Russia, export, import and invest

Storage is one of the main challenges in global energy. Power consumption is uneven throughout the day, which makes power plants often operate in a suboptimal mode. Industrial-scale energy storage facilities can help make the electricity grid more flexible by smoothing out peaks in consumption. The market potential for energy storage is constantly growing and is forecast to be more than RUB 100 bln ($1.32 bln) by 2025, according to Rusnano. Andrey Bryzgalov, General Director of Energozapas, spoke about the energy storage system their team has developed, what difficulties the project faced, and when the project is going to be implemented on an industrial scale.

Who invented solid-mass gravity storage plants?

Established in 2016, Energozapas is now the only company in Russia working on gravitational energy storage that is not PSH (pumped storage hydroelectricity). The idea of ​​storing energy using solid weights was born in 2012. Chairman of the Supervisory Board of the Market Council nonprofit partnership Yury Udaltsov met with Andrey Bryzgalov who then headed Uniscan, a company that made electronic devices. Udaltsov suggested storing energy by lifting and lowering a heavy mass. The innovative automated technology is based on raising a heavy solid weight vertically and lowering it to store and release energy. The company employs about 80 specialists and 40 subcontractors. Energozapas has been a resident of the Skolkovo Technopark since 2016.

Problem: how to store surplus energy?

The need for long-duration energy storage is high around the world, as such systems would solve some pressing problems for the power industry. First and foremost, they would equalize the load on power generation units reducing the accident rate. Second, they would reduce grid maintenance costs. Power peaks inevitably occur in industrial production, causing overloads of power supply substations. Storage devices installed at the substation or at the consumer end would smooth out consumption peaks and reduce the load on the power grid. Third, energy storage is also in demand on the off-grid market.

The vast majority of energy storage systems in the world are pumped storage hydropower (PSH) plants. According to the US Department of Energy, they account for more than 98% of the world’s total capacity. A pumped hydroelectric energy storage has two reservoirs located at different levels and interconnected by a system of pumps and generators. During periods of low demand, water is pumped from a lower elevation reservoir up to a higher elevation, consuming low-cost off-peak power from the grid. During peak consumption, water is released through turbines to generate expensive electric power and return it to the grid.

The largest pumped storage hydropower plant in Russia, Zagorskaya, is on the Kunya River in the Sergiyev Posad District of the Moscow Region. Its capacity is 1.2 GW, and gross output, 7.2 GWh. However, the use of pumped storage hydroelectricity has its limitations. Building this facility requires a large area and a difference in height elevation. This is a significant disadvantage given Russia’s predominantly flat terrain. Also, a natural high-capacity source of water is needed. In case of an accident at a pumped storage power plant, there is a risk of a man-made disaster. Considering these factors, the Energozapas team proposed its own solution to use the potential energy of a solid mass instead.

Solution: earth versus water

After Andrey Bryzgalov met Yury Udaltsov, the team spent five years developing the concept of an energy storage using weights. In 2017, they presented the first prototype of a gravity storage power plant.

Lifted Weight Storage (LWS) operates in pretty much the same way as the PHS, only it uses compressed soil instead of water. The facility consumes energy from the grid lifting the weights up to the height of a few hundred meters and generates energy as needed when the weights go down affected by gravity. Capital expenditure of an LWS becomes economically efficient with the capacity above 300 MWh. The efficiency of the prototype is 60%, and will grow to 80% with an increase in capacity.

LWS plants can be built on any terrain and do not require any high relief. The area they use is immeasurably smaller than what is needed to build a PHS. According to Bryzgalov, an LWS with the same capacity and output parameters as the Zagorskaya PHS plant will take only 2.5% of its area. It is also important that the operation of the LWS is environmentally safe, and in case of an accident, there is no danger of a technogenic disaster.

It should be noted that other countries are also working on projects that involve raising a solid mass to generate gravitational potential energy. For example, the German company Heindl Energy has a project where a one-piece 250 m wide granite piston is lifted up by a water column in a cylinder.

In a project by ARES (United States), heavy weights are driven uphill by mass cars and then, also connected to the cars, are deployed downhill while delivering electric power.

Still, each of these examples also requires a unique landscape or a huge body of water. That was why Energozapas started looking for a completely new approach, which it realized in 2018 in the Novosibirsk Academic Town.

Lifts carrying energy

The solution proposed by Energozapas is a system of lifts. A 20 m high LWS prototype with a capacity of 10 KW was built in 2018. Eight shafts, or vertical columns connected by horizontal and slanted cross beams, are located along the walls of the building. Lifts carry weights up the shafts while consuming excessive energy from the grid. The weights are secured at the top while lifts go down for a new load. The weights are pulled down affected by gravity, which activates a motor generating electric energy.

LWS lifts have no counterweights. Durable polymer sacks filled with compressed soil are used as weights. The weights are reinforced with geomesh, to reduce lateral pressure and lower demands for the case material.

The structure is surrounded by a “skirt” to eliminate the impact of the wind. The skirt has a width of one-quarter of the LWS radius and converts the horizontal pressure of the wind into vertical load. The developers also considered cushioning seismic vibrations. This is where the structure of the LWS helps. A specific number of weights are moved at any given time while the remaining weights serve as plummets and kill the vibration.

The next step towards a full-fledged industrial-scale LWS is construction of a pilot plant on the territory of the Skolkovo Technopark. The pilot will be 80 m high and have a capacity of 2.4 MW.

Why we need the pilot

The pilot LWS is planned for launch in 2021. The project raised RUB 1–2 bln ($13–26 bln) in funding from the National Technological Initiative that implements projects of the Russian Agency for Strategic Initiatives. The cylindrical structure has a diameter of 30 m and is reinforced with so-called Shukhov mesh to withstand the wind. Inside the cylinder, there are recuperative lifts and weights as well as the battery’s supporting frame.

Andrey Bryzgalov says the structure in Skolkovo will serve as a showroom for testing the electrophysical installation and demonstrate results to potential investors. He noted that building a 300 m tower would have been impractical because energy producers who may potentially offer funding must first see a functioning structure and successful experience of its construction and operation. The pilot structure will consist of the same mechanical and electronic components and will be based on the same construction technology that will be reproduced in the industrial-scale LWS. Energozapas engineers also presented a VR model of the pilot LWS that shows the interior and exterior with a great degree of detail.

If all the technical specifications are approved, Energozapas plans to launch the first industrial-scale LWS in 2025. Standing at 300 m tall and covering an area of about 1 sq km, the plant will have a storage capacity of 10 GWh and operating capacity of 1 GW, both parameters adjustable to customer needs.

Application

Energy storage using LWS may work for any type of energy systems. In renewable energy, it will supply electricity during weather conditions that are not suitable for renewable energy production. In thermal power plants, exhausted plant units may be replaced with gravity batteries instead of new but identical plant units. The other units will operate in a mode that reduces depreciation to a minimum while ensuring maximum efficiency. Nuclear power plants must operate at a steady capacity to avoid accidents. Batteries can help accumulate their excessive energy.

Bryzgalov notes that the Energozapas project is also targeting foreign markets. The energy storage facility could be in demand in such countries as India, China, Vietnam and Japan. Belarus, where the Ostrovetskaya Nuclear Power Plant is located, is also interested in an LWS, as is the Northwestern District of Russia that has reported an excess of energy.

Energozapas currently cooperates with Russian energy companies and its project is part of the National Technological Initiative.

By Kristina Firsova

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a global association owned by its members and the world’s leading provider of secure exchange of financial messages. The creation of SWIFT in 1973 in Belgium was supported by 248 banks from 19 countries. SWIFT carries an average of 42.3 mio financial messages per day and connects over 11,596 members all over the world.

There is a Russian-made alternative to SFIWT: the System for Transfer of Financial Messages (SPFS) which is similar to SWIFT in terms of technology and infrastructure; it was launched in 2016.

There are currently 402 banks in Russia connected to SPFS, and if Russia is cut off from SWIFT, they will transition to the intra- and interbank messaging inside Russia. One must understand that Russian banks still use SWIFT for local financial operations. The system is open to foreign participants, both banks and legal entities. As of now, there are only a few foreign banks that use SPFS.

Naturally, SPFS cannot replace SWIFT in servicing international payments. At the moment, it is impossible to create a Russian-made system that is similar to SWIFT in terms of scale and distribution.

Speaking of creating Russian-made payment systems that use alternative infrastructure and technology solution, the world has already accumulated certain experience with introducing blockchain and using it in international payments. Even Russian banks have tried using blockchain in payment transactions: Alfa Bank and Sberbank were the first in Russia to use blockchain technology in 2017. In global payment business, blockchain has widely been used by American Express, Visa, MasterCard and PayPal.

Many of the world’s major banks offer their clients to do international transactions using alternative payment systems. These are the American banks Wells Fargo and Citibank, as well as British banks Barclays, HSBC, and other European banks such as Santander, BBVA and INTESA SANPAOLO. Stock exchanges such as Nasdaq, SIX Swiss Exchange, UAExchange, the Australian Securities Exchange and others have also transitioned to blockchain. In 2018, SWIFT itself successfully concluded a pilot project involving blockchain.

As of now, R3 and Ripple have been trying to push aside centralized systems of international payments, first of all, SWIFT, by offering their own technologies based on blockchain. However, there are other initiatives as well: in Asia, the financial startup Lightnet is striving to become a regional real-time financial settlement center with a total investment of some tens of millions of dollars. MOIN allows for making payments between Japan, China, the US, Singapore, Australia, Great Britain and others. InstaReM is a company engaged in digital cross-border payments. Velmie launched a platform for cross border money transfers based on blockchain for retail and business customers in 2020.

It is obvious that the rivalry for servicing payments and the scale of using blockchain in cross-border transfers will only increase. In the nearest future, banks will tend to use blockchain more. In the medium term, the use of decentralized technologies at a global level can become very real. In order to create an international payment system based on blockchain in Russia, one needs to acquire the permission of national regulators and reach multilateral agreements with stakeholders. At the same time, participants in the traditional centralized systems should understand all benefits and disadvantages or transitioning to the new system.

Funding is another condition for the development of a Russian alternative to SWIFT. Investment in blockchain technology that allows for making cross-border payments reaches several millions of dollars. Thus, Ripple has invested $50 mio in MoneyGram in order to jointly provide money transfer services based on blockchain. However, cooperation has been put on hold.

Asian-based Lighnet has attracted $31.2 mio to create a regional payment system. Given the scale and complexity of the task, as well as bureaucratic obstacles, expenses and overall hesitation over the viability of the project, the introduction of alternative payment systems based on blockchain technologies will be slowing down. To make the transition quicker, participants need to see real income that would exceed the expenses. Another thing should be kept in mind: new technologies do not simply lower costs, they also lower the income of banks that receive trillions in profits from money transfers.

By Irina Aydrus, Head, International Finance program, Institute of World Economy and Business, People’s Friendship University of Russia

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The authorities do not intend to postpone the labeling of ice cream and cheese in Russia

The largest wood processing plant was opened in the Leningrad region

REC opened access to 78 export electronic trading platforms for Russian exporters

Head of the Ministry of Natural Resources: Waste should be considered as a raw material base

Rosreestr is going to make its services free

The government has allocated more than 210.5 million rubles for the digitalization of public health services

In Russia, the procedure for obtaining a TIN has been simplified

New US sanctions affect six Russian IT companies

A unified database of land and real estate will be launched in December

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Crisis is a time when people begin to think especially actively about the right investment decisions regardless of the amounts available. And if first there is a slowdown in investment activity, what we faced in 2020, then after you get the effect of deferred demand. Forecasts predict Russia will have 30% growth in investment in commercial real estate (up to 3.5 billion euros), and interest in Mosbirzha does not subside — over 10 millions of private investors are already registered there: it’s a new historical record. This is partly due to a decrease in the deposit rate from 5.15% to 4.53%.

People in search of an effective alternative are growing stronger interested in securities. What actions and tools should be invested, how much attractive domestic assets are (for foreign investors as well) and when cryptocurrency trade will be legal, — all these issues were discussed with Artem Lutik, managing director of the investment company Univer Capital.

Impact of the pandemic and sanctions on investment

— How do you assess the prospects of Russian investment companies against the background of America’s increasing sanctions restrictions?

— The infrastructure of the global financial market allows to trade assets all over the world from Russia. This gives our customers the opportunity not to close inside the Russian stock market, and to choose the best investment instruments that the global market provides.

But if sanctions pressure increases, Russian investors and investment companies will be forced to focus on countries that are happy to see Russian money — first of all, these are the EAEU countries. Mutual economic integration of the EAEU countries is already underway; on the Moscow Exchange both government and corporate bonds of the countries of the union are traded.

— Do you agree with the statement that the attractiveness of the Russian securities market for foreign investors fall amid capital outflows from the country over the past year by more than $47 billion (according to the Central Bank of the Russian Federation)? If yes, what measures should be taken by the state to increase investments in Russian assets?

— Last year’s data cannot be considered indicative: investment activity in the whole world was reduced due to COVID-19. Many investment and venture capital deals were rescheduled to 2021; already based on the results of its first quarter we will be able to see opposite trend in long-term investment flows, especially in Russian Eurobonds.

In recent years, the RDIF (Russian Direct Investment Fund) became the most notable agent for attracting direct foreign investments in Russia. Against the background of COVID-19 its public activities shifted to the promotion of the Sputnik V vaccine, but in the long term, this activity will help attract direct investment in knowledge-intensive sectors of the domestic economy.

Russian securities are in steady demand by international investors; the situation will not change as long as the spread between the key rates of Russia and the United States remains, and there is also the possibility of receiving an increased income by international investors.

— How do you feel about the information that many investment companies in Russia are using the so-called speculative trading strategy on the stock market? Do such transactions strongly affect the real value of securities and other derivatives of financial instruments?

— Speculative trade, which is absolutely normal. Possibility of speculative trade in the Russian stock exchange is a great benefit for the entire economy of the Russian Federation. No EAEU country has such a wide stock market that can absorb the funds of 5 million new investors without growth hundreds of times in a year.

Such activity of citizens in the stock market allows Russian corporations to place bonds on the stock exchange not only at the expense of institutional investors, but also due to the market demand of individuals. This allowed in 2020 domestic companies to conduct several IPOs in the local market and attracted interest in secondary listing on the Moscow Exchange. In 2021, the trend will only intensify: observing a positive result, even more corporations will rush to the Russian exchange.

— Investment company “Univer Capital” had the volume of client operations at 9.3 trillion rubles in 2020. How was the company affected by capital outflows?

— It is worth talking not about capital outflow, but about redistribution of capital from speculative ruble assets into more conservative ones providing revenues in foreign currency. Devaluation of the ruble forces investors to look for protective and at the same time profitable assets for Investing money.

First of all, such an asset for our customers are Eurobonds. 9.3 trillion rubles is the volume of client operations of Univer Capital on Moscow Stock Exchange. We are among the top 10 in terms of client operations at the Moscow Exchange, but this is not the only market where our customers trade.

— What new products and solutions does the company offer to customers?

— From the second half of 2020, the capital market department appeared in Univer Capital, focused on working with issuers that have a BBB- or higher credit rating. As a result, over the past year, Univer Capital took part as an organizer and co-organizer in 11 bond issues with a reliability rating from A- to BBB-, including in three debut issues of issuers not previously represented on the stock market.

Decrease of the key rate of the Central Bank of the Russian Federation in 2020 made bank deposits less attractive. And after adjusting tax legislation, almost all investment instruments began to be taxed at a single personal income tax rate. This created increased demand among private investors on corporate bonds of “investment grade.”

Promising assets and cryptocurrency trading

— In your opinion, what strategy of the investment portfolio is valid for novice investors from Russia? Tell us about your company’s experience with risk diversification?

— We take a conservative approach in investments and look for customers who are not chasing momentary profits and speculation. Conservative investments in bonds and investment-grade Eurobonds gradually make our customers richer, generating stable income above the key rate level.

Our customers are qualified investors, corporations and wealthy individuals for whom the number one task is not to lose money. Only in second place, they look for the profitability of investments. Proceeding from the client’s request, we form an investment portfolio with ratio parameters “risk/profitability” corresponding to the customer profile.

— How Univer Capital helps novice investors get on their feet in this area without serious mistakes?

— Univer Capital is focused on corporations and wealthy individuals. Such customers are basically intolerant of investment errors, as they increase all the time their financial literacy and look for professionals who can effectively provide the profitability they require without significant risks and with a service that exceeds expectations. It is such services that Univer Capital provides to customers.

— Many Asian countries allow cryptocurrency trading in their stock markets, for example, there is such experience in Japan and South Korea. What prevents the state from making trade in crypto assets in Russia legal?

— Most financial regulators in the world believe that cryptocurrency trading has speculative and pyramidal character. In this regard, its admission to the exchange and, accordingly, getting the opportunity to trade cryptocurrency for unskilled investors can lead them to loss of money.

Such excesses can once again make Russian investors disappointed in the stock market, which the state represented by the regulator tries to prevent.

Russian exchanges and everything around them

— At the moment, what are the most undervalued securities or currencies observed on the stock market in Russia? Which papers and tools you can start investing in from a point of view of growth prospects for the next 2–3 years?

— In our opinion, now it is worth paying attention to commodites (goods from the real sector, traded on the exchange) and issuers that will earn on the recovery of global demand after the COVID-19. First of all, we are talking about Russian metallurgical, mining and oil companies. From the point of view of conservative investments, a correctly made portfolio of Eurobonds and Russian corporate bonds, especially of investment grade and with long maturity, is able to bring the required return in two to three years in any market situation.

— What other measures besides tax deduction should the state take to increase financial literacy among the general population, in your opinion? In developed countries people often prefer to invest in securities rather than in bank deposits with a small yield.

— The state has already contributed to the fact that more than 10% of the working-age population of the Russian Federation opened a brokerage account on the stock exchange. And first of all they stimulated this not by tax incentives, but by a reduction in the key rate. Private investors, accustomed to receive double-digit yield in rubles on bank deposits, began to migrate to more than risky instruments that are in the same time more profitable. Mostly the flow of new investors was directed to real estate and conservative investments on the stock market.

In the hands of the state there is a tool that regulates the demand for products, alternative to bank deposits — that is the key rate. Its demotion now effectively displaces individuals from deposits.

— Is it possible in the future that the Moscow Stock Exchange will become the platform where issuers from EAEU countries will receive access? How will the financial flow of investment distribution change?

— Issuers from EAEU countries have already gained access to the Moscow Exchange, primarily they are interested in the debt market. Already at the auction you can see both government and corporate bonds of EAEU countries. The largest activity is shown by issuers from Kazakhstan and Belarus, there are issuers from Armenia too. Russian investors are ready to invest funds in papers of companies from EAEU countries, if they have credit ratings of investment level from international or Russian rating agencies. Most popular, of course, are state or quasi-state issuers, but also non-state corporations from the EAEU countries (such as Eurotorg LLC, the largest grocery retailer in Belarus) are successfully placed on the Moscow Exchange.

Interviewed by Kristina Firsova

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The Central Bank does not expect Russia's disconnection from international payment systems "Union of Independent Networks of Russia

The expert compared the fall of the economies of Russia and Europe during the pandemic

Visa and Master Card will continue to work in Russia

SIBUR has developed a unique component for imparting fire resistance to building materials

Rosstat spoke about poverty reduction in Russia

Rosturizm proposed to legislate the status of guest houses

Tax breaks: all or nothing

Poor people in Russia decreased by 5.3 million people

Popular professions of self-employed Petersburgers became known

Nord Stream 2: Akademik Chersky is preparing to start laying pipes for Nord Stream 2

FAS will check hotel prices in Russia

Sberbank: Plastic cards will become a rarity by 2025

5 billion rubles will be allocated for preferential car loans in Russia

Rosselkhoznadzor took part in the 16th meeting of the Steering Group of the OIE Animal Welfare Platform for Europe (SG16)

IMF: Russia did an excellent job of managing the economy during the pandemic

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Russian business news headlines in English so that you can decide what to translate.

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IDGC of Center and Volga Region: The company “Rosseti Center and Volga Region” has published its audited consolidated financial statements under IFRS

En + Group becomes the lowest carbon footprint aluminum producer

An unmanned logistics treasure

The Ministry of Industry and Trade of Russia for the first time published the official statistics of the development of industrial parks and industrial technoparks in Russia

Green Deal: Risks and Opportunities for the EU and Russia

Pharmaceutical companies warned of a possible shortage of drugs in Russia

Why Russia is speeding up the construction of the next gas pipeline to China

Why Russia does not have enough of its fruits

Nutritional supplements labeling will protect consumers from counterfeit and unsafe products

Fintech will create the first blockchain operator in Russia

Oil prices rise above $ 65 per barrel

The State Duma did not accept the draft exempting minimum wages from personal income tax

The Central Bank does not expect Russia to be disconnected from international payment systems

Azbuka Vkusa launches a platform for farmers

The Central Bank does not expect Russia's disconnection from international payment systems "Union of Independent Networks of Russia

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The number of electric cars in Russia exceeded 10,000 by the end of January 2021, represented by 18 models from 14 brands. However, despite a considerable increase from about 6,000 a year before, Russia is not even in the top 25 markets for electric vehicles. This, according to the ranking team, mainly has to do with Russia not having an official representative office of the largest electric car manufacturer, Tesla, or other global brands that make electric vehicles.

Neither does Russia offer strong motivation to buyers of electric vehicles, and most customers predictably make their choice in favor of an internal combustion engine.

An incentive package under the Federal Law on Environmentally Friendly Transport has been in the works for a few years and is unlikely to be adopted until 2023, according to expert estimates. On the other hand, many European Union countries have been rewarding motorists who opt for electric versions with wide-ranging benefits and incentives for a few years. In Austria and Germany, owners of electric vehicles enjoy free parking in the city center and use toll roads at a discount. Finland and Sweden provide preferential loans for the purchase of electric cars. In Norway, you can trade in your old fossil-fuel car and get its full market value as well as a subsidy of up to 10,000 euros to buy an electric one since 2018.

With enough political will, this experience can also be applied in Russia. At the same time, one needs to keep in mind the long distances between cities and towns in Russia — unlike in Europe — as well as the sparse charging infrastructure; Russia only has a few dozen charging stations.

The prospect of ending up with a dead battery hundreds, or maybe thousands of kilometers from a city big enough to have a charging station, especially in a region where temperature drops below 30–40 degrees Celsius in winter, predictably motivates even most open-minded motorists to buy conventional gasoline or diesel, or hybrid cars again and again.

Colder weather is also a problem with battery-operated cars. It is not about having your heating on and spending your battery much faster. The operating temperature for lithium-ion batteries used in modern electric vehicles is from 0 to 30 degrees Celsius, and they lose some of the energy in a colder environment. The lower the battery charge, the higher the chances that the car will not cover the distance planned. Remember how your cell phone dies in the cold?

All these factors drag down the mass demand for electric cars in Russia. Still, there are high chances that this segment of the car market in Russia will show steady growth. In the next four or five years, electric cars and hybrids will be seen much more often in big Russian cities.

Moscow and St Petersburg with their better-developed infrastructure will become strong leaders for electric car traffic. Vladivostok will surely be third and a leader for recycling used Japanese electric cars.

Until there is proper infrastructure in other Russian cities, the interest in electric cars will remain low.

By Maxim Chernyayev, PhD (Economics), Associated Professor of the Department of Economics, People’s Friendship University of Russia; Timofei Mazurchuk, expert of the Department of Economics, People’s Friendship University of Russia

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Putin instructed to provide measures to support export projects in case of price reductions

Ozon began to cooperate with IKEA

The Baltic states cut off the supply of electricity from Russia for the first time

The government approved an updated methodology for calculating key performance indicators of governors

Russia may introduce labeling of foreign dietary supplements

Russian banks began to close voluntarily more often

The construction of the region's largest sheep feeding site for 50 thousand heads has begun in the KChR

The government has clarified the rules for the application of maximum selling prices for essential and essential medicines

The Russian car market is losing ground in Europe ("Autostat")

A modern laboratory agrocluster opened in Moscow in Skolkovo

Direct investments of non-residents in Russian companies grew by $ 4.7 billion

Metro in Russia quadruples profit amid pandemic

The deadline for accepting applications for supporting the export of cinema, online services and IT products has been announced

FCS of Russia: on the transfer of funds to the federal budget

IDGC of Center and Volga Region: The company “Rosseti Center and Volga Region” has published its audited consolidated financial statements under IFRS

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In any discussion about renewable energy, the debate usually concerns the development of hydrogen technologies. There are three main sources for the production of hydrogen: 18% is produced by processing coal; 4% is “green hydrogen” that comes from renewable sources, mostly by electrolysis of water. The dominant source of hydrogen — 78% of the world’s hydrogen production — is natural gas and oil.

For obvious reasons, Russian resource extraction companies prioritize the production of hydrogen from petroleum commodities in developing their own corporate hydrogen strategies. The following two facts play a key role here:

First, the basic element of the new European energy policy is the Green New Deal adopted by the European Commission. It focuses on renewable energy and decarbonized gases, first of all, hydrogen. Moreover, the Hydrogen Strategy for a Climate Neutral Europe is mostly looking at green hydrogen and envisages a cumulative investment of €180 bln — €470 bln for renewable hydrogen as compared with €3 bln — €18 bln for fossil-derived hydrogen.

Second, the developing extensive global market of exporting and importing hydrogen is becoming a reality of the current energy agenda. Today, pretty much every transnational energy corporation is involved in an area of activity directly related to research programs and applied developments in hydrogen energy, especially after Germany announced its National Hydrogen Strategy, one of the most ambitious European hydrogen strategies which implies that the country will gain a status of a major ‘green’ hydrogen importer in the western market even in case the program’s second stage scheduled for 2024-2030 is successfully implemented. Berlin has also announced plans to launch energy units with the total capacity of up to 5GW for producing green hydrogen by 2030, with additional equal capacities to be commissioned by 2040.

As regards hydrogen exports to Germany, Gazprom and Novatek — whose total share of natural gas imports to the EU was 47.5% in 2019 — are going to face competition from the most prospective hydrogen producing EU regions, particularly Scandinavian countries, the North and Baltic seas areas, and Southern Europe.

Northern Europe’s key specialization is hydropower technologies for producing hydrogen, such as in Scandinavian countries, or through wind power generated at aqua-territorial renewable energy source facilities. Southern/Mediterranean Europe has abundant solar energy; Germany-Morocco Hydrogen Agreement signed in June 2020 provides for constructing Morocco’s first green hydrogen production plant. The project, which is implemented as part of the German-Moroccan Energy Partnership (PAREMA) established in 2012, aims to develop industrial solutions for solar energy conversion with the use of the Power-to-X technology.

Low cost of conversion (about $1.5-3 per 1 kg) remains the key factor in favor of using natural gas to produce hydrogen. A more expensive technology for water electrolysis results in a 2.5-3-fold increase in the cost. Even given the economic attractiveness, the issue of production localization and hydrogen transportation is yet to be resolved. Possible options for Russian natural gas exporting companies in the European hydrogen market include the use of the existing gas pipeline system.

Estimated technical capacities allow for increasing the levels of hydrogen in the methane-hydrogen mixture up to 20% with its further delivery via the gas pipeline infrastructure. A proposal has even been made for utilizing a string of the Nord Stream pipeline and Nord Stream 2, whose construction is underway, solely for exporting hydrogen, or increasing the concentration of hydrogen in the methane-hydrogen mixture up to 70%.

So far, Gazprom considers such option as unfavorable citing the risks of non-observance of long-term contractual commitments as to both natural gas deliveries and the quality of exported gas. Also, it is entirely unclear who will assume the burden of additional investments for adaptive modernization of the gas pipeline infrastructure required for transporting the methane-hydrogen mixture.

A potential solution to the problem could be efforts to produce hydrogen near operating gas compression stations at the consumer’s location. Hydrogen generating capacities near stations will vary depending on the current or forecast demand. This will provide a necessary amount of manufactured hydrogen in European regions in accordance with the specified demand, and will also preserve the specialization of the gas pipeline system, without initiating programs for its modernization or construction of additional pipeline strings.

By Rinat Rezvanov, independent expert on infrastructure systems

“We will never go back to a life we had before the pandemic. The workplace will never be the same as before COVID-19.”

President of Henkel Russia and General Manager of Beauty Care Russia and the CIS Sergei Bykovsky made this statement about the post-COVID workplace for white-collar staff at a news conference on March 31.

According to Bykovsky, Russia seems to have no need of reinstating a full-fledged office employment. The ideal format would be some form of hybrid between online and offline work. The possibility of working remotely literally gives people space, and improves their quality of life.

Offices are going to be different in the future; instead of rows of workplaces, they will rather provide a space where people will meet to work as a team. The available workplaces will not be assigned to specific employees, and there will be fewer of them than the number of workers — down by a certain coefficient.

About 30% of the staff of the Russian branch of Henkel are working at the office today, and according to Sergei Bykovsky, their share may soon increase to 50%. As for longer prospects, this remains to be seen, Bykovsky added.

Ivan Kladov, co-founder of the investment company Aravana Capital Management, shared his expert assessment of the prospects for the financial market: «Do not expect 2021 to be as good in terms of profitability as 2020 (even despite the coronavirus pandemic). However, there are many companies on the market that can seriously improve their financial and operational indicators in the coming year. For the most part, the fact is that we can see the record profitability only after a significant correction – in fact, what happened in 2020. The current year has not yet made it possible to buy at good prices, but there are still three quarters ahead!

Renewable Energy Outlook

It is worth noting the renewable energy sector, which a large number of investors and analysts are hoping for. The fact is that the newly elected President of the United States, Joe Biden, may introduce tax breaks or other exemptions for companies from this industry. In addition, the sector itself is far from possible peaks, because the trend for renewable energy began only in the last decade. Therefore, companies from this industry definitely have a future. There is general skepticism about the effectiveness of such companies, their ability to reach a break even point without government subsidies, but this will not prevent them from gaining capitalization against the background of the general hype. So it makes sense to look closely at highly volatile securities in order to revive the dynamics of the entire portfolio. There is no need to dive into this sector 100%, but up to 10–20% you may well go.

Let’s take an example of a green energy company, which will have explosive growth in 2021:

NextEra Energy is one of the largest US energy companies. Includes the following subsidiaries Florida Power & Light (FPL), NextEra Energy Resources (NEER), NextEra Energy Partners (NEP) and NextEra Energy Services. Together with its subsidiaries, the company is the world’s largest wind and solar power generator. In addition to wind and solar energy, NextEra Energy uses natural gas, nuclear and oil-fired installations.

The main competitors of NextEra Energy are also major energy companies such as: Exelon Corp, Southern Co and Duke Energy Corp. It should be noted that #NEE outperforms its competitors in terms of capitalization more than twice.

TTM Revenue: $ 18.2B (-5.3% YoY)

TTM Operating Profit: $ 4.9B (-4% YoY)

Net Income: $ 3.9B (+ 5% YoY)

Earnings per share last quarter: $ 0.66, better than $ 0.65 forecast

The products of energy companies are characterized by low elasticity of demand. Therefore, this sector can be considered resistant to various crises.

Distribution of revenue by business segment:

• FPL — 63.49%
• NextEra Energy Resources — 29.36%
• Gulf Power — 7.15%
• EPS forecast for the current quarter: $0.36

The company is strong and has a steady growing trend. The last purchase was at 68-70 and it was possible to enter for almost a whole month. Now the deal looks much worse and here I would not take it, although I believe that the paper will reach 82/83. Why not, because the stop will have to be placed behind the previous low, and this gives approximately equal profitability at equal risk, which seems to me not entirely interesting.

Recently, the renewable energy sector has been in high demand from investors. Especially against the backdrop of Joe Biden’s victory in the US presidential election. Therefore NextEra Energy is a sustainable company with growth potential. However, it should be noted that due to the specifics of energy sources, the fourth quarter for the company is usually characterized by lower profit. This is due to the fact that solar panels receive less energy during the winter. Thus, #NEE is truly a company with growth potential.

American Robingood strategies

As many may have noticed, 2020 has shown how American investors love unprofitable companies that have a unique product or provide a unique service. After all, the percentage of unprofitable companies on IPOs over the past year has practically grown to the level of the 2000s, when the technology market was extremely overvalued. It is impossible to say with certainty when this trend will end. However, some of the young tech companies can really be a good investment. Even in spite of the current revaluation by the market. In this case, the comparison with the 2000s is not accidental, the level of insanity is practically the same. The amount of free money is off the charts, yields on classic instruments such as bonds are minimal, which leads to the fact that everyone wants to buy shares. And yes, of course, all newbies, or as it is now customary to say the Robinhoods (from the word – Robinhood is an American retail broker without commissions on deals on stocks) crave in excess of returns, in their opinion, + 10/20/30% per week is the norm. They basically rock unprofitable companies.

To view the statistics of Robinhood’s positions for a particular stock you can use the robintrack.net website.

To view the ticker for a specific American stock, simply enter its ticker at the end of the address.https://robintrack.net/symbol/TSLA

Commodity sector growth

I would also like to point out separately the raw materials sector, which is now starting to grow at a rather serious pace. The reason for this was the growth of almost all Commodities, from platinum to oil. Due to limited supply and an ongoing pandemic, commodity prices may also rise after a slight correction.

Here, however, you need to be careful, because there is a correction ahead in the Commodities market. This is facilitated by the growth / reversal of the dollar index. The current commodity spurt was largely helped by the dollar index, which weakened by almost 15% over the past year, which pushed the prices of goods denominated in dollars up. Now, after the correction, it will be possible to enter Commodities again, but it’s better not to rush.

Financial sector growth dynamics

Another sector that is already showing fabulous dynamics this year will be the financial sector, in which the regulator, represented by the CFTC, has lifted the restriction on share buybacks that have been in effect since 2008.

It is easy to assume that the delayed accumulated appetite and large amount of cheap money will show themselves in all their glory, and the “ugly duckling of last year” will spread its wings and become a wonderful swan. I recommend taking note of this sector».

Why Russia’s lag behind the global average growth rate is growing, and what are the main shortcomings of Russian economic policy? Invest-Foresight discusses these issues with the director of the Institute for Economic Growth named after Stolypin, Anton Sviridenko.

Russia amid global trends

— What is in focus of your institute now?

— In general, our focus is on the economy and everything that happens there. The Russian economy, its comparison with the parameters of the world economy. Does Russia come closer in Its economic indicators with other similar countries, whether there is convergence or vice versa, Russia is in some kind of countertrend? I will immediately say, it turns out both answers are correct in some way.

Our other task is to study issues of administrative and business climate. In partnership with the Commissioner for the Protection of the Rights of Entrepreneurs, we prepare an annual report. We conduct analytical, expert studies; meetings that let determine what happens in Russia from the point of view of the business environment, what rules and laws negatively or positively affect the business conditions, what changes are needed. We “highlight” areas that deserve special attention.

Our third task is contact with the public, work with public organizations, institutions, interaction with society. To do this, we annually hold Stolypin forum. This year it will be held for the fourth time: September 9-10.

— It is very interesting what you said about trends and countertrends. Could you give an example?

— Indeed, there are many interesting things here. We recently made a comparison

how countries went through the pandemic. I must say, according to external signs, Russia seems to handle it more easily. Our scale of the fall was not as large as in some foreign countries, especially Europe. Our fall was comparable to the United States: Russia — minus 3.1%, and they — minus 3.4%.

In the same time, it should be noted that over eight years, from 2008 to 2020, Russia’s GDP grew in constant prices by only 5%. Moreover, on average, the world growth was 41%. And for developing countries, now Russia belongs to this group, the growth was 68%. This is the so-called Herschenkron effect — when catching up development is faster than advanced one due to the effect of a low base. We are far behind the developing countries. At the same time, we also have an effect of a low base.

By purchasing power parity, our relative rates are more or less decent, but still we are far behind. And by nominal indicators in dollars — the lag is very, very strong. In 2014, we ranked ninth among all world economies in terms of nominal GDP. According to the results of 2020, we will probably drop to 11th place. If pandemic year 2020 discarded, then from 2008 to 2019 we grew by 11%, and the world — by 45%. By purchasing power parity, we wanted to be in the top five countries, but now we take 6th place. Here Indonesia is catching up with us. It used to lag far behind Russia in development in terms of such indicators as GDP per capita of GRP, by population income, and now it is picking up closer.

— But after all Russia handled the pandemic easily?

— Yes, but due to the effect of a low base: we had nowhere to fall much. We went through a pandemic more or less against the background of developed countries, worse than commodity countries, although conditions were the same for everybody; oil, gas and other commodity prices fell equally. Moreover, we no longer hold world-first place in oil production. We are inferior in gas to America.

And in general we are growing worse than commodity countries. We have less investment in fixed assets — 22.8%, and in commodity countries, the same indicator is 28%. In addition, this allows us to conclude that our raw material basis for development needs to be changed. Despite the fact that the commodity sector is a good airbag, and, in principle, we could live well using this because we have a constant influx of foreign exchange funds. However, excessive concentration on the commodity sector leads, firstly, to the strongest dependence on it, and secondly, the fact that we have underdeveloped other industries. We live on imported, consumer goods, we export few such goods.

Because of this we must always focus on our future situation with raw materials. If our economy was more diversified, we could produce consumer goods to replace imports, and export to level off foreign exchange flows. Then our standard of living would have risen a lot. The raw material airbag would give additional bonuses. And we would live, maybe, better than some other commodity countries, because we have great geographical opportunities for development.

Economics and the struggle of departments

— In this regard, what do you consider the main drawback of our economic policy in terms of the development of non-primary industries?

— There is no public focus on these tasks. There is no single center, who would follow everything and make adjustments. Politics we get is a little bit multidirectional. Various blocs within the government pursue their departmental interests, and it turns out that decisions that are made in favor of development are compensated by decisions taken against development.

We are all in favor of reducing the costs of small and medium-sized businesses, for reducing administrative pressure, reduction of fines. And there are decisions that are aimed at achieving that. On the other hand, constantly some new acts worsen the situation of business. For example, a new drainage fee has recently appeared. Without any reason, now half of the small businesses in the country have to pay 1.5 or even 3.5 times more. This is completely incomprehensible.

We are all in favor of the small business, we give subsidies to SME, in 2020 we realized that SME contribute to employment, but at the same time from nowhere arise such decisions. Why? All the pros that the authorities and the president constantly talk about are suddenly offset by such small point decisions. That is, the main thing is contradictory policies. We do not have a single strategy for how we should grow.

— In terms of growth strategy, who in the world could we focus on?

— Within the framework of world experience, countries used different growth models. For example, Asian countries, those called “new tigers,” and China after them, worked on the low costs model. Low costs were an advantage in world trade. These countries grew at the expense of their export. At the same time, domestic demand was very limited, because of low salaries. This is a model of growth at the expense of patience, when people endure low costs and understand that in the future, in 20–30 years, their children will receive a return.

So, for example, it happened in South Korea. Initially, the domestic market there was very narrow, and now they have repeatedly exceeded our Russian level of GRP per capita. China is implementing a new concept too. There the level of well-being increased greatly due to work, which they have done in 20–30 years. And they already often have incomes nominally exceeding Russian salaries. Accordingly, now they have the concept of “double circulation”: they work both on the external and on the internal market.

But there is another way that was developed, for example, by the post-war countries of Europe and Japan — when domestic market immediately acted as the driver of development. Then a policy of high productivity and high salaries was adopted.

— How should Russia develop?

— We have neither of these two models, to be honest. We now have labor costs, for example, very low when compared to the world, but the unstable situation and uncertainty of the exchange rate do not let move with low cost policies. We can’t do this because we have the administrative environment that is not ready to accept business and raise investments. We would like to grow, of course, within the framework of the concept of high incomes and a productive economy. But here we have a whole block of solutions that are not implemented.

This is monetary policy too. Although in last year there was a serious easing, this did not always make it easier to get a business development loan. High barriers remain in financing, in control and supervision activities in the form of unnecessary requirements. Although the regulatory guillotine is working now, we are not yet surely understanding its results. We do not have tax incentives that stimulate high-performance economics, innovation and the arrival of entrepreneurs in regional technology parks. For this, special tax, rental and other conditions are necessary that suggest that the person will reach breakeven point.

We do not have all this to the right extent. We have certain economic zones, where individual, successful projects are really implemented. But they do exist since the 90s, despite general trends in the economy. These islets of efficiency could not raise economy. And now there are islands of efficiency: beautiful factories, beautiful entrepreneurs, even islands of effective public administration. But this is not a massive trend.

— And what is the trend?

— The trend is that there is no understanding of how we realize growth. We have a tax policy that is confusing, disproportionate. Everyone wants to be an IP (“individual businessman”), because there are no taxes on dividends. As a result, everyone is trying to split their big business between several individual entrepreneurs. This is very difficult: to comply with the business structure, in the same time properly transferring the assets.

Everyone chooses between modes, looking for tax benefits and forgetting about development. There is still a problem of the “tax pit”: if you cross the turnover border laid for a simplified taxation system, your taxes increase by 2–3 times.

The judicial system is also provoking complaints. Criminal prosecution of business is excessive. Although, I must say, the general work of the authorities, of the prosecutor’s office and of the commissioner for the protection of entrepreneurs’ rights, the creation of the “Забизнес.рф” platform helped to equalize the situation a little. Now the most criminal cases against business are initiated by public procurement. The trends are — less arrests, less pressure on ordinary business affairs. But in procurement, too rules are not fully understood. The problem has become smaller, but it remains.

A separate problem is the tariffs of natural monopolies. They grow faster than inflation. They are often incomprehensible. Why is the investment component exactly that? In general, there is some opacity.

Looking for the perfect economic policy

— You still think that Russia should develop according to the model, approximately similar to the European post-war one?

— There is a feeling that it is closer to our path than the Asian path of prolonged deprivation. Even in a pandemic, when there was a shortage of jobs, Russian citizens still did not accept the jobs, which were not paid very well. They tried to live with state benefits, staying at home. And still, migrants were involved in these jobs. There was a problem: as pandemics have suspended cross-border movements, our citizens did not want to take jobs, but there were no migrants to replace.

In certain areas, despite the fact that unemployment increased, there was a shortage of labor force, for example, in trade. Russia has historical experience, we have good personnel, we have a memory of our technical breakthroughs, there are universities. Therefore, we are closer to the high path performance. With our oil pillow, we can implement it even without radical transformations in the global financial system, achieving sfor the ruble a reserve currency status.

China has achieved this for the yuan, we have not yet been able to do this. Now we face already era of crypto finance. Perhaps here we should look for a solution. A new world system where our ruble, our currency or maybe the single currency of the Eurasian Union will have more weight, it will be easier used in world payments. Something could be realized here already on the crypto financial basis, because the ruble, with its fluctuations in the exchange rate, even by formal criteria does represent the reserve currency, not to mention political pressure.

Therefore, we are forced to use third parties’ currencies. Plus our ‘oil pillow’ allows us to use the funds going into budget reserves just on investment goals. We need foreign exchange reserves to buy equipment and machines abroad. But the state does not provide incentives for the mass import of investment goods. And to grow with high performance, it is certainly necessary.

— If you imagine that the economic policy of the state is changing for the better, what would you propose as priority reforms to the government?

— First, project financing for business, when under special project financing the company is given simple or syndicated loans at favorable conditions, at least 5.5%. Now there is a program at 7%, also not bad, and it works, but collateral requirements are unbearable for our business, you’ll have to gather up to 42 documents, so only sole production projects are lucky to get credit.

As a result, the business is unable to start project because there is no normal long-term funding. We are now preparing program “Economics of simple things,” it provides for standardization for production projects. For such projects you should open technology parks, provide financing conditions, give people money for specific projects, which are already known and calculated – there will be a result!

— So, the first one concerns financing?

— The second one concerns taxes. More equal tax system when everybody has got the same regime, let rates vary for small, medium and large businesses, but there will be no ‘running’ between different modes. It is not clear what to do with the pension system: you need to think about how to change it. Taxes on our labor are very high. The rate is 30%: business can’t stand it. And the most interesting thing, now they have done a single social contribution of 15% in excess of the minimum wage – and more contributions began to arrive at this rate, and wages began to rise more amid the crisis, that is, people stopped to hide them strongly. Third is the reform of the judicial system, reduction of criminal and control — supervisory pressure. And the fourth one concerns land, buildings, rent. Preferential rent for a developing business.

— Any proposals that are formulated by your institute are now in discussion somewhere in government?

— We work in partnership with the institution of the Commissioner for the Protection of the Rights of Entrepreneurs, our proposals were repeatedly reported to the President of Russia, there was a program “Growth Strategy,” then a roadmap for the growth of the non-resource economy. A lot of its content was actually implemented. For example, national goals. Now specific guidelines are set, and monitoring is underway, how national projects affect achieving national objectives. And we talked about it 5 years ago.

— And in terms of project financing?

— There is a factory of project financing in VEB (Vnesheconombank), but this is not what we wanted: we talked about small and medium-sized projects, and they have only large ones. Nevertheless, the lending program at 7% reflects the fact that we once asked for a soft loan at 5%, this is already close to what is needed for small and medium businesses.

Last year, the state held, for the first time in our history, direct demand stimulus, which was often used in Western countries. In fact, this was helicopter money to families and businesses. Sometime before we offered, too, such a stimulation of demand, but then it faced great fears. The President of Russia has already said: we need to check everything related to monopoly tariffs, we talked about this 3 or 4 years ago. In the field of tax regimes, the discussed offers (for example, about a special regime for catering) seem similar to what we offer. Control and supervisory reform and regulatory guillotines were already brought into action.

We had our own approach, nevertheless reform occurred, new laws on control and supervision were passed. There have been many changes in criminal legislation regarding business arrests, criminal case investigation, seizure of evidence. Perhaps there are trends that show: what the institute once worked on is gradually being embodied. Not quickly, but it should be so: there can be no quick solutions. The only thing we cannot do yet is creation of development management system.

— Administration of growth?

— Yes, a separate body that would deal only with development, moving away from current issues. Because in current issues, administrative weight disputes always begin between various officials. Current agenda does not leave time to deal with development issues. The development bloc should not participate in this; it should not encounter departmental opposition. One minister has one wish, another has a different wish, and controversy begins. You can drown in disputes; the truth can be lost over the years. The growth administration has not yet been created, but it would be good.

Interviewed by Konstantin Frumkin

There is no doubt that the COVID-19 pandemic has changed the entire world, causing a huge crisis in the global economy and making almost every aspect of human lives completely different. With a pending lockdown, unprecedented borders’ closures, and travel restrictions, our mobility that we used to take for granted has become severely curtailed, which has forced a lot of people to think about their Plan B.

As a result, the demand for citizenship and residency by investment programs has skyrocketed. Among the benefits that a second passport or residency permit of some of the most sought after countries offers there is not only the opportunity to travel visa-free to numerous countries, such as the UK, Schengen, Hong Kong and the majority of others, even in the situation of closed borders, but also access to better healthcare and education, favourable conditions for business, tax incentives, and many others.

During the pandemic, a range of countries running economic citizenship and residency programs have significantly lowered prices and offered more flexible terms in order to attract more investors. For instance, last summer St Lucia introduced a new investment option named “COVID-19 Relief Bond” (a refundable non-interest-bearing government bonds’ investment), halving the minimum investment threshold, thus making it $250,000. After the 5-year holding period expires, the entire investment amount is returned to the investor. Another example is St Kitts and Nevis offering a reduced donation of $150,000 for a family of up to four people, which is the same as for a single applicant. Dominica does not lag behind either: it also cut down the donation amount to $175,000 for families of four.These advantageous conditions have sparkled interest of potential investors seeking to obtain a beneficial Caribbean passport.

For those who would like to live and work within the European Union, such countries as Malta and Portugal are increasingly popular. With a brand-new Maltese citizenship by investment program, it has been possible to become a full-fledged citizen of Malta and therefore the EU after only a year of residence. The investment minimum starts from €700,000 (if citizenship is granted after 3 years). As for Portugal, its Golden Visa program is regarded as probably the best residency by investment program worldwide and is much favoured due to its multiple benefits. It does not require living in Portugal permanently while enables applicants to obtain European citizenship in already 5 years. The minimum amount for investment ranges from €250,000to €280,000 depending of the chosen option. Since the Portuguese government is restricting the real estate option from 2022, prohibiting the purchase of residential properties in major cities, Lisbon and Porto, and coastal areas under the Golden Visa, this has prompted investors to buy properties in the urban centres and by the seaside before 2021 is over. Besides, in 2022 the amounts for other investment options of the Golden Visa program are almost doubling, so many are catching the chance to become Portuguese residents at the current lowered prices.

Lately, Turkey has been gaining popularity among investors, as it provides one of the fastest and simplest routes to secure a second passport. The Turkish citizenship by investment program is very cost-effective, with investment thresholds starting from $250,000, ensures quick application processing (3–4 months), and makes applicants eligible for US E-2 Visa, which allows relocation to the United States. Economic citizenship of Vanuatu is even faster to acquire, granting investors second passports in around 2 months, and has a wide appeal due to the advantages it offers.

The overwhelmingly successful Golden Passport program of Cyprus was terminated last year and is not to be replaced; however, the Montenegrin citizenship by investment program can be seen as a good alternative to that. Joining the EU in 2025, Montenegro will be able to grant strong European citizenship with all the perks that go with it. The program offers a minimum investment of €350,000 and is scheduled to operate only until the end of 2021.

The coronavirus pandemic has highlighted the importance of a second passport or at least a residence permit by investment. Providing economic and social stability, citizenship and residency by investment is an insurance policy against turbulences and uncertainties of the rapidly changing world.

GLS Private Office offers citizenship and residency by investment solutions around the world (5 countries in the Caribbean- St Kitts and Nevis, Dominica, Grenada, St Lucia, Antigua and Barbuda), Vanuatu, in Europe (UK, Portugal, Spain, Greece, Malta, Cyprus, Montenegro), and Turkey. We also offer tailored ancillary services depending on the clients’ goals.

By Victoria Vella, Managing Director, GLS Private Office

Russian business news headlines in English so that you can decide what to translate.

Click on the headline to see the original story in Russian. When you find an opportunity contact us to follow it through!

email: NewsCentre@volgatrader.com

The Rosreestr bill will simplify the registration of rights to houses and land

The government will expand measures of state support for fisheries

Russian Post has opened a new service for online commerce

Russia on the international freight market

Compiled a list of the most profitable types of real estate for investment in 2021

Guest houses in Russia are classified and included in a single register

A unified register of control types will appear in Russia

Beeline created a subsidiary to develop IT products

An approximate list of goods subject to traceability in Russia has been prepared

The Ministry of Industry and Trade has formulated the conditions for the introduction of labeling for new goods

Economy potatoes will be put on the shelf. Trading networks may start taking substandard tubers for sale

The institute of forest protection can be revived in Russia

New fines, gadgets with Russian software and a business census: What laws came into force in April

LED lights will begin testing in laboratories

Industrial respirators from the Tver region began to be exported to the Czech Republic

Use our team in Russia to improve your business.

Parents these days often complain that children don’t like to read and prefer electronic devices. Mobile games have replaced the fascinating stories about Winnie the Pooh, the Moomins, Little Red Riding Hood and Neznaika. By merging paper books and digital technology, Devar, a startup from Tula, blew up the publishing market and made millions. Devar’s CEO and Tula University of Education graduate Anna Belova now lives in New York and is listed as one of the most promising Russian entrepreneurs below the age of 30 according to Forbes. She believes that augmented reality books will soon take over bookstore shelves all over the world.

The fate and fortunes

Devar means “wishes come true” in Sanskrit. The startup definitely granted its creators’ wishes.  Devar books and toys are now sold in 40 countries making a total profit of $40 mio. As it often happens, this road to success began by accident. Anna Belova was engrossed in studying art and humanities at the Tula State University of Education. She loved attending professional conferences where she once struck a conversation with Andrei Komissarov. It turned out both had been thinking about starting a business. As it often happens when you are 20 years old and meet a like-minded-person, they got down to business right away and set up a web design studio. The co-founders found a brainy programmer and started offering their services. Sometimes work was in abundance, followed by a dry spell; but overall, the company continued growing and could soon spend more time on exploring technology. Once a particularly challenging job came their way: to develop a video surveillance system for monitoring nuclear reactors. The company proved to be up to the task. It was one of the first projects involving computer vision and augmented reality (AR).

It was then that the young entrepreneurs started thinking about development vectors. Perhaps it was possible to combine advanced digital technology and a mass product? They started experimenting with AR and using a mobile app to combine 2D pictures with 3D virtual imagery. They decided to apply AR to children’s books. And they didn’t go wrong: it turned out to be a potentially lucrative business.

What dinosaurs roar about

Having no experience in publishing books, the co-founders of Devar went to publishing houses. But none of the publishers was interested in the new technology: five years ago, one could hardly believe that AR books could sell well. Devar members had to invent the next best thing: relatively inexpensive augmented reality coloring books. The first 50,000 books were printed at a Tula printing office.

“How it works: a child fills in a cartoon character on the page and uses the free app to scan the image and create a 3D animated model of that same character within the app. It is a mesmerizing experience for children. Their parents are glad, too, because the technology encourages children to color, which promotes fine motor skills and hand-eye coordination. So, Devar coloring books were quite popular with customers, and we began creating children’s books,” Anna Belova says.

According to Anna, the publishing of AR books is more expensive than that of traditional ones, but the costs are recovered due to a larger number of copies and larger sales. The average number of copies of a traditional children’s book is 5,000, while AR books are published in editions of 25,000-40,000 copies. It allows for selling AR literature at accessible prices. For instance, the Dinosaur World encyclopedia costs RUR 288 ($3.8), The Wonders of the World and Outer Space sell at RUR 490 ($6.4), and Teremok at RUR 70 ($0.9). And yes, the dinosaurs roar and the planets rotate: just point your phone’s camera at them.

Devar books are currently published in 30 languages and include fairy tales, encyclopedias, ABC books and coloring books. The company employs about 100 people.

Anna says that their business model includes the creation of one book and selling it on various markets, which significantly increases profitability. However, this one book requires a plot that would be interesting to children from various cultures. The founders of Devar did not see it initially and had to learn from their own mistakes. For instance, a series of “live” books with Russian fairy tales did not gain much popularity on the global market. Devar sold it in ten countries, but overall, the series sold best in Russia. For instance, in Arab countries, people are wary of dragons (the Quran disapproves of these mythical creatures), as well as half-naked mermaids. At the same time, books about animals are interesting to everyone.

Entertaining or educating?

Naturally, not all parents appreciate the fact that their children start reading with a smartphone in their hands, but Anna believes that her company’s books are not just for entertainment, they can educate too.

“We have books dedicated to the development of emotional intelligence, as well as books on physics, anatomy and astronomy. With the coloring books, we conducted an experiment. We gave such a book to children and promised them that after they are done with it, they will receive a tablet device to play with. Of course, they hurried to color the book. Then we used the device to animate the characters they colored. The children immediately wanted to continue coloring and this time, they did it with diligence. Is it entertainment or education? I think it’s the latter, and its aim of teaching kids to color carefully and thoughtfully has been reached. AR books boost attention levels by 45% and increase children’s involvement,” Anna thinks.

A mix of augmented reality, gadget technology and a traditional book can actually be helpful for accelerating the learning process. For instance, children (and often adults as well) find it difficult to wade through medical terms while reading about the blood circulatory system and lobes of the brain. And it’s another thing to see a 3D drawing in the anatomy encyclopedia, rotate the image of the brain, see it from all sides and hear the basic terms. In an encyclopedia of space, the AR technology will allow the reader to see inside the planets to learn about composition of their layers, while a personal robot assistant will tell them about various space objects. An AR book about microcosm will help users examine a drop of water without a microscope and study the structure of a Paramecium caudatum. 

Anna assures that AR books are now easier to publish: a manufacturer does not have to hire developers but can opt to use the MyWebAR service launched by the Devar company last year. The AR technology can be used to ‘animate’ not only books but also toys, puzzles and actually any object. The AR globe model manufactured by the company allows kids to point their mobile phones or tablets at a certain portion of the Earth and see animals inhabiting the area as well as cultural monuments, flora and natural landmarks available there. 

Future belongs to phygital   

Devar’s CEO believes that augmented reality technologies, which are infiltrating our lives, can be compared to the emergence of the internet, when many processes and behavior models migrated from the reality to the virtual world. AR technologies are making a step further by incorporating the internet into the reality and providing physical objects with a new context and consumer properties. A book that utilizes the AR technology will offer a greater amount of information to kids and will engage them in a faster learning process, Anna says, adding that AR books will definitely be chosen over traditional ones.   

Today, we can see increasing use of AR technologies in various fields. With more industries to introduce them within the next few years, the future belongs to phygital – a tight integration of virtual objects into the reality. Many futurologists believe that the ultimate transformation will take place as soon as there are convenient AR smart glasses, with hands free and mobile phones becoming less relevant as mediators between people and the digital world. This will immediately change everything, including advertising, real estate and marketing industries.

“Today, many restaurants choose to offer e-menu instead of traditional paper one. Yet, it would be much more convenient to introduce AR for visitors to see 3D images to get a clear idea how various meals look like. Users will soon get used to receiving a larger amount of content and to augmented reality. With this perspective in mind, we are planning to develop our MyWebAR service, which allows any producer to manufacture products that utilize AR technologies. We launched this service last year and it is currently in use in 100 countries,” Anna says.

By Natalia Sysoeva

The new package of sanctions “may barely dent Fortress Russia,” according to Ruchir Sharma, Head of Emerging Markets at Morgan Stanley Investment Management.

Seven years of sanctions have hardened the Russian economy against outside pressure, the expert wrote, quoted by Rossiyskaya Gazeta. Ruchir Sharma underlined that President Vladimir Putin has long been relatively careful on macroeconomic policy and focused on turning Russia into a financial fortress invulnerable to external pressure, including sanctions.

The economist added that import substitution played a role. That policy invigorated Russian agriculture and reduced dependence on foreign suppliers. As a result, the ruble has become less dependent on world oil prices.

Invest Foresight previously reported that the United States had imposed new sanctions against Russia that affected Russian defense technology exports.

The first thing that the Orenburg Region Development Corporation did was make an inventory of the local investment opportunities. We studied each municipality in our region to figure out what can be of interest to an investor. The list included land, production facilities, and other sites connected to utilities. All investment destinations are listed on our portal, orenburinvestin.ru.

Next, we prepared an application for creating a Special Economic Zone in the Orenburg Region. The new area with enhanced business opportunities, embracing the cities of Orenburg and Orsk, will provide over 2,000 new jobs.

That prospect confronted us with another problem, which was personnel. The first thing investors asked was if the region could supply specialists with the necessary competencies to work at their new enterprises.

That was why the Orenburg Region Development Corporation teamed up with the Orenburg State University to create the Institute for the Development of the Economy and Competencies. The idea was to build a bridge between the employer and the university. Graduates awarded their degrees should be as prepared as possible to work at modern enterprises.

We will continue to create new meanings, methodically and consciously — the new vectors for the university’s development. We will make sure that a graduate taking their first job no longer hears, “forget everything you were taught at the university.” We will build a new educational model to fit the frameworks, challenges and changes of the new age.

Our plans for this year

A ‘Board of Directors’ will be established at each department, with seats given to the most dedicated and professional representatives of business, academia and government agencies. Their mission will be:

• To set goals for the training of the necessary specialists,

• To approve KPIs for each department at the university,

• To provide scholarships, internships and grants for students.

What else are we planning to do this year? We will engage major national and regional businesses to establish ‘partner’ departments covering the areas of training that are in demand on the market in and outside the region. We will also draft a new development strategy for the Orenburg State University taking into account the modern reality and the new — post-COVID — economy.

Universities’ role evolves globally

The world in which traditional universities were created has changed dramatically. We all have access to the expertise of leading academics, world champions and the most successful entrepreneurs — just open YouTube or Coursera. The internet definitely knows far more than any lecturer ever will.

Teachers now have to compete for students’ attention not with their colleagues from other universities but with the best speakers and masterminds from all over the world. This places completely different demands both on the quality of teaching and on the role of universities in general. We are past the times when universities were just a place where students only get information and develop skills.

In the economy of knowledge, a university is a magnet for best employers, researchers, entrepreneurs and talents as well as many other unique people. This is how new knowledge is created. A university must become an ecosystem and platform where students are free to create, decide and make mistakes. It must be a place for:

• bustling research
• new concepts
• idea discussions
• creating the future and the present based on the realities of business and industries.

Success comes with tenacity. We’re up to the task. We are committed to developing the region and education.

By Ignat Petukhov, General Director, Orenburg Region Development Corporation

The most important event of recent decades, which completely turned the world of photos, was the appearance of digital cameras. The first models were not very convenient, differed in low resolution, they did not have displays for viewing shots, but had high speed and a huge resource, which no longer depended on the presence of film.

Now it seems like something ordinary, but in those years such a technique seemed like real fiction, which every photographer dreamed of.

It was no longer necessary to mess with the development of film, to depend from improperly exposed exposition, to shoot on a long shutter speed and to worry about each frame. Digital technology has greatly simplified the work, although film fans, of course, still cherish it.

The form of transmission of snapshots has also changed. With the advent of technology, photographers stopped printing photos in dark rooms and began to transfer them on flash drives and discs, and now everything is transferred through mail and file exchanges.

Our photo project, by the way, went even further. We create a personal account for every client on the website, where all his photos are stored, redeemable and downloadable at any time. This is convenient because the client decides for himself how many photos he is ready to pay: all or only some photos. Thus, we allow customers to save money and stimulate photographers take more good pictures.

Another stage in the development of the photo business was the appearance of highly sensitive matrices and modern lenses that allowed to take high-quality pictures at low lighting. At the same time, the cameras and lenses themselves became smaller every year, and matrices became larger.

Now photographic equipment has become so compact and universal that the photographer no longer has to carry a whole backpack of accessories with him. Small camera and a pair of interchangeable lenses will be enough to complete any task, and for some tasks even a smartphone will have enough shots.

As for smartphones — in recent years, top models in some cases have begun to provide better output than mirroring cameras. High quality is achieved due to good built-in optics, exposure control and instant picture processing. Smartphones are already filming not only weddings, but also documentaries, and even feature films.

Professional cameras, of course, still have a higher resolution, but you will notice the difference only when printing large-format pictures. On the phone or laptop screen it is almost impossible to notice the difference. Moreover, in recent years, Lo-Fi became the order of the day, when even professional shots are specially reduced in quality and interference is added to fit them to Instagram trends.

Instagram, by the way, was another milestone in the development of photography. When it arose people faced a need to create a lot of visual content, which led to an increase in number of photographers and increased shooting skills of the population. If previously few people understood in the exposition, composition and color palette, today every teenager knows how to take cool pictures, and has intuitive understanding of the correct camera settings and of frame building rules.

At the same time, photographers had the need to offer thematic photo shoots to customers in different locations. If before people asked just to shoot on the street or in the studio, now many customers have a need to take thematic photo shoots dedicated to special days: family, business, Baroque style, in watercolor, etc. In addition, there are bloggers who work in certain topics and need a permanent generation of thematic content.

For such clients, for example, we plan thematic photo days for a month ahead. Photo days calendar is published on the site, and everyone can choose and book a photo day. Photo days take place daily, so if you want, you can participate in filming every day and receive photos from a variety of locations: roofs, lofts, aqualocations, village haywalls, children’s bedrooms, spaceship decks, etc. The shooting is carried out conditionally free, and you only need to pay for those snapshots you like.

Yes, social networks, of course, popularized the photo, but they, unfortunately, depreciated it. There are so many images around us that they have ceased to be something interesting. If 15–20 years ago, people went to exhibitions of photographers to admire interesting pictures, now, in order to really interest a person in photography, you need to make a lot of effort.

This is not only about digital processing of pictures, although the appearance of photoshop and lightrum should be considered a separate milestone in the development of the photo business, since with their help photographers learned to create real masterpieces and batch process hundreds of photos at once. We are talking about interesting stories. People are tired of computer- embellished, but soulless images. Perhaps this is why there is a trend on Lo-Fi and a craving for live interesting stories, told through photos.

The photographic services market is constantly changing. This is a living organism in which something is outdated, something becomes a trend, and something needs to be changed. We monitor trends and develop a new ecosystem that will change the digital photo services market, making it more convenient. In our ecosystem people, for example, will be able to call a photographer at any minute through the application, like a taxi, and participate in any photo shoots for free, paying only those photos they like through a personal account on the site.

This is how we see the future of the market. Now our project has implemented 70–80% of our road map. Estimated full launch date is end of 2021 — beginning of 2022. Now you can use all the services in beta testing mode.

Author: Vladimir Khramtsov, marketer of the Wase photo project

The company’s entry into international markets is a growth point for any business. Since 2016, our financial group has been developing investment strategies for private wealthy clients and resolving their near-financial needs thanks to a large number of global partners. In 2020, we realized that we were ready to go further: to erase geographical boundaries, and now we are actively heading for Asia. Sergei Uskov, managing partner of the investment company Aravana Capital Management, tell us which trends to focus on in the process of globalization.

Trends

In my opinion, in the next ten to fifteen years, the economy will change rapidly under the influence of demographic, technological and, as a consequence, environmental factors. The financial sector will have to renew itself along with the economy. Considering the above factors, I have identified three global trends that affect the economy and determine the future of finance.

Digitalization

We can see how digitalization is changing the structure of companies’ business models. The things which were discussed by society in the late nineties – early zero seemed like something impossible, is already a top direction today.

Platform economy

An interesting case was shown by Ant Financial, a subsidiary of Alibaba, which is engaged in the Alipay mobile payment application. While the Americans were struggling with chips and PIN codes, and the Europeans were mastering contactless payments, Chinese company with more than 1 billion users and without a single branch bypassed everyone in terms of digital payments. Today, about half of the world’s financial transactions take place outside the banking system.

Big data

According to the IDC forecast, the global digital data volume will increase to 175 zettabytes by 2025 (40 zettabytes in 2020). Most of this data will be constantly changing in real time. Currently, the largest big data markets in terms of revenue are the United States (53% of the global market, $ 100 billion), Japan (5.1%, $ 9.6 billion) and the United Kingdom (4.9%, 9.2 billion dollars). The Russian market still has an insignificant share and is estimated at 45 billion rubles.

How will this affect the financial market?

Financial companies can support the evolving digital and platform economy by developing fast, secure and cross-border payment methods. And the introduction of the Internet of Things will allow companies from different industries to centralize their business processes on the basis of a single platform.

Renewal period. Moving to a low carbon economy

At the moment, a green economy creates not only risks, but also opportunities for the economy and the financial sector. Investors do not yet have a clear idea of how companies will feel in the changing environment, new rules and customer reactions. It is difficult to assess climate-related risks and opportunities yet. Experts estimate that the world will need more than $ 90 trillion in the next decade to build the necessary infrastructure — an impressive investment in the transition to a low-carbon economy.

Demographic changes

There are at least 4 generations among the clients of companies, and each of these segments is individual, has its own habits, stop factors and rules. In the context of increasing life expectancy, the rapid development of young teenagers, companies need to be able to incorporate into their services solutions and problems that customers may have in a year / two / ten years.

How will this affect the financial market?

Financial companies are well positioned to help the economy go through its transition. So, with the help of Al, the protection against fraud will increase in the next few years, financial services will become even more personalized, companies will be able to reduce their costs.

And the transition to a low-carbon economy will require not only impressive investments, but also a significant amount of information (the experience of developing countries).

Stability check. Development of new business models

In addition to banks and fintech companies, small startups are entering the financial market, creating a competitive environment. According to the Financial Stability Board, almost 50% of all global financial assets now belong to players operating outside the banking system. As a result, competition in the non-banking financial sector is increasing.

Cyberattack threat

According to experts from McAfee and the Center for Strategic and International Studies the global economy lost more than a trillion dollars (820 billion euros) in 2020 due to hacker attacks.

Increased technological efficiency

New technologies will be able to make financial companies (and not only) more dynamic, helping to create new services and products that meet customer requirements. For example, over the past few years, self-driving innovation has made a big breakthrough not only in grocery delivery, but also in passenger transportation. Other leaders in the automotive industry, from car and hardware manufacturers to taxi services, have also joined the driverless race.

How will this affect the financial market?

The pandemic has shown that in the conditions of the most severe crisis, systemically important companies survive to a greater extent, capable of providing jobs and those structures that are ready to change their business model in a short time, taking into account market conditions. Relying on new inputs in the field of cybersecurity, innovations in financial spheres, special attention should be paid to market regulation. It is important to rethink old rules that may not fit the new economy.

Why Asia?

According to the long-term forecast of Bloomberg Economics, in the world until 2050 the center of economic power will shift from West to East, to Asia (strengthening of the above trends). According to a forecast based on an analysis of capital, technology and labor, Asia’s share of global GDP will rise from 25% at the beginning of the 21st century to more than 50% in 2050 due to a decrease in the shares of North America and Europe.

In my opinion, foreign direct investment, high savings rates, impressive investment in human and physical capital, and effective macroeconomic policies will be key drivers of East Asia’s development.