Invest strategy presentation_eng

MOSCOW INVESTMENT STRATEGY 2014-2025

May 2014

2

CAPITAL INVESTMENTS in Moscow

Source: Russian Federal State Statistics Service (RFSSS)

bln. US $

Private, demand-

driven 59%

26%

Budgetary (infrastructural)

Private, competitive

15%

2012

23,4 24,1 29,1

39,3

2009 2010 2011 2012

44,3

2013

Source: IBM, Moscow City Investment Agency


3

INVESTMENT STRATEGY: OBJECTIVES AND RESULTS

45%

2012

2025

• To attract private investments into spheres traditionally funded by public funds

• To improve investment climate for private investments , considering social and urban priorities of the city

• To increase volume of private direct investments, to improve competitive position against international peers


Private, demand-driven

Budgetary (infrastructural) Private, competitive

25%

30% 59%

26%

15%

4

INVESTMENT CLIMATE: STRONG POSITION AND RISKS

Economic, political and business center of Russia and the CIS

The largest distribution market in Europe

Favourable geographic location, regional logistic hub

Solid and balanced city budget,

high credit ratings

“New territories” potential

Budget’s dependence on “capital rent

income”

Increasing international competition

for investors

Increasing international competition for highly skilled labor

Decreasing Russia’s economic growth

rate

Условия ведения бизнеса

Skilled workers, a high

proportion of the population with a higher

education

Developed financial market (compared

with other Russian regions)

“Russian gateway to abroad”

Advanced IT infrastructure

Considerable scientific potential

Russia’s general problems associated with

a low level of property rights protection and inefficient justice system

Deterioration of the image of Russia’s

business climate internationally

Limits to cost reduction

Место для жизни

Rich historical heritage

Vast opportunities for recreation

Positive growth of public spaces

(parks, pedestrian zones)

Relatively low crime level

High cost of living (especially for foreign employees)

Overuse of urban infrastructure

(e.g. congestion)

Relatively low quality of social services

(compared with global peers)

Potential business opportunities Business environment Comfortable place to live

Str

ong p

osi

tions

Ris

ks


5

INVESTMENT STRATEGY: OBJECTIVES

• To attract private investment into areas traditionally funded mainly by budgetary funds, for example, by involving in the economic turnover inefficiently used city properties (education, health, transport, culture, etc.).

• To create highly paid and highly productive jobs (technology parks, science parks, and industrial parks).

• To develop Public Private Partnership (PPP) projects.

POTENTIAL BUSINESS OPPORTUNITIES

• Cost reduction of business operations by simplification of administrative procedures, improvements in tax system, etc.

• Competition development and enforcement of clear «rules of the game»

• Creation of infrastructure facilities for project realisation

• Development of flexible state support system

• Promotion of Moscow’s investment image

IMPROVING BUSINESS ENVIRONMENT

• Balanced infrastructure development

• Creation of comfortable urban area

A COMFORTABLE PLACE TO LIVE IN


6

STRATEGY IMPLEMENTATION: MEASURES AND PRIORITIES

General measures, aimed at

improvements in the city’s

investment image in general

Specific measures, aimed at

attracting investments to

priority fields


7

GENERAL MEASURES: BUSINESS OPPORTUNITIES

BUSINESS OPPORTUNITIES

Attraction of private investors into

areas traditionally funded mainly

by public funds

Involvement in the economic turnover

of inefficiently used city properties

Reduced rent of city property in priority

sectors

Public Private Partnership (PPP) projects

Subsidies for public services to private

organisations

Long-term contracts (Lifecycle Contracts)

Support for investment projects

Creation of highly paid and highly

productive jobs

Support measures for priority sectors

Technology, science, and industrial parks creation

The inflow of investment and job creation by

improving the existing business environment


8

GENERAL MEASURES: BUSINESS ENVIRONMENT

Improvements in business environment

Cost reduction of business operations

Simplification of administrative

procedures

Time and cost reduction of administrative procedures

included the Doing Business

rating

Optimisation of other administrative procedures (based on business appeal)

Activities of the Headquarters to protect the entrepreneurs’ rights and legitimate interests

Conversion of public services into electronic form

Tax policy

Tax benefits for investors (for priority

sectors)

Regular assessment of the efficiency of tax

incentives

Transfer of the tax burden to property,

rather than the activity

Tariff policy in the energy and public services sector

Long-term tariff planning

Tariff optimisation

The introduction of network connection fees

Involvement of consumers of utility resources in the

payment planning process

Competition development and establishment of “clear rules”

Further improvement of the public procurement

system

Increased competition in the property and land

auctions

Improvement of Moscow’s

investment image

Alignment of direct communications and

feedback from investors

Promotion of Moscow as a place for business

Work with international sources of information

Bilingual unified information investment

portal


9

GENERAL MEASURES: A CITY TO LIVE IN

Moscow – a comfortable city to live in

Balanced infrastructure development

Balanced urban policy

Changes to the city planning rules and

regulations

Development of a polycentric city structure

Creation of parks, pedestrian zones, etc.

Integrated development of territories (including

comprehensive redevelopment)

Expansion and modernisation of transport infrastructure

The development of the public transport system

Intelligent traffic management systems

Reorganisation of parking space

Creation of a comfortable city environment

Improvement of social service quality

(education, public health service, etc.)

Service improvements of Government organisations

Increased private sector involvement

Public security The development of

a legal residential rental market

Saving the city’s historical heritage

Restoration of cultural heritage sites, using

funds by private investors (preferential

rent)



Priority fields

Transport Infrastructure

Health & Education

New Economy Traditional Industry Financial & Business Services

Wholesale, Retail, Logistic Travel, Hospitality, Leisure & Sport,

Urban Environment

Housing & Utilities


Field priorities

OBJECTIVES AND PRINCIPLES:

• Improvements to the transport situation in

Moscow;

• smoothing of key burdens on a city budget;

• development of Public Private Partnership

mechanisms;

• promotion of new technologies, including

administrative;

• creation of a united transport system for the

whole Moscow agglomeration .

Transport infrastructure


• Promotion of private sector

growth, competition

development, quality

improvement and price

reduction, creation of new

facilities;

• attraction of foreign investors

with competencies which are

lacking or insufficient in

Moscow;

• creation of attractive projects

for private businesses

considering city’s interests.

Social sphere (education & health)

PRIORITIES:

• Reconstruction and modernisation of existing

healthcare services, using PPP mechanisms;

• support in construction of private health services

using funds of private investors;

• using private investment for creation of

preschool and school facilities, using PPP

mechanisms;

• attraction of private investments to high-school

and professional education;

• promotion of education programmes recognised

internationally.

PRIORITIES:

• Tube development;

• public transport modernisation;

• development of railway services ;

• long-term purchases of trains;

• creation of transport hubs;

• road building, including different forms

of PPP.

TOOLS AND MEASURES:

• Concessions, long term

purchases (lifecycle

projects) and other forms of

PPP;

• building transport

infrastructure using special

Moscow investment

program.

TOOLS AND MEASURES:

• Reduced leasing price

(1 rub per 1 sq. m);

• subsidiaries for private

businesses providing

services for Muscovites;

• concession s and PPP

mechanisms;

• consultation and

support.


Industry priorities


• Creation of well-paid and highly

productive jobs;

• development of knowledge intensive

spheres ;

• attraction of international investment;

• increase in production and export of

high-technology products with greater

added value;

• building infrastructure for innovative

industries.

«New economy»


• Optimisation of industry

territories, increasing efficiency;

• increase in competitive industries;

• restructuring of inefficient

enterprises.

«Traditional industry»

TOOLS AND MEASURES • Concessions for investments;

• elaboration and approval of

documents concerning urban areas

that cannot be redeveloped;

• subsidies to compensate costs for

personal training.

PRIORITIES:

• Upgrade of existing industries and

increase in their productivity;

• introduction of energy saving

technologies;

• improvements in safety and

environment facilities.

PRIORITIES:

• Electronics, microelectronics,

nanoelectronics;

• development of new materials,

laser-based and radiation

technologies;

• aerospace complex;

• pharmaceuticals (as related to

research and development);

• telecommunications and

information technologies;

• other spheres.

TOOLS AND INSTRUMENTS • Creation of infrastructure

for technological and

industrial parks;

• tax privileges for residents

of science, technological

and industrial parks;

• subsidiaries for innovative

companies;

• consultation and support.


Industry priorities

OBJECTIVES AND PRINCIPLES :

• Integrated land development: accommodation, infrastructure, employment within walking distance ;

• creation of economic conditions attractive for investors considering city’s interests;

• maintenance of cultural heritage objects and their involvement in the economic turnover.

Urban area

OBJECTIVES AND PRINCIPLES :

• Upgrade and develop municipal infrastructure;

• transition to financing of engineering public infrastructure by using funds of utility service providers.

Public services

PRIORITIES : • Electricity, heat and gas supplies;

• Develop and upgrade collector facilities;

• water-pipe and canalisation facilities;

• clearing and processing waste water;

• unified lighting area development;

• creation of network of public toilets.

TOOLS AND MEASURES :

• Long-term contracts;

• Public Private Partnership mechanisms.

TOOLS AND INSTRUMENTS :

• Elaboration of redevelopment projects;

• attracting private investment into renovation work and maintaining the sites by offering them for long-term lease;

• consultation and support.

PRIORITIES :

• Redevelopment of existing territories;

• renovation of cultural heritage;

• involvement in the economic turnover of shabby objects;


Results Investments in capital ($ US bln.)

Foreign direct investment (%)

Competitiveness index of the cities in the world (The Global City Competitiveness Index), Moscow

Private investment in education (% to 2012)

Private investment in health services (% to 2012)

GRP per worker (% to 2012)

OVERALL RESULTS

Opportunities for business

32,4 2012 40 2016 82 2025

15 2012 20 2016 30 2025

58/120 2012 50 2016 30-40 2025

100% 2012 300% 2016 700% 2025

100% 2012 300% 2016 700% 2025

100% 2012 120% 2016 200% 2025

Moscow in Innovation Cities Top 100 Index 74/445 2012 60 2016 50-55 2025

15

REALISATION PLAN: SHORT-TERM PROJECTS (EXAMPLES)


Transport:

• Life cycle contracts to purchase rolling stock for the Metro;

• PPP in building and maintenance of Northern Back-Up for Kutuzovsky Avenue;

• Creation of transfer hubs (255 overall).

Education:

• Reduced leasing rate for private schools and kindergartens (40 objectives in 2013-2014)

Health services:

• Reduced leasing rate of 1 rub per 1 sq.m for «Doctor Round the Corner» project;

• Concession projects.

Urban area:

• Reduced leasing rate for cultural heritage;

• Old industry modernisation.

«New economy» High-tech:

• Investment proposals and state support: Zelenograd, special economic zone, Moscow Technopolis, innovation cluster and other infrastructure for innovative production.

Invest strategy presentation_eng

Law

Transcript of Invest strategy presentation_eng