04 May 2016

    Russian President Vladimir Putin met Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev and Minister for the Development of the Russian Far East Alexander Galushka to discuss the region’s development.

    The discussion centred around elevating the socioeconomic status of the Far Eastern macroregion. They talked specifically about the role of advanced special economic zones, international investment cooperation, expanding the Free Port of Vladivostok model to cover other key ports in the Russian Far East, measures aimed at reducing energy tariffs to match the national average, as well as the allocation of land plots in the Far East Federal District to Russian citizens.

    The Minister for Development of the Russian Far East Alexander Galushka outlined the current volume of investment: “New development mechanisms in the Russian Far East have to date enabled us to raise RUB 1.03 trillion, including RUB 950 billion in private investment and RUB 80 billion in public investment. That gives us a public investment multiplier of one to 12: for every rouble of state funding we receive, we raise 12 roubles in private investment. These investment projects will create 55,000 new jobs. It is reasonable to expect that we will attract more than RUB 2 trillion by the end of the year.”

    The Minister also announced plans to enhance the production capacity of the Russian Far East, noting that by the end of the year, there were “plans to open up 16 new facilities. We already have 41 new projects due to launch next year, 70 in 2018, and 200 new production facilities are set to open in the Russian Far East between 2021 and 2023.” Galushka went on to stress that “this is not the upper limit; we are now working to promote all of these mechanisms on both Russian and foreign investment markets.” Among the new tools available is the specially created Agency for Investment and Export Promotion in the Russian Far East.

    The results of the new economic policy in the region are expected to be showcased at the Eastern Economic Forum, which will take place in early September in Vladivostok. “Rather than explaining what we have achieved ourselves, we would prefer for the actual investors to talk about their experiences of working in advanced special economic zones, and the speed at which they were connected to the electricity grid, granted a building permit, able to build their factories and successfully invest in the Russian Far East. We’d really like to make this the primary focus”, the Minister said.

    Another topic for discussion was international cooperation in the Russian Far East. Galushka underlined that expanding cooperation with foreign investors is a priority area. “For us, the quality of investment is important, so that we can guarantee the creation of jobs for our residents and economic growth.” To support this, he cited the example of the Russia–China Agricultural Investment Fund, which will invest up to RUB 650 billion. In accordance with the agreements reached, Chinese investors will contribute 90% of the fund’s capital, and Russian investors the other 10%. The Far East Development Fund will receive a 51% stake in the management company, and the CEO and Chairman of the Board will be appointed on the basis of a Russian proposal.

    Social issues were also a priority on the agenda. As the Minister noted, “jobs and the economy are not the only important things; we must also focus on tightening up the social sector and developing our transport infrastructure.”

    The Russian government currently has 27 state programmes in the pipeline with sub-programmes specifically focusing on the Russian Far East. Sub-programmes have already been drawn up for the first five of these projects, in transport, culture, health, shipbuilding, and aircraft construction. According to Alexander Galushka, “a total of RUB 700 billion in public investment have been set aside for these five sub-programmes in the region over the next 10 years.”

    He also recalled the new 2016–2025 federal target programme for the development of the Kuril Islands. This project launches this year, with total funding amounting to RUB 68.9 billion.

    A similar plan has been developed for Komsomolsk-on-Amur, which is set to become a dynamic centre of development in the Russian Far East. The Minister announced that a comprehensive plan for 2016–2025, comprising 60 measures, had been developed and approved. The measures include 33 organizational tasks and 27 infrastructure projects. The first three measures are set to be implemented this year: the restoration of a theatre, the construction of an iron and manganese removal facility, and the establishment of a professional skills training centre.