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Social and Economic Development of the Republic of Karelia in 2012

  Economic Policy

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Investment and Construction Activities

In solution of tasks of economic development one of priority directions of activity of the Government of the Republic of Karelia is pursuance out of the state investment policy focused on improvement of investment climate and support of investment projects implemented within the territory of the republic, reduction of the administrative barriers interfering investment development of the region, institutional development of investment infrastructure.

Performance of a complex of the measures scheduled for 2011-2012 concerning implementation of the Basic directions of investment policy of the Government of the Republic of Karelia for 2011-2015 is completed. The project of corresponding actions for 2013 including but not limited to measures on introduction of the Standard of activity of enforcement authorities of the constituent entity of the Russian Federation on provision of congenial investment climate is developed.

With a view of development of state-private partnership as one of new financial mechanisms of mobilization of investments work on formation of the regional regulatory framework was performed. The order of development and conclusion of agreements of the state-private partnership, the order of selection of private partners and the Regulations of the Investment Fund of the Republic of Karelia based on the mechanism of project financing capable to provide mobilization of funds of the federal budget for co-financing of the long-term and capital-intensive projects aimed at development of the economic base and overcoming of infrastructural problems of the region have been approved. Projects of laws of the Republic of Karelia On Establishing of the Investment Fund of the Republic of Karelia and On the State Support of Investment Activity in the Republic of Karelia have been developed.

Corporation for Development of the Republic of Karelia which focal area is teritorial development continued its activity within the regional system of institutes for mobilization of investments.

Activities on investment promotion of the region featured last year for its emphasys on Karelia's foreign marketing in the Nordic countries has received further development. In 2012 a number of presentations of economic and investment potentials of the Republic of Karelia have been held within the scope of the business mission of the Republic of Karelia to Finland (April), a seminar on development of mini hydropower generation in the Northwest Federal District in Helsinki (February), the Forum on renewable power generation in the Northwest of Russia in Petrozavodsk (April), the official visit of the delegation of the Republic of Karelia to Finland (September), business missions of small and medium business entities of the Republic of Karelia to Finland (Helsinki), Norway (Oslo), and Sweden (Stockholm).

In the year of account information and analytical materials on investment activities of the republic were prepared for some specialized expert and business editions, as well as for international representation institutes, special international economic organizations and authorities of foreign states, the information and reference book Karelia for Investing in Russian and English languages was released. Online presentation of investment potential of the republic was organized, in particular at the Forum of Investors and International Investment Projects of the official site of the All-Russia project Helpinver Open New Russia! meant for both Russian, and foreign investors. Karelia continues participation in the interactive PR-project of the Ministry of Economic Development of the Russian Federation The Investment Map of the Russian Federation (http://invest.gov.ru/map/) where the updated registers of investment projects and sites are submitted for publishing.

The Republic of Karelia for Investors Internet portal has proposals on more than 30 investment and innovative projects and offers for investment, information on more than 100 plots of land which can be used at implementation of investment projects. The information is presented with regard to municipal formations and is updated periodically. Results of research of the investment appeal rating of Russian regions performed by Expert RA Group of Rating Agencies indicate improvement of investment climate in the republic. By results of the research performed in 2011-2012 the rating of the Republic of Karelia has grown to the 31 level (reduced potential moderate risk).

In 2012, as a result of development of processing industries, transportation and communication, social sphere, trade and financial branches the volume of investments into fixed capital of the Republic of Karelia (on the full circle of organizations) has made 32,1 billion roubles, or 100.7% to the level of 2011 in comparable prices. The volume of investments into fixed capital per capita has grown from 46,3 thousand roubles in 2011 to 50,3 thousand roubles in 2012.

In structure of investments regarding spheres of economic activities (without small business entities) the share of investments into transport and communication has increased in 2012 to 30.2% (24.3% in 2011). Relative density of investments into production as a whole has slightly reduced from 55.7% in 2011 to 50.6% in 2012 that is related to decrease in investments into production and distribution of electric power, gas and water, and extraction of minerals.

Among the sources of financing of investments in the fixed capital the share of funds involved in 2012 has made 54.4% compared to 50.8% in 2011, mainly due to increase in the share of budgetary sources from 20.6% to 25.9%.

The Interdepartmental commission on accommodation and development of productive forces is run in the republic. Its sessions considered projects of The North-West Development Corridor Inc. planned to be implemented within the scope of performance of complex investment plans of monoprofile municipal formations of Lahdenpohja and Suojärvi, the project of the organization of production of forest products at FinTech Research and Development Company Ltd. in Kostomuksha, etc.

In the year of account 13 investment applications of organizations concerning selection of options for investment cooperation, selection of industrial sites, rendering assistance to investors at solution of arising problems during implementation of projects, and 35 investment proposals of investors were considered.

As of January 1, 2013 the regional list totals 82 investment projects already launched or planned to be implemented within the territory of the republic from 2011 to 2015 and in the following period.

In 2012 implementation of the first stage of the project on construction of the wood-working factory on deep processing of timber in Sortavala municipal region was completed, modernization of some timber-processing enterprises was in progress, new roadmetal quarries in Kondopoga and Prionezhsky municipal regions and a crushing-and-sorting complex in Pitkäranta municipal region were commissioned, new enterprises producing building materials were put into operation in the town of Petrozavodsk, reconstruction of cattle-breeding objects in Olonets national municipal region continued, modernization of operating and organization of new fish-breeding farms in Pitkäranta, Pryazha national, Medvezhiegorsk municipal regions, construction of a fish-processing shop a Lahdenpohja municipal region was completed, a number of objects of public health services, physical culture and sports, road facilities, municipal, trade, etc. objects were put into operation.

As a result of the project implementation, 1894 new jobs have appeared, that exceeds the planned level by 10,8%, and is 1.4 times more than parameters of 2011.

To perform the list of assignments of the President of the Russian Federation of August 21, 2011 NPr-2437 the Ministry of Economic Development of the Republic of Karelia is appointed the body in charge of cooperation with the investment representative in the Northwest Federal District, Deputy Head of the Republic of Karelia and Minister of Economic Development of the Republic of Karelia is personally responsible for implementation of this cooperation.

Appointed oficials of executive bodies of the Republic of Karelia are personnaly responsible for administration of priority investment projects already launched and planned to be implemented in the region.

Quarterly monitoring of implementation of regional development projects included in the list of priority investment projects in the Northwest Federal District (construction of deep-water seaport in Belomorsk, reconstruction of engineering constructions of the Besovets Aeroport Complex, construction of the OSB-producing enterprise, reconstruction and construction of mini hydroelectric power stations in territory of Karelia) is provided.

Special attention is paid to mobilization of federal budgetary investments into economy of the region. The volume of federal investments in construction and objects of the republic has increased in relation to the level of 2011 by 46.9% having made 5178,2 million roubles.

According to the list of construction sites and objects for the federal state needs for 2012 financed due to the state capital investments stipulated for implementation of the Federal address investment program, 21 building object was financed in territory of the republic. Sites of Kola highway were commissioned, stages of works on reconstruction of the White Sea-Baltic Canal and the Kizhi State Open-Air Museum of History, Architecture and Ethnography were completed, reconstruction of buildings of specialized part Central Administration of the Ministry of the Russian Federation for Civil Defense, Emergency Management and Natural Disasters Response in the Republic of Karelia in the town of Petrozavodsk and Offices of Public Prosecutor in the town of Pitkäranta, construction of buildings of interdistrict investigatory departments in in towns of Kostomuksha and Sortavala were completed at federal co-financing in 2012.

Due to the funds of the Address investment program of the Republic of Karelia construction and reconstruction of 37 objects and events were financed, 6 of which were commissioned in 2012, including the unit of obstetrics and surgery with a polyclinic in the settlement of Kalevala (II phase), a health and fitness complex with a universal hall in Lahdenpohja.

In 2012 the practice of rendering the state support to investors in the form of granting tax exemptions within the scope of the mode of the most favoured investor treatment, the state guarantees provided by the budget of the Republic of Karelia, grants from the budget of Republic Karelia on for partial reimbursement of credit interest expenses on credits obtained in credit organizations for implementation of investment projects continued.

With a view of granting subsidies for partial reimbursement of credit interest expenses in 2012 the budget of the Republic of Karelia has assigned 18,5 million roubles. Subsidies were granted to Karelavtotrans state unitary enterprise of the Republic of Karelia to purchase ShuChi-6126 buses, to Bumex Lahdenpohja Plywood Mill, Ltd. to purchase equipment and motor transport, Yagoda Karelii (Berry of Karelia) Ltd. to build a factory to produce fruit- and fruit-flavoured food products.

The Government of the Republic of Karelia has sogned agreements on issuing state guarantees to the amount of 528,0 million roubles within the credit contracts concluded by Petrozavodsk Municipal Systems Inc. with Finnish Nordic Environment Finance Corporation (NEFCO) and Nordic Investment Bank (NIB) on impementtion of the investment project Complex Reconstruction of Water Supply and Drainage Facilities in Petrozavodsk, the Republic of Karelia for the period trough January 1, 2024.

In 2012 the following investment agreements on granting tax exemptions to investors implementaing investment projects in territory of the Republic of Karelia have been concluded:

  • with SevPromResurs Ltd. the project of substantiation of efficiency of the organization of industrial and financial activity of SevPromResurs Ltd. on development of Lizhemskoye deposit;
  • with Yarmarka TD, LLC the project of modernisation of the enterprise with organization of production of groats and beans of the new product line;
  • with Russian Wood Alliance Ltd. the project of organization of production of components of houses of regularized round timber.

In total as of January 1, 2013 11 investment agreements on granting the mode of the most favoured investor treatment were in force in the Republic of Karelia. One of the key factors influencing living standards of the population is solution of the problem of housing availability, and in this connection increase of volumes and quality of housing construction is stated among priority directions of development of the republic.

As a result of introduction of market mechanisms in the investment and building activity the record-breaking in the past 20 years commissioning of residential space (195,300 sq.m.) was observed in Karelia in 2012, that is 9.8% more than in 2011. In 2012 the share of total residential space on the average in the republic per capita was 25.8 sq.m.

In the period of account large builders such as Karelstroimekhanizatsiya Joint-Stock Company, Clean City Ltd., BEK Building Company Joint-Stock Company were involved in implementation large investment projects of building up the Drevlyanka-II residential estate of Petrozavodsk city district. In total in 2012 in Petrozavodsk it was constructed 132,000 sq.m. of habitation (117% to the level of 2011). Except for Petrozavodsk city district, leaders on residential space commissioning were municipal regions of Kondopoga, Kahdenpohja, and Kem, and Kostomuksha urban district.

Implementation of investment projects focused on development of the building industry and the industry of building materials, including construction of the concrete grout unit and a shop producing paving tiles (Monolith Ltd.), manufacture of glued structures and frames of homes of veneer lumber and calibrated logs (FinTech R&D Company Ltd.), manufacture of ferro-concrete designs and products, window and door blocks of PVC with double-glazed windows continued.

In 2012 the Government of the Republic of Karelia continued cooperation with the Federal Housing Construction Promotion Fund regarding involving of federally owned plots of land in economic circulation for housing and other types of construction. By the decision of the Governmental Commission of the Russian Federation on development of housing construction the Republic of Karelia was transferred a 15-hectare federally owned plot of land located in the village of Vidany, Pryazha national municipal region, for economy class housing construction.

Implementation of activities of the program Removal of administrative barriers in construction of the Republic of Karelia in 2011-2015 was performed. Work on the organization of informing the population about plots of land for implementation of investment projects and housing construction, as well as on optimization of procedures of formation and granting land areas in territory of the republic continued. The number of plots of land made available for housing construction has grown from 1125 sites with total area of 181,6 hectares in 2011 to 1223 sites with total area of 259,6 hectares in 2012.

In the year of account performance of activities of the Housing long-term target program for 2011-2015 proceeded.

Within the scope of the subprogram Performance of State Obligations on Provision of Housing for Categories of Citizens Prescribed by the Federal Legislation 11 state housing certificates amounting to 20,3 million roubles were issued in 2012. For citizens dismissed from military service and equal-status persons 48 apartments were purchased in the apartment building commissioned in 2012 in Petrozavodsk, and home purchase (or construction) grants were issued.

Volumes of the state support within the Provision of Housing for Young Families subprogram has increased considerably. In view of co-financing from the budget of the Republic of Karelia 176,1 million roubles of social payments were issued to 248 young families (compared to 102 families in 2011).

Implementation of the subprogram Development of Mortgage Housing Credit in the Republic of Karelia which stipulates rendering the state support to some categories of citizens by partial reimbursment of expenses for using a residential mortgage loan continued. In 2012 it was issued 2823 mortgage credits amounting to 3607,4 million roubles, that exceeds volume of credits issued in 2011 1.4-fold. Support totaling 55,3 million roublesfrom the budget of the Republic of Karelia was rendered to 2563 citizens in the form of reimbursment of the interest rate. The list of categories of citizens rendered state support is expanded, in particular, large families are included in the specified list.

To inform the population of the republic about free premises available in the real estate market, conditions of residential mortgage, measures of the state support The Days of Mortgage took place.

With a view of increase of availability of residential mortgage for citizens of the republic offers on conclusion of agreements on cooperation between credit organizations regarding granting concessionary terms to all to participants of the sub-program are prepared and forwarded to all credit organizations registered in territory of Karelia. The agreement is signed with The Savings Bank of Russia Inc., agreements with banks of Uralsib Inc. and VozrozhdenieInc. are expected to be signed.

Coordination of the process of development of documents of territorial planning by municipal formations in the Republic of Karelia was performed. Within 2013 work on formation of the system of documents of territorial planning and town-planning zoning are supposed to be completed.

Technical support
Created: August 14, 2013. Last updated: September 17, 2013.
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