An address from the Mayor of Moscow, Sergey Sobyanin
Moscow has gained additional competitive advantages in the new economic context. While maintaining the superb quality of its investment environment, the capital has become one of the world’s most attractive investment destinations in terms of many types of costs.
In recent years we have implemented a number of measures to reduce operating expenses, simplify administrative procedures and improve tax and tariff policies.
The city is actively promoting public–private partnership mechanisms, including concessions, life cycle contracts and property lease with mutual obligations.
We are opening new technoparks and technopolises to cater to high-tech production lines.
All these factors will only ensure that Moscow will become more and more attractive to investors.
Our main goal is to transform the capital of Russia into a modern, successful megalopo- lis which is comfortable to live in and where it is easy to do business. To achieve this goal, we strive for a mutually beneficial and fruitful partnership with the investment community. The result of such a partnership will be exciting new ideas and projects for the benefit of Moscow and Muscovites.
An address from the Mayor of Moscow, Sergei Sobyanin
Moscow is one of the world’s largest business and financial centres. It is a megalopo- lis on a global scale, which is carrying out a major infrastructure development programme and offers wide range of opportunities to investors from all over the world. Mayor of Moscow Sergei Sobyanin
Information and communication technology, banking, finance and insurance, construction and real estate, transport and trade, science, education and health care — these are the main industries that are driving Moscow’s rapid economic development. The industrial sector plays an important role which accounts for one sixth of the capital’s gross regional product.
In 2016, capital investments in Moscow amounted to USD 25.5 bn. The amount is impres- sive, but there are reserves for increase. 1. Moscow today I Social and economic situation
Moscow has one of the world’s largest economies among cities
Moscow is one of the Top-10 largest megalopolises by gross regional 1 product (GRP) in the world Moscow today Social and economic situation of gross added value 1/5 of all Russian regions
Moscow’s diversified post-industrial GRP structure is as follows:
35.4% 19.8% Trade sector Business services, including R&D
26.1% 18.7% Other areas: Industrial production Construction; Transport and communication; Social sphere; Public sector etc.
One of the largest consumer markets in Europe
The total population of the Moscow metropolitan area:
m of Russia’s overall 20 people 14 % population
m 200 people the point of entry to the Russian and CIS markets 1. Moscow today I Social and economic situation
Over USD bn in consumer spending annually 50 m m2 of real estate built in 6 years 151 3rd place among European cities 10% of the real estate fund updated, including about 19m m2 of housing
10% of all Russia’s real estate is built in Moscow Moscow is the biggest market for Russia-made goods. approximately of all incoming foreign direct investments % 14% consumption of industrial products manufactured in all regions 50 in Russia of Russia
USD bn 15% retail trade turnover in Russia worth of public-private 10 partnership contracts concluded: in 2013-2016, including:
concessions — USD 1.1 bn Stable growth in investments life cycle contracts for supply and maintenance of Metro rolling stock and above ground urban transport — USD 5.3 bn USD bn fixed capital investments 25.5 in 2016 long-term contracts with an investment component — USD 3.4 bn
Growth in fixed capital investment of more than 50% st place in over 6 years «public-private partnership development in Russia» rating in 2016 and 2017 11,6% of total fixed capital investment in Russia
70% extra-budgetary investment 1. Moscow today I Social and economic situation
International business, Proximity to key consumer markets in Russia, Eastern Europe, CIS, and Baltic states. trade and investment centre
Flights to European and Asian financial centres A Top-10 global business hub — over 60% of leading international companies have offices in Moscow. Moscow Russia
Home to 90% of the headquarters of foreign banks and international financial organ- London isations operating in the Russian market. 4 hours Frankfurt Focal point for almost all of the nation’s securities exchange. 3,5 hours Beijing Zurich 7,5 hours 3,5 hours About 1.0 m legal entities, over 250 thousands of sole traders or (in total) 15% of the total number of companies registered in Russia.
Around 25% of companies in Moscow specialize in business and financial services. New Delhi Dubai 6 hours Hong Kong 5 hours 9 hours
Favourable geographic location Stable position in international ratings
Investment attractiveness of Moscow based on Financial Times fDi Markets:
1st place among Eastern European cities;
12th place among European cities;
London Frankfurt Moscow New Delhi Beijing In the Top-25 of 130 cities worldwide. (-2) (-1) (+2,5) (+5)
In the Top-25 of the world’s most economically powerful The core of the Moscow metropolitan area, strategic centre of the Eurasian cities — CITYLAB: 25 Most Economically Powerful Economic Union's Customs Union and free trade area of the Commonwealth of Cities of the World. Independent States (CIS).
Convenient time zone for working with European and Asian commercial and financial 10th place among 128 global cities markets. Global Cities Outlook A.T. Kearney. 2. Why Moscow? I Competitive advantages for doing business in Moscow
Quality of labour force
m people thousand people 2 economically graduating professionals Why Moscow? 11 active population 200 with diploma of higher in Moscow education annually Competitive advantages for doing business in Moscow A magnet for competitive and qualified stafffrom other regions of Russia and the CIS.
High level of education: 50% of the employed population have a higher education degree.
Average monthly salaries (2016 estimate for all categories of the employed): 1030 USD.
High potential for science and R&D
More than 20% 35% of patents issued in Russia of organizations performing for utility models and inventions R&D
th 30% 43 place among 500 cities around of research and academic the world staff in Russia in the 2thinknow rating of innovative cities, up 149 positions from 2011 2. Why Moscow? I Competitive advantages for doing business in Moscow
22 % Spare capacity of public utility infrastructure share of innovative products, work and services in Russia thousand MW 50% 6.7 spare capacity Extensive infrastructure for innovative manufacturing and R&D facilities: of energy supply for new power consumers capacity reserves in Moscow • 30 technoparks and technopolises; • Special economic zone Zelenograd; • Innovative territorial clusters Troitsk and Zelenograd. 50% 54% of heat supply capacity spare water supply reserves and drainage capacity Developed real estate market Moscow’s commercial property pool:
thousand m sqm 75 buildings 200 total floor area
m sqm % Advanced information 16 office spaces in Moscow, 17 available including 3.9 mn sqm — office spaces and communication technologies class A office spaces
Average price for class A office space rent (Results for Q3 2016) USD per sqm per year 4G network covers over 30 thousand public over 99% of the city’s Wi-Fi connection points 420 territory
Average price for rent of space in technoparks: USD per Mbps of households have 80% broadband Internet USD per sqm per year 0.60 with an average speed of 20 Mbps for office аverage price of broadband 190 spaces Internet services USD per sqm per year 112 for industrial site 2. Why Moscow? I Competitive advantages for doing business in Moscow
Advanced transport infrastructure Price competitiveness
international airports: m passengers The rouble’s decline since late 2014 has led to substantial growth 5 Sheremetyevo, Domodedovo, 76.5 in 2016 — passenger of Moscow’s price competitiveness compared to other big cities. Vnukovo, Zhukovskiy and turnover of the Moscow Ostafyevo business airport air hub
Business expenditures in EUR have dropped:
17 3 30% 60% federal highways river ports for manufacturing companies for particular kinds of expenditures leading out and high-tech export-oriented (wages, property rent) of the city companies
These price benefits over peer cities are expected to hold strong in the mid-term. The Moscow rail km hub includes 2 ring 2 ,700 track length railways and 11 radial railways Simple and transparent administrative procedures
In recent years Moscow has significantly simplified the administrative procedures for set- 26% 60% ting up and conducting business. transit freight export and import products Establishing a company Property registration
3 steps, 1 procedure, 3 working days. 5 working days.
USD per litre 0.65 Connection to electricity grids: petrol price 80 days and 0 visits for facilities with a capacity of 15–150 kW; 380 days and 3 visits for facilities with a capacity of 150–670 kW.
In the Doing Business-2017 dating, Moscow has risen 84 positions compared to 2010 and is now in 40th place. 2. Why Moscow? I Competitive advantages for doing business in Moscow
Support from the Moscow City Government Active investment policy
creation of favorable conditions for attracting investment from different sources
project support in the 'one-stop shop' format
Stable fiscal policy attracting projects from industry leaders and international companies and the development of public private partnerships Balanced and sustainable budget
USD bn % of GRP — Moscow budget low level USD bn % 25.4 in 2016 1,1 of state debt 21.7 70 value of the Targeted Investment TIP costs — transport infrastructure Investment oriented budget: Programme (TIP) 2017–2019 development
% investment expenses 25 Over 3 years (2017-2019), Moscow is to build:
368 km 47 of new roads metro stations Reasonable tariff policy
Restrained tariff growth and restrictions on cross subsidizing.
The increase in utility service tariffs for enterprises is 50% lower than inflation 200 км from 2011 to 2016. of new railway lines
Utility costs for businesses In September 2016, the Moscow Central Ring was opened (as of September 2016):
Electricity — USD 0.07 per kW; 54 km of lines 31 stops Heat — USD 23.5 per Gcal; Water supply (including drainage) — USD 0.84 per cubic meter. Annual passenger traffic — 250 m passengers An average of 260 thousand journeys a day Integration with public transport (underground, ground transport) Transport coverage of Moscow’s industrial areas 3. Where to invest? I Promising areas for investment
The Moscow City Government’s key goal is to attract industry leaders and investors 3 to the city’s real economy. Where to invest? Moscow is interested in attracting investments to: Promising areas for investment Sectors and projects that focus on phasing out imports and meeting domestic demand in Russia and the Customs Union nations;
Export-oriented high value added sectors and projects;
Public-private partnership projects in transport and social infrastructure and the development of the New Moscow area.
Moscow offers beneficial tax rates and support to sectoral investors, industrial developers as well as investment funds and companies that finance transport and social infrastructure development projects, including public-private partnerships. 3. Where to invest? I Promising areas for investment
3.1. For industrial investors Support mechanisms: Projects are implemented under special investment contracts with the Moscow City Government. The goal of the Moscow City Government is to attract investments into the real economy, construction and extensive renovation of existing industrial enterprises and innovative infrastructure facilities. Support measures:
Tax exemptions: New investment projects
Beneficiaries: Up to 25 % — reduction of the total tax burden, including: Profit tax payable to Moscow reduced by 26% (12.5% instead of 17%); New projects with an investment amount of at least USD 12.9 m. Property tax reduced by 100%;
Investment phase — maximum 5 years. Land use tax reduced by 99% (0.7% of the sum of calculated tax);
Ground rent reduced by up to 99%. Priority sectors*:
Up to 60% — reduction of tax per 1 sqm of property. Pharmaceuticals Medical equipment and biotechnologies and tools
Additional support measures:
Electrical equipment Transport vehicles Guaranteed security from non-commercial risks; and car parts Potential allocation of land without tenders;
Foods Special terms for utility connections. and beverages Construction materials
Microelectronics Information and computer technologies engineering
Research and development * Including but not limited to 3. Where to invest? I Promising areas for investment
Guaranteed protection against non-commercial risks: Investment sites
Land plots for industrial production Guaranteed risks Impact of such circumstances for investor Over 8,000 hectares of industrial zones
Over 20 sites with total area of more than 60 hectares that are ready Nationalization and seizure of property; Investor is incapable to deliver the for production investment project; Termination of land title or other prop- erty rights due to the actions of the Investor incurs a major loss: Moscow authorities; increase in implementation period by more than 18 months and/or cost Unfavourable changes in Moscow leg- increase of over 20%. islation;
Unlawful actions (lack of action) by Moscow officials.
Out-of-court compensation from the budget of Moscow
Long-term state orders in exchange for investment (offset contracts) * map of land plots location
Benefits for investors: Technoparks and technopolises High demand for product supply - state procurements by Moscow for more than USD 8.6 bn per year Ready-to-use spaces and business infrastructure for R&D projects and innovative manufacturing: Long-term guaranteed demand from the Moscow Government - contract validity of up to 10 years m m2 hectares Prompt decisions on land issues 30 1,95 585 technoparks of building space of land plots - provision of a land plot without bidding and technopolises
Conditions for investors: over Total investment in production of at least USD 17.2 bn 1.500 41.000 residents high-tech and high-paid jobs Production and supply of goods of Russian origin 3. Where to invest? I Promising areas for investment
Industrial specialization: Special economic zone of technology and innovation type, Moscow
Information and telecommunication technologies; Laser technologies; Activities in the field of research and development, manufacturing of high-tech products. Microelectronics; Biomedical technologies;
Lighting solutions; Pharmaceuticals and medical tools, Special economic zone mode etc. Innovative materials, composites and Without customs duty and VAT on imported foreign materials coatings; and equipment All information about technoparks and technopolises is available at the portal investmoscow.info 174.5 ha 15.7 ha total area available for construction
Free of charge Preferential terms connection to utilities of lease and possibility of land acquisition
Property % Profit tax tax 12.5 (instead of 20%)
% Transport % Contribution to social tax 14 security funds 0 (instead of 30%) Land tax
Administrative and business centre (16 thous. sq.m.): * map of technoparks location innovative business centre Advantages of technoparks in Moscow: personnel training and further training centre – technical university collective use centre (R&D-centre) ready to use premises for the preferential connection to utilities; customs terminal projects; access to shared centres reduced rental rates; (prototyping, certification, etc.). Innovative regional cluster Zelenograd: availability of land plots for micro- and nano-electronics, electronic devices and equipment, IT. construction; 3. Where to invest? I Promising areas for investment
m m2 3.2. For investment companies total urban development potential and funds 14,5 of transfer hubs over USD bn planned investment Transport and social infrastructure 17 in the development of transfer hubs Moscow has vast experience in public-private partnership projects.
Key areas of private investments: Private investments in the development of social infrastructure — childcare centres, schools, healthcare centres, and cultural heritage sites. Construction of transfer hubs on new lines and at existing metro and city railway stations. Reduced rent of space for children’s educational centres and healthcare centres within walking distance of city residents’ study and work places (“1 RUB per 1 sq. m.”, “Doctor nearby”).
Projected construction of Reduced rental cost of cultural heritage sites for reconstruction and preservation projects (“1 RUB per 1 sq. m.” programme). 96 junction hubs 271 transfer hubs 175 main hubs
Transfer hubs include service and commercial areas;
Investors install all transfer hub property units and hand over the service areas to the city;
Return of investments through the lease and sale of commercial space (retail property units, offices, etc.);
The distribution right is competed for within the open auctions. 3. Where to invest? I Promising areas for investment
Development of New Moscow Unique opportunities for investment projects in a variety of areas — from new innova- tive industrial enterprises to transport and social infrastructure facilities. The main development driver for Moscow today is the utilization of new territories.
The area of the Russian capital grew Support measures by 148,000 hectares in 2012 (2.5 times) due to the integration of the Novomoskovsky The Moscow City Government offers preferential terms for investors who and Troitsky administrative districts. implement their projects on the territory of New Moscow:
‘One-stop shop’ administration principle; thousand 148 ha Tax benefits and reduced ground rent for priority investment projects; The active development of New Moscow’s basic infrastructure based on national were added to Moscow programmes; in 2012 Consistent demand from city residents and public sector;
Additional guarantees to investors and coverage of non-commercial risks.
Territory of Moscow before 2012
Territory of New Moscow
New Moscow has:
Over a dozen major Construction of 600 km business and economic of roads and 40 km clusters of metro lines
m people m — — expected new jobs 1.5 population 1 will be created by 2035 4. Who to contact? I Information resources, development institutions and executive authorities 4 Who to contact? The Portal is avalible in 5 languages: Information resources, development institutions and executive authorities English German Spanish Arabic Chinese
Point of entry for a new project in Moscow; List of ongoing and planned investment projects.
Multifunctional platform for investors who do or would like to start a business in Moscow:
Up-to-date statistics and analytics; Information on how to set up and do business; Government support measures; Industrial and innovative infrastructure.
Access to the united electronic market place of Moscow:
Information about all the property units listed for auctions (lease, sale, etc.); Interactive map of property units listed for auctions; Auction documentation and auction calendar; Preview of property units listed for auctions.
Prompt and personalized interaction with the Moscow City Government.
Investor’s personal account; Direct line. 4. Who to contact? I Information resources, development institutions and executive authorities
Development institutions Executive authorities of Moscow
The Moscow city has a number of effective institutions that engage with investors. Their Moscow City Government mission is to coordinate investors’ interests with the city’s development priorities and offer www.mos.ru the business community profitable projects and transparent mechanisms of engagement with the city.
Moscow City Investment Agency Department of Economic Policy and Development of Moscow www.en.investmoscow.ru/agency www.depr.mos.ru
The Moscow City Investment Agency is the authorized provider of invest- ment projects support services based on the ‘one-stop shop’ principle Department of Science, Industrial Policy in the Moscow City. and Entrepreneurship of Moscow www.dnpp.mos.ru The Agency promotes investment opportunities, advantages and achieve- ments of Moscow; creating greater investment appeal of the city’s infrastructure and improvement of investment procedures; and project administration. Urban Development and Construction Complex www.stroi.mos.ru The Agency seeks to introduce new forms of engagement with both domestic and foreign investors, builds effective cooperation among the public authorities, business and citizens. Department of Transport and Road Infrastructure Development www.dt.mos.ru
Moscow City Innovations Agency Department of Competition Policy of Moscow www.tender.mos.ru www.inno.msk.ru
The mission of the Moscow City Innovations Agency is to draft and imple- ment development programmes for the city’s high-tech sectors. Department of City Property www.dgi.mos.ru
Department of Foreign Economic Activity and International Relations www.dvms.mos.ru 5. A city for comfortable living I Urban environment
Moscow is a modern megalopolis that offers comfortable living conditions and is attractive for businesses.
5 Convenient transport infrastructure
A city Unified, integrated city public 14 lines and 203 Metro for comfortable transport network stations, 31 MCR stations
living Over 900 city ground 55,000 transportation route licensed taxis Urban environment
Advanced retail and food & beverage infrastructure over over 56,000 12,000 stationary retail enterprises catering enterprises
Educational capital of Russia:
Approximately 200 public and private higher education institutions (universities, institutes, academies, etc.) in Moscow.
6 of the TOP-10 Russian universities according to the QS (Quacquarelli Symonds) are located in Moscow
Over 830,000 students
Specialized programmes of international schools: 9 institutions for international Bachelor degrees; 8 institutions of DSD (Deutsches Sprachdiplom); 4 institutions for Spanish Bachelor degrees; 14 bilingual educational institutions. 5. A city for comfortable living I Urban environment
World-class cultural and historic sites Active development of event tourism:
World culture monuments thousand 2018 FIFA World Cup and Russian national cultural landmarks: 8 heritage sites International military music festival Spasskaya Tower Kremlin of Moscow; (10% restored Bolshoi Theatre; over 6 years) Moscow International Festival Circle of Light Tretyakovskaya Gallery; Moscow Conservatory, etc.
With Moscow City Government support, over Moscow Seasons festival events were held in 2016 1,500 250 libraries theatres and concert organisations m participants over 450 120 55 museums cinemas and exhibition halls Moscow Jam Moscow Cinema City Day Golden Autumn m 869 tourists Fish Week 17,5 visit Moscow every year Trip to Christmas Back to School
Moscow 870 Spring hotels Moscow and mini–hotels Our Product Ice-cream
Information portal for Russian and foreign guests who come to Moscow is available in 6 languages. An attractive tourist destination
37% rise in tourism since 2010 Official Moscow guide 5. A city for comfortable living I Urban environment
Building a comfortable urban environment is an absolute priority for the Moscow City Gov- Improved quality of public spaces ernment. Over the past six years a number of programmes designed to improve the city’s over infrastructure were implemented in Moscow: 437 200 green areas created new parks were created Transport infrastructure development and landscaped
>500km +156 of new roads overpasses 203 >6,000 (12.5% increase in the length and motorway junctions streets beautified buildings facades were of main roads) (25% increase in the number renovated of engineering structures)
+21 Purchased: thousand stations were built over 1,600 carriages, >15.5 (metro stations network more than 7,000 buses facilities equipped with is increased by 10%) additional exterior lighting
Social infrastructure development:
+273 More than schools and kindergartens 100 health and sports facilities High level of security
over thousand video surveillance 130 cameras are functioning
In terms of safety, Moscow is similar to European cities such as Stockholm, Barcelona, and Hamburg.