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Nizhny Novgorod Region investment policy

By Eugene Allen,2014-11-21 22:09
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Nizhny Novgorod Region investment policy

    Nizhny Novgorod Region

Region’s advantages

Unique geographic location

    - Nizhny Novgorod Region is situated in the geographical centre of the European part of Russia, on the crossroad of 2 international transportation corridors: EU TEN?2 (Berlin –

    Warsaw Minsk Moscow Nizhny Novgorod) and NORTH-SOUTH (Helsinki Saint-

    Petersburg Nizhny Novgorod Astrakhan Teheran Bandar-Abass Indian Ocean), thus,

    having unique opportunities for logistics and distribution.

    - Nizhny Novgorod region is located just 439 kilometers away from Moscow. This distance is covered by air for 40 minutes and automobile trip takes normally 4 hours. - Nizhny Novgorod is the best placed in Russia from the point of view of access to the largest market of consumers exceeding even the city of Moscow. 43 million people live within 500 kilometers, of which 24 million live in cities with populations above 100 000 people. Within 1000 kilometers there are about 84 million consumers, of which more than 45 million live in cities.

    - At the same time, the solvency of population in these zones is higher than the average for Russia.

Distance from Population Cities with

    Nizhny population >500 000

    Novgorod people

    up to 500 km 43 million people Moscow, Nizhny

    Novgorod, Kazan,

    Togliatti, Ulyanovsk,

    Yaroslavl, Tula, Ryazan,

    Penza, Kirov

    up to 1000 km 84 million people Samara, Ufa, Perm,

    Voronezh, Saratov,

    Izhevsk, Naberezhnye

    Chelny, Lipetsk, Saint-

    Petersburg, Volgograd,

    Orenburg

Business environment

    The Nizhny Novgorod region is more attractive than many other Russian regions with regard to the business environment and the cost of running a business:

    - The price of renting commercial real estate and purchasing land in the Nizhny Novgorod region is lower than in Moscow, St Petersburg, Kaliningrad, Samara regions, Tatarstan Republic and a number of other regions in the European part of Russia.

    - Salaries in the region equal to average level in Russia being relatively lower than in main competing regions.

    - Well developed financial infrastructure (the number of banks exceeds the number of banks in Saint-Petersburg).

    - Well developed telecommunications infrastructure (the main telecommunications company VolgaTelecom is the largest and the most advanced in Russia).

    - Favorable business environment based upon well-developed entrepreneurship supporting infrastructure and advanced system of state support measures and incentives.

Education and R&D infrastructure

    The region has an exceptionally well-developed educational and scientific base:

    - Traditionally, it has always been the Russian centre for automotive, aviation, shipbuilding, precise instrumentation, nuclear physics and defense industries, and other high technology sectors of economy

    - Approximately 100 scientific, educational, R&D institutions with 50 thos. people engaged.

    - It is one of the leading Russian educational centers, including 16 state higher schools and universities

    - Great industrial potential combined with the strong research and development traditions provides the region’s role as the centre of innovation development.

    - Nizhny Novgorod’s role as a capital of soviet industry and research centre has provided

    the region with well-educated and highly qualified human resources.

Investment climate

    In 2005 the new principles of the regional investment policy were introduced in the region. 4 years of this system’s functioning proved the efficiency of the new investment policy aimed at the establishment of the comfortable business conditions. The concrete data allows experts even from abroad to consider regional investment climate as favorable and beneficial for investors. Foreign investment excluding portfolio investments totaled USD 708.5 million in 2008, increased up to 173.0% in comparison with the previous year. The unique mechanism of the investment support allows the Nizhny Novgorod region to be ahead of the other Russian regions: stin the 1 half of 2009 investments in Russia dropped down to 81,8% whereas the similar index in the Nizhny Novgorod region grew up to 114,5%.

    The process of implementation of the investment projects in the Nizhny Novgorod Region is simple and transparent. Investors benefit from the one stop shop principle. After the decision to invest to the Nizhny Novgorod is made an investor applies to the Ministry of Investment Policy which was the first specially investments oriented governmental unit established in Russia. The investor’s application is to be considered in the definite deadlines

    fixed in law. Such term may not exceed 104 days if a land plot is specified, or 142 days if a land plot is not specified yet. Upon the expiration of this term, an investor obtains documents certifying rights to develop the land plot and a set of documents needed to start the design and construction work.

Investment infrastructure

    Regardless of the size of investment, the type of business activity and nationality an investor in Nizhny Novgorod region receives organizational support in the investment project implementation. Basing upon the interests of investors the regional Government has developed and introduced the investment infrastructure which has proved its efficiency for the last few years and includes:

    - Ministry of Investment Policy which accompanies the implementation of the

    investment projects and provides the activity of the Investment Council;

    - Investment Council headed by the Government which is enabled to give green light to

    a project and to grant a priority status.

    - Board of Investors which is organized to conduct a direct conversation with the

    Governor on the problems occurred within the investment projects’ implementation.

Priority investment projects

    Investment projects having high importance for the development of the region could be granted with a priority status which provide investors with measures of state support. They include tax incentives, tax credits, partial refund of interest expenses. Additionally priority projects may receive non-financial support in creating business infrastructure, favorable public relations support and assistance when interacting with federal agencies, etc.

    Investment projects granted with the priority status could gain tax incentives maximal in the Russian Federation and similar to the conditions of the Special Economic Zones as follows:

    Tax Tax rate Budget levels

    Federal Regional Municipal

    2,2% - 80% 20% Property tax

    of tax amount of tax amount

    Tax incentive 0% - 0% 0%

    20% 2,0% 18,0% - Profit tax

Tax incentive 16% 2,0% 14,0% -

    1,5% - - 1,5% Land tax

Tax incentive 0% - - 0%

    18% 18% - - VAT

Tax incentive 18% 18% - -

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