4 September 2024

Cooperation between Russian and international industrial parks: creation of a new seamless space for technological partnerships

Industrial cooperation is the foundation for sustainable partnerships at the international level. However, investors in Russia face a number of challenges, including a shortage of industrial sites, high interest rates on loans, and often a lack of information about cooperation opportunities. To address these issues, it is essential to improve the efficiency of existing special economic zones, promote industrial mortgages more actively, and scale up the advanced cooperation experience already gained. These were the points discussed by participants in the ‘Cooperation between Russian and International Industrial Parks: Creation of a New Seamless Space for Technological Partnerships’ session held as part of the Eastern Economic Forum.

KEY CONCLUSIONS

Industrial cooperation is the foundation of international collaboration

“In the decree of the President of the Russian Federation Vladimir Putin, which sets out the national goals, one of the tasks for achieving these goals is the establishment of sustainable partnerships with key countries. Such industrial cooperation, we believe, forms the basis for these sustainable partnerships,” Roman Chekushov, State Secretary - Deputy Minister of Industry and Trade of the Russian Federation.

“In modern international trade, the sale of goods without a comprehensive package of services, without offering localized production in the country where the goods are intended to be sold, particularly high-tech products, will inevitably be less competitive than comparable offers from industrialized nations. Therefore, we understood from the outset that we must not focus on relocating our main assets abroad, but rather on scaling up our industrial expertise,” Roman Chekushov, State Secretary - Deputy Minister of Industry and Trade of the Russian Federation.

“We support and welcome the Russian government’s focus on facilitating the movement of capital by Russian companies into foreign countries, the creation of industrial parks, the establishment of production facilities, and the development of new, unique products that are currently in demand and will continue to be sought after abroad,” Denis Kanataev, Commercial Director, Far-Eastern Shipping Company.

Industrial parks are most suited to the accelerated development of industrial entrepreneurship

“Industrial parks, as noted by the entrepreneurs themselves, are the most convenient infrastructure for the accelerated development of industrial entrepreneurship. This allows our medium-sized businesses to quickly and comfortably enter into their projects and achieve returns within a short period,” Alfia Kogogina, First Deputy Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Small and Medium Entrepreneurship.

PROBLEMS

Attracting investment is difficult with high loan interest rates in Russia

At present, loans in Russia are very expensive, with rates exceeding 20%. If profits are less than 25%, few investors would be willing to invest in such a technology park,” Xie Weidong, Director, Center for Scientific, Technical, Trade and Economic Cooperation "Weilai" ("Future").

This interest rate [the current loan rate in Russia – ed.] is critical. It is a serious obstacle to the establishment of production facilities by our partners from friendly countries,” Andrei Minaev, Director, Industrial Park Primorye.

A shortage of sites for industrial parks and special economic zones

The issue… is the lack of sites in the Far East. We have indeed completed the creation of an industrial park, but we cannot find a new site. Our company’s operations in the Far East are now winding down simply because there is nowhere to build,” Andrei Minaev, Director, Industrial Park Primorye.

“Industrial sites are in high demand. Advanced Special Economic Zones (ASEZs) may seem vast, but they are already filled with projects at various stages of completion, sometimes stagnant, but the land is still occupied. Industrial parks, which are more agile in decision-making compared to government institutions, could provide an alternative,” Denis Gros, Chairman of the Interregional Branch for the Khabarovsk Territory and the Jewish Autonomous Region, Delovaya Rossiya (Business Russia); General Director, MC DA! Development.

SOLUTIONS

It is necessary to improve the efficiency of existing industrial parks and special economic zones

It is important to increase the efficiency not only of the industrial parks themselves but also of the management teams. There are very successful parks, less successful parks, and, unfortunately, some parks that have been built, partly with public funds, but have a minimal number of residents or none at all,” Alfia Kogogina, First Deputy Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Small and Medium Entrepreneurship.

It is important to build industrial parks abroad and create clusters

In the past 2–3 years, two technology parks have been established and are now operational in Uzbekistan: Chirchik and Jizzakh. One is being built in Navoi, and others are planned in Sumgayit, Azerbaijan, and in Tajikistan. All these parks are brownfield sites, created on vacant, non-operational industrial facilities. […] 29 residents operate in the Chirchik industrial park. These residents include not only Russian businesses but also companies from Korea and Germany,” Alfia Kogogina, First Deputy Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Small and Medium Entrepreneurship.

New opportunities are emerging between China and Russia regarding industrial parks. <…> China has a strong foundation for attracting investments into industrial parks. Our industrial development is progressing rapidly, with many production facilities. We need to invite more Chinese enterprises to Russia,” He Zhenwei, Chairman, China Overseas Development Association.

Ensure funding for industrial parks and develop industrial mortgages

It is necessary to address how the infrastructure of these industrial parks will be financed. In my view, the RUB 30 billion allocated over six years for 100 parks is clearly insufficient. The industry, together with the regions, is preparing proposals,” Alfia Kogogina, First Deputy Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Small and Medium Entrepreneurship.

Create navigation tools for investors

One of the reasons for our company’s relatively low overseas activity is the lack of awareness about investment conditions in a given country, city, or specific free economic zone. Let us return to the discussion on creating such a navigation system,” Roman Chekushov, State Secretary - Deputy Minister of Industry and Trade of the Russian Federation.

More support is needed from development institutions for projects

We are talking about risk-sharing instruments, such as guarantee mechanisms. We have the Russian Export Centre, within which EXIAR operates, offering insurance products. Our task is to help Russian investors gain access to these opportunities abroad,” Daniil Algulyan, Deputy Chairman, VEB.RF.

 

*This is a translation of material that was originally generated in Russian using artificial intelligence.

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en.

 

 

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