KEY CONCLUSIONS
Preferential regimes for investors have proved to
be effective
“Over a period of five years, we have seen the
establishment of 20 ASEZs [Advanced Special Economic Zones – ed.], the
FPV [Free Port of Vladivostok – ed.] regime operates in five regions,
with 1,773 residents implementing their projects, 236 of which have already
been completed and launched. Our residents are expected to invest around RUB
3.2 trillion in the Far East, with RUB 44 billion already invested. We also
expect to see the creation of 129,000 jobs, with around 30,000 already created.
These figures show just how much our preferential regimes are in demand,”
Sergey Tyrtsev, First Deputy Minister for the Development of the Russian Far
East and Arctic.
“Today, the ASEZ in Amur Region is home to 23
projects. Around 1 trillion in investment has been announced, and more than
5,000 jobs will be created in the future. We see this endeavour as a huge
contribution, one that provides excellent privileges to companies who come to
us,” Pyotr Pak, Deputy Prime Minister of Amur Region.
“There is nothing else in existence like the ASEZs
we have in Russia. We have taken a close look not only at Russia, but the
world, and this package of benefits is absolutely unique. It puts us in a
position whereby we can proudly take our place in the international arena,”
Vadim Medvedev, Managing Director of Investment Department, ESN Group.
The state is taking steps to further improve the
business environment
“The most important thing about this mechanism
[ASEZs – ed.] is something that isn’t written in a single document
anywhere, but which is clearly evident today. It is that people in various
places and jobs, people in various ministries view the residents’ or potential
residents’ investment projects as their ‘children’. Every day, lobbyists and
promoters look for ways to help residents implement their projects,” Alexander
Osipov, Acting Governor of Trans-Baikal Territory.
PROBLEMS
Infrastructure is insufficiently developed
“If we were to draw up a rating of shortcomings
cited by residents, then infrastructural shortcomings would come first,
followed by financial shortcomings, and then staff shortages. Government bodies
have recently focused a great deal on providing services and having development
institutions in place,” Aslan Kanukoev, Acting General Director, Corporation
for Far East Development.
“We have seen one problem from the point of view of
tourism, and that is the development of infrastructure. Infrastructure
requirements for tourism are higher than those for industry. For example, it is
vital for us to not only have accommodation, but a road network and the ability
for people to easily get to and visit various geoparks and tourist sites. We do
not see provisions in ASEZs for the requisite infrastructure to be developed,”
Sergey Bachin, General Director, Roza Khutor.
Special conditions for remote areas need to be put
in place
“Any tool has the potential to be improved and refined,
and there are some things we could do to make this regime even more effective.
In our experience of working with plots of land and transferring them from one
category to another, we have often found that the same requirements apply to
remote or hard-to-reach areas as they do to more connected ones. In this
regard, the Corporation for Far East Development could be given additional
powers to expedite the process of transferring land categories for industrial
use, because we find this process takes a great deal of time,” Dmitry Gavrilin,
Chief Executive Officer, Tigers Realm Coal.
A shortage of qualified management staff
“A resident’s decision to join an ASEZ is not only
guided by financial considerations, but to a large extent by the business
climate, too. The business climate in Russia is driven by differences in
management teams and ways in which the authorities can effectively work with a
preferential regime. There is a need for a healthy business climate and
effective institutions. Municipal and state governance must be at a high
level,” Vadim Zhivulin, Deputy Minister of Economic Development of the Russian
Federation.
Visa restrictions
“Border controls are so tough and archaic, that I
cannot really imagine how we can attract tourists in any real numbers. ASEZs
should probably focus on this area as well,” Sergey Bachin, General Director,
Roza Khutor.
SOLUTIONS
Improving preferential regimes
“There is one significant difference between our
ASEZs and preferential regimes in other countries, or the Asia Pacific at
least. That is, we are attempting to create a preferential regime for the
company in front of us. This is typically a company that manufactures goods or
extracts resources – an industrial company. In other countries, the focus is on
developing the services sector. It appears to me that we very rarely pay
attention to the services sector,” Mikhail Orlov, Partner, Head of Tax and
Legal, KPMG Russia.
“One area we have not thought about yet, but which
we should, is the services sector. It currently has an extremely limited
presence in the economy,” Vadim Khromov, Deputy Chairman of the Moscow Region
Government.
“In addition to the work on creating a base regime
which has been accomplished by our colleagues, we should add a sector-specific
focus. Taxation is obviously very important, as is infrastructure. I think our
colleagues will have more to say about personnel and logistics, but for us,
things like the introduction of a return scheme for ethane excise are no less
important,” Aleksey Kozlov, Member of the Management Board, Managing Director,
SIBUR.
Ensuring fixed rules for doing business
“We currently have one request: to guarantee that
the conditions proposed to investors are not subject to change, at least during
the recoupment period,” Vadim Medvedev, Managing Director of Investment
Department, ESN Group.
Supporting exports
“A big achievement for us has been that investors,
as you know, have largely focused on the markets of Southeast Asia. We help
them get their product to the end user, and exports have grown. A breakthrough
on our part has been the opening of the Chinese market for grains, oil crops,
and milk and dairy products. Within literally a few days, goods produced by our
people in the Far East should be heading to consumers in China,” Sergey
Tyrtsev, First Deputy Minister for the Development of the Russian Far East and
Arctic.
Optimizing interaction between government bodies
“All administration at an ASEZ is managed by
federal government bodies, namely the Ministry for the Development of the
Russian Far East and the Far East Development Corporation. We are ready to
submit an application to participate in an ASEZ project, but we don’t
understand how to do this, because according to the rules the Ministry of
Economic Development works with the regions. There needs to be a form of
contact between the Ministry of Economic Development and the Ministry for the
Development of the Russian Far East so that industrial parks at ASEZs can work
directly according to a federal project,” Andrei Minaev — Member of the Board,
Association of Industrial Parks of Russia (AIP).
