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Seaside pandemic vaccine
Primorye and in the pandemic remains a territory of opportunities. The negative trends of 2020 are only one side of the coin, on the other - positive changes in the investment climate and new preferences for business.
In 2020, the Primorsky Territory, like the whole world, faced the challenges of the pandemic and experienced a decline in many areas. Not only because of the coronavirus. The strongest "ice storm" in 30 years caused serious problems in the power supply. But "an optimist sees opportunities in every difficulty" - this quote by Winston Churchill, Deputy Chairman of the Primorsky Territory Government, Konstantin Shestakov, could have made his motto. In his interview with East Russia, he tells what opportunities investors see in Primorye, despite the pandemic. How long will the tourism market take to recover? Which projects made it to the home stretch and which ones had to be postponed? Who else can go to the SAR on Russky Island, and what will change for business in 2021, and when the fish market opens in Vladivostok.
- Konstantin Vladimirovich, how would you rate the work to improve the investment attractiveness of Primorye in 2020? What promising investors did you manage to attract and for what projects?
- The year 2020 tested us all for strength. We have thrown our main efforts to support investors who are already developing projects in the Primorsky Territory. We continuously monitored the industry. Potentially and promptly proposed measures to support specific areas of entrepreneurship. These included tax breaks and other support measures. For example, due to the fact that due to the coronavirus pandemic, many government organizations have suspended the reception of visitors and documents, the regional Investment Agency directly interacted with municipalities on the issue of land plots. The measures taken allowed entrepreneurs to continue investing in the development of their business in accordance with the schedules.
As a result, it was possible to launch the Kormbiosintez plant of the resident of the Nadezhdinskaya TOR of the Arnika group of companies.
Thanks to the joint efforts of the regional authorities and business, it was possible to obtain entry permits for foreign specialists involved in the implementation of investment projects in various sectors of the region's economy. For example, it turned out to attract foreign specialists to work at the enterprise of the KGK group.
It is definitely worth recalling that Primorye entered into a pilot project to provide a new type of support - protection of incentives for investment, and in 2020 the first agreement was concluded with the investor LLC Sea Port in Trinity Bay, which has already launched a unique project to develop transport logistics for agricultural products in the Far East. The implementation of the Eastern Grain Gate Multimodal Transport Corridor project opens the export market for agricultural products for producers of the Far Eastern and Siberian Federal Districts.
Solving the problem of providing affordable housing and social infrastructure facilities, such large investors as PIK and VIS companies have been attracted to the region.
We also constantly interact with investors who have decided to invest in projects in the field of hospitality and tourism.
- What projects are you talking about?
“Last year, a new hotel and entertainment complex“ Shambala ”was put into operation in the Primorye gambling zone. With Korean partners - LS Networks Co. Ltd. " - concluded an agreement on the creation of a large golf club near Vladivostok. These partners are already investing. In early 2020, a large Japanese hotel chain Okura signed an agreement for the management of the Okura Vladivostok hotel complex with the Russian investor Burguduz. In August this year, a five-star hotel under their brand will open in Vladivostok on Korabelnaya embankment. This is a top segment of the hotel business, its presence in the region is an important factor in investment attractiveness for our future Japanese partners. Moreover, last year the two largest airlines in Japan, JAL and ANA, entered Primorye with direct flights.
In addition, Accor, an international hotel operator headquartered in France, is negotiating three projects in Primorsky Krai. One of them is already underway. This is the construction of a hotel under the Novotel brand in the center of Vladivostok. The hotel is expected to open at the start of the tourist season this year.
- It is characteristic that all the events you listed took place in 2020, that is, the pandemic did not affect the plans of investors?
- Foreign business, even in the post-like world, pays attention to new opportunities in Vladivostok. For example, Accor is interested in the development of MICE tourism (from the English Meetings, Incentives, Conferences, Exhibitions - the field of the business tourism industry - ed.), It is entrepreneurs and officials who are seen there as their main guests. The Government of Primorye, together with the Singapore company Changi, one of the owners of Vladivostok International Airport, has developed a plan to attract a MICE tourist to the territory of the region. We have a huge number of business-oriented events, so the niche is promising. Vladivostok, without exaggeration, is the center of business activity in the Russian Far East.
From the point of view of improving the investment climate, the success of foreign companies in Primorye is important, we place a significant emphasis on this. Of course, I would like to show an actual, not an illusory picture of the fact that the Primorsky Territory is safe, reliable and promising for foreign capital. This also applies to the service sector, incl. logistics, agriculture, and industry and other industries.
LEADING IN INVESTMENT
- And what about the number of residents in the ASEZs and the free port of Vladivostok? Are there any positive dynamics?
- In 2020, 15 companies with a planned investment volume of 5,3 billion rubles became residents of the TOP, they have already invested 0,3 billion rubles. 414 organizations with declared investments of 220,6 billion rubles became residents of FPV, 6,2 billion rubles were invested. Projects are planned for implementation in different areas.
In terms of investments, such large residents as, for example, Dalselkor, a company that grows and processes rice and soybeans in the Mikhailovsky ASEZ, are in the lead. Or "AT Group" Terminal "with a project of a diversified logistics complex for storage, transshipment, processing of agricultural products in the Mikhailovsky ASEZ. VAMT, a resident of the free port of Vladivostok, has started to create a port transshipment complex in the area of Cape Klykov. At the same time, many projects of FPV residents are related to the construction of residential buildings. These are Alliance LLC, Bereg LLC and others.
I would like to note that in 2020, four companies received the status of a priority investment project in the Primorsky Territory. For such projects, it is envisaged to provide state property support in the form of leasing land plots without bidding.
- In which industry, besides the hotel industry, in your opinion, can we talk about positive changes, where is a breakthrough expected?
- I would like to mention the construction. The Vladivostok administration is preparing a landmark development project for the city. A decree was signed according to which 2,72 hectares of land practically in the center of the city become a zone of complex development of the territory. The private sector is now located there. It was proposed to involve the land in the business turnover. Investors who can enter this project will build residential complexes and business buildings. In fact, we are talking about "renovation". In 2020, amendments to federal law No. 494-FZ improved the mechanisms for resettlement of emergency and dilapidated housing, so today we have a real tool for the integrated development of territories. Vladivostok is the capital of the Far East, and the issues of renovation and improvement are one of the key issues. Issues of promising complex housing development are most often brought up to a meeting of the Investment Council under the Governor of the Primorsky Territory. Investors are showing high interest in this area.
GET INTO THE THIRTY ASI
- Why, despite all the efforts and key advantages - especially in terms of logistics, climatic and geographical features - the Primorsky Territory will not make it into the top 30 of the National Investment Climate Rating, although there are: the Republic of Sakha (Yakutia) (in the top twenty), Amur Region, Kamchatka Territory and Sakhalin Region?
- The rating is specially designed to minimize the climatic and geographical features of the regions (in 2018, the Tyumen region with not the most favorable conditions for life was the best in the country). Yes, we are not in the top thirty. But in two years we have moved from 76th to 34th place, showing one of the best speakers in Russia.
Yes, we have a lot to work on, because the investment climate is not only the volume of investments. When assessing it, many parameters are taken into account: the conditions for doing business, the quality of public services for entrepreneurs and the timing of their provision, the level of digitalization in this area, and the effectiveness of development institutions.
Last year, we set out several strategic goals for ourselves. First of all, this is the improvement of the investment climate, taking into account social priorities - public projects in the field of public-private partnerships. Now we are already implementing concession initiatives in the field of housing and communal services and education. We will also invest in the development of infrastructure in order to replace budget investments, and help the real sectors of the economy.
In addition, we are now preparing amendments to the law on priority investment projects in the Primorsky Territory. In the future, investors will be able to claim not only land leases without tenders, but also other measures of state support.
- Does Primorye have a chance to become a leader in the digitalization of services for business?
- The development of electronic services for business is one of the priorities of our work in 2020. Today, all the network organizations of Primorye in electronic form provide entrepreneurs with services for connecting to power grids. All 34 municipalities of the region provide a comprehensive service “Issuance of a building permit”, which includes all procedures for obtaining a building permit. Additionally, the service "State examination of project documentation and engineering survey results" has been added.
In 2021, it is planned to transfer to electronic form at least 18 municipal services in the field of land and property relations, as well as social protection of the population and education.
A comprehensive service will be developed for entrepreneurs to conclude an agreement for connection to utilities (electricity, water, heat supply) for submission of documents in the "one window" mode.
By October 1, 2021, on the basis of the Regional portal of state and municipal services of the Primorsky Territory, a payment service will be introduced for non-cash payments for state and municipal services.
Recently, I have been in charge of the forestry direction in the regional government. The Ministry of Forestry today sets a very short tactical task for the digitalization of all services that are in the forestry industry. First, it will help, if not remove, then minimize the issue of possible corruption. Secondly, in the end it will become more comfortable for companies located, for example, in the north of the region. For your business to work successfully, it will be enough to submit the necessary documents through the "Gosuslugi" portal.
When I began to supervise the direction of trade, literally a few weeks later, law enforcement agencies revealed a corruption scheme in the executive authorities associated with the issuance of alcohol licenses. In the shortest possible time, we digitized this service, and the problem was solved. Yes, the number of refusals increased, but the corruption factor was minimized and the terms for obtaining licenses were reduced to an average of 18 days, although the administrative regulations prescribed 20 days.
- What other measures will help Primorye rise in the ASI rating?
- A lot of them. There are, for example, two curious areas that arouse keen interest. Accelerators for entrepreneurs have been organized in Primorye. This is assistance to exporters and the opening of private preschool institutions.
The educational program for honey producers, the “Energy of Beekeeping” accelerator, has united industry workers who are ready to process honey and send it abroad. Thanks to the accelerator, they received all the necessary information about foreign markets and support tools for this.
As for the organization of preschool institutions, we are talking about private kindergartens. Of course, it is possible to build large state gardens, but there is another way, in my opinion, a shorter and more efficient one. We have combined the possibilities of municipalities to provide, for example, municipal property for the organization of such a garden, the possibilities of various programs. And this synergy of common efforts led to the fact that in Ussuriisk, on the pilot site of the project, several private kindergartens appeared at once.
Of course, this year we want to implement this practice in other cities as well.
It should be noted also the pilot project "Primorsky Start", launched in 2020. It aims to support initiatives in technology entrepreneurship, innovation economy. On a competitive basis, the best startups - project participants receive grants in the amount of 2 million rubles each. The directions are very interesting, from development in the field of artificial intelligence for a website builder to disinfectants - not chemical, but biological. Just recently, a project was adopted related to pilot copies of carbon fiber wheelchairs - lightweight, weighing up to three kilograms, while analogues weigh in the region of 9-12 kilograms. And all this has been implemented here, on the territory of Primorye.
ICE RAIN BETWEEN PROBLEMS
- "Freezing rain" riveted attention to Primorye as rarely any other event. Many questions have arisen about the energy supply of the region. The other day, the Chairman of the Board - General Director of RusHydro said that it is in the Primorsky Territory that the RusHydro group is planning to implement large investment projects to improve the reliability of energy supply to consumers in the grid complex and to generate electricity and heat. What specific projects are we talking about?
- Indeed, the “freezing rain” in November last year exposed the problems of power supply in the Primorsky Territory: high wear and tear of electrical networks; closed food centers; lack of redundancy.
To improve the reliability of power supply to the population of the region, DRSK JSC has developed a program for the modernization and reconstruction of the power grid complex of the Primorsky Territory with a total capital investment of 12,5 billion rubles. The main tasks are both bringing the existing electrical networks of 0,4 / 6/10 kV to the standard state, and the construction of new facilities. These are the Artyomovskaya CHPP, which will operate on gas fuel, and the power transmission line in Ussuriysk.
During the V Eastern Economic Forum, RusHydro and the authorities of Primorye signed agreements on cooperation in the implementation of projects for the modernization of the Vladivostok CHP-2 and the construction of the Artemovskaya CHP-2 with an investment volume of 91,2 billion rubles.
In addition, in November last year, colleagues from the Primorsky Krai Gas Supply and Energy Agency, on behalf of the Krai Governor, addressed the Deputy Prime Minister of the Russian Federation A.V. Novak with the issue of ensuring reliable energy supply to consumers in the Khasansky District of the Primorsky Territory
As a result, a decision was made to reconstruct the 110 kV Zapadnaya substation (with a transfer to 220 kV and increase the transformer capacity by 63 MVA) and build a tap-off from the 220 kV Vladivostok-Volna overhead line to the Zapadnaya substation. The deadline is scheduled for the end of 2022. Responsible executor - JSC "DRSK". This event will allow the next year to start supplying consumers of the Khasan region with electricity. This, of course, also applies to hotels and numerous recreation centers in the south of the region - operating and those that are only planned to be put into operation.
INVESTORS DO NOT HURRY
- Since the fall of 2018, the CAP mechanism has been operating on the Russky Island, and only recently only the third resident came there, what is the reason for such a slow pace of investors?
- The Corporation for the Development of the Far East and the Arctic, the management company of SAR on the Russky Island, sees a serious interest of business in moving to special administrative regions, especially after the revision of agreements on avoidance of double taxation with a number of foreign jurisdictions. But there is also a certain caution, the business very carefully evaluates all the pros and cons of moving. The instrument is relatively new. Today, the KRDV has about four more companies that are potential interested parties, they are actively interacting with them, and the possibilities of moving to the SAR are being worked out.
- What sectors are potential residents from?
- The spheres are very different: finance, energy, services, development, agriculture - there is no clear connection between the industries and companies interested in re-domiciliation. But a certain territorial tendency can be traced: the Russkiy and Oktyabrsky islands are the eastern and western points of our country, between which there are about eight thousand kilometers and eight time zones. At the same time, Russky Island is significantly removed from both Cyprus (the main location of the redomiciled companies) and from Moscow and Central Russia, where management functions are concentrated. Therefore, the main interests are companies whose business and assets are concentrated in Siberia or the Far East: Re-registration in the CAP allows them to increase the speed of business management and reduce transaction costs. The mode is also interesting for companies focused on the markets of the Asia-Pacific region.
FISH MARKET WILL START BY 2024
- At what stage is the project for the construction of a specialized fish market in Vladivostok, the start of construction of which was announced this year? Will there be a postponement? Will the project become a "victim of a pandemic" of coronavirus infection due to the catastrophic sagging of the tourist market of Primorye?
- Unfortunately, the investor really had to shift the timing of the project, but the reasons are rather technical and not related to the coronavirus pandemic. A lease agreement for the land plot where the market will be located has already been drawn up, a project for the planning of the territory has been agreed, amendments have been made to the agreement between the KRDV and the investor. Now we have entered the stage of project appraisal. After that, we will deal with the registration of a building permit. We expect that the fish market will be launched by 2024.
In addition, if we talk about affordable fish in Vladivostok and nearby municipalities, as part of the execution of the Prime Minister's instructions, a plan has been developed according to which we will create additional points of sale for fish products in the very near future.
- Is this approximately what Governor Oleg Kozhemyako did on Sakhalin in his time? Affordable fish at an affordable price?
- Exactly so. We must enable entrepreneurs to sell their products on the territory of municipalities. And Primorye residents can see more points with fresh produce in the region. And we already have experience - the project "Made in Primorye", launched in 2019, showed that both manufacturers and buyers are interested in placement at key city sites. Moreover, we held the festival "Made in Primorye" in mono-directions - honey, cheeses, wild plants. I would very much like to organize such work in the fishing area so that fish and seafood are sold inexpensively and in a large assortment at municipal markets.
- What is Primorye lacking in order to make a qualitative breakthrough in the tourist services market?
- One of the important criteria of tourist attractiveness is the presence of key centers of attraction for tourists. Unfortunately, in many Far Eastern regions - and our region is no exception - there is a lack of high-quality tourist infrastructure, transport accessibility and a comfortable environment in cities and villages.
In accordance with the instructions of the Prime Minister Mikhail Mishustin, we are working on territorial planning and urban development of promising tourist destinations. This task is feasible due to the development of building regulations and territorial development documents for large tourist destinations, including master plans.
That is, unique tourist areas and facilities will be developed taking into account the best world practices, including the architectural appearance of resorts, modeling of traffic flows, and infrastructure distribution.
If we talk about Vladivostok, an important task is to equip the central, historical part of the city exactly as a tourist destination, with the construction of new pedestrian logistic connections, but with an emphasis on the comfort of residents. This year, the development of the concept of this project began. The Government of the Primorsky Territory has come up with an initiative to include measures that will help to implement it in the national tourism development project. I myself was born in Vladivostok, my children live here. I want the city to be comfortable.
We also started developing concepts for a tourist route in the historical part of Vladivostok, a tourist and recreational ecological cluster "Land of the Leopard" in the Khasansky District and a tourist and recreational cluster on Russky Island, we are improving beach areas with the help of private investors.
- It has been repeatedly said that it is necessary to develop its own cruise routes in the Far East. How is work progressing in this direction?
- The Government of the Primorsky Territory has initiated the issue of creating a Far Eastern cruise line.
The most promising direction for the development of cruise tourism in the waters of the Far East and the Arctic is expeditionary cruise tourism. This segment is highly popular all over the world, attracting tourists with the natural beauty of the Arctic and Antarctic, Kamchatka, Alaska and Greenland.
The sailing zone may include the Commander, Shantar and Kuril Islands (Iturup, Urup and Onekotan), the coast of the Sea of Okhotsk, Kamchatka, Chukotka, and, in the future, the entire northern sea route. In the expeditionary segment, the regions of the Far East and the Russian Arctic have the opportunity to become leaders in the number and variety of cruise routes, and Russian cruise operators are able to occupy a significant market share with their own cruise fleet. The main obstacle in organizing a domestic expeditionary cruise line is the lack of the necessary cruise fleet.
At the same time, the crisis in the cruise industry caused by the COVID-2019 pandemic also presents a convenient opportunity to open a new market for expeditionary cruise tourism in Russia, including due to a significant decrease in the market value of cruise ships that are idle on Antarctic routes in the port of Punta. -Arenas and Alaska routes.
Given these circumstances, we turned to the First Deputy Prime Minister of the Russian Federation Andrey Removich Belousov with a request to instruct VEB.RF or PJSC State Transport Leasing Company to prepare special loan products with preferential terms for the implementation of projects for the acquisition of foreign-built cruise ships of reinforced ice class for 100 -200 passengers for operation on a cruise expeditionary line in the seas of the Far East and the Arctic.
The experience of operating such foreign-built vessels in Russian waters will make it possible to determine the most acceptable parameters and technical characteristics for the development of domestic projects of this type of vessels and their subsequent construction, including at shipbuilding enterprises in the Far East. For example, in the Big Stone.
OVERCOMING THE CRISIS WILL TAKE AT LEAST THREE YEARS
- What can oppose Primorye to such leaders in terms of inbound tourist traffic, like, say, Kamchatka?
- For tourists from the western part of Russia, there is a good opportunity through Vladivostok to organize all the logistics of travel in the Far East, and here the main thing is to explain to us, why come to Primorsky Krai. Thank God that we have enough of these reasons. For example, we are focusing on the development of the Far Eastern cuisine. This is a new gastronomic phenomenon that has emerged on the Pacific coast of Russia and can become a powerful driver for the development of tourist Primorye.
A line of eventful gastronomic events has already been formed - festivals of mussels, crab, scallop, taiga and others. We develop gastronomy tours, create specialized content on gastronomy, train chefs for free. The concept of the development of gastronomic tourism in the Primorsky Territory based on the Far Eastern cuisine was highly appreciated by experts of the tourism industry. They prepared it together with the business. We took into account specific tasks, amounts of funding, an action plan. This is very important for us, I see this as a really anchor reason for visiting Primorye. Guys who are far from this direction, laugh: "Well, do not eat?" Including food, believe me.
- How soon, in your opinion, can we expect the tourism market to return to the pre-crisis, pre-pandemic level?
- Currently, the hospitality industry is one of the most affected sectors of the economy in Russia and in the world. The situation with the coronavirus has led to the cessation of tourist flows, both internationally and domestically.
The tourism industry in the region has developed dynamically in recent years. At the end of 2019, the Primorsky Territory entered the top five regions in terms of tourist flows with five million tourists a year. But in view of the existing restrictions on the operation of hotels, catering, leisure facilities and the difficult epidemiological situation in the regions in 2020, we did not expect exorbitant figures for the flow. In 2020, the flow was only 1/5 of the 2019 flows.
It is difficult to make any predictions about the exact number of tourists. Taking into account the current situation, we believe that it will take about three years to get out of the crisis, that is, only by the end of 2023, the tourist flow in the region and, accordingly, all other targets of the tourism industry will be able to reach the level of 2019.