2
2004 2005 2006 2007* 2008* 2009*2009 to
2005, %
GDP 7.2 6.4 6.6 6.0 5.8 5.9 26.6
Industrial Production 8.3 4.0 4.7 4.2 4.5 4.7 19.4
Capital Investments 11.7 10.7 11.0 10.4 9.7 9.8 47.5
Real Personal Disposable Income 10.4 9.3 12.5 10.2 8.9 8.2 46.1
Retail Trade Turnover 13.3 12.8 12.1 10.5 9.5 8.5 47.2
Main social-economic indicators(rate of growth, %)
*estimate
3
Economic Development Results2001-2005
Steady macroeconomic stability achieved :
Federal Budget Profitability in 2006 – 7,4% of GDP
Stabilization Fund by the end of 2006 – $ 81,8 bln.
Gold Reserves as of April 2007 – $ 346,3 bln.
4
Russia as investment opportunity
2000 year
State
GDP - $ 260 bln.
Consolidated budget - $ 40 bln.
State Debt – over 50 % of GDP and
over 120% of Federal Budget
Gold and currency reserves - $ 25 bln.
Short-terms goals logic
Lack of PPP’s legal base and practice
Macroeconomic instability
Business
RTS Index – 190 points
Large holdings establishment (raider
expansion), high legal risks
Minimization of taxation,
use of internal offshore and transfer pricing
Lack of long-term strategies in companies
2006 year
State
GDP - $ 900 bln.
Consolidated budget - $ 260 bIn.
State Debt – less than 10 % of GDP and
less than 28% of the Federal Budget
Gold and currency reserves– $ 272 bln.
Long-term strategic planning on federal
and regional levels
New legal base and practice for PPP
Macroeconomic Stability
Business
RTS Index – 1500 points
Finalized establishment and restructuring
of large holdings
Creation of competitive development strategies
Numerous completed and planned IPO
Companies have substantial investment
programs and plans
5
472230
1961158354 44
835,7
30,7
17,227,6
33,8
45 43
65
84
(estimate)
0
100
200
300
400
500
600
700
800
900
1999 2000 2001 2002 2003 2004 2005 2006
-10
10
30
50
70
90
110
130
Stock market growth
Stock market capitalization, $ bln. Stock market capitalization, % of GDP
6
14,6
12,8
8
3,52,7
0
5
10
15
2001 2002 2003 2004 2005
Foreign direct investments
$ bln.
Foreign Investments Growth
7
Legal Base
Establishment of legal base and authorities for
market regulation, de-bureaucratization of economy
and competition development
Tax Code, Customs Code
Legislation on licensing and valuation activity
Legislation on “Natural Resources”: Entrails, Water, Forest (draft)
Land legislation
Legislation on bankruptcy, currency control,
new edition of the law on joint-stock companies
Law on state purchases
Law on competition protection
Law on autonomic organizations (draft)
8
Industrial
• Investment Fund
• Concessions
• Special Economic Zones
• Industrial assemblage
Innovation
• Special Economic Zones
• Russian Venture Company
• Technoparks
• Federal Target Programs
Diversification of Economy
Diversification of economy
9
Investment Fund
2006
$ 2,5 bln.
2007
$ 4,2 bln.
2008
$ 4,1 bln.
Approved Investment projects
№ ProjectsTotal Cost of the
project($ bln.)
State investments (Investment Fund)
($ bln.)
1 Motorway Odintsovo in Moscow region 0,64 0,37
2Transport Infrastructure for mineral resource development in Chita region 5,2 1,5
3 Orlovsky Tunnel in St.Petersburg 0,97 0,3
4 Western High Speed Diameter in St.Petersburg 3,1 1,0
5Nizhnikamsk Complex of Oil-refinery and Chemical works
4,8 0,6
6 Complex Development of the Lower Angara Region 8 1,3
7 Moscow - St.Petersburg Highway (km 15 - km 58)2,0 0,95
8 Project documentation for construction and exploitation of
the motorway M-4 “Don”0,07 0,07
9 Construction of water-supply system in Rostov-Don 7,36 0,19
10Project documentation for construction and exploitation of
the motorway “Krasnodar-Abinsk-Kabardinka”
0,6 0,6
Total ($ bln.) 32,74 6,88
11
Project's basic characteristics:
• Motorway length – 46,4 km, including 13 bridges and viaduct
• Up to 8 lanes
• Estimated traffic speed - 120 km/h
• Construction time – 6 years
• Fare – $ 0,05 for 1 km – passenger car
$ 0,11 for 1 km – tracks
Initiate organization – «Western Speed Diameter»
Investor of the project will be chosen on concession tender
Total investments value – $ 3,1 bln.
Investment Fund financing– $ 1 bln.
Potential concessionaires: Strabag SE, Vinci Concessions,
Marubeni Corporation, Aldesa Construcciones, S.A., Autovie
Venete S.p.A., Lotte Engeneering & Construction etc.
Construction of the motorway «Western Speed Diameter»
in St.Petersburg
Based on The Law on Concessions
Approved Investment Projects
12
Complex development of the Lower Angara region
Objects for investment
Industrial enterprises
(at the cost of investor)
- Boguchanskaya HPS – 3000Мvт
- Aluminum plant – 600 000 tones of primary
aluminum
- Tagar metallurgical union
- Gorevskoe metallurgical union
- Pulp and paper mill in Yarky
- Cement works
- Gas-transfering plant in Karabula
Infrastructure
(at the public cost (Investment fund)
- Electric main for Boguchanskaya HPS
- Reconstruction of the Kansk-Aban-Boguchany-
Kodinsk highway
- Bridge over Angara river and Boguchany-Yarky-
Angarsky highway sector
- Railroad Karabula-Yarky
Initiate organization – «Corporation for Krasnoyarskiy region
development»
Investors – «Russian Aluminum», «Gidro OGK»
Total investments value – $ 8 bln.
Claim on Investment Fund– $ 1,3 bln.
Approved Investment Projects
13
Objects for investment
Industrial enterprises
(at the cost of investor)
Oil refinery plant
Petrochemical plant
Infrastructure
(at the public cost (Investment fund))
• rail-roads transportation
• pipe-line and delivery duct
Project's basic characteristics:
• processing per year 7000 thousand tons
• oil processing level up to 95%
• quality “Euro-4”, “Euro-5”
Initiate organization and Investor – «TATNEFT»
Total investments value – $ 4,8 bln.
Claim on Investment Fund – $ 0,6 bln.
Oil processing and petrochemical plants in Nizhnekamsk
PETROCHEMISTRY
Approved Investment Projects
14
Subjects to Concession Agreements
15
Concession Project scheme
16
Special economic zones in Russia
St. Petersburg
Moscow (Zelenograd)
Tomsk region (Tomsk)
Lipetsk region (Lipetsk)
Moscow region (Dubna)
Tatarstan (Elabuga)
17
Administrative
CustomsTaxes
Advantages provided by
special economic zones
Corporate profit tax:
– Accelerated amortization
– Removing restrictions on losses transfer to future periods
– Accelerated recognition of R&D expenses
Reduced uniform social tax rate in technological zones
Property and land tax exemption
for 5-years
VAT and duty free imports to special economic zone
territory
“One window” approach
Protection from non-favorable changes in tax legislation
Special economic zones advantages for investors
18
Industrial Assemblage
$mln
Thousands vhl.
Total Investments – 2 $ bln
Total output in 2010 – 800 thousand vhl
50
200
100
100 11560
220
270
400
230
70
120
30
Planned Investment
80
Import of vehicles - 25 %
Custom Tariffs
Import of components – 12,5 %
Import of components for industrial assemblage - 0%
for basic components
19
2,3
1,2 0,6
8,1
1,5
Infrastructure development
New generation
Vital functions security and environmentpreservationScience, innovations and "know-how"
Regional development
20072006
$ 13,7 bln.* $ 18,9 bln.*
Federal Target Programs 2006-2007
3,6
1,7
0,6
10,8
2,2
* Open share, including national projects
20
Russian venture company
Russian venture company
Private
venture
funds
Private
Co-investorVenture
projects
Main goal – to support venture investments in Hi-Tech industry
21
Investment fund
JSC Russian venture
company
Venture funds
Venture managing
companies
$ 15
bln. 100%
$ 625-1250
mln.
51%
Venture
capitalists
management
Bonus (~20% of
profit) Profit share
(~80%)
Up to 10 funds
Venture
investments
Innovation companies at early stage
management
Private
venture
investors
$ 600-1200
mln.49%
Acquisition price :
initial price +
3% per year
Right for RVC shares
acquisition
Acquisition price :
initial price +
3% per year
Right for RVC
shares
acquisition
Russian venture company
22
Organization State corporation (special law)
PurposeDevelopment of production and financial infrastructure, innovations, exports and small and medium-sized business
Charter capital sources
USSR VEB assets, Russian Development Bank and Roseximbank shares
Equity sources Bank for Development bonds, loans attraction
Investment priorities
To be established by RF government
RestrictionsNo activities with individuals, some restrictions in bank and
securities operations
Bank for Development
23
Opportunities offered by PPP in Russia
24
2000 2001 2002 2003 2004 2005 2006
Standard&Poor’s B- B+ BB BB BB+ BBB ВВВ+
Moody’s В2 Ва3 Ва2 Ваа3 Ваа3 Ва1 Ваа2
Fitch В В+ ВВ- ВВ+ ВВВ- ВВВ ВВВ+
Sovereign credit ratio growth
25
Welcome to cooperation
Ministry of Economic Development and Trade of the Russian Federation
Investment policy Department
Tel. +7 (495 )248 8400, fax +7 (495) 202 5697, [email protected]