Investments

Investment policy of Mari El Republic is based on the principles of investment attraction to the efficient and high-competitive productions and activities that stimulate business activity in various branches of economy and facilitate income growth of the republican budget.

As for legislation, Mari El has a well-formed regulatory framework in the field of investment activity. Since 2001 state support mechanism for top-priority investment projects has been implemented in the region. It was elaborated on the basis of the Republican Law “On attraction of investment in Mari El Republic economy”. The law specifies legal, economic and social conditions for attraction of Russian and foreign capital and foreign credits in the economy of the region. Besides, the law secures and protects property rights of the objects of investment activity and intends to stimulate production, restructure the economy and create new jobs.

The following regulatory legal acts aimed at regulation of investment activities have been adopted within the Republic:

• Law of Mari El Republic (MER) “On setting lower corporate profits tax rates payable to the republican budget of Mari El Republic” – lowers corporate profits tax rate by 1 – 4 percentage points (depending on the investment volume) for the companies carrying out investment activity in the region
• Law of MER “On corporate property tax in Mari El Republic” – tax rate has been set at 2.2% of taxable property cost. Organizations that implement investment projects with total cost over RUR 100 mln and those who have invested minimum RUR 200 mln of private funds in the construction of the objects of social infrastructure in the region are exempted from property tax
• Resolution of MER Government on the procedure and terms for granting subsidies to the subjects of investment activity implementing investment projects” – stipulates partial subsidy assistance with interest expense and leasing payments to the subjects of investment activity
• Resolution of MER Government on the lease of land owned by Mari El Republic – the companies implementing investment projects in Mari El Republic pay land rent at the minimum rate of 0.01% of land cadastral values, applied to count the rent charge
• MER Government order “On confirmation of a model form of investment agreement between MER Government and investor implementing investment project in Mari El republic” – helps to coordinate the actions of all the interested parties when implementing investment project on the territory of the Republic. MER Government is entitled to monitor implementation of investment projects.

The Government of Mari El Republic gives priority to the establishment of the following industrial facilities on the territory of the Republic:

1. Bottled water and related products manufacturing plant. Mari El Republic is one of the most ecologically clean regions of the European part of Russia possessing large raw materials resources (over 2,000 operating and abandoned artesian water wells) enough to organize manufacture of bottled water and related products on its territory.
2. Confectionary plant with capacity of 5,500 tons of confectionery per year. There is a good opportunity to launch an enterprise producing weight out and packed sweets and other confectionery, that would be targeted at the regional market and partially at the markets of the neighbouring regions.
3. Car assembly plant. As a part of the republican target program “Development of investment activity in Mari El Republic in 2010–2014”, establishment of special economic zones is considered in the region. Since the legal platform for regional SEZ operation in the Republic has been secured by legislation, foreign syndicates dealing with automotive engineering will be offered to arrange their enterprises in SEZ.
4. Energy-saving bulbs manufacturing facility. The project can be realized on public-private partnership basis with attraction of Russian and international development institutes’ funds.
5. Glass and glass container manufacturing plant. Mari El Republic has high-quality deposits of glass sand. Close proximity of explored and perspective deposits to traffic arteries and rivers may cut down the expenses on transportation of end products to consumers.

Regional Government pays much attention to the development of Southern industrial district of Yoshkar-Ola. By now, the boundaries of Southern industrial district have been determined, its total area makes 2,370 ha. The list of idle land plots that lye within the territory of the industrial district and could be potentially used for construction of new enterprises has been made. For now idle land makes over 800 ha.

Southern industrial district will be developed on terms of public-private partnership. Republican budget and raised funds will cover the expenses on replacement of existing objects of engineering infrastructure and construction of the new ones. Industrial facilities are to be constructed at the expense of private investors.

During the construction phase, land plots - allocated and registered in accordance with land legislation - will be passed on to investors on a leasehold basis. Once the industrial facilities are constructed, investors can obtain the leased land into ownership.

Sothern industrial district will host enterprises manufacturing glass containers, machine-building articles, commercial refrigeration equipment, construction materials, automotive components as well as enterprises for advanced woodworking and processing of agricultural products.

Investment ratings

Russian rating agency “Expert RA” has rated Mari El Republic at 3B2 level (lower potential – moderate risk). The region ranks 59th among the Russian regions in investment risk, and 72nd in investment potential. The minimum investment risk is that of management and ecology, the maximum risk falls on finances.

Ministry for Economic Development and Trade
Minister
Ilyas G. Yakupov
424001, Russia, Mari El Republic, Yoshkar-Ola, 29 Leninsky Pr.
Tel. +7 (8362) 64-20-71
Fax: +7 (8362) 42-61-49
E-mail: mecon@gov.mari.ru