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Russia's Kamchatka, Chukotka and Maritime regions work to improve their investment ratings

The rating is used to evaluate efforts of regional authorities, identify best practices in investor relations and introduce these practices in other regions

MOSCOW, January 22. /TASS/. Authorities of the Far Eastern regions, which in the past year were outsiders in the National Investment Climate's rating by the Agency for Strategic Initiatives (ASI), are working hard to improve the investment climate: a special fund in Chukotka helps businesses to receive state support, Kamchatka is improving the legal base, and the Maritime Region offers educational seminars to cut mistakes in applying to state authorities.

ASI's rating estimates efforts the regional authorities undertake to organize favorable conditions for doing business there. In 2017, Russia's all regions participated in the rating. Minister of the Far East's Development Alexander Galushka said about special conditions at the federal level for development of the Far Eastern District, but regions use them differently, and, according to him, biggest problems were in the Maritime Region, Kamchatka, and Chukotka. TASS correspondents talked to experts and responsible specialists in those regions to find out how they see the region's investment attractiveness and what drawbacks they can see in the rating's methods.

Improving the rating's methods

"It is not professional to compare investment climates in Chukotka and in the Khabarovsk region, as the regions differ greatly in the economic activities, in the population, development of infrastructures and so forth. It is neither correct to compare the Sakhalin Region, where hydrocarbon production projects take the bulk of investments, with the Jewish Region, which has only agriculture. Thus, while analyzing regions in the Far East Federal District, we should be speaking not only about ratings of investment attractiveness, but also about other aspects of the social and economic activities there," Deputy Director of the Far Eastern Federal University's Expert-Analysis Center (in Vladivostok) Dmitry Shelest told TASS.

The expert stressed the investment attractiveness rating is a new form of reporting, and its methods should be more accurate. The requirement to focus on forming a favorable investment climate was presented only in 2017, and blaming the governors could be rather for slow reaction to the new requirement.

The problem of delays with receiving permissions for construction or for using infrastructures (which the rating calculates) does not necessarily depend on "somebody's ill-will," he continued. Infrastructures in the regions are mostly worn out, and increasing its exploitation without renovations and modernization may affect regular work of water, electricity or other systems.

Chukotka: special Arctic conditions

Chukotka's authorities also explain the low result in ASI's rating by drawbacks in the methods, which ignore the region's peculiarities. The regional economic department told TASS the result may be explained by a lack or low number of respondents, satisfying ASI's requirements, in the rating's eight positions. The methods say in a case like that the region's rating goes down.

Another factor, the authorities continued, is the existing geographic peculiarities. It is not reasonable to expect from the far-away Arctic territory of more than 700,000 square kilometers, where only 50,000 live, a mass use of information technologies, a vast network of good roads and low construction costs.

At the same time, the department continued, the authorities are doing their best to use all available mechanisms to attract investments. From 2014, the district has been using the legal base, which offers mechanism of supporting investments, including tax benefits and preferences.

From 2016, the local fund for economic development and direct investments is working more actively. In 2017, the fund's team offered not only assistance in formalizing tax benefits, but also in getting optional state support.

Kamchatka: legislative changes

Kamchatka's authorities say changes in the local legislation will improve the region's investment climate if they offer different regulations in concession agreements. Head of the local Agency for Investments and Entrepreneurship Oksana Gerasimova says the region has drafted already a document to regulate relations between the authorities and businesses in that sphere, hoping the problem would be settled within 2018.

Local businesses often complain they do not have access to discussions at the regional Investment Council. According to Gerasimova, the information is posted regularly on the regional Investment Portal, and from January, an additional channel is available on Youtube.

Despite the generally negative estimation, she continued, the region has certain achievements in improving its investment attractiveness. "We have a positive dynamics in investments over recent three years, small and medium businesses are growing, we have a high production index in agriculture," she said.

Maritime Region: information technologies would be helpful

The Maritime Region's biggest problems, which affect its investment attractiveness, are delays and refusals in registration of companies and lands. The local authorities do not agree those are administrative violations: the refusals come from many mistakes in filed documents. In order to avoid this problem, the region organizes training seminars for respective government employees and cadastral surveyors.

The region's economy department told TASS about a newly implemented portal of service organizations, where clients may apply for connecting to electricity infrastructures. The local Guarantee Fund offers access to credit and financial resources.

ASI rating

Since 2014, the Agency for Strategic Initiatives works together with leading business associations to assess the quality of investment climate in regions throughout the country.

The rating is used to evaluate efforts of regional authorities, identify best practices in investor relations and introduce these practices in other regions.

A pilot rating test, conducted in 2014, covered 21 Russian regions and involved about 14,000 business representatives. In 2017, all Russian regions participated in the rating, and 51 of them demonstrated a general growth of the integral parameter year-on-year.