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January

Moscow Investment Digest. January 2021

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The Moscow Department of Investment and Industrial Policy and the Moscow City Investment Agency present you the next digest of the main investment events in the Russian capital.

NEWS

5TH OFFSET CONTRACT TO BE AWARDED TO DRUG MANUFACTURER

The tender for the 5th offset contract is over. The only application was submitted by the Moscow Endocrine Plant. The company will conclude a drug supply contract. The plant will set up production of anti-glaucoma, antibacterial, analgesic drugs, antidepressants and neuroleptic agents.

“The 10-year contract will be awarded to a sole vendor. The tender terms oblige the winner to invest RUB 1 bn within two years in order to localize the production of 20 drugs. Over the next eight years, the city will purchase drugs from the manufacturer for a total of RUB 1.1 bn. The contract with the investor will be signed tentatively in February, after the tender documentation is checked,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir  Efimov said.

“Offset contracts provide an opportunity to save budget funds, because the price of purchased goods usually goes down during the tender. Moreover, as the contract is signed, Moscow gets new jobs and increased tax revenues. Business gets with an offset contract a long-term guarantee of sales for localized products and the inclusion in the regional register of sole suppliers. The capital was the first in Russia to sign an offset contract in fall 2017; four such agreements with investors have already been signed up to date. The total private investments within these contracts amount to RUB 11.9 bn, the procurement volume is RUB 71.6 bn,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov said.

VOLUME OF MOSCOW PPP CONTRACTS INCREASED BY RUB 120+ BN

250+ public-private partnership contracts were concluded in the capital. Last year, their volume increased by almost RUB 124 bn, and the total investments exceeded  RUB 1 tn.

“Moscow has been using public-private partnership mechanisms since 2013. This allows to attract private funds for infrastructure development and to balance the interests of the city and investors. The most popular instruments are life cycle contracts, offset contracts, concessions and corporate forms of PPP,” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir Efimov said.

Over the last year, 70+ life cycle contracts (LCC) worth RUB 74 bn were signed in the capital. The practice of offset contracts also continues to develop: already the fourth offset was concluded last year.

“In 2021, the Russian capital will continue to develop PPP mechanisms that are widely demanded by business. Thus, it is planned to sign at least two concession agreements, the related tenders started in fall 2020: investors will invest over RUB 25.5 bn in construction of two plants for environmentally friendly sewage sludge processing and establishment of a geriatric center. Today three large concession projects are already being implemented in the city,the investments are RUB 60,2 bn,” CEO of the Moscow City Invetment Agency  Svetlana Ganeeva specified.

INVESTMENTS IN MOSCOW INVESTMENT PRIORITY PROJECTS INCREASED BY RUB 2.8 BN

The total 2020 investments in investment priority projects (IPPs) exceeded RUB 32 bn. Moscow is currently running 14 such projects including the construction of two gerontological centers, a veterinary drugs plant, a technology park and the reconstruction of HPP-2, plants etc. In two of them, the investors decided to increase their investments by RUB 2.8 bn at the end of last year.

“Moscow investors are not only fulfilling current obligations, but are also taking the initiative to increase their investments in projects. Thus, an additional agreement with the investor was concluded at the end of 2020 to increase investments from RUB 8 to 10 bn in the creation of a multifunctional HPP-2 complex inn the Bolotnaya embankment. Another investor will invest RUB 2 bn instead of the planned RUB 1.2 bn in construction of a plant for the production of  sheet steel stamping products in West Biryulevo West.” Moscow Deputy Mayor for Economy and Property and Land Relations Vladimir  Efimov said.

INVESTMENTS IN MOSCOW ECONOMY GREW BY MORE THAN 2.5 TIMES OVER 9 YEARS

The 2019 investments in the Moscow economy amounted to almost RUB 3.3 tn. This is a 24.6% increase over 2018. These data are provided by the Federal State Statistics Service. Last March, Rosstat gave a preliminary estimate of funds that businesses allocated to the Moscow developmentin 2019. According to preliminary data, this figure amounted to RUB 2.9 tn. More comprehensive statistics was compiled by the end of 2020 and showed that the exact amount of 2019 investments in the Moscow economy exceeded the initial estimate. As a result, the 2019 investments were up nearly a quarter over 2018, and had more than doubled since 2010. Moscow now accounts for 17% of all Russian investments in fixed capital and about half of the direct foreign investments in Russia.

“The system of support measures and the developed innovation infrastructure help the city to attract more than three rubles of private investment for every ruble invested in development. For example, having localized production in the SEZ "Technopolis "Moscow", residents can count on tax and customs preferences - almost all basic tax rates are zeroed or significantly reduced there. There are also 124 companies with special statuses in Moscow - industrial complex, technopark, anchor resident, investment priority project. The investments of such enterprises exceeded RUB 96 bn over the past five years, 111,100 jobs were created,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov said.

MOSCOW INVESTMENT PORTAL HAS NEW FUNCTIONS

A new section dedicated to the support of the Moscow industry has been opened on the Moscow Investment Portal. It will help manufacturers find a site where they can locate their production as well as participate in bidding for city real estate. Moreover, users of the portal have now got access to a map of integrated area development, a list of the latest technological developments as well as current industry news.

In addition to the new section, a service allowing investors to apply for preliminary consideration of a concession initiative has been launched on the website. It helps to send project documentation to the specialists of the Moscow Department of Investment and Industrial Policy for elaboration of concession implementation conditions and its further discussion. The application shall be considered within 14 to 30 calendar days. As a result, the investor receives a decision on possible project elaboration for further submission of the concession initiative and suggestions for project optimization if necessary.

INVESTMENT PORTAL WON NATIONAL DIGITAL TOPS IT-CONTEST

The Moscow Investment Portal won the Digital Tops Contest of Russian Developers in the Best IT Solution for Economic Development category. Five online process automation and information sharing platforms competed for the award. Experts pointed out the investment portal as a resource to build economic processes and to stimulate economic growth. The project attracts investments, creates opportunities and offers a variety of ways to interact with market participants within an extensive legal framework.

Over the seven years of its existence, the investment portal became an important part of the digital ecosystem in interaction between the city and business. Last year, the list of benefits and support tools for various categories of business was expanded, and relevant online services were developed and implemented on the website in a short time, which ensured uninterrupted information support for users and prompt processing of applications for preferences. The national award for the portal is a confirmation that the resource meets digital trends and the needs of investors.

INVESTORS WILL RE-DEVELOP 5 OTHER FORMER INDUSTRIAL ZONES

Former Moscow industrial zones are increasingly being transformed into modern urban spaces. The integrated area development project of the Automotornaya former industrial zone and proposals on boundaries for the integrated area development of two sites in the Kuryanovo industrial zone as well as sites in the Kashirskoye Shosse and South Ochakovo industrial zones were approved at the January meeting of the Moscow Urban Planning and Land Commission.

77 hectares of the Avtomotornaya industrial zone will be occupied by residential houses, recreation and sports facilities, as well as new production facilities according to the integrated area development project. The Kashirskoye Shosse, South Yuzhnoe Ochakovo and Kuryanovo industrial zones will get 1+ million square meters of public and industrial facilities in the future. These projects will allow the city to get almost 37,000 jobs. The expected investment volume will amount to RUB 240+ bn, and the annual budgetary effect will be about RUB 13 bn.

SUPPORT MEASURES

124 INDUSTRIAL COMPANIES IN MOSCOW ARE ENTITLED TO TAX AND PROPERTY BENEFITS

124 Moscow industrial companies have a status of industrial complex, technopark, technopark anchor resident and investment priority project. These statuses reduce the tax burden for businesses by 17-25%.

In 2020, 12 companies received the special statuses of industrial complex and investment priority project. Savings are used for technical re-equipment, construction and installation work and improving working conditions for employees. For example, the total savings of industrial complexes in four years -from 2016 to 2019 - amounted to RUB 4.5 bn, and the 2020 savings are estimated to be about RUB 2 bn.

The reduced tax burden allows businesses to grow rapidly. 58 industrial complexes are operating in Moscow, their total investments amount to RUB 31 bn. Moreover, 14 priority investment projects are being implemented in the city. The total investments in these projects will exceed RUB 32 bn.

19 INDUSTRIAL COMPLEXES AND TECHNOPARKS GOT PREFERENTIAL LAND RENT RATES IN 2020

In 2020, the city granted 19 industrial complexes and technology parks a ten-year preference on rent agreements for 24 land plots of total 33.6 hectares. This allowed businesses to save RUB 183 m on renting city land plots. Five tenants received this support for the first time, and 14 tenants of the remaining 19 land plots confirmed the status of industrial complexes and technoparks and concluded additional agreements for reduced rent rate.

“The special status allows us to save significant funds and direct them to other important production tasks. The projected annual tax savings for just six companies that received the industrial complex status in 2020 are about RUB 300 m. These are companies from various industries: a representative of the defense industry, a pharmaceutical company as well as machine builders and equipment manufacturers,” Head of the Moscow Department of Investment and Industrial Policy Alexander Prokhorov said.

MOSCOW IDENTIFIED MAIN AREAS OF SUPPORT FOR CREATIVE ECONOMY IN 2021

Moscow has identified four main areas of support for creative industries in 2021. These include new infrastructure, subsidies and grants, acceleration programs and assistance in promoting products in foreign markets.

Creative industries accommodate about 113,000 companies and individual entrepreneurs in the capital. They employ half a million Muscovites. The annual turnover of this segment in the city economy is estimated at RUB 3 tn, and it has a significant potential for further growth.

Interpreneurs are interested in support in infrastructure development, international promotion, information and analytical assistance, financial and regulatory measures.

AUCTIONS

NON-RESIDENTIAL UNIT ON CLEAR PONDS IS FOR SALE

A non-residential unit of 39 sq.m. located in the Zhukovsky Street, Basmanny sub district is listed for auction. The initial auction price is RUB 8.19 m.

The building with the unit is not a cultural heritage site.

The unit has a free functional permitted use, is equipped with the necessary services and will be sold at an open e-auction. It can accommodate an office, a cultural and leisure facility or a shop.

Applications are to be submitted by February 24, 2021, the auction will be held on March 4.

INVESTORS CAN BUY NON-RESIDENTIAL UNIT IN ZAMOSKVORECHYE

The city has listed for sale a 163.4 square meter non-residential unit of free functional permitted use located in the Monetchikovsky lane. The property is offered for sale without any price announcement, its value will be offered by the bidders themselves. 

The unit is located in the basement, the first, second and third floors of a brick non-residential building constructed in 1914. The building is within walking distance from the Paveletskaya metro station and is not a cultural heritage site.

Any individual or legal entity as well as an individual entrepreneur may buy the property. The auction deposit amount is RUB 2 m. Applications are to be submitted by March 31, 2021, the sale results will be announced on April 2.

 

Thank you for your attention!

Moscow Department of Investment and Industrial Policy

www.mos.ru/dipp

Moscow City Investment Agency

investmoscow.ru

Supplier Portal

www.zakupki.mos.ru

The digest archive is available on the Moscow Investment Portal.