The Republic of Karelia is an investment attractive region due to:
Rich natural resources and availability of on-site processing facilities
Unique northern nature, rich cultural and historic heritage
Considerable labour and scientific potential
Near-border location enabling development of border cooperation
Transit transportation perspectives and access to southern and northern seas and the Baltics
Over 60 large and medium-size investment commercial projects have been implemented over these years in the Republic. Major Russian investors - SUAL, Severstal, Gazprom, Russian Railways have invested their funds into regional industrial and infrastructural projects. Large investments have been made by Karelian companies: Segezhsky Pulp-and-Paper Plant JSC, Kondopoga JSC, Karelia Chipboard JSC. Among foreign investors working in the Republic are Stora-Enso Group of Companies, RKS Group, IKEA, etc.
The Government aims to create favourable conditions for all the investors registered in the Republic, which involves transparent, profitable and predictable cooperation between the enterprises and taxation authorities, regulatory bodies, law enforcement authorities and other public authorities.
The regional Law “On Investment Activity in the Republic of Karelia” specifies criteria for assigning top-priority status to investment projects:
the project is to be implemented in top-priority sectors of teh regional economy (wood harvesting, woodworking and pulp-and-paper industry, mining industry, machine building, tourism, construction industry, agro-industrial complex, fishing industry)
the project implementation brings positive economic and social effect
the total amount of investment makes at least RUR 1 bln
Other top-priority spheres for investment attraction include:
Manufacture of goods second to none in the world, in case they are protected with domestic patents or relevant foreign documents
Manufacture of high-quality export goods in non-oil-and-gas sectors, which are in high demand abroad
Food manufacturing
Development of transport infrastructure
Environmental situation improvement in the Republic of Karelia
Organization of innovative production
Construction and reconstruction of the of healthcare, cultural, sports and social service objects
Organization of environmental industrial safety
Investment legislation
The Law “On Investment Activity in the Republic of Karelia” was elaborated and enacted in the region to specify basic aspects of most favored treatment by local authorities in respect to investors of any type.
Investment favoured treatment involves the following measures:
granting tax allowances in regard to regional taxes, as well as federal taxes in the part payable to the regional budget
competitive granting of state guaranties of the Republic of Karelia
competitive budget financing of investment projects
providing subsidies for partial reimbursement of expenses on paying the interest for loans obtained to finance investment projects
information and organization support
In 2009 the Guarantee Fund of the Republic of Karelia was founded to give securities for liabilities of small companies towards creditors, and perform financial intermediation. The Fund gives warranties to small and medium-size companies for the loans given by commercial banks, which have entered into partnership agreement with the Guarantee Fund. The Fund’s present authorised capital makes USD 3.9 mln: USD 2.9 mln of federal budgetary funds and USD 1 mln of regional budgetary funds.
Investment ratings
The international rating agency Fitch Ratings has confirmed Long-term local and foreign currency rating of the Republic of Karelia on the international scale at the ′ВВ-′ level and Short-term foreign currency rating at the ′B′ level. The National Long-term rating is confirmed at ′A + (rus)′. The forecast on all ratings is ′Stable′.
The leading Russian rating agency Expert-RA has assigned ‘3B2’ investment rating (low potential - moderate risk) to the Republic of Karelia. The region ranks 48th (among 83 Russian regions) in investment risk index and 59th in investment potential index. The lowest investment risk is administrative, the highest is ecological. Tourism has the highest investment potential.
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