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The attractiveness of the regions of the east of Russia for investment is recognized as low - EastRussia | Analytics of the East of Russia

Irkutsk
Ulan-Ude

Blagoveshchensk
Chita
Yakutsk

Birobidzhan
Vladivostok
Khabarovsk

Magadan
Yuzhno-Sakhalinsk

Anadyr
Petropavlovsk-
Kamchatsky
Moscow

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The Far East still loses the struggle for investment

Investments in the region are still assessed as risky

Far Eastern subjects of Russia are losing the fight for investment, some of them are labeled as high-risk. This is stated in the published analytical research "Rating of investment attractiveness of Russian regions" for 2017 year, collected by analysts RAEX rating agency "Expert".

The Far East still loses the struggle for investment
Despite the close attention of the federal center and even the creation of a separate Ministry for the development of the Far East, subjects have not become more attractive to investors yet. Senior expert of the department of regional studies "RAEKS-Analytica" Vladislav Bukharsky explained that according to the rating, in 2017 the natural resource potential of the Far Eastern Federal District was 20,7% of the total Russian, while the industrial one, only 4,3%.

At the same time, poorly developed logistics infrastructure hampers the development of virtually all industries. According to Rosstat data for 2016 year, the overall indicator of the density of railways in the Far Eastern regions amounted to 14 km of tracks for 10 thousand square meters. km of the territory, which is several times lower than the national level (50 thousand square kilometers of the territory), while in the Kamchatka Krai, Magadan Oblast and the Chukotka Autonomous District, there are still no railways. The main type of economic activity in the Far Eastern regions is still mining. Its share in the gross regional product of DFO subjects was 28,6%.

Analyzing the economic components, the agency's experts attributed to the regions with low investment attractiveness potential Yakutia, Primorsky and Khabarovsk, Sakhalin region. The potential of Amur and Magadan regions was called “insignificant”. But the Kamchatka Territory, the Jewish Autonomous Region and Chukotka were also included in the high-risk regions for investing money.

According to analysts, there are fundamental economic problems due to which the Far Eastern regions are very vulnerable: small diversification of the economy, lack of labor resources and high dependence on federal budget money.

The decrease in the effect of budgetary injections on the economy was demonstrated by the Amur region (falling on 16 positions) due to a pause in the construction of the next bursts of the Vostochny cosmodrome. However, hopes are pinned on gas processing. The Amursky gas processing plant under construction, the head of the Ministry of Eastern Development Alexander Galushka called "the largest construction project in the country." The company will supply products to China and Japan.

The Kamchatka Territory, relying on fishing, also found itself in a difficult situation. Analysts note that even the federal law passed last year on the introduction of quotas for the extraction of aquatic biological resources did not help the development of fish production. On the one hand, the law will affect the investment attractiveness, as it obliges entrepreneurs to build a fishing fleet at domestic shipyards or fish processing plants in coastal regions, but, on the other hand, will require additional expenses, accordingly, the profitability of enterprises will decrease, which will serve as an impetus to their care in the shadow.

In the Republic of Sakha, all the negative tendencies have converged, which, combined with the government's sluggish economic policies, lead the region to a very tangible stagnation. Yakutia practically does not appear in the lists of large investment projects. Even at the last Eastern Economic Forum, the Yakut authorities failed to show themselves at least somehow. In addition to signing agreements on cooperation with neighboring regions around the region, the head of the republic Yegor Borisov did not flash investment achievements.

The Republic of Sakha is also abundantly "flooded" with federal finances and in 2018 will take 2 place after Dagestan on subsidies among all Russian regions, having received 43,94 billion rubles. Such a passive economic policy, with generally good indicators of investprivlekatelnosti, pushed the head of the region in the ranking of governors on the outcome of the year already on 81 place from 85.



Noticeable is the loosening of the basic diamond mining industry. All the fault is the general decline in demand for diamonds. This is indicated by the annual report of the consulting company Bain & Company. The market for diamonds recorded stagnation due to a decrease in demand from India and China.

"The situation in the world diamond market is really difficult," said industrial expert, PhD in Economics Leonid Khazanov, "Since the PRC and India are the largest consumers of diamonds on the planet, and if the stagnation in them continues, it may in principle have a negative impact to the entire global diamond market, and if the stagnation continues, it is likely that diamond mining in Russia will not decrease, because it is simply unrealistic to take and stop any ALROSA mine: it is a rather complex production with a sp the number of diamonds in kimberlite pipes does not depend on the world prices for "best friends of girls." Then ALROSA will have to accumulate "extra" diamonds in warehouses if it can not sell them on the market.In case of further deepening of demand decline , support and even more so increase production will be difficult, because it will be necessary to somehow cover production costs. "

In such difficult conditions experts of the agency "RAEKS-Analytics" advise the regional authorities to engage densely the diversification of the regional economy, the development of infrastructure and processing industries whose products can be exported.

"Due to the remoteness of the Far Eastern regions from the main domestic sales markets of the country, export orientation remains one of the few chances for the development of their industry and increasing investment attractiveness in general," explained Vladislav Bukharsky. "The TOPs (territories for advanced development - EastRussia) practically the entire range of manufacturing industries that are promising for this macroregion, but the mining industry has not yet exhausted its potential. "

Analysts unanimously assert that many Russian regions, including, of course, the Far East, will have to undergo a change in the economic paradigm.

"If before the crisis the role of these or those regional drivers was obvious (for one group of territories - the oil and gas complex, for the other - the AIC, for the third - the effect of implementing large-scale federal programs), now the picture of socioeconomic development in territorial refraction has become defocused, - experts "RAEKS-Analytic" warn. "Gradual blurring of an understandable set of levers of influence on economic growth requires from the regional authorities the complication of management tools."

Summarizing, we can conclude that in the current economic conditions, to increase the standard of living in the Far Eastern regions, it is not enough to passively observe the regional authorities for attempts to implement investment projects by federal and local players. An active position is needed to encourage investors to implement large projects aimed at the production of export-oriented products that can become points of growth and ensure the inflow of financial and labor resources into the region.