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“Rebooting” Regional Development Tools

On 14 February 2019, a panel session «’Rebooting’ Regional Development Tools» was held at the Forum.

Vadim Zhivulin, Deputy Minister of Economic Development of the Russian Federation, noted that support tools for business vary in different countries. We must consider the global experience in this area when establishing a new system of preferential support for the regions.

Because of the variety of investor support tools, which have been shaping up for several years, we have created confusion over preferential schemes that work at 500 sites and few people know how they differ from each other.

Investors today aren’t as concerned about incentives and tax regimes, as they’re worried that the rules of the game stay the same, as well as the conditions for access to the region, i.e. the availability of all necessary infrastructure (electricity, gas, water and heating), assistance in finding contractor suppliers and product sales.

The idea of the Ministry of Economic Development of Russia is to summarize the experience of past years, to codify regulations and repack them into a new kind of special territorial preferential regime, which could be called ‘Special Economic Zone’. A specialized set of preferences will allow this tool to be shaped up for a specific projects and regions.

Sergey Tyrtsev, First Deputy Minister for the Development of the Russian Far East, believes that adequate and effective development tools have been established in the Far East. «We will support unification, but the Russian Far East needs extraordinary, highly flexible preferences,» said Sergey Tyrtsev.

Alexander Gusev, Governor of Voronezh Region, supported the proposals for unification of preferences, but with the condition of preserving the ones that already exist and work well.

Vittorio Torrembini, Vice President of the Association of Italian Entrepreneurs in Russia, said that not merely a unification would be required, but also the entire system needs to be simplified. Any kind of support tool should provide the investor with guarantees of ownership, available connection to the infrastructure, clear incentives and the end market. He also believes that it is necessary to introduce not only high technologies, but simply good product mechanisms.

Alexey Ivanchenko, Deputy Chairman of the VEB.RF State Development Corporation, believes that any platform should create comfortable conditions for doing business, as well as ensure transparent decision-making and simplified procedures.

Anatoly Artamonov, Governor of Kaluga Region, recalled his twenty years of experience in transforming the region from a deeply depressed area into a stable donor. He believes that in terms of today’s situation in the world combined with sanctions, we need to consider new support tools for businesses, including small and medium-sized ones; completely freeing from bureaucratic procedures the investors who come into the region not asking for anything but doing their own business. The governor was also pleased with the success of the Russian banking system and said that it was necessary to look for middle ground between its appetite for profit and lending terms, which may be impeding the country’s development today.

Sergei Zhigarev, Chairman of the State Duma Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship, supported the proposals of the speakers, but stated: «Russia is large, all regions have their own features, and so do monotowns. The system must be flexible and take those features into account.»

The panelists also noted that unification always has a positive effect and said that everything must be done very carefully, with consideration of the global practices and introduction of the international terminology.

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