Investment climate in the Republic of Tatarstan
a) General
The Republic of Tatarstan is one of the most investment-favourable regions of
the Russian Federation, which is ensured by perfect combination of high
investment potential and low investment risks. This is confirmed by international
rating agencies.
According to the “Measuring Business Environment in Russian Regions”
Report implemented in 2011 by the Centre for Economic and Financial Research at
the New Economic School with support from Ernst & Young, Tatarstan was
recognised the most favourable region for doing business in Russia. Also in 2011,
the Republic of Tatarstan headed the Forbes Top 30 list of the best regions for
doing business and investment in Russia.
According to Expert RA, a Russian rating agency, the Republic of Tatarstan is
among the “leading mainstay regions” of Russia in the general rating of its 83
regions following the results of 2011-2012. At the end of 2012, Tatarstan was one
of the 5th regions awarded the 1A rating (Maximum Potential, Minimum Risk),
thus having moved from the 10th place (2B: Average Potential, Moderate Risk)
where it was at the end of 2011.
The World Bank and International Finance Corporation (IFC) have compiled
the national rating for conditions of Doing Business in Russia 2012. According to
this subnational report, doing business among 30 cities of the Russian Federation is
the easiest on the aggregate rank in Ulyanovsk, Saransk, and Vladikavkaz. Rostovon-Don ranked 4th and Kazan ranked 5th.
According to the results of 2012 and in January to March 2013, the Republic
of Tatarstan still held the lead among the regions of the Volga Federal District in
the capital investment. In January to December 2012, capital investment used for
economic and social development in the Republic of Tatarstan amounted to RUB
464,744.9 million (108.7% y-o-y in comparable prices); of these, investment by
large and medium-sized businesses accounted for some 60% and investments by
small and micro businesses were within 4%. In January to March 2013, the figure
of capital investment increased by 11.7% y-o-y totalling RUB 72,289.1 million (of
these, 60% were invested by large and medium-sized businesses and 6%, by small
and micro businesses).
In January to December 2012, foreign investment received in the republic
amounted to US$ 735.6 million. In the structure of foreign capital received in the
Republic of Tatarstan, direct investment accounted for 78.5% of the total, while
other investment accounted for 15.5%, and portfolio investment, for 6%.
In the structure of the foreign capital received by the Republic of Tatarstan,
direct investment was the best contributor with 79.5%, or US$ 577.3 million. This
figure was 5.8 times as large as that in 2011. The bulk of the received direct
investment is represented by the credits from foreign co-owners of the processing
enterprises; other investment is credits in the production of petroleum products.
In January to December 2012, foreign investments were received by Tatarstan
from 30 countries. The most active investors were Denmark (with its contribution
to the total foreign investment received accounting for 34.9%) and Turkey (25%).
As of 1 January 2013, the accumulated foreign capital in the economy of Tatarstan
totalled almost US$ 4 billion.
An effective vehicle for implementing foreign direct investment is joint
venture companies with the participation of foreign capital.
As of 1 January 2013, a total of 1,438 commercial organisations with foreign
investment have been registered in the Unified State Register of Enterprises and
Organisations of Tatarstan (against 1,044 as of 1 January 2012).
The geographical structure of commercial organisations with foreign
investments shows that the enterprises with participation of investors from Turkey,
Cyprus, Germany, Uzbekistan, Switzerland, and the USA are the best contributors
to the total number of the registered companies.
b) Innovation Activities
The share of innovation-intensive enterprises in Tatarstan is higher than the
Russia’s average (12.5% in Tatarstan vs. 9.0% in Russia). The republic attaches
great importance to the creation of innovation infrastructure. In 2012, a total of 14
technoparks were operated here, including the Kama Industrial Park Master (one of
the largest parks in terms of the area occupied), the Innovation Production
Technopark Idea; the republic has also created the Technopolis Himgrad, 5
business incubators, and 6 investment and venture foundations.
Technopolis Himgrad is aimed to unite the existing leading companies of the
industry and contribute to the growth in the number of new processing and
servicing petrochemical enterprises, as well as to create the conditions for
additional processing of petrochemical products and increasing their added value.
The anchor companies of the Technopolis Himgrad include Kazanorgsintez,
Nizhnekamskneftekhim, and other enterprises. Their mission is to provide small
enterprises with raw materials and contracts. The Technopolis is currently a home
for over 180 companies with the total of 5,667 employees. Large residents of the
Technopolis Himgrad are OOO Fosforos, OAO Tasma, OAO Carpol, OAO Start,
OOO JVC Gerobplast, OOO Danaflex-nano, ZAO NITs Inkomsystem, OOO
PlastComposite Materials, OOO Gasplast, etc.
During 2012, more than 30 small businesses built their production facilities
on the territory of the Technopolis, among them OOO PK UretanTekh
(polyurethane coatings and polyurethane products), OOO Extrusion & Painting
(sealants from elastomeric compounds), OOO Kazkor (cardboard tubes (spools)
for chemical and related industries), OOO Kazan Plant of Polymers (PP, LDPE,
HDPE granules), OOO Alfagrin (pulp and paper insulation (cellulose fibre) out of
MSW plastic waste), OOO Engineering Centre+ (rubber and plastic products),
OOO Premium-Plast (rubber and plastic products), OOO Plastek (polymers) and
several others. Underway is the construction of plants by OOO PULP-Invest
(paper for sanitary purposes and related products) and OOO Kazan Plant of
Modern Packaging (woven polypropylene AD*STAR block bottom sacks).
At 1 January 2013, the gross output of the Technopolis residents in 2012
totalled RUB 11.347 billion (up 39.7%); the Technopolis hosts over 200
companies with a total of 6,200 employees.
In 2012, the Technopolis signed agreements for placing the production
facilities of world’s leading chemical manufacturers, such as BASF and Francebased Air Liquide. The projects are expected to be launched in 2013. Both
facilities will be located in the premises put into operation during the joint project
with OAO Gazprombank to expand the infrastructure of the Technopolis. The total
area of the reconstructed and newly built facilities under the project is about
50,000 square metres. The amount of funds invested in the project totalled RUB
634 million (credit facilities by OAO Gazprombank).
In the field of industrial production, the basic technopark is the Kama
Industrial Park Master created on idle production premises of OAO KamAZ, the
republic’s truck manufacturer, which is aimed to develop state-of-the-art and cost
efficient facilities manufacturing automotive components for this enterprise. The
tenants of the KIP Master include two joint venture companies between KAMAZ
and Daimler for the production of medium-duty trucks (Mitsubishi Fuzo) and
tractors (Mercedes Benz). Kama Industrial Park Master is now actually the only
example of the Russian technopark majoring in the mechanical engineering
industry.
The total floor space of production and office premises of the KIP Master
exceeds 370,000 square metres. The number of residents is 230. The premises of
KIP Master provide 4,500 jobs. Given the families of the employees, the KIP
Master promotes the well-being of more than 10,000 residents of Naberezhnye
Chelny.
The total amount of tax revenues from the tenants of the KIP Master to the
budgets of all levels amounted to RUB 3.9 billion in the post-crisis period. With
this in mind, it may be concluded that the revenues to budgets of all levels exceed
the expenditures for creating the KIP Master by RUB 2.6 billion.
With a view to ensure the organisational and financing conditions for the
implementation of scientific projects and shortening the deadlines for their
commercialisation, the Innovation Technopark Idea was established in the
republic with the aim of creating favourable incubatory conditions for start-ups, to
train employees and to provide resources for the accelerated implementation of
innovation projects.
The Technopark is operated in accordance with European standards, is a
member of EBN (European Business & Innovation Centre Network) and EC-BIC
accredited (European Community Business & Innovation Centre) since 2009.
The decision to welcome the joining of the Technopark Idea to the EBN
network was adopted on 29 April 2013 by the EBN Board of Directors. (For
reference: The European Business & Innovation Centre Network comprises over
200 business innovation centres, and similar organisations, such as business
incubators and venture centres, throughout Europe. EBN is a leading European
network).
Performance indicators of the Technopark Idea at the end of 2012 are as
follows: the value of products, jobs and services is RUB 6,922 million, including
those with the use of nanotechnologies worth RUB 2,169 million. The proportion
of innovative products and services in the total output of Technopark residents is
80%; the number of newly established companies is 59, the number of the jobs
created is 692. Each year, the budget of the republic receives about RUB 150
million from the Technopark Idea in the form of uniform social tax and personal
income tax.
In 2008, the Industrial Park Kamskiye Polyany for SMEs was created some
40 km away from Kamskiye Polyany settlement with its core activities being the
processing of polymers produced by OAO Nizhnekamskneftekhim. To date, the
management company of Industrial Park Kamskiye Polyany has built two
production buildings to accommodate the existing multi-filament yarn and stretch
film production facilities; also underway is the construction of a new plant for the
production of CPP film (food wrap).
Based on public-private partnership, Industrial Park Chistopol is being created
in the area of 292 hectares.
Within the comprehensive investment plan to upgrade the single-industry
town of Chistopol, a total of RUB 592 million was allocated in 2010 from the
federal budget for the construction of utilities in the Industrial Park Chistopol. In
2011, the allocated funds were utilised in full to build the supporting infrastructure/
utilities. To date, the industrial park occupied an area of over two hundred
hectares.
As of 2013, nine potential Tatarstan investors expressed their desire to
become residents of the park, with RUB 22.0 billion worth of investment planned
in business projects and 2,372 new jobs. The tripartite letters of intent were signed
by the following residents: Kamsky Printing and Publishing Works, Chistopol
Ceramics Plant Turan, OOO SKD-Invest and Tatteplotruba.
The ceremony of laying the first stone to the foundation of the Industrial
Park Synergy was held on 14 February 2013 in the SEZ Alabuga with the
participation of Tatarstan President Rustam Minnikhanov, Deputy Minister of
Russia's Ministry of Economic Development and Trade Oleg Savelyev, and
Director General of RusSEZ Oleg Kostin. The industrial park is of interest to the
companies which do not plan to build their own production facilities due to limited
timing of deliveries or because of the fact that their financial business model does
not provide for the construction costs.
Having placed their production facilities in the Industrial Park Synergy, the
companies would have a SEZ Alabuga resident status to enjoy residents’ tax and
customs privileges. Manufacturers of automotive components are expected to be
the main tenants of the Synergy. Preliminary agreement to lease office and
industrial premises in the IP Synergy was signed with ZAO Interskol that intends
to conduct research and manufacturing activities there.
The industrial park will comprise the production area of 18,650 square metres
and administrative area of 5,891 square metres. The total number of employees in
the IP Synergy will be about 550.
For the purpose of encouraging promising avenues of research, the
Comprehensive Programme of Tatarstan Nanotech Industry Projected
Development has been worked out for the period of 2009-2013 and further until
2015. The Programme comprises over 200 R&D projects in the field of creating
nanotechnologies and nanomaterials, as well as their industrial applications in
petrochemical industry and oil refining, aircraft industry, automotive industry,
mechanical engineering, and in medical, pharmacological and biotechnology
spheres.
In accordance with the Joint Action Plan between OAO Rusnano and the
Republic of Tatarstan to Stimulate Demand for Innovative Products,
Including Nanotechnology Ones, a survey of companies is being conducted
concerning shipments of goods (jobs, services) related to nanotechnology. In the
period of January to March 2013, nanotechnology products shipped in the
Republic of Tatarstan totalled RUB 7,208.6 million (as against RUB 423.5 million
in Q1 2012).
To date, the work is underway on the long-term targeted programme
“Development of Nanoindustry in the Republic of Tatarstan in 2013-2016” as
approved by the Resolution of the Cabinet of Ministers of the Republic of
Tatarstan No. 241as of 9 April 2013.
c) Special Economic Zone of Industrial Production Type Alabuga in the
territory of the Yelabuzhsky District of the Republic of Tatarstan (SEZ
Alabuga)
In 2013, the vigorous development of the Special Economic Zone of
Industrial Production Type Alabuga continued both in terms of infrastructural
development and in attracting potential residents.
The total investment used by residents for the entire period of their activities
exceeded RUB 41.6 billion as of early Q2 2013. A total of 2649 new jobs were
created. The aggregate production output was RUB 64.6 billion. Taxes paid to the
budgets of all levels for the entire period of residents’ activities amounted to RUB
4.8 billion.
To date, 35 companies have been registered as residents in SEZ Alabuga:
1. OOO Ford Sollers-Yelabuga (Ford cars and engines);
2. ZAO Polimatiz (non-woven fabric and other polymer products);
3. OOO P-D Tatneft-Alabuga Steklovolokno (glass fibre and products
thereof);
4. OOO Air Liquide Alabuga (technical gases: liquid oxygen, liquid
nitrogen, gaseous oxygen);
5. OOO Rockwool-Volga (mineral wool);
6. ООО Belaya Dacha Alabuga (processing of vegetables);
7. ZAO Interskol-Alabuga (formerly ZAO Technical Equipment Plant, heat
pumps and elements of climatic control systems);
8. OOO Septal (equipment for local and small sewage systems);
9. OOO Akulchev-Alabuga (confectionery and bakery products);
10. ZAO Trakaya Glass Rus (float glass, mirrors, automotive glass,
structures from insulation glass);
11. OOO Kastamonu Integrated Wood Industry (construction MDF, pressed
wood-fibre boards, laminated flooring, door panels);
12. OOO Saria Bio-Industries Volga (meat-and-bone meal tankage and
technical fat);
13. ООО Pixar Coatings (liquid and powder varnishes and paints, corrosionresistant and wood coatings);
14. ZAO Automotive Glass Alliance Rus (automotive glass);
15. OOO Polycrystalline Silicon Plant Kristall (polycrystalline silicon);
16. OOO Hayat Kimya (sanitary and hygienic tissue products);
17. OOO Alabuga-Volokno (carbon fibres);
18. OOO Trade House KMZ (new-generation diesel-hydraulic locomotives);
19. OOO Italtex (polyamide threads);
20. OOO R.R.Donnelli Alabuga (printed goods and packaging);
21. OOO Kessel-Alabuga (wall-mounted gas boilers);
22. OOO Alabuga Motors (electric buses);
23. OOO EcoTechnologies-Alabuga (recycling of scrap tyres into rubber
crump);
24. OOO RMA Rus (steel ball valves);
25. OOO Scientific and Technical Centre for Modernisation of Full-Scale
Production Facilities (car emission-gas control systems (silencers));
26. OOO Armstrong Building Products (suspended ceilings);
27. OOO East Bolt Alabuga (buns for McDonald’s);
28. OOO HAVI Logistics Alabuga (production and distribution centre for
McDonald’s suppliers fleet);
29. ZAO 3M Volga (anticorrosive protection for petroleum industry, glass
microspheres, abrasive tapes and disks, industrial adhesive materials and
tapes);
30. OOO Tatplastik (plastic products: kitchen utensils, children’s articles);
31. OOO Hygiene Technologies (hygienic products);
32. OOO Coskunoz Alabuga (automotive body parts);
33. OOO Vertikal-Alabuga (concrete and reinforced concrete products);
34. OOO Gabriel-Chemie Alabuga (master batches and additives for
plastics);
35. OOO Sollers-Shtamp (stamped and welded body and chassis parts; body
part production outsourcing is being considered);
It is expected that the existing territory of SEZ Alabuga with the area of 2,000
hectares would provide some 60 residents with production sites by 2015. Total
investment would reach RUB 180 billion. By 2015, some 8,350 jobs would be
actually created, with the progressive total taxes to the budgets of all levels making
up over RUB 7 billion.
d) Development prospects of SEZ IPT Alabuga
Effective from 1 January 2012, the new wording of the Federal Law “On
Special Economic Zones in the Russian Federation” No. 116-FZ states that the
area of the special economic zones of industrial production type may be no more
than 4,000 hectares. The possible doubling of SEZ Alabuga territory up to 4,000
hectares would allow the increase in the number of residents by 2020 up to 120
companies with declared investments of over RUB 360 billion and progressive
total taxes of some RUB 15 billion.