Penza: investment projects and achievements

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MOSCOW. (RIA Novosti commentator Yekaterina Lutsenko)

The latest session of the Russian-Spanish intergovernmental commission listed the Penza region among Russia's most promising territories for expanded bilateral cooperation.

The Penza region is conveniently located in central European Russia, not far from industrial centers like Moscow and Samara. Consequently, it can use imported raw materials and feedstock, guaranteeing co-production arrangements and product sales. The region is renowned for its powerful R&D potential, well-developed industry and skilled workforce, all of which has created a favorable investment climate.

Investors from Moscow, St. Petersburg, Samara and other cities are now working in the region.

"Penza has all the conditions necessary for attracting sizeable foreign investments," the region's deputy governor Alexander Chernitsov said.

"We would like to attract private and foreign investments into the regional economy. First of all, these investments must deal with a number of problems, such as expanding export and import-substitution potential, and developing the machine-building sector and the processing industry. Moreover, they must boost hi-tech production and guarantee the sector's competitiveness on the global market."

Regional authorities realize that establishing joint ventures is an optimal way to work with investors. Thus, investors will get preferential treatment from the region's government.

"We also consider it important to develop transport and communications infrastructure, and to create service centers for the local population, as well as international-class hotels and motels. The same is true of camp sites, travel agencies and resort areas," Chernitsov said.

Favorable conditions for large-scale development of the real-estate market are needed in order to ensure sustainable economic growth. The regional investment strategy stipulates the elements of a mortgage-loan program to be drafted and put in place.

"This is why we consider the experience of other countries to be very important," Chernitsov said.

The regional government has drafted an official regional investment strategy together with a group of consultants and experts from the National Direct Investments Agency.

If adopted, a new version of the local bill "On Investments in the Penza Region" will make it possible to give foreign investors numerous tax and budgetary incentives. The main strategies laid out in the bill are tax breaks, budgetary subsidies for bank-loan interest rates, easy-term land-lease and state-property lease contracts, and use of budgetary appropriations to develop the necessary engineering and social infrastructure.

The region's macro-economic indicators for 2002-2005 highlight invigorated local investment activity. Investments made up 15.9 % of gross regional product in 2002, and the region has been implementing major investment projects since 2000.

Dutch investors have built a greenhouse complex in Mokshana where roses are grown for sale on the world's largest flower market: The Netherlands. This project involves Holland and the Tarkhany regional bank, while the regional government provided administrative and political support.

Italian investors helped the local computer factory to master production of gas ranges and water heaters under Italian license. Italian companies also want to implement grain-production plans for the Penza region.

The regional meat sector is set for fresh investments in the near future.

"The Penza region will become a leading poultry-and-pork producer in Russia," said Igor Babayev, president of Moscow's Cherkizovsky meat-processing plant, adding that Penza enterprises will annually produce at least 40,000 tons of poultry.

Poultry output is set to reach 100,000 tons per year by 2008. The Penza region's Vasilyevskaya, Olkhovskaya, Kuvak-Nikolskaya and Penzenskaya poultry factories must be overhauled completely to implement this program. Cherkizovsky plant will channel nearly $60 million into this project in 2005-2006. It is also ready to invest about $30 million into reviving the Zarechenskaya poultry factory.

There are also plans to build an insulin-production factory. An agreement has already been signed between Russia's Biotek and China's Dongbao. The region's government will provide administrative and political support for this project as well.

Russia still has to import virtually all its insulin. The new enterprise will turn out 12 million bottles per year, meeting about 33 % of nationwide insulin demand. It will take eighteen months and at least $20 million worth of initial investment to build and commission this factory.

The Penza region therefore feels quite optimistic about the future, hoping to implement new large-scale investment projects with foreign involvement.

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