THERE is a huge number of construction opportunities in Russia, reflecting the vast size of the country, but British firms are lagging behind their competitors in taking advantage of them. I want to help put that right.
In October, I led the UK construction industrys first trade mission to Russia. Accompanied by a team of 11 British firms, I visited Moscow and St Petersburg and was impressed by the scale of projects the Russians are planning.
Opportunities exist particularly in the fields of housing, with the increasing demand for cottage-style homes, and in the building materials market, due to the shortage of quality products throughout Russia. In St Petersburg, reconstruction and rehabilitation feature high on the list of priorities, reflecting the authorities desire to develop the city and surrounding area into a tourist attraction.
But the key area for development throughout the the country is infrastructure. Russias move to a market-led economy has created an acute need for sustained investment in an efficient transport infrastructure. There are plans for new and improved railways, roads, metro systems, bridges, ports and airports. One of the most high-profile projects is, of course, the Moscow-St Petersburg High-Speed Rail Link.
Infrastructure projects should offer British companies a wide variety of construction financing and related commercial opportunities. Anticipating this, the Department of Trade and Industry (DTI) is holding a seminar next week to highlight the opportunities in Russias developing transport infrastructure. The DTI is also supporting UK companies which wish to exhibit at Transtec in St Petersburg.
I am pleased to see the increasing number of British companies established in the market many now with offices in Moscow. Those who have made the commitment have found the market profitable. Bovis, Motherwell Bridge, Taylor Woodrow, Trafalgar House, Hanscomb and Ove Arup are just some of the British names operating successfully in this new market. I am also delighted that 19 UK building material manufacturers, with DTI support, will be taking stands at the Mosbuild Exhibition in April.
But I want to encourage even more companies to take a serious look at the Russian market. Now is the time for British firms to gain a foothold there. Many of our competitors, particularly the French, Germans and Finns, are already establishing a presence.
From my experience of the way Russians do business, I would say it is vital for foreign firms to develop contracts and work in joint ventures with local partners. We have an important advantage in that the Russians really want to do business with the British.
The Russians understand the importance to foreign companies of a stable legal and fiscal framework. There is growing economic stability and a set of new laws to help create a more favourable investment climate. For example, foreign companies starting to work in Russia can be granted a taxation relief period.
Of course, working in the Russian market does have its problems. The amount of red tape involved in doing business can be off-putting, but I know that many British companies have managed to work their way successfully through the maze of bureaucracy to obtain the necessary permits they required.
Crime and getting paid are also often perceived as problems, but the view of the companies I have spoken to which are working in Russia is that stories are exaggerated. I would advise companies new to the market to speak to the British companies already established there they can advise on the practicalities of doing business. The British Embassy in Moscow too can provide practical advice and assistance to British firms.
The government is taking steps to encourage companies to gain from these new opportunities. My department is working closely with the DTI on a campaign to raise the profile of the market. With this in mind, I shall be returning to Russia at the end of September with another team of representatives from the British construction industry. Ian Lang, the President of the Board of Trade, will visit Moscow in May.
We are also considering setting up a construction working group, as a sub-group to the UK/Russia Intergovernmental Steering Committee on trade and investment, which would examine construction issues and identify projects in which British firms might be involved.
I discussed this idea with the Russian deputy prime minister, Aleksei Bolshakov, on his recent visit to London. Mr Bolshakov is co-chairman of the steering committee and was keen to take the idea of a sub-group forward.
I am hopeful the group will meet before the steering committees next meeting in May.
British firms should be looking to Russia for new opportunities, says construction minister James Clappison