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. Last Updated: 07/27/2016

Putin Sees Role for Foreign Investors

Presidential Press ServiceKrasnodar Governor Alexander Tkachyov, Putin and Ivanov in Sochi on Friday.
President Vladimir Putin told business leaders in Sochi on Friday that private investors, including foreigners, would have a major role in a $1 trillion program planned to modernize industry and infrastructure.

Speaking earlier at the city's investment forum, acting First Deputy Prime Minister Sergei Ivanov said the country aimed to invest $1 trillion in infrastructure over the next 10 years.

In his speech to the forum, Putin said his administration was working to encourage private investment.

"We expect that private investors will play an increasingly noticeable and leading role in the large-scale modernization of the economy," he said.

Acting Finance Minister Alexei Kudrin said earlier that the state would contribute about 20 percent of investment in the economy, with private business supplying the bulk.

Ivanov, speaking at the forum, said state investment in the economy would equal 3.8 percent of the gross domestic product in the next two years and rise to 4.5 percent by 2015.

"We are prepared to give investors additional tools that will guarantee a high level of returns in infrastructure investment," Ivanov said.

"We are broadening competition. We aim to guarantee liberal access to monopolized sectors of the economy by strengthening free market regulatory methods," he added, without specifying which sectors.

"In those areas where maintaining monopolies is economically justified -- and I emphasize the word economically -- we are prepared to privatize the maximum number of structures within the service and maintenance sectors."

Ivanov said the country should pass long-awaited legislation governing foreign investment in strategic sectors by the year's end. The State Duma passed the bill in a first reading last week.

The legislation defines 39 business areas where national security is affected and requires foreign investors seeking a controlling interest in such a business to undergo an approval process.

Kudrin, also speaking at the forum, said capital investment in the country would total $370 billion in 2010, compared with $168 billion in 2006. The government's national projects have been a key driver of capital investment of late.

Ivanov said the government would invest 170 billion rubles ($6.8 billion) next year in the state power grid company, plus another 120 billion rubles ($4.8 billion) in the Federal Atomic Energy Agency.

Investment in the country's airport network will reach $30 billion by 2020, Ivanov said.

Among the business leaders meeting with Putin were MDM Bank chairman Oleg Vyugin, Evraz Group board member Alexander Abramov, Renova chairman Viktor Vekselberg, Basic Element chairman Oleg Deripaska, Sistema chairman Vladimir Yevtushenkov, Interros chief executive Vladimir Potanin and TNK-BP chief executive Robert Dudley.

Enel, Ernst & Young, E.On, Strabag and Cementir were among the foreign firms represented at the meeting, the Kremlin said.

n Putin said the government would support the liquidity of the country's banks to ensure economic growth amid a worldwide credit squeeze.

"We will in no way allow the situation to lead to the creation of so-called bubbles in the economy," Putin said Friday in televised remarks. "There will be a swift reaction to events affecting global markets."

The Central Bank has injected more than 2 trillion rubles ($80 billion) into the banking system through repurchase agreements since last month.

Longer-term lending presents a bigger hurdle than short-term lending, Vyugin said Friday. Banks are "being cautious and are not parting with their liquidity," Vyugin said. If the capital markets remain closed for banks and Russian companies in retail, construction and other industries, companies will have to curb investments, he said.

Reuters, MT, Bloomberg