Investor Presentaiton
24 Leonid B. Vardomskiy
On 1 January 2001, 73 joint ventures and 50 subsidiaries of foreign legal sub-
jects engaged in economic activity in the territory of the Ryazan Oblast. They have
approximately 7'000 employees, or approximately 1.3% of the total number of
employed population. The number of people employed in enterprises with for-
eign investment (EFI) has practically not increased since 1997. Enterprises with
foreign investment accounted for 3.2% of all goods and services produced by the
industries of the oblast in 1999.14
The total direct investment in the oblast between 1994 and 2000 was US$10.7
million, according to the State Committee on Statistics of the Russian Federation.
According to the Statistical Department of Ryazan Oblast, US$33.7 million of for-
eign investment were invested in the region from1992 to 2000, an estimate which
is most likely exaggerated. The absolute volume of investment per functioning
enterprise with foreign investment, regardless of the method of accounting, was
a paltry US$150'000-450'000. The main foreign investment partners came from
Italy and Ukraine (nine each), Cyprus and the Czech Republic (eight each), Ger-
many and Belarus (seven each), Bulgaria, Poland and Latvia (six each), and
Uzbekistan (five companies). Most of these businesses are located in Ryazan.
According to the Ryazan Chamber of Commerce and Industry, the largest
influx of investment into the oblast came from Cyprus and amounted to US$13.9
million or 64% of all investment. Austria and Germany came next with 15.6% and
5.5% respectively. One can confidently state that the phenomenon of large-scale
Cypriot investment is due to the return of capital that was previously spirited out
of Russia.
Many enterprises with foreign investment operate in the retail and service
sectors. Practically all of those enterprises are oriented toward the Russian mar-
ket. "Texaco" began production of lubricants at the Ryazan PPP within the frame-
work of a joint enterprise with "TNC-Texaco," which was able to secure 30% of
the market for packed oil in Moscow, and 10% each of the Russian and Ukrainian
markets. 15 The "Isabel" company produces sewing products with Italian part-
ners. A considerable number of enterprises with foreign investment receive
import materials and spare parts. In particular, these are "Ryazan-West" (in coop-
eration with the German company "Salamander"), which produces shoes and
imports raw leather products, and "Ryazan-Bosch" and "Automotive Lighting,"
which produce automobile lights and import some spare parts.
The oblast's lack of investments can, on the one hand, be explained by
Moscow's securing a large part of the investment coming into Russia. Moscow is
more attractive for foreign investors than any other subject of the Russian Feder-
14 Riazanskaia oblasť v 1999g., Op. cit., pp. 288-289. - Data by the Regional Statistics Committee
for 2001.
15 "Krupneishie kompanii: itogi goda" (Largest Companies: The Results of this Year). Ekspert, no.
37, 10 February 2000, pp. 94-95.
Foreign Economic Relations of Ryazan Oblast 25
ation. On the other hand, the situation is the consequence of the protectionist pol-
icy pursued by the oblast authorities.
The Ryazan Oblast has a certain experience in credit cooperation. In 1996,
the administration of Ryazan acted together with the administrations of the cities
of Vladimir, Orenburg, Cherepovets, Volkhov and Petrozavodsk as a sub-bor-
rower of the loan of US$300 million provided by the World Bank to the govern-
ment of the Russian Federation for the project "Transfer of Ministry-Controlled
Housing Funds." Ryazan received US$69.7 million out of this loan for a period of
14 years under the guarantee of the administration of the Ryazan Oblast. The
funds were to have been allocated between 1996 and 2002. In April 2000, the TPC
and "Eksim-Bank" signed an agreement on guarantees for a large long-term loan
of US$5 million, which was to be used for the reconstruction of the Ryazan PPP.
International contacts of the oblast in the humanitarian and educational
spheres are still quite limited. To a large extent, this is due to the poverty of the
population, the low regional budget and the way the budget is organized. Only
limited grants are available from various international funds and organizations.
Few students and specialists go to foreign countries for internships. For example,
in the last three years, only 18 people were sent by the Ryazan Chamber of Com-
Parameters of openness of the economy of the Ryazan Oblast and the neigh-
boring regions
Table 8:
Regions
gorod Oblast
volume of foreign
trade per capita, in
US$ (1998)
ratio of foreign
trade to gross
regional product,
in % (1998)
Accumulated
foreign direct
investment per
capita, in US$
(1994-1999)
share of foreign
direct investment
into main capital
in 1999, %
Vladimir Oblast
198.2
10.8
41.3
7.6
Lipetsk Oblast
1123.7
44.2
24.4
2.1
Mordovia
72.8
3.9
9.8
0.2
Moscow Oblast
424.4
14.9
266.4
10.3
Nizhnii Nov-
315.2
11.8
29.9
0.8
57.9
4.3
2.7
0.1
Ryazan Oblast
211.1
10.4
7.5
0.3
Tambov Oblast
110.7
7.3
12.0
1.2
Tula Oblast
458.8
23.0
48.2
0.8
Russian
606.0
110.2
3.2
Federation
Penza Oblast
19.8
(Source: The figures were calculated on the basis of statistical sources that were used for
Tables 1 and 7. Also: Regiony Rossii: ekonomicheskaia kon'iunktura (sotsial'no-ekonomich-
eskaia informatsiia) (Regions of Russia: Economic Market Situation [social-economic informa-
tion]). Moscow: Izd. Tsentr ekonomicheskoi kon'iunktury pri pravitel'stve RF, June 2000.)View entire presentation