Tatarstan: A unique republic, A unique investment opportunity
What investors say about investing in Tatarstan
Tatarstan: supporting innovative start-ups
Tatarstan in the capital markets
Tatar banks expand with help of western capital
Taking Tatarstan’s petrochemical resources into the future
Tatarstan’s new Special Economic Zone Alabuga
Tatarstan’s thousands of years of culture
Kazan: home to some of the best sports facilities in Russia
Prime minister, could you tell us why foreign investment is important for Tatarstan, and what you do to try and attract it?
Foreign investment brings in capital to the Republic. But that’s not the only reason, or even the main one. Foreign partners also bring in new technology, such as risk management systems for banks, or compressors for petrochemical companies. They help our companies integrate with the global economy, and become competitive enough to compete effectively there.
In terms of what we do to attract FDI, as you know, capital is like water. It goes where there are the least obstacles. So we try to present the least obstacles to capital. We try to make it clear that investors can come to the government when they have problems. And we try to make them feel welcome. And I think we succeed in that – if you speak to the foreign investors who are here already, companies like IKEA, ARC International or East Capital, then they are very satisfied.
And what are the attractions of investing in Tatarstan for foreign investors?
Our region is one of the most prosperous and fast growing in Russia. Gross regional product, for example, totalled approximately $24 billion in 2006, while industrial output was up. We have some of the best companies in Russia based here, such as Tatneft, Nizhnekamskneftekhim, Kazan Helicopter Plant, Kazan Aviation Plant, Kamaz and Ak Bars Bank, and many of these are actively seeking foreign partners for joint ventures or for equity investment.
The region is rich in natural resources, and well-placed geographically, just 750km from Moscow and with three main rivers running through it. It has a population of almost 4 million, 75% of which live in cities, so there is a promising consumer market here, particularly as incomes rose 20% last year in Kazan.
And there is a stable and investor-friendly government here. I like to think we are a leader among Russian regions in terms of understanding the needs of foreign investors and making them welcome.
Tatarstan has something of a ‘special relationship’ with the federal centre. Could you tell us a bit about that, and where the relationship stands today?
Tatarstan is of course a very proud republic, with deep traditions and history, going back a millennium. After the break-up of the Soviet Union, it’s conceivable it could have gone the way of Chechnya, towards full independence from Moscow. But thanks to the wisdom of our president, we took a middle path, a path of compromise and balanced interests. Instead, we secured an agreement with the federal government, which gave us some special autonomy within the federal state. We are at present negotiating a second agreement, which is likely to be signed in the near future.
In general, I would say relations between the federal government and ourselves, between Moscow and Kazan, are very good. Our president is a senior member of United Russia, the so-called ‘party of power’. We support the federal centre as one of the 10 donor regions that contribute to the federal budget.
And the federal government gives its support to us. For example, last year, one of the five infrastructure projects the federal investment fund chose to support was the construction of a new petrochemical refinery for Tatneft here in Tatarstan. The federal ministry of economic development and trade also supported the establishment of a special economic zone here, at Elabuga. So I think the relationship is one of mutual support and respect.
Speaking of the Special Economic Zone Alabuga, what are the attractions of investing there?
First, tax benefits on all technology imported into the SEZ. Second, cheap land rent – just two dollars per square metre. The equipment and components delivered to the zone are exempt from import tax and VAT, while they are inside the SEZ. Additionally, the residents of the zone are exempt from local taxes such as property tax, land tax and transport tax, for a period of 10 years. The profit tax is lowered by 4% and is set at 20%. Third, the federal and republican government is investing hundreds of millions of dollars into infrastructure there, including railways, roads, postal service, new port infrastructure, banks and conference centres. The SEZ Alabuga is highly attractive for investors because it provides them with land as well as the whole infrastructure required by modern industries. Since the SEZ is a customs duty-free zone, we built a customs terminal on 60 hectares. The cargo will be delivered there by motorways and railways. Consequently, the investor receives tax and customs privileges and lowers his costs for setting up this infrastructure.
What other areas are particularly attractive for foreign investors?
There are several, but I will mention two. Firstly, real estate. There are some very attractive projects under development here, some being led by the City of Kazan, others by banks like Ak Bars Bank, and this presents a very attractive opportunity for foreign investors, without the complications that sometimes present themselves investing into Moscow real estate.
Secondly, the financial sector is booming. We’re already seeing the biggest Moscow banks doing well here, like Alfa Bank or Vneshtorgbank, and some foreign banks too, such as Raiffeisenbank and Bank TuranAlem.
But local banks are also doing very well, even better than Moscow banks in fact, and they’re now looking for foreign equity investment. A few have already found it – Spurt Bank sold a minority stake of 28.25% to the EBRD, for example, and Akibank recently sold a 20% stake to East Capital.
Other banks are considering doing IPOs, such as Ak Bars Bank, in which the government has a controlling stake, which will help to build up its muscles so it can continue its expansion around the country, and hopefully become one of the top five banks in Russian banking.
