RUSSIA AND CHINA SIGN A SHAREHOLDERS’ AGREEMENT ON ESTABLISHING AN AGRO-INDUSTRIAL DEVELOPMENT FUND IN THE FAR EAST
26 April 2016
According to a press release for the Ministry for the Development of the Russian Far East, the document was signed by CEO AO Far East and Baikal Region Development Fund Alexei Chekunkov and President of Management Company for the Asia-Pacific Food Foundation of China Lu Huang Ling.
Minister for the Development of the Russian Far East Alexander Galushka commented that the agreement was “a key step in launching the agro fund’s practical operations. This document gives us justified hope that, already in May, all incorporation procedures will be completed and, from June, the Fund will start working.” He also expressed hope that the Fund would be able to present its first projects by the second Eastern Economic Forum this September in Vladivostok.
It follows from the signed document that China will provide 90% of the capital for the Fund and Russia – 10%. As regards the management company, the Managing Director and Board Chairman of the Russian-Chinese Far East Agro-Industrial Development Fund (RCFAD) will be appointed by recommendation of the Russian side.
Only Russian companies will be allocated land for farming purposes in the Far East and the share of Russian citizens employed at the new facilities should be at least 80%.
Russian operators of effective agricultural projects in the Far East engaged in crop production, processing and sale (including horticulture, animal husbandry, aqua culture), as well as in development of agro-industrial infrastructure, may claim RCFAD financing.
As stated by Alexander Galushka, the new agro fund reconciles the interests of Russia and China: “The Chinese side provides the market and financing. Russian companies work on the lands of the Far East, employing Russian workers and contracting Russian suppliers. We expect this will be a good precedent for developing mutually beneficial relations with Chinese investment institutes.”