The Government of the Saratov Region, the Russian Federation

1
The Government of the Saratov Region, the Russian
Federation
Investment attractiveness of the Saratov Region
The Ministry for Investment Policy of the Saratov
Region
2
Content
Slide 3 The Saratov region general
information Slide 4 Main economic parameters of
the Saratov region Year 2006 Slide 5
Industrial sector Year 2006 snapshots Slide 6
Agricultural sector Year 2006 snapshots Slide
7 Main socio-economic indicators of the Saratov
region Year 2006 Slide 8 Investment activities
of the Saratov region Year 2006 Slide 9
Competitive advantages of the Saratov
region Slide 10 Competitive advantage - energy
security Slide 11 Competitive advantage -
attractiveness of land resources Slide 12 Land
resources unused agricultural lands Slide 13
Land resources free lands Slide 14 Competitive
advantage reach mineral-resources base Slide
15 Mineral resources base solid minerals
brick- tile clays Slide 16 Mineral resources
base solid minerals expanded clays Slide 17
Mineral resources base solid minerals
carbonate rock for lime production Slide 18
Mineral resources base solid minerals
chalkstones dolomite rocks Slide 19 Mineral
resources base solid minerals sandrocks
siltstones Slide 20 Mineral resources base
solid minerals construction sands Slide 21
Mineral resources base solid minerals
gaizes Slide 22 Mineral resources base solid
minerals mineral paints Slide 23 Mineral
resources base hydrocarbon deposits Slide 24
Competitive advantage unique transport
infrastructure Slide 25 The Saratov region one
of the most important transportation points of
Russia Slide 26 Competitive advantage
attractiveness of labour force Slide 27
Competitive advantage favorable
socio-political, socio-economical situation Slide
28 Competitive advantage Most-Favoured-Nation
Treatment for Investors in Saratov Region Slide
29 The regional law On Most-Favoured-Nation
Treatment for Investors in Saratov Region Slide
30 The regional law On Most-Favoured-Nation
Treatment for Investors in Saratov Region Slide
31 One window regime procedures of
investment contract concluding process
3
The Saratov region general information

• South-east of European part of Russia
• Administrative center Saratov city
• Area of the region 101,2 thous. sq. km
• Population of the region 2608,3 thous. people
• Population of Saratov city 850 thous. people
• Distance from Saratov to Moscow 858 km
• National boundary with Kazakhstan 550 km
• Borders with 7 regions of the Russian
  Federation (Samara, Penza, Volgograd,
  Ulyanovsk, Tambov, Orenburg, Voronezh)
• Location of Saratov city - at one of the
  largest navigable waterways the Volga
  river
• Southern temperate climate and advantageous
  fourth zone

Moscow
858 km
Povolzhskiy Federal District
The Russian Federation
Saratov
Kazakhstan
4
Main economic parameters of the Saratov region
Year 2006
Gross Regional Product (billion roubles)
Industry index Year 2006 (in to
correspondent previous period)
Structure of GRP Year 2006
Structure of foreign-economic activity - Year
2006
Industry
30,6
14,9
Agriculture, hunting and forestry
TOTAL foreign-economic activity 2246.7 million
USD
14,9
Transport and communication
7,5
Construction
Export1901.0 million USD
Import 345.7 million USD
12,3
Wholesale and retail trade
Other activities
19,8
Industry index equal to aggregated indexes on
spheres of activities ( exploration of mineral
resources, processing production, production
distribution of energy, gas, water)
5
Industrial sector Year 2006 snapshots
Main spheres of industrial sector of the
region - oil gas industry, oil processing,
power generation, chemical production,
construction production of construction
materials, machine equipment
construction, production of rubber plastic
goods,etc. Number of enterprises - 1969 large
middle-scale enterprises - 3218 small
enterprises Growth rates of production -
electro-, electronic optic equipment 144,5
- machines equipment 124,50 - rubber and
plastic goods by 1,9 times Construction -
volume of works 24 bln. Rubles - put into
operation 805 thous. sq.meters of apartments

• Competitive production
• rolled glass
• rubber items
• accumulator batteries
• synthetic fiber
• wooden furniture
• bearings
• trolley-buses
• carriages
• tobacco products
• mineral fertilizers
• refrigerators freezers
• chemical fiber
• synthetic detergents
• wallpaper

• Major foreign companies investing in the region
• TNK BP Holding JSC Saratov oil refinery
• BOSCH group of companies JSC Robert Bosch
  Saratov''
• Henkel company JSC Henkel Yug''
• BAT company JSC BAT Saratov Tobacco Factory"
  
• Holcim group of companies JSC ''Volskcement''

6
Agricultural sector Year 2006 snapshots

Number of enterprises farm households - over
8 thousand enterprises farm households Volume
of agricultural production - 45 billion
Rubles - 3rd place in the Povolzhskiy Federal
District Growth of cattle head - sheeps 109,
4 - pigs 114,8 - great cattle
101,4 Budgetary provisions for agriculture -
growth rate 134 - financing of cattle breeding
grew by 2,4 times - financing of plant
cultivation grew by 1,5 times Growth rates -
total agricultural production 103,6 (the
Russian Federation 101,5) - milk production
105,3 - meat production 102,8
7
Main socio-economic indicators of the Saratov
region Year 2006

Growth rates of average salary and incomes -
average salary 128,7, up to a level of 7000
Rubles - real money income 109,2 Labour
potential - economically active population
includes over 1320 thousand people, that is
50 of the total population of the region
Unemployment rate - 1,6, much more lower
than average index of the Russian Federation
(2,3) Natural loss of population - decreased
by 17 (6,4 persons per 1000 inhabitants)
Birth rate - grew by 1,1 (9,2 persons per
1000 inhabitants) Mortality ratio - decreased
by 7 (15,6 persons per 1000 ?????????)
8
Investment activities of the Saratov region
Year 2006
Volume of investments - fixed capital
expenditures 42,4 billion Rubles (bln1,6) -
growth rate during the period 2004-2006 , the
volume of investments grew almost by 2
times Investment Rating ( according to data of
leading rating agency ''Expert-RA') - 3B1
(lower potential / moderate risk) was established
in regards to the Saratov Region as of
results of 2005-2006 - the 20th position among
Russian regions as of the level of
investment risks (for comparison in 2004-2005 -
27th position)

• Attractive Sectors of Economy for Investment
• power engineering
• construction
• construction materials industry
• chemical industry
• oil gas extraction
• automobile construction
• machine-building
• biotechnology
• food industry
• agriculture
• tourism
• processing industries
• etc.

• Current investment projects with foreign capital
• Metro Cash and Carry (Germany)
• IKEA (Sweden)
• Heidelberg Cement (Germany)
• BOSCH group of companies (Germany)
• Holcim group of companies ( Switzerland)
• Ramenka (Turkey)
• BulgarConserv (Bulgaria)
• Baring Vostok Capital Partners (UK)

9
Competitive advantages of the Saratov region

• The region has at its disposal a variety of
  competitive advantages in respect to the main
  factorsof Business Doing

The Saratov region
Geographical location
Political situation
Economic social situation
Labour force
Transport infrastructure
Mineral resources base
Land resources
Energy resources
10
Competitive advantage - energy security

• Superfluous electric energy supply
• - the volume of generated electricity is 41
  billion kilowatt-hour
• - regional own electricity intake is less than
  30 of volume of output
• Fuel energy complex enterprises
• - Balakovo Nuclear Power plant
• - Saratov Hydroelectric Power station
• - Thermoelectric Power stations
• - Saratov oil refinery
• Safe fuel market
• - considerable gas oil deposits at the
  territory of the region
• - regional own gas-extraction oil exploration
• - total-lot gasification of inhabited localities
  and enterprises
• - crude oil processing production of oil
  products at the Saratov oil refinery
• - two crude oil main lines (JSC Transneft)
  pass through the region

11
Competitive advantage - attractiveness of land
resources

• Availability of free agricultural lands
• - total area of more than 109 thousand hectares
• Availability of unusable agricultural lands
• - total area of more than 216 thousand hectares
• Availability of free lands for industrial use
  and construction
• - sites are with all the distribution supply
  lines, power heat capacities
• - total are more than 5420 thousand square
  meters
• Low cost of the land

12
Land resources unused agricultural lands
Unused agricultural lands total area 216
thous. hectares
32 thous.ha
6 thous.ha
48 thous.ha
56 thous.ha
4 thous.ha
5 thous.ha
10 thous.ha
14 thous.ha
41 thous.ha
13
Land resources free lands
Free lands for industrial use and construction
total area 5420 thous. sq. meters
Free lands for agricultural use total area
109 thous. hectares.
470 thous.m2
80 thous. m2
22 thous. m2
387 thous.m2
70 thous.m2
10 thous.m2
100 thous.m2
1930 thous.m2
40 thous.m2
1300 thous.m2
1120 thous.m2
14
Competitive advantage reach mineral-resources
base
Solid minerals - 564 mineral
deposits more than 280 of them
are accounted by State balance of
reserves - 420 occurrences -
340 zones - 53 prospective areas

• Cement raw materials - 590,2 mln. tones
• Chalk - 159,5 mln. tones
• Construction sands 231,6 mln. cubic meters
• Glass - making sands 390 thous. cubic meters
• Expanded clays 53,5 mln. tones
• Brick - tile clays 143,4 mln. cubic meters
• Building stones 415, 8 mln. cubic meters

Hydrocarbon deposits - 110
deposits, incl. are accounted
by State balance of reserves
- 53 developed - 36 in
conservation - 21 in exploration

• Oil - 618,3 mln. tones
• Dissolved gas - 221,1 bln. cubic meters
• Free gas 1526,7 thous. cubic meters
• Condensate 144,0 mln. tons
• Net oil shale - 9,1 bln. tons

15
Mineral resources base solid minerals brick -
tile clays
Brick - tile clays
16
Mineral resources base solid minerals expanded
clays
Expanded clays
17
Mineral resources base solid minerals
carbonate rock for lime production
Carbonate rock for lime production
18
Mineral resources base solid minerals
chalkstones dolomite rocks
Chalkstones dolomite rocks
19
Mineral resources base solid minerals
sandrocks siltstones
Sandrocks siltstones
20
Mineral resources base solid minerals
construction sands
Construction sands
21
Mineral resources base solid minerals gaizes
Gaizes
22
Mineral resources base solid minerals mineral
paints
Mineral paints
23
Mineral resources base hydrocarbon deposits
Oil gas, shale oil, gas condensate
24
Competitive advantage unique transport
infrastructure

• Railroads
• - South-Eastern and Privolzhskaya divisions of
  JSCRussian Railways
• - railway main lines connect the region with
  Central Russia, Urals, Siberia,
  Northern Caucasia and Central Asia
• Motor roads
• - total stretch of network in general use 10,
  42 thous. Km
• - the density of hard coated motorways is 103 km
  for 1000 sq. meters (average
  indicator in Russia - 32 km for 1000 sq. meters)
• River transport (on the Volga river)
• - river way connects the region with Moscow,
  Western Urals, the Black Sea,
  the Caspian Sea, the White Sea, the Barents Sea,
  the Baltic Sea, the
  Mediterranean Sea
• Air traffic
• - JSC Saratov airlines, state airline with
  regular airline service
• - airport of II class, international status)
• Pipelines
• - main lines of crude oil, oil products and gas
  transportation pass the Saratov
  region from the east to the west Transneft,
  Blue stream, Gazprom

25
The Saratov region one of the most important
transportation points of Russia
Railway roads
Motor roads
Water routes
26
Competitive advantage attractiveness of labour
force

• Low cost of labour force
• - average salary is about 7142 Rubles per month,
  that is 3 times less than in
  the Moscow region
• Labour potential
• - economically active population includes over
  1320 thousand people, that is
  50 of the total population of the region
• Availability of qualified labour resources, high
  scientific and technical potential
• - 6 institutes of the Russian Academy of
  Sciences
• - 21 Research Studies Institutes
• - 19 design institutes
• - 14 Institutes of Higher Education, lots of
  technical training colleges
• High cultural, medical and educational potential

27
Competitive advantage favorable
socio-political, socio-economical situation

• Full concord among population
• - between people of different nationalities,
  races and creeds
• Political stability in the Region
• - Governor is authorized for 5 years, total
  change of authorities in the
  Region and in all municipal entities, as well as
  in many federal structures
• Low criminality rate
• Steady growth of income of the population
• - up to 20 per cent a year, it increases the
  market capacity and, therefore,
  liquidity of goods, works and services
• Inflation in the Region
• - 8.3 , that is lower, than in average index
  in Russia, equal to 9.0
• The expenses for ecological and nature
  protection measures
• - are comparatively low
• House making, construction of industrial and
  commercial real estate
• - low prime cost
• Communication and telecommunication security
• Well developed banking and insurance sectors of
  economics

28
Competitive advantage Most-Favoured-Nation
Treatment for Investors in Saratov Region

• Most favored - nation treatment for investors
  in the Saratov region is provided by
• regional legislation new laws, developed by the
  Ministry for Investment Policy of the Saratov
  region on preferential tax treatment
• - On most - favoured-nation treatment for
  Investors in Saratov Region
• - On Tax Rate on Organizations Profits with
  Regard to Investors Engaged inInvestment
  Activity in Saratov Region
• - On Alteration of Article 4 of Law of Saratov
  Region On Transport Tax Levyin Saratov Region
• - On Alteration of Article 2 of Law of Saratov
  Region On Levy of Wealth Taxon Organizations in
  Saratov Region
• - On Alteration in the Law of Saratov Region On
  Competitive Placing ofRegional Budget Means for
  State Support of Economic Agent
  ImplementingInvestment Projects at the Territory
  if the Saratov Region
• state support
• - scheme of effective interaction with investor
  ensured by the Ministry for Investment Policy of
  the Saratov Region provides investment project
  management (information consulting, coordination
  of interactions of regional, federal, local
  authorities, institutions, organizations and
  business environment)
• - Investment Council under the Governor of the
  Saratov Region considers the investment projects
  planned to be implemented in the region

29
The regional law On Most-Favoured-Nation
Treatment for Investors in Saratov Region

• The regional law On Most-Favoured-Nation
  Treatment for Investors in Saratov Region which
  come into force from January, 1, 2008 -
  provides the investor with
• - reduced wealth tax to 0.1, in regards
  to the wealth
• a) created (acquired) and not included into
  taxable wealth at the territory of the region
  before the beginning of an investment project
  implementation by investor organization that made
  capital investments no less than 50 million
  rubles for production purpose in the key
  assets located at the territory of the Saratov
  Region, and no less than 650 million rubles into
  construction - during 5 years
• b) acquired as wealth set within the frameworks
  of investment project at the insolvency
  (bankruptcy) procedure external control,
  bankruptcy proceedings - during 1 year
• - minimum profit tax rate 13,5 (in the
  part paid into the regional budget) - in regards
  to the new established investor organizations
  that made capital investments no less than 50
  million rubles in the key assets located at the
  territory of the Saratov Region, and no less than
  650 million rubles into construction
• - no transport tax during 5 years - in
  regards to the organizations that made capital
  investments no less than 50 million rubles for
  production purpose in the key assets located at
  the territory of the Saratov Region, and no less
  than 650 million rubles into construction
• - investment tax credit - in the process of
  investment project implementation for the period
  from 1 to 5 years

30
The regional law On Most-Favoured-Nation
Treatment for Investors in Saratov Region

• The regional law On Most-Favoured-Nation
  Treatment for Investors in Saratov Region which
  come into force from January, 1, 2008 -
  provides the investor with
• - taxes other obligatory dues fees
  payment delay or payment in instalments - for
  capital investments into production at the
  territory of the Region of not less than 1
  million rubles
• - state securities are pledged on a
  competitive basis as securities of discharge of
  investors obligations on repayment of borrowed
  monetary funds obtained for investment projects
  implementation
• - budget credit budget investments - in
  the form of a share holding of the Region in
  authorized capital stock of public corporations,
  with fixing of corresponding part of safety stock
  of established public corporation as state
  ownership
• - subsidies - are granted on a competitive
  basis for indemnity of part of interest rate on
  bank credit obtained for investment project and
  indemnity of part of leasing payment on leasing
  agreement concluded for investment project
  implementation
• - subventions - regional budgetary funds are
  granted for carrying out research development
  investment projects also for directed at
  augmentation of own key assets for more than 10
  million rubles at the expense of profit of
  economic agents
• - one - window regime is rendered to
  investors in the process of investment project
  implementation with a help of investment contract
  investment certificate

31
One window regime procedures of investment
contract concluding process
One window regime procedures of investment
contract concluding process
Step 1
Step 2
Step 3
Step 4
Step 5