Guide to investment Krasnodar Region PwC Russia (www.pwc.ru) provides industry-focused assurance, advisory, tax and legal services. Over 2,000 professionals working in PwC offices in Moscow, St Petersburg, Ekaterinburg, Novosibirsk, Kazan, Krasnodar, Yuzhno-Sakhalinsk and Vladikavkaz share their thinking, experience and solutions to develop fresh perspectives and practical advice for our clients. The Global PwC network includes over 161,000 employees in 154 countries. PwC first appeared in Russia in 1913 and re-established its presence here in 1989. Since then, PwC has been a leader in providing professional services in Russia. According to the annual rating published in “Expert” magazine, PwC is the largest audit and consulting firm in Russia (see “Expert”, 2000-2010). This overview has been prepared in conjunction with the Department of investments and project support of the Krasnodar region. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, the PwC network, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 2 | Guide to investment Content 4 Welcome letter from the governor 38 Formula 1 Grand Prix of Krasnodar Region 40 Sochi Park Introduction by PwC Russia’s 5 2018 FIFA World Cup Managing Partner 42 44 Azov City Gambling Zone 6 General information about Krasnodar Region: 46 Foreign economic activity 10 Economic potential Investment climate 14 Key areas of economic activity: General information Agriculture Legislation Industry Forms of government support for SME investors Construction sector PPP Transport Innovations Telecommunications 50 Sochi International Investment Forum Energy 52 Past investment projects Health resort and tourism sector 54 Pending investment projects Housing and utilities 61 Conclusion 34 The 2014 Olympic and Paralympic Winter Games in Sochi 62 Useful information 36 Sochi Olympic Games PwC | 3 Welcome letter from the governor of Krasnodar Region Dear all, projects that Russian and foreign investors have carried out here. Many of these Krasnodar Region is one of Russia’s top investors have become good friends regions for making capital investments. of the region and have already been working The region’s vast potential, unique here for many years. We are proud to count geographic location, natural well-known international companies among and recreational resources, fertile our strategic partners. farmland, expansive transport infrastructure and, most importantly, conditions conducive Krasnodar Region is always open to developing business, combine to make to dialogue with Russian and international it a consistent leader in the most prestigious business. The possibilities for capital investment ratings. Our region is listed investments here are endless – from creating among the best for business by Forbes agricultural and industrial companies, magazine, the Russian Ministry of Regional ports and residential complexes, to carrying Development, and a slew of Russian and out Olympic projects, building Formula 1 international publications. racetracks and preparing for the 2018 FIFA World Cup. Over RUB 1 trillion has been attracted to the regional economy in just the last three Those who invest in Krasnodar Region receive years. In 2010, about RUB 493bn was various benefits and preferences, access invested in Krasnodar Region, to government sales and procurements, and the investment growth rate was over and strong support from the regional 118%. This year, we plan to attract no less administration, and find that doing business than RUB 550bn. in our region is a profitable and secure investment. But the best confirmation of these ratings and numbers are the hundreds of large Welcome to Krasnodar Region! Governor of Krasnodar Region Alexander N. Tkachev 4 | Guide to investment Introduction by PwC Russia’s Managing Partner Krasnodar (often called Kuban) is one region’s investment appeal high marks; of Russia’s most rapidly developing regions. the region is a leader in terms This is a result of its favourable geographic of favourable conditions for conducting location, comfortable climate, ample natural business. resources and favourable investment climate. The Krasnodar Regional Administration Kuban is a leading Russian region in terms helps attract investors by providing various of agricultural output and is a key source benefits and actively assisting of food supplies to the country’s industrial the promotion and implementation centres. What’s more, a number of major of investment projects. domestic and foreign investors have been successfully operating their businesses Krasnodar is buzzing with activity in the region’s woodworking, glass, chemical for other reasons, as well. Preparations and consumer goods industries for some time for the 2014 Olympic and Paralympic now, and the local construction and energy Winter Games in Sochi are well under way, sectors are amongst the fastest growing and several large projects for the 2018 in Russia. Kuban is also a leader in terms FIFA World Cup and Formula 1 Grand Prix of recreation; it has a wide range of tourist are just getting started. facilities and its recreational businesses work The aim of this publication is to help hard to attract visitors year-round. potential investors to properly assess The region’s unique opportunities and select the most promising investment for investors are underpinned by its steady projects, so they can contribute economic growth and efficient investment to the region’s further economic policy. It’s no coincidence that top Russian development and ensure their own and foreign rating agencies have given the success at the same time. David Gray Managing Partner PwC Russia PwC | 5 General information about Krasnodar Region Geographic description Labour force and Viticulture; the Krasnodar Lukyanenko Russia’s southernmost region. It shares 50% of the region’s population of over 5m. Scientific and Research Institute a border with the Rostov and Stavropol of Agriculture; the Pustovoit All-Russia regions and the Republic of Abkhazia, Transport routes Scientific and Research Institute of Oil Crops; and is partially surrounded by the Azov nine sea ports; five airports, four of which the Scientific and Research Institute and Black seas. The region’s total area are international; federal railways of Medical Primatology; and the All-Russian is 76,000 sq m and it has over 1,000km and motorways. Scientific and Research Institute of Floriculture and Subtropical Crops. of beaches. Science and education Climate in Krasnodar Region The region’s higher education institutions, moderately continental, subtropical; Krasnodar Region (often called Kuban) which train specialists almost in all available there are 280 sunny days per year. conducts fundamental and applied research disciplines, play a special role in education, in leading areas of science and technology. science and culture. Administrative centre The most prominent contributions The region ranks tenth in Russia in terms the City of Krasnodar to the development of science in Krasnodar of higher education professionals Region and Russia as a whole have been and fourth in terms of specialised secondary Key branches of the economy made by the research scientists industry, construction, transport, education professionals. Several volunteer of the Southern Scientific and Production agriculture, energy, resorts and tourism. training centres have been opened using Association for Marine Geological these educational establishments Main natural resources Operations (Yuzhmorgeologiya) Russian as their foundation. Around oil, gas, minerals, iron and apatite ores, rock State Scientific Centre; the All-Russian 8,500 volunteers are expected salt, drinking water reserves, finewood, Scientific and Research Institute of Rice; to be trained for the 2014 Olympic 3.9m hectares of fertile blacksoils, 18 resort the North Caucasus Zonal Scientific and Paralympic Winter Games in Sochi. and recreation areas. and Research of Institute of Horticulture Berdyansk Yeysk Orlovsky Yeya Kushevskaya Salsk Pavlovskaya The Sea of Azov Primorsko-Akhtarsk Belaya Glina Tcs B he o ysu lb g as Tikhoretsk Egorlyk Timashevsk Kerch Kropotkin Izobilnyy Temryuk K Ust-Labinsk Taman u ban Krasnodar Feodosiya Anapa Krymsk Armavir Stavropol Novorossiysk Belorechensk Nevinnomyssk Gelendzhik The Black Sea Maykop Labinsk Khadyzhensk p ru Cherkessk Tuapse U ba Symbols La Territorial regional motorways Federal motorways Main railways Sochi Karachaevsk State borders 6 | Guide to investment There are 12 state higher education institutions in Kras- nodar Region, including: • Kuban State University; • Kuban State Agrarian University; • Kuban State University of Technology; • Kuban State Medical University; • Kuban State University of Physical Education, Sport and Tourism; • Krasnodar State University of Culture and Arts; • Krasnodar University of the Russian Ministry of Internal Af- fairs; • Armavir State Pedagogical Academy; • Admiral Ushakov Maritime State Academy; • Sochi State