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The territory of concentrated development

EastRussia found out what Korean business wants to focus on

The business circles of the Republic of Korea expressed their concerns at the V Far Eastern Russian-Korean forum held in Khabarovsk about the decline in the rates of economic cooperation with Russia in general and the Far East in particular, and outlined their own vision of investment participation in development projects in the region. Among the claims to the development of the situation with sites with special conditions for investors are backward investment and social infrastructure, excessive bureaucracy that negatively affects the motivation of investors, and the "smearing" of the model of territories of advanced development (TOP).

The territory of concentrated development

By the principle of one and only window

So, the doctor of the Korean Research Institute for Human Settlements (KRIHS), Khan Wu Sok, believes that foreign policy factors associated with the Ukrainian crisis and sanctions are hindering investment from the Country of Morning Freshness: customs procedures, regulatory vulnerability. ” “Korean business likes everything to be done quickly,” Khan U Sok reminded about the traditions of the business people of his country.

According to the representative of KRIHS, in the Far East it is necessary to choose "the most potentially profitable region of cooperation, and then to expand this cooperation." “The Sakha Republic (Yakutia), the Primorsky Territory, the Khabarovsk Territory are of priority in terms of investment attractiveness,” ranked the Korean doctor of Far Eastern subjects of the Russian Federation, which are of interest to investors from abroad, according to ranking. According to Khan Woo Sok, those already declared to create TOR are not all equally attractive to Korean business. The scientist noted that it is necessary "to identify the key TOR for the development of Russian-Korean cooperation." The representative of South Korea considers the port of Zarubino in Primorye to be such a priority platform.

Khan U Sok was supported by KRIHS colleague Jong Il Ho. He also noted that “the TOR model seems too scattered and not focused on a specific region, which complicates the attraction of capital”. Cho Il Ho recalled that in the Republic of Korea various mechanisms and models similar to TOR were also used. The main thing in building a model of advanced development, in his words, is “to determine the anchor projects and get the earliest visible results.” In addition, the mechanisms of PDA should be linked to the research work of institutes and universities, and during the creation of investment sites, not just new industrial facilities should appear, but scientific and industrial parks, according to Chon Il Kho. “The most important thing is to combine the specifics of the region with the R & D function, only then it can be developed as a result,” said the KRIHS representative.

In turn, Lee Sok Pae, Consul General of the Republic of Korea in Vladivostok, said that Korean business shows a high interest in participating in TOR, but the execution and creation of the legal basis for TOR and the free port zone in Vladivostok is in lag.

Do you want fast - get

As if responding to the statements of the Korean guests, Albert Rakipov, Deputy Director of the Department for Attracting Direct Investments, Supporting Export and Foreign Economic Activity of the Ministry of Eastern Development, said that investment projects with a payback period of 10-14 will pay for themselves twice as fast as they are in TOR.

"The same financial model, but corrected for the parameters of TOR, shows a payback significantly lower - the figures are 3-5 years," the representative of the Ministry of Natural Resources of the Russian Federation designated the capabilities of the territories. He called the main advantages of TOR: "ready infrastructure, preferential tax treatment, single window system, debureaucratization and informational support for investors." "All this will give the very competitive offer," said Albert Rakipov, turning to Korean investors.
“The advantages of the territories of advanced development are obvious,” said the deputy director of the department, “Investors will be given all possible support, and the process of starting and operating enterprises will be maximally bureaucratic.”

Albert Rakipov recalled that now there are nine TORs at the formation stage. According to him, "the interest of foreign investors has been shown to these sites."

The representative of the ministry said that at the first Eastern Economic Forum (VEF), which will be held 3-5 September in Vladivostok, presentation sessions of investment projects, business dialogues, public interactive tables, an exhibition of proposals for investors and informal meetings without ties will take place.

“We have identified priority areas for the economy of the Far East. These are, for example, natural resources, infrastructure projects, including port, industry, as well as some special zones in the APR, such as a game zone and a bank with a special license, ”said Albert Rakipov. He assigns a special role to the presentations of investment projects.

“We want to gather qualified experts and significant investors in individual economic segments. It is assumed that the sessions will be held in the format of 15-minute presentations in closed mode - without the participation of the press. Currently, a pool of projects is being formed for presentation at the forum. Only those projects that are in a high degree of readiness for practical implementation will be presented, ”he said.

"The forum will bring together representatives of state bodies of Russia and the APR countries, large investors - business representatives, industry experts. It is designed to promote the emergence of the Russian Far East on investment maps of the largest Russian and international companies, to consolidate the eastern vector of economic development, "Albert Rakipov said.

Active signal

“If the Japanese and Chinese business enters the TOR, this is a signal to Korean business to take more active actions,” said Mikhail Potanin, head of the Department for Advance Development Areas of the Khabarovsk Region Government Investment Committee, in turn. 

The volume of Korean investments in the Far Eastern region is just over one percent of all foreign investments of the Republic of Korea abroad. In the Chukotka Autonomous Okrug, in the Sakhalin Oblast, there are practically no Korean investments in the EAO. As for the Khabarovsk Territory, the total amount of Korean investments accumulated in the region amounted to 78 million dollars for 2014 year, in the total amount of investments it is just over 3 percent. As a result of 2014, the bilateral trade turnover between the Khabarovsk Territory and South Korea amounted to more than 400 million dollars. Export is about 82% of turnover, imports - about 18-20%. The basis of exports to the Republic of Korea is fish products (mainly pollock), exports of ferrous metals, hard coal, refined products, timber and products from it. The import of the Khabarovsk Territory from the republic is represented by the output of machine building (more than 15% of imports).

According to the first deputy chairman of the regional government on economic issues Vasily Shikhalev, South Korea is the second most important economic partner of the Khabarovsk Territory after China. "The Russian-Korean forum is one of several venues, along with the organization of business missions and other events on the interaction of the Khabarovsk Krai Government with Asian investors for the development of imports and exports between our countries and other issues," he explained to journalists. "South Korea, in particular, is a major importer of engineering products in our region."

“If you just call a business, then he just will not come. Business should understand that it invests in such a territory where there is an attractive development prospect for the years ahead, - considers Vasily Shikhalev. - And if we talk about promising areas for business and investment activity, it is significant that 81 company with Korean investments is working in the Khabarovsk region. Approximately 45% of them are companies with 100-interest investments, and the rest are joint ventures. These companies operate in services, trade and construction. These enterprises, both for themselves and for other investors, show that in our region money can be invested and the necessary conditions have been created for this. Today, we have contracts for the future with Korean builders. ”

"At the moment, much has already been done in terms of reducing the time for obtaining various permits. I think that it will not take long to wait for the moment when there really will be one window, not only for our builders, but also for investors, "the deputy chairman of the regional government said.

“In April and May 2015, entrepreneurs of the region signed contracts with South Korean partners for the supply to Korea of ​​ice cream and peat substrate produced in the Khabarovsk Territory,” Vasily Shikhalev recalled.

Korean companies are involved in important projects such as housing, modernization of the Khabarovsk airport, the reproduction of seafood. In 2015, LSNetworks entered into a project to build a recycling station in the Southern District of Khabarovsk. The Korean side has already invested 158 million rubles in its implementation. The total volume of South Korean investments will be 600 million rubles.

For your information:

The participation of South Korean investors in projects in priority development areas and in the Free Port of Vladivostok zone became the central topic for discussion at the V Far East Russian-Korean Forum, which took place on June 15-16 in Khabarovsk. The platform brought together representatives of government authorities, business, and the scientific community from the regions of the Far East and the Republic of Korea. Within five sessions, the participants discussed new approaches to expanding international economic cooperation in areas such as trade, ecology, logistics, and electricity. 

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