Alabuga turning for Belgorod

Alabuga SEZ offered the authorities of Belgorod Oblast to open a branch of the SEZ on the border with Ukraine

Tatarstan's Alabuga SEZ continues its expansion into the Russian regions to extend the regime of the special economic zone. As it became known to Realnoe Vremya, the management of the SEZ held the first negotiations with the authorities of Belgorod Oblast on the opening of a branch of the Yelabuga zone in the region. The interest of Alabuga has to do with the ongoing migration of businesses to Russia, and Belgorod Oblast receives more and more moving entrepreneurs. However, the “Moscow” meeting was more of a preliminary nature and did not bring concrete solutions. “We are ready for healthy competition with Alabuga”, the Management for the Development of Industrial Zones, which manages several industrial parks in the region, responded to the initiative of Tatarstan residents.

Alabuga is lured to the patrimony of the new host of Belgorod

Belgorod Oblast has become the third Russian region that can feel the investment warming with the coming of one of the national leaders in attracting investments. The acting governor of Belgorod Oblast, Vyacheslav Gladkov, and the head of Alabuga SEZ Timur Shagivaleev held in Moscow the first negotiations on the creation of a branch of the Tatarstan economic zone in Belgorod Oblast.

However, the advance of Alabuga to the south-western borders is associated not only with economic interests, but rather with geopolitical factors. After the “Crimean Spring”, many Russian businessmen were forced to curtail their work in Ukraine, moving to nearby regions. Russian entrepreneurs had somewhere to run: they were received by Belgorod Oblast, which has grown with industrial parks. The creation of the branch of Alabuga SEZ can facilitate the tax regime for them.

Information about the first negotiations was confirmed to Realnoe Vremya in the press service of the acting governor of Belgorod Oblast.

“Indeed, the issue was discussed in the ministry of economic development in Moscow," said the head of the department for interaction with the media, Sergey Lukinov. “But this meeting was held tet-a-tet. Nothing is known about the results so far. The issue of creating the territory of Alabuga in Belgorod Oblast was not brought forward in the public space of the region," he stressed in a brief conversation.

In turn, Alabuga SEZ used general vague wording, preferring not to focus on this meeting:

“At the moment, we are negotiating with many regions on the issue of creating SEZs on the territory of the regions”, the press service of the management company says in the response.

The fate of the third stage of Alabuga

Most likely, negotiations on this topic were held with the participation of the top official of the republic. As you know, on January 29, Tatarstan President Rustam Minnikhanov together with Minister of Industry and Trade Albert Karimov and Director General of Alabuga SEZ Timur Shagivaleev flew to a meeting in the ministry of industry and trade of Russia. By the way, they also returned to the issue of allocating subsidies for the third stage of construction of Alabuga SEZ, for which Tatarstan requested 29 billion rubles from the federal authorities. There was no final answer.

“The possibility of increasing the limits of the budgetary assignments, allocated under the ordinance No. 194, will be considered on the implementation of these measures of support in 2021, with a possible inclusion of proposals for extending support to the bill on the federal budget for 2022 and the planning period 2023-2024," the press service of the ministry of industry and trade reported, with reference to Minister of Industry and Trade of Russia Denis Manturov.

Investment tour of the border regions of Russia

Probably, in anticipation of a positive decision, Alabuga SEZ entered into negotiations with the leadership of Belgorod Oblast with the idea of extending the preferential tax regime. As Realnoe Vremya reported, in search of opening a branch, Shagivaleev's team began to travel around the regions last summer. Going beyond the borders of Tatarstan is explained by that Alabuga SEZ filled the entire area of 2,000 hectares with residents.

In August, the delegation led by Artur Ayupov, the deputy director general for state programmes, visited Bryansk Oblast. The branches of the SEZ was seen in the territory of the Novozybskovsky machine-building plant. The main advantage of Bryansk Oblast is called the access to Belarus and Poland, which is beneficial to exporters. As reported last Thursday to our publication in the regional government, the idea is not frozen but is still under discussion:

“We are calculating what costs we will have to bear on infrastructure," said Yulia Mityaeva, the deputy director of the department of economic development. “We are waiting to see what proposals will be received from Alabuga for residents. The project is in progress.”

We got closer to the goal in Novgorod Oblast faster. Timur Shagivaleev, the director general of Alabuga SEZ, and Andrey Nikitin, the governor of Novgorod Oblast, signed a partnership agreement on the creation of an industrial-type special economic zone right next to Leningrad Oblast and with subsequent access to the Baltic Sea.

As the administration of the region reported to Realnoe Vremya last week, the application for the creation of the Novgorodskaya SEZ is in the final stage of consideration in the ministry of economic development of Russia. The zone itself will operate under the management of the Novgorodskaya management company, but with the participation of the Alabuga management company.

“One of the strategic tasks facing Alabuga SEZ is to create new platforms for investments in other Russian regions and transfer the positive experience of Tatarstan in attracting investments. As part of this project, Alabuga plans to open new sites throughout Russia — where businesses need them," Timur Shagivaleyev, the director general of Alabuga SEZ, told our publication.

The residents pay income tax, 2%, for the first five years, 7% — from the sixth to the tenth year and 15,5% — until the end of the agreement. The property tax is reset to zero for 10 years from the date of formation of the tax base. Alabuga residents are exempt from paying transport tax for 10 years. Also, in accordance with the regime of the free customs zone, the imported equipment and products used in the territory of Alabuga are exempt from customs duties (10%) and value added tax (18%).

Belgorod Bastion

The possible coming of Alabuga in Belgorod Oblast was met with caution.

“We are ready for healthy competition with Alabuga, but there are already a lot of industrial sites in the region," the Directorate for the Development of Industrial Zones told Realnoe Vremya.

It manages three industrial parks with a total area of 100 hectares. It has run them since 2008. Residents of the parks are provided with property tax benefits. According to the representative of the company, many entrepreneurs from Ukraine move to them, who transfer their businesses to Russia. Besides, next year, an industrial park will open in the Gubkino PSEDA, which promises considerable benefits.

“We do not understand why to create a branch, and not the zone itself," they are perplexed in the management company.

According to the ministry of industry and trade of Russia, there are five industrial parks in the region with a total area of more than 100,000 hectares. “In 2019, 71 (4**) residents were registered in existing and newly created industrial parks, and 2,120 (4**) jobs were created”, the website of the information system of the ministry of industry and trade of Russia reports.

Strangers are not welcomed

The apathy of the regions to open branches of Alabuga is explained by the reluctance to “let strangers in”, explains Natalia Zubarevich, the chief researcher at the HSE Institute of Social Policy:

“They understand that the “strangers” will set their own rules. Second, the local authorities understand that it will not bring them much money immediately. For investors, there are also risks: it is one thing when the head of Tatarstan is “backing”, another-when you get into the zone of dual power together with Tatarstan managers. And the main reason is that the regions do not see great investment prospects because the investor should be looked for “with a lantern”. If Timur had “extra” investors, they would have come to Tatarstan. If he plays without revealing his cards, then trust will be lowered, and jealousy, of course," the expert believes.”

The choice of Alabuga over Belgorod Oblast is risky, Natalia Zubarevich believes. “Belgorod Oblast has a new governor — these are big risks. First, in September, he will have to run for the office of governor. Second, he is absolutely a stranger to the region after the resignation of great and powerful Savchenko, who had led the region for 30 years. How can he control it? But in Belgorod, the situation is better with the labour force than, for example, in Novgorod Oblast (here the population has greatly aged, many go to work in St. Petersburg and Nizhny Novgorod). Trust in the new head of the business is zero. But if it is built in, it will be a different story.” There are also financial problems, according to the source of the publication: “Who will pay for infrastructure? Now the host region does not have the money for this. No one guarantees them what kind of assistance they will receive from the federal budget next year.”

By Luiza Ignatyeva
Analytics Tatarstan
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