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. Last Updated: 07/27/2016

New Moves to Lure Investors

The government is pushing ahead with new measures to attract foreign investment to key sectors of the sagging economy, Foreign Economic Relations Minister Oleg Davydov said Thursday.

"Attracting foreign investment is a most important and integral part of successful economic reforms in Russia," he said.

Another vital factor in the transformation of the economy after seven decades of communist rule would be admission to the world trade body, the General Agreement on Tariffs and Trade, he said.

Russia formally applied to join GATT last year. Davydov said talks on the application should take place this autumn.

"Russia intends to secure for itself stable and predictable conditions for foreign economic relations," he said.

The government was striving to bring Russian legislation into line with standard international practices as part of this process, he said.

A draft of new laws, aimed at accelerating foreign investment, had been largely completed, he said. These included a new version of the Law on Foreign Investment, a Law on Free Economic Zones and a Law on Concessions.

Foreign oil companies have also been waiting for a Law on Oil and Gas, which was passed on a first reading in June, and a Law on Production Sharing.

Davydov said the number of enterprises in Russia created with foreign capital was growing constantly and totalled 11,705 at the end of 1993.

But many of these firms were engaged in trade and services, rather than in industry and agriculture where foreign participation is most sought after.

"The government is looking at a new programme for attracting foreign capital to the process of converting Russia's defence enterprises (to civilian output)," Davydov said.

He listed priority areas as civil aviation, sea and river transport, fuel and energy sector equipment, communications and the agro-industrial complex.

"Foreign investment in these areas could be $4 billion by 1995," he said.

During a visit to Britain in April, Davydov said a draft contract had been agreed between Russian gas industry giant Gazprom and British firms to supply gas pumping equipment.

The equipment, valued at about $190 million, would be used for a new pipeline leading from the Yamal Peninsula in north Siberia to Western Europe, he said.

The minister also said oil export tariffs, which producers want reduced, would be "revised downward." He gave no details.

Export tariffs are 30 ecus ($36.71) a ton for crude oil, but joint ventures with Western firms are entitled to exemptions if they prove that the exports are their own production. Exports on behalf of the state are also exempt.

The number of goods subject to import tariffs exceeding 30 percent would also be reduced by the end of this year, Davydov said.

"It is expected that import tariffs will be maintained at a moderate level, preventing the use of duties as an economic instrument to close off the internal market," he said.