Board Member, Vnesheconombank Deputy Chairman Alexandr Ivanov’s Interview to the TV Channel Russia 24

TV Channel Russia 24
Kurs Dnya
22.03.2013, 20:34

HOST: Our guest today is Alexandr Ivanov. Alexandr, I suggest that we discuss China again as Xi Jinping chose Russia as the first country to visit. Could this stimulate the development of Russia and China and enhance ties in trade and investment sectors?

Alexandr IVANOV, Board Member, Vnesheconombank Deputy Chairman: In my opinion, China is Russia’s neighbor and has a tremendous investment potential. China is known to have the largest gold and foreign currency reserves. Moreover, recently China has made great progress in developing and introducing new technologies. And to my mind, close relations between our two countries are sure to boost trade turnover and increase the number of investment projects to be funded jointly by the two countries. I’d like also to stress a great importance of the program to finance Russia’s Far East where we have a lot projects.

HOST: It is a region which is of interest for both countries, if only for geographical reasons.

Alexandr IVANOV: Absolutely. And there are a lot of opportunities for our further joint cooperation here.

HOST: Could you specify the opportunities?

Alexandr IVANOV: These above all include infrastructure, tourism clusters, construction of industrial facilities which can be oriented to both exports to China and to meeting domestic demand on the Russian territory. These might also be port zones, airports. There are a lot of opportunities here.

HOST: Representatives of the Russian Direct Investment Fund say that the China Investment Corporation, the Russian-Chinese Investment Fund and Vnesheconombank signed a Memorandum of Understanding which allows to increase joint investments by tens of billions of dollars. What about the time periods and amounts of investments?

Alexandr IVANOV: You are quite right. This Memorandum has been signed today in the presence of the two countries’ leaders. It is expected that the China Investment Corporation and its subsidiary the Russian-Chinese Investment Fund on the one hand and Vnesheconombank and its subsidiary the Russian Direct Investment Fund will jointly select, identify, analyze and offer for funding infrastructure projects. Here I mean long-term, meaningful, capital-intensive projects. Investment horizon is from seven years and longer. As a rule it is ten-fifteen years. Naturally, all these projects should be of integrating importance and boost the development of the Russia’s and China’s economy.

HOST: Alexandr, do you have a clear idea of specific projects at Vnesheconombank?

Alexandr IVANOV: Vnesheconombank has the so-called pipeline of projects. We are known to be pretty active in funding projects on supplying Chinese equipment to Russia and on modernizing enterprises. Moreover, we established the Far East and the Baikal Region Development Fund. This Fund is now working on about ten meaningful projects. I wouldn’t like to go into details as an expert examination has not been completed. As is known, a decision can be taken later after all internal procedures have been followed.

HOST: A summit of BRICS countries is getting underway in the Republic of South Africa. What issues are on its agenda?

Alexandr IVANOV: This BRICS summit is the fifth summit to be held in Durban next week under the slogan of “Partnership between BRICS and Africa for Development, for Modernization, for Industrialization”. A wide range of issues are to be discussed ranging from international security, from ecological responsibility to financial cooperation. Key themes are to include funding infrastructure and moving to payments in national currencies. They will also discuss the establishment of a BRICS Development Bank. As is known a decision was taken last year. And we expect some sort of road map to be made public and agreed upon in the course of the summit and this road map will specify main stages of establishing a BRICS Development Bank.

HOST: What functions will this bank perform, when can it start operating?

Alexandr IVANOV:  The bank can start operating when member countries transfer required charter capital. This is the responsibility of relevant countries’ finance ministries. As far as its functions are concerned they include securing payments in national currencies, supporting and promoting national exports and as a whole promoting integration processes on the territories of all five member countries.

HOST: Starting from next month a couple of yuan/ruble trading will start on MICEX in a standard mode of the most liquid couples. Do you think it makes sense to do the similar thing with other currencies of BRICS countries: the Brazilian real, the Indian rupee and maybe even South African rand?

Alexandr IVANOV: There is no doubt about it. The fact that a couple of yuan/ruble trading has started is very important on the way to moving to payments in national currencies. Moreover, I can say that Vnesheconombank is interested in placing its debt instruments that might be denominated in yuans. And this stock exchange mechanism will allow us to convert these earnings into rubles.

HOST: The fact that a yuan trading starts on our stock exchange floor makes it easier for us to gain access to China’s debt market. Did I get it right?

Alexandr Ivanov: Yes, you did. It’s easier for us to access capital market. It’s a broad market with a tremendous growth potential.

HOST: How is this access regulated? To this end there are a lot of various programs in China and there is a potential everywhere. Will Russian investors find their niche?

Alexandr IVANOV: Of course they will. The capital market is still regulated in China but restrictions are being gradually removed. At present, institutional investors can invest in debt obligations of Russian companies and banks. We expect the Chinese monetary authorities to further remove existing restrictions. And in the long run even retail investors will be able to invest in such obligations. In this case the market is sure to receive a huge potential for growth. And Russian companies will be able to raise funds in much greater amounts.

HOST: Alexandr, I can’t help asking you. Are they going to discuss Cyprus next week?

Alexandr IVANOV: At the BRICS summit?

HOST: Surely.

Alexandr IVANOV: I think so. This is a hot theme. The more so, leaders of five countries will attend the summit. And these countries account for about forty percent of the world’s GDP. It is these countries where the wellbeing of the middle class is on the rise, where markets are growing and economies are developing. So, this issue is sure to be discussed at all levels.