SpeechSpeech by Minister of Trade and Foreign Economic by Minister of Trade and Foreign Economic Cooperation of the Republic of Tatarstan Cooperation of the Republic of Tatarstan

Hafiz SalikhovHafiz Salikhov

The 8th Annual The 8th Annual Russian Economic ForumRussian Economic Forum

Investment Climate Investment Climate in the Republic of Tatarstan: in the Republic of Tatarstan: Experience, Estimations, and Experience, Estimations, and Prospects for Development Prospects for Development

London,London, 12 12 AprilApril 2005 2005

GDP of the Russian Federation andGDP of the Russian Federation and GRP of the Republic of Tatarstan in GRP of the Republic of Tatarstan in 2002004 4 pricesprices, , RUR billionRUR billion

254,1273,4

292,6

324,4335,8

358,3379,8

1139

1,1

1212

0,1

1333

2,1

1399

8,7

1460

0,6

1566

6,5

1677

8,8

0

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 2003 20040

2000

4000

6000

8000

10000

12000

14000

16000GRP of the Republic of Tatarstan in 2004 pricesGDP of the Russian Federation in 2004 pricesTrend of Russia's GDPTrend of Tatarstan's GRP

Russia

Tatarstan

chemical and petrochemical

18,0%

other2,4%

food processing7,6%

mechanical engineering and

metalworking24,8%

light ind.0,7%

forestry, woodworking, pulp-and-paper

1,7%

construction materials1,5%

electric energy6,8%

fuel36,5%

Industrial Production Structure Industrial Production Structure of the Republic of Tatarstanof the Republic of Tatarstan

2004 2004

105,5

112,9 112,5111,1

107,1

105104

102,4100,7

99,3

80

85

90

95

100

105

110

115

%

100%

Increase in Output by Sector Increase in Output by Sector in the Republic of Tatarstanin the Republic of Tatarstan

20042004

Credit Rating of the Republic of Tatarstan :Credit Rating of the Republic of Tatarstan :Foreign exchange borrowings ratingForeign exchange borrowings rating

Ba1 Ba1 stable outlookstable outlookLong-term credit ratingLong-term credit rating

В-В- positive outlook positive outlook

Investment RatingInvestment Ratingof the Republic of Tatarstanof the Republic of Tatarstan

Investment rating among 89 Russian regions: Investment rating among 89 Russian regions: 66th in investment riskth in investment risk 99th in investment potentialth in investment potential

Structure of Foreign Structure of Foreign Investments Investments inin 2004 2004

Portfolio13,5%

Other73,2%

Direct13,3%

Republic of Tatarstan

Portfolio0,8%

Other75,9%

Direct23,3%

Russian Federation

System ElementsSystem Elements for for Infrastructure Infrastructure of Investments Attractionof Investments Attraction

productionproduction (modern logistics centres and hubs, (modern logistics centres and hubs, transportation networks, warehousing facilities)transportation networks, warehousing facilities)

organisation of the economy organisation of the economy ((various various centrescentres and services dealing with promotion of investments, and services dealing with promotion of investments, their insurance and export promotiontheir insurance and export promotion) )

quality of life quality of life ((system of additional health system of additional health insurance, information support and other social insurance, information support and other social systemssystems))

Main Reasons for Insufficient Main Reasons for Insufficient Amounts of Attracted Amounts of Attracted InvestmentsInvestments

lacking well-developed infrastructure for attraction lacking well-developed infrastructure for attraction of investmentsof investments

insufficient development of the stock market, land insufficient development of the stock market, land and real estate market, and the capital marketand real estate market, and the capital market

absence of prepared projectsabsence of prepared projects

direct foreign investments are direct foreign investments are focused on several large-scale projects focused on several large-scale projects being implemented under the auspices being implemented under the auspices of the republic's governmentof the republic's government

investments in ordinary projects are investments in ordinary projects are virtually absent, though the republic has virtually absent, though the republic has some excessive investment resourcessome excessive investment resources

Composition of InvestorsComposition of Investors

as a rule, only technologically related to as a rule, only technologically related to the enterprise are being invested the enterprise are being invested

those primarily interested in the source of those primarily interested in the source of raw material, a place for arranging the raw material, a place for arranging the production, and cheaper labour forceproduction, and cheaper labour force

for the most part, investors do not for the most part, investors do not consider our economy as a safe and expedient consider our economy as a safe and expedient place to invest money and make profitplace to invest money and make profit

Programme for Improving the Programme for Improving the Investment Attractiveness of the Investment Attractiveness of the Republic of TatarstanRepublic of Tatarstanaimed at implementation of pilot infrastructural projects aimed at implementation of pilot infrastructural projects identified by the Government of Tatarstan as priority identified by the Government of Tatarstan as priority projects oriented to international financial and business projects oriented to international financial and business community community

efficient commercial projects should stimulate efficient commercial projects should stimulate business activities in the republic and become a kind of business activities in the republic and become a kind of growth centres growth centres

they would be implemented on the pledge-free they would be implemented on the pledge-free commercial basis, with the use of insurance mechanisms commercial basis, with the use of insurance mechanisms and instruments of securities marketand instruments of securities market

Measures to Improve the Investment Attractiveness Measures to Improve the Investment Attractiveness of the Republic of Tatarstanof the Republic of Tatarstan Increasing the growth rates of people’s real incomeIncreasing the growth rates of people’s real income Increasing the financial efficiency of existing enterprisesIncreasing the financial efficiency of existing enterprises Attracting to the republic most high-performance and technologically Attracting to the republic most high-performance and technologically

advanced enterprisesadvanced enterprises Encouraging enterprises which provide the best earning records and Encouraging enterprises which provide the best earning records and

highest pay riseshighest pay rises Providing incentives to the process of production re-equipment, Providing incentives to the process of production re-equipment,

replacement and withdrawal of fixed assets replacement and withdrawal of fixed assets Providing priority incentives to small business development as a factor to Providing priority incentives to small business development as a factor to

increase the level of people’s real income and to meet consumer demand increase the level of people’s real income and to meet consumer demand for goods and services for goods and services

Developing transportation and communication infrastructure – primarily, Developing transportation and communication infrastructure – primarily, through wider use of up-to-date communication facilitiesthrough wider use of up-to-date communication facilities

Encouraging the funding of sciences and scientific services, establishing Encouraging the funding of sciences and scientific services, establishing technology parks and hi-tech citiestechnology parks and hi-tech cities

Risks Whose Indices Have a Potential of Risks Whose Indices Have a Potential of Being DecreasedBeing Decreased

Legislative risksLegislative risks:: Non-transparency of investor support proceduresNon-transparency of investor support procedures Lack of a system of documents contributing to the improvement Lack of a system of documents contributing to the improvement

of the republic’s investment attractivenessof the republic’s investment attractiveness

Environmental risksEnvironmental risks:: Still essential waste water contaminationStill essential waste water contamination

Criminal risks:Criminal risks: Rather high level of crime including such connected to drug Rather high level of crime including such connected to drug

traffickingtrafficking

Financial risks:Financial risks: Low rates of budget parameters improvementLow rates of budget parameters improvement

Programme for Development of Programme for Development of Innovative Activities in Innovative Activities in the Republic of Tatarstanthe Republic of Tatarstan for 2004-2010for 2004-2010

special attention in implementing investment special attention in implementing investment programmes is devoted to innovative aspects and priority programmes is devoted to innovative aspects and priority development of hi-tech processing sectorsdevelopment of hi-tech processing sectors

we intend to allocate government resources for we intend to allocate government resources for support of those sectors of the economy which can cause support of those sectors of the economy which can cause a multiplicative effect on the development of other a multiplicative effect on the development of other sectors, ensure the innovative nature and growth in sectors, ensure the innovative nature and growth in efficiency of production and efficiency of labour in the efficiency of production and efficiency of labour in the economy in generaleconomy in general

Programme for Development of Innovative Programme for Development of Innovative Activities in the Republic of Tatarstan for 2004-2010Activities in the Republic of Tatarstan for 2004-2010

Tatarstan Investment Venture Fund which accumulates Tatarstan Investment Venture Fund which accumulates investment and directs it to the implementation of innovative investment and directs it to the implementation of innovative projects projects

A number of sectoral innovative centres and technology parks A number of sectoral innovative centres and technology parks based on the leading universities of Tatarstanbased on the leading universities of Tatarstan

State Non-Commercial Organisation “Stabilisation Pledge and State Non-Commercial Organisation “Stabilisation Pledge and Insurance Fund of the Republic of Tatarstan” intended to ensure Insurance Fund of the Republic of Tatarstan” intended to ensure financing for investment programmes and projects aimed at financing for investment programmes and projects aimed at economic and social development of the Republic of Tatarstaneconomic and social development of the Republic of Tatarstan

Another important element for commercialisation of scientific Another important element for commercialisation of scientific research results is the Innovative Technopark “Idea”research results is the Innovative Technopark “Idea”

Creation of Industrial Districts Creation of Industrial Districts in the Republic of Tatarstanin the Republic of Tatarstan

NizhnekamskNizhnekamskOAO Nizhnekamsk-OAO Nizhnekamsk-

neftekhimneftekhim

Naberezhnye Naberezhnye ChelnyChelnyOAO KamAZOAO KamAZ

KazanKazanOAO KazanorgsintezOAO Kazanorgsintez

The project’s mission is to develop the industrial potential The project’s mission is to develop the industrial potential of the republic by attracting a large number of small to of the republic by attracting a large number of small to medium businesses. medium businesses.

Tatarstan Regional Investment Bank Tatarstan Regional Investment Bank (TRIB)(TRIB)

It will offer a complete range of financial services in It will offer a complete range of financial services in accordance with international practiceaccordance with international practice

To date, a feasibility study for the TRIB project was To date, a feasibility study for the TRIB project was prepared together with Hogan & Hartson, a US leading law prepared together with Hogan & Hartson, a US leading law firm; we are working to attract international financial firm; we are working to attract international financial institutions to the implementation of this projectinstitutions to the implementation of this project

We invite potential partners who wish to do We invite potential partners who wish to do business in our republic and are prepared to business in our republic and are prepared to cooperate with us in the implementation of this cooperate with us in the implementation of this projectproject

Celebrations of the Celebrations of the MillenniumMillennium Anniversary of KazanAnniversary of Kazan

Kazan, the capital of the Republic of Tatarstan, was inscribed Kazan, the capital of the Republic of Tatarstan, was inscribed in the UNESCO World Heritage List in the UNESCO World Heritage List

one of the largest economic, scientific and cultural one of the largest economic, scientific and cultural centrescentres of of RussiaRussia

a city of higher education establishments, theatres and a city of higher education establishments, theatres and museums, international festivals and contestsmuseums, international festivals and contests

a a city where Asia unites with Europe, mosques amicably city where Asia unites with Europe, mosques amicably neighbour on churches, and hoary legends are carefully preserved neighbour on churches, and hoary legends are carefully preserved against the background of the onrushing advent of the latest against the background of the onrushing advent of the latest technologiestechnologies

Празднование 1000-летия Празднование 1000-летия города Казанигорода Казани

состоится 30 августа 2005 г. состоится 30 августа 2005 г.

Предстоящий юбилей является Предстоящий юбилей является событием не только российского, событием не только российского, но и мирового масштабано и мирового масштаба

Приглашаем всех желающих Приглашаем всех желающих на празднование города!на празднование города!

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