What Awaits Investors in the Far East After APEC | 2012 | APEC Russia 2012 | The Moscow Times
Far East Development Minister Viktor Ishayev has called for increased state spending on infrastructure, mainly railroads and highways, that could facilitate mining, logging and other local businesses.
"This is the only way for us to get serious development," he said at a meeting dedicated to the Far East, chaired by Prime Minister Dmitry Medvedev in July. "Where there are roads, there is life."
Former and present business leaders have pushed another agenda. The government must announce tax breaks and rebates for any new businesses in the Far East, said Pavel Maslovsky, a Federation Council senator who formerly worked as a mining director in the region.
"The solution is to create a special economic zone for the entire Far East," he said. "A special taxation regime could drive the economy forward."
One of the heaviest burdens, the profit tax, needs to disappear altogether for a while, he said.
"It should be a total zero," Maslovsky, who led the Petropavlovsk company, said in an interview. "Why be petty about this?"
Investors in a new Far Eastern enterprise could use breaks for the value-added and property taxes, he said. The social tax, charged on the payroll, could stay, but at a lower rate.
"As a former executive of a metallurgic company, I know that would give a strong push to the things there," Maslovsky said.
Given these conditions, private companies could bankroll construction of some of the required roads and power lines to remote natural-resource deposits, rather than wait for the state to make these basic investments, he said.
Maslovsky mentioned the need for a rail connection between Magadan and the country's railway system. There's also demand for greater capacity of the one-track Baikal-Amur Railway. Companies use the railway to transport coal, timber and other resources, mainly for export from the Pacific coastal ports.