New vistas for Chistopol
So as I mentioned in my last blog post, I wanted to get PPP Local off the ground in my adopted hometown of Chistopol. My first meeting with the local government occurred on April 16. I met with the following representatives:
Ildus Talgatovich Ahmetzianov - Head of the Chistopol Local Government
Alexander Tochinsky - Chistopol Local Government Official in charge of the Monogorod program
Radik Ramisovich Islyamov – the State Duma deputy from Chistopol
We talked for about 20 minutes, and during the first half of the meeting I outlined the main objectives of PPP Local and how its implementation would be beneficial for the town. I then outlined why we wanted to cooperate with the local government and how I envisaged the partnership. The project was well received by the local government and they outlined the goals of their government, which is keen to promote Chistopol abroad and attract foreign investment to the town. They went on to explain that Chistopol is involved in a federal program called Monogorod. In short, it is a federal program designed to encourage market diversification in "single-industry" towns (in Russian, “gorod” is a town). So if a town only relies on one type of industry/factory/or company, it can apply for the Monogorod program. If it is accepted into the program, the town received federal funding to create an area in the town with special tax benefits. The funding would also be used to provide facilities to the companies operating in the area.
I was then handed a cd-rom, Chistopol 2020, which describes the vision the local government has for the year the Monogorod program ends, when the results should be realized. The video is also available on YouTube at http://www.youtube.com/watch?v=13ixfC6eTeM
It’s a very ambitious vision, and if only part of it is achieved then it will be great for the town. Overall the local government was very receptive and welcoming.
After this meeting, Alexander Tochinsky – who has become our local liaison – had a follow-up meeting with me in his office where he went through the Monogorod program in more detail. The local government is in talks with entrepreneurs and businessmen in the town regarding the program, and he said that the businesses targeted for the program will be in a range of sectors including oil, gas and nanotechnology. He also said that any companies operating in the nanotechnology sector will have support from Russia’s giant technology firm Rusnano through the Monogorod program that is prepared to fund up to 50 percent of any projects that receive outside investment. When asked about the funding size and range, Alexander said anything up to 5-10 billion rubles (so $170-$350 million at the upper limit).
Some things to note: I spoke with various individuals before the meeting they outlined that there is generally a strict tender process for public projects and that these generally require the participation of a Russian company. These companies must have a license to apply for the local government tenders and they can receive investment from outside investors, but this heavily checked by the FSB. What I do know is that the federal government is keen to upgrade this regulation and there is a lot of rhetoric about making it easier for foreign companies to invest in governmental projects and strategic industries, but rhetoric is one thing and action another.
On May 18, we had another meeting with Alexander and discussed the next steps. First on the agenda was the Elabuga Special Economic Zone which is one of three such zones in Russia and has been in existence for around 10 years. The Monogorod program in Chistopol will be a scaled-down version of this, focusing on all kind of businesses, where as the Elabuga project has a mainly industrial focus. The Monogorod program in Chistopol is being overseen by the Tatarstan Republic government in Kazan. The current budget allocated to the Chistopol Monogorod is approximately 500 million rubles ($17.5 million). This has the potential to be doubled or even tripled to 1.5 billion rubles ($53 million) upon review from the regional and federal authorities.
Currently the foundations are being laid for a 300 square meter allotment and the funds have already been allocated to it – two-thirds of the funding is coming from the Monogorod budget and one-third from domestic investors. These are companies from Moscow and other regions who have an interest in allocating to the Monogorod tax incentivized zone. The building work for this will happen over the next three months.
By May 25, things had already progressed quite considerably. A new, updated version of our platform had been designed and we were in touch with Oleg Karsanov, the Tourism Minister of North Ossetia-Alania about that region joining the PPP Local platform. I spoke to Oleg, and he outlined that the region was very interested in encouraging FDI (as is the Russian government). He also said he would send me some investment information. I received the packet in the mail recently, and I was literally blown away by the detail – the presentation in the booklets, the visual interaction on the CD-ROM, as well as the heavily detailed description of investment opportunities available in the region. In short, I have not seen anything like the high quality of this presentation in a long while.
On May 27 and 28, the local government had a meeting about how to gather strategic contacts from around the world. They considered the types of projects they wanted to implement up to 2020 with a focus in the scientific and industrial sector.
In the coming months, Chistopol will start to implement its plans to engage the domestic and international business community. PPP Local will be a key driver in this process and the enthusiasm for the project has greatly exceeded our expectations. When I return, I will be making various presentations and laying the foundations for our project launch. Each step will be documented here - taking you with us on this fantastic journey.