SUBJECT COUNTRY:
RUSSIA
POST OF ORIGIN:
YEKATERINBURG
DATE OF REPORT:
991130
AUTHOR:
ALEKSANDR DEYANOV
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 1999. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.
1. Summary. The current IMI gives an overview of the investment climate and legislation in the city of Izhevsk, capital of the Udmurt Republic, located in the Western Urals in the heart of Russia. End summary.
2. Izhevsk is the capital of the Udmurt Republic located in the Western Urals in the heart of Russia. The city has a population of 650,000 and is an important economic and political center of Russia.
Izhevsk's economy is based on machine-building, metal processing, metallurgy, chemical industry, and wood processing. Izhevsk produces 56 percent of Udmurtia's total industrial output.
Izhevsk produces two thirds of Russia's gearboxes, one third of paper making machinery, and more than half of its hunting rifles and carbines. Izhevsk enterprises manufacture medical equipment, household appliances, satellite communication systems, electronics, automobiles and motorcycles.
The city has 159 joint ventures with companies from 40 countries. Joint ventures employ more than 1,600 people. The biggest foreign investors in Izhevsk's economy are Siemens and Motorola.
Well-developed industrial potential is complimented by the business infrastructure and qualified personnel.
Izhevsk is an important transportation node. It has an airport and is 40 miles from the river port Sarapul.
Izhevsk officials point out the following factors that add to investment attractiveness of the city:
£ Well-developed industrial potential, skilled labor, research & development institutes
£ Favorable geographic location, well-developed transport infrastructure
£ Sophisticated communications infrastructure
£ Easy access to gas pipelines and electric supply
£ Political stability in the region
£ Mineral resources (oil, timber, and peat)
£ Moderate climatic conditions favorable for agribusiness
£ Pro-business environment, tax regime that stimulates investment
£ Friendly attitude of Izhevsk officials towards foreign and domestic investors
£ Investment legislation
Izhevsk has several targeted municipal programs including a small business support program, an energy saving program in the public utilities sector, and an environment protection program.
The republic and city investment legislation contains several laws favoring investment activity. The law No. 509/1 of November 25,1997 guarantees investors' rights and envisages long-term (up to 50 year) land lease. On December 25,1998 the Izhevsk City Duma passed regulation No. 62, giving tax breaks to investors for the recoupement period for up to three years. Companies involved in investment projects in new technologies or new production are liberated from paying the profit tax, the property tax, the social infrastructure maintenance tax, and the land tax to the city budget. Leasing companies dealing with investment projects do not have to pay the property tax. Firms that are financing investment projects for over one year are exempt from the housing and social infrastructure maintenance tax. Companies that insure investment risks are exempt from paying the housing and social infrastructure maintenance tax. On January 26, 1999 Izhevsk City Duma passed regulation No. 71 on investment tax credit. According to this regulation, companies involved in research and development and innovative activity are given a 50 percent tax credit for a period of 1-3 years.
3. Contact information
Andrey A. Armyaninov
Deputy Head of Administration
Izhevsk Administration
276, Pushkinskaya Str.,
Izhevsk 426070
Udmurt Republic
Tel: (3412) 226-795
Fax: (3412) 228-494
E-mail: invest@mayor.udm.ru
The U.S. & Foreign Commercial Service Yekaterinburg is offering to U.S. companies that want to sell U.S. equipment in the Russian market its services aimed at generating export sales, including identifying distributors and arranging meetings with prospective buyers during business visits to Russia. For more information on FCS Yekaterinburg services or investment opportunities in Russia, U.S. exporters may visit the BISNIS site at: www.mac.doc.gov/BISNIS or contact:
Aleksandr Deyanov
Commercial Assistant
U.S. & Foreign Commercial Service Yekaterinburg
15 Gogolya Street
Yekaterinburg, 620000 Russia
Tel: 7-3432-56-47-36
Fax: 7-3432-56-45-15
E-Mail: Alexander.Deyanov@mail.doc.gov