15 April 2016
What to expect from the St Petersburg forum
The St Petersburg International Economic Forum (SPIEF) is the largest international business gathering in Russia. It’s an opportunity for companies to get their investment issues on the government agenda and to reinforce their interest in the Russian market. Of course, businesses don’t attend the St Petersburg forum to just listen to the official speeches. Working meetings with decision-makers, competitors, industry peers and experts are what make SPIEF sessions thought provoking and valuable. Tense international relations and the crisis-hit Russian economy are leaving their mark on a wide range of issues that will be discussed during closed meetings. This year could hardly be called a time of big ideas and big project initiatives. International business concerns focus on lowering political risks and securing guarantees of stability for investment. What can be expected from SPIEF 2016?
A new venue.
The 20th anniversary of the SPIEF Forum this year will be held at the new ExpoForum complex in Shushary. It’s located about 8km from the city center on the route from Pulkovo Airport to Pushkin. The closest hotel is at the airport. The hotel complex at ExpoForum itself is still under construction. Most delegates will predictably stay in the center of St Petersburg. And that’s most likely where the formal and informal events around the forum will also take place. So delegates will travel from the center out to Shushary. Given the number of guests last year (officially 10,000 people), traffic jams will be inevitable, even if the road to Pulkovo is completely closed to traffic. But what we get in return is a modern spacious venue with a great view onto the city, albeit without the Gulf of Finland.
The organizer this year for the first time will be RosCongress, a new state corporation that has taken over handling all the major business forums: St Petersburg, Sochi, Open Innovations and the Eastern Economic Forum. Sergey Belyakov, the former Deputy Economy Minister and then Head of the SPIEF Foundation who was much admired by international investors, has left the job. He now heads up an association of non-state pension funds. In his new role, Belyakov will protect the interests of private pension funds in the ongoing pension reform and, possibly, support their involvement in the privatization of state property. Sergey Vyazalov, the former Deputy Governor of St Petersburg and current Director General and the RF Ministry of Foreign Affairs is now heading RosCongress. The new manager of Russia’s key forums will need to show some qualitative improvements in event organization. So changes seem inevitable. They could be manifested in how speakers are selected and also in the choice of subcontractors. The backbone of the team on the ground, however, will remain unchanged.
The number of guests attending SPIEF is often seen as the key indicator of the Russian investment climate. This year attendance promises to be better than last and significantly better than 2014, when attendance was particularly sparse due to hostilities in Ukraine. Over the past two years of sanctions and cooler relations between Russia and the West, business has adjusted to operating in the new business realities. Foreign companies need to support their business in Russia and are no longer afraid of calls from the American White House. A bigger European presence is expected at the forum this year and the European Commission President may even possibly attend. SPIEF is a good platform for positive announcements. And the Americans, who have been less visible in the Russian public space since the sanctions, have become notably more active. Alexis Rodzianko, president of the American Chamber of Commerce in Russia, gave two major interviews in March alone. He says it’s business as usual and commercial activities on both sides are far from zero.
SPIEF is infamous for repetitive discussions on the same topics. But recent events and government actions need to be explained officially and discussed in the context of the investment climate. Russia’s “break-up” with international rating agencies Moody’s and Fitch and the creation of the national Analytical Credit Rating Agency (ACRA) will inevitably be the focus of investor attention. The program will also reflect official Russia’s keen attention to the changing and fast growing Internet economy. Russia is trying to get a better understanding of how the new wave of disruptive companies like Uber, Alibaba and others works. The government’s interest is understandable. Its need to control information flow and tax collection for the state budget from online business, a large part of which simply doesn’t exist in Russian legislation. The issue of online security will also be high on the agenda. National security is the all-encompassing umbrella justification for all state control and oversight activities. Rational business solutions and advocacy have little traction here.
Discussions about the economic recession hitting “bottom,” will be perpetuated; structural reforms that are vitally needed will continue to be discussed; and, a popular vote of confidence required for structural transformations to begin are all familiar SPIEF messages. We’re confident in predicting these will be repeated more than once at forum sessions. Stability and consistency in key messages is not a bad thing. But what’s most important is that stability is backed up by action, achievements and believable proof points.
Two years of a new business reality for the Russian economy suggest that the organizers of the “Russian Davos” need to present the first results of import substitution, successful Eurasian integration, and closer ties with China for starters. Other proof points that we’ll be looking for to support the new business reality are strong national brands and their rising exports; innovations and their commercialization are beginning to show signs of green shoots for economic growth; western business willing to view the Eurasian Economic Union with the same level of enthusiasm as the common EU marketplace; and, Chinese investors actually investing in the Russian economy rather than increasing their imports here. We look forward to the start of SPEIF discussion at the new ExpoForum.