Relief for financial sector expats working in Russia?

23 Jul '09
Oleg Kouzbit, Online News Managing Editor

Last week an interesting bill was submitted to Russia’s State Duma for consideration. In a promising move to enact a long-term incentive for international expertise to come and stay in this country, the Russian Parliament may consider abolishing work permits for expats employed in the financial sector. The proposed new rules are expected to ease the lives of foreigners working in banks, insurance companies, nongovernmental pension funds, mutual, investment and nongovernmental funds, specialized depositories, and securities markets. Their visas might be extended to five years from today’s 12 months. Even expats’ relatives may become eligible for the new visa system. In a longer-term revolutionary scenario Russian legislators may expand the eased work visa regulations to other sectors that employ foreigners.

Making lives easier

According to Kira Lukyanova, a Fair Russia representative who authored the bill, the law is vital to Moscow’s efforts to become a world financial center. Contrary to Russia’s legendary love for bureaucracy, Ms. Lukyanova is suggesting that the burden of expats’ legalization in Russia be shifted from foreign specialists to their employers. If the new law passes, business would be required to notify the Federal Migration Service and submit just a few simple documents to verify staff qualifications.

More amendments are expected as the bill is debated in the Parliament, specifically to allow for the possibility of obtaining required medical certificates in an expat’s home country for HIV and six other diseases.

If passed, the new bill will eliminate the huge delay in hiring international specialists to come to work in Russia. Now it takes an employer almost a year to get a person on board between applying for a staff’s quota (currently to be done by May 1) and applying for his/her work permit (to be filed in January).

A first reading for the long-awaited bill is expected in a few months after the Duma members reconvene for the fall session.

Europe and the U. S. short-listed

The new proposed law will not apply to all expats indiscriminately.

To keep illegal immigration on a leash, the bill proposes a special “eligibility list” by countries. According to Ms. Lukyanova, the EU member-states and the U. S. will surely be listed. Foreign bankers, however, will all be eligible for new visa rules, irrespective of their countries of origin.

Just financiers? Not enough

The Federal Migration Service is reportedly supportive of the changes. The agency believes the initiative should cover other sectors, too.

The FMS’ Konstantin Poltoranin told The Moscow Times that the financial sector accounted for as little as one to two percent of legally employed foreigners in Russia and he would like oil/gas and mining sector specialists to also have their work visa procedures alleviated.

How they view it

Andrew Somers, president of the American Chamber of Commerce in Russia, was quoted by The Moscow Times as calling the legislation “a radically new approach and an absolutely shocking thing for us.”

Marchmont asked its expat contacts to comment on the new bill and see if it was really perceived by them as helpful and making a difference vs. what they have now.

Thomas D. Nastas, founder of Innovative Ventures Inc. and a member of the board of directors of Moscow’s Sotsgorbank, sounded very enthusiastic about the initiative. “My only comments to the suggested changes and visa regime are that they are great. It will save time and money for lots of expats,” he said.

“What this law will do is ease the cost and time employers spent getting the quotas and annual work visa,” Eric Hansen from the Moscow-based U.S. Russia Center for Entrepreneurship echoed Thomas. He has a temporary residency permit, though, and doesn’t have to worry much about the current bureaucratic fuss that surrounds work visas.

Marchmont CEO Kendrick White said the new regulation wouldn’t affect him because he has worked here for 16 years and has received permanent resident status. But he’s excited about other foreigners whose life may be made easier.

“It’s a chance for reduced uncertainty and less bureaucracy and provides a great incentive for foreign professionals, especially young ones, to come to Russia and bring in international know-how,” he said.

Under the current visa regime foreigners must physically leave Russia to re-apply for a visa every 12 months, so there’s little impetus for long-term commitments. Young energetic specialists, Mr. White believes, are simply reluctant to risk their careers, by coming to Russia for a short time. If Russia wants their expertise and drive, this new bill is timely, he said.

Reinhold V. Ungern-Sternberg, the CEO of Germany’s Flaig + Hommel working in Russia’s automotive sector, is positive the initiative would do good to all foreign specialists. Talking to Marchmont, he emphasized that the eased regulations would be very helpful for his company's projects here. At the moment, Mr. Ungern-Sternberg is busy applying for another one-year visa and told us how wearisome and business-unfriendly this bureaucratic process is.

Philippe Der Megreditchian who lived and worked as chief executive and partner in Russian private equity companies for 16 years and now manages Paris-based financial information service OnLineMA, supports the idea of expanding the eased regulations to other sectors.

“I would welcome any changes that would simplify and streamline the visa, work permit and residency rules in Russia for foreign managers and technical personnel who can help Russian businesses become more effective. In the financial sector, the biggest need is in commercial banking to improve operations, service, risk management and controls to allow Russian banks to be more competitive, particularly following the disruptions to the industry by the financial crisis. However, foreign specialists are equally essential in other sectors, for instance to make energy extraction more efficient, reduce environmental hazards, and improve the auto industry, to name a few.”

Mr. Der Megreditchian calls upon authorities to take a smart approach to implementing the change. “In the past two years, the process of bringing foreign technical specialists and managers to Russia has become more complicated and difficult, not less so. In general, it should be a business, whether Russian or foreign, that determines its need for foreign workers based upon technical and economic factors. The engagement of foreign technical specialists and managers should be separated from the more difficult situation in Russia with migrant laborers,” he said.

Thousands are waiting

According to the Federal Migration Service, just about 5 million foreign workers were issued work visas between January 2008 and May 2009. There’s no separate statistics on expats employed in Russia’s financial sector, though, but headhunting firms unofficially estimate them to be around 5,000, including about 500 working as top executives at hundreds of Russian subsidiaries of international firms. All will be watching to see if at long last, they can continue to work here with less worry.
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