Russia

June 2011

FOREIGN DIRECT INVESTMENTS – Finnish investment in the Russian economy have reached 8 Bn €. There are currently 600 Finnish companies in Russia, which employ 50 000.

CAR SALES - Sales of new cars in Russia went up 77 % in Q1/2011 y-o-y. In 2012 the Russian car market is expected to reach the pre-crisis level with 2.8-2.9 million cars sold yearly.

CAPITAL OUTFLOW - The outflow of kapital reached 20 Bn € by the end of 4/2011, which is almost equal to the total outflow in 2010. May figuure is expected to be close to 6 Bn €. This is in stark contrast to Moscow's aspirations of becoming a global financial centre linking London with Hong Kong.

RETAIL - British book retail chain, Waterstone’s, has been sold by HMV Group to A&NN Capital Fund Management, controlled by Russian magnate Alexander Mamut, for 60 M€.

CONSTRUCTION - Vinci, OHL Group and Autostrade, French, Spanish and Italian companies, have confirmed their interest in joining the construction of the 684 km, 13 Bn € Moscow-Saint Petersburg highway. The road is expected to be ready by 2018.

TELECOM - Nokia has started recruiting employees to the Skolkovo innovation center project. Nokia will send to Russia about 25 employees and invest tens of millions of euro in research projects within the next few years.

TELECOM - Wind Telecom, owned by Egyptian mogul Naguib Sawiris, paid 1,1 Bn € in the merger with Vimpelcom, owner of Russia’s Beeline and Ukraine’s Kievstar operators. The merged companies became the world’s 6th largest operaator with 181 mln subscribers in 20 countries

March 2011

GDP DEVELOPMENT - Russia’s GDP grew by 4% in 2010.

INFLATION – Inflation is forecasted to be at 7-8% level in 2011.

ENERGY - Russia and Belarus will sign an agreement on construction of two nuclear power in Belarus in April; construction works are to start in September. The total capacity of the plants is to be 2 400 MW with the first stage being ready for operation in 2017.

SCIENCE PARKS - The Russian Skolkovo innovations centre and the Swiss Technopark Zurich will sign a cooperation agreement. The model of the Zurich industrial park will be applied in five Russian regions.

OIL - Russia’s Rosneft oil giant may be selling its non-core assets to optimize its business activities. The assets pre-estimation value exceeds 1 Bn $.

AUTOMOTIVES - General Motors Co. signed anagreement with GAZ Group to produce the newChevrolet Aveo model in Russia to tap into amarket that may more than double in the next 15 years. GAZ plans to make 30 000 Aveo sedansand hatchbacks in Nizhny Novgorod starting in mid-2012. GM joins larger competitor Toyota Motor Corp., Volkswagen AG and Ford Motor Co. in ramping up production in Russia, a market that may grow by 16 % this year to 2.2 M vehicles.

AUTOMOTIVES - The Russian company Sollers is teaming up with the Ford to create a jointventure enterprise on the basis of two existing factories - one in Leningrad region and two in Tatarstan. Ford is the fifth largest car exporting company to the country, selling already about 100 000 units per year.

REAL ESTATE - Lithuania-based property management company City Service has successfully acquired a group of private companies in the city of Stavropol, Russia. With a 1,7 M€ investment City Service will get to start managing approximately two million m2 of residential buildings

December 2010

GDP GROWTH - Russia's GDP growth is forecasted to reach 4.4% in 2010 and accelerate to 4.6% in 2011.

CORRUPTION - Corruption costs equal to 2.9% of Russian GDP every year. Kickbacks from state procurement programs alone are estimated to account for 25 Bn€.

CREDIT RATING - Fitch has raised Russia's credit rating to positive from stable based on the data on the country's economic recovery after the financial crisis.

FOREIGN DIRECT INVESTMENTS – FDI in Kaluga region for 1-9/2010 totaled 707 M€, which is near last year’s total. 14 different manufacturing facilities have opened in the region, including the Peugeot-Citroen-Mitsubishi joint assembly plant, Magna auto components production facility, L'Oreal factory and General Electric’s Energy Technology Center.

PRIVATIZATION - The Russian Federal Agency for State Property Management auctioned 100% of Mosmetrostroy metro-engineering company to Centrstroy, the Moscow-based city infrastructure building company, with 183 M€.

INNOVATION - Russian Parliament has approved setting up an innovation centre in Skolkovo, near Moscow. The would-be innovation centre should become the prototype of a city of the future, a major test ground for Russia’s new economic policy. Japanese, US and Italian companies are interested in conducting R&D projects in the center - among them e.g. Nokia, Microsoft and Enel.

PLASTICS - Finnish Rani Plast has started construction of a 20 M€ plastic film extrusion plant in Lemminkäinen’s I-Park Kaluga industrial park. The plant is to be opened at the end of 2011.

RETAIL - IKEA has frozen investment into new projects in Russia, including construction of Europe's largest shopping mall near Moscow, until its projected shopping mall in the Volga city finally opens.

FOOD INDUSTRY - Coca-Cola plans to invest some 800 M€ in developing its production in Russia. By 2020 Coca-Cola is to double the volume of its business in Russia.

FOOD INDUSTRY - Coca-Cola bought leading Russian juice producer, Nidan Juices, from Britain's Lion Capital for 210 M€. Nidan Juices controls 16.9% of the Russian juice market with the brands such as Moya Semya, Caprice, Caprice Tea, Sokos, Da! and Champion.

FOOD INDUSTRY - PepsiCo has bought 66% of Russia’s dairy giant Vimm-Bill-Dann for 2,9 Bn€, which to date is the biggest foreign acquisition of a Russian company.

FOOD INDUSTRY - PepsiCo plans to invest 110M€ in the construction of a soft drink plant during 2012-2013 in the city of Azov in Southern Russia.

FOOD INDUSTRY - PepsiCo subsidiary Frito Lay Manufacturing company will open a 84M€, plant with 50 000 tons annual production capacity to produce chips in Rostov region. The factory will employ 1 000 people.

HOTEL INDUSTRY - Hilton Worldwide will open three new hotels in Russia in Yaroslavl, Kazan and a second Hilton hotel in Moscow.

CONSTRUCTION MATERIALS - Italian producer of commercial stone Santa Margherita S.p.A. plans to invest 1,5 M€ to establish a stone processing plant in south Russia’s Krasnodar Territory, in the village of Vishnyaki by the end of 2011. The plant will use modern equipment based on nanotechnology and will create 60 jobs

HEALTHCARE - The Italian company Newster S.r.l could set up a plant making equipment to treat medical waste in Russia’s Chelyabinsk Region. Although one Newster medical-waste sterilizer is currently operating at the regional children’s general hospital, demand remains high.

CONFETIONARY INDUSTRY – Ukrainian Roshen Corporation is planning to construct its third chocolate production and distribution complex in Lipetsk region. The project is worth 190 M€, has a floor space of 63 000 m2 and a yearly capacity of capacity will be 253 000 tons. The construction will start in 2011 and is to be completed in 2016. The factory will employ about 3 500 employees.

CAR SALES - Sales of new passenger and light commercial cars increased by 14% y-o-y to 1.13 million vehicles in the period 1-8/2010. The Russian car market is expected to recover to pre-crisis level by mid 2013 and become largest in Europe 2014.

AUTOMOTIVES - Hyundai opened its first plant outside St. Petersburg. The plant cost 500 M€ and has an annual capacity of 150 000 cars a year. Hyundai will be using highest share of locally produced components among the foreign carmakers in Russia.

AUTOMOTIVES - Mercedes-Benz Trucks Vostok, a joint venture between Daimler AG and KAMAZ, has assembled its first Mercedes-Benz Actros 1841 LS truck at its plant in Naberezhnye Chelny. The plant's annual capacity amounts to 4 500 vehicles.

AUTOMOTIVES - Toyota plans to establish a second plant in Russia. Toyota opened its first factory in St. Petersburg in 2007 and today has a production capacity of 20 000 cars per year and employs 750 people.

AUTOMOTIVES - Renault-Nissan is negotiating with Russia's biggest private investment bank Troika Dialog about buying its stake in the country's largest carmaker AvtoVAZ. State-owned hi-tech conglomerate Russian Technologies, Troika and Renault each own 25% plus one share in AvtoVAZ.

AUTOMOTIVES - Renault-Nissan in talks with the government of the Primorye Territory to select a site for a new auto-assembly plant in Russia.

AUTOMOTIVES - Mazda plans to follow its countrymen Toyota, Nissan, and Mitsubishi and construct an assembly plant in Russia.

AUTOMOTIVES - Chinese Jianghuai Automobile Co (JAC Motors) plans to open an assembly plant in Russia.

September 2010

GDP DEVELOPMENT - Russia's GDP grew 4.2% in the H1/2010, while June GDP rose 4.9%

AUTOMOTIVES - Sales of luxury cars in Russia increased by 30.5% in the H1/2010, despite a rise of only 3% in the Russian car market as a whole. The Russian Ministry of Industry and Trade expects a 15% growth in the country's car market as the "cash for clunkers" program continues in Russia.
HOTEL INDUSTRY - Hilton Worldwide has signed an agreement to open five new hotels in Russia by 2014. Two of the hotels are to be opened in 3Q/2010 in Novosibirsk and Gelendzhik, two in Sochi by 2012 and one in Perm by 2013.

HOTEL INDUSTRY - Bavarian businessmen are prepared to invest nearly 3Bn€ to build 10 hotels in Moscow. The construction of the first "Bavarian" hotels could start as early as next year. 10 plots of land were available on the outskirts of the capital which Bavarian businessmen were ready to use as building sites for the construction of hotels with 200-300 room capacity.

CONSTRUCTION MATERIALS – Danish Rockwool group plans to invest about 39M€ in a mineral wool board plant in the Chelyabinsk Region in the Urals. The upgrade project will include expanding production facilities and introducing innovative technology.

PHARMACEUTICAL INDUSTRY - The Danish pharmaceutical company Novo Nordisk will build a 62-77M€ insulin production plant in Kaluga in the Grabtsevo Technopark creating 200 jobs by 2011.

AUTOMOTIVES INDUSTRY - Canada's Magna, one of the largest car utilities producers in the world, opens a 300 employee plant in St. Petersburg in fall 2010 being the third Russian plant for Magna. The plant will produce parts for cars and car plants based in the region.

FAST INDUSTRY - Wendy's/Arby's Group, one of the world's leading fast food operators, will enter the Russian market in 2011 and open 180 restaurants there over the next 10 years.

MINING INDUSTRY - Canada's Kinross Gold has completed the acquisition of Russian companies which own the rights to develop and mine high-grade gold deposits for 128M€ and 10.56 million new Kinross shares.

June 2010

AUTOMOTIVE - PSA Peugeot Citroen and Mitsubishi launched a new car assembly plant in Kaluga. The companies have invested 470M€ in the enterprise, called PSMA Rus, with 70% owned by PSA and 30% by Mitsubishi Motors. PSA’s Didier Aleton and Mitsubishi’s Masayuki Imada will manage the plant. The enterprise aims to assemble 90,000 vehicles by 2012.

AUTOMOTIVE - Sales of new passenger cars in Russia in January-February 2010 decreased by 34% compared with the same period last year.

REAL ESTATE - Chinese companies may invest 1,6B€ to build hotels in Russia's Black Sea resort of Sochi, the host city for the 2014 Winter Olympic games. Prices for housing apartments in Sochi exceed in some cases prices in Italy.

FOREIGN DIRECT INVESTMENTS - Finland’s Atria has launched the full capacity of its production and logistics complex in the town of Gorelovo, Leningrad Region. The 77M€ integrated logistics center and production site project reportedly kicked off in 2006. The logistics part of it was launched in the fall of 2008. Now its production area is being completed. The Atria group of companies is one of the world’s largest meat foods producers. Its Russian assets have been operational since 2005. In 2008, Atria Russia’s revenue reportedly hit 105M€.

RETAIL - The first in the Urals hypermarket of the international chain Castorama has been opened in Perm. The DIY shop is occupying the area of 11 400 m2 located in a mall at the 2nd Kazantsevskaya Street. Shoppers are presented with 35 thousand different products for home and garden. The new hypermarket is the thirteenth Castorama site in Russia. Castorama currently controls 13 stores in Russia in the cities of Moscow, St. Petersburg, Krasnodar, Rostov-on-Don, Omsk, Samara, Togliatti, Voronezh and Perm.

FOREIGN DIRECT INVESTMENTS - The Interregional Investment Company ,Nizhny Novgorod is investing 163-203M€ in construction of a recreation and entertainment zone on the Grebnye Peski island on the Oka river in Nizhny Novgorod. The investor is to raise part of funding from the federal budget under public-private partnership to be spent on construction of a dam and hydro technical facilities to protect the island from flooding. Under plans, the project is to be carried out in several stages in 2010-2016.

ICT - China's largest Internet company, Tencent, has bought 10% of Digital Sky Technologies (DST), a leading Russian Internet investment firm, in a bid that may signify Chinese expansion into Russian cyberspace. The Chinese company has paid 244M€ for the new share issue of DST, a major Internet company in the Russian-speaking and East European markets that operates the popular social networking website Odnoklassniki, and also Mail.ru, Astrum Online Entertainment and other assets, DST co-owner and general director Yury Milner told Vedomosti.

GDP - Russia's economy could grow by as much as 4-4.5% in 2010 compared with the government's forecast of 3-3.5%. Drop in lending and low consumer demand were the main factors restricting economic growth in 2010.

PHARMACY - The Kaluga regional authorities and Berlin-Chemie agreed on Friday on the construction of a new pharmaceutical factory. The new factory will become a part of a full-cycle pharmaceutical unit in the Kaluga Region. The Kaluga authorities will provide the necessary engineering infrastructure and staff education. Building will start in July 2010 and will last two years.

CONSTRUCTION - Alfa Bank is to invest around 195M€ in Mirax Group to continue construction of a Moscow skyscraper, planed as one of the world's tallest buildings. The conditions are being agreed with Mirax at the moment. Alfa Bank will be the main creditor, but other banks are not excluded from the project. The tower is part of the Moscow City development in the west of Moscow. The project was delayed by four years because of the financial crisis and is now expected to be completed after 2016. Mirax Group chief Sergei Polonsky previously announced plans to reduce the height of the skyscraper, which is planned at 509 meters because of insufficient funding. However, the investment is enough to accomplish the initial ambitious plan.

CONSTRUCTION - Construction Company Aviakor will invest 20M€ into construction of a hotel complex ‘Hilton Garden Inn’ in Ulyanovsk. The project is reportedly to create 150 local jobs. The 175-guest-room hotel is to be located at the Goncharov Street in the city center. The hotel is to be kitted out with a business center with a conference hall and 96-car underground parking lot. Construction is scheduled to start in the Fall 2010, with the hotel to be opened in 2012 and operate at full capacity by 2014.

PHARMACY - Danish company Novo Nordisk, a world leader in production of anti-diabetic medicine, has signed an agreement to build an insulin plant in Kaluga. The project will become another important step in creating a major pharmaceutical cluster around the Grabtsevo technopark outside Kaluga. Under the agreement, the construction of the insulin plant, which will be 100% owned by Novo Nordisk, will have several stages, with overall investment expected to reach 65-81M€.

FOOD INDUSTRY - One of the U.S's largest coffee chains Dunkin' Donuts has re-entered the Russian market and has plans for expansion, the company's franchisee for Russia and Ukraine. Dunkin' Donuts first established itself in Russian in 1996 but had to close its two outlets after a drop in sales during the 1999 crisis. The company plans to invest 8-10 M€ in development this year.

AGRICULTURE - Iranian businessmen plan to build a poultry farm, a combined fodder factory and a livestock breeding complex, worth a total of 32M€, in the Chelyabinsk Region in the Russian Urals by 2013. The construction of the facilities will begin this year. The project envisages the construction of a farm for 1.2 million chickens for egg production, a combined fodder factory with a capacity of 30 metric tons per hour and a complex for 3,000 cattle, including 1,000 dairy cows and 2,000 beef-producing livestock.

AUTOMOTIVE - Hyundai Motor Co. will become the first foreign automaker to launch a full-capacity press forging unit at its St. Petersburg car assembly plant, which starts production in September. Hyundai began building the 366M€ plant in St. Petersburg's Kamenka industrial estate in June 2008. The new plant will have an initial annual production capacity of 100,000 vehicles, which the company plans to expand to 150,000 vehicles. The company has invested over 24M€ in the forging unit and it would completely meet the plant's production demands.

ICT - Finnish mobile giant Nokia plans to expand its activities in Russia and establish a research and development center. The center could be located in Sarov, in the Volga region near Nizhny Novgorod, or in Tomsk, a city in southwest Siberia.

March 2010

CUSTOM UNION - Russia-Belarus-Kazakhstan customs union launched in January eliminates trade duties among the members. Common external customs tariffs enter into force at the beginning of July. Under the customs union rules, imports of certain products to Russia that earlier did not require an import license now require a license. These products include wine and certain alcoholic spirits, vitamins and telecom equipment used e.g. in construction of 3G mobile networks.

SUPPORT PACKAGE - Last year’s federal budget included 27 Bn € for fighting the effects of the economic crisis. The amount represented 12 % of budget spending and corresponded to 3 % of GDP. Of this sum 7,4 Bn € went to supporting the enterprise sector. In the 2010 budget the stimulus measures have been cut to 4,7 Bn € with a large part of the money again going to the production sector and with economically or strategically important firms getting a total of 1,6 Bn €.

GREY ECONOMY - The grey economy accounts for about a fifth of Russia’s economic output. The value of grey economy output last year was estimated at around 180 Bn €.

OLYMPIC GAMES - A total of 1,7 Bn € is to be invested in construction of road facilities for Sochi Winter Olympics in 2014. Of the total funding, 1,4 Bn € is to be assigned from the federal budget, and 303 M€ to be invested by national rail operator Russian Railways. Construction of a combined railway and motorway – road from Adler to Alpika-Service mountain ski resort will consume 1,4 Bn € of the funds.

CONSTRUCTION - Vladivostok will host the 2012 Asia-Pacific Economic Cooperation Forum as part of efforts to boost the international image of Russia’s Far East. Vladivostok infrastructure projects, including construction of a huge congress centre, are valued at over 6,7 Bn €. The project is Russia’s second largest infrastructure project after the Sochi Olympics.

REGIONAL DEVELOPMENT - Russia seeks to broaden its markets and strengthen its strategic position in Asia and the Pacific region by developing its far eastern economy. The government’s development strategy published last year states that the Russian Far East’s problems include isolation of its economic activities and infrastructure from the rest of the country, as well as poor port, rail and air transport infrastructure and low labor productivity compared to the rest of Russia.

FISHING - Kamchatka oblast will invest 85 M€ over the next three years into its fishing and seafood sectors. The funding will come from regional coffers and non-budgetary sources between now and 2012 under a special three-year regional program. Fishing and seafood sectors account for more than 50% of Kamchatka’s GDP and over 90% of regional exports.

HOTEL INDUSTRY - A 99 M€ project, involving financing of the development, construction and operation of five mid-market hotels in Samara, Krasnoyarsk, Kaliningrad and Yaroslavl is being sponsored by Turkish company Akfen Holding Anonim Sirketi and the principals of Kayi Group and Insa Group of Turkey. The hotels will be managed by Accor under the Ibis and Novotel brands. EBRD is financing 27 M€ of the project with senior loan to the Borrowers and an equity investment of up to 6,6 M€ in the Investee Company.

REAL ESTATE - YIT Lentek made an agreement with Finnish Dermoshop on office and logistics centre construction in 2010. The construction area will cover 1 300m2 in the technological part ‘Gorelovo’ Leningrad region. Investments into the project amounts to 3 M€.

CABLES - Italian company Prysmian Cables and Systems has purchased electric cables manufacturer Rybinskelectrokabel, based in the town of Rybinsk, Yaroslavl region, for 12 M€. This is the company’s first direct investment in Russia.

FOOD INDUSTRY - Sugar maker Prodimex intends to invest 50 M€ building a molasses desugaring complex in Voronezh region. The complex is to be launched at premises of Olkhvatsky Sugar Factory. The complex’s projected daily capacity is 300 tons of processed molasses. The facility is scheduled to be put into commission by the end of 2010. It will be the first molasses desugaring facility in Russia.

CONSTRUCTION MATERIALS - Nizhny Novgorod region gypsum plant Décor-1 has announced 11 M€ plans to launch production of gypsum strand boards. Projected annual capacity is 50 000 - 65 000 m3 or 5-6 Mm2 of gypsum strand boards.

FAST FOOD - Burger King has opened its first outlet in Russia, part of the company’s expansion strategy in the EMEA region. The first location is in the Metropolis shopping centre in Moscow, and will be followed by a second in Europeysky shopping centre.

CHEMICALS INDUSTRY - Chemical company Nitol, in cooperation with state corporation Rusnano, intends to build a 289 M€ plant to produce titanium dioxide in Irkutsk Region. Rusnano’s contribution into the project has yet to be defined. The plant will be located in the town of Usolye-Sibirskoye. The project is scheduled to be carried out in 2010-2015.

STEEL INDUSTRY - Sverdlovsk region-based Nizhny Tagil Iron and Steel Works has announced plans to increase its 2010 investment program by 67% on 2009 – to 123 M€. Under plans, specifically, the funds are to be used to complete reconstruction of the fourth convertor and continuous steel casting machine.

PHARMACY CHAIN ON SALE - Well-developed Moscow based drugstore business consisting of 13 outlets is for sale. All the necessary permits and licenses have been obtained.

January 2010

GDP DEVELOPMENT - The latest World Bank forecast sees Russian GDP contracting 8,2% in 2009 and returning to 3,2% growth in 2010. The economic recovery is predicated on revivals of the global economy and international financial markets, as well as a relatively high crude oil price. On the other hand, growth is limited by Russia’s weak domestic demand and tight domestic credit markets.

The Global Venture Capital and Private Equity Country Attractiveness Index rank – 48 up one position from 2006.

PRIVATE CONSUMPTION - The structure of private expenditures has changed significantly within the first seven months of 2009: the share of incomes spent on goods and services went from 182.4% in January, when people also used their savings to finance the purchase of goods, down to a minimum of 68.2% in July 2009. The highest salaries in July 2009 were received in air transport, the financial sector and the extractive industry. The lowest wage level was observed in secondary education, hotel service and social care.

EXPORTS - The value of Finnish imports from Russia in January-September amounted to 5B€, or 16 % of total imports. The value of imports fell 38 % y-o-y. Finnish exports to Russia continued to contract faster than Finland’s total exports, which were down 36 % y-o-y.

INFRASTRUCTURE - Russia’s Ministry of Transport confirmed that a project of building the new federal motorway between St. Petersburg and Moscow would be finally launched. The construction would, overall, cost approximately 4 B€. The project would be financed by bank VTB, Russia’s Pension Fund, and a pool of private investors.

CONSTRUCTION INDUSTRY - The volume of construction production declined 18 % y-o-y in 1-9/2009. The volume of residential housing completed in 1-9/2009 was down less than 1 % from the same period in 2008. The main reason was that construction of detached houses and summer houses increased 6 % y-o-y. Their share of total completed residential housing was 55 %. Growth was concentrated in some of Russia’s wealthiest areas such as the Moscow and Leningrad regions.

AUTOMOTIVE INDUSTRY - Renault, which holds a blocking interest in AvtoVAZ (known for its Lada brand), is willing to invest in the ailing Russian auto giant. Russian government has already allocated 600 M€ to help the auto giant repay and is prepared to grant another 300 M€. Renault confirmed that it is prepared to invest in the development of AvtoVAZ, including the provision of the most advanced technologies. The volume of investment is not yet clear.

AUTOMOTIVE INDUSTRY - Fiat plans to launch production of off-roaders in Russia. Russian car producer Sollers and Fiat established a joint venture in Tatarstan in June of 2008 and as a result Sollers already produces the Fiat Albea, Dolbo and Ducato models.

AUTOMOTIVE INDUSTRY - Volkswagen's subsidiary in Russia is launching full-cycle production of cars in the city of Kaluga southwest of Moscow. Volkswagen has already invested 570 M€ in the plant. At the moment the plant employs over 1 800 people and the number of could reach 3 000 in 2010, when the plant is expected to reach its capacity of 150 000 cars a year.

AUTOMOTIVE INDUSTRY - The Opel factory with 2 600 employees in Antwerp, Belgium is likely to be closed by the carmaker's new owners and production could be moved to Russia.

AUTOMOTIVE INDUSTRY - KamAZ and Daimler Trucks intend to set up a 50/50 joint venture to assemble Mercedes-Benz trucks in Tatarstan. Investment in the project has yet to be disclosed but the production facilities are to be built at premises of KamAZ plant.

FOOD INDUSTRY - German producer of baby foods, HiPP, opened a new plant in Mamonovo (near the Polish border). Total investment in the plant amounted to approximately 10 M€. The plant has received tax benefits as a resident of the Kaliningrad Special Economic Zone.

WHITE GOODS - Lithuanian refrigerator producer, Snaige, decided to close down its Kaliningrad plant because of the losses on the Russian market.

CONSTRUCTION MATERIALS - Knauf is opening a 110 M€ production line for gypsum-cardboard sheets in the beginning of 2010. Capacity of the new line is 60 M m2/year.

AVIATION - Kaliningrad’s airline, KD-Avia, finally filed for bankruptcy despite the federal government having transferred 90 000 € to the regional government to bail out the airline. KD-Avia’s shareholders, creditors and the regional government could not agree on the terms of the bail-out, so KD-Avia did not receive the funds.

WOOD INDUSTRY - Austrian company Mayr-Melnhof Holz and St. Petersburg developer LSR Group launched a 80 M€ wood-processing plant in Leningrad province. The plant will supply wooden boards to both the construction sector and furniture producers.

TECHNOLOGY INCUBATORS - The first national business incubator in Kuban ”Razvitye” or ”Development” has started its operation in Krasnodar region. The total investment into the project amounted approx. 2,2 M€ that includes 1 M€ from the federal budget and 1,2 M€ from the regional budget.

TELECOM - Nokia Siemens Networks and Intellect Telecom, Sistema’s R&D and innovation centre, have concluded a deal to create a joint research and development centre on the basis of the Sistema-Sarov technology park. The new research and development centre will focus on such fields as satellite navigation, mobile communication technologies, telematics, testing, and support for system solutions.

ELECTRONICS INDUSTRY - On August 2009 the Voronezh administration and Siemens signed an agreement to build a high volt transformer factory for the power supplier substations. The Siemens transformer factory in Voronezh region will be established by spring 2010. Siemens is investing 35 M€ into the project.

PAPER INDUSTRY - Austrian company Mondi, as part of its 500 M€ reconstruction program in Russia, will loan 200 M€ to finance reconstruction of its subsidiary ”Syktyvkarsky Timber Plant”. The program will increase pulp production by 20% (890 000 ton per year) and cardboard sheet production by 20% (1 Mton per year).

MARINAS - Island Global Yachting, one of the world’s premier owners, developers and managers of luxury marinas and yachting lifestyle destinations, agreed to run Olympic Village Marina, which will be built by Oleg Deripaska's Basic Element. Olympic Village Marina will encompass 600-700 permanent yacht berths.

September 2009

FOREIGN DIRECT INVESTMENT – Although the economic crisis has decreased the amount of FDI globally, Russia is still perceived the 5th most interesting target country (down from 4th last year) behind Brazil and UK, states the UNCTAD World Investment Prospects survey 2009-2011.

FOREIGN DIRECT INVESTMENTS – FDI volume in Novgorod region has increased in 1Q/2009 by 52,4% y-o-y to 155,5 M$. In 1Q/2009 investments came from Finland (77,6 M$), Denmark (24,5 M$), Poland (17,5 M$) and Germany (11,8 M$), Turkey (5,8 M$) and France (5,6 M$). Of the total investments 98,3% were made into processing industry.

UNEMPLOYMENT – The global financial crisis is punishing the hardest those of the Russian cities and regions, which - as a result of Soviet legacy - rely on one industry (so called mono-cities and mono-regions). In these cities unemployment levels have skyrocketed and in some cases there have been demonstrations for renationalizing key companies in the city.

OIL INDUSTRY - About 540 new gas stations will be built in Moscow region by 2012. Total volume of investment will amount to 700 M€. Companies, such as British Petroleum and Shell are interested in the project.

MINING – Russian Eurochem will carry out 700 M$ investment programm during 2009 as it has not been hit by crisis.. The company has partnered with German K+S Group to develop a potassium deposit in Perm region.

PAPER INDUSTRY – Finnish Pöyry will provide engineering services for the Investlesprom’s Segezha pulp mill in Russia. The total value of the assignment exceeds 6 M€. The services include project management and permitting engineering services for all disciplines extended over the whole pulp mill.

RETAIL - The EBRD has granted a 40 M€ loan to Sibstroyinvest for building a 145 000 m2, 200 M€ AURA shopping & entertainment mall with business centre in Novosibirsk. According to Metropol analyst the crediting rate can be 7%-10% per year. Sibstroyinvest is owned 50% / 50% by Amstar Global Property Fund I L.P. and Turkish Renaissance Construction, which is also the main contractor for the centre.

RETAIL - Mobile phone retailer Euroset invests 25 M$ into creating a chain of 15 luxury stores by the end of 2009. Average price of a mobile phones in the stores is 6 500 €. It is estimated that in 2008 about 25-30 000 luxury mobile phones were sold in the ordinary market, with Euroset having 80% market share.

RETAIL – French Auchan is opening its 2nd store in Golden Park shopping center in Snegiri micro-region, Novosibirsk. The hypermarket will take 7 000 m2 of the 30 000 m2 available in the shopping center.

RETAIL – In 7/2009 IKEA opened a 120 000 m2, 88 M€ trade and commercial complex in Omsk region. In the complex MEGA shopping center occupies 64 500 m2, IKEA 25 600 m2, Leroy Merlin 14 700 m2 and Auchan 15 500 m2.

RETAIL - IKEA confirms that the company plans to complete the ongoing projects in Samara, Omsk, Ufa and Moscow region and will continue negotiations in Saratov, Voronezh and Tyumen instead of freezing the projects, as the company threatened earlier this year, after having faced with unpredictable character of local administrative procedures on several sites.

RETAIL - Stockmann is preparing to open the 185 M$, 97 000 m2 Stockmann Nevsky Centre by 3Q/2010 in the heart of St. Petersburg. Half of the surface area will be offices, 20 000 m2 Stockmann department store and the rest will be rented to other shops.
§CONSTRUCTION INDUSTRY – Ruukki and Italian-Swiss Sadko Management have formed a joint venture to construct residential, industrial and commercial houses in the north-west region of the Russian Federation

ENERGY - GE Energy announced the start of construction for GE’s new Power Technology Center in the Kaluga Region, 180 km Southwest of Moscow. The center further expands GE’s in-country capabilities to deliver its products and services to customers across Russia and CIS. GE’s initial investment in the center is 30 M$, but that figure is expected to grow to 50 M$ by the time the facility is commissioned in late 2010.

ENERGY – American, MGF-CIS Ltd., plans to invest 545 M$ into construction of 8 mini power stations by 2015 with capacity of 3-50 MW, and heating power is to range from 2.5-100 GCal in Tomsk. The power stations are to be built in the city districts, experiencing power deficit. The company has similar project in Orenburg Region where 242 M€ will be invested into 32 mini power stations in 18 cities and districts of Orenburg region by 2013.

MACHINERY INDUSTRY - The American Deere & Company will invest about 500M$ in 2009-2015 into Russian joint venture with regional companies (e.g. Volgograd Tractor Mill, a member of Agromash Holding) to build a factory in Kaluga region. The 80 M$ factory, which includes a logistics center, will produce agricultural machinery.

NONWOVEN MATERIALS - Polymatiz has launched a 51 M€ production line for polypropylene non-woven materials in Alabuga Special Economic Zone, Tatarstan. Production volume of Polymatiz is roughly 15 000 tons of polypropylene non-woven with 10-14 000 tons of raw material to be delivered by Nizhnekamskneftekhim.

AUTOMOTIVE INDUSTRY - German-Japanese Takata Petri is planning to open 22,2 M€ factory in Ulyanovsk for manufacturing steering wheels, pillows and seat belts.

AUTOMOTIVE INDUSTRY - South Korean Yura Corporation is building a 10 M$ auto component factory in the Pskov region. The company will produce wire harnesses for passenger cars.

BANKING – UK company International Personal Finance Plc, decided to discontinue its pilot in in Russia due to the negative economic trends.

June 2009

GDP DEVELOPMENT – Russian GDP is estimated to contract by 7,5% in 2009 according to EBRD.

FOREIGN DIRECT INVESTMENTS – FDI to Russia totaled 12 bn $ in the Q1/09, down 30% y-o-y.

IT - Microsoft invests 300 M$ in Russia within the next three years. The program includes a range of activities from raising computer literacy level to opening new development centers.

PAINT MANUFACTURING - Finnish Tikkurila is opening a 20 M€ logistics centre in Mytischi, near Moscow to increase delivery channel efficiency.

AVIATION - Vestles is constructing a 1,2 bn € plant to Kaliningrad for manufacturing airships (a.k.a Zeppelins).

AVIATION - Kaliningrad’s airline, KD-Avia, was saved from ceasing its flights for the second time in the last few months after banks refused to provide loans to the company. Regional government will invest 92 M€ into the airline. In exchange, the airline should divest the Khrabrovo airport which it owns and operates.

RETAILING - French Carrefour Group is opening its first retail shop in Moscow in 2009 while French Auchan is planning to add six new hypermarkets during 2009 to its current chain of 33 outlets. On average the Auchan outlets, located in Omsk, Samara, St Petersburg and Moscow, will cover 10-13 000 m2.

LOCOMOTIVES - Russian Sinara Group and Siemens AG set-up joint venture to produce electric locomotives. Sinara will contribute to the joint venture a machine building plant.

CONSTRUCTION INDUSTRY – Italian Todini Construzioni Generali (TCG) conjointly with several other Italian investors is set to invest 600-700 M€ into building two hotel and shopping centres in Sochi. The first project, called Little Venice, involves construction of apartment buildings with the total area of 350 000 m2 and a shopping area of 10 000 m2. The second project, Little Milan, implies construction of 2 100 three star hotel rooms, 1 820 four star and 400 five star apartments and also a shopping area of the same size as that in Little Venice.

STEEL INDUSTRY - Estar Holding, a Russian stainless steel producer founded by State Duma Deputy Vadim Varshavsky, said six of its nine steel plants filed for bankruptcy after debt grew to 1 billion.

AUTOMOTIVES - Nissan Motor Company launched a 150 M€ plant in St. Petersburg. The plant became the third automaker in the regional automobile cluster after those of Toyota and General Motors.

AUTOMOTIVES - Spanish Gestamp Automocion launched a 65 M€ plant in Leningrad province. The plant produces metallic items for Ford and GM car factories in the region.

CONSTRUCTION MATERIALS - H+H International launched in May a 40 M€ aero-concrete plant in Leningrad province.

March 2009

FOREIGN DIRECT INVESTMENTS – 1-9/2008 foreign companies invested more than 700 M$ in the Krasnodar region. The two largest foreign investors Phillip Morris (200 M$) and Knauf (240 M€), who have been operating in the area already for more than 15 years, will continue investments in the region also in 2009. Philip Morris plans to invest 65 M€ and Knauf 11 M€.

ENERGY - Siemens is to invest 45 M$ into a joint venture with Rosatom to construct a transformer factory in Russia's Voronezh region.

AUTOMOTIVE - Volvo Trucks has launched its 100 M€, 15 000 trucks per year assembly plant in Kaluga Region. Analysts say that no more than ½ of the plant capacity will be used during the next 2 years as there will be not enough demand.

AUTOMOTIVE - Yokohama Rubber Company 85 M€ into a tyre factory to be opened in 2011 in the Lipetsk special economic zone. The first stage of the development will yield 1,4 M car tyres per year and at completion the annual capacity will be 3,5 million tyres.

AUTOMOTIVE – Spanish Gestamp and Severstal have formed a joint venture to invest 100 M€ into establishing a car body kit stamping production in Kaluga region. The production will start in 2010. The joint venture is expected to serve the automobile companies such as Volkswagen and Peugeot Citroen who are establishing factories in the region.

ELECTRONICS – A joint venture led by Onexim Group Ltd will invest 93 M€ in led components and led based lighting systems production. In Dec. 2008 Onexim acquired 82% of the Finnish Optogan Oy, to use its led technology in the joint venture.

ICT - Sinterra, National Group of Communication service provider, is by the end of 2009 going to open 25 regional data processing centers across the country. Each center will cost between 2-4 M€.

TECHNOLOGY PARK - Kuzbass technological park, to be constructed 2008-2010, opened its main building in Kemerovo region in late 2008. Many of the 100 projects selected to the park are related to the large coal mining activities in the region.

CONSTRUCTION EQUIPMENT - Komatsu has begun a 63 M$ project in Yaroslavl to open a factory manufacturing excavators. The factory will have a total area of 500 000 m2 and full production capacity should be reached by June 2010: 3 000 20-and 40-ton excavators and 7 000 forklifts.

CONSTRUCTION MATERIALS - Italian Buzzi Unicem is investing 263 M€ into construct of a cement factory in Akbulaks. The capacity of the plant will be 2 M tons of Portland cement per year. Besides the adjoining Russian areas the plant supplies also parts of Kazakhstan with cement.

WOOD INDUSTRY - The Austrian Springer Wood-Mechanising Company is investing 35 M€ into Hanty-Mansysk region to build in the first phase a 5 M€ automatic sorting plant of timbers and in the second phase a 30 M€ factory producing wide-span beams.

FOOD INDUSTRY - Nestle is planning to invest 220 M$ in the expansion of its coffee factory in Krasnodar region. The new instant coffee line is to be launched in the beginning of 2011.

PAPER INDUSTRY - Svenska Cellulosa (SCA) has opened its 170 M€ factory producing hygienic products under in Tula region. Manufacturing capacity of the factory is estimated to be 60-90 thousand ton per year.

December 2008

RESCUE PACKAGE - The Russian government has lent 10 bn $ to cash-strapped firms. Another 40 bn $ is reserved for the remaining of 2008. However, during 2009 additional 150bn $ worth of loans are due. Although the government has time on its side, worries over the exchange-rate, currency reserves and the oil price dampen government's generosity.

GDP & INFLATION - The GDP forecast for 2008 has been lowered from 7.3% to 6.8-7% and the consumer price inflation is forecasted to slightly exceed 13% in 2008.

STEEL INDUSTRY - Severstal has cut its production by half and applied for a 244 M$ loan from Vneshekonombank. The company will reduce its capital expenditures by 20 % this year and will postpone a 8 bn $ investment program from 2009 to 2011. The steelmaker's debt has grown 140 percent to $3.6 billion since December.

CONSTRUCTION - The 2012 Winter Olympic Games 12 bn $ budget is under scrutiny. The federal government has committed to providing 60% of the costs but the falling oil price pressures the government to take a second look at cost. The government stated that an oil price of 60 $ per barrel would be needed to cover all governmental expenditures e.g. in 2010.

MACHINERY INDUSTRY - Liebherr International started a 200 M EUR project to build a excavation and construction machine plant in Nizhny Novgorod region. The new plant will also make spare parts for the aircraft industry and maintain after-sale service support for Russian Gidromash.

October 2008

INFLATION - Consumer prices were up 15% y-o-y last month. 12-month inflation has remained at the 15% level since last spring, and food prices continue to soar. Prices of grain products are up 25-40% y-o-y and milk products 25-30%. The Central Bank of Russia expects 12-month inflation to fall to around 12 % by December.

REAL ESTATE - The city of Moscow plans to spend as much as 2 Bn $ bailing out developers who are struggling to fund projects in the world's third-costliest property market.

BREWERY - Baltika, St. Petersburg's largest brewery, continued its expansion to Siberia. The company invested 143 M EUR in its new brewery in Novosibirsk. Baltika plans to become a leader in the Siberian market, and to raise its share of this market from today's 31% to 41%.

MEAT PRODUCTION - Cherkizovo group, a leading Russian meat producer, recorded a turnover of 559 M$ (up 66% y-o-y) and net income of 36 M$ (up 63% y-o-y) during the first nine months of 2007.

RETAIL - Sedmoi Kontinents, a Russian grocery retailer, sales turnover for 1H/08 grew to 790 M$, up 33%. The company's EBITDA for the same period was 67 M$, up 3% y-o-y.

CEMENT PRODUCTION - LSR Group, St. Petersburg producer of construction hardware, started construction of a 390 M EUR cement plant in Slantsy, Leningrad province. The plant, with an annual capacity of 1.85 million tons will be launched in 2010.

METAL PRODUCTION - UC Rusal, the world's largest aluminum concern, and OMK, a big Russian producer of metal ware, signed an agreement worth 270 M EUR for constructing a logistics complex for metal cargoes in Ust-Luga, Leningrad province.

TRANSPORT - Russia and North Korea began a 150 M EUR project to reconstruct the railroad from Russia's Khasan to North Korea's sea port of Rajin. Cargo transshipment from Asia to Europe along the route will take 14 days compared to the sea freight taking 45 days. The completion of just the first stage of the project will make it possible to attract up to 100,000 containers annually to the Trans-Siberian railroad.

August 2008

WAGES - Wages continue to rise rapidly. The average monthly wage in Russia is 430 EUR. Pay levels, however, vary widely across branches and regions. In real terms, the average wage rose 14 % y-o-y, some-what lower than a year ago.

UNEMPLOYMENT - The number of unemployed continued to fall putting the unemployment rate at 6.4%. Due to the rather low unemployment rate and weak mobility of labor, labor shortages have appeared in several fast growing regions. Rosstat reports that the unemployment rate at the end of 2007 was less than 1% in Moscow and only 2% in St. Petersburg.

AUTOMOTIVES - Daimler AG is in negotiations to purchase a 42% stake in truck manufacturer KAMAZ from Troika Dialog.

AUTOMOTIVES - Peugeot Citroen and Mitsubishi Motors have started the construction of a 470 M EUR plant and Hyundai a 330 M$ plant in St Petersburg.

REAL ESTATE - Russian capital surpassed London City in terms of office lease prices and now yields to London West End only. The average price one has to pay to rent a m2 in Moscow is 85 EUR/m2/month, while in the London City the average is 74 EUR/m2/month.

CAR SALES - Upto 3.8 million cars are to be sold in Russia in 2008 making it the largest car market in Europe. The car sales in 1H/2008 grew by 41% y-o-y.

FURNITURE - Russian Company Domashny Interier (Home Interior) has signed a franchise agreement with Austrian Kika Group, the company plans to launch a network of 15 stores in across Russia.

COSMETICS - French Company L'Oreal and the authorities of the Kaluga Region, Russia, signed an agreement on construction of a cosmetics factory. The expected investment is 45 M EUR. L'Oreal plans to finish construction works by the end of 2010.

RETAIL - Cloth retailer Melon Fashion Group intends to open 280 new stores in Russia. Trade network expansion up to 400 outlet stores will require an investment of 20 M$.

AGRICULTURE - Russian government plans to create a state grain trading to control up to half of the country's cereal exports.

SHIPBUILDING - Russian shipbuilding holding OPK, the owner of two St. Petersburg shipyards, signed a memorandum with South Korean Daewoo Shipbuilding and Marine Engineering on joint projects in shipbuilding. The sides have plans to invest 650 M EUR in creating a large shipyard complex in St. Petersburg, which would produce gas tankers for Gazprom. Norwegian Aker Yards might also join this project.

TRANSPORT - Prime minister Putin presented a record 13,500-billion-rouble (nearly EUR370 billion) investment program targeting development of transport infrastructure to run between 2010 and 2015.

INSURANCE - Russia's Department of Insurance Supervision reports insurance premium in-come last year reached 776 billion roubles (over EUR20 bil-lion), up 27 % y-o-y. Growth was slightly higher than in 2006. Nevertheless, Russia's insurance sector is still small; premium income corresponds to only about 2.5 % of GDP (e.g. the EU average exceeds 8 % of GDP).

ECONOMY - The latest World Bank survey of Russia finds distinct signs of economic overheating. Factors include GDP growth in excess of 8 %, growth in real wages far outstrip-ping productivity gains, a decline in unemployment below 7 % and accelerating inflation.

May 2008

FOREIGN DIRECT INVESTMENT - The law on foreign investment in strategic industries got final confirmation. Foreign investors are required to seek official permission before acquiring 50% of an enterprise operating in the following strategic fields:

Hydrometeorology, geophysics
Nuclear energy (materials, waste handling, research, equipment design and construction, safety studies)
Manufacture, maintenance and sales of technology used for intelligence or code encryption
Design, manufacture, maintenance, sales and use of weapons systems and arms
Design, testing, manufacture and maintenance of aerospace technology, air safety, space activities
Large circulation publishing, TV and radio broadcasting
Natural monopolies (excluding electrical power and municipal heating distribution, postal services)
Major telecommunications companies (excluding Internet providers)
Major metals producers if their products are used by de-fence industries
Prospecting and quarrying of important minerals
Fisheries

FOREIGN INVESTMENTS - Foreign investments almost doubled in the Leningrad region in 2007. FDI grew 5% y-o-y only, while long-term credits from foreign sources rose nearly fourfold. The structure of foreign investments changed significantly in 2007 with share of FDI decreasing from 67% to 37% and other investments growing from 33% to 63%. Foreign trade grew 22% on the import side and 40% on the export side, y-o-y.

PRIVATIZATION - The Russian Privatization Authority announced that it had privatizing 867 companies and received 750 M$ for them in 2007.

CREDIT RATING - Standard & Poor has revised its outlook of Russia from stable to positive. The main reasons include strong economy, comfortable budget surplus and growing reserves. The high oil price is having a positive effect on the country's domestic demand.

RETAIL - The Finnish retailer SOK announced plans to take 10% of the St. Petersburg retail market. SOK plans to invest 500 M EUR by 2015 to create a network of 20 Prisma supermarkets.

RETAIL - A survey ranked Russia as Europe's fourth largest retail market after Germany, France and Great Britain in 2007. It was forecasted that that in 2008 Russia will become Europe's largest retail market. Among European cities, Moscow already overtook the number one London market in 2007. An indication of rising general living standards is the decreasing sales in outdoor markets: down from 20% to 15% of all retail sales in 2007.

FOOD INDUSTRY - Kraft Foods launched a new instant coffee plant in the Leningrad region. The plant cost 70 M EUR and has an annual production capacity of 5 000 tons.

INSURANCE - A subsidiary of Sampo, IF P&C Insurance Holding Ltd, announced its plans to acquire 100% stock of St. Petersburg insurance company Region. The value of the purchase remains confidential, but experts evaluate it to be close to 4B EUR.

RETAIL - Wal-Mart announced its intention to expand to Russia and Eastern Europe, announcing that it had recruited Stephan Fanderl , a German retail executive, to explore opportunities in the region.

March 2008

ELECTIONS - Dmitri Medvedev won the Russian presidential election on 2 March. According to preliminary results, Medvedev gained 70% of the votes, whilst communist candidate, Ziuganov, received 18%, nationalist Zhirinovsky 9% and Bogdanov from the Democratic Party gained less than 2%. Voter turnout was around 70%. The election of Medvedev paves the way for a continuation of Putin's policies and no dramatic changes are expected in the short term. Medvedev is however expected to have a somewhat more liberal economic policy, less confrontational foreign policy and generally more focus on socio-economic development. In a speech he announced that he would focus on institutions, innovations, infrastructure and investments.

FOREIGN DIRECT INVESTMENT - FDI into Russia doubled in 2007 totaling USD 27.8bn, states the Russian statistics authority. The total inflow of foreign capital also doubled last year, reaching USD 121bn. The consumer goods sector was the most popular, attracting 40% of the investments. The trend is expected to continue in 2008 as European investors, according to a study published by A.T. Kearney, see Russia as the third most interesting FDI target after India and China.

MINING - Russian Severstal has sold two of its coal mines in Berezovskaya and Pervomaiskaya to Arcelor Mittal for USD 650m. The deal was unexpected, but explained by the fact that Severstal seems to have got a very good price for the assets.

ENERGY - Finnish power giant Fortum bought 29% of the shares of Russian power company TGK-10 for EUR 0.8bn and committed to buying a further 24-47% of the company.

RETAIL - SCA, the Swedish company having brands such as Libero and Libresse, invests EUR 48m in a new production facility for consumer goods in Tula region South of Moscow.

AUTOMOTIVE INDUSTRY - French car giant Renault's expansion in Russia saw the company paying USD 1bn for a 25% share of Russian car manufacturer Avtovaz.

CONSTRUCTION - A Hungarian developer TriGranit signed an investment agreement with the St. Petersburg government. TriGranit invests nearly EUR 0.5 bln in two projects. The first project is the construction of a multifunctional Badajevszkij shopping and exhibition center on 28 ha, which will also incorporate residential and office buildings, hotels and congress center. The second project is a large movie studio complex with hotel and parking facilities on Basil Island.

CONSTRUCTION - A tender for a complete reconstruction of Apraksin Yard, the largest marketplace in the city centre, was won by a large Russian developer Glavstroy-Spb. The winner is a part of a nation-scale Bazel holding, owned by aluminum magnate Oleg Deripaska. Glavstroy-SPb intends to invest EUR 700mln in this project.

ELECTRONICS - Flextronics, a Singapore producer of electronics and IT-equipment, decided to create its plant in St. Petersburg. The plant would produce monitors, TV-sets, PCs and laptops. Annual turnover of the subsidiary is expected to be EUR 70 mln, and after extension EUR 350 mln.

FOOD INDUSTRY - Finnish company, Fazer Group, announced its plans to invest EUR 70 mln in the creation of a new bakery in Leningrad region. Prior to the bakery investment Fazer has already invested EUR 130 mln in Russia.

AUTOMOTIVE INDUSTRY - A group of 11 South Korean producers of automobile parts plan to create a techno park close to the constructed Hyundai car plant. The companies intend to invest nearly EUR 150 mln, but are still looking for a convenient location in Leningrad region or in St. Petersburg.

CONSTRUCTION MATERIALS - Danish company H+H International started to build a plant producing aerated concrete. The plant will be launched already in 2008 and in 2009 its capacity is expected to reach 0,4 Mm3. Initial investment to the plant is EUR 30 mln.

BANKING - A Russian company Krizo and Chinese Beijing C&W Technology are investing EUR 35 mln in Leningrad region to build a factory for producing ATMs. Until now all the ATMs used in Russia have been imported.

BANKING - International Personal Finance Ltd bought 52% of the Kaliningrad Maritime Commercial Bank. The British company wants to use this bank as a platform to develop its consumer credit business in Russia.

January 2008

FOREIGN INVESTMENTS - Foreign investments in St. Petersburg. In the first three quarters of 2007 non-financial large and medium enterprises invested almost EUR 4 bln into St. Petersburg's economy, which by 32.0% exceeded the corresponding sum for January-September 2006. Construction and transport were the most attractive sectors for the investors. Foreign capital inflow constituted the bulk of all investment, totaling EUR 3.4 bln. The share of foreign portfolio investment continued to grow, comprising 10.9% of all FI, much higher than the small 1.2% share it had a year ago.

RETAIL - Swedish IKEA announced its decision to invest at least 100 mln EUR and build a store in the Kaliningrad region with a total area of 140 thousand square meters.

CAR INDUSTRY - British producer of automobile components Stadco Ltd got a permission to build its production plant in the Vsevolozhsk district of Leningrad region. Stadco plans to start supplying components to regional and St. Petersburg auto producers from 2009 onwards, and invests EUR 208 mln in this new plant.

MEAT INDUSTRY - Sadia from Brazil has invested USD 78 mln in a poultry processing plant in Kaliningrad and will open it by the end of the year.

MACHINERY INDUSTRY - Russian metal company Maksi- Group announced its plans to invest EUR 300mln in creating a plant producing metallic articles and armature. The plant would supply its products to St. Petersburg construction companies.