Russian parliament passes draft to curb foreign investment

Mar 21, 2008, 16:06 GMT

Moscow - Russia's parliament on Friday voted 355 to 3 in favour of draft legislation limiting foreign investment in strategic sectors including oil and gas, publishing, telecoms and fishing, news agency Interfax reported.

Under the bill, foreigners are forbidden from buying a significant stake in companies without government approval in industries defined as crucial to national security.

Friday's vote brings one step closer to being enacted a law that has drawn criticism at home and provoked concern among foreign investors who fear more state bureaucracy blocking business deals.

The Kremlin administration personally oversaw amendments extending the list of sectors viewed as strategic and other fine points of the bill, said Martin Shakkum, head of the Construction and Land Policy Committee, which with the cabinet is sponsoring the law.

Shakkum judged Friday that the bill, now in its second reading, would not be seriously revised before the third and final reading after which it will be put before Russia's upper house and President Vladimir Putin to be signed into law.

The bill requires foreign investors to seek the approval of a government commission to acquire more than 50 per cent of a company in one of the wide-ranging sectors defined as 'strategic.'

Russian newspapers listed the nuclear, aerospace and arms industry, as well as oil and gas, fishing and mass media among the 42 strategic sectors.

But some Russian lawmakers have criticized the breadth of sectors seen as crucial to defence and security.

The Minister of IT and Communications, Leonid Reyman, said last week that the bill could impede investment in the telecommunications market and cause a slow-down in the booming industry.

It could take anywhere up to six months for approval on business deals from a comission headed by the prime minister, according to Russian media estimates.

If passed into law, Putin, who has promised to become prime minister after May, would then be the first to head the new commission deciding on foreign requests to invest in strategic sectors.