MOSCOW: Russia's finance minister said Friday that President Dmitry Medvedev's modernisation effort was being hampered by a poor investment climate that was holding back economic growth.
Alexei Kurdin reported a third successive annual drop in foreign direct investment for 2010 and painted a cautious growth picture that he said will keep Russia lagging behind the world's more developed states.
The liberal minister also described a government that was awash in red tape and indecisive about its future course of action.
"We have to substantially improve the investment climate," news agencies quoted Kurdin as telling an economic forum in Siberia.
He said preliminary data showed that foreign direct investment totalled $12-14 billion (9.9-10.3 billion euros) in 2010, the third successive year of declines that began in the midst of the 2008 global financial crisis.
The figure followed a 41 percent drop to $15.9 billion in 2009 and Kudrin expressed clear frustration at the government's inability to reverse the downward trend.
"This is not enough," Kurdin said of the 2010 investment estimate.
"When we talk about modernisation, the most important indicator is the volume of investment and the pace of fixed asset replacement."
Medvedev has made Russia's modernisation the cornerstone of his presidency, a message that he has repeated in state of the nation addresses and took with him to last month's World Economic Forum in Davos.
Part of that drive involves weaning Russia off its dependence on energy exports and refocusing it on "innovative" growth that relies on IT expansion and high-tech production.
But Kurdin described a government that was awash with policy statements and short of ideas about how they might be achieved.
He said Russia currently had 193 "strategic concepts" that had been signed by either Medvedev or Prime Minister Vladimir Putin, with another 83 currently in the works.
"Our goals and resources are not balanced," said Kurdin.
Both Medvedev and his predecessor and mentor Putin have touted Russia's ability to avoid outright collapse during the 2008 crisis.
But Russia's recovery has been helped in large part by a rebound in energy prices and Kudrin stressed that significant structural reforms had to be followed if the country was to achieve sustainable growth.
He predicted future growth rates near the 4.0 percent figure officially recorded last year, a pace that has seen industrial production only now recovering back to the levels seen before the global economic meltdown.
"In upcoming years, we will have steady growth rates of four percent and more, although for Russia, this is not enough. This is the average rate of the world economy," Kurdin said.
"Russia needs higher economic growth rates, six to seven percent," he said.
Kurdin noted that industrial production was still two percent off the 2007 level and that the engineering sector was down 20 percent.
"We hope to reach the pre-crisis level by the end of 2011 or the start of 2012," he said.
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