Russian

FedeRation
Facts and Figures | November 2011
MODERNRUSSIA.COM/FACTSANDFIGURES
1
Table of conTenTs
Key Geographical Data
2
Map of Russia
4
Administrative Structure
6
Rest of World Comparison
8
Key Macroeconomic Indicators
10
Exports
12
Imports
13
Employment and Education
14
Economically Active Population
15
Eurasian Customs Union
A Large Addressable Market
16
Human Capital
17
Infrastructure Investment

18
Investment Priorities

21
Priorities in Modernisation
of Russias Economy

22
Incentives for Investment Projects

27
Inwards FDI Structure

28
Outwards FDI Structure
29
Capital Inflow into Russia

30
Top Inbound M&A Deals

31
Recent IPOs

32
Case Study Pharmaceutical Industry

33
Banking System

34
Taxes in Russia v. Other BRIC Countries

35
Privatisation Plans

36
2
Russian fedeRaTion
Key GeoGRaphical daTa
Capital: Moscow
Russia is located in the eastern part of Europe and in the northern part of Asia
Total Area
1

17,098.2 thousand km
2

(as of 1 January 2010 agricultural acreage amounted to
13% of the total area; forests 51%; surface waters (including marsh) 13%)
Population
142,905.2 thousand people (as of 14 October 2010)
Density of the Population
8.4 people per km
2

(as of 14 October 2010)
Maximum Length
Longitudinal direction 4 thousand km
Latitudinal direction 9 thousand km
State Borders
Northwest Norway and Finland
West Poland, Estonia, Latvia, Lithuania, and Belarus
Southwest Ukraine
South South Ossetia, Abkhazia, Azerbaijan, Georgia, and Kazakhstan
Southeast China, Mongolia, Democratic Peoples Republic of Korea
East (marine) USA and Japan
1st by total land area, 6th by GDP
1 According to the Federal State Statistics Service .
3
Longest Rivers
2
Lena 4,337 km
Yenisei (with Angara) 3,844 km
Volga 3,694 km
Ob 3,676 km
Amur 2,824 km
Russia Is Surrounded by
Arctic Ocean (Barents Sea, White Sea, Kara Sea, Laptev Sea,
East Siberian Sea, Chukotka Sea)
Pacific Ocean (Bering Sea, Okhotsk Sea, Sea of Japan)
Atlantic Ocean (Baltic Sea, Black Sea, Azov Sea)
Largest Lakes
3
Baikal 31.5 thousand km
2
Ladoga 17.7 thousand km
2
Onega 9.7 thousand km
2

Highest Elevation
Elbrus 5,642 m
Largest Islands
Archipelago Novaya Zemlya 82.6 thousand km
2
Sakhalin 76.4 thousand km
2
Archipelago Novosibirsky 38 thousand km
2
Archipelago Severnaya Zemlya 37 thousand km
2
Average Temperatures
January from 0,-5C (Northern Caucasus) to -40, -50C (east of Saha (Yakutia)
where the lowest temperatures can reach -65, 70C);
July from 1C (northern Siberian coast) to 24, 25C (Caspian lowlands)
The Russian Federation has the largest land area in the world; it is eighth by
population globally
4
and sixth by GDP denominated in USD at purchasing power
parity
5
.
2 Data from statistical handbook of the Federal Agency for Water Recourses.
3 According to the Federal Agency for Water Recourses.
4 According to preliminary results of the 2010 AII Russia population census
5 According to the World Bank 2011.
4
CENTRAL FEDERAL AREA
NORTHWESTERN FEDERAL AREA
SOUTHERN FEDERAL AREA
NORTH CAUCASUS FEDERAL AREA
VOLGA FEDERAL AREA
MOSCOW
URAL FEDERAL AREA
SIBERIAN FEDERAL AREA
FAR EAST FEDERAL AREA
Map of Russia
5
CENTRAL FEDERAL AREA
NORTHWESTERN FEDERAL AREA
SOUTHERN FEDERAL AREA
NORTH CAUCASUS FEDERAL AREA
VOLGA FEDERAL AREA
MOSCOW
URAL FEDERAL AREA
SIBERIAN FEDERAL AREA
FAR EAST FEDERAL AREA

6
ExEcutivE Branch
Government
ExercisestheexecutivepowerinRussia
ConsistsofthePrimeMinister,DeputyPrimeMinistersandFederalMinisters
Prime Minister
AppointedbythePresidentwiththeconsentoftheStateDuma
Deputy Prime Ministers
Coordinateactivitiesofvarious
federal executive power bodies,
or all such bodies in a specific area
(economy, social policy, etc.)
Somearesimultaneouslyheads
of particular ministries
ProposedbythePrimeMinister
and appointed by the President
President
ElectedforsixyearsbycitizensoftheRussianFederation
HeadoftheState;determinestheguidelinesofdomesticandforeignpolicies
Cabinet of Ministers
TheInterior
CivilDefence,Emergenciesand
Disaster Relief
ForeignAffairs
Defence
Justice
HealthcareandSocial
Development
Culture
EducationandScience
NaturalResourcesand
Environmental Protection
IndustryandTrade
CommunicationsandMassMedia
RegionalDevelopment
Agriculture
Sport,TourismandYouthPolicy
Transport
Finance
EconomicDevelopment
Energy
adMinisTRaTive sTRucTuRe

rEgional govErnmEnt
Eighty-threefederal subjects ruled by Governors who are proposed by
the President and approved by regional parliaments
lEgislativE Branch
The Federal Assembly
ConsistsoftwochamberstheFederationCouncilandtheState
Duma
TheFederationCouncilincludestworepresentativesfromeach
subject of the Russian Federation; one from the legislative and one from
the executive body of state authority
TheStateDumaconsistsof450deputies(partiespresentinthecurrent
Duma are United Russia, KPRF, LDPR, and A Just Russia), and shall be
elected for a term of five years (next elections are on 4 December
2011)
Judicial Branch
ConstitutionCourt(consistsoftwochambers,representedby10and9
judges, respectively; judges are selected by lot; main function is
checking the laws for consistency with the Constitution)
TheSupremeCourtoftheRussianFederationisthesupremejudicial
body for civil, criminal, administrative, and other cases under the
jurisdiction of common courts, shall carry out judicial supervision
over their activities, and provide explanations on the issues of court
proceedings
7
8
ResT of WoRld coMpaRison
Russias global ranking in production of select industrial and agricultural
products
Source: US Geological Survey, 2010
GLOBAL LEADER IN METAL RESERVES
% of total global reserves
19%
25%
13%
6%
0
Iron Ore
PGM Gold Nickel Copper
1 2 3 3 9
18%
9%
11%
9%
4%
COAL PRODUCTION 2010
MM tons
3,000
4,000
2,000
1,000
0
China USA India Australia Russia Indonesia RSA Germany Poland Algeria
Source: BP
3,240
985
570
424
317 306 254
182
133 111
GAS PRODUCTION 2010
bcm
540
720
360
180
0
USA Russia
Canada
Iran Qatar Norway China Saudi
Arabia
Indonesia Algeria
Source: BP
611
589
160
139
117
106 97
84 82 80
CRUDE OIL PRODUCTION 2010
mbpd
15
10
5
0
Russia Saudi
Arabia
USA Iran China Canada Mexico UAE Kuwait Venezuela
Source: BP
10.3 10
7.5
4.2 4.1
3.3
3.0
2.8 2.5
2.5
Russias
Ranking
9
WHEAT 2009
USD Bn
18
12
6
0
China India
USA Russia France Canada Pakistan Turkey Australia Germany
USD Bn
USD Bn
USD Bn
Source: FAO
16.3
12.1
8.4
7.5
4.6
4.2
3.5
2.9
2.7 2.3
SUGAR BEET 2009
1.5
2.0
1.0
0.5
0
France USA Germany Russia Turkey Poland UK Ukraine Nether-
lands
Belgium
Source: FAO
1.5
1.2
1.1
1.0
0.7
0.5
0.4
0.3
0.2 0.2
MILK 2009
20
25
15
10
5
0
USA India China Russia Germany Brazil France New
Zealand
U.K. Poland
Source: FAO
22.8
11.7
9.5
7.8
7.4 7.3
6.4
4.0
3.6 3.2
POULTRY 2008
Source: FAO
20
25
15
10
5
0
USA China Brazil Mexico Russia Iran Indonesia Argentina UK Japan
23.2
16.2
14.2
3.7
3.3
2.4
2.2 2.1 2.1 2.0
1st by crude oil production, gas and iron ore reserves
10
Key MacRoeconoMic
indicaToRs
In 2011, the Ministry of Economic Development forecasts growth of GDP at 4.2%,
inflation below the level of 7%, and the Ministry of Finance forecasts that the
fiscal surplus will be 0.5% of GDP
2006 2007 2008 2009 2010
Production Indicators
GDP change (%), year-on-year 8.2 8.5 5.2 -7.8 4.0
Industrial output, change (%), year-
on-year
6.3 6.8 0.6 -9.3 8.2
Manufacturing, change (%), year-on-year 8.4 10.5 0.5 -15.2 11.8
Extraction of mineral resources, change
(%), year-on-year
2.8 3.3 0.4 -0.6 3.6
Fixed capital investment, change (%),
year-on-year
16.7 22.7 9.9 -16.2 6.0
Fiscal and Monetary Indicators
Defcit (surplus) of the federal budget,
(% of GDP)
7.4 5.4 4.1 -6.0 -4.0
M2, change (%), end year/end year 48.7 43.5 0.8 17.7 31.1
Infation (CPI), change (%), at year-end 9.0 11.9 13.3 8.8 8.8
GDP defator 15.1 13.9 18.0 1.9 11.4
Producer price index (PPI), (%), at
year-end
10.4 25.1 -7.0 13.9 16.7
Nominal exchange rate, average, RUB/
USD
27.19 25.58 24.85 31.75 30.37
Real effective exchange rate, change
(%), year-on-year (IMF)
9.4 4.2 5.1 -5.6 9.6
Reserve Fund, USD Bn, at the end of
period
137.1 60.5 25.4
National Wealth Fund, USD Bn, at the
end of the period
88.0 91.6 88.4
Reserves (including gold), USD Bn, at
the end of the period
303.7 478.8 426.3 439.5 479.4

Source: Federal State Statistics Service, Central Bank of RF, EEG, EIU, IMF,
company estimates
11
2006 2007 2008 2009 2010
Balance of Payment Indicators
Trade balance, USD Bn 139.3 130.9 179.7 111.6 151.7
Share of energy resources in export of
goods, %
63.2 62.1 66.4 63.5 64.5
Current account, USD Bn 94.7 77.8 103.5 48.6 70.3
Export of goods, USD Bn 303.6 354.4 471.6 303.4 400.4
Import of goods, USD Bn 164.3 223.5 291.9 191.8 248.7
Gross foreign direct investments,
USD Bn
29.7 55.1 75.0 36.5 42.9
Average export price of Russian crude
oil, USD/bbl
61.1 69.3 94.4 61.1 78.2
Financial Markets Indicators
Weighted average corporate loan rate, % 10.4 10.0 12.2 15.3 9.1
CBR refnancing rate, %, at the end of
period
11.0 10.0 13.0 8.75 7.75
Real average rate on RUB loans, %
(defated py PPI)
1.6 0.9 -1.7 3.2 -6.5
Stock market index (RTS, in RUR, at the
end of period)
1.922 2.291 632 1,445 1,770
Corporate Financial Condition
Share of loss-making companies 29.7 23.4 25.2 30.1 27.8
Share of loans in capital investments 14.3 15.5 17.6 20.1 14.3
Proftability (net proft/paid sales), % 25.6 36.8 21.5 28.7 32.7
Income, Poverty, and Labour Market
Real disposable income, change (%),
year-on-year
13.5 12.1 2.3 2.0 4.2
Average wages in USD 390.9 532.2 695.8 587.0 689.9
Unemployment (%, according to ILO
defnition)
7.2 6.1 6.3 8.4 7.5

Source: Federal State Statistics Service, Central Bank of RF, EEG, EIU, IMF,
company estimates
12
expoRTs
Other 21%
Crude Oil 34%
Petroleum Products 18%
Natural Gas 12%
Fertilizers 2%
Metals 9%
Machinery,
Equipment,
& Transport 5%
Source: Federal Customs Service
Source: CBR
GOODS EXPORT STRUCTURE
$398B USD volume in 2010
EXPORTS OF SERVICES BY DIRECTION OF TRADE
$45B USD volume in 2010
UK 9%
USA 9%
Germany 7%
Ukraine 5%
Cyprus 5%
Switzerland 4%
Kazakhstan 3%
Other 58%
13
iMpoRTs
Metals and Steel 5%
Other 37%
Clothing and
Footwear 4%
Medicines 4%
Food including
Beverages 7%
Machinery,
Equipment &
Transport 43%
GOODS IMPORT STRUCTURE
Source: Federal Customs Service
Source: CBR
IMPORTS OF SERVICES BY ORIGIN OF TRADE
$74B USD volume in 2010
$230B USD volume in 2010
Turkey 7%
Germany 6%
U.K. 6%
USA 5%
Ukraine 5%
Cyprus 5%
Egypt 4%
Other 62%
14
eMployMenT and educaTion
Distribution of Employed Population by Age and
Education in 2010
6

(percentage of total)
6 According to a random poll of population on employment issues.
7 Including post-university education.
2008 2009 2010
Employed total 100 100 100
Including people aged, years:
Less than 20 1.1 1.4 0.8
20 - 24 9.6 10.5 8.7
25 - 29 13.6 14.5 12.7
30 - 34 12.7 13.0 12.4
35 - 39 12.2 12.0 12.3
40 - 44 11.7 11.2 12.2
45 - 49 14.3 13.3 15.3
50 - 54 12.8 11.8 14.0
55 - 59 8.1 8.4 7.7
60 - 72 3.8 3.8 3.8
Average age of employed population, years 40.0 39.5 40.5
Employed total 100 100 100
Including those with:
Higherprofessionaleducation
7
28.9 25.6 32.2
Secondary professional education 27.1 22.1 32.3
Primary professional education 19.7 24.5 14.7
Secondary education 20.0 22.5 17.4
Primary education 4.0 4.9 3.2
No education 0.3 0.4 0.3

Source: Federal State Statistics Service
15
econoMically acTive
populaTion
As percent of total
8

8 According to the data obtained from a random poll of population on employment issues: 1992, 1995,
2010 as of the end of October; 2000-2009 as of the end of November. Starting from 2006 data
includes Chechen Republic.
1992 1995 2000 2005 2006 2007 2008 2009 2010
Economically Active
Population total
100 100 100 100 100 100 100 100 100
Including:
Employed 94.8 90.5 89.4 92.8 92.8 93.9 93.7 91.6 92.5
Unemployed 5.2 9.5 10.6 7.2 7.2 6.1 6.3 8.4 7.5
Men 100 100 100 100 100 100 100 100 100
Including:
Employed 94.8 90.3 89.2 93.2 92.6 93.6 93.4 91.0 92.0
Unemployed 5.2 9.7 10.7 6.8 7.4 6.4 6.6 9.0 8.0
Women 100 100 100 100 100 100 100 100 100
Including:
Employed 94.8 90.8 89.6 93.0 93.2 94.2 93.9 92.2 93.0
Unemployed 5.2 9.2 10.4 7.0 6.8 5.8 6.1 7.8 7.0

Source: Federal State Statistics Service
16
euRasian cusToMs union a
laRGe addRessable MaRKeT
POPULATION
MM
USD Bn
200
150
100
50
0
Russia Kazakhstan Belarus Total
Source: Global Insight, Federal State Statistics Service
142
167
16
10
2,000
1,500
1,000
500
0
Russia Kazakhstan Belarus Total
Source: Global Insight
1,479
1,681
147
55
NOMINAL GDP
USD Bn
800
600
400
200
0
Russia Kazakhstan Belarus Total
Source: Planet Retail
527
582
34 22
RETAIL MARKET
17
huMan capiTal
Highlyeducatedlabourforce.
OneofthesevenleadingcountriesbythenumberofNobelPrizewinners,
most prizes awarded for achievements in the field of physics.
Highlevelofbasiceducation.
Significantscientificresearchandtechnicalresourcesbase.
Substantialhumancapitalsupportingfavourableopportunitiesfor
innovative growth.
USD Bn
120%
90%
60%
30%
0
Russia
Primary
China Brazil India
Source: Report of UNESCO, 2006, OECD, 2009 data for Brazil and Russia
92%
88%
54%
91%
52%
15%
94%
41%
11%
96%
78%
5%
LEVEL OF EDUCATION BRIC COUNTRIES
%
120%
90%
60%
30%
0
Russia
China
Brazil India
Source: Euromonitor, 2010
99.6%
68.5%
94.3% 92.7%
LITERACY RATE (% OF POPULATION AGED 15+) BRIC COUNTRIES
Secondary Higher
Highest level of educated population among BRIC countries
18
infRasTRucTuRe invesTMenT
USD Bn
120
90
60
30
0
8
6
4
2
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Infrastructure Investment
Source: Federal State Statistics Service
INFRASTRUCTURE INVESTMENT
% of GDP
%
Completed
Project Name Sector

Project Budget,
USD Bn

Short Description
Nord Stream O&G
midstream
10.0 Two line 1224 km 55 bcma
pipelines from Russia
(Vyborg) to Germany
(Greifswald)
Sakhalin-
Khabarovsk-
Vladivostok
pipeline
O&G
midstream
10.0 Construction of 1800 km
Sakhalin - Khabarovsk -
Vladivostok gas transmission
system
BPS-2 O&G
midstream
3.3 Construction of 1000 km
pipeline from Unechka on
Belarus border to Ust Luga
port near St. Petersburg

Source: Broker reports
19
RussianinfrastructureinvestmentasapercentageofGDPbyoverthree
percentage points of GDP over the last decade, and by ten times in terms of
US dollars, and amounted to 7.4% of GDP ($111B USD) in 2010.
RussianinfrastructureprojectsincludeinvestmentrelatedtotheSochi
Winter Olympic Games in 2014 and the APEC summit in Vladivostok in 2012,
which are intended to modernise the infrastructure of an entire region.
TheRussiangovernmentseekstoincreasetheroleoftheprivatesectorin
building, operating and financing infrastructure projects.
In Progress
Project Name Sector Project Budget,
USD Bn
Short Description
Bovanenko O&G E&P
15.0
Construction of 572 km
railway Obskaya-Bovanenko
and 2400 km gas pipeline
Bovanenko-Ukhta, Uhkta-
Torzhok
Moscow-St
Petersburg
toll road
Roads 18.9 626 km 4-8 lane Moscow-
St Petersburg highway, of
which the first 43 Petersburg
toll road West km has been
contracted
Ust-Luga port Water
transport
5.0 Harbourdeepening,
construction of quays,
rail connections and road
connection from Novgorod

Source: Broker reports
21
21
invesTMenT pRioRiTies
DIvERSIFICAtIoN oF ECoNoMy DEvELoPMENt PRIoRIty
ShareofmineralresourcessectorinGDPandinexportisstillfairlyhigh;
however, specific measures are being taken in order to diversify the Russian
economy; this should have a positive effect on Russias global
competitiveness
KEy AREAS oF DIvERSIFICAtIoN IDENtIFIED By thE RUSSIAN PRESIDENt:
Energyefficiency
Nucleartechnologies
ITandsoftware
Spacetechnologiesandtelecommunications
Medicaltechnologiesandpharmaceuticals
Other 16%
Utilities 1.6%
National security,
insurance 6.2%
Transport &
communications 9.7%
Natural resources 10.4%
Real estate 11.4%
Retail & wholesale
trade 18.2%
Manufacturing
16.4%
2010 GDP BREAKDOWN
Source: Federal State Statistics Service
Financial services 4.4%
Construction 5.7%
The goal is to modernise and to diversify the economy
22
pRioRiTies in ModeRnisaTion
of Russias econoMy
EnErgy EfficiEncy
Main Objectives
ReduceRussiasenergyintensitytoGDPratioby40%throughenergy
savings, improving energy efficiency, and eliminating regulatory gaps by 2020
Northern Countries
1.50
1.00
.50
0.00
Germany Japan Finland US Brazil Canada India China Russia
Saudi
Arabia
Source: Rosstat, MED, BP Statistical Review of World Energy
0.19 0.19
0.23
0.32
0.40
0.48
0.75
0.86
1.14
1.39
ENERGY INTENSITY OF GDP IN 2007
9 In 2005 prices.
23
spacE tEchnologiEs and
tElEcommunications
Main Objectives
Increasetheefficiencyandqualityofinformationservices
Developamoderninformationinfrastructureinallsectorsofthenational
economy
2009
NUMBER OF LIFT-OFFS 2010
40
20
0
Russia USA China Europe India Japan South
Korea
Israel
2008
31
16
15
6
3
2 1 1
50
25
0
Russia USA China Japan Europe
32
25
7
3
India
2
6
North
Korea
1
Sea Launch
Project
1
Iran
1
South
Korea
1
40
20
0
Russia USA China Europe
Sea Launch
Project
India Japan Iran
27
15
11
6
5 3
1
1
Russia plays a leading role in space exploration
24
mEdical tEchnologiEs and pharmacEuticals
Main Objectives
ProductionofmostmedicinesandmedicalequipmentinRussia
Developmentandproductionofinnovativemedicalproducts;
expansion of Russian manufacturers into new markets
While Russias healthcare spending is still low, funding has been increasing at
a fast pace.
USD
TOTAL HC SPEND PER
CAPITA 2008
US
France
Germany
UK
Italy
Spain
Lithuania
Brazil
Russia
Turkey
Kazakhstan
Ukraine
China
India
Ukraine
Russia
Kazakhstan
Lithuania
China
Spain
Brazil
Turkey
Italy
France
UK
India
Germany
US
%
TOTAL HC SPEND PER CAPITA,
GROWTH
10
CAGR 2000-08
Source WHO, McKinsey
0 2,500 5,000 7,500 10,000 0 8 15 23 30
7,536
5,122
4,628
3,924
3,533
3,087
881
620
509
313
267
142
43
722
28
26
26
19
16
15
13
11
11
10
10
9
6
13
One of the fastest growing
health markets
10 Without inflation and exchange rate effects.
25
information tEchnologiEs and softwarE
Main Objectives
Develophigh-performance,application-orientedcomputingsystems
Improvetheefficiencyandqualityofinformationservices
Developmodern,social,andindustrialinformationinfrastructure
By international standards, current Russian IT spending is low, but growing fast.
IT SPEND
USD Bn, 2010-15
IT SPEND
% OF GDP, 2010
Hardware Software
World Market
Growth in 2010-15: 6%
CAGR%
Services
51
UK
US
Finland
Japan
Sweden
Denmark
Germany
France
Russia
34
17
0
2010 2012 2015
19
4
4
11
5
5
16
9
9
26
43
25
19.0
18.1
17.4
18% p.a.
0 2 4 6 8
Source: Gartner, Global Insight, IDC
7.6
5.9
5.0
4.8
4.2
3.8
3.8
3.6
1.7
NUMBER OF HOUSEHOLDS WITH INTERNET BROADBAND
ACCESS PER 100 HOUSEHOLDS
30
20
2008 2011
Source: MED
50
40
26
nuclEar tEchnologiEs
Main Objectives
Ensureoverallandconsistentdevelopmentofthenationalnuclearpower
potential
Guaranteelong-termsupplyofcheapenergy
MaintainRussiasleadershipontheglobalnuclearmarket
Substantiallyreduceuraniumconsumption
Mitigateenvironmentalimpactandnuclearproliferationrisk
The Safest Nuclear Technology
1
A four-physical
barrier defense-
in-depth system that
prevents the potential
release of radioactive
emissions outside the
power unit.
Containment is a double leak-
proof envelope that protects
the reactor from outside impacts,
both natural and technogenic.
2
3
A safer two-loop
steam cycle of
the reactor that
precludes the potential
release of radioactive
substance outside of
the reactor hall.
There are passive and active
(power supply-dependent)
safety systems in place at all the
reactors, which, in combination,
ensure the highest level of safety
in all contingencies.
4
27
incenTives foR invesTMenT
pRojecTs (in 2011)
EncouragE rEgional authoritiEs to improvE
thE invEstmEnt climatE
A mechanism of grant distribution to the regions achieving the best results in
business development and attracting investment has been developed.
Thegovernmentintendstoawardgrantsto20regionsthathave
achieved the best results in terms of the efficiency of investment
policies and ongoing growth of investment projects
Theplannedvolumeofgrantsin201210billionrubles
stratEgic initiativE agEncy (sia)
Establishment of Strategic Initiative Agency to promote
new projects.
ThepurposeoftheSIAistoselectthebestideasand
help with their implementation
Currently,theagencyhasformedapreliminaryportfolio
of investment projects
There are currently about 2000 selected projects.
russian fund of dirEct invEstmEnts (rfdi)
RFDI aims to provide long-term (5-7 years) financing to
Russian investment projects, and attract foreign investors
to co-invest in these projects.
Thetargetsizeofthefundis$10BUSD,tobe
funded from oil revenues; in 2011 $2B USD
were allocated from Russias oil funds
ThevolumeofRFDIinvestmentperprojectwillamountto
at least 50 and not more than $500M USD
Andrei Nikitin
(31 years old)
Gen. Director
Kirill Dmitriev
(36 years old)
Director of RFDI
28
inWaRds fdi sTRucTuRe
BY COUNTRY OF ORIGIN
Source: CBR
BY SECTOR
Source: CBR
Luxembourg 7% France 6%
Mining 16%
Manufacturing
41%
Real Estate 16%
Trade 9%
Financial
Activity 5%
Other 9%
Transport 4%
Rest of World
38%
Cyprus 29%
Netherlands 8%
Germany 7%
Ireland 5%
29
BY COUNTRY OF ORIGIN
Source CBR
BY SECTOR
Source CBR
Rest of World
33%
Cyprus 34%
Netherlands 14%
Luxembourg 6%
British Virgin
Islands 4%
Belize 5%
Germany 4%
Trade 40%
Manufacturing
29%
Mining 6%
Transport
15%
Real Estate 5%
Other 1%
Financial Activity 4%
ouTWaRds fdi sTRucTuRe
30
capiTal infloW inTo Russia
No REStRICtIoNS oN FREE MovEMENt oF CAPItAL IN RUSSIA
Theonlylimitationisinvestmentinstrategiccompanieswhich
have special importance for national security and economic
stability
Incomparison,therearerestrictionsondirectforeign
investments in China and India, and Brazil is planning to limit the
free movement of capital
UNLIKE ChINA AND INDIA, IN RUSSIA thERE ARE No FoREIGN
CURRENCy LIMItAtIoNS
ThereisaregimeofamanagedfloatingRURexchangerate,
with the rate largely determined by the market and the CBR only
intervening to reduce volatility
Incomparison,thereareforeigncurrencylimitationsinChina
and India
FoREIGN DIRECt INvEStMENtS ovER thE LASt 10 yEARS AMoUNtED
to $282B USD
$42.9BUSDin2010
CUMULATIVE STOCK OF INWARD FDI
USD Bn
240
320
160
80
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 9M2011
Source: Central Bank of Russian Federation
6
3
14
30
43
72
127
202
239
282
313
Virtually no restrictions on free movement of capital
31
Virtually no restrictions on free movement of capital
Top inbound
M&a deals
TOP RUSSIAN INBOUND M&A DEALS
2001 2011 YTD
Date % Acquired Value, USD Bn Acquiror Target
Feb-03
Apr-07
Jun-09
Dec-10
Mar-11
7.6
5.8
4.0
4.6
4.0
100.0
20.0
25.0
66.0
12.1
Source: Thomson Reuters
(Severneftegazprom)
32
RecenT ipos
Date Value, USD MM Issuer
May-11
Feb-11
Nov-10
1,435
360
388
Apr-11
Nov-10
Oct-10
782
400
241
July-11
Apr-11
Nov-10
565
575
1,003
June-11
Apr-11
Nov-10
588
375
428
Source: Dealogic
33
case sTudy
phaRMaceuTical indusTRy
COMPANIES GROWTH IN RUSSIA
USD MM
2005 2009 % CAGR
% SHARE
OF GOVT
SALES 2009
2
3
1
4
5
12
25
40
26
33
Source: 2010 IMS
318
372
116
170
136
783
36
32
87
28
3
585
445
427
418
Novartis
11
Sanofi
J&J
Bayer
Pharmstandard
Mainly Rx
Mainly BGx Mix of Rx and Branded Gx
11 Including RX, OTC, and Sandoz
34
banKinG sysTeM
Asof1January2011totalassetsoftheRussianbankingsystem
amounted to approximately $1,107B USD
RelativelylowdepositactivityinretailbankingamongBRICcountries
12% in Russia vs. 30% in China
%
%
#
SHARE OF STATE BANKING ASSETS
75
100
50
25
0
China India Russia
80
75
40
SHARE OF OWN FUNDS IN BANKING SYSTEM
RELATIVELY LOW COMPETITION
AVERAGE NUMBER OF BRANCHES OF ONE BANK
15
20
10
5
0
Russia India Brazil China Europe
15 15
6 6
4
150
200
100
50
0
India Brazil Russia
163
75
3
Onehundred-oneRussianbanksarecontrolledbynon-residententities,
representing around 19% of all banking assets
InRussiathereareover800mediumandsmallregionalbanks,representing
around 5.4% of all assets
Thescopeofanti-crisismeasurestakenbytheBankofRussiain2008-2009
has been estimated at 14% of total banking assets
%
%
#
SHARE OF STATE BANKING ASSETS
75
100
50
25
0
China India Russia
80
75
40
SHARE OF OWN FUNDS IN BANKING SYSTEM
RELATIVELY LOW COMPETITION
AVERAGE NUMBER OF BRANCHES OF ONE BANK
15
20
10
5
0
Russia India Brazil China Europe
15 15
6 6
4
150
200
100
50
0
India Brazil Russia
163
75
3
The highest share
of own funds in the
banking system
among BRIC countries
35
12TheHeritageFoundationindexofeconomicfreedomfor2010.
Taxes in Russia vs.
oTheR bRic counTRies
RUSSIA hAS thE MoSt LIBERAL AND FAvoRABLE tAx REGIME AMoNG ALL
othER BRIC CoUNtRIES
Lowestcorporateincometax20%
Personalincometaxof13%,regardlessofincomesize
Opportunitytohaveaone-timewrite-offof30%ofdepreciation
costs for tax purposes
FromJanuary2011zeroprofittaxforeducationalandhealthcare
institutions
From2011therewillbenocapitalgaintaxincaseoflong-term
direct investments
Cutinsocialcontributions(payrolltax)from34%to30%from
1 January 2012
Country Corporate
Income tax
Personal
Income tax
vAt
China 25% 5-45% 23%
Brazil 34% 7.5-27.5% 17-25%
India 30-40% 10-30% 12.5%
Russia 20% 13% 18%
taxes in Different Countries in 2010, as % of GDP
12

Belarus 30.4% Italy 43.1%
Brazil 34.4% Japan 28.3%
Canada 32.2% Kazakhstan 27.7%
China 18.0% South Korea 26.6%
France 44.6% Great Britain 38.9%
Germany 40.6% USA 26.9%
India 18.6% Russia 34.1%
Low corporate and personal taxes
36
pRivaTisaTion plans
The following privatization programme has been developed for 2011-2015:
Company Company Name Stake/Comments
Government
Stake
United Grain
Company
100%
By 2012-2013:
100% of shares
Source: MED
VTB 75.5%
In 2012-2013:
25.5%-1 share
Sovcomflot
In 2012-2013: 50%-1
share with the possibility
of reducing the RF
interest in 2014-2015
below controlling stake
100%
RusHydro 57.97%
Reducing government
interest to full exit by 2017
FGC UES 79.11%
During 2012-2013:
4.11%-1 share
Sberbank
During 2012-2013:
7.58%-1 share owned
by the Bank of Russia
57.58%
RosAgroLeasing 99.9%
During 2013-2015,
with RF retaining the
controlling stake
(50%+1 share)
Rosneft 75.1% By 2015: 25%-1 share
Rosselkhozbank 100% By 2015: 25% of shares
RZD
Starting in 2013 up to
25%-1 share
100%
37
In 2011, the government reviewed the privatisation programme and expanded it,
adding a further 10 companies to be privatized in whole or part by 2017.
Company Company Name Stake/Comments
Government
Stake
Source: MED
50.9% Alrosa By 2017: 50.9% of shares
Sheremetyevo
Airport
By 2017: 100% of shares 100%
Inter RAO
14.8% The Russian Government
makes full exit from the
charter capital
Zarubezhneft 100% By 2017: 100% of shares
Rusnano During 2012-2013: 10% 100%
United
Shipbuilding
Corporation
100%
By 2017, with RF
retaining the
controlling stake
United Aircraft
Corporation
82.95%
By 2017, with RF
retaining the
controlling stake
UralVagonZavod 100%
By 2017, with RF
retaining 75%+1 share
Transneft By 2017: 3.1%-1 share 78.1%
Aeroflot 51.17% By 2017: 51.17% of shares
Moreover, the Government endorsed the initiative to increase shareholdings
in joint-stock companies that had been targeted for privatisation. The initiative
provides for full Government exit from Rosneft, Rushydro, FSK UES, Sovkomflot,
VTB Bank, Rusagroleasing and Rosselkhozbank.
MODERNRUSSIA.COM/FACTSANDFIGURES
Ministry of Economic Development
of the Russian Federation