Russia`s industrial and innovation infrastructure
Transcription
Russia`s industrial and innovation infrastructure
Russia’s industrial and innovation infrastructure Demo version Russian Federation Foreword In a country such as Russia, with its vast territory and regional differences, the issue of where to locate a business isn’t easy: one region, for example, may have unique infrastructure, another the right people, and a third inexpensive premises. For over 25 years, EY has helped Russian and international firms find the most comfortable environment for their enterprises, and investors always impress on us the need for a single information source that they can use to get their bearings when surveying the range of Russian investment opportunities. Central Federal District Northwestern Federal District Southern Federal District With this in mind, we have summarized our experience with clients and regional administrations and prepared a report based on our study of production and innovation infrastructure in the Russian regions, including systematic information on various essential elements of business infrastructure as well as regional profiles. In preparing the report, we also drew on other EY studies on specific infrastructure (e.g., maps of industrial parks, studies of technoparks and business incubators and regional surveys of the investment climate). North Caucasian Federal District Volga Federal District Ural Federal District Siberian Federal District Far Eastern Federal District Crimean Federal District Consumer market (2014) Indicator Russian Federation Median for Russian constituent entities Population 146.3m people 1.2m people Economically active population 75.3m people 615,000 people Monthly average income per capita RUB27,700 RUB34,200 Retail turnover RUB26,119b RUB164.7b Sources: Rosstat, EY estimates. Russian Federation Median for Russian constituent entities Equity investment, 2014 RUB13,528b RUB86.8b Foreign direct investment, 2013 US$26,118m US$66.6m Indicator Russian Federation Median for Russian constituent entities Universities (including branches) / graduates in the 2013–14 academic year 2,451 / 1.3m people 21 / 9,000 people 3,605 / 727,000 people 21 / 2,000 people Sources: Rosstat, EY estimates. Education and science Number of R&D organizations / employees, 2013 Sources: Rosstat, EY estimates. • Major companies interested in large territories – for greenfield projects, for example, or business development in special economic zones (SEZ) and advanced development zones (ADZ) • M ► edium-sized companies that can study the range of industrial park locations • S ► mall companies that can consider the options for renting/purchasing premises in technoparks or business parks Investments Indicator We believe that our report will be useful for a wide range of businesses, including: In addition, this report will enable regional administrations to analyze consolidated information on constituent entities of the Russian Federation and compare the figures with those for their own region. They can use the data to improve the business climate in their region by updating the list of promising industries, developing investment strategies and using more effective means of interacting with investors. Keeping clients up to date on key market trends is our central concern. EY regularly publishes a variety of analytical materials, surveys and reports covering the latest economic developments of importance for business. In May 2015, EY completed a major new study – a survey of Russia’s industrial and innovation infrastructure – and presented it at the St. Petersburg International Economic Forum. This material draws on our long history of cooperation with clients and regional administrations. Our study is a unique information product that should prove useful to a wide range of private companies as well as regional leaders. Facts and figures about the survey • The most complete survey of Russia’s industrial and innovation infrastructure • Messages from regional leaders to potential investors • 300 pages of text, graphics and analytical material • Up-to-date information for decisions on doing business in Russia’s regions • Highly reliable information: • The survey has been prepared in two languages, Russian and English — 83 constituent entities of the Russian Federation provided first-hand information — Exclusive material from Special Economic Zones OJSC and the Ministry for the Development of the Russian Far East • Around 800 industrial and innovation infrastructure sites with their key features: specialization, number of residents, area • Comprehensive profiles of all Russian regions, featuring: — Promising sectors for investment and industrial specialization — Examples of major private investors in the region — Statistical data in such categories as the "consumer market," "investments," and "education and science" • Detailed maps identifying infrastructure sites Our services in attracting and making investments in Russia’s regions EY’s dedicated, multidisciplinary team offers a wide range of services in attracting and making investments for private and state companies. We help clients successfully develop their business in Russia’s regions, selecting a range of potential locations appropriate for a specific business in view of the availability of qualified people, the specifics of the local real estate market, proximity to suppliers and consumers, tax benefits and other factors. We also advise regional administrations on the creation and financing of all types of industrial and innovation infrastructure to make regions attractive for new companies, and we formulate development strategies for regions and other large territories. Our understanding of how government agencies operate and our experience in supporting international companies’ production localization and cooperating with major development institutions allow us to offer efficient solutions for investment projects in all of Russia’s regions. Report distribution Format: Print version Language: Russian, English Price: RUB 8,000 for the Russian version and RUB 12,000 for the English version. The price is negotiable if several copies are ordered. All prices are inclusive of VAT. Contact details If you have any questions on obtaining the report or are interested in advice on attracting and making investments, please contact the Real Estate, Infrastructure and Government & Public Sector Group: Ilya Sukharnikov Senior Manager Tel.: +7 (495) 662 9398 [email protected] [email protected] Contents Contents Full version Demo version Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Industrial parks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Industrial parks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Special economic zones and advanced development zones . . . . . . . . . . . . . . 10 Special economic zones and advanced development zones . . . . . . . . . . . . . . 10 Regional innovation clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Regional innovation clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Technoparks and business incubators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Technoparks and business incubators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Consolidated data on investment projects in federal districts . . . . . . . . . . . . 29 Consolidated data on investment projects in federal districts . . . . . . . . . . . . 29 Regional profiles by federal district . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Regional profiles by federal district . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 (Survey excerpt) Central Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Northwestern Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Southern Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 North Caucasian Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Volga Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Ural Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 Siberian Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Far Eastern Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Crimean Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 Russian infrastructure sites by federal district . . . . . . . . . . . . . . . . . . . . . . . 247 Central Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Northwestern Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 Southern Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 North Caucasian Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 Volga Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 Ural Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Siberian Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Far Eastern Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 Crimean Federal District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 Russian infrastructure sites by federal district . . . . . . . . . . . . . . . . . . . . . . . . 45 (Survey excerpt) Introduction Typical company preferences and terms of use of production and innovation infrastructure sites Major companies Medium-sized companies Small companies Greenfield projects SEZs / ADZs Lease/acquisition of an undeveloped land site for building a plant in accordance with the company’s needs Lease of land sites taking into account the ability to reduce costs through tax, customs and social exemptions Brownfield projects Industrial parks Lease/acquisition of a land site with realties, e.g., industrial/office buildings Long-term lease/acquisition of industrial premises/ building or long-term lease/ acquisition of a land site Technoparks Business incubators Long-term lease/acquisition of premises/buildings for similar companies at one site Lease of premises at a reduced rate and the support of newly established companies during the incubation period In recent years, many Russian regions have made substantial headway in creating industrial and innovation infrastructure to stimulate investments in the real sector of the economy. A developed infrastructure makes a region much more attractive to investors prepared to open new enterprises in the region, promotes the establishment and expansion of local manufacturers, and encourages the formation of clusters and related production facilities. In our study, we looked at various types of infrastructure: industrial parks, special economic zones, technoparks and business incubators, advanced development zones, and regional innovation clusters. The report based on this study gives a concise survey of the current situation and development trends for each of these types; provides regional profiles, including key figures and business infrastructure maps; and lists infrastructure facilities along with their salient features. Sources and disclaimer In addition to official data published by state and regional administrations, EY’s own research findings and information specially requested from regional administrations were used in preparing this report. For the purposes of our analysis, EY professionals regarded this data, obtained orally and in electronic form, as reliable. We did not independently verify their accuracy or completeness. EY assumes no responsibility for the accuracy or reliability of the initial information provided. 8 Russia’s industrial and innovation infrastructure. Demo version | 9 Industrial parks Classification of industrial parks Depending on the stage of project completion, Russian industrial parks for our purposes may be grouped as follows: The industrial park concept came to Russia from abroad, where it is a common format for mid-sized industrial enterprises. In Russia, the initial stage of industrial park development is over, and the market is now going through intensive development. In this period, growth in supply has more to do with project realization and the expansion of successful sites than it does with an increasing number of projects. Regional and federal law continues to develop in this area, including new terminology and mechanisms for benefits and subsidies, and sites are becoming better prepared and better equipped with the infrastructure needed to launch production. For the purposes of this study, the concept of an industrial park will include manufacturing and industrial zones, production development zones, production and warehouse technoparks and industrial and logistics zones that conform to the common definition: Industrial park: A territory prepared by a local administration or private entrepreneur in a nonresidential zone and equipped with transport and utility infrastructure for manufacturing, warehouse facilities and enterprises. Industrial park resident: An enterprise that rents or buys manufacturing/warehouse premises/land in an industrial park and has gone through the full round of approvals required for locating, building and operating manufacturing facilities in the given territory. 10 • Finished (operating) industrial park: A large area of land classified as “settlement land” or “land for industry, transport and communications” with defined boundaries and approved as a site “for manufacturing and warehouse facilities,” in some cases with industrial and warehouse buildings already in place, that has been made available by a private company or local administration. The land has been surveyed, and approvals have been obtained for enterprises to be located in finished buildings and new manufacturing, warehouse and office facilities to be constructed. The area is accessible to all forms of road transport, has been graded and divided into lots, and has on-site roads and in some cases a rail line. The park has been connected to utility networks (electricity, gas, heat, water and wastewater drainage). The territory has residents and is guarded. • Industrial park in the formative stage: A large tract of land categorized as “settlement land” or “land for industry, transport ...” with defined boundaries that has been made available by an administration or private company as a site for manufacturing facilities, warehouses and offices. The land is in the initial stage of being surveyed and prepared. The park has no new residents as of yet. One or more potential investors have stated their intention to locate manufacturing facilities on the site. Issues with respect to further surveying, the construction of an access road and on-site roads, hookups to main utility networks and the required utility capacity may be decided jointly by the landowner and the future investor. The park’s organizer is prepared to do part of the preliminary work involved in surveying, utility hookups and road construction at its own expense. • Planned industrial park: An area allocated for an industrial park — a large tract of land, possibly categorized as agricultural land, that has been made available for manufacturing and storage facilities by decision of the local administration or a private owner. Surveying and site preparation are just getting under way or haven’t yet begun (clear boundaries haven’t been defined, and there may be surface or underground structures owned by outside or unknown entities). Land reclassification, further surveying, the construction of an access road, topsoil removal, landscape grading, drainage and utility hookups are in their initial or planning stages. The owner is prepared to do this work either against guarantees provided by the future resident or jointly with the resident. There are not as yet any residents or potential investors. Russia’s industrial and innovation infrastructure. Demo version | 11 Key trends and indicators 37% Regions of the Russian Federation Industrial parks are largely concentrated in the European part of Russia — 37% are located in the Central Federal District, and 17% in the Northwestern and Volga Federal Districts. Overall, the sector is expanding geographically, but new industrial parks in Russia are unevenly distributed. industrial parks Also, the regional administration should have a specialized organization to actively recruit investments, and a one-stop shopping principle should apply at all stages of the project. Certification Percentage of Russian industrial parks in the Central Federal District CFD Experience shows that the first residents are critical for a park’s further development, so preferential terms are frequently offered to attract them. Investor interest depends on the professional level of a park’s organizers. In 2012, the Association of Industrial Parks approved a professional Industrial Park Standard, which sets both mandatory and optional requirements for industrial parks. In certifying a site, the Association checks such mandatory features as access to main roads, a management company, the industrial park development concept, available utility capacity, and a parcel of land officially documented and prepared for construction. As of April 2015, the association had certified thirty-two operating industrial parks and ten planned parks. State support and the regulatory framework Number of industrial parks in federal districts of the Russian Federation 7 sites 64 sites 135 sites 64 sites 14 sites 12 27 sites 11 sites 23 sites 21 sites Central Federal District North Caucasian Federal District Siberian Federal District Northwestern Federal District Volga Federal District Far Eastern Federal District Southern Federal District Ural Federal District Crimean Federal District The Law “On Industrial Policy in the Russian Federation” of 31 December 2014 defines an industrial park as “a complex of industrial infrastructure facilities intended for the establishment or modernization of industrial production and managed by a management company that is a commercial or nonprofit organization created under Russian law.” In 2014, the Russian Ministry of Industry and Trade, together with the Association of Industrial Parks, initiated support for industrial parks as part of the state program “Industry Development and Enhanced Industry Competitiveness.” Based on a selection process, twelve organizations received interest rate subsidies applicable to loans for the formation of industrial parks. Up to RUB1.6t have been allocated for this program’s implementation in the period until 2020. Under the program’s terms, ten industrial parks in Russia received subsidies from the Ministry for Economic Development in 2014 as part of support provided by constitutent entities of the Russian Federation for small and mediumsized business. Part of the program’s budget is to be used to subsidize interest rates on loans and create the required infrastructure for industrial park residents. Support in terms of information, organization and the state information system The Association of Industrial Parks is a nonprofit organization uniting the majority of Russian industrial parks as well as service providers involved in industrial construction to promote their common interests. Over 90 legal entities are members of the association, representing 65 industrial parks in 43 constituent entities of the Russian Federation. Russia’s industrial and innovation infrastructure. Demo version | 13 Results At the start of 2015, the Russian Federation had almost 366 industrial parks that are in various stages of formation and preparedness. As shown in the diagram below, in the five years since EY did the first largescale study of the industrial park market, the supply of this type of infrastructure by state of preparedness has changed dramatically. The proportion of finished sites has grown substantially — from 29% in 2010 to 44% in 2015 (51 and 160 sites, respectively) — while the proportion of sites at the planning and formative stages has steadily declined. This is because many of the industrial parks previously at these stages are now finished sites that are ready to accept residents’ production facilities. Industrial parks by state of preparedness, 2010-15 Number of industrial parks 180 160 • Reduced rate of profits tax (by no more than 4.5%) • Reduced rate of assets tax or exemption (for fixed assets used in production) • Reduced rate of transport tax or exemption • Land tax exemption or a reduced rate for sites on which industrial enterprises are situated • Subsidies partially covering costs for the creation of utility and transport infrastructure for industrial parks 140 120 100 80 Most of these benefits apply for a fixed period not to exceed an investment project’s payback period 60 40 20 2010 Completed Source: EY research. 14 In many regions, industrial park residents are granted tax subsidies and exemptions in an amount depending on factors stipulated by local law, such as the amount of investments in fixed assets, an investment project’s status as strategic for the region’s economy, etc. The following are common exemptions and preferences for investors: • Interest rate subsidy for loans to management companies 200 0 Support for industrial park residents 2012 Under construction 2015 Planned Management companies that invest in the development of industrial park infrastructure may receive the following preferences: • Regional guarantees • Partial subsidies from the regional budget for costs involved in constructing and reconstructing utility and transport infrastructure Practice, however, has shown that regional preferences and local exemptions for residents are not enough to guarantee an influx of investors and capital. A region becomes attractive to investors when regional authorities take a proactive position and follow a consistent policy of lowering administrative barriers. Such a policy is based on an understanding that tax benefits are not lost revenues that could have helped the budget, but incentives for industrial development in the region. The expectation is that investments will subsequently yield tax returns far higher than the initial “losses” to the budget. In recent years, the number of regions committed to such a policy has grown. It is becoming increasingly clear that an ill-defined system of benefits, red tape and a lack of transparent administrative procedures greatly reduce the effectiveness of formal legislative initiatives designed to attract investments in manufacturing. Reports of the Industrial Park Association single out two problems standing in the way of new industrial parks in Russia. The first is the low quality of project preparation. Business plans and project documentation for new industrial parks do not, as a rule, meet the standards and requirements of the ultimate users (investors) or of financial institutions that are potential creditors. A lack of debt financing, in turn, forces park owners to wait for investors, hoping to use their funds for business development. Whereas it costs RUB 5 million to RUB 25 million per hectare to set up a full-fledged industrial park, actual investments in the infrastructure of new industrial parks in Russia have averaged RUB 5.1 million per hectare over the last 10 years. Special economic zones and advanced development zones Resident of a special economic zone: A commercial organization (not a unitary enterprise) that is registered in an SEZ’s municipality and has contracted with the SEZ’s management company and the Russian Ministry for Economic Development to carry out activities appropriate to the type of SEZ in accordance with the procedure and on the terms stipulated by Federal Law No. FZ-116. Under this law, residents of technology implementation and tourist and recreation SEZs may also be individual enterpreneurs. Classification of SEZs: In international practice, special areas that have the infrastructure needed for launching production and offer preferential tax, customs and administrative systems are a common means of attracting large enterprises. 16 Such areas are generally formed on the state’s initiative to make the economy more competitive on international and inter-regional levels and promote the development of Russia’s regions, priority branches of industry and the service sector as well as to expand exports. In Russia, these purposes are served by special economic zones and advanced development zones. Special economic zones A special economic zone (SEZ) is an area in Russia with a special legal status and economic benefits designed to bring Russian and foreign companies into priority sectors of the Russian economy. SEZs are formed under a federal program overseen by the Russian Ministry for Economic Development (Federal Law No. FZ-116 of 22 July 2005). The state management company Special Economic Zones OJSC (SEZ OJSC) manages the majority of SEZs and is responsible for recruiting and assisting resident companies. In regions, SEZ OJSC is represented either by branches or by subsidiary joint-stock companies. Current law envisages four types of special economic zone. • Industrial SEZs: Extensive territories in industrially developed regions. Proximity to industrial resources, available utility capacity, accessibilty to all forms of ground transport — these are only the most important of an industrial zone’s advantages. Reduced expenses make the output of facilities in industrial zones more competitive on the Russian market. • Technology implementation SEZs: Located in major centers of science and education that have rich scientific traditions and recognized research institutions. Customs and tax benefits, the availability of professional staff, and a growing demand for new technologies and modernization in various sectors of the Russian economy make technology implementation SEZs attractive for venture capital funds as well as for developers and producers of high-tech products. • Port SEZs: Located in proximity to key transport routes and waterways. A port SEZ may become a site for shipbuilding, ship repairs and logistics services and also serve as a base for new land and sea delivery routes. • Tourist and recreation SEZs: Located in scenic areas and regions popular as tourist destinations. Tourist and recreation SEZs offer favorable conditions for tourism, sports and recreation activities, and other forms of business. Advanced development zones In the Russian Far East and Eastern Siberia, there are plans to establish a network of advanced development zones with preferential conditions for non-resource production that is oriented, among other things, on exports. The formation of ADZs is regulated by Federal Law No. 473-FZ of 29 December 2014 “On Advanced Development Zones in the Russian Federation.” Under the law: An advanced development zone is an area in a constituent entity of the Russian Federation where, by decision of the Russian Government, a special legal regime has been established for entrepreneurial and other types of activity in order to create favorable conditions for investments and accelerated socioeconomic development, as well as comfortable living conditions for the public. Russia’s industrial and innovation infrastructure. Demo version | 17 Key trends and indicators Special economic zones As of the start of 2015, Russia had thirty special economic zones, including the Northern Caucasus Resorts cluster, which includes nine SEZs. As with industrial parks, we can identify three stages of SEZ development with their characteristic features: 1. Zones in operation, where infrastructure is complete and there are resident companies in operation 2. Zones in the formative stage, where infrastructure is under construction and there are resident companies in operation 3. Planned zones, where pre-project and project work is under way SEZs by state of preparedness and type Type of SEZ In operation In the formative stage Planned Industrial Alabuga, Lipetsk, Togliatti Lyudinovo, Moglino, Titanium Valley Lotus, Vladivostok Technology implementation Dubna, Zelenograd, Innopolis St. Petersburg, Tomsk Port Tourist and recreation Biryuzovaya Katun Total 8 5 Ulyanovsk-Vostochny Murmansk, Sovetskaya Harbor 3 Baikal Harbor, Gates of Baikal, Altai Valley, Northern Caucasus Resorts (two SEZs) Northern Caucasus Resorts (seven SEZs), Russky Island (Vladivostok) 14 One feature of SEZ development is the large number of sites in the second and third stages. Only 8 of 30 sites have a completed infrastructure and residents, and almost half of the non-operating sites are tourist and recreation zones. According to SEZ OJSC, at the start of 2015, SEZs of all types had 375 registered residents, employing over 13,000 people. Since the launching of the SEZ program, investors have shown the greatest interest in industrial and technology implementation zones, and some 87% of all SEZ residents were residents of such zones at the start of 2015. Dubna and Tomsk technology implementation zones have the greatest number of residents: 89 and 58 companies, respectively. As for port and tourist and recreation SEZs, many are currently in the stage of infrastructure formation or are looking for their first residents. Number of SEZ residents 400 375 350 306 300 Number of residents An ADZ resident is an individual entrepreneur or a commercial organization (legal entity) that has entered into an agreement to operate in an ADZ and is included in the register of ADZ residents. 323 342 249 250 207 200 143 150 100 50 0 53 12 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Special Economic Zones OJSC Number of residents by type of SEZ 6 44 105 220 Technology implementation SEZs Industrial SEZs Tourist and recreation SEZs Port SEZs Source: Special Economic Zones OJSC Total 8 Source: Special Economic Zones OJSC 18 10 12 30 According to SEZ OJSC, proposed investments by residents total some RUB 500 billion. As of today, more than RUB 145 billion in investments have been realized, and residents have paid over RUB 14 billion in taxes. Russia’s industrial and innovation infrastructure. Demo version | 19 Geographical location of special economic zones 8 14 3 Tourist and recreation SEZs Industrial SEZs Port SEZs 5 Technology implementation SEZs Murmansk Murmansk Region Moglino Pskov Region St. Petersburg St. Petersburg Zelenograd Moscow Dubna Lyudinovo Moscow Region Kaluga Region Lipetsk Innopolis Lipetsk Region Ulyanovsk-Vostochny Ulyanovsk Region Togliatti Samara Region Northern Caucasus Resorts Lotus Astrakhan Region Republic of Tatarstan Alabuga Republic of Tatarstan Titanium Valley Sverdlovsk Region Sovetskaya Harbor Tomsk Khabarovsk Territory Tomsk Region Biryuzovaya Katun Altai Territory Gates of Baikal Irkutsk Region Altai Valley Altai Republic Baikal Harbor Vladivostok Republic of Buryatia Primorsky Territory Russky Island Source: Special Economic Zones OJSC 20 Primorsky Territory Russia’s industrial and innovation infrastructure. Demo version | 21 Advanced development zones In his address to the Federal Assembly on 12 December 2013, the Russian President proposed that a network of advanced development zones be created in the Russian Far East and Eastern Siberia, providing special conditions for non-resource production that is oriented, among other things, on exports. New enterprises in such zones would receive • Five-year tax holidays for profits tax, mineral extraction tax (excluding oil and gas), land and assets tax • Preferential insurance rates These zones would provide “business conditions competitive with key business centers in the Asia-Pacific Region”1, including procedures for obtaining construction permits, power grid hookups, customs clearance, etc. This type of investment opportunity has developed in the following stages: • On 29 December 2014, Federal Law No. 473-FZ “On Advanced Development Zones in the Russian Federation” was adopted, establishing the legal framework for ADZs and the procedure for operating in such zones as well as state support measures. • On 12 February 2015, a shortlist of three ADZ candidates was approved. (On the map of infrastructure in the Far Eastern Federal District, presented further in this report, these sites are indicated as finished.) — Nadezhdinskaya industrial park site in Primorsky Territory — Three sites in Khabarovsk Territory, where it is planned to manufacture thermal insulation materials and tubular piling as well as develop metallurgy, logistics centers, greenhouse complexes, etc. — A site in Komsomolsk-on-Amur, where components are to be manufactured for the aviation industry Brief description of approved sites: Nadezhdinskaya The Nadezhdinskaya ADZ project involves the creation of an investment site with a total area of 807 ha, complete with road and utility infrastructure. Target residents are investors with projects in the areas of machine building, food, pharmaceuticals and light industry as well as building materials and production logistics. According to the Far East Development Industry, private investments as of January 2015 stood at RUB 100 million, and state investments in infrastructure are planned at a level of RUB 3 billion. Support for investors Khabarovsk State investments needed for the creation of infrastructure for Khabarovsk ADZs are estimated at RUB 1.8 billion. The site near Rakitnoye (in the environs of Khabarovsk) is to have five proposed investment projects that are largely industrial in nature (metallurgy, construction, and food products). There are also plans to build a logistics complex. The Avangard Industrial Park unites two projects worth around RUB 4 billion. Khabarovsk Airport may become a third site. Komsomolsk The ADZ in Komsomolsk, according to preliminary data, is to get around RUB 15.23 billion in private investments and RUB 1.2 billion in state investments for infrastructure. One of the chief advantages offered by SEZs is that residents’ initial outlays are held to 30% of their capital investments by granting tax, customs and other benefits and also that the construction of common utility and transport infrastructure is funded by federal and regional budgets. One of the main features that distinguish SEZs from industrial parks and other investment sites with completed infrastructure is that the former are free customs zones. This means that import duties and VAT are not charged on equipment, parts and materials imported into SEZs, and export duties are not charged on goods produced in an SEZ and exported to countries outside the Customs Union (other than Russia, Kazakhstan and Belarus). Investors are also Information on approved ADZ projects ADZ Specialization Area, ha Planned private investments, RUB million Number of residents announced Nadezhdinskaya Light industry, food industry, transport services 807 6,733 3 Khabarovsk Industrial, transport and logistics 716 28,517 8 Komsomolsk Industry 327 15,230 5 Source: Ministry for the Development of the Russian Far East 1 http://www.kremlin.ru/news/19825 22 Russia’s industrial and innovation infrastructure. Demo version | 23 interested in state guarantees of mutual obligations and infrastructure, and they sign such agreements with the Ministry for Economic Development — in effect, with the Government of the Russian Federation. Since tax exemptions and preferences are among the key conditions that SEZs and ADZs offer to manufacturing companies, we decided, for the purposes of our study, to do a comparative analysis of the tax regimes applicable to these types of infrastructure. In order to compare the investment appeal of SEZs and ADZs, we analyzed federal laws, regulatory acts of Russian constituent entities, and local regulatory acts. For the purposes of analysis, we selected corporate profits tax, corporate assets tax, land and transport taxes, mineral extraction tax and social contributions. The table gives the ranges of tax rates for a specific period of time. A more detailed analysis of the applicable benefits is required in order to select a specific zone. SEZs and ADZs generally provide comparable tax benefits, although SEZs offer more attractive and flexible profits tax rates ranging from 0% to 15.5%. In terms of assets tax, SEZ and ADZ residents are in roughly the same position and can count on a reduced rate of 0% for a specific period, or an exemption. It should be noted that assets tax and land tax benefits for ADZs are established by government decree. ADZs have a major tax advantage over SEZs in that they offer substantial benefits applying to mineral extraction tax and social contributions. Thus, ADZ residents will be eligible for a preferential MET rate of 0% for four years and a reduced social-contribution rate of 7.6%. Tax exemptions for ADZ residents Mineral extraction tax Profits tax Assets and land tax Transport tax Social contributions 0% for 4 years, subsequently raised incrementally to 100% Possible exemption — 7.6% for 10 years No more than 5% for the first 5 years, no less than 10% for the next 5 years Tax benefits for residents by type of SEZ Type of SEZ Profits tax Corporate assets tax Transport tax Industrial zones 0% to 13.5% for 10 years Exemption/ benefit Possible exemption Technology 13.5% to 15.5% implementation zones for 10 years Exemption Exemption for 5 to 10 years Tourism and recreation zones 13.5% Reduction to 0% Possible exemption Port zones 2% to 15.5% for 10 years Reduction to 0% for 5 years Exemption for 10 years Social contributions* 14% to 28% — * In industrial zones, benefits with respect to social contributions are provided only to residents engaged in technology implementation 24 Russia’s industrial and innovation infrastructure. Demo version | 25 Regional innovation clusters Key trends and results In Russia, legislators have made active use of cluster initiatives over the past few years to make the national economy more competitive, and these efforts are still in the early stage of development. In August 2012 the Russian Government approved a list of 25 pilot regional innovation clusters. In finalizing the list of RICs, the specially formed expert group considered 94 proposals from various regions of Russia. The approved list includes clusters in the following broad areas of technology: • Nuclear and radiation technologies • Production of aircraft and spacecraft and ship building Regional clusters are a means of bringing together participants in the innovation system for the realization of joint projects. As a rule, such participants represent business, education and science. Synergy between cluster participants enhances the competitiveness of a cluster’s output as well as of individual cluster participants. Synergy is a product of the geographical proximity of cluster participants and expanded access to innovations, technologies, know-how, specialized services and highly qualified personnel. A regional innovation cluster (RIC) is a complex of enterprises and organizations (cluster participants) located in a defined territory and characterized by: • A unifying science and production chain in one or more areas (key types of economic activity) • A mechanism for coordinating operations and for cooperation between cluster participants • A synergy effect: the high degree of concentration and cooperation makes each enterprise/organization more cost-efficient and productive2. • Pharmaceuticals, biotechnologies and the medical industry • New materials • Chemical industry • Information and communication technologies and electronics Based on the proposals’ level of development and potential, 25 approved clusters were divided into two groups: • Group 1: 14 clusters with well-developed proposals and high potential • Group 2: 11 clusters with development programs that need further work The 25 selected clusters are largely located in areas with a high concentration of scientific/technical and manufacturing activity: the Central, Siberian and Volga Federal Districts. By 2016, according to the Strategy for Specialized Cluster Development, constituent entities of the Russian Federation should have some 30 centers of cluster development that have been in operation for at least two years. Projects included in development programs for the period from 2012 through 2017 are to receive a total of almost RUB 1.5 trillion in financing for the development of the network of regional innovation clusters. RUB 480 billion (33%) are to come from the federal budget and some RUB 213 billion (14%) from regional and local budgets. Off-budget sources are expected to contribute RUB 780 billion (53% of total financing). The two groups will be financed in differing degrees. The 14 clusters in the first group will get around 80% (RUB 1.2 trillion) of funds raised for further development. The remaining 20% (RUB 282 billion) will go to support the 11 clusters in the second group. In view of the high potential of clusters in the first group, the funds they get from off-budget sources and the federal budget will total 55% and 30%, respectively. The second group requires greater state involvement, and the proportion of federal investments (41%) is thus higher than for the first group. 2 http://innovation.gov.ru/taxonomy/term/545 26 Russia’s industrial and innovation infrastructure. Demo version | 27 Geographical location of regional innovation clusters in the first and second groups Legend St. Petersburg Moscow Zelenograd cluster Moscow New materials, laser and radiation technologies (Troitsk) Moscow Region Nuclear physics and nanotechnology cluster in Dubna Oil and gas refining and petrochemicals Electronics Biotechnologies Medical, pharmaceutical and radiation technology cluster Energy Radiation technologies Tomsk Region Pharmaceuticals, medical equipment and information technologies Puschino regional biotechnology innovation cluster Phystech XXI cluster (Dolgoprudny, Khimki) Laser technologies St. Petersburg, Leningrad Region Moscow Region Moscow Region Health care and pharmaceuticals Development of information technologies, radio electronics, instrumentation, communications and infotelecommunications Arkhangelsk Region Regional shipbuilding innovation cluster Aircraft and spacecraft industry Automotive industry Krasnoyarsk Territory Innovative Technologies ZATO cluster (Zheleznogorsk) Kaluga Region New materials Shipbuilding Information and communication technologies Engine building Pharmaceutical, biotechnology and biomedicine cluster Instrumentation Nizhny Novgorod Region Nuclear technologies Nizhny Novgorod industrial innovation cluster in the areas of automobile manufacturing and petrochemicals Chemical industry Moscow — first group of regional innovation clusters Nizhny Novgorod Region Sarov innovation cluster Moscow — second group of regional innovation clusters Republic of Mordovia Energy-efficient lighting technology and smart lighting control systems Ulyanovsk Region Ulyanovsk-Avia Science Education and Production Cluster consortium Ulyanovsk Region Nuclear innovation cluster (Dimitrovgrad) Samara Region Regional aerospace innovation cluster Republic of Tatarstan Kama regional production innovation cluster Sverdlovsk Region Khabarovsk Territory Titanium cluster Perm Territory Novy Zvezdny Technopolis regional rocket engine innovation cluster Republic of Bashkortostan Regional petrochemical cluster Kemerovo Region Regional aircraft-engineering and shipbuilding innovation cluster Integrated processing of coal and technogenic waste Novosibirsk Region IT and biopharmaceutical technology innovation cluster Altai Territory Altai biopharmaceutical cluster Source: Ministry of Economic Development of the Russian Federation, Russian Cluster Observatory 28 Russia’s industrial and innovation infrastructure. Demo version | 29 Participants in regional innovation clusters include such leading Russian scientific and educational institutions and enterprises as: • Institutes of the Russian Academy of Sciences and the Russian Academy of Medical Sciences, research centers and universities, federal universities and major institutions of higher education • Major companies in the Russian machine- and ship-building sectors, the fuel and energy complex and metallurgy • Major Russian companies in IT and telecommunications, as well as the biotechnology sector • Branches and subsidiaries of transnational corporations The number of a cluster’s participants generally reflects the cluster’s geography. The greatest number of participants are concentrated in the Central and Volga Federal Districts (38% and 25%, respectively). Technoparks and business incubators Number of RICs by district 7 49 92 307 161 202 Central Federal District Volga Federal District Siberian Federal District Far Eastern Federal District Northwestern Federal District Ural Federal District Source: Integrated Information Portal on State Support for Innovative Business Development (www.innovation.gov.ru), RIC sites An important role in regional innovation ecosystems can be played by technoparks and business incubators. Business incubators are designed to provide support for new business projects in their earliest stages, while technoparks focus on supporting companies that are developing and scaling up their high-tech business. It should be noted that, although technoparks and business incubators have a long history in Russia, only some of those in operation actually operate as their names would imply. The core activity of many sites designated as technoparks or business incubators remains property rental, rather than quality support for residents’ business objectives. At the same time, a survey of Russian business incubators and technoparks done by EY in cooperation with the Russian Venture Company (RVC)3 shows that some Russian innovation sites achieve results comparable to their European and American counterparts. Most regions thus face the task of bringing their business incubators and technoparks up to the level of the Russian leaders. 3 ”Challenges and Solutions: Business Incubators and Technoparks in Russia,” 2014, http://www.ey.com/Publication/vwLUAssets/ EY-business-incubators-and-technoparks-in-russia/$File/ EY-business-incubators-and-technoparks-in-russia.pdf 30 Russia’s industrial and innovation infrastructure. Demo version | 31 As a result of the survey, the following key success factors were identified for innovation sites: • Thorough screening of residents, taking into account their development potential • The experience of resident companies’ employees • An expert board with broad powers • A wide range of technological and consulting services Problems most frequently encountered by residents are: • Lack of qualified experts, especially with business experience A number of solutions suggested by survey respondents formed the basis of strategic recommendations made to RVC and the relevant state agencies on support for incubators and technoparks. Key trends and indicators As in the case of industrial parks, the distribution of Russian technoparks and business incubators is uneven, with over half concentrated in the Volga and Central federal districts. The Central Federal District leads in terms of the number of technoparks (41 sites), while the Volga Federal District has the most business incubators (75 sites). • Lack of quality business projects • Lack of seed investments and business angels • Insufficient demand for innovations Number of business incubators and technoparks in Federal Districts of the Russian Federation 2 sites 47 sites 79 sites 103 sites 24 sites 19 sites 28 sites 37 sites 11 sites Central Federal District North Caucasian Federal District Siberian Federal District Northwestern Federal District Volga Federal District Far Eastern Federal District Southern Federal District Ural Federal District Crimean Federal District 32 Technoparks Specialization of technoparks The history of Russian technoparks began in the 1990s. The first Russian technopark was the Tomsk Science and Technology Park, formed in 1990. In 2007, the state program “Formation of Russian Technoparks with a High-Tech Profile” was launched under the auspices of the Russian Ministry of Communication. As a result of this program, over RUB 12 billion in federal funds have been allocated for capital construction, and 13 technoparks with a high-tech profile, covering a combined area of over 400,000 sq.m., are being developed in 11 constituent entities of the Russian Federation. These parks have created over 18,500 jobs. According to information obtained from regional authorities for the purposes of this report, the Russian Federation currently has 117 technoparks. Most Russian technoparks specialize in high technologies, with 26% specializing in information technologies and telecommunications (including data processing, storage and analysis, computer technologies and telecommunication systems), around a quarter in electronics and instrument making, 13% in biomedicine (including genetic engineering, pharmaceuticals and microbiology) and 12% in chemistry and petrochemistry. In other cases, “Other/ various sectors” is indicated. 26% 27% 12% 23% 13% Information and communication technologies Electronics and instrument making Medicine and biotechnologies Chemistry and petrochemistry Different industries State support On 16 February 2015, the Ministry of Communication began the selection procedure to determine which Russian constituent entities would qualify for state infrastructure subsidies for technoparks with a high-tech profile. The selection rules and the list of documents provided by constituent entities were approved by Government Decree No. 1119 of 30 October 2014. According to the ministry, a new support mechanism for the formation of technoparks will become effective in 2015. Costs incurred by constituent entities setting up industrial parks and technoparks will be reimbursed out of residents’ federal taxes and customs payments. Although the state program of support for technopark construction officially ended in 2014, it is expected to be extended until 2018. Over the next four years, regions must meet a number of commitments involving the development of technopark ecosystems and improved technopark efficiency. Russia’s industrial and innovation infrastructure. Demo version | 33 Business incubators According to information obtained from regional authorities for the purposes of this report, Russia currently has 231 business incubators, although considerably fewer are actually in operation. Fiftythree incubators responded to the survey “Challenges and Solutions: Business Incubators and Technoparks in Russia,“ and most of these operate under the auspices of regional or municipal authorities. Over a quarter of our respondents operate under the auspices of institutions of higher education. The reasons for the relative scarcity of private business incubators in Russia are substantial risks, a poorly developed legal framework, business-model complexity, modest expected returns and inadequate state support for private sites. Business incubators by form of ownership 5% 28% 46% Consolidated data on investment projects in federal districts 21% Regional staff Municipal staff University staff Private individual or company Source: EY’s survey “Challenges and Solutions: Business Incubators and Technoparks in Russia“ In preparing this survey with the assistance of regional administrations, we collected data on the amounts that private companies have invested in their enterprises’ fixed assets in the last ten years. Although not all regions provided data, the overall picture of investments on a national scale is quite informative. The greatest concentration of investments is in the chemical industry. The largest projects are in various regions, which is evidence of growing regional specialization in the leading branches of modern industry. The largest investment projects by region are shown in the table on the following page. An analysis of projects by specialization shows that the industries with the greatest investment appeal in the last ten years have been: • Agriculture • Oil and gas production, mining • Timber and wood processing • Food processing • Construction materials industry • Metallurgy • Chemical industry 34 Russia’s industrial and innovation infrastructure. Demo version | 35 Largest projects, in terms of investments, realized by private companies in the last 10 years, RUB billion Company Line of business Investments, RUB billion Khanty-Mansiysk Autonomous District – Yugra Surgutneftegaz OJSC Oil and gas production Khanty-Mansiysk Autonomous District – Yugra LUKOIL OJSC Oil and gas production 721.4 Primorsky Territory National Chemical Group CJSC Construction of a mineral fertilizer plant 435.4 Khanty-Mansiysk Autonomous District – Yugra TNK-BP Holding OJSC Oil and gas production 371.3 Tyumen Region Sibur Holding JSC Chemical production: plastics and synthetic resins in primary forms 358.8 822.3 Source: Regional administrations, economic ministries, development corporations The largest number of projects are in oil and gas production and mining, with agriculture coming in second. These areas are being developed in virtually every federal district. Murmansk Region and Kamchatka Territory specialize in fishing, and the Kursk, Voronezh and Belgorod Regions in animal husbandry. The Central Federal District specializes largely in food production: the largest projects are in the Tula, Orlov and Vladimir Regions. Since Russia is a world leader in oil, gas and mineral production, regions with the chief deposits — the Ural, Siberian and Far Eastern Federal Districts — have received greater investments in this sector than other federal districts. The largest investment projects are being realized by Surgutneftegaz and LUKOIL in the KhantyMansiysk Autonomous District–Yugra and by Irkutsk Oil Company in Irkutsk Region. 36 number in the Central and Ural Federal Districts. The largest capital investments in the last ten years have been made in the Republic of Mordovia and Rostov Region. The chemical industry has attracted major investments in the last ten years. The industry is developing thanks to growing state support and substantial investments by private companies. The main investment targets are: • Production of plastic and rubber goods Total investments made by private companies in the last 10 years by main branches of production in Russian federal districts, RUB billion 50 15 • Wood pulp and paper production The main investments in enterprises producing paper pulp, paper and paper goods are concentrated in the Central and Northwestern Federal Districts. The largest projects under way are in the Moscow and Tula Regions. The wood-processing and woodworking industry has investment appeal in the Republic of Khakassia, Tomsk Region and Krasnodar Territory. Construction materials tend to be manufactured in proximity to the sources of required natural materials. Investment projects in this area are under way in many regions of the country, with the greatest The following map indicates Russian federal districts that have seen the largest investment projects in the last ten years. • Fertilizer production The timber and wood-processing industry has two segments: • Wood processing and woodwork The chemical industry is well developed in the Volga, Far Eastern and Ural Federal Districts. Major projects have been realized in Tyumen Region as well as Primorsky Territory. 103 10.5 25.9 24.9 6.2 3.3 435.4 358.5 117.4 23.1 10 7.2 822.3 25.2 9.8 154 305.5 70 34.8 Agriculture Food processing Central Federal District Oil and gas production, mining Northwestern Federal District Chemical industry Timber and wood processing Southern Federal District North Caucasian Federal District Volga Federal District Construction material industry Ural Federal District Metallurgy Siberian Federal District Far Eastern Federal District Crimean Federal District Sources: Regional administrations, economic ministries, development corporations Russia’s industrial and innovation infrastructure. Demo version | 37 Regional profiles by federal district Survey excerpt 38 Volga Federal District ARKHANGELSK REGION VOLOGDA REGION IVANOVO REGION KOSTROMA REGION VLADIMIR REGION RYAZAN REGION V17 V12 V13 V6 V16 V5 V7 V10 CL01 V18 Consumer market (2014) Indicator Population Economically active population Monthly average income per capita Retail turnover Volga Federal District 29.7m people VORONEZH REGION V31-32 V60-61 District median V27 V44 V28-29 PENZA V59 V67 V46 1,759,300 people 928,100 people RUB24,000 RUB21,000 V101 V105 V41 V49 CHUVASH REPUBLIC CL05 V106 V55-56 V36 V63 V35 V43 V45 V53 V62 ULYANOVSK REGION V153 П152 CL08 ULYANOVSK VOLGOGRAD REGION V145 V146 RUB233b Foreign direct investment, 2013 V68 V81 V84 V142 V86 V92 V85 Volga Federal District ORENBURG REGION District median RUB2,356b RUB111.3b US$2,307.9m US$74.2m V88 V83 V87 KAZAKHSTAN V93 REPUBLIC OF BASHKORTOSTAN ORENBURG V20 V21 V24 V23 V80 Total Volga Federal District District median 27 / 14,000 people Number of R&D organizations / employees, 2013 633 / 114,000 people 29.5 / 5,300 people 40 V91 CL04 463 / 257,800 people Sources: Rosstat, EY estimates. V82 V89 UFA V90 Education and science Universities (including branches) / graduates in the 2013–14 academic year V76 V123 V141 Completed In progress Planned 64 V2 V1 V69 4 V120 V121 V121 28 V8 75 V10 9 CL01 Industrial parks Technoparks V14 V25 SEZ Business incubators Regional innovation clusters Sources: Regional administrations, economic ministries, development corporations, the Ministry for Economic Development of the Russian Federation, Special Economic Zones OJSC. V22 V74 V77 V78 V71 V113 V129 Sources: Rosstat, EY estimates. Indicator V72 CL03 V73 PERM Investment Equity investment, 2014 V150 V115 V120 V79 Indicator V69 SAMARA CL07 V134 SARATOV REGION Sources: Rosstat, EY estimates. IZHEVSK REPUBLIC CL06 OF TATARSTAN V132 SAMARA REGION V137 V143 V140 PERM TERRITORY V149 V118 V114 V131 V135 V147 V1 V133 V112 V139 V148 V126 V127 V116 V119 V111 V107 V151 CL09 V138 V136 UDMURT REPUBLIC V117 V108 V122 V124 V125 П130 V155 V144 SARATOV V75 V110 V109 V128 V121 KAZAN V157 V70 MARI EL REPUBLIC V158 V156 V154 V100 YOSHKAR-OLA V164 V167,171 V38,57,66 V26 KIROV REGION V96 V99 V159 CHEBOKSARY V39-40 V50-51 V47 V48 15.4m people RUB4,843b V42 V65 V94 V160-163 V166 V165 V103 V102 V104 V54 V95 NIZHNY NOVGOROD V97 REGION V168-170 SARANSK V58 V30 V33 KIROV V2 V98 REPUBLIC OF MORDOVIA PENZA REGION V14 V4 V15 CL02 V37 V34,64 V52 V3 V11 V9 TAMBOV REGION KOMI REPUBLIC V19 NIZHNY NOVGOROD V8 CHELYABINSK REGION SVERDLOVSK REGION Kirov Region Message from the regional authorities to potential investors “Kirov Region has strong industrial, scientific and human potential. We support projects to develop mineral and forest resources as well as create resourcesaving high technologies and scientific and production systems guaranteeing product competitiveness and environmental safety. We have all the conditions that are needed for successful business and investments.” Consumer market (2014) Population of the region / capital city (Kirov) 1.3m people / 487,000 people Economically active population 680,000 people Monthly average income per capita RUB20,400 Retail turnover RUB166.1b KOSTROMA REGION Equity investment, 2014 RUB56.3b Foreign direct investment, 2013 US$11.8m www.razvitie43.ru NIZHNY NOVGOROD REGION V3 24 / 9,600 people Number of R&D organizations / employees, 2013 23 / 1,600 people Industrial / innovation infrastructure Industrial parks KIROV REGION MARI EL REPUBLIC REPUBLIC OF TATARSTAN Potentially attractive industries for investment KIROV V2 Universities (including branches) / graduates in the 2013–14 academic year Current industrial specialization of the region KOMI REPUBLIC Education and science Type of infrastructure ARKHANGELSK REGION VOLOGDA REGION Investment PERM TERRITORY UDMURT REPUBLIC V1 Completed In progress Completed Planned and in progress Total 1 2 3 Electricity balance (regional generation as a share of regional consumption) Investment web portal: Kirov Region on the map of the Russian Federation V2 Selected major investors 55% Sources of information on the Kirov Region: Rosstat, Corporation for Development of the Kirov Region. V1 Industrial parks Industry Equity investment within the past 10 years KES-Holding RUB7b–15b IKEA Trading und Design RUB3b–7b Pirelli RUB3b–7b Tele2 RUB1b–3b Candy Group RUB1b–3b Regional tax incentives Population data on the regional center is for the beginning of 2014, while population data on the region is for the end of 2014. Russia’s industrial and innovation infrastructure. Demo version | 43 Nizhny Novgorod Region Message from the regional authorities to potential investors “In Nizhny Novgorod Region, investors and the authorities are on the same wavelength. We guarantee transparency and short approval periods, tax benefits and personneltraining support. In 2014, 1,403 projects worth RUB138b were approved, and 1,042 of these have already been launched.” Consumer market (2014) Population of the region / capital city (Nizhny Novgorod) 3.3m people / 1.3m people Economically active population 1.8m people Monthly average income per capita RUB27,900 Retail turnover RUB623.1b Investment Equity investment, 2014 RUB286.6b Foreign direct investment, 2013 US$514.8m Education and science 55 / 31,400 people Number of R&D organizations / employees, 2013 96 / 41,500 people 44 VLADIMIR REGION RYAZAN REGION V13 V6 V16 V5 V7 V10 V17 V12 NIZHNY NOVGOROD V8 CL01 V18 V15 CL02 NIZHNY NOVGOROD REGION Specialization of regional innovation clusters Planned Industrial parks Potentially attractive industries for investment Technoparks V8 CL01 MARI EL REPUBLIC KIROV REGION CHUVASH REPUBLIC V4 V10 V19 V14 V4 V11 V9 Completed Current industrial specialization of the region KOSTROMA REGION V14 Business incubators Regional innovation clusters Industrial / innovation infrastructure Completed Planned and in progress Total Industrial parks 4 — 4 Technoparks 2 — 2 Business incubators 8 2 10 Electricity balance (regional generation as a share of regional consumption) www.mininvest.ru IVANOVO REGION REPUBLIC OF MORDOVIA Universities (including branches) / graduates in the 2013–14 academic year Type of infrastructure Investment web portal: Nizhny Novgorod Region on the map of the Russian Federation Selected major investors 37% Sources of information on the Nizhny Novgorod Region: Rosstat, Ministry of Investment Affairs of the Nizhny Novgorod Region . Industry Equity investment within the past 10 years LUKOIL-Nizhegorodnefteorgsintez LLC RUB100b–300b United Metallurgical Company (Viksunsky Metallurgy Company OJSC and OMK-Steel) RUB50b–100b RusVinyl LLC RUB50b–100b GAZ Automobile Plant LLC RUB15b–50b Regional tax incentives Population data on the regional center is for the beginning of 2014, while population data on the region is for the end of 2014. Russia’s industrial and innovation infrastructure. Demo version | 45 The full version of the report is distributed on a commercial basis and includes profiles for all 85 regions of the Russian Federation. For reference Private investor companies For the purposes of our study, a private company is a legal entity whose share capital is no more than 50% owned by the state as ultimate beneficiary. Data from regional administrations, economic ministries, development corporations and the SPARK system were used in selecting investor companies. Russian infrastructure sites by federal district Survey excerpt Volga Federal District Industrial / innovation infrastructure No. Type Name Area Specialization Number of residents The full version of the report includes descriptions of approximately 800 infrastructure facilities located in the Russian Federation. Kirov Region V1 IP Vyatskie Polyany V2 IP Igrograd V3 IP Slobodino Metalworking, construction materials 8 Children's goods 7 Metalworking, construction materials, instrumentation 7 277 ha Various industries 2 24 11 60 ha 2 ha 16 ha Nizhny Novgorod Region V4 Abbreviations IP — industrial parks (including manufacturing and industrial zones, production development zones, industrial manufacturing parks, manufacturing parks, production and warehouse technoparks, industrial and logistics zones and agroparks) SEZ — special economic zones, managed by Special Economic Zones OJSC RSEZ — regional special economic zones, managed by regional authorities IP Bor-Tsentralny V5 IP DzerzhinskVostochny 680 ha Automotive industry, motor vehicle parts V6 IP No data (based on facilities of OJSC Zavolzhsky Motor Plant 120 ha Motor vehicle parts Chemical industry, metalworking, motor vehicle parts 21 Information and communication technology 24 ADZ — advanced development zones TP — technoparks (including technology implementation parks, science and technology parks, IT parks, innovation and technology centers and science parks) BI — business incubators (including centers for first-time entrepreneurs and young entrepreneurs) ICT — information and communication technologies IT — information technologies V7 IP Oka-Polymer 300 ha V8 TP Ankudinovka 5,401 sq.m. V9 TP Sarov Various industries 57 V10 BI CLEVER 23,000 sq.m. 3,688 sq.m. High technology 29 V11 BI Borsky 1,368 sq.m. TBD 12 V12 BI Vyksa 2,988 sq.m. TBD 4 V13 BI Dzerzhinsk 799 sq.m. TBD 19 V14 BI Krasnie Baky No data TBD No data V15 BI Lyskovo No data Various industries No data V16 BI Zavolzhsky 1,099 sq.m. TBD 12 V17 BI Pavlovsky 1,141 sq.m. TBD 20 V18 BI Sarov 8,525 sq.m. Information and communication technology, new materials 22 V19 BI Tonshaevsky 1,859 sq.m. Industrial production C1 Completed C6 In progress Membership in specialized associations M ember of the International Association of Science Parks (IASP). The IASP’s mission is to make international science parks and other innovation infrastructure sites as well as related national associations more effective by linking them in a single network. In early 2015 the IASP had 398 members, representing 72 countries. C ertified by the Association of Industrial Parks. The association is a nonprofit organization uniting the majority of Russian industrial parks and service providers involved in industrial construction to promote their common interests. Over 90 legal entities are members of the association, representing 65 industrial parks in 43 constituent entities of the Russian Federation. 8 C10 Planned Member of the International Association of Science Parks (IASP). Certified by the Association of Industrial Parks. Sources: regional administrations, economic ministries, development corporations, Association of Industrial Parks, International Association of Science Parks (IASP) 48 Russia’s industrial and innovation infrastructure. Demo version | 49 Legend Industries Agriculture Livestock Crops Fishing industry Agroindustry Biotechnologies Construction Education Exploration for underground resources Extractive industries Extraction of fuel and energy resources Mining (excluding fuel and energy resources) Types of business and industry specializations Transport and telecommunications Various services Wholesale and retail trade Processing industries, including: Building materials and other non-metal mineral products Chemical industry Electronic and optical equipment Food processing, including beverages and tobacco Chemical industry New materials Light industry Machines and equipment Energy Oil and gas processing and the petrochemical industry Manufacturing of vehicles and equipment Engine building Radiation technologies Aircraft and aerospace industry Electronics Health care and pharmaceuticals Nuclear technologies Shipbuilding Rolling stock Manufacturing of autos and other vehicles, production of automotive components Laser technologies Tourism ICT Forestry and woodworking, pulp and paper IT Robotic engineering Laser technologies Shipbuilding Aircraft and spacecraft construction Biotechnologies Health care and social services Real estate, rent and services Instrumentation Generation and distribution of power, gas and water ublic administration and military security; P mandatory social security Regional innovation clusters Automotive industry Finance Nuclear industry As far as possible, types of business and industry specializations are aligned with the Russian Classifier of Types of Economic Activity ОК 029-2001 (OKVED). In some cases, industry specializations/ types of business and the corresponding icons are of a general nature, reflecting the essence of business activity without matching any specific OKVED code. This is because many regions provided information in a format that didn’t make use of codes. Regional tax incentives High rating in terms of regional tax benefits Medical equipment Metallurgy and production of finished metal goods Pharmaceuticals Production and refining of oil products Production and repair of household appliances Rubber goods Medium rating in terms of regional tax benefits Low rating in terms of regional tax benefits The rating is based on EY experts’ analysis of regional tax benefits. For purposes of analysis, we considered corporate profits tax, assets tax, transport tax and land tax. Our analysis takes into account benefits provided under regional law in the form of a reduced tax rate and/or tax exemption. 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