Russia must swiftly make a number of changes in tax and customs legislation if it is to obtain increased foreign investment, the country's top economics officials said Monday.


"The amount of investment in Russia is dozens of times smaller than it could be in view of the size of the country," First Deputy Prime Minister Anatoly Chubais, who has overall responsibility for Russia's economic policy, told reporters. "There is a tough competitive struggle going on between a number of countries for foreign investment."


Economics Minister Yevgeny Yasin, speaking after two days of meetings of the Foreign Investment Council, said international capital had a major role to play in reconstructing the country's shattered economy. The council brings government officials together with 17 of Russia's leading foreign investors.


"We are very interested in a mass influx of foreign investment to Russia," he said. "Foreign investors, especially those oriented toward production, would bring with them the experience of management, new technologies, create new jobs and this is what we desperately need today."


Changes in regulations for foreign investment have often been promised in the past with few results, but the remarks by the two top officials in President Boris Yeltsin's new economic team drew favorable responses from investors attending the meeting.


Chubais on Sunday predicted portfolio investment could reach $1 billion a month early next year, and direct foreign investment could total as much as $8 billion to $9 billion in 1995 if the government "took extra moves to ease the tax burden on foreign investors," Interfax reported.


This would represent a considerable turnaround for Russia, which attracted just $2.7 billion in direct foreign investment from 1988 through 1993. Portfolio investment has run at around $500 million to $700 million a month since July, according to Chubais, from almost nothing at the start of the year, but is not counted as direct investment since it is mainly concentrated in the secondary securities market.


A recent report by the U.S. consulting firm Ernst & Young showed just 6 percent of multinational companies were targeting Russia for major investments, preferring China, southeast Asia and Latin America. Many investors associated Russia with political instability and preferred to do business with countries that possess a more favorable legal and taxation framework.


Yasin said the purpose of the Investment Council was to hammer out the specific changes that foreign investors wanted to see in Russia and to take steps to implement them.


Chubais pointed to the experience of the U.S. giant Masterfoods as a practical example of the kind of regulations that are currently deterring foreign entrepreneurs. The company delayed construction of a large factory near Moscow that would create thousands of jobs after Russian authorities levied import taxes on goods and equipment brought into the country for the project, Chubais said.


He said a presidential decree offering preferential customs rates to foreign investors had been drafted.


The decree -- which should be signed within two weeks -- would halve import duties for a five-year period on a range of goods for foreign companies with at least a 10 percent involvement in investment projects worth $100 million or more, Reuters reported.


Chubais said the government would hold a special meeting to discuss how to improve conditions for foreign investment after Prime Minister Viktor Chernomyrdin returns from his trip to the Middle East.


Questions on the government's agenda, Yasin said, will include three problems that have long been a bane to foreign investors:


?clarification of banking regulations, particularly in relation to hard-currency transactions;


?abandoning the value-added tax on capital investments and equipment brought in from abroad; and


?exempting foreign companies from paying the excess wages tax and reforming the profit tax.


No mention was made, however, of a promise given by Chernomyrdin in June to grant foreign investors a five-year tax holiday and a three-year exemption from detrimental changes in legislation. Neither measure has been implemented.


Nevertheless, Western business representatives responded positively to their talks with Russian officials.


"I don't think I've ever been to a more productive meeting," said E. Neville Isdell, senior vice president of Coca-Cola, "I think that the level of honesty and sincerity bodes well."


Percy Barnevik, president of Asea Brown Bovery manufacturing company, said Western businesses should start paying more attention to the opportunities offered in Russia.


"Russia's got too little foreign direct investment, it's not more than 1 percent of the world's foreign direct investment, and with the great opportunities in Russia that ought to be changed," he said. "I think that Russia could have a 10 times bigger share of the world's investment."


Yasin's Economics Ministry has been designated as the main state organization that will promote Russia to foreign investors, Chubais said, by greatly expanding the role currently played by its investment information center.


The move is further evidence of the ministry's return to the center of the economic policy-making stage since the appointment of Yasin earlier this month under Chubais' supervision.