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Electric cars - made in Vladivostok!

General Director of SUMOTORI Group Vitaly Verkeenko about event tourism, car business and projects in the Free Port Vladivostok

The Primorskoye Koltso tourist and recreational cluster is one of the priority development projects of the Primorsky Territory. And not only in the field of tourism. The cluster gained its fame thanks to the efforts of a whole team of like-minded people, the desire to do something significant, attractive and capable of competing with similar foreign projects, not so much for themselves, as for the region and its guests. Vitaly Verkeenko, General Director of the Primorskoye Koltso shopping and entertainment complex and the SUMOTORI technoholding, told EastRussia about the promotion of this largely social project, as well as about the prospects for the development of the automotive market in Primorye and new business initiatives.

Electric cars - made in Vladivostok!
Photo: Tass / VEF Photobank
Vitaly Vasilievich, as a representative of the automotive business - how do you assess the prospects for the car market in the Far East. It's no secret that the average age of cars here is the largest in Russia - almost 20 years. Will the car park grow old? Or is there a major upgrade?
- Of course there is a problem of "heredity". In Primorye, for a long time there was the opportunity to buy inexpensive cars, it was profitable, and in many ways without alternative. Today the situation has changed radically, but it is difficult to get rid of the stereotypes worked out over the decades. Unfortunately, many still pass all the "circles of hell", prefer to bring from Japan a second-hand car with an opaque history, restored after the accident or "drowned man," with the incomprehensible "craftsmen" button GLONASS. Although for the same money in the showroom, you can buy a new car of a similar class with a three-year warranty.

Alas, people in a limited communication field, without knowing the information, make decisions, they think, deliberately and carefully. But they are not that the test drive did not pass on a new European car, but even the prices were not compared. And yet, the trend that the car park in Primorye will start to grow young, is. Prerequisites for this will include, among other things, neglected government support mechanisms and a gradual rejection of the established stereotypes of our citizens. Maybe a very quick update of the car fleet will not happen, but it will not grow old either.

- AvtoVAZ (Renault-Nissan) recently told that they have export deliveries, including cars under foreign brands, but assembled in Russia. We 25 years imported cars from the East. And how do you think, will we start (and when) export them back to the APR? Is it possible for large assembly production in the region to be export-oriented?

- Current trends are such that in Russia it becomes cheaper to manufacture production than in Asia. We come to this conclusion, dealing with various Asian manufacturers. It so happened that the cost of production of the Russian assembly is now beginning to decline both due to increased production efficiency and technology, and at the expense of low costs. Today we already have an offer from the South Korean concern about the production of new electric vehicles for Asia in Primorye. At first our partners intended to place this production on the territory of South Korea. But now South Korean businessmen are proposing to place this production in Primorye, in the TOP, because there are specific preferences - both tax and customs, for electricity, engineering networks, for assembly costs, etc. Today this is an objective reality - it is more profitable to produce in Primorye and send to the countries of the Asia-Pacific region. Therefore, I am sure that such an enterprise in the Far East, which is export-oriented, will soon be operating. The potential is enormous.

- Do you mean the announced joint project with the Japanese company Arai for the conversion of old Japanese cars into electric vehicles in Primorye? With the subsequent delivery of them for export to India?
- Yes. Our project "Prometheus" (TOR "Nadezhdinsky") really got an additional development: we want not only to convert second-hand Japanese minicar to electric cars, but also to collect new cars. The market, as I said, both domestic and export - both Asia and Europe.

- You are also working with China - the assembly of FAW trucks was announced on the site "SUMOTORI"In Artem. How is the project going?
- The joint venture was registered, the manufacturer's licenses were obtained. Have brought the first samples. The assembly company is a resident of the Free Port of Vladivostok, but not all preferences are obtained due to administrative or objective reasons. Nevertheless, it is encouraging that there is such an opportunity - to study in practice and "grind", theoretically, the smooth mechanisms of the Free Port, as applied to our realities. We plan to complete all the certification processes for 1 September, and in the middle of the month to get the first batch of kits for the assembly. First and foremost, these are dump trucks of the G6 model, adapted for the Russian market with the formula 6x4 and 8x4.

- Another project of yours - the Primorskoye Koltso shopping and entertainment complex - is also a resident of the Free Port of Vladivostok. How is the initiative developing?
- The group of companies "SUMOTORI" during the last 15 years supported auto-motosport, but qualitative development is impossible without a foundation. So there was a playground "Primorskoe ring". We studied different business models in search of a golden mean, so that the project did not pull money from the budget and athletes, and at the same time would pay for itself, including through commercial facilities integrated into the sports complex.

There are positive changes: from the sports and technical complex the project turned into a full-fledged tourist-recreational cluster. For the inhabitants of the region, the Primorskoe Ring has long been a favorite destination for family holidays. Many specially come from nearby cities. In many respects, thanks to the successful neighborhood with the international airport, the efforts of our team are recognized and visited by guests of the Primorsky Territory. Racers and tourists from Japan, Korea, China are frequent guests. And starting in August, the simplified visa regime of the Free Port of Vladivostok begins to operate. We expect in this regard an even greater influx of foreign tourists.

- In September, the fourth international drift-battle AsiaPacific D1 PrimRing GP 2017. You are the main organizer. What do you expect from this event? Are costs justified?
- With 15 on 17 September, Vladivostok will host the first International Motor Show Vladivostok 2017 (VIAS 2017). The exhibition is being held as part of the drift-battle of AsiaPacific D1 PrimRing GP 2017. According to plans, the first stage of construction of the TRC is planned to be put into operation and opened with this big event.

I would like to note that last year the Ring was awarded the Russian Events Awords award as the best recreational and sports facility. So this year we have every chance to hold the planned events at the most worthy level. We attract spectators, the press, and this is becoming a significant event for the region. Thus, we mark Vladivostok on the international tourist map. This year we expect over 20 people, including foreign tourists. The event involves both local well-known pilots and internationally recognized racers from Russia and other countries.

Of course - high profits should not be expected - after all, the Primorskoye Ring is primarily a social project. The social project does not have high profitability, for stable development it needs preferences, which are provided today by the Free Port law regime. Of course, the status of a resident of the Free Port of Vladivostok helps to a large extent to optimize costs, and the commercial projects that complement the facility compensate them.

- You have been using the economic regime of the Freeport of Vladivostok for almost a year. What specifically did it give you?
- In principle, the Free Port regime allows the investor to increase the efficiency of the project through the application of two types of preferences: special customs regulations and tax incentives. Tax benefits work well and are fairly understandable. We are already getting the effect from the reduced rate of social payments to the wage fund - this greatly helps to optimize the expenditure part at the start of projects and with their further implementation. In the future, we expect a positive effect on other tax benefits - on profits, property, land.

At the same time, we are much in demand for customs preferences - it is extremely advantageous for our business to import equipment, machinery, materials without duty. The opportunity to use these preferences is, but according to the order of the Customs No. 57N, equipment of the customs control zone is required. And this requires additional investment. According to our estimates, for example, for the small-scale production project "YUBO-SUMOTORI", the cost of equipment for the customs clearance zone is approximately 14 million rubles. If we are talking about the implementation of our Taiyuan agricultural project in the Shkotovsky District, then 7 thousand hectares fenced with a height of 2,5 m to fulfill the terms of the customs order - this is hundreds of millions of rubles.

Of course, such costs are unequal to the potential benefit that we can get from customs preferences. Therefore, we are expecting by September of this year the promised changes in the legislation that will allow more flexible application of the free customs zone procedure.
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