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Mikhail Fradkov said that the state should continue to participate in a number of sectors of the economy
Investment in the Growth Economy conference, Prime Minister Mikhail Fradkov said that the state should continue to participate in a number of sectors of the economy and perhaps increase its involvement primarily through handling state-held packages more efficiently. Mr. Fradkov said the state's participation in some sectors of the economy must not be at the expense of bona fide entities such as minority shareholders, including foreign ones. On the contrary, the state intends to protect the rights of shareholders, first, minority ones, he said. "The role and place of the state is to build up the market's infrastructure," he said. "We should be against the state's excessive influence," he continued, "where it is not needed, and we are trying to achieve a balance suitable for applying ready market tools under present conditions. "We could form large infrastructure facilities through a correct policy in the system of partnership among state-owned and private entities." According to him, this would be possible if the sides stuck to the principle of transparency. "Otherwise, partnership of the kind might bring about corruption," he noted. The government intends to focus on measures against corruption and steps to promote a competitive business environment. Mr. Fradkov assured the foreign investors at the conference that they could work in Russia without "looking back". According to him, no one would be given privileges. He said that currently, a law was being drafted to protect competitiveness on the financial market. The document will provide for mechanisms to prevent abuses of a dominant position on the financial services market, Mr. Fradkov said. The prime minister said the government would work on "forming an adequate banking system," as the sector is definitely expanding. Thirty-three banks with authorized capital that is 100% owned by non-Russian residents currently operate in Russia and eight other banks have a 50% of foreign participation level. The advances lending agencies' portfolios have increased sixfold since 2000 to reach 18% of Russian GDP. "The share of bad debts owed by banks has reduced by 66.7%," Mr. Fradkov said. The prime minister also emphasized that credit resources tend to decrease as interest rates were 11%-13% annually. "As the situation in the banking sector improved," he said, "consumer loans have grown 17 times, which triggered domestic and production growth." Foreign capital accumulated in Russia had made up $66 billion by early July. "The share of direct investment reached 40.7%, with portfolio investment at 2.1%" he said. According to him, the largest share of investment was made by Germany, Cyprus, the Netherlands, Luxemburg, the US and Britian. Mr. Fradkov said Russian industry, trade and commerce were the most attractive sectors for foreign investment. "There is a lasting trend for investment growth as a result of the government's policy seeking reforms," he said.
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