The U.S.-Russia Business Council 17th Annual Meeting
September 24-25, 2009 • New York, NY spur further development, Kaluga is taking several concrete actions.
that will operate in the CIS region and gradually extend to other markets.
The first is a move from original equipment manufacturer (OEM) plants to a real automotive cluster. Mr. Akimov explained that a concentration of OEM does not represent real development and that, in the long run, Kaluga needs more advanced facilities, such as those for research and education. Development of this type would facilitate the expansion of other industries — such as automotive parts — and spur the creation of local businesses. The second step is to create effective urban environments and guest services such as hotels, restaurants and leisure facilities.
Mr. Aksakov stressed the increasing importance of regional banks with regard to a new presidential strategy of innovative development for the Russian economy. Regional banks are especially valuable as they work with small- and medium-sized enterprises and have proven to be extremely flexible. Despite a lack of resource allocation to regional banks during the crisis, they demonstrated outstanding viability and managed to escape bankruptcy. To improve the outlook for these banks, Mr. Aksakov noted that the Association of Regional Banks of Russia and the International Finance Corporation recently signed a memorandum of understanding to create a fund for the recapitalization of Russian regional banks.
Mr. Akimov then said that Kaluga’s industrial and investment policies have achieved positive results and that the region now has ambitious targets for the future. He explained that Kaluga’s strategy is sustainable due to several important factors. It is located near Moscow, has excellent transport infrastructure, an advanced labor market, a regional government that proactively supports investment, a strong scientific center in Obninsk, and a developed network of higher education. Mr. Akimov noted that Kaluga offers investors a clear product: industrial parks with developed infrastructure; access to supplies, logistic connections and a developed transportation network; clear property rights; and preferential tax exemptions.
The drafted program involves foreign investors and consultants — who will help to manage toxic asset problems in the Russian regional banking system — and increases the transparency and quality of the system. Mr. Aksakov invited American investors to take part in the joint program of the Association and the IFC and affirmed that it would be a profitable deal. In conclusion, Mr. Aksakov mentioned that the Russian Bank for Development (Vnesheconombank) would probably allocate resources for small- and medium-sized businesses to ensure the implementation of the new strategy of innovative economic development.
Anatoly Aksakov continued the dis-
Olga Andreeva began her presentation
cussion by explaining that Russia’s regions offer more favorable conditions for business as there is less bureaucracy and corruption and a greater desire for investments compared to the major cities. Mr. Aksakov then addressed the topic of the financial sector in Russia, saying that contemporary financial and banking systems were demonstrating sustainability and consistency even during difficult times. He stated that Russia is planning to develop a modern regulatory framework for the Russian banking system, including the creation of transnational banks
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Russia Business Watch Winter 2009-2010
of the Krasnodar Krai with an overview of the natural resources, historical heritage, major industries, and outlook of the region. She emphasized that Krasnodar’s hosting of the 2014 Winter Olympics in Sochi is particularly interesting to investors. She said the region is creating several Special Economic Zones with publicprivate partnerships designed to spur particular industries, and noted that the region also has a developed transportation complex — Krasnodar’s seaports handle over 35 percent of Russia’s foreign trade.
In addition, the oil pipeline transportation industry is growing, with future projects anticipated. Agriculture is also particularly strong in Krasnodar, where 85 percent of Russia’s rice and a substantial percentage of other crops are produced. Food processing is an important industry with a large multinational corporate presence. Ms. Andreeva emphasized that the trade relationship between the U.S. and Krasnodar is developing, but added that there is much room for improvement. Turning to the Sochi Olympics and the related construction and investment opportunities present there, Ms. Andreeva noted that, in addition to creating sports facilities, Sochi is also trying to create world-class tourist facilities. She emphasized that construction contracts and investment opportunities are open to international companies. Finally, Ms. Andreeva discussed Krasnodar Krai’s planning strategy for social and economic development. Saying that Krasnodar was one of the only regions with a master development plan for all urban centers in the region, she explained that planning for the future must take into account multiple domestic and international interests and intentionally incorporate foreign investment, business, NGO’s, and universities in order to establish mutually beneficial relationships.
Vadim Ivanov then presented an assessment of the Nizhny Novgorod regional investment situation, noting that it is a major business center with 3.3 million people. He cited the proximity to Moscow and the region’s position in the middle of important trade routes as reasons why Nizhny Novgorod is attractive to investors. A sophisticated transport network with an international airport creates additional opportunities. As one of the leading education centers in Russia, Nizhny Novgorod is home to 17 institutions of higher education and 300 high tech companies. The region also established several innovative technoparks that large, multi-national corporations utilize. Nizhny Novgorod’s regional