MOSCOW CITY
INVESTMENT AGENCY

Moscow
Investment Climate
Leonid Kostroma

Oсtober 2013
Key Economic Indicators in 2012

GRP, billion of USD
341

357

382

400

421

445

Structure of GRP
Industries

Share, %

...
Key Economic Indicators in 2012

Moscow City (106 h)
New Moscow (145 h)

7,6m sq m
+9%

Real-estate
constructed

12m

Popu...
Investors Believe in Moscow

4th Highest FDI Volume
in Greenfield Projects in the World1

Overall Positive Feedback
From I...
Moscow Focuses Its Efforts on Creating a Favorable
Investment Climate Across Three Key Areas

Forging successful private
a...
Business Environment

Strengths

Guiding Principles

•

Qualified personnel

•

•

Subsidizing employers’ expenses on
pers...
Doing business in Moscow

Time, days

Starting a
business

Dealing with
Getting construction Registering
electricity
permi...
Development of Competitive Environment

• Enhancement of government procurement procedures
• Promoting competition in prop...
We’re Driving Institutional Changes to Ensure Investor
Support – Several Core Institutions Already in Place

Protection
of...
New Business Opportunities

Strengths
•

Largest city in Europe

•

Fast-growing economy

•

Economic, political
and comme...
Industry-Focused Priorities

Transport
Infrastructure

New Economy

Industrial Zones

Financial & Business
Services

Healt...
Moscow as a Basis for Urban Area Development

Moscow Targeted Investment Program for 2014

Investment, M USD
Key features
...
Transport Infrastructure
Railway

 Bringing private and public sector together in developing transport infrastructure
 C...
Transport Infrastructure
Roads

South Alternate to Kutuzovsky Avenue
Toll road to Skolkovo with 3 kilometers
$0.9b of inve...
Industrial Zones

 Optimizing of territorial location of industrial and scientific facilities
 209 industrial zones
 De...
Government Support of Innovations and Industries

Government support of innovation

Innovative infrastructure development
...
New Moscow

• New center of growth
and attraction
• Polycentric development

Area development*:

• Development of
multifun...
Healthcare

 Developing private health care including public-private partnerships
 Import substitution of medical servic...
• Reducing the deficit of educational
services

Education

• Developing the private sector of the
education system

City P...
Sports

 Improving accessibility and attractiveness of the city’s sports infrastructure
 Hosting the 2018 football World...
Urban Environment



Developing of public areas



Architecture and historic preservation



Balanced city-planning


...
Place to Live

Strengths
•

Broad cultural heritage

•

High level of safety

•

Public areas

•
•

Guiding Principles
•

...
Thank you!
Leonid Kostroma
Moscow City Government
Moscow City Investment Agency
Strategy Deputy CEO
KostromaLV@mos.ru
www....
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RFNY2013: Invest In Moscow - Moscow Investment Climate

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Presentation was made during the Russia Forum New York 2013 series - “Invest in Moscow: Doing Business in Russia’s Capital” which was held at the Princeton Club of New York on October 28th.

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RFNY2013: Invest In Moscow - Moscow Investment Climate

  1. 1. MOSCOW CITY INVESTMENT AGENCY Moscow Investment Climate Leonid Kostroma Oсtober 2013
  2. 2. Key Economic Indicators in 2012 GRP, billion of USD 341 357 382 400 421 445 Structure of GRP Industries Share, % Wholesale, retail 2011 1.7% $57b +17,6% $32.4b +8.5% 2012 2013 2014 2015 Debt to GRP ratio City Budget Investments in fixed assets 2 | Investment Climate of Moscow | 2013 2016 17,0 Wholesale of fuels 2010 24,1 Manufacturing 276 14,4 Business services 9,8 Transportation & communication 9,3 Social & government sector 8,4 Real estate services 5,5 R&D and IT 4,4 Construction 2,4 Other 4,7
  3. 3. Key Economic Indicators in 2012 Moscow City (106 h) New Moscow (145 h) 7,6m sq m +9% Real-estate constructed 12m Population $19.6k Average annual salary +12.8% $4.2b +5.9% 23% 3 | Investment Climate of Moscow | 2013 Foreign direct investments, FDI Share in Russian incoming FDI
  4. 4. Investors Believe in Moscow 4th Highest FDI Volume in Greenfield Projects in the World1 Overall Positive Feedback From Investors Cumulative FDI (2008 – 2012), number of investments 1375 London Top 25 European Cities of the Future 2011 9th Place Economic Clout: Cities of Opportunity 2012 7th Place 1133 Shanghai 4th Place Top cities ranked by the number of large companies 996 Hong Kong 661 Moscow Sao Paolo 654 Paris 641 618 Beijing New York 477 Sydney 462 Barcelona 399 Frankfurt 385 Dusseldorf 384 0 500 1000 1. Not including Dubai, Frankfurt or Warsaw Source: The Financial Times; rankings official websites 4 | Investment Climate of Moscow | 2013 1500
  5. 5. Moscow Focuses Its Efforts on Creating a Favorable Investment Climate Across Three Key Areas Forging successful private and public partnerships & incentivising private sector to lead the projects previously managed by public body Encouraging business activity & improving business climate Business environment Business opportunities 5 | Investment Climate of Moscow | 2013 Place to live Developing enjoyable & clever urban environment convenient to work and live
  6. 6. Business Environment Strengths Guiding Principles • Qualified personnel • • Subsidizing employers’ expenses on personnel education Cost cutting in business operation • Reduction of administrative procedures • Simplifying interaction of business and government • Enhancement access to infrastructure • Competition policy elaboration • Strengthening Moscow’s investment image • • Low taxes (13% personal tax, 20% corporate tax) Tax exemption for innovative companies and car producers • Developed infrastructure (IT, social, transport, etc.) • Sound scientific opportunities • Developed financial market • Balanced budget policy • WTO and Common Economic Space member 6 | Investment Climate of Moscow | 2013
  7. 7. Doing business in Moscow Time, days Starting a business Dealing with Getting construction Registering electricity permits property 2012 29 281 423 43 2013 18 281 344 44 2014 12 146 Doing Business ranking 7 | Investment Climate of Moscow | 2013 152 90th 20 112th 118th place 2012 place place th 20 place 2018 2014 2013 "I have visited many countries but nowhere I found the devotion to improve the business climate the way I find it in Russia, and particularly in Moscow“ Jim Yong Kim, President of World bank
  8. 8. Development of Competitive Environment • Enhancement of government procurement procedures • Promoting competition in property and land tenders • Encouraging competition in product markets • Uniform and transparent rules Concession City’s OFFER Tendering Process: 1. Choose a suitable project 2. Examine the project and documentation Sale of Property and Shares TENDER Leasing Land and Nonresidential Premises 3. Pay deposit 4. Submit application 5. Attend the tender Joint Venture 6. Win the tender 7. Sign the contract Location Approval 8 | Investment Climate of Moscow | 2013
  9. 9. We’re Driving Institutional Changes to Ensure Investor Support – Several Core Institutions Already in Place Protection of Entrepreneurship Committee Moscow Innovation Development Center • Tool for elimination of administrative barriers and systematic problems • Innovative investment champion in Moscow • Hotline for any problems with implementation of investment projects • Coordinator of all high-tech investment promotion initiatives • Advocate in contacts with government bodies and infrastructure providers • Guide for all hightech innovation zones and programs 9 | Investment Climate of Moscow | 2013 Moscow City Investment Agency • Dedicated project coordinators for major projects • Omniscient navigator of Moscow investment system • Partner in finetuning investment projects • Public-Private Partnership initiatives Committee for involvement of state assets • Disposal, lease, PPP and other ways to profit from city property • Education, health care, culture, entertainment and leisure, sports, etc.
  10. 10. New Business Opportunities Strengths • Largest city in Europe • Fast-growing economy • Economic, political and commercial center Guiding Principles • Advantageous geographical position • Public property involvement into economy • Opportunities of innovation and industrial infrastructure • Extensive city investment program 10 | Investment Climate of Moscow | 2013 • Attracting investments to priority areas • Increasing productivity and wealth of population • Developing flexible state support for investment projects • Implementing public-private partnerships (lifecycle contracting and concessions) • Expanding infrastructural capabilities • Developing New Moscow
  11. 11. Industry-Focused Priorities Transport Infrastructure New Economy Industrial Zones Financial & Business Services Health & Education Travel, hospitality, leisure & sport Wholesale & Retail Urban environment 11 | Investment Climate of Moscow | 2013
  12. 12. Moscow as a Basis for Urban Area Development Moscow Targeted Investment Program for 2014 Investment, M USD Key features 12,000 11,891 8,030 • Stable investment program • Increasing focus on transport 8,000 12.7 48% 52% 11.9 12.8 11.9 Investment, B USD 12.0 11.9 38% 32% 31% 33% Other 60% 62% 68% 69% 67% 2012 2013 2014 2015 40% investment Transport 68% 2011 100% 2016 1,429 4,000 12% 1,289 11% 599 5% 0 Total Transport Residential estate 12 | Investment Climate of Moscow | 2013 Social Utilities 208 97 2% 1% Construction Economy stimulation 239 Other
  13. 13. Transport Infrastructure Railway  Bringing private and public sector together in developing transport infrastructure  Creating a merged transportation system for the agglomerate  Implementing cutting-edge information technologies  Focusing on Public transportation +150 kilometers of subway lines 15.9b passenger-kilometers in 2012 +70 stations +240 kilometers of main routes $5b annual CAPEX ~300 trains ($4b) 3rd interchange circuit 3,000 train cars with $6b of train procurement and $6b-$9b maintenance cost 255 transport hubs: 163 multifunctional as capital structures Subway Transport hubs 92 in operation as junctions 13 | Investment Climate of Moscow | 2013 Railway Moscow Small Ring Railway 9 directions 54 kilometers of railroad 31 stations 19 transport hubs 33 trains with 7 cars each $4b of train procurement and $4b-$6b maintenance cost
  14. 14. Transport Infrastructure Roads South Alternate to Kutuzovsky Avenue Toll road to Skolkovo with 3 kilometers $0.9b of investments with 50% funded by city 1.6 million square meters of real estate North Alternate to Kutuzovsky Avenue Toll road to Moscow-City 11 kilometers $2b of investments Overground Transport 2014-2016yr 242 km of lanes for public transport 30 km of tram lines 4 200 vehicles Central Ring Road 521 kilometers Located 50 kilometers from Moscow Ring Road with 75% of investments financed by the state and 25% by the private investments 2022 completion year 14 | Investment Climate of Moscow | 2013
  15. 15. Industrial Zones  Optimizing of territorial location of industrial and scientific facilities  209 industrial zones  Developing along a mixed-use model (workplaces + housing + social infrastructure)  Reducing commute time ZIL Industrial Zone 6.5 kilometers from Kremlin Territory of ZIL, ha 125 Nagatinskaya Poyma Park 95 Total developed area, mln m2 4.6 Commercial and residential real-estate, mln m2 1.6 Total investments $5.2b Private investments $4.4b 15 | Investment Climate of Moscow | 2013 MosAutoZIL Construction of CKD assembling facilities with the capacity of per year 50,000 units
  16. 16. Government Support of Innovations and Industries Government support of innovation Innovative infrastructure development Technoparks Slava Strogino MosGorMash FizTech XXI project Technopolises Moscow Industrial parks Zelenograd project Rudnevo project Special Economic Zone Zelenograd Tax exemption for 10 years Management company 0-1,1% property tax 0,01-0,3% land tax Residents 0% property tax 13,5% corporate tax Financial support Compensating credit interest on construction and development technopark Compensating credit interest on construction and development of technopolis / industrial park Amount granted <$3.2m <$9.5m Government support of industrial sector • Curbing the growth of tariffs on resources for industrial consumers • Granting benefits in exchange for investments • Subsidizing interest expenses, leasing payments, employers’ expenses on personnel education 16 | Investment Climate of Moscow | 2013
  17. 17. New Moscow • New center of growth and attraction • Polycentric development Area development*: • Development of multifunctional areas • Bringing transport and social infrastructure up to the standards of Moscow • Linear arrangement of roads +1.087m population Growth points +1m jobs, incl. 0.3 m in social sector (social and business clusters) +37 km of metro lines Agroregion “Rogovo”  Agroindustrial cluster “Klenovo”  Logistic and agrocluster “Voronovo”  Logistics cluster “Kievskyi”  Historical and recreational complex  Innovation and science center “Troitsk”  Medical cluster  Educational cluster Business center “Kommunarka” Aeropolis “Vnukovo” Technopark “Mosrengen”  +837 km of roads   +27m sq.m. of public, business and industrial buildings International Financial Center at Rublyovo-Arkhangelskoe  +51m sq.m. of housing   +146k hectares of area Technopark “Rumyantsevo” *forecast up to 2035 17 | Investment Climate of Moscow | 2013
  18. 18. Healthcare  Developing private health care including public-private partnerships  Import substitution of medical services  Increasing accessibility to public and specialized medical facilities  Medical care within walking distance 1st PPP project in healthcare sector 29k sq.m. of reconstruction area 23 polyclinics with $650m of investments 6 fixed facilities with $200m of investments +46 units constructed with private investments $145m of investments $32m concession fee 20142016 #63 City Hospital 1.5 hectares of land $80m of investments 130 beds 20-30% of services provided to patients with mandatory health insurance 4.5-year lease Leasing benefits for 20 years Cardiology Center 3 operating rooms 4 laboratories 25-30% of service by compulsory health insurance 18 | Investment Climate of Moscow | 2013 Doctor is Nearby 1 Rub per 1 sq.m. Reconstruction and equipping medical offices 11 premises were conveyed to investors 18 premises are ready for auction Overall 100 facilities
  19. 19. • Reducing the deficit of educational services Education • Developing the private sector of the education system City Program for Education, 2014-2016 years $983m of investments: 60 preschools 16 schools 23 outbuilding of elementary school +56 preschools & 29 schools constructed with private investments • Promoting competition in the industry • Increasing the quality of, and demand for, education • Building and remodeling schools, kindergartens and other institutions, including via public-private partnerships • Creating full-cycle educational facilities Program for Creating PRESCHOOLS • Arranging schools in accordance with international standards Concession Land Rent Preferential Premises Rent BOT model 1.5yr of construction 15yr of operation $5.2k pubic financing per child Rent during construction and operation Leasing benefits for 49 years, with an annual rate of 1 Rub per sq.m. Results: 3 land plots, 9 premises Current situation: Auction announced for 13 premises Targets: 18 premises and 2 land plots by year-end 19 | Investment Climate of Moscow | 2013 Similar program ‘Preferential Premises Rent’ is being developed for schools
  20. 20. Sports  Improving accessibility and attractiveness of the city’s sports infrastructure  Hosting the 2018 football World Cup  Constructing sports infrastructure  Developing tourist infrastructure City Program for Sport, 2013-2016 years ~80 Auctions were held to rent 15 land plots following the construction of sport and recreation centers. Auction is announced for 10 units. 60 land plots is going to be auctioned Sport and recreation centers 7 cycle tracks 11 football fields 1 skiing resort Football arenas with sport, hotel and other complexes Luzhniki Size of the stadium, kilo seats Investments, billion of USD Spartak CSKA Dynamo 81 44 30 45 3,6 0,5 0,35 1,5 20 | Investment Climate of Moscow | 2013
  21. 21. Urban Environment  Developing of public areas  Architecture and historic preservation  Balanced city-planning  Walking accessibility Libraries – $350m Cultural centers - $65m Theatres and concert halls – $1,2b Exterior lightening - $625m Footpath area - $110m (2014y only) Cinema – 2 lots with 10 theatres and $154m initial price till the end of 2013 2014-2016 program for developing Culture sector 300 meters from Kremlin 13 hectares of land hotel with 340 rooms $429m of investments, including $146m for hotel Largest exhibition complex in Russia 237 hectares of total area 480k sq. m. of constructed area Park Zaryadye Moscow river Outstanding projects All-Russia Exhibition Center 361 hectares botanical garden 615 buildings 45 architectural landmarks 21 | Investment Climate of Moscow | 2013 Nagatinsk Poyma Park The project covers embankments with 10% of territory of old Moscow It includes construction of roads, bridges, developing recreation zones Peninsula park 94.8 hectares 298,6k sq. m. of commercial real estate $900m of investment
  22. 22. Place to Live Strengths • Broad cultural heritage • High level of safety • Public areas • • Guiding Principles • Balanced development of residential, transportation and social infrastructure in Moscow as a global capital Entertainment and leisure attractions • Cultivation of a comfortable urban environment Government services via the Internet • International educational standards • Infrastructure preparation for 2018 football World Cup • Improvement of ecological conditions • Construction of hotels and rentable housing • Quality medical care • Strong educational facilities 22 | Investment Climate of Moscow | 2013
  23. 23. Thank you! Leonid Kostroma Moscow City Government Moscow City Investment Agency Strategy Deputy CEO KostromaLV@mos.ru www.mosinvest.mos.ru
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