Irina Babyuk: "Competition for investors has stiffened among the national and global regions"

Irina Babyuk, Chairman of St Petersburg’s Committee on Investments told the “Construction Weekly” about principal areas of the city’s investment policy, the importance of participation in international exhibitions and about what the city is doing to meet the investors’ requirements.

"Last year, for the first time in the last 15 years the city did not participate in the MIPIM exhibition. Why didn’t you go last year, but decided to participate in the current one?"
"Early in 2013, the St Petersburg Committee on Investments was restructured in compliance with new tasks in investment attraction set by the governor. In the first months of work the committee forged a new investment policy and formed a database of the city’s investment proposals. Under such circumstances, it looked unwise to participate in MIPIM with projects the city already presented at this exhibition in the last few years. We presented the city’s new projects at the very first major international exhibition, ExpoReal in Munich, in October 2013, which we also attend each year."

"What projects will the city present to potential investors at the exhibition?"
"This year, the Committee on Investments, in the framework of the city’s exposition, will present 32 advanced investment projects for transport, logistics, social infrastructure, sports, culture and tourism. The foreign business community will also be introduced to the project of renovating the Apraksin Court whose new concept was approved late last year. The investors are increasingly interested in this project, which is why we expect that the exhibition will bring more of them. In addition, if the Council for investments approves a new Zoo project, this too will be included in the database of investment proposals for MIPIM."
 
"Please tell about the city’s investment attraction strategy. What are its focal points and what investors is it supposed to attract to the city?"
"St Petersburg supports not only big time investors, but also projects involving a relatively small amount investments which essentially improve the urban environment and are socially important. At the same time, top priorities were pointed out in the investment. Those include high technology production, transport, logistics, cultural and intellectual issues, construction and tourism."

"Can we define the investment environment of St Petersburg as favorable?"
"St Petersburg is an attractive city in terms of investments. This is proved by the positive dynamics of influx of foreign investments in 2013. The amount of direct investments in St Petersburg in the last nine months of 2013 grew by 1.5 times compared to the same period in 2012, reaching US$ 1.14 billion. This testifies to the investors’ growing trust in the city and results from the improved investment environment in the region. The Expert RA rating agency characterized St Petersburg in 2013 as a region with a maximum investment potential and minimum risks."

"How easy is it for investors, foreign ones in particular, to access our market?"
"An all-round assistance to investors, including foreign ones that come on Petersburg’s market, is rendered by the Investment Attraction Agency. This organization was established in 2013 based on the existing entity supervised by the Committee on Investments, which eventually was vested with new functions for seeking and supporting investment projects. At present, the agency supports 15 investors and the total of planned investments exceeds 30 billion rubles. In 2014, the agency plans to diversify the services provided to investors and to improve their quality."
 
"What is the Committee doing to improve the dialogue between the investors and the authorities?"
"A monthly council session on investments is held in St Petersburg under the supervision of the governor. At it, representatives of the business community present their investment projects and have an opportunity to address directly the city’s authorities. Last year, the council approved the projects worth a total of 90 billion rubles. The council sessions invariably evoke a copious public response and the business community puts a high value on the efficiency of this practice. In addition, since 2013 the Committee on Investments regularly arranges the governor’s meetings with investors at which burning issues are discussed that arise in business conduct. Based on results of the last meeting held in December 2013, five foreign companies decided to come on the market of St Petersburg. At the same time, we seek to remove the administrative barriers and stimulate the influx of investments to St Petersburg."

"The Committee has designed the city’s brand. What’s for?"
"In the complex economic situation the competition for investors among the regions of the country and the world has stiffened. Under such circumstances, the inflow of investments into the city’s economy depends largely on promotion of investment opportunities on the foreign markets. Such factors as the image and reputation become increasingly important in decision making over choice of spheres of investment. The investment branding is just such tool that enables the presentation of Petersburg as a convenient site for doing business and attracting new investors to the city. In 2013 the Committee on Investments designed St Petersburg’s investment brand which is already used on the largest international business sites."

"Over the last years the city has actively promoted its investment potential on international sites. Is the participation in those events really effective?"
"Actually, over the last years Petersburg has participated in major international exhibitions and forums, which improves the information awareness of prospective investors concerned with the investment opportunities of the city. Especially productive was their participation in the Exporeal real estate exhibition held in October 2013 at which St Petersburg signed two agreements, totaling 75 billion rubles, with investor companies. At issue is the Regions state-funded company with its Dream Works entertainment park and the S-Fruit Alliance that plans to build in Pulkovo an innovative agricultural products logistic centre, the first part of which will go into operation in August 2014."

"The investments in Russian projects are estimated as rather risky. How to change this situation?"
"The foreign investors’ interest and trust in Petersburg grow year after year. From 2003 to 2013 the amount of foreign investments in St Petersburg increased by 15 times from US$ 696 million to 10.8 billion. At present, over 1200 companies with foreign capital operate in St Petersburg and their number is growing.  
Also, over the last two years the structure of foreign investments has changed and the share of direct investments has grown substantially. It means that the foreign business invests in the real sector of economy. For instance, in mid-February the Tensar plant was commissioned in Petergof. This high technology enterprise is built using exclusively foreign investments, the amount of which exceeds 1 billion rubles.

"The city seeks investors to build a pedestrian bridge from the opening of the Yakhtennaya Street to the northern part of Krestovsky Island and a cableway to it. How does the process get on? Are there any interested parties yet?"  
"The project of the pedestrian bridge to Krestovsky Island is quite costly and rather specific in terms of recoupment. In order to reduce the investor’s expenses, project documentation is now being drawn up at the expense of the city budget. We continue to actively seek investors and the interested parties are already found. The construction of the bridge may become an image-building project for major companies. As for the cableway linking Krestovsky Island with Vasilyeostrovsky and Primorsky districts, the investor is already found. This is the Lenstroi Company. The project is approved by St Petersburg governor and the possibilities of its implementation are being considered.

"The Committee voiced the plans to build creative clusters. How do you get on with this idea? Have you determined yet the places and projects?"
"The Committee on investments studied the creative industries and their influence on the economic development of the cities across the world. The spotlight shifted from Milan to London. Several sites were considered for making a creative cluster in St Petersburg. Among them were the Kresty building and tram park No.2 on Vasilyevsky Island. However, it was the historic quarter Apraksin Court that was found to be the most apt place for realizing this concept. For this purpose it will be reconstructed to become a modern centre of the city’s cultural life and entertainment. By June 2014 an economic and technical model will be developed for renovating this territory. This will show the investors the means and the time they will need for project implementation."