Last one for me off to the pub with my Russian mates. LOL...

Last one for me off to the pub with my Russian mates. LOL Russia: Geopolitical Opportunity
Cursory thoughts of Russia conjure up an image of the American Wild West
combined with a dose of Italian style Mafiosi. Closer examination reveals that
Russia has emerged from an enormous economic crisis and the country is in far
better shape than many would believe.
The Russian economy underwent tremendous stress in the 1990s as it moved
from a centrally planned to market economy. Difficulties in implementing fiscal
reforms aimed at raising government revenues and a dependence on short-term
borrowing to finance budget deficits led to a serious financial crisis in 1998. The
result was a 60% decline in the value of the rouble, flight of foreign investment,
delayed payments on sovereign and private debts, a breakdown in commercial
transactions, and the threat of hyperinflation.
Since 1999, Russian GDP has averaged almost 7% growth each year due to wide
ranging economic reform, tight fiscal policy, and favourable commodity prices.
Household consumption and fixed capital investments have both grown by 10%
per year since 1999 and have replaced net exports as the main driver of demand
growth. Inflation and exchange rates have stabilised. The rouble is now
convertible for both current and capital transactions.
The Russian government has created a stabilisation fund which has assets of 130
billion USD. Russia has the third largest foreign exchange reserves in the world,
north of 420 billion USD. Russia paid its Soviet era Paris Club debt of $22bn in
late 2006, pushing Russia’s sovereign foreign debt down to $45bn, or 5% of
GDP. By these standards Russia is in sound economic shape. The country
currently enjoys a sovereign investment-grade rating of BBB+ from Standard and
Poors.
Although the economy has begun to diversify, the government budget remains
dependent on oil and gas revenues. The government recognises the need to
intensify reforms that will promote new investment. The government has set up a
series of special economic zones, of which Tomsk-Oblast, where Solagran has its
manufacturing facility, is one.
In a presentation this week to the Australia Russia Business Council, Mr Chris
Cannan, the Assistant Secretary for Northern, Southern and Eastern Europe
within DFAT, made it clear that Russia is seen as a strong and high growth
economy that offers excellent opportunities for Australian business.
Healthcare
A legacy of the command economy is the enormous size of the Russian health
care system. Russia has more hospitals (1.6m beds), more physicians (650,000)
and more health care workers than almost any other country in the world. Russian
citizens consult a physician an average of 10 times per year, far more than in any
other industrialised country.
Article 41 of the Russian Constitution guarantees free, universal health care for all
Russian citizens.
Article 41
1. Everyone shall have the right to health protection and medical aid. Medical aid
in state and municipal health establishments shall be rendered to individuals
gratis, at the expense of the corresponding budget, insurance contributions, and
other proceeds.
2. In the Russian Federation federal programmes of protecting and strengthening
the health of the population shall be financed by the State; measures shall be
adopted to develop state, municipal and private health services; activities shall be
promoted which facilitate the strengthening of health, the development of physical
culture and sport, ecological and sanitary-epidemiological well-being.
Since the collapse of the Soviet Union the health of Russian population has
declined significantly, a result of social, economic, and lifestyle changes – and
temporary stress due to instability. As of 2006, the average life expectancy in
Russia is 59.12 years for males and 73.03 years for females.
The biggest factor contributing to this relatively low life expectancy is a high
mortality rate among working age males from preventable causes, including
excessive alcohol consumption.
Whilst the State no longer blindly funds the entire system, the Russian
government does subsidise the first $1,000 of treatment, regardless of how the
patient is treated. The key for Solagran is to have clinicians and hospital
administrators well informed with respect to Ropren. This is precisely what
Solagran has done. The arrival of Ropren is widely anticipated and welcomed in
Russian medical circles.
Russia has a reputation for being a difficult place to do business. It has a body of
overlapping, conflicting and rapidly changing laws. In such an environment,
negotiations and contracts from commercial transactions are complex and can be
protracted. However, more and more small businesses in recent years have
reported fewer difficulties in this regard. The fact that Solagran is effectively a
Russian company largely mitigates this risk.