Board Member, Vnesheconombank Deputy Chairman Alexandr Ivanov’s Interview to the TV Channel Russia 24

22 march 2013 года

TV Channel Russia 24
Kurs Dnya
22.03.2013, 20:34

HOST: Our guest today is Alexandr Ivanov. Alexandr, I suggest that we discuss China again as Xi Jinping chose Russia as the first country to visit. Could this stimulate the development of Russia and China and enhance ties in trade and investment sectors?

Alexandr IVANOV, Board Member, Vnesheconombank Deputy Chairman: In my opinion, China is Russia’s neighbor and has a tremendous investment potential. China is known to have the largest gold and foreign currency reserves. Moreover, recently China has made great progress in developing and introducing new technologies. And to my mind, close relations between our two countries are sure to boost trade turnover and increase the number of investment projects to be funded jointly by the two countries. I’d like also to stress a great importance of the program to finance Russia’s Far East where we have a lot projects.

HOST: It is a region which is of interest for both countries, if only for geographical reasons.

Alexandr IVANOV: Absolutely. And there are a lot of opportunities for our further joint cooperation here.

HOST: Could you specify the opportunities?

Alexandr IVANOV: These above all include infrastructure, tourism clusters, construction of industrial facilities which can be oriented to both exports to China and to meeting domestic demand on the Russian territory. These might also be port zones, airports. There are a lot of opportunities here.

HOST: Representatives of the Russian Direct Investment Fund say that the China Investment Corporation, the Russian-Chinese Investment Fund and Vnesheconombank signed a Memorandum of Understanding which allows to increase joint investments by tens of billions of dollars. What about the time periods and amounts of investments?

Alexandr IVANOV: You are quite right. This Memorandum has been signed today in the presence of the two countries’ leaders. It is expected that the China Investment Corporation and its subsidiary the Russian-Chinese Investment Fund on the one hand and Vnesheconombank and its subsidiary the Russian Direct Investment Fund will jointly select, identify, analyze and offer for funding infrastructure projects. Here I mean long-term, meaningful, capital-intensive projects. Investment horizon is from seven years and longer. As a rule it is ten-fifteen years. Naturally, all these projects should be of integrating importance and boost the development of the Russia’s and China’s economy.

HOST: Alexandr, do you have a clear idea of specific projects at Vnesheconombank?

Alexandr IVANOV: Vnesheconombank has the so-called pipeline of projects. We are known to be pretty active in funding projects on supplying Chinese equipment to Russia and on modernizing enterprises. Moreover, we established the Far East and the Baikal Region Development Fund. This Fund is now working on about ten meaningful projects. I wouldn’t like to go into details as an expert examination has not been completed. As is known, a decision can be taken later after all internal procedures have been followed.

HOST: A summit of BRICS countries is getting underway in the Republic of South Africa. What issues are on its agenda?

Alexandr IVANOV: This BRICS summit is the fifth summit to be held in Durban next week under the slogan of “Partnership between BRICS and Africa for Development, for Modernization, for Industrialization”. A wide range of issues are to be discussed ranging from international security, from ecological responsibility to financial cooperation. Key themes are to include funding infrastructure and moving to payments in national currencies. They will also discuss the establishment of a BRICS Development Bank. As is known a decision was taken last year. And we expect some sort of road map to be made public and agreed upon in the course of the summit and this road map will specify main stages of establishing a BRICS Development Bank.

HOST: What functions will this bank perform, when can it start operating?

Alexandr IVANOV:  The bank can start operating when member countries transfer required charter capital. This is the responsibility of relevant countries’ finance ministries. As far as its functions are concerned they include securing payments in national currencies, supporting and promoting national exports and as a whole promoting integration processes on the territories of all five member countries.

HOST: Starting from next month a couple of yuan/ruble trading will start on MICEX in a standard mode of the most liquid couples. Do you think it makes sense to do the similar thing with other currencies of BRICS countries: the Brazilian real, the Indian rupee and maybe even South African rand?

Alexandr IVANOV: There is no doubt about it. The fact that a couple of yuan/ruble trading has started is very important on the way to moving to payments in national currencies. Moreover, I can say that Vnesheconombank is interested in placing its debt instruments that might be denominated in yuans. And this stock exchange mechanism will allow us to convert these earnings into rubles.

HOST: The fact that a yuan trading starts on our stock exchange floor makes it easier for us to gain access to China’s debt market. Did I get it right?

Alexandr Ivanov: Yes, you did. It’s easier for us to access capital market. It’s a broad market with a tremendous growth potential.

HOST: How is this access regulated? To this end there are a lot of various programs in China and there is a potential everywhere. Will Russian investors find their niche?

Alexandr IVANOV: Of course they will. The capital market is still regulated in China but restrictions are being gradually removed. At present, institutional investors can invest in debt obligations of Russian companies and banks. We expect the Chinese monetary authorities to further remove existing restrictions. And in the long run even retail investors will be able to invest in such obligations. In this case the market is sure to receive a huge potential for growth. And Russian companies will be able to raise funds in much greater amounts.

HOST: Alexandr, I can’t help asking you. Are they going to discuss Cyprus next week?

Alexandr IVANOV: At the BRICS summit?

HOST: Surely.

Alexandr IVANOV: I think so. This is a hot theme. The more so, leaders of five countries will attend the summit. And these countries account for about forty percent of the world’s GDP. It is these countries where the wellbeing of the middle class is on the rise, where markets are growing and economies are developing. So, this issue is sure to be discussed at all levels.


Vnesheconombank Chairman V.A. Dmitriev’s Interview to the TV Channel Russia 24

15 february 2013 года

TV Channel Russia 24,
15.02.2013, 17:45

HOST: The 10th annual Economic Forum is progressing in Krasnoyarsk. My colleague Irina Matyushenko talked about the Forum’s first results and prospects for the Russian economy with Vnesheconombank Chairman Vladimir Dmitriev.


CORR.: Here in Krasnoyarsk, the Forum is taking place under the slogan “Russia: A Map of Changes.” What changes does Russia need for its economy to advance energetically and for us to achieve growth rates of 5 percent and accomplish objectives set?

Vladimir DMITRIEV, Vnesheconombank Chairman: In my opinion, changes that Russia needs result from our Government’s plans and their implementation. By implementing them we’ll be able to achieve economic growth targets, increase labor productivity, build infrastructure and make structural changes that we have been talking about for a long time. I’m sure we are implementing these plans pretty dynamically.

CORR: In what economic sectors is Vnesheconombank going to invest in the first place in 2013?

Vladimir DMITRIEV: We’ll continue to fund economic sectors that are of primary importance for us. These are above all sectors related to manufacturing high technology products: power engineering, transport, aviation, automotive industry. We’ll commit significant financial resources to fund infrastructure, we’ll go on financing Olympic projects, the more so because there is less than one year left before the Sochi Olympics and we’ll go on funding small and medium-sized enterprises. And taking into account successful activities of our subsidiary institutions namely the Export Credit Agency of Russia, the Russian Direct Investment Fund we’ll give high priority to raising foreign investments, creating a positive investment image of Russia and promoting Russian exports.

CORR.: You’ve mentioned infrastructure. Dmitry Medvedev said at the Forum today that one of the most important objectives was to develop infrastructure including transport infrastructure. Ambitious targets have been set. For example, freight transportations are to be increased by 40 percent and passenger transportations - by 1.8 times in five years’ time. These are very serious ambitious tasks. Are they realistic? Will there be enough money for this?

Vladimir DMITRIEV: If you mean budget, we are not likely to have enough money but we should withdraw from this old paradigm and look for extra budgetary financing sources.

CORR.: You mean private investments?

Vladimir DMITRIEV: Private investments. But private investments will be channeled to infrastructure only in the case that we determine and enact rights and liabilities of participants in this process, that is, the state, private investors and financing institutions. Here we have a lot of examples: concession agreements on the construction of toll motorway Moscow Saint-Petersburg, the North-Western High Speed Diameter, the Odintsovo Bypass. We have done a lot in this respect and if we move ahead in this direction everything is sure to work out well.

CORR.: In 2014, VEB’s authority to manage pension funds of the so-called “undecideds” expires. And lately there’s been much talk about the need to withdraw this authority from Vnesheconombank.  What do you think should be done?

Vladimir DMITRIEV: I think we are performing our functions pretty well. Last year, Vnesheconombank produced the best results in managing the funded portion of pension funds. We believe that the first infrastructure bonds funded through pension savings funds will be launched this year. The amount of these bonds might reach 200-300 billion rubles. We have already invested about 100 billion rubles in corporate bonds of highly reliable issuers. So, we are performing this function pretty well. If a new institution comes into being and if this institution is capable of managing pension funds and using them for the needs of real sectors of the Russian economy as efficiently as our Bank, we’ll share all our experience with this new institution. But I think here we have a case when the best is the enemy of the good.

CORR.: There’s a lot of talk at the Forum about the need to improve Russia’s investment climate and investment image. You’re a member of the working group on improving investment climate in Russia. But even here at the Forum foreign participants admit that Russia’s image is negative rather than positive. What should we do in this situation?

Vladimir DMITRIEV: I think that in this situation we must work as hard as the leadership of the Kaluga region, Tatarstan and a number of other Russian regions do. They do not hire foreign consultants but they are open for foreign investments. Having created an attractive investment climate in these regions they demonstrate that they can raise both foreign and Russian investments. So, the most important thing is to work hard. Investors won’t come to a region where its leaders are not interested in engaging foreign investors and do not know how to do it. The example I have given shows that regional leaders are involved in creating an attractive investment climate. Regional leaders know foreign languages, do appropriate training courses, work with investors on a regular basis and their mobile phone numbers are available to all who want to invest in their regions. This is the way we should work with investors. And in this respect, both Vnesheconombank and its subsidiary companies are ready to provide support for those regions which need it.

CORR.: There is a lot of talk at the Forum about the so-called “green economy.” A case in point is the situation in the Baikal pulp-and-paper mill. Vnesheconombank became a controlling creditor by buying out debts from Alfa-Bank. By the way, the Greens and ecologists say that the mill should be closed down as soon as possible because it’s very harmful for environment. Are you going to close it down?

Vladimir DMITRIEV: I think that regional authorities, specialists and federal authorities tend to believe that the life pattern of this mono-city should be radically changed and the mill should be closed. There are no technologies in the world that would ensure closed production cycle without harming environment. We are not talking about closing down the mill immediately because the mill is equipped with slime ponds and treatment facilities. So, we should invest significant funds to close down the mill and realign this zone without harming environment.

CORR.: Are you going to invest?

Vladimir DMITRIEV: Realignment must aim to maximally use Baikal’s cleanest water and the region’s favorable ecological situation. And one of potential projects is to create a tourist-recreational zone and bottle and sell Baikal’s water adding to it appropriate minerals. We should make this area attractive for foreigners through creating a tourist-recreational special zone. So, there are many plans. And we are ready to invest in these projects relying on the state’s support because this line of activity is one of our priorities.

CORR.: Thank you very much for your interview Vladimir Alexandrovich.

Vladimir DMITRIEV: Thank you.



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