Small- and Medium-Sized Business

President's Letter

Preparing for a Presidential Business Summit

Among many other programs, events, and advocacy projects that we organize, we have been deeply involved in the preparations for the July 7 business summit of chief executives from major American and Russian companies, the midpoint of President Obama's visit to Moscow AmCham spent the weeks leading up to the event working on the agenda and other details with the U.S. Chamber of Commerce, USRBC, and senior administration officials, including key White House staff, as well as Russian business and government representatives.

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Issue Contents

• President's Letter
  Preparing for a Presidential Business Summit

  Among many other programs, events, and advocacy projects that we organize, we have been deeply involved in the preparations for the July 7 business summit of chief executives from major American and Russian companies, the midpoint of President Obama's visit to Moscow AmCham spent the weeks leading up to the event working on the agenda and other details with the U.S. Chamber of Commerce, USRBC, and senior administration officials, including key White House staff, as well as Russian business and government representatives.

• MARKET PLACE
  A Closer Look at the Numbers: Is There Light at the End of the Tunnel?
  Russia has been strongly affected by the crisis, and in a harsher manner than can be simply explained by oil prices and export volumes alone, and despite the fact that domestic and external fundamentals look much better than in many other emerging countries. Virulent capital outflows have been the main additional contributing factor to the seriousness of the turbulence in Russia ($130 billion in 4Q08 and $35 billion in 1Q09 left Russia in the form of net private capital), combined with the unexpectedly fragile state of the domestic banking system. The result of these negative factors is obvious: from last autumn, Russia registered a series of very poor macro-economic performances and the country continues to plunge in a recessional spiral.
• Investing in the Eye of the Storm

  Having been the best performing amongst the .world's big capital markets over the first five months of 2009, Russia's equity and debt markets are facing a much tougher environment through the summer and autumn. Apart from the high correlation with the price of oil, the current lack of credit in the economy and the likely consequences for the banking sector and companies in Russia because of the debt restructuring to come in the autumn present major investment risks. These risks are expected to restrain further upward revision to asset price valuations over the medium-term. Investors are wary of paying higher prices for equities, or debt, until there is greater clarity regarding these issues. The cheap valuations of late 2008, which paid investors to take these risks, are no longer available.

• Should the Russian Bear Learn the Samba?

  The rise in oil price from $40 per barrel at the end of December 2008 to $70 per barrel by mid-June 2009 has fuelled growth in the Russian RTS index of over 140 percent from 492.59 in mid-January to 1,202.64 in early June 2009. This rise however sits uncomfortably with a number of key Russian economic indicators such as an estimated decline in GDP in 2009 of between 2.2 percent (the government estimate) and 4.5 percent (the World Bank estimate), an increase in unemployment to 10.2 percent at the end of May 2009 compared to 5.4 percent in June 2008 and a record level of capital flight in 2008 of $130 billion, the flip side of which is the sharp drop in foreign investment and lending into Russia.

• Global Economy Innovation
   The most powerful ideas come from the most unexpected places. Working globally reduces risk and investment and scores a win for everyone, whatever the economic environment.

  The speed with which the economic crisis spread across the globe, devastating so many economies, surprised many. The catalyst for the crisis can be laid at the feet of creditors, but its rapid contagion from one country to another can be explained by the globalization of supply chains.

• COVER STORY
  The AmCham Enterprise Development Committee: Focusing on SMEs

  This spring, the American Chamber of Commerce in Russia and members of the AmCham Enterprise Development Committee took important steps to ensure that the committee will meet on a more frequent basis, and that the issues involved in the development of small- and medium-sized enterprises (SMEs) in Russia become a key focus for AmCham and this Committee.

• Private Equity for SMEs: Financing the Development of Russia's Economy

  There is a sense of Deja vu in Russia as the country again finds itself in the midst of an economic crisis. The Russian economy achieved impressive growth since the early 1990s, and especially since the 1998 crisis, exceeding many expectations; however, the country's continued dependence on commodities and foreign capital contribute to heightened cyclical-ity and volatility, and result in a love-hate relationship with foreign investors. The challenge is clear. To reduce its vulnerability to external shocks, Russia needs to diversify away from commodities and build a "value-added" economy. To facilitate this, it needs to develop long-term domestic sources of private sector debt and equity capital that also reduce its dependence on short-term international capital flows.

• LEGAL BRIEF
  The Degree of Protection of Creditor Interests in Russia: Up or Down?

• Changes in the Legislation on Limited Liability Companies
• REGIONAL PROFILE
  Regional Profile: Kirov Oblast
• Q&A with Nikita Belykh, Governor of Kirov Oblast
• POLICY EVENTS
  Nizhny Novgorod Governor Briefs AmCham Members
• James A. Baker III Speaks to AmCham on U.S.-Russian Relations
• Citigroup CEO Discusses the Crisis
• AmCham at the Annual St. Petersburg Economic Forum
• Deputy Health Minister Briefs Members on Labor Issues
• COMMITTEES
  Committee Briefs Moscow (Spring 2009)
• Committee Briefs St. Petersburg (Spring 2009)
• Off-the-Wire
  Off-the-Wire
• Welcome Aboard
  Welcome Aboard
• Social Events
  AmCham 15th ANNIVERSARY ANNUAL AWARDS
• AmCham Social Events
• Twelfth Annual Meeting and General Membership Meeting