Medvedev unveils new plan to improve investment climate

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Russian President Dmitry Medvedev on Wednesday slammed the country's investment climate and reeled off a list of measures in a bid to entice foreign capital into the country.

At a meeting with state officials and tycoons in the metals city of Magnitogorsk in the Urals, the Kremlin chief gave a particularly bleak assessment of the investment climate and told state officials to leave corporate boards of directors and appoint investment envoys across the country.

"I have already given my opinion on the investment climate in our country -- it is very bad. Very bad," Medvedev said in televised remarks.

"Corruption's grip is not weakening, it has the whole economy by the throat. The result is obvious -- the money is fleeing our economy."

The current state of affairs, he said, was so dire that he did not have too much good news to report at January's World Economic Forum in Davos.

"It was a sad address," the Kremlin chief said.

Medvedev unveiled a list of concrete measures he said should help improve the investment climate, including an order to government officials to stand down from company boards of directors by mid-2011.

Special investment envoys who will help companies in their business projects will be appointed across the country from May while officials should also allow minority shareholders in public firms full access to the companies' books, he said.

Analysts say foreign investors are not rushing to put money into the country because of widespread corruption, red tape and doubts over the rule of law.

Medvedev however is pinning his hopes on a $10 billion fund Russia is setting up in partnership with private equity firms to attract investment.

The Russian president said the new vehicle would have to attract investment five times its size.

"This is an ambitious task of course but I think that taking into account our country's size, this task is feasible," he said, adding that the fund should be set up by mid-summer.

State-run development bank Vnesheconombank will manage the fund, whose capital will be built to $10 billion from $2 billion over the next few years.

Medvedev stressed that state managers would leave the fund once it is up and running.

"The state should not participate in managing such a fund and should guarantee its withdrawal from the capital of the company in around seven to eight years, or maybe a bit more," Medvedev said.

The Kremlin chief, who seeks to wean his country's economy off oil and gas, last year vowed to create a "special sovereign fund" that could help boost his economic modernisation efforts and make Moscow into a global financial centre.

In other measures, the Russian leader said officials should look into ways to reverse a recent increase in social welfare taxes that currently stand at 34 percent.

Russia is heading for presidential elections in 2012 and both Medvedev and his mentor, Prime Minister Vladimir Putin have said they may run.

Neither one has so far confirmed his intention, a fact that analysts say does not improve economic stability in Russia.

© 2011 AFP

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