EDB Centre for Integration Studies reports a 32% growth in mutual investments between the CIS countries over three post-crisis years
The leading investor is Russia and the leading investee is Ukraine.
St. Petersburg, 10 September 2013. The accumulated mutual foreign direct investments (FDI) between the CIS countries and Georgia have reached almost US $54 billion, up 32% over three post-crisis years. This figure is stated in the annual report Monitoring of Mutual Investments in the CIS Countries 2013 by Eurasian Development Bank’s (EDB) Centre for Integration Studies.
This major research project, which has the purpose of maintaining and analysing the continuously growing database on investment projects in the post-Soviet space, was launched last year. The Monitoring of Mutual Investments’ (MMI) database is significantly larger than official statics, primarily because it adequately records investments made through third countries. In this project the EDB Centre for Integration Studies partners the Russian Academy of Sciences’ (RAS) Institute of World Economy and International Relations (IMEMO). At present the database contains information on more than 1,000 transactions and projects and is the largest source of information on investments in the post-Soviet space.
According to experts, FDI in the Customs Union total US $22.7 billion or 42% of all mutual FDI between the CIS countries and Georgia. Experts believe that the intensity of mutual investments within the Customs Union can grow significantly, given the fact that the aggregate GDP of Belarus, Kazakhstan and Russia accounts for 87% of GDP of the CIS.
“Ukraine is an undoubted leader in terms of attracted investments, amounting to US $17.1 billion, practically all from Russia,” says Vladimir Yasinsky, Managing Director for Research at EDB. “Because of their economic and industrial potential and because of the presence of Russia’s largest investors, Ukrainian regional leaders are not only Kyiv and Kyiv Region (US $9.257 billion), but also Dnepropetrovsk (US $1.539 billion), Donetsk (US $1.236 billion), Lugansk (US $1.116 billion), Odessa (US $916 million) and Ivano-Frankovsk (US $580 million) Regions.”
Russian companies continue to lead among CIS investors. The Centre for Integration Studies reports that in 2012 they accounted for 82.7% of all accumulated FDI (US $44.5 billion) and the majority of large transactions. Russian transnational companies determine, to a significant extent, the industrial breakdown of mutual FDI in the region. The leading sector was telecommunications (16% of accumulated FDI), followed by crude oil and natural gas production (12%), gas transportation and sale (11%), banking (8%) and the electric power sector (7%). In the three Customs Union countries, the leading sector was gas transportation and sale in Belarus with Russian FDI.
The second largest investor in the region, according to MMI, is Kazakhstan, with investment reaching US $5.61 billion. It is followed by Ukraine (US $1.57 billion) and Azerbaijan (US $1.55 billion). The fourth is Belarus, which, with a relatively low level of FDI in the region, ranks second among the CIS countries in terms of closed investment transactions, primarily due to the creation of a distribution network for Belarusian goods and the development of service centres for mechanical engineering products.
MMI has confirmed once again that offshore companies continue to play an excessive role in the geographical structure of FDI exports and imports in the CIS. As a result, the MMI data exceeds official statistics significantly. For example, according to MMI, Russia’s accumulated FDI in Ukraine total US $16.7 billion, while Ukraine’s State Statistical Committee reports Russian FDI standing at US $3.8 billion (4.4 times less).
The analysts from the EDB Centre for Integration Studies and IMEMO believe that the data and analysis provided by Monitoring of Mutual Investments in the CIS Countries 2013 will help companies to better understand business environment in the region and the countries to promote mutually beneficial industrial cooperation.
Monitoring of Mutual Investments in the CIS Countries 2013 is available as a report and presentation at the EDB website.
Additional Information
Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. Read more at https://www.eabr.org.
The Centre for Integration Studies is a specialist research centre of Eurasian Development Bank. The Centre organises research and prepares reports and recommendations on regional economic integration. Read more about the Centre’s projects and publications at www.eabr.org/r/research/analytics/centre/