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SPIEF 2015: Tendencies and expectations

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This week the Saint Petersburg International Economic Forum, the biggest event in business life of Russia and its investors will take place. It is an annual gathering of influential Russian and international politicians and government officials, businessmen, representatives of academic community. The Forum aims to establish the framework for developing ties between politics and business on local and the international level. This is a place where business faces politics and all the challenges the nowadays complex international situation brings.

The First St. Petersburg Economic Forum was held in 1997 under the aegis of the Federation Council of Russia and the Inter-parliamentary Assembly of the Commonwealth of Independent States. The next year St. Petersburg Forum changed into a permanent body with a view to developing entrepreneurship in Russia, strengthening relations with international trading partners and attracting foreign investments.

Within the next few years the Forum grew up from a conference focused on the CIS integration processes to a grand economic event encompassing a wide range of business development issues and drawing intense international attention. In 2007 the St. Petersburg Forum and the World Economic Forum signed the memorandum on participation of the WEF in the work of Forum. Many heads of states and other high officials attended the Forum, turning it into the event of a global scale. Political officials and businessmen sign here cooperation agreements and contracts worth millions of dollars.

The President and his Forum

In 2005 Vladimir Putin attended the SPIEF for the first time. Since then, unofficially called “presidential”, the Forum has transformed into a highly political event. The President became an excellent decoy for Russian and foreign political and economic elite. He is the official identity of the Forum. In his speeches and during round table discussions Putin more often considers international politics issues.

The atmosphere on the last year’s Forum was a perfect reflection of the tense relations between Russia and the West over the Ukrainian crisis. In particular, the economic sanctions, coming after the annexation of Crimea, were the main subjects to discuss. Putin claimed that so far the sanctions target just “his friends, the people from his inner circle” and aim to “punish them, nobody knows why”. He also took the opportunity to deny once again that the annexation of Crimea was planned and the presence of Russian military in the region.

Although, the St. Petersburg Economic Forum was a convenient framework for the foreign companies presented in Russia, the large companies decided to stay away from the risks and maintain their reputation. A number of big European and American companies boycotted the 2014 Forum. Among others, the representatives of Boeing, Goldman Sachs, Siemens, the Coca-Cola Company refused to come to St. Petersburg. Many companies reduced their representation in the event. The White House confirmed that the Administration of the U.S. President advised CEOs to ignore the Forum.

SPIEF – 2015: Tendencies and expectations

This year the Forum expects more than 5,000 of participants. “Recent changes require cohesive actions from the international community to ensure sustainable, long-term development”, President Putin says. He will hold a meeting with CEOs of big companies and corporations, and discuss new challenges for business with heads of investment funds.

When the United States and Europe have blocked off the way to the West to a number of Russian politicians and businessmen and frozen the assets of several companies, Russian business faced serious challenges – many large Russian companies face difficulties in attracting European and American investors, purchasing of military equipment and dual-use goods. Also, a number of transactions in the energy sector were banned. However, the US and European companies involved in the Russian market are doing better than expected, although their activities are still subject to risk. Russia has been living under the sanctions regime for a year already and the forthcoming Forum might be a useful platform for reflection on the future of Russian economics and business.

Due to the Russian politics in Ukraine, a number of participants has been reduced significantly. Nevertheless, the organizers of the Forum are confident: “Political confrontation does not affect serious business”. They are ready to welcome some large American and European companies soon. BCG and McKinsey & Company, Metro AG and TUI AG, Ernst & Young, Shell, BP, Societe Generale, Total, Schlumberger, Metro and Carlsberg are among them.

New reference point – Focus on Asia

The St. Petersburg International Economic Forum may be devoted to finding new allies, experts say. Most likely, they will be found in the Asia-Pacific region and Latin America. This year, Russian companies are preparing to conclude preferential agreements on international trade with the Shanghai Cooperation Organization and BRICS member states, as well as Turkey, Israel, South Korea, India and Peru. Also the possibility of establishing a free trade zone with ASEAN and further development of the Eurasian Customs Union are actively discussed.

Already last year the tendency to reorient the big Russian companies to Asia became visible. For instance, Gazprom has struck the biggest bargain in its history with the Chinese CNPC – a contract worth $ 400 billion for 30 years. This year more representatives of Chinese business are expected to attend the Forum. The Japanese Toyota also plans to expand its presence in Russia, although with a view to producing vehicles for Europe but not for Russian domestic market – as ruble has become weaker and the purchasing power of the population decreased.

Saint Petersburg to become a business capital for a few days

The Forum is a good opportunity to show the attractiveness of Saint Petersburg for Russian and foreign investors. The City Administration adopted the law which benefits investments in such areas as health care, education, culture and sport, science and innovation. The legal procedures for licensing of the future investors are being simplified as well.

St. Petersburg will present its investment projects in transport infrastructure, science and innovation, energy, culture and tourism. A large part of the exhibition will be devoted to the development of the Arctic zone. The city will present the information about the region and its involvement in the development of these strategic for Russia territories. The models of the newest equipment for exploitation of the oil fields will be showcased.

Without any doubts the Forum promises to be interesting. The confrontation between Russia and the West evolves – the White House claimed that the U.S. Authorities of any level will not be represented, while Alexis Tsipras, the Prime Minister of Greece, is expected at the Forum to discuss the “Greek question” with Vladimir Putin. The forthcoming Saint Petersburg Economic Forum will face the new challenges of today’s political situation. It will show the capacities of Russia’s economy to manage them.

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Economy

Russians Need to Strategise Trade with Africa

Kester Kenn Klomegah

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Russian business lobbying groups, together with about 40 business and industry heads, have shown interest in exporting their products to markets in Africa but found it difficult to access facilitation procedures in some of the countries.

To understand some of the processes and procedures, Nonna Kagramanya, the Vice President of Delovaya Rossia (Business Russia), moderated a special seminar to constructively discuss emerging issues and possible solutions on various foreign economic tracks. Representatives of governments, development institutions, private businesses as well as Southern and Eastern African diplomats attended the event.

She said despite the relatively small trade turnover with African countries, Russian companies were very interested in establishing stable long-term contacts with African partners.

As a first step, Ms. Kagramanya proposed the creation of a permanent discussion-line for all interested participants of the seminar to discuss a set of priority problems and barriers when working with Africa.

Polina Slyusarchuk, Head of Intexpertise (St. Petersburg-based African focused Consultancy Group), questioned whether Russia has a broader Africa policy or long-term strategy in there.

“Today, Russia wants to deepen its understanding of the business climate and explore trade and partnership opportunities in Africa,” she underscored.

While meetings organised between Russia and Africa have to be used to discuss thoroughly how to trade, efforts should be made to remove or lessen some of the barriers for mutual benefits. Now Russia’s main goal is to decide what it can offer that foreign players haven’t yet been made available in the African market.

Contributing to the discussion, the General Director of Intelnexus, Anatoly Yakimenko, introduced the participants to the opportunities for the development of Russian-African business cooperation, noting the favourable and hindering factors in the African market.

He stressed the need for potential exporters of Russia to adopt high-tech production and solutions to expand initiatives for more effective positioning of high-tech companies in Africa.

The Deputy Director of the Department of Asia, Africa and Latin America of the Ministry of Economic Development of the Russian Federation, Alexander Dianov, spoke about the non-financial support measures for Russian companies operating within the department.

“Currently, there are 10 intergovernmental commissions between the Russian Federation and African countries,” he said.

At the same time, he said: “There are trade missions only in four African countries, and if you take sub-Saharan African countries, the trade mission operates effectively only in South Africa. It is obvious that there is something to work on in terms of developing the infrastructure to support Russian businesses. If there is a serious request from the business community, we are ready to expand the geography of our presence.”

A representative of the Russian Export Centre (REC) in Africa, Dmitry Suchkov, drew the attention of companies to the need for in-depth analysis of national programmes of economic and investment development of African countries.

He spoke about the initiatives of the Coordinating Committee for Economic Cooperation with Sub-Saharan Africa.

Natalia Zaiser, the Chairperson of the Board of the African Business Initiative, pointed to the problems of ensuring security and stable “rules of the game,” as well as the need to identify five priority areas of business cooperation on the medium and long term perspectives for individual countries.

Representatives of the embassies of Rwanda, Tanzania and South Africa spoke about the integration processes on the African Continent, the potential of regional markets and national development initiatives.

Members of diplomatic missions also noted the greatly unrealised potential of cooperation between Russia and African countries, and interest in attracting investments in infrastructure, education and many other sectors.

They called for a wider interaction between African business circles and Russian businesses.

During the discussion, the participants mentioned high import duties, complicated certification procedure, high cost of products, expensive logistics, security and guarantee issues, and information vacuum as some of the barriers to Russian-African trade and economic cooperation. However, the participants agreed on the need to develop a comprehensive strategy for Russia to work with Africa.

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Economy

Curating a Vision with Young African Entrepreneurs

Jenni Jostock

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How can young people be involved in creating a future of work that is decent, equitable and bright? This November I was fortunate enough to take part in an event with this mandate at its heart.

The Youth Entrepreneurship and Self-Employment Forum (YES Forum) in Dakar, Senegal was co-organised by the ILO and our partners in the Global Initiative on Decent Jobs for Youth. It was a collaborative effort supporting young entrepreneurs in the region, and it was a joy to see this vision becoming real during the two-day event – with young entrepreneurs shining at different stages of the YES Forum.

More than 30 young entrepreneurs took on active speaking roles across the discussion sessions, a “Dragon’s Den” style pitching competition, and the Marketplace. This Marketplace offered participants the opportunity to float in between booths and to have one-on-one interactions with the presenting entrepreneurs and organisations.

The vibrant tone was set at the very start, with all participants given hand-made, customised notebooks, the product of an all-female team led by entrepreneur Ndey Fatou Njie for her business TIGA Gambia. TIGA Gambia is now an all-around fashion and accessories retailer, but originally zoomed in on providing locally-inspired swimwear – a large market gap that Ndey spotted and filled!

Not only were the TIGA Gambia notebooks a showstopper, they were also a colourful and popular extension of the empowering message of the YES Forum.

The innovative and vibrant spirit of entrepreneurs in their element was palpable all through the Forum, but shone particularly during the networking lunch and the Marketplace. It was difficult to lure the participants back into the plenary after these events, because they were so busy talking, forging synergies and building contacts.

While the young entrepreneurs embraced their speaking opportunities to the fullest, they also created a wonderfully inclusive setting that allowed everyone’s successes to be seen and recognised. I was particularly touched when the pitching competition winner, Malick Diouf, CEO of LAfricaMobile, immediately called his three competitors onto the stage to congratulate them on their incredible work.

Malick was humble about his win but his company deserves a special shout-out. LAfricaMobile serves as a digital bridge between African media publishers and organizations wanting to disseminate their content to the African diaspora. As a comms aficionado I was particularly impressed by how effortless their SMS service is in helping the African diaspora connect to what is going on in their home countries.

All in all, the YES Forum left a lasting impression on me for two reasons: Firstly because of the level of mutual support and cooperation that the young entrepreneurs showed, and secondly because the Forum truly catered for these young entrepreneurs and allowed them to share their stories and to explore collaboration. I believe it will leave a lasting result – of stronger alliances and greater empowerment.

Mariama Johm, founder of Afri Taste, a Banjul health joint that combats fruit and vegetable waste, summed up the atmosphere in her remarks during the Young Global Entrepreneurs panel: “I am glad we have the youth actually speaking here. We, young entrepreneurs, want to speak and let policymakers hear from us – not only here, but we want to make governments take into consideration what we are saying and that they should not make decisions on our behalf.”

ILO

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Easing US-China trade tensions could save millions of jobs

MD Staff

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Millions of jobs in the Asia and Pacific region have been put at risk by conflicts over trade, despite a recent agreement not to escalate tit-for-tat tariffs by the United States and China, according to a new regional UN report.

The 2018 Asia-Pacific Trade and Investment Report, issued by the UN’s development arm in the region, ESCAP, suggests that an escalating “tariff war” and resulting drop in confidence next year, could cut nearly $400 billion from the global gross domestic product, drive regional GDP down by $117 billion.

“As production shifts take place and resources are reallocated across sectors and borders due to the trade conflicts, tens of millions of workers may see their jobs displaced and be forced to seek new employment,” said Mia Mikic, the head of Trade, Investment and Innovation Division at ESCAP.

That said, the report also noted trade tensions have already had had a major impact, resulting in disruptions to existing supply chains and dampening investment. Trade growth slowed after the first half of 2018, and foreign direct investment (FDI) flows to the region are also expected to continue on a downward trend next year, following a 4 per cent drop overall this year.

In such a scenario, regional investment will be key to creating new economic opportunities, says Ms. Mikic, adding that “complementary policies” such as labour, education and retraining, and social protection measures must be placed high on the policymaking agenda.

This is also critical for ensuring progress on implementing the Sustainable Development Goals (SDGs), she said.

ESCAP has also called on countries to take full advantage of all existing initiatives to strengthen regional cooperation, including a new UN treaty on digitalizing trade procedures and enabling cross-border paperless trade in the zone.

‘Trade war’ has no winners

The report has also underscored that neither China nor the US can win a “trade war”, explaining that “both will see significant economic losses from continuing conflict.”

It also finds that implementation of mega-regional trade agreements such as the Regional Comprehensive Economic Partnership, among the Association of South-East Asian Nations (ASEAN) and its six partners – Australia, China, India, Japan, New Zealand and the Republic of Korea – could offset much of the economic losses from trade tensions.

The 2018 report estimates that implementation of such agreements could boost exports by 1.3 to 2.9 per cent and add 3.5 to 12.5 million jobs in the Asia-Pacific.

ESCAP, or the Economic and Social Commission for Asia and the Pacific is largest among UN regional commissions. Its 53 member States and 9 associate members span a geographic area from the Pacific island of Tuvalu in the east to Turkey in the west, and Russia in the north to New Zealand in the south. The region is home to nearly two-thirds of the world’s population.

In addition to countries in the Asia-Pacific region, ESCAP’s membership also includes France, the Netherlands, the United Kingdom and the US.

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