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TOP or not TOP?

Expert EastRussia - on the prospects of a new concept for the development of the Far East

TOP or not TOP?
Special project TORA and Free Port

We are witnessing the formation of a new model of governance in the Far Eastern regions. One of the unresolved issues is the creation of the Institute of Advanced Development Territories (TOR). To date, a draft law has been prepared, the main provisions of which make it possible to judge the features and prospects of this institution.

As you know, the main administrative structures dealing with the Far East from the federal level have already been determined. These are the Deputy Prime Minister of the Russian government, who combines his position with the post of the plenipotentiary representative of the president in the Far Eastern Federal District, and the Ministry for the Development of the Far East, claiming the role of an authorized federal body that will control the TOP. The stake on the Far East and its accelerated development is also determined by the ongoing geopolitical changes, which are pushing Russia to an ever greater reorientation to the AP region. This was also demonstrated by the recent visit of Vladimir Putin to China, which was accompanied by the signing of many important agreements.

Creation of TORs is still at the initial stage: the necessary legislative base is still being prepared and not passed all the approvals. Many details are not settled, but now one can judge about the specifics of this new procedure for creating special legal regimes in the particular territories of the country to ensure social and economic development. At the same time, as the authors of this idea believe, TORs are called to demonstrate the best results in comparison with other similar regimes used in Russia and become not just another attempt, but the most successful project of this kind. In this connection, the positions of the federal draft law deserve closer scrutiny.

First of all, it should be noted that TORs are created in full accordance with the policy of centralized and directive management of the regions, so characteristic of Russia in recent years. The procedures for making decisions on the creation and management of ASEZs are almost completely centralized and closed. It is assumed that TORs will be created by government decisions, which, in turn, are based on the proposals of the Ministry for the Development of the Russian Far East. Public and competitive selection of proposals for the creation of ASEZ is not expected. This is quite consistent with the well-known history of special economic zones, which were initially created following the consideration of applications for a tender, and now are created simply by government decisions, using the proposals of their curator represented by the Ministry of Economic Development. The legislation also does not imply any initiative or meaningful participation in the coordination of the creation of ASEZs on the part of regional and municipal authorities. Their consent to the creation of the TOP, as well as their signatures in agreements to be concluded with the residents of the TOP is considered sufficient. In general, decisions on TOPs will be made in Moscow, where, in accordance with the principles of centralized management, it is believed that they will be able to create a unified and well-thought-out system of TOPs without "unnecessary" discussions and publicity.

The centralization of TORs is vividly illustrated by the actual transfer of powers of regional and municipal authorities in their territory into the hands of a management company, i.e. specially created federal structure. The bill provides a list of such powers, which are seized from local authorities, which in itself is controversial in terms of its legitimacy. However, many state and municipal functions, including the provision of services in the housing and utilities sector, the maintenance of transport infrastructure, the transfer of land from one category to another, etc., will be concentrated in the hands of the management company. In other words, TOR represents the territory of departmental federal control, the “city-factory”, where the power will belong to the management company. If the territory is large, then, accordingly, the municipality, on which the TOP is located, will actually lose its meaning. As for money, when dealing with financial issues of the functioning of the TOR, the draft law provides funding from all three levels of government - federal, regional and municipal. But, as practice shows, regional authorities, and especially local government, are not able to finance large projects, and the main burden will fall, of course, on the federal budget.

It is interesting in this connection to note the fact that the TORs will acquire many of their own units of territorial bodies of executive power, which are designed to serve their special regime. In particular, in the Torah will have its own police, tax and migration services, customs, etc. In essence, the PDA will look like a small state in a state, “armed” with all possible federal bureaucracy.

It is assumed that the TORs will be acquired by a large number of institutions, the need to create such an amount is not obvious. Along with the management company, which will deal with the TORs, it is planned to create another joint stock company for solving financial issues and two autonomous non-commercial organizations. One of them should be engaged in attracting investments and working with investors, the other - with the development of human capital and labor. Why so many organizations are needed, and it is not easier to combine all the functions in one, remains unclear. At least, there are no explanations on this score and it is probably assumed that the scale of the very idea of ​​the accelerated socio-economic development of the Far East automatically assumes the plurality of structures that deal with it.

At the same time, key players will still be few, and they assume to take control completely into their own hands. This is the Ministry of Regional Development and the management company established under its control, as well as its subsidiaries, which may arise for specific TORs. They will receive a lot of authority in the sphere of issuing various permits, for example, for the construction and commissioning of facilities. The management company among other things is called upon to create the infrastructure of the TORs and ensure its functioning. State and municipal ownership of land and buildings will pass into its hands. Thus, with a multiplicity of bureaucratic structures, management as a whole should be concentrated in the same hands, which is logical, since it is the Ministry of Oriental Arts that promotes the idea of ​​TORs, considering them as their own hardware resource.

By itself, a centralized management model is neither bad nor good, its effectiveness depends on what the state itself intends to offer to potential residents. Legislation on this subject contains many preferences, but it does not directly dictate how they will work, and how attractive they will be in practice. First of all, business can be interested in the application of the free customs zone procedure, which means benefits for export-import operations, and, of course, tax incentives. Of course, there will be no less important benefits when connecting facilities to infrastructure, rent, land use, attraction of foreign labor, a special and probably facilitated procedure for conducting state and municipal inspections, technical regulation, etc. It is assumed that the TORs will receive appropriations from the Far East Development Fund, which was established long ago, but so far it has not taken place as a really working structure.

However, it is important that the government retains its full freedom to maneuver. All possible benefits for residents of TORs are not guaranteed, but probabilistic. In other words, a set of benefits for each specific case can be its own and, accordingly, will be discussed in the process of preparation and decision-making. This gives the authorities more opportunities to manipulate the rules of the game in various TORs, and lobbyists - a great chance to promote their interests. Also, the government will determine which types of economic activities will receive support in a certain TOR, what should be the minimum capex, whether the free customs zone regime will be applied, as well as, of course, the boundaries of the TOR and the term of its operation. To achieve greater certainty with a special tax and customs regime, however, it is still necessary to adopt amendments to the Budget and Tax Code.

In the current situation, it is important that the experience of TORs is not as ambiguous as the experience of special economic zones (SEZs), remembering that the authorities want to make TORs more efficient and attractive. The law does not directly imply that potential residents will immediately rush into the TOPs. Too much remains unclear, or is attributed to the achievement of individual agreements on specific TORs and residents. Many will be deterred by the complexity of the system of development institutions, where they will have to work with a large number of contractors authorized by the state, and not with a "one window".

In this connection, one should remember the experience of the SEZ, the law of which was adopted in 2005 with great difficulty and in the context of an acute hardware conflict between the Ministry of Economic Development and the Ministry of Finance, and as a result led to the creation of a number of non-working zones, some of which have already been closed. The authors of the draft law on TORs are trying to take into account these mistakes, as well as to disengage from the Ministry of Economic Development, which is responsible for SEZ, and who without enthusiasm met a new project of his colleagues in the government. In particular, TORs involve a more complex approach, greater scope of benefits and preferences, a more complex and interesting structure of the territory with its zoning for different purposes (while the territory itself, like in the case of SEZs, covers parts of one or several municipalities). In order to resolve the problems with the Ministry of Economic Development, it was necessary even to put into the bill the position according to which the creation of TOP should be accompanied by an assessment of the economic inexpediency of the creation of the SEZ. As you know, the creation of the SEZ in the Far East is not simply not abolished, but continues. In Primorsky Krai, a new SEZ of an industrial-production type, oriented to auto assembling, should soon be approved. The issue of the procedure for the work of the already existing SEZ in the Magadan Region is being resolved, which together with the extension of its operational period will also receive a new profile, focusing more on industrial production.

At the same time, the question of why the SEZ institute did not take place in the Far East remains unanswered and duly analyzed, although at its creation officials said that this macro-region is a priority. But the reality is that in the Far East only two SEZs were created - the port in the Khabarovsk region in Sovetskaya Gavan and the tourist and recreational in the Primorsky region on the Russian island, and neither earned, attracted residents.

Thus, the experience of the SEZ suggests that the decision to create a territory with a special regime in Russia does not at all mean that this territory will begin to "work". It is likely that there will not be a single resident in the TOPs, or there will be very few of them. It is extremely important not to create dozens of piles of dummies, and there are such risks - because of active lobbying and too excessive approach, when the appetite comes with food and the quantity will be more important than the quality of each TOR.

The question of the number and location of TORs remains open. The bill suggests their creation only on the territory of the Far Eastern Federal District, i.e. In the sphere of influence of the Minsk region. At the same time, the state program covers not only Transbaikalia, but also the Baikal region, includes Buryatia and the Irkutsk region. One can expect that these regions will also demand that they be allowed to create TORs, and their interest is quite natural and reasonable.

In order to place TORs on the territory of the Far East, there are still ambiguities. For example, will there be TORs in each constituent entity of the federation, which regions manage to obtain not one but several TORs? It is not clear where the TOPs are likely to be located. The bill only mentions that the TOP can not be closer than 50 km from the city of a million people, but this requirement is meaningless, since there are no such cities in the Far East and it is not foreseen. This requirement can be regarded only as a hint that the TORs are intended for the development of peripheries, and not centers, i.e. Can be created in medium-sized cities such as Komsomolsk-on-Amur, in the "clean field", around new deposits of minerals, etc.

Perhaps, larger and more successful regions from the point of view of lobbying will receive more TORs. Clearly more prerequisites for their creation are the Primorsky and Khabarovsk Territories, as well as the Amur Region. The idea is that the TORs in Kamchatka are necessary, it is hardly possible to "bypass" the Jewish Autonomous Region, which needs additional incentives. At the same time, the SEZ regime operates in the Magadan region, Sakhalin is considered an already successful region, and Chukotka is too "weak" in terms of labor resources. Although lobbying processes can lead to another geography of placement of TORs.

Also, only practice will show what the specialization of TORs really will be, whether it will be raw materials projects, processing of raw materials, high technologies, port complexes, etc., whether TORs will be completely export oriented. It is possible that, over time, the gradation of the TORs according to their specialization will be needed, as was done from the very beginning with the SEZ. In our opinion, this gradation suggests itself and, in fact, is close to the one that acts in relation to the SEZ - conditionally speaking, the TORs are raw materials (mining), processing, high-tech, coastal port, maybe - fishing, etc.

It is likely that special emphasis will be made on the creation of TORs on projects that are interested in big business and in particular - state corporations. The latter, having their own entrances to the government and major interests in the Far East, can use a lobbying resource to put the Torahs into their service. For example, it is quite possible to link TORs to the engineering projects of the United Shipbuilding Corporation (as well as the special project of the Zvezda Shipyard) and the United Aircraft Building Corporation. Rosneft and Gazprom may be interested in using TORs for processing oil and gas. It is very likely that Inter RAO will connect with generation development projects for the export of electricity to China (as well as coal mining). Private financial-industrial groups can use TORs for their raw material projects such as the Elginsky and Nezhdaninsky deposits, the Kimkano-Sutarsky GOK and the Amur metallurgical cluster, the Chukotka deposits of coal, gold and non-ferrous metals, etc.

Despite all the problems and ambiguities mentioned above, the Institute of Torahs is certainly an interesting and new attempt to ensure accelerated socio-economic development of individual territories. But it also has its own risks - the reluctance to reckon with local authorities, not to mention public interests, the combination of managerial centralization with the cumbersome structure of development institutions, the not completely transparent and potentially manipulative nature of the game rules for different TORs and residents, the creation of many non-working TORs, the combination of the unattractiveness of TORs for “ordinary” investors with ensuring the interests of privileged FIGs. Taking into account all sorts of benefits, it is not obvious that TORs will ensure the growth of budget revenues, especially regional and municipal ones, although such a requirement is contained for them. Rather, they will provide economic growth and jobs for the territories, and incomes and, perhaps, super-profits for residents. Over time, it will be necessary to introduce criteria for evaluating the effectiveness of TORs, as was relatively recently done with the SEZ. And already in the name of the institute there is a very obligatory word “advance”, i.e. growth rates should be higher than in the country as a whole and, perhaps, than in the Far East as a whole, otherwise TOR cannot be considered as TOP. Whether it will be possible to make a new institution viable and, in fact, ahead, depends heavily on the rules of the game, which largely remain outside the scope of the bill, but, according to Russian tradition, they determine the realities. 

More details about the territories of advanced development: sites of TORs, investment projects, opinions - on the special page

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