The regional investment standard was implemented in 70 constituent entities of the Russian Federation in 2023

After two years of work to create a unified investment environment in Russia, 70 regions managed to confirm the implementation of the investment standard, data from Business Russia showed. However, as First Deputy Prime Minister Andrei Belousov said, we are still talking about creating “forms” – investment declarations, investment reports, investment cards, their content and effectiveness differ markedly by region. Therefore, the authorities are looking for additional incentives for practical changes in the regions. However, regions interested in investment have no problems with motivation: governors are already competing for investors by training personnel for projects and manually solving their problems with joining networks.

The regional standard was implemented in 70 constituent entities of the Russian Federation in 2023, the head of Business Russia Alexey Repik said on Friday at the forum “Implementation of the regional investment standard” in Nizhny Novgorod. This means that in 70 regions an investment declaration, a set of investment rules, an investment card, an investment development agency and an investment committee have appeared. This entire infrastructure is aimed at increasing the attractiveness of territories for capital investments by increasing the transparency of work with investors and supporting investment projects throughout their entire life cycle. The implementation of the standard is confirmed by the beneficiaries of the changes – business associations (RSPP, Chamber of Commerce and Industry and Business Russia) – based on the results of a survey of entrepreneurs. Thus, to implement a standard, 90% of positive assessments are needed for each of its elements; with an assessment above 75%, the region needs to take into account the recommendations of the Ministry of Economy and Business; with an assessment below 75%, the standard is considered not to be implemented.

The implementation of the standard in pilot regions began in 2021, but work quickly spread to other territories. Only if the standard is implemented, regions can compensate from the federal budget up to two-thirds of the costs of investment tax deductions for companies. As First Deputy Prime Minister Andrei Belousov explained at the forum, since 2021, so far it has been possible to create only “forms” for unifying the investment environment in the regions; the content of the elements of the standard is noticeably different. While in some regions investment declarations have become a working tool, in others they are just “paper”. Therefore, the logic of the investment standard will change: regions will be required not just to implement it, but to have measurable results in the form of investments and jobs. Regional management teams are encouraged to constantly train for new tasks. Thus, the authorities want to make the process of working to change the investment climate permanent – this is required by changes in the business environment, including the departure of Western investors and the activation of Asian and Middle Eastern ones.

The formalism of a number of regions in transforming the investment environment is understandable: investors themselves are not always conscientious and abandon unfinished projects, and investments entail additional costs for the region. “The tax base will expand, I don’t know when, but expenses need to be made today: build roads, power grids,” explains Andrei Belousov. Construction often causes social discontent, and this is a political factor. However, for other regions, long-term effects in the form of investment and development are more important – and they do not require external incentives. Thus, in the Arkhangelsk region, all colleges and universities in the region with areas of specialist training were put on the investment map: the authorities are ready to expand educational programs for specific enterprise projects. Moscow has similar experience in training specialists for industry. In the Murmansk region there is an institute of investment plenipotentiaries who manually resolve investor problems.

According to the head of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, the presence of a pool of leading regions makes it possible to form Reginveststandard Pro. Those who are ready to implement the “advanced standard” can be offered additional incentives, for example, in the form of increased compensation to the regional budget for lost revenues from the federal budget for INV. One of the additional directions could be working with foreign investors from friendly jurisdictions, as well as with friendly investors from unfriendly countries. “It is useful for regions to have a methodology for working with this category of investors,” believes Alexander Shokhin.

Diana Galieva