Dmitry Yalov: “A regional law on PPP will not be necessary”

The sanctions have become a growth factor for separate economy segments, says Dmitry Yalov, Deputy Chairman of the Government of Leningrad Region – Chairman of Committee for Economic Development and Investment Activity.

– How was the economy of Leningrad Region developing in 2015?
– In our region, as in other RF subjects, the development of economic situation in 2015 was shaped by the trend towards decreasing investment activity and decreasing consumer demand against the background of high inflationary spiral. Introduction of special measures against the Republic of Turkey, stipulated in the decree by the president of the Russian Federation dated November 28, 2015 No. 583, also negatively influences financial and business activities at certain enterprises. Rejections to unload cargo and make payments, goods reexport contribute to non-fulfillment by enterprises of their obligations to contractors, which, in its turn, can lead to suppression of activity at such enterprises and employees dismissal.
But I shall note that last year Leningrad Region showed higher development rates than average in Russia, and there is no forecast for significant decrease in Region’s main macroeconomic indices.
Sanctions served as a driving force for certain domains.
First, a significant number of investment projects, including those aimed at imports phase-out, are currently being planned and implemented in the Region. A huge incentive for modernizing production at industrial plants was the possibility to get beneficial credit loans in the Industry Development Fund – currently over ten applications are under consideration.
Second, the traditionally strong agricultural sector received an additional incentive. Agrarians implement projects not only in the area of large-scale production, but also in “niche” markets.

– Focus on development of pioneering industries in Leningrad Region economy was announced many years ago. What was made in the last year-year and a half to increase the share of pioneering industries in the gross regional product?
– Now Russian enterprises operate in the conditions of negative objective and subjective circumstances, and there appears a necessity to apply new approaches to forming sustainable innovative development of the Region.
A number of measures on creating pioneering industries and innovation infrastructure objects in the Region are being taken. One of such measures is a project to create Northwestern Nanotechnology Center on the territory of Gatchina district in Leningrad Region. Residents of the Gatchina nanopark will be small and medium companies in the domains of nanotechnologies, nanoelectronics, nanomaterials, radiation technologies, biotechnologies, medical and pharmaceutical industries.
The project of Tosno industrial park with the total area of over 110 ha for placing factories of hazard classes III-V will enable creation of over 1 500 jobs.
An important object of regional innovation infrastructure is Northwestern Center for Technology Transfer (part of the federal network of nanocenters by ROSNANO group), created with the purpose to commercialize innovation projects in the domain of nanotechnologies and provide infrastructure support for their transfer to industries and markets.
The development of an innovative territorial cluster for medical and pharmaceutical industries and radiation technologies is continuing. One of the projects within the cluster is the construction of a factory to produce infusion solutions, NPO PharmaDome CJSC. Severnaya Zvezda Zao is implementing a project on construction of a finished pharmaceutical product factory, and NanotechMed Plus – on construction of the world’s first factory for manufacturing medical products of carbon.

– In the past 2 years, regional legislation underwent significant changes regarding regulation of investment activity. What results have been already obtained after introducing these changes?
– Significant changes in legislation and supportive measures systems happened, in the first place, in 2014, when we formed a frame for working with investors. The investment strategy for Leningrad Region till 2025 was approved, as well as a “road map” for its implementation. The main principles of cooperation with investors were established in the investment policy statement of Leningrad Region. Development and implementation of normative legal acts became a basis for further enhancement of schemes for investment activity state support.
The regional law “On Measures of State Support for Establishing and Developing Industrial Parks in Leningrad Region” is aimed at developing territorial infrastructure for investment activity. The law focuses on encouraging organizations to pursuit activities on establishing and developing industrial parks in Leningrad Region by means of providing them tax reliefs and reduced rental charges. In 2015, Greenstate and South Gate industrial parks, and in 2014, Northwestern Nanotechnology Center received the status of industrial parks in Leningrad Region.
Besides, in 2014 significant changes were made to the regional law “On State Support for Organizations Carrying Out Investment Activity on the Territory of Leningrad Region”, which enabled the creation of a transparent communication system, reduction of reliefs provision terms, enlargement of potential support receivers pool. In 2015, the list of activities types for organizations to receive reliefs and support was extended.

– When is the regional law on public and private partnership (PPP) scheduled to be adopted?
– Last July, the law on state and private and municipal and private partnership in RF was adopted at the federal level. The law outlines in detail the procedure and conditions for PPP projects preparation and implementation, establishes a consistent approach to PPP on the whole territory of the country, and provides for federal regulation of conceptual issues regarding development and application of this scheme in regions.
Because of this, RF subjects do not need to pass regional PPP laws and can only adopt the necessary bylaws regulating implementation of federal PPP legislation at a regional level. In Leningrad Region, they are planning to adopt these bylaws in mid-2016.

– What are the results of the activity by Economic Development Agency of Leningrad Region in 2015?
– Today, the Agency supports over 126 large investment projects including 25 with the involvement of foreign capital (from France, Italy, Finland, Germany, China, Great Britain, India, Lithuania, Turkey, Estonia, Belgium and the USA). Projects with a joint investment volume of over 300 billion rubles are being implemented in the domains of construction materials and plastic products manufacturing, woodworking, mechanical engineering, metalworking, transport and logistics, automobile manufacturing, chemical industry.
Agency’s effectiveness last year is proved by a number of achievements. For example, Leningrad Region was included in the list of regions with a high development level of institutions for business within the “National Rating of the Investment Climate State in the Russian Federation Subjects”. Leningrad Region is among top-five Russian regions with lowest investment risks according to the rating of regions investment potential by Expert rating agency.
Lastly, our region ranked six in the rating of Russian regions regarding the level of PPP development, among other things through establishing a project office on base of the agency to support PPP projects.

By the way:

The biggest volume of foreign investments into the enterprises of Leningrad Region is allocated by the USA, Germany and Finland. Thus, in 2014 the American company Mondelez Rus invested 2.5 bln rubles into the project for reconstruction of the integrated works for lyophilized coffee production in the Lomonosov district of Leningrad Region. Investments into the reequipment of the paper mill "International Paper" in the Vyborg district of Leningrad Region (the project completion date is 2018) will amount to 2 bln rubles.

Information:

The Telko Ltd. company, a distributor of industrial chemistry, polymers, industrial oils and other materials, is implementing a project for constructing a logistics complex in Leningrad Region, investments into which will exceed 1 bln rubles. The project completion date is 2017. Within the framework of St. Petersburg International Economic Forum in June 2015, LLC Telko and CJSC YIT Saint Petersburg solemnly signed an agreement about the intention to purchase a land plot to construct this logistics complex on the premises of Greenstate industrial park.