The Russian Far East offers a wide range of measures to support investors, including infrastructure subsidies, tax benefits and financing from the Far East Development Fund. A total of RUB 50 billion in support is being made available to 21 investors. Any company that invests more than RUB 50 million in a new facility in the Russian Far East can apply for preferential corporate income tax rates and reduced taxes on mining operations, which remain in effect for ten years. How can investors working in the Russian Far East take advantage of these state support measures? How do these measures affect investment performance? How successful are projects that receive state support?
The demographic situation in the Russian Far East has seen improvements in recent years. Since 2012, for the first time in 20 years, there has been natural population growth and a steady reduction in outward migration flows. Experts believe that this positive demographic trend is directly linked to new investment projects in the Russian Far East. In order to achieve its demographic growth strategy, the Ministry for the Development of the Russian Far East is developing a demographic policy framework for the region to 2030, including specific measures for implementation.
What measures to increase birth rates and life expectancy could have a long-term economic effect? How can the economic losses from premature mortality in the region be calculated? Can the creation of new jobs persuade residents of the Far East to stay in the region? What migration policy models should be adopted in the south and the north of the region? How can labour mobility and repatriation programmes be linked to the new economic tools, namely advanced special economic zones, the Far Eastern Hectare programme, and the Vladivostok Free Port?
In addition to its large-scale industry and densely populated urban areas, the Asia-Pacific Region boasts many unique natural habitats, and is home to extremely rare animal and plant species: the Amur leopard, Siberian tiger, grey whale, oriental stork, and many other endemic varieties of flora and fauna. If the region manages to attract investment to implement major projects, this could pose serious threats to its environment and biodiversity. At the same time, there are numerous tools that can be used to help maintain a balance between the economy and the environment. The Russian Far East could become a pilot region in terms of attracting green and environmentally-friendly investment. The countries in the region and businesses operating there are increasingly aware of the need to protect biodiversity as part of their overall strategy. It has been suggested that a common approach to maintaining the ecological balance in the region needs to be discussed. What do the Asia-Pacific countries need to do to preserve biodiversity in the region? How can the interests and capacities of all stakeholders (states, businesses and local populations) be taken into account in developing a green economy? What biodiversity programmes have already proved effective? What requirements do investors in the Russian Far East currently have to meet from an ecological point of view? What economic mechanisms might enable us to maintain the region’s unique natural environment?
The ability to resist non-economic threats is a key factor in the Far East’s appeal to investors. The Asia-Pacific Region regularly faces the threat of epidemics, which not only impedes regional integration and stable socioeconomic development but also results in significant financial losses. Over the last few years, the negative effect of such threats can be measured in billions of dollars. In the Far East, the increased cross-border movement of people and goods requires further improvement of techniques for managing health risks. The existing Russian system for preventing and responding to the threat of dangerous infectious diseases has shown itself to be effective. Given the border-crossing nature of epidemics, a regional approach to combating acute threats needs to be developed (the Zika virus, Ebola, new strains of flu), as well as in addressing HIV, tuberculosis, dengue fever, etc. Losses resulting from health threats must be reduced, which will not only increase returns on investment but also improve quality of life. Policy decisions in this area have already been made by leaders within an array of multilateral and international organizations (EAS, APEC, ASEAN). The time has come for practical measures. What risks does the region currently face from epidemics? How much do infectious diseases cost investors and economies? What are the prospects for developing a regional system to manage health and epidemiological risks? What would its future components be? What measures exist for helping developing nations within the Asia-Pacific Region create basic epidemic warning and response capabilities, and what is Russia’s role? Inclusive investment: could investment in healthcare reduce losses caused by epidemics?
Over the past year, the federal government has applied considerable efforts to increasing the appeal of the Russian Far East to entrepreneurs. A number of laws have been passed to encourage regional-level investment and to exploit competitive advantages, including a law on Advanced Special Economic Zones, a change in industrial policy, and a law aimed at stimulating investment. Increasing economic activity in an area depends first and foremost, however, on the approach taken by local authorities. At the regional level, measures have included a one-stop-shop investor support mechanism, simplification of administrative procedures for construction and grid connection, and allocation of land plots, among others. Despite all these efforts, none of the nine regions in the Russian Far East made it into the top twenty in the Russian Regional Investment Climate Index for 2016. How do the regional authorities plan to rectify the situation through policy changes, ensuring stable regional economic development and attracting investment? How is work to implement such a project being carried out? What has been accomplished over the past year? What has been less successful? How do entrepreneurs and investors assess the effectiveness of the regional governors’ administrations? What does business currently need most from the regional authorities?
The modernization of housing and utilities is an important factor in the socioeconomic development of Russia’s Far East. Russian and foreign investors are expressing increasing interest in the housing and utilities sector; investment agreements signed in 2015 amounted to RUB 70.9 billion – a tenfold increase over the previous investment period. Foreign business partners are currently very interested in implementing residential projects in the Russian Far East. What special measures for development of housing and utilities in the Russian Far East could help realize the sector’s potential? Are any additional measures required to support investors? How can existing business incentives in the Russian Far East be used to attract investment into housing and utilities? What is the best way to use the experience of foreign investors within the Far Eastern Federal District?
The law governing Advanced Special Economic Zones, which came into effect in 2015, is only the first step towards creating a competitive investment climate in the Russian Far East. In order to win investors in the face of international competition, the ASEZ system must evolve until it outperforms global best practices. The practical experience of creating ASEZs amassed over the last two years has led to some strategic forks in the road. Not all of the initial ideas on conditions in ASEZs could be brought about in the first version of the legislation. Now that ASEZs in their present form have already proven successful with investors, it is vital to improve the regulations that govern the creation of ASEZs to incorporate current best practices. The goal of this strategic session is to discuss how ASEZ legislation will evolve in the future. What benefits should be offered to ASEZ residents working in various sectors and on various priority projects? What factors will shape the rating system used to evaluate proposals for new ASEZs and for new projects in existing ASEZs? Which regulatory powers will be transferred from the federal to local governments?
Freight traffic from the Asia-Pacific Region reaches all corners of the world. By rerouting some of the freight along major transport routes in the Russian Far East, shippers in China, Korea, Japan, and other countries can cut their costs significantly. In recent years, the Russian Government has issued a number of decrees designed to tap into the transit potential of the Far Eastern Federal District. The main focus of these measures is to expand the region’s port infrastructure, modernize the railways and streamline border crossing and customs procedures. Which freight from the Asia-Pacific Region could be shipped expediently via Russia’s Far East? What railway, port and cross-border infrastructure in the Russian Far East holds potential for investment? How can the Advanced Special Economic Zone (ASEZ) and free port regimes protect investors and increase returns on investment in the transit infrastructure? What steps must be taken to make transport corridors more accessible and attractive to investors? What is the outlook for using the Northern Sea Route as a global transport corridor?
Close ties between the Russian and Korean leaderships provide an excellent foundation for a business partnership. The fact that Russia and Korea are neighbours provides a further impetus to deepening bilateral economic, financial and business relations. Cooperation in these sectors reinforces stability throughout the Asia-Pacific Region. Russian entrepreneurs are interested in establishing branches of Korea’s biggest medical centres at the Free Port of Vladivostok, creating a Russo-Korean agricultural investment fund and transitioning to practical implementation of joint mechanical engineering, high-tech, agriculture and aquaculture projects, in accordance with the import substitution initiative. Experience amassed by Korean companies of working in European Russia may also be successfully applied in Eastern Siberia and the Russian Far East. This year’s Russia–Republic of Korea business dialogue focuses on specific projects that could serve as a stepping stone toward a qualitatively new level of cooperation between the two nations. Advanced Special Economic Zones and the Free Port of Vladivostok: modern solutions. Which factors stand in the way of Russian–Korean joint investment projects? Which new Russian projects could capture the attention of Korean investors in Russia and vice versa?
The current economic situation requires concentrated development and consolidation of all available resources for sustainable socio-economic development of the regions of the Far East. At the government’s expense, a foundation power and transport infrastructure has been set up, within the scope of the preparations for the APEC Summit, Vladivostok has been transformed and a number of projects implemented for developing the social infrastructure. At the First Eastern Economic Forum, President of the Russian Federation Vladimir Putin gave instructions to ensure priority financing of socio-economic development of the Far East within the scope of implementing state programmes of the Russian Federation. What impact do budget investments have in raising the quality of life and the investment appeal of the Far East? What is the role of the state going forward in developing the infrastructure for life and business in the Far East? How should approaches to state programming be changed to achieve maximum effect in developing the Far East?
In this session, Forum participants and guests will learn about prospective projects in farming, the food industry, fish farming, and agriculture. The presentations will cover projects involving the construction of livestock breeding and greenhouse complexes, pig farms, and broiler farms, a project to create an Antarctic krill technology park in Primorsky Territory, and more.
Address by President of the Russian Federation Vladimir Putin
Address by President of the Republic of Korea Park Geun-hye
Address by Prime Minister of Japan Shinzō Abe
This series of presentations will focus on unique, strategically important projects involving the exploration and commercial development of different territories, and the extraction and mining of natural resources: development of the Zapadno-Anabarsky (West Anabar) licensed area; a project to create a coal cluster centred on the Omsukchan coal basin; development of the Soyuznoye graphite deposit; creation of a hydrocarbon refining centre in Aldan, in the Sakha Republic (Yakutia); construction of a methanol plant; and construction of the Amur oil refinery (an oil refining and petroleum product transportation complex).
The development of human capital is an important precondition for attracting investment in the Russian Far East. State policies for developing human capital are already seeing their first results: the government has launched training programmes for local residents and resettlement programmes from other parts of the country, and has simplified regulations for employing foreign workers in ASEZs and free ports in the Russian Far East. In order to help investors attract workers, the government has also created the Agency for the Development of Human Capital. The Agency is a one-stop-shop system offering investors standard solutions, as well as services tailored specifically to their needs. How acute is the region’s need for experts in various fields and at various levels, and how does the new development institute plan to fill the demand for human resources? What kind of services does the Agency offer to investors? How does support provided by the Agency affect investment performance in Russia’s Far East? How does the business community rate the Agency’s services and performance?
In today’s world, use of space technologies for communications, navigation and natural resource monitoring is a crucial tool for dealing with strategic matters of territorial development, ensuring the safety and efficiency of passenger and freight transport, and monitoring and minimizing the consequences of natural disasters. A number of Asia-Pacific countries, including China, Russia and Japan, are among those leading the way in developing national space-related activities. South Korea and Mexico, as well as other countries in the region, have launched their own national space programmes. The region also hosts the Asia-Pacific Regional Space Agency Forum (APRSAF).
Work on developing a space infrastructure is continuing apace. Some of the world’s most advanced space centres started operating in the region in 2016: the Vostochny Cosmodrome in Amur Region and the Wenchang Satellite Launch Center on China’s Hainan Island. A transport safety network based on the GLONASS navigation system is being created in the Russian regions and similar projects are under way in China.
The extractive industries today make up as much as a third of the Russian Far Eastern Federal District’s economy, this being not only greater than the figure for neighbouring countries, but two and a half times above the Russian average. In view of this, accelerated development in the innovation sector is particularly important, both in terms of diversifying the regional economy and with respect to improving efficiency in the extractive sector during a period of low raw material prices. Despite Russia investing adequately in research and development, on a par with the UK, Canada and Norway in this respect, the range of innovative technologies on offer to businesses lags considerably behind that typical in developed economies. Developing the innovation sector in the Far Eastern Federal District will require a substantial increase in the supply of innovative technologies via three key channels: R&D localization on the part of major Asia-Pacific markets, growth in the number of innovative small and medium-sized enterprises, and an increase in the innovative activities of large companies in the region. How can the quantity and quality of commercial innovations carried out in the Far Eastern Federal District be increased? What practical steps and “quick wins” should be prioritized? What economic and regulatory incentives need to be created? What is the critical bottleneck in the Far Eastern Federal District’s innovation infrastructure? Which sectors should serve as priority areas of focus?
Germany has not only been a traditionally reliable supplier of quality products and hi-tech equipment for Russia, but also the leading investor in the real sector. Cooperation between Russian and German businesses covers all areas of the economy, from mechanical engineering to agriculture. New Russian government projects and programmes for developing the Russian Far East, together with their raw material potential, as well as the proximity of the Asia-Pacific Region, are of interest and provide new opportunities for bilateral cooperation. On the one hand, German business is interested in participating in already declared infrastructure projects and in modernizing enterprises in the Far East. On the other hand, the rich experience of localizing the production of German companies in Russia can be successfully used in the macro region. The purpose of the event is thus to draft a roadmap for the development of Russian–German cooperation in the Far Eastern Federal District for 2017.
What are the prospects for implementing joint projects in the Far Eastern Federal District, including in Advanced Special Economic Zones and Free Port of Vladivostok? What are the stimuli and deterrents to implementing German investment projects in the Far Eastern Federal District?
Russia–ASEAN On 19–20 May 2016, Sochi hosted the ASEAN–Russia Summit. During the ASEAN–Russia Business Forum, held at the same time, the participating countries adopted a joint declaration defining the main areas of cooperation between Russia and the Association. The Summit confirmed that both parties were keen to develop business contacts throughout the ASEAN region. What are the promising areas for cooperation?
A roadmap for building trade, economic and investment cooperation between Russia and ASEAN: what next?
How can best use be made of the potential benefits of merging regional integration processes, including by building economic cooperation between the EAEU and the ASEAN Economic Community?
One of the most important tools for economic development is the law, consisting of a set of legal means and methods used by business and government. It is the legal environment that forms the basis for systemic changes in the economy of Russian Far East, for increasing the competitiveness of this region in the Asia-Pacific in the years to come. The legal landscape in Russian Far East is consistently changing, with new legal concepts emerging, such as special economic zones. Key changes are now also under way in industry-related legislation (fisheries, forestry, etc.). But this is not enough for a new legal reality to emerge. Effective dispute resolution instruments must be used in building relations with our partners from the APR nations, ones to which they are accustomed. A serious need exists for law enforcement practice to be modified and some legal provisions revised as regards foreign trade. The Forum’s legal section will focus on these and other matters.
Accelerated development of the Far East requires consolidation of all available resources. In the current economic situation, investments by state-owned companies drive economic processes and allow the conditions for private investments to be created. At the First Eastern Economic Forum, President of the Russian Federation Vladimir Putin gave instructions to ensure priority financing of socio-economic development of the Far East within the scope of the activities of state-owned companies. What are the plans for implementing state investments in the Far East? What is to be expected from implementation of the major projects (FEPCO, Power of Siberia, construction of new power plant, extension of the Baikal-Amur and Trans-Siberian Mainlines, launch of the Vostochny Cosmodrome)? What are the prospects for development of small businesses in connection with implementation of major projects? What is the role going forward of programmes for development of state-owned companies in increasing the investment appeal of the Far East?
The Federal Law on the Free Port of Vladivostok was signed and came into effect in 2015. The law establishes special business conditions in 15 municipalities of Primorsky Territory. One objective of the law is to tap into the transit potential of the southern part of Primorsky Territory by creating an environment that would attract investment in port, rail and other types of logistics infrastructure and by introducing simpler freight customs clearance procedures. The law stipulates special border crossing conditions for individuals, vehicles, freight, goods and livestock entering the Free Port of Vladivostok; it governs the application of customs procedures in duty free zones and defines procedures for storing certain highly valuable assets, such as luxury items, art and antiques. This strategic session has been designed as a discussion with experts and residents of the Free Port of Vladivostok focusing on the practical side of these special conditions and on steps that must be taken to ensure high-quality government services at the Free Port. Which international best practices could be applied in implementing the Free Customs Zone in the Free Port of Vladivostok? How could the Free Port legislation be modified to make it more attractive to entrepreneurs and investors? What does the process for finding and clearing land for business use in the Free Port of Vladivostok entail?
In this section, projects involving the construction of a factory producing energy-saving materials, a high-tech sawmill, and a high-tech park, and the development of innovative soil stabilization technologies will be presented. These projects are aimed at furthering the region’s economic and innovation-driven growth, creating new jobs, improving infrastructure, and protecting the environment thanks to the use of the latest technologies and high-quality equipment. This also enables the products concerned to play a successful role in import substitution programmes and to help develop exports to Asia and the East.
