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BMW expects to sign deal for plant construction in Kaliningrad region in 2018

German carmaker BMW Group expects to sign a special investment contract for the construction of a full cycle plant in Kaliningrad region before the end of the year

MUNICH, March 21. /TASS/. German carmaker BMW Group expects to sign a special investment contract for the construction of a full cycle plant in Kaliningrad region before the end of the year, Member of the Board of Management of BMW Group AG Oliver Zipse told TASS. According to him, the company is currently in the process of negotiations with Russian partners, regional and federal authorities.

"We aim to finalize it before the end of the year," he said, adding that manufacturing for the local market would be the focus of this plant; however export is also part of the negotiations.

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BMW sets up subsidiary in Russia’s Kaliningrad

It was reported earlier that BMW chose the Kaliningrad region to build its full-cycle plant. The industrial park Khrabrovo might become a platform for it.

According to Kaliningrad Region Governor Anton Alikhanov, the region, in addition to allocating the infrastructure of the park, is ready to invest about 250 mln rubles ($4.37 mln) in the development of the BMW site. According to his estimations, under favorable conditions, the plant might be built within two years and by the beginning of 2021 could start assembling cars.

At the end of March 2017, BMW announced plans to make a final decision on the construction of a plant of complete production cycle in Kaliningrad.

It was planned that by June the terms of a special investment contract between BMW, Avtotor (a local carmaker), Russian Industry and Trade Ministry and the regional government will be set.

The new mechanism implies that the authorities guarantee unchanged tax conditions to foreign and domestic industrial producers while those guarantee making investments.

In 2013, Avtotor and BMW signed a package of agreements and a joint company was established. A subsidiary of this company was registered in Kaliningrad. In order to further develop the production of cars in Russia, an agreement has been concluded between BMW and the Russian holding company to launch a plant with complete production cycle in the region.

In April 2015, an agreement on partnership and cooperation was signed between Avtotor and the regional government. In early 2018, BMW announced the establishment of its subsidiary OOO BMW Rusland Automotive in Kaliningrad.

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