Although the city of Moscow is the capital of the Moscow Oblast, the oblast and the city are two separate administrative entities with no hierarchical relationship (unlike in other regions with the exception of St. Petersburg). Thus, the statistics provided below for Moscow Oblast do not include numbers for the city of Moscow.

Moscow Oblast is divided into 39 districts (rayon) with local administration; 38 cities have independent status, which means they are subordinated directly to the Oblast Administration and not to the rayon where they are located. Rayon administrations can be key players in lobbying for investors and creating favorable conditions for project implementation. Since regions are less saturated with foreign investment than the capital, investors might be more able to attract special attention from the regional government. Good relationships with the local government could diminish administrative barriers as well.

Moscow Oblast has tremendous industrial potential. It specializes in machine building (represented mainly by electronics, instrument-manufacturing, and airspace), metal processing, and production of chemicals, construction materials, and textiles. Other industrial sectors, such as pharmaceuticals, printing and publishing, are also represented; the importance of the food-processing industry and energy sector in regional output is increasing. The region's agricultural output comprises 10% of the total Russia's agricultural production and consists mainly of meat, eggs, and dairy products. The output of the defense sector, known for its outstanding technologies and human resources with specialized skills and education, comprises 30% of gross regional output. Podmoskovie is a leading innovation center in Russia, with 20% of all scientific research facilities of the country located on its territory.

Despite overall industrial growth in the region, a few companies and certain industry sectors are experiencing difficulties. Besides financial difficulties, shortages of raw materials previously delivered from former-Soviet republics and increased prices have become a significant problem. For example, oblast textiles factories are no longer able to purchase cotton from Uzbekistan, or to afford expensive cotton from Turkey (which has been the leading supplier in the recent years). To gain access to lower-priced materials, the Moscow Oblast Government signed an agreement with the government of Uganda for utilizing 220,000 hectares of African land for growing cotton that will then be supplied directly to the Moscow Oblast enterprises. Similar agreements are being signed with other countries. Currently, in Ceylon there are two tea plantations where tea is grown for the Moscow Oblast, and two factories for initial tea-processing. The cash economy, while more prevalent in the oblast than in Russia as a whole, is incomplete, and barter transactions remain common.

TAX PRIVILEGES

To facilitate the development of those industry sectors that are currently in a vulnerable economic position, Moscow Oblast adopted a law "On Tax Privileges in Moscow Oblast" in June 1997. The law endorses tax privileges for Russian producers and foreign investors that are active in production business of the Moscow Oblast economy. Among others, regional tax privileges are applicable to the following sectors:

- Scientific organizations: the regional profits tax is decreased by 50%;
- Meat-processing plants: regional property and road fund taxes are decreased by 50%;
- Enterprises producing baby-food: exemption from taxes on profits received from actual baby food production;
- Companies producing and selling vaccines for polio: exemption from profits tax. The exemption is to equal the difference between the production cost and federal government subsidies;
- Textiles and light industry: property tax is reduced by 50%;
- Defense sector: property tax is reduced by 50%;
- Dairy (milk-processing) sector: exemption from profits tax; the road fund tax is decreased by 50%;
- Public catering organizations: property and road fund taxes are decreased by 50%;
- Leasing companies: property and road fund taxes are decreased by 50%.

TAX PRIVILEGES - INVESTMENT POLICY

Potential foreign investors are eligible for industry-specific tax breaks, and also for oblast tax privileges under Article 44 of the law "On Tax Privileges Granted in Moscow Oblast" if they invest $1 million in a project in Moscow Oblast. If an investment in the form of currency, machinery, equipment, or real estate is made into the industrial and agribusiness sectors, or into construction of industrial infrastructure within three years, the investor is entitled to profits, property, and road fund tax privileges. The regional property and road fund tax breaks are decreased by 50% for three years after the completion of the project. The profits tax exemptions are gradated. Thus, the profits tax is 10% during the 18 months after the project generates the first profit. Upon the expiration of these 18 months, the tax is stated to be 15% for a year. Special conditions are stipulated if the investment is carried out in parts within the three-year time frame. Projects with especially large value could be subject to a government decree granting even further privileges.

In May of 1999, the Governor of Moscow Oblast signed an amendment to the regional Law AOn Tax Privileges in Moscow Oblast effective January 1, 1999. The amendment grants tax exemptions to those investors that invest over $5 million into production of substances of genetically-engineered human insulin in Moscow Oblast. The investors are exempt from the regional taxes and taxes to the local road fund for two years starting from the date when the total amount of funds transferred to the account of the organization for production of genetically-engineered human insulin is equal to or exceeds $5 million.

REGIONAL LAW "ON GUARANTEES ON CARRYING OUT INVESTMENT ACTIVITIES IN MOSCOW OBLAST"

Moscow Oblast Government plays a strong role in creating a favorable investment climate. The latest step in creating the legal base for foreign investment was the Law "On Guarantees on Carrying out Investment Activities in Moscow Oblast" (published in the Moscow Oblast official press on March 16, 1999), which is to provide government guarantees by Moscow Oblast to Russian and foreign investors and protect their rights. The law guarantees legal protection of investment activities; compensation in case of nationalization or requisition of investments; protection from unlawful actions (or lack of actions) by Moscow Oblast government agencies; grandfather protection in case regional law is changed; and protection of property rights and income spending options. The regional government also guarantees on a case-by-case basis partial compensations to creditors if the debtor does not pay back the principal in the time period stipulated in the contract. The Law "On Guarantees on Carrying on Investment Activities in Moscow Oblast" also determines the conditions under which an investor may be applicable for investment tax credit that would allow the investor to reschedule its tax payments from one to five years by decreasing tax payments and making consequent credit payments.

IMPLEMENTED INVESTMENT PROJECTS

During the last six years, Podmoskovie has reportedly attracted $2 billion in foreign investment and established 510 joint projects with foreign entrepreneurs (62 were registered in 1998.) Although the crisis has impacted the 1998 level of foreign direct investment (bringing FDI down from the expected $1 billion to $735 million), the total volume of investment increased by 1.8% compared with 1997. The following districts attracted the greatest amount of investment: Solnechnogorsky ($136 million), Naro-Fominsky ($108.9 million), Zhukovky ($44 million). Other rayons that attracted significant investments in 1998 are Kashirsky, Klinsky, Leninsky, Odintsovsky, Stupinsky, and Domodedovsky. During the 1998, 40 projects with foreign participation were under construction in Podmoskovie. The projects were mainly in sectors such as food processing, beverage production, machine building, and textiles.

OPPORTUNITIES FOR FOREIGN INVESTORS

As the purchasing power of Russian consumers has dropped since mid-1998 and importers have become more risk-averse towards purchasing items that they are not sure they can sell, Russian imports decreased by 19.1% in 1998. Being lower in price and frequently of equal quality, some domestic products (especially foodstuffs) are now in demand. For example, domestic yogurts are preferred to imported ones as being more "natural", containing less preservatives, and of course, as cheaper alternatives.

Due to the ruble's depreciation, domestic producers have gained from 10% to 20% of market share. Despite this temporary windfall, domestic producers need investments to continue their growth. Because many of them have obsolete equipment and lack resources, yet have facilities equipped with the necessary infrastructure, investments in the local consumer-oriented industry could be a good opportunity for U.S. companies interested in entering or staying on the Russian market.

Most foreign investors in Moscow have focused on production of consumer goods (50% of total joint projects registered in the Moscow Oblast); wholesale and retail (10%); construction and building of industrial entities (10%); production of construction materials (5%); and other. The district overviews will detail possible opportunities for investment.

SMALL BUSINESS IN THE REGION

Many investment opportunities are offered by the small business sector, which accounts for over 30,000 enterprises in the oblast. Small business enterprises in the oblast generate approximately 12% of regional revenues. Despite the mobility of small enterprises, they encounter multiple problems such as taxation and bureaucracy.

The Small Business Association of Moscow Oblast, headed by a former entrepreneur and Regional Duma Deputy Andrey Tishkov, is a non-government organization whose mission is to promote the development of small business. The Association lobbies for the interests of small business enterprises, and maintains information and a list of investment projects in the oblast. It was also the initiator of a legislative amendment that would allow a small business enterprise to choose between paying regular taxes and paying one tax based on the single tax on imputed income (A federal law was passed requiring small businesses to pay a single tax on imputed income, however, it is activated at a regional level only if their Regional Dumas adopt the law on the regional level.) The Association could also be a good source of current information on investment projects in the region.

The Small Business Association of Moscow Oblast currently seeks a partner for joint creation of a permanent exhibition complex near Sheremetevo International Airport. This project is unique in that it will operate year-around and will serve as a meeting point between regional companies featured in the exhibition complex and interested parties visiting the complex. The Association is interested in discussing the terms with potential investors.

CONTACT INFORMATION:

Tishkov, Andrei Nickolaevich, President of the Small Business Association
Tel/Fax: (7-095) 925-3302; 924-3239

OVERVIEW OF MOSCOW OBLAST DISTRICTS

Moscow Oblast consists of 39 districts. For reporting purposes, the information on the districts will be divided into parts. The first part, included in this report, will feature the districts of Balashikha, Chekhov, Fryazino, Kashira, Kolomna, Odintsovo, Sergievo-Posad, Serpukhov, Stupino, Zheleznodorozhny, and Zhukovsky.

BALASHIKHA DISTRICT (BALASHIKHINSKY RAYON)

Balashikha district is located east of Moscow and is advantageously adjacent to the modern Moscow Ring Automobile Road (MKAD), which circles the city. It is also located along the three other highways and a railroad, to which railway spurs of various industrial enterprises lead. The nearest airport to the rayon is Bykovo (40 kilometers); Sheremetievo International Airport is 65 kilometers away.

Investment opportunities in Balashikha reflect the district's industrial specialization. Following are proposed investment projects that range from $100,000 to $11,000,000 in estimated costs and are touted by the District Administration:

-- production of cotton socks and stockings (Balashikha Cotton Yarn Factory);
-- development and production of "ratin" wool cloths using existing Italian equipment (Balashikha Textiles Factory);
-- construction of an enterprise for utilizing industrial and production polymeric waste; recycling and re-usage (Balashikha Experimental Chemical Factory);
-- technological refurbishment for production of concrete reinforcements (State Road Research and Construction Institute);
-- equipment for production of geo-synthetic materials to be used in road works (State Road Research and Construction Institute);
-- project development and launching production of constant speed drive-generators with nominal power up to 16 kWatt (Rubin Avionics Corporation);
-- project development and launching production of new types of carbon composite materials for breaks used in aviation (Rubin Avionics Corporation);
-- modernization of technological processes and launching industrial production of large-gabarit plate lamellar-ribbed for thermal exchanges apparatuses for cryogen machines (Cryogenmash).

Dutch company Akzo Nobel has established a joint venture AAkzo Nobel Dekor with a Roskhimneft and the Moscow City Government. In this joint venture, 60% of the venture capital belongs to the Dutch company, 30% to Roskhimneft, and 10% to the Moscow City government. A factory that is being constructed will produce 12,000 metric tons of exterior and interior paint.

CONTACT INFORMATION:

Kibalnik, Vladimir Ivanovich, Head of the District Administration
Zolotaryova, Larisa Leonidovna, Head of the Economics Department
Tel: (7-095) 529-2483; 529-2125; Fax: (7-095) 529-0206
Tel/Fax: (7-095) 529-3762

CHEKHOV (CHEKHOVSKY RAYON)

Chekhov is located south of Moscow. The district covers 914,000 square kilometers of land. The railway that passes through the district connects it with Kursk oblast to the southwest; two highways (to Tula and Simferopol) are heavily used for cargo transport.

There are 13 main industrial enterprises in the district that bring in over 40% of the local tax revenues. The leading companies are Chekhov Electronics Plant, Polygraphics Plant, Kryukovsky Ventilator Plant, Chekhovsky Regenerator Plant, and Chekhov Hydro Steel Plant. The construction sector is represented by companies Leko, Sedo, Chekhovstroy. Automobile sales and service companies occupy an important niche in the district's economy. Agribusiness is mainly oriented towards meat and milk processing. French company Danone made an investment in the local agribusiness by establishing a joint venture, Danone-Industry, for construction of a confectionery and milk-processing plant.

CONTACT INFORMATION:

Savin, Anatoly Nikolaevich, Head of the District
Krivoshapova, Natalia Viktorovna, Press Secretary
Tel: (7-272) 8-48-62; 2-45-10; Fax: (7-272) 6-25-22; 2-48-07

EGORIEVSK (EGORIEVSKY RAYON)

Egorievsky rayon is located 114 kilometers southeast of Moscow. The railroad passing through the district connects Moscow with Kazan and Nizhny Novgorod. Egorievsk occupies 172,900 hectares of land, 57% of which is covered with forests. Beautiful landscapes and environment, including river and forests, balance out 23 large industrial enterprises operating in the district.

The region specializes in production of cloth, shoes, clothing, dental equipment, furniture, wood, collapsible reinforced concrete, bread, dairy, and meat foodstuffs. Companies listed below make the most significant contribution to the district economy:

-- light industry and textiles: KhBK (cotton cloth, clothing), Lyubava (clothing), Egorievsk-Shoes, Adamantan (cotton cloth, clothing);
-- machine-building: Machine-Building Factory Komsomolets (metal-cutting and wood processing equipment);
-- petrochemical industry: Egorievsky Factory ATI (laps and breaks);
-- processing industry: Egorievsky Bakery, Egorievsky Beverages and Beer Factory,
Egorievsky Meat Processing Plant, Tsna (fish processing);
-- 12 farming enterprises (poultry, fish, potatoes, meat, dairy, vegetables)
-- farm equipment: Slekhoztechnika;
-- turf-excavating enterprise Ryazanovskoe.

The District Administration and Duma consider certain privileges for investment projects

on a case-by-case basis. Currently, there are three joint ventures with foreign participation in Egorievsk: Egorievsky Beverages and Beer Factory (Taro-Invest Ment, Great Britain), Adamant (Hungarian company Gedeon -Richter), and Lesnoe (Israeli Vlad-Guniz).

The district administration seeks partners for the following investment projects:

-- construction of an automated factory for producing high-protein mixed feed (Normiks);
-- overhauling equipment and increasing production of men suites and military suits and tunics (Lyubava-2);
-- establishing a joint venture for production of textile and consumer goods on vacant premises (Egorievsky Cotton Factory);
-- production of reinforced concrete and articles from metal and wood on the existing premises (Factory of Reinforced Concrete Articles);
-- production of constructions for road and bridge building (Rural Construction Factory and Factory of Reinforced Concrete Articles);
-- completion of renovations for pharmaceutical production jointly with the Hungarian company Gedeon-Richter (Adamanton).

Local officials offer vacant production facilities with all the necessary engineering infrastructure and also half-finished building are available for the creation of joint ventures.

CONTACT INFORMATION:

Lavrov, Mikhail Trofimovich, Head of the District Administration
Makhov, Igor Nickolaevich, First Deputy Head of the Administration
Zykov, Alexander Timofeevich, Deputy Head of the Economics Department
Tel: (7-240) 4-23-76; 4-10-47; Fax: (7-240) 4-22-67

FRYAZINO (FRYAZINSKY RAYON)

Fryazino (population 53,368) is located 25 kilometers northeast of Moscow. It is connected with Moscow by highway and has access to the railroad.

Fryazino is a center of science and electronics industry. 48 science and research enterprises operate in the rayon. Local enterprises are involved in research, development and production of microwave-diapason items, lasers, apparatii for linear radio connection, means for reflecting the information, equipment for local fiber-optic and coaxial connections, and medical equipment. 47 small business companies are active in the medical industry, communications, metal construction, measuring technology, furniture manufacturing, and production of canned fish and confectionery goods.

There are a number of joint ventures in the district. The Russian-American joint venture Istok Audio International was established in 1994 as part of a defense conversion plan.

Istok Audio specializes in medical and social rehabilitation of hearing-impaired people in Russia. Utilizing vacant production facilities in Fryazino, Indian companies Intercontinental Business Development and Ellicing Enterprise Limited established a joint venture producing confectionery goods. Italian company Merloni has signed a contract with Fryazino Experimental Factory for manufacturing of gas stoves and washing machines. Domestic companies, usually more limited in capital and thus more investment-averse, are also investing into the district. Tea company May is constructing a large tea-processing factory. The Russian company Allegro is to manufacture furniture on the vacant facilities of a science and research institute.

CONTACT INFORMATION:

Savchenko, Vladimir Petrovich, Head of City Administration
Gotnik, Lydia Nikolaevna, Deputy Head of Administration Economics Department
Rovensky, Georgy Vasilievich, Specialist with the Economics Department
Tel: (7-095) 526-9060; 9195; 9293; Fax: (7-256) 4-36-48

KASHIRA (KASHIRSKY RAYON)

Kashirksy Rayon is located 118 kilometers south of Moscow along the Oka River. Several federal highways cross Kashira connecting it with Southern oblasts, the Caucasus, and the NIS countries. Two train stations are located in the district; Domodedovo international airport is 65 kilometers away. Two cargo carriers operate in Kashira: Kashiraavtotrans, working closely with candy-maker Mars, and German Robert Kukla. The Kashira district occupies 628,500 square kilometers of land of which 400,300 sq. km are used in agriculture; there are 74,000 people living in the district.

Both agribusiness and industry are well-represented in the district. Local agribusiness enterprises specialize mainly in vegetables, especially potatoes; in poultry and animal breeding; and food processing. The leading industrial sectors are energy, casting production, food industry, furniture, and production of construction materials utilizing minerals available in the district. They industry is represented by GRES-4, the largest generating electric station in Moscow Oblast; Kashirsky Foundry Tsentrolit; Factory of Metal Constructions; Gofron, one of the leading manufactures of corrugated cardboard, renovated with partial EBRD credit); and Makkon. The production of most enterprises (with the exception of furniture) is delivered to Moscow for sale. Thus, you can see in Moscow stores frozen mushrooms grown and packaged in the district.

There are two Polish and Czech joint ventures in Kashira district. In 1998, Frito-Lay Russia began construction of factory for production of potato chips and corn flakes. Although after the 1998 financial crisis the realization of their project has slowed down, the company maintain plans to resume it in the near future (currently, the facilities are used as a warehouse for imported products).

In 1997, the local administration began cooperation with the Dutch company Petroplus -Engineering. Local company Bogatischevskaya Poultry Farm signed a contract with the Dutch company for $7 million worth of potato and vegetable-processing equipment and received credit from the Dutch ING Bank for this amount. This credit was guaranteed by Kashira regional government. Investors are entitled to local tax breaks during the construction period.

On the district's wish-list for potential investments are:

-- production of pork meat;
-- milk processing;
-- ice-cream production;
-- construction of compost production factories;
-- production of mineral water and juices;
-- reconstruction and development of poultry production;
-- production of canned meat and meat processing;
-- construction of a brewery
-- production of ethyl alcohol, alcohol and utilization of production byproducts (please keep in mind that on March 31, 1999, a law went into effect suspending the import of ethyl alcohol into Russia until 2002);
-- construction of a factory for processing byproducts of GRES into construction materials;
-- launching production of special electrodes (Kashirsky Factory of Metal Constructions);
-- technical overhaul of aluminum and iron foundries (Tsentrolit);
-- technical overhaul of a brick and tile factory (Keramik).

CONTACT INFORMATION:

Kovalev, Oleg Ivanovich, Head of the District Administration
Titov, Alexander Vasilievich, Deputy Head of the District Administration
Strelnikova, Lyudmila Georgievna, Head, Foreign Relations Dept, District Administration
Tel: (7-269) 28-411; 28-997; Fax: (7-269) 31-162

KOLOMNA (KOLOMENSKY RAYON)

Kolomensky Rayon is located 110 kilometers southeast of Moscow and covers 1,553 square kilometers of land. The district is well-connected to the capital; two airports (Domodedovo International Airport, and Bykovo) are within 80 kilometers away. River transport is used for shipping cargo. Agribusiness and construction materials are the leading sector of the Kolomna economy.

The agribusiness enterprises specialize in potato and vegetable planting. According to the Head of the District, fertile land, existing premises, closeness of the Moscow consumer market make potato and vegetable planting as well as the food processing sector especially attractive to foreign investors. Thus, Russian-Dutch joint venture Oka-93 specializes in growing potatoes. Oka-93 works with 17 farms and has also set up a service center for their machinery. A French company jointly with a Kolomna enterprise launched experimental planting of peas. Among Kolomna agribusiness enterprises are Leninskoe (potatoes), Nepetsino (fruit orchards and berries), Kolomnamolprom (dairy), Kolomensky Meat Processing Plant, Osenka Fish Farm, and other companies.

Industrial potential in the district is represented by: Kolomzavod (one of the leading manufacturers of diesel locomotives); Klomnatechmash (leather ware, textiles, and equipment for manufacturing these items); and the Science and Research Institute of Irrigation Systems and Water Supplies for Agribusiness (hydro-technical equipment, irrigation systems). Abundant mineral resources sustain production of construction materials by such companies as Gololobovsky Brick Plant, Karasaevsky Ceramics Plant (construction ceramics), Stroitel (windows and door sets), Peskovsky Plant of Construction Materials, and Avtodor. Local companies are interested in joint production; many need upgraded equipment for increasing production volume and product assortment.

CONTACT INFORMATION:Gornostaev, Evgeny Petrovich, Head of the District
Keshabyants, Georgiy Iosifovich, Head of the Foreign Economic Relations
Tel/Fax: (7-261) 4-67-65; 2-58-69; Fax: (7-261) 2-21-06
E-mail: akr@kolomna.ru

NARO-FOMINSK (NARO-FOMINSKY RAYON)

Naro-Fominsk is one of the largest districts of Moscow Oblast. Its northern boarder is 30 kilometers southwest of the capital. Naro-Fominsk is strategically situated between two federal highways connecting Moscow with Minsk, Belarus, and Kiev, Ukraine. The largest railroad hub is located in the district, and seven customs terminals and warehouses are also to the district's advantage.

Agribusiness and industry are both well-developed in the district. The agribusiness sector is represented by such companies as Elinar (modernized poultry farm), Ptichnoe (poultry), Tolstopaltsevo (potato planting and grain production), Arkhangelskoe (animal breeding), Kuznetsovsky Kombinat (animal breeding, meat and milk processing), Veselevsky (cereals growing), and others. Farming land and land utilized under agribusiness comprises 38,638 hectares. Most local farm output is delivered to Moscow City.

Industry is represented by the machine-building sector, light industry, wood processing, construction and manufacturing of construction materials. Companies like Elinar (electric isolating materials, polymeric wrap), Narfomshelk (textiles), Shiknar (light industry), Startor (machine building, compressor spare parts for aviation industry), Naro-Fominsky Khladokombinat (services; refrigerated wharehousing), Tekhnosnastka and Experimental Factory of Heat-Isolating Materials (construction materials) operate in the district.

Clean environment (78% of the district land is covered by forests), low crime level, infrastructure, vacant premises equipped with the necessary utility connections, strategic location together with privileges granted to investors contribute to the investment attractiveness of the district. Thus in 1998, Swiss company PLM invested $140 million into construction of aluminum bottle-making plant PBKM-Naro-Fominsk. Domestically-made aluminum cans are in demand among bottling companies operating in Russia (such as Pepsi and Coca-Cola). PBKM-Naro-Fominsk has become the largest foreign investment project in the Moscow Oblast. Other successful investment projects in Naro-Fominsk include Sov-FranceGeo, a Russian-French geophysics joint venture; a Russian-American venture for breeding broilers; a Russian-Canadian joint venture for production of house constructions in compliance with Canadian technologies; German Veka-Rus company for production of profiles from aluminum and plastic; and construction of a plant by a joint Dutch and Greek company Algida for production of ice-cream and frozen fruits.

CONTACT INFORMATION:

Kramkov, Vladimir Ivanovich, Head of the District
Krikunov, Aleksey Mikhaylovich, Deputy Head for Foreign Economics Affaires
Tel: (7-234) 3-62-91, 5-18-23, 3-43-16; Fax: (7-234) 3-51-54

ODINTSOVO (ODINTSOVSKY RAYON)

Odintsovky Rayon is adjacent to the city of Moscow on the west and occupies 1,300 square kilometers of land. A federal highway connects Odintsovo with Mozzhaysk Odintsovo is located in the forest zone of the Moscow Oblast, making tourism and recreation activities among the district's priorities for development.

Poultry, dairy, vegetable planting are well developed in the district. Industrial enterprises produce construction materials such as fire-proof brick, linoleum, paints and polishes; metal constructions; and furniture. Recently, two companies assembling buses and manufacturing prefabricated houses began operations. Currently, 22 companies with foreign capital (mostly European) operate in the rayon.

The local administration is compiling a list of its priority investment projects. The list will include projects in tourism development, which is one of the targets of the Regional Development Program for the years 1998-2005.

CONTACT INFORMATION:

Gladyshev, Alexander Georgievich, Head of the District
Karabanova, Nadezhda Semyonovna, Deputy Head of Economics
Tel: (7-095) 593-0405; Fax: (7-095) 596-1417

SERPUKHOV (SERPUKHOV DISTRICT)

Serpukhov is one of the largest industrial cities in Moscow Oblast. The district accommodates many science and research facilities (mainly biology). Serpukhov is located South of Moscow along the Oka River and boarders the regions of Tula and Kaluga.

Machine building, textiles, light industry, food processing, wood and metal processing, and chemical sectors are developed in the district. The local enterprises produce Oka automobiles, gas filling station equipment, electric appliances, leather, cotton and wool cloths, chemical fibers, and furniture. There are plans to build an insulin plant on the premises of a biological center in Obolensk. Moscow Oblast Duma has passed a law that grants local tax breaks to manufacturers if their investment into the plant exceeds

$5 million. (At this point, all the insulin is imported, and Moscow Oblast spends over $3 million annually on the insulin imports for Podmoskovie citizens).

CONTACT INFORMATION:

Adushev, Nikolay Alekseevich, Head of the City
Mulyavko, Petr Arsentievich, Head of the Committee on Industry and Foreign Affairs
Tel: (7-27) 75-10-38; Fax: (7-27) 75-91-6

STUPINO (STUPINSKY RAYON)

Stupinsky rayon is located south of Moscow and covers 169,000 hectares of land. 35% of the land is covered by forests, and 44.6% is used in agriculture. There are 113,000 people living in the district of which 59% live in the city of Stupino itself.

There are 22 large industrial enterprises on the territory of Stupino, involved in:

-- non-ferrous metallurgy: SMK company produces aluminum and titanium rolled metal; alloys, aluminum dishes corrugated metal sheets, automobile disks;

-- machine building: SMPP company is involved in mechanic processing; metallurgy; production of goods from rubber, plastic and composites; and aviation systems. Aerosila develops, produces, and repairs aviation technologies, propellers, etc. Mikhnevsky RMZ manufactures construction and road construction machines;

-- cardboard and paper industry: Stupeks produces cardboard for packaging;
-- chemical: Stupinsky Factory of Glass Plastics produces glass fiber, glass and plastic fiber. Zhilevsky Plastics Plant manufactures thermo-reactive polymeric materials, polyether resin, and cremnium organic materials. Khimzavod produces washing detergents and other household chemicals;
-- confectionery: U.S. company Mars has a wholly-owned factory that produces candy bars and animal feed;
-- meat processing: Stupinsky Meat Processing Plant;
-- dairy: Milk Processing Plant produces dairy products and baby food. Campina, a Dutch firm, processes milk and produces yogurt and is also involved in restructuring of local dairy farms;
-- construction materials: companies producing brick, reinforced concrete, etc.
-- Furniture Plant makes home and office furniture;
-- Mikhnevsky Electric Plant manufactures cable muffs;
-- Sewing Factory makes children's clothes;
-- Dutch logistics company ETL also operates in Stupino.

The local administration is promoting the following investment projects:

-- modernization of profile-pressing, pipe, and rolled production at the SMK company as well as renovation of its consumer goods production facilities;
-- modernization of titanium bar production (Stypinskaya Titanic Company);
-- launching production of construction machinery at CMPP;
-- starting production of foam polyurethane at Aerosila premises;
-- overhaul of the cardboard-making machinery for production of corrugated cardboard at Stupeks;
-- overhaul of an oven for fiber-plastic production (SZS company);
-- completing construction of a meat-processing plant APK Stupinsky;
-- modernization of baking ovens at Karavay Bakery;
-- overhaul of concrete production facilities at the ZYAB company;
-- acquiring technologies and equipment for production of household chemicals at the Chemical Plant;
-- further complex development of farms and milk production in the district (Campina will be the main customer.)

Investors are granted local tax privileges if the investment is USD 10 million or more. The investor is exempted from paying 50% of the profits tax to the local budget and from paying local property and land taxes for up to three years.

CONTACT INFORMATION:

Chelpan, Pavel Ivanovich, Head of the District
Palamarchuk, Ivan Ivanovich, deputy Head of the District
Tel: (7-264) 4-21-10; (7-095) 546-7587; Fax: (7-264) 2-29-22

THE CITY OF ZHELEZNODOROZHNY

Zheleznodorozhny is a city with independent status, which means it directly reports oblast authorities rather than to any district administration. Zheleznodorozhny is located 11 kilometers east of Moscow and is well-connected with Moscow and Nizhny Novgorod via highway and railroad.

Local industry includes production of building materials (decorative tiles and facade bricks, ceramic tiles, window and door blocks, saw-timber, ceramics for welding metals); textiles and clothing industry; food processing industry; and furniture manufacturing industry;

The city has three science research facilities and over 400 wholesale companies. In 1998, nine companies with foreign capital were registered in Zheleznodorozhny. One investment project promoted by the local administration features Mostermosteklo, a local glass manufacturing factory. The project, with an estimated cost of $13,000,000, envisions installation of new glass foundry line for production of rock wool.

CONTACT INFORMATION:

Kurganov, Gennady Andreevich, Head of City Administration
Trushina, Vera Nickolaevna, Deputy Head of the City Administration
Tel: (7-095) 522-7347; 522-93-25; Fax: (7-095) 522-4080

ZHUKOVSKY

The city of Zhukovsky is located southeast of Moscow near Bykovo airport. The name Zhukovsky is closely associated with Russian aviation industry, which is the main industry in the city. Other sectors include machine building, wood processing, and food processing. These sectors are represented by major companies such as the Zhukovsky Central Air-hydrodynamic Institute, the Gromov Test Flight Institute, the Myasischev Experimental Machine-Building Factory, the Agat Science Research Institute, the Science and Research Institute of Aviation Equipment, the Science and Research Institute of Apparatus-Building, and the Zhukovsky Machine-Building Factory.

In 1998, Zhukovsky attracted $44 million of foreign investment. A number of investment projects have been implemented in Zhukovsky. On the facilities of the Myasischev Experimental Machine-Building Factory joint ventures produces business-class airplanes for a regional airline (joint venture with Czech company Valter); prepared a project of a passenger airplane for 9-14 seats (joint venture with the Indian company NAL); and developed a project of employing a Geophysics, high-altitude airplane for exploration of upper stratums of atmosphere (European Community). Gromov Test-Flight Institute jointly with a French Company established a centrifuge research center. Ice-cream factory Nestle-Zhukovskoe Morozhenoe produces ice cream that is very popular with Muscovites.

Zhukovsky is also known as the location of the biannual Moscow International Air and Space show (MAKS). The next show will take place in August of 1999.

CONTACT INFORMATION:

Petrikovich, Leonid Fedorovich, Head of the City
Evseev, Dmitriy Dmitrievich, Deputy Mayor for Economics and Entrepreneurship
Tel: (7-095) 556-8270; 556-9854
Fax: (7-095) 556-6981
E-mail: jukodir@juko.obladm.msk.su

CONTACT INFORMATION FOR MOSCOW OBLAST:

Tyazhlov, Anatoly Stepanovich, Governor of Moscow Oblast
Staraya Ploschad, 6 Moscow 103070 Russia
Fax: (7-095) 928-9812

Svistunov, Nikolay Ivanovich
Minister of Moscow Oblast Governor for Foreign Economic Relations
Staraya Ploschad, 6 Moscow 103070 Russia
Tel: (7-095) 206-6591; Fax: (7-095) 206-6415

Bilyaletdinov, Gazis Ibragimovich
Administration of Foreign Economic Relations of Moscow Oblast Government
Staraya Ploschad, 6 Moscow 103070 Russia
Tel: (7-095) 925-3486; Fax: (7-095) 928-9812