RATE OF FOREIGN INVESTMENT IN RUSSIAN FEDERATION INCREASES TO $3.3 BILLION BY JULY 1995, UN PUBLICATION SAYS

Press Release
ECE/461

RATE OF FOREIGN INVESTMENT IN RUSSIAN FEDERATION INCREASES TO $3.3 BILLION BY JULY 1995, UN PUBLICATION SAYS

GENEVA, 8 February (UN Information Service) -- Although foreign direct investment in the Russian Federation increased during 1995, the rate of increase remained lower than in smaller transitional economies, according to the winter 1995 issue of "East-West Investment News", a publication of the Economic Commission for Europe (ECE). While the stock of foreign direct investment in that country equalled that in the Czech Republic or Poland, it was only one third of such investment for Hungary.

By July 1995, investment in Russia had reached $3.3 billion, a 27 per cent increase from $2.4 billion at the beginning of 1994, the newsletter states. Over 60 per cent of that increase was in industrial investment (mining and manufacturing).

In Latvia, investment increased more than eightfold, from $33.4 million at the beginning of 1993 to $294.3 million two years later, with the cumulative value of foreign capital there reaching some $380 million by July 1995. By the start of 1995, the largest share of foreign capital in Latvia (29 per cent) was in the financial sector (banking and insurance), which saw the largest increase since 1993.

There was an important shift in the sources of foreign direct investment during 1994, the newsletter states. Switzerland and the United States topped the ranking of major investors, with 29 and 21 per cent of total foreign capital commitment, respectively. They were followed by Singapore (with 7 per cent), China (6 per cent) and Germany (5 per cent). While the combined share of European Union countries dropped by more than half, that of the other West European States, particularly Switzerland, more than quadrupled. The United States share also showed an impressive increase.

The year-end issue of "East-West Investment News" also reviews recent changes in the foreign investment legislation in various transitional economies; new laws on foreign currency, export credit insurance and financing in the Czech Republic; and the Russian Federation's foreign investment promotion programme.

- 2 - Press Release ECE/461 8 February 1996

Other matters covered by the issue include the use of foreign debt government securities in privatization in Bulgaria; the newly established foreign trade centre in Romania; the introduction of a new currency in Georgia; the establishment of a new investment bureau in the Kyrgyz Republic; Tajikistan's new economic reform programme for 1995-2000; and a new regulation on leasing property in Ukraine.

Detailed information is also provided on the operation of Hungary's EXIMBANK since its establishment in May 1995, as well as on the forthcoming publication of the ECE's "Guide on Financing Private Companies and Trade". The guide will examine ways the private sector can raise capital, as well as legal contracts which bankers use when lending to private companies.

* *** *

Note: The "East-West Investment News", is published quarterly by the Economic Commission for Europe in Geneva, at a subscription rate of $80 per year. Subscription orders and inquiries should be sent to United Nations Sales Section, Palais des Nations, CH 1211 Geneva 10, Switzerland. Fax: 41-22-917-0084. Internet: PPIGUET@UNOG.CH.