FEDERAL LAW. NO. 116-FZ OF JULY 22, 2005. ON SPECIAL ECONOMIC ZONES IN THE RUSSIAN FEDERATION
The Special Economic Zones (SEZ) of the Russian Federation are a large-scale federal project aimed to bring in investments and advanced scientific, manufacturing, and management technologies.
The zones provide companies with a unique opportunity to use the full range of Russia’s investment opportunities while avoiding the typical concerns related to non-market business pressures and inefficient administration.
Investing in the Special Economic Zones is the best way to capitalise on Russia’s steady economic recovery (estimated 4% GDP growth in 2010)*, the growing consumer activity of one of the world’s biggest markets (Russia has a population of 141 million, and the entire FSU region has 281 million people), and the economy that has the third biggest gold and currency reserves ($476 Bn in 3Q2010).
Russia has a 94.1 million strong manpower and some influential research schools, many of which are concentrated in regions where the Special Economic Zones are located. Investors can employ highly skilled local personnel and have access to R&D in science, technology, and medicine.
Russia’s advantageous geographic position, developed transport infrastructure and integration with international transport corridors, most of which pass through the country, allows quick delivery of the special zones’ products to the domestic market, Europe, Middle East, Asia-Pacific, and North America.
Russia’s Challenges are Investors’ Opportunities
The challenges related to Russia’s quite obsolete industry and underdeveloped infrastructure can be seen as strategic opportunities by SEZ investors. Given the tax and customs privileges, localisation of technology-intensive products finds a ready market in Russia, which is tight for high-quality and affordable locally-produced industrial goods.
The Special Economic Zones’ unique advantage is that they remove the administrative barriers, protect investors from corruption, provide direct access to the benefits of Russian economy, and translate the challenges faced by Russia into drivers of commercial success. Such companies as Yokohama, Isuzu, Air Liquide, Bekaert, Rockwool, and Sollers appreciate the potential of the Russian special zones and run successful operations there.