Leningrad Region Emphasis Put On Cluster-based Policy

In December 2013, Expert RA rating agency mentioned that Leningrad Region was the most reliable Russian region in terms of investments. They made such a conclusion based on the results of surveys among investment, banking and expert communities.

Strategically important investors like Caterpillar, Ford, Nokian Tyres, Kraft Foods and others have been active in Leningrad region lately.

Development priorities

Social and economic development concepts in Leningrad Region imply paying special attention on cluster-based policy integration in the nearest decade. Investment strategy of Leningrad Region, planned up to 2025, is targeting competitive advantage of several regional economy sectors, common in the region, as well as upgrading them to high-tech priority clusters. Automotive, chemical and petroleum chemical, transport and logistics, construction materials production and power generation were acknowledged as the first priority fields of economy in Leningrad Region.
"There are already good and competitive clusters in the region: for instance, construction materials and health industry. There are several active enterprises that not only produce medicine raws and off-the-shelf medication, but also conduct scientific research. Three pulp and paper plants have paved a way to the wood industry cluster development. Automotive cluster development is also a subject to concentrate on. Automotive enterprises that already operate in the 47th region and in Saint Petersburg are interested in bringing spare parts manufacturers to the macroregion", Dmitry Yalov says, vice-governor of Leningrad Region and the president of the Committee for economical development and investments.
Besides, Leningrad Region practices pooling state and business resources. One of the largest infrastructure projects in Russia being implemented in the region is Ust-Luga commercial seaport. Seaport and infrastructure development investments already amount to 200 billion roubles and more that 90% of the funds come from private investors.
Today, there are enough opportunities and assets to launch new projects to improve both engineering and social infrastructure within the frames of state and private business partnership. Hence, the private-public partnership project was initiated in the sphere of health industry as the "Regional Medical Rehabilitation Centre" in Kommunar town, Gatchina district. Two billion roubles project provides for creating a modern medical facility to house 200 patients, which is currently unlike any other hospital in Russia. The rehabilitation centre will be able to permit up to 8 thousand patients per year and will provide necessary medical attention to all Leningrad  Region residents.
"Beside industrial investments where we can attract funds indirectly, there are investments regulated by state authorities, which essentially affect social environment in the region. Not long ago, bidding for the regional rehabilitation centre development concepts was successfully completed. Attracting funds to the health industry is only the first sign: we are currently discussing investments to transportation and public utility sector", Dmitry Yalov says.

Infrastructure for investors

Despite the undeniable advantages of Leningrad Region such as dynamics in economy, infrastructure and geographic position, one of the acutest problems in running business here is the lack of fully engineered land plots to erect an enterprise, according to the regional government. "Rapidly increasing investors' interest in Leningrad region leads to necessity in land plots, fully equipped with utilities. It is important for us to have fully prepared land plots in order to arrange new production facilities. It is not important who the land owner is in this case, Dmitry Yalov says.
In 2013, a new legislation in Leningrad Region on state support of investors came into force. It implies that an investor is entitled to have tax benefits (reduction in the tax rate to 13.5% as well as terminating property tax duties) almost automatically as per fixed time terms, depending on the project investment scale. For example, for machinery, equipment, cars and car parts manufacturers who invest over 3 billion roubles in their own production, the system of benefits is valid for 8 years. At that, a contract for state support shall be signed within 35 business days after the company provides all necessary papers.