The city has created all the necessary conditions for investors to operate successfully

16 August 2017

Vladimir Efimov, the Minister of the Moscow City Government, the Head of Department of Economic Policy and Development of Moscow, gives an interview to the Moscow Investment Portal.

- Hello, Mr. Efimov. In 2014, Moscow adopted its investment strategy. How its’ implementation going on today?

 - Yes, in 2014, Moscow developed a strategy for increasing its investment appeal as a world-class metropolis. The strategy determines the principal directions for developing Moscow’s investment climate, suggests steps for improving it, for simplifying administrative procedures, improving taxation and tariff policies, and it also determines change points in those areas of development important to investors.

Moscow’s investment climate demonstrates the results of implementing this strategy. When assessing this climate, we primarily look at the World Bank’s Doing Business ranking. Since 2010, Russia hasgone up in the World Bank’s ranking by over 80 places, largely owing to the efforts to improve the business environment in Moscow, since the share of Moscow’s indicators in calculating the ranking is 70%.

Our systemic work in the area was also reflected in the National investment climate rating in the Russian Federation. In 2017, Moscow moved to 3rd place and made it to the list of the leading regions.

In discussing implementation of our investment strategy, I would also like to emphasize the results of our work to develop private-public partnerships (PPP). Owing to Moscow’s systemic work to rise private investment in areas traditionally financed by the city treasury (transport, healthcare, education), the city has held 1st place in the National PPP Development ranking for two years running.

Over recent years, the city has, in general, created all the necessary conditions for investors to operate successfully. Today's urgent task is to use the accumulated methodologies and experience of collaboration with the global investment community to fine-tune the system while testing the application of innovative solutions that are new for Russia.

- What are the investment dynamics in Moscow now

-  Moscow demonstrates a high level of investment activity. Over the last six years, investments in Moscow’s core assets have grown over 1,5-fold in comparable prices over 2010 and now total to RUB 8.3 trln.

In the first quarter of 2017, investment in Moscow totaled to over RUB 280 bln, which is nearly 13% of the entire Russian investment capacity. Moscow is one of Russia’s regions with the greatest investment appeal; it has long become a center of attraction for foreign investors. The city accounts for about 50% of foreign direct investments coming into Russia.

- Expanding the PPP practice is a priority of Moscow’s economic policies. Could you, please say a few words about it?

- We use various investment forms and mechanisms, from concessions and life cycle contracts (LCC) to leases with investment obligations. Over the last four years, Moscow has concluded PPP contracts for about RUB 700 bln.

There are many projects in Moscow of this kind , so I will list just a few of them. Transfer hubs are being constructed in Moscow as PPP projects. 12 such projects were launched in 2016; investors gained the right to implement them by purchasing blocks of shares in specialized project companies. Or, for instance, small PPPs, such as leases with an investment component in healthcare, education, leases of cultural heritage property: the city gives real estate to investors on the condition that they restore the property; once that obligation has been discharged, the investor switches to a symbolic rental of 1 RUB per 1 sq. m. In recent years, Moscow has concluded RUB 4.5 bln worth of such contracts.

-  Let’s talk about the industrial sector; what is Moscow doing to stimulate activates in this area and why?

– The latest global trends demonstrate that high-tech manufacturing enterprises are the driver of development in major cities. When Moscow launched an industry supporting programme in 2015, the supporting measures were primarily geared toward cutting-edge innovative manufacturing enterprises: technopolises, technoparks, large investment projects with high added value. They represent various sectors: foodstuff industry, pharmaceutical and textile industries, electronics manufacturing, R&D, but they are united by a modern approach to manufacturing as an innovative activity.

Supporting measures are offered to efficient manufacturing enterprises with a high investment level for, among other things, creating high-paying jobs; these measures allow the enterprises to reduce their regional tax burden by nearly 25%. 63 enterprises already participate in the supporting programme: 30 have industrial complex status, 3 have the status of a technopark anchor resident. Moscow’s technoparks alone are now home to the production facilities of 1,500 high-tech companies manufacturing products with a major knowledge-based component. The total number of new well-paid jobs is about 78,000.

- What does Moscow offer investors intending to localize in the city?

- A system of support for new investment projects. The support includes virtual exemption from ground rent and property taxes, and 25% reduction on profit tax. An additional bonus is a mechanism for long-term public procurement from the new enterprise under offset contracts. In addition, the city offers newcomers guarantees against non-commercial risks, which is important for foreign investors.

- What instruments does Moscow use in its work with foreign investors?

- The Moscow City Investment Agency is the main contact between the city and international investors. The Agency offers a “one-stop-shop” service of assistance to investment projects, assesses projects, provides consultations to investors. In addition, the Agency operates the Moscow Investment Portalwww.investmoscow.ru, which provides lists of city property up for auctions, of technopolises and technoparks working in the city and the option of submitting an application to site a business there.

- How popular is the Moscow Investment Portal among investors?

- Visit statistics and online service use statistics demonstrate that the portal is, indeed, in demand. Since the Portal launched in 2014, it has registered over 3.2 m visits. 5,000 people visit the portal daily, about 20% are foreign users. In 2017, the increase in visits due to the expanded number of interactive services was 70%.  

- Mr. Efimov, thank you for the interview. We wish you to succeed in implementing the investment strategy.

- Thank you.

 

Source: Moscow City Investment Agency

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