OREANDA-NEWS. May 27, 2013. “The policy of our state is to attract foreign investments, which is, first of all, encouraged by the legislative framework on foreign investments in the Russian Federation”, said the Head of FAS Department for Control over Foreign Investments, Armen Khyanyan, at UFG Asset Management Conference organized for institutional and private foreign investors from North America, Europe and the Near East.

The Conference focused on direct foreign investments in Russia. In particular, it concerned priorities of the national policy in the dialogue and partnership with foreign investors for attracting investments in Russia.

Armen Khyanyan said that within five years of enforcement of the Law “On the Procedures of Foreign Investments in the Business Entities of Strategic Importance for the National Defence and State Security” Russia had adopted several packages of amendments aimed at simplifying the control, procedures by eliminating excessive administrative barriers for foreign investors, and clarifying some norms of the law. For the first time the law was liberalized in 2011 when the threshold value of establishing control by a foreign investor over a subsoil user was increased from 10% to 25%; operation of radiation sources in the civilian sector of the economy, and cryptography and encrypting by banks were excluded from the list of strategic activities, which enables foreign investors to acquire stock (shares) of the banks where there is no participation of the Russian Federation, without approvals by the Government Commission.

At the moment the State Duma is considering a new package of amendments, also aimed at simplifying and clarifying the norms of No.57-FZ Federal Law, and already passed it in the first reading. The new package, in particular, excludes from strategic activities the use of infectious agents by companies mainly involved in production of food products. It means, that today, in view of enforcement practice, it would be excessive to classify production of cheese, dairy products, juices, bread and bakery products, beer, etc., as strategic activities.

“Another important step towards foreign investors will be a possibility (right) of investors to ask the Government Commission to prolong the validity period of a decision issued earlier by FAS on a particular transaction”, said Armen Khyanyan. “Today, if a foreign investor is unable to complete a transaction within a period specified in a decision, the package of documents must be prepared again”.

According to the available data, in the period of enforcement of the law around 40 billion dollars have been invested in the companies of strategic importance. Investments are most often made in the companies involved in use of subsurface resources, infectious agents or radiation sources, TV and radio broadcasting, natural monopolies.

Foreign investors were most interested in the incidents of refusals to grant preliminary approvals (9 out of 163 petitions considered by the Government Commission). Armen Khyanyan emphasized that “investments, particularly, foreign, certainly play an important role in the national economic development, but everything should be reasonable. There are fields, where, first of all, it is necessary to be guided not by increasing the inflow of finances but by national defence and state security”.