An address from the Mayor of Moscow, Sergey Sobyanin Moscow has gained additional competitive advantages in the new economic context. While maintaining the superb quality of its investment environment, the capital has become one of the world s most attractive investment destinations in terms of many types of costs. In recent years we have implemented a number of measures to reduce operating expenses, simplify administrative procedures and improve tax and tariff policies. The city is actively promoting public private partnership mechanisms, including concessions, life cycle contracts and property lease with mutual obligations. We are opening new technoparks and technopolises to cater to high-tech production lines. All these factors will only ensure that Moscow will become more and more attractive to investors. Our main goal is to transform the capital of Russia into a modern, successful megalopolis which is comfortable to live in and where it is easy to do business. To achieve this goal, we strive for a mutually beneficial and fruitful partnership with the investment community. The result of such a partnership will be exciting new ideas and projects for the benefit of Moscow and Muscovites. An address from the Mayor of Moscow, Sergei Sobyanin Moscow is one of the world s largest business and financial centres. It is a megalopolis on a global scale, which is carrying out a major infrastructure development programme and offers wide range of opportunities to investors from all over the world. Information and communication technology, banking, finance and insurance, construction and real estate, transport and trade, science, education and health care these are the main industries that are driving Moscow s rapid economic development. The industrial sector plays an important role which accounts for one sixth of the capital s gross regional product. In 2016, capital investments in Moscow amounted to USD 25.5 bn. The amount is impressive, but there are reserves for increase. Mayor of Moscow Sergei Sobyanin
1. Moscow today I Social and economic situation 1 Moscow today Moscow has one of the world s largest economies among cities Moscow is one of the Top-10 largest megalopolises by gross regional product (GRP) in the world Social and economic situation 1/5 of gross added value of all Russian regions Moscow s diversified post-industrial GRP structure is as follows: 35.4% 19.8% Trade sector Business services, including R&D 26.1% Other areas: Construction; Transport and communication; Social sphere; Public sector etc. 18.7% Industrial production One of the largest consumer markets in Europe The total population of the Moscow metropolitan area: 20 m people 14% of Russia s overall population 200 m people the point of entry to the Russian and CIS markets
1. Moscow today I Social and economic situation Over USD 151 bn in consumer spending annually 3rd place among European cities Moscow is the biggest market for Russia-made goods. 50 m m 2 of real estate built in 6 years 10% of the real estate fund updated, including about 19m m2 of housing 10% of all Russia s real estate is built in Moscow 14% consumption of industrial products manufactured in all regions of Russia approximately of all incoming foreign direct investments in Russia 50% 15% retail trade turnover in Russia USD 10 bn worth of public-private partnership contracts concluded: in 2013-2016, including: Stable growth in investments USD 25.5 bn fixed capital investments in 2016 concessions USD 1.1 bn life cycle contracts for supply and maintenance of Metro rolling stock and above ground urban transport USD 5.3 bn long-term contracts with an investment component USD 3.4 bn Growth in fixed capital investment of more than over 6 years 11,6% 50% of total fixed capital investment in Russia st place in «public-private partnership development in Russia» rating in 2016 and 2017 70% extra-budgetary investment
1. Moscow today I Social and economic situation International business, trade and investment centre A Top-10 global business hub over 60% of leading international companies have offices in Moscow. Proximity to key consumer markets in Russia, Eastern Europe, CIS, and Baltic states. Flights to European and Asian financial centres Moscow Russia Home to 90% of the headquarters of foreign banks and international financial organisations operating in the Russian market. Focal point for almost all of the nation s securities exchange. About 1.0 m legal entities, over 250 thousands of sole traders or (in total) 15% of the total number of companies registered in Russia. London 4 hours Frankfurt 3,5 hours Zurich 3,5 hours Beijing 7,5 hours Around 25% of companies in Moscow specialize in business and financial services. Dubai 5 hours New Delhi 6 hours Hong Kong 9 hours Favourable geographic location Stable position in international ratings Investment attractiveness of Moscow based on Financial Times fdi Markets: 1st place among Eastern European cities; 12th place among European cities; London (-2) Frankfurt (-1) Moscow New Delhi (+2,5) Beijing (+5) In the Top-25 of 130 cities worldwide. The core of the Moscow metropolitan area, strategic centre of the Eurasian Economic Union's Customs Union and free trade area of the Commonwealth of Independent States (CIS). Convenient time zone for working with European and Asian commercial and financial markets. In the Top-25 of the world s most economically powerful cities CITYLAB: 25 Most Economically Powerful Cities of the World. 10th place among 128 global cities Global Cities Outlook A.T. Kearney.
2. Why Moscow? I Competitive advantages for doing business in Moscow 2 Why Moscow? Competitive advantages for doing business in Moscow Quality of labour force 11 m people economically active population in Moscow 200education thousand people graduating professionals with diploma of higher annually A magnet for competitive and qualified staff from other regions of Russia and the CIS. High level of education: 50% of the employed population have a higher education degree. Average monthly salaries (2016 estimate for all categories of the employed): 1030 USD. High potential for science and R&D More than 20% of organizations performing R&D 35% of patents issued in Russia for utility models and inventions 30% 43 of research and academic staff in Russia th place among 500 cities around the world in the 2thinknow rating of innovative cities, up 149 positions from 2011
2. Why Moscow? I Competitive advantages for doing business in Moscow 22 % share of innovative products, work and services in Russia Extensive infrastructure for innovative manufacturing and R&D facilities: 30 technoparks and technopolises; Special economic zone Zelenograd; Innovative territorial clusters Troitsk and Zelenograd. Developed real estate market Moscow s commercial property pool: Spare capacity of public utility infrastructure 50% of energy supply capacity reserves 50% of heat supply capacity reserves 6.7 thousand MW spare capacity for new power consumers in Moscow 54% spare water supply and drainage capacity 75 thousand buildings 200 m sqm total floor area 16 17 m sqm % office spaces in Moscow, available including 3.9 mn sqm office spaces class A office spaces Advanced information and communication technologies Average price for class A office space rent (Results for Q3 2016) USD 420 per sqm per year 4G network covers over 99% of the city s territory over 30 thousand public Wi-Fi connection points Average price for rent of space in technoparks: USD 190 per sqm per year for office spaces USD 0.60 per Mbps аverage price of broadband Internet services 80% of households have broadband Internet with an average speed of 20 Mbps USD 112 per sqm per year for industrial site
2. Why Moscow? I Competitive advantages for doing business in Moscow Advanced transport infrastructure Price competitiveness 5 international airports: Sheremetyevo, Domodedovo, Vnukovo, Zhukovskiy and Ostafyevo business airport 76.5 m passengers in 2016 passenger turnover of the Moscow air hub The rouble s decline since late 2014 has led to substantial growth of Moscow s price competitiveness compared to other big cities. 17 3 federal highways leading out of the city river ports Business expenditures in EUR have dropped: 30% 60% for manufacturing companies and high-tech export-oriented companies for particular kinds of expenditures (wages, property rent) The Moscow rail hub includes 2 ring railways and 11 radial railways 2,700 km track length These price benefits over peer cities are expected to hold strong in the mid-term. Simple and transparent administrative procedures 26% 60% transit freight export and import products In recent years Moscow has significantly simplified the administrative procedures for setting up and conducting business. Establishing a company Property registration 3 steps, 3 working days. 1 procedure, 5 working days. USD 0.65 per litre petrol price Connection to electricity grids: 80 days and 0 visits for facilities with a capacity of 15 150 kw; 380 days and 3 visits for facilities with a capacity of 150 670 kw. In the Doing Business-2017 dating, Moscow has risen 84 positions compared to 2010 and is now in 40th place.
2. Why Moscow? I Competitive advantages for doing business in Moscow Support from the Moscow City Government Active investment policy creation of favorable conditions for attracting investment from different sources project support in the 'one-stop shop' format Stable fiscal policy Balanced and sustainable budget attracting projects from industry leaders and international companies and the development of public private partnerships 25.4 1,1 of USD bn % of GRP Moscow budget low level in 2016 state debt Investment oriented budget: USD 21.7bn value of the Targeted Investment Programme (TIP) 2017 2019 70 % TIP costs transport infrastructure development 25% investment expenses Over 3 years (2017-2019), Moscow is to build: Reasonable tariff policy Restrained tariff growth and restrictions on cross subsidizing. The increase in utility service tariffs for enterprises is 50% lower than inflation from 2011 to 2016. 368 km of new roads 200 км of new railway lines 47 metro stations Utility costs for businesses (as of September 2016): Electricity USD 0.07 per kw; Heat USD 23.5 per Gcal; Water supply (including drainage) USD 0.84 per cubic meter. In September 2016, the Moscow Central Ring was opened 54 km of lines 31 stops Annual passenger traffic 250 m passengers An average of 260 thousand journeys a day Integration with public transport (underground, ground transport) Transport coverage of Moscow s industrial areas
3. Where to invest? I Promising areas for investment 3 Where to invest? Promising areas for investment The Moscow City Government s key goal is to attract industry leaders and investors to the city s real economy. Moscow is interested in attracting investments to: Sectors and projects that focus on phasing out imports and meeting domestic demand in Russia and the Customs Union nations; Export-oriented high value added sectors and projects; Public-private partnership projects in transport and social infrastructure and the development of the New Moscow area. Moscow offers beneficial tax rates and support to sectoral investors, industrial developers as well as investment funds and companies that finance transport and social infrastructure development projects, including public-private partnerships.
3. Where to invest? I Promising areas for investment 3.1. For industrial investors The goal of the Moscow City Government is to attract investments into the real economy, construction and extensive renovation of existing industrial enterprises and innovative infrastructure facilities. New investment projects Beneficiaries: New projects with an investment amount of at least USD 12.9 m. Investment phase maximum 5 years. Priority sectors*: Support mechanisms: Projects are implemented under special investment contracts with the Moscow City Government. Support measures: Tax exemptions: Up to 25% reduction of the total tax burden, including: Profit tax payable to Moscow reduced by 26% (12.5% instead of 17%); Property tax reduced by 100%; Land use tax reduced by 99% (0.7% of the sum of calculated tax); Ground rent reduced by up to 99%. Pharmaceuticals and biotechnologies Electrical equipment Foods and beverages Medical equipment and tools Transport vehicles and car parts Construction materials Up to 60% reduction of tax per 1 sqm of property. Additional support measures: Guaranteed security from non-commercial risks; Potential allocation of land without tenders; Special terms for utility connections. Microelectronics and computer engineering Information technologies * Including but not limited to Research and development
3. Where to invest? I Promising areas for investment Guaranteed protection against non-commercial risks: Investment sites Guaranteed risks Nationalization and seizure of property; Termination of land title or other property rights due to the actions of the Moscow authorities; Unfavourable changes in Moscow legislation; Unlawful actions (lack of action) by Moscow officials. Impact of such circumstances for investor Investor is incapable to deliver the investment project; Investor incurs a major loss: increase in implementation period by more than 18 months and/or cost increase of over 20%. Land plots for industrial production Over 8,000 hectares of industrial zones Over 20 sites with total area of more than 60 hectares that are ready for production Out-of-court compensation from the budget of Moscow Long-term state orders in exchange for investment (offset contracts) * map of land plots location Benefits for investors: High demand for product supply - state procurements by Moscow for more than USD 8.6 bn per year Long-term guaranteed demand from the Moscow Government - contract validity of up to 10 years Prompt decisions on land issues - provision of a land plot without bidding Conditions for investors: Total investment in production of at least USD 17.2 bn Production and supply of goods of Russian origin Technoparks and technopolises Ready-to-use spaces and business infrastructure for R&D projects and innovative manufacturing: 30 technoparks and technopolises over residents m m 1,95 2 hectares 585 of building space of land plots 1.500 41.000 high-tech and high-paid jobs
3. Where to invest? I Promising areas for investment Industrial specialization: Information and telecommunication technologies; Microelectronics; Lighting solutions; Innovative materials, composites and coatings; Laser technologies; Biomedical technologies; Pharmaceuticals and medical tools, etc. All information about technoparks and technopolises is available at the portal investmoscow.info Special economic zone of technology and innovation type, Moscow Activities in the field of research and development, manufacturing of high-tech products. Special economic zone mode Without customs duty and VAT on imported foreign materials and equipment ha 174.5 ha 15.7 total area available for construction Free of charge connection to utilities Preferential terms of lease and possibility of land acquisition 0% Property tax Transport tax Land tax 12.5 14 % % Profit tax (instead of 20%) Contribution to social security funds (instead of 30%) * map of technoparks location Advantages of technoparks in Moscow: ready to use premises for the projects; reduced rental rates; availability of land plots for construction; preferential connection to utilities; access to shared centres (prototyping, certification, etc.). Administrative and business centre (16 thous. sq.m.): innovative business centre personnel training and further training centre technical university collective use centre (R&D-centre) customs terminal Innovative regional cluster Zelenograd: micro- and nano-electronics, electronic devices and equipment, IT.
3. Where to invest? I Promising areas for investment 3.2. For investment companies and funds Transport and social infrastructure Moscow has vast experience in public-private partnership projects. 14,5 m m 2 total urban development potential of transfer hubs over USD 17 bn planned investment in the development of transfer hubs Key areas of private investments: Construction of transfer hubs on new lines and at existing metro and city railway stations. Private investments in the development of social infrastructure childcare centres, schools, healthcare centres, and cultural heritage sites. Reduced rent of space for children s educational centres and healthcare centres within walking distance of city residents study and work places ( 1 RUB per 1 sq. m., Doctor nearby ). Projected construction of 271 96 main hubs transfer hubs 175 junction hubs Reduced rental cost of cultural heritage sites for reconstruction and preser vation projects ( 1 RUB per 1 sq. m. programme). Transfer hubs include service and commercial areas; Investors install all transfer hub property units and hand over the service areas to the city; Return of investments through the lease and sale of commercial space (retail property units, offices, etc.); The distribution right is competed for within the open auctions.
3. Where to invest? I Promising areas for investment Development of New Moscow The main development driver for Moscow today is the utilization of new territories. The area of the Russian capital grew by 148,000 hectares in 2012 (2.5 times) due to the integration of the Novomoskovsky and Troitsky administrative districts. Unique opportunities for investment projects in a variety of areas from new innovative industrial enterprises to transport and social infrastructure facilities. Support measures The Moscow City Government offers preferential terms for investors who implement their projects on the territory of New Moscow: 148 thousand ha were added to Moscow in 2012 One-stop shop administration principle; Tax benefits and reduced ground rent for priority investment projects; The active development of New Moscow s basic infrastructure based on national programmes; Consistent demand from city residents and public sector; Additional guarantees to investors and coverage of non-commercial risks. Territory of Moscow before 2012 Territory of New Moscow New Moscow has: Over a dozen major business and economic clusters Construction of 600 km of roads and 40 km of metro lines 1.5 m people expected population 1will by 2035 m new jobs be created
4 Who to contact? Information resources, development institutions and executive authorities 4. Who to contact? I Information resources, development institutions and executive authorities The Portal is avalible in 5 languages: English German Spanish Arabic Chinese Point of entry for a new project in Moscow; List of ongoing and planned investment projects. Multifunctional platform for investors who do or would like to start a business in Moscow: Up-to-date statistics and analytics; Information on how to set up and do business; Government support measures; Industrial and innovative infrastructure. Access to the united electronic market place of Moscow: Information about all the property units listed for auctions (lease, sale, etc.); Interactive map of property units listed for auctions; Auction documentation and auction calendar; Preview of property units listed for auctions. Prompt and personalized interaction with the Moscow City Government. Investor s personal account; Direct line.
4. Who to contact? I Information resources, development institutions and executive authorities Development institutions Executive authorities of Moscow The Moscow city has a number of effective institutions that engage with investors. Their mission is to coordinate investors interests with the city s development priorities and offer the business community profitable projects and transparent mechanisms of engagement with the city. Moscow City Government www.mos.ru Moscow City Investment Agency www.en.investmoscow.ru/agency The Moscow City Investment Agency is the authorized provider of investment projects support services based on the one-stop shop principle in the Moscow City. The Agency promotes investment opportunities, advantages and achievements of Moscow; creating greater investment appeal of the city s infrastructure and improvement of investment procedures; and project administration. The Agency seeks to introduce new forms of engagement with both domestic and foreign investors, builds effective cooperation among the public authorities, business and citizens. Department of Economic Policy and Development of Moscow www.depr.mos.ru Department of Science, Industrial Policy and Entrepreneurship of Moscow www.dnpp.mos.ru Urban Development and Construction Complex www.stroi.mos.ru Department of Transport and Road Infrastructure Development www.dt.mos.ru Moscow City Innovations Agency www.inno.msk.ru The mission of the Moscow City Innovations Agency is to draft and implement development programmes for the city s high-tech sectors. Department of Competition Policy of Moscow www.tender.mos.ru Department of City Property www.dgi.mos.ru Department of Foreign Economic Activity and International Relations www.dvms.mos.ru
5. A city for comfortable living I Urban environment 5 Moscow is a modern megalopolis that offers comfortable living conditions and is attractive for businesses. A city for comfortable Convenient transport infrastructure Unified, integrated city public transport network 14 lines and 203 Metro stations, 31 MCR stations living Urban environment Over 900 city ground transportation route 55,000 licensed taxis Advanced retail and food & beverage infrastructure over over 56,000 12,000 stationary retail enterprises catering enterprises Educational capital of Russia: Approximately 200 public and private higher education institutions (universities, institutes, academies, etc.) in Moscow. 6 of the TOP-10 Russian universities according to the QS (Quacquarelli Symonds) are located in Moscow Over 830,000 students Specialized programmes of international schools: 9 institutions for international Bachelor degrees; 8 institutions of DSD (Deutsches Sprachdiplom); 4 institutions for Spanish Bachelor degrees; 14 bilingual educational institutions.
5. A city for comfortable living I Urban environment World-class cultural and historic sites Active development of event tourism: World culture monuments and Russian national landmarks: Kremlin of Moscow; Bolshoi Theatre; Tretyakovskaya Gallery; Moscow Conservatory, etc. 8 thousand cultural heritage sites (10% restored over 6 years) 2018 FIFA World Cup International military music festival Spasskaya Tower Moscow International Festival Circle of Light over 1,500 libraries 450 museums and exhibition halls 250 theatres and concert organisations over 120 cinemas 17,5 m tourists visit Moscow every year 870 hotels and mini hotels City Day 869 Trip to Christmas Our Product With Moscow City Government support, Moscow Seasons festival events were held in 2016 Moscow Jam Moscow Spring 55 Golden Autumn Fish Week Back to School m participants Moscow Cinema Moscow Ice-cream An attractive tourist destination Information portal for Russian and foreign guests who come to Moscow is available in 6 languages. 37% rise in tourism since 2010 Official Moscow guide
5. A city for comfortable living I Urban environment Building a comfortable urban environment is an absolute priority for the Moscow City Government. Over the past six years a number of programmes designed to improve the city s infrastructure were implemented in Moscow: Transport infrastructure development >500 km +156 of new roads (12.5% increase in the length of main roads) overpasses and motorway junctions (25% increase in the number of engineering structures) Improved quality of public spaces 437 green areas created and landscaped 203 streets beautified over 200 new parks were created >6,000 buildings facades were renovated +21 stations were built (metro stations network is increased by 10%) Purchased: over 1,600 carriages, more than 7,000 buses >15.5 thousand facilities equipped with additional exterior lighting Social infrastructure development: +273 schools and kindergartens More than 100 health and sports facilities High level of security over video surveillance 130thousand cameras are functioning In terms of safety, Moscow is similar to European cities such as Stockholm, Barcelona, and Hamburg.