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Business portrait of the Far East
Expert EastRussia Rostislav Turovsky - on the new economic policy in the region
The Far East today is a promising territory and at the same time a territory of internal contrasts. EastRussia expert Rostislav Turovsky analyzed the investment potential of the region
In 2014, the volume of investments in fixed assets in the Far Eastern Federal District amounted to 820 billion rubles, exceeding the indicator of 2013 (814 billion rubles).
In 2014, the share of funds from the federal budget in investments decreased and amounted to 15,1%, but this is still a fairly high value relative to the all-Russian indicator (8,6%), and in 2013 the indicator was even higher - 19,3% ( the all-Russian indicator is 9,8%). The main volume of investments in the Far East is now going to large raw materials and infrastructure projects implemented by state and private companies. The Far East is one of the priorities for such leading state corporations as Rosneft, Gazprom, Transneft, RusHydro, etc. At the same time, the task of more actively using private business has been set and is gradually beginning to be addressed through the creation of preferential tax regimes ...
If we talk about foreign investments in fixed assets, then their volume is not yet high and amounts to about 20% of the total volume. Probably, the investment attractiveness of the region for foreign companies is negatively affected by the geographic features of the Far East, namely, the combination of large uninhabited territories with insufficiently developed infrastructure and difficult climatic conditions. These factors increase the costs of investments in fixed assets, labor resources, transportation costs, etc. At the same time, the huge resource potential of the region cannot but interest foreign investors. In Russia in 2013, the Far East accounted for about 9,22% of all foreign direct investment (FDI) of the country (previously it was 11,64% and 17,31% in 2012 and 2011, respectively), which is generally a good indicator. ... With regard to FDI in the Far East, it is also worth noting some important features.
First, the inflow of foreign direct investment is unevenly distributed among the regions of the Far East and demonstrates unstable dynamics. The Sakhalin Region stands out, which has been the leader in the Far East in terms of direct foreign investment since the beginning 2000-x years (its share reached 96,41% in 2005), in 2011 the share of this region was 70%, and in 2013 it significantly decreased - to 40%. The Sakhalin region is the most prominent region of the Far East and in other parameters of investment climate. For example, in terms of the volume of investments in fixed assets per capita, the Sakhalin Region leads not only among the regions of the Far East, but also occupies 4-e place in the country with an indicator of 429,47 thousand rubles per capita. The Sakhalin Oblast also has the largest budget surplus among all constituent entities of the Russian Federation (15,7% in 2014), while all other regions of the Far East (like most Russian ones) have a deficit.
Second, FDI is predominantly concentrated in the extraction of minerals. In particular, the implementation of oil and gas projects in the Sakhalin Region for a long time provided almost the entire volume of foreign direct investment in the Far East. In general, the directions of investment investments tend to diversify. For example, in the Primorsky Territory, for the first time in history, the development of the automotive industry takes place, namely, the production of Sollers-DV was created.
Thus, investment processes in the Far East are contradictory. On the one hand, it is necessary to reduce the presence of the state and increase the inflow of FDI, and on the other hand, this cannot be done by the forces of the regions themselves, without federal support. It is likely that in the near future it will be impossible to achieve uniform development of all regions of the Far East, but in any case, the emergence of individual growth points will stimulate business activity in the entire macroregion.
Key sales markets and external trade turnover
In contrast to the unstable investment process, the Far East is characterized by a fairly stable picture of foreign trade turnover, as well as the configuration of permanent trading partners abroad.
Last year, as expected, the foreign trade turnover of the Far Eastern Federal District decreased (for the first time since 2008) and amounted to USD 39,01 billion, which is 2,6% less than in 2013. The negative dynamics is explained by a decrease in imports (by 12,8%), which is the result of the devaluation of the ruble, an increase in prices for imported goods (including due to an increase in customs duties pegged to the euro exchange rate), which, as a result, led to a decrease in consumer demand. Exports, on the contrary, increased (by 1,7%), however, the difficult economic situation in the country slowed down the rate of export growth.
The foreign trade turnover of the Far East is mainly associated with the states of the Asia-Pacific Economic Cooperation (APEC), which is due to the peculiarities of the geographical location of the region. The key counterparties are the Republic of Korea, China and Japan; these countries account for about 80% of the entire foreign trade turnover of the Far East. The largest export partners in 2014 were the Republic of Korea (32,0%), Japan (29,7%) and China (19,1%), the structure of imports is represented by the same countries, but in a different percentage. The leader is China with a share in imports - 45,1%, followed by Japan - 16,9% and the Republic of Korea - 10,6%.
The Sakhalin Region, Primorsky Territory and Yakutia provide up to 90% of the entire foreign trade turnover of the Far East. Until 2009, the Khabarovsk Territory was among the top three, but its foreign trade turnover began to decline. As a result, the region moved to 4-e having missed Yakutia, which, on the contrary, continues to increase the growth rate of foreign trade turnover.
The Sakhalin Region, which for the last 8 years has been the leader in terms of foreign trade turnover among other regions of the Far East (in 2014, its share was 46,14% or $ 18,0 billion), mainly cooperates with Japan (43,4% of foreign trade turnover). Sakhalin's economy has a pronounced export orientation. Recently, one of Sakhalin's main export commodities has been liquefied natural gas (LNG) produced under the Sakhalin-2 project, in which Gazprom, Shell and Japanese companies Mitsui and Mitsubishi participate. Japan is the leading buyer of Sakhalin LNG. In 2014, Sakhalin's trade with the Republic of Korea increased by $ 7,2 billion (11,5%) thanks to the growth in crude oil and coal exports, and this country now accounts for 40,2% of the total foreign trade turnover of the Sakhalin Region. Sakhalin export is mainly represented by products of the fuel and energy complex (94-95%), import - machinery and equipment, metals, which ensure the technological implementation of oil and gas offshore projects on Sakhalin.
For many years, Primorsky Krai has been in the Far East in second place in terms of foreign trade turnover, which in 2014 amounted to 12,9 billion US dollars or 29,48% of the total foreign trade turnover of the Far Eastern Federal District. The main trading partner of Primorsky Krai is China, located across the border (51% of the total turnover).
The region, due to its border and coastal geographic location, is distinguished by high rates of imports, significantly exceeding exports. There is a particularly close cooperation of the region with the Chinese border provinces of Heilongjiang and Jilin, which is facilitated by the presence of ports and five checkpoints across the border of the Russian Federation. The modernization of the Primorye-1 and Primorye-2 transport corridors will significantly reduce the cost of transport costs and further increase the trade turnover between Russia and China, effectively creating a single transport space. The cooperation of the Primorsky Territory with the Republic of Korea is equal in terms of trade turnover. Japan - 17% from each country.
The Republic of Sakha (Yakutia) took the third place in 2014 in terms of foreign trade turnover - 5,1 billion dollars, or 13% of the Far Eastern Federal District. The main export partner is Belgium (about 55% of the total foreign trade turnover), followed by India, China, Israel. Unlike the Sakhalin region and Primorsky Krai, the republic's exports in 2014. 85,7% is represented by precious stones and precious metals, since the largest diamond deposits in Russia are located in Yakutia. Unsurprisingly, in this regard, the bulk of production goes to Belgium, where one of the world's largest diamond markets is located.
The Khabarovsk Territory is in 4th place (its share is 5,7%) with the volume of foreign trade turnover of USD 2,2 billion. The position of this region in foreign trade relations is volatile due to the lack of reliable and guaranteed demand for its products. However, the region last year showed the highest growth index of foreign trade turnover - 124,8% compared to the previous 2013. The main export partner is China (84%), and the commodity structure of exports is mainly represented by timber and pulp and paper products (about 90% of all exports ).
With regard to the foreign trade turnover of other regions, it is also worth noting some features. The Amur Region exports ores, iron and titanium concentrates, timber; its main partner is China. The Magadan Region is more actively cooperating with the Republic of Korea (79,1% of exports), supplying mineral products (66,8% share), fish products (28,8%), food products and agricultural raw materials (29,2%). Silver and gold are a specialty of this region in the foreign market.
The export of Kamchatka Krai is dominated by fish products (97%), the main trading partners are the Republic of Korea, China, Japan, and the USA. Chukotka also exports mainly fish products (about 85% of turnover), the main partners are the Republic of Korea, China, and the United States.
Foreign trade cooperation of the Jewish Autonomous Region is almost entirely (2014% in 94,5) focused on China. The commodity nomenclature of exports of the Jewish Autonomous Region consists of 71,5% of timber and 23,2% of soybeans.
Thus, the structure of imports varies slightly from region to region and is represented mainly by machinery and equipment, metals. A significant part of imports goes through the Primorsky Territory, with China being the main supplier. The export structure has its own characteristics from region to region, the main sales markets are the Republic of Korea, Japan and China. In the future, we can expect an increase in the diversification of export products of the Far East and, in particular, its lagging regions. This is due to the launch of new raw materials projects, in particular - for the extraction of coal, iron ore, gold, etc.
The implementation of large projects is impossible without proper provision of labor resources. In the Far East at the moment there is a question of attracting qualified workers, as there is a shortage of personnel. This is due to the peculiarities of the organization of the labor market in the region, which are largely determined by its geographical position and the current all-Russian features of social development.
С 90-x The population of the Far East declined by 1,8 million people, the largest population losses were suffered by the Chukotka Autonomous Okrug, Kamchatka Territory, Magadan and Sakhalin Regions, about 49% of the decline was caused by these most remote regions.
Firstly, the Far Eastern regions have not bypassed the all-Russian trend of population depopulation. Although in 2014 the birth rate in the Far East exceeded the death rate by 9334 people, one cannot speak of a stable positive trend. The birth rate was indeed higher in 2014 (14,1) than in 2013 (13,9), but this difference is insignificant. At the same time, the values for the subjects do not deviate very much (exceptions: Yakutia with an increased value of 17,8% and a low value of the Magadan region - 12,2).
Over the past years, mainly due to Yakutia in the Far Eastern Federal District, the natural population growth rate has taken a positive value (+1,5). At the same time, it is important to note that now the birth rate in the Far Eastern Federal District exceeds the same Russian indicator, which is 13,3. Therefore, we can still talk about the presence of the prospect of population growth due to an increase in the birth rate.
Secondly, the problem of the migration outflow of the population (especially the able-bodied) to other regions of Russia is even more acute; it accounts for about 84% of the total population decline in the Far East over 20 years. The value of the migration loss changes every year, either increasing or decreasing, but at the same time the migration balance always remains negative. In 2014, it amounted to 24 people. The migration balance is negative for all regions, which has become a stable trend in recent years. In 752, the outflow of the population increased from the Sakhalin Region and from the Kamchatka Territory, the rest of the regions showed a decrease in the migration outflow, but not less than 2014% compared to last year. This negative trend has not yet been reversed.
At the same time, the region does not experience problems with the training of professional personnel. In total, there are 44 universities and 80 branches in the Far East, and the educational centers of the region can be considered the Khabarovsk Territory (14 universities and 12 branches), the Primorsky Territory (10 universities and 26 branches) and Yakutia (7 universities and 13 branches). The Far Eastern and North-Eastern Federal Universities (included in the top ten federal universities established in Russia) located in the Primorsky Territory and Yakutia, respectively, stand out. Higher educational institutions offer a wide range of educational programs (about 300 specializations in total) in the areas in demand for the region related to by sea transport, fisheries, mining and processing industries, etc.
But, despite the favorable conditions, applicants are often focused on non-production professions (socio-economic profile), while there is a need for engineering personnel. In addition, the massive desire of school graduates to get a higher education (this is not only a problem in the Far East) creates an imbalance in the labor market, since in addition to qualified specialists, representatives of blue-collar professions are urgently needed. The imbalance between supply and demand is already being felt and may worsen in the future.
At the moment, the regions of the Far East are faced with the task of retaining existing human resources and attracting new ones. At the federal and regional levels of government, discussions are underway about initiatives that would stimulate the attraction of personnel to the Far East. In particular, at the moment there is a discussion of a draft law, according to which any resident of the Russian Federation can be allocated 1 hectare of land in the Far East with the possibility of its further acquisition of ownership when the site is developed within a five-year period. Of course, this measure will not be able to completely eliminate the shortage of labor resources, but at the same time, such initiatives indicate that the federal center is concerned about this problem and is ready to take further steps to eliminate it.
New incentives for investors, prospects
In recent years, the federal center has taken many steps to improve the investment climate in the Far East.
The TOP project and other projects of the Ministry for the Development of the Russian Far East also became an impetus for the creation of organizations in order to support them. The Ministry for the Development of the Russian Far East initiated the creation of an Agency for Human Resource Management, which will engage in attracting professional personnel, coordinate the recruitment of specialists, and facilitate their relocation to the Far East. The ministry also plans to create an Agency for attracting investments and supporting exports of the Far East to attract investors. In addition, almost every region of the Far East has an investment development agency (or fund), for example, the Investment Development Agency of Yakutia, the Agency for the Development of the Kuril Islands and Investment Programs of the Sakhalin Region, the Fund for the Development of Economy and Direct Investments of the Chukotka Autonomous Okrug, etc.
On the agenda is the task of maximizing the potential of the region. First of all, the areas of advanced socio-economic development (TOR), which should attract investors to the region, will become the points of growth of the economy of the Far East. On March 30, 2015, federal law No. 473-FZ “On territories of advanced social and economic development in the Russian Federation ”, which the federal authorities have been preparing since last year. Territories of advanced socio-economic development are economic zones that are subject to a special preferential tax regime, as well as simplified administrative procedures.
At the moment, 9 TOP are being created, each of which has its own specialization: two territories in the Khabarovsk Territory, these are the TOP "Khabarovsk" (industry, transport and logistics) and the TOP "Komsomolsk" (industry), two in the Primorsky Territory - the TOP " Nadezhdinskaya "(light and food industry, transport and logistics focus) and TOR" Mikhailovskaya "(animal husbandry, crop production, food production), two in the Amur region - TOR" Priamurskaya "(industry, transport and logistics focus) and TOR" Belogorsk " (agro-industrial focus). In addition, in the Kamchatka Territory, the Kamchatka ASEZ will specialize in tourist-recreational, port-industrial, agro-industrial activities, in the Chukotka Autonomous Okrug, the Beringovskaya ASEZ in the mining industry, in the Republic of Sakha (Yakutia), an industrial park of the Kangalassy ASEZ is being created ... It is also planned to create a PDA in the Sakhalin region - on the Kuril Islands and in the Jewish Autonomous Region. As a result, at least one ASEZ will be created in each constituent entity of the FEFD federation, and in some constituent entities there will be two of them.
The minimum requirement for investors is an investment of 500 thousand rubles, which is a fairly small amount. Investors are provided with a large set of benefits: TOP residents pay only 7,6% of insurance premiums (instead of 30%) during the first 10 years, 0% is VAT on imports and processing, 0% - import and export customs duties, income tax for the first 5 years from 0-5%, the next 5 years - at least 10%. Reduced lease rates (0,4 of the base rate) and mineral extraction tax are applied (0-0,8 in for the first 10 years). Also, the territories will have a free customs zone regime for residents, namely, duty-free and tax-free import, storage, consumption, (use) of foreign goods within the TOP, as well as re-export of goods and equipment.
Simplification of administrative barriers is as follows. Environmental expertise of infrastructure facilities will last only 45 days, and the time required for obtaining permits has also been reduced. To solve the problem of labor resources, it is allowed to attract foreign workers without obtaining additional permits and taking into account quotas. The state undertakes to finance the construction of the infrastructure of ASEZ facilities. It is important to note that the law does not regulate the number of TOP, which means that in the future, new territories of advanced development may appear in the Far East. At this stage, the creation of a TOP is possible in the Far East, as well as in single-industry towns with a difficult economic situation in other parts of the country. If successful, in the future, the TOP will be created outside the Far East, as already provided for by law.
At the same time, the idea of TOR was born taking into account the critical analysis of the work of the former SEZs. Firstly, ASEZ projects provide for a more comprehensive approach to improving investment attractiveness, since they provide not just special preferential conditions, but a set of measures to generally improve the socio-economic development of territories. In addition, as mentioned above, within the framework of the TOP, the development of project infrastructure is provided by the state. If we talk about the detailed features, then the tax benefits of the ASEZ exceed the preferences offered within the SEZ, and administrative barriers have been significantly reduced.
In many respects, the idea of the TOP continues to create the Free Port of Vladivostok (on October 12, 2015, federal law No. 212-FZ "On the Free Port of Vladivostok"), which unites 15 municipalities in the south of the Primorsky Territory and offers a number of tax benefits, customs preferences for investment activities. Among the benefits are reduced rates of insurance premiums (7,6%), residents are exempt from taxes on profits, property, land and others for 5 years. An important feature is that the visa regime is simplified, in particular, there is an opportunity to obtain 8 day an entry visa directly at the border. A free customs zone regime for residents is also offered, similar to the conditions of the PDA. According to the law, the port is created for 70 years, but the possibility of extending this period is envisaged. It is assumed that in the future a free port regime can be created in other coastal regions of the country, but so far the experiment is being carried out only in Vladivostok.
In addition to the large-scale projects of the ASEZ and the Free Port, it is worth noting other initiatives of the federal and regional authorities to provide tax incentives to stimulate investment activities in the Far East. From January 1, 2014, the federal law of the Russian Federation of September 30, 2013 No. 267-FZ "On amendments to parts one and two of the Tax Code of the Russian Federation in terms of stimulating the implementation of regional investment projects in the territories of the Far Eastern Federal District and individual constituent entities of the Russian Federation", which implies special preferential tax conditions for investors. It is important to note that the law introduces the concept of a "regional investment project" (previously there was no such term in the Tax Code), the purpose of which is to produce goods on the territory of one of the subjects, which may include all regions of the Far Eastern Federal District, as well as a number of regions of Eastern Siberia - Republic of Tyva, Irkutsk region, Trans-Baikal Territory, Republic of Buryatia. An investment project cannot be associated with the production and (or) refining of oil, the production of natural gas and (or) gas condensate, the provision of services for the transportation of oil and (or) oil products, gas and (or) gas condensate, the production of excisable goods (exception - cars and motorcycles), carrying out activities to which the tax rate for corporate income tax is applied in the amount of 0%. In addition, investments should be directed exclusively to the production of goods, which means that activities in the service sector (for example, the development of railway and road infrastructure facilities) are taxed in the general manner.
To receive benefits, an investment project must meet a number of conditions. The amount of investments must be at least 50 million rubles (for a period of up to 3 years) or at least 500 million rubles (for a period of up to 5 years). In general, these amounts are quite acceptable and do not constitute a significant barrier. Instead of the usual 20% income tax rate, the preferential treatment assumes its reduction to the range 0-10% for the first 5 years and at least 10% over the next 5 years. The starting point is the moment of extracting the first profit from the project. The regions in which the implementation of regional investment projects is taking place have also adopted the corresponding laws, which regulate the rates of income tax. In Yakutia, Amur Region, Khabarovsk Territory, Chukotka Autonomous Okrug, Jewish Autonomous Region, Sakhalin Region, Primorsky Territory, rates correspond to the minimum values specified in the federal law, Kamchatka Territory offers less loyal conditions for investors - 10% during the first five years, and also Magadan region - during the first five years - 9%, the next five years - 13,5%.
In addition, the law proposes decreasing rates for mineral extraction tax rates: 0 for the first 2 years; further 0,2 to 4 years; 0,4 to 6 years old; 0,6 to 8 years old; 0,8 to 10 years old. However, this procedure applies only to gold, coal, ores of ferrous and non-ferrous metals, but does not include oil, gas, gas condensate, common minerals, mineral waters and medicinal mud.
Restrictions were also introduced that exclude the possibility of turning the regions of the Far East into offshore zones. Firstly, a participant in an investment project should not have separate subdivisions outside the entity in whose territory the project is being implemented. Secondly, at least 90% of the participant's income must be received from the sale of goods produced as a result of the investment project. These requirements will not allow the creation of enterprises to receive benefits without carrying out real activities in the territory of the subject where it was registered.
Also in July 2015, the procedure for recognizing priority investment projects in the Baikal region and the Far East was simplified, in particular, the requirement that actual investment be at least 10% of planned private investment was canceled. In addition, the government decree confirmed the fact that financial support will come directly from the Fund for the Development of the Far East and the Baikal Region. The main condition is that the total cost of the investment project must be over 250 million rubles. Thanks to these changes, the Russian government approved in July six priority investment projects in the Far East, the total amount of allocated funds, which will amount to 13,8 billion rubles.
Thus, investors now have many new opportunities for doing business in the Far East. Favorable conditions of the tax and customs regime, and most importantly, the reduction of bureaucratic barriers significantly increase the investment attractiveness of the Far East, allow counting on serious changes in the socio-economic situation and deeper integration of the macro-region into the APR.