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. Last Updated: 07/27/2016

Traffic Cops, Customs Keep Out Investment

Corruption and bureaucracy on the part of Moscow's customs and traffic police are the biggest obstacles to foreign investment in the capital, according a survey from the ROMIR research center.

"I was surprised to hear that when talking about bribery in Moscow, almost everybody named two bodies -- customs and GIBDD [traffic police]," ROMIR president Yelena Bashkirova said Wednesday at City Hall during a news conference to present the research.

"Not a single person said there is no corruption in these organizations."

Corruption and bureaucracy are common throughout the country, according to the survey, but imperfect legislation and a lack of protection for investments remain the biggest obstacles to foreign investment nationwide. Frequently changing tax legislation is another major barrier, the survey said.

ROMIR polled 40 experts from major foreign companies operating in Moscow, as well as embassies, chambers of commerce, consultancies, recruitment agencies, charity groups and research organizations. The survey was ordered by City Hall.

Thirty-six of those polled said Moscow is generally attractive for foreign investors, Bashkirova said. Many of the experts said the situation in the city is quickly changing for the better, she added.

"I was surprised that so many experts started to sincerely say that the general [investment] situation here is getting better," Bashkirova said.

"Many said that before coming here they had a negative opinion of Russia, but when they came, things did not appear so bad," she said. "I could talk about the beginning of a new positive tendency here."

Food and consumer goods, and banking and finance were the two most attractive sectors for foreign investment, according to the survey, while pharmacy and real estate were the two least attractive.

Georgy Muradov, the head of City Hall's foreign relations department, said the research "pointed out quite a few shortcomings in Moscow, which the Moscow government will start looking at and fixing."

Some negative thinking about Moscow's investment climate comes from a "lack of knowledge," he said.

As an example, Muradov said that many foreigners believe that construction orders are distributed by City Hall "among organizations close to it." Companies, however, must win a tender to get a contract, he said.

Muradov said City Hall is also worried about the negative impression Sheremetyevo Airport makes on foreign investors.

"This airport is a shameful phenomenon and a scar on the face of Moscow," he said.

Muradov defended City Hall, however, saying the airport is not managed by the Moscow administration.

"Mayor [Yury Luzhkov] has drawn the attention of the federal government, demanding that it put [the airport] in order," he said. "We will keep doing it."

The investment climate survey was only the "first stage" of research into Moscow's image and will be followed soon by second and third stages to further study foreign investment, Muradov said.

Moscow has received $16 billion in accumulated investment.

The city drew $5.1 billion in 2001, or 55 percent of all foreign investment into Russia, Muradov said. Moscow drew $2.7 billion of foreign investment in 1999 and $3.8 billion in 2000, he said.

Germany and Cyprus were the largest investors, each pumping $1.3 billion into the city.