As I prepare to lead a senior City business delegation to Moscow and St Petersburg, economic winds of change seem to be blowing across Russia.
There is no doubt that Russia is an economic powerhouse, with the country’s sheer size and abundance of natural resources ensuring it is an important player on the global stage. And yet for years it has been punching consistently below its weight.
As a result, Russian President Dmitry Medvedev recently mapped out his vision for attracting foreign investment through long promised economic reform at the St Petersburg International Economic Forum. Prime Minister Vladimir Putin has subsequently endorsed this approach.
Cynics will, of course, say they have heard it all before but there appears to be a real determination to diversify and to create a business environment conducive to inward investment.
Couple this with the US$1 trillion commitment to upgrade the country’s infrastructure over the next decade, not to mention the forthcoming Winter Olympics and Football World Cup, and it is clear that Russia has the ambition to take its rightful place in the global economy.
With an IPO market that offers an internationally respected business environment with significant advantages – deep pools of capital, a broad investor base, and high standards of corporate governance – London has traditionally been the centre of choice for Russian companies looking to raise capital.
But we cannot afford to be complacent, with recent reports indicating Russian firms are increasingly keen on listing in Far Eastern markets.
Whilst London is quite right to demand high standards of corporate governance – and the Bribery Act will bolster our reputation in this area still further – there is a real danger that Asia could become the destination of choice for high quality Russian companies looking to raise capital.
There are significant mutual advantages in strengthening ties between the UK and Russia and President Medvedev’s recent comments are a welcome signal of intent.
There is, however, a long way to go. Russia ranked 154th out of 178 on Transparency International’s Corruption Perceptions Index in 2010 and 123rd out of 183 on the World Bank/IFC Ease of Doing Business report in 2011.
International investors need reassuring that Russia values certainty, predictability and transparency, especially with regards to the rule of law.
The UK is working hard to increase trade and investment with our Russian counterparts. For that to happen we need to create a partnership based on mutual trust. I look forward to helping drive this agenda during the course of my visit and beyond.
Michael Bear is Lord Mayor of the City of London