Japanese Businessmen Like Russian Investment Climate

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Japanese business community lists Russia among the most attractive regions.

According to the government-controlled Japan Bank for International Cooperation, the Japanese business community lists Russia among the most attractive regions.

An annual survey involving 497 Japanese industrial corporations assessed the moods of local businessmen. Mid-term business opportunities were analyzed for the next three years, with Russia placing sixth, making Russia even more popular than Western Europe. As far as long-term business operations (10 years) are concerned, Russia shares fifth and sixth place with the United States.

Japanese businessmen consider Russia's market growth potential, cheap labor and human resources to be the most attractive factors. However, risks like instability in security and the social sphere, insufficient information about the Russian investment climate and a relatively undeveloped judicial system, are of some concern.

According to official statistics, Japan makes up for less than 1% of Russia's overall trade turnover. The Japanese-U.S. trade turnover exceeds the Japanese-Russian trade turnover 44-fold. The Japanese-Russian trade turnover is also 20 times smaller than that between Japan and China.

"Foreign investors now face ten-fold greater political risks in Russia than one year ago," Anton Struchenevsky, an analyst with the investment company, Troika-Dialog, said. "As a result, incoming direct foreign investment totals only 2% of this country's GDP, whereas similar Eastern European levels are 5-8%."

In June 2004, Russia's Federal Tax Service demanded that Japan Tobacco's Russian subsidiary pay more than $70 million in tax debts. The state owns 50% of corporate shares. However, the corporation denied its guilt, with tax inspectors presenting additional claims. The Japanese Foreign Ministry was forced to intervene, asking Russian officials to take reasonable action, but the legal dispute still continues, known in Russia now as the "Yukos-ization of the Tobacco business."

Additional business information: http://business.fignia.com/cgi-bin/padla.pl
SOURCE:"RIA Novosti"

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