To support the growing economy, Russia has a strong demand for capital
goods: Nearly half of its imports consist of machinery and equipment. Its second
and third largest import groups are food products and chemicals.
“The
opportunities for business expansion seem almost unlimited here,” says Lance
Pilant, one of the directors for the Moscow branch of a multinational commercial
real estate agency. Originally from Missouri, Pilant moved to Moscow in
the mid-1990s to head the logistics and industrial property division of DTZ
Zadelhoff Tie Leung International Property Advisers. He represents and gives
advice to foreign investors looking for properties to rent or purchase as they
expand their operations in Russia.
 | | “You have to be friends with your counterparts, which means tremendous
amounts of travel, dinner, vodka, banya and conversation.” |
High inflation rates, however, do dampen
the picture by making it difficult for the Russian people to purchase consumer
goods; the country’s Central Bank is struggling to get inflation under control.
Inflation was 20.2 percent in 2000; it dropped to 18.6 percent in 2001, to 15.1
percent in 2002, and to 12 percent in 2003. The federal budget for 2004
projected a 10 percent rise, but the outturn was 11.7 percent. By April 30 of
this year, inflation was up 6.5 percent, according to the U.S.-Russia Business
Council.
Imports
The Russian government, in the interest of improving the climate
for foreign investment, is working to liberalize its business laws. “Customs
formalities have been simplified, and a new Customs Code has been implemented to
better correspond to the interests of exporters and importers,” explains Andrey
Dolgorukov, Russian trade representative to the U.S. The new Customs Code, which
took effect on January 1, 2004, essentially reduced the time limit for customs
clearance of goods from 10 days to three. In addition, customs clearance fees
have been reduced, and fees for customs certificates and permissions have been
removed.
Foreign Exchange Regulations
In 2003, a new federal law entitled Foreign
Exchange Regulation and Foreign Exchange Control was passed, which eliminated
state intervention in the foreign exchange market. The law also eliminated the
limits on foreign currency operations between residents and nonresidents. It
allows residents to open accounts in foreign banks, if the banks are domiciled
in member states of the Organization for Economic Cooperation and Development or
of the Financial Action Task Force.
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