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June
2013
Russian Federation — Key Geographical Data
Capital — MoscowRussia is located in the eastern part of Europe and in the northern part of Asia
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%)
Population as of 1 January 2013 — 143,369.8 thousand people
Density of the population as of 1 January 2013 — 8.4 people per km2
Maximum length, thousand km:Longitudinal direction — 4 Latitudinal direction — 9
Russia is surrounded by:
Arctic Ocean (Barents Sea, White Sea, Kara Sea, Laptev Sea, East Siberian Sea, Chukotka Sea)
Pacifi c Ocean (Bering Sea, Okhotsk Sea, Sea of Japan)
Atlantic Ocean (Baltic Sea, Black Sea, Sea of Azov)
State border:
North-west — Norway and Finland;
West — Poland, Estonia, Latvia, Lithuania, and Belarus;
South-west — Ukraine;
South — Azerbaijan, Georgia, and Kazakh-stan;
South-east — China, Mongolia, Democratic People’s Republic of Korea;
East (maritime) — the USA and Japan
Longest rivers2, km:
Lena 4,337Yenisei (with Angara) 3,844Volga 3,694Ob 3,676Amur 2,824
Largest islands, thousand km2:
Novaya Zemlya Archipelago 82.6Sakhalin 76.4New Siberian Islands 38Severnaya Zemlya Archipelago 37
Largest lakes3, thousand km2:
Baikal 31.5Ladoga 17.7Onega 9.7
Highest elevation, m:
Elbrus 5,642
Average temperatures:
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 in population globally4 and sixth in GDP denominated in USD at purchasing power parity5.
1 Source: Federal State Statistics Service2 Data from statistical handbook of the Federal Agency for Water Recourses3 Source: Federal Agency for Water Recourses4 According to preliminary results of the 2010 AII-Russia population census5 Source: World Bank 2011.
1st in total land area,6th in GDP
Map of Russia
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Administrative Structure
The Interior
Civil Defence, Emergencies, and Disaster Relief
Foreign Affairs
Defence
Justice
Healthcare
Labour and Social Security
Culture
Education and Science
Natural Resources and Environmental Protection
Industry and Trade
EXECUTIVE BRANCH
LEGISLATIVE BRANCH JUDICIAL BRANCH
Deputy Prime Ministers
Coordinate activities of various federal executive power bodies, or all such bodies in a specifi c area (economy, social policy, etc.)
Some of the Deputy Prime Ministers are simultaneously heads of particular ministries
Deputy Prime Ministers are proposed by the Prime Ministers and appointed by the President
Cabinet of Ministers
Communications and Mass Media
Regional Development
Agriculture
Sport
Transport
Finance
Economic Development
Energy
Development of the Russian Far East
Coordination of Open Government
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 fi ve years
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
Government
Exercises the executive power in RussiaConsists of the Prime Minister, Deputy Prime Ministers and Federal Ministers
Prime Minister
Appointed by the President with the consent of the State Duma
President
Elected for 6 years by citizens of the Russian FederationHead of State; determines the guidelines of domestic and foreign policies
Vladimir PutinPresident of the Russian Federation
Dmitry MedvedevPrime Minister of the Russian Federation
2007 2008 2009 2010 2011 2012
Production Indicators
GDP change (%), year-on-year 8.5 5.2 -7.8 4.5 4.3 3.4
GDP per capita, PPP ($) 14 816 15 939 14 934 15 687 16 767 17 709
Nominal GDP per capita ($) 9 101 11 631 8 567 10 674 13 335 14 246
Industrial output, change (%), year-on-year 6.8 0.6 -9.3 8.2 4.7 2.6
Manufacturing, change (%), year-on-year 10.5 0.5 -15.2 11.8 6.5 4.1
Extraction of mineral resources, change (%), year-on-year 3.3 0.4 -0.6 3.6 1.9 1.1
Fixed capital investment, change (%), year-on-year 22.7 9.9 -15.7 6.0 10.8 6.6
Fiscal and Monetary Indicators
Defi cit (surplus) of the federal budget, (% of GDP) 5.4 4.1 -5.9 -4.0 0.8 -0.02
Federal budget expenditures, USD Bn 234 270 273 298 371 415
Public debt (% of GDP) 7.2 6.5 8.3 9.0 9.6 10.7
M2, change (%), end year/end year 43.5 0.8 17.7 31.1 22.3 11.9
Infl ation (CPI), change (%), at year-end 11.9 13.3 8.8 8.8 6.1 6.6
GDP defl ator 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
Real effective exchange rate, change (%), year-on-year 4.2 5.1 -5.6 9.6 4.7 2.4
Reserve Fund, USD Bn, at the end of period 125.2 137.1 60.5 25.4 25.2 62.1
National Wealth Fund, USD Bn, at the end of the period 32.0 88.0 91.6 88.4 86.8 88.6
Reserves (including gold), USD Bn, at the end of the period 478.8 426.3 439.5 479.4 498.6 537.6
Key Macroeconomic Indicators
Source: IMF, Federal State Statistics Service, Central Bank of the Russian Federation, Ministry of Finance of the Russian Federation
2007 2008 2009 2010 2011 2012
Balance of Payment Indicators
Trade balance, USD Bn 123.5 177.6 113.2 147.0 196.9 193.2
Share of energy resources in export of goods, % 64.2 68.8 66.7 67.6 70.1 65.7
Current account, USD Bn 71.3 103.9 50.4 67.5 97.3 74.8
Export of goods, USD Bn 346.5 466.3 297.2 392.7 515.4 529.1
Import of goods, USD Bn 223.1 288.7 183.9 245.7 318.6 335.8
Gross foreign direct investments, USD Bn 57.0 74.8 36.6 43.1 55.1 51.4
Average export price of Russian crude oil, USD/bbl 69.4 94.4 61.1 78.2 109.3 110.5
Financial Markets Indicators
Weighted average corporate loan rate, % 10.0 12.2 15.3 10.8 8.5 9.1
CBR refi nancing 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 1 578
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 1 329 374 764 991 798 816
Income, Poverty, and Labour Market
Real disposable income, change (%),year-on-year 12.1 2.4 3.0 5.9 0.5 4.4
Average wages in USD 531.4 695.7 587.0 689.2 794.9 862.4
Unemployment rate, % 6.0 6.2 8.3 7.3 6.5 5.5
Key Macroeconomic Indicators (Continued)
Source: Federal State Statistics Service, Central Bank of the Russian Federation, NAUFOR, Federal Customs Service.
1 Average weighted rate for RUB loans to non-fi nancial institutions up to 1 year.
Russia and ROW Comparison
Russia’s global ranking in production of select industrial and agricultural products
Crude Oil Production 2011mbpd
Gas Production 2011bcm
Coal Production 2011MM tons
Global Leader in Metal Reserves % of total global reserves
11.2 10.3 7.8
4.3 4.1 3.5 3.3 2.9 2.9 2.8
Saudi Arabia Russian
Federation
US Iran China Canada United Arab
Emirates
Mexico Kuwait Iraq
651.3 607.0
160.5 151.8 146.8 102.5 101.4 99.2 78.0 75.6
US Russian
Federation
Canada Iran Qatar China Norway Saudi Arabia Algeria Indonesia
3,520
993588 415 334 325 189 139 116 87
China US India Australia Russian
Federation
Indonesia Germany Poland Kazakhstan Ukraine
15%
2%
10%8%
4%
Iron ore PGM Gold Nickel Copper
3 2 4 4 7Russia’s ranking
Source: BP Statistical Review of World Energy June 2012
Source: BP Statistical Review of World Energy June 2012
Source: BP Statistical Review of World Energy June 2012
Source: US Geological Survey, 2013
One of the leading countries in crude oil and gas production
Russia and ROW Comparison (Continued)
Wheat 2012MM tons
Centrifugal Sugar 2012MM tons
Milk 2012 MM tons
Poultry, Meat, Broiler 2012 MM tons
137.2117.4
86.9
56.2 54.429.9 25.3 25.0 22.7 22.3
EU-27 China India Russia USA Australia Canada Pakistan Kazakhstan Ukraine
37.525.6
16.414.6 9.9 8.0 6.0 4.9 4.7 4.3
Brazil India EU-27 China Thailand USA Mexico Russia Pakistan Australia
140.090.6
55.5 32.5 32.2 31.5 20.3 11.8 11.2 10.9
EU-27 United States India China Russia Brazil New Zealand Argentina Mexico Ukraine
13.7 12.89.5
3.2 2.9 2.8 1.9 1.7 1.6 1.5
China Brazil EU-27 India Mexico Russia Argentina Turkey Indonesia Thailand
Source: FAO (Food and Agriculture Organization of the United Nations)
Source: USDA
Source: USDA
Source: USDA
Russian Exports
Goods Export Structure $524.7 Bn Volume in 2012
Source: Federal Customs Service
Exports of Goods By Direction of Trade
Source: Federal Customs Service
Crude Oil;34.5%
Petroleum Products;19.7%
Natural Gas;12.0%
Metals;8.5%
Other;15.7%
Fertilizers;2.1%
Machinery, Equipment &
Transport; 5.0%
Coal;2.5%
Othercountries;
55.2%
Netherlands;14.6%
China;6.8%
Germany;6.8%
Italy;6.2%
Ukraine;5.2% Turkey;
5.2%
Russian Imports
Structure of Imported Goods $312.6 Bn Volume in 2012
Source: Federal Customs Service
Imports of Goods By Origin of Trade
Source: Federal Customs Service
Machinery,Equipment &
Transport;50.3%
Other;20.8%
Clothing and footwear;
5.6%
Medicines;3.4%
Metals and steel;7.0%
Food products and agricultural raw
materials;12.9%
Othercountries;
51.1%
France; 4.4%
Japan; 5.0%
Ukraine; 5.7%
China 16.6%
Germany; 12.2%
USA; 4.9%
Employment and Education
Total Men Women
Employed — total 100 100 100
Including people aged, years:
Less than 20 0.7 0.9 0.5
20–24 8.3 9.2 7.5
25–29 14.3 15.1 13.4
30–34 13.3 13.6 12.9
35–39 12.7 12.5 12.9
40–44 11.6 11.2 12.1
45–49 12.3 11.5 13.1
50–54 13.4 12.3 14.5
55–59 8.8 9.0 8.5
60–72 4.6 4.6 4.6
Average age of employed population, years 40.1 39.6 40.6
Source: Federal State Statistics Service
Distribution of Employed Population by Education in 20121
Source: Federal State Statistics Service
1 According to a random poll of the population on employment issues.
Distribution of Employed Population by Age in 20121
Total Men Women
Higher professional educationSecondary education
Secondary professional educationPrimary education
Primary professional educationNo education
30.8%21.1%
33.5%
14.6%
25.9% 17.7%
3.1%5.0%
23.4%
24.3%
29.6%
4.1%
20.6%
19.5%
25.8%
0.3% 0.4% 0.2%
Economically Active Population
As percent of the total1
2000 2005 2006 2007 2008 2009 2010 2011 2012
Economically Active Population — total 100 100 100 100 100 100 100 100 100
Including:
Employed 89.4 92.8 92.8 93.9 93.7 91.6 92.5 93.5 94.5
Unemployed 10.6 7.2 7.2 6.1 6.3 8.4 7.5 6.5 5.5
Men 100 100 100 100 100 100 100 100 100
Including:
Employed 89.2 92.7 92.5 93.6 93.4 91.0 92.0 93.1 94.2
Unemployed 10.8 7.3 7.5 6.4 6.6 9.0 8.0 6.9 5.8
Women 100 100 100 100 100 100 100 100 100
Including:
Employed 89.6 93.0 93.2 94.2 93.9 92.2 93.1 94.0 94.9
Unemployed 10.4 7.0 6.8 5.8 6.1 7.8 6.9 6.0 5.1
Source: Federal State Statistics Service
1 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.
Eurasian Customs Union — A Large Addressable Market
Population 2012 (in millions)
Nominal GDP 2012 ($ in billions)
Retail Market 2012($ in billions)
612
40 21
673
-
200
400
600
800
Russia Kazakhstan Belarus Total
Source: Global Insight
Source: Global Insight
Source: Planet Retail
14316 10
169
-50
100150200
Russia Kazakhstan Belarus Total
1,968204 50
2,221
-500
1,0001,5002,0002,500
Russia Kazakhstan Belarus Total
Level of Education: gross enrolment ratio – OECD Countries1 %
Human Capital
Highly educated labour force.
One of the 7 leading countries by the number of Nobel Prize winners, most prizes awarded for achievements in the fi eld of physics.
High level of basic education.
Signifi cant scientifi c research and technical resources base.
Substantial human capital supporting favourable opportunities for innovative growth.
Literacy Rate (% of population aged 15+) – OECD Countries %
Source: World Bank, 2011
Source: Euromonitor, 2012
1 Gross enrolment ratio is the total enrollment in primary education, regardless of age, expressed as a percentage of the population of offi cial primary education age. GER is higher than the net enrolment ratio and can exceed 100% due to the inclu-sion of over-aged and under-aged students because of early or late school entrance and grade repetition.
120%
90%
60%
30%
0%Russia FranceGermany Japan UK USA OECD
average
Primary Secondary Tretiary (gross)
99%89%
76%
110% 113%102%103%
NA
103%107%
102% 105%102% 105%
96% 95%98%
57% 60% 60%67%
Russia USAUKJapan Germany France OECD average
99.6%99.9%100.0% 100.0% 99.9% 99.9%
98.9%
Infrastructure Investment USD Bn
Project Name SectorProject Budget,USD Bn
Short Description
North Stream O&G midstream 9.6 Two line 1,224 km 55 bcma pipelines from Russia (Vyborg) to Germany (Greifswald)
Sakhalin-Khabarovsk-Vladivostok pipeline
O&G midstream 10.0 Construction of 1,800 km Sakhalin — Khabarovsk — Vladivostok gas transmission system
BPS-2 O&G midstream 3.2 Construction of 1,000 km pipeline from Unechka on Belarus border to Ust Luga Port near St. Petersburg
Infrastructure Investment
Source: Federal State Statistics Service
Project Name SectorProject Budget, USD Bn
Short Description
Bovanenko O&G E&P 15.0 Construction of 572 km railway Obskaya-Bovanenko (almost complete) and 2400 km gas pipeline Bovanenko-Ukhta, Ukhta-Torzhok.
Moscow-St. Petersburg toll road
Roads 18.9 626 km 4-8 lane Moscow-St. Petersburg highway, of which the fi rst 43 Peters-burg toll road West km has been contracted.
Boguchansk Hydro Power and Aluminium Plant
Energy 5.8 The 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, artifi cial lake will cover 2,326 km².
Development of Sochi Region (Sochi 2014)
Transport 31.7 Besides sport venues and the construction of supporting facilities, development of the Sochi area will also include construction of a gas pipeline, the creation 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.
Ust-Luga Port Water transport 8.1 Harbour deepening, construction of quays, rail connections, and road connections from Novgorod. It is one of the largest infrastructure projects in Russia. Construction is planned to be completed in 2013.
Russian infrastructure investment as a percentage of GDP has grown by over 3.5 % of GDP over the last decade, and by about ten times in terms of US dollars, amounting to 7.2% of GDP ($145 Bn) in 2012.
The Russian government seeks to increase the role of the private sector in building, operating, and fi nancing infrastructure projects.
Source: Broker reports
Source: Broker reports
In Progress
Completed
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
8%
6%
4%
2%
0%
150
100
50
0
Infrastructure investment, % of GDP Infrastructure investment, Bn USD
Russia — Investment Priorities
Diversifi cation of Economy — Development Priority
Share of mineral resources sector in GDP and in export is still fairly high; however, specifi c measures are being taken in order to diversify the Russian economy, this should have a positive effect on Russia’s global competitiveness
2012 GDP Breakdown
Source: Federal State Statistics Service
Key areas of diversifi cation identifi ed by the Russian President:
— Energy effi ciency;
— Nuclear technologies;
— IT and software;
— Space technologies and telecommunications;
— Medical technologies and pharmaceuticals. The goal is to modernize and to diversify the economy
Manufacturing13.0%
Electricity, gas and water production and supply
3.0%Construction5.5%
Wholesale and retail trade, repair of motor vehicles, motorcycles and personal
and household goods16.9%
Agriculture, hunting, forestry, fi shing and fi sh farms
3.3%
Net taxes on goods14.5%
Other4.8%
Public health and social work3.3%
Public administration and defence, compulsory
social security5.6%
Real estate, renting and service rendering
10.1%
Transport and communications
7.0%
Mining and quarrying9.3%
Financial activity3.7%
Priorities in Modernization of Russia’s Economy
Main Objectives
Reduce Russia’s energy intensity to GDP ratio by 40% through energy saving, improving energy efficiency and eliminating regulatory gaps by 2020
Energy Efficiency
Energy Intensity of GDP in 2011USD per Rg of oil equivalent1
Source: Enerdata
1 In 2005 prices
0.63
0.440.40
0.350.32 0.30
0.28 0.27 0.26
Uzbekistan Ukraine Kazakhstan Russia Saudi Arabia South Africa Iran China Kuwait
Number of Blast-offs 2012
Main Objectives
Space Technologies and Telecommunications
Increase the efficiency and quality of information services Develop a modern information infrastructure in all sectors
of the national economy
Priorities in Modernization of Russia’s Economy (Continued)
2010
28
18 17
7 4 3
0
20
Russia China USA Europe India Japan
2011
31
16 156
3 2 11
0
20
Russia USA China Europe India Japan South Korea Israel
Russia plays a leading role in space exploration
23
19
1310
2 2 11
0
20
Russia USA China Europe India Japan South Korea Israel
Main Objectives
Medical Technologies and Pharmaceuticals
Production of most medications and medical equipment in RussiaDevelopment and production of innovative medical products, expansion of Russian manufacturers into new markets
Priorities in Modernization of Russia’s Economy (Continued)
One of the fastest- growing health markets
While Russia’s healthcare spending is still low, funding has been increasing at a fast pace
Total HC Spending per Capita 2012($ per capita)
Source: Euromonitor
Total HC Spending per Capita, Growth CAGR 2000–12(%)
58
241
256
425
565
763
1 034
1 078
3 023
3 161
3 551
4 097
4 531
8 483
0 5 000 10 000
India
Ukraine
China
Kazakhstan
Russia
Brazil
Lithuania
Turkey
Spain
Italy
United Kingdom
France
Germany
USA
3.4%
4.2%
4.8%
5.1%
5.9%
6.4%
7.9%
9.4%
11.1%
12.9%
15.8%
16.2%
18.5%
19.9%
0% 10% 20% 30%
Italy
France
Germany
USA
Turkey
United Kingdom
Spain
India
Brazil
Lithuania
China
Russia
Ukraine
Kazakhstan
2008
50
40
30
202011
Priorities in Modernization of Russia’s Economy (Continued)
Develop a high-performance, application-oriented computing systems
Improve the efficiency and quality of information services Develop a modern social and industrial information
infrastructure
Information Technologies and Software
Main Objectives
By international standards, current Russian IT spending is low, but growing fast
IT Spending% of GDP, 2012
Source: Gartner, Global Insight, IDC
IT SpendingUSD Bn, 2010–2015
2545
9
45
9
19
1611
26
43
0
17
34
51
2010 12 2015Hardware SoftwareServices
17.4
18.1
19.0
CAGR %
World Market Growthin 2010–15: 6%
18% p.a.
Number of Households with Broadband Internet Access per 100 Households
Source: MED
20122015: 6%
0% 5%
Japan
Sweden
Russia
Finland
Denmark
France
Germany
United States
United Kingdom
6.3%6.3%
6.0%
7.6%
7.5%
7.4%
5.5%
5.2%
10%
4.5%
Priorities in Modernization of Russia’s Economy (Continued)
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
Nuclear Technologies
Main Objectives
The Safest Nuclear Technology
2
1 3
4
Containment is a double leak-proof envelope that protects the reactor from outside impacts, both natural and technogenic
A four–physical barrier defence-in-depth system that prevents the potential release of radioactive emissions outside the power unit
A safer two-loop steam cycle of the reactor that precludes the potential release of radioactive substance outside of the reactor hall
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
Incentives for Investment Projects
Russian Direct Investment Fund (RDIF)
Export Insurance Agency of Russia (EXIAR)
The RDIF is a $10 billion fund established by the Russiangovernment 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.
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:
• 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)
• 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 fi rst 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
• 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
• 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
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:• Export Credit Insurance
• Investment Insurance
Kirill DmitrievDirector of RDIF
Peter FradkovChairman of the Management Board & CEO
Russian Inwards FDI Structure
By Country of Origin
2012
Source: Central Bank of the Russian Federation
By Sector
2012
Source: Central Bank of the Russian Federation
Netherlands; 19.9%Luxembourg;
21.6%
Cyprus;6.4%
Ireland19.2%Rest of the world
19.9%
British Virgin Islands;
4.9%
Germany; 4.1%
Bahamas;4.1%
Trade;25.6%
Funancial and insurance activities;
31.6%
Other;4.3%
Other serviceactivities;
8.1%
Construction;7.6%
Mining and quarrying;10.3%
Manufacturing; 12.5%
Russian Outwards FDI Structure
By Country of Origin
9M 2012
Source: Central Bank of the Russian Federation
By Sector
2012
Source: Federal State Statistics Service
Cyprus;43.0%
Netherlands;3.7%
Luxembourg;4.1% Turkey;
9.8%
Rest of world;26.8%
Bermuda;2.5%
Austria;3.1%
British Virgin Islands;
7.1%
Transport andcommunications;
6.7%
Other;0.4%
Manufacturing;33.3%
Mining and quarrying;
15.8%
Real estate;6.9%Funancial and
insuarance activities;4.7%
Trade;32.4%
Capital Infl ow into Russia
Cumulative Stock of Inward FDIUSD Bn
Source: Central Bank of the Russian Federation
No restrictions on free movement of capital in Russia
— 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
Unlike China and India, in Russia there are no foreign currency limitations
— There is a regime of a managed fl oating 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 US $382 Bn
— US $51.4 Bn in 2012
VIRTUALLY no restrictions on free movement of capital
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
8 2336 66
121
196232
275
331
382
0
100
150
200
250
300
350
400
50
Top Russian Inbound M&A Deals
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 1.6 100
May-12 1.15 15.28
Apr-12 AF Telecom Holding 1.45 26.1
Apr-12
AF Telecom Holding
3.7 25.1
Mar-12 1.2 100
Jan-12 1.1 100
Aug-11 1.2 43.1
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
Recent Russian IPOs
Case Study — Pharmaceutical Industry
The Russian pharmaceutical market in 2011 reached a value of $11,114 million
Russian market is one of the top 5 pharmaceuticals market globally.
Pharmstandart is the leading player in the Russian pharmaceutical markets, generating a 4.8% share of the market’s value
The Russian pharmaceutical market is characterized by fairly strong purchasing power, with the ease of market entry strongly affected by legal and regulatory frameworks
Companies on the Russian Pharmaceutical MarketUSD MM
Source: 2010 IMS research for 2005, DSM Group research for 2011 data.
Pharmstandard
Bayer AG
Novartis
Sanofi -Aventis
136
170
318
372
4.8%
3.2%
3.5%
4.2%
536
383
411
473
1
2
3
4
27
14
4
4
2005 2011 CAGR, % Market share 2011, %
Share of Own Funds in Banking System %
Russian Banking System
As of 1 January 2013, total assets of the Russian banking system amounted to approximately $1 578 Bn
Relatively low deposit activity in banking among BRIC countries – 69% in Russia vs. 77% in China
Share of deposits in liabilities %
78% 77%69%
0255075
100
India China Russia
Sources: CBR, National Reserve Bank of India, Central Bank of China
13% 9%8% 6%
05
101520
Russia Brazil India China
Sources: CBR, The World Bank, National Reserve Bank of India, Central Bank of China
Relatively Low Competition — Average Number of Branches of One Bank
477
1082,3
0
250
500
India Brazil Russia
Sources: CBR, National Reserve Bank of India, Government of Brazil
117 Russian banks are controlled by non-resident entities, representing around 18% of all banking assets
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
THE HIGHEST share of own funds in the banking system among BRIC countries
Taxes in Different Countries
Income Tax2
Country Corporate Income Tax
Personal Income Tax VAT
China 25 % 3 – 45 % (progressive) 17 %
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 %
India 7.4 % USA 24.8 %
Russia 27.2 %
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 profi t 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 Source: The Heritage Foundation – 2013 Index of Economic Freedom.2 Source: Deloitte Global Services Limited3 Source: The Heritage Foundation – 2013 Index of Economic Freedom.
Taxes in Russia vs. Other BRICS Countries, as % of GDP (2013)1