Albert Karimov offers industrialists a fund and special contract

Deputies of the State Council complained that there were many opinions about the development of the industry but few actions at federal level

Albert Karimov offers industrialists a fund and special contract
Photo: Maksim Platonov

The Ministry of Industry and Trade of Tatarstan elaborated a bill on industrial policy of the republic based on federal law. This bill is to define the further development vector of the industry. The very functionaries don't hide that it repeats the already existing measures in the republic in many aspects. However, it offers a couple of new mechanisms like the creation of the regional Industry Development Fund for granting soft loans to enterprises and Special Investment Contract on behalf of the republic. First of all, the support may refer to enterprises of defence procurement and petrochemistry. Realnoe Vremya goes into details.

New law on industrial policy: support of export, innovations and creation of industrial sites

Yesterday the Minister of Industry and Trade of Tatarstan Albert Karimov presented a bill on industrial policy in the Republic of Tatarstan to deputies at a meeting on economy, investments and entrepreneurship of the State Council of the Republic of Tatarstan. But he noted that a similar federal law was adopted last year which had being discussed for about 10 years. The speaker does not hide that the analogous project of the republic was created on its basis.

Karimov emphasized the importance of the document saying that the industry accounts for 40% of GRP of Tatarstan. The deputies and functionaries state about an exceptional importance of the bill. 'It is destined to become a foundation for the realization of key instruments of the industrial policy of the Republic of Tatarstan,' Karimov said.

Nevertheless, the content of the very text of the bill is formal and general. So, it regulates the relationships between the bodies and departments that participate in the realization of the industrial policy, sets goals and tasks and defines the main terms, that is to say, vests the bodies with authority they already have. For instance, the Cabinet of Ministers has an authority to adopt laws, regulations and state programmes designed for the development of the industrial policy, sign agreements. The backbone goal of the industrial policy is obvious: 'to improve the competitiveness of products and technical level of the industry, provide the exit of innovative products and hi techs to the domestic and extrernal market, to substitute imported products and transfer of the industry to the stage of sustainable growth based on innovative and active industrial production.' According to Karimov, the state programme on development of the industry will be more concrete. The state programme is elaborated and will be presented after the adoption of the bill by the Parliament of the republic. He promised that these programmes on the development of the industry would be co-financed by the federal centre.

The enumeration of the measures on support and stimulation of the industry is the key point of the bill. It includes both the existing directions: financial support of the scientific and innovative activity, development of human resources, innovative and consultancy support, privileges, ande the creation of industrial clusters, industry development funds, signing of special investment agreements as new directions, according to Karimov. The bill adopted them from the federal analogue. 'Their approval is necessary for the support of those projects on development of the industry, which are not included in neither federal support nor support of medium and small entrepreneurship,' he explained.

Enterprises will be granted loans at 5% per year by Industry Development Fund of Tatarstan

We are speaking about a republican analogue of Industry Development Fund, which was founded at federal level last year. 'It is one of the main active instruments of support, which was created by the law on Industrial Policy of Russia. Its mechanism was activated quickly; 20bn rubles were expended on its work. Projects had being considered and approved since May,' Karimov said.

It should be reminded that the fund has already supported four projects of Tatarstan at 1,4bn rubles: Interskol-Alabuga JSC (500m rubles), producer of terephthalic acid and polyethylene terephthalate SafPet PLC (700m rubles), Kama Cristal Technology PLC (102mn rubles) and a project on the organization of the production of urinal for kids Paritet PLC (102,4m rubles). We should note that many of them have been realized in special economic zones and industrial sites where they have concessions. The Minister added that an additional project for financing is prepared too.

Interskol-Alabuga JSC got 500m rubles. Photo: time56.ru

'Regions need not only much money but also a careful selection of projects and control of their execution in order to realize an effective model of cooperation with enterprises. This is why a mechanism of joint estimate of projects is elaborated at federal level,' Karimov says.

He presented one of the possible variants of the financing scheme of the fund: the size of the loan is from 20 to 100m rubles. The share of the loan of the federal Industry Development Fund doesn't exceed 70%, the regional fund is at least 30%. The term of loan is up to 5 years at 5% per year, and investor's own funds are to be no less than 15%. As the Minister informed at a meeting with entrepreneurs on 25 February, the fund will have been created by the end of the year.

The head of the Committee Rafis Burganov did not tell it. He just noted that it depended on the possibilities of the budget of the republic. In addition, he told Realnoe Vremya later that the project was able to count on support of both federal and regional funds simultaneously: their bases will be connected. He did not exclude that the majority of the projects would try to get funds from the centre first. Then they will address to the regional fund. In the deputy's opinion, the enterprises of defence procurement will take this opportunity first.

Special Investment Contract for Nizhnekamskneftkhim

Special Investment Contract is another new form of support for Tatarstan taken from the federal law on industrial policy. 'Nowadays it presupposes a possibility of conservation of tax regime and privileges during the whole term of project realization. One the one hand, it might seem the mechanism of its action is similar to the mechanism of signing of contracts on investment activity, which are applied on the territory of the republic. However, the application of the current legislature of the republic to the special investment contracts is a bit complicated. Requirements for projects, terms, conditions of stimulation, list of documents are different there,' Karimov explained.

Special investment contract will probably be the most attractive form of support of such large-scale projects like construction of the new Olefin Complex in Nizhnekamskneftekhim

What is more, according to him, not only the investor and the republic can represent Special Investment Projects but also the bodies of the federal and municipal authority. Now a possibility of reduction to 0% of the tax rate on profit and application of the increasing coefficient of amortization, possibility of participation in state procurement out of competition are prepared within the scope of Special Investment Contracts on the instruction of the President of Russia. In the mid of the year, Karimov expects the corresponding documents to be adopted, so these contracts are to be prepared for use by this moment. 'Special Investment Contract will probably be the most attractive form of support of such large-scale projects like construction of the new Olefin Complex in Nizhnekamskneftekhim OJSC whose capacity is 600,000 tonnes. This complex is at the stage of elaboration because nowadays this project is not included in any support programme at federal level,' the Minister complained. So, Special Investment Contract presupposes a term of the exit of the project to operational profit from 5 to 20 years. It can be applied to the creation or modernization of industrial production, implementation of the best technologies or learning the production of products that don't have analogues in Russia.

Moreover, the bill presupposes measures on support of exporters, creation of tech parks and industrial sites and other types of business development realized in the republic. At the same time it doesn't regulate the production of alcoholic products and alcohol containing food, tobacco goods. 'We think that you will build quickly on this basis… you have certain thoughts. Now there are too many opinions, articles and so on but few actions at federal level. For this reason, we should quickly channel this processes like in the 90s and help those who would do some good and expend money to the budget,' Burganov concluded. The deputies supported the bill in the first reading.

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By Dina Valiullina, photo: Maksim Platonov