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Moscow Investment Climate Leonid Kostroma
MOSCOW CITY INVESTMENT AGENCY
Oсtober 2013
2 | Investment Climate of Moscow | 2013
Key Economic Indicators in 2012
Structure of GRP
Investments in fixed assets $32.4b
+8.5%
Debt to GRP ratio 1.7%
$57b +17,6%
City Budget
Industries Share, %
Wholesale, retail 24,1
Manufacturing 17,0
Wholesale of fuels 14,4
Business services 9,8
Transportation & communication
9,3
Social & government sector
8,4
Real estate services 5,5
R&D and IT 4,4
Construction 2,4
Other 4,7
GRP, billion of USD
276
341 357 382 400
421 445
2010 2011 2012 2013 2014 2015 2016
3 | Investment Climate of Moscow | 2013
Key Economic Indicators in 2012
Moscow City (106 h)
New Moscow (145 h)
Population 12m
Real-estate constructed
7,6m sq m +9%
$19.6k +12.8%
Average annual salary
$4.2b +5.9%
Foreign direct investments, FDI
23% Share in Russian incoming FDI
4 | Investment Climate of Moscow | 2013
Investors Believe in Moscow
4th Highest FDI Volume in Greenfield Projects in the World1
Overall Positive Feedback From Investors
1. Not including Dubai, Frankfurt or Warsaw Source: The Financial Times; rankings official websites
4th Place
9th Place
7th Place
Top 25 European Cities of the Future 2011
Economic Clout: Cities of Opportunity 2012
Top cities ranked by the number of large companies
0 500 1000 1500
Paris
Sao Paolo
Moscow
Hong Kong
Shanghai
Frankfurt
Beijing
New York
Sydney
Barcelona
Dusseldorf
London
641
654
661
996
1133
618
477
462
385
384
399
1375
Cumulative FDI (2008 – 2012), number of investments
5 | Investment Climate of Moscow | 2013
Moscow Focuses Its Efforts on Creating a Favorable Investment Climate Across Three Key Areas
Business environment
Business opportunities Place to live
Encouraging business activity & improving business climate Forging successful private
and public partnerships & incentivising private sector to lead the projects previously managed by public body
Developing enjoyable & clever urban environment convenient to work and live
6 | Investment Climate of Moscow | 2013
Business Environment
• Qualified personnel
• Subsidizing employers’ expenses on personnel education
• Low taxes (13% personal tax, 20% corporate tax)
• Tax exemption for innovative companies and car producers
• Developed infrastructure (IT, social, transport, etc.)
• Sound scientific opportunities
• Developed financial market
• Balanced budget policy
• WTO and Common Economic Space member
Strengths Guiding Principles
• Cost cutting in business operation
• Reduction of administrative procedures
• Simplifying interaction of business and government
• Enhancement access to infrastructure
• Competition policy elaboration
• Strengthening Moscow’s investment image
Starting a business
Getting electricity
Dealing with construction
permits Registering
property
2012 29 281 423 43
2013 18 281 344 44
2014 12 146 152 20
7 | Investment Climate of Moscow | 2013
Doing business in Moscow
118th place
112th place
90th place
20th place
2012
2013
2014
2018
Doing Business
ranking "I have visited many countries but nowhere I found the devotion to improve the business climate the way I find it in Russia, and particularly in Moscow“
Jim Yong Kim, President of World bank
Time, days
8 | Investment Climate of Moscow | 2013
Development of Competitive Environment
TENDER
Concession
Sale of Property and Shares
Leasing Land and Nonresidential Premises
City’s OFFER
• Enhancement of government procurement procedures
• Promoting competition in property and land tenders
• Encouraging competition in product markets
• Uniform and transparent rules
Joint Venture
Location Approval
Tendering Process:
1. Choose a suitable project
2. Examine the project and documentation
3. Pay deposit
4. Submit application
5. Attend the tender
6. Win the tender
7. Sign the contract
9 | Investment Climate of Moscow | 2013
We’re Driving Institutional Changes to Ensure Investor Support – Several Core Institutions Already in Place
• Tool for elimination of administrative barriers and systematic problems
• Hotline for any problems with implementation of investment projects
• Advocate in contacts with government bodies and infrastructure providers
• Innovative investment champion in Moscow
• Coordinator of all high-tech investment promotion initiatives
• Guide for all high-tech innovation zones and programs
• Dedicated project coordinators for major projects
• Omniscient navigator of Moscow investment system
• Partner in fine-tuning investment projects
• Public-Private Partnership initiatives
Moscow City Investment Agency
Protection of Entrepreneurship
Committee
Moscow Innovation Development Center
• Disposal, lease, PPP and other ways to profit from city property
• Education, health care, culture, entertainment and leisure, sports, etc.
Committee for involvement
of state assets
10 | Investment Climate of Moscow | 2013
• Largest city in Europe
• Fast-growing economy
• Economic, political and commercial center
• Advantageous geographical position
• Public property involvement into economy
• Opportunities of innovation and industrial infrastructure
• Extensive city investment program
Strengths Guiding Principles
• Attracting investments to priority areas
• Increasing productivity and wealth of population
• Developing flexible state support for investment projects
• Implementing public-private partnerships (lifecycle contracting and concessions)
• Expanding infrastructural capabilities
• Developing New Moscow
New Business Opportunities
11 | Investment Climate of Moscow | 2013
Industry-Focused Priorities
Transport Infrastructure
Health & Education
New Economy Industrial Zones Financial & Business Services
Travel, hospitality, leisure & sport
Wholesale & Retail Urban environment
12 | Investment Climate of Moscow | 2013
Moscow as a Basis for Urban Area Development
2%
Economy stimulation
599
5%
Utilities
1,289
11%
Social
Investment, M USD
12,000
8,000
0
4,000
Other
239 97
1%
Construction
208
Residential estate
1,429
12%
Transport
8,030
68%
Total
11,891
100%
Moscow Targeted Investment Program for 2014
Other investment
Transport
Key features
• Stable investment program
• Increasing focus on transport
2011 2012 2013 2014 2015 2016
12.7 11.9
12.8 11.9 12.0 11.9
48%
52%
40%
60%
38%
62%
32%
68%
31%
69%
33%
67%
Investment, B USD
13 | Investment Climate of Moscow | 2013
Transport Infrastructure Railway
Bringing private and public sector together in developing transport infrastructure
Creating a merged transportation system for the agglomerate
Implementing cutting-edge information technologies
Focusing on Public transportation
+150 kilometers of subway lines
+70 stations
$5b annual CAPEX
3rd interchange circuit
3,000 train cars with $6b of train procurement and $6b-$9b maintenance cost
15.9b passenger-kilometers in 2012
+240 kilometers of main routes
~300 trains ($4b)
9 directions
54 kilometers of railroad
31 stations
19 transport hubs
33 trains with 7 cars each $4b of train procurement and
$4b-$6b maintenance cost
255 transport hubs:
163 multifunctional as capital structures
92 in operation as junctions
Transport hubs
Moscow Small Ring Railway
Subway Railway
South Alternate to Kutuzovsky Avenue
Toll road to Skolkovo with 3 kilometers $0.9b of investments with 50% funded by city
1.6 million square meters of real estate
14 | Investment Climate of Moscow | 2013
Transport Infrastructure Roads
North Alternate to Kutuzovsky Avenue
Toll road to Moscow-City 11 kilometers $2b of investments
Overground Transport 2014-2016yr
242 km of lanes for public transport 30 km of tram lines
4 200 vehicles
Central Ring Road
521 kilometers Located 50 kilometers from Moscow Ring Road with 75% of investments financed by the state and 25% by the private investments 2022 completion year
15 | Investment Climate of Moscow | 2013
Industrial Zones
Optimizing of territorial location of industrial and scientific facilities
209 industrial zones
Developing along a mixed-use model (workplaces + housing + social infrastructure)
Reducing commute time
ZIL Industrial Zone
6.5 kilometers from Kremlin
Territory of ZIL, ha 125
Nagatinskaya Poyma Park 95
Total developed area, mln m2 4.6
Commercial and residential real-estate, mln m2 1.6
Total investments $5.2b
Private investments $4.4b
MosAutoZIL
Construction of CKD assembling facilities with the
capacity of 50,000 units
per year
16 | Investment Climate of Moscow | 2013
Government Support of Innovations and Industries
Amount granted
Compensating credit interest on construction and development technopark
<$3.2m
Compensating credit interest on construction and development of technopolis / industrial park
<$9.5m
Financial support
Tax exemption for 10 years Management company Residents
0-1,1% property tax 0,01-0,3% land tax
0% property tax 13,5% corporate tax
Innovative infrastructure development Technoparks Slava Strogino MosGorMash FizTech XXI project
Technopolises Moscow
Industrial parks Zelenograd project Rudnevo project
Special Economic Zone Zelenograd
Government support of industrial sector
• Curbing the growth of tariffs on resources for industrial consumers • Granting benefits in exchange for investments • Subsidizing interest expenses, leasing payments, employers’ expenses on personnel education
Government support of innovation
17 | Investment Climate of Moscow | 2013
New Moscow
*forecast up to 2035
Growth points (social and business clusters)
• New center of growth and attraction
• Polycentric development
• Development of multifunctional areas
• Bringing transport and social infrastructure up to the standards of Moscow
• Linear arrangement of roads
International Financial Center at Rublyovo-Arkhangelskoe
Agroregion “Rogovo”
Agroindustrial cluster “Klenovo”
Logistic and agrocluster “Voronovo”
Logistics cluster “Kievskyi”
Historical and recreational complex
Innovation and science center “Troitsk”
Medical cluster
Educational cluster
Business center “Kommunarka”
Aeropolis “Vnukovo”
Technopark “Mosrengen”
Technopark “Rumyantsevo”
Area development*:
+1.087m population
+1m jobs, incl. 0.3 m in social sector
+146k hectares of area
+51m sq.m. of housing
+27m sq.m. of public, business and industrial buildings
+837 km of roads
+37 km of metro lines
Healthcare
#63 City Hospital
Cardiology Center
Doctor is Nearby
1st PPP project in healthcare sector
29k sq.m. of reconstruction area
$145m of investments
$32m concession fee
20-30% of services provided to patients with mandatory health insurance
4.5-year lease
1.5 hectares of land
$80m of investments
130 beds
3 operating rooms
4 laboratories
25-30% of service by compulsory health insurance
Leasing benefits for 20 years
1 Rub per 1 sq.m.
Reconstruction and equipping medical offices
11 premises were conveyed to investors
18 premises are ready for auction
Overall 100 facilities
Developing private health care including public-private partnerships
Import substitution of medical services
Increasing accessibility to public and specialized medical facilities
Medical care within walking distance
23 polyclinics with $650m of investments
6 fixed facilities with $200m of investments
+46 units constructed with private investments
2014- 2016
18 | Investment Climate of Moscow | 2013
19 | Investment Climate of Moscow | 2013
Education • Reducing the deficit of educational
services
• Developing the private sector of the education system
• Promoting competition in the industry
• Increasing the quality of, and demand for, education
• Building and remodeling schools, kindergartens and other institutions, including via public-private partnerships
• Creating full-cycle educational facilities
• Arranging schools in accordance with international standards
Leasing benefits for 49 years, with an annual rate of 1 Rub per sq.m.
Program for Creating P R E S C H O O L S
Preferential Premises Rent
Land Rent
Rent during construction and operation
Results: 3 land plots, 9 premises
Current situation: Auction announced for 13 premises
Targets: 18 premises and 2 land plots by year-end
City Program for Education, 2014-2016 years
$983m of investments:
60 preschools 16 schools 23 outbuilding of elementary school +56 preschools & 29 schools constructed with private investments
Similar program ‘Preferential Premises Rent’ is being developed for schools
Concession
BOT model 1.5yr of construction 15yr of operation $5.2k pubic financing per child
Sports
Improving accessibility and attractiveness of the city’s sports infrastructure
Hosting the 2018 football World Cup
Constructing sports infrastructure
Developing tourist infrastructure
Luzhniki Spartak CSKA Dynamo
Size of the stadium, kilo seats 81 44 30 45
Investments, billion of USD 3,6 0,5 0,35 1,5
Football arenas with sport, hotel and other complexes
City Program for Sport, 2013-2016 years
Sport and recreation centers
Auctions were held to rent 15 land plots following the construction of sport and recreation centers. Auction is announced for 10 units. 60 land plots is going to be auctioned
11 football fields
7 cycle tracks
1 skiing resort
~80
20 | Investment Climate of Moscow | 2013
Libraries – $350m
Cultural centers - $65m
Theatres and concert halls – $1,2b
Exterior lightening - $625m
Footpath area - $110m (2014y only)
Cinema – 2 lots with 10 theatres and $154m initial price till the end of 2013
Urban Environment
Nagatinsk Poyma Park
All-Russia Exhibition
Center
Park Zaryadye
300 meters from Kremlin
13 hectares of land
hotel with 340 rooms
$429m of investments, including $146m for hotel
Largest exhibition complex in Russia
237 hectares of total area
480k sq. m. of constructed area
361 hectares botanical garden
615 buildings
45 architectural landmarks
Peninsula park
94.8 hectares
298,6k sq. m. of commercial real estate
$900m of investment
Developing of public areas
Architecture and historic preservation
Balanced city-planning
Walking accessibility
Moscow river
The project covers embankments with 10% of territory of old Moscow
It includes construction of roads, bridges, developing recreation zones
Out-standing projects
2014-2016 program
for developing
Culture sector
21 | Investment Climate of Moscow | 2013
22 | Investment Climate of Moscow | 2013
• Broad cultural heritage
• High level of safety
• Public areas
• Entertainment and leisure attractions
• Government services via the Internet
• Quality medical care
• Strong educational facilities
Strengths Guiding Principles
• Balanced development of residential, transportation and social infrastructure in Moscow as a global capital
• Cultivation of a comfortable urban environment
• International educational standards
• Infrastructure preparation for 2018 football World Cup
• Improvement of ecological conditions
• Construction of hotels and rentable housing
Place to Live
Thank you!
Leonid Kostroma
Moscow City Government
Moscow City Investment Agency
Strategy Deputy CEO [email protected] www.mosinvest.mos.ru