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Economic development of the Republic of Karelia in 2007

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  Economic Policy

    Investment

  Industrial Policy

  Services

  Natural Resources
  and Ecology


  Cooperation

   Results of 2007

Economic Policy

Economical policy of the Government of the Republic of Karelia is defined by the Concept of Social and Economic Development of the Republic of Karelia for the period through to 2012 and the Program of Economic and Social Development of the Republic of Karelia for the period through to 2010.

The basic priority directions of development of the republic, stipulated by the Program in the medium-term prospect, are the following:

  • development of industry, first of all, the leading sectors of economy - timber processing and mining complexes, intended for profound timber processing and effective utilization of natural resources;
  • support of intensive agricultural productions, also within the scope of the national project Agricultural Sector Development, as well as breeding and processing of fish and sea resources;
  • development of tourism;
  • further perfection of transport and customs infrastructure;
  • increasing volumes of construction, including housing within the scope of Affordable and Comfortable Housing for Citizens of Russia national project;
  • development of small business;
  • creation of innovative potential

For implementation of priority directions of economic and social development of the republic there has been prepared the Plan of Actions of the Government of the Republic of Karelia for 2007.

All the actions stipulated by the plan have been performed. Actions on maintenance of steady balanced growth of economy, strengthening of economic basis of local self-government, solution of employment problems and supporting branches of economy with qualified personnel, improvement of quality of life of the population and management efficiency in territory of the republic have been fulfilled.

Implementation of economic policy is substantively carried out due to program-target methods. There operate economic programs on development of mining, timber industry and agricultural sector, investment policy, housing construction, development of road facilities, support of small business, modernization of housing and communal services, etc. Development of Agricultural Sector of the Republic of Karelia through to 2010 and Development of Tourism in the Republic of Karelia through to 2010, Active Involving of Local Fuel and Energy Resources in Fuel and Energy Complex of the Republic of Karelia in 2007-2010 programs were approved in 2007.

Public policy of the Government of of the Republic of Karelia in the sphere of economy was carried out in view of priorities of social and economic development of the Russian Federation in the medium-term prospect in cooperation with federal enforcement authorities.

In particular, work on formation of optimum export duties was conducted that has allowed to reduce export deliveries of round timber by 26% in comparison with 2006. Сancelling of softwood saw-timbers export duties has allowed Karelian enterprises to save about $1,7 million. As a result of decreasing import duties, import of goods of investment purpose in the republic increased.

Problems of innovative transformations in the economy directed on transition to innovative technologies, creation of innovative infrastructure on the basis of available basic elements are being solved. Development of the transport infrastructure necessary for more complete development of natural resources, development of tourism and other kinds of activity is provided.

The republic participates in mutually advantageous international and inter-regional cooperation directed on reception of concrete results and, in particular, on involving investments into economy.

Economic policy pursued by the Government promoted acceleration of rates of economic development that last year has allowed the republic to win the second place among the regions of the Northwest federal district on rates of growth of industrial production, at that, 10,1 percent growth of volumes in manufacturing activities exceeds growth of volumes of extraction of minerals.

In 2007 Strategy of Social and Economic Development of the Republic of Karelia through to 2020 was developed and approved. For the purposes of attainment of goals stated by the Strategy a Plan of Actions of the Government of the Republic of Karelia for 2008 is being developed for implementation of priority trends of economic and social development of the republic.

Investment Policy

One of priority directions of activity of the Government of the Republic of Karelia is following the investment policy of the state directed on creation of favorable conditions for maintenance of steady growth of investments, increasinge investment appeal of the republic.

With a view of fulfilling tasks of acceleration of social and economic development of the republic, doubling of gross regional product the Basic directions of investment policy of the Government of the Republic of Karelia for the period from 2007 to 2010 have been developed and accepted in 2007 to define priorities in investment activity in the medium-term period.

In recent years development of investment activity in the republic was characterized by positive dynamics.

In 2007 there has been successfully completed more than 20 large investment projects. Among them there are reconstruction and technical re-equipment of Kondopoga, Inc., reconstruction of Karelsky Okatysh, Inc., startup of gluing shop producing furniture plates at Swedwood-Karelia, Ltd., startup of Karelstroimekhanizatsiya Joint-Stock Company factory producing ferro-concrete products and Solomensky timber mill, construction and startup of building stone quarries of Karelprirodresurs, Ltd., Karelkamen, Ltd., opening of assembling of Nonel initiation and detonation systems of Dino Nobel Russia, Ltd., startup of Elektromeka, Ltd., enterprise producing electronic products, etc. It has been created over 2 thousand new workplaces.

In 2007 Government of the Republic of Karelia entered into the largest in the sphere of investments Agreement with Bank of Moscow, Inc., and Investlesprom Joint-Stock Company on development of timber industry complex of the republic in 2007-2012, according to which Investlesprom Joint-Stock Company invests more than 21 billion roubles in development of its own companies in Karelia.

Legislatively stationaried measures of public support of investment activity according to which all investors disregard of organizational and legal forms and patterns of ownership were given most-favoured-nation status of investment at implementation of investment projects in territory of the Republic of Karelia promoted following strategic policy of the Government of the Republic of Karelia in the field of attraction of investments.

Budgetary credits remained the most claimed measure of public support of investment activity. In 2007 for financing of investment projects it has been allocated 440 million roubles.

By results of competitive selection in 2007 11 investment projects with 239 million roubles of total amount of budgetary crediting were recognized its winners. From implementation of the given projects the planned budgetary effect will make 70 million roubles. In addition, there will be organized 128 new workplaces. Among the competitions winners there are projects on purchasing buses for intercity and tourist transportation, road-building machinery for Petrozavodsk Maintenance Depot and Kondopoga Maintenance Depot state unitary enterprises of the Republic of Karelia, housing construction.

For the first time for rendering public support to investors implementing projects in housing-and-municipal sphere, a decision has been made to allocate budgetary credits for reconstruction and modernisation of boilers and other objects in municipal units of the republic was. One of such projects was the project of reconstruction of water treatment works of Petrozavodsk.

Investment projects with attraction of budgetary credits are also implemented in timber and woodworking industry, transportation, construction, agriculture and fish breeding, and tourism.

In 2007 the Government of Karelia concluded two new Investment agreements on granting favorable investment treatment in realization of the project on construction of ore mining and processing complex producing mineral dressing (Karelmineral, Ltd.) and a project of modernisation of Karelprirodresurs, Ltd.producing high-strength ballast stone on Raikonkoski and Leppäsyrja natural stone deposits. The planned volume of investments makes 477 million rbl.

In total in 2007 there operated nine Investment agreements on granting favorable investment treatment with 3,4 billion roubles of investments of which most of the projects is implemented at participation of foreign capital:

  • Setles, Ltd. - Construction of Saw-Mill with a Productivity Rate of 115000 Cubic Meters of Saw-Timber a Year project;
  • Swedwood-Karelia, Ltd. - Timber Cutting. Saw-Mill. Production of Furniture Components project;
  • Karhakos, Ltd. - Construction of Manufacturing Capabilities of Karhakos, Ltd. project;
  • Elektromeka, Ltd. - Organization of Production Complex Producing Electronic Products project.

With a view of further expansion of measures of the state stimulation of investment activity, maintenance of additional attraction of bank resources to realization of investment projects in 2007 a decision has been made on granting the partial reimbursement of loan interest payments involved for financing of investment projects.

In the financial year interdepartmental working group for assistance in involvement of investments into economy of the republic, headed by the Prime Minister of the Government of Karelia continued its work. The working group is called to monitor realization of projects and to assist in overcoming the problems arising during promotion of the project which decision depends on enforcement authorities of all levels. In 2007 there has been held 10 sessions of interdepartmental group where 57 investment projects presented by enterprises and supervising ministries were considered. The joint decision of problems contributes to effective promotion and successful realization of investment projects.

For work with potential investors there have been generated a list and passports of investment sites and ground areas, which may be used within the declared projects, in the context of regions of the republic.

Within a year the Government of Karelia has been considering applications on location of new enterprises, and reconstruction, expansion and conversion of operating industrial enterprises, prepared alternative offers of ground areas and free industrial sites for location of new enterprises, meetings of representatives of the companies with heads of municipal areas were organized.

As a result of the work done two protocols on intentions on realization of investment projects have been signed (Technological village and Organization of Production of Oriented Strand Boards (OSB)), draft protocold on intentions wirh Agrodom Severny, Ltd., and GT7 group of companies were prepared.

With a view of coordination of activity of regional authorities in the sphere of cooperation with investors there has been elaborated a project of the Operating Procedure for Investment Projects and Offers in Territory of the Republic of Karelia. The order provides obligatory registration of investment projects (offers) received by enforcement authorities of the republic, with their inclusion in the register of the republic.

Marketing of the territory remains an important component in the activity for increasing investment prospects of the Republic of Karelia.

Perfection of the structure and updating of design of The Republic of Karelia for Investors web-site continues. There has been developed and introduced the Project Searches for its Investor database containing information on investment projects for which promotion it is necessary to involve investment. Now the section includes 14 projects. In total the database contains more than 100 investment projects realized or planned for realization in municipal units and town districts of the republic. Within the financial year on the site there has been registered more than 6 thousand users.

In 2007 in the Government of Moscow there passed a meeting of representatives of the Government of the Republic of Karelia with business circles of the capital for presentation of investment potential of our republic which resulted in interest of business circles and representatives of the Department of town-planning policy and reconstruction of Moscow in development of cooperation in the sphere of investment activity.

There passed presentations of the largest projects and investment potential of the Republic of Karelia at the meeting with business circles of St.-Petersburg and at the Second Moscow Forum of leaders of real estate market within which framework investment opportunities of the region in various branches of economy (extraction of minerals, woodworking, trout-breding, housing construction, etc.) have been presented. During discussion of investment opportunities of Karelia in St.-Petersburg there passed meetings with representatives of delegations of Lithuania, Finland, Hungary and China.

In 2007 the fourth edition of the Karelia for Investments brochure was published. The brochure contains information and analysis of natural resources potential of the republic, its economy, investment and innovative development, as well as legal regulation in the sphere of investments and measures of government support in the region.

There has been issued the Karelia for Investments CD (in Russian and in English) with video information and slides both on investment potential of the republic, and specific investment projects in various branches of economy of the region offered for investment is presented to video.

Address investment program of the republic supplemented with co-financing of objects within the Federal address investment program and federal target programs is the main tool of investment and budgetary policy directed on realization of the Basic directions of investment policy of the Government of the Republic of Karelia for the period from 2007 to 2010. On results of the year on objects included in the address investment program of 2007 there has been adopted more than 1,3 billion roubles.

Government support of business is an important component in work of the Government of the Republic of Karelia regarding formation of favorable business environment and investment climate.

Small enterprises start to play more significant role in economy of the republic. In Karelia there operate more than 4 thousand small enterprises where work about 33 thousand people. In 2007 the turnover of these enterprises has exceeded 69 billion roubles and in comparison with 2006 has increased by 38%. The share of small enterprises in total amount of turnover of organizations of the republic has made 32%.

In 2007 of efforts of the Government of the Republic of Karelia in the field of support of innovative small business have been directed on realization of the project on creation of a business-incubator which was financed out of means of the branch target program of government support of small business in the Republic of Karelia for 2006-2008 and federal budgetary funds. Total amount of financing within the project has made 9,7 million roubles, including 5,2 million roubles of federal budgetary funds.

The First starting complex business-incubator of the Republic of Karelia has been opened on July 3, 2007. It offers 60 new workplaces for subjects of small business beginning their business with furniture, computers, office equipment, phones, and access to the Internet.

Due to support of the Government of the Republic of Karelia rent of one square meter of the business-incubator area (includes rent of space, equipment, municipal and operational services) costs 340 roubles a month.

From the moment of the beginning of work of the first starting complex business-incubator competitive selection in it was passed by 11 subjects of small business with 42 employees in the following spheres of activity: design-engineering activity; software development and consulting in this sphere; research using of local natural resources.

The business-incubator is run by a company chosen on a competitive basis. Its tasks include management of activity of the incubator and rendering services to subjects of small business.

Information support of subjects of small and medium business, including in the field of regulatory and legal framework, granting free-of-charge opportunity for promotion of output and services was carried out by the Government of the Republic of Karelia in 2007 by means of support of a portal for small and medium business of the republic.

The have been held sessions of the Council attached to the Government of the Republic of Karelia on small business which includes representatives of executive and legislature bodies of the republic, bank sector, public organizations and entrepreneurship.

As a result of teamwork of members of the Council there has been elaborated a bill of the Republic of Karelia On Some Issues of Small and Medium Business Development in the Republic of Karelia. The bill of the Republic of Karelia on the opportunity of application simplified tax system for individual businessmen on the basis of a patent for the territory of the Republic of Karelia has been prepared. Development of the government support program of small and medium business in the Republic of Karelia for 2009-2011 is carried out.

Due to change of Rules of granting federal budgetary funds providing government support to small business, the list of directions within which it is possible to involve these funds under conditions of co-financing from the budget of Republic Kareliya extends considerably.

With the purpose of involvement of federal budgetary funds in 2007 the Government of Karelia has made changes to the branch target program of government support of small business regarding addendum to the list of spheres of support. New spheres provide starting granting on a competitive basis for representatives of disadvantaged grpoups of the population willing to organize their own business; granting certificates for businessman's independent choice of educational establishment and sphere of training; assistance to development of arts and crafts; development and increase of efficiency of using modern information and communication technologies in the sphere of small business.

To solve tasks the Government of the Republic of Karelia is facing in 2008 regarding increasing the level of investment prospects of the republic, maintenance of efficiency of state budgetary investments, activization of innovative activity realization of following actions is provided:

  • performance of the Plan of Actions in 2008 for realization of the Basic directions of investment policy of the Government of the Republic of Karelia in 2007-2010;
  • establishing of the operating procedure for investment projects and offers in territory of the Republic of Karelia;
  • development of a new edition of the Law of the Republic of Karelia On Government Support of Investment Activity in the Republic of Karelia;
  • establishing of the order of granting of enterprises investing in territory of the Republic of Karelia;
  • realization of the Government Support of Innovative Activity in the Republic of Karelia in 2008-2010 target program;
  • achieving 20,1 billion roubles of investments into the fixed capital, including involving 1,6 billion roubles of federal budgetary funds.

Tasks set by the Government of the Republic of Karelia for 2008 in the sphere of government support of small and medium business development:

  • to pass the Law of the Republic of Karelia On Some Issues of Small and Medium Business Development in the Republic of Karelia;
  • to deveop and accept a program of government support of small and medium business in the Republic of Karelia for the period from 2009 to 2011;
  • to develop infrastructure to support small business, including the business-incubator.
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Created: March 24, 2008. Last updated: March 24, 2008.
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