One of the Forum’s key sessions, Protecting the Rights of Investors in the Far East: Guaranteed Safeguards, was held on 2 September at the Eastern Economic Forum 2016. Over the course of the session, participants discussed in detail a series of steps specifically aimed at improving the investment climate in the Russian Far East.
The session was moderated by Dimitry Afanasiev, the Chairman of EPAM. Mr Afanasiev initiated the discussion by giving a short overview of the existing investment protection mechanisms in Russia, before laying out a series of concrete proposals. The idea of creating a special investment court for residents of ASEZs and Vladivostok Free Port generated particular interest. The court would be answerable to the Supreme Court of the Russian Federation and enable residents, who have a deep understanding of investment law and the specifics of regional practices, to be involved in settling disputes. Mr Afanasiev believes that such a court would make the region more attractive to potential investors.
The session continued with Yuri Gulyagin, Deputy Prosecutor General of the Russian Federation, who highlighted the particular role of the prosecution authorities in protecting business rights and interests. Mr Gulyagin called on the business community to make better use of the opportunities offered by interministerial working groups on the protection of entrepreneurs’ rights, which are sponsored by the Prosecutor General of the Russian Federation and regional prosecution authorities. The positive influence of the Unified Register of Inspections was also noted. Open access to the data available in the register has made inspectors more accountable and reduced the risk of unwarranted inspections. A designated email address providing a direct line of communication between the business community and the Prosecutor’s Office has also proved effective. Positive changes have included: improvements to government policy regarding criminal law; the liberalization of the criminal code; the softening of sentences for a variety of economic crimes; and the expansion of sentencing options available to judges, including the use of fines as the main form of punishment. Together, these measures are intended to reduce – and in the long term to prevent – excessive administrative pressure on businesses, to significantly improve the conditions for doing business, and to increase the level of protection offered to entrepreneurs, including foreign investors, against abuse. Mr Gulyagin concluded by promising to bring issues relevant to ASEZ residents under his control.
The proposal to create a special investment court was supported by Kirill Stepanov, State Secretary and Deputy Minister for the Development of the Russian Far East, who also spoke in detail about the efforts that his Ministry is leading to better protect the rights of entrepreneurs in the region.
Co-Chairman of Delovaya Rossiya (Business Russia) Andrey Nazarov likewise made several proposals which, in his view, will attract investors and help local entrepreneurs feel more at ease. Firstly, he spoke of the need to update Russia’s criminal code to include provisions for the punishment of those who knowingly bring an unlawful criminal case against an entrepreneur. In addition, the prosecution authorities should have the power to bring proceedings against those who carry out illegal investigations of individual business professionals. Mr Nazarov also argued that any criminal case brought against an ASEZ resident should be heard at the level of the regional prosecutor. The subject of administrative prejudice was also raised.
A proposal to improve and energize cooperation between Russia and South Korea was put forward by Lee Kyung Bum, President of LS Networks, which has become the top foreign investor in ASEZs. Using currency swaps such as those used in South Korea, Japan, and China could provide significant support to manufacturers, as well as reducing the currency risk associated with an unstable exchange rate.
Shiv Khemka, Vice Chairman of Sun Group, which is one of the leading investors in Russia and other emerging markets, observed that the investment situation has been continually improving in Russia since the early 2000s.
Also joining the panel to share their experience and views regarding the situation in the Russian Far East were Sergey Darkin, President of Pacific Investment Group; Doo-Sik Kim, Senior Partner at Shin & Kim; and Kevin Nash, Deputy Centre Director of the Singapore International Arbitration Centre.