Guide to Investment The Novosibirsk Region PwC Russia (www.pwc.ru) provides industry-focused assurance, advisory, tax and legal services. Over 2,300 professionals working in PwC offices in Moscow, St Petersburg, Ekaterinburg, Kazan, Novosibirsk, Krasnodar, Yuzhno-Sakhalinsk and Vladikavkaz share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. Global PwC network includes over 169,000 employees in 158 countries. PwC first appeared in Russia in 1913 and re-established its presence here in 1989. Since then, PwC has been a leader in providing professional services in Russia. According to the annual rating published in Expert magazine, PwC is the largest audit and consulting firm in Russia (see Expert, 2000-2011).

This overview has been prepared in conjunction with the Ministry of Economic Development of the Novosibirsk region. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, the PwC network, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Contents

4 Welcome message from the Governor 22 Innovation-driven development of the Novosibirsk Region 24 Transport infrastructure 5 Foreward 26 Tourism Overview of the Novosibirsk Region 6 28 Foreign trade The Novosibirsk Region’s investment Economic potential 32 10 climate Gross regional product (GRP) Competitive advantages Personal income levsls of the Novosibirsk Region Consolidated budget Capital investments Unemployment rate Investment legislation Financial and lending system Government support for investments Special purpose programmes made in the Novosibirsk Region Promising areas for investment 14 Key industries Competing for investment project tenders Heavy engineering and metalworking Investor information support Mining Energy sector 34 Industrial and technology park projects Housing Industrial and Logistics Park Small business Novosibirsk Science Campus Technopark Agricultural sector Biotechnopark in the Koltsovo science city Food production 38 Investment projects Consumer market 46 Contacts Telecommunications High-technology sector

PwC | The Novosibirsk Region | 3 Welcome message from the Governor of the Novosibirsk Region

investors are partially reimbursed for the immediately demonstrated strong interest costs of developing business plans, upgrading in the facility: the biotech park’s first technical equipment, performing R&D, resident has put up two manufacturing conducting congresses, and patenting. buildings on the site. Current plans calls These efforts have resulted in increased for launching pharmaceuticals production investment. Last year, RUB 142 billion at the biotech park already by late 2012. in new investment was raised for the regional A milestone event for enhancing the region’s economy (as a comparison: RUB 106.8 billion investment attractiveness was the opening in 2010). This year, our goal is to attract in January 2012 of the Novosibirsk Expocentre at least RUB 168 billion. international exhibition complex. Today, In the Novosibirsk Region’s investment policy, this facility is the largest exhibition space particular focus is placed on establishing in the eastern part of Russia, hosting more and developing industrial and technology than 100 exhibitions and forums annually. parks. The Technopark at Novosibirsk’s But, of course, the region’s attractiveness world-famous Science Campus (in Russian: is not dependant only on its level of economic Akademgorodok) acts as an integrator development. A favourable social environment of innovation-driven activities. Today, also plays a major role in this regard. already 180 resident companies are actively Dear friends, We are now actively carrying out programmes operating at the Technopark. It also home to upgrade our educational and healthcare The Novosibirsk Region is an attractive to the Centre for Engineering Support, systems, and promote physical fitness location for investment and doing business. the Centre for Nano-Structured Materials, and sports, and cultural development. Our region’s competitive advantages include and the Centre for Information Technologies. One of the main achievements of these a favourable geographical location, a robust Construction of a group of laboratory efforts is the fact that, for the first time scientific and educational community, and manufacturing buildings for resident in many years, the region has demonstrated and a diversified local economy. companies is nearing completion. an upward trend in natural population The regional administration’s top-priority The Industrial and Logistics Park (ILP), growth. task is expanding the economy and attracting which is now being developed adjacent More detailed information about the investment. According to expert estimates, to Tolmachevo International Airport, region’s social and economic development, the Novosibirsk Region currently has one represents the region’s most ambitious and investment process support measures, of Russia’s most effective mechanisms project. Thanks to our vigorous efforts is available in this investment guide. for investment projects, and has to attract potential investors to the ILP, demonstrated a positive trend in economic by early 2012 the first enterprises For my part, I can assure you that and social development. In May 2012, had already begun operating the Novosibirsk Region is open the Fitch Ratings agency upgraded the and about 10 major investment for cooperation and eager to implement Novosibirsk Region’s rating to BB+, with agreements had been signed. new projects. Your ideas can become a “Stable” outlook. a reality within a comfortable environment In 2011 we launched a programme of mutually beneficial cooperation, while Investment projects in the region enjoy for creating a biotechnology park all your business initiatives will enjoy government support in the form of subsidies in the Koltsovo science city. To date, the full-fledged support of the Novosibirsk on loan interest and leasing payments, as well the engineering infrastructure has been Region Administration. as tax benefits, government loan guarantees put in place and preparation of the initial and non-financial measures. In addition, site has been completed. Targeted residents Welcome to the Novosibirsk Region!

Vasily A. Yurchenko Governor of the Novosibirsk Region

4 | Guide to Investment | PwC Foreword

The Novosibirsk Region today presents Another industry with great investment a vivid example of a dynamic, rapidly potential is the resort, recreation growing economy. The region’s investment and tourism sector. The Novosibirsk appeal continues to grow, opening Region is home to about 10 alpine up fresh opportunities for productive ski resorts that have become popular capital investment and fostering a favourable with both Russian and foreign tourists. environment for doing business. In deciding to do business in a specific An advantageous geographical location region, investors look for two key things and the rapid development of logistics – stability and a dynamic growth trend, facilities have allowed the Novosibirsk both of which the Novosibirsk Region Region to position itself as eastern Russia’s can offer in abundance. The Novosibirsk leading transportation hub. Region Administration has been working actively to boost the region’s investment The Novosibirsk Region is also one attractiveness by introducing more of Russia’s major centres of science and more new initiatives designed and education. We work actively with to smooth the way for both Russian the region’s public universities and know and international investors. that the Novosibirsk Region enjoys These comprehensive efforts have a wealth of human resources talent. already led to marked growth The Novosibirsk Science Campus in investment activity. Technopark offers researchers This publication, which we have and entrepreneurs unique opportunities prepared jointly with the Novosibirsk for developing and commercialising Region Ministry of Economic high-end technologies. Such facilities Development, is intended to serve help create an environment that is highly as a handy guide for potential investors. conducive to establishing new production It will help them properly assess and select capacity and promoting innovation-driven the most promising investment projects, entrepreneurship. while giving them the opportunity to contribute to the Novosibirsk Region’s economic growth under terms that are beneficial for their business.

David Gray Managing Partner PwC Russia

PwC | The Novosibirsk Region | 5 Overview of the Novosibirsk Region

Geography development lies in the growth of high-tech, of the region’s landscape is its lakes – The Novosibirsk Region is one of Russia’s innovative manufacturing facilities. the region has over 3,000 of them. largest. It is situated in the central part The Novosibirsk Region shares a border The Novosibirsk Region’s time zone is UTC +6. of the country, in the southeastern with the Altai Territory to the south, part of the West Siberian Plain. Mineral resources Kazakhstan to the southwest, the Omsk There are 523 deposits of various minerals The Novosibirsk Region is part Region to the west, the Tomsk Region in the Novosibirsk Region, 83 of which of the Siberian Federal District (SFD), to the north, and the Kemerovo Region are currently being developed. which has a predominant share to the east. Proven reserves of coal amount of the country’s primary raw materials The Novosibirsk region has a total land to 905 million tonnes, while and energy resources. The city area of 177,800 sq km (1.1% of Russia’s potential reserves could be as much of Novosibirsk serves as both the capital territory), stretching for over 600 km as 5.6 billion tonnes. High-quality of the Novosibirsk Region and the SFD’s from east to west and over 400 km anthracite (approximately 800 million administrative centre. from north to south. tonnes of proven reserves, with potential The distance between Novosibirsk The region’s landscape mainly reserves estimated at 5 billion tonnes) and Moscow is 3,191 km. consists of plains. The Novosibirsk Region is mined in the region. generally occupies the southern part The Novosibirsk Region is one of the most In the northwestern part of the region, industrially developed regions in Siberia, of the Vasyuganskaya Plain and Barabinskaya Lowland, while the eastern there are open deposits of oil and natural accounting for approximately 10% gas, of which the Verkh-Tarskoye oilfield of the SFD’s total industrial output. part the region is surrounded by mountains (the foothills of the Salair Ridge). is the largest. Proven oil reserves amount However, no single industrial sector to 43 million tonnes, while potential predominates; the region’s economy enjoys There are about 350 rivers in the region, reserves could reach 113 million tonnes. a well-balanced combination of industry, the largest of which is the Ob. agriculture, transport and construction. The Novosibirsk Reservoir is located near Estimated reserves of peat amount The greatest potential for economic Novosibirsk. A characteristic feature to 7.2 billion tonnes, but there is virtually

Orlovka Bespalovka Nadezhdinka Verh-Tarka Noviy Mayzas Severnoye Vorobievo Vdovino Novotroitsk Pikhtovka B Urez a r a b i n s Kamyshevo k a y a L o w l a n d Malchikha Vengerovo Turunovka lake Ubinskoye Bolotnoye Pokrovka Kuybishev Stantsionno-Oyashinsky Kozhurla Kargat river Tatarsk Barabinsk Chany Ubinskoye r Novomokhaylovka Toguchin s Zuzya Kargat ntain Suma rive ou lake Sartlan Chulym Novosibirsk ya riverld m In ba Ob’ kie ks Fedosikha ta Sa Lebedevo Ust-Sumy Berdsk go la Verkh-Kargat u irs Verh-Chik B ki Novosibirskoye ch Bolshenikolskoye Iskitim ain lake Maliye Chany Verh-Irmen Verh-Urum Dovolnoye Zaviyalovo Maslyanino Kupino Ordynskoye Travnoye Kirza Cherepanovo Chingisy Shurigino Burla Suzun Karasuk

6 | Guide to Investment | PwC The Novosibirsk Region is made up of 490 municipal units. These include: • 5 urban districts; • 30 municipal districts; and • 455 settlements (26 towns and 429 villages).

The city’s population is 1,498,900 (as of 1 January 2012). Other major cities in the Novosibirsk Region include Berdsk (98,800 people), Iskitim (59,100 people) and Kuibyshev (44,800 people).

no active development of peat fields in the include fir, spruce, pine, cedar, birch, Administrative and territorial divisions region. aspen and larch. The City of Novosibirsk is the region’s capital and the largest municipal unit Large-scale deposits of base metal ores Climate in Russia. have also been discovered in the Novosibirsk The Novosibirsk Region has a continental Region, including titanium dioxide climate. The average temperature Workforce (approximately 1.7 tonnes) and zirconium in January ranges from -16°C in the south The region’s population is 2,676,000. dioxide (approximately 7.2 million tonnes). to -20°С in the north. The average Of this number, 77.4% live in cities temperature in July is between +18°С (including 55.6% in Novosibirsk), Four marble deposits have been discovered, and +20°С. while 22.6% live in rural areas. holding over 8.5 cubic metres of marble. Two of these deposits are rich in marble The absolute lowest temperature is -52°С The average population density used for decorative purposes, which while the absolute highest is +37°С. is 15 people per sq m. is in great demand. Warm, cold and frostless seasons The level of economic activity The region has significant resources last 188, 178 and 120 days, respectively. in the region is 67.2%. of underground fresh, thermal and mineral Ground frosts typically appear The region has been seeing increased water. The daily output of 9,500 wells in the second half of September in-migration since 2004. This is mainly equals over 0.5 million cubic metres and continue through May. due to internal migration within Russian of water. The region receives about 425 millimetres and immigrants from CIS countries. Forests cover 26% the region’s territory, of precipitation annually. The greater Novosibirsk region, with overall forestry resources covering with easy transport access within approximately 4.5 million hectares. a radius of 300-600 km, is home The most common trees in the region to over 12 million people.

PwC | The Novosibirsk Region | 7 Novosibirsk is home to: • 2,170 cultural heritage sites, 1,080 of which are protected by the government, including 273 architectural monuments, 185 historical monuments, 1,708 archaeological monuments and four memorials; • 1,128 cultural and leisure institutions, including 7 national cultural centres; • 889 public libraries, including the State Public Science and Technical Library, the largest in Siberia; • 44 museums; • 20 theatrical entertainment organisations.

Culture The concentration of scientific personnel in Novosibirsk Novosibirsk is the cultural capital of Siberia. is 2.2 times higher than the Russian average. The Novosibirsk State Academic Theatre of Opera and Ballet The region’s scientific and educational institutions is one of the largest in the country and widely regarded employ over 30,000 people, including 2,300 with PhDs as a symbol of the city. The Novosibirsk Philharmonic Hall and over 7,100 candidates of science. and the M.I. Glinka State Conservatory, which is the only conservatory beyond the Urals, have won international Education acclaim. The Novosibirsk Region is developing an educational sector that is the largest in the Asian part of Russia: Science The Novosibirsk Region is one of Russia’s largest scientific centres, • 41 higher educational institutions and branches; and has held a leading position in science and technology • 67 institutions of intermediate vocational education, for over 50 years. including subdivisions of higher educational institutions The region is home to the following scientific research institutions: with intermediate vocational educational programmes; • the Siberian Branch of the Russian Academy of Sciences (RAS); • 52 institutions of elementary vocational education. • the Siberian Branch of the Russian Academy of Medical Sciences The largest university in the region is Novosibirsk State (RAMS); Technical University (NSTU). Over 20,000 students study • the Siberian Branch of the Russian Academy of Agricultural at NSTU. Sciences; The region’s educational institutions train specialists • the Vektor State Scientific Centre of Virology and Biotechnology; for all sectors of the economy, including IT and industrial • 51 academic institutions and over 60 industrial scientific manufacturing. and research, engineering, technological and design institutes; A distinctive feature of the region’s educational system • over 100 large and 1,700 small enterprises engaged is its close links with the scientific community. in developing and implementing technologies. The Siberian Branch of the Russian Academy of Sciences

8 | Guide to Investment | PwC is located in Novosibirsk, something that • the Scientific Research Institute The Novosibirsk Academician contributes to both high-quality education of Traumatology and Orthopaedics E.N. Meshalkin Scientific Research and opportunities for students to get under the Federal Public Health Institute of Circulation Pathology involved in scientific activities. and Human Services Agency; is the largest cardiac surgery centre in Russia. Such universities as Novosibirsk State • the Novosibirsk Branch University (NSU), Novosibirsk State Technical of the S.N. Fyodorov Eye Its specialists consult over 50,000 University (NSTU), Novosibirsk State Microsurgery State Institution; patients and perform over 15,000 University of Economics and Management high-tech surgical operations each year. • the Scientific Research Institute (NSUEM) and the Siberian State Transport The institute is the largest provider of Clinical and Experimental University (SSTU) are well-known throughout of high-tech medical care in the field Lymphology under the Siberian Russia and attract students from across of cardiovascular surgery Branch of RAMS; the country and the CIS. to the general public in accordance • the Scientific Research Institute with a federal government directive. Healthcare of Clinical Immunology under The Novosibirsk Region is one The Scientific Research Institute the Siberian Branch of RAMS; of the country’s leaders in the development of Traumatology and Orthopaedics of medical science and the level • the Novosibirsk Scientific Research under the Federal Public Health of qualifications of medical personnel. Institute of Tuberculosis under and Human Services Agency is one the Russian Ministry of Health of the country’s leading centres The following federal-level medical and Social Development; treating patients suffering centres provide state-of-the-art medical musculoskeletal and central care to the region’s population: • Novosibirsk District Clinical Hospital; and peripheral nervous • the Novosibirsk Academician E.N. • the Siberian District Medical Centre system disorders. Meshalkin Scientific Research Institute under the Federal Public Health Since 1987, the institute has been of Circulation Pathology under the and Human Services Agency. Russia’s only spinal disorder centre. Russian Ministry of Health and Social Development;

PwC | The Novosibirsk Region | 9 Economic potential

Gross regional product (GRP) GRP per capita increased by over Growth in real disposable income The Novosibirsk Region’s GRP in 2011 was 14% as compared to the preceding (income less obligatory payments) estimated at RUB 558.5 billion, an increase year and, according to estimates, in 2011 reached 103.3% versus 2010. of 5.2% from 2010. amounted to RUB 208,600. The proportion of the population with The growth in the region’s GRP in 2011 Personal income levels an average cash income below the minimum was driven by expansion in the production Over the past 10 years, actual salaries subsistence level was 17.4% in 2011. capacities of almost all economic sectors, and the population’s disposable The amount of monthly pensions increased as well as greater investment activity income have almost tripled. by 9% in 2011. Through regional additional in the region. The population’s average cash income payments, all Novosibirsk Region pensioners In the overall GRP structure, manufacturing per capita increased by 10.6% in 2011 received pensions that were no lower than accounted for 24.8%, retail trade for 16.8%, to reach RUB 17,800, which is almost the minimum subsistence level. transport and communication for 13.1%, 2.7 times higher than the minimum agriculture for 7.5%, and construction subsistence level. for 3.9%. The service sector accounted for about 34% of the region’s GRP.

Gross regional product (RUB billion)

558.5

482.0 453.6 425.4 105.7 105.2 104.6

105.2 104.3 104.3

92.4

89.4

2008 2009 2010 2011

GRP of the Novosibirsk Region (RUB billion) The Novosibirsk Region’s

The region's volume index as compared to the preceding period (%) economic growth over the past 10 years is reflected Volume index of Russian GDP as compared to the preceding period (%) in the following data points: • gross regional product GRP per capita (RUB thousand) (GRP) has increased by 1.7 times; • industrial output has increased by 1.8 times; 2008 172 • fixed capital investments have quadrupled; • actual salaries and the population’s 2009 160.8 GRP per capita (RUB thousand) disposable cash income has tripled; • over 10 million sq m 2010 181.1 of residential housing has been commissioned.

2011 208.6

10 | Guide to Investment | PwC Novosibirsk Region’s GRP structure in 2011 (%)

Healthcare and social Public administration and services Provision of municipal, social national security; compulsory 5.3 and personal services social insurance 1.4 Agriculture, hunting, 5.2 Education fishing, forestry 4 7.5

Real estate, leasing Manufacturing and provision 24.8 of services 16.2

Finance Construction 0.6 3.9

Hotels and restaurants Trade 1.2 Transport 16.8 and communications 13.1

Consolidated budget (RUB billion) The most significant component of the tax activity among the population; and implement income structure is personal income tax specific measures aimed at ensuring effective 2009 2010 2011 (40.1% of all tax receipts); the stable growth employment of the rural population. Total revenue 85.4 100.3 112.6 of budget revenues comes from property In 2011, the Novosibirsk Region taxes. Including tax 58.5 70.3 80.5 Administration implemented a programme revenue The region’s budget expenditures of supplementary measures aimed at ensuring amounted to RUB 114.5 billion in 2011, labour market stability, and a departmental Non-tax 8. 6 9.1 10.6 which is 11.6% higher than in 2010. special purpose programme titled Facilitating revenue Employment of the Novosibirsk Region Most budget expenditures in 2011 Population in 2011-2013. Receipts 18.3 20.9 21.5 (63.8% or RUB 73.05 billion) went without toward provision of social guarantees Due to the proactive government policy consideration to the population: educational of facilitating employment, the registered Total 91.1 102.6 114.5 and medical services, and social aid. unemployment rate dropped as low as 1.5% expenditures of the economically active population Unemployment rate (in 2010, it stood at 1.8%). The unemployment rate, calculated using In 2011, the region’s consolidated budget the International Labour Organisation’s Financial and lending system revenues saw an inflow of RUB 112.6 billion methodology, decreased by 0.4 points (growth rate: 112.3% versus 2010, Novosibirsk Region has the largest banking in 2011 (versus 2010) and totalled 7.2%. and 122.9% versus the pre-crisis sector in the Siberian Federal District levels of 2008). The Novosibirsk Region has developed and is one of Russia’s financial centres. a set of measures to support entrepreneurial It has about 80 lending institutions, The main source of the consolidated budget’s activity, primarily in the innovation sector; branches and representative offices of major income is tax revenue (71.5% of the income facilitate effective job creation; expand Russian and foreign banks that are active structure). self-employment and encourage labour in Russia.

Novosibirsk Region’s consolidated budget – revenues and expenditures Monthly personal income levels per capita (RUB) (RUB billion)

2011 114.5 17,789.4 2011

112.6

2010 16,090.1

102.6

2010 100.3 2009 15,059

91.1

2009 revenues 2008 13,090.4 85.4 expenditures

PwC | The Novosibirsk Region | 11 Breakdown of the regional banking sector’s resource base (%)

Other sources Reserves and earnings 12 16 Parent bank funds Deposits and other funds 30 of legal entities 6

Funds held on corporate settlement accounts 9

Retail deposits 27

The Novosibirsk Region, along with Special purpose programmes special purpose programmes, including Moscow and St Petersburg, is one of only In 2011, 78 special purpose programmes construction (reconstruction) of facilities a few Russian regions where the banking were implemented in the region. under a federal special purpose investment sector’s assets exceed the GRP: according Financing for them exceeded RUB 19 billion programme. Funding amounted to more to estimates, in 2011 the value of bank (or 22.4% of the regional budget’s than RUB 7.3 billion. assets was higher by 30%. overall expenses). In 2011, the region received significant The banking sector’s resources increased In 2011, the Novosibirsk Region federal support as part of the following by 28.5% in 2011. developed 53 special purpose programmes federal special purpose programmes: (27 long-term and 26 department-sponsored Lending to businesses showed a positive programmes). In 2012, there will be over trend. Based on 2011 results, the corporate 1 Federal Special Purpose 80 special purpose programmes operating loan portfolio increased almost Programme for Development in the region. Over RUB 96 billion has by 25%. Manufacturing, agricultural of the Russian Transport System been allocated to finance them, or over and construction businesses accounted (2010-2015): RUB 2.78 billion; 24% of the regional budget’s overall for 47% of the total volume of originated expenses. loans. 2 Federal Special Purpose The region’s special purpose programmes Consumer lending, particularly mortgages Programme for Development are developed and implemented (the most important segment, accounting of Education for 2011-2015: in accordance with the priorities for 36% of all consumer loans), also RUB 602 million; established by the Novosibirsk Regional showed signs of a positive trend. There Programme for Social and Economic was an increase in the number of mortgage Government Programme Development for 2011-2015. 3 transactions and the size of loans issued; for the Establishment of High-Tech RUB 15.9 billion worth of mortgage loans In 2011, the Novosibirsk Region received Technoparks in the Russian were issued in 2011. federal support for implementing 17 federal Federation: RUB 400 million;

Major foreign banks in the Novosibirsk Region

Bank name Contact details GE Money Bank (representative office) 163 Krasny Prospect, Novosibirsk, 630049 + 7 (383) 334 0190, +7 (383) 225 3570 www.gemoney.ru ZAO Bank Intesa, Siberian branch 52 Lenina Street, Novosibirsk, 630004 +7 (383) 227 8191 www.bancaintesa.ru Commerzbank (Eurasia), representative office 42 Krasny Prospect, Office 415, Novosibirsk, 630099 + 7 (383) 211 9092, +7 (383) 211 9093 Nordea Bank NF 15 Sovietskaya Street, Novosibirsk, 630007 +7 (383) 325 1177 www.nordea.ru Raiffeisenbank, Siberian branch 20 Uritskogo Street, Novosibirsk, 630099 +7 (383) 210 5900 www.raiffeisen.ru UniCredit Bank NF 53 Gorkogo Street / 27 Sovietskaya Street, Novosibirsk, 630099 +7 (383) 218 8156, +7 (383) 230 0163, +7 (383) 230 0169

12 | Guide to Investment | PwC Structure of regional budget expenditures for 2012 special purpose programs to be implemented in Novosibirsk Region, with breakdown of priority areas for social and economic development (%)

Enhancing the efficiency Developing an information Education of the rural economy society and electronic and human and preserving the rural government in the resources Developing the housing way of life Novosibirsk Region 10 stock and improving 8 4 Public the urban architectural infrastructure environment 1 11 Developing energy, and enhancing energy efficiency Improving public health and conservation and enhancing demographic 1 potential 14

Developing transport infrastructure Creating an environment 32 for developing moral qualities, culture and spiritual standards 8 Developing innovation- Ensuring public safety driven activities in the Developing and siting and protecting economyand society the Novosibirsk Region’s the environment 3 manufacturing capacities 4 4

Federal Special Purpose Programme the Novosibirsk Academician 4 2 for Development of the Russian E.N. Meshalkin Scientific Research Defence-Industrial Complex Institute of Circulation Pathology for 2007-2010 and for the period under the Russian Ministry of Health up to 2015: RUB 179 million; and Social Development (reconstruction and development of a complex): Federal Special Purpose Programme RUB 1.65 billion; 5 for Social Development in Rural Areas (through 2010): RUB 176.6 million. Federal State-Sponsored Educational 3 Institution of Higher Professional Major federally funded capital construction Education Novosibirsk State projects in 2011 under federal programmes University: Student dormitories with included: leisure facilities and cafes; transformer sub-stations (stages 1 and 2 of the first Construction of the second stage 1 start-up complex), Novosibirsk: of the first part of the Omsk-Novosibirsk RUB 421 million; Road: the segment from Prokudskoye to Sokur with a bridge over Construction of a children’s the Ob river by Krasnyi Yar 4 astrophysical centre in Novosibirsk: in the Novosibirsk Region RUB 200 million. (RUB 2.67 billion);

PwC | The Novosibirsk Region | 13 Key industries

A highly diversified B2B- and consumer- Small business’ products account Heavy engineering oriented economy that encompasses for between 52.1% and 63.2% and metalworking transport, communications, construction, of the region’s overall industrial output. Electrical engineering (e.g. generators, agriculture, retail trade and a mature The industrial production index turbines and electric furnaces) and industrial sector is the Novosibirsk Region’s for 2011 was 106.4% compared to 2010, manufacturing of aircraft, instruments, core competitive advantage. which is above the total both for Russia machine tools, equipment and farm Large and medium-sized businesses as a whole (104.7%) and the Siberian machinery are among the Novosibirsk form the basis of the region’s industrial Federal District (104.6%). The index Region’s leading industrial sectors. sector. They account for 83.6% of local reflects the growth in output data Novosibirsk is among Russia’s top ten industrial products shipped with a value in the following economic sectors: defence industry centres. It is home of RUB 266.229 billion. Small businesses production of transport vehicles to more than 50 defence manufacturing account for 16.4% of industrial output. and equipment (127% versus 2010); companies and related R&D centres. They predominate in such areas as leather mining except for fuel and energy resources products, footwear, textiles, clothing (127.7%); production of machinery Major local heavy engineering enterprises manufacturing, woodworking, wood and equipment (123.9%); bulk steel include OAO ElSib (turbine generators, products, rubber and plastic products, pulp and steel products (114.9%); and other hydraulic turbine generators, asynchronous and paper, and printing and publishing. non-metal mineral products (112.4%). motors), OAO SibElectroTherm (electro- metallurgy equipment), Tchkalov Aircraft

Breakdown of local products shipped, and work and services performed independently in the Novosibirsk Region in 2011 (as % of the total)

Production and distribution of electric power, gas and water Food and beverages 19.0 24.5 Production of power generation, electronic and optical equipment 7.9 Metals production and finished metal goods 9.0

Production of other non-metal minerals 6.3 Other production 33.3

14 | Guide to Investment | PwC Research & Engineering (Sukhoi 34 multi- Mining local anthracite is exported, primarily mission jet fighter; they shared the Sukhoi In 2011, the mineral resources production to Europe and Southeast Asia. Russia’s Superjet-100 Project) and the Novosibirsk index for the Novosibirsk Region reached largest producer of carbon electrodes, Kuzmin Steel Mill. 97.4% compared to 2010. the Novosibirsk Electronics Plant, uses anthracite as a power source. A special purpose government programme, Mining, however, is not a dominant sector Revamping Novosibirsk Region Industry in the region. Steel mills are the main consumers in 2010-2012, is being implemented of Siberian anthracite. Anthracite permits in the region. Federal budget funds have However, the region has unique deposits replacing coke, which has traditionally been been allocated for carrying out technical of ultra-high-grade (UHG) anthracite, used in producing ferrous metals, whereas upgrades of defence sector enterprises and featuring the lowest level of emissions when carbon electrodes are used extensively launching new competitive product lines. used for industrial purposes. About 97% of to produce non-ferrous metals.

NPO ElSib: developing production of new generators and electric motors The project’s scope includes the design and commercial manufacturing of innovation-driven products for import substitution. The overall investment exceeds RUB 1.6 billion.

NEVZ-Soyuz Holding to manufacture nano-ceramic products The project intends to manufacture nano-ceramic products for end-consumers in such industries as defence, radio-electronics, photonics, aerospace and nuclear engineering, heavy engineering, chemicals and petrochemicals, and medical products. The overall investment totals RUB 1.5 billion.

PwC | The Novosibirsk Region | 15 Energy sector is among the 12 regions across Russia Small business Two thermal power plants generate that have traditionally accounted There are more than 150,000 small and electric power for the Novosibirsk Region: for nearly half of the new housing medium-sized enterprises (SME) operating OAO NovosibirskEnergo and Novosibirsk commissioned nationwide. in the Novosibirsk Region, including self- Hydroelectric Power Station, a branch Drawing on all available funding sources, employed entrepreneurs. They employ of OAO RusHydro. Power generation a record 1,505,200 sq m of housing 33.5% of the region’s overall corporate dropped 15.3% in 2011 compared was commissioned in 2011, or 109.1% workforce. The SME sector accounts for to 2010 (13.064 billion kWh). This drop compared to 2010. The per capita level 48% of the region’s overall corporate in consumption has been mostly due of new housing in the region exceeded revenues. to more efficient use of electricity as well the average figures for Russia as a whole The Novosibirsk Region ranks seventh in as several special purpose programmes and the Siberian Federal District. Russia and first in the Siberian Federal now under way in the Novosibirsk Region District in terms of small businesses aimed at promoting energy conservation The increase in residential housing (excluding micro-businesses). in key sectors of the economy development represents 2% growth and in the social sphere. in the available housing stock To promote the growth of the region’s in 2011 compared to 2010. Today, SME sector, a regional special purpose In 2011 the region’s thermal power the per capita average housing space programme, Development of Small stations were upgraded with next- in the region is 21.9 sq m. and Medium-Sized Enterprises in the generation turbines. In addition, Novosibirsk Region for 2009-2013, has been the power grid infrastructure was More than RUB 2 billion and over initiated. In 2011, regional budget funds overhauled, including 21.336 km RUB 1.6 billion from the consolidated totalling RUB 190 million were allocated of heat pipelines and 523.3 km regional funds and the federal budget, to the programme, while another RUB of overhead systems, as well as high- respectively, were allocated in 2011 470.4 million in federal budget funds was voltage substations and transformers. for residential development, better housing and higher quality-of-life contributed. Housing programmes in the region. Thus, Since 2009, an SME Development Fund has Extensive development of residential government budget expenditures been operating in the Novosibirsk Region. housing and more comfortable housing helped improve housing conditions Banks issue loans, guaranteed by the Fund, standards have helped boost the region’s for more than 6,500 Novosibirsk Region at interest rates capped at no more than four attractiveness. The Novosibirsk Region residents in 2011.

Commissioning of housing units per capita (sq m)

2009 0.42 0.46

2010 0.41 0.52 Russia Novosibirsk Region

2011 0.44 0.56

VPK-Oil Refinery to reach target capacity of 200,000 tonnes of oil per year This project is aimed at increasing the refinery’s capacity up to 200,000 tonnes of oil per year, from 50,000 tonnes, with a refining depth of 90-95% and products that meet the Euro-4 quality standard. The product line will also include Euro-5 quality high-octane motor fuel. The overall investment is expected to be RUB 2.314 billion.

Development of the Siberian Anthracite processing mill is expected to produce 9.5 million tonnes of anthracite per year. The mill’s production meets the highest global quality standards. The overall investment in the project is RUB 30 billion.

16 | Guide to Investment | PwC percentage points above the Central Bank of Russia rate. Under the programme, The project for developing the Sibirsky Stroitel plant 13 banks collaborate with the Fund for manufacturing cellular, steam-cured concrete products as lenders. with a volume of 470,000 sq m per year In 2011, the Fund issued 210 guarantees Plans call for building, jointly with the Federal Residential Housing for loans totalling RUB 691.4 million. Development Fund, a plant for manufacturing aerated concrete In 2011, the Fund, jointly with for low-rise buildings and economy-class housing in the town OAO Levoberezhny Commercial Bank, of Michurinskiy, Ikhtimskiy District, under a relevant comprehensive developed a special Business Innovation construction programme. lending programme for small innovation- driven businesses. The programme The overall investment is RUB 3.138 billion. simplifies the documentation required from borrowers and the lender’s loan approval process. The Fund’s preliminary guarantee is sufficient grounds for issuing a loan under the programme. Loan amounts normally range between RUB 200,000 and RUB 3 million with maturities of between 3 and 36 months. to young entrepreneurs between established to act as a clearinghouse A regional SME micro-financing fund 18 and 35 years old, for up to three for informational, analytical, also operates in the Novosibirsk Region. years. Borrowers must successfully logistics and advisory support The micro-financing fund expanded present their business plans for regional SMEs looking to export the range of potential micro-loan to an Expert Council to obtain to global markets. a loan. Eleven loans worth borrowers in 2011. As a result, In 2011, the Novosibirsk Region RUB 1.65 million were issued 20 start-ups were able to borrow was once again the Siberian Federal under the programme in 2011. a total of RUB 9.15 million. District’s winner in the nationwide The micro-financing fund has been In April 2012, the Centre contest for the Best Russian (Constituent) lending money under the Russian for Coordinating Support Region for Promoting Small Youth Business programme since 2011. for Export-Oriented Small and Medium-Sized Enterprises Loans of RUB 150,000 or less and Medium-Sized Enterprises and Creating an SME-Friendly are issued at 12% annual interest in the Novosibirsk Region was Environment.

Breakdown of employment in the Novosibirsk Region’s SME sector (%)

Provision Healthcare of municipal, social Agriculture, hunting, and social and personal services Real estate, leasing forestry services 1 and provision 10 2 of services 17 Manufacturing Finance 19 1 Transport and communications 5 Production and distribution Hotels and of electric power, restaurants gas and water 3 1% Construction Wholesale and retail trade; repairs 12 of autos, motorcycles, household and personal items 29

PwC | The Novosibirsk Region | 17 Agricultural sector The level of profitable farms meat, and 774,800 tonnes of eggs The Novosibirsk Region is among in the region reached 89.1%. (1.196 billion eggs). Russia’s top ten agricultural The grain yield grossed at 2.9 million Regional farms’ milk yields averaged producers. tonnes, with a normal effective harvest 3.9 tonnes per cow in 2011, or 4.5% The region accounts for 13.8% yield of 17.4 centners per hectare. year-on-year growth. ZAO Plemzavod of all agricultural output The region is entirely self-sufficient Irmen Cattle Breeders produced in the Siberian Federal District. in terms of feed and seed grain. 10.4 tonnes of milk per cow and FGUP Tulinskiy Training Farm produced The region’s agricultural sector Cattle breeding in the region 9.2 tonnes of milk. specialises in grain crops, potatoes focuses on beef and dairy livestock, and vegetables. Cattle breeding swine-breeding, poultry farming The investment policy for the region’s and dairy and meat products has and sheep husbandry. The region’s agricultural sector has prioritised also been prioritised for the local agricultural production capacity meets modernising the livestock farming agricultural sector. Linen production not only local demand, but also yields segment. is also an important segment a sufficient surplus to export produce In 2011, agribusiness enterprises of the region’s agricultural sector. to neighbouring regions. Such exports in the Novosibirsk Region made include 40% of milk, and 50% Gross agricultural output in 2011 investments of RUB 11 billion, of eggs, poultry meat and pork. was estimated at RUB 61.5 billion, exceeding the 2010 figure or 106.3% year-on-year growth. Agricultural output increased in 2011. by RUB 3 billion. RUB 8 billion went toward agricultural production, In 2011, the region’s farms posted The Novosibirsk Region produced while RUB 3 billion was invested total profits of RUB 2.5 billion. 224,100 tonnes’ worth of live weight in processing.

Structure of cultivated land use by crop, %

Potato and vegetable Fodder crops gourds 28 1.9

Technical crops 1.3 Grains and legumes 68.8

Breakdown of agricultural output by type of farm, %

Production of cattle and poultry for consumption Egg production Dairy production

9.8

0.2 32.6 41.3 Agricultural enterprises Farms 56.4 Private farms 1.2 66.2

90.2 2.3

18 | Guide to Investment | PwC The year 2011 saw 65 investment projects implemented under Expanding OAO Kudryashovskoe the departmental special purpose programme titled Construction This project is aimed at the vertical integration of the holding, which of Milk-, Meat- and Livestock-Producing comprises: Complexes (Farms) in the Novosibirsk • swine-breeding farm complexes; Region in 2010-2012, which promotes • a breeding plant; the development of family farms in addition to large-scale, modern • crop farms; and agribusinesses. • a slaughtering unit. In 2011, RUB 100 million was The overall investment is expected to be RUB 9.842 billion. invested in building up the community and engineering infrastructure in rural areas. Constructing the Novosibirskiy Greenhouse Plant

In 2011, 19,000 sq m of rural housing The project involves building a high-tech greenhouse plant producing a was developed under the federal special wide range of vegetable crops over a total area of 17.24 hectares. purpose programme titled Rural Social Development up to 2012, including 9,400 sq m of housing for young families The overall investment is expected to be RUB 2.041 billion. and recent university graduates. Drawing on all available funding, RUB 700 million was allocated in 2011 for implementing the federal special Consumer market retail trade turnover. Every day, local purpose programme titled Rural Social The region’s consumer sector residents market around RUB 1 billion Development up to 2013. consists of 10,700 standalone worth of consumer goods. retail shops with a total area Food production In 2011, public services worth of 2.8 million sq m; 2,200 public Production of food, including beverages, nearly RUB 80 billion were provided catering facilities seating 97,000 diners; is one of the largest and fastest-growing to Novosibirsk Region residents. 1,200 wholesale trade outlets; sectors in the Novosibirsk Region economy. The primary paid services provided 92 retail markets; and 4,500 small-scale The food industry produces about 33% to local residents were communications retail outlets. In 2011, 26 new stores of all processed goods shipped. (23.9%), transport (15%), utilities with a total area of 192,000 sq m (14.9%), domestic (9.9%) The region’s food and processing were opened. plants produced RUB 78 billion worth and educational (7.8%) services. The Novosibirsk Region’s consumer of their own goods, work and services. The Novosibirsk Region accounted sector employs approximately for 15% of all public services The region is entirely self-sufficient 250,000 people, accounting provided across the Siberian Federal in corn, milk, butter, eggs, poultry for over 19% of the workforce. and pork. The only everyday food items District in 2011. In 2011, the retail trade turnover the region does not produce are sugar Overall, in 2011 investments was RUB 368.3 billion, representing and vegetable oil. The region’s food of RUB 9.5 billion were made 10.8% year-on-year growth. production is dominated by the dairy in establishing and rebuilding and meat segments with a combined The Novosibirsk Region is the Siberian consumer market facilities, thus share of 44%. Federal District’s leader in per capita creating 3,000 jobs.

Retail trade turnover per resident (RUB thousand per capita)

137.5

Novosibirsk Region Siberian Federal District

107.2

PwC | The Novosibirsk Region | 19 Telecommunications while the telephone density was The market for telecommunications about 30 numbers per 100 residents services is one of the fastest-growing of the region, which is the highest sectors in the Novosibirsk Region in the Siberian Federal District. economy. Altogether, 169 telecom Broadband networks with operators provide communications dedicated lines are expanding. services in the region. In 2011, this service was used All types of fixed-line cable and wireless by over 470,000 subscribers. communications are used extensively The consolidated subscriber base in the region. The region boasts a highly of mobile operators in the Novosibirsk developed telecoms sector, where Region comprises 4 million people, growth has been driven primarily with a pool of over 400,000 potential by Novosibirsk’s role as a major 3G cellular subscribers. business centre and capital of the Siberian Federal District. The base stations of major mobile operators cover about Currently, the region’s public 75% of the region, and services communication traffic network, are accessible for 95% of the region’s based on fibre-optic lines, population. is over 23,000 km long. The Russian Post network in the The telephone numbering capacity Novosibirsk Region consists of 784 post was about 910,000 numbers in 2011, offices, including 597 serving rural areas.

Building and developing the Mars Animal Feed Production Plant This project is aimed at building a plant for, and further modernising and expanding, production of animal feed and fodder. The overall investment is expected to be RUB 1.256 billion.

Upgrading production of Karachinskaya Mineral Water This project calls for modernising a mineral water production plant, establishing production of still mineral water, and rebuilding existing production facilities and constructing new facilities. The overall investment is expected to be RUB 546 million.

Rebuilding and upgrading the Rossiyskie Myasoprodukty Holding’s meat processing plant The reconstruction and modernisation of the plant’s production capacity will boost meat-processing output to 140 tonnes per day. RUB 785 million overall was invested in the project.

20 | Guide to Investment | PwC High-technology sector The region’s businesses are very active Novosibirsk is Russia’s third most in the market for high-tech products. prominent IT centre. The region’s software The Novosibirsk Region produces: developers specialise mainly in automation (54%), telecommunications (40%) • 75% of all diagnostic agents and data protection (23%). produced in Russia; Major IT developments and solutions • 60% of all medical X-ray machines include: software for optical-pattern produced in Russia; image recognition and other areas of artificial intelligence; bundled software • 90% of virtualisation hosting solutions for virtual reality, server software; virtualisation and hosting automation systems; modular bundled software • 90% of all liquid chromatography solutions for modelling of physical, units produced in Russia. biological, geological and environmental Furthermore, the Novosibirsk Region processes; bundled software solutions is Russia’s leader in exports of laser for technology and enterprise management automation systems; and bundled systems and accessories. software and hardware solutions for telecommunications systems, industry and housing/utilities infrastructure. One of the most promising areas of scientific and high-tech production in the region is nanotechnology development.

PwC | The Novosibirsk Region | 21 Innovation-driven development

In the context of the ongoing integration • Novosibirsk Region Gubernatorial Governmental support of academic scientific institutions, Executive Order No.254-r of 19 October for innovation-driven activity universities, industrial enterprises 2009 “On Approval of the Framework In 2011 the following new mechanisms and small- and medium-sized innovation- for Developing Innovation Activity were developed to incentivise innovation- driven businesses, the region is successfully in the Economic and Social Spheres driven activity in the Novosibirsk Region: developing such areas as information in the Novosibirsk Region”; • subsidies for partial reimbursement technologies, machine tool engineering, • Novosibirsk Region Gubernatorial of costs associated with providing power electronics, electric machinery Decree No. 327 of 18 October 2010 services to business entities involved engineering, and biomedical technologies. “On Measures for Facilitating in innovation-driven activities, The Novosibirsk Region is one the Integrated Development business incubators and technology of the founders of the interregional of Scientific and Innovation Activity park management companies; Association of Innovative Regions of the Novosibirsk Scientific Centre • subsidies to business entities of Russia (AIRR), which was created of the Siberian Branch of the Russian involved in innovation-driven to address relevant issues in introducing Academy of Sciences and the Sovietsky activities, for preparing, transferring innovative methods in industry District”. and commercialising technologies, and includes 12 member regions To promote further development including pilot pre-production across Russia. of scientific, technological and innovation- release of products, their certification, driven activities, the following special The regional innovation infrastructure production upgrading and other purpose programmes have been approved: includes: activities; • the Science Campus Technopark; • Long-Term Special Purpose Programme • subsidies for educational institutions for Creation and Development for training of innovation specialists. • the Biotechnology Park in the Koltsovo of the Novosibirsk Science Campus Plans call for supporting young scientists science city (Biotechnopark); Technopark for 2011–2014; • business incubators, including ones through grants, scholarships and bonuses. • Long-Term Special Purpose attached to educational institutions; The Novosibirsk Regional Fund Programme for Creation of a Scientific for Support of Science and Innovation • a network of innovation technology and Technology Park in Biotechnologies Activity, an autonomous state institution, centres (centres for development in the Science City of Koltsovo is focused on the further development of innovation competencies, youth for 2011-2015; workshops and creative talent of knowledge-intensive production development centres within • Departmental Special Purpose operations, as well as promoting the school-university system). Programme for Development the consolidation of public and private of the Novosibirsk Region’s financing sources for effective breakthrough Legal framework for developing Innovation System and Talent Pool technology and infrastructure projects. innovation-driven activity for 2011-2013; and The Fund is involved in preparing project • Novosibirsk Regional Law No.17-OZ • Novosibirsk Region Administration plans for institutes and innovation of 20 April 1995 “On Scientific Work Executive Order No. 44-rp of 17 February companies (business plan development, and the Scientific and Technology 2012 “On Approval of the Framework marketing research) for review Policy of the Novosibirsk Region”; for the Long-Term Special Purpose by potential investors. • Novosibirsk Regional Law No.178-OZ Programme on State Support The Novosibirsk Regional ARIS Agency of 15 December 2007 “On the Novosibirsk for the Integrated Development for Generation of Innovation-Driven Projects, Region Policy for Innovation System of the Sovietsky District in the City an autonomous state institution, provides Development”; of Novosibirsk and the Scientific Centres advisory and methodological support of the Siberian Branch of the Russian for businesses involved in innovation Academy of Sciences and the Siberian activities, and assists in selecting Branch of the Russian Academy technological solutions for proposed of Medical Sciences for 2012–2016”. innovations.

The Novosibirsk Regional Fund for Promoting the Development of Venture Investments in Small Businesses Engaged in Science and Technology has provided support for four major projects totalling over RUB 240 million.

22 | Guide to Investment | PwC Since 2009, Novosibirsk has hosted for innovative products and technologies. As part of OAO ROSNANO’s programme the annual INTERRA International A Joint Operating Plan has been signed for Development of a Network Innovation Forum, which has become between OAO ROSNANO, the Novosibirsk of Nanotechnology Centres in the Russian one of Russia’s leading venues Region and the Siberian Branch Federation, two Novosibirsk-based for discussing and shaping of the Russian Academy of Sciences universities (Novosibirsk State University the fundamental concepts and practices for implementing a set of measures and Novosibirsk State Technical University) behind innovation-driven development to ensure incentives aimed at boosting have been included in the nationwide in the economy and society at large. demand for innovative products nanotechnology network. manufactured on the basis of nano- The forum’s goal is to gather together Cooperation with technologies and nano-materials. representatives of the expert community, the Skolkovo Foundation fundamental science, universities, The region is implementing a number In 2011, the Skolkovo Foundation innovation companies and investment of projects supported by OAO ROSNANO: and the Russian Academy of Sciences groups in a common effort to identify • setting up pilot production signed an agreement to cooperate best practices and optimal conditions of state-of-the-art lithium-ion on innovation-driven activities. and technologies for promoting batteries in Russia (OOO Litiy-Ionniye The agreement is intended to ensure innovation-driven breakthroughs Tekhnologii); cooperation in the development in Russia’s regions. and implementation of a long-term • upgrading and expanding strategy and specific activities aimed Cooperation with OAO ROSNANO the production of nano-inks at facilitating and maintaining A three-party agreement was signed and equipment for high-tech the appropriate conditions and environment in 2010 between the Rosnanotech digital printing (ZAO SAN-NSK); State Corporation (ROSNANO), for advanced research and development • establishing the industrial activities for subsequent commercialisation the Novosibirsk Region Administration production of multifunctional and the Siberian Branch of the Russian of the results, as well as fostering ceramics, including medical products a new generation top-class specialists Academy of Sciences, which was designed (KhK OAO NEVZ-SOYUZ); to facilitate the priority innovation-driven in priority areas of technological development of the Novosibirsk Region, • setting up production of cathode cooperation. materials for manufacturing as well as establish the elements Institutes that have signed formal of lithium-ion batteries (OAO NZKhK). of a nationwide nano-technology network cooperation agreements with the Skolkovo within the region aimed at promoting The Novosibirsk Region together Foundation, include: the G.I. Budker the large-scale expansion of nano-industry with the Tomsk Region were declared Institute of Nuclear Physics (Siberian Branch production. the winners of a competitive tender run of the Russian Academy of Sciences); The regional system for generating by ROSNANO for setting up an infrastructure the G.K. Boreskov Institute of Catalysis innovations and innovative product complex designed for commercialising (Siberian Branch of the Russian Academy commercialisation can function at peak nano-technology solutions. The complex of Sciences); and the A.V. Rzhanov Institute operational efficiency only in combination was built on the grounds of the Novosibirsk of Semiconductor Physics (Siberian Branch with efforts to incentivise demand Science Campus Technopark. of the Russian Academy of Sciences).

INTERRA 2012 The fourth annual INTERRA International Innovation Forum will be held in Novosibirsk on 14–15 September 2012.

Innovation for Life will be the main The specific features of the 2012 forum’s theme INTERRA 2012. Forum topics have shaped the event’s format. participants, experts and guests will INTERRA 2012 is a laboratory forum focus on innovative ideas and solutions uniting research solutions with hands- designed to improve the quality of life. on experience. INTERRA is rapidly becoming a community of professionals, The key topics to be covered during a “smart event”, a place not only the forum include: to present concepts but to implement • New Economy; them as well. • the Liveable City Traditionally, the forum has included • Territory of Innovation, an intensive humanitarian agenda, • Innovation Development Policy with the main focus on developing and Management. new concepts in urban culture.

PwC | The Novosibirsk Region | 23 Transport infrastructure

Since its founding, Novosibirsk The transportation sector is one The М51, М52 and М53 federal highways has always been a major transportation of the regional economy’s specialised traverse the region. and distribution hub. Today, industries, accounting for 12% In 2011, 26.4 million tonnes of cargo the Novosibirsk Region is the largest of the gross regional product. was shipped by all types of general-purpose transport hub in the eastern part The Novosibirsk section of the Western transport, representing a cargo turnover of Russia. It lies at the crossroads of major Siberian Railway spans 1,509.8 km. of 97.2 billion tonnes per km. Rail transport railway routes, highways, air routes, accounts for the bulk of the region’s and waterways. Novosibirsk links Siberia, General-purpose highways, owned cargo turnover (95.5%). the Russian Far East and Central Asia by the regional or federal governments, with the European regions of Russia. cover 13,562 km, of which 10,879.9 km Three hundred thirty-four million is hard surface road. passengers were served by general-purpose transportation, representing passenger traffic volume of 20.6 billion passengers per km

Exit to NORTH WAY

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Kazakhstan Middle Asia countries Central Asia countries А349 Gorno-Altaisk Map keys The Main railways Automotive transport corridors Republic Federal highways Territorial highways CHUYA TRACT of Altai River routes Mongolia Air ways China

24 | Guide to Investment | PwC Air destinations served by Novosibirsk’s Tolmachevo International Airport

Domestic flights Air transportation Tolmachevo Airport is one of Russia’s Moscow (Vnukovo) 2 flights per day fastest-growing federal-level airports. Moscow (Sheremetyevo) 3 flights per day It is a major transport hub, serving passengers Moscow (Domodedovo) 7-9 flights per day and cargo shipments on air routes to 90 destinations across Russia, the CIS, International flights and other countries. The airport serves Almaty, Kazakhstan 2 flights per week around 100 airlines. Antalya, Turkey 10 flights per week Tolmachevo Airport places great emphasis Astana, Kazakhstan 4 flights per week on developing transfer services and is well- positioned to become a major multimodal hub. Baku, Azerbaijan 3 flights per week Developing Tolmachevo as cargo hub offers Bangkok, Thailand 3 flights per week considerable promise given the potential Bishkek, Kyrgyzstan 6 flights per week for its further integration into global Burgas, Bulgaria 1 flight per week transport networks. Varna, Bulgaria 1 flight per week Rail transport Novosibirsk is the largest railway hub in Siberia. Hanover, Germany 1 flight per week The Trans-Siberian Railway runs through Guangzhou, China 1 flight per week http://www.tolmachevo.ru the Novosibirsk Region. The region also Denpasar, Indonesia 1 flight per week Detailed information on has rail links to Kazakhstan and Central Asia. Cargo is mainly transported by rail (95.6%). Dushanbe, Tajikistan 3 flights per week scheduled flight arrivals and departures from Tolmachevo In 2011, 13.5 million tonnes of cargo was Dusseldorf, Germany 1 flight per week Airport is available on: shipped by rail, accounting for cargo turnover Erevan, Armenia 2 flights per week of over 62 billion tonnes per km. Coal, for domestic flights: oil products and construction freight account Heraklion, Greece 2 flights per week +7 (383) 216 9841 for the major part of cargo volume. Kiev, Ukraine 6 flights per week for international flights: The region’s rail infrastructure is being Larnaca, Cyprus 3 flights per week +7 (383) 216 9771 developed, which by 2015 should ensure Osh, Kyrgyzstan 6 flights per week rapid cargo turnover growth in rail stations in the Novosibirsk suburbs and districts Beijing, China 6 flights per week undergoing intensive economic development. Prague, Czech Republic 2 flights per week Pula, Croatia 1 flight per week Phuket, Thailand 1 flight per week Sanya, China 1 flight per week Istanbul, Turkey 3 flights per week Tashkent, Uzbekistan 3 flights per week Urumqi, China 5 flights per week Ust-Kamenogorsk, 2 flights per week Kazakhstan U-Tapao, Thailand 1 flight per week Frankfurt, Germany 1 flight per week Harbin, China 1 flight per week Hurghada, Egypt 1 flight per week

PwC | The Novosibirsk Region | 25 Tourism

The Novosibirsk Region enjoys Natural mineral springs, therapeutic The Long-Term Special Purpose Programme significant potential for developing mud and clay make the health for Developing Tourism in the Novosibirsk domestic and international tourism. and wellness sector a key tourist Region in 2012-2016 was drawn up The region’s cultural attractions, attraction in the Novosibirsk Region. to help build a significant tourism rich biodiversity and significant industry in the region. The region’s most popular recreational balneological resources create destination is the Novosibirsk Water Work has already begun on identifying opportunities to develop virtually Reservoir (over 185 km long), which the most promising projects and creating all types of tourism: business is commonly known as a “sea”. local tourism development zones and recreational tourism, health Its shores are covered with numerous in the region. resorts, sports tourism, rural holiday camps, recreation centres tourism, and hunting and fishing. and children’s health resorts. There are over 2,500 historical The institutional, legislative framework and cultural heritage sites, 25 wildlife for developing the Novosibirsk Region’s sanctuaries, and 53 natural landmarks tourism sector was established in the region. in 2011-2012.

Creating a tourism infrastructure zone on the territory of the historic Suzun workers’ village The project provides for creation of a museum and tourism centre – the Suzun Brass Works and Mint. The overall investment totals RUB 1 billion.

The Novosibirsk Region’s tourism and recreation sector includes 124 hotels, 42 health and wellness facilities, 31 recreation camps, 26 hunting lodges and stopover sites, and 11 Alpine skiing centres.

L.B. Bertenson’s Healing Waters, Therapeutic Muds, and Seabathing in Russia and Abroad, published in St Petersburg in the early 20th century and the only complete reference work of its kind, referred to Lake Karachi and its healing brine and muds. In terms of the therapeutic properties of their mud and brine, Lake Gorkoye and Lake Ostrovnoye exceed the famous Dead Sea.

26 | Guide to Investment | PwC Government support for the tourism industry in the Novosibirsk Region

Forms of government support and development of the tourism sector

Financial Organisational Economic Informational

Building top-priority tourist Defining and constructing Special-purpose programmes Monitoring utilisation facilities top-priority tourism facilities of tourism resources Tax incentives Presenting Novosibirsk Facilitating participation Tourism register in tourism exhibitions, of tourism entities in tourism for the Novosibirsk Region fairs, and other events exhibitions, fairs, conferences, Collecting, consolidating, roundtables, business Tenders for tourism and distributing information meetings, and other events operators on top-priority tourism facilities Collecting and consolidating information on tourism- related events

PwC | The Novosibirsk Region | 27 Foreign trade

In 2011 foreign trade transactions (45.9% of overall foreign trade). Exports Ukraine (36.4% or USD 420.6 million) were carried out with partners decreased by 8.4% year on year, while and Bulgaria (9.0% or USD 103.5 million). in 107 foreign and CIS countries. imports dropped by 10.4% year on year. Engineering products dominated Around 1,900 entities registered Engineering products represented the Novosibirsk Region’s imports in the Novosibirsk Region were the region’s top export in 2011 in 2011 with a share of about 21%. involved in import/export with a share of over 52%. Chemical Imported textiles and shoes constituted operations. products made up 16% of overall exports, 23% of overall imports, while foods Foreign trade turnover with food products and agricultural and agricultural raw materials made up USD 2.656 billion. raw materials each accounting each accounted for about 9%. Exports amounted to USD 1.436 billion for about 9% of the region’s exports. Major importers were China (59.3% of total (54.1% of overall foreign trade), while The leading recipient countries imports, or USD 674.2 million) and Germany imports amounted to USD 1.219 billion for the region’s exports were (8.7%, or USD 99.2 million).

Foreign trade turnover for the Novosibirsk Region (% of total)

China 30.6 Germany 8.3 Iran 2.9 USA 3.9 Bulgaria 4.2

Uzbekistan 1.8 Belgium Others 2.3 26.5 Kyrgyzstan 2.2

Ukraine 17.3

28 | Guide to Investment | PwC PwC | The Novosibirsk Region | 29 The Novosibirsk Region’s investment climate

Capital investments Investment legislation Competitive advantages The volume of investment in fixed assets The Novosibirsk Region has of the Novosibirsk Region: in 2011 was RUB 142.1 billion, or nearly created one of Russia’s best regulatory 16% higher than the 2010 level. and legislative frameworks for promoting • favourable geographical the investment process and innovation- The volume of inward foreign investment location; driven activity. in the Novosibirsk Region was over • developed transport USD 533 million. The main local law regulating investment in the region is Novosibirsk Region Law and logistics infrastructure; In 2011, increased investment No. 97-OZ of 14 April 2007 “On Government was recorded in such key sectors • highly diversified economy Regulation of Capital Investments Made of the economy as manufacturing in the Novosibirsk Region”. • unique personnel, scientific of machinery, vehicles and equipment, and innovation potential; construction, transport The law defines the measures and terms and communications, finance, for the provision of government support, • the regional administration’s wholesale and retail trade, as well as the rights and obligations effective investment policy. and production of fabricated metal of investors implementing projects products. in the region. The volume of government support Government support for investment The high ratings given by both Russian for investments in the Novosibirsk Region projects is provided under a regional and international rating agencies have in 2011 is broken down as follows: special purpose programme titled confirmed the effectiveness of the Government Support for Investment investment policy being implemented • over RUB 193 million in subsidies in the Novosibirsk Region from in the Novosibirsk Region: to compensate for interest rates on bank loans and leasing payments; 2012 to 2012. All programme measures • In May 2012, Fitch Ratings changed have been approved and secured its long-term rating for the Novosibirsk • RUB 1.3 million in subsidies to participate by the regional budget. Region (in foreign and local currency) in exhibitions and fairs jointly with from BB to BB+, and its long-term the Novosibirsk Region Administration; national-scale rating from AA-(rus) • over RUB 268 million in profits tax to AA(rus). These ratings have a “Stable” and property tax benefits; outlook. The region’s short-term rating (in foreign currency) was affirmed as B. • RUB 530 million in government guarantees for investors. • Forbes magazine rated the Novosibirsk Region as Russia’s seventh best region Tax payments to the Novosibirsk “The regional authorities’ for business development in 2011. Region’s consolidated budget from focus on attracting the implementation of investment The Novosibirsk Region is the only top-10 investment has been region in the Siberian Federal District. projects entitled to government support were over RUB 5.552 billion. an important factor. Accordingly, the regional budget The Novosibirsk Region received over RUB 11 in tax revenue per RUB 1 of government support doesn’t have the type (excluding state guarantees). of income base that neighbouring regions enjoy “I do not see any major strategic issues that currently stand from natural resources. in the way of making large-scale investments in the region: The regional administration and our example shows this – we have been working understands that it must in the region for nine years already, and over this time focus its efforts on creating we’ve encountered only operational problems that infrastructure, instead are quite easily resolved.” of standalone investment projects. If the infrastructure Mars is in place – the investors will come on their own.” Sibirsky Stroitel

30 | Guide to Investment | PwC Government support for investments • providing investors with information Promising areas for investment made in the Novosibirsk Region about the existing engineering Promising areas for investment include: Financial support infrastructure required for project • modernisation, expansion implementation and its status; or establishment of production Tax benefits: • distribution of information about of high-technology/ knowledge-intensive/ • Corporate property tax exemption the investment project. innovation-driven products and services; (on property used to implement projects) Special support • modernisation, expansion • Corporate profits tax rate reduced by 4.5% The Novosibirsk Region or establishment of production Subsidies: Administration provides support of food products, and manufacturing; • Subsidies to compensate for a portion measures for commodity • modernisation, expansion of the interest rate on bank loans and agricultural producers, and small or establishment of production (half of the Central Bank of Russia (CBR) and medium-sized businesses, as well of modern construction materials refinancing rate, and two-thirds of the CBR as measures to encourage innovation-driven and components; refinancing rate for regions with investment activity in the region. • modernisation, expansion incentives); Scope and timing of government support or establishment of high-output • Subsidies to compensate for a portion 1. The scope of government support agricultural production facilities of lease payments (two-thirds of cost cannot exceed 25% of the investment and large-scale cattle breeding farms; paid to the lessor); expenditure stated in the investment • construction and revamping of tourist • Subsidies to compensate for a portion project’s business plan (i.e. 50% industry infrastructure; of the cost of completing work related for regions where investment • modernisation, expansion to an investment project (i.e. 25% of costs is encouraged). or establishment of high-technology involved in implementing socially significant 2. The overall volume of government mining facilities; projects in regions where investment support is determined by budgetary • construction and revamping is encouraged); efficiency indicators developed of exhibition infrastructure; by the Novosibirsk Region • Subsidies to compensate for a portion • construction and revamping of the cost of competing work Administration for promising areas for investment, and approved of transport and logistics for connecting to utility networks infrastructure; (i.e. 50% of the connection project costs by regional administration resolutions. incurred in implementing socially significant 3. Government support is provided during • modernisation, expansion projects in regions where investment the investment project’s payback period, or establishment of facilities is encouraged); but only up to seven years. for deep processing of timber; • modernisation, expansion • Subsidies to compensate for a portion Special conditions have been or establishment of facilities of the costs incurred in participating established for government support for processing recoverable raw in an interregional or international of investment projects in those materials and domestic household investment measure jointly with the districts where investment is encouraged waste; Novosibirsk Region Administration and for socially important projects. (i.e. 75% of costs, but no more • construction and revamping than RUB 1.5 million). Regions where investment of engineering and transport is encouraged: Municipal districts infrastructure in the Industry Government guarantees: whose estimated fiscal capacity and Logistics Park outside • Government guarantees per resident in terms of the municipal Novosibirsk, science and biological of the Novosibirsk Region provided district’s fiscal revenue for the reporting technology park in the Koltsovo as an investor performance guarantee financial year precedingthe current science city and the technology (i.e. 50% of the amount raised financial year is lower than park on the grounds of Novosibirsk’s to complete an investment project). the average municipal district level Science Campus; in the Novosibirsk Region. The system of non-financial • construction of housing government support includes: Socially important projects: Projects for commercial lease; • consultancy, methodical implemented in preschool education, • construction and revamping and informational project support; supplementary children’s education, of socially important infrastructure culture, physical education and sports, • establishing a special working group used for education, culture, sports to support a project at all stages including as part of other investment and healthcare purposes. of its implementation; projects.

“One of the advantages of the Novosibirsk Region is the young, dynamic government team that helps facilitate investment projects. If we need to find something that we cannot locate on our own, there is always an expert who can help us solve the problem. To a great extent, we have been able to localise our production operations with the help of the regional administration: we have begun procuring more local raw materials. If we had not had such support, we would, of course, still have implemented the project, but it would likely have cost more and taken more time.” Mars

PwC | The Novosibirsk Region | 31 Competing for investment project tenders 2. The Ministry of Economic Investor information support Government support for investment Development works jointly with Information on the types of government projects is allocated through tenders. the regional executive agencies support available for investors overseeing a project’s targeted sector in the Novosibirsk Region, as well Tenders are held by the Novosibirsk to issue an investment project opinion, as regulatory and legislative acts governing Region Administration to select those which includes: investment, and programme and strategic investment projects that are the most documents, are available effective and important for the region’s • an assessment of the project on the Ministry of Economic Development’s social and economic development. to determine its alignment with website: the Novosibirsk Region’s investment All tenders are open. Investment http://econom.nso.ru. priorities, as well as the scope projects are selected based and timelines of potential support; Information about the economic on the principles of equality and investment potential of all districts and and objectivity. • an industry-specific expert opinion cities in the Novosibirsk Region by the executive agency overseeing The Novosibirsk Regional Ministry is available on the interactive map: the investment project’s targeted sector. of Economic Development provides http://map.nso.ru organisational support for tenders 3. Once the investment project opinion For more information, investors should and interaction with investors. is issued, the Ministry of Economic contact the Investment Policy and Regional Development presents the project 1. With support from the regional Economic Development Department to the Investment Council in the office Ministry of Economic Development, of the Novosibirsk Region Ministry the Governor of the Novosibirsk Region. the initiator of an investment project of Economic Development. prepares a bid for a relevant competitive The Council then examines You can learn more about tender, including the following set the competitive bids, hears reports investment projects being implemented of documents: by the project initiators and heads in the region, as well as access information of industry-specific ministries, on the investment resources and needs and holds a discussion of the project 1 a free-format tender application; of various Novosibirsk Region districts, details. on the Novosibirsk Region’s investment the investment project’s business According to the results of the meeting, website: 2 plan, drafted in accordance with the Council may decide to approve http://newsib.ru the requirements given the project for implementation in the appendix to the Tender and to provide government support. Procedure; In addition, the Council may also appoint a project supervisor from financial statements certified 3 among the heads of executive authorities, by the tax authorities. establish a working group to support the project, and provide it with organisational assistance. 4. The Investment Projects Tender Committee examines the projects recommended by the Investment Council for the provision of government support and determines the scope and timing of such support.

32 | Guide to Investment | PwC Novosibirsk Region Ministry of Economic Development 18 Krasny Prospect Novosibirsk, 630011 Tel.: +7 (383) 210 3352 E-mail: [email protected] http://econom.nso.ru Department for Development of Investment Activity, Projects and Programmes Tel.: + 7 (383) 231 0444, +7 (383) 222 0146

The region is continually working to improve the investment climate. A regional programme for improving the investment climate was introduced in 2011; a law on the Novosibirsk Region’s participation in public-private partnerships was passed in March 2012.

PwC | The Novosibirsk Region | 33 Industrial and technology park projects

A critical tool in the Novosibirsk Region’s Industrial and Logistics Park With its close proximity to Novosibirsk, investment policy is the development The largest investment project Tolmachevo Airport, the Trans-Siberian of industrial and technology park zones. in the region is the creation Railway and major highways, this location of an Industrial and Logistics Park. offers an attractive place for hosting Such projects promote use of the “one-stop logistics facilities and production plants. shop” concept when allocating land plots Novosibirsk’s location is unique and approving technical conditions in terms of warehousing properties: Anticipated residents of the Industrial for placing new production facilities the city is located at the intersection and Logistics Park: of major transport routes connecting on land with the required engineering • major transport and logistics Europe and Asia, western Russia and technological infrastructure, companies that provide goods’ and the Far East, and serves and raising the required funds storage and processing services; for the construction of infrastructure. as the distribution centre for the entire region. • retail chains that require high-quality The region is already implementing storage facilities, including The regional administration has allocated three park projects: an Industrial for organising regional distribution a 2,000 ha plot of land for the project and Logistics Park near Tolmachevo centres; Airport, the Novosibirsk Science Campus to create an industrial and logistics park. Technopark, and a scientific and technology Extensive infrastructure will be built • light industry, assembly plants park in biotechnologies in the Koltsovo on this land with a network of roads (precision engineering, electronics, etc.); and multi-level junctions with the M-51 science city. • businesses that are moving their industrial Baikal Highway. facilities outside of the city;

Implementing projects at industrial and technology parks will create the following advantages for investors: • the length of procedures for allocating land plots and their connection to infrastructure will be significantly reduced. • expenditures on infrastructure are reduced, as its creation is centralised for the entire pool of investors and expenses are distributed proportionally; • the park zone ensures a strong concentration of services: technological, logistics, consulting, etc.

To carry out investment projects, the park’s residents will be offered plots of land with connections to the following infrastructure at the property line: • electricity; • gas; • sewer systems; • storm water drainage; • water supply; • telecommunications and the Internet; • rail spur line; • heating. The scope of infrastructure is agreed individually with each resident.

34 | Guide to Investment | PwC • ull-scale manufacturing facilities Services to be offered by the Industrial • giving technical advice on connecting of research companies that are based and Logistics Park’s management to the park’s infrastructure facilities; at the Novosibirsk Science Campus; company: • assistance in estimating the required • leasing land plots with a subsequent infrastructure. • food industry companies (processing buy-out right for those residents whose agricultural products); Class A warehouse complexes with investment projects have been approved a total floor space of 145,000 sq m • building materials manufacturers; by the commission to establish have been built. the Industrial and Logistics Park; • packaging industry, packing Five resident companies were operating and filling/sorting lines. • acting as a developer for construction of the Industrial and Logistics Park’s in the Industrial and Logistics Park The project will be carried out residents’ facilities; in 2011. By 2012, all necessary conditions by a specialised management company, will be created for implementing eight • providing services to ensure established by order of the governor more industrial and logistics projects the technical conditions for connecting of the Novosibirsk Region, to organise with a total investment of about to the Industrial and Logistics Park’s the construction and operation RUB 20 billion and the potential to create infrastructure facilities; of the Industrial and Logistics Park’s at least 5,000 jobs. The construction engineering and transport • connecting the park residents’ facilities of infrastructure facilities will require infrastructure facilities. to the park’s existing infrastructure a total investment of approximately facilities; RUB 2 billion.

Currently, the following infrastructure facilities have been put into operation at the Industrial and Logistics Park: • a 7-km railway line to the Chik Railway Station and 1.2-km connector railway line; • a 5.2-km high-pressure gas pipeline; • a power line with a 6-MW substation; • utility fluid and storm flow treatment facilities; • a 1.3-km motor road with an access road from the M-51 highway to the main railway line.

Contacts: OAO Investment Development Agency of the Novosibirsk Region (OAO AIR) Andrey L. Roketsky General Director Kronos Business Centre, Sector B, 6th Floor 5 Sovietskaya Street, Novosibirsk, 630007 Tel./fax: +7 (383) 289 2725 Website: www.air-nso.ru

OAO Industrial and Logistics Park Management Company (OAO UK PLP) Kronos Business Centre, Sector B, 6th Floor Viktor A. Balala General Director 5 Sovietskaya Street, Novosibirsk, 630007 Tel./fax: +7 (383) 289 2725 E-mail: [email protected] Website: www.plp-nso.ru

PwC | The Novosibirsk Region | 35 The following will be created on the The Technopark’s main areas of specialisation are: Technopark grounds: •information and telecommunications technologies; • an engineering support centre for innovation-driven development •biomedicine and biotechnologies; with high-tech equipment, including a prototyping and small batch production •instrument making and high-technology equipment; centre (put into operation in 2010); •power electronics and electrical engineering. • a business incubator technopark (opened in 2011); • a nano-materials engineering and technology centre (construction completed in 2011); • a group of laboratory and manufacturing Novosibirsk Science Campus access to the technological buildings for Technopark resident companies Technopark 3 and service infrastructure (construction is in progress); The Novosibirsk Science Campus of the technopark, which Technopark is another federal-level • a group of buildings for IT includes the following: project that is expected to become and telecommunications cluster the core of the Novosibirsk Region’s • specialised technological companies (construction is in progress). infrastructure and shared innovation system. Technopark resident companies service centres; The Novosibirsk Science Campus Currently, 180 innovative companies Technopark ranks second in terms • business infrastructure; are Technopark residents, including such of the main federal programme major companies as: Financial Technologies participation in the technopark’s performance indicators, trailing only 4 Centre (over 40% of Russian banks operate the IT Park in the Republic of Tatarstan. resident innovation support using software developed by this company; programme, including: the Gorod payment acceptance and processing The project calls for establishing • engineering support programme system is being rolled out all over Russia); a world-class technological infrastructure • investment and financial programme DataEast (over 2,500 government for the successful development • marketing programme and commercial organisations all over of high-tech and innovative companies. the world use this company’s geo-information • cooperation programme The advantages of developing products); SoftLabNSK (a major Russian high-tech companies in a technopark • business incubator development developer of simulators for aerospace, environment are: programme aviation, railroads, cars and ships; developer • HR programme of one of the most popular simulator games, the opportunity to lease specialised “Truck Drivers”); and Uniscan (the Barrier 1 • housing programme office and laboratory premises, as well automated border monitoring system • the opportunity to do business as production facilities; has been installed at Russian border in the unique information surveillance points; the company has also innovative companies have and business environment developed a mobile X-ray machine designed 2 the option of investing of a technopark, expanding for all types of X-ray examination in medical in the construction of premises partnership connections institutions as well as field conditions). and subsequently acquiring and the use of the technopark’s The technopark business incubator, title to them; brand. which will facilitate implementation of projects by 34 resident companies, The accreditation procedure for Technopark has launched operations. residents is as follows: Residents’ revenue amounted to RUB 13.125 billion in 2011. • organisations operating in the high-tech sector can register as Technopark residents; • the decision to grant resident status is made by OAO Novosibirsk Science Campus Technopark; • residents receive access to all the services and infrastructure of the Technopark and the Technopark Resident Support Programme; and • leasing or acquiring title to Technopark real estate is not mandatory for registering as a Technopark resident.

Contacts: OAO Novosibirsk Science Campus Technopark 20 Inzhenernaya Street, Novosibirsk Tel./fax: +7 (383) 344 9317 Website: www.academpark.com E-mail: [email protected]

36 | Guide to Investment | PwC Biotechnopark in the Koltsovo The advantages of developing Biotechnopark management science city biotechnology companies A Biotechnopark Management Company A new project launched in 2011 calls at the Koltsovo Biotechnopark will be created to efficiently oversee for creating a scientific and technological include: the establishment and development park dedicated to biotechnology • an existing biotechnology of the Biotechnopark’s innovation (Biotechnopark) in the Koltsovo cluster integrating the research infrastructure. science city. and production potential The objectives of the Biotechnopark The project will give a powerful boost of successful high-tech Management Company are as follows: for tapping into and developing manufacturers, whose centre, • organisational support for the operation the Novosibirsk Region’s potential Vektor, is one of the largest of innovative infrastructure elements in biotechnology and the bio-industry. research virological and biotech in the Koltsovo science city, centres in Russia The project calls for the construction and development of the Biotechnopark’s • geographic proximity and reconstruction of engineering residency policy; to major research centres and transport infrastructure facilities, • interaction with regional executive within the Siberian branches and developing infrastructure at investment authorities and the Koltsovo village of the Russian Academy of Sciences, sites for accommodating manufacturers administration for the allocation the Russian Academy of Medical of vaccines, antivirals and antibiotics, of land plots to be included within Sciences, and the Russian as well as veterinary drugs, food the Biotechnopark; Academy of Arts; and cosmetics, and new biotechnologies. • creation of the service infrastructure • the presence of existing businesses Production of pharmaceuticals for the Biotechnopark’s residents, which engaged in research and technology, includes business services stimulating will be launched at the Biotechnopark as well as owners or potential creators already in 2012. the residents’ development; management of innovations, and existing innovative services for innovation-related A shared bacterial and viral biotech projects and ideas that are ready and financial flows; marketing; business centre will serve as the park’s for expert examination planning; information, legal and patent technological core. and implementation; licensing support; and assistance • active housing construction in locating business partners, raising In addition, plans call for setting up service in the Koltsovo science city; investment and in obtaining permits, infrastructure at the Biotechnopark, which licences, and approvals for manufacturing will include an entire range of business • developed social infrastructure high-tech products. services, as well as implementing a series in Koltsovo; of measures to hire, train and retain highly • favourable environmental Total investment in the Biotechnopark under qualified personnel in the field conditions in Koltsovo. the Long-Term Special Purpose Programme of biotechnology. for Creation of a Scientific and Technological Park in Biotechnologies in the Science City of Koltsovo for 2011-2015 is expected to be at least RUB 1.2 billion, and at least 2,000 new jobs will be created.

Contacts: OAO Management Company for the Scientific and Technology Park in Biotechnologies 1 Tekhnoparkovaya Street, Village of Koltsovo, Novosibirsk Region Tel./fax: +7 (383) 243 6007, +7 (383) 306 1611 Website: http://btp-nso.ru

PwC | The Novosibirsk Region | 37 Investment projects

Project name Project summary Initiator Investment volume, RUB mln

Transportation and logistics The project involves: - construction of a intermodal transportation terminal, Developing an air transport new passenger terminal, hotel and business centre; OAO Tolmachevo hub at Tolmachevo over 20,000 - development of adjoining transportation Airport International Airport infrastructure

The project involves construction of a class A logistics Building a logistics centre OAO Mashkomplekt 208 centre with an area of 11,200 sq m

Upstream The project involves increasing refining capacity from 50,000 to 200,000 tonnes of oil per year with Increasing refinery capacity an oil refining depth of 90–95% and Euro-4 grade OOO VPK-Oil 2,315 products, as well as production of Euro-5 grade high-octane motor fuel The project involves: - Raising the mining output up to 9.5 million Developing a mining complex tonnes per year; to produce and enrich - Constructing an enrichment complex with ZAO Siberian 30, 060 anthracite with the capacity the capacity of 8 million tonnes per year; Anthracite of 5 mln tonnes per year - Acquiring mining equipment - Developing railway infrastructure and constructing an internal railroad The project involves construction of a rock-crushing Developing production and screening plant to produce gravel based on existing OOO Skala 99 of road-building gravel production capacity, which will help increase gravel production to 700 mcm per year

Agriculture and processing The project involves establishment of a vertically- integrated holding covering the whole goods production cycle from grain and compound feed production to meat Creating the Kudryashovskoe factory products sales. vertically integrated OAO Kudryashovskoe 9, 842 The project will allow the company to adopt modern agribusiness holding company pig-breeding standards by having the breeding plant and commercial farm in different locations, thus significantly decreasing the epizootic risk The project involves: - construction of livestock houses Building the Siberian Field for 2,000 head of cattle; OOO Siberian Field 758 livestock farm - acquiring young pedigree Simmental cattle; - acquiring milking equipment

38 | Guide to Investment | PwC Investment projects

Project name Project summary Initiator Investment volume, RUB mln

The project involves the construction of a stock Constructing a stock breeding breeding complex with a capacity of 1,800 units ZAO AF Lebedevskaya 551 complex of dairy cattle The project involves the construction of a stock Constructing a stock breeding ZAO Iskitimsky breeding complex with a capacity of 1,200 forage-fed 369 complex molzavod cows The project involves: - construction (with further expansion) of a plant Building and expanding a pet producing wet and dry pet food with a capacity OOO Mars 1,256 food plant of 82,000 tonnes per year; and - construction of a finished goods warehouse with 2,100 spaces The project involves the construction of a modern dairy farming facility, which would include: - a pedigree cattle stock station, including a sperm bank; - a milk processing plant; - premix production plant (supplement feeds); OOO Nekofarm Building a livestock complex - a veterinary control station; Livestock Logistic; 1,075 and specialised logistics centre - an agricultural equipment service centre; OOO Ulybino - a warehouse module for fodder storage Livestock Farming - a training and professional development centre for cattle breeding specialists; - a hotel complex; - a quarantine station The project involves: Developing production - renovating mineral water production; OOO Karachinsky of Karachinskaya mineral - organising still mineral water production; 546 Spring water - organising auxiliary production of carbon dioxide; - construction of a warehouse complex The project involves the construction Greenhouse centre OOO Novosibirsk of a high-technology greenhouse to produce 1, 935 construction Greenhouse Centre vegetables with the area of 17.24 ha Construction of Baltika Construction of a brewery with a capacity OAO BALTIKA 5,842 brewery of 5 mln hectolitres per year Breweries The project involves the construction of a plant OOO Siberian Construction of a distillery for producing hard and soft alcoholic beverages 1,355 Distillery with a design capacity of 15 mln decilitres per year The project involves expanding production areas Russian Meat Construction of a production and acquiring modern, high-technology equipment, Products Holding 785 unit at a meat processing plant which will help increase the production of sausages Company and prefabricated meat products to 140 tonnes per day

PwC | The Novosibirsk Region | 39 Project name Project summary Initiator Investment volume, RUB mln

The project involves the construction of: - a greenhouse complex with an area of 7 ha; Construction of a farming - a vegetable storage facility with a capacity complex with greenhouses of 13,000 tonnes; OOO Giant’s Gardens 1,051 and vegetable storage facilities - a cold-storage warehouse; - a presales preparation workshop; - a distribution centre The project involves the construction of a deep grain Construction of a deep grain Sangri Ltd. investment processing plant with the capacity of 700 tonnes 5,200 processing plant company per day. The project involves building a kvass and soft drinks Branch of OAO Baltika Enhancing capacities production line, as well as constructing a boiler house breweries – Baltika- 229.6 of Baltika-Novosibirlk plant and upgrading an elevator Novosibirsk Construction of a starch, The project involves construction of a starch, OAO Bagansky dry gluten, and compound dry gluten (from wheat flour), and compound 556.5 Elevator feed plant feed plant

Manufacturing The project involves the construction of Russia’s only lithium-ion battery production plant with the capacity of 400 million Ah The company produces lithium ferrous phosphate batteries designed for any kind of electric OOO Lithium- Production of lithium-ion vehicles, including passenger buses. Ion Technologies 11,690 batteries At the first stage, LIOTECH will produce lithium-ion (LIOTECH) batteries using imported components, expecting complete localisation of battery component manufacturing in the future. The project involves: - R&D to develop the contents of UV-nanoink for a wide range of printing heads and base materials, as well as the development of a processing line Upgrading and expanding for batch production of UV-nanoink and SUN NEO production of nanoink UV-LED Evolution printers; ZAO SUN-NSK 1,348 and equipment for high-tech - construction of technology lines and expansion types of digital printing of UV-printer and UV-nanoink production; - expansion of the distribution network in Europe, North America and Asia through opening own service and dealership centres The project involves: - development of innovative competitive import NPO Elsib development substitution products and their serial production; OAO NPO ELSIB 1,622 - renovation and technical upgrade of production facilities Expansion of production The project involves the technical upgrade OAO SIBIAR 132 at household solvents plant of production and renovation of production facilities

40 | Guide to Investment | PwC Project name Project summary Initiator Investment volume, RUB mln

Upgrade of production The project involves upgrading production FGUP Iskra of non-electric blasting of non-electric blasting systems using shockwave Novosibirsk 350 systems pipe for the mining industry Mechanical Plant The project involves: - renovation of production facilities and all engineering OAO Central Renovating and re-equipping communications; and Automobile Repair 765 auto repair plant - replacement of major production equipment Works No. 15 with extensive wear and tear Development of narrow The project involves: and wide-neck glassware - renovation of existing glassmaking furnaces; OAO Zavod Ekran 2,145 production - construction of a new glassware production complex The project involves organising the production of goods from nanoceramics for consumers from Organising production the following industries: defence, radio electronics, NEVZ-Soyuz Holding 1,500 of nanoceramics photonics, aerospace, nuclear engineering, mechanical engineering, chemicals and petrochemicals, as well as the production of medical goods The project involves the development of serial Expansion of electric vehicle production of small-size, high-torque electric cars FGUP PO Sever 1,114 production of small and average capacity Construction of a medium- The project involves the construction of a deep oil capacity petrochemical conversion plant with the capacity of 3.2 million tonnes complex in the city of OOO VPK-Oil 70,000 per year. The company plans to produce over 20 deep Barabinsk, the Novosibirsk conversion products. Region The project involves the construction of a flax mill Construction of a bandage employing a closed-loop production cycle of flax OOO Volokno 3,900 manufacturing plant growing, primary processing, and deep processing, as well as construction of a production materials plant Construction of new The project involves the construction of two and revamping of the existent OAO Novosibirsky new glass-melting furnaces and the revamping 5,900 glassware manufacturing EKRAN Plant of the existing manufacturing facilities. facilities. The project involves the: Expansion and renovation - renovation of the warehousing facilities, construction of the warehousing facilities of three new warehouses; OAO Sibiar 222 and retooling of the existent - acquisition of the latest technology manufacturing project.

Establishment of dip-galvanised product The project involves the construction ZAO ELSI manufacturing capacity 474 of a dip galvanising facility StalKonstruktsiya at Linevsky Constructional Ironworks Plant

PwC | The Novosibirsk Region | 41 Project name Project summary Initiator Investment volume, RUB mln

The project involves the construction of a plant Construction of a plant for for manufacturing energy-saving fluorescent tubes, manufacturing small-size including full-cycle manufacturing and waste OOO EkoSvet 223 fluorescent tubes management facilities. Rated annual output: 10 million tubes The project involves the construction of a fire-resistant cable manufacturing plant to equip Construction of a fire-resistant fire alarm systems, fire extinguishing systems, nuclear OOO Rotor 755 cable manufacturing plant industry, underground service, cable communications industry, power lines, power supply facilities.

Construction industry Expanding production The project involves launching an aerated concrete Glavnovosibirskstroy of aerated concrete at the Sibit production line with a manufacturing capacity 627 ОАО manufacturing plant of 162,000 cubic metres per year The project involves organising the hi-tech Organising sandwich panel manufacturing of three-layer wall and roofing sandwich Termoland OOO 266 production panels Building a plant for manufacturing Building a plant for manufacturing components components and products Sibirskiy Stroitel OOO 3,180 and products out of autoclaved lightweight concrete out of autoclaved lightweight concrete The project involves modernising existing brick Expanding brick manufacturing facilities from 30 to 50 million pieces Doroginskiy Kirpich 274 manufacturing per year, including expanding M-125 branded brick ZAO manufacturing up to 18 million pieces per year The project involves construction of a modern brick Creating a complex manufacturing facility in Novosibirsk for producing for manufacturing ceramic brick via Keller technologies and equipment. Mezon-L OOO 2,112 construction materials The facility’s manufacturing capacity will be up to 63 million pieces per year The project involves construction of a new Rebuilding a concrete plant dry mix process production line with a capacity with adoption of dry mix of up to 1.3 million tonnes per year. Iskitimtsement OAO 13,592 process Overall manufacturing capacity of the reconstructed plant will reach 3 million tonnes per year Construction of a plant The project involves the construction of a plant OOO Bergauf for producing Bergauf dry for the production of Bergauf dry construction mix. Construction 402.1 construction mix Rated annual output: 200,000 tonnes Technologies

42 | Guide to Investment | PwC Project name Project summary Initiator Investment volume, RUB mln

Hi-tech medicine The project involves construction of a modern Constructing an innovative medical-technological centre with an overall area medical and technological of over 12,000 square meters encompassing a polyclinic centre on the basis treating 100,000 patients per year, a diagnostic centre Tekhinkom OOO 1, 300 of Novosibirsk Traumatology handling 35,000 patients per year, a convalescence and Orthopaedics Research home, and an innovative medical and technical centre Institute providing innovation-driven firms access to the resources of the complex The project scope includes: - Retooling of the surgery/intensive therapy ward Development of Blood in the main building; Circulation Pathology - Construction of a new admission/outpatients 8,400 Research Centre named after department; Academician Meshalkin - Construction of an education centre for training post-graduates, professional development and career enhancement. The project involves the revamping of the existing Revamping and construction midwifery department and the construction GBUZ NSO GNOKB 2,000 of a perinatal centre of a new perinatal centre using the facilities of the State Novosibirsk Regional Hospital. The project involves the construction of an oncology Construction of a regional centre on the basis of the regional oncology dispensary 3921.78 oncology centre in Novosibirsk. Area: ca. 70,000 sq m The project involves the construction of a TB hospital Construction of a TB hospital 1,770 for 1,000 beds

Services and infrastructure The project scope includes the construction of a six-lane Construction of a third bridge arched bridge. Length of Bridge and Flyover across 17,716 across the River Ob the river floodplain is 2.1 km The project involves construction of a modern exhibition complex with a total area of 60,000 square metres containing showrooms, a business centre Building an international and a hotel. The scope includes the construction Siberia Expocentre 1,600 exhibition centre of auxiliary warehousing facilities, individual OOO technical buildings, access roads and car parks. The first stage is expected to be completed on 31 January 2012 The project involves the large-scale reconstruction Renovating the Ob’ Hotel and renovation of the hotel (room maintenance, River Park Hotel OOO 1,600 opening a new restaurant and a conference room)

PwC | The Novosibirsk Region | 43 Project name Project summary Initiator Investment volume, RUB mln

Sport Novosibirsk-based sports The project involves the construction of a skating rink and recreation centre with (56x28 m) with a terrace for 200 seats plus a workout 134.1 an artificial ice skating rink room and a choreography room Construction of a sports and recreation centre with Construction of a sports and recreation centre with an artificial ice skating rink Total investment: an artificial ice skating rink to be located in Tatsrsky to be located in Tatsrsky 261.5 and Kudryashovsky Districts in suburban Novosibirsk and Kudryashovsky Districts in suburban Novosibirsk Construction of swimming- pools in Suzunsky The project involves the construction of 25x11 m Total investment: and Tchanovsky Districts swimming pools and 36x18 athletic fields 169 in suburban Novosibirsk The project involves the construction of a team sports Construction of a team sports centre to accommodate an audience of five to seven 1,200 centre in Novosibirsk thousand people The project involves the construction of a regional Construction of a regional shooting sports centre. Infrastructure encompasses shooting sports centre 150 5 combined facilities for trench-and-trap shooting in Novosibirsk events and a open terrace for 300 seats Construction of a regional The project involves the construction of a regional 188 fencing centre fencing centre. Fencing hall area: 42x24 m The project involves the construction of a regional Construction of a regional snow-boarding centre to encompass Half-Pipe, 219.2 snow-boarding centre Slopstyle, a gym with a race track and floor mats plus a terrace for 1,000 seats. The project involves the construction of a facility The construction for adaptive physical training. The centre is to house of a specialised health-and- sports halls for practice & training, mini-football, 250 fitness centre for disabled goal-ball, fencing, seated volleyball, power-lifting athletes. and table tennis events plus a swimming pool The project involves the construction of a health-and- Construction of a health-and- fitness centre complex for martial arts, wrestling, 300 fitness centre complex boxing and entertainment events

44 | Guide to Investment | PwC Project name Project summary Initiator Investment volume, RUB mln

Culture Construction The project involves the construction of a new Novosibirsk Regional of a philharmonic Novosibirsk Philharmonic concert hall on 12.4 thousand 1,580 Government concert hall square metres to meet the highest acoustic requirements Construction of a building The project involves the construction of a new building Novosibirsk Regional for Novosibirsk State Regional 1,500 (10,000 sq m) Government Scientific Library Revamping the Novosibirsk The project involves revamping and renovating Novosibirsk Regional 300 Musical Comedy State Theatre the Theatre Government

Education The project involves the construction of new Novosibirsk State University training and scientific research buildings plus social 4,000 development infrastructure The project involves the construction of a multi-purpose The establishment university campus to accommodate hostels, small- of a multi-purpose family housing and buildings for a variety of purposes, 8,950 university campus such as public events, business, social, commerce and entertainment.

Tourism The project involves establishing a history/cultural complex to accommodate - Reconstructed Tchaussky Burg; - Siberian Village Everyday Life outdoor museum; Establishment of a history/ - Art-park featuring modern wood architecture and Administration tourism centre in Kolyvansky design work; of Kolyvansky District, 638.6 District outside Novosibirsk - Town of Artisans (exhibition grounds); Novosbirsk Region - Recreation grounds called Pikhtovy Urman; - Siberian Venice tourist park; - Fisherman-and-Hunter Retreat pastime centre; - Tin mine galleries. Establishment of an all-season The project involves establishing an all-season tourist tourist centre called Karakan: centre to accommodate an equipped beach, grounds 14.4 First Step for active rest and festive events. MOU DOD DOOCT Yunost, Cossack Establishment of a tourist/ The project involves establishing a tourist/excursion Village NGO and cultural centre called Berdsky 79 centre for young children Museum of Local Burg Folklore, History and Economy Development of tourist The project involves establishing a museum/tourist infrastructure in the grounds complex featuring the historical Suzun copper-smelting 1,000 of the Suzun historical park plant and mint

PwC | The Novosibirsk Region | 45 Contacts

Novosibirsk Region Administration PwC Office of the Governor of the Novosibirsk Moscow Region and the Novosibirsk Region White Square Office Centre Administration 10 Butyrsky Val 18 Krasny Prospect, Novosibirsk, 630011 Moscow, 125047 Tel.: +7 (383) 223 3575 Tel.: +7 (495) 967 6000 http://nso.ru www.pwc.ru Public Reception Office of the Governor of the Novosibirsk Region Novosibirsk Tel.: +7 (383) 223 0862 Hilton Business Centre, 7 Kamenskaya Street Novosibirsk, 630009 Novosibirsk Region Ministry of Economic Development Tel.: +7 (383) 211 9500 Tel.: +7 (383) 210 3352 Fax: +7 (383) 211 9501 http://econom.nso.ru Alexey Fomin Partner, PwC Russia Department for Development Director of the Novosibirsk office of Investment Activity, Projects Email: [email protected] and Programmes Tel.: + 7 (383) 231 0444, +7 (383) 222 0146

OAO Investment Development Agency of the Novosibirsk Region (OAO AIR) Kronos Business Centre, Sector B, 6th Floor 5 Sovietskaya Street, Novosibirsk, 630007 Tel.: +7 (383) 289 2725 http://air-nso.ru

Regional Marketing Agency Autonomous Public Institution of the Novosibirsk Region 45 Oktyabrskaya Street, Novosibirsk, 630099 Tel.: +7 (383) 231 0400, +7 (383) 231 0500 http://sibarm.com

Novosibirsk Region Investment Website http://newsib.ru

46 | Guide to Investment | PwC www.pwc.ru

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