Moscow Investment Digest. December 2020
The Moscow Department of Investment and Industrial Policy in cooperation with the Moscow City Investment Agency presents you the next digest of the main investment events in the Russian capital.
PACKAGING PRODUCTION FACILITY IN TSARITSYNO GOT MOSCOW INVESTOR STATUS
JSC Smurfit Kappa Moscow Soyuz - a packaging manufacturer - became the first company in the Russian capital which was awarded with the Moscow investor status of the second category. This status entitles to an investment tax deduction. The company will be able to apply a reduced profit tax rate of 8%.
The investment tax refund can be used to write off up to 90% of investments in fixed assets within the regional profit tax and up to 10% of investments in fixed assets within the federal tax. The investor will be able to carry forward the unused benefit amount for up to seven years.
Being the only full-cycle corrugated board producer in Moscow, JSC Smurfit Kappa Moscow Soyuz occupies 7% of the Russian corrugated board packaging market. In 2017, the company was granted the industrial complex status: this gave it the right to profit, property and land tax benefits.
PRODUCTION PLANT OF VETERINARY DRUGS WILL APPEAR IN MOSCOW BY 2022
The investor will create in Moscow a modern production plant of veterinary drugs: the project will be implemented by the BinoMedVetService company, which has the investment priority project status.
“The agreement states that BinoMedVetService shall erect a state-of-the-art facility to produce at least five veterinary drugs. The city has already rented out to the investor a 0.3-hectare land plot in the South-Westert Administrative District. The investments in plant construction will amount to RUB 514 m, it is planned to be commissioned in 2022. The company will create 85 new jobs,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir Efimov said.
The IPP status entitles the investor to significant tax and non-tax benefits: the total tax burden can be reduced for the investor by a quarter. The profit tax is reduced by 26% (it will be 12.5% instead of 17%), the land tax is reduced by 99%, the property tax is zeroed. Moreover, this status allows companies including BinoMedVetService to get a discount on the land rent: it will be only 0.01% of the cadaster instead of 1.5% .
FIRST AGREEMENT ON INVESTMENT PROTECTION AND PROMOTION SIGNED IN MOSCOW.
The agreement on investment protection and promotion states that the investor - R-Opra LLC - will build a pharmaceutical factory in the Technopolis Moscow special economic zone, and will receive in return a guarantee of unchangeable conditions for state support.
“The agreement signed between the Russian Government, the Moscow Government and R-Opra LLC will last for six years. The project investments amount to RUB 8.5 bn, RUB 2.3 bn of them are investor’s own funds. The agreement guarantees to the investor the invariability of land, urban planning and tax legislation. Moreover, the investor is assigned a guarantee of state support for this period of time. The city along and the federal authorities undertake to compensate for damage in the event of legislation changes and decisions that would change the timing and amount of state support for the investor,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov explained.
R-Opra has already received a permission from the capital city to build a plant in the SEZ. The investor will get here zero regional property, profit and transport taxes.
SECOND AGREEMENT ON INTEGRATED AREA DEVELOPMENT OF FORMER INDUSTRIAL ZONE SIGNED IN MOSCOW
The Moscow Government concluded an agreement with a private investor on integrated area development for a part of the Korovino industrial zone in North Moscow. This is the first agreement in Russia concluded upon the done auction for integrated area development of an industrial zone and the second one in Moscow within similar projects. Inteco was the auction winner. The Government of Moscow signed with the investor a contract on the integrated area development worth RUB 201.2 m.
“Industrial, public and business facilities of max total of 600,000+ square meters are planned to be built on an area of 35+ hectares. The investments in the industrial zone redevelopment are intended to be about RUB 40 bn, the annual tax revenue will be about RUB 3.8 bn. Up to 13,000 new jobs will be created for Muscovites on the site,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir Efimov said.
MOSCOW SUMMED UP ANNUAL RESULTS OF INDUSTRIAL COMPANIES SUPPORT PROGRAM
The Moscow Department of Investment and Industrial Policy held a working meeting with Moscow industrialists to summarize the annual results of the real economy support program. The meeting covered acute issues of cooperation between business and the Moscow Government and existing measures to support industrial enterprises as well.
“The industry support program has been in effect in Moscow for four years, and 58 operating companies have received benefits during this period time what enabled them to allocate additional funds for the development and upgrade of their facilities. 14 new projects got an opportunity to set up production due to special tax conditions. As a result, we face a completely different industry in the city - modern high-tech factories employing hundreds of thousands of people. 120+ companies in the city are currently taking enjoying the benefits, their total investments are approaching RUB 100 bn. I should note that the number of companies with different statuses is steadily growing every year,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov said.
He added that support measures were adjusted annually. The most import thing is that when making any changes to this or that mechanism, the authorities rely on the opinion of investors who are very active in the life of the city.
3+ MILLION VISITS TO MOSCOW INVESTMENT PORTAL IN 2020
In 2020, the Moscow Investment Portal was visited nearly 3 million times, 8,200 unique users access it daily. “The Moscow Investment Portal was created in 2014 for prompt and high quality interaction with business. On the Moscow Investment Portal, entrepreneurs can find information on investment projects, industry support measures, tenders for sale and rent of city property, tax regimes and benefits. The Moscow Investment Portal remains one of the most popular specialized resources for business: the web-site has been visited 12+ million times in almost seven years. If at the start of the project, when only 10 online services were available to investors, the portal was visited by about 100 people a day, now it is a resource with 29 services and a daily traffic of 8,200 thousand unique users. Since the beginning of the year portal services have been used more than 90,000 times, that is about 250 times a day,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir Efimov said.
“The Moscow Investment Portal is currently running a complete virtual office with a wide range of available electronic services and services for business. Appointment for auction lot site inspection has remained the most popular one for several consecutive years. The service allows investors to submit an online application and to inspect at a suitable time the premises listed for auctions by the city. It has been used 125,000 times since the launch. Moreover, the city premises can be also visited in the 3D mode in Property from the City section. This year, this opportunity is especially relevant,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov said.
TECHNOPOLIS MOSCOW IS IN TOP 5 SPECIAL ECONOMIC ZONES IN RUSSIA
Technopolis Moscow ranked fourth in the 6th Investment Attractiveness Ranking of Russian Industrial Parks and Special Economic Zones by the Expert analytical center. The sites were assessed in management and services, location, cost of production resources, tax and customs benefits.
“The Investment Attractiveness Ranking by the Expert analytical center summarized the results of 121 sites for 2019. The Moscow special economic zone gained the leading positions in the ranking through the following services: web accounts for residents, possibilities of interaction with city authorities and development institutions, land and profit tax benefits, access to duty-free export,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov informed.
MOSCOW MANUFACTURING INDUSTRY GREW BY 5.2% IN 2020
The production growth in the Moscow manufacturing industry in November vs. November last year amounted to 35.3%, and 1.1% nationwide. At the same time, the Moscow production volume increased by 5.2% in the first 11 months of 2020.
“The city industry is steadily increasing the production volume despite the impact of pandemic. Thus, the production of machinery and equipment increased almost six-fold this November compared to last November. This category includes elevators, the demand for them significantly increased being driven by the scheduled replacement of elevator equipment in Moscow and a growing number of new construction projects. Two largest plants - Karacharovsky Mechanical Plant and Shcherbinsky Elevator Plant - have their running production facilities in the capital city,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir Efimov said.
ELECTRONICS, PHARMA, COSMETICS: WHAT THE MOSCOW BUSINESS EXPORTS
The Moscow non-energy non-resource exports to Europe doubled to USD 15.3 bn in the first nine months of 2020. This figure was USD 7.8 bn at the end of the same period last year. The growing export items to European countries accommodate electronic integrated circuits - exports almost doubled to USD 2.74 m, pharmaceutical products increased by almost 18 times up to USD 1.17 m, cosmetics grew by three times up to USD 0.67 m.
The non-energy non-resource exports from Moscow to China totaled USD 1.5 bn in the first 9 months of 2020, which is 40.8% higher than in the same period last year. Thus, China accounts for about 16% of the Moscow exports.
The Moscow lighting equipment exports increased by 6.3% up to USD 40.24 m in the first nine months of 2020: these products are now being supplied to 78 countries. The key destinations are countries in the West and East and the post-Soviet region as well.
The exports of food industry products from Moscow grew by 3.3% in January-September and reached USD 733.7 m. The Moscow share of the Russian exports in this segment amounted to 9.2%. Refined sugar, flour- and milk-based baby foods, dog and cat food, chocolate products, instant coffee, drinking and household water, and ice cream were mostly demanded abroad.
MOSCOW WILL PROVIDE ADDITIONAL BENEFITS TO PROJECT ON JOB CREATION OUTSIDE THIRD RING ROAD
In fall 2020, Pioneer Group committed to build 82,000+ square meters of office space in the Ostankino business park (near the Butyrskaya metro station) and in the Botanichesky Sad transfer hub. 800+ new jobs will be created there. The Investments in these projects will exceed RUB 4.6 bn.
For its part, the city will provide benefits for for the first year of land rent and discounts for fees related to the change of the permitted use type for land plots where residential houses are to be built. In December 2020, the developer decided to increase the space of one of the facilities by 24,900 square meters what will consequently add 250 new jobs. The volume of benefits to be provided to the investor will also increase respectively.
MOSCOW COMPANIES WILL GET SUBSIDIES OF RUB 216 M
Additional 14 Moscow industrial enterprises will get subsidies to reimburse rent payments, loan interests, equipment purchase and connection to utilities. The total amount of subsidies will be RUB 216 m.
The subsidy recipients are companies in the food industry and the military-industrial complex, construction companies, manufacturers of high-tech products, heating equipment, automotive components, paper and cardboard products, etc.
“The city systematically provides financial support to industrial enterprises: 100+ companies have received subsidies of total RUB 2.6 bn since 2012. 20+ Moscow industrial companies have been approved for subsidies since the beginning of 2020, the total amount exceeds RUB 360 m,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir Efimov reported.
CITY WILL SELL NON-RESIDENTIAL UNIT IN MOSCOW CENTER
A non-residential unit of 81.4 square meters with a free functional purposed use located in the Bolshaya Yakimanka Street is offered for sale. The lot is located in the first level of a residential building constructed in 1991 and is ready for commercial use. The building is located near the Museon Park, within walking distance from the Oktyabrskaya metro station. The unit is in a good technical condition and is being offered at the starting price of RUB 167,100 per square meter.
Applications are to be submitted by January 20, 2021, the electronic auction will be held on January 28. The auction’s starting price is RUB 13.6 m.
INVESTORS CAN BUY UNIT IN EARLY 20th CENTURY FORMER REVENUE HOUSE
The city will sell the basement in the former revenue house located within walking distance from the Smolenskaya metro station. A 92.4-square-meter lot will be offered through a public auction at the starting price of RUB 9.1 m.
The house was built as an apartment house in 1914 designed by architect Vladislav Dombrovski and is not a cultural heritage site. The non-residential basement unit offered to investors is located on the first line of Krivoarbatsky Lane and has a separate entrance. Auction applications are to be submitted by October 20.
Moscow - Beijing 25: New Times - New Opportunities forum
ALEXANDER PROKHOROV, HEAD OF THE MOSCOW DEPARTMENT OF INVESTMENT AND INDUSTRIAL POLICY, HAS A BUSINESS MEETING WITH INDUSTRIALISTS