barometer of business russia industry index. investment projects. support measures anastasia...

BAROMETER OF BUSINESS RUSSIA

Industry index. Investment projects. Support measures

Anastasia [email protected], +7-916-572-08-53

Maria [email protected], +7-909-151-45-85

PARTLY CLOUDY

1.0

DECEMBER

2011

Web: deloros.ru

BAROMETER OF “BUSINESS RUSSIA”

Monthly monitoring of tone and expectations of entrepreneurs in the production sector as an indicator of condition of the Russian economy, alternative and unbiased criteria of assessment of economic situation in Russia;

Survey includes 4500 CEOs of companies, out of which 3 800 belong to the processing industry;

Monthly issue of Barometer includes the following parts:

Analytical part

Developed by National Public Organization “Business Russia” and Centre of Market Research of the Institute of Statistic Research and Science Economy of the National Research Institute Higher School of Economics;

Analyzes business climate in industry and expectation of entrepreneurs for the next 3-4 months;

The analytical part of Barometer is based on such international indexes as ISM in USA, Tankan in Japan, or IFO and ZEW in Germany;

Invest Review

Is developed on the basis of data from regional Corporations and Development Agencies, representatives of authorities and business;

Gives information about key components of investment climate of regions of the Russian Federation;

Quick survey of investment climate in the Region of the month (in December – Chelyabinsk Region):

Reflects the viewpoint of the governor of the Region, Administration of development of the Region, representative of regional business, and representative of foreign investor working in the Region, on key issues of investment climate.

Декабрь 2011

Барометр «Деловой России»

BASIC RESULTS, DECEMBER 2011 December shows slight improvement: after six months of stagnation the Index of entrepreneur

confidence* is up by 1 point to make +1%;

Main drivers of the workload for the assets and increase of demand are enterprises of processing industries, especially those focused on final consumption;

Including the data for December, it can be supposed that the industry will end its annual “drift” in the area of 5% growth.

Декабрь 2011


ANALYTICAL PART

1. Main factors contributing to the Index of entrepreneur confidence

1.1. Production activity

1.2. Price dynamics

1.3. Financial and economic condition

2. Additional factors limiting the growth of production in the industrial organizations

INVEST REVIEW: Vladimir Region;

Voronezh Region;

Kurgan Region;

Stavropol Region;

Khanty-Mansi Autonomous Area - Yugra.

QUICK SURVEY: CHELYABINSK REGION Mr. Mikhail Valeryevich Yurevich, Governor of Chelyabinsk Region;

Ms. Elena Vladimirovna Murzina, Minister of Economic Development of Chelyabinsk Region;

Mr. Mikhail Pavlovich Plekhanov, Chief Executive Officer of the Management Company of the Holding Company «Ural Agrarian Group»;

Mr. Marat Mindigayanovich Zaripov, Chief Executive Officer of LLC «Heraeus Electro-Nite Chelyabinsk».


Декабрь 2011

ANALYTICAL PART1. Main factors contributing to the Index of entrepreneur confidence


1.2. Price dynamics


In December, production activity in industrial organizations, in accordance with the assessment of their CEOs, was characterized by slight increase of domestic demand for industrial products, Thus, the balance of assessment of change of the index for the month is up by 1 point making +4%.

The key driver of increase of the production efficiency in December was the processing sector: companies producing textile and clothing, rubber and plastic goods, electric appliances, electronic and optic devices. Drastically low demand influences the companies carrying out paper manufacturing, editorial and printing activity (56%), producing transport vehicles and equipment (53%).

Picture 2. Dynamics of assessment of change of demand for products of industrial organizations


Декабрь 2011

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Декабрь 2011



1.2. Price dynamics


The leader of production intensity improvement in December was the processing sector, namely the companies producing rubber and plastic goods, electric appliances. Among mining industries the best situation in production was seen in the companies mining fossil fuel and mineral resources.The workload for the assets remained at the level of November (63%), and in opinion of over 80% of respondents, in the near future the assets remain sufficient to meet the demand.

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INDUSTRY, totalOther non-metal mineral products

Pulp-and-paper

Transport vehicles and equipment

Machinery and equipment

Food manufacturing

Processing industries

Rubber and plastic goods

Textile and clothing

ChemicalsElectric equipment

Metallurgy industry

Wood processing

Leather, footwear and leather goods

Mining exclusive of fossil fuel

Mining exclusive

Production and distribution of power, gas and water

Extraction of fossil fuel

Coke and petroleum products

December 2011

Picture 3. Assessment of limiting factor “insufficient demand for products of the company in the country” by

types of activityShare of companies to their total number, %



1.2. Price dynamics


Positive trends in the analyzed period include improvement of situation in the labour market, however, part of industrial enterprises continued to suffer from lack of qualified human resources: in December 2011 it was reported by 26% of CEOs, while in December 2010 their number dropped to 23%. Lack of qualified human resources was seen at the enterprises of almost all industries.


Декабрь 2011

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INDUSTRY, total


Metallurgy




Electric equipment

Wood processing

Other non-metal mineral products

ProcessingMining exclusive of fossil fuel

Mining exclusive

Pulp-and-paper



Food


Chemicals


December 2011

Picture 4. Assessment of the limiting factor “lack of qualified workforce” by

types of activityShare of companies to their total number, %



1.2. Price dynamics


In December, the situation with prices for sold goods remained stable. The balance of assessment of change of the index stayed at the level of October-November, i.e. +11%.

The most prominent growth for dispatched goods was seen in mining exclusive of fossil fuel, production of rubber and plastic goods, electric appliances, electronic and optical devices.

There was a trend towards slowdown of growth of prices for raw materials: the balance of assessment of change of the index made +29%, which is up by 1 point as compared to the previous month.

Picture 5. Dynamics of assessment of change of prices for sold products, raw materials of industrial enterprises


Декабрь 2011

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2007 2008 2009 2010 2011

Price of sold products

Price of raw materials

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1.2. Price dynamics


Such indicators as availability of own financial resources and profit continued to decrease although slower.

Some positive trends in the industry during the period in review determined a decrease of reduction rate of availability of own financial resources of companies. As a result for industrial companies in December, the balance of assessment of change of the index made –2% (–4% in the previous month).

CEOs of companies producing rubber and plastic goods, electric appliances, electronic and optical devices evaluated financial condition of their companies more optimistically.

Picture 6. Dynamics of assessment of change of availability of own financial resources of industrial companies


Декабрь 2011

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2007 2008 2009 2010 2011

Balance %

Picture 7. Dynamics of assessment of economic condition of industrial companiesShare of companies to their total number, %


Декабрь 2011



1.2. Price dynamics


Availability of own financial resources of industrial companies determined the profit change pattern. As a result, the balance of assessment of change of the index slowed down its decrease in comparison with the previous month and made –1%.

The economic condition of industrial companies remained almost unchanged: the majority of CEOs (79%) assessed this indicator as satisfactory, 14% named it unsatisfactory, and 7% of businessmen considered it to be good.

Assessing prospects of development of industrial companies in the upcoming 3-4 months, 64% of entrepreneurs expressed the opinion that the economic situation will stay the same, and nearly 30% foresaw its improvement.

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Good Satisfactory Unsatisfactory

Picture 8. Assessment of factors limiting the growth of production of industrial companies

Share of companies to their total number, %


Декабрь 2011


2. Additional factors limiting the growth of production of industrial companies

The following limiting factors have the largest negative influence on financial and economic activity:


High level of taxation;

Insufficient domestic demand for products of the company;

Shortage of financial resources;

Economic uncertainty.

Picture 9. Dynamics of assessment of the most prominent factors limiting the growth of production of industrial companies

Share of companies to their total number, %


Декабрь 2011

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Insufficient demand for products in the domestic market Economic uncertainty

Shortage of financial resources Lack of skilled workforce

High level of taxation

%



Throughout the year the following growth rate of negative impact of five factors was seen: high level of taxation (from 40 in December 2010 to 47% in December 2011), wear and absence of proper equipment (from 27 to 28%), lack of skilled workforce (from 23 to 26%), competing import (from 20 to 22%), insufficient demand for products of the company abroad (from 17 to 18%).


Декабрь 2011

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INDUSTRY, total





Wood processing

Pulp-and-paper

Processing

Food

Electric equipmentOther non-metal mineral products

Metallurgy


Mining exclusive

Mining exclusive of fossil fuel

Chemicals




December 2011

Picture 10. Assessment of the limiting factor “high level of taxation” by types of

activityShare of companies to their total number, %



High level of taxation was most frequently mentioned by CEOs of industrial companies producing leather, footwear and leather goods (66%), rubber and plastic goods, textile and clothing (56%).

ANALYTICAL PART

1. Main factors contributing to the Index of entrepreneur confidence


1.2. Price dynamics



INVEST REVIEW: Vladimir Region;

Voronezh Region;

Kurgan Region;

Stavropol Region;

Khanty-Mansi Autonomous Area - Yugra.

QUICK SURVEY: CHELYABINSK REGION Mr. Mikhail Valeryevich Yurevich, Governor of Chelyabinsk Region;


Mr. Mikhail Pavlovich Plekhanov, Chief Executive Officer of the Management Company of the Holding Company «Ural Agrarian Group»;



Декабрь 2011

Section Information

RegionContacts

Vladimir RegionHead: Vitaliy B. Lonskiy, Chairman of the Committee for Industrial Policy and Science of the Administration of Vladimir RegionContact person: N.Y. Kokshaeva, Phone: (4922)33-19-68, E-mail: [email protected]

Priority branches of processing industry in the framework of regional industrial policy

Food, pharmaceutical, chemical industries, high-precision machinery construction, including that for defense purposes, electronic and electric equipment, construction materials, wood processing.

Largest projects of construction of new manufactures and reconstruction of existing ones (at the stage of design and construction)

Construction of Kovrov steel rolling plant PLC, Vladimir Region, Kovrov Region, Maksi-Invest PLC, production of rolling and assorted steel, 1.15 mln tons per year, 2000 jobs, 2013-2014.

Construction of the plant for production of nanostructure membranes RM Nanotech PM, Vladimir, NTC “Vladimir” PLC, Rosnanotech JSC, 170 jobs, 2012-2013.

Construction of the plant for production of food articles under “Maggi” brand, Vyazniki Region, Nestle, 30 thousand tons of food products per year, 500 jobs, 2012-2013.

Construction of the plant for cement production, Gus-Khrustalniy Region, Karbonat LTD, 2 mln tons of cement, 400 jobs, 2013-2014.

Adopted regional legislative documents and programs contributing to attraction of investments into the Region

Law of Vladimir Region dated 02.09.2002 No. 90-ОЗ “On governmental support of investment activity in the form of capital investment in the territory of Vladimir Region”;

Law of Vladimir Region dated 07.10.2010 No. 90-ОЗ “On development of small and medium business in Vladimir Region”;

Law of Vladimir Region dated 12.10.2011 No. 86-ОЗ “On establishment of differentiated taxation rates for taxpayers applying simplified taxation system”;


Invest Review. Vladimir Region

Декабрь 2011

Full version: www.deloros.ru

mailto:[email protected]





Section Information


Resolution of Governor of the Region dated 04.06.2010 No. 668 “On long-term target program of attraction of investments into the territory of Vladimir Region for 2010-2013”;

Resolution of Governor of the Region dated 15.06.2010 No.681 “On long-term target program “Contribution to development of small and medium business in Vladimir Region for 2011-2013””

Resolution of Governor of the Region dated 01.02.2011 No. 54 “On holding of tenders for financing of projects aimed at modernization of the economy and support of innovations in Vladimir Region, in 2011-2013”.

Presence of Regional Development Agencies or Corporations in the Region

State Autonomous Organization of Vladimir Region “Fund of guarantees and development of small and medium business” (GAU FGRMSP)

Presence of Industrial or Technological Parks in the Region

Technological park “Strunino” (Aleksandrov Region); Technological park “Stavrovo” (Sobino Region); Technological park “Avtopribor” (Vladimir); Technological park “Tochmash” (Vladimir).

Need for involvement of financial partners and private investors into the regional projects with participation of local development corporations and regional authorities: Project name (resume is

optional); Volumes and sources of

financing; Term of project

implementation.

Establishment of complexes for decontamination, processing and disposal of the total range of wastes (peat, coal, wood processing wastes, household garbage, organic wastes of agricultural production, for generation of electric, heat and mechanical energy), biogas facilities, NPO “GazGen” LTD, RUB 3.0 mln, 1 year;

Creation and introduction of facility for geothermal oxygenation of water for processing of liquid wastes, Alternativnaya energetika LTD, RUB 5.0 mln, 1 year;

Production of motor oils modified with carbonic nanomaterial, Energoeffektivnost LTD, RUB 2.0 mln, 1 year;

Development and introduction of cavitation heat generators, Akvageoenergosistemy LTD, from RUB 0.5 mln, 1 year;

Technologies of generating biological fuel and bioelectric energy from organic wastes, NTC BioTechnologii LTD, RUB 1.0 mln, 1 year



Декабрь 2011


Section Information

Events aimed at attraction of potential investors in the past month – name, description, term

The Administration of Vladimir Region together with the Chamber of Trade and Commerce of Vladimir Region arranged the regional exposition at the exhibition Rusnanotech Expo-2011 held in the framework of the international forum on nanotechnologies Rosnanotech 2011 on October 26-28 2011 in Moscow, Central Exhibition Complex “Expocentre”, participated by 12 companies.

Events aimed at attraction of potential investors in the upcoming months (name, description, term)

The Administration of the Region together with the Regional Council of Vladimir Region for review of projects submitted for financing under the program “Participant of youth scientific and innovation competition” of the Fund for contribution to development of small companies in the scientific and technical sphere, in December 2011 plans to arrange participation of scientific organizations in open tenders for small businesses in the framework of the program “Start-2012” of the Fund for contribution to development of small companies in the scientific and technical sphere.



Декабрь 2011


Section Information

RegionContacts

Voronezh RegionOGBU “Agency for investments and public and private partnership”Igor A. Lotkov, Director of OGBU “Agency for investments and public and private partnership”Phone: (473) 261 00 57E-mail:[email protected]


Chemicals, radio electronics, machinery construction (railroad machinery, automobile and energy machinery construction), construction industry, agriculture.


1.Plant for production of power transformersAddress: Industrial park “Maslovskiy”. Investor: SiemensPlanned range of products: transformersThe government arranges engineering infrastructure to the construction site. Term of project implementation: scheduled launch date – 2012.Number of jobs: 300 2.Plant for production of grain refining equipment.Address: Industrial park “Maslovskiy”. Investor: Voronezhselmash JSCPlanned range of products: grain refining equipment, photoseparators, dryers etc.), and elevator equipment.Term of project implementation: scheduled commissioning date – end-2012.Number of jobs: 297


Invest Review. Voronezh Region

Декабрь 2011


Section Information


3. Construction of the plant for production of sandwich panelsAddress: Industrial park “Maslovskiy”Investor: Armaks Group LTDPlanned range of products: sandwich panels, silicate cotton, and life support systemsTerm of project implementation: 2009-2014Number of jobs: 550 4. Construction of new facility for production of butadiene-styrene thermoelastolayers with the capacity of 50000 tons per year (TEP-50)Address: 2, Lenin avenue, Voronezh 394014Investor: Voronezhsintezkauchuk JSCFGUP VNIISKPlanned range of products: thermoelastolayersTerm of project implementation: 2010-2013Number of jobs: 300


Law of Voronezh Region dated 07.07.2006 No. 67-ОЗ “On governmental (oblast) support of investment activity in the territory of Voronezh Region”;

Law of Voronezh Region dated 27.11.2006 No. 99-ОЗ “On corporate income tax rates for investors implementing investment projects of special importance in the territory of Voronezh Region”

Law of Voronezh Region dated 12.03.2007 No. 21-ОЗ “On income tax rates for residents of technological parks in the territory of Voronezh Region”

Law of Voronezh Region dated 27.11.2003 No. 62-ОЗ “On corporate property tax”

Resolution dated July 25, 2007 No. 691 On governmental (oblast) support of creation of social and engineering infrastructure in the framework of investment projects implementation

Region target program “Support of investment projects of organizations of industry, transport and communication of Voronezh Region in 2011-2013”



Декабрь 2011


Section Information


Resolution dated 15.04.2011 No. 296 “On adoption of the Order of provision of subsidies from the oblast budget to organizations implementing investment projects of special importance included into the Program of social and economic development of Voronezh Region for 2010-2014”

Region target program “Development and support of small and medium business in Voronezh Region in 2011-2015”

Region target program “Development of innovation activity in Voronezh Region in 2011-2015”

Presence of Regional Development Agencies or Corporations

OGBU “Agency for investments and public and private partnership”


Technological parks manufacturing innovation products: “Sodruzhestvo” – in the sphere of electronics and microelectronics; “Kalininskiy” – in the sphere of mechanical treatment and machinery

construction “MITEM” – in the sphere of electric equipment and machinery

construction; “Kosmos-Neft-Gaz” – in the sphere of chemical machinery construction

and nanotechnologies.Technological parks comprise over 80 small innovation enterprises, the production volume makes about RUB 2 bln per year. Products of technological parks are supplied to more than 50 regions of Russia. Industrial parks:“Maslovskiy” (Voronezh) (Resolution of the Government of Voronezh Region dated 06.04.2010 No. 269)“Liskinskiy” (Liski) (Resolution of the Government of Voronezh Region dated November 1, 2011 No. 950)Industrial park “Perspektiva”Production site VAST (Shilovo)“Bobrovskiy” industrial park (Bobrov) is pending official authorization



Декабрь 2011


Section Information

Presence of inter-branch clusters in the region

Agreements were signed on creation of the following clusters: Aircraft building Radioelectronics Manufacturers of oil and gas extraction and chemical equipment Electromechanics etc.In the framework of implementation of the departmental target program “Creation and development of clusters in Voronezh Region in 2011-2013” there was established OGU “Centre of cluster development of Voronezh Region”

Need for involvement of financial partners and private investors into the regional projects with participation of local development corporations and regional authorities

1. Modernization of anti-tuberculosis service of Voronezh Region.Supposed forms of attraction of investments: Turn-key construction with payment in installments within 10-12 years Lifecycle contractTerm of implementation: 3 yearsVolume of investments: RUB 3000 mln, including 100% of investor’s funds.Project owner: Department of health care of the Region 2. Construction of the railroad station “Voronezh-3”Term of implementation: 8-9 yearsVolume of investments: RUB 2990 mln including: 1) RUB 900 mln – funds of Russian Railways JSC;2) RUB 400 mln – investors’ funds;3) RUB 250 mln – funds of Voronezh Region;4) RUB 250 mln – funds of municipality of Voronezh 3. Construction of VPS-21 (water intake complex)Supposed form of attraction of investments: conclusion of concession agreementCost of construction: RUB 1 095 799,25 thousand.Project owner: Division for cooperation with industrial companies of the Department of economy of Administration of Voronezh



Декабрь 2011


Section Information

Need for involvement of financial partners and private investors into the regional projects with participation of local development corporations and regional authorities

4. Reconstruction of the airport “Voronezh”Term of implementation: 2008-2015Volume of investments: RUB 2910 mln, including:- RUB 1682,7 mln – funds of Rosaviation- RUB 227,3 mln – funds of Voronezh Region- RUB 1000 mln – investors’ fundsThe project is ready by 50%.Project owner: Government of Voronezh Region

Events aimed at attraction of potential investors in the past month – name, description, term

On December 1-3 the 3rd Voronezh agricultural industrial forum 2011 took place. This is the venue for meeting of leading experts in agricultural, processing and food industries; presentation of innovation achievements, newest technologies; summarizing annual results; establishment of mutually beneficial contacts

On December 16, there was held Presentation of public and private partnership in development of regional infrastructure in the framework of IX Russian regional congress “Investment climate: best practice of the regions”.

Events aimed at attraction of potential investors in the upcoming months (name, description, term)

1. Event of Russian-German Foreign Trade Chamber “Dialogue with the Governor of Voronezh Region” (February 2012)Russian-German Foreign Trade Chamber is the union of German companies and entrepreneurs carrying out business in Russia. The format of the event “Dialogue with the Governor” is a round table discussion with members of the Chamber.2. Presentation of Voronezh Region in the Embassy of France (February)3. Voronezh Industrial Forum 2012Branch: Machinery construction. Date: March 21-23, 20124. Participation in the International tourist exhibition “Intourmarket” (Moscow)Date: March 17-20, 2012



Декабрь 2011


Section Information

RegionContacts

Kurgan RegionHead: Nikolay I. Boltnev, Deputy Governor of Kurgan Region, Director of Department for economic development, trade and labour of Kurgan RegionContact person: Division for investments, foreign economic activity and regional relations of the Government of Kurgan Region, S.V. Krasnova, lead expert, [email protected], phone: (8-3522) 42-90-81


1. Grain processing2. Wood processing and manufacturing of wooden products3. Chemical production 4. Metalworks and production of ready-made metal goods5. Machinery and equipment construction


1. Concept of investment project of the plant for deep processing of grainTotal cost of the project: RUB 8000,0 mln (USD 240 mln), borrowed fundsMain features of the project:Grain processing with the capacity up to 300 thousand tons per year.

Production of flavour, starch, fibrin, bioethanol, glucose, bran, lysine, methionine, gluten, spirit.

2. Concept of investment project of the plant for production of drilling machines

Total cost of the project: RUB 241,0 mlnOwn invested funds: RUB 80,0 mlnBorrowed funds: RUB 161,0 mlnMain features of the project: designing of the plan of development of

Bauer machines – Kurgan LTD for the period until 2015 in order to increase production volumes up to 36 machines per year in 2015. For this, it is planned to construct a new assembly plant and administration and living premises. Construction is planned on the 20000 sq.m. plot owned by the company.

Totally 9 projects


Invest Review. Kurgan Region

Декабрь 2011




Section Information


1. Law of Kurgan Region dated 24.11.2004 No. 822 “On corporate income tax rates to be paid into the budget of Kurgan Region” stipulates application of reduced rate of regional tax from 18% to 13.5% depending on the share of capital investments in making capital investments for production purposes.

2. Law of Kurgan Region dated 26.11.2002 No.255 “On transport tax in the territory of Kurgan Region” stipulates application of tax rates reduced by 50% on transportation vehicles used in housing construction on the investment site or purchase under the respective investment projects and used for carrying out activity on the investment site, by companies implementing investment projects on investment sites within 3 years.

3. Law of Kurgan Region dated 26.11.2003г. №347 “On corporate property tax in the territory of Kurgan Region” stipulates tax exemption within three years for companies implementing investment projects on investment sites, for the following objects of fixes assets for production purposes:

Used in housing construction on the investment site; Acquired or newly established (constructed, produced), with the initial

value of more than RUB 500 thousand and used for carrying out activity on the investment site;

In relation to the value of the property, in the amount of expenses borne and included on the non-recurrent basis into the cost of completion of construction, equipment, reconstruction, modernization, technical re-equipment of such objects in the amount of over RUB 500 thousand.


Декабрь 2011



Section Information


4. Law of Kurgan Region dated November 2, 2009 No. 495 “On public and private partnership in Kurgan Region”

Article 11. Governmental support of development of public and private partnership in Kurgan Region.

Governmental support of development of public and private partnership in Kurgan Region can be provided in the following forms:

Subsidies and tax benefits; State guarantees of Kurgan Region; Investment tax loan; Other forms in compliance with the current legislation.5. Resolution of Administration (Government) of Kurgan Region dated

June 6, 2006 No. 200 “On creation of summarized register of investment sites in the territory of Kurgan Region”. Section I, item 6. Investors implementing investment projects in the territory of investment sites included into the register are entitled to receive governmental support including tax benefits stipulated by the legislation of Kurgan Region.

6. Resolution of the Government of Kurgan Region dated 27.06.2011 No.311 “On approval of target program of Kurgan Region aimed at creation of favourable conditions for attraction of investments into the economy of Kurgan Region for 2011-2015”

Section III. “Creation of favourable conditions for carrying out investment activity by companies” of the List of measures of the target program of Kurgan Region aimed at attraction of investments into the economy of Kurgan Region for 2011-2015:

Item 8. Creation of summarized register of investment sites in the territory of Kurgan Region and the catalogue of free investment sites in the territory of Kurgan Region.

Item 19. Creation of the regional investment fund of Kurgan Region.


Декабрь 2011



Section Information


Technological park of Kurgan Region JSC

Events aimed at attraction of potential investors in the past month

1. Placement of the list of potential projects of Kurgan Region requiring investments on the web-site of the Government of Kurgan Region. Date of placement: 01.11.2011.2. The Agreement was signed between the Government of Yamal-Nenets Autonomous Area and the Government of Kurgan Region on trade and economic, and scientific and technical, social and cultural cooperation.Date of signing: November 29, 2011

Events aimed at attraction of potential investors in the upcoming months

1. It is planned to provide governmental guarantees to legal entities implementing investment projects in the territory of Kurgan Region, on the tender basis. In 2012, it is planned to execute governmental guarantees of Kurgan Region for the total amount of RUB 2000 mln.2. The Government of Kurgan Region developed and is negotiating the draft of the regulation “On the regional investment fund” aimed at support of investment projects of creation or development of capital construction objects of transportation, power supply and engineering infrastructure.3. In the framework of the Agreement between the Government of Yamal-Nenets Autonomous Area and the Government of Kurgan Region on cooperation, the draft of the Program of measures for 2012-2016 on implementation of the Agreement is being worked out.4. Preparation of presentation materials for presentation of Kurgan Region at exhibitions including a movie about Kurgan Region, the information board with industrial and social policies of Kurgan Region, and passport of investment projects.5. Development and placement of the information section “Investor’s guide” at the web-site of the Government of Kurgan Region.


Декабрь 2011


Section Data

RegionContacts

Stavropol TerritoryMr. Yevgeniy Anatolyevich Bondarenko, Deputy Minister of Economic Development of Stavropol TerritoryTel. (8652) 26-86-13, Е-mail: [email protected]://www.stavinvest.ru

Priority processing industries in the context of the regional industrial policy

Chemical production; Production of rubber and plastic manufactured items; Production of other non-metal mineral products (production of glass and

glassware); Other industries (production of furniture); Textile and clothing industry; Production of leather, leather manufactured items and footwear; Metallurgical production and production of finished hardware goods; Pulp and paper industry, publishing and printing activities; Production of petrochemicals.

Major projects on establishing new and reconstructing available productions (under design and construction)

Altogether 21 projects, including:1. Reconstruction of “Kugulta Brick Works” with the aim of increasing the production

of ceramic bricks up to 40 mln. pcs per annum” LLC Kugulta Brick Works.Total value of the investment project implementation – 611.2 mln. RUB83 employment positions to be created additionally2. “Construction of sandwich panel and ventilation equipment manufacturing plant

CJSC “Lissant-Yug”.Line of Business – production of ventilation equipment and ventilation systems, production of sandwich panels with foamed polyurethane and polyisocyanurate foam as a filling agent of 30-220 mm in thickness for low-rise housing construction Total project value – 516.0 mln. RUB200 employment positions to be created additionally


Invest Review. Stavropol Territory

Декабрь 2011


Section Data

Adopted regional acts of legislation and programs designed to encourage investments into the Region

Altogether 20 acts of legislation: Law of Stavropol Territory No. 55-kz dd. 1 October 2007 “On Investment Activities

in Stavropol Territory” stipulates the following areas and measures of state support for the entities involved in investment activities:

subsidies for payment of part of the interest rate for the loans obtained for the implementation of fast-payback investment projects (at the rate of 3/4 of the refinancing rate of the Central Bank of the Russian Federation);

subsidies for payment of part of the interest rate for the loans obtained to replenish the working capital (at the rate of 2/3 of the refinancing rate of the Central Bank of the Russian Federation);

reduction of profits tax rate payable as revenue to the budget of Stavropol Territory (18 – 13.5% depending on the revenue share);

reduction of the property tax (2,2 - 1,1%); deferral or instalment plan for payment of regional taxes; rent relief for use of the state-owned property of Stavropol Territory to be used for

the implementation of the investment project; state guarantees of Stavropol Territory; Decree No. 331-p dd. 17 August 2011 of the Government of Stavropol Territory

“On Approving the Subsidization Procedure as regards Payment by Small and Medium-Sized Business Entities of the First Instalment (Advance Payment), when Concluding a Leasing Agreement for Equipment out of the Budget Funds of Stavropol Territory”;

Decree No. 324-p dd. 17 August 2011 of the Government of Stavropol Territory “On Approving the Subsidization Procedure out of the Budget Funds of Stavropol Territory to Small and Medium-Sized Business Entities for Technological Connection to Power Supply Network Facilities”;

Executive Order No.495-rp dd. 22 November 2011 of the Government of Stavropol Territory “On Program as to Creating Favourable Conditions for the Encouragement of Investments into the Economy of Stavropol Territory for 2011-2015;



Декабрь 2011


Section Data

Availability of regional Development Agencies and Corporations

“Management Company of Investment and Innovation Development of Stavropol Territory”, State Unitary Enterprise of Stavropol Territory was set up by Executive Order No.458-rp dd. 16 December 2009 of the Government of Stavropol Territory in view of accomplishing social tasks by fostering the investment process, developing the innovation activity and managing regional, tourist and recreational parks, technological parks in Stavropol Territory

Availability of Industrial and Technological Parks in the Region

8 priority development zones have been established within Stavropol Territory, majoring in industrial, petrochemical, agro-industrial, tourist and recreational lines of business. Besides, the Coordination Board for the Development of Investment Activity within Stavropol Territory have agreed on the establishment in Stavropol Territory of:“Pharmatsevtika”, Regional Industrial Park (Protocol No.9 dd. 18 August 2011);“Aleksandrovskiy”, Regional Industrial Park (Protocol No.10 dd. 29 September 2011). As of 1 October 2011 there were registered 13 resident regional parks with the projects of 42,137.82 mln. RUB total value, accounting for more than 7,000 new employment positions, with the implementation pending in 2011-2014.The construction of 6 regional parks is currently under way in the city of Mineralnye Vody, in the city of Kislovodsk, in Kochubeyev District, Neftekumsk District, Krasnogvardeysk District and Apanesenkov District

Necessity to involve financial partners and private investors in the regional projects in partnership with the Development Corporation and regional authorities

LLC “Gelios”Project Name: The construction of a manufacturing float-line of 600 t daily capacity for the production of plate glass Financing scope and sources:Total project value – 4,652.411 mln. RUB, inclusive ofOwn funds – 30%, 1,395.723 mln. RUBDebt financing – 70%, 3,256.688 mln. RUBProject implementation deadlines: 2012 - 2015



Декабрь 2011


Section Data

Necessity to involve financial partners and private investors in the regional projects in partnership with the Development Corporation and regional authorities

CJSC “Chimex Group”Project Name: The construction of a plant for the manufacture of commercial motor vehicles; the establishment of the Research and Development Centre and production facilities for the development and manufacture of advanced models of lightweight commercial trucksFinancing scope and sources:Total project value – 14,932.941 mln. RUB- a share of 2,932.941 mln. RUB (approximately 19.7% of the total project value) out of the own funds of the project stakeholders (which includes monetary funds and asset contributions, while generating the authorized capital of CJSC “INTRALL RUS” to be invested into the acquisition and generation of the own funds and intangible assets;- a share of 10,500.000 mln. RUB (approximately 70.3% of the total project value) to be invested out of the funds of a bank loan for financing a turnkey master contract for the construction of an automobile assembly plant (the share of the credit resources in total financing volume of the said contract to make up 85%);- a share of 1,500.000 mln. RUB (approximately 10.0% of the total investment project volume) to be invested out of the funds of the state aid (Development Corporation of North Caucasus, which includes monetary funds contributions, while generating the authorized capital of CJSC «INTRALL RUS».Project implementation deadlines: 2012-2015JSC Research and Production Company “Eskom”Project Name: expansion and reconstruction of the operating and construction of new production capacities for the manufacture of infusion solutions and nutrients for parenteral feeding as well as foundation of pharmaceutical clusters in the city of StavropolFinancing scope and sources:Total project value – 6,038.8 mln. RUB, inclusive of:Debt financing – 4,227.150 mln. RUBProject implementation deadlines: 2012-2015



Декабрь 2011


Section Data

Measures aimed at engaging potential investors taken during the last month

On 10 November 2011 the Ministry of Economic Development of Stavropol Territory communicated to potential investors proposals as to their participation in the implementation of the investment project: “The construction of a new stadium in the city of Stavropol”. Proposals to the potential investors as to their participation in the implementation of the investment projects in Stavropol Territory are communicated on a regular basis.The official website of the Ministry of Economic Development of Stavropol Territory stavinvest.ru posts an updated catalogue of the investment projects of Stavropol Territory which require debt financing.

Measures aimed at engaging potential investors pending implementation in the near future

IX International Forum “Investments into Human Being”, Kislovodsk.Objectives: creating an international communication venue between the representatives of

state authorities, business, science, culture, education, health care specializing in the field of development of human potential;

calling the attention of national and international community to the issues of spiritual and physical health of a person, improving the quality of life and living standards of the population;

attracting investments into the projects of social significance related to the growth of the human capital (intellectual, physical, spiritual);

developing the mechanisms of the private sector participation in human investments.

25-27 April, 2012



Декабрь 2011


Section Data

RegionContacts

Khanty-Mansi Autonomous District— YugraMr. Pavel Petrovich Sidorov, Director of the Department of Economic Development Telephone: (3467): 39-20-28E-mail: [email protected]

Priority processing industries in the context of the regional industrial policy

Oil and gas processing, fish breeding, manufacture of construction materials, agriculture, timber processing

Major projects for establishing new and reconstructing available production facilities (under design and construction)

Complex project JSC “Sibur”Construction of the petroleum products pipeline “South Balyk Main Piping Station –

Tobolsk Petro-Chem, the main piping station of the petroleum products pipeline “South Balyk – Tobolsk, a unit for complete extraction of gas liquids, a gas pipeline and a gas compressor station of the Southern Licensed Territory, gas processing complex in Nizhnevartovsk DistrictImplementation deadlines: 2008-2015Construction of a plant for the manufacture of wood chipboards, Sovetsky District, JSC “Yugra-Plate” (the town of Sovetsky, Northern Industrial Base No.2); 1st priority launch – 2011, 2nd priority launch – 2014.Reconstruction of a fish breeding plant for the reproduction of valuable fish species in the middle Ob in the city of Khanty-Mansi, LLC “Yugorsky Fish Breeding Plant” (the city of Khanty-Mansi), implementation deadlines: 2011-2013Construction of a poultry egg and meat plant and a greenhouse block of JSC “AgroFirm” near the village of Yarki of Khanty-Mansi DistrictImplementation deadlines: 2011-2014.Construction of Nyagan State District Power Station(Khanty-Mansi Autonomous District – Yugra, the city of Nyagan), JSC “Fortum” – Russian subsidiary of the Finnish energy concern Fortum, the city of Chelyabinsk.Implementation deadlines: 2007-2015


Invest Review. Khanty-Mansi Autonomous District— Yugra

Декабрь 2011



Section Data

Adopted regional acts of legislation and programs designed to encourage investments into the Region

“On Investments Support by State Authorities of the Autonomous District within Khanty-Mansi Autonomous District – Yugra” (Autonomous District Law No. 6-oz dd. 21 December 2004)

“On State Guarantees Granting Procedure of Khanty-Mansi Autonomous District – Yugra” (Autonomous District Law No. 130-oz dd. 12 October 2007)

“On Innovations in Khanty-Mansi Autonomous District – Yugra” (Autonomous District Law No. 114-oz dd. 10 July 2010)

“On Tax Rates Payable due to Using the Simplified Taxation System” (Autonomous District Law No. 166-oz dd. 30 December 2008)

“On Using the Simplified Taxation System by Private Entrepreneurs on a Patent Basis within Khanty-Mansi Autonomous District – Yugra” (Autonomous District Law No. 135-oz dd. 12 October 2009)

“On Corporate Property Tax” (Autonomous District Law No. 190-oz dd. 29 November 2010)

“On Rates of Taxes on Corporate Profits as related to Payables to the Budget of Khanty-Mansi Autonomous District – Yugra” (Autonomous District Law No. 65-oz dd. 30 November 2004 (as in force on 29 November 2010)

“On Participation of Khanty-Mansi Autonomous District – Yugra in Public Private Partnerships” (Autonomous District Law No. 155-оз dd. 18 October 2010).

Availability of regional Development Agencies and Corporations

Regional Investments Centre – “conductor for business” carries out, as of today, the preparation of the required documents in view of rendering state support to investment projects

Availability of Industrial and Technological Parks in the Region

Technological Park of high technologies meets the statutory requirements of the Ministry of Regional Development of the Russian Federation in terms of space (at least 5 thousand sq. m.)

Availability of Cross-Industry Clusters in the Region

Under development

Necessity to involve financial partners and private investors in the regional projects

Investments into the regional projects are required



Декабрь 2011


Section Data

Measures aimed at engaging potential investors taken during the last month – item, description, deadlines

VI International Investment Forum “Yugra – 2011” (12-14 October 2011): operator – Regional Investments Center of Khanty-Mansi Autonomous District – Yugra

Measures aimed at engaging potential investors pending implementation in the near future – item, description, deadlines

Signing the Agreement on Cooperation between the Government of Khanty-Mansi Autonomous District – Yugra and All-Russia Public Organization “Business Russia”.Adopting the District Law “On State Support of Investment Activities in Khanty-Mansi Autonomous District – Yugra”



Декабрь 2011




1.2. Price dynamics



INVEST REVIEW:

Vladimir Region;

Voronezh Region;

Kurgan Region;

Stavropol Territory;

Khanty-Mansi Autonomous District – Yugra.

QUIZ: CHELYABINSK REGION Mr. Mikhail Valeryevich Yurevich, Governor of Chelyabinsk Region;


Mr. Mikhail Pavlovich Plekhanov, Chief Executive Officer of the Management Company of the Holding Company

«Ural Agrarian Group»;



Декабрь 2011


Governor of Chelyabinsk Region

Mr. Mikhail Valeryevich Yurevich

What is the way of encouraging investments inflow and implementing industrial projects in the region?Thanks to the visits of the official delegations of Chelyabinsk Region to various countries we have no lack of investors in the region. The major investing countries are: Switzerland (69.2%), Germany (7.8%), France (5.4%). The accrued foreign capital volume had amounted to 4,287 mln. USD by the end of 9 months of 2011.Different round table meetings are continuously held with the participation of the Ministry of Industry and Nature Resources of Chelyabinsk Region and other interested ministries and departments for the purpose of implementing industrial projects, as a result of which a decision is taken as providing assistance on behalf of the regional authorities.What kind of state support of industrial investment projects is available at the regional level?Various kinds of support are stipulated for the entities involved in investment activities.For the entities implementing their investment projects (beginning 1 January 2011) which are included in the list of priority investment projects of Chelyabinsk Region if the total investment volume for a certain investment project makes up at least 300 mln. RUB:а) the procedure of applying the reduced corporate property tax is stipulated (Law of Chelyabinsk Region No. 189-ЗО dd. 27 November 2003 “On Corporate Property Tax”);б) the procedure of reducing the corporate profits tax payable as revenue to the regional budget is stipulated (Law of Chelyabinsk Region No. 154-ЗО dd. 23 June 2011 “On Reducing the Rate of Corporate Tax for Specific Categories of Taxpayers”.в) the possibility of providing state guarantees of Chelyabinsk

Region is stipulated in view of the implementation of investment projects (Executive Order No. № 177-П dd. 15 June 2011 of the Government of Chelyabinsk Region “On the Procedure of Holding Tenders for Investment Projects of the Entities Involved in Investment Activities Eligible for State Guarantees of Chelyabinsk Region and on Amending Executive Order No. 212-П dd. 27 October 2010 of the Government of Chelyabinsk Region”).Furthermore, the Program for attracting investments in the economy of Chelyabinsk Region for 2010-2012 continues in effect (Executive Order No. 176-рп dd. 04 August 2010 of the Government of Chelyabinsk Region).

Декабрь 2011




What measures are taken to minimize corruption? Targeted Program for Corruption Counteraction in

Chelyabinsk Region for 2011-2013 has been approved (No. 90-P dd. 17 August 2010);

The regional legal and regulatory framework has been arranged (see enumeration in full version);

The procedure and technique of carrying out the anti-corruption expert examination of draft laws has been approved, the appropriate administrative rules of procedure have been elaborated, the entire body of the regulatory and legal acts previously adopted by the Governor and Government of Chelyabinsk Region which are currently in force has been reviewed from an expert point of view;

The Register of corruption-prone state service employment positions has been approved (altogether about 400 employment positions);

Complete revision and detailed inspection of the provisions of duty-related rules of procedure of civil servants have been carried out, which include, in particular, the manifestation of corruption factors; personal responsibility has been established for the non-performance or improper performance of respective official duties;

An additional internal surveillance of the activity of the persons occupying corruption-prone positions as well as annual inspection of credibility and completeness of the information about the income, property and commitments of dominial is under way;

The Ministry of Industry and Property of Chelyabinsk Region regularly inspects the intended use and integrity of land areas and property of Chelyabinsk Region. The Chief

Accountability Directorate of Chelyabinsk Region arranges measures to reveal any violations of the budget and other legislation, those of intended and efficient use of the regional budget funds, state-owned property in Chelyabinsk Region, as well as the completeness of revenue receipts, correctness of accounting and using the funds obtained from profit-yielding activities;

For the purpose of revealing any corrupt transactions the Chief Directorate of Material Resources of Chelyabinsk Region continuously monitors the placement of state and municipal orders; the policy of joint inspections with control and surveillance agencies authorized to carry out control in the field of order placement is practiced;

“Hot-Line” for messages about evidence of corruption in the activities of the civil servants functions electronically round-the-clock,

The public receives information about the measures taken to counteract and prevent corruption via mass media, Internet-sites of the Government and Governor of Chelyabinsk Region, those of the executive authorities and the administrations of municipal and city districts.

Декабрь 2011




What grants or subsidies are allocated to support the infrastructure construction?Chelyabinsk Region takes an active part in annual competitive selection of the constituents of the Russian Federation which is held by the Ministry of Regional Development to provide grants and subsidies from the federal budget for the implementation of regional targeted programs for the development of housing construction. The subsidies are allocated to reimburse part of the expenses for the repayment of interest on the loans obtained in the Russian credit organizations in order to provide with the engineering infrastructure the ground areas intended for the economy class construction.At the same time, the Government of Chelyabinsk Region together with the Federal Fund for Assistance to Housing Construction Development supports on a regular and long-term basis the winners of auctions in terms of efficient utilization of the ground areas of the Fund, inclusive of the stage for the provision of the engineering infrastructure. The first tranche of the financial aid is intended for the development of the territory of the rural settlement of Kremenkulsk of Sosnovsk municipal district for 2011-2012, with the funds being afforded to the extent of 322 mln. RUB for 2011 and to the extent of 598 mln. RUB for 2012 respectively.

Декабрь 2011


Minister of Economic Development of Chelyabinsk Region

Ms. Elena Vladimirovna Murzina

What are the major activity guidelines?The major task for the Ministry of Economic Development of the Region lies in the implementation of the state policy of the social and economic development of Chelyabinsk Region and promotion of trade and economic relations with foreign countries.The priority activity guidelines for the Ministry of Economic Relations: developing the market infrastructure; increasing the investment appeal and attracting capital into

the regional economy; developing international, cross-regional cooperation and

promoting the products of regional manufacture; drafting and implementing the conceptual, strategic and

prognosticative documents; developing social partnership within the Region. A system of indicative figures has been determined in every activity field of the Ministry of Economic Development which requires financing out of the regional budget funds.What infrastructure facilities have been set up for the development of processing industries? The regional infrastructure is well developed. The federal highways and the South-Urals railway – a spur railway track line of the Trans-Siberian Railway – run across the Region. Two international airports in Chelyabinsk and Magnitogorsk serve as the “air gates” to the Region. The regional advantage lies in the availability of highly qualified labour force as well as in rich and diverse natural resources.The creation of the infrastructure designed to develop and introduce innovations is steadfastly under way. The best efforts to encourage and support entrepreneurship, to eliminate administrative hurdles, to develop competitiveness and create a

favourable environment for the business activities are used.The regional targeted program “The Construction of the Park of Industrial Innovations for 2011-2012” is currently under implementation. The construction of the traffic and engineering infrastructure to the ground area designed to accommodate new state-of-the-art production facilities out of the funds of the regional budget is in progress. This ground area is going to accommodate 18 enterprises. Besides, utility and communication service lines are being laid to the ground areas accommodating the investment projects in livestock and poultry farming.

Декабрь 2011


Minister of Economic Development of Chelyabinsk Region

Ms. Elena Vladimirovna Murzina

What public private partnership projects apply to the Region?1. The Government of Chelyabinsk Region is a signatory of: The Memorandum on Cooperation in the Implementation of

Pilot Projects in Chelaybinsk Region as part of the Joint Project of the Bank for Development and Foreign Economic Affairs (Vnesheconombank) and the Development Program of the UNO “The Development of Public Private Partnership in Russia” (April 2010);

The Agreement on Cooperation in Investment Activities with the Bank for Development and Foreign Economic Affairs (Vnesheconombank), State Corporation (20 May 2009).

2. Appropriate measures are being taken together with the Centre for Public Private Partnership of the Bank for Development and Foreign Economic Affairs (Vnesheconombank) to obtain credit facilities to cover the reconstruction of the systems of:

heat and water supply and water disposal in the urban settlement of Satka;

water supply and disposal in the urban boroughs of Zlatoust and Miass town.

Executive Order No. 1493-р draft dd. 22 August 2011 of the Russian Federation “The Complex Modernization of the Water Supply and Disposal Systems in the towns of Satka, Miass, Zlatoust” has been deemed as pilot and aimed at attracting private investments to the development of power engineering facilities and public utility infrastructure systems as part of the implementation of the programs of complex development of the public utility infrastructure systems.3. There has been signed an inter-municipal agreement on

cooperation in the field of preparation and implementation of

the inter-municipal program for the reconstruction and development of the water supply, water disposal and heat supply systems between the above mentioned regional municipal entities and LLC “Public Utility Technologies Group” (Technical Customer).

4. The regional targeted Program “Clear Water” for 2010-2011 is under implementation within Chelyabinsk Region using the mechanisms of the public private partnership.

5. There has been prepared an enumeration of measures aimed at upgrading and reconstructing the heat supply systems of the populated settlements of Chelyabinsk Region in order to replace and improve the performance of the inefficient boiler plants. The implementation of the projects will take place by way of concluding agreements (investment and concession) for fixing long-term public utility service rates with annual adjustment, out of the funds of which the investment repayment is supposed to be ensured.

6. A regional venture fund operates on the terms of co-financing out of the federal budget funds. The capitalization of the fund makes up 480 mln. RUB (half of it accounts for the funds of private investors). The management company has considered 80 projects, 10 projects of which have been short-listed and 4 projects have been financially covered for the amount of 196.5 mln. RUB.

Декабрь 2011


Chief Executive Officer of the Management Company of the Holding Company “Ural Agrarian Group”

Mr. Mikhail Pavlovich Plekhanov

What in your opinion stifles the production growth in Russia?In my opinion, it is the accessibility of inexpensive (under 100%) and long-term (from 5 years and longer) credits that checks the growth. Besides, it is the lack of advanced technologies in machine-tools construction. China illustrates the case very well. While obtaining the state-of-the-art technologies (most probably, limited by all possible legal means) they reproduce them within China with no worry at all! Our production facilities are 100% furnished with foreign equipment and even with low-value and non-durable items. The final point is the customer demand.Have any changes related to the burden on your business due to the compliance with the regulatory authorities requirements taken place?With the restrictions introduced on the inspections to be conducted not oftener than three times a year, we come to enjoy a far more quiet way of living and working. Surprisingly, but we observe more order: now most regulatory authorities work on a notification basis. But still it is unclear what one should do in the event of an “inadvertent infringement”, especially noting that as from the year of 2012 ten articles of the Code of Administrative Offences increase the fines from 100 thousand up to 1 mln. RUB. I believe that a notification-based discharge of the claims of the regulatory authorities will add to the pressure on business since one badly needs experts with profound knowledge of the contemporary requirements and provisions of the regulatory authorities and we have none. Business will have to engage experts and auditors to analyze the current condition and its correction and once again to notify the regulatory authorities of such correction. All in all, it will look like this: self-committed, self-

detected, self-corrected and self-reported. And it is not clear what is to be gained from that.How does your business get affected by the changes in the cost of services rendered by monopolies?Let me set an example: there is a project proposal for the construction of a plant of 400 additional employment positions, with the cost of construction less utility facilities of 80 mln. RUB and the equipment of 120 mln. RUB. The land grounds are allocated by the administration at the price of 16.5 mln RUB, which is, for some unknown reason, 1.5 times higher than the realtors’ price in the same district. Well, let’s note the climax: the approvals for the limits and electric power supplies specifications alone (electricity, gas, water, sewerage system) cost 135 mln. RUB, rendering this project unprofitable and, consequently, unfeasible.All changes in the fuel costs (petrol, gas), electric power, water etc. are immediately reflected in the price of the finished product to burden eventually the purse of the final consumers. Therefore, this issue is more related to the sales system and to the fact how strong the competition for the manufactured product is.With the boosted prices for the energy materials, the product quality is bound to deteriorate, unfortunately. To maintain the demand a more rapid growth of the income of the population is needed, rather than the price growth for the energy materials.

Декабрь 2011


Chief Executive Officer of the Management Company of the Holding Company “Ural Agrarian Group”

Mr. Mikhail Pavlovich Plekhanov

It is the monopoly for the distribution of quotas for the duty-free import of raw materials in favour of a restricted range of persons that worries me most of all. Thus, under certain “law”, the third autumn in succession sees a “seasonal” increase of prices for the imported raw materials, with the Russian manufacturers forgetting, that they run business in this country, correcting the price as applied to its foreign counterpart. For example, imported pork side costs 110 RUB per kilo, in Russia it is 115 RUB per kilo as of 1 August 2011, and we have the imported price of 145 RUB per kilo and the Russian price of 148 RUB per kilo as of 1 November 2011 , the increase making up 32% over 2 months. The import volumes have grown because of the speculations of major players, with our fodders for some unknown reasons dropping in price by twice when compared with the previous year. The result is inevitable – the end consumer pays for all.How accessible are the credit facilities for the development of your business?All banks have toughened the terms of loan disbursement to enterprises during the last year: 5 banks with which we had preliminary arrangements and to which we were about to present our financial accounts have refused to grant us loans. Nevertheless, the loan obtained by us indicates that it is the approach, commitment and the choice of the bank that matters. All banks actually increased the interest rate by 1-1.5%, which is very obvious, because the Chairman of the Government of the Russian Federation speaks about the all-time low inflation this year and the budget surplus.Is there any state support of industrial investment

projects at the regional level?I didn’t notice it. If it gains utmost publicity, i.e. whom they helped and why, then I will believe in such support. Today they assist large corporations, which hardly need any help. Therefore they do not announce such support because it will not be understood by small and medium-sized business representatives.We have certainly been receiving various subsidies and grants all these years, which, of course, were very welcome, buy they did not change anything essentially. We have created about 700 employment positions over the last three crisis years, which actually accounts for 50% of the employment positions of “PEAK 239”, with everything out of the funds of fully secured business credits. If such business teams were able to obtain, instead of various grants and subsidies, state guarantees as investment credit security at the rate of 30% of the investment amount (decreasing bank coefficient = 0.7) under clear, accessible specified scheme, then evident results would not be slow to arrive.

Декабрь 2011


Chief Executive OfficerLLC “Heraeus Electro-Nite Chelyabinsk”

Mr. Marat Mindigayanovich Zaripov

What in your opinion stifles the production growth in Russia?It is the lack of domestic consumer demand, which results from the insufficient income of the population. The original reason for that lies in extremely low labour productivity at manufacturing facilities. With today’s level of labour productivity it is extremely difficult to speak about the increase of the income of the population at a time. We find ourselves in a vicious circle: no solvent demand → no production growth → no income growth. It is possible to break this circle only by means of strong support of non-oil and gas business. We need revived processing industries, their technical and technological overhauling in order render their produce competitive. Then these industries will become the locomotive able to pull other industries forward. After all, in order to ensure the industrial demand one needs an extremely diverse product range, which manufacture requires technological advancement and creation of new employment positions. Thanks to the multiplier effect every state-owned RUB will turn out into several ones.But one should not forget about corruption. I do not even mention the corruption in the authorities, because this phenomenon has permeated all our culture through and through. Illicit payoffs, bribes in commercial transactions between large corporations are more than common nowadays. These illicit remuneration kickbacks encumber heavily the business itself, which, in its turn, prevents it from using these funds for these very programs designed to increase the labour productivity. Moreover, these schemes generate unfair competition, which again impedes, and in principle neutralizes the necessity to advance the production

facilities technologically since it does not influence the customer decisions at all.Have any changes related to the burden on your business due to the compliance with the regulatory authorities requirements taken place?Given the option of remote presentation of accounting reports to the tax authorities, we spend less time for that, which is very pleasing. We are somewhat indignant at continuous modifications of the employment and labour laws, namely as concerns the calculation of withholdings, changed rates etc. I hope that these will be decreasing in number in the course of time, but as the proverb says, there is always room for improvement.Apart from the tax authorities, we as an industrial enterprise are accountable to the Russian Federal Service for Ecological, Technical and Atomic Supervision “RosTekhNadzor” (it means four different departments, four different inspections), to the Federal Service for Supervision of Natural Resource Usage “Rosprirodnadzor”, the Federal Service for Fire Safety Inspection “Gospozharnadzor”, the Federal Service on Customers' Rights Protection and Human Well-Being Surveillance, the Labour Inspection and the number of requirements which we must meet is enormous! There are requirements which must be complied with, but there are also such which need reviewing and bringing in line with the reality.

Декабрь 2011


Chief Executive OfficerLLC “Heraeus Electro-Nite Chelyabinsk”

Mr. Marat Mindigayanovich Zaripov

One of the positive points which cannot help pleasing us is that the Licenses to operate hazardous facilities will not be limited in time. This will save us from the necessity to prepare and process huge piles of documents and approvals every year.How does your business get affected by the changes in the cost of services rendered by monopolies?The staple goods of our business are sensors for measuring the characteristics of melting metals. As related to our cost price, the services of natural monopolies are not dominant and mostly do not depend on the results of our activities. The inability to manage own expenditure is as good as a red cloth for a bull – it exasperates immensely. We have taken, and we take on a regular basis, the measures aimed at reducing our energy consumption expenses but at present we do not enjoy any significant saving.There is another type of monopolies which I could define as vital to our production. It is the monopoly of large supplying companies. The monopoly position of such companies is determined inclusive of their territorial location. For example, cardboard costs (one of the staple raw materials in our production) in Russia more than in Italy or France. But the transportation expenses from Europe (even without reference to the customs clearance expenses) will render null all our efforts in terms of the cost price reduction. So, the manufacture seems to be local, of domestic raw materials, but the cost price for a range of manufactured items is higher than that at our European production facilities.

How accessible are the credit facilities for the development of your business?We are lucky to have, as they put it, a rich parent company. In this respect we originally obtained credit facilities for the operation of the enterprise on favourable terms. Though we receive lots of proposals for crediting from different banking institutions, in my opinion, their borrowing cost is exorbitant. For high-grade processing industrial facilities current interest rates are sky-high.

Декабрь 2011

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Декабрь 2011


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