The major hindrance to foreign investment in Russia lies in the fact that the numerous technical requirements specified in Russian laws and regulations, which have led to discretional enforcement. Besides, as foreign investors have frequently encountered restrictions formed by a series of policies made by local governments in such respects as recruitment, corporate purchase and necessary infrastructure development, their investment projects are always failed. The approval procedures in Russia are quite complicated owing to overlapped governance brought about by division of administration over foreign investment between the federal government and local governments.
Russia maintains the franchise for the federal government. Besides, the maximum limit on foreign equit in some certain foreign invested projects or has specified the maximum limit on foreign funding in the statutory capital of economic entities have turned out to be restrictions imposed on foreign investors.
The Draft Law on Hidden Resources stipulates that mineral resources users can be foreign natural or legal persons who meet the requirement set by the laws of Russian Federation, but this stipulation does not apply to the cases specified by some federal laws or the Decision on Auction under the aforesaid draft law; mineral users can be foreign legal persons according to the Agreement on Product Distribution signed by parties concerned; in the case of special regulations laid down by the federal government, auction organizers are allowed to prevent or prohibit foreign natural or legal persons from bidding; it is stipulated that in the projects of rare or strategic mineral resources, the Russian ownership shall be no less than 50% while the balance can be shared by foreign owners.
According to the List of industries, operative projects and regions forbidden to foreign investors and practitioners, foreign investors are prohibited from investing in the following areas: nuclear weapons, nuclear power, national defense, and military industry; information and security; special products such as diamonds, currencies, and certifications, etc.; information on resources and ecological environment; epidemic prevention. Industries, operative projects and regions restricted to foreign investors in Russia include the conveyance and transformation of the federal electric power network; maritime, inner water and air transportations; railway transportation; the design, construction and maintenance of civil airports; highway construction; medical products and pharmaceutical manufacturing; the exploration, processing and recycling of precious metals and rare earth; the exploration and processing of precious stones (except diamonds); education; privatized special investment funds; the research and application of dual- use technologies; productive fishing; forestry; the production and sales of alcoholic products; accounting and auditing; animal epidemic prevention, etc.
