Russia - Country Commercial Guide
Investment Climate Statement

The Investment Climate Statement Chapter of the CCG is provided by the State Department. Any questions on the ICS can be directed to EB-ICS-DL@state.gov.

Last published date: 2021-10-16

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

The Russian Federation remained in 28th place out of 190 economies in the World Bank’s Doing Business 2020 Report, reflecting modest incremental improvements in the regulatory environment in prior years. The World Bank paused the publication of the Doing Business 2021 report to assess a number of irregularities that have been reported, therefore no updates since last report are available. However, fundamental structural problems in Russia’s governance of the economy continue to stifle foreign direct investment throughout Russia. In particular, Russia’s judicial system remains heavily biased in favor of the state, leaving investors with little recourse in legal disputes with the government. Despite on-going anticorruption efforts, high levels of corruption among government officials compound this risk.

Throughout 2020, a prominent U.S. investor, who was arrested in February 2019 over a commercial dispute, remained under modified house arrest.  Moreover, Russia’s import substitution program gives local producers advantages over foreign competitors that do not meet localization requirements. Finally, Russia’s actions since 2014 have resulted in EU and U.S. sanctions – restricting business activities and increasing costs.

U.S. investors must ensure full compliance with U.S. sanctions, including sanctions against Russia in response to its invasion of Ukraine, election interference, other malicious cyber activities, human rights abuses, use of chemical weapons, weapons proliferation, illicit trade with North Korea, support to Syria and Venezuela, and other malign activities. Information on the U.S. sanctions program is available at the U.S. Treasury’s website: https://www.treasury.gov/resource-center/sanctions/Pages/default.aspx . U.S. investors can utilize the “Consolidated Screening List” search tool to check sanctions and control lists from the Departments of Treasury, State, and Commerce: https://www.trade.gov/consolidated-screening-list.

Russia’s Strategic Sectors Law (SSL) established an approval process for foreign investments resulting in a controlling stake in one of Russia’s 46 “strategic sectors.” The law applies to foreign states, international organizations, and their subsidiaries, as well as to “non-disclosing investors” (i.e., investors not disclosing information about beneficiaries, beneficial owners, and controlling persons).

Since 2015, the Russian government has had an incentive program for foreign investors called Special Investment Contracts (SPICs). These contracts, managed by the Ministry of Industry and Trade, allow foreign companies to participate in Russia’s import substitution programs by providing access to certain subsidies to foreign producers who establish local production. In August 2019, the Russian government introduced “SPIC-2.0,” which incentivizes long-term private investment in high-technology projects and technology transfer in manufacturing.