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Guide to Industry in the Leningrad Region

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GUIDE TO INDUSTRY IN THE LENINGRAD REGION LENINGRAD REGION COMMITTEE FOR ECONOMIC DEVELOPMENT AND INVESTMENT ACTIVITY PwC Russia (www.pwc.ru) provides industry-focused assurance, advisory, tax and legal services. Over 2,500 people work in our offices in Mos- cow, St. Petersburg, Yekaterinburg, Kazan, Novosibirsk, Krasnodar, Voronezh, Yuzhno-Sakhalinsk and Vladikavkaz. We share our thinking, ex- perience and solutions to develop fresh perspectives and practical advice to open up new opportunities for business. The global network of PwC firms brings together more than 180,000 people in 158 countries. PwC first came to the Russian market in 1913, and re-established its presence in 1989. Over the past 20 years, PwC has grown to become the larg- est professional services provider in Russia. TABLE OF CONTENTS According to independent research conducted among the largest companies and organisations in Russia over the period 2008-2012, PwC has consistently been the strongest brand among the Big Four over the past five years. This study was conducted anonymously by an independent research organisation to ESOMAR standards. 4 Introduction by the Governor - Defence-industrial complex of the Leningrad Region - Mining - Production and distribution of power, 6 Foreword by the Managing gas and water Partner of PwC Russia - Agricultural sector - Success stories 10 Investment potential • ZAO International Paper of the Leningrad Region • Tikhvin Freight Car - Social and economic situation Building Plant CJSC - Gross regional product (GRP) • OAO Ust-Luga Company - Investment climate • Galactika Group of Companies - Introduction of a Standard for Promot- ing a Favourable Investment Climate 44 Development priorities and in the Leningrad Region government support - Workforce - Development priorities and sources of - Transport and logistics system growth - Foreign trade - Cluster policy - Tax and financial incentives 22 Industrial sector - Support for the Pikalyovo production of the Leningrad Region complex - General statistics, dynamics of development 54 Industrial parks and zones - New production facilities commis- in the Leningrad Region sioned in 2006-2012 - Production distribution by type of core 60 Business and industry economic activity associations - Manufacturing sector 62 Contacts This Guide has been prepared jointly with the Leningrad Region Committee for Economic Development and Investment Activity. This publica- tion 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 brochure 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. PwC, 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. 2 Guide to Industry | PwC PwC | Leningrad Region 3 INTRODUCTION BY THE GOVERNOR OF THE LENINGRAD REGION Dear friends, Our achievements have established a solid base and fa- vourable conditions for the further development of the Len- Industry is the fundamental basis of the Leningrad Re- ingrad Region’s industrial sector. Enterprises with sustainable gion’s economy. Enterprises with stable, successful opera- operations are the best advertising for our business climate tions make a significant contribution to the gross regional and the effectiveness of the region’s investment policy. Ow- product (GRP) and represent a key source of tax revenue ing to this, in 2012 we brought in over RUB 330 billion to the for the regional budget. regional economy. The region offers an investor-friendly tax Today, we are seeing the successful development of in- regime, and a clear, transparent support system for invest- dustrial production in the Leningrad Region, which helps ment projects. ensure a high rate of economic growth for the region as This Guide to Industry in the Leningrad Region is intended a whole. to be a reliable guide that can help investors establish and In 2012, industrial output increased by 4.2%. Our region develop their businesses in the Leningrad Region. ranks among the top three leaders in industrial production Our region is open to all who are enterprising and ready in north-western Russia, particularly by such indicators as to take the initiative, and who value solid commitments and the volume of industrial goods shipped and production of guarantees. natural resources. The Leningrad Region is a major transport and logistics Alexander Drozdenko centre for north-eastern Europe. Across the region, ports, Governor of the Leningrad Region industrial zones and technology parks have been expanding their capacity, and integrated development plans are being implemented. 4 Guide to Industry | PwC PwC | Leningrad Region 5 FOREWORD BY THE MANAGING PARTNER OF PWC RUSSIA The Leningrad Region today presents a vivid example of The Leningrad Region Government has been actively im- a dynamic, rapidly growing economy. The availability of an plementing mechanisms aimed at smoothing the way for in- extensive raw materials base, skilled labour, access to both vestors, such as investment project support on a “one-stop- Russian and European markets, and significant industrial shop” basis, which have contributed to creating a highly and technological potential support the Leningrad Region's favourable environment for doing business. development as a highly industrialised region where all types In addition to a simplified procedure for obtaining tax of production are represented. preferences, another advantage of doing business in the The Leningrad Region is unique in terms of its geographi- Leningrad Region is the availability of functioning industrial cal location. Access to the Baltic Sea, geographic proxim- parks and clusters. ity to Western Europe, rapid development of practically all This Guide presents the most interesting and helpful in- modes of transport, and the availability of ports and lo- formation about the economic situation in the region, in- gistics hubs make the Leningrad Region one of the largest cluding the region’s development prospects, special aspects transportation hubs in north-western Russia as well as an of establishing and doing business in the region, and gov- important link in Russian and global transport networks. ernment support programmes for investors. Among the region’s top priority objectives today are the We strongly believe that this publication will be helpful further improvement of living standards and creating fa- to both existing and potential investors, and wish the Len- vourable conditions for the development of new investment ingrad Region Government continuing success in their work projects. for the benefit of the region. David Gray Managing Partner PwC Russia 6 Guide to Industry | PwC PwC | Leningrad Region 7 ONE OF RUSSIA’S MAJOR TRANSPORT HUBS WITH A STABLE ECONOMY Map of the Leningrad region Finland Svetogorsk Lake Ladoga Priozersk Podporozhye Vyborg Lodeinoye Pole 1,3 13 Vysotsk Primorsk Forestry 75 Transport machine-building Gulf of Finland St. Petersburg Agriculture Vsevolozhsk Sosnovy Bor Volkhov Ports Shlisselburg Lomonosov 46 Oil refining Ust-Luga Tikhvin FMCG Gatchina Boksitogorsk Development Tosno Kirishi Volosovo Estonia Building materials Petersburg Nuclear Physics Institute (PNPI) Slantsy Freight turnover, tonnes mln Population centres Luga Railways International highways NEG (North European Gas Pipeline) 8 Guide to Industry | PwC PwC | Leningrad Region 9 SOCIAL AND ECONOMIC SITUATION The Leningrad Region is located in north-eastern Rus- The region is also among the leaders in north-western sia and has an area of 83,900 square km. The region has Russia in timber cutting, processing and export. a population of 1.75 million people, of which 65.2% are These factors support the Leningrad Region's develop- urban dwellers and 34.8% live in rural areas. The region ment as a highly industrialised region where all types of borders on Finland and Estonia and has administrative production and transportation are represented. borders with five other constituent regions of the Russian The region's diversified economy ensures the consis- Federation: the Novgorod, Pskov and Vologda regions, tent growth of key macroeconomic indicators: the Republic of Karelia and the City of St. Petersburg. • the net profit of regional enterprises and organisations grew Moreover, the Leningrad Region is rich in various natu- INVESTMENT by 23% versus the same period the year before; ral resources. The region has major reserves of: bauxite, • capital investments grew by 0.8% year on year; clay, phosphorite, shale, granite, limestone, sand and POTENTIAL peat. New types of feedstock have been discovered in • the volume of construction work grew by 8.7% year on year; the region, including magnetite ore of tin-silver and ura- • real personal income rose by 3.0% year on year; nium mineralisation, ornamental stones, natural gas and • real wages rose by 8.5% year on year. OF LENINGRAD bitumen. REGION GROSS REGIONAL PRODUCT (GRP) A key indicator of the region's successful development is its pated positive growth trend in the industrial sector, active con- growing gross regional product (GRP). struction of new enterprises, increased capital investment, and In 2010, the region’s GRP was RUB 502.1 billion,
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