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Saturday November 25, 2:01 AMRussia adopts new forestry code to lure investorsMOSCOW, Nov 24 (Reuters) - Russia's upper house of parliament voted on Friday to adopt a new forestry code, intended to attract foreign investment to the lucrative wood-processing business.Russia, the world's largest nation by territory, has one quarter of the world's forests by area. But investors have been slow to come to the country, instead buying its logs to process into paper and other products in their home countries. The new code seeks to decentralise control over Russia's forests, passing them into the hands of regional governments, Nikolai Kosarev, member of the Council of Federation upper champer of parliament, told journalists. The new law, which comes in force on Jan. 1 2007, also scraps compulsory auctions for investors to win the right to a forest area, enabling regional executive branches to sign direct contracts with them. "This boosts investment opportunities," said Kosarev, deputy head of the upper chamber's natural resources and environment committee. He said however that the maximum tenure of lease for forests had been cut to 49 years from 99 years. "This period can still be reduced or extended," he said. President Vladimir Putin said last month that Russia should raise export duties on timber logs and cut import duties for wood processing equipment to protect forests and promote domestic wood-processing. Kosarev said none of the innovations proposed by Putin had become part of the new forestry code, but he said the government itself could still make the changes any time. In October, on the day of Putin's appeal to diversify Russia's wood processing, U.S.-based International Paper Co. agreed to form a joint venture with Russia's leading forestry firm, Ilim Pulp. The joint venture will produce annually 2.5 million tonnes of market pulp, uncoated papers and packaging for sale to the Russian and Chinese markets. But across Russia's northwestern border, Finland's Stora Enso , the world's leading paper and board maker, complained on Thursday that Russian plans to hike duties on timber exports were a further blow to the struggling industry. Wood processing factories are lined up across Finland's border with Russia, buying up timber logs from Russian firms and illegal lumberjacks. "If Russia becomes self-sufficient to process all these timber logs into saw-timber, then it will probably affect (Finnish) businessmen," Kosarev said. "The Finns are welcome to come and invest in Russia. Why not? They are most welcome." "(But) it's still much easier to sell timber logs ... There is a lack of investment to launch wood processing (in Russia)." |
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