Moscow authorities grant investors guarantee on safe operation
A thousand of Austrian companies work today in the Russian capital, and none of them left the city due to the economic crisis. This was announced by Sergey Cheremin, Head of the Department for External Economic and International Relations of Moscow, on the economic conference “Moscow is the city for business” opened on April, 27 in Vienna. The event was held in the Austrian Federal Economic Chamber, which was crowded with guests to the beginning of the meeting.
“Moscow, as well as the whole of Russia, continues to be among the most important Austrian partners,” explained the interest of Austrian business delegation the Vice President of the Chamber, Richard Schenz. Later, summing up the conference, the Head of the Chamber, Christoph Leitl said that he has always been an opponent of sanctions against Russia, and they have to be lifted as soon as possible: “Sanctions are harmful; they damage the economy of Russia as well as the economy of Austria”. Statistics proves this statement. Until 2014 the mutual goods turnover between the two countries was growing at a record pace, then from 2014 it began to slump down. In Russia as a whole it fell by 40%, while in Moscow – by 1.7 times.
[citata id=875]Moscow authorities for their part do their best in order to create favorable conditions for investors who have already come to the city and who intend to arrive in future. It does not go unnoticed worldwide. It is no accident that on the MIPIM held in March in Cannes, the Russian capital has received 7 awards at once, recalled Sergey Cheremin. Moscow ranked first among Eastern European cities for sustainable development. The ranking was done by fDi Magazine, a bi-monthly investment publication of the Financial Times Group. In addition, the Russian capital is included in the TOP-10 major cities in terms of attractiveness, cost-effectiveness of urban management, friendly attitude to business, economic potential, as well as with regard to development of human capital assets and attractiveness of living conditions.
But the city government has no illusions: “Much has been done to reduce administrative barriers, though due to the term of obtaining construction permit Moscow resides on 119th place among the major cities of the world. So we still have a lot to do to move on,” said Sergey Cheremin. The fact is that nowadays the Russian capital offers more than ever possibilities for investors. Over the past five years, the Moscow government has radically changed spending priorities of the city budget. More than half of it is spent on social services. In particular, 10 million EUR is spent on development of road network and transport infrastructure annually, which allowed building 400 km of roads in for 4 years – it amounts to 10% of the whole road infrastructure of the city.
[citata id=762]For the first time in Moscow there were established bus lanes for public transport, pedestrian zones and bikeways. “A while before Moscow ranked first due to the number of traffic jams, but now it has moved to 5th position, and plans to withdraw even further – on 20th or 30th place,” said the head of the Moscow delegation. It sounds perfectly real. After all, new roads and metro lines are being built at the pace unprecedented even for Soviet times: 15 km per year. The second ring of the metro is under construction; another circle of public rail transport – light rail metro will come into operation in September. A network of transport hubs will appear along the Moscow Ring Railway: 100 hubs will be built under public-private partnership, 30 of which are already at the design stage. The adjacent territory comprise 15 million square meters for office, retail and residential real estate, that surely makes this project interesting for Austrian companies, according to Sergey Cheremin. Another driver for investment could be 18 thousand ha of industrial areas. Some of them are located along the Moscow River, the development of which is another priority of the city authorities.
Sergey Cheremin gave an example of how the business enters Moscow development projects, he told about the construction project of North relief road of Kutuzovsky Prospekt. Another example is a company that established a joint venture in Russia for supply of metro coaches and their maintenance during 30 years contractual life cycle. “This reduces the burden on the city budget; we no longer need to spend money on the underground development. The city authorities plans to employ the same scheme in purchasing trams and trolleybuses,” said Cheremin, suggesting investors another way to Moscow. After all there is the “New Moscow” territories, with huge potential to create new centers of business and social activity with the number of employees up to 1 million people, and construction of housing for half a million Muscovites.
[citata id=860]A number of participants shared their experiences of entering the Moscow market. Alfred Gunacker, International Sales Director of a large Austrian company specializing in access control system equipment, described how they provide security at the stadiums in Moscow, which are now being built or reconstructed in a huge amount. Julius Krueger, one of the heads of a medical corporation gave a speech on how they created centers for the treatment of patients with renal insufficiency. Having already equipped these centers in 17 regions of the country on the basis of public-private partnership, they are now preparing to launch 3 pilot projects in Moscow.
“But the most important thing is that not a single project implementing in Moscow with the participation of foreign investors, is frozen, – concluded Sergey Cheremin – Many objects are already in are at very advanced stage of readiness or under active construction.” That is not surprising, due to the fact that Moscow increases support for business every year. For example, since the beginning of this year, a set of tax incentives came into operatation. Income tax (the part which is paid to the city budget) has been reduced from 18 to 13.5%, property tax of enterprises and organizations is abolished, land rental rate reduced up to 10%. Under the new law, the city took over the risks of doing business. That means, the faults of the authorities will be reimbursed from the city budget.