Investments

10 reasons to invest in Krasnodar Region:

1. Clear investment legislation
2. Close interaction with domestic and foreign investors is the highest priority for authorities at all levels
3. Strategically favorable geographic location with respect to Europe
4. Political stability in the region
5. Well-developed financial infrastructure
6. Government support of investment projects at all stages – from signing Protocols of intent to facility commissioning
7. Well-educated workforce
8. High standard of living
9. Possibility of investment project implementation in any branch of the economy
10. Ample potential of natural resources

Krasnodar Region is one of Russia’s top regions for making capital investments. The region’s vast potential, unique geographic location, natural and recreational resources, fertile farmland, expansive transport infrastructure and, most importantly, conditions conducive to developing business, combine to make it a consistent leader in the most prestigious investment ratings.

Over the last three years, investments in the regional economy have amounted to RUB 1.2 trillion, including RUB 493 billion in 2010. Fixed asset investments rose 60% over three years vs. a 1.8% decline for Russia as a whole. In 2008-2010, the region completed 160 large-scale investment projects worth over RUB 80 billion.

The Krasnodar Regional Administration helps attract investors by providing various benefits and actively assisting the promotion and implementation of investment projects.

The fundamental regional investment law is Krasnodar Region Law “On Government Stimulation of Investment Activity”, along with subordinate legislation. The law is meant to attract investment to Krasnodar Region based on the creation of a system of favourable treatment for Russian and foreign investors, as well as of equal protection of the rights, interests and property of entities involved in investing activities, regardless of the investor’s legal form.

According to this law, investors are given both financial and non-financial government support when carrying out investment projects:

• tax breaks on payments to the regional budget (property tax)
• investment tax credit on regional taxes, and corporate profits tax at the tax rate set for this tax payment to the regional budget
• favourable terms for the use of land and other natural resources
• regional government guarantees
• financing of investment projects using regional budget funds
• various forms of subsidies for investment purposes, including small and medium business
• support for investment projects, etc.

When carrying out investment projects, small and medium-sized businesses can also receive government support as part of the Programme for Government Support of Small and Medium-Sized Businesses in Krasnodar Region. This system of government support includes the following:

• help in receiving bank credits secured by Krasnodar Region’s Guarantee Fund for the Support of Small Business
• subsidised expenditures for entrepreneurs on a whole range of activities
• support for businesses at start-up
• information and advisory support
• training for small- and medium-sized businesses’ staff

The PPP is a basic scheme for attracting extra-budgetary investment for the development of various types of infrastructure. Government organs or municipal authorities can use the PPP in place of traditional methods for budget financing of capital investments in building public infrastructure or improving the quality of public services.

The region operates one-stop service, which carries out the work on harmonization of investment projects with municipal, territorial and federal agencies, and technical services from the filing of an investor declaration of intent of the facility to provide the land and beginning construction.

An Advisory Council on Foreign Investment at the head of the Administration (Governor) of Krasnodar Region was established to foster a favorable investment climate, attract foreign investment, ensure information exchange and mutual cooperation between the regional administration and foreign investors.

The 2014 Olympic and Paralympic Winter Games in Sochi

The International Olympic Committee has chosen Sochi to be the host city of the 2014 Winter Games. Today, the future venues of the 2014 Olympic and Paralympic Winter Games in Sochi comprise the world’s largest construction site. Dozens of kilometers of the combined highway and railway between Adler, on the Black Sea Coast, and the mountain resort of Krasnaya Polyana have already been built. Numerous other construction projects are also under way.

New energy supply and generation facilities are also being proposed, along with hospitals, schools and residential buildings. In total, the new Sochi 2014 Olympic facilities will include over 100 hotels, 50 transport infrastructure projects and almost 50 energy projects. Sochi is quickly becoming an international year-round center for sports, beach recreation, education and health tourism.

The Krasnodar Region Administration’s involvement in the ambitious project spans three main areas:

• Allocating land plots for Olympic facilities
• Resettling people from Olympic construction zones
• Coordinating specific Olympic construction projects

While preparations for the 2014 Olympic and Paralympic Winter Games in Sochi are well under way, several large projects for the 2018 FIFA World Cup and the first ever Formula 1 Grand Prix in Sochi are just getting started.

Azov City Gambling Zone

Azov City is the southernmost of Russia’s four gambling zones. It is located on a 1,002 hectare plot on the shore of the Sea of Azov in the Sherbinsky District of Krasnodar Region. Under regional development programmes, some engineering and transport infrastructure (motor roads, energy, gas and water supply and waste treatment facilities) has been constructed and put into operation.

A top-priority development plot (152 hectares) has been identified in the western section of Azov City, where 20 subplots, with areas ranging from 2 to 20 hectares, have been apportioned and leased to investors.

The subplots in the top-priority development area are earmarked for a complex of gambling parlours, hotels, sports and entertainment venues, and public catering facilities, as well as recreational facilities (theme parks and indoor water parks).

Sochi International Investment Forum

At present, the Sochi International Investment Forum is the country’s leading investment platform and one of Russia’s main arenas for constructive dialogue between the business community and the government.

The forum is an annual event aimed at raising investment for the Russian regions’ priority projects and promoting them locally and internationally. Traditionally, sessions are attended by Russian government officials and heads of Russian constituencies, as well as by Russian and foreign company executives, high-ranking diplomats, major investors and leading experts from various fields. In September 2011, the Sochi International Investment Forum marked its 10th anniversary.

Investment ratings:

Krasnodar Region’s investment activity, steady budget indicators, moderate leverage and diversified economy have prompted leading international rating agencies to give it high credit ratings.

In June 2011, Fitch Ratings confirmed the region’s long-term foreign and local currency ratings at ′BB′, its short-term foreign currency rating at ‘B’, and its long-term local currency rating at ‘AA-(Rus)’. The long-term ratings carry a positive outlook.

Moody’s Investors Service has given the region ‘Ba1’ issuer ratings in foreign and local currency on the global scale. The same rating was also assigned to regional bonds issued in 2010. The ratings carry a stable outlook. At the same time, Moody’s Interfax gave Krasnodar Region and its bonds ‘Aa1’ ratings on the national scale.

Krasnodar Region Investment and Project Design Department
Address: 35, Krasnaya street, Krasnodar 350014, Russia
Phone: +7 (861) 214-5848
Fax: +7 (861) 262-3681
Email: dips@krasnodar.ru
Website: www.investkuban.ru