Why do Russian companies refuse to invest?
Most large enterprises consider their investment to be insufficient, a significant part of which think that the reason is not only a limited amount of their resources, but also non-financial obstacles. This conclusion follows from the report of the Research and Forecasting Department of the Central Bank, Forbes reports.
The survey was conducted following the example of the Bank of England, which made a similar study of private organizations in 2016. In Russia, a survey was carried out in 2019 to study investment in 2016-2018. According to the Central Bank, despite the withdrawal from the economic crisis of 2008, the level of investment activity remains low.
Large organizations were included into the selection of companies, thanks to which the country’s economy has always been growing. They were represented by industrial enterprises that relate to the mining and processing sectors.
The majority (51.2%) of respondents said that they had not invested enough, 47.3% indicated that they considered the volume of investments to be sufficient, and 1.5% said they had too many investments.
Interviewees also indicated industries where they considered an ample level of investment. Woodworking was indicated by 80% of the responses, finished goods production – 63%, mineral production – 62%, chemical industry – 59%. 70% of participants believe that insufficient funds are being invested in pharmaceuticals, 69% indicated light industry, 63% – the production of building materials, 54% noted a lack of investment in food production.
To determine the reasons for the low level of investment, the Central Bank divided the influencing factors into financial and non-financial issues. The former included high loan costs and limited access to finance. The second – the lack of qualified personnel, a long payback period, the volatility of the economic situation, as well as the insecurity of property rights.
The main reason was the lack of own funds, 81% of companies indicated it. 45% of organizations explained the insufficient level of investment with uncertainty in the economic situation, 38% refuse to deposit because of the long payback period of the invested funds.
According to the results of the study, Central Bank analysts concluded that in order to increase the level of investment in Russia, it is necessary to correct the structural weaknesses of the economy, as well as take measures to stimulate business activity.