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  • Paratunka is waiting for new residents of «Kamchatka» ASEZ

    p. 18 Presentation of the Investment Project

    p. 22 Cover Story: Fishery Industry

    pp. 14–19

    Everything is Just

    Beginning in Country’s

    East President of TechnoNIСOL

    corporation Sergei Kolesnikov on business development in the

    Russian Far East pp. 10–11

    Success Story: Synthesis of Two Technologies

    p. 12

    The Ministry for Development of the Russian Far East is continuing to improve legislative control

    of the region’s advanced development с. 9

    Also inside:

    Government of Russia Expands Komsomolsk ASEZ

    p. 8

    #17 | MAY 2018EAST RUSSIA ECONOMIC AGENDA

    Official Bulletin of the Ministry for Development of the Russian Far East. The document was prepared by ANO Far East Investment and Export Agency. Distributed by subscription. Reference to the source is required when using materials.

  • ECONOMY OF THE FAR EAST

    2

    The St. Petersburg International Economic Forum (SPIEF) was held on May 24-26. The reason to open the business program of the forum with a discussion entitled "Far Eastern Breakthrough: How to Become a Leader in the Growth of Private Investment?" was the statistics of 2017.

    For the first time in several years, the Far Eastern Federal District has become the leader in the private investment growth rate with 17.1% against 4.4% of the national av- erage. 1200 investment projects are being realized in the Far Eastern Federal District with total financing of RUB 3.7 tn. 107 new enterprises were created by residents of the priority development areas (ASEZs) and the Free Port of Vladivostok (FPV) with a total investment amount of RUB 90 bn. Accord- ing to the Federal State Statistics Service, the growth rates in the Far Eastern Federal District exceeded the Russian average: the industry rate exceeded it by 2.2%, agricul- ture rate by 8.2%, construction rate by 9.2%. And the organizers of the discussion won- dered what is considered "advanced" at all, if not such economic development, calling the development of the Russian Far East a "breakthrough".

    The moderator of the session was Al- exander Ivlev, Managing Partner of EY in Russia. The following people took part in the discussions: the Deputy Prime Minister – the presidential envoy to the Far East- ern Federal District Yury Trutnev, Head of the Far East Development Corporation De- nis Tikhonov, Head of the Far East Invest- ment and Export Agency Leonid Petuk- hov, as well as major businessmen: CEO of PJSC Polyus Pavel Grachev, CEO of Sibur Mikhail Karisalov, CEO of PJSC Sollers Vadim Shvetsov, presidents of two corpo- rations – TechnoNICOL Sergei Kolesnikov and Kinross Gold Paul Rollinson, Heads of Boards of Rusagro Group LLC Vadim Mos- hkovich, Kolmar Group LLC Anna Tsivileva and ESN Group Grigory Berezkin. Among the experts were also vice speaker of the State Duma Irina Yarovaya, Khabarovsk governor Vyacheslav Shport, dean of the

    Faculty of World Economy and World Pol- itics of the Higher School of Economics Sergei Karaganov.

    All these people represent the largest investments in the Russian Far East that ei- ther have already been implemented or are just planned (Sibur is planning to make the most significant contribution of RUB 500 bn to the Amur Gas Chemical Complex). The absence of representatives of Gazprom and Rosneft at the discussion about the "Far Eastern breakthrough" was somewhat dis- sonant, although it turned out that the Far Eastern agenda of the SPIEF also included them: Igor Sechin and the project of East- ern Petroleum Company was mentioned by Yury Trutnev during a media scrum, and at the discussion about gas several hours later, Alexey Miller said that by 2035 Gazprom ex- pects to supply as much as 80-110 bn cubic meters of gas to China from 180-190 bn cu-

    SPIEF 2018 Opens with Discussion on Far Eastern Breakthrough & Requests to Authorities from Business

    Investors to Receive Help In Entering Foreign Markets

  • EVENTSMAY 2018

    3

    bic meters which China will import through pipelines. Another major investor in the Russian Far Eastern economy, Viktor Veksel- berg, was speaking at the digitalization ses- sion at those moments.

    Yury Trutnev, began the session by an- swering the question of "what are we going to do next?". "First of all, we will continue to support the conditions for better business. The world is changing every day, and hav- ing once created a matrix favorable for the investor does not mean that one can count on winning", stressed the Deputy Prime Minister and promised to start transform- ing the sectoral legislation in the inter- ests of entrepreneurs this year, since "gen- eral preferences are not enough," as well as "continue reducing administrative pressure on business."

    "Most industries have significant obsta- cles to investments, with your help, we will try to understand to the letter what needs to be eliminated," said Yury Trutnev. "It's also very important to have a sufficient number of trained specialists. Currently, while there is demand for certain professions, people are trained for others. Within two months we should complete the "balance" through- out the Russian Far East, and then start the education reform," he added. Thus, changes are promised not only for legislation on tim- ber processing or aquaculture, for example, but also for the system of the Ministry of Education, which is new to the Russian gov- ernment.

    Many speakers thanked Yury Trutnev for the system of preferences for invest- ments in the Far Eastern Federal District created with his participation, and in- deed asked for amend- ments to certain areas of legislation. For ex- ample, Pavel Grachev proposed extending last year's alignment of electricity tariffs in the Russian Far East to the federal level be- yond the originally defined period of three years. "It's not a long period for any in- vestor: with three years, one just has time to create the project and, maybe, to start the construction, but not to commission it. The initiative to extend this measure for 10 years, which is now discussed, would be very useful as an incentive for attract- ing new players," said Pavel Grachev. He also proposed to allow concluding con- tracts on tariffs in isolated power systems for a period of five years instead of one

    year, as it is now (the draft law is in the State Duma).

    Paul Rollinson called again attention to the fact that the current threshold for assigning deposits to the federal level is set at a rate of 50 tons of recoverable gold reserves, but the Ministry of Natural Resources "intends to suggest raising the threshold to 200 tons in the autumn, and we continue to make such proposals." Vad- im Moshkovich noted that "optimal con- ditions for investments aimed at meet- ing domestic demand have been creat- ed" in agriculture, but it is difficult to start exporting Russian products. "We haven't solved the problems of biosafety in the country. The government is aware of the problem. It's clear what to do: we've been talking about this at all levels for sever- al years. However, there is still no central- ized solution," said Mr. Moshkovich. "The Russian Far Eastern region alone can eas- ily feed all of Southeast Asia even with- out involving the central part of Russia; there is the task to double our exports, we can easily send 10 mn tons of pork abroad. That's USD 20 bn, a doubling if you will," he stressed.

    Anna Tsivileva also drew attention to the problems of entering foreign markets and the need to refine the mechanisms of inves- tor benefits. In a number of Chinese ports, there are re- strictions on the import of coal from Rus- sia, but according to her, that's not the only problem. "It's up to the level of the inter- governmental commission and business, to make us a competitive partner in the Chi- nese market. The import duty on coking coal is 3%, and on energy coal is 6%. And Australia and New Zealand import goods under agreements without duties. We are a bit uncompetitive here: we either have to lower the price, dump, or increase purchas- ing prices. In addition, there is the prob- lem of reducing the customs clearance time in China, we are faced with the fact that sometimes our shipment stands up to three months without customs clearance," said Anna Tsivileva.

    For Russian products to enter for- eign markets more successfully, Grigory Berezkin suggested "creating technolog-

    ical clusters along the border, where dif- ferent redistribution chains would work in stages, in a related manner." "We have not reached this stage, but we will soon. This way we will bond consumers to us more", he stressed (ESN plans to supply grain al- cohol, produced from gas of "Sila Sibiri," to the countries of the Asia-Pacific Region). "And the second is the cost of financing: it's much cheaper all over the world. This is the next frontier because while we have solved administrative problems and tax planning, this problem still remains com- pletely," added Mr. Berezkin.

    Products of the Khabarovsk TechnoN- ICOL plant entered the Chinese market through automotive thermal insulation supplies, but 80% is still sold in the Rus- sian Far East market. "We don't have a sin- gle automobile corridor from the Russian Far East deep into China. We have to trans- ship our stone wool to Chinese cars. This is a waste of time because the builder always wants the products "yesterday", and we lose a week. In addition, there's also dam- age, as with any transshipment. The third thing is the number of cargo-and-passen- ger cr