Mayor to Americans: Invest Now or Lose

Itar-TassMoscow Mayor Yury Luzhkov
A jovial and confident Mayor Yury Luzkhkov coyly warned a group of leading American businessmen Friday to open their wallets and invest in the capital now -- or miss out on the coming boom.

"Think, Americans, think," he told an American Chamber of Commerce luncheon, "Before, I was offering you the best seats on the train. Now I'm saying, try to catch this train before it is too late. In a few years the opportunity will be entirely gone."

The second-term mayor said Moscow remains the jewel of the Russian economy and the most lucrative and safe investment target in the country, and he implored future investors to take their projects straight to City Hall if they had any doubts.

When asked whether Luzhkov should be advocating a direct and active role for the municipal government in major business ventures in the city, AmCham president Andrew Somers replied that it was probably a "good thing, for now."

"The perception in America is still that Russia and Moscow are high risk, and Luzhkov is saying that the city should be involved and will protect you," Somers said.

Luzhkov said foreign investment grew 50 percent last year to $4 billion and is expected to grow another 25 percent this year, but American companies will account for only $220 million, making the United States only the third-largest investor.

Luzhkov hailed the business acumen of Turkish retailer Ramenka, which he said jumped in at the right time to launch nine successful Ramstore hypermarkets.

Luzhkov said that the retail industry still needed massive investment, even though Russian companies have already grabbed a large chunk of the market while foreigners stood by.

For a sure-fire return on investment, Luzhkov singled out his pet Moskva City business complex project, as well as the high-tech, hotel and capital market sectors.

Reinforcing Luzhkov's confidence in the strength of the local economy, Deputy Mayor Iosif Ordzhonikidze said the mayor had signed off on issuing up to 400 million euros' ($357 million) worth of Eurobonds before the end of the year, on top of 300 million euros' worth of Eurobonds issued last month.

Moscow municipal debt committee chief Sergei Pakhomov said the city hoped to float as much as 250 million euros' worth of bonds starting early next week.

The issue is going to be lead-managed by J.P. Morgan, BNP Paribas, Merrill Lynch and Dresdner Kleinwort Wasserstein, he said.

Pakhomov said he expects the bond to be sold at a higher yield than the 10.25 percent on last month's issue because of a longer duration, probably four years.

However, the officials said they were so certain the bond would fair well that no roadshow is being held.