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
The Alabuga Special Economic Zone is particularly special because, while most of the zones around Russia have been ear-marked for IT, the Alabuga zone is intended to become a ‘cluster’ for automobile construction.
What special tax privileges will companies enjoy? Sergei Narvatkin, expert from the department of foreign activity for the territorial board of RosOEZ for the Republic of Tatarstan, says: “Firstly, machinery and components imported to the zone are exempted from import duty and VAT for the duration of their stay in the zone. There is no export duty either. Tenants are also exempted from several local taxes, such as property, land and transportation taxes.”
The federal and regional administrations are also spending R10 billion ($300 million) on essential infrastructure to support the zone. Moryak Yusupov, chief of staff of Elabuga municipality says: “We’re building a new railway station, a new port, an airport, and a hotel and conference centre. We’ve already built new roads connecting the zone to the rest of Tatarstan.”
The zone already has its first tenant – Severstal-Avto, which has invested $100 million into a car assembly line there. The factory will be able to produce 75,000 Fiat Ducato automobiles annually.
Adil Shirinov, general director for Severstal-Avto Alabuga, says: “The region has some great advantages, besides the tax exemptions. Firstly, salaries are naturally lower than in Moscow or St Petersburg – perhaps 2.5 times lower. Secondly, about 30% of the cost of putting together a car comes from petrochemical products. Elabuga is very close to Nizhnekamsk, with all its petrochemical expertise. And the zone is also not far from Moscow, while being at the heart of the whole Volga region and near to the South of Russia.”
Shirinov says political support from the regional administration was crucial in helping Severstal-Avto decide to join the zone. He says: “The president and prime minister of Tatarstan really want to develop the region. They’re interested not just in the initial investment, but in developing a whole new sector of the economy.”
He believes the Severstal-Avto plant is the first step in the development of this new sector because, as he points out, “each job on an automobile assembly line creates 20-30 more jobs in automobile component manufacture”.
Experts already believe that in the first several years of its existence, the Alabuga SEZ will attract 100 resident companies, investments will reach $1 billion, and 30,000 people will be employed.
The SEZ is a leading example of how economic policy in Tatarstan, and in Russia, is increasingly drawing inspiration both from Asian and western developmental models.
SEZs were first set up in China by Deng Xiaoping in the 1980s, where they have enjoyed great success. They have also been heavily used by Singapore, which has been active in exporting the technique to other countries such as Indonesia and India.
Singapore has also been sharing its expertise with Tatarstan on development-style economic policy. Around 20 senior managers from the regional administration have already been trained in Singapore in how to carry out the policy. Tatarstan has also carried out investment seminars in Singapore.
And the region’s main holding company, Svyazinvestneftekhim, also takes its lead from Singapore-style development economics, according to its CEO, Vladimir Sorokin. He says: “The Singapore model works best when you want to develop your economy quickly.” He says he is interested in selling a stake in Svyazinvestneftekhim to Singapore’s main development holding company, Temasek, in order to attract both its capital and its expertise.
