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has finally began to attract foreign investors St. Petersburg (18.11.2000 - Juhani Artto) In St. Petersburg and the surrounding Leningrad oblast the foreign direct investment is up. Last year's figures were much above the 1998 level and in September this year the 1999 figures were already surpassed. In nine months the 4,7 million inhabitant St. Petersburg received 700 million USD foreign investments and the 1,8 million inhabitant Leningrad oblast almost 400 million USD. Another positive sign is the St. Petersburg balanced budget in two consecutive years and the 2001 draft showing an almost 40 million USD surplus. The incomes are estimated to rise to 1,48 billion USD. In St. Petersburg the production and average incomes are rising. At the St. Petersburg City Hall Vice Governor T. Tkatchev is happy to speak about these trends but he does not let any illusions to grow out of the long expected turn upwards. "The chinese City of Shanghai receives about ten times more foreign direct investment than St. Petersburg", he reminds. However, qualitatively the foreign investors at Russia's North-Western region make quite an impressive list. The global heavy weights Ford, Caterpillar and tobacco giant Phillip Morris are there. Also several forest industry and food working multinationals have productive assets in the region. As so far, the electronic and telecommunication powerhouses have been more cautious and restricted their presence mainly in marketing and sales organisations. The foreign investments have created thousands of new jobs but probably still more important is the encouraging message the investment decisions send to the rest of the global business community. With their entrance Ford and the others clearly state confidence in the Russian political stability and economic growth. The investments also prove that the notorious red tape and corruption are not any more all preventive obstacles. The foreign owned production facilities almost totally focus in the domestic market. What's the logic behind this? When investing in Russia the foreign enterprises are not removing their production from other countries to Russia but adapting to the Russian market competition rules. They favour the production in the country against the imports. The pick-up of the North-Western region foreign investments are partly due to the investment incentives. To the irritation of the St. Petersburg City Hall, a few years ago the Leningrad oblast leaders opened the game by issuing tax holidays for the foreign investors. The holidays were extended until the end of the total recovery of the investment or even a bit further. When seeing this to have a real impact in the competition, the St. Petersburg leaders were forced to follow the suit. "However, we have a limit, how far we can go in the tax competition as the city has a big social budget. More than half of St. Petersburg population are dependant on the social programmes. In the city live 1,2 million pensioners, 600 000 disabled and 800 000 young citizen's below 16 years of age", Vice Governor Tkatchev explains. As to the red tape the Leningrad oblast has a clear advantage to St. Petersburg, the Russian media agrees upon the situation. In the crime prevention, St. Petersburg City Hall has, according to Tkatchev, achieved good results of recommending to the foreigners services of certain security companies. All important for Finland For the Finns the Russian development is more important than to any other Western European nation. With a more than thousand kilometer common boarder and a long tradition of economic and other cooperation Finland's future is partly bound with the Russian destinies. The collapse of Soviet Union and the beginning of the economic transition process did not change the need of mutual undestanding and cooperation but definitely changed its character. Now, in many sectors Russians expect know-how, financial assistance and investments from Finland. This includes the trade union movements of the two countries. In the private sector, Finland is St. Petersburg's number two foreign investor, lagging only behind the USA. The Finnish government assists the historical city to clean up its waste water that is the worst single destoyer of the fragile Gulf of Finland. The Finnish Municipal Workers Union KTV brings to the St. Petersburg Water Company Vodo Kanal reform process the impact of the Nordic trade union concept of close and mutually beneficial cooperation between the employer and the employees. In 1703, when Peter the Great established the city, now again known as St. Petersburg, Russia's economic and political centerpoint moved close to the area where the Finns live. In the mid 1990s, when Russia's present president Vladimir Putin acted as St. Petersburg Vice Governor he replaced on his office wall Lenin's picture with a painting on Peter the Great. In this room the present Vice Governor, responsible for foreign affairs, Mr. Tkatchev makes all he can to bring the city back to its glory. When asked when Nokia, the superiorly strongest multinational based in Finland, begins to invest heavily in St. Petersburg or elsewhere in Russia, Tkatchev sighs. The reaction reflects well the situation where the city's and whole Russia's leaders have much homework to do before a real invasion of foreign capital - outside the huge oil and gas fields - is a reality. Until that the leaders may comfort themselves with the newly born trend of at least being on the move upwards. That's a source of slight optimism for the Finns, too. |
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