The head of Minvostokrazvitiya Alexander Galushka — about the investment attractiveness of the region for Russian and foreign business
Photo: RIA NOVOSTI/Alexey Filippov
Minister for Far East development ALEXANDER GALUSHKA told in interview to the correspondent “News” Svetlana Subbotina about the Ministry’s plans for 2017 how the far East implemented a new approach of the government to improve the living conditions of the far East, about the dates of the WEF, as well as the outcome of the visit of Russian President Vladimir Putin to Japan.
— The beginning of the year is a traditional time to make plans for the future. What will happen to the funding for the development of the Far East whether it will preserve the status of the region priority development?
— Development of the Far East, determined by President of Russia Vladimir Putin as a priority. The government, making decision on the funding of various programs, of course, comes out of this. So, in the Federal budget for the next three years just for new development tools — the Torah (priority development areas. — “News”), support of investment projects — provided 56 billion. It is more than two times greater than it was in the years 2014-2016.
To stimulate and support investment is certainly necessary, they play a catalytic role, but the most important system to approach to ensure that the quality of life in the far East was improved to build new schools and kindergartens, residents receive quality health care, build new affordable housing. All this should be done through the relevant state programme.
Until recently, in many cases the far East were financed by a residual principle, that is, farther to the East of the country, the lower the fiscal capacity per inhabitant.
Now this imbalance is eliminated. The Chairman of the government Dmitry Medvedev instructed to March 31, 2017 in 27 government programs to allocate a special “far Eastern” sections focused on the specific problems of the Far East and the needs of its residents.
— There is also private investment?
— In little more than a year thanks to Tori, a free port, the development Fund of the Far East, support of investment projects in the far East attracted 1.3 trillion rubles of investments. These are 470 investment projects, creating almost 80 new jobs.
I would emphasise that this investment is not just for a year or two. They will be realized gradually up to 2025. But the first 24 new businesses have opened in the far East in 2016. And this year we will see another 75 new businesses in 2018 — 118, in 2019 — 280.
73% of the total volume of attracted investments is not natural resources and not raw materials, and industries such as agriculture, transport, logistics, recycling, water resources, shipbuilding. There are foreign investments. In the total volume they make up 22%. We are not going to rest on our laurels — we will attract new investment. In the portfolio of the Agency of the Far East to attract investment and support exports are already projects worth 1 trillion rubles.
— How much already invested the Fund in the far East?
— Now Foundation [development of the Far East] supports 12 investment projects in the far East with a total investment of more than 114 billion.
In addition to funding for major investment projects, the Foundation also supports small business. Since November, we began implementing the program “Affordable credit for SMEs”, the pilot phase of which the Foundation is implementing jointly with Sberbank. Part of the Fund would give entrepreneurs loans at an average rate of 11.1% up to 10 years. 98 already issued the first credits in the amount of 1.4 billion rubles. The program was launched at the end of last year and will continue to grow.
— If you go back to the “far Eastern” sections of the government programs, how it will work?
For example, in the program of development of physical culture and sport provides additional construction in the far East, 12 sports complexes, ice rink, the stadium for 500 seats, indoor athletics arena and training complex. In the program of development of education in the development of the all-Russian children’s center “Ocean” address allocated 5 billion rubles.
— It turns out that the Far East will engage the whole government, not just Ministry?
— Indeed, and this is a new approach to public planning and financing the development of the Far East. We implement along with our colleagues in the government.
Any government program — is the essence of the state policy, the specific priorities, objectives, activities and resources. And for the Far East all of this will be produced, the Ministry together with the line ministries.
The President on 7 December a meeting of the security Council, which was devoted to the theme of economic security of the country, spoke not only about the allocation of a special “far Eastern” sections in state programs, and that funding should be such as to ensure accelerated development of the Far East. With the concurrence of the state programs we will execute the instruction of the President.
— This year the decision on reduction in electricity tariffs in the far East…
— Yes, at the latest in 2016 plenary, the senators supported the law on the reduction of electricity tariffs in the far East.
The law will reduce the cost of electricity for industrial consumers in the far East to the national average. Today it is 3 rubles 19 kopecks for 1 kWh In the far East, in some regions the price comes to 30-40 rubles. And the regional average reduction of 30%. Annually, it will save far East businesses up to 40 billion rubles, which is the source of new investment in the far East. The reduction in energy tariffs will start from 1 July 2017 and will happen in the next 2-3 years.
In 2017, the access to “far Eastern acres” will appear at all of the Russians. The Federation Council on 23 December 2016, supported the amendments in the relevant law. How this programme is in demand whether it?
— As of the end of December already 30 thousand in the far East applied for a “far Eastern hectare”. And this number is increasing every day. Most of the people were taking the plots for house construction and agriculture. With this in mind we created a list of more than 35 measures of the state support available to the citizen who received the “far Eastern hectare”. On the basis of the Agency for the development of human capital in the far East created a single support centre recipients of land.
— But if under the earth — “diamonds”?
— The subsoil is the property of the state. Yes, they can be developed, but it is necessary to obtain special permission to enter into a license agreement with the state.
— Recently hosted the visit of the Russian President to Japan, you were part of the Russian delegation. What succeeded or failed to achieve?
— If to speak about economic results of the visit, the 81 documents signed between the Russian and Japanese parties, 23 of them directly related to economic cooperation in the far East.
For example, the Japanese side plans to implement (signed agreements) in Primorsky Krai, the project on construction of a woodworking factory with a total investment of 20 million U.S. dollars. The depth of wood processing will be 54% of the volume of the workpiece this is a serious indicator. Wood waste, the company plans to put on production of fuel granules (pellets).
In addition, actively discussed cooperation between Russian and Japanese companies that will work on the introduction of advanced medical technology. In particular, it is planned to create a rehabilitation centre in the free port of Vladivostok.
Between the Agency of the Far East to attract investment and support exports and the Japanese Bank for international cooperation (JBIC), had been signed the main conditions of creating a joint company which will be engaged in attraction of Japanese investors in the priority development areas in the free port of Vladivostok.
— And what about the situation on the Kuril Islands?
— There is a separate Federal program for the development of the Islands through 2025. During this time it is planned to build transport infrastructure (to make smooth transport with Sakhalin and the mainland), to provide residents with affordable and comfortable housing, modern communication and attract serious investment.
Speaking about the cooperation with Japan, it is preparing projects for the implementation of joint economic activities.
— You also negotiate with Chinese investors…
— Currently, the Russian-Chinese cooperation in the far East is developing very actively — 23 projects are implemented with investments from China, totaling about $3 billion.
We have prepared and submitted to the Chinese side’s proposal on the establishment of the far Eastern center for support of investors and entrepreneurs from China. This mechanism, in our opinion, will give the additional necessary momentum to Russian-Chinese cooperation in the macro-region and will in order to increase the number and quality of incoming investments.
— Who exhibits the greatest interest — the Japanese partners or Chinese investors?
— Our Japanese partners later began active cooperation. Of the 22% of foreign investment — 5% Japanese.
In General, I want to say that for the year 22% of foreign investment — a very good result, which we are not going to stop.
WEF and BRICS
— For the past VEF was going to do a simplified visa regime for the free port of Vladivostok. Decided whether this question?
— December 26 this issue was discussed at a meeting of the Russian government. A bill introduced in the state Duma and its consideration will begin during the spring session. We are talking about a completely new mechanism — e-visa with duration of stay up to eight days. This unique solution for our country. The design will become easy and affordable — enough to leave the statement on the special site four days before the proposed date of entry. In the case of a positive decision — to fly.
The visa will allow visiting tourists to move freely within the regions where a free port. This Primorye, Khabarovsk Krai, Sakhalin oblast, Chukotka and Kamchatka. This solution will make easier entry of foreign investors, and we expect to increase the number of tourists in these regions.
— How do you assess the results of the WEF in 2016 and what are the forecasts for 2017?
In 2016 we could see that in the plenary session of VEF together with our President, leaders of some of the most developed economies in the Asia-Pacific region — the President of the Republic of Korea and the Prime Minister of Japan.
The leaders of these countries made it clear that the partners are willing and able to cooperate well with Russia in the far East. This is the international response to the policies of our country in the Eastern territories. It is also a result. As signed by 1.85 trillion rubles 216 agreements that are now being implemented. If we talk about dates, September 6-7 will be held WEF-2017, just after the BRICS summit (it is scheduled for 4-5 September in the Southeast China city of Xiamen).
— What does the attraction of investments by the far East, as they assess the development of the region?
— Research shows that up to 15% of Russians believe that now the far East is the perspective territory, and more than 50% sure that he will be in ten years. More than 20% believe that he will be a promising area of development, but later. That is, 85% of Russian citizens believe that the far East is a promising area, a point of economic growth. Of the remaining 15% part is difficult to answer, and part believe not, but pessimists, once again, an order of magnitude smaller. If you recall the mood of the 1990-ies in relation to the Far East, it is a radical change of public perception.