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INVESTMENT AUDIT OF THE UDMURT REPUBLIC. VERSION 1.0 UDMURTIA ON THE MAP OF RUSSIA 1 Moscow MADE IN UDMURTIA Kirov 42,100 SQ KM Perm Nizhny Novgorod Area Izhevsk (56th/85*) Kazan Yekaterinburg Ufa Samara 1.5M Population (30th/85*) UDMURTIA’S LARGEST CITIES RUB 556BN 970 КМ GRP IZHEVSK 650,000 Distance from Izhevsk (33rd/85*) to Moscow: SARAPUL 98,000 2 hours VOTKINSK 98,000 18 hours — 1200 km GLAZOV 93,000 RUB 356,043 GRP per capita (42nd/85) KEY TRANSPORT INFRASTRUCTURE: Trans-Siberian Railway (Balezino Station, Glazov Station) The P320 Elabuga-Izhevsk regional highway, connection to M7 Volga. Udmurt Republic * ranking among Russian regions Volga Federal District (VFD) IGOR SHUVALOV MAKSIM ORESHKIN DENIS MANTUROV DMITRY PATRUSHEV 3 Chairman of VEB.RF Minister of Economic Development Minister of Industry and Trade Minister of Agriculture THE REGIONAL ADMINISTRATION HAS INITIATED AN INVESTMENT AUDIT TO SUPPORT UDMURTIA’S LONG-TERM ECONOMIC DEVELOPMENT MADE IN UDMURTIA 2014 2017 2019 2020 “VEB.RF, the Russian Export “Udmurtia’s focus on driving non- “Udmurtia is a region with “Udmurtia’s climate and Centre, DOM.RF and the SME resource-based exports, training enormous investment potential environment provide an excellent Investment strategy Map of investment Investment audit Udmurt Republic’s 2027 opportunities Social and Economic Corporation are providing people entrepreneurs and promoting and ambitious goals to develop foundation for the further Udmurtia’s 2025 The investment audit of Strategy of Udmurtia with essential support entrepreneurship, enhancing the manufacturing sector. There development of the agribusiness, Investment Strategy In 2017, Udmurtia the Udmurt Republic will tools to attract investors, open productivity and adopting best is intense demand for investment food, raw materials and consumer is aimed at enhancing undertook a massive highlight the following: The strategy will be based on new manufacturing sites, create practices from other regions, among companies in Udmurtia goods sectors. Fast growth stock-taking of its growth areas identified during the republic’s investment the benefits of new jobs, upgrade existing with the proper implementation, and strong collaboration between has helped to drive promising investment resources ━ the investment audit appeal and nurturing investing in Udmurtia enterprises and promote goods is definitely the right way to the regional administration and investments in Udmurtia’s a favourable environment and developed a map of made in Udmurtia in foreign develop the region’s economy.” the Industrial Development Fund agricultural sector, where there for investment projects. investment opportunities: ━ priority investment markets. VEB.RF has forged established by the Russian Ministry are vast opportunities on both the madeinudmurtia.ru areas The strategy’s main a comprehensive partnership of Industry and Trade. Regional Russian and international market.” recommendations objectives are to: ━ with the regional administration. companies are participating in on infrastructure We are ready to participate in joint modernisation initiatives, ━ improve the development the region’s priority investment setting up new production lines competitiveness of a roadmap of priority projects on transport infrastructure and import substitution products. ━ regional manufacturing investment areas and and urban development, As a result, Udmurtia today ensure a better quality projects to engage including a major upgrade of is one of the 10 leading Russian ━ of life for the people investors public transportation networks. regions in terms of the amount Another economic priority is the of private equity raised via the ━ retain and develop diversification of Udmurtia’s Industrial Development Fund. human capital defence sector. The region’s highly In 2018, companies filed RUB 1bn ━ develop small and education population and human worth of requests with the Fund medium enterprises capital resources provide Udmurtia and signed RUB 500m worth drive well-balanced with the opportunity to enhance of contracts. In 2019, Udmurtia ━ regional development existing manufacturing capacities plans to attract around RUB 750m to produce highly competitive via the Industrial Development ALEXANDER BRECHALOV civilian-use goods using reduced- Fund for production development Governor, Udmurt Republic cost financing tools.” projects. The region’s cluster of oil and gas equipment manufacturers are going to be a powerful driver developing the oil and gas sector. Furthermore, the region is successfully facilitating the conversion of military enterprises to civilian-use manufacturing, and, in the process, creating jobs and demand for further investment.” “We will use the results of PwC’s investment audit to build a new strategy to develop the regional economy through 2027.” 5 KIRILL NIKITIN 4 Partner, Government THIS INVESTMENT AUDIT OF THE FIRST RESULTS OF THE INVESTMENT AUDIT HAVE HIGHLIGHTED and Public Sector Leader, PwC Russia THE UDMURT REPUBLIC IS UDMURTIA’S FAVOURABLE INVESTMENT CLIMATE AN INDEPENDENT ASSESSMENT OF THE REGION’S POTENTIAL MADE IN UDMURTIA MADE IN UDMURTIA FROM THE INVESTOR’S POINT “We are pleased to present the first results of our invest- ment audit of Udmurtia. The project was initiated by OF VIEW Key advantages of Udmurtia identified the regional administration to benchmark the republic’s in the investment audit: investment potential and identify high-potential and promising investment and growth areas. 1. Our retrospective analysis has demonstrated that the 10. Udmurtia has a highly educated population to sup- region’s favourable business climate can already be port investment projects, including 16 universities. In the fall of 2017, Alexander Brechalov was appointed credited with fostering investment successes. A majority (67%) of graduates stay to work in the the governor of Udmurtia. One of his first announce- region. ments was to focus on budget optimisation, business Key objectives of the investment audit: 2. The regional administration is highly accessible for 11. Udmurtia offers a wide range of tax benefits to development and the ambitious goal of attracting 1. Identify the competitive advantages everyday work with investors. investors, including tax incentives in the Glazov and additional direct investment. Much has already been of Udmurtia for direct investment. 3. The regional administration has taken special mea- done to improve the region’s investment appeal—ad- Sarapul priority social and economic development 2. Identify direct investment growth points sures to focus on important dimensions of social and ministrative barriers have been reduced, a package of tax areas (PSEDAs). in Udmurtia economic development. and financial benefits has been developed and invest- 12. Investors and their projects receive turn-key support 4. Udmurtia provides investors with relevant informa- ment platforms at our industrial parks and priority social 3. Prepare recommendations on the in Udmurtia across ten key areas. tion about opportunities in the region via the modern and economic development areas (PSEDAs) have been development of regional infrastructure. communication channels. 13. Over the last three years (2016-2018), investment launched. These initiatives are ongoing. 4. Develop a roadmap for priority investment projects in Udmurtia have received more than RUB 5. The consumer market around Udmurtia is more than For this stage of the investment audit, we evaluated the areas. 2.5 billion from federal development institutes and RUB 2 trillion. factors that drive investment appeal and identified poten- more than RUB 2 billion from regional and municipal tially attractive investment opportunities in light of our 6. PwC analysis identified investment appeal factors development institutes. current growth rates and import volumes. across five industries selected for an in-depth audit. 14. In 2018, for the first time in the last five years, This information is intended for potential investors and 7. PwC analysis identified ten promising drivers of eco- Status: the growth of capital investments was above 10%. partners, development institutes and federal authorities.” nomic growth in Udmurtia. 1. The investment audit began in March 2019. 8. The transport infrastructure in Udmurtia offers signif- 2. The implementation roadmap will be prepared icant advantages to investors. in the third quarter of 2019. 9. Udmurtia provides investors with the opportunity 3. This document contains a summary of PwC’s to get their businesses up and running quickly at preliminary analysis. launch-ready sites. 7 CONTENTS 6 3 BENEFITS FOR INVESTORS IN UDMURTIA? — 31 P. 3.1 Rankings — 32 p. MADE IN UDMURTIA 3.2 Transport infrastructure — 34 p. MADE IN UDMURTIA 3.3 Human capital — 38 p. 1 WHERE TO INVEST 3.4 Investment platforms and industrial parks — 40 p. IN UDMURTIA? — 9 P. 1.1 High-potential investment areas in Udmurtia — 10 p. 1.2 PPP opportunities in Udmurtia — 14 p. 4 APPENDICES — 55 P. 4.1 Business success stories in Udmurtia — 56 p. 4.2 Advantages of investing in industries selected for an in-depth audit — 71 p. 2 REGIONAL SUPPORT FOR INVESTORS 4.2.1 Dairy farming — 72 p. IN UDMURTIA? — 17 P. 4.2.2 Petroleum refining — 76 p. 4.2.3 Wood — 78 p. 2.1 Tax incentives — 18 p. 4.2.4 Machinery — 82 p. 2.2 Financial incentives — 20 p. 4.2.5 Food production — 86 p. 2.3 Infrastructure incentives — 26 p. 4.3 Key contacts in the regional administration — 90 p. 2.4 Administrative incentives — 29 p. 9 9 MADE IN UDMURTIA WHERE TO INVEST 01