Address of the Head of the Republic of Crimea on the Investment Climate in the Crimea
Dear colleagues, investors and entrepreneurs,
Addressing the Annual message on the investment climate has long been a good tradition in the Republic of Crimea.
This is not only a summing up of the work we have done in this area, but also an opportunity to identify the main priorities of investment policy, as well as to announce issues and planned measures to improve the investment climate in the Republic.
One of the strategic goals of the Republic of Crimea is to create an innovative and investment-attractive economy.
Today, summing up the results of 2018, we can say with confidence that the Republic of Crimea has something to be proud of and something to offer investors for cooperation.
So according to the results of the year 2017, positive trends were recorded in almost all major economic sectors in the Republic of Crimea. An expected overall economic growth is at the level of 10%, which is a record-breaking value over the last 10 years.
In 2017 an industrial production growth was 0.1%, including 11.9% in the mining industry, 10.3% in the processing industry, and 3.8% in the water supply and discharge, organization of waste collection and recycling, and pollution elimination activities.
The overall volume of shipped commodity goods of domestic production in 2017 was over RUB 128 billion, which exceeds the figures of 2016 by 16%.
The cost of works performed by the construction industry enterprises was RUB 47.4 billion, which is 5.7 times higher as compared to 2016. The volume of commissioned housing was 833.6 thousand sq.m., which are 2.9 greater against the previous year. Herewith, the construction of multiple-dwelling housing increased by more than 32%.
At last year end the level of recorded unemployment in the Republic was 0.6%, which is 1.6 lower than the national average in the Russian Federation (1%).
In 2017 the average monthly wage increased by 6.1% and was RUB 26,312, the per capita population income increased by 18.2% and amounted to RUB 21,000, given that the actual disposable population income increased by 9.6% – it is the highest indicator in the Russian Federation.
Financial performance of Crimean plants demonstrates their growing efficiency. According to the results of the year 2017, large and medium-sized enterprises in the Republic earned a profit of RUB 62.9 billion, which is 1.8 times higher than that of 2016, in particular, the profit of profit-making enterprises, the relative weight of which is 67.2%, was 1.7 times higher and amounted to RUB 68.1 billion.
Improvements in the Republic's economy fueled the growth of budget revenues. Tax and non-tax revenues increased by 47% and amounted to RUB 59.7 billion, including the personal income tax – by 12.3%, profit tax – 3.2 times increase, excise duty – 2 times increase, land tax – by 4.5%.
Tax revenues to the budget from health resort establishments grew up by 7.4% and exceeded RUB 2.5 billion.
Among the main results obtained in the area of investments, I would like to note the following.
In 2017 the amount of fixed capital investments into the Republic's economy was RUB 195.4 billion, which is 2.3 higher than last year.
Under the decision-making procedure regarding implementation of projects on the basis of government-owned property and land, a number of agreements were signed and implementation of 181 investment projects for the total amount of RUB 190.5 billion (involving creation of more 15 thousand jobs) started. 66 of these agreements for the amount over RUB 68 billion were signed in 2017.
A resort, recreation and tourism sector, agriculture, construction, industry and fuel and energy sectors are the most attractive for investors.
Crimea is attractive not only for the Russian capital.
At the moment 2,419 legal entities established by foreign entities and individuals from 56 countries are registered within the territory of the Republic of Crimea. Founders of these legal entities are mainly companies and individuals from Ukraine, Cyprus, the Republic of Belarus, Armenia, Turkey, Kazakhstan, Germany, the Virgin Islands, Great Britain, the Seychelles, Israel, the USA, etc.
RUB 190,5 billion
We will continue with modernization of laws and authorization procedures to create the environment most comfortable for investment attraction.
We adopted the Social and Economic Development Strategy of the Republic of Crimea for the Period up to 2030 and approved the Strategy Implementation Plan, which includes a separate section with actions for development of investment activity in the Republic of Crimea.
The Strategy sets priorities and a general thrust of long-run development, key lines of the investment policy and actions for business climate improvement, simplification of business environment, and lowering of the administrative barriers.
Implementation of this Strategy will allow the Republic of Crimea to become a part of the Russian economic space, accelerate the social and economic development, create new industries and upgrade the existing industries through application of innovative technologies, and increase the competitive advantage of the economy and living standards of the population.
Draft law "On Investment Policy and State Support of Investors in the Republic of Crimea and on Amending Certain Laws of the Republic of Crimea", which identifies measures of state support for investment entities, was developed and is under approval.
This draft law is aimed at creation of favorable conditions for implementation of high-priority and large-scale investment projects, attraction of investments, material and financial resources, up-to-date equipment and technology, managerial experience into the Crimean economy and social sector, creation of new jobs, as well as an increase in the taxable base and consolidated budget income.
The best practices of the National Investment Climate Ranking are being implemented, as well as Operational Standard for Executive Authorities of Constituent Entities of the Russian Federation Regarding Creation of Favorable Investment Climate in the Region.
Today 14 of 15 practices specified in the Investment Standard are deemed to be adopted in the Republic, namely:
- Annual address on the Investment Climate and Investment Policy;
- Presence of the Council for Investment Climate Improvement;
- Presence of a specialized organization involved in attraction of investments and work with investors;
- Creation of the specialized Investment Internet Portal;
- Availability of the unified rules for investment project support according to the one-stop principle;
- Adoption of the investment policy statement of the region;
- Adoption of an enactment regulating the procedure for assessment of the regulatory impact of regulatory legal acts on entrepreneurial activities that have been adopted or will be adopted;
- Participation of energy consumer spokesmen in the executive authority in the area of rate regulation;
- Availability of the direct channel for communication between investors and the authorities of the constituent entity of the Russian Federation for operational solution of problems and issues arising in the course of investment activity;
- Availability of the Region's Investment Strategy (under Social and Economic Development Strategy for the Period Up to 2030);
- Availability of the annual Plan for Creation of Investment and Infrastructure Facilities;
- Availability of the staff training system, to meet the investors' needs;
- Creation of available infrastructure for placement of investor's facilities;
- Availability of the system of training, advanced training and competency assessment for the staff of specialized public authorities of constituent entities of the Russian Federation and specialized organizations for attraction of investments and work with investors.
In the second half of 2018 we are planning to implement the remaining practice of the Investment Standard.
The Government of the Republic of Crimea carries out extensive work to bring the values of the National Ranking closer to the best values.
At the same time, we still need to exert every effort to lower administrative pressure on business and reduce the number of inspections, follow the basic principles of the reform in the control and supervisory activities, more specifically, place greater emphasis on preventive actions and use of the risk-oriented approach.
Consequently, we plan to devote the year 2018 to alteration of the regulation base – reducing the number of procedures, simplifying the business environment, in particular through bringing administrative rules for public service provision to a common scheme "five steps – once click - one visit" with the maximum term of processing – not more than 30 days.
In accordance with the instruction of the President of the Russian Federation dated December 5, 2016 and federal regulatory legal acts in the Republic of Crimea in 2017 we approved road maps for implementation of 12 target models for business environment simplification and improvement of investment appeal of the Republic of Crimea (Regulation of the Council of Ministers of the Republic of Crimea dated February 28, 2017 No. 201-r).
The specified models require concerted efforts of all public authorities, as well as resource providers to achieve target values.
Such concerted efforts not only allows for elaboration of comfortable business conditions but also for formation of the active business environment.
As of the end of the year 2017, implementation of the model of simplified business operation procedures and improvement of the investment appeal of the Republic of Crimea was 83%.
The Republic of Crimea has fully (100% completion) reached the target values set in the following target models:
- Quality of the investment portal of the constituent entity of the Russian Federation;
- Efficiency of feedback and direct channels of communication between investors and the Republic's authorities;
- Effective operation of the specialized organization involved in attraction of investments and work with investors;
- Hookup (technological connection) to the heat supply, water supply and water discharge networks;
- Hookup (technological connection) to gas distribution networks;
- Technological connection to electricity networks.
In other models achievement of target values is 70% on average.
Government Program of the Republic of Crimea "Economic Development and Innovation-Based Economy 2017–2020"
Under the Government Program of the Republic of Crimea "Economic Development and Innovation-Based Economy 2017–2020" a subprogram "Improvement of Investment Climate in the Republic of Crimea" is implemented; this subprogram identifies basic directions and estimated figures of the investment activity, as well as actions to create favorable investment climate.
These actions are aimed at fulfillment of the instructions of the President of the Russian Federation expressed during the St Petersburg Economic Forum, and implementation of these actions will allow the Republic of Crimea to reach higher positions in the National Investment Climate Ranking.
We are working on improvement of the investment activity management system: the project management system is being introduced
Project management is a universal system for planning, monitoring and recording the operating results of the public authorities and is an essential factor of management process development and optimization not only in the investment activity but also in other economic realms.
Today this system has become a part of public administration; it is being introduced at every level of the state power in the Russian Federation, and the Republic of Crimea has picked up this slack with good grace, as evidenced by a high level of the work accomplished in this direction.
Competition in professional management of project activities in the public sector "Project Olympus"
Thus, after considering the results of project management implementation, the Republic of Crimea was awarded with the third prize in the annual competition in professional management of project activities in the public sector "Project Olympus" conducted by the Analytical Center under the Government of Russian Federation.
At the moment the Automated Information System of Project Activity Management is deployed and successfully functions on the website pm.rk.gov.ru. The main regulatory framework, governing the project activity in the Republic of Crimea was developed and approved by the Decree of the Council of Ministers of Crimea dated July 25, 2018 No. 371 "On Approval of the Regulation on the System of Project Activity Management in Government Bodies of the Republic of Crimea and Local Government Agencies in Municipalities of the Republic of Crimea".
Project committees have been created and function in the executive authorities and municipalities.
The incentive system for participants of project activities was developed and approved by Decree of the Council of Ministers of the Republic of Crimea No. 654 dated December 5, 2017 "On Approval of the Regulation on Incentivization of Project Activity Participants in the Executive Government Bodies of the Republic of Crimea".
In 2017, the Project Committee of the Republic of Crimea and the Central Project Office were created and are operating; and functional and municipal project offices were established in the executive government bodies and municipalities. Training workshops on project management and work in the System were conducted for the staff of executive government bodies, municipalities and the senior management of the Council of Ministers of the Republic of Crimea.
I believe that implementation of project management should become a common practice and cover all government authorities of the Republic of Crimea and municipalities.
Council for Investment Climate Improvement of the Republic of Crimea
Investment activity development institutions are becoming increasingly active in the Republic of Crimea.
Sessions of the Council for Investment Climate Improvement in the Republic of Crimea have become almost weekly; 75 investment projects were considered at these sessions in 2017.
Every Thursday the Government of the Republic of Crimea holds an investor's open day.
For rapid resolution of problems and issues arising in the course of investment activity, a direct channel for communication of investors and the authorities of the Republic of Crimea functions on the Government's official portal, on the website of the Ministry of Economic Development, and the Investment Portal.
The Investment Portal (invest-in-crimea.ru) allows for remote access to the essential information on the region, documents submission and entry into an agreement for participation in the free economic zone, and it may be also used to search for investment sites and consider investment offers of the Republic of Crimea. The investment portal has been integrated to the project management system.
In 2017 a large-scale upgrading of the Investment Portal of the Republic of Crimea was carried out. Based on the best practices of Autonomous Non-profit Organization Agency for Strategic Initiatives, the presentation of investment sites and offers available on the website has been significantly improved and extended. The work to improve the user-friendliness of the portal was performed, including: introduction of a more convenient form of authorization in the personal account, password recovery system. Other changes include development of adaptable versions of the portal for mobile devices and tablet PCs, upgraded design and navigation system, extended main menu, addition of new layers to the investment map.
Crimea Development Corporation is one of development institutions ensuring enhancement of the business environment, targeted attraction of investments to high-priority economic sectors, development and implementation of projects on the region's area development.
The Corporation's activity is aimed at ensuring high rates of socio-economic development of the Republic of Crimea, attraction of investments and technologies into the Region's economy, arrangement of effective communication between investors and governmental authorities, assistance in implementation of socially important infrastructure projects in the territory of the Republic of Crimea including industrial parks.
Under the Federal Target Program "Social and Economic Development of the Republic of Crimea for the Period up to 2020", the Republic of Crimea works on creation of industrial parks.
The stage of front-end engineering and design is almost completed.
The work on attraction of residents to industrial parks is conducted concurrently (10 memorandums have been signed; the amount of potential investments is RUB 14.775 billion). Regulatory documents identifying the procedure and criteria for selection of industrial park residents were developed.
Backbone entrepreneurship support institutions: Crimean Guarantee Fund, Microfinance Fund, Crimean Entrepreneurship Support Fund
Small and medium-sized business is one of the major branches of the Crimean economy. The Republic's authorities support it through the system of entrepreneurship support institutions:
- Crimean Entrepreneurship Support Fund granted bank loan guarantees totaling to RUB 1.4 billion, which allowed for creation of 407 new jobs;
- 2. As of today the Crimean Entrepreneurship Microfinance Fund has granted microloans totaling RUB 501 million, which allowed for creation of 988 new jobs;
- 3. In 2017 Crimean Entrepreneurship Support Fund:
- held over 60 events aimed at entrepreneurship promotion, provision of educational and information–consulting support to business, attended by more than 3,200 people;
- held large forums: "Entrepreneurial Achievements of the Republic of Crimea 2.0", "Business Crimea", "Business Ground" attended by more than 1,500;
- provided over 300 consultations on various aspects of business operations.
bank loan guarantees
Programs on Small and Medium-Sized Business Development in the Republic of Crimea
In cooperation with the Federal Agency for Youth Affairs, the Fund actively promotes development of youth entrepreneurship. The primary objective of this line includes entrepreneurship promotion and involvement of young people into business, selection of active and ambitious young people to take part in program "You are an Entrepreneur", in the regional stage of Russian National Competition "Young Entrepreneurs of Russia", and other interregional, national and international events.
Today the number of small and medium-sized business entities registered in the Republic of Crimea is 87,207 (of which 22,735 – legal entities and 64,472 – individual entrepreneurs), which is by 6.5% higher than the previous year’s level.
With a view to supporting SMB, in 2017 subprogram "Development of Entrepreneurship and Innovative Activities in the Republic of Crimea" was adopted under the Government Program of the Republic of Crimea "Economic Development and Innovation-Based Economy 2017–2020".
Crimean Center for Development of Folk Arts and Crafts
In 2017 Autonomous Non-Profit Organization Crimean Center for Development of Folk Arts and Crafts was established. The Center implements activities to support entrepreneurship in the area of folk arts and crafts, provides assistance in advance training of handicraft masters, information and methodological support.
In 2017 the center provided support in the form of advanced training for 27 craftsmen-entrepreneurs, arranged participation in federal handicraft exhibitions and fairs for more than 30 people. This year the work in this area will continue.
In 2017 the Center for Cluster development carried its activities based on the Center for Investment and Regional Development.
To date, the Strategy for Agroindustrial Biotechnological Cluster has been approved in the Republic of Crimea. The Terms of Reference for development of the Strategies for creative, tourism, and shipbuilding clusters have been prepared.
In cooperation with Crimean Federal University, it is planned to establish engineering centers of biotechnologies, which will be the basis for a number of different specialized laboratories.
The free economic zone functions successfully, which includes acceptance of documents and conclusion of agreements for the operation environment in FEZ, arrangement of consultancy work with potential participants, as well as awareness-raising activities for active participants.
FEZ in the Republic of Crimea offers opportunities for implementation of projects in various sectors with application of a wide range of tax incentive measures.
In 2017 the number of signed agreements for the operation environment in FEZ was 544 with the committed capital investments amounted to over RUB 21.0 billion, over 16 thousand of jobs are planned for creation.
Over the period of FEZ operation, the amount of financing channeled to implementation of investment projects was over RUB 48 billion, which allowed for creation of approximately 25.9 thousand jobs.
signed agreements 544
capital investments RUB 21 billion
new jobs 25 900
A significant focus was on image formation and promotion of economic, investment and export potential of Crimea.
In 2017 the 3rd Yalta International Economic Forum was arranged with participation of All-Russian Public Organization “Business Russia” and Foundation "Yalta International Economic Forum"
The number of attendees of Yalta International Economic Forum 2017 exceeded 2,200 people from 46 world countries: Australia, Republic of Belarus, Bulgaria, Brazil, Great Britain, Hungary, Venezuela, Germany, Greece, Israel, Ireland, Italy, Kazakhstan, Cyprus, China, Republic of Korea, Latvia, Malaysia, Mongolia, New Zealand, Poland, USA, Turkey, Finland, Czech Republic, Switzerland, Estonia, Japan, etc. As compared to 2016 this number doubled.
The Forum has beaten its own record of the previous year and once again it has accepted the largest number of foreign visitors over the contemporary history of Crimea.
A permanent organization International Club of Crimea's Friends was established during Yalta International Economic Forum 2017. One of the Club's aims is international promotion of Crimea.
During Yalta International Economic Forum 2017 its participants signed over 30 agreements, contracts, arrangements and memorandums totaling RUB 100 billion, which is RUB 30 billion more than in 2016, of which RUB 64 billion accounts for contracts and over RUB 50 billion – for arrangements and memorandums.
The economic and investment potential of the Republic of Crimea was presented during events held in the territory of the Russian Federation and foreign countries.
The Republic of Crimea regularly takes part in the high-profile international events, including St Petersburg International Economic Forum, Russian Investment Forum (Sochi).
The economic and investment potential of the Republic of Crimea was presented during events held in the territory of the Russian Federation and foreign countries: International Festival in Italy (Merano, South Tyrol province); People's Republic of China; Republic of Bulgaria; Republic of Serbia; Republic of Belarus; Hanoi, Socialist Republic of Vietnam, etc.
We continue arrangement of business missions of foreign delegations to Crimea and conducting of bilateral meetings with the entrepreneurship, during which we provide them with up-to-date information on the economic situation in Crimea and potential for development of trade and economic cooperation.
The Export Strategy of the Republic of Crimea for the Period up to 2025 and the Action Plan for 2018–2019 to implement the strategy were approved.
In 2017 Crimea was included on the list of regions for implementation of the Operational Standard for Executive Authorities of Constituent Entities of the Russian Federation Regarding Creation of Favorable Conditions for Export Activities Development. Among the Standard implementation actions Autonomous Non-Profit Organization Southern Regional Export Support Center and Export Council under the Head of the Republic of Crimea were established.
Subprogram "Export Support and Incentive in the Republic of Crimea" was developed under Government Program of the Republic of Crimea "Economic Development and Innovation-Based Economy 2017–2020".
Through the work of the Government of the Republic of Crimea and our development institutions, planned investment policy our region is characterized by economic recovery and high investment activity.
Investments will remain the key priority in the economic policy of the region.
In 2018 our priority areas for investment attraction include:
- tourism and recreation complex;
- water and technologies for rational water use;
- high-tech manufacturing in machine building, shipbuilding, instrument making industry, and chemicals;
- agroindustrial sector;
- information telecommunication technologies and biotechnologies;
- rapid growth of small-sized business in trade, construction, agricultural sector, tourism, services;
- transport and logistics complex;
Further organizational measures of investment activity support will include the following:
- completion of the investor support infrastructure formation;
- launch of "one-stop" service in the resource-supplying organizations, regarding the land issues and issues of cadastral registration of land plots and real estate units;
- synchronization of mechanisms and procedures for investment activity support at the federal, regional and municipal levels;
- improvement of regulatory legal framework in the investment area;
- 100% fulfillment of indicators of simplified procedure target models and enhancement of investment appeal of the Republic of Crimea;
- optimization of control and supervision activities to improve efficiency of its implementation;
- extension of the network and list of services for entrepreneurs through multipurpose centers and the House of Entrepreneur;
- large-scale implementation of project management, including attainment of 100% coverage of municipalities and 50% coverage of rural settlements with the project activity system;
- automation of all processes of work with the investor;
- improvement of public services provision by government agencies of the Republic of Crimea through reduction in the term of services provision to 30 days and their provision according to the principle "five steps – once click - one visit".
Heads of municipalities of the Republic of Crimea have an important role in creation of investment climate.
Implementation of the set tasks allows for considerable improvement of the investment climate, creation of the most favorable conditions for business operations, development of investment infrastructure, and honorable representation of the investment potential of the Republic of Crimea in the world arena.
In conclusion, I would like to note that, despite the achieved results, we still have a lot of work to establish interaction and create a comfortable business environment.
I am sure that together we will be able to improve the business climate in the Republic of Crimea and create an effective system for attracting investment to the region's economy.
Thanks for attention!