The Moscow business is increasing investments despite the coronavirus. Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov told the Company magazine about this.
Alexander, I suggest to begin the conversation with the news that Moscow has headed the Russian Regions Investment Attractiveness Ranking by Agency for Strategic Initiatives. Please Could you tell us please, what significance does this fact have for the city?
- I think that the national ranking is the most referential for domestic and western investors. Not for nothing pay all regions and their top officials much attention to it. Last year we headed it for the first time in the history. The key to success has been for example the digitalization of services for business and the fact that we are systematically engaged in attracting investors and work on support tools they can use. We are probably the only ones in Russia to sign offsets contracts. There are four of them so far. Three - in pharma and one - in the food industry. The total amount of private investments under offset contracts is almost RUR 12 bn.
A large number of land plots in the city are allocated for investment projects including construction of manufacturing facilities. The city invests a large amount of money in transport infrastructure, environmental protection, improvements. The combination of all these factors helps to keep the first place.
Can you tell us what major investment projects have been announced recently?
- On July 8, Moscow signed the Russia’s first agreement on integrated development of industrial area. We do not just build housing in former industrial zones, we create new production facilities and new jobs. Two more agreements will be signed this year under a similar scheme.
The city actively concludes investment-priority projects, in which we support tax incentives for large investors during the construction of manufacturing facilities.
I cannot but say about the Technopolis Moscow Special Economic Zone. The Alabushevo site is currently undergoing active construction of new facilities, some of them - under an offset contract. The SEZ offers not only land plots, but also 5,000+ square meters to be rented in the office center.
Has the investment area been affected by the coronavirus and restrictions imposed in the country? Have special support measures been developed for investors with announced projects in this regard?
- As of now, major players neither suspended their investments nor cut back on stuff. Moscow is a big market, it's a convenient logistic story. We have not removed any program on support measures for entrepreneurs, but on the contrary, we have increased them. These include subsidies to small businesses and deferral in rent payments for premises and land in the most affected industries.
I would like to point out that Moscow was investing even before the pandemic. For each ruble invested by the government, three rubles are invested by investors. This is a good indicator, which makes it clear that our support measures reach the business and provide a response from investors.
Can we now evaluate how Moscow companies have managed to pass the coronavirus exam?
- Nowadays all Moscow large and medium-sized industrial enterprises are operating. And the requirements for personal protective equipment have been also observed.
I will not hide the fact that there are several companies which, unfortunately, have not re-opened. However, this is primarily due to the pre-crisis financial instability of these companies. In addition, several companies moved their factories to other regions during the pandemic while keeping their headquarters in Moscow. The fact is that there are certain requirements for average remuneration in Moscow. The result of this struggle for marginality was the relocation of five companies.
Have new companies appeared in the Moscow market?
- Of course, there are such companies. In 2019, only the Technopolis Moscow Special Economic Zone accommodated AxelFarm LLC from Moscow region, NPP ALEXANDR LLC from Ryazan and IP D.V.Kazachenko - ADC rehabilitation center from St. Petersburg. And I named only big companies, the number of new registered smaller companies is even higher.
Moreover, five decisions have been made by the Moscow Commission of Urban Planning and Land Use on renting out land plots without auctions within large-scale investment projects for construction of production facilities since January 2020.
All companies that are moving to Moscow primarily appreciate the huge sales market, transport logistics, financial benefits and human resources. All this attracts high-tech, smart industries.
Do you have any expectations how quick the city economy will recover?
- All statistics on the pandemic impact on Moscow industry and investment business will be available by the end of the third quarter. But we are already recording a positive trend. If we see the trend going down, we will decide together with the business what kind of support measures we need to "twist" to make them work more efficiently.
How close was the contact with business during the pandemic?
- The contact was on the daily basis. We not only requested information from businesses, but also provided support, including personal protective equipment. We also helped the logistics of goods: because the restrictions at industrial enterprises stuck cargo at the border of regions.
Is it possible to say that the share of local producers in the Moscow market has increased as a result of countries' isolation?
- It so happened that Moscow did not lack anything but personal protective equipment during the pandemic. Therefore, we have directed all our efforts to provide the city with masks, respirators, antibacterial agents. I would like to note that a number of industrial enterprises have quickly re-oriented their productions. Perfume factories set up production of disinfectants. The manufacturers of treatment filters for the oil industry developed, tested and put into production filters for treating infection hospital effluents in a very short time. Textile industry companies began sewing protective equipment for medical professionals. It is gratifying to note that everyone has adjusted the production in time in order to jointly fight the pandemic.
How did the pandemic affect the export history of the Moscow business?
- In the first four months of this year, exports exceeded USD 10 bn. It's about the non-resource non-energy sector. The figures are almost 47% higher than last year. Moreover, the Export Support Center did not stop working for a day during the pandemic - our subordinate organization ANO Mosprom conducted all consultations and business missions remotely.
You often communicate with industrialists, what is the mood of business in Moscow?
- Moscow manufacturers have returned to their usual mode of work: they have got backalmost all employees from forced leaves and from "working at home", part-time workdays have been cancelled. Many industrialists we regulary keep in touch with say that they have used the forced "working at home" for new developments and know-how as well. That's why Moscow industrialists can’t complain about time wasted.