This overview has been prepared to help potential investors properly assess the most promising industries and provide a detailed picture of investment projects in the Krasnodar Region Guide to Investment Krasnodar Region 1st place leading region for minimal investor risk А++ the region’s credit rating 5th place among Russian regions in total annual investment 3rd place among Russian regions in population PwC Russia (www.pwc.ru) provides industry-focused assurance, tax, legal and advisory services. Over 2,500 professionals working in PwC offices in Moscow, Contents St Petersburg, Ekaterinburg, Kazan, Rostov-on-Don, Krasnodar, Voronezh, Novosibirsk, Vladikavkaz and Ufa share their thinking, experience and solutions Welcome Address by the Governor of the Krasnodar Region ................................................... 2 to develop fresh perspectives and practical advice for our clients. PwC refers to the Welcome Address by the Managing Partner of the PwC office in Krasnodar ............................3 PwC network and/or one or more of its member firms, each of which is a separate Geographical Location of the Krasnodar Region...................................................................... 4 legal entity. Together, these firms form the PwC network, which includes over 223,000 employees in 157 countries. Please see www.pwc.ru/en/about/structure. Transport Infrastructure ......................................................................................................... 6 jhtml for further details. Favourable Investment Climate ............................................................................................. 10 Economic Potential ............................................................................................................... 12 Labour Force ......................................................................................................................... 13 Educational Infrastructure and Innovation .......................................................................... 14 Success Stories .................................................................................................................... 15 State Support System for Investors and Entrepreneurs .......................................................... 20 Development Corporation of the Krasnodar Region .............................................................. 21 Industrial Parks .....................................................................................................................22 Priority Investment Areas: .................................................................................................... 24 • Agribusiness • Wine • Hospitality & Tourism • Manufacturing • Construction • Information and Communication Technologies • Financial Sector • Insurance Market Why Krasnodar Region is a Good Investment Opportunity? .................................................. 36 Useful Contacts .....................................................................................................................40 Appendix .............................................................................................................................. 42 • Selecting Investment Projects for State Support • Supporting Investment Projects • State Subsidies by Industry Sectors • Technological Connection to Electric Power Grids • Obtaining a Construction License This guide was prepared by the Krasnodar Region Administration jointly with PwC. This publication has been prepared solely for general guidance on the matters herein and does not constitute professional advice. II PwC Guide to Investment Krasnodar Region 1 Welcome Address by the Governor Welcome Address by Managing Partner of the Krasnodar Region of the PwC office in Krasnodar Dear colleagues and partners, Metro Cash and Carry, Nestle, We are pleased to present this for doing business. In this light, Philip Morris, Tetra Pak and Radisson. for the Krasnodar Russian and foreign rating agencies I would like to invite you to discover Having achieved excellent results, Region, a region with enormous have been speaking highly of the the Krasnodar Region. This is one these companies are committed to economic and investment potential. region’s investment appeal for several of the southernmost and warmest advancing their businesses further here years running. They acknowledge that regions of Russia. I am confident that in the Krasnodar Region. The Krasnodar Region boasts the region is in a dominant position the Krasnodar Region will provide a unique geographical location, climate compared with other regions. you with business opportunities full of In turn, we are committed to supporting and natural resources. Its economic enormous potential. We not only a dynamic and progressive economy stability and infrastructure have We have prepared this report have a beautiful environment and in the Krasnodar Region. It is our engendered a favourable environment in conjunction with the Krasnodar a mild climate, but our region is also pleasure to invite you to become our to support the growth and expansion Region Administration. Its key a platform for forward-thinking and business partners and build successful of your business. objective is to help potential investors innovative people. ventures together. Do not miss this properly assess the most promising chance, for tomorrow someone The region’s economic indicators and financial investment targets and Today we are one of the most attractive else might snap up your potential its effective investment policies have provide a detailed picture of regions in the Russian Federation investment platform in Krasnodar. helped to attract a significant number investment projects in the Krasnodar in terms of investment. Every year, of Russian and international investors. Region. the business community launches We believe that new leaders are In addition, the Krasnodar Region dozens of new investment projects the driving force behind Russia’s Administration has been actively in our region, and we host many economy of the future. Join us! introducing valuable tools aimed important international business at easing the way for investors Vyacheslav Solovyev Veniamin Kondratyev and cultural events. We have dozens and creating an optimal climate Managing Partner, PwC Krasnodar Head of Administration (Governor) of international partners, including of the Krasnodar Region Bonduelle, CLASS, Danone, Knauf, 2 PwC Guide to Investment Krasnodar Region 3 Geographical Location of the Krasnodar Region New York 8 400 km The largest port agglomeration in Russia. The Krasnodar Region is a centre of international transit London 3 000 km Madrid 3 500 km Paris 2 800 km Stockholm 2 100 km Berlin 2 000 km Rome 2 200 km Moscow 1 200 km Tokyo 8 000 km Istanbul The population of the Krasnodar Region is 950 km Krasnodar 5.5 million people (3rd place in Russia) Cairo 1 800 km eing 6 100 km The most popular resort and tourist region in Russia. More than 15 million tourists visit the Krasnodar Region every year Delhi 3 800 km 4 PwC Guide to Investment Krasnodar Region 5 Transportation Infrastructure Map of transportation infrastructure 237 km Yeisk The transportation infrastructure in Krasnodar (in particular, Sea transport infrastructure ensures direct access ports, wide railway network and highways, railway stations, to international foreign trade routes via the Black Sea and railway terminals, airports and gas mains) is strategically the Sea of Azov. Over 200 million tons of cargo are shipped important not only for the region, but also for country as through Krasnodar’s nine ports every year. a whole. Primorsko-Akhtarsk The port in Novorossiysk, the largest in Russia, is a modern The transportation infrastructure delivers tourists and multifunctional and highly automated complex. In 2016, holidaymakers to the coastal areas on the Black Sea, which is the port’s cargo turnover amounted to over 129 million tons, Azov Sea Tikhoretsk the main resort complex in Russia, attracting over 15 million including over 92 million tons of oil and over 37 million tons tourists annually. It also provides cargo export transit, of dry cargo. including oil exports. Port of Сaucasus 230 km 150 km Timashevsk Temryuk Comparative characteristics of transportation infrastructure in Russian regions Kropotkin Taman Region of the Number of Operational length Length of Number of 230 km Russian Federation sea ports of public railways, km public roads, km international airports Anapa Krasnodar Krasnodar Region 9 2,087.6 37,156.6 3 163 km Krymsk Moscow Region 0 2,705.1 38,900.3 3 Abinsk Armavir Rostov Region 2 1,841.1 24,372.0 1 Novorossiysk 150 km Republic of Tatarstan 0 876.8 37,823.4 2 Gelendzhik Stavropol Region 0 921.8 17,073.5 2 180 km Maikop Source: official Internet resource of the Federal State Statistics Service: gks.ru Otradnaya Tuapse Federal highways 175 km Railways Sea ports Black Sea Domestic airport Krasnaya Polyana Sochi International airports 301 km Adler Russia’s largest transport hub located in the Krasnodar Region includes: 9 sea port complexes (incl. the Russia’s largest sea port – Novorossiysk) 3 international federal airports (Kranodar, Sochi, Anapa) wide railway network 419 km for 1000 sq.km and highways 6 PwC Guide to Investment Krasnodar Region 7 The railway infrastructure in the Krasnodar Region is the leading southern regional city in terms of the length of railways, volume of shipments and economic indicators. About 70% of all cargo traffic in the Krasnodar Region