Guide to Investment Republic of

2015 PwC (www.pwc.ru) provides industry-focused assurance, tax, legal and advisory services. Content Over 2,500 professionals working in PwC offices in , St Petersburg, Ekaterinburg, , Rostov-on-Don, Krasnodar, Voronezh, Novosibirsk, and Vladikavkaz share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. 4 Welcome address by the President 37 Workforce PwC refers to the PwC network and/or one or more of its member firms, each of which is a of the Republic of Tatarstan Rustam Higher education separate legal entity. Together, these firms form the PwC network, which includes over 195,000 Minnikhanov 38 employees in 157 countries. Please see www.pwc.ru for further details. 5 PwC introductory remarks by Igor 39 Science Lotakov 40 Global events in Tatarstan Tatarstan Investment Development 6  44 The Republic of Tatarstan's Agency (TIDA) strategic economic development 9 General information on Tatarstan priorities 10 Natural resources 46 Chemicals and petrochemicals 12 Economic and investment potential of 48 Machinery and auto components the Republic of Tatarstan 50 Healthcare and pharmaceuticals 16 Tax system Agro-industry 17 Investment climate 52 Development, real estate, 20 Investment infrastructure 53 construction and manufacture Transport infrastructure 32 of building materials Europe-Western International 34  Information technology Transport Corridor 54 Services and tourism 35 Sviyazhsk interregional multi-modal 56 logistics centre 58 Conclusion 36 Utilities 60 Contacts

This Guide to Investment has been prepared jointly with the Tatarstan Investment Development Agency and Tatarstan's Ministry of Economics.

This publication contains information as of September 2015.

PwC Republic of Tatarstan 3 Welcome address by the President PwC introductory remarks of the Republic of Tatarstan by Igor Lotakov Rustam Minnikhanov Dear partners, Dear friends,

The Republic of Tatarstan is rapidly growing region of the Russian We are delighted to present you with the Investment Guide for Federation. the Republic of Tatarstan. This region shows high performance Our long-term targeted economic policy has helped Tatarstan to create year-on-year and is among Russia's leading constituents favourable conditions for investors to conduct successful business. in terms of economic growth and ease of doing business. Tatarstan benefits from its skilled labour, rich natural resources and unique position at the hub of major transport routes.

Many well-known international brands have already Universiade. In 2015, the republic hosted the World An important factor that makes Tatarstan attractive We are also confident that this overview will be a selected Tatarstan as a hub for their operations, Aquatics Championship. In 2018, Tatarstan will be home to investors is its government's work aimed at useful resource for potential investors and assist them including Ford Sollers, Air Liquide, Rockwool, Marriot, to the FIFA World Cup. simplifying relations between international and in making an assessment of Tatarstan's potential Sisecam, Hayat Group, Daimler, Fujitsu, Kastamonu, Russian investors. This is the place where the special for economic growth and the advantages of doing Haier, Wienerberger, 3M, and others. In 2011, a special intergovernmental body was set economic zones (SEZ) Alabuga and have business in this region, as well as going ahead with up - the Tatarstan Investment Development Agency been created, where more and more technoparks and the most challenging investment initiatives. Legal guarantees, social, economic and political stability, (TIDA). Its goal is to promote Tatarstan globally in order business incubators are opening and various business and a tested system to support investment ensure the to attract investment, as well as provide support to support arrangements are being implemented. most comfortable conditions for businesses. investment projects on a “one-stop-shop” basis. We should also mention the contribution of the Tatarstan Investment Development Agency (TIDA), The Republic of Tatarstan has well-developed Ensuring favourable an investment climate and which is a one-stop shop for potential investors infrastructure for investment. For instance, the two providing support to business projects are the constant and also provides all sorts of support for project special economic zones (SEZs) operating in Tatarstan priorities of our economic policy. This is also spelled out implementation. are SEZ Alabuga for industry and manufacturing and in the strategy for the social and economic development Innopolis for technical implementation where various of the Republic of Tatarstan up until 2030. Furthermore, Tatarstan regularly conducts and hosts technical parks and industrial sites are already in rapid global sporting, cultural and political events such as development. These include KIP Master, Khimgrad The Republic of Tatarstan is always pleased to welcome international KAZANSUMMIT, XXVII Summer World Technopolis, IT Park High-Technology Park, and Idea new business partners and will continue to foster the Student Games (Universiade 2013), 2015 World Technopark, as well as various engineering centres and conditions necessary for the successful implementation Aquatics Championship, WorldSkills Russia National accredited municipal industrial sites. of your projects! Tournament and some of the 2018 World Cup matches, etc. These activities make Tatarstan known Another competitive strength of Tatarstan is its internationally and the excellent organisation of such advantageous geographical location, as it is positioned events helps to build a positive image of the region. at the meeting point of transport arteries connecting Europe and Asia. The Moscow-Kazan high-speed railway We prepared this Investment Guide together with will be laid here and become a part of the “New Silk Tatarstan Investment Development Agency and Road”. Tatarstan's Ministry of Economics and based on the materials they provided. Our republic has repeatedly been home to high- level global and Russian events, including economic forums, summits, and meetings of intergovernmental commissions. We have held and plan to host major global sporting events. In 2013, Tatarstan welcomed Rustam Minnikhanov Igor Lotakov participants and guests of the World Summer President of the Republic of Tatarstan Country Managing Partner PwC Russia

4 Guide to Investment PwC PwC Republic of Tatarstan 5 Tatarstan Investment Development Agency (TIDA) Tatarstan Investment Development was established on 1 June 2011. Agency (TIDA) Ladies and gentlemen, The Agency's investment policy objectives are: • promoting Tatarstan at the global level as a Russian region offering attractive investment Tatarstan is a unique and cutting edge region of Russia. opportunities; Tatarstan is a leader in the national investment climate rating for Russia's regions in 2015. • attracting investment to the republic, including through creating the necessary investment infrastructure; • participating in developing and maintaining investment projects, including PPP-based projects, Today we are able to compete on the global market. Cooperation with Tatarstan is profitable and as a successful mechanism for working with investors. Innovations, high-tech production, qualified experts, pleasant. You are invited to come and see it with developed infrastructure, a wide offering of tax your own eyes! preferences and an encouraging business climate are our competitive advantages. The Agency works with investors on a “one-stop-shop” principle. The republic has created a special government body working on a “one-stop-shop” basis, the Tatarstan Investment Development Agency (TIDA). The Agency was founded in 2011 to support, assist Determining Completing Applying to TIDA Signing Project and implement investment projects so that investors investor’s package an agreement launch can feel both confident and comfortable as our long- requirements of documents term partners. And this has been a stunning success. • providing • helping prepare • interacting We have investment projects with various countries, information about the the necessary packet with ministries republic by industry of documents and agencies and for many years already, we have worked with to agree and sign such leading foreign investors. • selecting an • agreeing the investment platform packet of documents an investment agreement • helping resolve with relevant Tatarstan has well-developed operational investment ministries and agencies • managing infrastructure. This means that investors can issues with the relevant ministries • providing the process of signing obtain a full package of benefits for various and agencies information support an investment projects, including land plots with ready-made on legal, tax and other agreement between engineering infrastructure and free connections issues the parties to gas, heat, electricity and other resource networks. For residents, there is zero tax on land, property and transport for a period of 10 years from the moment when first profit is generated. 50 Peterburgskaya St, Kazan 420107 Tatarstan also provides access to an extensive Tel.: +7 (843) 570-40-01 consumer base throughout Russia. Seven of Russia Fax: +7 (843) 570-40-05 and the Region's biggest cities are within http://tida.tatarstan.ru/ 1,000 km distance to us and, as a result, you can Taliya Minullina [email protected] offer your products and services to nearly half Head of the Tatarstan Investment Development Agency, of the country's population. Member of the Government of the Republic of Tatarstan, Chairperson of the Board of Directors, Tatarstan Tatarstan’s Investment Development Agency is a member of the World Association Our main focus is partnerships that are both long- Export Corporation and Tatarstan Development of Investment Promotion Agencies (WAIPA). Corporation term and reliable.

6 Guide to Investment PwC PwC Republic of Tatarstan 7 General information on Tatarstan

Brief • Tatarstan is located in the centre of a large industrial region, 800 km east of Moscow, at the meeting of the Volga information and rivers. • Total territory: 67,836.2 sq. km • Population: 3.8 million people • Length of territory: Tatarstan stretches 290 km from North to South and 460 km from West to East • Climate: moderate continental • Official languages: Tatar and Russian • Main religions: Islam and Orthodox Christianity • Percentage of residents living in urban areas: 75.4% • Capital: Kazan (area: 614.2 sq. km; population: 1.161 million people)

Tatarstan’s Traditionally, the Republic of Tatarstan is among Russia's leading regions in terms of the key macroeconomic indicators. leadership In 2014, the republic ranked seventh for regional gross domestic product, third for agricultural production, fifth for manufacturing and capital expenditures, sixth for construction and eighth for new housing supply and retail turnover. In 2015, the Republic of Tatarstan took first place in the national rating of investment climate in the regions of Russian Federation, developed by ANO “Agency of strategic initiatives on promotion of new projects”. The effectiveness of Tatarstan's investment policy is supported by research performed by leading international agencies and companies. Over recent years, Tatarstan has consistently been a leader among the Volga Federal District regions for its minimum investment risk, according to Expert RA rating agency. Kazan was recognised as the best municipality in Russia based on the results of the VI nation-wide competition of municipal entities. In addition, Kazan was included in the Top-10 business-friendly cities by Forbes magazine. On 30 August 2005, Kazan marked its 1,000th anniversary. Since April 2009, Kazan has had a right to be officially named the Third Capital of Russia.

8 Guide to Investment PwC PwC Republic of Tatarstan 9 Republic of Tatarstan

Tatarstan's Water resources: the Volga, Kama, Belaya and Vyatka Rivers, as well as numerous small rivers and lakes 1010 ofof 1515 RussianRussian megacitiesmegacities andand natural Forest resources cover 16% of the land. resources Land resources: 50%50% ofof thethe populationpopulation areare locatedlocated • oil (around 800 million tonnes); within radius of 1000 km from • limestone and dolomite (66 million tonnes); within radius of 1000 km from • natural stone (35.3 million cubic metres); RepublicRepublic ofof TatarstanTatarstan • peat (over 35,000 ha); • plaster stone (72 million tonnes); • brick clay (73.5 million cubic metres); • petroleum bitumen (12.5 billion tonnes).

Oslo

Stockholm Helsinki Copenhagen St. Petersburg Amsterdam

Perm Luxembourg Ekaterinburg Kaliningrad Nizhni Omsk Novgorod Moscow Kazan Minsk Chelyabinsk Prague Warsaw Ufa

Vienna Astana Bratislava Voronezh Ljubljana Budapest Zagreb

Rome Volgograd

10 Guide to Investment PwC PwC Republic of Tatarstan 11 Economic and investment potential of the Republic of Tatarstan

GDP of Russian Federation GRP production structure of Tatarstan and GRP of Tatarstan by field of business 2,000 106

105.5 Mineral and resource extraction 18.2% 1,500 103.4 104 20.9% Manufacturing

102.4 21% 20.5% Production 1,000 101.3 102 and distribution 7.9% of electricity, gas and water 101.3 7.9% 100.6 18.1% Agricultural output 500 100 18.5% 1,437.0 1,547.2 1,631.4 2013 Construction 14.2% 2.8% (USD 46.3 bln) (USD 48.7 bln) (USD 43.0 bln) 15.2% Wholesale 98 10.4% 5.1% 0 2012 2013 2014 2.7% and retail trade GRP of Tatarstan, RUB billion 10.6% 6% Transportation GRP of Tatarstan, in comparable prices as % against the previous year Other activities GDP of Russia, in comparable prices as % against the previous year 2014

GRP of Tatarstan per capita, RUB thousand

430 424.1 (USD 11.2 ths) 420 403.9 410 (USD 12.7 ths) 400

390 376.9 (USD 380 12.1 ths)

370

360

350 2012 2013 2014

12 Guide to Investment PwC PwC Republic of Tatarstan 13 Capital In 2014, total capital investments in Tatarstan's economy The external economic situation and the recent imposition of sanctions Tatarstan's investments and social sphere came to RUB 542.8 billion (USD 14.3 billion). have had a negative impact on Tatarstan's foreign trade turnover, foreign As a result, the share of capital investment in GRP is estimated which decreased in 2014 by 18.2% year-on-year to USD 22.6 billion. trade turnover at 33.3%. Export of goods dropped 18.7% to USD 18.2 billion while import of goods decreased by 16.1% to USD 4.4 billion. Tatarstan capital investments

560 542.8 115 Tatarstan’s export composition by products in 2014 (USD 14.3 bln) (percentage of total exports) 540 110.1 525.7 (USD 16.5 bln) 110 0.7% 520 Products of fuel and energy sector 106.8 106.2 105 500 7.7% 470.8 100.0 480 (USD 15.2 bln) 100 10% Chemical production 99.8 460 97.5 95 440 Heavy machinery and equipment 420 90 2012 2013 2014 Other Capital investment in Tatarstan, RUB billion 81.6% Capital investment in Tatarstan, in comparable prices as % against the previous year Capital investment in Russia, in comparable price as % against the previous year

Flow of foreign investment into Tatarstan, USD million

1,000 893.9 Tatarstan’s import composition by products in 2014 (percentage of total imports) 800 735.6

600 577.3 551.9 Heavy machinery 1.9% and equipment 435.7 408.2 3% 11.2% 400 Chemical production

Metal and related products 200 7.2%

Other 0 2012 2013 2014 5.7% Groceries and agricultural Foreign investment 72,9% raw materials Direct foreign Textile and clothing manufacture

In terms of economic activity, investment has primarily been put towards the manufacturing industry (43.8%), real estate operations, leasing and services (18.2%), and resource extraction (10.5%).

14 Guide to Investment PwC PwC Republic of Tatarstan 15 Tax system Investment climate

Tax preferences In 2015, the Law of the Republic of Tatarstan “On Strategic Strategy 2030 Russian For Alabuga For Innopolis Planning in the Republic of Tatarstan” was ratified. The strategy Tax Federation in the Republic SEZ residents SEZ residents of Tatarstan focuses primarily on achieving the “Tatarstan-2030” strategic 0% (import vision, which is characterised by the following: VAT 18% of raw materials 18% and machinery) Tatarstan-2030 – a globally competitive and stable Profits tax 20% 13.5%* 0%** 0%** region, with the “Volga-Kama” growth pole as driver. Personal income Tatarstan - a leader in quality interconnected development tax 13% 13% 13% of human capital, institutions, infrastructure, economy, foreign Transport tax 1–150 rub./hp 0%*** 0%*** integration (as the Eurasian axis of the Russian Federation) Social tax and internal space. contribution 34% 14% 14% Land tax 1.5% 0%*** 0%** A region with higher than average growth rates, and a higher degree of involvement in the international division of labour. Property tax 2.2% 0.1%* 0%*** 0%***

* for enterprises carrying out investment projects (with a period of return of no more than seven years, or, in the case of the heavy machinery sector, up to 13 years from the start of the investment) ** during first five years since the realization of profit *** during 10 years since appearance of taxable base

16 Guide to Investment PwC PwC Republic of Tatarstan 17 Investment climate

Key target areas Tatarstan 7+5+3 model Key objective Competitive for the Republic sphere of Tatarstan Per capita GRP, ‘000 USD in 2013 prices MARKETS

TS/PRO OR JEC REAL FF ST T INSTITU- CAPITAL E CLU ERS S TIONS 29.3 35.8 7areas 20.9 22.9 of competition Strategy 2013 2018 2024 2030 2030 Integrated services Fuel/energy/chemical 5 complex Heavy engineering Human capital base economic Agroindustrial Infrastructure complex HUMAN complexes FINANCIAL CAPITAL Average annual population figure Expected lifespan (in years) CAPITAL Kamskaya Economic Kazan Economic Zone Zone (in ‘000 of persons) Almetyevskaya 3 Economic Zone economic zones 3,830 3,897 4,069 4,182 72.12 73.4 74.6 75.3 around 3 mega- regions NATURAL 2013 2018 2024 2030 2013 2018 2024 2030 RESOURCES INNOVATION Competitive AND INFOR- sphere MATION Innovation and information

Share of innovative production in overall industrial GRP share of expenditures on R&D, % output, % The implementation of a cluster approach for the strategic development of the Idea Technopark includes the intensive promotion of nano-technologies and high- tech products, as well as the implementation of investment projects in priority economic sectors. 22 25.2 30.1 35 0.9 1.5 2.3 3 The plan for developing a nanotechnology cluster includes the following efforts: 2013 2018 2024 2030 2013 2018 2024 2030 • coming up with a development programme for industrial enterprises in Tatarstan, which foresees placement of orders for the manufacture Financial capital Institutions of necessary products at small entities; • developing infrastructure to support the nano-cluster; Direct foreign investment accumulated Share of small and medium sized enterprises (SMEs) (USD, bln) in added value, % • promoting nano-cluster enterprises and project members in federal and global nano-technology markets and state support for enterprises;

16.4 44 • training and re-training of personnel to work in the nano-cluster. - 3.4 25.6 27.9 30.5 33 2013 2018 2024 2030 2013 2018 2024 2030

18 Guide to Investment PwC PwC Republic of Tatarstan 19 Investment infrastructure

Heavy engineering, utilities, consumer Kazan - capital of the republic Kazan SEZ goods, construction, food and processing industries Heavy engineering, chemicals and pet- Transfer of production, rochemicals, consumer goods and food consumption and entertainment processing centres to the sub-centres Elabuga Formation of united area of innovation-based economy Oil production and heavy engineering Activisation of towns and rural Kama SEZ settlements Industrial and technological development of the Kama cluster Forming of single and diversified labor market The density and quality of transport and functional Kazan links

Nizhnekamsk Innopolis Petrochemicals Innovative Science City

Almetyevsk

Petrochemicals (oil and associated gas production) SEZ Sectoral diversification and industrial cooperation Creation of single market of labour, land and real estate Qualitative growth of services sector

Consumer goods and food processing

20 Guide to Investment PwC PwC Republic of Tatarstan 21 Investment infrastructure 43 investment sites Largest investment sites of the Republic are located in Republic of Tatarstan of Tatarstan

1 1 1 1 1 2 2 Semiozerka Novonikolaevskiy 1 1 Kazan 8 2 2  Prisma Municipal Industrial site Tulachi 7  Innovative production Idea Technopark Innopolis Kazan Elabuga  IT Park high-technology park Naberezhnye Chelny Kamskie  Technopolis Himgrad 1 Polyany 1 SMART-City 1 1 Innopolis SEZ 2 2 Kazan 1 Chistopol 1 P Buldyrskoye 1 SMART-City Kazan 1 M 241 Almetyevsk 7 Semiozerka Nizhnyaya Maktama  Municipal Industrial site Palandiya 1

1 1 Elabuga municipal district, 1 Elabuga Leninogorsk P Naberezhnye Chelny  Alabuga SEZ 239 1  Kama Industrial Park Master  Razvitie Industrial park Tulachi municipal district,  Chelny Industrial park village Tulachi  IT Park high-technology park  Tulachi Industrial park M 5 Baltasi municipal district, Nizhnekamsk municipal district, urban-type settlement Baltasi Kamskie Polyany  Baltach Halal industrial park  Kamskie Polyany Industrial park 1 Location and number of Leninogorsk investment sites Zelenodolsk municipal district,  Idea-Yugo-Vostok Innovative production Novonikolayevsky village Technopark  M7 Industrial Park Water transportation system Highway Almetyevsk municipal district Chistopol Federal highway settlement Nizhnyaya Maktama  Chistopol Industrial Park Railroad  -Activ Municipal Industrial site

1 22 Guide to Investment PwC PwC Republic of Tatarstan 23 Investment infrastructure

The Alabuga SEZ has access to federal Kastamonu Integre, Saria Bio-Industries Alabuga SEZ highways and railways. The following Volga, Preiss-Daimler Tatneft, Armstrong, modes of transport are available for freight 3M, Hygiene, RR Donnelley, etc. forwarding: air - ; rail - branch railway line of over five km integrated with the federal railway network; road - on-site road network of over 13 km, plus the federal M7 Highway; river - river cargo ports at Naberezhny Chelny and Nizhnekamsk. Alabuga SEZ residents include major Russian and global companies representing such major brands as Rockwool, Isuzu, Air Liquide, Ford Sollers, Sisecam, Saint Gobain,

Among Alabuga SEZ's other competitive advantages are:

• All essential industrial infrastructures are agencies under one roof within the SEZ's already in place. administrative and business centre. This allows residents interact with governmental • Residents are not charged any fee authorities without leaving the SEZ. for connections to utility systems. The Alabuga Special Economic Zone (SEZ) The Alabuga SEZ also offers free hook-ups plays a leading role among Tatarstan's • Residents are granted tax benefits Alabuga SEZ: Summary information: to the power grid. development institutions. It serves as a for up to 10 years. • Site size - 20 sq. km; centre for attracting investors and carrying Comparison of costs for power grid • It has more than 40 resident companies; • The free economic zone customs regime out promising high-tech projects in such connection: • It provides more than 5,000 jobs; exempts imports of modern high-tech fundamental economic clusters as the • Minimum investment threshold for obtaining equipment, raw materials and components  Moscow – RUB 29 million petrochemicals, automotive and construction resident's status: EUR 3 million; from both import duties and VAT. (USD 515 thousand) per MWt; industries. • Total state investments in the project: RUB 15.5 billion (USD 408.2 million); • The SEZ has its own customs post, allowing  Tatarstan – RUB 6.25 million According to Alabuga SEZ's development • Total private investment in the project: resident companies to promptly resolve any (USD 111 thousand) per MWt. strategy until 2023, the zone will likely more than USD 1 billion; customs-related issues. An electronic customs have attracted up to 120 companies with • Total capital investment exceeded declaration system is also available. total combined investment of around RUB 92 billion (USD 2 423 million); RUB 360 billion. • Manufacture of production: more than • The “one-window” system (one-stop RUB 130 billion (USD 3 423.8 million). shop) combines the offices of 16 regulatory www.alabuga.ru

24 Guide to Investment PwC PwC Republic of Tatarstan 25 Investment infrastructure

Innopolis Innopolis SEZ consists of two plots The centre is accessible via the nearby of 294.03 ha combined located in the M7 Volga Highway with the Zaimishcehsnky Verkhneuslonsky and Laishevsky Municipal Bridge crossing the Volga, as well as suburban Districts of Tatarstan. ferries, helicopter services, and a new cableway, which is expected to be built in the The site in the Verkhneuslonsky Municipal near future. District of Tatarstan (192.71 ha) is located 30 km from Kazan in the centre of Innopolis Innopolis will also provide the necessary and is designed to accommodate offices of residential and social infrastructure for innovation companies and R&D facilities. future residents that will meet the most up- to-date requirements. High quality residential The site in the Laishevsky Municipal District houses of various formats will be built (101.32 ha) is located 15 km from Kazan, in the city and will be affordable to various in close proximity to Kazan International categories of residents: cottages, townhouses Airport. It is designated for resident and apartment blocks, as well as short-stay companies’ manufacturing activities in order accommodations such as 3* and 4* hotels. to produce innovative products. www.innopolis.ru

Innopolis Innovation Centre is a new city apartment buildings to townhouses and in Russia specialising in IT business cottages), the bulk of which will be rented and training. The project will bring to employees of resident companies with a together young, highly-qualified specialists purchase option. from all over Russia to help in the innovative Construction started on 9 June 2012. The development of the Russian economy. The Innopolis SEZ grants special terms project is scheduled to reach completion in project’s overall budget is RUB 67 billion for entrepreneurial activities such as: 2027. • special tax regimes; (USD 1.2 billion). • access to developed international-class The first students were enrolled to the Innopolis is a "smart city" with subdivided business infrastructure; university in September 2013. Since 2015, business infrastructure (technological parks, • beneficial land lease and connections to utility around 300 bachelors and 100 masters systems; R&D centres, etc.). It will feature Russia's will begin their studies in the new city. They • simplified administration of residential first university specialising in information activities; will specialise in software engineering, cyber technologies (working in partnership with • access to a developed talent pool; security, data sciences and robotics. Carnegie Mellon University, USA), as well • additional opportunities to attract foreign highly qualified specialists. as a full range of social and commercial The first phase of construction at infrastructure (schools, kindergartens, Innopolis should be completed in 2015 hospitals, shopping centres, restaurants, etc.), (living infrastructure, providing work and several classes of residential areas (from to 5,000 people).

26 Guide to Investment PwC PwC Republic of Tatarstan 27 Investment infrastructure

Project - SMART City Kazan Stimulus For scientific endeavours: Stimulus packages are under development in Package-3. For companies and individuals the three following areas. engaged in the development of services with high added value (R&D, high-tech For investors, during construction phases: production, etc.). Tax breaks for company Package-1. This package aims at optimising revenues, as well as breaks on revenues and construction investment projects. It includes social payments by entities in a particular provision of construction sites with roadway sector, will be developed. access and utility networks, accelerates The following organisations have been invited the approval of permits, and provides tax to take part in the project: breaks on investment projects along with tax • Exhibition operators; holidays for set periods. • Financial, export, and insurance For SEZ residents: companies; • Business service outsourcing centres; Package-2. This package aims at encouraging • R&D centres; companies to set up representative offices. • Hi-tech production centres; It assists in the provision of visas and legal • Hotel and educational operators. SMART City Kazan is a new urban area near Zone and cluster development support, as well as preferred tax breaks Kazan now under development, which will on company revenues. SMART City Kazan is divided into four main have a population of around 59,000. www.kazansmartcity.com areas based on functionality: The project's cost comes to RUB 400 billion • International Public Business Centre (220 (USD 7.1 billion) and it will be implemented ha); on the basis of a public-private partnership • Education and Scientific Centre (209 ha); (PPP). • Special Economic Zone (SEZ) (102 ha); • Parkland (100 ha). SMART City Kazan is the creation of an urban space for the development of business, SMART City Kazan's main clusters are educational and R&D activities with the based on Tatarstan's most promising sectors The IT Park high-technology park purposes of stimulating and developing and should become sources of growth the most promising sectors of Tatarstan's for the entire region: economy. The latest developments in • Healthcare cluster; Kazan IT Park is Eastern Europe's urbanisation and engineering will be used • Educational cluster; largest development institute aimed at promoting the large-scale Investments in the IT Park totalled RUB 4.3 billion (USD in this project. SMART City Kazan is a "smart • High-tech production cluster; 76 million), allocated from federal and regional budgets. city" project with modern and comfortable • Tourism cluster. commercialisation of IT and The IT Park hosts 158 resident companies and has conditions for Tatarstan-based, Russian infocom projects. The main goal provided 3,860 jobs. and international companies to do business. of the IT Park is to ensure the most The total combined revenue of residents there came favourable environment for start-ups to RUB 8.7 billion in 2014. The project will also feature residential Since 2014, the IT Park has been a full-fledged member and recreational opportunities. and developing IT businesses. One of of the International Association of Science Parks (IASP) Project - SMART City Kazan: the key areas of specialisation for IT that has made Tatarstan's innovation cluster even more The project covers around 650 ha and is located Park resident companies is software attractive internationally. three km from Kazan International Airport and development, including applications Memorandums of understanding have been signed with 15 km from the city centre. A branch of the inter- a number of international organisations, including Hoa modal railway line Aeroexpress runs through for "electronic government" and Lak Technology Park (Hanoi, Vietnam), leading Indian SMART City Kazan, linking the new area with the "electronic public services". IT company Allied Digital Services Limited, and Bilkent airport and the city centre. University (Ankara, Turkey). www.itpark-kazan.ru

28 Guide to Investment PwC PwC Republic of Tatarstan 29 Investment infrastructure

Chelny Industrial Park The IT Park High-Technology Park (Naberezhnye Chelny) The city of Naberezhnye Chelny is geographically an automotive centre in Russia (e.g. the location of OAO KAMAZ, OOO Ford Sollers Holding). This is the second site of the Kazan IT Park with office space coming to 12,000 sq. m. It has all the necessary conditions to enable to grow thanks The land plot, on which the Industrial Park is developed, is located in the industrial high-tech companies to the concentration of financial and intellectual resources. area of Naberezhnye Chelny. The land plot area covers about 100 ha. The general plan provides for the creation of 580,000 sq. m of industrial space, chelny.itpark-kazan.ru an EXPO centre of 50,000 sq. m, as well as hotel complex and administrative buildings. Its plan foresees 110 resident companies and over 3,000 jobs. Kama Industrial Park (KIP) Master

More than 60% of russian synthetic rubber, 24% of plastics, one in three russian KIP Master is the sole example of a functioning industrial park with an exclusive focus on the heavy trucks and one in three russian tires are produced on the territory of the engineering sector. Its major goal is to encourage the robust development of advancedautomotive Cluster. component manufacturing. More than half of the Kama Industrial Park's resident companies www.ipchelny.ru maintain close ties with OAO KAMAZ. www.kipmaster.ru

Tyulyachi Industrial Park Technopolis Himgrad

Tyulyachi Industrial Park, which was created in 2012, was one of the first parks located Himgrad offers the optimum environment for developing innovative SMEs in the in a rural area and was specialised by the input material from which products can be made petrochemicals and polymer processing sectors. Technopolis Himgrad is the first Russian for various industries rather than by individual industry sector. Polymeric material industrial park certified by the NP Association of Industrial Parks in the Russian Federation. products were selected as the key operational profile for Tyulyachi Industrial Park, Its product consumers are major Russian companies, including OAO Gazprom, OAO NK Rosneft, which has the facilities to composite polymers with other materials. OAO Lukoil, and OAO Nestle Russia. Export sales to the CIS and other countries account for 10% www.tulachi.su of all goods produced. www.himgrad.ru

Chistopol Industrial Park M7 Industrial Park

Chistopol Industrial Park is an industrial area of 292 ha prepared for construction M7 Industrial Park is designated for processing polymers and located in close proximity that includes general infrastructure facilities such as roads, power, gas and water supply systems to the Kazanorgsintez Plant. It was set up to provide strategic and financial support and waste treatment plants. to the innovation and investment activities of SMEs. The Park's profile covers the following industries: The park consists of 35 plots, each covering from one to 13 ha. • Polymer processing; The Industrial Park operates on a “one-stop-shop” basis and provides built-to-suit services. • Heavy engineering; Investors also enjoy utility connection benefits and tax exemptions. • Metal processing; • Construction materials. www.chistopolinvest.ru www.m7park.ru

30 Guide to Investment PwC PwC Republic of Tatarstan 31 Transport infrastructure Air transport Air transport facilities in Tatarstan are represented by three airports:

M7 MOSCOW - UFA OAO MAK, OAO Begishevo Airport Begishevo and OOO Airport. Elabuga international Kazan airport Innopolis Kazan international Naberezhnye Chelny Map of direct flights airport of the Republic of Tatarstan Motor transport Nizhnekamsk City...... Country Three federal highways cross the Republic R239 KAZAN - AKBULAK Chistopol Almetyevsk Baku...... Azerbaidzhan of Tatarstan: M-7 Volga, M-5 Ural, Yerevan...... Armenia and R-239 Kazan-. The region also Heraklion...... Greece has 18,500 km of paved public roads. Rhodes...... Greece Thessaloniki...... Greece R241 MOSCOW - ULYANOVSK SHALI - Hurghada...... Egypt 1 Sharm el-Sheikh...... Egypt Barcelona...... Spain Water transport M5 MOSCOW - CHELYABINSK Almaty...... Kazakhstan Larnaca...... Cyprus Tatarstan also has three cargo ports with five Bugulma Е30 CORK - OMSK Bishkek...... Kirgizia cargo territories, four passenger ports (Kazan, Osh...... Kirgizia 1 Dubai...... United Arab Emirates Naberezhnye Chelny, Chistopol, and Nizhnekamsk), Dushanbe...... Tadzhikistan and six inland water terminals. 1 Khujand...... Tadzhikistan SHALI - BAVLY Under construction Antalya...... Turkey 1 Motorway system Bodrum...... Turkey Е30 CORK - OMSK European route Dalaman...... Turkey Pipeline transport Stretch of express trunk motorway system, km. Istanbul...... Turkey 1 Water transportation system 1 Samarkand...... Uzbekistan Druzhba, the world’s largest oil pipeline, starts 1 Highway Tashkent...... Uzbekistan Fergana...... Uzbekistan in Tatarstan. Trunk gas pipelines carrying SHALI - BAVLYFederal highway 1 Helsinki...... Finland natural gas from the Urengoy and Yamburg fields Е30 CORK - OMSK 1 Railroad2 1 to Western Europe also run through the region. 4250 612.4 1200 1700 1 1 SHALI - BAVLYDruzhba pipeline 1 2013 2018 2024 2030 4 Е30 CORK - OMSK 1 1 Railways 1 Air transportM Rail transport 1 7 4 2 1 Stretch of rapid transit and high-speed railways, Rail cargo turnover: in 2014, freight handling 1 Airport passenger handling, mln passengers p.a. km. 1 1 4 volume on the Gorkovskaya and Kuibyshevskaya 1 P4 1 12 1 Railways in Tatarstan came to 1.16 million tonnes 241 (103.4% vs. 2014 plan) and 14.1 million tonnes 1 M 7 1 4 M (100.5% vs. 2014 plan), respectively. 43 336 2.25 3.7 5.5 7.3 1 P 7 2024 2030 1 2013 M 2018 2024 2030 1239 P 7 1 32 Guide to Investment PwC 241 PwC Republic of Tatarstan 33 1 1 1 1 M P 1 7 241 P 239 P 1 M 239 P 7 239 1

P 1 239 M 5 P 239

M 5

M 5 Europe-Western China International Sviyazhsk interregional Transport Corridor multi-modal logistics centre

One sizeable project currently under way of traffic and transport flows circulating Another project that can help to resolve Main advantages of the centre's in Tatarstan is the construction of a outside populated locations. The total cost pressing issues with respect to freight location: section of the Europe-Western China of the project is RUB 132 billion (USD 2 billion). delivery optimisation is the Sviyazhsk • Shortest distances to adjacent International Transport Corridor. interregional multi-modal logistics centre. industrial cities and towns, including The Europe-Western China This project will help to ensure the shipment Kazan, Zelenodolsk, Volzhsk, Kanash, The Europe-Western China International Transport Corridor will of freight to any Russian region. It is also Yoshkar-Ola, Cheboksarsk, , Corridor has the following route: reduce travel time by 3.5 times able to re-direct freight flows away from Ulyanovsk, , , St Petersburg – Kazan – Orenburg – and significantly decrease Central Russia and set up social and economic and . Aktyubinsk – Almaty – Khorgos. This is an transportation costs, thus infrastructure along the length of transport • Proximity to and possibility of using optimum route from Europe to China as the becoming the key freight route corridors. railcar maintenance and shipbuilding number of countries and borders involved is for Central Asia. facilities. kept to a minimum. The total length of the Location • Transport and expedition services, route comes to 8,500 km, with 2,200 km The Sviyazhsk interregional multi-modal as well as customs clearance (accepting passing through the Russian Federation. logistics centre is located in the Kazan requests, drafting proposals, processing transport hub, in the Zelenodolsk District transport and finance documents, freight The investment appeal of the Europe-Western near the Sviyazhsk Railway Station, which is escorting). China Transport Corridor for freight owners situated in the estuary of the Sviyaga River. is characterised by reduced costs and time This is a public-private partnership (PPP) for freight deliveries as compared to southern The centre has access to federal transport project. Total investment amounts to sea routes. The corridor goes along the routes, including railways, waterways, and RUB 19.9 billion (USD 300 million). traditional route of trade between Russia motorways. This will allow the centre to and European countries, which also presumes become a large transhipment hub for export The estimated cost of the project is potential access to one of Europe's largest and import freight for all Volga regions, as RUB 14.5 billion (USD 220 million) ports – Hamburg. well as the main river port for freight to be (including RUB 6.5 billion from the Russian shipped through international transport federal budget and 1.5 billion from the Under this project, the Shali (M-7)-Bavly corridors. budget of the Republic of Tatarstan). (M-5) Toll Highway is being built in Tatarstan as part of efforts to develop a new section The first stage of the project is scheduled of the Kazan-Orenburg Federal Highway. for completion in 2015. The second phase The length of the toll highway will come will be completed in 2017. to 294 km. It is scheduled for commissioning in 2018. The motorway under construction will bypass populated locations, thereby helping to improve the environmental situation in the region thanks to the reduced number of traffic jams, and higher speed

34 Guide to Investment PwC PwC Republic of Tatarstan 35 Utilities Workforce

Tatarstan's utilities are capable of meeting its According to estimates, the output of generating Economically active population: Average monthly wages electric and heating needs. They also supply and distribution companies approximated 2.05 million people (53.7% of the total RUB 80.5 billion (USD 2.1 billion) in 2014. 30,000 120 power to large companies engaged in oil, oil population). 116.1 refining, petrochemicals and heavy engineering Tatarstan's generating companies produced Unemployment estimated using 25,000 112.1 115 21.4 billion kWh of electricity in 2014, industries in Tatarstan. ILO methodology: 3.9% of the economically 109.5 which is 4.4% less than in 2013. active population. 20,000 111.1 110 Tatarstan's power system currently includes In 2014, Tatarstan’s electricity consumption was 104.9 the following independent business units: The average monthly wage and salary 15,000 105 estimated at around 27.1 billion kWh, which 102 • Four power and heat generating companies of employees working in Tatarstan's companies is 1.9% more than in 2013. and organisations, including small businesses, operating under a cogeneration regime: 10,000 100 According to OAO Setevaya Company, actual came to RUB 28,352.2 in 2014 (USD 500), OAO Generating Company, OAO TGK-16, which is a 9.5% increase on 2013. The real 95 power network connection time (without 5,000 23,233.7 26,034.5 28,352.2 OOO Nizhnekamskaya CHPP and ZAO TGK capital repairs) is: wage growth rate relying on the consumer (USD 747.8) (USD 818.2) (USD 746.7) 90 Urussinskaya GRES; price index for goods and services was 102%. 0 2012 2013 2014 • for applicants with power receiver • Power grid companies, the largest of which 52 days Average nominal accrued monthly wages, RR capacity up to 150 kW (regulatory time limit – is ОАО Setevaya Company, both in terms of Real accrued wages, year-on-year percentage change 120 days); the length of it grid and the composition of Nominal accrued wages, year-on-year percentage change its core equipment and distributed electric • 90 days for applicants with capacity power; up to 670 kW (regulatory time limit - 120 days); Average monthly wages and salaries in Tatarstan • Guaranteed supplier in Tatarstan – ОАО • 94 days for applicants with capacity Tatenergosbyt. up to 670 kW (regulatory time limit - one year). Types of economic activity RUB USD 2013 2014 2013 2014 In 2014, Tatarstan's power grid ensured reliable The average weighted time for connection Total for Tatarstan 25,896 28,352 818 504 and secure power supply to consumers. to OAO Setevaya Company’s grid is 53 days. Including: agriculture, hunting and forestry 13,014 14,718 409 262 mining 41,515 45,627 1,305 811 processing industries 26,186 28,967 823 515 power, gas and water supply 32,664 35,470 1,027 630 and distribution building & construction 27,753 27,835 872 495 wholesale and retail; repair of 23,563 25,836 741 459 vehicles and household appliances hotels and restaurants 20,067 20,920 631 372 financing activities 34,085 36,727 1,071 653 healthcare and social services 20,554 23,408 646 416

36 Guide to Investment PwC PwC Republic of Tatarstan 37 Higher education Science

Tatarstan is a region with huge educational and The Republic of Tatarstan is world-famous In addition, a new area for developing At the beginning of 2014-2015 school year, there scientific potential. For instance, its capital Kazan were 27 higher education institutions operating for its scientists. Nikolay Zinin, Alexander innovation infrastructure in Tatarstan is one of the largest educational centres in Russia. in the Republic of Tatarstan (most of which were Butlerov, Alexander Arbuzov, Nikolay has been the creation of engineering located in Kazan). It ranks third in the number of students after Lobachevsky, Khamid Mushtari, Evgeny and prototyping centres that facilitate Moscow and St Petersburg (with the total number Zavoysky, Alexander Vishnevsky, and many the implementation of innovative of students at 169,500 people). others have worked here. technologies in manufacturing and other The following educational institutions were sectors of the Russian economy. Kazan (Volga) Federal University was created classified as resource centres in 2014: Tatarstan carries out active fundamental on the basis of the famous V.I. Ulyanov-Lenin • Arskiy Teachers College named after Gabdulla and applied research in such promising In 2013 and 2014, six high-tech centres were Kazan State University (KSU) and is a science and Tukai; areas as nanotechnologies, composite established. education centre of international standing. • Polytechnic College; materials technologies, physics of magnetic • KAI-Laser Regional Engineering Centre; • Nizhnekamsk Oil Chemistry and Oil Refining phenomena, laser technologies, • Regional medical simulator engineering Since 2014, Tatarstan’s Ministry of Education and College (Nizhnekamsk); biotechnologies, robotics, etc. centre Medical Science Centre; Science has been building, in conjunction with • Sarmanovsk Agricultural College; • Regional Chemical Engineering Centre; leading employers, a network of resource centres • Kamsk State Auto Mechanical College Research activities in Tatarstan are • Regional Biotechnology Engineering Centre; to train specialists for various industries through (Naberezhnye Chelny); implemented by R&D centres, research • Prototyping and Domestic Robotics existing vocational educational institutions. • Kazan Energy College; institutes and design bureaus at enterprises, Implementation Centre; • Leninogorsk Polytechnic College; technical parks, technological sites, business • Prototyping centre Digital Technology The advantages of these centres include • Kazan Pedagogical College; incubators, and various other entities. Centre. their flexible structure and rapid updating of • Pedagogical College. professional programmes. Employers take part in both the training process and the management Furthermore, in 2015, new resources centres are The engineering and prototyping centres opened in Tatarstan lay the groundwork for further and financing of these centres. slated to open at nine educational institutions. innovative economic development. These new institutions are involved with technological modernisation and substitution of foreign products and technologies with the involvement of institutions of higher education and SMEs.

38 Guide to Investment PwC PwC Republic of Tatarstan 39 Global events in Tatarstan

Tatarstan is an active partner in global-scale World Aquatics Championships 2015 International Opera Festival in Honour events. Large events are held in Tatarstan The first in Russia 16th World Aquatics of Fedor Shalyapin from every year under the auspices of Championships was held in Kazan in summer International Opera Festival in Honour reputable international organisations. Over 2015. of Fedor Shalyapin is one of the cultural 120 international events were hosted in 2014, www.fina.org/H2O/ brands of the Tatarstan Republic and the including mutual official visits, working trips largest music and theatrical event in Russia. and business forums aimed at developing XXVII Summer World Student Games The Shalyapin Festival is visited by world international cooperation. (Universiade - 2013) stars and singers known for performing in the best theatres around the world. In July 2013, Tatarstan's capital Kazan hosted the XXVII Summer World Students Games that International Classical Ballet Festival Among the events of international standing: appeared to be the most massive sporting event in Honour of Rudolf Nuriev in the history of the global students’ games. The Games attracted 7,980 athletes and 3,798 International Classical Ballet Festival The Kazan Venture Fair KazanSummit officials from 160 countries. The event was also in Honour of Rudolf Nuriev is the largest festival of choreographic art and one The Kazan Venture Fair is an annual two- KazanSummit is one of the leading global attended by around 150,000 guests and tourists. of the longest-standing of its kind in Russia. part event, which includes the promotion economic forums for Russia and member- www.kazan2013.ru It has been annually since 1987, in May, on innovative companies, a congress block for states of the Organisation of Islamic the stage of the Musa Jalil Tatarstan State issue-based events and an exposition where Cooperation (OIC). Participants at this Theatre of Opera and Ballet in Kazan. Having corporate exhibitors have chance to present forum will discuss pressing issues in risen from all-Russian to international their business ventures to investors and the regards to doing business and development prestige and gaining greater popularity public at large. of economic cooperation between Russia every year, this festival is a musical and and countries of the Islamic world. ivf.tatarstan.ru theatrical landmark for Tatarstan, as well www.kazansummit.com as a significant event in the cultural life EURO-ASIA EXPO of Russia and Europe. The largest international exhibition in Russia, The annual international forum kazan-opera.ru EURO-ASIA EXPO 2014, was a site of active INVEST in TATARSTAN collaboration among cultures, large-scale The annual international forum INVEST trade operations, the conclusion of several in TATARSTAN is an exclusive event held crucial agreements and strengthening trade with the involvement of top-level government and diplomatic ties. officials, who speak to investors from all euroasiarussia.com over the world about the advantages of the Tatarstan Republic as a place for investment. investintatarstan.com

40 Guide to Investment PwC PwC Republic of Tatarstan 41 Global events in Tatarstan

WorldSkills Competition 2019 2018 FIFA World Cup In August 2015, Kazan won the privilege In 2018, along with other 10 Russian cities, to host the international final of WorldSkills Kazan will host the 21th FIFA World Cup. Competition 2019. The concept for the championship foresees The WorldSkills Competition matches at 12 football stadiums, including is a championship of professional skills Kazan Arena. As part of the championship, for young people of ages from 16 to 25. Kazan will also host play-off matches. Sports The main purpose of the competition Facilities magazine praised Kazan Arena is to enhance the quality of training for as the best stadium for 2014. workers and engineers, make working http://welcome2018.com/en/ professions more popular, and encourage the application of global professional standards throughout Russia. In 2014 and 2015, Kazan hosted the II and III national championships of WorldSkills Russia, regularly held in the country. More than 60 countries will take part in the competition. The participants will compete in 50 professional areas (competencies), including woodwork, carpentry, graphic design, welding technologies, mobile robotics, etc. http://worldskillskazan2019.org

42 Guide to Investment PwC PwC Republic of Tatarstan 43 The Republic of Tatarstan's strategic economic development priorities

• Chemicals and petrochemicals; • Heavy engineering and automotive components; The Republic of Tatarstan has set the objective of creating investment infrastructure that can • Healthcare and pharmaceuticals; help attract both Russian and foreign investors in the coming years. The following priority • Agro-industry; areas for Tatarstan's economic development have been established in order to achieve this • Development, real estate, construction and building materials manufacture; objective and improve Tatarstan's investment climate while also ensuring international • IT and telecommunications; investors are offered competitive advantages: • Services and tourism.

44 Guide to Investment PwC PwC Republic of Tatarstan 45 Chemicals and petrochemicals Oil production and refining Rubber and plastics production Oil companies of the Tatarstan Republic On 13 October 2014, Nizhnekamsk All Steel produced nearly 960 million cubic meters Tyre Plant Ltd produced its two-millionth of associated oil gas, while output was 101.5% tyre. To date, this plant's output includes 54 against 2013. commercial items, such as tyres for all types The chemicals and petrochemicals industry mainly includes: Main enterprises: With the support of the Russian and Tatarstan of trucks, buses and semi-trailers, including • petroleum products output; OAO Tatneft www.tatneft.ru Governments, OAO Tatneft is implementing 25 commercial items produced in accordance with the Off-take system for European • chemical production; OAO TANECO in Nizhnekamsk a major investment project – • rubber and plastics production. www.taneco.ru the construction of a complex of oil processing companies, including premium brands. The chemical and petrochemical sectors form the basis for growth OAO TAIF and petrochemical plants. In March 2014, i-Plast Ltd commissioned www.taif.ru in Tatarstan's economy. Since 2000, TAIF Group alone has invested The official opening ceremony for the the production of 660 litre containers. OAO Nizhnekamskneftekhim TANECO Integrated Hydrocracking Unit was The new container is designed in line with RUB 158 billion (USD 4.2 billion) into its enterprises. TheTANECO www.nknh.ru project, being implemented by oil producer Tatneft in the city held on 2 December 2014. the European EN 840 standard. The facility’s OAO Kazanorgsintez production capacity can reach up to 80,000 of Nizhnekamsk, has received investments totalling around www.kazanorgsintez.com In November 2014, OAO TAIF NK built containers annually. RUB 200 billion (USD 5.3 billion). OAO Nefis Cosmetics the last large-capacity facility – the main Developments in the petrochemical complex www.nefco.ru fractionator for oil tar hydro-conversion. OJSC Kazan Synthetic Rubber Based on the 2014 results, petrochemical enterprises' share in total Plant Chemicals and Petrochemicals shipments comes to 59.2%, amounting to RUB 972.5 billion (USD www.kzck.ru In April 2014, OAO Nizhnekamskneftekhim 25.6 billion). OAO L.Ya. Karpov's Chemical held a grand ceremony for the commissioning Plant www.karpovchem.ru of the fourth line of its polystyrol production facility with annual capacity for 50,000 AO KVART www.kvart-rti.ru tonnes. Dynamics of petrochemical industry OAO Nizhnekamskshina Since 2013, the Russia's largest polyethylene 370 363.5 shinakama.tatneft.ru producer, OAO Kazanorgsintez, has been (USD 400 (USD 114 implementing a special four-year programme 11.6 bln) 9.6 bln) Foreign investments 111.1 112 350 in the industry: aimed to stabilise and improve the reliability 110 of its production. The project comes to 314.7 Clariant, Switzerland 300 (USD 229.2 108 www.clariant.com RUB 6 billion (USD 106.6 million). 270 8.3 bln) 205 (USD 106 OOO P-D Tatneft Alabuga 250 (USD (USD 6.0 bln) Glass Fibre, Germany 8.5 bln) 6.4 bln) 104 www.alabuga.tatneft.ru A success story 200 101.6 102 OOO Air Liquid Alabuga, OOO Air Liquid Alabuga, France: 150 France a plant producing fabricated technical gases 100.8 100 www.ru.airliquide.com 70 63.3 98.9 98 100 (USD (USD Jan Keller, Vice President, Air Liquide group, Russia and CIS: 2.2 bln) 1.7 bln) “Air Liquide was granted access free of charge, which helped 96 us to save USD 2.5 million in investments.” 50 94 Project implementation milestones: 29 September 2008 – approval of the project 0 92 Production Petroleum Chemicals Production by the Supervisory Board of the Alabuga SEZ PPT; of fuel/energy production production of rubber 28 November 2008 – signing of an agreement from resources and plastics for industrial and production activities; 1 July 2010 – launch of the first stage of production; Products shipped in 2013, RUB billion 16 May 2012 – launch of the second stage of production. Products shipped in 2014, RUB billion IPP in 2014, %

46 Guide to Investment PwC PwC Republic of Tatarstan 47 Machinery and auto components

Machinery and auto components include the In addition, 2014’s output for Kazan Increased output was demonstrated by Main enterprises: following types of activities: Aircraft Plant (OAO Gorbunov KAPO) – OAO Kazan Helicopter Plant. In 2014, OAO Kamaz www.kamaz.ru • production of machinery and equipment; a branch of OAO Tupolev – came to RUB production came to RUB 55 billion (USD 1.4 Yelabuzhsky Automobile Plant www.elaz.ru 3.3 billion (USD 87 million), with its billion), with its industrial production index at •production of electronics, electrical and Kazan Aircraft Production Association (OAO industrial production index standing at 106.5%. Based on last year’s results, the plant optical equipment; Gorbunov KAPO) www.kaztupolev.ru 118.7%. produced 108 helicopters. •production of transport vehicles and ОАО Kazankompressormash equipment; www.compressormash.ru A success story •production of automotive components. OAO Gorky Zelenodolsk Plant www.zdship.ru Foreign investments in the industry: ООО Ford Sollers Yelabuga (USA/Russia) – production of Ford cars and engines In 2014, Tatarstan's machinery complex Ted Cannis, President, Ford Sollers: “The Alabuga SEZ has world-class infrastructure and it is real.” produced products worth RUB 362.1 billion. OOO Ford Sollers Holding www.fordsollers.com Project implementation milestones: OAO Kamaz produced 38,800 trucks and 19 September 2011 – the plant signs an agreement Daimler AG (Germany) dispatched items worth RUB 98.7 billion. for industrial and production activities. www.daimler.com 1 October 2011 – the plant becomes a part of Ford In January 2014, a new production block, Honeywell (USA) Sollers joint venture; OOO ZF KAMA, was opened in Naberezhnye honeywell.com January 2012 – the plant starts producing the Ford Transit – Ford's first model at the plant. Operations Chelny. It is a joint venture (JV) of OAO ZAO Schneider Electric (Germany) start; Kamaz and German company Zahrad Fabrik www.schneider-electric.com 11 April 2013 – the plant launches production of Ford engaged in the production of gear boxes and ZAO Cummins Kama (USA) Explorer, the legendary off-road vehicle, using full www.cummins.com cycle technologies; related spare parts. By 2016, investments in May 2013 – Ford Sollers announces that it has begun ZAO Automotive Glass Alliance Rus constructing a plant to produce engines in Yelabuga this JV will likely total around RUB 6 billion, www.sisecam.com and its production capacity should increase by that will be opened in December 2015. The first Kiekert AG (Germany) www.kiekert.com engines to be produced would be Sigma family engines 2.5 times. with 85, 105, and 125 hp capacity; 16 October 2013 – Ford Sollers' plant in Yelabuga In December 2014, after its complete starts producing the Ford Kuga, the first smart- modernisation, the Ford Sollers plant crossover, using full cycle technologies; was opened in Naberezhnye Chelny, with The results for 2014 show that the output On 21 April 2015, the plant officially starts of OAO Kazankompressormash totalled producing Ford Transit vehicles using full cycle production capacity of up to 115,000 vehicles assembly. per year. Total investment in the project is about RUB 2.5 billion (USD 66 million). Ford Sollers' plant in Yelabuga fully complies with valued at about RUB 20 billion. The company produced and dispatched Ford’s quality standards and is one of the most high- 17 compressor machines as part of the South tech and modern plants in the world. In 2014, the Ford Sollers JV also started Stream project. collaborating with Turkish company Coşkunöz Holding. In August 2014, the Turkish company Furthermore, the 2014 results show that opened a plant to produce pressed car parts the output of OAO Gorky Zelenodolsk for Ford vehicles in the Alabuga SEZ. Plant amounted to RUB 16.5 billion (USD 435 million), with its industrial production index at 147.1%. The output of OAO Production Association OAO Zelenodolsk Production Association Yelabuzhsky Automobile Plant for 2014 Sergo Plant has also been successful. totalled RUB 3.4 billion (USD 90 million). In 2014, its output totalled RUB 5.2 billion Since 2011, the plant has been producing (USD 137 million), with its industrial cars per the request of OAO Russian production index at 103.4%. Railways.

48 Guide to Investment PwC PwC Republic of Tatarstan 49 Healthcare and pharmaceuticals

Healthcare and pharmaceuticals include Main enterprises: the following: OAO Kazan Medical Instrument Plant • Production of medical equipment www.kmizmarket.ru and pharmaceuticals; OAO Tatchempharmpreparaty • Provision of healthcare services; www.tatpharm.ru • Pharmacy chains. Foreign investments in the industry: The following are in operation in Tatarstan: Johnson&Johnson www.jnj.com FAVEA (Czech Republic) www.favea.org • Nine medical centres providing high-tech medical services; Average lifespan in Tatarstan is 72.2 years (all- • Seven major multiprofile clinics with facilities Russia – 70.9 years). for clinical trials and testing. Infant mortality rate decreased by 7.3%, Tatarstan is a major scientific centre where maternal mortality rate – by 17%, mortality the following are in operation: from Miocardial Infarction – by 20% in 2014 in • One of the oldest medical universities in Russia, the republic. which turned 200 years old in 2013; • A medical academy; Volume of the Tatarstan pharmaceuticals market, RUB billion • An institute of fundamental medicine and biology with 110 faculties. 30

The non-commercial PPP Educational Centre 24.02 (USD 632.6 mln) for High Medical Technologies was formed in 25 21.7 (USD 682.0 mln) Tatarstan. This is a one of a kind organisation in 18.38 Russia. 20 (USD 591.6 mln)

The growth rate of the republic's pharmaceutical 15 market is 10.7%, following the results of 2014 market volume amounted RUB 24.02 billion 10 (USD 632.6 million) (2013 – RUB 21.7 billion (USD 682 million), 2012 – 18.38 billion 5 (USD 591.6 million)).

0 2012 2013 2014

A success story A success story Johnson&Johnson FAVEA For over five years, Tatarstan has been working with Johnson & Johnson in the areas of equipment In November 2014, FAVEA and OAO Tatkhimfarmpreparaty signed an agreement to launch production procurement and education. of sterile creams and skin ointments (gels). Tatkhimfarmpreparaty is slated to undergo a major upgrade. In September 2007, at the initiative of the Russian Ministry of Healthcare and with support from the Plans call for investing EUR 12 million in the technical re-equipping of the company. Republic of Tatarstan and OOO Johnson & Johnson, the Medical High-Technology Educational Centre, a A new ointment and gel manufacturing unit is expected to be built and put into operation in autumn non-profit partnership, was established as part of efforts to implement the national Healthcare Project. 2015, right in line with the timeframe stipulated in the signed agreement. Johnson & Johnson invested USD 15 million over a five-year period. Previously, FAVEA was involved in designing and building a new production facility for manufacturing In 2014, Tatarstan purchased 22,000 units of surgical equipment and 600 joint implants from the solid dosage forms (pills and gelcaps) in Kazan, which was commissioned in late 2008. company.

50 Guide to Investment PwC PwC Republic of Tatarstan 51 Agro-industry Development, real estate, Today Tatarstan is consistently ranked among leaders Main enterprises: construction and manufacture of agricultural production of the country: place in milk production; OOO Prosto Moloko Management 1st Company www.tatarmilk.ru of building materials 2nd place in potato gathering; ZAO Agroforce Group The construction sector includes the following: 3rd place in gross output of agriculture. www.agroforceg.com Dynamics of construction In 2014, the gross grain harvest in Tatarstan came to • construction of residential houses; OOO Chelny Broiler 2,405 117.3 120 3,627,700 tonnes, which a 29.4% increase from 2013. www.chelny-broiler.ru • construction of non-residential buildings; • construction of infrastructure. 2,404 The gross harvest of (factory supplied) sugar beet of Krasny Vostok Agricultural Holding 115 www.kvagro.ru 2,403 all types of households decreased by 33.3% and came 110 In 2014, the construction volume totalled 2,402 to 1,408,400 tonnes. OOO Belaya Dacha Alabuga RUB 266.5 billion (USD 7 billion), or 100% 2,401 105 The gross harvest for field vegetables in all types www.bdsalads.ru 100.2 in comparable prices against the 2013 100.1 2,400 of households increased by 8.5%. 100 level. The volume of constructed residential 100.1 100.0 Households in the region gathered 357,000 2,399 100.0 houses came to 2,404,200 sq.m., including 95 Dynamics of agricultural industry 2,398 tonnes of vegetables, which is an 8.4% 383,400 sq.m. built under the social mortgage 2,399.5 2,400.4 2,404.8 188.8 2,397 90 increase from 2013. 2012 2013 2014 200 (USD 5.0 bln) 160 programme. 160.2 In 2014, milk production increased by 1.0% Constructed residential housing, in ‘000 of sq. m 150.1 (USD 5.0 bln) (USD 4.8 bln) while egg output grew by 2.9% for all types Constructed residential housing, 150 130 % against the previous year 105.8 103.7 of households. 95.2 Total construction operations in comparable prices 100 100 Foreign investments in the industry: as a % against the previous year 98.6 102.3 92.5 Family farms are at the heart of a new and OOO Rockwool – Volga (Denmark) www.rockwool.ru 50 70 promising approach to the development of rural small businesses. The number of ООО Wienerberger-Kurkachi (Germany) www.wienerberger.ru 40 high-tech family farms already up and running 0 2012 2013 2014 is 405. Furthermore, this number is expected OOO Kastomonu Integrated Wood Industry Total agricultural output, RUB billion to reach around 1,000 in the next few years. (Turkey) kastamonu.ru Russian Federation, in comparable prices as a % against the previous year Republic of Tatarstan, in comparable prices as a % against the previous year

A success story A success story OOO Rockwool-Volga (Denmark) – production of non- Belaya Dacha flammable heat insulators from rock wool Project implementation milestones: Nicholas Andrew Vince, CEO, Rockwool Russia (until 2012): 16 April 2010 – approval of the project by the Supervisory Board of Alabuga SEZ PPT; “ROCKWOOL Group has built a plant with the most powerful line of rock 22 July 2010 – signing of an agreement for industrial and production activities; wool production in the world, having invested nearly USD 150 million and 15 October 2010 – ground-breaking ceremony at the plant's basement; saved USD 12.6 million thanks to customs breaks.” 29 August 2012 – grand opening ceremony for the plant. Project implementation milestones: The plant was built on a land plot measuring six ha. The project’s implementation at Alabuga SEZ has helped 13 November 2007 – signing of an agreement for industrial and production activities in the Alabuga SEZ; to create more than 250 jobs. 18 June 2010 – start of construction of the ROCKWOOL plant; Production capacity at the facility comes to 33 tonnes of finished goods per day. 4 April 2012 – grand opening ceremony for the ROCKWOOL plant. Total investments in the project are estimated at over RUB 600 million (USD 10.7 million). The plant produces new generation heat insulators – LIGHT BATTS SCANDIC thermal insulation. The item is The plant is an exclusive supplier of fines herbs to the McDonalds chain of restaurants. The SEZ provides produced under patented technology, which is one of a kind at the market. This know-how helps to compress the infrastructure support, beneficial administrative, tax and customs preferences, and supports efforts to expand product by nearly 70%, while keeping all of its operational features in place. The product has more than once won its production capacity. the award "Product of the Year" for its high quality and popularity among consumers.

52 Guide to Investment PwC PwC Republic of Tatarstan 53 Information technology

Over the past few years, Tatarstan has come More than 6,500 base station units are used to the fore in IT developments. in Tatarstan. In addition, the number of cellular subscribers increased to 6.5 million (cellular The republic’s IT sector includes the following penetration now stands at 172%). types of activities: • mobile telecommunications; Furthermore, 4G technology is available in entire • Internet access; territory of Tatarstan. • software development. Coverage by digital terrestrial TV broadcasting The results for 2014 show that gross revenue reached 86%. Also, broadcasting of II multiplex from the IT and telecommunication industry is available for 72% of the population. totalled RUB 48.7 billion (USD 1,280 million). Total investments in developing key funds for enterprises in the industry in 2014 amounted Main enterprises: to RUB 5.3 billion (USD 140 million). OAO Tattelecom tattelecom.ru The level of broadband Internet access reached BARS Group bars-open.ru 73% while the total number of Internet users Foreign investments in the industry: in Tatarstan by all types of access exceeds ICL-KME CS www.icl.ru 3.3 million.

Innopolis is a new city in Russia with an university's primary focus on the needs of the A success story economy based on high-tech industries. The IT industry. ICL-KME CS intellectual heart of the new city is Innopolis ICL-KME CS is a leading Russian company offering integrated IT solutions and services, ranging from consultancy, design, implementation through to warranty service and maintenance of information University, which specialises in training An important part of Innopolis, as well as an systems regardless of scale. specialists and carrying out research related integral component of its investment appeal, ICL-КME CS was founded in 1991 by the Kazan Manufacturing Enterprise of Computer Systems (KME CS) and Britain’s International Computers Limited (ICL). to modern information technologies. is a special economic zone that fosters the Today, ICL-КME CS is Russia’s biggest system integrator. most favourable conditions for its residents Joint venture history Today, Innopolis is a site for effective to do business along with the effective 1991 – establishment of a joint venture (ICL-КME CS JV): 51% held by ICL (International Computers Limited), UK, 49% – KME CS (the Kazan Manufacturing Enterprise of Computer Systems), (then communication between representatives of development of their projects. USSR). research initiatives, educational institutions, 1994 – reorganisation into a joint stock company; the founders – ICL, the State Committee for Property Management of Tatarstan, and the Kazan Production Association of Computer Technologies and businesses. It was set up due to the www.innopolis.ru Terminal. 1997 – reorganisation into an open joint-stock company. 2007 – main shareholders of the enterprise include Fujitsu Services Limited (before April 2002, the company's name was ICL), the Tatarstan Ministry of Land and Property Regulations. In June 2013, OAO ICL-КME CS withdrew from Fujitsu Group. The controlling stake, earlier held by Fujitsu Technology Solutions (the Netherlands), was acquired by OOO Scientific and Production Association of Computer Systems (OOO SPA CS).

54 Guide to Investment PwC PwC Republic of Tatarstan 55 Services and tourism

The Republic of Tatarstan plays an important role International companies operating in developing tourism in Russia and has continued in the sector: to demonstrate positive dynamics according to key indicators. The annual increase of tourists Marriott, Ibis, Park Inn hotels; FlyDubai, in Tatarstan averages around 14.8%. Turkish Airlines; the McDonald’s, KFC and Burger King restaurant chains. This positive trend remained throughout 2014 as well. The scope of services provided in the tourism industry (related industries not included) in 2014 totalled RUB 10 billion (USD 264 million). The operators (69 of them work in the domestic and increase in the scope of hotel services provided in international tourism sector). 2014 was 28.9%, tourism services – 10.8%, and In order to develop tourism infrastructure, health resort services – 2.6% (compared to the it is necessary not only to construct new indicators of 2013). accommodation facilities, but also to create In 2014, Tatarstan was visited by 2.5 million and restore places of interest. This includes tourists and sightseers. This indicator grew reconstructing historical and cultural by 16.3% against 2013. monuments of Kazan such as the ancient town of Bolgar, the island town of Sviyazhsk and International companies operating in the sector other tourist centres in the region, as well as include Marriott, Ibis and Park Inn hotels; the development of new museums and tourism FlyDubai and Turkish Airlines; the McDonald’s, facilities. KFC and Burger King restaurant chains. The ancient city of Bolgar The island town of Sviyazhsk proposals prepared to create tourism and Tatarstan is deemed to be one of the most The island town of Sviyazhsk is located 30 km recreational clusters on the banks of the Volga developed Russian regions in the hotel services The Bolgar Historical and Architectural from Kazan, in the estuary of the fast-flowing and Kama Rivers. Complex is the world's northernmost industry and is also the leader in the Volga and deep Sviyaga River. Federal District by a number of core indicators monument of medieval Turkic and Islamic Based on the 2014 results, Tatarstan won This unique city and fortress, built back in for the hotel market. For instance, in 2014, 12 wooden architecture, and a unique sample the "My Planet" award as “Best Region public accommodation facilities were opened in of Tatar architecture of the 13th, 14th and the 16th century, is an all-Russian orthodox for Travelling in Russia”. 15th centuries. The museum is a one-of-a-kind sanctuary, which attracts many people from all Tatarstan. Kazan also placed third in a rating for valuable monument of ancient states (Volga over the country. developing tourism operations in Today, more than 800 travel companies Bulgaria, the Golden Horde, and the Kazan Unique orthodox churches are located on the Europe and eighth place globally are operating in Tatarstan, including 71 tour Khanate), which evidences their rich culture and island. based on an assessment prepared by way of life. TripAdvisor, an international travel website. Volume of tourism services, RUB million This ancient city has had a significant impact on http://www.ostrovgrad.org/ the evolution of civilization. 12,000 10,028.1 (USD 264.1 mln) In 2014, the Verkhneuslonsky, Spassky, Rybno- 8,318.1 In 2014, the Bolgar Historical and Architectural 10,000 Slobodsky and Kamsko-Ustyinsky Municipal 6,895.0 (USD 261.4 mln) Complex was included on UNESCO's World 8,000 (USD 221.9 mln) Cultural Heritage List. Districts of Tatarstan prepared the "Five Winds" 6,000 project to develop domestic and international http://Великий-болгар.рф 4,000 tourism in the Volga-Kama basin. The project

2,000 shall be implemented through a public-private 2012 2013 2014 partnership. There are four investment

56 Guide to Investment PwC PwC Republic of Tatarstan 57 Conclusion Welcome to Tatarstan!

Tatarstan is the fastest-developing constituent One of Tatarstan's priorities is to create region of the Russia Federation and has the best possible conditions for developing a wide range of competitive advantages. entrepreneurial activities and supporting Located in the heart of Russia, the republic a favourable investment climate. The region's holds a strategic territorial position. main advantages include: One of Tatarstan's priorities is to create • a developed market; the best possible conditions for developing • world-class infrastructure; entrepreneurial activities and supporting • tax preferences; favourable investment climate. • highly qualified specialists; These and other advantages have made the • openness of state agencies for dialogue; Republic of Tatarstan a leader in the national • a low level of bureaucracy; investment climate rating for Russia's regions. • safety and stability.

The Republic of Tatarstan is a reliable partner for both Russian and foreign investors.

58 Guide to Investment PwC PwC Republic of Tatarstan 59 Contacts

Republic of Tatarstan PwC Russia

President Moscow of the Republic of Tatarstan: 10 Butyrsky Val, Moscow 125047 Rustam Nurgalievich Minnikhanov White Square Business Centre Tel.: +7 (495) 967-60-00 Kremlin, Kazan, 420014 Fax: +7 (495) 967-60-01 Tel.: +7 (843) 567-89-01 www.pwc.ru Fax: +7 (843) 292-70-88 president.tatarstan.ru Kazan 35/2 Pravo-Bulachnaya St., Kazan, 420111 Head of the Tatarstan Investment Development Tel.: +7 (843) 233-07-07 Agency (TIDA) Fax: +7 (843) 233-07-17 Taliya Ilgizovna Minullina Denis Derevyankin 50 Peterburgskaya St., Kazan, 420107 Managing Partner Tel.: +7 (843) 570-40-01 (05) in the Volga federal district tida.tatarstan.ru Tel.: +7 (843) 233-07-13 e-mail: [email protected]

Mikhail Nosov Republic of Tatarstan official web-page: Director, Assurance Inbound http://tatarstan.ru/eng/ Tel.: +7 (843) 233-07-13 e-mail: [email protected]

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