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MOSCOW INVESTMENT STRATEGY 2014-2025
May 2014
2
CAPITAL INVESTMENTS in Moscow
Source: Russian Federal State Statistics Service (RFSSS)
bln. US $
Private, demand-
driven 59%
26%
Budgetary (infrastructural)
Private, competitive
15%
2012
23,4 24,1 29,1
39,3
2009 2010 2011 2012
44,3
2013
Source: IBM, Moscow City Investment Agency
MOSCOW INVESTMENT STRATEGY 2014-2025
3
INVESTMENT STRATEGY: OBJECTIVES AND RESULTS
45%
2012
2025
• To attract private investments into spheres traditionally funded by public funds
• To improve investment climate for private investments , considering social and urban priorities of the city
• To increase volume of private direct investments, to improve competitive position against international peers
MOSCOW INVESTMENT STRATEGY 2014-2025
Private, demand-driven
Budgetary (infrastructural) Private, competitive
25%
30% 59%
26%
15%
4
INVESTMENT CLIMATE: STRONG POSITION AND RISKS
Economic, political and business center of Russia and the CIS
The largest distribution market in Europe
Favourable geographic location, regional logistic hub
Solid and balanced city budget,
high credit ratings
“New territories” potential
Budget’s dependence on “capital rent
income”
Increasing international competition
for investors
Increasing international competition for highly skilled labor
Decreasing Russia’s economic growth
rate
Условия ведения бизнеса
Skilled workers, a high
proportion of the population with a higher
education
Developed financial market (compared
with other Russian regions)
“Russian gateway to abroad”
Advanced IT infrastructure
Considerable scientific potential
Russia’s general problems associated with
a low level of property rights protection and inefficient justice system
Deterioration of the image of Russia’s
business climate internationally
Limits to cost reduction
Место для жизни
Rich historical heritage
Vast opportunities for recreation
Positive growth of public spaces
(parks, pedestrian zones)
Relatively low crime level
High cost of living (especially for foreign employees)
Overuse of urban infrastructure
(e.g. congestion)
Relatively low quality of social services
(compared with global peers)
Potential business opportunities Business environment Comfortable place to live
Str
ong p
osi
tions
Ris
ks
MOSCOW INVESTMENT STRATEGY 2014-2025
5
INVESTMENT STRATEGY: OBJECTIVES
• To attract private investment into areas traditionally funded mainly by budgetary funds, for example, by involving in the economic turnover inefficiently used city properties (education, health, transport, culture, etc.).
• To create highly paid and highly productive jobs (technology parks, science parks, and industrial parks).
• To develop Public Private Partnership (PPP) projects.
POTENTIAL BUSINESS OPPORTUNITIES
• Cost reduction of business operations by simplification of administrative procedures, improvements in tax system, etc.
• Competition development and enforcement of clear «rules of the game»
• Creation of infrastructure facilities for project realisation
• Development of flexible state support system
• Promotion of Moscow’s investment image
IMPROVING BUSINESS ENVIRONMENT
• Balanced infrastructure development
• Creation of comfortable urban area
A COMFORTABLE PLACE TO LIVE IN
MOSCOW INVESTMENT STRATEGY 2014-2025
6
STRATEGY IMPLEMENTATION: MEASURES AND PRIORITIES
General measures, aimed at
improvements in the city’s
investment image in general
Specific measures, aimed at
attracting investments to
priority fields
MOSCOW INVESTMENT STRATEGY 2014-2025
7
GENERAL MEASURES: BUSINESS OPPORTUNITIES
BUSINESS OPPORTUNITIES
Attraction of private investors into
areas traditionally funded mainly
by public funds
Involvement in the economic turnover
of inefficiently used city properties
Reduced rent of city property in priority
sectors
Public Private Partnership (PPP) projects
Subsidies for public services to private
organisations
Long-term contracts (Lifecycle Contracts)
Support for investment projects
Creation of highly paid and highly
productive jobs
Support measures for priority sectors
Technology, science, and industrial parks creation
The inflow of investment and job creation by
improving the existing business environment
MOSCOW INVESTMENT STRATEGY 2014-2025
8
GENERAL MEASURES: BUSINESS ENVIRONMENT
Improvements in business environment
Cost reduction of business operations
Simplification of administrative
procedures
Time and cost reduction of administrative procedures
included the Doing Business
rating
Optimisation of other administrative procedures (based on business appeal)
Activities of the Headquarters to protect the entrepreneurs’ rights and legitimate interests
Conversion of public services into electronic form
Tax policy
Tax benefits for investors (for priority
sectors)
Regular assessment of the efficiency of tax
incentives
Transfer of the tax burden to property,
rather than the activity
Tariff policy in the energy and public services sector
Long-term tariff planning
Tariff optimisation
The introduction of network connection fees
Involvement of consumers of utility resources in the
payment planning process
Competition development and establishment of “clear rules”
Further improvement of the public procurement
system
Increased competition in the property and land
auctions
Improvement of Moscow’s
investment image
Alignment of direct communications and
feedback from investors
Promotion of Moscow as a place for business
Work with international sources of information
Bilingual unified information investment
portal
MOSCOW INVESTMENT STRATEGY 2014-2025
9
GENERAL MEASURES: A CITY TO LIVE IN
Moscow – a comfortable city to live in
Balanced infrastructure development
Balanced urban policy
Changes to the city planning rules and
regulations
Development of a polycentric city structure
Creation of parks, pedestrian zones, etc.
Integrated development of territories (including
comprehensive redevelopment)
Expansion and modernisation of transport infrastructure
The development of the public transport system
Intelligent traffic management systems
Reorganisation of parking space
Creation of a comfortable city environment
Improvement of social service quality
(education, public health service, etc.)
Service improvements of Government organisations
Increased private sector involvement
Public security The development of
a legal residential rental market
Saving the city’s historical heritage
Restoration of cultural heritage sites, using
funds by private investors (preferential
rent)
MOSCOW INVESTMENT STRATEGY 2014-2025
MOSCOW INVESTMENT STRATEGY 2014-2025
Priority fields
Transport Infrastructure
Health & Education
New Economy Traditional Industry Financial & Business Services
Wholesale, Retail, Logistic Travel, Hospitality, Leisure & Sport,
Urban Environment
Housing & Utilities
MOSCOW INVESTMENT STRATEGY 2014-2025
Field priorities
OBJECTIVES AND PRINCIPLES:
• Improvements to the transport situation in
Moscow;
• smoothing of key burdens on a city budget;
• development of Public Private Partnership
mechanisms;
• promotion of new technologies, including
administrative;
• creation of a united transport system for the
whole Moscow agglomeration .
Transport infrastructure
OBJECTIVES AND PRINCIPLES:
• Promotion of private sector
growth, competition
development, quality
improvement and price
reduction, creation of new
facilities;
• attraction of foreign investors
with competencies which are
lacking or insufficient in
Moscow;
• creation of attractive projects
for private businesses
considering city’s interests.
Social sphere (education & health)
PRIORITIES:
• Reconstruction and modernisation of existing
healthcare services, using PPP mechanisms;
• support in construction of private health services
using funds of private investors;
• using private investment for creation of
preschool and school facilities, using PPP
mechanisms;
• attraction of private investments to high-school
and professional education;
• promotion of education programmes recognised
internationally.
PRIORITIES:
• Tube development;
• public transport modernisation;
• development of railway services ;
• long-term purchases of trains;
• creation of transport hubs;
• road building, including different forms
of PPP.
TOOLS AND MEASURES:
• Concessions, long term
purchases (lifecycle
projects) and other forms of
PPP;
• building transport
infrastructure using special
Moscow investment
program.
TOOLS AND MEASURES:
• Reduced leasing price
(1 rub per 1 sq. m);
• subsidiaries for private
businesses providing
services for Muscovites;
• concession s and PPP
mechanisms;
• consultation and
support.
MOSCOW INVESTMENT STRATEGY 2014-2025
Industry priorities
OBJECTIVES AND PRINCIPLES:
• Creation of well-paid and highly
productive jobs;
• development of knowledge intensive
spheres ;
• attraction of international investment;
• increase in production and export of
high-technology products with greater
added value;
• building infrastructure for innovative
industries.
«New economy»
OBJECTIVES AND PRINCIPLES:
• Optimisation of industry
territories, increasing efficiency;
• increase in competitive industries;
• restructuring of inefficient
enterprises.
«Traditional industry»
TOOLS AND MEASURES • Concessions for investments;
• elaboration and approval of
documents concerning urban areas
that cannot be redeveloped;
• subsidies to compensate costs for
personal training.
PRIORITIES:
• Upgrade of existing industries and
increase in their productivity;
• introduction of energy saving
technologies;
• improvements in safety and
environment facilities.
PRIORITIES:
• Electronics, microelectronics,
nanoelectronics;
• development of new materials,
laser-based and radiation
technologies;
• aerospace complex;
• pharmaceuticals (as related to
research and development);
• telecommunications and
information technologies;
• other spheres.
TOOLS AND INSTRUMENTS • Creation of infrastructure
for technological and
industrial parks;
• tax privileges for residents
of science, technological
and industrial parks;
• subsidiaries for innovative
companies;
• consultation and support.
MOSCOW INVESTMENT STRATEGY 2014-2025
Industry priorities
OBJECTIVES AND PRINCIPLES :
• Integrated land development: accommodation, infrastructure, employment within walking distance ;
• creation of economic conditions attractive for investors considering city’s interests;
• maintenance of cultural heritage objects and their involvement in the economic turnover.
Urban area
OBJECTIVES AND PRINCIPLES :
• Upgrade and develop municipal infrastructure;
• transition to financing of engineering public infrastructure by using funds of utility service providers.
Public services
PRIORITIES : • Electricity, heat and gas supplies;
• Develop and upgrade collector facilities;
• water-pipe and canalisation facilities;
• clearing and processing waste water;
• unified lighting area development;
• creation of network of public toilets.
TOOLS AND MEASURES :
• Long-term contracts;
• Public Private Partnership mechanisms.
TOOLS AND INSTRUMENTS :
• Elaboration of redevelopment projects;
• attracting private investment into renovation work and maintaining the sites by offering them for long-term lease;
• consultation and support.
PRIORITIES :
• Redevelopment of existing territories;
• renovation of cultural heritage;
• involvement in the economic turnover of shabby objects;
MOSCOW INVESTMENT STRATEGY 2014-2025
Results Investments in capital ($ US bln.)
Foreign direct investment (%)
Competitiveness index of the cities in the world (The Global City Competitiveness Index), Moscow
Private investment in education (% to 2012)
Private investment in health services (% to 2012)
GRP per worker (% to 2012)
OVERALL RESULTS
Opportunities for business
32,4 2012 40 2016 82 2025
15 2012 20 2016 30 2025
58/120 2012 50 2016 30-40 2025
100% 2012 300% 2016 700% 2025
100% 2012 300% 2016 700% 2025
100% 2012 120% 2016 200% 2025
Moscow in Innovation Cities Top 100 Index 74/445 2012 60 2016 50-55 2025
15
REALISATION PLAN: SHORT-TERM PROJECTS (EXAMPLES)
MOSCOW INVESTMENT STRATEGY 2014-2025
Transport:
• Life cycle contracts to purchase rolling stock for the Metro;
• PPP in building and maintenance of Northern Back-Up for Kutuzovsky Avenue;
• Creation of transfer hubs (255 overall).
Education:
• Reduced leasing rate for private schools and kindergartens (40 objectives in 2013-2014)
Health services:
• Reduced leasing rate of 1 rub per 1 sq.m for «Doctor Round the Corner» project;
• Concession projects.
Urban area:
• Reduced leasing rate for cultural heritage;
• Old industry modernisation.
«New economy» High-tech:
• Investment proposals and state support: Zelenograd, special economic zone, Moscow Technopolis, innovation cluster and other infrastructure for innovative production.