22 August 2019
A round table
was held on the topic of ‘Small Business
of the Far East. Opportunities, Conditions, and Preferences’ in Moscow on
21 August in preparation for the 5th Eastern Economic Forum. Discussion participants included First
Deputy Minister of the Russian Federation for the Development of the Far East
and Arctic Sergey Tyrtsev, Managing Director of the Far East Development Fund
Kirill Kamenev, Director General of the Agency for the Development of Human
Capital in the Far East Sergey Khovrat, and Deputy Executive Director of the
OPORA RUSSIA All-Russian Non-Governmental Organization of Small and Medium
Business Ivan Efremenkov.
Roundtable
participants noted that a major portion of investment in the Far East comes
from large projects though they account for less than 15% of the total number
of residents of advanced development zones (ADZ) and the Free Port of
Vladivostok, with the lion’s share being
medium and small business. In total, more than 300,000 SMEs are operating in the
Far Eastern Federal District (FEFD), equal to about 5% of all SMEs in the
Russian Federation.
Many small and medium-sized business
entrepreneurs are taking advantage of the tax and customs incentives offered at
the Free Port of Vladivostok and in the advanced development zones. According
to Tyrtsev, as of 15 August 2019, 20 advanced development zones had been created
in the Far Eastern Federal District, with 369 residents implementing projects
for a total investment of RUB 2.5 trillion, 95 projects in the ADZ already
having been implemented and more than 61,000 jobs planned.
“The Free Port
of Vladivostok regime is currently being implemented in 5 Far Eastern Federal
District regions. 1404 residents are taking advantage of the incentives
available for a total investment of RUB 698.5 billion. 68,000 thousand new jobs
are planned as part of these projects”, Tyrtsev
added.
The deputy
minister also mentioned the recent creation of a project office in the Ministry
for the Development of the Russian Far East and Arctic to work with SME
representatives. The office is tasked with giving SME representatives a voice
and taking the necessary actions to aid small and medium-sized businesses in
successfully developing in the Far Eastern Federal District. Work is underway
to staff the office, and its first meeting is planned for September.
Kamenev spoke
about the Far East
Development Fund’s work to support small and medium-sized entrepreneurs. The Fund has been
engaged in this work since 2016. “The Fund has
launched an Affordable SME Loan programme, and we can already speak about its
first results. Over this period, we have funded 814 projects for more than RUB
18 billion”, Kamenev said. The main
advantages of the Fund programme, which is implemented jointly with partner
banks, include: the provision of funds to entrepreneurs for long periods of up
to 10 years and low interest rates on loans for small businesses – from 8.5%.
What’s more, the Fund lends
working capital in addition to investment projects.
A free and
easy way to receive land for your business in the Far East is to participate in
the Far Eastern Hectare programme. According to Director General of the Agency for the
Development of Human Capital in the Far East Sergey Khovrat, about 40% of hectare recipients implement
projects in entrepreneurship, agriculture, and tourism. In total, more than RUB
700 million in state support has been provided since the programme’s inception.
The majority of the funds – RUB 590
million – has been allocated to
support entrepreneurs engaged in agriculture.
Primarily
micro-enterprises are created on the hectares. “It is our
opinion that cooperation helps to increase profits, reduce costs, and at the
same time transform these micro-enterprises into something big. The Agency has
begun to introduce a cooperative model in 8 Far Eastern Federal District
regions, and 450 people are presently involved”, Khovrat
said.
Currently,
there is a tendency in Russia to reduce the number of SMEs: on average by 4% to
the number of enterprises and by 5% to the number of employees. “The figures
for the Far East are generally comparable to those of the country at large: minus
3.9% to the number of SMEs and minus 5.6% for employment,” Efremenkov said. According to him, the main problems that entrepreneurs face
are a decline in consumer demand, competition between SMEs and the public
sector, the availability of financing, and interaction with municipalities.
State support of small and medium-sized exporters, infrastructure development,
particularly projects to expand the Primorye 1 and 2 checkpoints, and a review
of tax-related interaction between business and municipalities can help solve
these problems.
Discussion of
how to improve the conditions for small and medium-sized business in the Far
East will continue at the 5th Eastern Economic Forum, which will be
held on 4–6 September in
Vladivostok. The Forum business programme sessions ‘SMEs as a
Driver of Economic Growth’ and ‘Preferential
Regimes for Investors: Current Progress and New Challenges’ are specially
devoted to this topic.
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