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The Big Four
Will there be an investment paradise in the Far East?
The Far Eastern region has for some time acquired a rather strange image. On the one hand, he is called one of the most problematic regions of Russia, arguing on this basis that he needs particularly intensive state support. On the other hand, the Far East is considered promising and actively developing due to its gradual integration into the APR region. It remains unclear whether the Far East can and should develop independently using the existing interest of Russian and foreign business, or it must be implemented a model of active federal support, since the Far East itself can not provide its development.
An analysis of the investment situation in the Far East argues in favor of the second thesis. And the most recent years have been dysfunctional, and the region now needs a new start of the investment process. The reason is that the effect of the recent multi-billion dollar investment was short-term. As you know, the main public funds went to two megaprojects. First, this is the construction of facilities for the APEC summit in Vladivostok, as a result of which new bridges, buildings of the Far Eastern Federal University, an air terminal, etc. have appeared in the city. Secondly, the East Siberia - Pacific Ocean oil export pipeline has been built.
Anyway, the increase in the volume of investments in the Far East was mainly provided by the political decisions of the state, while the investments themselves came from the federal budget and funds from state corporations. It is noteworthy that according to 2012, the share of funds from the federal budget in the total investment in the Far Eastern Federal District significantly exceeded the average Russian indicator (14,8% and 9,6%, respectively; in 2011, this share even reached 18,1%). Among the regions in terms of the share of federal budget investments in 2012, Kamchatka, Primorye and Amur Oblast (more than 20%) stood out. In 2011, Primorye, Magadan Oblast and Chukotka (more than 30%, and in Primorye - 38,6%) were extreme examples. Moreover, in 2010 on Kolyma, the share of federal budget funds in investments exceeded 40%. If we talk about the volume of funds, then in 2012, the federal budget invested 43,5 billion rubles in Primorye (in 2011 - record 118,7 billion), 37,1 billion in Yakutia, 20,2 billion in the Amur region.
It was due to the federal center in the Far Eastern Federal District that the positive dynamics of investment growth over the years has been maintained. Even in the crisis year 2009, when the index of investments in Russia was 86,5, in the Far East their growth was secured by 7,1%. The maximum investment growth in the federal district was obtained in 2011, by 26,5% and also through the implementation of state programs. However, this opportunistic growth (the APEC summit was held in 2012) was followed by a decline, and in 2012, the investment index was only 85,2 compared to the previous year. At the same time, the most dramatic decline was in the volume of investments in the Primorsky Territory, where the summit was held, by 41%. These facts clearly show the excessive dependence of the investment process in the Far East on federal injections. In the now changed situation, the question of how to attract Russian private and foreign investments to the Far East has become even more acute.
In general, Yakutia, Sakhalin, Primorsky and Khabarovsk Territories consistently make up the "big four" regions, which, as a rule, attract the lion's share of Far Eastern investments. The Amur region lags far behind them, but its share is also relatively high, amounting to about 10%. It is followed by the Trans-Baikal Territory. Outsiders are Kamchatka, Chukotka, Magadan Oblast and the Jewish Autonomous Region. If we compare the results of 2012 and the Soviet period (1990 year), then it turns out that not much has changed. The role of Sakhalin has grown significantly due to new projects and, on the contrary, the share of the Magadan Oblast and the Trans-Baikal Territory has fallen, where in the market conditions the competitiveness of the economy has dropped. In other respects, the positions of the regions are about the same as, by the way, once again shows the determining role of the state, since it was the investor in the years of the planned economy.
With regard to investment dynamics, then, as already mentioned, 2012 year was clearly a failure. Investment fell not only in Primorye, but also in the Khabarovsk Territory, the Amur Region, on Sakhalin, in the Jewish Autonomous Region. Significant growth, by contrast, was demonstrated by Chukotka (by 51,6%) and the Magadan Region (by 21,3%), as well as by Yakutia (by 10,2%). However, no region shows a stable dynamics, perhaps. A remarkable example is Sakhalin, where investments change from year to year depending on the progress of key projects. For example, in 2000, they fell almost twice, then a steady decline in investment continued in this region throughout the 2007-09 years. In 2010-11 a new increase was observed (including almost a third in 2011), but in 2012 there was a decrease again. The situation in Chukotka is extremely unstable, where a weak economic base causes abrupt dynamics of indicators. For example, in 2000, investment in this region has tripled, and in 2010, it has halved. After a sharp decline in Chukotka, there is a recovery growth with very good dynamics.
Of particular interest, given attempts to integrate Russia into the APR, of course, represent foreign investment. Despite the advantageous geographical position, the Far East is clearly not spoiled by them. The share of the Far East in the volume of foreign direct investment (FDI) entering Russia is significant (17,3% in 2011, 11,6% in 2012), which can serve as a positive signal (although, given the specifics of statistics, it is still impossible to separate funds Foreign companies from Russian funds coming from offshore and foreign structures of Russian by origin of FIGs). Nevertheless, the dynamics here is extremely unstable, although we can definitely say that after 2000 the situation has become better. So, in 2005, the Far East attracted almost 4 billion dollars of FDI, and in 2009 - only one and a half billion. In 2011, the indicator again increased to 3,2 billion, and in 2012, it fell to 2,2 billion. According to preliminary data, the decline continued in 2013 year. Thus, there is no stable influx and sustained growth of foreign investment in the Far East.
Sakhalin's very special role is also noteworthy, since the main stream of foreign investment went to its oil and gas projects. This region steadily and confidently outstripped all other regions of the Far East up to 2013, but the receipts from abroad change from year to year, which also determines the general volatile dynamics of the Far Eastern indicators as a whole. For example, in the successful 2005 for the Far East, Sakhalin provided almost the entire volume of FDI for the macroregion.
In recent years, regional diversification has been noted in the situation with foreign investments, which should be recognized as a positive trend. On the one hand, the role of Sakhalin is falling, which is caused by a decline in foreign investment in 2012-13. On the other hand, positive developments have become especially characteristic of the Amur region. In 2012, she received almost 560 million dollars in FDI. Most recently, the role of Primorsky Krai has increased, where FDI increased sharply in 2012 (just amid a decline in federal investment) and for the first time exceeded 400 million dollars. In 2013, the growth of foreign investment in Primorye continued, and this region for the first time bypassed Sakhalin. In addition, Zabaykalsky Krai began to attract more foreign investment, where their volume in 2012 was more than 200 million dollars. At the same time, Kamchatka is still receiving very little FDI, the Jewish Autonomous Region clearly lags behind.
Thus, the investment attractiveness of the Far East and Transbaikalia is not at a high level and still needs to be stimulated through special public policy measures. The regional authorities can significantly influence this process, although their role remains small, and real experts are skeptical about real efforts.
In particular, the most well-known and made up over many years rating of the investment attractiveness of the Russian regions of the Expert Rating Agency is not inclined to overestimate either the potential of the Far Eastern regions or the investment policy of regional authorities. In the 2013 ranking, most of the regions were divided between the two groups. One of them can be called relatively favorable (lowered potential, but moderate risk), it includes just those four regions that attract investment best of all - Yakutia, Sakhalin, Primorye and the Khabarovsk Territory. On the other hand, four regions fall into obvious outsiders (low potential and high risk); these are Kamchatka, Chukotka, the Magadan region and the Jewish Autonomous Region. In the intermediate position are the Amur Region (low potential and moderate risk) and Transbaikalia (low potential and high risk).
At the same time, speaking of the policy of regional authorities, the regions of the Far East are grouped somewhat differently. With the regional investment policy, the indicator of managerial risk is directly interrelated, which is assessed by the "Expert", along with other areas of investment risks. Here, the best way to assess the activities of the authorities of Sakhalin (10 place on management risk) and Yakutia (12 place), the number of relatively successful regions include the Amur region (26 place) and the Magadan region (29 place). On the other hand, low positions are occupied by Kamchatka (63 place) and Chukotka (82 place). The rest of the regions can be called middle peasants: Khabarovsk Territory (35 place), Transbaikalia (36 place), Primorsky Krai (38 place), Jewish Autonomous Region (42 place).
Recently, measurements of the investment climate in the Russian regions have become a state matter. A pilot national rating of the investment climate in the regions of Russia, which is being implemented by the pro-government Agency for Strategic Initiatives for the Promotion of New Projects (ASI), has been launched. If the rating agency "Expert" has a complex and not transparent methodology, this rating is much easier, because it is based on expert surveys. In the pilot sample (21 region) three large Far Eastern regions came into the region, which, we note, attracts investments - Yakutia, Primorsky and Khabarovsk Territories. And the result of the polls was deplorable. The Primorye Territory was in the worst group E, and it turned out to be the most unfavorable region of all those included in the sample (in all directions, it received the lowest marks - five). Yakutia and the Khabarovsk Territory are located in the penultimate group D. But it is important to note that in the direction of "regulatory environment", which is more connected with the work of regional authorities, all three Far Eastern regions received lower estimates, i.e. Fives. Thus, in the ASI rating, which claims to be the main and official status, the Far East starts with a very low start. You can, of course, refer to the inadequate quality of the expert survey, but real problems still exist.
In the most recent years, following the requirements of the federal government, which it began to formulate with respect to regional investment policy even during the times of D. Medvedev’s presidency, the regional authorities in the Far East began to pay more attention to work on improving the investment climate. The authorities are implementing the requirements of the federal authorities and ASI. Investment standards are being introduced, investment declarations are formulated, and investment advice is being created. In the regions, laws have been passed on state support of investment activities and on the procedure for granting state guarantees, in some cases regional targeted programs exist to create a favorable investment climate. Also, regional authorities create specialized structures, such as investment agencies (Primorsky Krai, etc.), development corporations (Kamchatka, Primorye, etc.), introduce the institution of investment commissioner, which is one of the officials of the regional government (Khabarovsk Krai, etc.). The work on holding investment forums has intensified, a new example of which is the international forum Far East - 2014, which took place on September 4-5 in Petropavlovsk-Kamchatsky (which is especially important in Kamchatka, given that there is too little investment in the region).
However, on the other hand, one should understand that not so much depends on regional authorities, and their investment policy itself is often formally bureaucratic and does not arouse enthusiasm among investors. This can be judged, for example, by the very different quality of information provided on regional investment portals and the very presence of such portals. In particular, good information and insight into investment processes can be obtained on the website of the government of Primorsky Krai. The information on the Amur region, Kamchatka, the Magadan region, etc. is well organized. On the contrary, informing investors by the authorities of Chukotka, the Khabarovsk Territory, etc. cannot be called benevolent and full-fledged.
At the same time, in the context of budgetary constraints, it is clear that only a few regions can and do want to directly invest in the Far East, as well as in the country as a whole. So, according to the share of funds from the regional budget, only the Kamchatka Territory is allocated in the total amount of investments: in 2012 this share was 16,6% (2011% in 12,6). In absolute terms, most investments come from the regional budget in Yakutia and Primorye. As for indirect incentives, the nuances of regional investment legislation may vary slightly, but this is not so important: after all, the federal government is now asking the rules of the game. It is she who determines not only investment policy in the Far East, but also what benefits regional and municipal authorities should provide to investors, including. For priority projects of privileged state corporations. In these circumstances, the role of regional authorities in investment policy will remain small, if not insignificant, no matter what efforts they make. This role is more limited to local projects in the field of local infrastructure, agriculture, forestry, trade, etc. A sharp increase in investment these projects will not provide.
Thus, the federal authorities are ready to invest large amounts in the Far East, but stubbornly do not solve the problem of balanced territorial development. Within the framework of the state program of socio-economic development of the Far East and the Baikal region, the Primorsky Territory remains a priority region, great attention is paid to Sakhalin. Of course, large funds are coming and will continue to come through other programs. For example, the construction of the Vostochny cosmodrome becomes the most capital-intensive project of the Amur Region. In addition, the construction of the Power of Siberia export gas pipeline, the Gazprom equivalent of ESPO, which will pass through the territories of Yakutia, the Amur Region, the Jewish Autonomous Region and the Khabarovsk Territory, can be attributed to state projects.
The second direction is the implementation of large and mainly raw (partly - infrastructure) projects. Here you can attract foreign investment, the funds of Russian companies, both public and private. In this case, the former leader Sakhalin begins to give way to Primorsky Krai seriously. On Sakhalin, one can count on expanding the production of liquefied natural gas (LNG) and launching new offshore projects, i.e. Continuation of old trends. There are few local projects on Sakhalin, and they are all small. But in the Primorsky Territory numerous prospects are emerging for the region's new productions - oil refining, LNG production, automotive, civil shipbuilding, and infrastructure complexes (port Zarubino, etc.).
Of the large regions, the new prospects for attracting private investment are not so clear, perhaps, in Khabarovsk Krai, where previously the stake was on reconstruction of oil refining and railway infrastructure, but there are probably not enough breakthrough projects for the future. A similar "uncertain" situation differs also Kamchatka, new investment projects of which are small (a number of gold mining and fish processing enterprises) and often have local significance (for example, in agriculture). But in both cases, the situation can be changed through large infrastructure projects, for example, the radical reconstruction of the port in Petropavlovsk-Kamchatsky and the expansion of port facilities in Vanino and Sovetskaya Gavan. Perhaps in the Khabarovsk Territory it will be possible to ensure the growth of aircraft and shipbuilding.
Finally, the third area is the creation of favorable conditions for attracting investment at the sites of advanced development areas (TOP), as well as a number of new and old special economic zones (SEZ). We have already written about this more than once in our articles. All these processes are also controlled by the federal center, which will make final decisions on the placement of the PDA after it approves the relevant law. Previously, we can say that the leadership here will belong to the Primorsky Territory, where most of the TOR and a new SEZ are being created.
Of course, it is not necessary to expect the Far East to become an investment paradise. The investment processes in this macro-region were too unstable, opportunistic and politicized. In essence, they remain so now. So far, the federal center continues to play a leading role in the organization of the investment process. He will continue to invest in infrastructure, support state-owned companies and friendly private businesses, and start creating TORs. This will create a good and relatively stable base, but most likely there will not be a sharp increase in investment due to this. In essence, this model of investment policy has worked before, and the innovation in the form of TOR has so far vague prospects, taking into account the former, though not so large-scale, experience of creating an SEZ in the Far East.
One of the obvious reserves is to create more favorable conditions for the inflow of foreign investments, among which investments from China can play a special role. So far, China has not become a major investor in Russia, but this process is beginning, and its prospects are very large. Given the problems in relations with Western countries, which partly affect Russian-Japanese relations, China naturally occupies the niche of the main Russian partner in the Far East. Another poorly used reserve is the ability of regional authorities to conduct a more flexible financial and tax policy. Now the economic policy in the Far East is excessively centralized, the regional authorities have to “punch” their initiatives or focus on the fulfillment of instructions from above. The center itself wants the regions to work more actively to improve the investment climate, but the conditions for this have not been created. As for federal investments, they remain too unbalanced. An obvious stake is being made on the Primorsky Territory, which in fact has many prospects, but the future of all the other regions, and all without exception, looks very vague. Under these conditions, there is a growing need for a well-thought-out and realistic investment strategy for the entire Far East.