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Highlights: Breakfast Briefing – Russia, The Current Business Climate & Ongoing Developments

September 30, 2014

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by Jennifer Condon

The current geopolitical climate added to bilateral sanctions between the EU and Russia is creating more obstacles for Irish – Russian Business.

On Monday, 29th September 2014, the Ireland Russia Business Association (IRBA) hosted a business breakfast briefing with Gerard MacCarthy, Director, Enterprise Ireland Russia / CIS & Head of the Commercial Department at the Embassy of Ireland in Moscow speaking about the current business climate and developments in Russia. IRBA Chair Dr Constantin Gurdgiev covered the issues of economy and macro-risks e.g. rouble valuations, credit supply, sanctions impact and risks for Russian demand side.

Gerard MacCarthy, Director, Enterprise Ireland Russia / CIS & Head of the Commercial Department at the Embassy of Ireland in Moscow:

“From a trade point of view, the rouble euro-exchange rate, the so-called ‘Presidentail Ban’ targeted at the food sector as response of EU sanctions against Russia, and a volatile and unpredictable political and legislative environment are key current risk factors in dealing with the Russian market.

Irish companies in the food sector have been hit hard, primarily by Russian sanctions against Europe, but also by the pork ban introduced at the beginning of the year, costing Ireland in total an estimated €100m in food related exports in 2014. Opportunities still remain, particularly in genetics, ingredients, and food technology / agricultural consultancy, and it is hoped that the current ban will be lifted in the short term.

Despite a volatile and unpredictable multilateral political landscape in the Russia/CIS region, Irish non-food companies have shown agility and resilience in engaging with what is, after all, the 3rd biggest non-EU exports market for Irish companies after the US and China.

The latest available figures show Ireland’s total exports to Russia increasing 28% from January to July in comparison with 2013, with July alone showing a 121% increase. The growth has been consitent over time – Enterprise Ireland client exports to Russia – which account for over 45% of the CSO figues – have increased 87% between 2008 and 2013, underlining that Irish companies which have committed to the Russian market are determined to follow through on market development strategies in the Russia/CIS region despite the obvious negatives.”

Constantin Gurdgiev, Economist, Lecturer and Chairman of the Ireland Russia Business Association:

“The opportunity space for Irish exporters in Russia remains wide open in areas not impacted by sanctions, e.g. outside immediate supply of some food and agricultural products. And new opportunities should open up in the areas relating to agricultural production, food processing, storage and transportation.

In addition, there is renewed scope for investment in Russia in the above areas and in areas relating to technological innovation and modernisation in a wide range of sectors.

However, to facilitate this, it would be positive if Russian authorities were to accelerate policy efforts directed at attracting foreign investors into the country, especially in areas linked to investor protection and regulatory and tax facilitation.

While over the next 1-2 years we can expect more uncertainty and risks to materialise, including the risk of significant further devaluation of the rouble, taking a longer term horizon of 5-10 years, these factors are likely to be replaced by more positive growth momentum and improved returns on foreign investment.”

The Ireland Russia Business Association (IRBA) is a non-profit organisation dedicated to promoting economic links and trade between Ireland and Russia as well as related markets. The organisation is member funded and driven by volunteer engagement. The IRBA commenced its operations in 2010 as a subsidiary of the Irish Exporters Association.

The IRBA’s primary activities include: educating its members though various events, connecting with the market and peers, assisting on policy by engaging with related public bodies and organisations.

Contact: Jen Condon
Website: http://www.irba.ie
LinkedIn: https://www.linkedin.com/groups?trk=myg_ugrp_ovr&gid=2769669
Email: jc@irba.ie
Phone: 01 6424178

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