Newsletter for the Brazilian businesses and investors (Issue 1, 2014)
New Russian legislation of interest to Brazilian businesses and investors
Russian government approves a draft federal law to remove hiring restrictions on foreigners in civil aviation
On 5 December 2013 the Russian cabinet reviewed and approved the federal statute “On Amendments to Some Legislative Acts of the Russian Federation Regarding the Admission of Foreign Nationals as Crew Members of Civil Aviation.” The document amends the Aviation Code and the Federal Law "On the Legal Status of Foreign Citizens in the Russian Federation," by removing restrictions on the engagement of foreigners as flight crew members, and granting the Government the authority to establish admission procedures which will allow a foreign citizen to replace a commander in commercial civil aviation.
"Principle of reciprocity" no longer applies to banks of OECD member countries
Article 18 of the Federal Law "On Banks and Banking Activity" stipulates that the Bank of Russia has the right to impose, in consultation with the Government of the Russian Federation, reciprocal limitations on the banking operations of credit organizations with foreign investments. Federal Law 266-FZ of 30 September 2013 amends Article 18 by stating that the principle of reciprocity does not apply if it is otherwise provided by international treaties of the Russian Federation. This amendment brings the Russian legislation into compliance with Organization for Economic Cooperation and Development.
Financial news
BRICS joint currency reserve fund established
By the end of 2014, BRICS countries have agreed to establish a US$ 100 billion joint currency reserve fund, known as the Contingency Reserve Arrangement, aimed at maintaining the stability of BRICS national currencies through mutual support. China is expected to make the largest contribution to the fund, US$ 41 billion; the Russian Federation, India and Brazil will contribute US$ 18 billion each; and South Africa will make the smallest contribution, US$ 5 billion.
There are plans also for the creation of a BRICS Development Bank for joint industrial investment. Each of the BRICS countries would contribute US$ 10 billion, to fund the new institution with US$ 50 billion in assets. The project for establishment of the bank will be submitted at the scheduled BRICS summit in Brazil in March of 2014.
Major projects in Russia
Central Ring Road (CRR)
In August 2013, State officials announced plans for accelerated construction of the Moscow Central Ring Road (CRR), at an estimated cost of 350 billion rubles. On 2 November 2013, the first open request for tenders was published, inviting bids for the right to enter into a long-term investment agreement for the construction, maintenance, repair and overhaul of the starting complex (Construction phase № 1, the first building lot of the CRR). The competition was scheduled to close in December of 2013, but the deadline was extended to 10 April 2014. Results of the competition will be revealed on 30 April 2014.
Transport interchange hubs in Moscow
As part of its Transport Strategy, the Moscow Government intends to build, by the year 2020, 255 transport interchange hubs, 160 of them in the capital. The remaining hubs will require improvement of the grounds and clearing of unauthorized vendors, retail shops, and kiosks. The project is expected to be funded partially by attracting private investors in the construction of the hubs.
On 4 December 2013, the company OOO Gaztehlizing announced the cost terms for the construction of the first three transport interchange hubs in Moscow, which will be built in cooperation with OAO RZD-Development Stations. The total cost of the projects is estimated at 67.5 billion rubles (approximately 1.5 billion euros).
Other important news for Brazilian businesses
Russian specialists to inspect Brazilian meat suppliers
As of 25 November 2013, specialists of Rosselkhoznadzor (Russian Federal Service for Veterinary and Phytosanitary Surveillance) began to inspect Brazilian meat suppliers to verify compliance with the Russian ban against the use of the feed additive ractopamine. Brazilian poultry producers will also undergo checks by Russian inspectors, to verify compliance with the ban against the use of chlorine solutions.
Effective 2 October 2013, Rosselkhoznadzor banned meat imports from 10 meat processing plants in Brazil, as a result of inspections conducted in Brazil by veterinarians of the Russian Federation (in consultation with veterinary services of Kazakhstan and Belarus) from 30 June to 14 July 2013.
On 17 December 2013, Rospotrebnadzor (Federal Service for Supervision of Consumer Rights Protection and Human Welfare) instructed its regional authorities throughout Russia to restrict any imports of poultry meat from Brazil that does not comply with consumer labeling, particularly in regard to declaring phosphate contents.
Privatization strategy announced for the grain market in Russia
In an interview by Vlast on 23 December 2013, Arkady Dvorkovich, Chairman of the Government Commission for Monitoring of Food Markets, discussed the development strategy for the grain market in Russia. According to him, OAO United Grain Company (UGC), one of the largest Russian grain exporters, is expected to be privatized, with State ownership being reduced to no more than 25%. He also mentioned that discussions are taking place to integrate UGC with similar companies in neighboring countries, to result in the creation of a “regional grain pool.”
Prospects for supply of foreign aircraft to Russia
In an interview by Gazeta.ru, on 27 November 2013, Minister of Transportation Maxim Sokolov discussed the supply of foreign aircraft to Russia. In spite of Russia’s policy of supporting domestic aircraft production, current prospects for purchases of foreign aircraft appear to be strong. According to the minister, currently Russia does not produce any domestic wide-body, long-haul aircraft, and medium-haul domestic aircrafts still are not competitive with foreign aircraft. Mr. Solokov also said that the customs policies for foreign aircraft will be reviewed; for example, a reduction of import duties for turboprop aircraft with a capacity of more than 55 seats is being discussed at the Eurasian Economic Commission for Europe (ECE).