Guiding Lines: No Need to Go

We have an international investment forum and now many people are asking where to invest, whether it is good to invest in general or whether it is better to wait. Investors are running from many markets in a panic, and from Russia are running particularly fast," says Andrei Sharonov, managing director at Troika Dialog, who opened the forum.

The public has been seriously alarmed by the financial crisis. "Everybody wanted money, but there were few bankers," says Andrei Donsky, chairman of the board at Uralsib. However, judging by the participants - Russian managers and directors of large businesses - the forum was not quite as good as last year's. At the forum, in particular, there was prime-minister Vladimir Putin, deputy prime-minister Alexander Zhukov, ministers Dmitry Kozak, Elvira Nabiullina, Vagit Alekperov (Lukoil), Oleg Deripaska (UC Rusal), Mikhail Prokhorov (Oneksim), German Gref (Sberbank), Andrei Kostin (VTB), and Vladimir Dmitriyev (Vneshekonombank).

The most important to note at the Sochi forum were the unofficial discussions about the problems of the market, says general director of Aeroflot Valery Okulov, strategic planning was of less importance. However, for a large number of participants the last forum was probably not very useful. Only a limited number of people could gain entry to the plenary session of the forum. The half first day the majority of participants loitered around waiting for the opening the forum, to which a select few were invited, to end.

"We hoped that the contingent would be more solid and that we would be able to make contacts with possible partners," a representative of consulting company NEO Tsentr, complained after attending the forum for the first time. "Last year active negotiations with potential clients took place but this year it was mainly empty small talk," a well-known lawyer told Vedomosti.

Nevertheless the organizing committee of the Sochi investment forum has reported that there were more than 8,000 participants from 40 countries, including the prime ministers of France, Belgium and Bulgaria. And during the forum 112 agreements worth 504 billion rubles (13.8 billion euro) were signed. This is slightly less than last year: at the Sochi-2007 forum 169 agreements and memorandums were concluded worth 560 billion rubles. The world crisis has restrained participants, the Sochi official explains.

According to a representative of the organizing committee, this year the exhibition area was three times smaller than in 2007. A large share of the exhibition area was occupied by the Krasnodar area and the regions. The Krasnodar area alone presented 1,500 investment projects worth a total sum of 27 billion euro and occupied more than 3,000 sq.m, which included hundreds of models of large-scale projects that the area wants realized in the territory. It seemed that the exhibits presented to potential investors were not there for the purpose of finding financing – the main spots were again occupied by fantastic projects with artificial islands, demanding multi-billion investments.

64 agreements worth 305 billion rubles (8.4 billion euro) were signed in 11 Russian regions. The majority - 35 agreements on 165 billion rubles (4.4 billion euro) - were signed by the governor of the Krasnodar territory. The structure of the transactions was as predicted: the priority area for investors is construction, in particular investments in resort projects in the Krasnodar area. For example, the largest volume of investments in this region will be in construction - 178 billion rubles, in resorts - 45 billion rubles, in the consumer sphere - 31 billion rubles, in a thermal power station - 23 billion rubles, in industry – 16.5 billion rubles, and in agriculture - 16 billion rubles.

However to sign an investment agreement and realize it is not the same. For example, St. Petersburg company M-industriya has concluded an investment agreement on the realization of the Gornoye Morye projects in Zheleznovodsk worth 12 billion rubles (Stavropol Territory) and the Yuzhny logistics park (11 billion rubles, Adygea). The company has signed the corresponding documents with the heads of the regions, but whether these projects will be realized is another question, the company only has to find financing or investors.

You could count the large developers at the forum on your fingers: Glavstroi, PIK-Region, Berkley, Zheldoriipoteka. From the point of view of the quality of time spent in Sochi the trip was useful, says general director of Glavstroi Artur Markaryan. "The forum is a good platform to make useful contacts and to sign investment agreements," agrees Nikolai Ditsman, head of the marketing department at Eurasia Logistics. His company signed a contract with Vneshekonombank in Sochi on the allocation of a credit line of $220 million for the construction of a logistics in Tatarstan and an agreement with the Saratov region on the construction of an industrial park worth 5.5 billion rubles. However, agreements would be signed without the forum. "In fact officials also need to report about work done", a participant of Sochi-2008 summarizes.

General director of consulting group NEO Tsentr Valery Esaulenko considers the main result of the forum to be a "base of calm and confidence in a period of financial crisis, and for market participants to get positive impulses not only from the authorities, but also from global financial institutions." This was spoken about at the closed opening session of the forum. But 8,000 people didn’t need to go to Sochi for this purpose. Besides, the level of organization of such events and the infrastructure of the city will not correspond to its declared status. There were practically as many police as there were visitors. “And because of police cordons, it took several hours to get to a meeting with a customer,” a businessman from a small European country complained. And in the mornings participants of the forum stood in long Sochi traffic jams.