Posted on 12/27/2005 10:45:38 PM PST by jb6
Dec. 27 (Bloomberg) -- Russian Economy Minister German Gref said a final agreement on investment zones next year will help wean Russia, the world's largest energy producer, from its dependence on oil and gas for economic growth.
President Vladimir Putin's government is working on the last details of a plan to create by 2007 special economic zones that will give companies lower tax bills and other incentives and encourage growth in sectors not related to energy, including the automotive, computer and appliance industries.
Gref, 41, said disputes since 2000 have waned about how Russia can reduce the influence of oil and gas sales on gross domestic product and insulate the $521 billion economy should energy prices fall, he said. Companies including Fabriano, Italy- based Indesit Co. and Japan's Toyota Motor Corp. are interested in building factories in the planned zones, said Yuriy Zhdanov, the head of the economic zone agency, on Dec. 22.
``We finally switched to acting from talking,'' Gref said in his first interview with Bloomberg after a Dec. 23 speech at Moscow's Advanced School of Economics. ``We have taken the first steps in that direction this year and even though they're still insufficient, it's good that we have finally started.''
Oil and gas sales account for about a fourth of the economy and have driven growth to as much as seven times the pace of the 12 nations that share the euro.
Slowing Growth
The economy is expected to expand less than 6 percent a year in 2007 and 2008, compared with an expected 6.4 percent this year and more than 7 percent a year in the previous two years as oil prices fall from records.
Oil production probably will rise less than 2 percent a year through 2008, at least five times less than in 2004, the Economy Ministry said in a report on Dec. 21. The price of Urals, Russia's major export blend of oil, will probably average about $51 a barrel in 2005, compared with $48 initially expected, and may fall to between $45 and $34 a barrel in 2006, the ministry said. Urals closed at $52.04 a barrel on Dec. 23, according to Bloomberg data.
The government expects Indesit, Europe's third-largest home- appliance maker, to invest a zone in Lipetsk, south of Moscow, said Zhdanov. Aichi, Japan-based Toyota may begin making car parts in a zone to be located in Elabuga, he said.
VW Talks
The zones may also result in agreements with other companies, he said. Volkswagen AG, Europe's largest carmaker, which allowed car production in a similar zone in neighboring Ukraine by a local company in 2001, has been negotiating to place a car-making plant in Russia since the late 1990s. The Ukrainian government cancelled the economic zones earlier this year.
Gref also said Russia should guarantee intellectual property rights to win more non-oil investment. The government has begun closing companies involved in the production of counterfeited goods this year.
``It's impossible to develop economy without defending intellectual property rights,'' Gref said. ``One of the major tasks is to tackle counterfeited goods producers.''
He also said the government has agreed not to spend more windfall oil revenue for infrastructure projects than the estimated $2 billion planned for next year and will deposit it in the Stabilization Fund.
The fund totaled a record $43.6 billion in November, even after the government spent money to reduce its foreign debts, including to the Paris Club of creditor nations.
Refraining from spending more money would aid the government's attempt to slow consumer price growth to below 9 percent next year from ``slightly more'' than 11 percent expected this year, Gref said.
Spending Limits
``We have agreed to try to restrict spending next year and put all windfall oil revenue aside, to the Stabilization Fund,'' Gref said. ``The government is implementing serious enough measures for achieving'' its inflation target in 2006, Gref said. ``Putting windfall oil revenue aside is the first and the foremost measure on the list.''
Gref used to disagree with Finance Minister Alexei Kudrin's insistence to curb spending on road and rail building already next year. Even so, he said more money can be spent in 2007 to make needed improvements.
``We can't develop fast enough with such an infrastructure as we have now,'' Gref said. ``We have to build more railways, highways, improve sea ports infrastructure and expand airports. None of that is impossible without state investment.''
To contact the reporter on this story: Halia Pavliva in Moscow at hpavliva@bloomberg.net
ping
As for everyone else on this ping list, guess you've all been called traitors by Nyquist and his groopies.
Sounds like they have some currency devaluation problems.
When you out grow the Golitsyn conspiracy fantasies, come talk.
No it makes me a realist who doesn't fall for conspiracy theories. har har har.
Communism is a radical utopianistic economic system that lends itself nicely to autocratic regimes. It existed, the vast majority of conspiracy theories are just fevered dreams or cheap ways to make money, like Lunov's books on Newsmax about how Russia was going to invade the US on Y2K. Funny, they all disappeared from sales the day after.
Looks like a war zone in here with all the deleted messages. :)
Be interesting to see if Russia can attract more investment in future.
Golitsyn Was Right first post was to accuse everyone with Russian wives, aka me and gary and Romanov and others, and everyone who's ever been to Russia as Russian spies.....not to smart, not to smart at all. He signed up yesterday night.
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