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RFNY2013 - Invest In Moscow - Moscow Investment Climate

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Moscow Investment Climate Leonid Kostroma MOSCOW CITY INVESTMENT AGENCY Oсtober 2013
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Page 1: RFNY2013 - Invest In Moscow - Moscow Investment Climate

Moscow Investment Climate Leonid Kostroma

MOSCOW CITY INVESTMENT AGENCY

Oсtober 2013

Page 2: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 3: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 4: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 5: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 6: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 7: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 8: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 9: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 10: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 11: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 12: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 13: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 14: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 15: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 16: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 17: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 18: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 19: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 20: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 21: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 22: RFNY2013 - Invest In Moscow - Moscow Investment Climate

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

Page 23: RFNY2013 - Invest In Moscow - Moscow Investment Climate

Thank you!

Leonid Kostroma

Moscow City Government

Moscow City Investment Agency

Strategy Deputy CEO [email protected] www.mosinvest.mos.ru


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