Why foreign investors in Tatarstan trust only one person’s word
Rustam Minnikhanov peeped the idea of a juridical forum in Davos
International investment deals of M&A in Russia are more and more often made on the basis of Russian law. But none of them puts a signature without a prior approval of corporate jurists, grey eminences of big business. To earn trust in this environment, Kazan became an organiser of Kazan Legal 2017 International Juridical Forum where head of the Federal Anti-Monopoly Service Igor Artemyev, business ombudsman Titov and stars of Russian law promised to come. The signing of an agreement with Chinese Haier that is considered the toughest negotiator around the world was an illustrative example of the trust of foreign investors in Tatarstan. Realnoe Vremya tells the details.
Grey eminences of foreign investments
It seems that Tatarstan has become the organiser of a juridical forum, which is unusual for it, for the first time in the last 25 years of international investment activity. If previous Tatarstan business forums were obviously commercial in the end, now it seems it is time to persuade foreign investors that the region's law is clean because for them it is still important to have juridical guarantees that their private property will be protected and Russian laws will help to achieve implementation of cooperation agreements. In brief, so that the basic principle of Russian law's superiority – ''Law Is Above Everything'' – won't be just a slogan without practical content.
The Tatarstan Investment Development Agency was the organiser of Kazan Legal 2017 International Juridical Forum.
''A jurist plays a key role in a company because the future of an investment project depends on his legal expert opinion,'' TIDA head Talia Minullina defined the motives of the forum. ''If he gives a negative opinion or thinks that the legal environment of this country is difficult for work or other companies had scandalous precedents there or there were cases when business was under pressure in these countries, of course, the investor will follow his recommendations and make a negative decision. And it is not desirable for us.''
According to her, foreign investors, as a rule, don't know the legislation of the country they are going to open their production in. This is why they turn to juridical consulting. At the moment when he chooses, it is important for us that experts recommend Russia and Tatarstan as a region with the best conditions for investing.
Minnikhanov's idea brought from Davos
Tatarstan President Rustam Minnikhanov was the author of the idea of holding the forum, Taliya Minullina specified. She said the president charged TIDA with organising the forum right after the return from the World Economic Forum in Swiss Davos late in January this year. Then the forum's general topic was ''Responsive and Responsible Leadership''. The event gathered a record number of participants – about 3,000 representatives of power, business, international organisations. ''The juridical forum is aimed to improve the investment climate in Tatarstan. This is why TIDA was charged with holding the forum,'' Taliya Minullina explained. As a partner, TIDA chose a juridical company that chaired the ''Ъ'' rating in 2015 in terms of revenue from juridical practice. But it also attracted TIDA because the company specialises in four areas: international juridical arbitration, corporate disputes, bankruptcies, anti-monopoly disputes.
Famous lawyer Natalia Korosteleva who win the global dispute of Yandex against Google in March 2016 and lawyer Evgeny Raschevsky who defended Russia's interests in the dispute with Georgia will become the stars of the juridical forum. Head of the Federal Anti-Monopoly Service Igor Artemyev, Chairman of the European Commission for the Efficiency of Justice Georg Stawa, Commissioner for Entrepreneurs' Rights Boris Titov, federal deputies from Tatarstan will be the main guests of the forum. Over 1,000 participants from 35 countries of the world and 35 regions of the Russian Federation registered for the forum.
''The main goal of the forum is to create recommendations in order to improve the legal normative framework. ''It refers to intellectual property (Editor's Note: that's to say, the right to use licences in joint ventures), real estate market and even criminal right. The whole programme will cover 35 areas in topical issues of Russian law's application,'' Minullina told.
Presidential guarantee is ironclad
The TIDA director called well-known Russian ''misfortunes'' the main risks for foreign investors: rapidly changing legislation and unbeatable corruption. ''We make amendments to the legislation so often that they don't have the time to follow. And let's face it that our entrepreneurs don't always have the time to follow the changes. And even honest people have to pay fines. Corruption frightens foreign investors.''
''They often raise such questions, it is enough to remember the case of IKEA. We should not keep silent,'' the TIDA director said having given to understand that these two painful topics will be discussed at the forum.''
In addition, she recognised that however perfect the Russian law is, in practice, all the foreign investors who come to Tatarstan trust only the Tatarstan president's word. And he doesn't fail. ''You can remember the tense moment in Russian-Turkish relations,'' Taliya Minullina reminded and specified that all the enterprises in the Republic of Tatarstan continued to work while they closed in other regions.
Answering to Realnoe Vremya's question about how often partnership joint ventures are terminated in Tatarstan business practice, Taliya Minullina noted that investments were always a risk. It means that they need to be ready for a ''divorce'' and advised everyone to agree on everything from the beginning. ''What happened to Pfisterer is a divorce. We need to be ready for it, it is fine. It is a bad case. I can't say how often it happens. Partners usually know how to agree,'' she commented the situation when INVENT company from Tatarstan left the capital of German Pfisterer cable connectors manufacturer.
Chinese financial diploma: Tatarstan to accept direct investments only
The signing of an agreement on cooperation with Chinese Haier on opening of an industrial park in Naberezhnye Chelny was to be the major event of the forum. The minister of Industry and Information Technology, a key figure in further negotiations with Chinese companies, will come to the signing ceremony. Taliya Minullina says that Chinese investors have traditions of conservative negotiations, that's to say, they base on the opinion of the highest leaders of the country and won't make a step without them. For negotiators, it is very important not to breach the subordination with the authorities – it is a priority factor while choosing any partner.
The fact that the local authorities are not ready to provide state guarantees for the offered projects like other regions of the Russian Federation can be the only thing that can impede Chinese investments from entering Tatarstan. ''We are not interested in ''loan stories'' much,'' Taliya Minullina says – she meant investment deals with the Bank of China. ''Although large-scale Chinese projects in other regions are linked with the Bank of China more where there are low rate loans for state guarantees of Russian regions.''
''We don't provide such guarantees today because we need to enter the business' management to provide state guarantees and make the business successful. It is our position because if the project fails financially, the region will be responsible for the financial viability. We support projects with direct investments like Haier,'' she stated.
Now TIDA is discussing the creation of a joint venture to localise Chinese construction machinery production with one of the biggest manufacturers that have ''quite a big sales volume in the Russian market'' and other several joint ventures. But now it is unknown where the flow of Chinese investments will go.