Investment activity in Kursk region
Leading Enterprises of Kursk region.pdf
The regional economic potential is a base for creation of favourable conditions for promoting of business and attraction of investment. In 2010 investment in the fixed capital made up 46,1 billion rubles or 111,9% at comparable prices as compared with 2009, and more than 58 billion rubles in 2011 with the growth of 13,5%.
During the last years the trends of investing in the fixed capital were characterized by the following indices:
| Indicator |
2008 |
2009 |
2010 |
2011 |
| Capital investments (actual prices) (at current prices, respectively), RUB billion |
45,1 |
41,2 |
46,1 |
58,2 |
| Capital investment growth rate in comparable prices (% year-on-year) |
113,0 |
84,9 |
111,9 |
113,5 |
In 2011 foreign investment amounted to 63,2 million USD with the growth of 3,2 times as compared with 2010. The main volume of investment was allocated to agriculture – 70,5%, transport and communication – 26,1%.
According to the last estimation of the investment climate by «Expert» rating agency Kursk region is in 3B1 category of “Reduced potential – moderate risk”. This category also includes Voronezh, Kaluga, Yaroslavl, Tula, Tambov and some other regions.
Kursk region takes the 38th place in investment potential and the 26th place in investment risk among Russian regions.
The most promising spheres for investors are the following: electric power engineering, ferrous metallurgy, manufacture of building materials, machine-building and metal-working, chemical and petrochemical industry, an agrarian sector of economy and food industry.
The regional Administration is constantly working on ensuring of the most comfort conditions for business of investors.
In Kursk region business is carried on actively by joint ventures with attracted foreign investments or enterprises set up with the participation of foreign companies from European countries. They are Russian-Czech Group of Enterprises «Matis» – sale of Czech and native motor transport, Kursk branch of ÎÀÎ «SUN InBev» – brewing, ZAO «KONTI-RUS» – production of confectionery, ÎÎÎ «IStochnik TOka Kursky» – production of batteries, ÎÎÎ «ETI NVA with Foreign Investment» – production of low-voltage equipment.
ÎÎÎ «Ivolga-Holding» (Kazakhstan) and “Myllyn Paras Oy” company (Finland) are operating in the agroindustrial complex of Kursk region.
Companies from Armenia, Belarus, Hungary, Vietnam, Germany, Gibraltar, Italy, Kazakhstan, Cyprus, Luxemburg, Panama, Poland, Serbia, Ukraine, Finland and the Czech Republic invest in the economy of Kursk region.
Foreign investors have the same rights to the measures of state support as Russian ones.
Legal and economic conditions of investment activity in Kursk region are regulated by the Constitution of the Russian Federation, the legislation of the Russian Federation, Kursk region Law ¹ 37-ÇÊÎ of 12.08.2004 “On Investment Activity in Kursk Region”, other acts and statutory instruments of Kursk region.
Kursk region Law ¹ 37-ÇÊÎ of 12.08.2004 “On Investment Activity in Kursk Region” provides for the following forms of state support of investors:
- creation of most favoured nation treatment;
- granting of tax concessions on the property of organizations;
- giving of investment tax loans;
- granting of the following on a competitive basis:
a) budgetary investments;
b) subsidies for compensation of a part of expenses for paying interests on loans received by investors in credit institutions;
c) state guarantees of investment projects at the expense of regional budget funds according to the list of provided guarantees approved by Kursk region law on a regional budget for a corresponding financial year;
d) concessionary terms of using the state property of Kursk region
e) pledging of the property and property rights of Kursk region as investors` collateral before credit institutions on loans received for the implementation of investment projects, including lease payments for the equipment acquired on lease terms with subsequent buy-out of the given equipment for the implementation of investment projects;
f) subsidies for reimbursement for parts of expenses to a leasing receiver for making leasing payments for the equipment acquired on lease terms with subsequent buy-out of the given equipment for the implementation of investment projects, or for reimbursement for parts of expenses for paying interests on loans received by investors in credit institutions for making lease payments for the equipment acquired on lease terms with subsequent buy-out of the given equipment for the implementation of an investment project.
The law provides that an investor of one investment project is given one form of support, excluding investors implementing projects to the sum of investment of 2 billion rubles.
1. Creation of most-favored nation treatment
The right of the most-favored nation treatment can be used by investors, which have concluded investment agreements with Kursk region Administration and implement investment projects with the total volume of investment in the fixed capital of not less than 100 million rubles (including VAT), which provide for organization of production related to part D «Manufacturing activity» of All-Russian Classifier of Economic Activities, except for code 27.12 «Manufacture of products of iron ore direct reduction», and which are going to:
a) build new enterprises;
b) build new workshops on operating enterprises;
c) organize production on non-functional areas including reconstruction and re-equipment;
d) fit out existing production with new equipment, including replacement of old equipment by new one.
The total volume of investment in the fixed capital may include the cost of several investment projects that are implemented at one enterprise and that require at least 100 million rubles (including VAT) of capital investment.
Investment projects can be considered to be the projects implemented in conditions of the most-favored nation treatment if they meet the following requirements:
1) an investment project must be commercially and budgetary effective;
2) an average wage in an organization implementing an investment project must not be less than an average wage of workers of the given branch, and in case of absence of information about the branch it must not be less than an average wage in Kursk region;
3) organizations must not have any debts of tax payment to a budget system of the Russian Federation on the date of making an application to the Administration of Kursk region.
A mechanism of entering the most favoured nation treatment was specified by Resolution ¹ 102 of the Governor of Kursk region of 29.02.2008 “On measures of implementation of Article 101 of Kursk region Law “On Investment Activity in Kursk region”.
2. Granting of a tax concession on a property of organizations
Part 8, Article 4 of Kursk region Law ¹ 57-ÇÊÎ of 26.11.2003 “On a Tax on a Property of Organizations” provides for granting of a tax concession on a property of organizations.
A right of a tax concession on a property of organizations can be used by investors implementing investment projects in manufacturing branches in Kursk region to the sum of not less than 100 million rubles including VAT and working in conditions of the most-favored nation treatment.
Such organizations are exempted from taxes on a property that relates to fixed assets newly created or acquired during implementation of an investment project. In case the project provides for, among other things, building and erection works, the exemption is granted for three taxable periods, in case of no building and erection works - for two taxable periods. A tax concession on a property of organizations is in force from a taxable period when newly created or acquired fixed assets were booked on a balance sheet of the organization.
3. Setting of a reduced tax rate on a profit of organizations, payable to a regional budget, for some categories of tax payers
Kursk region Law ¹ 112-ÇÊÎ of December 14, 2010 “On reduction in a tax rate on a profit of organizations payable to a regional budget for some categories of tax payers” provides for a reduced tax rate on a profit of organizations, payable to a regional budget, in an amount equal to 13,5% for organizations founded after January 1, 2011, and implementing investment projects on establishing of new enterprises in manufacturing industry in conditions of the most-favored nation treatment.
A reduced tax rate on the profit of organizations is valid during three consecutive taxable periods starting from the accounting period when a taxable base of a profit tax of organizations appeared in the organization according to information of fiscal accounting but not later than in three years from the year of booking the property of a new production facility (to full extent) on the balance sheet of the company in conformance with the current legislation.
4. Granting of subsidies to investors and (or) leasing recipients on account of regional budget resources for paying interests on obtained loans or leasing payments
Subsidies are granted on a competitive basis. Investment projects of investors (leasing recipients) required subsidies are selected by a commission evaluating the efficiency of investment projects. It acts in accordance with a Resolution of the Governor of Kursk region ¹ 590 of 11.08.2005 “Organization and holding of a competitive selection of the most efficient investment projects” and with the criteria of determining the winners in competitions of investment projects specified by Kursk region Law “On Investment Activity in Kursk Region”.
The winners of a competition are given subsidies under the procedure specified by a Resolution of the Administration of Kursk region ¹ 324-ïà of June 22, 2011, “On approval of a procedure of granting subsidies from a regional budget to investors for reimbursement for parts of their interest charges of loans received in credit institutions for the implementation of investment projects, and to leasing recipients for reimbursement for parts of interest charges of loans obtained for paying of leasing payments or for reimbursement for parts of leasing expenses”.
5. Giving of an investment tax loan
An investment tax loan is given to investors on the grounds specified in Article 67 of a Tax Code of the Russian Federation and Article 11 of the Law of Kursk region “On Investment Activity in Kursk Region”. A decision-making procedure of giving an investment tax loan to tax payers was approved by a Resolution of the Administration of Kursk region “On approval of a decision-making procedure of giving an investment tax loan to tax payers”.
6. Pledging of Kursk region property as collateral on attracted loans
The property of Kursk region is pledged on a competitive basis and is governed by the Law of Kursk region ¹37-ÇÊÎ of August 12, 2004 “On Investment Activity in Kursk Region”, the Law of Kursk region ¹ 36-ÇÊÎ of July 17, 2008 «On a Pledge Fund of Kursk Region», a Resolution of the Governor of Kursk region ¹ 590 of 11.08.2005 “Organization and holding of a competitive selection of the most efficient investment projects”, a Resolution of the Administration of Kursk region ¹ 324 of 20.10.2008 “On approval of a procedure and the rules of pledging the property of Kursk region”.
7. Providing of state guarantees of Kursk region
State guarantees of Kursk region are provided to investors on a competitive basis in accordance with Article 14 of the Law of Kursk region “On Investment Activity” pursuant to the terms and procedures set forth in Article 115.2 of a Budget Code of the Russian Federation.
The projects are selected on a competitive basis according to a Resolution of the Governor of Kursk region ¹ 590 of 11.08.2005 “Organization and holding of a competitive selection of the most efficient investment projects”. The winners are provided state guarantees.
Protection of investment is provided for by Article 17 of the Law of Kursk region “On Investment Activity in Kursk Region”. Government bodies of Kursk region give the following guarantees to all investors irrespective of their form of ownership according to the legislation of the Russian Federation and Kursk region:
- ensuring of equal rights during investment activity;
- publicity in discussion of investment projects;
- a right to appeal to a court against the decisions and actions (inactions) of government bodies of Kursk region, bodies of local government of Kursk region and their officials;
- protection of capital investment;
- equality during participation in open auctions and competitions carried out by government bodies of Kursk region and bodies of local government on corresponding territories in Kursk region;
During the effective period of the state support of an investment project the investors are not subject to the newly effective laws and (or) other normative legal acts of the state government bodies of Kursk region that worsen financial and economic conditions of investment activity as compared with financial and economic conditions of investment activity that were valid according to the laws and (or) other normative acts of Kursk region on the date of beginning of financing an investment project, including those laws that increase the total volume of monetary funds payable to a regional budget as taxes and fees, and that establish new duties, norms and regulations.
Measures of state support are not only secured by law. The support is also given to investment stakeholders.
In 2005-2007 the regional agricultural manufacturers, that won a competitive selection of the most efficient investment projects, were granted state guarantees of Kursk region to the sum of 3,5 billion rubles.
In 2009-2010 the winners of a competitive selection of investment projects were given the property of a pledge fund of Kursk region to the sum of 500 million rubles for each project-winner.
Investors implementing investment projects within a priority national project “Agro-Industrial Complex Development” and a regional target program “Development of Agriculture of Kursk region for 2009-2014” are granted subsidies for repayment of a part of interests on investment loans received for a period of 10 years. Only in 2009-2011 more than 510 million rubles were allocated for these purposes from a regional budget.
In 2009-2011 12,7 million rubles of subsidies were allocated to industrial enterprises from a regional budget for repayment of a part of interests on loans received for the implementation of projects of development.
In 2011 the industrial enterprises were granted subsidies to the sum of 8 million rubles for compensation of a part of expenses connected with innovation activity.
In 2011 there was a competition for granting of subsidies to investors for paying interests on attracted loans. The winners of the competition (four organizations) were granted subsidies amounted to 16 million rubles from the regional budget.
Practically all large-scale enterprises of the region implement investment projects and investment programs aimed at updating of production.
A project «Construction of kiln ¹ 3» amounted to 12,9 billion rubles is under implementation at OAO «Michailovsky GOK». 4,36 billion rubles have been already invested in the project. Its implementation will facilitate the increase in the production of blast furnace pellets by 5,0 million tons per year and the creation of 237 workplaces.
ZAO “KONTI-RUS” continues to implement a project of building of a production and logistic complex of Kursk confectionery with total amount of financing of 7,7 billion rubles. 3,9 billion rubles were invested in the project. 4 production lines of “sweet” products were put into operation. 10 lines will operate in total. In 2012 it is planned to erect an office and amenity building and a production line of coated souffle sweets. The achievement of total output by the enterprise in 2015 will make it possible to manufacture 100 thousand tons of confectionery annually and to create 2000 workplaces.
OAO “Quadra” finished the reconstruction of a boiler-house and built a steam-gas plant with a capacity of 115 MW in the Northwest district of Kursk. 5,5 billion rubles were invested in the project.
OOO PO “Vagonmash” carried out a construction project of a workshop for manufacture of shock-absorbing units. The project cost was 100 million rubles.
ZAO “Composit” carried out a project of updating a production line of caterpillar tracks to the sum of 250 million rubles. The enterprise plans further upgrading of production facilities that will cost 500 million rubles more.
OOO “Pharmstandard-Leksredstva” implemented a construction project of a finished product warehouse in conformance with international requirements. The project cost was 344,1 million rubles.
ZAO “Kurskpromteplitsa” carries out a project of construction of a greenhouse complex 10,5 ha in area equipped with all modern engineering and technological systems. The total project cost is about 647 million rubles.
OAO “Kurskmedsteklo” is implementing a project of creation of quality glass tube production for manufacture of medical ampoules. The building of a glass melting furnace is coming to an end. It is planned to buy 9 additional lines for making of ampoules.
There is upgrading of production facilities at OOO “Kursk Plant “Accumulator” and OOO “Kurskchimvolokno”.
The projects are being implemented in the agroindustrial complex. 32 livestock complexes were built including 21 pig farms and 11 farms of cattle raising and milk production.
In Gorshechnoye area ZAO “Kursky Agroholding” carries out a construction project of a vertically-integrated poultry farm with annual productive capacity of 120 thousand tons of poultry on live weight basis. The total project cost is 12,8 billion rubles. 6,6 billion rubles have already been used. 3000 workplaces will be created.
Agroindustrial holding “Miratorg” builds a pig-breeding complex with a capacity of 20 000 productive sows in Pristen area. The project cost is 6,25 billion rubles. 320 workplaces will be created. A multiplication farm was brought into service. 4,4 billion rubles were invested in the project.
The second building stage of a selection-and-hybrid center and a pig fattening yard with annual capacity of 4,0 thousand tons of pork was finished. The amount of investment exceeded 600 million rubles.
OOO “Agrokomplektatsia” built pig-breeding complexes with a productive capacity of 52 000 heads each in Zheleznogorsk and Konyshovka areas. A cost of each complex exceeded 3 billion rubles.
OAO ACB “Avanguard” built a malt plant in Korenevo area. The project cost amounted to 2,2 billion rubles.
In 2011 the Administration of Kursk region drew up a regional target program «Creation of favourable conditions for attraction of investment in economy of Kursk region for 2011-2015». The program was drawn up in conformity with the Strategy of social and economic development of Kursk region till 2020 and the Program of social and economic development of Kursk region for 2011-2015.
The program is a comprehensive plan of actions on creation of favourable environment for investment stakeholders. The program will ensure pursuing of consistent and efficient investment policy by government bodies of Kursk region. It will facilitate the increase in investment amount in the fixed capital, the economic growth and social stability.
The following tasks will be solved for these purposes:
- creation of favourable administrative environment for investment;
- creation of prepared infrastructure for investment;
- financial support and tax incentive of investment;
- forming of a positive investment image of Kursk region;
- informational support of investment activity.
The implementation of the Program will enable the following:
- to bring the volume of investment in the fixed capital to 78,5 billion rubles (the growth of 75,2% as compared with 2010);
- to bring the volume of investment in the fixed capital to 70,3 thousand rubles per capita (the growth of 77,1% as compared with 2010);
- to create more than 10 thousand new workplaces owing to the implementation of investment projects.
The Program has been carried out actively from 2011.
The Council of improvement of investment climate and cooperation with investors governed by the Governor of Kursk region was established for further promotion of investment activity. The following tasks of the Council are among the main ones: to coordinate the activity of executive bodies of Kursk region, Kursk regional Duma, territorial authorities of federal executive bodies in Kursk region, local bodies, enterprises and organizations of Kursk region in the field of investment activity; to create open investment space in the field of investment activity in Kursk region.
The number of measures of state support of investors increased on account of funds of a regional budget.
In 2011 there was a competition in giving of subsidies to investors for paying interests on loans attracted for implementation of investment projects. The winners of a competition were granted subsidies to the total sum of 16 million rubles from a regional budget.
In October 2011 there was a presentation of economic potential of Kursk region in the Chamber of Commerce and Industry of the Russian Federation, in Serbia and at the beginning of 2012 — in Germany and France.
It is planned to continue expanding of state support of investors and to realize major measures aimed at attraction of investment in the regional economy in future.
In 2012-2015 subsidies amounted to 25, 40, 60 and 60 million rubles, respectively, will be granted to investors implementing investment projects.
The program provides for giving of state guarantees of Kursk region to the sum of 3 billion rubles, 1 billion rubles per year, starting from 2013.
There will be used such form of a state support as pledging of the property and property rights of Kursk region as investors` collateral on loans attracted for the implementation of investment projects. A pledge fund of Kursk region includes the property to the sum of more than 1,7 million rubles.
OAO “Agency for Attraction of Investment of Kursk region” was set up. Its main tasks are the following:
- to render support to native and foreign investors in implementation of investment projects in the region;
- to create and to develop industrial parks in Kursk region;
- to render consulting and information services to potential investors that are interested in creation of production in the region, to assist investors in receiving of endorsements and permissions in accordance with the legislation of the Russian Federation;
- to cooperate with local bodies in implementation of investment projects, including land matters;
- to accompany investors during carrying out of investment projects.
In 2012 for the purpose of formation of a positive investment image of the region and for its investment attractiveness some work will be done on giving of a credit rating to Kursk region by one of recognized world agencies: “Standard & Poor`s”, “Fitch Ratings”, “Moody`s”. The rating facilitates the growth in openness of regional authorities and the decrease in the cost of loan resources attracted to the region.
The “Central Russian Economic Forum” will be held every year besides annual “Kursk Korennaya Fair”.
A special investment site of Kursk region will be created in Internet in order to preserve and to improve the competitive ability of operating Kursk enterprises, to found new companies, including the ones with participation of foreign capital, to form a favourable image of the region and also to inform potential investors about processes that take place in Kursk region.
In order to reduce the load on business, to accelerate work on the implementation of projects and to divide risks it is planned to create industrial parks where investors will be offered investment sites.
In the first place the industrial parks will be formed in one-factory towns of Kursk region and will promote diversification of their economy. It is planned to create two industrial parks in the town of Zheleznogorsk and one in the town of Kurchatov.
In 2014-2015 it is planned to create two more industrial parks in the region for building of new enterprises in which Kursk region holds an interest.
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