Capital returns home – Kommersant FM
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Russian business is beginning to return assets to the country, but the pace is still modest. Over the past year and a half—since February 2022—citizens have repatriated assets worth more than $50 billion, Bloomberg estimates. We are mainly talking about large companies, for example, the construction equipment manufacturer UMG or the medical holding MD Medical Group of Igor Shilov and Mark Kurtser from Cyprus to Russia. But other Russians are following their example. Details from Daria Fomenko.
Russian entrepreneurs should not cling to the past – this is what President Vladimir Putin said in February. Faced with the “wolfish habits of the West,” domestic businesses are obliged to return to their homeland, Russia, rebuild their lives, work, and invest all capital in the country, and not outside its borders, he emphasized.
Problems – from freezing assets to refusals of service in banks – for Russians abroad began just a year before, in February 2022. Plus a partial suspension of double taxation agreements with a number of countries. Against this background, the return of capital to the homeland cannot be called voluntary, Ilya Rachkov, partner at the NSP law office, is sure:
“We can start with the unfriendly policy of the banks themselves, which refused to open accounts or demanded that Russians leave their organizations. In addition, it is not clear what to do in a situation where Russia has suspended the agreement on the avoidance of double taxation. Thus, there is a risk that checks will begin on the origin of this money, since the exchange of tax information has also stopped.
If you look at deposit rates in Russia, they are higher, but in any case, nowhere in the world do they, as a rule, catch up with inflation, so the task here is really to at least save this money. I think that if we compare deposit rates in the countries of the European Union and in the so-called friendly ones, then in the friendly ones they are higher, but still not high enough to earn something from it.”
Among those who decided to re-register assets in the forefront were the former general director of Phosagro, Andrey Guryev, and the chairman of the board of directors of PJSC Magnitogorsk Iron and Steel Works (MMK), Viktor Rashnikov, writes Bloomberg. They moved family holdings from Switzerland and Cyprus to Russia. Both were on sanctions lists. Those businessmen who were not subject to restrictions prefer to transport assets not to their homeland, but to so-called friendly countries, for example, the owner of NLMK Vladimir Lisin re-registered the company in Abu Dhabi.
For now, however, the scale of asset migration should not be overestimated, says Oleg Komolov, associate professor at the Financial University under the Government: “Direct investments abroad alone amount to more than $350 billion. If we take portfolio and other investments, under $1 trillion, so $50 billion is a noticeable amount , maybe this is the first step, but still it should not be overestimated. This is not a purely Russian unique situation.
For a long time now, in the context of such de-globalization of the world economy, many investors have begun to repatriate capital and withdraw it to national jurisdictions. But again, the question is whether this capital will turn into direct investment, will it turn out that this money will simply be poured into the purchase of securities and will stimulate the materially unjustified growth of the Moscow Exchange, which will lead to the formation of “bubbles” and a financial crisis in the Russian economy ”
Moreover, the outflow of capital from Russia has increased. As the Center for Macroeconomic Analysis and Short-Term Forecasting found out, in 2022 it was about $243 billion. This year the figures are much more modest. But there are no less people who want to continue expansion abroad, Alexey Petropolsky, head of the bureau for the protection of the rights of entrepreneurs “Opora Rossii”, is sure:
“The migration of capital to Russia or to friendly countries has indeed increased at an unprecedented pace. But if we take the quality of this money, then mostly it is “old”.
The reverse outflow of capital increased dramatically after the mutiny. You and I even saw how the exchange rate went up sharply. “Fresh” money, on the contrary, began to come out of here.”
At the same time, there are fewer and fewer opportunities for domestic business abroad, Kommersant FM’s interlocutors say. And it is quite possible that asset repatriation will continue. This is confirmed by the figures: just since the beginning of this year, 115 companies have entered Russian offshores, and in general, over the entire period, a little more than 250 have accumulated.
Everything is clear with us – Telegram channel “Kommersant FM”.
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