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EEF 2022: Industry Investors and Experts Made Over Proposals to Develop Tourism in Far East

11 July 2022
Инвесторы и эксперты отрасли внесли более 70 предложений по развитию туризма на Дальнем Востоке – к обсуждению на ВЭФ-2022

A roundtable on the development of the tourism industry was held as part of preparations for the industry-specific session of the 7th Eastern Economic Forum. It was organized by the Russian Ministry for the Development of the Far East and Arctic and the Far East and Arctic Development Corporation (FEDC). EEF 2022 will be held on 5–8 September in Vladivostok. The Forum operator is the Roscongress Foundation.

The roundtable brought together representatives of the tourism industry, federal and regional authorities, experts, as well as the Far Eastern residents of preferential regimes investing in the tourism industry.

Pavel Volkov, State Secretary and Deputy Minister of the Russian Federation for the Development of the Far East and Arctic, urged the meeting participants to propose what they considered to be the most important steps to develop the tourism industry in the macro-region to be included in the list of instructions fr om the President of the Russian Federation.

«The Government of the Russian Federation, with the direct involvement of the Russian Ministry for the Development of the Far East and Arctic, is working on and adopting measures to minimize the consequences of restrictive measures against Russia and to create favourable conditions for the socio-economic development of the country. Special attention is being given to the development of tourism. As of today, some of the proposals based on the results of EEF 2021 have been elaborated and received the status of instructions from the President of Russia. These included a reduction in insurance contribution rates for ASEZ and the Free Port of Vladivostok residents from the date of employment rather than the date of agreement signing, including for existing investors in the tourism industry. The value added tax rate for organizations in the tourism industry has been reduced — a 0% VAT exemption for hotels has been established for 5 years. A decision has been taken to double the tourist cashback for travel in the Far East — up to 40%. We continue to work on providing subsidies from the federal budget to Russian credit institutions to compensate them for the shortfall in income they receive as a result of providing loans at preferential rates to investors who build hotels with a room capacity of less than 120 rooms in the Far Eastern Federal District,» said Pavel Volkov.

However, there is still a number of issues that require further elaboration. Among the most important, the following were identified: cruise tourism and transport accessibility; preferential loans in tourism and compensation for transportation of construction materials from other regions of the country; amendments to the water and forestry codes.

Alexey Akindinov, President of Cosmos Hotel Group, believes it is necessary to supplement the list of compensated costs of infrastructure construction. He proposed to include the costs of creating internal infrastructure at tourist facilities in the costs compensated by subsidies to regions for the construction of supporting infrastructure (energy, gas, water and heat supply, and roads).

Konstantin Markov, leader of Sberbank’s Tourism Industry Expertise Centre, touched upon the programme of soft loans for tourism projects (Resolution of Russian Government No. 141 of 9 February 2021 «On Approval of the Rules of Granting Subsidies from the Federal Budget to Russian Credit Institutions and State Development Corporation VEB.RF»), which, in the opinion of all those present, needs to be expanded and the conditions amended.

«Only effective interaction with the state, a ‘nexus’ of state programmes helps to develop tourism on a regional scale. We commend the activities of the Tourism.RF Corporation, which helps investors with equity capital, as well as of Rostourism, which has made possible and oversees the subsidy programme. The implementation of public-private partnership tools, as well as expanding the scope of this programme to fewer-star hotels, not just those with a minimum of 120 rooms, is a significant boost to tourism development in general, and in the Far East in particular. We are changing our own approach to risk assessment, highlighting areas wh ere investors can come to our bank, for financing, with a smaller share of their own participation. However, it will be difficult to achieve a overall effect without effective support and without the assistance and some kind of backstop from the government,» said Konstantin Markov.

Vadim Prasov, Vice President of the Federation of Restaurateurs and Hoteliers of Russia and Managing Partner of Alliance Hotel Management, is convinced that tourism development in the Far East requires a comprehensive approach. Since the cost of construction in the Far East differs from other regions of Russia, it is necessary to reconsider the period of validity of the benefits for ASEZ residents that implement tourism projects. They should be valid 15 years from the moment of operational activity, instead of five. It was also noted that bringing VAT to zero for tourism facilities (the zero rate is applied starting from 1 July 2022) should apply to all activities of a hotel enterprise, rather than to certain types of services.

«The Far East should become an experimental site for introducing a practice-oriented approach to tourism and hospitality education. Businesses are not interested in waiting four years for a student to learn something. Even with a diploma, such a specialist is a blank slate. It is better to train them based on the ‘one year of practice — one year of theory’ approach. It will help them get involved in processes at real enterprises. The more we give students the opportunity not to waste time at university, but to get an internship and grow in their qualifications, the less they will want to leave for the mainland,» summed up Vadim Prasov.

Vasily Sutula, Director of Baikalsky State Reserve elaborated on the topic of ecological tourism development and specially protected natural areas. He emphasized the importance of creating tourism infrastructure, which will allow tourists to get acquainted with nature and at the same time preserve this heritage. The adoption of the law on national trails is of particular importance, since its absence hinders the development of this area of tourism. The speaker underscored the significance of improving the legislation concerning the rationing of loads on natural complexes in the central ecological zone of the Baikal natural territory and justified the need to prepare methodological guidelines for the monitoring of maximum permissible changes.

Alexander Sirchenko, Deputy CEO of FUN&SUN, vice president of Association of Tour Operators of Russia talked about finances of the charter flights programmes.

«We need to expand subsidies for charters in Russia, abolish parity rules to ensure a sufficient number of air travel, and attract air carriers from friendly countries flying to Russia to perform international flights from Russian airports. We are also interested in extending the zero VAT rate to the activities of tour operators,» said Sirchenko. He added that local authorities should actively support the development of mass tourism to make the East of Russia more open for travel.

All the participants in the discussion were in favour of introducing electronic visas for tourist, business, humanitarian and guest trips to Russia with the ability to obtain them online without invitations, hotel reservations, and any other documents confirming the purpose of the trip.

Alexei Volkov, President of the Nationwide Union of Hospitality Industry, Advisor to the Chairman of the State Duma Committee on Tourism and Development of Tourist Infrastructure, a member of the public council under Rostourism emphasized transport security of passenger traffic, the accelerated allocation of land plots of any purpose for the implementation of tourism projects, and advance training of crews of ships. He suggested creating children’s maritime centers in each seaside region to train future naval personnel, and proposed to start with the Far East. He also noted that when launching electronic visas it is necessary to simplify the application form for those who wish to come to Russia for tourism or business purposes in advance. This measure will increase the flow of tourists from abroad and attract investors.

According to FEDC, 294 residents of territories of advanced development (ASEZ), the Free Port of Vladivostok (FPV) and the Arctic Zone of Russia (AZRF) implement projects in the field of tourism.

«Today, seven federal constituents of the Far East (Kamchatsky and Primorsky Territories, Sakhalin Region, Republics of Buryatia and Sakha (Yakutia), Chukotka Autonomous District, Khabarovsk Territory) and six subjects of the Arctic zone (Murmansk and Arkhangelsk Regions, Krasnoyarsk Territory, Nenets and Yamalo-Nenets Autonomous Districts, Republic of Karelia) are creating new hotel complexes, recreation centres and glampings, building tourist routes, and expanding ski resorts. Every tenth entrepreneur investing in the Far Eastern and Arctic preferential regimes creates new points of attraction for Russian and foreign travelers. More than RUB 15 billion have already been invested in their implementation, and 1,600 people are working in the hospitality industry in the Far East and in the Russian Arctic. The total cost of the tourist projects exceeds RUB 122 billion and is designed to create more than 10 thousand jobs,» commented Maria Badmatsyrenova, Deputy Director of the Department of Law Enforcement Monitoring of the FEDC.

The roundtable was attended by over 50 representatives of the tourism industry, regional authorities, experts, as well as residents of the Far East, investing in tourism projects, which sent more than 70 proposals for further development and inclusion in the industry session during EEF 2022.