ROSCONGRESS INSIDER
INSIDER EEF 2019 SPECIAL ISSUE OUTCOMES OF EEF 2019
CONTENTS
Broadening Horizons 6 of the Economy
Broadening Horizons 18 of Life
Broadening Horizons of 26 International Cooperation
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This year we are hosting over 8,500 participants from 65 countries. OUTCOMES Since the first Forum, representation has increased more than twofold. We OF EEF 2019 believe this is a convincing indication of the growing interest in the Russian Far East and the cooperation opportunities offered by this truly In 2019, the Eastern Economic Forum colossal region was held under the motto ‘The Far Vladimir Putin, President of the Russian Federation East – Development Horizons’.
Five years of consistent efforts on the part of the government to stimulate the region’s economy have achieved notable results that will help to kickstart a new stage in its development.
“This stage will be about translating the region’s economic achievements over the past years into a social breakthrough in order to offer people a better quality of life. What this means is that we have to promote change in healthcare, education, urban and rural infrastructure that will be felt by millions of people. Importantly, people must feel these changes as soon as possible rather than in some kind of a distant future or in many years,” stated President of the Russian Federation Vladimir Putin at the Forum’s plenary session.
270 agreements worth trillion were signed RUB 3.4 at EEF 2019
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guarantees,” Dmitry Kobylkin, BROADENING HORIZONS Minister of Natural Resources and Environment of the Russian OF THE ECONOMY Federation. “We can already talk about large infrastructure projects involving Business support measures created in the Far East are popular among both VEB and the Far East Development Fund. <…> One of the investors, according to participants of the Eastern Economic Forum largest contracts in the shipbuilding sector is the project with the Zvezda shipyard: we are financing 15 LNG carriers, with a total value Federal and regional government exceeding RUB 300 billion. <…> As agencies and development of today, seven of the plant’s major institutes are actively involved in the projects have been approved [with investment process. project financing, –Ed .] including the Udokan copper mine and “Thus, as many as 20 territories Nakhodka Fertilizer Plant, among of priority social and economic others,” Nikolay Tsekhomskiy, development have been established First Deputy Chairman, Member around the region, with special of the Management Board, State conditions for launching production, Development Corporation VEB.RF. special tax regimes and state support measures. As many as 369 resident “Speaking about the Far East: companies have registered there, in the year since the last EEF we signed contracts worth nearly have doubled our project portfolio. 2.5 trillion roubles and announced At present we have 12 projects the creation of more than 60,000 new approved, ten financed and five jobs. These businesses have already under development,” Roman invested 344.8 billion roubles in Petrutsa, Director, Industrial their projects and created nearly Development Fund. Sergei Khovrat, General Director, 20,000 jobs. <…> The Vladivostok Agency for the Development of free port regime has been extended “Financial support for almost Human Capital in the Far Eastern to 22 municipalities. <…> As many 5,000 contracts in the Far East Federal District. as 1,404 resident companies chose has reached RUB 97.7 billion. ASEZs to take advantage of the benefits This includes RUB 37.7 billion The policy has helped turn the Far 20 offered by the free port regime and in guarantees on the part of the East into one of Russia’s fastest operating in the Far East signed contracts worth almost corporation. From now until 2024, growing regions. 700 billion roubles. They are going we need to grow by 25% annually. to create about 68,000 jobs in the <…> This will result in a figure of “As a result, industrial production area. As of today, 95.2 billion have As a result of our work over the last five years, over RUB 420 billion by 2024 with an growth in the Far East over the been invested and over 10,000 jobs 240 operations are now up and running and over RUB interest rate set at 2–3% below the past five years has amounted to created. This is a fait accompli,” 600 billion of private investment has been attracted. Our market level,” Alexander Braverman, almost 23 percent – almost three 369 Vladimir Putin, President of the multiplier exceeds 10, which means we attract 10 roubles of CEO, Chairman of the Management times greater than across Russia,” residents Russian Federation. private investment per rouble allocated from the budget for Board, Russian Small and Medium Vladimir Putin, President of the registered in ASEZs signed infrastructure. We have created 39,000 jobs. In recent years, Business Corporation. Russian Federation. agreements worth almost “Recent achievements and support the region’s growth rate has been almost twice that of the measures that have been adopted national average. In 2014–2018, 33% of the country’s direct “As of today, roughly 1,700 of those “Rosstat’s figures show that labour include the co-financing of foreign investment was in the Far East. We started with 2%, who were given a hectare have productivity has increased by 1.8% infrastructure construction as part and now we are at 33%. This represents sixteenfold growth received support, primarily in compared to last year. The figure of investment projects approved agriculture. About 30% of recipients for the Russian Far East is 2.4%. RUB Yury Trutnev, 2.5 by the government, the subsidizing Deputy Prime Minister of the Russian Federation and Presidential Plenipotentiary of grants from regional authorities <…> The Russian Far East is one of trillion of interest rates for credit, and Envoy to the Far Eastern Federal District and the Ministry of Agriculture are the most interesting regions in the the provision of government owners of Far Eastern hectares,” eyes of foreign investors. If we take
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25–30% of total foreign investment in Russia goes to the Far East
FEFD 9 regions out of 11 have shown improvements in most of their National Rating of the Investment Climate indicators
The 5th Eastern Economic Forum was record-breaking Why does the Russian Far East have higher Largely thanks to a modern regulatory 15 companies in terms of participation numbers and the total value of [labour productivity, – Ed.] indicators? The framework, growth rates in industrial became residents of Russky contracts signed during the event. These accomplishments investment component plays an active role here. production in the microregion are now three Technopark in the year between prove that the Forum has become a significant platform for The share of investment in the Far East’s GDP times higher than the national average, and EEF 2018 and EEF 2019 the promotion of international cooperation and the discussion is higher than the Russian national average. the Far East accounts for a third of all the of current global and regional economic issues. The Forum We’re seeing major projects come in because of foreign direct investment to have come into brought together leading representatives of major businesses, the advanced special economic zones. A large Russia in recent years. The region today and helps to foster partnership across the Asia-Pacific region. number of investors go and implement projects is open to investors in a very literal sense. The EEF has proven to be a high-quality event. Participants with high levels of productivity. This affects Citizens of 19 countries can apply for free are regularly offered new tracks and discussion formats, overall economic growth visas under a simplified scheme contributing to its overall effectiveness Maxim Oreshkin, Minister of Economic Development Alexander Kozlov, Minister for the Development Anton Kobyakov, Advisor to the President of the Russian Federation, Executive of the Russian Federation of the Russian Far East and Arctic Secretary of the Eastern Economic Forum Organizing Committee
a look at the statistics, we can see “The Republic of Sakha (Yakutia) President of the Russian Federation that in 2011, the Far East's share of and Kamchatka Region have already Vladimir Putin emphasized the fact all foreign investments in Russia made it into the top 30 regions for that turning the region into a global was somewhere around 4%. Now, entrepreneurship. <...> Nine out of centre for tourism is one of the the Russian Far East accounts for 11 regions have shown improved country’s strategic priorities. 25–30% of foreign investments. figures for most of the 45 indicators Investors are coming here,” in the national rating,” Svetlana “Tourism in the Far East is growing Alexander Ivlev, CIS Managing Chupsheva, General Director, Agency rapidly. <…> Tourism in the Far East Partner, Deputy Regional Accounts for Strategic Initiatives. has grown by 22.6% over the past Leader for Central, Eastern and year,” Olga Golodets, Deputy Prime Southeastern Europe & Central Tourism has become one of the Minister of the Russian Federation. Asia, EY. Far East’s leading growth points.
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OBJECTIVES
International cooperation in science and technology should give the Far Eastern regional economy a further boost. Certain steps towards this objective have already been taken. The Far Eastern Federal University is set to become a centre for new competencies
“During the previous academic by representatives of practically all situation is too complicated. All these year, the university welcomed industries. things prevent good producers from 20,000 students, including joining the supply chain. They have 3,500 foreigners from 74 countries. “Those who travel around the the produce, competencies, R&D, More than 200 foreign professors Far East know that getting from the licenses, and they know how to teach here. It is planned to one city to another is practically make and sell things. Unfortunately, further develop the local research impossible. This is a huge obstacle infrastructural obstacles make infrastructure, including the for business. We have people, people market entry impossible," Alexey construction of a megascience are coming over here, we have Kozhevnikov, Senior Vice President, facility. And we can confidently investors and powerful economic Russian Export Center. talk about the university’s future partners – they are all close at as one of the supporting centres of hand. We have everything that is Mining industry development is the common APR education space,” required for development, but we hindered, as there is no incentive Vladimir Putin, President of the do not have enough infrastructure,” for investing in prospecting and Russian Federation. Pyotr Zaselsky, Deputy Minister exploration. Representatives of the of Economic Development of the fishing industry are worried about the One of the problems standing in the Russian Federation. tough conditions for obtaining tax way of the region’s development is breaks in shipbuilding. Investments in a lack of qualified human resources. “Basic infrastructure links are the forestry industry call are coming missing. There are problems with the up against a lack of information on “The most pressing problem here quality of our customs infrastructure the status of resources and a lack of [in the Far East] is in qualified or border checkpoints; the logistical transparency in pricing. engineering personnel at construction companies,” Anton Glushkov, President, National Association of Builders (NOSTROY).
“Turnover among small and medium-sized enterprises in the Far Another concern for investors is the of new jobs. <…> The situation that Port Residents Support Association; East grew by 5.2%. On the other What matters most is that instability of legislation. has arisen is not ideal for residents,” General Director, Renaissance. hand, the number of employees at we increase the accessibility Olga Surikova, Head of Far East SMEs decreased by 3.7%. That is of the country’s unique “In August 2018 all residents Practice, KPMG in Russia and the CIS. “Several regions in the Far East are equivalent to 40,000 people. <...> national parks, nature and investors were hit with new switching to tax payments based on The personnel issue is becoming reserves, geological features, rules, which introduce changes to “We know that there is a pending cadastral valuation. In Primorye, the most pressing one,” Alexander and historical sites, so that conditions for providing benefits. amendment to the Land Code cadastral appraisals grew by Kalinin, President, All-Russian Non- Though the rule initially stipulated regarding benefits in relation to the 2–10 times. <...> Real estate owners Governmental Organization of tourism becomes a more that the status granted the right to provision of FPV land without tender are facing a serious threat, their Small and Medium-Sized Businesses substantial offer make use of benefits and reduced procedures. <…> If it is passed, if survival is at risk,” Alexander OPORA RUSSIA. Olga Golodets, tariffs on insurance premiums, this benefit is lost, then we will see an Kalinin, President, All-Russian Non- Deputy Prime Minister the revised version includes a erosion in the confidence of business Governmental Organization of The key problem is underdeveloped of the Russian Federation requirement to observe several in the economic regime,” Anton Small and Medium-Sized Businesses infrastructure. This was addressed conditions, including the creation Skorik, Chairman, Vladivostok Free OPORA RUSSIA.
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A lack of coordination in regulatory Utrobin, recipient of a Far Eastern [Russian Railways' tariffs for cargo practices is a further barrier to Hectare. shipment and support services, – Ed.] investment. make cargo shipments and transit The issue of administrative pressure through the Far East uncompetitive,” “Expedited VAT refunds. It is still a pressing concern. Eduard Zernin, Deputy General would appear that the issue has Director, United Grain Company; been resolved from a regulatory “In the Far Eastern regions, <...> Executive Director, Russian Union of perspective, but due to a lack 53% of entrepreneurs report Grain Exporters. of earmarked funding from the heavy administrative pressure FEDC (Far East Development from regional and municipal “What problems do we face in Corporation), guarantees cannot be administrations, less than 20% Khabarovsk? It is logistics above given to the tax authorities and, as a report on federal authorities, <...> all – logistical services are very result, it is impossible to implement 42% of entrepreneurs complain expensive. <…> Prices in the Far expedited VAT refunds at present,” about courts of general jurisdiction, East are roughly three times Denis Gros, Managing Partner, DA! <...> and 55% mention power supply higher than elsewhere,” Sergey Development Group; Executive organizations,” Svetlana Chupsheva, Kolesnikov, President, TechnoNICOL Director, Avangard Industrial Park. General Director, Agency for Corporation. Strategic Initiatives. “At present, bodies of water are classed as federal property. At the “The Republic of Buryatia is the same time, when it comes to land one most overregulated region in terms has to deal with regional and local of environmental legislation. <...> authorities. Unfortunately, there is The number of inspections has currently no coordination between grown significantly. About 30% of RUB these issues. Business can therefore small business in the tourism sector access the sea, but are unable to shut down this year alone. <...> access the land. This is one of those A site may cost RUB 100,000 and issues we need to focus on in order be ready in a month. An audit will 180 billion to aid advanced processing,” Vasily cost RUB 300,000 and takes two Grebennikov, Director, Effectivemonths,” Alexey Tsydenov, Head of is what the FEFD requires Energy; Chief Executive Officer, De- the Republic of Buryatia. for debt financing in Freeze Zapad. 2019–2021 (based on Business development is constrained ACRA estimates) “Permanent registration in rural by the high cost of logistics and areas as a prerequisite for the Young transport services. Farmer programme is a hurdle that limits potential participation among “Tariff policy is a real challenge young farmers who have acquired for agricultural export throughout a Far Eastern Hectare,” Mikhail the Far East. Today’s 10-01 tariffs
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SOLUTIONS
It is necessary to fine-tune the is the adopted law that cancelled residents for public discussion,” mechanisms for attracting investors declarations for transport and land Anna Tsivileva, Chairman of the and supporting business, and to taxes,” Konstantin Chekmyshev, Board of Directors, Kolmar Group. improve the business climate at the Deputy Head, Federal Tax Service of federal and regional level. Investors the Russian Federation. “The last year has seen many are calling for stability first and discussions of the law on protecting foremost. “Investors should be guaranteed investment and capital spending. It is the benefits and the conditions pretty simple: the entire investment- “I would like to note two other things. for receiving them that they were related regulatory environment – <…> The first is the Simplified Tax initially offered and on the basis of based on investment volumes – is set System online <…> which helps which they signed up to the ASEZs for up to 20 years. Taxes, export and those entities that use cash registers and planned their business models. import duties, and sometimes tariffs interact with tax authorities without <…> We would suggest submitting must stay unchanged,” Grigory declarations or ledgers of income all draft amendments to existing Berezkin, Chairman of the Board of and expenditure. <…> The second rules in the Tax Code that affect Directors, ESN Group.
Measures taken at the regional and federal levels aim to alleviate administrative pressure on business.
“Vladimir Putin has instructed us to create a so-called ‘Mirror Registry’ [for small business audits, – Ed.] on the Business Navigator website. <…> It will resolve three issues. First of all, we get feedback, cross- checking things against each other – everything from executive orders or any other document that initiates an audit, to audit results and the relevant challenges in centres," Vadim Zhivulin, Deputy “I believe that the time has come for Participants suggested optimizing court. <…> We find the delta, and Minister of Economic Development ASEZ residents to come together. the regulatory environment for there is an immediate response of the Russian Federation. We have taken the first steps in this specific industries. Thus, mining from the prosecutor. The next direction. A constituent meeting industry representatives root for task is to analyse and summarize More active and comprehensive of ASEZ residents was held in the promotion of prospecting and all the violations detected dialogue between government and early August. The documents are exploration as well as state support through audits. <…> Then business will help to improve the now with the Ministry of Justice. for investment in infrastructure. preventive measures for those investment climate. Nobody except us is going to types of violations need to be make our proposals a reality,” “There is a need for a twofold gradually prescribed,” Alexander “There is a wonderful Far East Denis Gros, Managing Partner, DA! increase in the expenses taken on Braverman, CEO, Chairman of the Development Association. I would Development Group; Executive by companies in prospecting and Management Board, Russian Small fully endorse an ASEZ Resident Director, Avangard Industrial Park. exploration. <…> One area that and Medium Business Corporation. Association. They are a very good could be of interest to the regions idea, because they allow you to “Success lies in communication in terms of developing the sector is “An important area <…> is the achieve consensus and help federal between business and regulatory reallocating the mineral extraction support infrastructure and the agencies in their work,” Pavel bodies. This year we have created tax (MET), and increasing the share one shop stop service available to Volkov, State Secretary, Deputy a very effective ‘Boiling Point’,” of the MET that benefits the regions. entrepreneurs. <…> Today, the Minister for the Development of the Vasily Orlov, Governor of Amur Today, the interest of the regions Far East is welcoming My Business Russian Far East and Arctic. Region. is merely hypothetical,” Roman
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Trotsenko, Founder, Chairman optimize internal workflows. Our improved by increasing the intake of of the Board of Directors, AEON goal is to enable cargo shippers and students at Far Eastern universities, We believe it is necessary to reintroducing a distribution scheme Corporation. other stakeholders to see what is reintroduce the professional happening with Russian Railways for graduates, and creating a network Yury Trutnev, Deputy Prime online, including where the cargo of education facilities to support the distribution scheme for those Minister of the Russian Federation will be, how much shipments will industry at both undergraduate and whose tuition is covered by and Presidential Plenipotentiary cost, and how workflows can be graduate institutions. the government. The scheme Envoy to the Far Eastern Federal optimized,” Oleg Belozerov, Chief will cover the Far East in District, announced plans to draft Executive Officer, Chairman of the “I believe that we need to offer the sectors that are in short amendments to the legislation that Executive Board, Russian Railways. more targeted and state grants at supply, while young people would improve the mechanism Far Eastern universities in areas for obtaining exploration and “The Corporation also believes that where professionals are in very will be able to access tax production licenses. customs clearance areas should be short supply, so that the young breaks and preferential optimized, with improvements made people have their tuition fees treatment in tenders “We need to review the mechanisms to the process including the removal covered by the government, or by Oleg Kozhemyako, the government can offer us in order of fences and the use of cutting- their potential employers. This Governor, Primorye Territory to make projects in the Arctic more edge digital accounting methods for way, students will know for sure financially attractive. One of those tracking the flow of goods,” Aslan that they will get a job, which solves elements would be concessionary Kanukoev, Acting General Director, employment-related problems,” financing for the construction of Far East Development Corporation. Vladimir Putin, President of the field facilities and the development Russian Federation. of infrastructure,” Andrey Patrushev, “The digital future of transport Russia aims to increase the Deputy Chief Executive Officer, Shelf corridors is a joint digital effort of “We would like to see interregional number of foreign students Projects Development, Gazprom Neft. the customs service, our foreign flagship secondary vocational significantly: twofold in the counterparts, our carriers, and the institutions <…> We would like next five years. This required The forestry industry can be business community in general,” every promising industry to have improved through updates to Vladimir Bulavin, Head, Federal a flagship educational facility in a special federal programme information about the status of Customs Service of the Russian the Far East, where people would that will support our resources and exchange trade. Federation. be trained and retrained,” Marina universities. <…> It aims to Dedyushko, Deputy Minister for the develop infrastructure in the “We need to think about using the “We have very specific plans Development of the Russian Far East cities where we expect foreign exchange trade mechanism for a to transform the industry and Arctic. students to arrive correct estimate of tax obligations [tourism, – Ed.] digitally based for those who sell their product at on available resources. <…> Until After the Forum, the President of Mikhail Kotyukov, low prices, and for those who sell we create high-quality and easily the Russian Federation ordered Minister of Science and Higher Education of the Russian Federation stolen produce at lower prices,” accessible digital content about the the Government of the Russian Mikhail Klinov, Deputy Head, Federal country, it is going to be very difficult Federation to increase quotas Agency for Forestry. to advance,” Zarina Doguzova, Head, for universities by 1 December Russian Federal Agency for Tourism. 2019, offering further federal Introducing digital technologies in budget-assisted places in targeted We have created the first governance and business is a crucial After the Forum, the President of sectors where there are shortages development tool. the Russian Federation instructed of professionals in the FEFD. school of digital economics in the Government of the Russian Additionally, the President ordered Russia. We proposed a project “Here, the main road we are taking Federation to draft proposals for the Government to fund the alongside the BRICS countries: involves ensuring the highest-quality attracting investors to develop regeneration of the resources and students will come from far and and tightest IT integration possible ecotourism in the Far East by equipment of the FEFD’s cultural wide and will study at the Far between the Federal Customs 1 December 2019. facilities, with particular attention Eastern Federal University, paid to small towns and rural areas. Service and the Federal Tax Service. with professors also coming <…> This will enable automatic VAT Vladimir Putin assigned the refunds,” Nikolay Podguzov, Director Government of the Russian Creating cultural clusters in the from different countries. We General, Russian Post. Federation the task of presenting its capitals of Far Eastern federal will use a new modular system proposals to create a special venture subjects will improve the humanities to organize the process fund in the Far East that would help space in the country as a whole. The “With digitalization, we are Nikita Anisimov, planning to make the most effective to develop new high-tech companies. first of these centres is being created Rector, Far Eastern Federal University decisions possible online, helping to The human resources situation can be in Vladivostok. (FEFU)
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BROADENING HORIZONS OF INTERNATIONAL COOPERATION
The location of the FEFD and its proximity to the Asia- Pacific nations offers unique development opportunities for the region and helps to attract foreign investment
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“Last year, President Putin and I Cooperation in the energy sector is “We have also agreed on a five- visited the Mazda Sollers factory, on the rise. year roadmap for cooperation in which is close to Vladivostok. In this area as well as in hydrocarbon OBJECTIVES June of this year the factory started “Indian partners own 20 percent and LNG production in the Russian building engines. I understand in the Sakhalin-1 project. Indian Far East and the Arctic region,” its capacity is 50,000 engines energy concerns are invited to join Narendra Modi, Prime Minister of per year and it is an important other promising projects, such as India. Utilizing the potential of transport projects factory for Mazda Sollers’ global Far Eastern LNG and Arctic LNG- strategy,” Shinzō Abe, Prime 2,” Vladimir Putin, President of the Minister of Japan. Russian Federation. “One project that is of strategic “The current state of the Far importance to our countries, not Eastern transport corridors can just for Russia but for Japan as be succinctly described in one well, is using the Russian Railways phrase – untapped potential. network for transit between Japan Despite significant progress it and Europe,” Maxim Oreshkin, is still not being fully used. This Minister of Economic Development can be said both about providing of the Russian Federation. Northeast China with an outlet to the sea via our lands, and about increased volumes of shipments on a major, Transeurasian scale,” Sergei Ivanov, Special Presidential Representative for Environmental Protection, Ecology and Transport.
“We have the capacity to be involved in two bridge projects: developing port and railway transport and becoming a transit point for Korea’s shipments to Europe and vice versa. There is huge potential for us here – around 3 million containers. There is a certain political interest in taking those volumes from the Suez Canal to the Trans-Siberian Russia is diversifying its Railway. The cost effectiveness economic ties with Asia in order of the Trans-Siberian Railway is to integrate its Eastern regions achieved through reduced delivery times: working together with into global and Asian markets. Russian Railways, we can reduce Ports are being modernized, Transporting Arctic LNG to Asian countries Around 50 agreements have been signed [during Today, cooperation with Japan them by 2–2.5 times compared to passenger and cargo terminals the Suez Canal,” Alexandrs Isurins, in ice-class vessels with transshipment onto EEF 2019 – Ed.] across various sectors: energy, accounts for nearly one third of are under construction, and new Chairman of the Executive Board, regulations have been introduced regular vessels in Kamchatka is a rapidly healthcare, professional training, mining, the Trans-Siberian Railway’s President, Far Eastern Shipping in addition to a legislative developing project. I mentioned it last year, and forestry. We expect to be able to provide cargo turnover. It exceeded Company (FESCO). when it was still being outlined. Today, the investments in the amount of USD 5 billion <…> 45 million tonnes last year, and framework. Indian industry must factory that was designed and built alongside In order to carry on facilitating the development the volume of cargo traffic is The situation in the transport and seize this opportunity our Japanese companies already liquefies gas of the Far East, India will provide a USD 1 billion growing. Container shipments logistics segment can be improved Sandeep Somany, through a comprehensive plan for President, Federation of Indian Chambers along three lines and carries out shipments credit line are growing faster than standard highway and road infrastructure. of Commerce and Industry Shinzō Abe, Narendra Modi, shipments, and account for more Prime Minister of Japan Prime Minister of India than 11% of total shipments “In terms of expanding export, the Baikal–Amur Mainline. There Oleg Belozerov, we need to address improvements is a programme in place, and it Chief Executive Officer, Chairman of the to the capacities of the Trans- provides for an increase in their Executive Board, Russian Railways Siberian Railway Network and capacity to 210 million tonnes
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SOLUTIONS
The development of transport corridors is closely linked to the expansion of free trade zones
Creating special zones in border regions is another mechanism for invigorating trade.
“We need to create cross-border economic zones that will contribute to the growth of trade,” Alexander Krutikov, Deputy Minister for the Development of the Russian Far East and Arctic.
Mutual support for joint projects by way of financing can help to stimulate cooperation.
“We have created a joint venture with the Russian Direct Investment Fund. The tool to promote Japanese projects through special loans is up and running. This mechanism has already resulted in signing contracts with 16 potential Japanese investors and is, of by 2025,” Eduard Zernin, Deputy role in upgrading regional and local After the Forum, Vladimir Putin course, helping to identify the General Director, United Grain aeroplane and helicopter fleets and ordered the Government of the weak spots and problems and Company; Executive Director, expanding the network of domestic Russian Federation to take appro- resolve those problems even at Russian Union of Grain Exporters. flights. He also proposed incentives priate measures by 1 March 2020. the micromanagement level. <…> for airlines operating in this region. Tomorrow will see a signing “National infrastructure develop- ceremony for the contract with ment plans include reconstruction “I believe it would be logical if Vnesheconombank to finance an works at nearly all airports in the the airlines that were willing Up to agricultural project in the Republic Far East. <…> In the next two to to increase their operations of Sakha (Yakutia),” Tadashi three years the Far East will see in the Far East and to pursue Maeda, Governor, Japan Bank for its airport infrastructure improve a responsible and reasonable International Cooperation. dramatically, with improvements pricing policy were offered to services and quality,” Evgeniy preferential rights to operate 210 “Our fund could serve as an Chudnovskiy, Director General, flights in other, more profitable million tonnes important partner for foreign Airports of Regions. regions. <…> I understand that investors, provide necessary expected growth in the this is not a market-oriented financial support, and share capacity of the Trans- Under our policy to invigorate trade, economic and investment President of the Russian Federation measure, but it is justified in this connections with local and Siberian Railway Network cooperation with Eurasian countries, we proposed jointly looking Vladimir Putin stated that Far region. Nevertheless, we must federal government agencies,” and Baikal–Amur Mainline at signing a free trade agreement between Mongolia and the Eastern aircraft plants in Ulan- discuss ways of formalizing it,” Denis Askinadze, Deputy General by 2025 Ude, Komsomolsk-on-Amur, and Vladimir Putin, President of the Eurasian Economic Union Director, Far East and Baikal Region Arsenyev will play an important Russian Federation. Khaltmaagiin Battulga, President of Mongolia Development Fund.
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“Today I am suggesting for the value-added chains in the Asia- people are unaware of it,” Alexey first time that we create a large Pacific region. Digital technologies Kozhevnikov, Senior Vice President, investment fund to develop the can assist with this. Russian Export Center. materials and equipment parts industry through the joint efforts “We are investing our “We need digital technologies to of Korea and Russia,” Hong Nam- efforts in involving Russian ensure the continuity of business ki, Deputy Prime Minister of the companies – small and medium-sized processes. Managing a company Republic of Korea. business primarily – in international in the Far East from Moscow is chains through e-commerce tools. far from easy. Technologies mean Forum participants emphasized the <…> The government has created huge investments. They will provide need for the Far Eastern Federal a processing regime in the customs regions with the opportunity to District to become part of global area. It is a shame that many develop primary resources <…>
Yesterday, Transmashholding, I think we have huge potential, Trade and economic ties Rosatom, and Sakhalin Region given the fact that both between India, Russia and signed an agreement to develop our countries, Russia and China have significant the nuclear energy industry Indonesia, are G20 members. untapped potential. According in Sakhalin. The hydrogen Among the G20 members with to our calculations, Russia industry is very interesting. economies of this size, there is a could increase its trade volumes Japan has long been dreaming lot of potential to increase both with China by at least 25% and of <…> using hydrogen engines, trade and mutual investments. by 17% with India. Therefore, in transport among other We are actually in a strong <…> Russia’s pivot towards things. <…> Such an interesting position: Indonesia is one of the India and China, which we project to develop the hydrogen top ten exporters to Russia are currently witnessing, is a industry in Sakhalin is of great Bambang Brodjonegoro, completely reasonable move Minister of National Development Developing international cooperation in the breeding of rare Our cooperation has not yet interest to Japan Apurva Sanghi, Planning of the Republic of Indonesia Acting Country Director for the Russian bird species can help to restore their populations in our country reached its potential. We must Alexander Sergeev, President, Russian Academy of Sciences Federation, The World Bank Group and abroad. A joint project to create a Russian falcon centre in adopt a range of measures in Kamchatka could prove to be an effective method of achieving order to reach an agreement on and create added value within the The administration of Primorye this. The hatchery will contribute to the restoration of rare bird a free trade zone encompassing country,” Gianni Bardazzi, Vice Territory launched a project to set populations in their traditional habitat, while attracting major ASEAN and the EAEU President for Russia and Caspian up an industrial park in Bolshoi foreign investments into the region’s tourism infrastructure. The Trinh Dinh Dung, Region, Maire Tecnimont SpA. Kamen and allocated 200 hectares Ministry of Natural Resources and Environment of Russia has Deputy Prime Minister near the Zvezda shipyard to build USD of the Socialist Republic of Vietnam Active cooperation in industry and production facilities there. We have 210 expressed its willingness to carefully study all the details and energy can open up new opportunities. two contracts on the way with billion coordinate implementation on this issue enterprises that are set to participate total Russian exports to India Dmitry Kobylkin, “The agreement between technology in the production chain for the first for the first five months of Minister of Natural Resources and Environment parks on Russky Island and vessels to be produced at Zvezda,” 2019, according to the Federal of the Russian Federation in Pohang can become a new Konstantin Bogdanenko, Acting Vice Customs Service of Russia cooperation mechanism. <…> Governor of Primorye Territory.
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“We must tackle social issues when President of the Russian Federation year, we have launched a Far BROADENING HORIZONS improving conditions for attracting Vladimir Putin emphasized the fact Eastern demography package to investment. At first, we didn’t pay that younger generations should support families with children. much attention to it, as we counted get special attention. Efforts are <…> Before the end of the year, OF INTERNATIONAL on Russia’s ministries of health, already underway in this area. almost 75,000 families will receive education, culture, sport, etc. These one-time payments after the births are their areas of responsibility. But “In 2018, we launched a project to of their firstborn and subsequent COOPERATION fast growth requires support across facilitate the social development children,” Alexander Kozlov, all departments,” Yury Trutnev, of cities [centres] of economic Minister for the Development of the Deputy Prime Minister of the growth. By 2021, the federal Russian Far East and Arctic. Russian Federation and Presidential budget will allocate RUB 95 billion Creating favourable conditions for life Plenipotentiary Envoy to the Far to construct, repair and upgrade is a prerequisite for the development of the Far East Eastern Federal District. over 700 social facilities. This
At least 55% of the country’s If we look at the health Developing cities in the Far population should have improvement programme as East is very important: it is a permanent access to sporting a whole, we can see that there huge, underpopulated territory facilities. Based on our is a whole range of preventive with very few attractive places. population figures, this should measures. <…> It includes This problem needs to be mean at least 80 million people. establishing a network of resolved, because preserving This is the target we need to public health centres directly this region and making achieve in Russia connected to every community, life there comfortable is a Igor Levitin, and creating individual regional geopolitical objective Aide to the President programmes to promote healthy Vladimir Yakushev, of the Russian Federation lifestyles. <…> It also includes Minister of Construction, Housing and corporate healthcare Utilities of the Russian Federation Veronika Skvortsova, Minister of Health of the Russian Federation
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OBJECTIVES
Efforts to develop the region’s social infrastructure currently lag behind the national average, and must be accelerated
The regional lag in socioeconomic the Federal Assembly of the Russian “Productivity is a pressing issue development is a huge challenge for Federation. for the Far East. [We need to cooperation. understand, – Ed.] how to develop “The baseline condition of human the region with such a deficit in the “In Far Eastern healthcare capital in the Far East creates labour force, how to improve the facilities, 73% of medical equipment potential risks for future high- training services market, and how is worn out. Over 1,000 additional tech development. I would like to to implement automation,” Mikhail ambulances are required. <…> share some numbers. Let’s take the Akim, Vice President, ABB Ltd. At present, when it comes to results of the Unified State Exam doctors and paramedics, there are in computer science, physics and Dissatisfaction with living conditions 5,500 job vacancies in rural areas,” chemistry in Primorye Territory: is the key reason for migration out of Alexander Kozlov, Minister for the 352 people scored 60 and above the Far East. President of the Russian Development of the Russian Far in computer science; 28 people Federation Vladimir Putin noted that East and Arctic. scored 80 and above in physics; this problem still exists, though it has and 41 people scored 80 and above halved since 2005. “There are 60% more deaths from in chemistry," Nikita Anisimov, external causes in the Far Eastern Rector, Far Eastern Federal “The population of practically all Federal District compared with University (FEFU). Far Eastern regions continues to the national average – socially decline. Unfortunately, more people significant infections such as The need for major investment in the leave the Far East than arrive here,” tuberculosis cause twice as many region’s social sphere overlaps with said Vladimir Putin. deaths than the average figure for the need for investment in its low Russia. The working age mortality investment attractiveness. “Two-thirds of those who receive rate for all causes of death is 15– targeted government-sponsored 20% higher,” Veronika Skvortsova, “The main indices for the region’s education intended to boost the Arctic Minister of Health of the Russian economic development do not yet region avoid going to the Arctic by Federation. reflect its stability and sustainability, any means possible. The reasons which is driven by strengthened are clear: there is no incentive in the “Dilapidated housing is among the internal potential. <…> The Far form of higher wages. Wages are most pressing issues. <…> Its share East as a market is not yet attractive basically the same as everywhere here is 2.5–3 times higher than the if we take into account its size, else: there are no benefits that would average for Russia. Only 70% of demographic trends and global motivate people to go to remote housing has a water supply, only interdependence with neighbouring areas,” Vladimir Solodov, Chairman 68% has sewage, and only 74% has economies. This means we need to of the Government of the Republic central heating,” Nikolay Kharitonov, profoundly alter our cooperation,” of Sakha (Yakutia). Chairman of the Committee for Lee Jae-Young, President, Korea Regional Policy and Issues of the Institute for International Economic North and Far East, State Duma of Policy (KIEP).
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SOLUTIONS
The national programme for the development of Russia’s Far East to 2025 and to 2035 aims to overcome the region’s socioeconomic lag. The President of the Russian Federation has given orders to prepare the programme, a draft version of which was discussed at the meeting of the State Council Presidium that took place in Vladivostok during the Forum.
“The national programme includes measures that, if implemented, will help to achieve two goals: ensure economic growth and bring living standards in line with the national average. All the programme’s measures have been discussed with federal agencies – they are in agreement that this list of measures is necessary, and that the development of one of the country’s largest regions depends on it,” Alexander Kozlov, Minister for the Development of the Russian Far East and Arctic.
A new mortgage programme that is I agree that a special mortgage programme should be launched in set to launch in 2019 and run for five the region, so that young families can borrow money to purchase years could become an effective tool flats or houses in the Far East at an annual interest rate of 2%. in resolving the housing problem. A decision on the programme was <…> We must apply it to the so-called primary market, that adopted during the Forum. is, the market for new residential buildings, as well as to the construction of private homes by those who are taking part in the Members of the State Council Far Eastern Hectare programme. I suggest that we use funds from suggested other measures to make the national programme for the development of Russia’s Far East housing more affordable including, and the Far East Development Fund for example, fully or partially government-sponsored construction Vladimir Putin, of housing that would be rented President of the Russian Federation out to private and public sector employees. think about additional incentives Regional Policy and Issues of the and a compensation mechanism. North and Far East, State Duma of The development of PPP tools could For example, we can provide VAT the Federal Assembly of the Russian help to improve the situation in the exemptions to utility providers in Federation. housing and utilities sector. the Far East that adopt concession agreements as well as a simplified Given the low population density in “Today, when it comes to tax system,” Nikolay Kharitonov, the FEFD, the approach to financing concessions in the Far East we must Chairman of the Committee for healthcare must be altered.
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“Healthcare institutions of the Far limit should be abolished at the procedure, which would make Northern and equivalent Far Eastern regional healthcare financing level. it possible to open subdivisions territories should be financed from and branches of foreign clinics the Federal Compulsory Medical In order to attract social workers without excessive formalities, Insurance Fund according to their to the Far East, Vladimir Putin attract top foreign specialists, estimated running costs, rather suggested increasing payments as and use medicines and methods than regulatory prescriptions. <…> part of federal programmes. that have already proven their Part of the oil and gas revenue that effectiveness abroad. This cluster comes from the Far East and is later “Among other things, we need to should of course function within redistributed through the Russian adapt the Rural Doctor and Rural the Russian jurisdiction,” Vladimir National Wealth Fund could provide Teacher national programmes for Putin, President of the Russian a source of additional financing,” Russia’s Far East. This could include Federation. Aysen Nikolaev, Head of the Republic offering greater benefits to doctors, of Sakha (Yakutia). paramedics and teachers willing After the Forum, Vladimir Putin to relocate to small communities ordered the Ministry for the “When it comes to estimated in the Far East. I propose doubling Development of the Russian Far financing the decision has already these allocations for the Far East East and Arctic to work alongside been made. Starting in 2020, compared with present national the Ministry of Healthcare and paramedic and first aid stations rates,” said Vladimir Putin. the Administration of Primorye across Russia will be fully financed, Territory to prepare draft instead of being financed based on Breakthrough projects will allow legislation by 15 January 2020. a tariff model, given that payroll healthcare in the region to reach an The legislation is to outline the accounts for 90% of monthly costs,” entirely new level in terms of services creation of the medical cluster in Veronika Skvortsova, Minister of and technologies. the FEFD, define its regulatory and Healthcare of the Russian Federation. administrative forms as a special “It is possible to create a medical type of organization, and assist Furthermore, Veronika Skvortsova cluster in the Far Eastern Federal in providing innovation in the believes that the regional subsidy District with a special regulatory healthcare sector.
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