The Moscow Department of Investment and Industrial Policy and the Moscow Investment Agency present you the next digest of the main investment events in the Russian capital.
“The program of stimulation of creation work places has been operating in Moscow since 2020. Under its terms, developers build commercial, industrial or social facilities and thus ensure the emergence of new jobs. The city in return provides investors with benefits when re-registering land plots for housing construction. Today, 27 agreements have already been signed under the program, under which investors will build 63 facilities with a total area of 1.35 m m2 and will create more than 35.500 places of work,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Developers will build 8 business centers, 6 technoparks, 4 shopping centers, 3 retail and office buildings, a production and logistics complex, a sports complex, as well as 40 educational facilities in different parts of Moscow.
“As part of the projects, 35.500 working places will be created in the city: 22.700 jobs in office, business and retail facilities, almost 10.000 more in modern production facilities and technology parks, about 3.400 in social facilities,” added Vladislav Ovchinsky, Head of the Moscow Investment and Industrial Policy Department.
At the end of 2019, the city signed an offset contract with Gemamed company, a resident of the Technopolis Moscow Special Economic Zone, to provide patients with stoma with the necessary medical devices free of charge. For 9 months, the enterprise provided almost 1.6 m products to the medical institutions of the capital.
As part of another offset contract signed in 2017, the Biocad biotechnology company has supplied about 600,000 packages of medicines for the needs of the capital’s healthcare system since 2021. Of these, almost 300.000 the company supplied from January till September of this year. As a part of the offset contract, the company produces drugs for the treatment of oncological and autoimmune diseases.
In total, Moscow signed 5 offset contracts with a total investment of RUB 12.9 bn. According to them, the capital will purchase products from manufacturers for RUB 72.7 bn. Four of the contracts provide for the organization of the production of medicines and medical products, one of them are for the production of baby food.
Moscow plans to conclude 4 more offset contracts for the supply of medicines. Under the terms of the contracts, suppliers-investors will undertake obligations to localize production in the city within 2-4 years and start producing medicines. Among them are immunodepressants, antitumor, anti-inflammatory, cardioprotective, hypoglycemic and antihistamine drugs.
The city will lease land plots to investors for the construction of new production facilities as part of the implementation of 27 large-scale investment projects without bidding. “The investments in the construction of industrial facilities will be more than RUB 75.5 bn. The implementation of the projects will create over 16.000 new jobs,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Over 1.1 m m2 of various real estate: industrial, warehouse and administrative premises. 10 of the enterprises will appear in Troitsky and Novomoskovsky administrative districts. The area of objects under construction will be 422.000 m2.
“There will be production facilities for food products, building materials, technological equipment, a logistics complex of a large Russian marketplace in the district. 10.600 specialists will be able to employ,” said Vladislav Ovchinsky, Head of the Moscow Investment and Industrial Policy Department.
“Investments of companies that are the Technopolis Moscow Special Economic Zone (SEZ) residents amounted to RUB 23.8 bn for the first three quarters of 2022. This is RUB 2.1 bn more than in the same period last year, and three times more than in the same period of 2020, when investments exceeded RUB 7.3 bn. The total amount of funds that residents have allocated for the development of production throughout the entire period of work in the Special Economic Zone amounted to more than RUB 87.7 bn,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Currently, 91 high-tech companies operate in the SEZ. They have resident status, which gives manufacturers the right to tax and customs preferences.
“The maximum volume of investments by residents of the SEZ of the capital for 9 months of 2022 was among microelectronics enterprises. The amount of their investments reached RUB 14.7 bn. This is almost twice as much as in the same period in 2021, when their investments amounted to almost RUB 7.5 bn,” said Vladislav Ovchinsky, Head of the Moscow Investment and Industrial Policy Department.
The Moscow Government has approved the procedure for concluding regional agreements on the protection and promotion of investments to which partly belonged to the Capital. In addition, a list of normative legal acts has been approved, to which the so-called stabilization clause can be applied. Agreements may be concluded in case of implementation of projects in the spheres of economy, healthcare, education, culture, sports.
The mechanism of agreements on the protection and promotion of capital investments provides for two main measures to support investors. The first of them is a stabilization clause. It’s a guarantee that the legislation applied in the framework of the investment project will not deteriorate during the entire period of its implementation. The second one is the possibility of compensating part of the costs incurred by the investor, subject to a number of requirements for the financial efficiency of the project.
The accumulated volume of China's foreign direct investment in the economy of the Russian capital at the beginning of this year amounted to USD 910 m. Of these, USD 616 m are accounted for by participation in the Moscow enterprises assets. At the end of 2021, the external trade turnover between Moscow and China increased by almost a third and reached USD 64.5 bn, and in total, over 5 years, Chinese business investments in the city’s economy increased by 1.3 times.
Investments in the Moscow economy from the Indian business also increased. Over the past 6 years, they have increased more than 4 times. Thus, according to the Central Bank of the Russian Federation, at the beginning of this year, the accumulated volume of foreign direct investment from India into the Moscow economy amounted to USD 143 m. As a rule, Indian investors invest in the food and pharmaceutical industries, construction, trade and real estate.
“Metropolitan enterprises continue to successfully organize their work in the new conditions, first of all, this concerns the supply of raw materials, components and equipment. This allows to maintain a positive trend in the industrial production. In January-September of 2022, Moscow enterprises increased their output by 7.4%. The volume of production in the manufacturing industry increased by 9.2% compared to the same period last year,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
In September alone, the total volume of industrial production in Moscow increased by 17.9% compared to the same month last year, and manufacturing enterprises – by 20.2%.
The turnover of the Capital's trade and service enterprises in January-October of 2022 amounted to RUB 14.2 trln. This is 21.6% more than in the same months of the previous year in current prices.
“For 10 months of 2022, the revenue of trade enterprises amounted to RUB 6.3 trln, which is almost 22% more than in the same period of 2021. One of the main growth drivers was a 43.8% increase to RUB 4.4 trln in sales in the non-food sector, including the online segment. The turnover of food trade companies increased by 10.2% and reached RUB 1.1 trln,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
The most significant growth over the 10 months of this year was observed in cultural, leisure and sports organizations (by 57.1%, up to RUB 306 bn), public catering enterprises (by 39.9%, up to RUB 431 bn), as well as in the hotel and tourism business (by 30.1% compared to the same period last year, up to RUB 634 bn).
“The turnover of the capital's small and medium-sized enterprises for 10 months of this year reached RUB 3.2 trln, which is 26% more than the same period last year. Over the same period, the share of small and medium-sized businesses in the total turnover of trade and service enterprises in Moscow increased by 0.8 percentage points, to 22.7%,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Trade is traditionally the leader in terms of turnover. In it, small and medium businesses earned RUB 1.13 trln in 10 months, which is 18% more than in the same period of 2021.
“In March of this year, Sergei Sobyanin approved a set of anti-crisis measures to support business, which included soft loans, deferrals for real estate rent, subsidies and grants. RUB 48.6 bn are provided for their implementation. At the same time, more than 36.000 companies have already applied for help, 12.500 of them received support in the amount of RUB 27.2 bn,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
One of the most requested measures was the deferment of payments for the lease of urban property and land, as well as the optimization of rental rates. The total amount of such support is estimated at RUB 14.8 bn. Assistance was received by 1.400 organizations.
“Since the end of March 2022, preferential investment loans for almost RUB 10 bn have also been approved for Moscow enterprises. Support was received by manufacturers of cosmetics, waste processing companies and other industries. The funds can be used to purchase new equipment and finance the costs of creating an industrial infrastructure in the city, as well as to acquire rights to the results of intellectual activity,” added Vladislav Ovchinsky, Head of the Moscow Investment and Industrial Policy Department.
Moscow exporting companies will be able to reimburse part of the costs of selling products outside of Russia under current year contracts. The corresponding resolution was signed by the Moscow Mayor Sergei Sobyanin. Previously, the City only reimbursed costs for the last 3 fiscal years prior to the year the application was made. To do this, exporters had to provide the necessary documents.
The maximum amount of the subsidy is RUB 3 m, but not more than 50% of the volume of export earnings and taxes paid to the City Budget.
“Entrepreneurs, who wants to develop the hotel business in the capital, can now join the preferential program and rent a building as a hotel at a rate of RUB 1 ruble per m2 per year,” said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
Investors who decide to join the program must participate in auctions. If we are talking about an ordinary building, the winner of the auction undertakes to carry out a major overhaul of the building within 18 months, and if it is about a cultural heritage object, to complete restoration and restoration work within 5 years.
The procedures for bidding for the right to place non-capital construction projects have been unified in the Capital. Now plots for them will be sold online, and the Moscow City Department for Competition Policy will be the organizer of the auction. Generic requirements for holding electronic auctions for the placement of non-capital construction projects in Moscow will make it possible to unify procedures, expand the circle of potential participants and optimize the auction mechanism.
Over the past 3 years, 89 non-capital objects have been sold, and the level of competition averaged 5 participants per lot. Among the implemented facilities, it is planned to organize ground parking at 18 sites, non-capital car services and car washes will be installed at 10 sites, and sports and recreation complexes will be erected at 61 sites.
Since the beginning of 2022, entrepreneurs have rented 6 land plots from the city in Troitsky and Novomoskovsky, 5 in Zelenograd, 3 in the Southwestern, one each in the East, West and South administrative districts. Investors will build there over 106,000 m2 of real estate.
Thus, retail and household facilities with a total area of almost 9.000 m2 will appear on 6 sites. Sports and recreation complexes with a total area of 51.100 m2 will be built on 4 sites. 3 more sites has been leased for the construction of multifunctional centers with an area of 42.400 m2. there will be cultural and leisure centers, roadside services, as well as cafes on the other sites.
Department of Investment and Industrial Policy of the City of Moscow
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