Russian minister of industry and trade Denis Manturov talks to fDi at the Eastern Economic Forum in Vladivostok.

Q: What do you feel has been the impact of US-led sanctions on the ability of Russia to attract FDI, and how do you see the prospects for the near term? 

A: It’s a good question, because from the first moment when sanctions were imposed on the Russian economy, every month all journalists have asked me ‘so when will be the impact?’ There is no direct answer, because each sector of the economy – I’m responsible for industry – reacts differently to the sanctions.

From my point of view, we were given both a great challenge as well as an opportunity a result of the sanctions. For example, today there is a great demand for our machinery from customers who work in Russia, especially for the oil and gas sector.

If you apply sanctions to oil and gas companies, making it hard for them to purchase US or Europe equipment, what are they going to do? Either they are going buy south Asian equipment or Russian. Of course, it’s more convenient to buy Russian equipment – so we created a consortium with Russian machinery companies, along with the scientific institutes and academies [to enable this], and we got the products.

We have the customers – and that is the main thing in business, the customers. If you have the anchor customers then you will find the resources, you will find the money and you will get the results. So we’re getting the results. During the past two years, we have been able to provide 70% of [the machinery] required by oil and gas companies working in Russia. And this lifts the whole industrial sector, because it has a great multiplier effect: to fulfil these orders, the machinery producers place orders with the chemical industry, which then places orders with other industries and suppliers, and so on. 

This is just an example of one sector of industry; I could give other examples in aviation or ship-building where the same effect is happening. These past four years, it is not about the sanctions; it is about [our own industrial pipeline].     

Q: Are you pushing to diversify your industries because of the decline in oil prices?

A: Yes, we are developing some new segments of industry, but not just because of oil prices. It is also important to our strategy of industrial development. Of course, new industrial targets and sectors are important to the whole Russian industry, just as they are for Western and US industries. New materials, building materials, green energy, and many other [sectors] are really interesting for us.

If you’re talking about the impact of Western sanctions, of course, some Russian companies now lack access to Western financing [but we are overcoming this]. All our scientific institutes are working in a very tight connection with companies, and it gives us additional impetus. 

This article is sourced from fDi Magazine
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