Russia Gives Free Land, Incentives to Invest in Asian Far East

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vladivostokrussiamapWith China’s OBOR initiative expanding to secure commodities and energy resources in North-East Asia, Siberian Russia is finally coming of age with its ability to be able to offer land and resources to provide attractive investment options in the region. Centered around the main Port of Vladivostok, yet continuing north to the Arctic Ocean and west – across Siberia – the development potential of the region coincides with the eastward movement of the global centers of financial and economic power.

Russia has, accordingly, just announced investment criteria for investing in its Far East, an area already popular with investors from China, Japan, South Korea, and India. The Russian Minister for the Development of the Far East Alexander Galushka, has clarified the investment situation as concerns attracting FDI into the Far East. These include:

  • 2.5 acres of free land (currently subject to Russians only but may be extended to foreigners);
  • Compliance with Russian environmental legislation;
  • Russian labor to be used for 80 percent of labor requirements;
  • Training programs for untrained Russian workers when only foreign expertise is available; and
  • Time-frames for localization to employ Russian workers.

Glaushka also stated that exceptions to the labor conditions can be agreed on a case-by-case basis, “when, for example, we do not have the necessary specialists at all.”

Russia however is wary of large numbers of Chinese labor entering Russia, hence the restrictions and need to use Russian labor. As Galushka emphasized: “We are creating a new economy in the Far East for our people – for Russian citizens.”

Galushka noted that the percentage of foreign investment in Russia’s Far East amounts to between 17-18 percent of total investment, with Russian companies and the Russian government accounting for the rest. He mentioned China, Japan, and India as three important investors in the region. Japanese investors, for example, have contributed US$16 billion to 21 projects that are presently being implemented, he explained.

Planned and active foreign investment into the Russian Far East includes major cross-border transport and energy infrastructure projects, international transport corridors, natural resource extraction and processing, agriculture, manufacturing, and investment in other spheres. The country is already investing, along with Chinese financing and development, into opening up the Northern Sea Passage and Russia’s Arctic Ports.

Land connections with both China and India are already underway. Russia and China have moved ahead with the Primorye-1 land route , which allows Heilongjang Province access to Vladivostok Port, while India and Russia are developing the International North-South Transport Corridor.

Russia has also begun issuing easy to obtain 8-day electronic visas for Vladivostok  while the Port itself operates tax incentives and possesses an increasingly popular Free Trade Zone. The World Bank estimates that North-East Asian regional wealth and production will grow 300 percent by 2030 as the area better integrates with the rest of Asia.

 

Russia Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, the Silk Road & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Eurasian region. We maintain offices in Moscow and St.Petersburg through our Russian partner firm, as well as our own offices in China, South-East Asia and India. For assistance with Russian issues or investments into Russia and Asia, please contact us at russia@dezshira.com or visit us at www.dezshira.com

 

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