political risks for international companies in Russia. Keywords: Russia, business environment, corruption, institutional ambiguity, systemic favouritism 1. The country characteristics of political risk The problems of Russian economic and business development have attracted the attention of a range of scholars for a long time.
Jul 23, 2017 · The similarity is that they both have political risks and a company entering the market should be aware of laws and restrictions that may later apply, and know how to avoid them. The difference is the level of threat. Russia is considered a more threatened zone for a business to operate in, whereas France is considered more expensive.
political system may become an extremely high political risk for foreign firms, if it is maintained for too long. The United Russia party won clearly the latest parliamentary elections in …
Russia is included on the Special 301 Priority Watch List due to significant shortcomings in protection of intellectual property rights (IPR). While the character and severity of these IPR risks varies by industry, the prospect of compulsory licensing for …
Political risks when entering Russia: 1 Political system is not evolving, and this is one of the major factors. They have some key political figures that represent the interest of the state. 2 Some restrictions on trade and investment. The government policies sometimes restrict operations for corporations. 3 Businesses entering the Russian market also face the problem of corruption. This can affect their business practices.
The difference is the level of threat. Russia is considered a more threatened zone for a business to operate in, whereas France is considered more expensive.
Russia has a highly-educated culture that spans 11 time zones but there are significant barriers to entry: sanctions, corruption, burdensome regulations, competition from large state-owned entities and inadequate rule of law. Sanctions against Russia currently are the biggest barrier to entry.
Russia’s exports are dominated by mineral fuels 74.9% which has historically contributed to a Russian trade surplus in the range of 180 billion euros annually. (Notably gas was not under EU sanctions as member states are reliant on Russian gas).
The sanctions regime against Russia was put in place in March of 2014 in response to Russia’s invasion and annexation of Crimea and use of force in Ukraine. The sanctions primarily targeted 14 defense companies, 6 banks and 4 energy companies. These sanctions include goods, services and credit financing. [1] .
Executive Order 13660#N#Sanctions put in place restrictions on the travel of certain individuals and officials and showed our continued efforts to impose a cost on Russia and those responsible for the situation in Crimea.
Globally Russia is the 8th largest economy (GDP) and 6th largest purchase power parity (PPP) and has over 142 million potential customers, acute infrastructure needs and is a vital export market for US businesses.
A correlation between sanctions and a major drop in Russian GDP growth is clearly illustrated (see graph below). The sanctions will not remain in place indefinitely and need to be addressed before economic realities lead to potential conflict.
Lynx Global Intelligence provides an outside the beltway approach, dealing in fact, guiding companies currently in Russia to hedge their bets and provides the legal understanding to deal in a complicated geopolitical risk environment.
It concerned promises of increased state support for citizens and, most importantly, an amendment allowing President Putin to run for the presidency again in 2024 and stay in power until 2036.
Vladimir Putin, who has been in power for 17 years, began a new 6-year presidential term in May 2018. His popularity has been eroded by the pension reform. Weakened approval ratings led to the sudden resignation of the government, including the prime minister Dmitry Medvedev, in January 2020.
Nevertheless, private consumption will not bring a substantial boost for the economy in 2021 due to falling real disposable income and a low savings rate. Indeed, real disposable income contracted by a record 8.4% year-on-year in Q2 2020 and unemployment increased to 6.1% (a nine-year high).
Ruben Vardanyan, head of Troika Dialogue Group, described Russia’s main challenges as being corruption, government interference and the high level of monopolisation. Although steps have been made to amend problems in central government, overseas firms still find the state of governance in Russia difficult to navigate. Protectionism.
Starting a business. According to a report by the World Bank and International Finance Corporation (IFC), it takes an average of nine procedures and over 23 days to start a business in Russia.
However, it still requires an average of four procedures and over 35 days to complete the procedure. Getting electricity.
Getting electricity. Getting electricity is an extremely laborious task in Russia and firms can wait between four months and a year to get switched on, depending on the destination. Design approval is a particularly complicated step, requiring several trips to public agencies and taking anything from 30 to 120 days.