To the Emirates with its own business climate – Kommersant

The visiting session of the St. Petersburg International Economic Forum (SPIEF) was held in the capital of the United Arab Emirates, Abu Dhabi, which became a platform for a business dialogue between the Russian Federation and the UAE. The Emirates market is recognized as one of the key export and investment destinations for Russian business after the imposition of sanctions – it is also seen as a platform for entering other countries in the Middle East region. The Russian authorities are ready to continue stimulating exporters, but they are also counting on the “return” of capital to the Russian Federation through the inflow of foreign investment. In particular, the head of the Ministry of Economy, Maxim Reshetnikov, convinced foreign partners that the state was ready to share their non-commercial risks and provide them with equal working conditions on the Russian market.

In Abu Dhabi, on the sidelines of the Annual Investment Meeting (AIM) Congress 2023 investment forum, the SPIEF-2023 field session “Russia – the Middle East: cooperation for economic growth and people’s well-being” was held. The head of the Russian Ministry of Economy, Maxim Reshetnikov, said at the session that over five years, the trade turnover of the Russian Federation with the countries of the Middle East and North Africa has grown by 83%, to $94.9 billion. In particular, one of the key areas of relocation and export for Russian business after the start of the military operation RF in Ukraine and the imposition of sanctions has become the market of the United Arab Emirates. According to the Ministry of Economy, at the beginning of 2023, the UAE took eighth place in the list of the main export destinations for the Russian Federation, having risen from 41st line over the year — the trade turnover between the countries in 2022 reached $9 billion.

The session showed that the Ministry of Economy is ready to further stimulate the entry of enterprises into the Middle East markets. At the same time, agro-industrial complex, IT, industry, nuclear and green energy were named promising areas for cooperation. Bilateral agreements with the countries of the Middle East and free trade zones are considered as the main mechanism for supporting exporters – they can reduce the costs of exporters, build preferential production and marketing relations. There are already bilateral agreements with 13 countries of the region on the promotion and mutual protection of investments, and by the end of the year, the Ministry of Economy expects to conclude an agreement on trade in services and investments between the Russian Federation and the UAE.

Agreements at the interstate level are complemented by practical support for Russian entrepreneurs — in particular, at the AIM Congress, Roscongress and Synergy Corporation organized a business mission that involved the search for investors and partners among local investment funds and companies. According to Andrei Terekhin, Trade Representative of the Russian Federation in the UAE, the number of business missions and launched projects is incommensurable, and the potential for cooperation has not yet been revealed. The fact is that, although the market of the United Arab Emirates is considered a convenient platform for exporters to enter the entire region, the process of working there is hampered by cultural and regulatory specifics. The exporter of educational services in the UAE, the head of Synergy, Vadim Lobov, said that entrepreneurs, based on the absence of a direct tax burden on business in Dubai, forget about indirect payments and significant costs for permits. “Problems also arise because of the peculiarities of the legal system – a de facto synthesis of English law and Sharia law,” he adds.

In turn, the Russian side is also counting on the return of capital to the Russian Federation in the form of foreign investments – now their inflow is complicated by the sanctions and counter-sanctions of the Russian government (restrictions on the withdrawal of funds from the Russian Federation). The head of the Ministry of Economy, however, convinced the listeners that investors in Russia, whether they are domestic or from friendly and unfriendly countries, are provided with equal conditions. The key was the message to foreign partners about the scheme “the state as an investor of last resort” – the willingness to share risks with investors, shifting non-commercial ones onto themselves. Among the instruments were the project financing factory (credit risk hedging), VEB guarantees as an analogue of state guarantees for projects “needed” by the economy, and SZPK (stabilization of regulatory conditions) – these mechanisms have long been considered by Russian business as an opportunity to compensate for the peculiarities of the business climate in the Russian Federation.

Diana Galiyeva, Abu Dhabi