Investments

Nizhny Novgorod Region investment climate belongs to the most comfortable in the Russian Federation. The regional investment laws and regulations considered by experts Russia’s most successful, as well as strong combination of financial and non-financial benefits offered to the business community and the organizational support for investment enable an investor to efficiently utilize the Region’s ample economic and resource potential of manufacturing industries and the innovations sector. Favourable geographic position and wealthy consumer market offer great opportunities to develop transportation and logistics. 

Any investor operating in Nizhny Novgorod Region is provided with organizational support and practical guidelines, in particular, at project outset. Unlike other regions, plot allocation procedures, which are the most timely-consuming and costly, cannot take longer than 104 days pursuant to regulations, if the facility allocation was approved earlier.

To obtain a plot in Nizhny Novgorod Region an investor has to communicate with only one authority - the Investment Policy Ministry, an authority dedicated to addressing investor issues. Thus, the very organization of project launching follows the one-stop-shop principle implying minimum of investor’s communication with bureaucracies.

Investors implementing Nizhny Novgorod Region priority projects enjoy considerable financial and non-financial support:

Financial support:

• Tax benefits
• Investment tax credit
• Exemption from land rent
• Nizhny Novgorod Government guarantees (extended through competitive bidding)

Non-financial support: 

• Application of the non-deterioration principle to an investor
• Backing/Forwarding petitions and applications to federal RF authorities for assistance to investors implementing investment projects
• Disseminating positive information on the investor
• Development of general business infrastructure
• Backing strategic investment projects at all implementation stages

All investment policy arrangements are secured through the regional investment legislation, which ranks among Russia’s most efficacious, and budgetary provisions. Nizhny Novgorod Region legislation protecting both regional and investor’s interests ensures the legitimacy of implemented policies. Institutional framework allows for prompt decision making and decision implementation and provides for interagency communication to release an investor from red-tape burden. Arrangements undertaken as part of implemented investment policies conform with the Region’s general economic policy and are accounted for in the regional budget and programs.

The investment policies were a success, confirmed by positive investment behavior, an increase in the number of internationally known investors operating in the Region, and high credit ratings assigned to it.

Nizhny Novgorod Region boasts high credit ratings demonstrating sustainable growth, expediency of all financial benefits furnished to investors and reliability of guarantees given by the Region to investors to secure their commitments:

• Fitch Ratings agency confirmed the region’s long-term foreign and domestic currency ratings at “BB-“. Short-term foreign currency rating was confirmed at “B”. Fitch Ratings also confirmed the national long-term rating at A+(rus). Long-term rating outlook is “stable”.
• In December 2009 the national rating agency Expert RA confirmed the region’s investment rating at “2B” level (medium potential – moderate risk). The agency ranked Nizhny Novgorod Region among 10 lowest investment risk Russian regions. The city is also among 10 investment potential leaders, the most investment potential is innovative.
• In 2008 Moody’s, a top international rating agency, assigned “Ba2” long-term credit ratings with a stable outlook for foreign and domestic currency obligations to Nizhny Novgorod Region. Another rating assigned was an “Aа2.ru” national scale rating. Only Russia’s two capital cities, Moscow and St. Petersburg, have better ratings.

The NNR investment policy identifies the following priority industries:

1. Priority Industries Group I: Automotive industry; research, education and new economy; information technologies; food industry; radioelectronics and instrument engineering; chemical and pharmaceutical industry.
2. Priority Industries Group II: Ferrous industry; fuel industry; glass industry; aircraft engineering; chemical and petrochemical industry; tourism.
3. Priority Industries Group III: Building materials industry; medical industry; timber industry and pulp-and-paper industry; light industry; shipbuilding; agriculture.

While investment activities enjoy general support in the Nizhny Novgorod Region, Government′s policy is to identify strategic “growth points”, i.e. projects that can significantly contribute to the economic growth, ensure substantial social impact, correct disparities in the Region’s development, etc. Such projects are granted the status of a Nizhny Novgorod Region priority projects and enjoy significant governmental support.

The prime criterion for granting priority status to an investment project is a positive impact of its implementation evaluated by the following parameters:

• Economic efficiency
• Budgetary efficiency calculated for the investment agreement term as the difference between the tax target and the governmental support granted to an investor through tax or other benefits and/or interest refund on loans attracted to implement any NNR priority investment projects. Negative impact for the budget will result in rejecting a tender for project’s priority status
• Social efficiency (new jobs, better working conditions, improved production staff structure, improved public health condition, improvements in housing and living conditions, supplies of certain consumer goods, time savings for households, etc.)

The regional investment policy can be evaluated based on the data available. The 2008 real investment reached RUR195.6 bln ($5.8 bln) pushing the y-o-y physical volume index up to 120.5 per cent. Between February 2006 and January 2009 1,953 investment projects have been approved under the new system of communication with investors, including 56 projects granted Nizhny Novgorod Region priority status to bring RUR 1,200 bln ($35.8 bln). The 2008 foreign investment in the region’s non-financial sector reached $708.5 bln .

Investment Policy Ministry
2, Kremlin 603082 Nizhny Novgorod
Tel. +7 (831) 411-82-16.
Fax + 7 (831) 411-83-27
E-mail: official@invest.kreml.nnov.ru