The Russian Federation continued to implement regulatory reforms in 2019, allowing Russia to climb three notches to 28th place out of 190 economies in the World Bank’s Doing Business 2020 Index.  However, fundamental structural problems in Russia’s governance of the economy continue to stifle foreign direct investment in the country.  In particular, Russia’s judicial system remains heavily biased in favor of the state, leaving investors with little recourse in legal disputes with the government.  Despite ongoing anticorruption efforts, high levels of corruption among government officials compound this risk.  In February 2019, a prominent U.S. investor was arrested over a commercial dispute and remains under house arrest.  Moreover, Russia’s import substitution program imposes local content requirements that  create advantages for local producers .  Finally, Russia’s actions since 2014 have resulted in numerous EU and U.S. sanctions – restricting business activities and increasing costs.

U.S. investors must ensure full compliance with U.S. sanctions, including sanctions against Russia in response to its invasion of Ukraine, election interference, other malicious cyber activities, human rights abuses, use of a chemical weapons, weapons proliferation, illicit trade with North Korea, and support to Syria and Venezuela.  Information on the U.S. sanctions program is available at the U.S. Treasury’s website: https://www.treasury.gov/resource-center/sanctions/Pages/default.aspx  U.S. investors can utilize the “Consolidated Screening List” search tool to check sanctions and control lists from the Departments of Treasury, State, and Commerce: https://www.export.gov/csl-search.

In January 2020, the Russian government published a privatization plan for 2020-22 that identified 86 federal unitary state enterprises, 186 joint-stock companies, and 13 limited liability companies for privatization over a three-year period.  The plan specifies that market conditions will determine the terms of privatization, but the government estimates the plan could generate RUB 3.6 billion ($48.2 million) per year for the federal budget.  The plan would also reduce the state’s share in VTB, one of Russia’s largest banks, from over 60 percent to 50 percent plus one share and in Sovkomflot, a large shipping company, to 75 percent plus one share within three years.  Other large SOEs might be privatized on an ad hoc basis, depending on market conditions.

Since 2015, the Russian government has had an incentive program for foreign investors called Special Investment Contracts (SPICs).  These contracts, managed by the Ministry of Industry and Trade, allow foreign companies to participate in Russia’s import substitution programs by providing access to certain subsidies to foreign producers who establish local production.  In August 2019, the Russian government introduced “SPIC-2.0, which incentivizes long-term private investment in high-technology projects and technology transfer in manufacturing.

U.S. Embassy Moscow advises any foreign company operating in Russia to have competent legal counsel and create a comprehensive plan on steps to take in case the police carry out an unexpected raid.  Russian authorities have exhibited a pattern of transforming civil cases into criminal matters, resulting in significantly more severe penalties.  In short, unfounded lawsuits or arbitrary enforcement actions remain an ever-present possibility for any company operating in Russia.

In February 2019, Russia’s Federal Antimonopoly Service (FAS) submitted its fifth anti-monopoly legislative package, which is devoted to regulating the digital economy, to the Cabinet.  It includes provisions on introducing new definitions of “trustee” and a definition of “price algorithms,” empowering FAS to impose provisions of non-discriminated access to data as a remedy.  It also introduced data ownership as a set of criteria for market analysis.  The legislative package is undergoing an interagency approval process and will be submitted to the State Duma once it is approved by the Cabinet.

Since January 1, 2019, foreign providers of electronic services to business customers in Russia (B2B e-services) have new Russian value-added tax (VAT) obligations.  These obligations include VAT registration with the Russian tax authorities (even for VAT exempt e-services), invoice requirements, reporting to the Russian tax authorities, and adhering to VAT remittance rules.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 137 of 180 http://www.transparency.org/
World Bank’s Doing Business Report 2019 28 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 46 of 129 https://www.globalinnovationindex.org/
U.S. FDI in partner country ($M USD, historical stock positions) 2018 $14,795 https://apps.bea.gov/international/di1usdbal
World Bank GNI per capita 2018 $10,230 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

The Ministry of Economic Development (MED) is responsible for overseeing investment policy in Russia.  The Russian Direct Investment Fund (RDIF) was established in 2011 to facilitate FDI in Russia and has already attracted over $40 billion of foreign capital into the Russian economy through long-term strategic partnerships.  In 2013, Russia’s Agency for Strategic Initiatives (ASI) launched an “Invest in Russian Regions” project to promote FDI on a regional basis.  Since 2014, ASI has released an annual ranking of Russia’s regions in terms of the relative competitiveness of their investment climates, and provides potential investors with information about regions most open to foreign investment.  In 2019, 69 Russian regions improved their Regional Investment Climate Index scores (https://asi.ru/investclimate/rating).  The Foreign Investment Advisory Council (FIAC), established in 1994, is chaired by the prime minister and currently includes 53 international company members and four companies as observers.  The FIAC allows select foreign investors to directly present their views on improving the investment climate in Russia and advises the government on regulatory policy.

Russia’s basic legal framework governing investment includes 1) Law 160-FZ, July 9, 1999, “On Foreign Investment in the Russian Federation;” 2) Law No. 39-FZ,  February 25, 1999, “On Investment Activity in the Russian Federation in the Form of Capital Investment;” 3) Law No. 57-FZ, April 29, 2008, “Foreign Investments in Companies Having Strategic Importance for State Security and Defense;” and 4) the Law of the RSFSR No. 1488-1, June 26, 1991, “On Investment Activity in the Russian Soviet Federative Socialist Republic (RSFSR).”  This framework of laws nominally attempts to guarantee equal rights for foreign and local investors in Russia.  However, exemptions are permitted when it is deemed necessary to protect the Russian constitution, morality, health, human rights, national security, or defense, and to promote its socioeconomic development.  Foreign investors may freely use the profits obtained from Russia-based investments for any purpose, provided they do not violate Russian law.

Limits on Foreign Control and Right to Private Ownership and Establishment

Russian law places two primary restrictions on land ownership by foreigners.  The first is on the foreign ownership of land located in border areas or other sensitive territories in terms of national security.  The second restricts foreign ownership of agricultural land, restricting foreign individuals and companies, persons without citizenship, and agricultural companies more than 50-percent foreign-owned from owning land.  These entities may, however, hold agricultural land through leasehold rights.  As an alternative to agricultural land ownership, foreign companies typically lease land for up to 49 years, the maximum term allowed.

A law “On Mass Media,” took effect in 2015 which restricts foreign ownership of any Russian media company to 20 percent (the previous law applied a 50 percent limit to Russia’s broadcast sector).   In December 2018, the State Duma approved in its first reading a draft bill introducing new restrictions on online news aggregation services.  If adopted, foreign companies, including international organizations and individuals, would be limited to a maximum of 20 percent ownership in Russian news aggregator websites.  The second, final hearing was planned for February 2019 but was postponed.  To date, this proposed law has not been passed.

U.S. stakeholders have raised concerns about similar limits on FDI in the mining and mineral extraction sectors, and describe the licensing regime as non-transparent and unpredictable.

Russia’s Commission on Control of Foreign Investment (Commission) was established in 2008 to monitor foreign investment in strategic sectors in accordance with the SSL.  Between 2008 and 2019, the Commission received 621 applications for foreign investment, 282 of which were reviewed, according to the Federal Antimonopoly Service (FAS).  Of those 282, the Commission granted preliminary approval for 259 (92 percent approval rate) and rejected 23 (https://fas.gov.ru/news/29330).  International organizations, foreign states, and the companies they control are treated as distinct entities under the Commission. They are subject to restrictions applicable to a single foreign entity if they participate in a strategic business.

Other Investment Policy Reviews

The WTO conducted Russia’s first Trade Policy Review (TPR) in September 2016.  Dates are still pending for the next Russia TPR.  (Related reports are available at https://www.wto.org/english/tratop_e/tpr_e/tp445_e.htm ).

The United Nations Conference on Trade and Development (UNCTAD) issues an annual World Investment Report covering different investment policy topics.  In 2019, the focus of this report was on special economic zones (https://unctad.org/en/Pages/Publications/WorldInvestmentReports.aspx ).  UNCTAD also issues an investment policy monitor (https://investmentpolicyhub.unctad.org/IPM ).

Business Facilitation

The Federal Tax Service (FTS) operates Russia’s business registration website: www.nalog.ru .  Per law (Article 13 of Law 129-FZ of 2001), a company must register with a local FTS office, and the registration process typically takes no more than three days.  Foreign companies may be required to notarize the originals of incorporation documents included in the application package.  To establish a business in Russia, a company must register with FTS and pay a registration fee of RUB 4,000.  Since January 1, 2019, the registration fee is waived for online submission of incorporation documents.

In 2020, Russia moved up three notches to the 28th position in the World Bank’s Doing Business 2020 Index.  The ranking acknowledged several reforms that helped Russia improve its position.  Russia has improved the process for establishing connection to electricity by setting new deadlines and establishing specialized departments for connection.  Russia has also strengthened minority investor protections by requiring greater corporate transparency, and facilitated the payment of taxes by reducing the tax authority review period of applications for VAT cash refunds, as well as enhancing the software used for tax and payroll preparation.

Outward Investment

The Russian government does not restrict Russian investors from investing abroad.  Since 2015, Russia’s “De-offshorization Law” (376-FZ) requires that Russian tax residents disclose to the government their overseas assets, potentially subjecting these assets to Russian taxes.

While there are no restrictions on the distribution of profits to a nonresident entity, some foreign currency control restrictions apply to Russian residents (both companies and individuals) and to foreign currency transactions.  As of January 1, 2018, all Russian citizens and foreign holders of Russian residence permits are considered Russian “currency control residents.”  These “residents” are required to notify the tax authorities when a foreign bank account is opened, changed, or closed and when funds are moved in a foreign bank account.  Individuals who have spent less than 183 days in Russia during the reporting period are exempt from the reporting requirements and restrictions using foreign bank accounts.  On January 1, 2020, Russia abolished all currency control restrictions on payments of funds by non-residents to bank accounts of Russian residents opened with banks in OECD or FATF member states.  This is provided that such states participate in the automatic exchange of financial account information with Russia.  As a result, from 2020 onward, Russian residents will be able to freely use declared personal foreign accounts for savings and investment in a wide range of financial products.

Russia is party to 64 bilateral investment treaties (BITs) in force and six trade and investment agreements with investment provisions .  (A full list is available here: http://investmentpolicyhub.unctad.org/IIA).  The United States and Russia signed a bilateral investment treaty (BIT) in 1992, but it was never ratified by Russia and is not in force today. As such, investors from the two countries must rely on domestic courts and have no recourse to international arbitration unless specifically written into contracts.

Russia is a founding member of the Eurasian Economic Union (EAEU), which includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan.  The EAEU has concluded a number of free trade agreements (FTAs), beginning with Vietnam in 2016.  The EAEU signed an interim three-year FTA with Iran in May 2018 that came into effect in 2019 and reduced or eliminated tariffs on goods accounting for roughly 50 percent of trade between the parties.  In May 2018, the EAEU and China signed an agreement on trade and economic cooperation.  The EAEU signed an FTA with Singapore on October 1, 2019, that reduces tariffs on 90 percent of goods exported by Singapore , expanding to 97 percent over 10 years.  In October 2019, the EAEU signed an FTA with Serbia.  Currently, the EAEU is negotiating FTAs with India, Israel, and Egypt (http://www.eurasiancommission.org/ru/nae/news/Pages/10-03-2020-3.aspx ).

The U.S.-Russia Income Tax Convention, in effect since 1994, was designed to address the issue of double taxation and tax evasion.  The treaty is available at https://www.irs.gov/pub/irs-trty/russia.pdf.  Russia is party to 82 double taxation treaties (http://minfin.ru/ru/document/?id_4=117045 ).

Transparency of the Regulatory System

While the Russian government at all levels offers moderately transparent policies, actual implementation is inconsistent.    Draft bills and regulations are made available for public comment in accordance with disclosure rules set forth in Government Resolution 851 of 2012.

Key regulatory actions are published on a centralized web site that also maintains existing and proposed regulatory documents: www.pravo.gov.ru .  (Draft regulatory laws are published on the web site: www.regulation.gov.ru .  Draft laws can also be found on the State Duma’s legal database: http://asozd.duma.gov.ru/ ).

Accounting procedures are generally transparent and consistent.  Documents compliant with Generally Accepted Accounting Principles (GAAP), however, are usually provided only by businesses that interface with foreign markets or borrow from foreign lenders.  Reports prepared in accordance with the International Financial Reporting Standards (IFRS) are required for the consolidated financial statements of all entities who meet the following criteria: entities whose securities are listed on stock exchanges; banks and other credit institutions, insurance companies (except those with activities limited to obligatory medical insurance); non-governmental pension funds; management companies of investment and pension funds; and clearing houses.

Additionally, certain state-owned enterprises are required to prepare consolidated IFRS financial statements by separate decrees of the Russian government.  Russian Accounting Standards, which are largely based on international best practices, otherwise apply.

International Regulatory Considerations

As a member of the EAEU, Russia has delegated certain decision-making authority to the EAEU’s supranational executive body, the Eurasian Economic Commission (EEC).  In particular, the EEC has the lead on concluding trade agreements with third countries, customs tariffs (on imports), and technical regulations.  EAEU agreements and EEC decisions establish basic principles that are implemented by the member states at the national level through domestic laws, regulations, and other measures involving goods.  The EAEU Treaty establishes the priority of WTO rules in the EAEU legal framework.  Authority to set sanitary and phytosanitary standards (SPS), however, remains at the individual country level.

U.S. companies cite SPS technical regulations and related product-testing and certification requirements as major obstacles to U.S. exports of industrial and agricultural goods to Russia. Russian authorities require evidence of product testing and certification as key elements of the approval process for a variety of products, and, in many cases, there are no mutual recognition arrangements in place; only an entity registered and residing in Russia can apply for the necessary documentation for product approvals.  Consequently, opportunities for testing and certification performed by competent bodies outside Russia are limited.  Manufacturers of telecommunications equipment, oil and gas equipment, construction materials and equipment, and pharmaceuticals and medical devices have reported serious difficulties in obtaining product approvals within Russia.  Technical barriers to trade (TBT) issues have also arisen with alcoholic beverages, pharmaceuticals, and medical devices.

Russia joined the WTO in 2012.  Although Russia has notified the WTO of numerous SPS technical regulations, it appears to be taking a narrow view regarding the types of measures that require notification that  may not reflect the full set of technical regulations under the WTO TBT Agreement.  Russia submitted 16 SPS notifications in 2019.  (A full list of notifications is available at: http://www.epingalert.org/en).

Legal System and Judicial Independence

U.S. Embassy Moscow advises any foreign company operating in Russia to have competent legal counsel and create a comprehensive plan on steps to take in case the police carry out an unexpected raid.  Russian authorities have exhibited a pattern of transforming civil cases into criminal matters, resulting in significantly more severe penalties.  In short, unfounded lawsuits or arbitrary enforcement actions remain an ever-present possibility for any company operating in Russia.

Critics contend that Russian courts, in general, lack independent authority and, in criminal cases, have a bias towards conviction.  In practice, the presumption of innocence tends to be ignored by Russian courts, and less than one-half of one percent of criminal cases end in acquittal. In cases that are appealed when the lower court decision resulted in a conviction, less than one percent are overturned.  In contrast, when the lower court decision is “not guilty,” 37 percent of the appeals result in a finding of guilt.

Russia law is based on a system of legal code; the Civil Code of Russia governs contracts.  Specialized commercial courts (also called “Arbitrage Courts”) handle a wide variety of commercial disputes.  Russia was ranked by the World Bank’s 2020 Doing Business Index as 21st in contract enforcement.

Commercial courts are required by law to decide business disputes efficiently, and many cases are decided based on written evidence, with little or no live testimony by witnesses.  The courts’ workload is dominated by relatively simple cases involving the collection of debts and firms’ disputes with the taxation and customs authorities, pension funds, and other state organs. Tax-paying firms often prevail in their disputes with the government in court.  As with some international arbitral procedures, the weakness in the Russian arbitration system lies in the enforcement of decisions, and few firms voluntarily pay judgments against them.

A specialized court for intellectual property rights (IPR) disputes was established in 2013.  The IPR Court hears matters pertaining to the review of decisions made by the Russian Federal Service for Intellectual Property (Rospatent) and determines issues of IPR ownership, authorship, and the cancellation of trademark registrations.  It also serves as the court of second appeal for IPR infringement cases decided in commercial courts and courts of appeal.

Laws and Regulations on Foreign Direct Investment

The 1991 Investment Code and 1999 Law on Foreign Investment (160-FZ) guarantee that foreign investors enjoy rights equal to those of Russian investors, although some industries have limits on foreign ownership.  Russia’s Special Investment Contract program, launched in 2015, aims to increase investment in Russia by offering tax incentives and simplified procedures for dealings with the government.  In addition, a law on public-private-partnerships (224-FZ) took effect January 1, 2016.  The legislation allows an investor to acquire ownership rights over a property.  The SSL regulates foreign investments in “strategic” companies.  Amendments to Federal Law No. 160-FZ “On Foreign Investments in the Russian Federation” and Russia’s SSL, signed into law in May 2018, liberalized access of foreign investments to strategic sectors of the Russian economy and made the strategic clearance process clearer and more convenient.  The new approach is more investor-friendly, since applying a stricter regime can now potentially be avoided by providing the required beneficiary and controlling person information.  In addition, the amendments expressly envisage a right for the Federal Anti-monopoly Service (FAS) to issue official clarifications on the nature and application of the SSL that may facilitate law enforcement.

Competition and Anti-Trust Laws

FAS implements antimonopoly laws and is responsible for overseeing matters related to the protection of competition.  Russia’s fourth anti-monopoly legislative package, which took effect January 2016, introduced a number of changes to Russia’s antimonopoly laws.  Changes included limiting the criteria under which an entity could be considered “dominant,” broadening the scope of transactions subject to FAS approval, and reducing government control over transactions involving natural monopolies.  Over the past several years, FAS has opened a number of cases involving American companies.  In February 2019, FAS submitted its fifth anti-monopoly legislative package, which is devoted to regulating the digital economy, to the Cabinet.  It includes provisions on introducing new definitions of “trustee” and a definition of “price algorithms,” empowering FAS to impose provisions of non-discriminated access to data as a remedy.  It also introduced data ownership as a set of criteria for market analysis.  The legislative package is still undergoing an interagency approval process and will be submitted to the State Duma once it is approved by the Cabinet.

FAS has also claimed the authority to regulate IP, arguing that monopoly rights conferred by ownership of IP should not extend to the “circulation of goods,” a point supported by the Russian Supreme Court.

Expropriation and Compensation

The 1991 Investment Code prohibits the nationalization of foreign investments, except following legislative action and when such action is deemed to be in the public interest.  In such instances, the investor must be adequately and promptly compensated for the seizure of property.  Acts of nationalization may be appealed to Russian courts.  At the sub-federal level, expropriation has occasionally been a problem, as well as local government interference and a lack of ability to enforce court rulings protecting investors.

Despite legislation prohibiting the nationalization of foreign investments, investors in Russia – particularly minority-share investors in domestically-owned energy companies – are encouraged to exercise caution.  Russia has a history of indirectly expropriating companies through “creeping” and informal means, often related to domestic political disputes.  Foreign investors can also be pressured into selling their Russia-based assets at below-market prices.  Foreign investors, particularly minority investors, have little legal recourse in such instances.

Dispute Settlement

ICSID Convention and New York Convention

Russia is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  While Russia does not have specific legislation providing for enforcement of the New York Convention, Article 15 of the Constitution specifies that “the universally recognized norms of international law and international treaties and agreements of the Russian Federation shall be a component part of [Russia’s] legal system.  If an international treaty or agreement of the Russian Federation fixes other rules than those envisaged by law, the rules of the international agreement shall be applied.”  Russia is a signatory but not a party and has never ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID).

Investor-State Dispute Settlement

According to available information, at least 14 investment disputes have involved an American and the Russian government since 2006.  Some attorneys refer international clients who have investment or trade disputes in Russia to international arbitration.  A 1997 Russian law confirms New York Convention obligations by recognizing foreign arbitration awards for enforcement in Russia..  Russian law was amended in 2015 to give the Russian Constitutional Court authority to disregard verdicts by international bodies if it determines the ruling contradicts the Russian constitution.

International Commercial Arbitration and Foreign Courts

In addition to the court system, Russian law recognizes alternative dispute resolution (ADR) mechanisms, i.e. domestic arbitration, international arbitration, and mediation.  Civil and commercial disputes may be referred to either domestic or international commercial arbitration. Institutional arbitration is more common in Russia than ad hoc arbitration.  Arbitral awards can be enforced in Russia pursuant to international treaties, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the 1958 New York Convention, and the 1961 European Convention on International Commercial Arbitration, as well as domestic legislation.  Mediation mechanisms were established by the Law on Alternative Dispute Resolution Procedure with Participation of the Intermediary in January 2011.  Mediation is an informal extrajudicial dispute resolution method whereby a mediator seeks mutually acceptable resolution.  However, mediation is not yet widely used in Russia.

Beginning in 2016, arbitral institutions were required to obtain the status of a “permanent arbitral institution” (PAI) in order to arbitrate disputes involving shares in Russian companies.  The requirement ostensibly combats the problem of dubious arbitral institutions set up by corporations to administer disputes in which they themselves are involved.  The PAI requirement applies to foreign arbitral institutions as well.  Until recently there were only four arbitral institutions – all of them Russian – which had been conferred the status of PAI.  In April 2019, however, the Hong Kong International Arbitration Centre became the first foreign arbitral tribunal to obtain PAI status.  In June 2019, the Vienna International Arbitration Center became the second foreign institution licensed to administer arbitrations in Russia.  The International Court of Arbitration of the International Chamber of Commerce, the London Court of International Arbitration, and the Arbitration Institute of the Stockholm Chamber of Commerce continue to be selected for administering international arbitrations seated in Russia, despite the fact that none of these have PAI status.  Nonetheless, to date arbitral awards rendered by tribunals constituted under the rules of these institutions can be recognized and enforced in Russia.

Bankruptcy Regulations

Russia established a law providing for enterprises bankruptcy in the early 1990s.  A law on personal bankruptcy came into force in 2015.  Russia’s ranking in the World Bank’s Doing Business 2020 Index for “Resolving Insolvency” is 57 out of 190 economies.  Article 9 of the Law on Insolvency requires an insolvent firm to petition the court of arbitration to declare the company bankrupt within one month of failing to pay the bank’s claims.  The court then convenes a meeting of creditors, who petition the court for liquidation or reorganization.  In accordance with Article 51 of the Law on Insolvency, a bankruptcy case must be considered within seven months of the day the petition was received by the arbitral court.

Liquidation proceedings by law are limited to six months and can be extended by six more months (art. 124 of the Law on Insolvency).  Therefore, the time dictated by law is 19 months.  However, in practice, liquidation proceedings are extended several times and for longer periods.  The total cost of insolvency proceedings is approximately nine percent of the value of the estate.

In July 2017, amendments to the Law on Insolvency expanded the list of persons who may be held vicariously liable for a bankrupted entity’s debts and clarified the grounds for such liability. According to the new rules, in addition to the CEO, the following can also be held vicariously liable for a bankrupt company’s debts: top managers, including the CFO and COO, accountants, liquidators, and other persons who controlled or had significant influence over the bankrupted entity’s actions by kin or position or could force the bankrupted entity to enter into unprofitable transactions.  In addition, persons who profited from the illegal actions by management may also be subject to liability through court action.  The amendments clarified that shareholders owning less than 10 percent in the bankrupt company shall not be deemed controlling unless they are proven to have played a role in the company’s bankruptcy.  The amendments also expanded the list of people who may be subject to secondary liability and the grounds for recognizing fault for a company’s bankruptcy.

Amendments to the Law on Insolvency approved in December 2019 gave greater protection, in the context of insolvency of a Russian counterparty, to collateral arrangements, close-out netting in respect of over-the-counter derivative transactions, repurchases, and certain other “financial” transactions documented under eligible master agreements.

Investment Incentives

The government also introduced Special Investment Contracts (SPICs) as an alternative incentive program in 2015.  In 2017 the government changed the rules for concluding SPICs to increase investment in Russia by offering tax incentives and simplified procedures for government interactions.  These contracts allow foreign companies in Russia access to import substitution programs, including certain subsidies, if they establish local production.  In principle, these contracts may aid in expediting customs procedures.  However, in practice, reports suggest companies that sign such contracts find their business hampered by policies biased in favor of local producers.

In August 2019, the Russian government created “SPIC-2,” which aimed to increase long-term private investment in high-technology projects and introduce advanced technology for local content in manufacturing products.  The Ministry of Industry and Trade also extended the maximum SPIC term to 20 years, depending on the amount of investment.  The key criteria for evaluating bids are speed of introducing technology, the volume of manufacturing, and the level of technology in local manufacturing processes.

Since 2005, Russia’s industrial investment incentive regime has granted tax breaks and other government incentives to foreign companies in certain sectors in exchange for producing locally. As part of its WTO Protocol, Russia agreed to eliminate the elements of this regime that are inconsistent with the Trade-Related Investment Measures (TRIMS) Agreement by July 2018.  The TRIMS Agreement requires elimination of measures such as those that require or provide benefits for the use of domestically produced goods (local content requirements) or that restrict a firm’s imports to an amount related to its exports or related to the amount of foreign exchange a firm earns (trade balancing requirements).  Russia notified the WTO that it had terminated these automotive investment incentive programs as of July 1, 2018.  In 2019, the Ministry of Industry and Trade introduced a new points-based system to estimate vehicle local content levels to determine original equipment manufacturer (OEM)’s eligibility for Russian state support.  The government provides state support only to OEMs whose finished vehicles are deemed to be of Russian origin, which will depend upon them scoring at least 2,000 points under the new system to get some assistance and 6,000 point to enjoy a full range of support measures.  Points will be awarded for localizing the supply of certain components.  Locally-sourced engines or transmissions used in vehicle assembly, for instance, are worth 40 points.  OEMs running a research and development business in Russia score an additional 20 points, and a further 20 points are granted to those using locally-sourced aluminum or electronic systems in their vehicles.

Foreign Trade Zones/Free Ports/Trade Facilitation

Russia continues to promote the use of high-tech parks, special economic zones (SEZs), and industrial clusters, which offer additional tax and infrastructure incentives to attract investment. “Resident companies” can receive a broad range of benefits, including exemption from profit tax, value-added tax, property tax, and import duties and partial exemption from social fund payments.  Russia currently has 23 SEZs (http://www.russez.ru/oez/ ).  A Russian Accounts Chamber (RAC) investigation of SEZs in February 2020 found they have had no measurable impact on the Russian economy, despite RUB 136 billion ($1.8 billion) investment from the federal government from 2006 to 2018.  In 2015, the Russian government created a separate but similar program – “Territories of Advanced Development” – with preferential tax treatment and simplified government procedures in Siberia, Kaliningrad, and the Russian Far East.  In May 2016, President Putin stopped work on ten existing SEZ’s and suspended the creation of any new SEZs, pending better coordination with this new entity.

Performance and Data Localization Requirements

Russian law generally does not impose performance requirements, and they are not widely included as part of private contracts in Russia.  Some have appeared, however, in the agreements of large multinational companies investing in natural resources and in production-sharing legislation.  There are no formal requirements for offsets in foreign investments.  Since approval for investments in Russia can depend on relationships with government officials and on a firm’s demonstration of its commitment to the Russian market, these conditions may result in offsets.

In certain sectors, the Russian government has pressed for localization and increased local content.  For example, in a bid to boost high-tech manufacturing in the renewable energy sector, Russia guarantees a 12 percent profit over 15 years for windfarms using turbines with at least 65 percent local content.  Russia is additionally considering local content requirements for industries that have high percentages of government procurement, such as medical devices and pharmaceuticals.  Russia is not a signatory to the WTO’s Government Procurement Agreement. Consequently, restrictions on public procurement have been a major avenue for Russia to implement localization requirements without running afoul of international commitments.

The Central Bank of Russia (CBR) has imposed caps on the percentage of foreign employees in foreign banks’ subsidiaries.  Russian employees in a subsidiary of a foreign bank should make up at least 75 percent of the staff.  If the executive of the subsidiary is a non-resident of Russia, at least 50 percent of the bank’s managing body should be Russian citizens.

Russia’s data storage law (the “Yarovaya law”) took effect on July 1, 2018, requiring providers to store data in “full volume” beginning October 1, 2018.  The law requires domestic telecoms and internet service providers (ISPs) to store all customers’ voice calls and texts for six months; ISPs must store data traffic for one month.  The Yarovaya law initially required longer retention with a shorter implementation window, which companies criticized as costly and unworkable.  Until recently, there were no special liabilities for violations of the data localization requirement.  In December, President Putin signed into law legislative amendments establishing significant fines ranging from RUB 1 million ($13,400) to RUB 18 million ($241,000) for legal entities and from RUB 100,000 ($1,340) to RUB 800,000 ($10,700) for company CEOs.

Real Property

Russia ranks12th in the 2020 World Bank Doing Business Indexfor registering property, which analyzes the “steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute,” as well as the “the quality of the land administration system.”

The Russian Constitution, along with a 1993 presidential decree, gives Russian citizens the right to own, inherit, lease, mortgage, and sell real property.  The state owns the majority of Russian land, although the structures on the land are typically privately owned.  Mortgage legislation enacted in 2004 facilitates the process for lenders to evict homeowners who do not stay current in their mortgage payments.

Intellectual Property Rights

Russia remained on the U.S. Trade Representative (USTR) Special 301 Priority Watch List in 2020 and had several illicit streaming websites and online markets reported in the 2019 Notorious Markets List.  Particular areas of concern include copyright infringement, trademark counterfeiting/hard goods piracy, and non-transparent royalty collection procedures.  Stakeholders reported in 2019 that enforcement of intellectual property rights (IPR) continued to decline overall from 2018 following a reduction in resources for enforcement personnel.  In December 2019, for the first time in Russia, the owner of several illegal streaming sites received a two-year suspended criminal sentence for violating Russia’s IPR protection legislation.  This case has set an important precedent for enforcing IPR laws in Russia.

Online piracy continues to pose a significant problem in Russia.  Russia has not honored its commitments to protect IPR, including commitments made to the United States as part of its WTO accession.  Nevertheless, there are indications that the Russian internet piracy market is declining.  According to Group-IB, the online pirated movie market declined by 27 percent year-on-year in 2019, while legal streaming services increased by 44.3 percent.  Despite Russia’s 2018 ban on virtual private networks (VPNs), the ban has not been fully enforced.  Since 2017, search engines, including Google and Yandex, have been required to block IPR-infringing websites and “mirror” sites as determined by federal communications watchdog Roskomnadzor.  As a result of increased scrutiny, internet companies Yandex, Mail.Ru Group, Rambler, and Rutube signed an anti-piracy memorandum with several domestic right holders, which is valid through the end of 2021.

Modest progress has been made in the area of customs IPR enforcement since the Federal Customs Service (FCS) can now confiscate imported goods that violate IPR.  From January to September 2018, the FCS seized 14.4 million counterfeit goods, compared with 10.1 million in the same period in 2017.  In 2019, the FTS seized 11 million counterfeited goods in the same period.  The FCS prevented infringement and damages to copyright holders amounting to RUB 5.9 billion ($79 million) between January and September in 2019, compared with RUB 4.5 billion ($60.3 million) in 2018.

Capital Markets and Portfolio Investment

Russia is open to portfolio investment and has no restrictions on foreign investments. Russia’s two main stock exchanges – the Russian Trading System (RTS) and the Moscow Interbank Currency Exchange (MICEX) – merged in December 2011.  The MICEX-RTS bourse conducted an initial public offering on February 15, 2013, auctioning an 11.82 percent share.

The Russian Law on the Securities Market includes definitions of corporate bonds, mutual funds, options, futures, and forwards.  Companies offering public shares are required to disclose specific information during the placement process as well as on a quarterly basis.  In addition, the law defines the responsibilities of financial consultants assisting companies with stock offerings and holds them liable for the accuracy of the data presented to shareholders. In general, the Russian government respects IMF Article VIII, which it accepted in 1996.  Credit in Russia is allocated generally on market terms, and the private sector has access to a variety of credit instruments.  Foreign investors can get credit on the Russian market, but interest rate differentials tend to prompt investors from developed economies to borrow on their own domestic markets when investing in Russia.

Money and Banking System

Banks make up a large share of Russia’s financial system.  Although Russia had 396 licensed banks as of March 1, 2020, state-owned banks, particularly Sberbank and VTB Group, dominate the sector.  The three largest banks are state-controlled (with private Alfa Bank ranked fourth); and held 51.4 percent of all bank assets in Russia as of March 1, 2020.  The role of the state in the banking sector continues to distort the competitive environment, impeding Russia’s financial sector development.  At the beginning of 2019, the aggregate assets of the banking sector amounted to 91.4 percent of GDP, and aggregate capital was 9.9 percent of GDP.  Russian banks reportedly operate on short time horizons, limiting capital available for long-term investments.  Overall, a share of non-performing loans (NPLs) to total gross loans reached 5.5 percent as of January 1, 2019.  Foreign banks are allowed to establish subsidiaries, but not branches, within Russia and must register as a Russian business entity.

Foreign Exchange and Remittances

Foreign Exchange

While the ruble is the only legal tender in Russia, companies and individuals generally face no significant difficulty in obtaining foreign currency from authorized banks.  The CBR retains the right to impose restrictions on the purchase of foreign currency, including the requirement that the transaction be completed through a special account, according to Russia’s currency control laws.  The CBR does not require security deposits on foreign exchange purchases.  Otherwise, there are no barriers to remitting investment returns abroad, including dividends, interest, and returns of capital, apart from the fact that reporting requirements exist and failure to report in a timely fashion will result in fines.

Currency controls also exist on all transactions that require customs clearance, which, in Russia, applies to both import and export transactions and certain loans.  As of March 1, 2018, the CBR no longer requires a “transaction passport” (i.e. a document with the authorized bank through which a business receives and services a transaction) when concluding import and export contracts.  The CBR also simplified the procedure to record import and export contracts, reducing the number of documents required for bank authorization. The new instruction is an example of liberalization of the settlement procedure for foreign trade transactions in Russia.  In 2016, the CBR tightened regulations for cash currency exchanges: a client must provide his full name, passport details, registration place, date of birth, and taxpayer number, if the transaction value exceeds RUB 15,000 (approximately $200).  In July 2016, this amount was increased to RUB 40,000 (approximately $535).  The declared purpose of this regulation is to combat money laundering and terrorist financing.

Remittance Policies

The CBR retains the right to impose restrictions on the purchase of foreign currency, including the requirement that the transaction be completed through a special account, according to Russia’s currency control laws.  The CBR does not require security deposits on foreign exchange purchases.  To navigate these requirements, investors should seek legal expert advice at the time of making an investment.  Banking contacts confirm that investors have not had issues with remittances or with repatriation of dividends.

Sovereign Wealth Funds

In 2018, Russia combined its two sovereign wealth funds to form the National Welfare Fund (NWF).  These funds have a combined holding of $123.4 billion as of April 2020.  The Ministry of Finance oversees the fund’s assets, while the CBR acts as the operational manager.  Russia’s Accounts Chamber regularly audits the NWF, and the results are reported to the State Duma.  The NWF is maintained in foreign currencies, and is included in Russia’s foreign currency reserves, which amounted to $563.4 billion as of March 31, 2020.

Russian state-owned enterprise (SOE)s are subdivided into four main categories:

1) unitary enterprises (federal or municipal, fully owned by the government), of which there are 692 owned by the federal government as of January 1, 2020;

2) other state-owned enterprises where government holds a stake, of which there are 1,079 joint-stock companies owned by the federal government as of January 1, 2019 – such as Sberbank, the biggest Russian retail bank (over 50 percent is owned by the government);

3) natural monopolies, such as Russian Railways; and

4) state corporations (usually a giant conglomerate of companies) such as Rostec and Vnesheconombank (VEB), of which there are currently six.

The number of federal government-owned “unitary enterprises” declined by 44 percent from 1,247 in 2017, according to the Federal Agency for State Property Management, while the number of joint-stock companies with state participation declined by 33.6 percent in the same period.

SOE procurement rules are non-transparent and use informal pressure by government officials to discriminate against foreign goods and services.  Sole-source procurement by Russia’s SOEs increased to 45.5 percent in 2018, or to 37.7 percent in value terms, according to a study by the non-state National Procurement Transparency Rating analytical center.  The current Russian government policy of import substitution mandates numerous requirements for localization of production of certain types of machinery, equipment, and goods.

Privatization Program

The Russian government and its SOEs dominate the economy.  In January 2020, the Russian government published a new privatization plan for 2020-22 that identified 86 federal unitary state enterprises, 186 joint-stock companies, and 13 limited liability companies for privatization over a three-year period.  The plan specifies that market conditions will determine the terms of privatization, but the government estimates the plan could generate RUB 3.6 billion ($48.2 million) per year for the federal budget.  The plan would also reduce the state’s share in VTB, one of Russia’s largest banks, from over 60 percent to 50 percent plus one share and in Sovkomflot, a large shipping company, to 75 percent plus one share within three years.  Other large SOEs might be privatized on an ad hoc basis, depending on market conditions.

The Russian government still maintains a list of 136 SOEs with “national significance” that are either wholly or partially owned by the Russian state and whose privatization is permitted only with a special governmental decree, including Aeroflot, Rosneftegaz, Transneft, Russian Railways, and VTB.  While the total number of SOEs has declined significantly in recent years, mostly large SOEs remain in state hands and “large scale” privatization, intended to help shore up the federal budget and spur economic recovery, is not keeping up with implementation plans.  The government has attributed the slow pace of privatization of large SOEs to low share prices, which would yield insufficient revenue for government coffers.   As a result, the total privatization revenues received in 2018 reached only RUB 2.44 billion ($32 million), down 58 percent compared to 2017.

In 2019, privatization revenues (excluding large SOEs) reached RUB 2.2 billion ($29.5 million), down 40.5 percent compared to the official target of RUB 5.6 billion ($75.0 million).  The government expects that “small-scale privatization” (excluding privatization of large SOEs) will bring up to RUB 3.6 billion ($48.2 million) to the federal budget annually in 2020-2022.

While not standard practice, Russian companies are beginning to show an increased level of interest in their reputation as good corporate citizens. When seeking to acquire companies in Western countries or raise capital on international financial markets, Russian companies face international competition and scrutiny, including with respect to corporate social responsibility (CSR) standards. As a result, most large Russian companies currently have a CSR policy in place, or are developing one, despite the lack of pressure from Russian consumers and shareholders to do so. CSR policies of Russian firms are usually published on corporate websites and detailed in annual reports but do not involve a comprehensive “due diligence” approach of risk mitigation that the OECD Guidelines for Multinational Enterprises promotes. Most companies choose to create their own non-government organization (NGO) or advocacy outreach rather than contribute to an already existing organization. The Russian government is a powerful stakeholder in the development of certain companies’ CSR agendas. Some companies view CSR as merely financial support of social causes and choose to support local health, educational, and social welfare organizations favored by the government. One association, the Russian Union of Industrialists and Entrepreneurs (RSPP), developed a Social Charter of Russian Business in 2004, which 269 Russian companies and organizations have joined as of April 1, 2020.

According to a study conducted by Skolkovo Business School, together with UBS Bank, corporate contributions to charitable causes in Russia reached an estimated RUB 220 billion ($2.9 billion) in 2017.  RSPP reported that as many as 185 major Russian companies published 1,038 corporate non-financial reports between 2000 and 2019, including on social responsibility initiatives.

Despite some government efforts to combat it, the level of corruption in Russia remains high. Transparency International’s 2019 Corruption Perception Index (CPI) ranked Russia 137 out of 180, which was one notch below its 2018 rank.

Roughly 24 percent of entrepreneurs surveyed by the Russian Chamber of Commerce in October and November 2019 said they constantly faced corruption.  Businesses mainly experienced corruption during applications for permits (35.3 percent), during inspections (22.1 percent), and in the procurement processes (38.7 percent).  The areas of government spending that ranked highest in corruption were public procurement, media, national defense, and public utilities.

In March 2020, Russia’s new Prosecutor General Igor Krasnov reported RUB 21 billion ($281 million) were recovered in the course of anticorruption investigations in 2019.  In December 2019, Procurator General’s Office Spokesperson Svetlana Petrenko reported approximately over 7,000 corruption convictions in 2019, including of 752 law enforcement officers, 181 Federal Penitentiary Service (FPS) officers, 81 federal bailiffs, and 476 municipal officials.

Until recently, one of the peculiarities of Russian enforcement practice was that companies were prosecuted almost exclusively for small and mid-scale bribery.  Several 2019 cases indicate that Russian enforcement actions, finally, may extend to more severe offenses as well.  To date, ten convictions of companies for large- or extra large-scale bribery with penalty payments of RUB 20 million ($268,000) or more have been disclosed in 2019 – compared to only four cases in the whole of 2018.  In July 2019, Russian Standard Bank, which is among Russia’s 200 largest companies according to Forbes Russia, had to pay a penalty of RUB 26.5 million ($355,000) for bribing bailiffs in Crimea in order to speed up enforcement proceedings against defaulted debtors.

Still, there is no efficient protection for whistleblowers in Russia.  In June 2019, the legislative initiative aimed at the protection of whistleblowers in corruption cases ultimately failed.  The draft law, which had been adopted at the first reading in December 2017, provided for comprehensive rights of whistleblowers and responsibilities of employers and law enforcement authorities.  Since August 2018, Russian authorities have been authorized to pay whistleblowers rewards which may exceed RUB 3 million ($40,000).  However, rewards alone will hardly suffice to incentivize whistleblowing.

Russia adopted a law in 2012 requiring individuals holding public office, state officials, municipal officials, and employees of state organizations to submit information on the funds spent by them and members of their families (spouses and underage children) to acquire certain types of property, including real estate, securities, stock, and vehicles.  The law also required public servants to disclose the source of the funds for these purchases and to confirm the legality of the acquisitions.

In July 2018, President Putin signed a two-year plan to combat corruption.  The plan required public consultation for federal procurement projects worth more than RUB 50 million ($670,000) and municipal procurement projects worth more than RUB 5 million ($67,000).  The government also expanded the list of property that can be confiscated if the owners fail to prove it was acquired using lawful income.  The government maintains an online registry of officials charged with corruption-related offences, with individuals being listed for a period of five years.

The Constitutional Court has given clear guidance to law enforcement on asset confiscation due to the illicit enrichment of officials.  Russia has ratified the UN Convention against Corruption, but its ratification did not include article 20, which deals with illicit enrichment.  The Council of Europe’s Group of States against Corruption (GRECO) reported in 2019 that Russia had implemented only 10 out of 22 recommendations: eight concern members of the parliament, nine concern judges, and five concern prosecutors , according to a draft report by the office of the Prosecutor General of the Russian Federation that was submitted to the State Duma.

U.S. companies, regardless of size, are encouraged to assess the business climate in the relevant market in which they will be operating or investing and to have effective compliance programs or measures to prevent and detect corruption, including foreign bribery.  U.S. individuals and firms operating or investing in Russia should take time to become familiar with the relevant anticorruption laws of both Russia and the United States in order to comply fully with them.  They should also seek the advice of legal counsel when appropriate.

Resources to Report Corruption

Andrey Avetisyan Ambassador at Large for International Anti-Corruption Cooperation
Ministry of Foreign Affairs
32/34 Smolenskaya-Sennaya pl, Moscow, Russia
+7 499 244-16-06

Anton Pominov
Director General
Transparency International – Russia
Rozhdestvenskiy Bulvar, 10, Moscow
Email: Info@transparency.org.ru

Individuals and companies that wish to report instances of bribery or corruption that affect their operations and request the assistance of the United States government with respect to issues relating to corruption may call the Department of Commerce’s Russia Corruption Reporting hotline at (202) 482-7945, or submit the form provided at http://tcc.export.gov/Report_a_Barrier/reportatradebarrier_russia.asp .

Russia continues to restrict the fundamental freedoms of expression, assembly, and association by cracking down on political opposition, independent media, and civil society.  Since July 2012, Russia has passed a series of laws giving the government the authority to label NGOs as “foreign agents” if they receive foreign funding, greatly restricting the activities of these organizations.  To date, more than 150 NGOs have been labelled foreign agents.  A law enacted in May 2015 authorizes the government to designate a foreign organization as “undesirable” if it is deemed to pose a threat to national security or national interests.  As of April 2020, 22 foreign organizations were included on this list.  (https://minjust.ru/ru/activity/nko/unwanted )

According to the Russian Supreme Court, 7,763 individuals were convicted of economic crimes in 2019; the Russian business community alleges many of these cases stemmed from commercial disputes.  Potential investors should be aware of the risk of commercial disputes being criminalized.  Chechnya, Ingushetia, Dagestan, and neighboring regions in the northern Caucasus have a high risk of violence and kidnapping.

Public protests continue to occur intermittently in Moscow and other cities.  In July and August 2019 in Moscow, large protests took place to voice frustration with the banning of opposition candidates from running in September municipal elections.  Some protests were marred by police brutality and indiscriminate arrests of participants and innocent bystanders.  In April, the Russian government imposed self-isolation orders in an effort to stop the spread of the COVID-19 pandemic. Protesters could not gather in person but did so virtually through on-line platforms, demanding the government provide social assistance or lift restrictions.

The Russian labor market remains fragmented, characterized by limited labor mobility across regions and substantial differences in wages and employment conditions.  Earning inequalities are significant, enforcement of labor standards remains relatively weak, and collective bargaining is underdeveloped.  Employers regularly complain about shortages of qualified skilled labor.  This phenomenon is due, in part, to weak linkages between the education system and the labor market and a shortage of highly skilled labor.  In 2019, the minimum wage in Russia was linked to the official “subsistence” level.  As of April 2020, this  was RUB 12,130 ($162).

The 2002 Labor Code governs labor standards in Russia.  Normal labor inspections identify labor abuses and enforce health and safety standards .  The government generally complies with ILO conventions protecting worker rights, though enforcement is often insufficient, as labor inspectors are over-stretched.  Employers are required to make severance payments when laying off employees in light of worsening market conditions.

The U.S. International Development Finance Corporation (DFC) (previously U.S. Overseas Private Investment Corporation (OPIC)) suspended consideration of any new financing and insurance transactions in Russia after Russia’s 2014 annexation of Crimea.  OPIC previously provided loans, loan guarantees (financing), and investment insurance against political risks to U.S. companies investing in Russia.

The RDIF was established in 2011 as a state-backed private equity fund to operate with long term financial and strategic investors and offer co-financing for foreign investments directed at the modernization of the Russian economy.  RDIF participates in projects estimated from $50 to $500 million, with a share in the project not exceeding 50 percent.  To date, RDIF has invested and committed RUB 1.7 trillion ($22.8 billion).  Of this amount, RDIF itself invested RUB 170 billion ($2.3 billion), while co-investors, partners, and banks provided RUB 1.6 trillion ($21.4 billion).  (Note:  Unless otherwise indicated, the RUB-USD-exchange rate is set at the closing May 5, 2020, rate of RUB 74.65 to the USD throughout the report.)  RDIF has attracted long-term foreign capital investments totaling more than $40 billion in the energy, energy saving technologies, telecommunications, and healthcare sectors.  The RDIF invests predominantly in Russia, but up to 20 percent of RDIF’s capital may be invested outside of the country provided that these projects are beneficial to the Russian economy.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($trillion USD) 2019 $1,689 2018 $1.661 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2018 $3,174 2018 $14,795 BEA data available at https://www.bea.gov/international/
Host country’s FDI in the United States ($M USD, stock positions) 2018 $8,175 18 $4,584 BEA data available at https://www.bea.gov/international/
Total inbound stock of FDI as % host GDP 2018 $24.5% 2018 25.0% UNCTAD data available at

* Source for Host Country Data: FDI data – Central Bank of Russia (CBR); GDP data – Rosstat (GDP) (Russia’s GDP was RUB 104,630 billion in 2018, according to Rosstat.  The yearly average RUB-USD-exchange rate in 2018, according to the CBR, was RUB 62.7078 to the USD).

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (as of October 1, 2019)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 550,209 100% Total Outward 473,141 100%
Cyprus 157,802 36% Cyprus 203,532 43%
Netherlands 57,810 11% Netherlands 58,463 12%
Luxemburg 41,666 8% Austria 26,049 6%
Bermuda 35,405 5% Switzerland 19,929 4%
Germany 17,583 4% 19,274 5%
“0” reflects amounts rounded to +/- USD 500,000.
Table 4: Sources of Portfolio Investment
Portfolio Investment Assets (as of October 1, 2019)
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 76,326 100% All Countries 7,529 100% All Countries 68.797 100%
Ireland 22,096 29% United States 2,252 30% Ireland 21,784 32%
Luxemburg 16,480 22% Jersey 1,353 18% Luxemburg 15,981 23.2%
UK 8,234 11% Cyprus 940 12% UK 8,047 12%
Netherlands 5,393 7% Luxemburg 499 6% Netherlands 4,904 7%
U.S. 5,099 6% Netherlands 490 6% U.S. 2,847 4%

Embassy of the United States of America
Economic Section
Bolshoy Deviatinsky Pereulok No. 8
Moscow 121099, Russian Federation
+7 (495) 728-5000 (Economic Section)
Email: MoscowECONESTHAmericans@state.gov

2020 Investment Climate Statements: Russia
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