KEY CONCLUSIONS
The Far East has numerous economic preferences
“If we’re talking about preferential treatment and advanced special economic zones, we are satisfied. I’ll explain why: even during this period when the advanced special economic zones were expanding in the Kuril Islands, we attracted over RUB 20 billion in private investment,” Deputy Chairman of the Sakhalin Region Government Anton Zaytsev.
“A lot of development tools have been introduced in the Far East. We know about the advanced special economic zones, the regime of the preferential Free Port of Vladivostok, and the regime of special administrative regions. Just a month ago, the government announced its intention to create more special regimes for the Kuril Islands,” Partner and Head of Tax and Legal Consulting at KPMG in the CIS Mikhail Orlov.
“For several years now, we have seen interest from the tourist community and tourists about how the dynamics of the tourist flow to the Kuril Islands has changed today. And we see the reaction of business today. Even in the northern Kurils, we have begun implementing a large-scale investment tourism project today to build both hotel complexes and other related infrastructure. And the investment is quite large,” Deputy Chairman of the Sakhalin Region Government Anton Zaytsev.
PROBLEMS
We need to get rid of restrictions in preferential regimes
“As regards the Kurils advanced special economic zone, the regime does not extend to all islands. These are local territories. When a business comes and declares it is implementing a project in a particular territory, it generally does not fall within the boundaries of the advanced special economic zone today. This is a limitation and we believe that when the preferential regime that we propose will apply to all islands, then, of course, we will not need 12 months to expand the boundaries of the territories,” Deputy Chairman of the Sakhalin Region Government Anton Zaytsev.
“It’s a question of criteria and requirements for a business’s presence. After all, we would very much like them to be informal. At present, for example, there is such a criterion that you must have an office of 100 square metres. If it’s 99, then you won’t get the benefit,” Director of the Project Review and Analysis Department at the Far East and Arctic Development Corporation Pavel Sheika.
“Do we need to adjust? Do we need to carry out some sort of measures to improve the preferential regimes? Our opinion is yes. We are in a competitive world. Our neighbours are systematically improving processes and taxation and preferential regimes in general and creating conditions for business development. Our opinion is that we should also do this,” Deputy Chairman of the Sakhalin Region Government Anton Zaytsev.
“When we look at our colleagues, especially those from the APR countries, we see that the creation of different zones pursues different goals. All goals are equal and deserve attention,” Partner and Head of Tax and Legal Consulting at KPMG in the CIS Mikhail Orlov.
SOLUTIONS
Both introduce new support measures and expand old ones
“In Russia, a full-fledged legislative framework has been created that allows foreign companies to change their personal law, their jurisdiction, and actually move to Russian territory. Thanks to the introduction of amendments to the relevant law this year, not only can a company that used to be somehow connected with Russia now move to Russia, but in general any foreign company can that wishes to do so if, of course, a number of conditions are met,” Director of the Project Review and Analysis Department at the Far East and Arctic Development Corporation Pavel Sheika.
“To a certain extent, all the mechanisms used in the advanced special economic zones, in the port, and in special economic zones are applicable to different kinds of business, different territories, and different criteria. Our task now is to develop a mechanism that will enable the Kuril Islands to develop at an accelerated pace,” Vitaly Altabaev, Director of the Department for the Development of the Priority Territory of the Far East and the Arctic of the Ministry for the Development of the Russian Far East and Arctic.
“What industries can get additional motivation for development? The fishing industry. It needs tax support measures. This will stimulate business. How will the industry’s development take place? Above all, due to the development of the coastal zone, namely the construction of factories and an increase in the deep processing of products that we can manufacture today,” Deputy Chairman of the Sakhalin Region Government Anton Zaytsev.
“We need to simplify the border regime. We would like to apply the experience of the free port and electronic visas there and, if possible, offer a short-term visa upon arrival for up to 14 days,” Vitaly Altabaev, Director of the Department for the Development of the Priority Territory of the Far East and the Arctic of the Ministry for the Development of the Russian Far East and Arctic.
Expand territories with preferences and their infrastructure
“We have transferred land plots from federal to municipal ownership. We already have a queue of investors who, since they’re not residents of the special administrative district, are ready to join today, including to acquire land plots,” Deputy Mayor of Vladivostok Azat Islayev.
“We really like it. The only thing is we encountered a number of problems at that time, especially with finding an office and a legal address for the company. We started solving this problem with the help of the Far East and Arctic Development Corporation [...] We realized that there are not enough legal addresses or offices and no commercial real estate on the island,” Finvision Holdings General Director Yury Gusev.
For more, see the Roscongress Foundation’s Information and Analytical System roscongress.org
