo Film a leading Russian cinema chain (together with Baring Vostok and UFG.
• First investment of the Russia-China Investment Fund in Russian Forest Products, the second largest Russian
forestry company
Real estate
4.3%
Trade
32.0%
Construction
6.8%
Export Insurance Agency of Russia (EXIAR)
EXIAR is the national export credit agency of Russia.EXIAR mandate is to support
Russian export and investment abroad. EXIAR covers short-, medium- and long-term
risks. The charter capital makes up USD 1 billion. The Board of Directors consists of senior
executives of the Russian Government and independent directors. The Agency’s activities
are backed by the Russian Federation in line with the budget legislation.
Major Facilities:
Mining and quarry
8.7%
Manufacturing
16.4%
Financial activity
17.1%
• Export Credit Insurance
• Investment Insurance
22
Peter Fradkov
Chairman of the Management Board & CEO
Source: Central Bank of the Russian Federation
23
Russian Outwards FDI Structure
Capital inflow into Russia
By Country of Origin
Cumulative Stock of Inward FDI
USD Bn
400
Rest of world
28.9%
Cyprus
33.33%
378*
350
331
300
275
250
196
200
150
121
100
50
Belarus
4.2%
232
0
8
23
2003
2004
36
2005
66
2006
2007
2008
2009
2010
2011
2012
Switzerland
5.8%
British Virgin
Islands
6.3%
Saint Kitts
and Nevis
6.9%
Netherlands
14.7%
Source: Central Bank of the Russian Federation
No restrictions on free movement of capital in Russia
Source: Central Bank of the Russian Federation
— The only limitation is investment in strategic companies which have special importance for
national security and economic stability
— In comparison, there are restrictions on direct foreign investments in China and India, and
Brazil is planning to limit the free movement of capital
By Sector
Unlike China and India, in Russia there are no foreign currency limitations
Real estate
9.3%
Other
1.7%
Mining and quarry
3.1%
Manufacturing
15.6%
— There is a regime of a managed floating RUB exchange rate, with the rate largely
determined by the market and the CBR only intervening to reduce volatility
— In comparison, there are foreign currency limitations in China and India
Foreign direct investments over the last 10 years amounted to USD 378 Bn
— USD 46.7 Bn in 2012*
Transport
and communication
27.1%
Virtually
no restrictions
on free movement
of capital
Trade
43.1%
Source: Federal State Statistics Service
*Estimate
24
25
Top Russian Inbound M&A Deals
Recent Russian IPOs
2011–2012 YTD
Date
Target
Acquirer
Value, USD Bn % Acquired
Dec-12
1.2
24.5
Dec-12
4.8
5.66
Nov-12
1.4
49
Jun-12
3.5
99.85
May-12
1.15
15.28
1.45
26.1
3.7
25.1
Apr-12
AF Telecom Holding
Apr-12
AF Telecom Holding
1.6
100
1.3
100
Jan-12
1.1
100
Aug-11
1.2
43.1
Jan-12
Jan-12
26
Lagus
Management
Limited
Apr-11
4.0
12.1
Feb-11
1.4
23.0
Source: MergerMarket, S&P Capital IQ, DealWatch, Bloomberg
Date
Issuer
Value, USD MM
Jan-13
500
Nov-12
1,700
Sep-12 1
5,200
Jan-12
250
Jul-11
565
Jun-11
588
May-11
1,435
Apr-11
375
Apr-11
782
Apr-11
575
Feb-11
360
Nov-10
400
Nov-10
1,003
Nov-10
428
Oct-10
241
Jan-10
2,239
Source: Dealogic
27
Case Study — Pharmaceutical Industry
Russian Banking System
The Russian pharmaceuticals market in 2011 reached a value of $11 114 million
As of 1 January 2013, total assets of the Russian banking system amounted to approximately
$1 629 Bn
Russian market is top-5 pharmaceuticals market globally.
Relatively low deposit activity in banking among BRIC countries – 45% in Russia vs. 77% in
China
Pharmstandart is the leading player in the Russian pharmaceuticals market, generating a
4.8% share of the market’s value
The Russian pharmaceutical market is characterized by fairly strong buyer power, with the
ease of market entry strongly affected by legal and regulatory frameworks
Share of deposits in liabilities
%
100
75
50
25
0
Companies on pharm market in Russia
USD MM
2005
1 Pharmstandard
2
Bayer AG
2011
136
536
170
CAGR, %
Market share
2011, %
27
4.8%
14
383
77%
78%
India
45%
China
Russia
Source: CBR, National Reserve Bank of India, Central Bank of China
117 Russian banks are controlled by non-resident entities,
representing around 18% of all banking assets
The highest
share of own funds
in the banking
system among
BRIC countries
3.2%
Share of Own Funds in Banking System
3
4
Novartis
Sanofi-Aventis
318
372
411
473
Source: 2010 IMS research for 2005, DSM Group research for 2011 data.
4
4
3.5%
%
20
15
10
5
0
4.2%
12%
9%
Russia
Brazil
8%
6%
India
China
Source: CBR, The World Bank, National Reserve Bank of India, Central Bank of China
Relatively low competition — Average Number of Branches of One Bank
#
500
477
108
250
0
India
Brazil
2,3
Russia
Source: CBR, National Reserve Bank of India, Government of Brazil
The scope of anti-crisis measures taken by the Bank of Russia in 2008–2009 has been
estimated at 14% of the total banking assets
28
29
Taxes in Different Countries
For Notes
Taxes in Russia vs. other BRICS Countries, as % of GDP (2013)
1
Income Tax2
Country
Corporate Income
Tax
Personal Income
Tax
VAT
17 %
China
25 %
3 – 45 % (progressive)
Brazil
25 %
7,5 – 27,5% (progressive)
20 %
India
30 %
7,5 – 30 % (progressive)
12,5 %
South Africa
28 %
up to 40 % (progressive)
14 %
Russia
20 %
13 %
18 %
Taxes in Different Countries in 2013, as % of GDP3
Belarus
25,6 %
Italy
43,0 %
Brazil
32,5 %
Japan
28,8 %
Canada
31,0 %
Kazakhstan
13,4 %
China
18,2 %
South Africa
23,8 %
France
42,9 %
South Korea
25,1 %
Germany
36,3 %
United Kingdom
34,3 %
USA
24,8 %
Russia
27,2 %
India
7,4 %
Russia has the most liberal and favourable tax regime among all other BRIC countries:
— Lowest corporate income tax – 20%
— Personal income tax of 13%, regardless of income size
— Opportunity to have a one-time write-off of 30% of depreciation costs for tax purposes
— Zero profit tax for educational and health care institutions
— No capital gain tax in case of long-term direct investments
— Cut in social contributions (payroll tax) from 34% to 30% from January 1, 2012
Low corporate and
personal taxes
1
2
30
3
Source: The Heritage Foundation – 2013 Index of Economic Freedom.
Source: Deloitte Global Services Limited
Source: The Heritage Foundation – 2013 Index of Economic Freedom.
31
For Notes
32