Industrial Clusters: How to Make the Regions More Attractive to Investors
14 February 2019
The mechanism of support for industrial clusters has proved to be successful
We legislated the mechanism of industrial clusters [support] more than two years ago. Over this time, 43 industrial clusters have been established, that is more than 600 enterprises. <...> The volume of output exceeds 1.3 billion roubles. Those are significant numbers, and they show a very high dynamics of the mechanism implementation. We recommend that regional authorities, corporations for regional development, state corporations and companies that are partially state-owned should continue establishing industrial clusters in order to increase the investment appeal of the regions — Denis Kravchenko, Deputy in the State Duma of the Federal Assembly of the Russian Federation; Deputy Chairman of the Committee on Economic Policy, Industry, Innovative Development, and Entrepreneurship.
Clusters are a tool to improve Russia’s competitiveness
The goals of our cluster are to determine the potential of the market, to show those niches to entrepreneurs, because it is impossible and wrong to run on public money all the time, <...> it is necessary to create an environment. A cluster is one of the very successful tools for creating such an environment — Alexander Tyunin, General Director, UMATEX Group.
We are entering the international markets <...> Basically, we cover Russia’s entire transport <...> sector. If there are clusters, it will be easier for us to have a conversation — Alexander Misharin, First Vice President, Russian Railways.
Industrial clusters allow to develop various forms of cooperation
Big enterprises create a raw material basis specifically for the development of small and medium-sized businesses. That creates a chain of technological conversions. Today, industrial parks are forced to transform into clusters in order to enhance this cooperation — Mikhail Sutyaginskiy, Chairman of the Board, Titan.
We have an unusual cluster, since clusters are typically created to build a chain of suppliers on several levels for the main consumer that makes the final product. In the three regions – Republic of Tatarstan, Moscow and Saratov Regions – we have created an industrial cluster ‘Composites Without Borders’ to build a market — Alexander Tyunin, General Director, UMATEX Group.
We have good projects. Small businesses cooperate with big ones, there are good products — Viktor Ikonnikov, Deputy Governor, Arkhangelsk Region.
Imperfections of the regulatory framework
SPIC 1 [the mechanism of special investment contracts – Ed.] did not work out; SPIC 2 has not been selected yet, but what started to gain traction was already cancelled. We must proceed gradually, we must help those growth points that provide an extensive chain for development of clusters — Mikhail Sutyaginskiy, Chairman of the Board, Titan.
A number of regions wished to join the work on our cluster, particularly, Ulyanovsk Region and Tula Region. And we encountered a problem: in order for the two regions to join the existing three, we would essentially have to start from scratch and create a new cluster — Alexander Tyunin, General Director, UMATEX Group.
Underdeveloped support system for investors
I would like to emphasize the importance of the final stage. We are now talking about how to attract investors. But it is important to go hand in hand with investors further on. These are not material measures anymore, it is the creation of business ties, training, and whatever is needed for investors not only to come, but also to stay — Olga Arkhangelskaya, Partner, Head of Real Estate, Hospitality, and Construction Services, Head of the Transportation, Infrastructure and Government, and Public Group in the CIS, EY.
We have no information [about what the investors need – Ed.]. It would be great if the region could obtain that information from somewhere. We very much want to develop this subject, analysing what we already have and what kind of conversion could be used for each enterprise — Igor Artamonov, Acting Governor of Lipetsk Region.
Lack of technology expertise system to set the priorities
There are a lot of examples when the choice falls on the technologies that are not the proper or promising ones — Grigory Ivliev, Head of the Federal Service for Intellectual Property..
It is critical to properly evaluate the technologies that are offered for investment or support from the government. There is a serious blind spot in this department — Alexander Tyunin, General Director, UMATEX Group.
Maximum use of industrial and scientific potential of the regions in the formation of clusters
Clusters need to be formed on a solid technological basis. It is necessary to create skill centres in clusters and technoparks in the regions — Grigory Ivliev, Head of the Federal Service for Intellectual Property..
We are now interested in having our largest suppliers located as close as possible to our plants in the cities and the regions. As a result, we have a better economy — Aleksey Sagal, President, Arnest.
Improving the public procurement mechanism
As of today, the winner in the public procurement system gets almost 100% of the contract. We propose to introduce a 70/30 system, when the winner gets no more than 70% of the contract, and 30% is guaranteed to companies that come 2nd and 3rd. Knowing that there is a chance to get through the filter will be a guaranteed incentive for companies to come and invest — Alexander Tyunin, General Director, UMATEX Group.
Comprehensive consideration of the investors’ interests
We are ready to provide sites and tax breaks in Lipetsk Region, we have everything specially prepared — Igor Artamonov, Acting Governor of Lipetsk Region.
We will start promoting the matter of sustainable development, among members of the association as well. This mechanism will allow our businesses to be competitive in foreign markets. Because if companies have the mechanism of sustainable development as one of their core values, their foreign partners and foreign banks are ready to compromise in terms of lending and providing additional incentives for development — Andrey Shpilenko, Director, Association for the Development of Clusters and Technology Parks of Russia; Member of the Strategic Council for Investment in New Industries, Ministry of Industry and Trade of the Russian Federation.
Using clusters for Eurasian integration
We are initiating the creation of new clusters; we are supporting those that already function. This is an opportunity for us to further integrate our countries <...> The more integration chains appear, the more clusters go beyond the borders of their regions or even the country; the more solidly and organically the countries intertwine, the stronger our union is — Aleksandr Subbotin, Member of the Board and Minister in Charge of Industry and Agriculture, Eurasian Economic Commission.
What the Eurasian Commission proposes is acceptable to us. I drafted a law on industrial policy of Armenia, with a provision that there is an industrial zone in each of the provinces — Mikael Melkumyan, Chairman, Standing Committee on Regional and Eurasian Integration, National Assembly of the Republic of Armenia.
Ensuring the continuity of government support tools
Our task is to provide financing for projects that we have already selected during the period of transition to national projects, and we will do that for projects that we have made commitments to, we will keep financing them — Sergei Bezrukov, Director of Department of Regional Industrial Policy and Project Management, Ministry of Industry and Trade.
Studying the international experience
The matter of industrial clusters was one of the key components of how China built its export base — J.V. Raman, President in Russia, Ukraine & Belarus, The Unilever Group.
The material was prepared by the Russian news agency TASS