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Direct line with the GovernorApplication for the project implementation

2018 Investment Address of the Governor of Novgorod Region

Dear colleagues!

A key subject is selected in our country every year. The 2018 subject has not been announced yet, but possible holding of a year of entrepreneurship is discussed among other lines. I think that we should pay maximum attention to business development and formation of a favorable investment environment here in Novgorod Region, even if a different subject matter happen to be chosen.

I would like to remind the words of Vladimir Putin, “Creation of a comfortable environment for business is one of the key conditions for assurance of sustainable growth, stable development of economy and social sphere.”

These are especially important for our region, as it has a key competitive advantage. The main railway and motor transport arteries connecting Moscow with St. Petersburg, Baltic States and Scandinavian countries pass through our region. It means an access to the seaports, airports and customs terminal. There is an intention to build an express motorway М11 in 2018. Moreover, the Government of Novgorod Region is planning to implement a large-scale investment project of constructing an airport in Veliky Novgorod.

For all these advantages, there is one major drawback – and that is demography. Unfortunately, the size of the region’s population is decreasing. Specialists move to big cities that present more opportunities of employment and higher wages.

Obviously, to overcome this trend, we must develop economy and create new high-tech enterprises, along with forming a comfortable residential environment. And here business is our major partner.

The regional economy is characterized by a high business diversity. Over 15 thousand enterprises and organizations with various ownership forms and as many individual entrepreneurs are currently registered in Novgorod Region. I want to highlight this number and stress the importance of the fact that we should not rely solely on the large-scale national corporations. Worldwide – and Novgorod Region is no exception – a region’s sustainability is ensured by local companies which, let me make a point here, always have a chance to become global. This is the trend the leaders among Novgorod manufacturers are demonstrating to us. These are such companies as Akron, Krestetskaya Strochka, Borovichi Refractories Plant, Medovy Dom, Deka, Kvant, and Splav Corporation. This list includes many more companies.

What do these enterprises have in common? A high level of their products, recognition of the products at the federal and international levels, an active social policy, and investments into the capacity expansion. The latter is especially important in view of the necessity to advance the regional economy.

One more detail is that these enterprises are mostly located in large population centers that are scarce in our region. Alas, the company show no intention to establish production entities in the countryside.

There is a number of reasons for this, including administrative hindrances, a poor selection of investment sites with an access to communications, and a lack of skilled personnel in the rural areas.

We set objectives of increasing diversity of the regional economy and development of all municipal entities within the region.

What do we do for it?

The rate of the tax imposed due to the application of the simplified taxation system for small and medium businesses has been reduced.

Starting next year, 50% of the tax imposed due to the application of the simplified taxation system will be transferred into the budget of municipal entities. This amount is going to be subsequently increased.

Requirements to the investment projects currently implemented in the region have been mitigated in terms of the criteria of categorizing them as strategic, priority and other projects to receive investment tax remissions.

There are measures of governmental support to the investors that implement strategic projects in the agricultural sphere.

The regional investment laws have been improved.

The regulatory legal basis for creation of industrial parks, industrial platforms, science parks and business incubators in the region and assurance of their operation will be ultimately formed by the yearend.

Based on the entrepreneurs’ opinions, we have come to a conclusion that priority social and economic development areas (PSEDA) need to be created in the mono-industry towns of our region. The status of a PSEDA resident renders substantial tax remissions at both regional and federal level.

In Novgorod Region, a beneficial rate of the organization profits tax entered into the regional budget is set for the PSEDA residents, specifically 5% for the first 5 years after the PSEDA resident status is assigned and 10% during the consequent 5 years.

Supported of the projects by the Agency for Development of Novgorod Region is organized for the investors. It functions on a “one-stop” principle.

On the slides, you can see the projects scheduled to be completed in 2017 and 2018, as well as their geographical location.

Our current task is to make Novgorod Region a smart location where individual conditions for doing business are created for each territory. These conditions take available resources and specifics into consideration.
Why did some regions become successful in terms of investment raising, while others have never achieved it?

In light of my experience in the Agency of Strategic initiatives, I find it easier to answer this question.

Successful regions have much in common, such as coordinated work of creative managerial teams, business community and public organizations, clear targets of social and economic development, daring public initiatives and undertakings, and private investments.

I believe that Novgorod Region, with all its advantages of the geographic location and rich cultural and historical heritage, deserves becoming one of the successful regions of our country.

Dear colleagues! In order to join the ranks of successful regions, we must think and act faster than others, as the competition among the regions for investment raising becomes sharper every year.

Before the end of 2017, we have to – and we have nearly managed it already – perform a minimal series of actions the Government of the Russian Federation demands from us in a form of introducing 12 target models to simplify procedures of doing business in the constituent entities of the Russian Federation.

As of today, the showings of Novgorod Region in this matter exceed the average figure countrywide.

In 2018, the institutions of the region’s development shall face special tasks.

Novgorod Fund for the support of small business must become the “one stop” dealing with the Industrial Development Fund, Russian Export Center and SME Corporation. At the same time, it is supposed to ensure raising of at least 2.5 billion rubles from all federal development institutions and federal programs for the investment projects financing. In addition, I am setting objectives for the year 2018, namely: to create a Fund for support of creative economy and to ensure a 30% growth of lending to SME entities.

The Ministry of industry and trade of Novgorod Region that is presently being formed is supposed to encourage raising of federal funds and funds of federal development institutions for the needs of the region’s enterprises.

It is deemed necessary to continue supporting travel business, raising investments and popularizing the cultural heritage by means of tourist office Novgorod Rus’.

The targets of the Agency for Development of Novgorod Region for the year 2018 include the 20% increase of the scope of private investments feeding the regional economy, becoming a reliable partner for the investors that would raise funds from Vnesheconombank and the Fund for development of mono-industry towns, and arranging the region’s participation in St. Petersburg International Economic Forum.

In 2016, a multifunctional business service center where businessmen can obtain a wide range of services started operating in Veliky Novgorod. In 2017, three additional windows were opened in the center and a business zone in the multifunctional center in mono-industry town of Pestovo.

Business zones, 3 windows each, are going to be opened in Borovichi and Staraya Russa in 2018. In addition to two current service-rendering centers, similar institutions are going to be opened on the basis of lending institutions, specifically Sberbank and Russian Agricultural Bank.

Moreover, the MFC is facing a task of including Borovichi and Staraya Russa into the overall federal internet service for the support of small and medium entrepreneurs – the SME Business Navigator portal.

The objectives also include development of the strategy of social and economic development of our region for the next 5 years and, consequently, fine-tuning of the region’s investment strategy and its implementation plan.

In 2018, we shall focus on export support. Novgorod Region became a pilot region for introduction of the Regional Export Standard. The regional government sees a high potential for the regional business to launch external markets.

Presently, 195 exporters are operating here, but there should be many more. This is a task for the regional center of export support.

The president of Russia supported a project called “Investment Hospitality” whose initiators were members of business community Leaders Club. The project concept lies in checking to what extent the region is ready to work with investors. The “mystery shoppers” record all and every aspect of the government authorities and organizations dealing with investors, up to such minor details as the promptness of replying to a written or verbal enquiry. Very importantly too, they also evaluate convenience of service and living environment – that is, accessibility of public transportation, quality of hotels and foodservices. It should be noted that the inspection process is recorded on a hidden video camera.

I hope the local self-government bodies will take an active part in this project.

It is essential for the municipal authorities to understand their role and responsibility in meeting the challenge of increasing investments into the economy, so that every municipality has clearly defined benchmarks it is planning to achieve.

We are willing to and shall help the rural districts to move forward and create additional stimuli for it.

We are launching a procedure of transferring earning received through the simplified taxation system over to the municipal level. It is important to understand in this case that these extra earning should be spent efficiently and channeled to the max for the objectives of the municipality’s economy and social infrastructure development.

Speaking of the inter-budgetary transfers, an innovation is expected in their respect as well. Starting 2018, obligations fulfillment agreements will be in force between the region and the municipalities. Then, if a municipal entity fails to fulfill development tasks, work on the investment raising, settle the matters of cost optimization, and create a new infrastructure, the scope of inter-budgetary transfers will not only cease growing, but may be reduced as well.

Starting 2018, all municipalities will be rated in terms of investment climate. Both opinions of the local entrepreneurs regarding an existence of a comfortable environment for doing business and the number of investment projects attracted into the municipality will be taken into account.

We cannot help but set a task for enhancement of the region’s standing in the National rating of the investment climate situation in the constitutional entities of the Russian Federation. In 2018, our region should improve its investment climate and deservingly shoot up by at least 10 lines in the rating.

In 2018, we are going to start creating the growth points, specifically industrial parks, science parks, business incubators, and regional industrial platforms in every municipality of our region. We are planning to create a special economic zone here.

We submitted requests to the Ministry of economic development of Russia to create priority social and economic development area “Uglovka” in Okulovka district and a PSEDA in Grusino urban settlement (Chudovo district). The first one received the ministry’s support. Now we are waiting for the verdict of the federal government. We are planning to submit documents for a creation of PSEDAs in Borovichi and Parfino by the yearend.

Still, while developing economy and introducing various standards, we should not abandon the living standards of the region’s population and development of the social sphere. When people find it comfortable living in the region, investment climate becomes attractive. This is why we are also setting the following 2018 tasks to ourselves:

  • build a new personnel training system focused on the economy needs;

  • ensure availability of primary medical care, engaging medical institutions with a non-governmental ownership form;

  • create a Unified round-the-clock dispatch service of emergency health service that will ensure the EHS team arriving within 20 minutes;

  • arrange regular health examination for 100% of employable residents of the region;

  • continue improving the yard and public areas and parks within the scope of forming a comfortable urban environment;

  • and, naturally, repair the road network in a consistent and orderly manner, increasing the share of roads that comply with regulatory requirements, which is what we are already doing, as you know. The colleagues from Borovichi who have justly complained to the president that one simply cannot drive out of this industrial center will bear me out on this matter…

Dear colleagues! I am sure that all steps mentioned today will enable us not only to attract the investors’ attention to our region and increase the scope of raised private investments, but also improve the level and quality of life of Novgorodians.

I hope very much that our joint actions will let the business implement all plans it has conceived and Novgorod Region look a worthy and hospitable place!

Thank you for your attention!