JOURNALISTS ASSESS THE RESULTS OF IMPLEMENTING NEW INSTRUMENTS FOR DEVELOPMENT OF RUSSIAN FAR EAST AT A MEDIA BRIEFING BY THE MINISTRY FOR THE DEVELOPMENT OF THE RUSSIAN FAR EAST
15 July 2016
A briefing of representatives of the Ministry for the Development of the Russian Far East on the subject ‘New Instruments for Russia’s Far East Development’ was held on 14 July 2016 in Moscow, as part of preparations for the Eastern Economic Forum (EEF).
The briefing participants summarized the functioning of new mechanisms for developing Russia’s Far East, such as Advanced Special Economic Zones (ASEZ), Free Port of Vladivostok (FPV), tax breaks and infrastructural support for investment projects by the government. The Ministry’s representatives designated ways for further development of these mechanisms and presented successful experience in delivery of investment projects.
Alexander Osipov reminded those present that, during the first year, 12 advanced special economic zones had been created, establishment of the 13th, in the Jewish Autonomous Region, had been approved, the regime of Free Port of Vladivostok had been formed, and five other key havens of the region had been awarded porto Franco status, thanks to enactment of a new law last week.
“Investments raised for all types and measures of support exceed RUB 1 trillion. Also under development are human capital development mechanisms in Russia’s Far East. Delivery of new investment projects will help create 50,000 jobs in 25 industries. These and many other measures are called on to accelerate the socioeconomic development of Russia’s Far East,” the First Deputy Minister stated.
The Far East Development Corporation, which is the structure established for receiving requests from potential investors in projects and assisting the residents in their operations, is in charge of collaboration with the residents.
For five years, ASEZ residents are exempted from profit, land and property taxes. These support measures shorten the project delivery time and payback period. What is more, investors are offered simplified procedures for land allocation and connection to the infrastructure. Each ASEZ has a free customs area, so investors do not have to pay import customs duties.
“Residents working in ASEZ represent different industries. We take an individual approach to each project. Every day, we get feedback and elaborate upon all the problems faced by the investor via a special ‘hot line’, which is actually 24/7, since our staff are located in Moscow, Khabarovsk and Vladivostok,” noted Provisional Director of the Department for Advanced Special Economic Zones and Infrastructure Andrei Fedotovsky.
One of the key instruments is the subsidy provided to investors for creating the transport, energy and other infrastructure needed for their projects. Already 13 investors have received this subsidy, as robust construction of infrastructure within five projects is under way.
A legislative decision has been made about new tax breaks for investors in Russia’s Far East. Anyone investing RUB 50 million or more is entitled to profit and mineral extraction tax breaks.
The current list of investor support measures keeps expanding. Already now investors may get financing for their projects from the Far East Development Fund at an interest rate of 5%.
The plan calls for implementing one more instrument by the end of the year: tax breaks in the amount of investments in new infrastructure creation. Work is going on now on the draft bill. We anticipate that the new law will be passed and come into effect already this year, Director of the Department for the Delivery of Investment Projects Alexander Krutikov emphasized.
Presented at the briefing were investment projects that are being successfully implemented in Russia’s Far East. One of them is being realized by ASEZ Khabarovsk resident JGC Evergreen, with 3,000 tonnes of tomatoes and cucumbers harvested in the greenhouse complex per season. “At present, the demand for our crops exceeds our capabilities, so we plan a fourfold expansion of our complex. Quite important for us as an SEZ resident is not only creation of infrastructure and tax breaks, but also the timely administrative support,” said CEO of JGC Evergreen Tomoyuki Igarashi.
The practical results of using the new mechanisms for Russia’s Far East development, as well as further projects, will be discussed during the Second Eastern Economic Forum, to be held in Vladivostok on 2–3 September 2016.