East meets West at the very heart of Europe
Following the very successful Horasis Meeting 2010 in China, Luxembourg hosted the third edition of the Global Russia Business Meeting under the patronage of Prime Minister Jean-Claude Juncker. Around 300 decision makers attended this event, co-hosted by the trade promotion agency Luxembourg for Business. Luxembourg is one of the most important foreign investors in Russia.
This meeting was an outstanding opportunity to strengthen economic and financial ties between the large Russia and Luxembourg, “a small country but at the very heart of Europe”, as Didier Mouget put it during his speech at the conference. The Managing Partner of PwC Luxembourg presented awards to three Russian entrepreneurs building and leading successful Russian firms.
The Russian Deputy Minister of Economic Development, Igor Manylov and Etienne Schneider, Luxembourg’s Minister of the Economy and Foreign Trade, joined the awardees. Mr Schneider sees both countries as strategic partners able to build a bridge between East and West. He is well aware that Russia plays an ever-growing role on the world stage. Luxembourg’s goal is to underline its immense potential as a hub for Russian firms. During this third edition of the event, two dozen conferences were held.
The future of financial services in Russia was one of the many topics discussed by local and international experts. Two years ago, the idea was first proposed to turn Moscow into an international financial centre. Ekaterina Lazorina is Partner at PwC Russia. She spoke about the efforts made by Russian legislators in order to attract foreign investors.
“We had a lot of discussions and meetings with foreign authorities such as the Luxembourg regulator CSSF. The result of this work has borne its fruit: A law has been adopted in order to create a centralised depositary. Another measure to make trading more efficient was the merger of the two largest stock exchanges. Moscow aims to improve the governance of the stock exchange and offer new products to investors. Furthermore, a law was adopted that would create investment funds according to the Russian legislation rules. There is also the abolition of a tax on different payment transactions in order to attract foreign asset managers”.
Playing in the major league
Moscow invests a lot of money into its transport and energy infrastructures in order to make Russia’s capital more attractive to foreigners and international companies. A lot of these projects are financed with foreign investors’ money. The main countries involved in these investments are Switzerland, the UK, the Netherlands, Cyprus and Luxembourg.
Veronika Shalisko is Assistant Vice-Rector at the International Banking Institute in Russia. She highlighted that her country wants to attract highly qualified people from abroad, but admitted at the same time that in terms of quality of life it is hard to compete with financial centres like London or New York. Another alternative is to keep valuable human capital in the country.
In this context Russia has had a very fruitful collaboration for the last 6 years with Luxembourg based ATTF, the Financial Technology Transfer Agency. ATTF’s aim is to transfer Luxembourg’s banking and finance knowledge and expertise. In 2011, nearly 3000 foreign finance professionals from all around the world took part in over 110 training programmes.
George Biskov is Chairman of the Board of Directors of the Russian Uniastrum Bank. He said that education is key to turn Moscow into an international Financial Centre. “You have to start with the more educational role of the Moscow Financial Centre to understand how business in Russia works and to explain that it is more productive to bring in equity than debt that you would have difficulty repaying”. Right now, he is not sure that there is a trend towards more equity, because a lot of managers of mid-size companies are reluctant to let any new shareholders in.
Freedom of expression
Timothy Beardson is Chairman of the Albert Place Holdings in Hong Kong SAR. He stressed during the roundtable that a financial centre is not successful because it is based in a large country or because it is part of a large economy. He mentioned both China and Japan as examples of countries that failed to create global financial centres. According to him, there are political and strategic guidelines to follow: “On the political front, one needs to see political stability. It is very difficult for an international investor to come to a financial centre where he is not sure that the political system will last for a year, five years or ten.
Freedom of expression is also very important. You need to be able to speak about a bond rating or a company that is badly managed even if it is unpopular. Investors want a society where you see freedom of expression, and where a journalist can also write about political issues”. On the strategic front, a successful financial centre needs financial stability and a functioning market, which is not subject to rapid, unpredictable changes. One needs fiscal stability too: neither arbitrary aspects nor political involvement, he added.
There is one more issue Timothy Beardson was very critical about. He is strictly against a national industry policy where you have national champions and where the government decides that it favours the manufacturing industry over the service industry, for example. It is certainly not the best of ideas to give domestic players an advantage over foreign ones in a world where Russia and Luxembourg want to build a bridge between East and West. CW