The move will placate concerns about Russia’s intentions, but the Prime Minister has made it clear that he wants the Russian industry revitalised, and more processing done in Russia. He is pushing for those currently processing outside Russia, to bring more work inside the country.

“Modernisation of the industry will stay our priority. We want to develop domestic deep-processing of wood. Demand has dropped during the crisis. Therefore we'll delay the wood export duty hike. It will remain unchanged for the next year and may be extended into 2011. I hope investors will take their time and diversify their business interests in Russia.”

The welcome mat for international players to set up in Russia also sees subsidies on loans and a new Forestry Code with improved woodland rental terms. Zakhar Smushkin, CEO of Ilim Group, also wants the government to introduce privatisation.

“We hope that sooner or later privatisation will be allowed. The world's largest economies which dominate the forestry market have already sorted out this issue. The only country which still uses rent is Canada, but Canada is not competitive any more.”

There are currently 75 priority joint projects in Russia worth almost $15 billion a year, but investors like Alex Williams, General Director from Rusforest Management, say there could be more, but corruption often gets in the way.

“Russia probably has potentially the best forestry sector in the World, but investment is strained, because you have all these problems on the local level, like access to power, access to forest land.”

The government and industry are also taking steps to address infrastructure issues affecting the profitability of domestic processing, with improved transport and logistics helping to reduce output costs for local processors. With an additional year and improved support mechanisms in Russia to encourage domestic processing, more money for the domestic economy will grow in Russia’s forests.