MOSCOW INVESTMENT DIGEST December 2019
The Moscow Department for Investment and Industrial Policy, in cooperation with the Moscow City Investment Agency, presents a new issue of the Moscow Investment Digest.
Moscow Has Chosen Investor for New Cable Way Construction
The cable way over the Khimki water basin will be constructed by a consortium including the Swiss cable way manufacturer Bartholet. The investor will invest over RUR 3 bn in the project.
‘The Moscow government has completed the tendering process for construction and operation of the cable way between the Skhodnenskaya and Rechnoy vokzal metro stations’. The winner is the consortium, which has already established itself in the project for the cable way construction on the Vorobyovy Gory (Sparrow Hills). The draft concession agreement does not imply the expenses of the city budget on the creation of a transport facility. Moscow will own the cable ways upon its commissioning. The concession time is 25 years,’ - said Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
The winner of the competition was determined on the basis of a number of criteria including the presence of air conditioning in the cabs, the frequency of movement, the number of free working days per year, etc.
‘Cable way length will be 2.3 km; it can be launched by 2023. The cable way will connect the areas of Levoberezhny, North Tushino and South Tushino and unload public transport and the road network. A preliminary study of urban planning documentation for the future cable way has already begun. Implementation of the project will reduce the travel time between districts of Moscow from forty-five minutes to seven’, – said Alexander Prokhorov, Head of the Moscow Department for Investment and Industrial Policy.
The cable way will be integrated into the city transport network, it will be possible to pay for travel by Troika card. According to the forecast, the passenger flow will be up to 19,000 people per day.
‘At the moment, the city authorities are considering the possibility of creating several more cable cars that will solve transport problems in various areas of the capital. The new facilities will help improve transport services for areas with a total population of more than 1.6 m inhabitants’, - explained Leonid Kostroma, Head of the Moscow City Investment Agency.
Gemamed Will Launch Production of Medical Products in Moscow
The Moscow government will sign upon the tender a 10-year offset contract with the investor.
‘The Moscow government has summed up the tender results to sign an offset contract enabling to create a manufacture of medical products for stoma patients which will almost completely substitute the import, - commented Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations, – The offset contract will be signed with OOO Gemamed at the end of the year. The contracted supply volume will amount to RUR 8.6 bn’.
Over three years an investor will invest RUR 1 bn in a project in Moscow. The investment stage will be held in two stages, taking into account the varying degrees of complexity of manufacturing products that will be supplied for urban needs for eight years.
This is the third offset contract for the production of medical devices for the capital. The advantages of offset for the city are import substitution in socially significant areas, an increase in the tax base, budget savings, since as a result of competitive procedures the price of purchased products is reduced, and in the future - the prices of subsequent government contracts. For the investor, signing of the offset is a high reliability of the buyer, a long-term guarantee of sales of localized products and the subsequent inclusion in the regional register of sole suppliers.
Moscow Remains Most Investment-Attractive Russian Region
Moscow has again headed the RAEX composite investment attractiveness ranking of the Russian regions (‘RAEX - Analytics’). The ranking results have been presented at the 17th Regional Investment Congress ‘Best Practices of Investment Attraction in Regions’.
Moscow has ranked first in investment potential of Russian regions and quality of social infrastructure and is also a region with the lowest investment risks.
The volume of the targeted investment program in Moscow for 2020–2022 is more than RUR 2 tn. These funds will be used to implement priority projects in transport, social services, landscaping, etc. Today, for every ruble invested by the city in the infrastructure development, it is possible to attract more than RUR 3 of private investment’.
Moscow Procures Modern Angiographs
Moscow will sign life-cycle contracts with the supplier of this complicated medical equipment used for blood vessel diagnostics. The total price of two contracts is RUR 1.45 bn.
‘The Moscow government has summed up the tender results on supply of 16 angiographs to city medical facilities. Three manufacturers for each of the two competition lots participated in the application. The winner is the Philips company. Life cycle contracts include not only the supply of equipment, but also its service for 10 years, including the purchase of spare parts and consumables, training personnel to work with equipment, updating equipment software’, -explained Alexander Prokhorov, Head of the Moscow Department for Investment and Industrial Policy.
The initial (maximum) contract prices following the results of competitive procedures were reduced by a total of 38.3% - from RUR 2.35 bn to 1.45 bn.
‘In 2020, Moscow will continue to purchase modern complex medical equipment (ultrasound, x-rays, mammographs, endoscopic equipment, etc.) through the LCC. It is supposed to include in the clause of the contract for future procurement requirements for the localization of the supplier’s service base in the city and, possibly, the production of components and spare parts’, – said Leonid Kostroma, Head of the Moscow City Investment Agency.
Moscow has been signing life-cycle contracts since 2013: their total value is currently RUR 467.9 bn.
Moscow Gets 50% of Foreign Investments in Russia
The cumulative direct foreign investments (DFI) in Moscow are USD 247.6 bn as of July 1, 2019 according to the Bank of Russia.
'Moscow is currently getting half of the DFIs in Russia. The largest investors in the capital are such countries as Germany, Finland, France, Italy, Austria. Most often, foreign business invests in companies engaged in financial and insurance activities, in the field of trade, in the industry and high technology sectors, as well as in real estate’, – explained Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations.
‘Foreign business can always get different preferences from the Moscow government. The city provides preferences to support new investment projects in industrial production what decreases the regional tax burden by 17–25%’, added Leonid Kostroma, Head of the Moscow City Investment Agency.
Tax Revenue to Moscow Budget from Tax Patent System in First Nine Months of 2019 Increased by 11%
The revenue growth to the Moscow budget from the tax patent system since the beginning of this year amounted to 11% compared to the same period in 2018 and reached RUR 3.5 bn.
According to Vladimir Efimov, Deputy Mayor of Moscow for Economic Policy and Property and Land Relations, 78,500 patents were acquired in Moscow over nine months. ‘The most demanded industry for the patent tax system is retail: in nine months, 33,600 patents were acquired in this area. In second place are household services. In this area, 9,900 patents have been acquired. In third place are rental services for residential and non-residential premises: lessors have acquired 9,100 patents within nine months,’ – said the Deputy Mayor.
The patent exempts the entrepreneur from paying VAT, personal income tax, property tax and trade levy, does not require accounting and minimizes tax reporting, which greatly simplifies the conduct of business.
Four More Moscow Companies Got Industrial Complex Status
Thus, taking into account earlier decisions, 53 industrial complexes and 36 technoparks with over 100,000 employees will operate in Moscow.
In December the Moscow government decided to grant the industrial complex status to four enterprises: GosNIIAS, the leading research center for aviation systems, VIAM, State Research Institute of Aviation Systems, Space Monitoring Systems, VNIIEM, Research and Production A.G. Iosifian Corporation Information & Control and Electromechanical Complexes and Meridian.
Thanks to the new statuses, enterprises will receive significant support from the city authorities: income tax, land tax and property tax benefits, as well as lower rental rates for land. The total reduction in the tax burden is 17–25 percent. The funds saved as a result of assigning the status of an industrial complex can be used by enterprises to develop and modernize production, increase employee wages, labor safety, training, etc.
Moscow Will Help Russian Oldest Machine-Tool Plant to Extend Production
TRANSMASH – an almost 100-year-old Moscow brake plant – will get a development loan from the Moscow fund of industrial and business support (MFPPiP). The company will spend the money for procuring modern high-precise equipment, which will increase productivity, accuracy of operations and product quality.
The total amount of investments in the project will amount to RUR 74 m, while the plant will receive RUR-51.8-bn (70% of the required amount) from MFPPiP. A soft loan was issued to the company for a period of 5 years at 2% per annum, which is significantly lower than the bank rate.
‘MTZ TRANSMASH is the oldest machine-tool plant in the country and a leader in developing and supplying new brake components in the Russian market. Today, the plant’s products are used in 30 countries. Thanks to the support provided to the plant by the capital fund for supporting industry and entrepreneurship, the company plans to release another 17 types of new products,’ - said Alexander Prokhorov, Head of the Moscow Department for Investment and Industrial Policy.
Building Lots for Two Transport Hubs in the East and Southeast of Moscow Listed for City Auction
Investors will be able to build two transport hubs - Ulitsa Dmitrievskogo 4 and South-East Applications are currently being accepted for participation in both competitions.
‘The winner of the open tender will be able to build a residential building with a total floor area of about 12,000 m2 in the east of Moscow, as part of Ulitsa Dmitrievskogo 4 Transport Hub. The initial price of this lot is RUR 101.1 m. And in the South-East Transport Hub after the city bidding may appear shopping or sports complex with an area of 7,900 m2. The starting price is RUR 68.9 m,’ - said Gennadiy Degtev, Head of the Moscow Competition Policy Department.
Applications for the first lot - a 99% share in the authorized capital of OOO Ulitsa Dmitrievskogo 4 Transport Hub, are accepted until February 11, 2020.
Applications for participation in the tender for the second lot - the acquisition of a 99% stake in the authorized capital of OOO South-East Transport Hub - can be submitted before February 18, 2020.
Land Plots in 6 Moscow Districts Will Be Listed for Auctions
It is planned to construct a medical center, a public complex, a car repair shop and other facilities on them. Land will be put up for auction in January 2020.
In the North-Eastern Administrative District, it is planned to build a production facility. In the Northern Administrative District in Lukhmanovskaya Street, it is planned to give the land for the construction of a medical center. Its area will be 729.3 m2.
In the Verhnie Polya Street in South-Eastern Administrative District, it is planned to build a production facility with an area of 10,300 m2. And in the South-Western Administrative District in Sinelnikovskaya Street, it is planned to build a public complex, where they will conduct trade, cultural and leisure activities. Its area will be 2,100 m2.
A car service enterprise can be built in a closed joint-stock company. In the North-Western Administrative District, it is planned to give the land plot for the construction of a transport service facility with retail premises.
Information on the objects put up for auction can be obtained on the Moscow Investment Portal in the Auctions section.