2

2004 2005 2006 2007* 2008* 2009*2009 to

2005, %

GDP 7.2 6.4 6.6 6.0 5.8 5.9 26.6

Industrial Production 8.3 4.0 4.7 4.2 4.5 4.7 19.4

Capital Investments 11.7 10.7 11.0 10.4 9.7 9.8 47.5

Real Personal Disposable Income 10.4 9.3 12.5 10.2 8.9 8.2 46.1

Retail Trade Turnover 13.3 12.8 12.1 10.5 9.5 8.5 47.2

Main social-economic indicators(rate of growth, %)

*estimate

3

Economic Development Results2001-2005

Steady macroeconomic stability achieved :

Federal Budget Profitability in 2006 – 7,4% of GDP

Stabilization Fund by the end of 2006 – $ 81,8 bln.

Gold Reserves as of April 2007 – $ 346,3 bln.

4

Russia as investment opportunity

2000 year

State

GDP - $ 260 bln.

Consolidated budget - $ 40 bln.

State Debt – over 50 % of GDP and

over 120% of Federal Budget

Gold and currency reserves - $ 25 bln.

Short-terms goals logic

Lack of PPP’s legal base and practice

Macroeconomic instability

Business

RTS Index – 190 points

Large holdings establishment (raider

expansion), high legal risks

Minimization of taxation,

use of internal offshore and transfer pricing

Lack of long-term strategies in companies

2006 year

State

GDP - $ 900 bln.

Consolidated budget - $ 260 bIn.

State Debt – less than 10 % of GDP and

less than 28% of the Federal Budget

Gold and currency reserves– $ 272 bln.

Long-term strategic planning on federal

and regional levels

New legal base and practice for PPP

Macroeconomic Stability

Business

RTS Index – 1500 points

Finalized establishment and restructuring

of large holdings

Creation of competitive development strategies

Numerous completed and planned IPO

Companies have substantial investment

programs and plans

5

472230

1961158354 44

835,7

30,7

17,227,6

33,8

45 43

65

84

(estimate)

0

100

200

300

400

500

600

700

800

900

1999 2000 2001 2002 2003 2004 2005 2006

-10

10

30

50

70

90

110

130

Stock market growth

Stock market capitalization, $ bln. Stock market capitalization, % of GDP

6

14,6

12,8

8

3,52,7

0

5

10

15

2001 2002 2003 2004 2005

Foreign direct investments

$ bln.

Foreign Investments Growth

7

Legal Base

Establishment of legal base and authorities for

market regulation, de-bureaucratization of economy

and competition development

Tax Code, Customs Code

Legislation on licensing and valuation activity

Legislation on “Natural Resources”: Entrails, Water, Forest (draft)

Land legislation

Legislation on bankruptcy, currency control,

new edition of the law on joint-stock companies

Law on state purchases

Law on competition protection

Law on autonomic organizations (draft)

8

Industrial

• Investment Fund

• Concessions

• Special Economic Zones

• Industrial assemblage

Innovation

• Special Economic Zones

• Russian Venture Company

• Technoparks

• Federal Target Programs

Diversification of Economy

Diversification of economy

9

Investment Fund

2006

$ 2,5 bln.

2007

$ 4,2 bln.

2008

$ 4,1 bln.

Approved Investment projects

№ ProjectsTotal Cost of the

project($ bln.)

State investments (Investment Fund)

($ bln.)

1 Motorway Odintsovo in Moscow region 0,64 0,37

2Transport Infrastructure for mineral resource development in Chita region 5,2 1,5

3 Orlovsky Tunnel in St.Petersburg 0,97 0,3

4 Western High Speed Diameter in St.Petersburg 3,1 1,0

5Nizhnikamsk Complex of Oil-refinery and Chemical works

4,8 0,6

6 Complex Development of the Lower Angara Region 8 1,3

7 Moscow - St.Petersburg Highway (km 15 - km 58)2,0 0,95

8 Project documentation for construction and exploitation of

the motorway M-4 “Don”0,07 0,07

9 Construction of water-supply system in Rostov-Don 7,36 0,19

10Project documentation for construction and exploitation of

the motorway “Krasnodar-Abinsk-Kabardinka”

0,6 0,6

Total ($ bln.) 32,74 6,88

11

Project's basic characteristics:

• Motorway length – 46,4 km, including 13 bridges and viaduct

• Up to 8 lanes

• Estimated traffic speed - 120 km/h

• Construction time – 6 years

• Fare – $ 0,05 for 1 km – passenger car

$ 0,11 for 1 km – tracks

Initiate organization – «Western Speed Diameter»

Investor of the project will be chosen on concession tender

Total investments value – $ 3,1 bln.

Investment Fund financing– $ 1 bln.

Potential concessionaires: Strabag SE, Vinci Concessions,

Marubeni Corporation, Aldesa Construcciones, S.A., Autovie

Venete S.p.A., Lotte Engeneering & Construction etc.

Construction of the motorway «Western Speed Diameter»

in St.Petersburg

Based on The Law on Concessions

Approved Investment Projects

12

Complex development of the Lower Angara region

Objects for investment

Industrial enterprises

(at the cost of investor)

- Boguchanskaya HPS – 3000Мvт

- Aluminum plant – 600 000 tones of primary

aluminum

- Tagar metallurgical union

- Gorevskoe metallurgical union

- Pulp and paper mill in Yarky

- Cement works

- Gas-transfering plant in Karabula

Infrastructure

(at the public cost (Investment fund)

- Electric main for Boguchanskaya HPS

- Reconstruction of the Kansk-Aban-Boguchany-

Kodinsk highway

- Bridge over Angara river and Boguchany-Yarky-

Angarsky highway sector

- Railroad Karabula-Yarky

Initiate organization – «Corporation for Krasnoyarskiy region

development»

Investors – «Russian Aluminum», «Gidro OGK»

Total investments value – $ 8 bln.

Claim on Investment Fund– $ 1,3 bln.

Approved Investment Projects

13

Objects for investment

Industrial enterprises

(at the cost of investor)

Oil refinery plant

Petrochemical plant

Infrastructure

(at the public cost (Investment fund))

• rail-roads transportation

• pipe-line and delivery duct

Project's basic characteristics:

• processing per year 7000 thousand tons

• oil processing level up to 95%

• quality “Euro-4”, “Euro-5”

Initiate organization and Investor – «TATNEFT»

Total investments value – $ 4,8 bln.

Claim on Investment Fund – $ 0,6 bln.

Oil processing and petrochemical plants in Nizhnekamsk

PETROCHEMISTRY

Approved Investment Projects

14

Subjects to Concession Agreements

15

Concession Project scheme

16

Special economic zones in Russia

St. Petersburg

Moscow (Zelenograd)

Tomsk region (Tomsk)

Lipetsk region (Lipetsk)

Moscow region (Dubna)

Tatarstan (Elabuga)

17

Administrative

CustomsTaxes

Advantages provided by

special economic zones

Corporate profit tax:

– Accelerated amortization

– Removing restrictions on losses transfer to future periods

– Accelerated recognition of R&D expenses

Reduced uniform social tax rate in technological zones

Property and land tax exemption

for 5-years

VAT and duty free imports to special economic zone

territory

“One window” approach

Protection from non-favorable changes in tax legislation

Special economic zones advantages for investors

18

Industrial Assemblage

$mln

Thousands vhl.

Total Investments – 2 $ bln

Total output in 2010 – 800 thousand vhl

50

200

100

100 11560

220

270

400

230

70

120

30

Planned Investment

80

Import of vehicles - 25 %

Custom Tariffs

Import of components – 12,5 %

Import of components for industrial assemblage - 0%

for basic components

19

2,3

1,2 0,6

8,1

1,5

Infrastructure development

New generation

Vital functions security and environmentpreservationScience, innovations and "know-how"

Regional development

20072006

$ 13,7 bln.* $ 18,9 bln.*

Federal Target Programs 2006-2007

3,6

1,7

0,6

10,8

2,2

* Open share, including national projects

20

Russian venture company

Russian venture company

Private

venture

funds

Private

Co-investorVenture

projects

Main goal – to support venture investments in Hi-Tech industry

21

Investment fund

JSC Russian venture

company

Venture funds

Venture managing

companies

$ 15

bln. 100%

$ 625-1250

mln.

51%

Venture

capitalists

management

Bonus (~20% of

profit) Profit share

(~80%)

Up to 10 funds

Venture

investments

Innovation companies at early stage

management

Private

venture

investors

$ 600-1200

mln.49%

Acquisition price :

initial price +

3% per year

Right for RVC shares

acquisition

Acquisition price :

initial price +

3% per year

Right for RVC

shares

acquisition

Russian venture company

22

Organization State corporation (special law)

PurposeDevelopment of production and financial infrastructure, innovations, exports and small and medium-sized business

Charter capital sources

USSR VEB assets, Russian Development Bank and Roseximbank shares

Equity sources Bank for Development bonds, loans attraction

Investment priorities

To be established by RF government

RestrictionsNo activities with individuals, some restrictions in bank and

securities operations

Bank for Development

23

Opportunities offered by PPP in Russia

24

2000 2001 2002 2003 2004 2005 2006

Standard&Poor’s B- B+ BB BB BB+ BBB ВВВ+

Moody’s В2 Ва3 Ва2 Ваа3 Ваа3 Ва1 Ваа2

Fitch В В+ ВВ- ВВ+ ВВВ- ВВВ ВВВ+

Sovereign credit ratio growth

25

Welcome to cooperation

Ministry of Economic Development and Trade of the Russian Federation

Investment policy Department

Tel. +7 (495 )248 8400, fax +7 (495) 202 5697, Dip@economy.gov.ru