Investment potential and priorities of social and economic

development of the Republic of Bashkortostan

THE REPUBLIC OF BASHKORTOSTAN

AREA 143,600 SQUARE KILOMETRES

POPULATION OVER 4.07 MLN PEOPLE

• comes 7th among Russian regions in total population;

• comes 24th in the area

Industry Deposits and fields

Ferrous metallurgy brown coal

Machine-building and metal-working oil

Oil refining natural gas

Gas processing iron ore

Chemical copper ore

Petrochemical common salt

Forestry and wood-working limestone

Construction materials gypsum

Glass production (working)

Light

Food

Bashkortostan possesses strategic reserves of important mineral resources: oil, gas, ores of ferrous, nonferrous and precious metals

3500 DEPOSITS OF MINERAL RESOURCES

Timber stock is 760 mln m3 (cubic metres). Land resources are 14 mln hectares.

SCHEME OF MAIN TRANSPORTATION LINKS OF BASHKORTOSTAN REPUBLIC

Automobile

Railroads

Pipelines

Airports

Passenger terminals

Freight terminals

SAMARA

KAZAN

PERM EKATERINBURG

ORSKORENBURG

UFACHELYABINSK

MOSCOW

ENTERPISE TURNOVER IN ALL KINDS OF ACTIVITY –

2009 – $ 43.2 bln2010 - $ 58.1 bln

GROSS REGIONAL PRODUCT

(PRELIMINARY ESTIMATE) –

2009 - $ 22.5 bln2010 - $ 26.8 bln2011 – $ 29,1 bln

SOCIO-ECONOMIC DEVELOPMENT OF THE REPUBLIC OF BASHKORTOSTAN

Growth rate dynamics of principal economic indices, %

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Es-ti-

mate)

80

100

120

140

160

180

200

220

240

116.5

124.1

124.6 130.3 135

143.4154.9 154,9

166,4 177.9

202.8226.1

119.5

128.7

109119.4

131.8

165.4 174.3

220.1 231,5

193.8

187 195.4

Industrial production index The volume of construction

ECONOMIC DEVELOPMENT INDICES, %

GRP 103,7%

GRP99,0%

GRP107,7%

GRP 107,5%

2010

2011 estimation

2009

2008

109,1

114,0

98,3

107,6

103,5

65,2

100,0

103,1

102,4

96,2

84,5

105,6

105,5

104,698,0

119,1

124,8

90,0

73,2

109,0

121,3

197,3

61,3

121,5

100%Industry

TradeAgriculture

InvestmentsConstructionExport

Oil and gas extraction 8 %

Producing other mineral resources

3 %

Foodstuff production

6%

Petroleum product manufacturing

45%

Chemical production

10% Production of construction

materials 3%

Metal manufacture 3%

Machine-building complex

10%

Other kinds of activity

3%

Electric power engineering

9%

INDUSTRIAL PRODUCTION STRUCTURE OF THE REPUBLIC OF BASHKORTOSTAN IN 2010

OIL REFINERY COMPLEX

11.2 % is a share in All-Russia primary crude oil distillation

CHEMICALS AND PETROCHEMICALS

comes 1st among Russian regions in producing anhydrous sodium carbonate, 2nd - in synthetic rubber production

NONFERROUS METALLURGY

Share in All-Russia ore extraction of zinc amounts to nearly 50%, of copper is closer to 10%

MACHINE BUILDING

Comes 1st among Russian regions in producing metal tools; 2nd – in manufacturing trolley-buses and concrete mixer trucks;3rd – in making helicopters.

The share of Bashkortostan Republic among the Russian Federation subjects in producing:

• auto–mounted concrete pumps – 100%

• anhydrous sodium carbonate – 57,8%

• trolley-buses – 31,8%

• metal tools (metal-cutting) machines – 27,0%

• lighting electric lamps – 26,0%

• concrete mixer trucks – 25,8%

• synthetic rubbers – 25,7%

• universal electric motors – 23,5%

• wire made of iron and alloy-free steel – 22,6%

• motor gasoline – 15,0%

• diesel fuel – 14,0%

• plastics – 11,8%

• sodium hydroxide (caustic soda) – 10,2%

CONSUMER MARKET AND SALARIES GROWTH

% to previous year (or period)

* January to August 2011

2008 2009 2010 2011 January to September

90

100

110

120

130

119.1

98

104.6 105.3

115.8

100101.4

101.2

127.7

106.2

109.5111,9*

Retail trade turnoverPaid services

2008 год 2009 год 2010 год0

20

40

60

80

100

30.4

43.9

32.939.6

29.7

1.5 2.1 1.6 2.0 1.5

5.2

9.3 9,3* 9.08,1*

Registered unemployment, thousand peopleRegistered unemployment rate, %Unemployment by ILO methodology, %

% thousand people

10

0

2011January-September

2010January-September

UNEMPLOYMENT RATE

* January to August

FOREIGN ECONOMIC TIES

Our partners are 98 countries worldwide

FIXED CAPITAL INVESTMENT

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Es-ti-

mate)

800

1600

2400

3200

4000

4800

5600

6400

7200

1117.4

1480.7

1480.4

1724.4

2122.42659.1

3391.9

5047,5

6410.9

4673.3

4591,1

5990.7Chart Title

$ mln

«Ва1» forecast “Positive” ”

CREDIT RATINGS OF THE REPUBLIC OF BASHKORTOSTAN

«ВВ+» forecast “Positive”

Law of the Republic of Bashkortostan of December 24, 2010 № 339-з «On the Investment Activities in the Republic of Bashkortostan in the Form of Capital

Investments»:

1)Using the state property of the Republic of Bashkortostan as security;

2) Subsidizing of interest rate for bank credits;

3) Partial compensation for purchase of leasing items;

4) Leasing on preferential terms of land plots belonging to the Republic of Bashkortostan (reduction of annual ground rent during the payback period of the project, not exceeding 5 years).

FORMS OF STATE SUPPORT

Law of the Republic of Bashkortostan of December 24, 2010 № 339-з «On the Investment Activities in the Republic of Bashkortostan in the Form of Capital

Investments»:

5) Non-financial measures of state support of investment activities in the form of capital investments :

a) consultative, methodological and information support of the investment project;

b) creation of a working group to support the investment project at all the stages of its implementation;

c) informing investors on the availability and state of the engineering infrastructure necessary for the project implementation;

d) dissemination of information on the investment project.

FORMS OF STATE SUPPORT

ОАО «DEVELOPMENT CORPORATION OF THE REPUBLIC OF BASHKORTOSTAN»

Approved by the Decree of the President of the Republic of Bashkortostan № 730-УП of December 20, 2010

Main functions:• Organizational and administrative support of investment

projects;

• Purchasing of land plots to prepare sites for creation of industrial parks;

• Organization of conferences, forums etc. for discussing investment policy of the Republic of Bashkortostan.

DEVELOPMENT OF BANKING SECTOR IN THE REPUBLIC OF BASHKORTOSTAN

82 credit organizations are present in Bashkortostan, including 11 regional banks and 71 banks from outside the region.

For the last 5 years the number of credit organizations operating in the Republic more than doubled.

Of 30 biggest Russian banks, 25 operate in Bashkortostan.

The Republic of Bashkortostan is the 6th among Russian regions as for the number of banking offices (1357 units).

SBERBANK OF RUSSIA is among TOP-50 world banks as for the volume of capital stock. Its capital and assets form more than a quarter of Russian banking system. SBERBANK has 17 branches and 591 internal structural units in Bashkortostan. Almost every inhabitant of the Republic is a client of SBERBANK OF RUSSIA.

VTB BANK is the second bank in Russia as for capital stock and assets. It holds leading positions in the sphere of corporate credits. It is represented by a filial agency in Bashkortostan.

«URALSIB» BANK is among TOP-10 of biggest Russian banks. It has one of the largest networks of business units in the Republic of Bashkortostan.

RUSSIAN BANKS

«AF BANK» - a universal bank with foreign shareholders. Founded in 1990.

«BASHKOMSNABBANK» - a universal bank providing a wide range of banking services to legal bodies, businessmen and broad public. It has been operating since 1991.

«INVESTCAPITALBANK» - a universal bank providing full range of services for both legal bodies and private persons since 1993.

LEADING REGIONAL BANKS

THE GOALS OF THE STRATEGY OF SOCIO-ECONOMIC DEVELOPMENT OF THE REPUBLIC OF BASHKORTOSTAN

UNTIL 2020

• effectively using the nature - resource potential;

• forming innovation model of Bashkortostan economy;

• developing priority types of economic activity in accelerated way;

• cooperating efficiently inter regions;

• improving the population life quality.

Since 2006 Strategy of socio-economic development of the Republic of Bashkortostan until 2020 approved in the new edition by the resolution of Bashkortostan Government on September 30th 2009 No 370 has been in action.

PRIORITY KINDS OF ECONOMIC ACTIVITY OF THE REPUBLIC OF BASHKORTOSTAN

• chemicals and petrochemicals;

• agro-industrial complex;

• machine building and metal working;

• nonferrous metallurgy;

• transport;

• construction.

PRIORITIES OF SCIENCE AND TECHNOLOGICAL AND INNOVATIVE DEVELOPMENT OF THE REPUBLIC OF

BASHKORTOSTAN

• Aviation and transport systems.

• Living systems.

• Industry of nanosystems and materials.

• Information- telecommunication technologies.

• Production systems.

• Reasonable use of nature.

• Power engineering and power saving.

TARGETED MILESTONES OF STRATEGY OF SOCIO-ECONOMIC DEVELOPMENT OF THE REPUBLIC OF BASHKORTOSTAN

UNTIL 2020

1. increasing gross regional product 2.3 times – from 2007 up in 2020;

2. going up 1.9 times the gross agricultural produce;

3. growing industrial production volume – 2.3 times;

4. putting in use of 25-30 mln square metres of housing;

5. increasing volumes of science-intensive and high-technology products up to 30%.

THANK YOU!