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Russia: Market Profile

Picture: Russia factsheet
Picture: Russia factsheet

1. Overview

Russia's economic recovery continues amid relatively high oil prices, enhanced macroeconomic stability, improved tax administration, a weaker currency, a conservative fiscal policy and gradual monetary loosening. However, Russia's growth prospects for 2019-2021 remain modest. A return to solid growth will need more private investment, the easing of Western-imposed sanctions and a lift in consumer sentiment. Structural reforms designed to bolster investor confidence could greatly enhance long-term growth prospects. A strategic focus on digital transformation has enabled Russia to build a national digital infrastructure. However, to gain significant socio-economic benefits from these changes, Russia will need to implement policies that accelerate the digital transformation of the economy's traditional enterprise sector, and promote research and development, innovation and entrepreneurship.

Sources: World Bank, Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

September 2016
The ruling United Russia party increased its majority in the parliamentary elections.

June 2017
The European Union (EU) extended sanctions against Russia.

May 2018
Vladimir Putin was inaugurated for fourth term as president in the March election.

October 2018
Novatek announced the discovery of a new gas field in the Ob Bay area, which was estimated to hold natural gas reserves of more than 300 billion cubic metres. The discovery was made via an exploration well in the North-Obsk license area.

December 2018
OPEC, Russia and other allies agreed to further limit oil production in an attempt to boost failing oil prices.

June 2019
The Russian Prime Minister Dmitry Medvedev approved the plans for the construction of a toll motorway that will cut cargo shipping time and ease trade between Mainland China and Europe. The USD9.3 billion 2,000km 4-lane highway project, termed the Meridian highway, woukd stretch from the Russia-Kazakhstan border to existing road networks near the Russia-Belarus border.

June 2019
On June 7 2019, new legislation was passed in Russia requiring manufacturers of the 735 medicines on the country’s Vital and Essential Drugs List to re-register prices with the Russian Ministry of Health. As part of the re-registration process, prices would be reassessed using external reference pricing methodology. After re-registration, manufacturers will be obliged to reduce prices in line with downwards price changes in reference countries.

July 2019
Construction started on a cableway at the Mainland China-Russia border. The 972m-long cableway will span the Heilongjiang River, known in Russia as the Amur River, and will connect Heihe in northeast Mainland China's Heilongjiang Province with the Russian city of Blagoveshchensk. The project is designed for two-way traffic and each cable coach will have a capacity to carry 80 people. The system will be able to carry six million people annually, with each one-way ride expected to take less than 10 minutes. The cableway is slated to become operational in 2021.

October 2019
The Russian government supported a draft law aimed at capping foreign ownership of major technology companies to 50%-minus-one share, a sharp increase from the 20% initially proposed.

October 2019
Presidents Vladimir Putin and Recep Tayyip Erdogan formalised a buffer zone 120km long and 32km wide immediately south of the Turkey-Syria border, which will be controlled and patrolled by Russian, Turkish, and Syrian troops.

Sources: BBC country profile – Timeline, Fitch Solutions

3. Major Economic Indicators

Graph: Russia real GDP and inflation
Graph: Russia real GDP and inflation
Graph: Russia GDP by sector (2018)
Graph: Russia GDP by sector (2018)
Graph: Russia unemployment rate
Graph: Russia unemployment rate
Graph: Russia current account balance
Graph: Russia current account balance

f = forecast
Sources: IMF, World Bank, Fitch Solutions
Date last reviewed: October 27, 2019

4. External Trade

4.1 Merchandise Trade

Graph: Russia merchandise trade
Graph: Russia merchandise trade

Source: WTO
Date last reviewed: October 27, 2019

Graph: Russia major export commodities (2018)
Note: Unclassified products are those that fall under "HS2 Code: 99"
Graph: Russia major export commodities (2018)
Note: Unclassified products are those that fall under "HS2 Code: 99"
Graph: Russia major export markets (2018)
Graph: Russia major export markets (2018)
Graph: Russia major import commodities (2018)
Date last reviewed: October 27, 2019
Graph: Russia major import commodities (2018)
Date last reviewed: October 27, 2019
Graph: Russia major import markets (2018)
Graph: Russia major import markets (2018)

Sources: Trade Map, Fitch Solutions
Date last reviewed: November 20, 2019

4.2 Trade in Services

Graph: Russia trade in services
Graph: Russia trade in services

Source: WTO
Date last reviewed: October 27, 2019

5. Trade Policies

  • Russia and Ukraine signed a programme of economic cooperation in 2011, before the Maidan revolution. The document was planned for implementation by 2020 and provides for enlarging free trade and mutual protection of investments, creating a system of payment and settlement operations and ensuring the free movement of citizens. However in Q118, Kiev announced the cancellation of its economic cooperation agreement with Moscow, marking a further decline in interstate relations.

  • The broader concern within Russia's trade profile is the limited diversification away from the country's high reliance on primary sector output – and specifically hydrocarbons. Investors will be dissuaded by the lingering obstacles to trade that stem from the country's stalled transition from a centrally-planned to a free-market economy. Although Russia became a member of the World Trade Organization (WTO) in 2012, it continues to implement policies and duties which restrict trade freedom and add to the difficulties faced by exporters and importers. While the Russian government, at all levels, offers moderately transparent policies, actual implementation can be inconsistent. Moreover, Russia's import substitution programme often leads to burdensome regulations that can give domestic producers a financial advantage over foreign competitors.

  • Russia's trade openness remains encumbered by tight protectionist measures. The average tariff rate remains the second-highest regionally in Central and Eastern Europe, at 6.3%, driven by the levying of considerable duties on imports of animal products (which average 23.1%), beverages and tobacco (22.1%), clothing (11.7%), transport equipment (8.9%) and manufactures (8.4%). The lowest tariffs are applied to cotton (0.0%) and petroleum (5.0%). Russia's failure to fully commit to WTO guidelines is a feature of its unpredictable trade policies.

  • Any import or export transaction equal to or over the value of USD50,000 requires a 'deal passport' authorised by a Russian bank, through which the payment will be processed. Although there are generally no problems with obtaining deal passports, this adds to the bureaucratic obstacles faced by businesses engaged in international trade.

  • Import value-added tax (VAT) is payable to customs upon importation of goods. The tax base for import VAT is generally the customs value of the imported goods, including excise duties. Either the 18% or 10% VAT rate may apply upon the import of goods to Russia, depending on the specifics of the goods. Import VAT may generally be claimed for recovery by the importer, provided that the established requirements for such recovery are met.

  • The government's import substitution policies, such as the Food Security Doctrine, cause significant uncertainty for businesses and may result in quotas or increased duties on imports.

  • There are various items that fall under the import substitution regime, with certain items of machinery being restricted for import into Russia – such as coal mining machinery – where a special duty rate applies.

  • In July 2014, sanctions were were imposed against Russia in a coordinated manner by the EU, the United States, Canada, and other allies and partners. These sanctions were further strengthened in 2018. These sanctions restrict access to Western financial markets and services for designated Russian state-owned enterprises in the banking, energy and defence sectors. They also place an embargo on exports to Russia of designated high-technology oil exploration and production equipment as well as designated military and dual-use goods. Externally imposed restrictions on imports of Western-borne capital goods have delayed exploration projects in the mining sector especially.

  • The Russian government holds significant stockpiles of metal ores and precious metals such as palladium, and restricts the amount of metal that can be exported each year. High entry barriers and substantial regulation will obstruct new, especially non-Russian companies, from entering the mining industry, which will continue to hinder growth in the sector.

  • There are also various export duties and bans imposed on various items, ranging from agricultural products to minerals deemed vital to the domestic economy. Arbitrary tariffs on exports have also been implemented on primary sector commodities in order to regulate prices on the domestic market. For example, in December 2014, a new levy on grain exports was announced, the third such time that exports of grains have been restricted since 2007. This remains in place as of July 2019, having been adjusted several times, although it has been largely ineffective in increasing the availability of wheat to the domestic market and pushing down prices.

  • Following the signing of a package of agreements in November 2009 to establish a Customs Union (CU), Russia, Belarus and Kazakhstan began using common external tariffs (CET) in early July 2010 and launched the common economic space on January 1, 2012, enabling free movement of goods, services, capital and workforce between the three member states. A treaty aiming for the establishment of the EAEU was later signed on May 29, 2014 by the leaders of Belarus, Kazakhstan and Russia, and came into force on January 1, 2015. Following the signing of respective treaties aiming for Armenia's and Kyrgyzstan's accession to the Eurasian Economic Union (EAEU) on October 9, 2014 and December 23, 2014, Armenia entered the EAEU on January 2, 2015 and Kyrgyzstan acceded on August 12, 2015.

  • In August 2016, the Russian government added unwrought lead to the list of goods deemed essential to the internal market. Goods stated on that list may become subject to an export ban to ease internal market conditions. The Russian government has also established a permanent fixed rate of export duties on other ores, such as tungsten ores and concentrates, at 10% of their customs value.

  • There are various export duties on ethane, butane and isobutene and restrictions on trade in strategic minerals such as platinum and palladium. Despite rising palladium prices, the Russian government will continue to exert tight control over the amount of palladium supply exiting the country, thus restricting the sector's growth prospects.

  • Even within the EAEU, there are export licensing requirements on unprocessed precious metals, commodities, waste, scrap, ores and concentrates of precious metals, as well as on untreated mineral stones.

  • Import and export duties are calculated as a percentage of the customs value of the goods (ad valorem) or in euros per unit of measurement of the goods, and/or as a combination of these two rates. In most cases, however, ad valorem customs duties are levied as a percentage of the customs value of the goods. For most Hong Kong-type consumer products – like garments, household hardware, consumer electronics, timepieces and jewellery – current tariff rates stand at 5%-20%. On the other hand, export duties are set for a few commodities like oil products, copper, nickel, timber and goods made of these materials. Meanwhile, anti-dumping proceedings against Hong Kong have been scarce. As of April 2019, only one anti-dumping measure in place affects Hong Kong goods – specifically imports of cold-rolled flat steel products with polymer coating.

  • The Russian customs tariff classification is based on the Harmonised Commodity Description and Coding System. All goods carried across the country’s customs border have to be declared to customs authorities of Russia. A customs declaration should be submitted within 15 days after the goods are presented to customs authorities. Customs duties, if any, should be paid to the authorities when the goods cross the Russian border.

  • In total, and as of July 2019, Russia has anti-dumping measures on 42 products from 34 countries. These anti-dumping measures are implemented by either Russia alone, or by the EAEU.

  • As of July 2019, 130 product lines from 65 countries have import restrictions on them. Most of these product lines fall under the Food Security Doctrine.

Sources: WTO – Trade Policy Review, Fitch Solutions

6. Trade Agreement

6.1 Trade Updates

Moscow has negotiated free trade agreements (FTAs) and trade pacts with a number of countries, notably with other Commonwealth of Independent States (CIS) states, Serbia and, most recently, Egypt, which lower barriers to trade with these countries. Russia is also a member of the newly formed EAEU, which was launched in 2015, and comprises Kazakhstan, Belarus, Armenia and Kyrgyzstan. This CU is intended to abolish tariff and non-tariff barriers to trade between members and align customs duties for trade outside the bloc.

6.2 Multinational Trade Agreements


  1. EEU: The EEU consists of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. The EAEU, which is based on the CU of Russia, Kazakhstan, and Belarus, was established in 2015. It was later joined by Armenia and Kyrgyzstan. The union is designed to ensure the free movement of goods, services, capital and workers between member countries.

  2. Egypt-Russia: Egypt is a minor trade partner to Russian exporters at present, though growing gas and high wheat demand in Egypt may provide an opportunity to boost trade flows.

Partially Active

Commonwealth of Independent States FTA (CISFTA): This agreement is between Kyrgyzstan, Russia, Ukraine, Belarus, Uzbekistan, Moldova, Armenia, Tajikistan and Kazakhstan. CIS states remain key trade partners, but Russia has suspended the application of the FTA for bilateral trade with Ukraine, meaning that barriers have been raised with Russia's largest trade partner within the group.

Source: WTO Regional Trade Agreements database

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Russia FDI stock
Graph: Russia FDI stock
Graph: Russia FDI flow
Graph: Russia FDI flow

Source: UNCTAD
Date last reviewed: October 27, 2019

7.2 Foreign Direct Investment Policy

  1. To stimulate investment with the aim of diversifying its economy, the Russian government is providing a wide array of incentives for investors developing new products or technology in the energy efficiency, nuclear engineering, space technology, medicine and information technology industries. Major incentives include profits tax/property tax/VAT exemption, reduced social contribution rates, special customs regime and a 150% deduction of qualifying costs for companies conducting eligible research and development activities to reduce profits tax or increase deferred tax assets. Other key sectors for development and investment include pharmaceutical and medical, real estate, innovations and technology, infrastructure, aluminium, iron and steel, lead, platinum-group metals, precious metals, nickel, copper, zinc, coal, telecommunications, transportation, agriculture, food and gas. However, in practice, the Russian government continues to impose some restrictions on trade flows and limits on foreign direct investment (FDI) in certain sectors, while state-owned institutions are prevalent in all areas of the economy.

  2. The North-South Transport Corridor will continue to gather momentum in the coming years, driven by the alignment of geopolitical goals and burgeoning trade ties among the countries along its route. The envisaged transport route, which aims to ultimately link India and Russia via Azerbaijan and Iran, will attract road, rail, and port infrastructure investment and would substantially reduce the time and cost needed to ship freight along a north-south axis.

  3. FDI is restricted in some strategic sectors, as detailed in the 2008 Strategic Investment Law. These sectors include those involved in the exploitation of natural resources, defence, media and industries, in which SOEs have a monopolistic advantage. Any investor seeking to increase shareholdings or gain a controlling stake in any company deemed to be in a strategic sector will require prior government approval, which is not always guaranteed and frequently comes with certain conditions. This prevents large-scale foreign investment in many potentially lucrative sectors, with the law also being arbitrarily applied to some activities that do not initially appear to fall under the description of a strategic sector. This was illustrated in 2012, when internet company Yandex was deemed a strategic asset, limiting foreign ownership in the company. In the extractive industries, government approval is required for foreign ownership above 25%. If a transaction occurs in contravention of the Strategic Investment Law, the companies involved may be subject to harsh penalties, including the complete voiding of the deal. Another major barrier faced by foreign investors in Russia is the large-scale government presence in the economy through complete or partial ownership of companies in a wide range of sectors. SOEs dominate the market in some industries, notably hydrocarbons (through Gazprom and Rosneft), banking (Sberbank and VTB), and telecommunications (Rostelecom). Following the collapse of the Soviet Union, the country began a long and arduous privatisation process which is still ongoing, but the government has maintained an interest in many companies, whether as a minority shareholder or the owner of a 'golden share' (50.1%). Thus, in several instances in which foreign investors have become involved with SOEs, they remain limited to minority shareholding positions. This often leaves them unable to influence company policy and subject to undue control by the board of directors. Competition between private entities and SOEs is also limited in certain sectors where the playing field is tilted in favour of government enterprises.

  4. Russia’s Strategic Sectors Law (SSL) establishes a list of 45 'strategic' sectors or activities in which purchases of controlling interests by foreign investors must be pre-approved by Russia’s Commission on Control of Foreign Investment. In 2014, the Russian government expanded the list to include companies, investments and transactions. Regulations require Russian government approval for foreign firms to invest in strategic sectors and, in some cases, ban majority foreign ownership. Most government initiatives point to a stronger government influence in SOE activities, including placing senior government officials on major SOE boards, dictating the percentage of SOE purchasing that must come from small and medium enterprises, and requiring Russian-made equipment purchases for government-funded projects.

  5. In addition to a raft of pro-business reforms introduced by President Vladimir since 2012, which have improved the operating environment, there are a number of incentives offered to encourage FDI. These will vary according to the location of the investment, the amount of capital provided and the type of economic activity. Foreign investors are exempted from the effects of unfavourable changes to legislation (for example, tax hikes or new caps on foreign ownership) for a period of seven years, if they hold more than 25% of capital in a company. A major new incentive introduced in 2014 is an income tax break for companies located in 13 Far Eastern and Siberian regions, which effectively reduces the profit tax rate from the usual 20% levy to 0% for the first five years after initial sales income is received, and to 10% for the following five years. Some regional authorities offer a reduced corporate income tax (CIT) rate of 15.5%, which is available for both foreign and national investors.

  6. The most significant incentives and benefits, however, are offered through the numerous special economic zones (SEZs) that are available throughout the country to investors. The zones are divided into four broad categories. These SEZ categories are Industrial, Technology Implementation, Port, and Tourist and Recreation SEZs. These SEZs are all intended to target specific industries, for example shipping and freight transport, hotels and tourist activities, automotive and mechanical engineering, or software and pharmaceuticals. Businesses located in these zones benefit from more efficient bureaucratic procedures, freedom from customs duties, state investment in transport networks, and subsidised expenditure on infrastructure. The government also hopes that SEZs will foster the development of sophisticated industrial clusters, which enhance technological advances and boost economic growth in particular regions.

  7. As of 2019, movable property is not subject to property tax. Consequently, the issue of correct classification of an asset (movable or immovable) has becomes an important topic for taxpayers. Note that the relevant court practice is not consistent, and Russian lawmakers are working on amendments to the Russian Civil Code that may introduce clear criteria of immovable property.

  8. Foreign ownership is permitted, with the exception of some sectors designated as strategic. Russia's regulatory environment will continue to restrict foreign investment from entering the country's mining sector. Defence, oil and gas, power, mining, media, transport, and agriculture are key sectors affected. Foreign ownership in air transportation, financial services, insurance, media and agricultural land is also restricted to a maximum of 49% ownership. There are significant barriers to entry facing foreign insurance firms looking to tap into the enormous long-term growth potential of the Russian insurance market. Foreign entities considering entry to or expansion in the Russia financial sector will also need to be mindful of economic sanctions imposed by the United States and EU, which potentially restrict operations over the short-to-medium term.

Sources: WTO – Trade Policy Review, ITA, United States Department of Commerce, national sources

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
25 SEZs divided between four broad categories: industrial and production zones, technology and innovation zones, tourist and recreation zones, port zones- Exemption from customs duties and VAT on imports
- Reduced CIT
- Reduced property tax
- Discounts on infrastructure expenses
- Access to 'One Window' special administrative regime
Skolkovo Innovation Centre (Moscow) – intended to foster innovation in high-tech manufacturing and R&D
- Exemption from profit tax
- Exemption from VAT
- Exemption from property tax
- Exemption from customs duties and VAT on imports
- Reduction of social security contributions
Advanced development zones (ADZ)In the Russian Far East and Eastern Siberia, there are plans to establish a network of advanced development zones with preferential conditions for non-resource production which is oriented to exports, among other things.

An advanced development zone is an area in a constituent entity of Russia where, by decision of the Russian government, a special legal regime has been established for entrepreneurial and other types of activity in order to create favourable conditions for investment and accelerated socioeconomic development, as well as comfortable living conditions for the public. The formation of ADZs is regulated by Federal Law of 2014 on Advanced Development Zones.

Source: Fitch Solutions

8. Taxation – 2019

  • Value Added Tax: 20%
  • Corporate Income Tax: 20%

Source: Federal Tax Service Of Russia

8.1 Important Updates to Taxation Information

  • Starting from January 1, 2019, the VAT rate increases from 18% (in 2018) to 20%.

  • The maximum corporate income rate has been set at 20%. Over the next five years, the 20% tax will be allocated in such a manner that 3% goes to the federal budget and 17% is allocated to the budgets of the relevant constituent regions. The rate of tax payable to regional budgets can be reduced under regional law for certain categories of taxpayers, such that the reduced regional rates introduced before September 3, 2018 will apply until the date of their expiry and/or a final date of January 1, 2023.

  • On January 1, 2019, new changes were introduced, which will require foreign entities to register for VAT purposes and pay the relevant taxes if they provide electronic services to legal entities and individual entrepreneurs.

8.2 Business Taxes

Type of TaxTax Rate and Base
CIT20% on profits (can be reduced by certain incentives depending on location)
Withholding Tax Rates
- 15% on dividends and income from participation in Russian enterprises with foreign investments
- 10% on freight income
- 20% on income such as royalties and interest from Russian sources
- 20% of the margin on capital gains
20% on sale of goods and services
Property TaxMaximum rate of 2.2% on book value of property
Mineral Resources Extraction Tax3.8%-8%, but generally variable according to the industry and the value and volume of the commercial resource

Sources: Federal Tax Service Of Russia, Fitch Solutions
Date last reviewed: October 27, 2019

9. Foreign Worker Requirements

9.1 Localisation Requirements

Performance requirements, such as job creation or investment minimums, can be imposed as a condition for establishing, maintaining or expanding an investment. Securing a work permit in Russia is the employer's responsibility and the deadline for the foreign labour requirement falls on May 1 annually.

Companies are informed of how many and which of their applications have been accepted; not all applications are successful. In 2013, the foreign labour quota for the entire country was 410,126. Some notable changes in Russian immigration policies and practices implemented from 2015 and early 2016 include the decline in the number of Highly Qualified Specialist (HQS) work permits being issued and a rise in the number of foreign nationals prohibited from entering Russia.

Presidential Order No. 583 of November 28, 2015 introduced restrictions on employers hiring or employing Turkish nationals. The prohibition does not apply in the following cases: if, up to and on December 31, 2015, the Turkish nationals were employed or engaged for the provision of services in Russia and had proper work authorisation documents; or if the Turkish national's employer is on the list of employers approved by the Russian government in the relevant resolution. This resolution, however, has placed a limit on the number of Turkish nationals that can be employed in Russia by a firm.

9.2 Obtaining Foreign Worker Permits for Skilled Workers

In 2006, in a bid to compensate for the country's demographic decline, the Russian government started simplifying immigration laws and launched a state programme assisting voluntary immigration of ethnic Russians from former Soviet republics. Overall, securing a working visa in Russia is both complex and relatively expensive, presenting bureaucratic and cost burdens to investors looking to import foreign labour. Russian immigration authorities operate a visa quota system for foreign workers. Immigration authorities have been given powers to revoke quota allocations to employers if they are found to be in breach of Russian labour and tax laws. There are work permit exemptions for employees in a number of fields, and there is a newly introduced work visa category for highly-qualified professionals. This new category speeds things up considerably, as there are no quota restrictions for highly-qualified professionals. To qualify for this permit, foreign specialists must be compensated with no less than RUB2 million per year. The permit can be issued for up to three years.

9.3 Visa/Travel Restrictions

Visas are issued by diplomatic missions or consulates of Russia, the Ministry of Foreign Affairs or the Ministry of Internal Affairs (directly or by proxy). Visas can be single-entry, double-entry or multiple-entry. Ordinary visas are divided into private, business, tourist, study, work, humanitarian, and entry visas for persons seeking asylum. Foreign citizens from most CIS countries and those who are permanent or temporary residents of Russia do not need entry visas.

In spite of a large number of foreign workers arriving in Russia, mainly from the CIS states, the system of attracting them is ineffective. The mechanism of selection of foreign workers from the CIS countries by profession and qualification does not meet the needs of Russian employers. Most foreign workers' labour contracts are limited to one year, which does not contribute to the employers' interest to invest in professional training of migrants.

9.4 Migrant Labour Regulations

There are three types of work visa in Russia: first, the single entry visa, which lasts for 90 days and is issued by the Russian consulate on the basis of a work visa invitation; second, the multiple entry visa, which is reissued on the basis of a single entry at a local branch of the Russian Federal Migration Service (FMS), third, the visa for HQSs whom earn more RUB2 million per year.

The cost and duration taken to acquire a working visa in Russia varies according to the country of an individual's origin. If permits are required the complicated and time consuming application process raises costs for employers and there is considerable risk for the employer as the information given in the application is binding.

The application requires details of the position they intend to fill as well as the nationality of the expat. The process can take up to a year and once granted a permit is valid only for the specific job it was issued for and cannot be transferred to different companies or subsidiaries of companies in other regions in Russia.

If the work would require the employee to work in different parts of the country, the application must be completed for every region the employee will work in. In 2010, the HQS permit was introduced as a new term in Russian immigration legislation. An HQS is a foreign citizen earning no less than RUB2 million per annum from an employer in Russia. A simplified quota-free, one-step application procedure for work permits and visas is established for a HQS individual intending to work in Russia for Russian legal entities or branches of foreign legal entities (but not representative offices).

Such HQS individuals may apply for work permits and work visas valid for three years with the opportunity to extend their validity for subsequent three-year periods, in comparison with one-year work permits and visas received by other foreigners.

Sources: Government websites, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings

Rating (Outlook)Rating Date
Baa3 (Stable)
Standard & Poor'sBBB- (Stable)
Fitch Ratings
 BBB (Stable)

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators

World Ranking
Ease of Doing Business Index
Ease of Paying Taxes Index
Logistics Performance Index
Corruption Perception Index
IMD World Competitiveness45/6345/63N/A

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices

World Ranking
Economic Risk Index RankN/A47/20134/201
Short-Term Economic Risk Score64.468.367.5
Long-Term Economic Risk Score64.366.370.1
Political Risk Index RankN/A102/20198/201
Short-Term Political Risk Score66.565.665.6
Long-Term Political Risk Score61.761.761.7
Operational Risk Index RankN/A68/20163/201
Operational Risk Score55.255.957.7

Source: Fitch Solutions
Date last reviewed: November 20, 2019

10.4 Fitch Solutions Risk Summary

Russia's economic performance compares relatively well against other emerging market peers due to low public debt ratios, high FX reserves and a current account surplus. Strong growth drivers will be elusive in the absence of much higher oil prices or a significant ramp-up in structural reform momentum, neither of which looks likely to speed up significantly in the coming years. Furthermore, economic diversification remains slow as technological enhancements and skilled labour is not as easily channelled into sectors that need more workers in a 'new' Russian economy. The economy is expected to see slow growth across 2019-2020, chiefly due to decelerating household spending and a tense geopolitical backdrop. The hike in the VAT will likely limit private consumption, while the potential for constrained oil output could hold back the energy sector. Softer-than-expected oil prices or additional tough sanctions remain key risks to Russia's outlook.

Despite access to a large labour market, vast natural resources and robust financial sector, the Russian market remains hamstrung by structural challenges that highlight the slow pace of reform over the years. High state involvement in the Russian economy, an infrastructure deficit and an ageing population pose the most immediate risks to the operating environment for foreign investors. Tepid economic growth and increasingly frosty relations with the West serve to further impair Russia's attractiveness to investors.

Source: Fitch Solutions
Date last reviewed: October 27, 2019

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: Russia short term political risk index
Graph: Russia short term political risk index
Graph: Russia long term political risk index
Graph: Russia long term political risk index
Graph: Russia short term economic risk index
Graph: Russia short term economic risk index
Graph: Russia long term economic risk index
Graph: Russia long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Political and Economic Risk Indices
Date last reviewed: November 20, 2019

10.6 Fitch Solutions Operational Risk Index

Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Russia Score57.763.6
Central and Eastern Europe Average62.4
Central and Eastern Europe Position (out of 11)919
Emerging Europe Average57.955.959.1
Emerging Europe Position (out of 31)18
Global Average49.750.349.8
Global Position (out of 201)63

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Russia vs global and regional averages
Graph: Russia vs global and regional averages
Operational Risk IndexLabour Market Risk Index
Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
Czech Republic69.5
Regional Averages62.4
Emerging Markets Averages46.9
Global Markets Averages49.7

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: November 20, 2019

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Russia

Graph: Major export commodities to Russia (2018)
Graph: Major export commodities to Russia (2018)
Graph: Major import commodities from Russia (2018)
Graph: Major import commodities from Russia (2018)

Note: Graph shows the main Hong Kong exports to/imports from Russia (by consignment)
Date last reviewed: October 27, 2019

Graph: Merchandise exports to Russia
Graph: Merchandise exports to Russia
Graph: Merchandise imports from Russia
Graph: Merchandise imports from Russia

Note: Graph shows Hong Kong exports to/imports from Russia (by consignment)
Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed:October 27, 2019

Growth rate (%)
Number of Russian residents visiting Hong Kong161,916
Number of European residents visiting Hong Kong1,961,4481.7

Source: Hong Kong Tourism Board
Date last reviewed: October 27, 2019

2017Growth rate (%)
Number of Russians residing in Hong Kong891.1

Source: United Nations Department of Economic and Social Affairs – Population Division
Date last reviewed: October 27, 2019

11.2 Commercial Presence in Hong Kong

Growth rate (%)
Number of Russian companies in Hong KongN/A
- Regional headquarters
- Regional offices
- Local offices

11.3 Treaties and agreements between Hong Kong and Russia

  • Alongside the Air Services Income Agreement effective since June 2010, Hong Kong signed a Comprehensive Double Taxation Agreement (CDTA) with Russia on January 18, 2016, which entered into force on July 29, 2016. To accommodate greater synergies, Hong Kong and Russia are also in the process of negotiating an Investment Promotion and Protection Agreement (IPPA).

  • Mainland China and Russia signed an agreement for the Avoidance of Double Taxation (DTA) on October 13, 2016 and Investment Promotion and Protection Agreements which came into effect on February 12, 2000.

Sources: Hong Kong Inland Revenue Department, national sources, Fitch Solutions

11.4 Chamber of Commerce or Related Organisations

Russia-Hong Kong Business Association
Email: info@russiahk.ru / pa@raschini.com
Tel: (7) 495 740 8833
Website: www.russiahk.com
Please click to view more information.

Source: Federation of Hong Kong Business Associations Worldwide

Russian Consulate General in Hong Kong
Address: Rooms 2106-2123, 21/F, Sun Hung Kai Centre, 30 Harbour Road, Wan Chai, Hong Kong
Email: cghongkong@ya.ru
Tel: (852) 2877 7188
Fax: (852) 2877 7166

Source: Protocol Division Government Secretariat

11.5 Visa Requirements for Hong Kong Residents

No visa is required for up to 14 days for HKSAR passport holders. Before entering Russia the migration card must be filled in and presented to the migration officer when entering and exiting Russia. The card is also required for migration registration at the place of stay, and must be kept by the foreign national during their stay in Russia. A visa is required for stays longer than 14 days.

Source: Consulate General of the Russian Federation in Hong Kong
Date last reviewed: October 27, 2019

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