Russia FDI

Presented to: Prof. Kishor Bhanushali

Presented By:
Rishabh Mehta (38)
Bhumika Bunha (10)
PGDM 2014-2016

Russia Foreign Direct Investment - Net Flows

Foreign Direct Investment in Russia

increased to
2640 Million USD in the second quarter of
2015 from 1704 Million USD in the first
quarter of 2015.
Foreign Direct Investment in Russia
averaged 5979.45 Million USD from 1994
until 2015
Foreign Direct Investment in Russia is
reported by the The Central Bank of the
Russian Federation.

Net Flow

Net Flow
Russia Foreign Direct Investment - Net

Flows is forecast to go down to 1967.96

Million USD in Q3 2015.
In the long term, Russia Foreign Direct
Investment - Net Flows is predicted to
converge to 4660.6 Million USD.

Inward FDI in Russia

In 2013, more than 90% of Net Inward

Foreign Direct Investment in Russia came

from six countries:
United Kingdom (26.8 percent)
Luxembourg (16.5 percent)
Ireland (14.8 percent)
British Virgin Island (13.3 percent)
Cyprus (11.8 percent)
Netherlands (8.14 percent).

Source:
http://www.tradingeconomics.co
m/russia/foreign-direct-

Russia Foreign Direct Investment Net Flows - was last refreshed on

Friday, October 23, 2015.

Inward FDI by Industries

Automaker Investment in
Russia
Chinese automakers have made several large-

scale investments in Russia in recent years as

they seek to establish their brands in the market.
Among recent investors, Hawtai Motor Group said
it planned to invest $1.1bn in the construction of
a car production plant in Russia.
Chongqing Lifan Industry, an automotive
company, plans to establish a new engine factory
in Russia after 2021.
The new facility represents part of the companys
strategy for localisation of manufacturing in
Russia.

Outflow
According to data from the Russian Central

Bank, in 2014 capital outflow totaled $151

billion.
By comparison, outflow in 2013 was $61
billion and even during 2008s economic
crisis it was lower at $133.6 billion.
The Ministry of Finance had estimated that
capital outflows in 2014 would be in the
range of $90-100 billion, while the Central
Bank had predicted a total of $128 billion.

Consequences
According to the Central Bank, capital outflow was a

consequence of the growth of dollar deposits and the

repayment of foreign debts by Russia's private sector
due to the limited possibility of refinancing debt because
of the economic sanctions imposed on the country.
But the main reason for such a level of capital outflow
was the behavior of Russian citizens.
In 2014 Russians acquired a record $34 billion through
the conversion of rubles, with a significant portion of it
being purchased in the fourth quarter.
In recent years the population's income has increased,
while the ruble remained sensitive to the fluctuation of
currencies

Sectors affecting outflow

Oil and gas
Metallurgy
Trade
Agriculture
Real estate investment

Outbound of FDI - Russia

Russias difficulties, including a weakened ruble, have dented

the ability of Russian companies to expand internationally.

Russian outbound greenfield FDI fell 73 per cent by volume of
announced capital investment to $5bn, according to FDI
Markets.
The country has fallen out of the top 10 as a source of outbound
greenfield investment from Europe.
Such figures refer strictly to corporate expansion, not general
capital outflows which, by contrast, are rising to record
levels.
Capital outflows hit $151bn in 2014, according to the Russian
central bank
This is two-and-a-half times those of 2013 and even surpassing
the $133.6bn that left the country in the throes of the financial
crisis in 2008.

Current Scenario
Foreign investment is now below zero
Foreign direct investment stopped coming

to Russia at the beginning of 2014

according to Central Bank data.
The overall amount for the year will be
available later, after the publication of the
fourth quarter data.
The total amount of foreign capital outflow
for the first three quarters was $21.7
billion.
Currently, there are direct and indirect bans
on investing in Russia and our western

Conclusion
Geopolitical tensions, international sanctions and economic instability

appear to have damagedRussias ability to attract inward investment, but

Chinese investors are stepping into the breach and making their moves
into the market at a time when western companies are shying away.
The number of greenfield FDI projects into Russia declined 39 per cent to
just 134 in 2014
Russia now stands as the eighth most popular investment destination in
Europe
Russia received only a third of the number of projects that second-ranked
Germany did, and a seventh of the number registered by top European
destination the UK.
Russia was the second ranked country in Europe last year for capital
expenditure in inbound greenfield projects, with an estimated total of
$12bn, capturing 10 per cent of European FDI.
The top five biggest investors in Russia were all Chinese companies, which
together announced more than $5bn of FDI projects in Russia in 2014.