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Free Port Status as a Prospective and Test for Vladivostok

In addition to the great economic benefits that the region is subject to the regime of "porto-franco," he also prepares him serious tests, the business ombudsman of Russia

EastRussia literally cites the text of Boris Titov "Free Port Status as a Prospect and Testing", published in the Vedomosti newspaper.

Free Port Status as a Prospective and Test for Vladivostok

Boris Titov

Business Ombudsman of the Russian Federation

The lack of movement in the economy leads to stagnation, and then to degradation. This is clearly visible in the Far East, bordering the rapidly growing countries of the Asia-Pacific region. They are distinguished by non-stereotyped thinking, ingenuity in making government decisions.

An example of such a non-standard solution can be giving Vladivostok the status of a free port. This decision may open up a completely new economic practice for Russia.

The proposal of the Ministry of Development of the Far East to make Vladivostok a free port promises great economic benefits to the region. The implementation of investment projects in the free port zone, the creation of a developed engineering, social and service infrastructure can triple the economy of the Primorsky Territory. In addition to Vladivostok, the territory of the free port also includes 13 municipalities - in fact, the entire south of Primorsky Krai. For residents of Vladivostok, this is a return to the roots: the city had the status of a free port from 1861, almost before the revolution, which allowed it to become one of the main ports of Russia.

A powerful impetus for development will be the entire region. Due to expanding sales markets, first of all exports to the APR countries, cheaper access to sources of raw materials and technological components, reduction of logistics costs and attraction of investments in technological modernization of production, the increase in GRP of DFO subjects up to 2025 can make 32-34%.

When drafting the draft law on a free port, the best practices of creating free ports of the APR countries were used, while new mechanisms were developed.

A lot of copies were broken around the final draft law. Discussed, for example, the option to create a new Hong Kong, removing it from under the Russian legal jurisdiction. The mechanisms of such cuts of territory are characteristic of third world countries, but they are not a civilized way of development. Such an approach at the level of the bill is excluded.

A new economic zone will exist for at least 70 years. On the territory of the port, it will be possible to apply the free customs zone procedure if required by investors. Early termination of the economic zone will require the adoption of a special law for strictly defined reasons - this is an additional guarantee of respect for the rights and legitimate interests of investors.

Advantages to investors are financial and tax. In my opinion, the benefits will be approximated to the Singaporean practice.

The maximum benefit from the tax regime will be the food, fish processing industry, the production of machinery and equipment, timber processing and construction. The authorities of Vladivostok count on localization of Korean medical centers in the city, increase of profitability from tourism.

Do not think that the new status of Vladivostok will automatically solve the problems of Primorye.

The city will have to withstand serious competition with neighboring Chinese and Japanese ports, increase the capacity on the borders with China, build new logistics and infrastructure: the current one does not correspond to the declared ambitions. There is a sharp shortage of workers. We need to carefully observe the balance in regulation, so that the export of raw materials through a free port does not become a dominant: to stimulate the creation of processing enterprises, the production of high technology high-tech products.

Another test is our bureaucracy: a free port is a good test of the quality of public administration.

Even for the best Russian laws, law enforcement practice becomes a problem. The development of a free port should be supported by a supervisory board that will tie together all levels of government. I hope that in the future the experience of the free port of Vladivostok will be scaled to the whole of Russia, and our government will find more and more unorthodox moves in economic policy.

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