“Investors are attracted by clear development strategies for the country”

— How has the pandemic affected Japanese investment in the Russian economy?

- According to statistics from the Japan External Trade Development Organization (JETRO), in 2020, the flow of foreign direct investment (FDI) from Japan to Russia amounted to $488 million, the volume of accumulated investments - $2.4 billion. Compared to the previous five-year period, both indicators increased. Despite the coronavirus crisis, Japanese business has not reduced its interest in Russia.

Japanese capital is concentrated mainly in the automotive industry and the energy sector of the Russian economy. The task of the two countries is to diversify the flow of FDI. Promising sectors are, in particular, health care, information technology, agriculture and the fishing industry. New joint projects are already developing in these areas.

ROTOBO, together with the Skolkovo Foundation and the Novosibirsk Akademgorodok, organizes pitches of Russian IT startups for Japanese investors. As a result, more and more Russian IT companies, especially software developers for education, are entering the Japanese market.

— How do you assess the investment climate in Russia?

— The country's business climate has improved significantly in recent years. Since the early 2000s, a large number of foreign companies have entered the Russian market.

In the Doing Business ranking in 2020, Russia has risen to 28th place from 120th in 2011. The country overtakes Japan (29th) and  China (31st). However, in practice, investment activity in China and Southeast Asia is still higher.

Russia needs to improve the quality of administrative services and regulatory measures, make more efforts to fight corruption and create equally comfortable conditions for all market players.

The key factors for investors are the growth potential of the partner country, as well as the political and social stability of the state. It is equally important for Japanese investors to have a clear development strategy for the country.

- Approximately a third of enterprises with full or partial Japanese participation operating in Russia are located in industrial parks and special economic zones (SEZs). Does the infrastructure and conditions meet the expectations of investors?

— Most of the SEZs at the time of granting the status of a resident to a company provide comprehensive services through a one-stop shop. However, it is necessary to improve the system of operational support for existing residents in case they have problems. It is also important that the preparation of the SEZ infrastructure is carried out on time.

— In many countries, under the influence of the pandemic, the trend towards localization of production has increased, primarily in the healthcare sector. Is Japanese business ready for localization in Russia?

The pandemic requires international medical cooperation. For Russia and Japan, health care has been one of the priorities since 2016, when the heads of state signed the Eight-Point Plan for Bilateral Economic Cooperation.

For example, in Khabarovsk, a Japanese company, in cooperation with Russian Railways, is building a Russian-Japanese center for preventive medicine and diagnostics, which is scheduled to open in 2022. In 2020, a Russian-Japanese enterprise based on jointly developed technologies released rapid tests for the coronavirus COVID-19 .

Many pharmaceutical companies, including Japanese ones, are diversifying their production bases. Local business, concluding contracts for joint production, is able to meet the needs of such cooperation.

At the same time, the development of medical technologies requires the protection of patents and technology transfer rights. The development of such a system is an important factor for the further deepening of local production.