[MUSIC] Now, let us look at general trends with regard to the foreign investment in the Russian Federation. We are going to deal with statistics. The data comes from the official sources in particular the UNCTAD and the Central Bank of Russia. At the same time, we would like to remind you that statistics does not always reflect a real picture. As you can see from the figure, after a stable growth till 2013, FDI to Russia fall down substantially since 2014. This is a result of two main factors. First, it can be explained by a general deterioration of key marker economic indicators reflecting the impact of economic crisis of 2008 followed by the stagnation. Second, unfriendly political environment as a result of the conflict over Ukraine, leading to serious limitations on some foreign investors and freezing of new projects. It is also worth to mention that the amount of portfolio investment to Russia have traditionally been much more modest than the FDI influence. This can be explained by the fact that the Russian stock market is still not well developed. And not many national companies are listed on stock exchanges. In addition, foreign investors might fear to invest without a control from their side. By looking at the figure, one might observe a substantial amount of other investment. Indeed, Russian companies and banks actively have drawn borrowed funds. Since 2014, the opportunity to learn abroad was limited by the sanctions regime imposed by a number of foreign governments. Including the United States, the EU countries and Japan. The next figure shows brought the picture of FDI influence to the Russian Federation. After a period of very modest influence of FDI till 2005, one can observe a 10 year boom of investments until 2014. According to the UNCTAD, in 2013, Russia was the fifth stop destination for foreign direct investments after the United States, China, Hong Kong and Canada. The figure also presents data on outward investments from the Russian Federation. In general, it shows a high correlation with the data on inward FDI. This can partly be explained by the fact that a substantial amount of inward investment to the country is a Russian capital. That was legally or illegally withdrawn from the country and, later on, invested back under NU origin. The next figure highlights FDI to Russia by sector, in 2017. It is not a surprise that investing in natural resources extracting is very popular among foreign investor, 28% in 2017. Manufacturing industries receive only 10% of foreign capital. At the same time, Russia reflects a general worldwide trend of FDI. The bulk of them go to services sectors, more than half of FDI in Russia go to services, an absolute leader is finance. As it was already mentioned, a substantial amount of FDI influx to Russia has been of the Russian origin. That explain the data on leading investors to the Russia Federation. One can see Bahamas, Bermudas, Cyprus, and other tax haven leading investors to Russia. There are several reasons for that, first, according to experts, some capital leaves Russia illegally. But after the money laundering process, it is coming back with the legal status. Second, for tax optimization purposes, it might be reasonable for a Russian person or a business entity to create a company in one of the offshores and then use it for investments to Russia. As reconciliator, foreign investors enjoy some benefits and protection provided by the Russian Federation. Therefore, it might force domestic capital to change its nationality in offshores. It also have to be taken into consideration that offshores can be also used for tax optimization purposes for investments. Originally coming from, for example, Sweden or Finland. The FDI statistics will not reflect the original country investor. In order to identify it, one has to undertake additional research activities. At the same time, real investment projects involve companies from Germany, France, United Kingdom. China, Switzerland, Sweden, Finland, and other countries. The European Union is the larger investor to Russia, more than 75% of FDI come from the European Union. Chinese companies are gradually increasing their investment to Russia.
