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Business news, 06.09.2005 17:53

Matviyenko Goes Too Far For Investors

Governor Valentina Matviyenko The first time it seemed like a neat joke or perhaps a cordial welcome. As more foreign investors sign up for factories and offices in St. Petersburg, however, Governor Valentina Matviyenko’s unsubtle endorsement of the arriving companies’ products has turned absurd.

When Toyota held a press conference to announce they will build an assembly plant in Shushary, the governor signed off her welcome speech with a promise that all the city officials will switch to using Toyota vehicles.

“As soon as Toyota starts production here, all of the city administration will switch to buying their cars, I can assure you of that,” the governor said at a press conference in April.

Last week, at the planting of the first tree – the German equivalent of laying of the first stone – at the site of a factory that’s being built by household appliances maker BSH Bosch und Siemens, the governor’s sales skills were on show again. “Every St. Petersburgers should have in their home a household appliance made by Bosch,” Matviyenko said.

Naturally, it is to the city’s advantage for its foreign investors to stay, to be profitable, and to continue paying taxes into the budget. Marketing and promotion, however, is each company’s business.

What does it say for the relationship between business and the administration when Matviyenko states that she “will take personal care of the [BSH] project?”

Why does the governor feel the need to plug company brands when she has a position that is outside corporate rivalry? And what will she do when another company working in the same market niche wants to establish itself in St. Petersburg?

That Matviyenko has not been as forthcoming with domestic investors may yet be explained by the fact that few Russian firms have laid out the same millions as for example as the Chinese developers in charge of the Baltic Pearl, or Toyota.

What puzzles most is how the governor will gladden DaimlerChrystler, should the U.S.-German automaker confirm its intentions to open an assembly plant in the city. St. Petersburg officials will already be driving their Toyota cars.

Will it mean that the task of keeping the newest investor profitable will fall on the ordinary citizen? Of course, they would not mind driving Mercedes, but they need the incomes to pay for them.

By picking favorites and determining who should be awarded large state contracts rather than leaving these matters to competition and market forces, the governor is acting against the possibility that the economy might improve that much.

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