• Wed
  • Sep 3, 2014
  • Updated: 8:26am
BusinessChina Business

Russia looks east for new investors

Moscow has US$14b of infrastructure projects on offer as it seeks a counterbalance to the West following sanctions imposed over Ukraine

PUBLISHED : Thursday, 17 April, 2014, 1:09am
UPDATED : Thursday, 17 April, 2014, 1:09am

The Ukraine crisis will increase Chinese investments in Russia, said participants at the "Russia and China Dialogue" conference in Hong Kong yesterday.

"Ukraine is one of the factors that will facilitate Chinese investment in Moscow and Russia," said Leonid Kostroma, deputy chief executive of the Moscow City Investment Agency.

The Russian capital offered billions of dollars of investment projects at the conference in a sales pitch to Hong Kong and mainland investors.

Chinese investment in Moscow and Russia will definitely increase this year, echoed Yi Qing, general director of Comex, a Chinese company developing commercial property in China, Europe and Russia. "Russia needs Chinese investment as a counterbalance [to the West]."

Economic relations between the European Union and Russia will fall off "slightly" because of the Ukraine crisis, Yi said. "It will be a huge opportunity for Chinese and Hong Kong companies to have close economic relations with Moscow and Russia. Hong Kong has been a mediator between Chinese and foreign companies. There is a niche for Hong Kong capital, services and expertise [in Moscow]," he said.

On Tuesday, the US Department of State said it anticipated more sanctions on Russia over Ukraine. The EU could impose deep and debilitating economic sanctions against Russia next week unless new talks result in a diplomatic solution to Ukraine, the Independent newspaper quoted French Foreign Minister Laurent Fabius as saying.

Under current EU and US sanctions, several Russian individuals are subject to travel bans and asset freezes over the tensions in Ukraine.

Moscow is offering at least US$14 billion of infrastructure projects to investors, including from Hong Kong and the mainland, said Kostroma. In the coming years, the Russian capital will build more than 200 transport hubs, a rail system in the centre of the city and continue to invest in its metro railway, Kostroma added.

Moscow is privatising some of its companies and seeking foreign investment, said Vladimir Efimov, the minister in charge of the city's property. This includes total privatisation of a Moscow energy company for an estimated US$2.86 billion.

Comex is building a 3.9 million square metre commercial complex in Moscow, which will be one of the largest such complexes in the world, encompassing a shopping mall, residential property, hotels and exhibition facilities, Yi said.

The first phase will be completed in three years and the entire project in seven, he estimates. The complex will have a budget of €2 billion (HK$21.4 billion), of which 30 per cent is open to foreign investors, Yi said. "We need investment partners, especially Hong Kong investors."


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