Russian President Vladmir Putin has ratified a bill intended to protect Russia’s key sectors from exposing them more towards foreign investments. The foreign investment rule is further aimed at strengthening himself even after his presidency tenure is over, because under the new rule, foreign private investors will have to seek permission from a committee chaired by the Russian prime minister who wishes more than 50% stake, and Putin is tipped to become the next prime minister. The foreign investors have urged Russian administration to be clearer on the decision to bring back lopsided state control and protectionism. However, Putin told the business community that he intended to lead a politics of encouragement and simplification for foreign investors, in regard to administrative regulation and investment legislation.
The State Duma, the lower house of Russia has passed the bill in its final reading by 384-55 to restrict foreign investments in key sectors including oil and gas, aerospace, telecom and mass media. Though it has to be passed by the upper house for implementation, the outcome is predictable and will be the same. The Russian officials claimed the long pending rules were more liberal than those in various other countries. The investors have pointed out, earlier there was only 16 sectors, but the final list has put even sectors such as fishing industry to increase it to 42, which is estimated at half of Russia’s economy. Analysts said the law, in fact had better defined the role of the investor, in which the absence has rather distanced themselves from investments. Other probable reason for Russia to take such a stance would be to avoid an economic collision with the global economy that is experiencing slowdown.
The Russian administration has stated, these measures were required, and believed, a tighter grip on foreign investments would instead strengthen the economy. The investors have severely criticized the state-controlled giants as behemoths plagued by inefficiencies and high corruption. Even though international economic organizations largely recommend Russia as one of the most attractive destinations for better returns on investments, foreign investors warn the investments will begin to shy away from the Russian markets soon.