The Saratov Oblast governmentThe Saratov Oblast government. . Russian FederationRussian Federation..

The Ministry of Investment Policy of Saratov OblastThe Ministry of Investment Policy of Saratov Oblast

Investment attractiveness of Investment attractiveness of Saratov OblastSaratov Oblast

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Saratov

Moscow

858 km

Povolzhskiy Federal District

Kazakhstan

Saratov Oblast – general information

• South-east of European part of Russia• Administrative center – Saratov city• Area of the Oblast – 101.2 thous. sq. km• Population of the Oblast ≈ 2600 thous. people• Population of Saratov city ≈ 850 thous. people

• Distance from Saratov to Moscow– 858 km• National boundary with Kazakhstan – 550 km• Borders with 7 oblasts of the Russian Federation (Samara, Penza, Volgograd, Ulyanovsk, Tambov, Orenburg, Voronezh)

• Location of Saratov city - at one of the largest navigable waterways – the Volga river• Southern temperate climate and advantageous fourth zone

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213.2

182.1

153.3129.9

247

0

25

50

75

100

125

150

175

200

225

250

2003 2004 2005 2006 2007

Main economic parameters of Saratov oblast – Year 2007

Gross Regional Product (billion rubles)

Industry index* – Year 2007(in % to correspondent previous period))

107.1%

Saratov Oblast

106.3%

Average index in Russia

Industry

Other activities

30.1%

15.4%

15.0%

7.6%

12.8%

19.1%

Agriculture

Transport and communication

Construction

Wholesale and retail trade

Structure of GRP – Year 2007:Structure of foreign-economic

activity - Year 2007

TOTAL foreign-economic activity: 1874,3 million USD

Export:1394.0

million USD

Import: 480.3

million USD

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Industrial sector

Main spheres of industrial sector of the Oblast:Main spheres of industrial sector of the Oblast: - oil & gas industry, oil processing, power generation, chemical production, construction & production of construction materials, machine & equipment construction, production of rubber & plastic goods, etc.Number of enterprises: Number of enterprises: -1969 large & middle-scale enterprises -3218 small enterprisesGrowth rates of production:Growth rates of production:

- electro-, electronic & optic equipment: 143.7%

- machines & equipment: 111.8%

Construction : Construction : - volume of works: 31.6 bln. rubles - put into operation ~ 1 million sq. meters of apartments

Competitive Competitive production:production:

rolled glass rubber items accumulator

batteries synthetic fiber wooden furniture bearings trolley-buses carriages tobacco products mineral fertilizers refrigerators &

freezers chemical fiber synthetic detergents wallpaper

Major foreign companies investing in the Oblast:Major foreign companies investing in the Oblast: TNK – BP Holding: JSC “Saratov oil refinery” BOSCH group of companies: JSC “Robert Bosch Saratov'' Henkel company: JSC “Henkel – Yug'' BAT company: JSC “BAT – Saratov Tobacco Factory" Holcim group of companies: JSC ''Volskcement''

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Agricultural sector

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Number of enterprises & farm households: Number of enterprises & farm households: - 8,000 + enterprises & farm households

Volume of agricultural production:Volume of agricultural production:- 49 billion rubles- 3rd place in the Volga Federal District

Growth of cattle head :Growth of cattle head :- sheep head: 113.0% - pig’s head: 100.1%- great cattle: 102.4%

Budgetary provisions for agriculture:Budgetary provisions for agriculture:- growth rate: 122.2%- financing of cattle breeding and plant cultivation grew by 1.5 times

Growth rates:Growth rates:- total agricultural production: 104.1 %

- milk production: 106.4%- meat production: 112.8%

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Investment activities

Volume of investments:Volume of investments:

- capital expenditures: 56.6 billion rubles; - growth rate: during the period 2005-2007 , the volume of investments grew almost by 2.5 timesInvestment RatingInvestment Rating ( according to data of leading rating agency ( according to data of leading rating agency ''Expert-RA'‘):''Expert-RA'‘): - 3B1 (lower potential / moderate risk) was established in regards to Saratov Oblast as of results of 2006-2007

Current investment projects with foreign capital:Current investment projects with foreign capital: Metro Cash and Carry (Germany) IKEA (Sweden) BOSCH group of companies (Germany) Holcim group of companies ( Switzerland) Ramenka (Turkey) BulgarConserv (Bulgaria) Baring Vostok Capital Partners (Great Britain)

Attractive Sectors of Economy for Attractive Sectors of Economy for investmentinvestment

power engineering construction construction materials industry chemical industry oil & gas extraction automobile construction biotechnology food industry agriculture tourism processing industries etc.

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Competitive advantages of Saratov Oblast

The Oblast has at its disposal a variety of competitive advantages The Oblast has at its disposal a variety of competitive advantages

in respect to the main factorsin respect to the main factors

of Business Doingof Business Doing::

Energy resourcesEnergy resources

Land resourcesLand resources

Mineral resources baseMineral resources base

Transport infrastructureTransport infrastructure

Labour forceLabour force

Economic & social situationEconomic & social situation

Political situationPolitical situation

Geographical locationGeographical location

Saratov Oblast

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Competitive advantage - energy security

Superfluous electric energy supplySuperfluous electric energy supply: - the volume of generated electricity is 41 billion kilowatt-hour - regional own electricity intake is less than 30 % of volume of output Fuel & energy complex enterprises:Fuel & energy complex enterprises: - Balakovo Nuclear Power plant - Saratov Hydroelectric Power station - Thermoelectric Power stations - Saratov oil refinery Safe fuel market:Safe fuel market: - considerable gas & oil deposits at the territory of the Oblast - regional own gas-extraction & oil exploration - total-lot gasification of inhabited localities and enterprises - crude oil processing & production of oil products at the Saratov oil refinery - two crude oil main lines (JSC “Transneft”) pass through the Oblast

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Competitive advantage - attractiveness of land resources

Availability of free lands for industrial use and construction :Availability of free lands for industrial use and construction :

- sites are with all the distribution & supply lines, power & heat capacities

Availability of free agricultural landsAvailability of free agricultural lands:

- total area of more than 877.9 thousand hectares

Low cost of the landLow cost of the land

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Solid minerals:Solid minerals:

- 564 mineral deposits more than 280 of them are accounted by State balance of reserves

- 420 occurrences - 340 zones - 53 prospective areas

Hydrocarbon deposits:Hydrocarbon deposits:

- 110 deposits, incl.: are accounted by State balance of reserves

- 53 developed - 36 in conservation - 21 in exploration

Oil - 618.3 mln. tones Dissolved gas - 221.1 bln. cubic meters Free gas – 1526.7 thous. cubic meters Condensate – 144.0 mln. tons Net oil shale – 9.1 bln. tons

Cement raw materials - 590.2 mln. tons Chalk - 159.5 mln. tons Construction sands – 231.6 mln. cubic meters Glass - making sands – 390 thous. cubic meters Expanded clays – 53.5 mln. tons Brick - tile clays – 143.4 mln. cubic meters Building stones – 415. 8 mln. cubic meters

Competitive advantage – reach mineral-resources base

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Brick - tile clays

Mineral resources base – solid minerals: brick - tile clays

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Mineral resources base – solid minerals: expanded clays

Expanded clays

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Mineral resources base – solid minerals: carbonate rock for lime production

Carbonate rock for lime production

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Mineral resources base – solid minerals: chalkstones & dolomite rocks

Chalk-stones & dolomite rocks

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Mineral resources base – solid minerals: sandrocks & siltstones

Sandrocks & siltstones

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Mineral resources base – solid minerals: construction sands

Construction sands

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Mineral resources base – solid minerals: gaizes

Gaizes

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Mineral resources base – solid minerals: mineral paints

Mineral paints

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Mineral resources base – hydrocarbon deposits

Oil & gas, shale oil, gas condensate

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Competitive advantage – unique transport infrastructure

Railroads:Railroads:- South-Eastern and Volga Area divisions of the Russian Railways- railway main lines connect the Oblast with Central Russia, Urals,

Siberia, Northern Caucasia and Central Asia Motor roads: Motor roads:

- total stretch of network in general use – 13. 7 thous. km- the density of hard coated motorways is 104 km for 1000 sq. meters

(average indicator in Russia - 31 km for 1000 sq. meters) River transport (on the Volga river):River transport (on the Volga river):

- river way connects the Oblast with Moscow, Western Urals, the Black Sea, the Caspian Sea, the White Sea, the Barents Sea, the Baltic Sea, the Mediterranean Sea Air traffic:Air traffic:

- JSC «Saratov airlines», state airline with regular airline service(airport of II class, international status)

Pipelines:Pipelines:- main lines of crude oil, oil products and gas transportation pass

Saratov Oblast from the east to the west «Transneft», «Blue stream», «Gazprom»

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Saratov Oblast – one of the most important transportation points of Russia

Motor roads

Water routes

Railway roads

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Competitive advantage – attractiveness of labour force

Low cost of labour force:Low cost of labour force:

- average salary is about 9,000 rubles per month, that is much less than in Moscow Oblast

Labour potential Labour potential

- economically active population includes over 1300 thousand people, that is ~ 50% of the total population of the Oblast

Availability of qualified labour resources, high scientific and technical potential:Availability of qualified labour resources, high scientific and technical potential:

- 6 institutes of the Russian Academy of Sciences

- 21 Research Studies Institutes

- 19 design institutes

- 14 Institutes of Higher Education, lots of technical & training colleges

High cultural, medical and educational potentialHigh cultural, medical and educational potential

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Competitive advantage – favorable socio-political, socio-economical situation

Full concord Full concord between people of different nationalities, races and creeds

Political stability in the Oblast :Political stability in the Oblast :- Governor is authorized for 5 years, total change of authorities in the

Oblast and in all municipal entities, as well as in many federal structures

Low criminality rateLow criminality rate

Inflation in the Region:Inflation in the Region:- 8.2 %, that is lower, than in average index in Russia

The expenses for ecological and nature protection measures:The expenses for ecological and nature protection measures:- are comparatively low

House making:House making:- put into operation 1 million sq. metres of apartments in 2007, that is on

26% + to 2006

Communication and telecommunication securityCommunication and telecommunication security

Well developed banking and insurance sectors of economics Well developed banking and insurance sectors of economics

- more than 60 banks and departments- more than 60 banks and departments

- more than 70 insurance companies- more than 70 insurance companies

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Most – favored - nation treatment for investors in Saratov Oblast is provided by:Most – favored - nation treatment for investors in Saratov Oblast is provided by: LLaws of Saratov Oblast:

- “On most - favoured-nation treatment for Investors in Saratov Oblast”

- “On Tax Rate on Organizations Profits with Regard to Investors Engaged in Investment Activity in Saratov Oblast”

- “On Transport Tax Levy in Saratov Oblast” - “On Levy of Wealth Tax on Organizations in Saratov Oblast”

Most-Favoured-Nation Treatment for Investors in Saratov Oblast

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The Oblast law The Oblast law «On Most-Favoured-Nation Treatment for Investors in Saratov Oblast» which «On Most-Favoured-Nation Treatment for Investors in Saratov Oblast» which come into force from January, 1, 2008 - provides the investor with:come into force from January, 1, 2008 - provides the investor with:

- tax preferences - budget credit and budget investments - implementation of management, information consulting, coordination of interactions between different levels of

governance and business environment - providing state guarantees of the Oblast - providing objects of pledge fund of the Oblast with the aim

of ensuring obligations by attracting investment resources for realization of investment projects on the area of the Oblast - using other activities, that do not contradict to federal and

regional laws

The Oblast law “On Most-Favoured-Nation Treatment for Investors in Saratov Oblast”

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The Saratov Oblast law “On most - favoured-nation treatment for Investors in Saratov Oblast”

The Ministry of investment policy of Saratov Oblast is authorized to make investment contract with investor.

Investment contractInvestment contract guaranteesguarantees: : conditions and order of providing information about realization of investment projectForms of interactions between investor and system of regional governance in the process of investment activity

Investor is given investment certificate after the conclusion of investment contract. .

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No transport tax regards to taxpayers, that follow next No transport tax regards to taxpayers, that follow next

requirements:requirements:

taxpayer must be anew created organization

taxpayer must realize investment project, that implies acquisition of transport, according to key directions of regional economy development

From the moment of creation of organization taxpayer must do capital investments in the key assets located at the territory of Saratov Oblast no less than 50 million rubles, and no less than 650 million rubles into construction

The Saratov Oblast law “On Transport Tax Levy in Saratov Oblast”

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In the aim of using the law the following kinds of economic In the aim of using the law the following kinds of economic

activity are key directions for the oblast economy activity are key directions for the oblast economy

developmentdevelopment:: agriculture, hunting and wooden economy manufacturing industries construction transport and communication health services and providing social goods industry and power, gas and water distribution mineral extraction

Period of releasing from transport taxPeriod of releasing from transport tax:

Five tax periods from the moment of the beginning industry capital investment when it was put in accountant balance of organization - taxpayer.

The Saratov Oblast law “On Transport Tax Levy in Saratov Oblast”

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Profits tax of organization that is taken in the oblast budget Profits tax of organization that is taken in the oblast budget

fixed in the rate of 13.5% for anew created investor fixed in the rate of 13.5% for anew created investor

organizationsorganizations::

implementation of investment project according to key directions of regional economy development

implement from the beginning of capital investments in the key assets located at the territory of Saratov Oblast no less than 50 million rubles, and no less than 650 million rubles into construction

The Saratov Oblast law “On Tax Rate on Organizations Profits with Regard to Investors Engaged in Investment Activity in Saratov Oblast”

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In the aim of using the law the following kinds of economic In the aim of using the law the following kinds of economic

activity are key directions for oblast economy activity are key directions for oblast economy

developmentdevelopment::

manufacturing industries construction transport and communication health services and providing social goods industry and power, gas and water distribution mineral extraction

Period of releasingPeriod of releasing::

Five tax periods from the moment of the beginning industry capital investment when it was put in accountant balance of organization - taxpayer.

The Saratov Oblast law “On Tax Rate on Organizations Profits with Regard to Investors Engaged in Investment Activity in Saratov Oblast”

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Taxpayer has a right to apply Wealth Tax in the rate of Taxpayer has a right to apply Wealth Tax in the rate of 0.1%,with implementation of the following conditions0.1%,with implementation of the following conditions::

to be organization-investor implementation of investment project according to key

directions of regional economy development implement from the beginning of capital investments in the

key assets located at the territory of Saratov Oblast no less than 50 million rubles, and no less than 650 million rubles into construction

Property have to correspond the following requirementsProperty have to correspond the following requirements:: to be created (acquired) by organization – investor after 1 January

2008 in the field of investment project implementation to enter into structure of tax payment property on the territory of

Saratov Oblast until the beginning of investment project implementation.

The Saratov Oblast law “On Levy of Wealth Tax on Organizations in

Saratov Oblast”

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In the aim of using the law the following kinds of economic In the aim of using the law the following kinds of economic activity are key directions for the oblast economy activity are key directions for the oblast economy developmentdevelopment::

agriculture, hunting and wooden economy manufacturing industries construction transport and communication health services and providing social goods industry and power, gas and water distribution mineral extraction

Period of releasing from the transport taxPeriod of releasing from the transport tax: Five tax periods from the moment of the beginning industry capital investment when it was put in accountant balance of organization - taxpayer.

The Saratov Oblast law “On Levy of Wealth Tax on Organizations in Saratov Oblast”

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Most-favored-nation treatment for investors in the Saratov Most-favored-nation treatment for investors in the Saratov

Oblast is provided by:Oblast is provided by:

State supportState support: :

- mechanism of efficient interaction with investor in implementation of the projects, that includes information consulting, ensure of interaction between regional, federal, municipal powers, establishments and organizations, business in the aim of investment project implementation

- Investment Counsil under the Governor of Saratov Oblast considers the investment projects planned to be implemented in the Oblast

The most-favored-nation treatment for investors in the Saratov OblastThe most-favored-nation treatment for investors in the Saratov Oblast

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Investment Council under the Governor of Saratov Oblast

Tasks of the Counsil:• assistance to creation of favorable economic, financial and organization conditions • assistance in implementation of important for regional economy investment projects • analysis of the governance activity in the questions of administrative barriers removal• elaboration of recommendations to the state and municipal governance

Governor of Saratov Oblast is the chairman of Investment Council, who leads it activity.

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“One – window” regime procedures of investment contract concluding process

signs

Investment contract

confers the serial numberMinistry for Investment Policy

of Saratov Oblast

Register of investment contracts

Investment contract

includes into

Investor Package of documents

1. Application on intentions to conclude investment contract2. Main parameters of investment project3. Copies of documents confirming the status of tax-payer at the territory of the Saratov Region 4. Copies of constitutive documents

Package of documents

sends to Ministry for Investment Policy of Saratov Oblast

Ministry for Investment Policy of Saratov Oblast

Investment certificate

delivers to Investor

certifies by the seal

Ministry for Investment Policy of Saratov Oblast

Investment certificate

sends a copy The rating authority wherethe investor is registered

Ministry for Investment Policy of Saratov Oblast

Investor’s application

draws up Draft of

investment contract

considers submits for approval The executive authority of the Region that

supervises the sphere of economy to which the investment project corresponds

Step 1

Step 2

Step 3

Step 4

Step 5

““One – window” regime procedures of investment contract concluding process :One – window” regime procedures of investment contract concluding process :