A YEAR PASSES SINCE ENTERING INTO FORCE OF FEDERAL LAW ON PRIORITY SOCIOECONOMIC DEVELOPMENT AREAS
30 March 2016
On March 30, 2015, a year ago today, Federal Law No. 473-FZ on Priority Socioeconomic Development Areas in the Russian Federation, dated December 29, 2014, entered into force, establishing a crucial new instrument in the development of Russia’s Far East.
Twelve priority development areas (PDAs) have been created since the law came into force. The PDA management company has received 110 formal applications from investors for the implementation of investment projects, with a combined value of RUB 442.3 billion. The aggregate tax contributions collected by state budgets at all levels during the implementation of these projects is expected to reach RUB 242.4 billion over the next ten years (2016–2025). It is expected that 26,700 new jobs will be created.
The necessary budgetary spending on PDA infrastructure has been calculated at RUB 35.4 billion. Thus, the ratio of private to budgetary presently stands at RUB 12.8 in private investments per RUB 1 of budget expenditure. The occupation rate of the PDAs stands at around 70% today, with the arrival of new investors projected to have an accelerative effect.
Alexander Galushka, Minister for the Development of the Russian Far East, is quoted as saying “Investors’ applications mean new businesses and new jobs created in Russia’s Far East. Among these businesses are a high-tech factory manufacturing aircraft components in the Khabarovsk Territory, an oil refinery in the Amur Region, construction material producing factories in the Amur Region and Yakutia, an added-value wood processing factory in Khabarovsk Territory, modern agro-industrial complexes in the Primorsky Territory and Sakhalin Region, and transport and logistics complexes in Primorsky and Khabarovsk territories. As part of the PDA programme, the large-scale Bering coal basin is being put into production in Chukotka Autonomous District, tourist clusters are under development in Sakhalin Region and Kamchatka Territory, and dozens of other new businesses are being launched elsewhere.”
According to Alexander Galushka, the first companies have already started operations: “In the Khabarovsk PDA, JGC, a company from Japan, has built a greenhouse complex for year-round vegetable production. The vegetables are already on sale in Khabarovsk shops. A plastic packaging factory has been commissioned in the Nadezhdinskaya PDA, located in the Primorsky Territory, a cement clinker production facility has been built in the Priamurskaya PDA, and a fish processing line is already operational in the Komsomolsk PDA. The plans include launching nearly two dozen companies in priority development areas located in Russia’s Far East by the end of the year.
The law gives PDA resident companies substantial tax concessions and preferential administrative treatment. In particular, preferential income, land and property tax rates are available in PDAs for a period of ten years, and insurance premiums on wages are collected at the reduced amount of 7.6%, instead of 30%, for the same period. A free customs zone has been established in the interests of PDA resident companies, with exemptions from import duties and advantageous customs duties. The PDA management company acts as a ‘single window’ authority for investors, providing swift processing of all administrative procedures, including granting of permits. All business inspections must be approved by the Ministry for the Development of the Russian Far East.
First businesses in priority development areas:
Investor: JGC Evergreen (Japan)
Investment project: greenhouse complex for year-round vegetable production (Khabarovsk PDA, Khabarovsk Territory)
Investor: C Technology
Investment project: cement production
(Priamurskaya PDA, Amur Region)
Investor: Primorsky EUROPLAST plant
Investment project: plastic packaging factory
(Nadezhdinskaya PDA, Primorsky Territory)
Source: http://minvostokrazvitia.ru/ (Russian)