RFNY2013: Invest In Moscow - Social Sector

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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 - Social Sector

  1. 1. MOSCOW CITY INVESTMENT AGENCY Development of Moscow Social Sector Leonid Kostroma October 2013
  2. 2. Priorities in Social Sector Education Sport Healthcare 2 | Development of Moscow Social Sector | 2013 Culture & Urban environment
  3. 3. Moscow Budget is Society Oriented Moscow Budget for 2014 Budget financing, B USD 49.2 49.4 48.6 44% 44% 49% 45% 56% Social Sector Budget Financing, M USD 49.4 56% 51% 55% 2012 2013 2014 2015 30,000 25,378 8,030 47.9 44% Other investment 56% Social sector* 2016 40% 20,000 6,156 100% 24% 6,156 10,000 24% 1,841 7% 1,183 5% 0 Total Social support Education Health care *Social sector include: Social support, Healthcare, Education, Culture, Tourism & Entertainment, Sport 3 | Development of Moscow Social Sector | 2013 Culture& Tourism Sport
  4. 4. 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 4 | Development of Moscow Social Sector | 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
  5. 5. 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 5 | Development of Moscow Social Sector | 2013
  6. 6. Culture & 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 6 | Development of Moscow Social Sector | 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
  7. 7. Education in Moscow 1. Substantial market for education: 15m people in Greater Moscow. Annual wage rate $19.6k per capita 2. Highly educated families with high expectations regarding their children’s level of education 3. 96% of educational services are offered by public sector 4. Insufficient selection and availability/affordability of services by private organizations (sociological poll of foreign specialists) 5. High cost of services of private organizations 6. Low competition and weak satisfaction of demand Moscow education system1 No. of institutions No. of students, thous. Kindergartens 1 851 423 General schools 1 457 825 Colleges 101 104 Universities 256 1 068 1Moscow Department of Education 7 | Development of Moscow Social Sector | 2013
  8. 8. Priorities in Moscow Education City Program for Education, Guiding Principles $983m of investments:  Reducing the deficit of educational services 60 preschools 16 schools 23 outbuilding of elementary school +56 preschools & 29 schools constructed with private investments  Developing the private sector of the education system 2014-2016 years  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  Arranging schools in accordance with international standards 8 | Development of Moscow Social Sector | 2013
  9. 9. Preschool Education: Mechanisms Mechanisms for developing pre-school education 1 3 2 Preferential Premises Rent Land Plot Rent 9 | Development of Moscow Social Sector | 2013 Concession
  10. 10. Preschool Education: Facilities Rent 49 years Annual rent rate: 1 ruble per sq m Rental of premises for Opportunities • Enrollment of children on a commercial basis • $1.3k in budget financing per child (5-7 year) annually • Receipt of secured loan under lease contract at MIA bank (special program) Terms: • Reconstruction in no more than 6 months • Capital repair in no more than 3 years Current situation, 2013 Auctions held Auctions announced Preparation for auction 9 13 18 10 | Development of Moscow Social Sector | 2013
  11. 11. Preschool Education: Land Rent Lease of a land plot to construct an educational facility Opportunities • Enrollment of children on a commercial basis • Preparation of urban land development plan at time of auction • $1.3k in budget financing per child (5-7 year) annually • Annual rent rate: 0.05% of cadastral value Terms: • Completion of construction within 5 years Current situation Auctions held Preparation for auction 3 2 11 | Development of Moscow Social Sector | 2013
  12. 12. Preschool Education: Build-operate-transfer PPP City: Investor: • Provides land plot • Constructs building • Licenses investor • • Buys service for people on waiting list Renders pre-school services, including for people on waiting list • Transfers building to the city $5.2k in public financing per child sent by the city from the waiting list $1.3k in public financing per child enrolling on a commercial basis 1.5 years of construction 15 years of operation >25% of children sent by the city 12 | Development of Moscow Social Sector | 2013
  13. 13. Schools 91.2% of general educational services are offered by state institutions 30% of students pursue extra-curricular activities 30% of school students visit sports clubs or practice fitness 50% of high school students take paid courses or study with tutors $2k per student in budget financing for accredited private schools 13 | Development of Moscow Social Sector | 2013
  14. 14. Schools: Mechanisms Rental of premises • A similar program as for preschools is being developed for schools: • Rental of premises for 49 years at rate of 1 ruble per sq m • 4 facilities are being prepared for auctions Demand from foreign communities and Russian families for education provided in line with global standards is growing. It’s recognized by many international universities. Average student fee is $20k per year. Currently 10 schools provided International Baccalaureate in Moscow. 14 | Development of Moscow Social Sector | 2013
  15. 15. New Moscow • Creation of 1m jobs planned • 9,700 children are in queue for pre-school in 2013 • +100 kindergartens will be built in the next 3 years, 50% by private investors • Large-scale plan to create educational clusters, including placement of facilities for Moscow Institute of Steel and Alloys on 60 hectares in Kommunarka Resource: Moscow City Government 15 | Development of Moscow Social Sector | 2013
  16. 16. Thank you! Leonid Kostroma Moscow City Government Moscow City Investment Agency Strategy Deputy CEO KostromaLV@mos.ru www.mosinvest.mos.ru 16 | Development of Moscow Social Sector | 2013

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