Loud announcements, active discussions, friendly chats and tours around gambling places in Macau is the best way to describe the atmosphere at the tenth anniversary international conference of RBC. "Expansion of Capital: From National Economies to a Transnational Economy" took place in Hong Kong on November 6-11.

The major business center of southeast Asia witnessed a four-day discussion on the fate of money controlled by the Stabilization and Pension Funds. Government officials felt jealous about the extent of economic freedom in Hong Kong and urged their countrymen to draw from China's experience in building an efficient economy in a single city. In addition, they couldn't do without making loud statements about the nearest future of the most well-known Russian company, YUKOS.

RBC's economic forums have become very important events for Russian business. Each year, the Russian business elite have a chance to visit world business centers. This time, the conference in Hong Kong was attended by chairman of Wimm-Bill-Dann David Yakobashvili, vice-president of Aton Capital Vladislav Vershinin, and YUKOS chairman Viktor Gerashchenko. In addition, the Russian delegation included presidential advisor Andrei Illarionov, deputy energy minister Ivan Materov, senior deputy chairman of the Central Bank of Russia Tatyana Paramonova, and CEO of the Russian Pension Fund Gennady Batanov. The total number of participants was around 200, mainly representatives of the Russian business elite and high-rank officials.

Compared to previous forums mainly concentrated on the idea and practical aspects of investing in Russia, this time Hong Kong witnessed the eagerness of Russian companies to enter the world market. "We used to pay most attention to investments in Russia. Now, it's time to talk about Russian investments in foreign assets," RBC's general director Yury Rovensky said. "The economic growth in the country is adding pace. Russian business both gets the insights of international management and information transparency standards, and gets more and more involved in global processes. Russia's direct investments in Western assets become among the main economic trends in our country."

RBC's international conferences are among the main splendid events for the Russian business community. Businessmen and politicians do have enough time for this, rather than for just serious conversations. They relax, do sightseeing, have informal meetings and enjoy themselves along with national pop stars. This time, the Mummy Troll group followed businessmen in Hong Kong. Ilya Lagutenko sang for bankers and industrialists in the New Era night club.

Before the participants of the conference were taken away by the problems of the investment climate in Eurasia, and visited the Bank of China and the Hong Kong Stock Exchange, they went sightseeing in Hong Kong. They got to see the Victoria Peak, the oceanarium and Macau. While in Macau, the guests first of all planned to see so-popular local casinos, but astonished by the beauty of the "bauhinia peninsula" they preferred to await gambling, private clubs and other local places. In particular, while in Macau, they visited one of the biggest and most luxurious Buddhist temples of the 14th century, Kun Iam. After that, they bought tickets with predictions and shared their impressions. Then they returned to the JW Marriott hotel for a gala dinner. Everyone was in perfect mood, and proposed very unusual toasts. For example, Russian businessmen and officials drank "for the last November 7 holiday in the history of Russia."

As Russian deputy prime minister Alexander Zhukov addressed himself to the participants of the business forum, he said Russia had found itself in a unique situation: its gold and currency reserves were growing, the Stabilization Fund was successfully created, and the Pension Fund sought places to invest the money in. "We have to do something with these resources as soon as possible," Zhukov urged everybody. "The money has to work. Especially now, when the world economy is so unstable. For example, every single dollar decrease drops the value of dozens of billions of dollars that don't work." But it still remains obscure where this money can be invested. According to estimates of the head of the financial policies department of the finance ministry Alexey Savatyugin, the total volume of the Stabilization Fund may hit USD88 billion by the year 2010. Presidential advisor Andrey Illarionov proposed using this money to pay foreign debt earlier. As an alternative, it could be spent on foreign policies, like building military bases or investing "in reliable assets abroad."

Chairman of the coordinating council of Russian business unions Alexander Shokhin prefers to invest the money in Russian projects instead. In particular, he believes it possible to spend the money "on social issues, as well as the development of depressed regions." As for oil dollars, Shokhin doubted that stable economic growth was possible here, pointing to over-high oil prices, which was quite a paradox. Maybe this was why our industrial production went down, he surmised. "We need to understand what a favorable foreign economic situation means to us. Does it keep us from stagnation and decline or not? Maybe it's better for us to wait (let's say several months, half a year, or one year) in order to realize that a favorable foreign economic situation is when oil prices are close to USD60. It may happen that even USD80 per barrel won't ensure high economic growth, and moreover, even a decrease in industrial production is possible.

But some participants were not so pessimistic. CEO of the Russian Pension Fund Gennady Batanov emphasized that his institution was able to change the investment climate of the country. Over the first decade of pension reform, the country would collect an additional USD35-30 billion that could go for "the implementation of large-scale investment projects," Batanov said. He did not specify which. He also warned "there will be a moment of truth for foreign investors over the next three to five years. They will either take a risk and enter the Russian market or the Russian economy will be developing mostly at its own expense. And it will be a problem to enter this market later." People keep arguing and economic growth slows in Russia. In 2004, growth rates will be 6.9 percent against 7.3 percent in 2003. This forecast was made by the European Bank for Reconstruction and Development. Illarionov called this information absolutely reasonable. Speaking at the conference, the presidential advisor said "the fact that there is economic freedom in Russia now is the main achievement of economic growth. But, unfortunately the latter has been sagging lately."

The YUKOS case was a sad example of Illarionov's thesis about lower economic freedom in the country, chairman of the YUKOS board Viktor Gerashchenko said. Worsening of the business climate in Russia could be extremely negative for the company. YUKOS might declare bankruptcy at an extraordinary shareholders' meeting scheduled for December 20, he said. It is not surprising that Russian companies are looking for attractive investments abroad. They are also looking for stability, convenient business infrastructure and economic freedom they lack in their homeland. General director of the Moscow International Business Association Alexander Borisov was quoted as saying that the association possessed information on around 300 projects of 111 Russian companies with assets in 62 countries worldwide. "But in reality, this number is three to four times bigger," Borisov said. Owing to the positive economic situation over the last several years and free financial assets at hand, second- and even third-tier companies were getting more and more involved in the process of buying assets abroad.

This major financial center is a great example to other countries in terms of their ability to create a favorable business environment. Profit and wage taxes are low here, namely 16 percent and 15 percent respectively, British common law and independence of the courts are strictly observed. In addition, the Hong Kong Stock Exchange creates extremely favorable conditions for companies willing to do IPOs. This is of immense importance for Russian businessmen, specially taking into consideration a high inflation rate in the country and continuing ruble strengthening. It is natural that Russian businesses have begun looking closer at Hong Kong. The Bank of Moscow and Rosbank have already made road-shows for their bonds recently. Gazprom, NOMOS-Bank, Aeroflot and MDM-Finance already work here. According to experts, following the initial issue of Eurobonds by Gazprom in September 2003, as well as by NOMOS-Bank, MDM-Finance and NIKoil in 2004, the stake of Asian investors reached 8-40 percent.