Amur Minerals Corporation - Re: AMC Stream Log - 05/16/2014 A. Galushka: Investing in...

05/16/2014 A. Galushka: Investing in the Far East focused on the Asia-Pacific countries Interview with the Minister of the Russian Federation on development of Far East Russia Alexander Galushki channel 24. Q: A new program for the Far East 5 times more expensive than its previous version. If earlier it was planned to spend 697 billion rubles for the program, now - more than 3.5 trillion. Tell me, what is involved in such a volume increase funding for the program in addition to the fact that its action is extended from 2018 to 2025. A.Galushka: We came very thoughtfully to the formation of this program, knowing all the budgetary constraints that exist in the financial system. And they built this program so that every budget ruble we got maximum attracted private investment. Therefore, the focus of our program - investment projects, realistic, backed by an investor with a clear interest to work out the project, with part of the traversed path. And there is a range of issues that should not solve the investor, and that is always open to the State. They are associated with the removal of a very specific infrastructure constraints. It may be in the power sector, roads, railway branch, which need a specific project. If these problems are removed, then the project is called, "fly." And in this case, low investment comes as the start key. Through this approach, and we formed this federal program. Of these more than three trillion rubles of investments Most - 80% - is private investment. And the smaller part - low cost money. Q: But if we talk about investment budget as now it is advisable to increase them, in a situation where government spending cuts? Plus we now have the Crimea, and there is a new ministry for the development of the North Caucasus. A.Galushka: The answer is simple and intuitive. This increase in budget expenditures associated with length. The program is not up to 18 years, and until 2025. Accordingly, the costs not only for the next few years, but for all 10 years. Why did this happen? Because investment projects proposed for implementation in the Far East, have no horizon of 2-3 years. This is not a speculative investment. This is a serious investment in the real economy, projects that require adequate support, ensuring the state in 10-year horizon. Related to this is the extension of our federal programs until 2025, and increased funding. Question: With regard to private investment ... First, we are now seeing a huge outflow of foreign investment from Russia, and, secondly, Russian investors, we are now seeing a new focus on the region, the Crimea. Would it not be here to attract investment competition with the Crimea? A.Galushka: Crimea and the Far East are very different. Those categories of investors who want the Crimea, and the ones that need the Far East - are also very different. We believe that each of these important regions of the country has its own niche. When we talk about the Far East, it is primarily investment-oriented economic integration with the Asia-Pacific region. And in the case of Crimea, it's still other investment priorities associated with recreational potential. And landlocked our country not so much ... And, of course, the whole development of the Crimea - not in the context of integration in the APR. Far East, as I said, with its specificity. And the most rapid, rapid, optimal development of this region is possible, if we find the right niche in the Asia-Pacific region. Far East market is very small, but next to it - huge, the biggest market. And that is expected to be localized in the Far East, primarily focused on export to Asia-Pacific countries. Obviously, this is very different stories, different profile investors investproetov. Therefore, in my opinion, this problem does not exist. Q: And if we talk about the relationship of Western and Russian investors? In 2013, 6, or 7% of Western investment accounted for just the Far East. In the current geopolitical situation, instability, introducing sanctions regime changed if the number of foreign investors who are ready to come to our Far East? A.Galushka: We appreciate the basic investment interest in the Far East from the Asian countries as very high. Imposes certain print current foreign policy situtsiya. However, we also see in the case of many Asia-Pacific countries, the rate on the primacy of the economy, to create a favorable investment climate and conditions for attracting investments with interest overrides any political characteristics and specific nuances. Therefore, we are confident that our consistent firm policy in the Far East to create a favorable investment climate and competitive conditions, better than in countries APR for business - it is the best response to some form of political complexity. If it is profitable, safe and comfortable to do business in the Far East, it is primarily in investment motivation. Today we are very actively kommunitsiruem with CEOs of major companies APR. These are people who make investment decisions. And we see that their interest in the development of investment projects in the Far East continues unabated. Their main request - a really comfortable environment for the friendly attitude as a partner, as a customer who needs to create a set of conditions for the normal implementation of the investment. Q: And these conditions are, in your opinion, there are now? A.Galushka: We are working on it very actively. In this regard, adopted a number of structural solutions. April 25 Prime Minister decided to establish a special sub-committee under the direction of Yuri Trutnev, which is going to track the implementation of investment projects in the Far East. Minvostokrazvitiya will naturally be the body that ensures its practical work. At the ministry, we have created a special department for maintenance and implementation of investment projects. Prepared a draft law on the territories of advanced development, which involves a radical deregulation, simplification and acceleration of procedures, bringing them to the best standards of the Asia-Pacific region. And here we offer just borrow the best that has proved its worth. Question: And if we talk about refocusing on the APR. Right now under Western sanctions we ever see interest from Russia towards Asia, and whether we see the influx of interest to us, especially from China, Japan and Korea? A.Galushka: For a variety of areas of interest is expressed. These projects are associated with the processing of natural resources, which is rich in the Far East. This recycling timber, fish, agro, petrochemicals and gas, shipbuilding, construction materials, automotive components, etc. What's important here? In formulating these priorities, we understand that they only become real when it stands for a private investor willing to take risks and invest. If it does not, it's apparent priorities. Areas that I listed - for them is already distinct interest from foreign investors. And when we talk about China, we understand you, that it originally occupied a special position in the foreign policy tension that arose. Today, Russia is the largest trade with China, and its potential is very large. We see today as a number of Asian countries has refocused its global economic strategy on China. It has already become a real Asian dominant. And catch the Chinese wind in their sails seeks not only to Russia but also other Asian countries. Therefore, it is very clear pragmatic economic policies that will allow us to develop the Far East. Q: And those 16 projects that have already been selected for funding target program, as they are generally selected, and what value investors out there? Anyone else, Russian and foreign investors? A.Galushka: primary in these projects, Russian investors. However, they are actively seeking foreign partners of ATP. We selected these projects according to the criteria that have been adopted in countries with developed institutions of public-private partnership and the general practice of successful projects of public-private partnership. Let me remind you that certain projects require co-financing from the state, primarily associated with the creation of the local environment, infrastructure problems solution. Therefore, we start from the best practices of public-private partnership. Criterion Three: is the amount of taxes that will be created by the project to budget investments, that is, in fact it cost profitability of investments; second - is the amount of value added, and the third - the ratio of budgetary and private investment. That is, those investment projects that give more value added, more taxes for every budget ruble, more private investment for every budget ruble - and these projects were selected. They allowed us to go out on the FTP parameters that give the maximum possible resources that you can draw today for the development of the Far East, because it is a very serious money. This is more than three trillion rubles of investments that actually create a different economy of the Far East. Q: Well, what exactly are the projects? Maybe call the largest. A.Galushka: This VNHK projects, the creation of petrochemical cluster in Primorye. This gas chemistry. Processing resources. A number of GOK. Here they are, perhaps, form the framework of projects that give the greatest weight of the value added tax and private investment in the Far East. Question: In the Crimea now actively being topic of a special economic zone. A year ago, Dmitry Medvedev proposed the creation of an offshore zone in the Kuril Islands or Sakhalin. What is the future of this idea? A.Galushka: When I talked about areas of advanced development, then there is a similar principle to the implementation of the Far East. It is about to make a withdrawal from the general rules of the settlement of the general rules which, unfortunately, makes our jurisdiction, our country uncompetitive for attracting investment, entrepreneurial activity. Make these exemptions and directly give the ability to set the best standards and regulatory regimes adopted in Asia Pacific. If we are talking about such an institution as free economic zones, areas of advanced development - that is the best practices and solutions. They correspond to the realities of the 21st century economy. In this regard, the experience of Japan is interesting that on December 13 last year passed a law on strategic areas of management. In Japan, it had to free economic zones. They were unsuccessful, ineffective. Abandoned old institution that did not work on a national scale. Took a fundamentally new legislation based on the withdrawal of the general rules and the possibility of establishing competitive modes, and today this project is being actively implemented. Similar thing we want to do today in the Far East. And interestingly, we are almost at the same time, the Japanese started. And literally move in parallel. This obviously visible competition countries for attracting investors. Why Japan has gone down this path? Because 30 years have not been economic growth, did not work. Why are we going down this path? For 25 years we still have not been able to reverse the negative trends in the development of our Far East. But it must be done. Realizing that export raw model has exhausted itself, we need a new. Including the Far East - a place for this kind of testing of regulatory practices for future use nationwide. Thus, developing the Far East, we can develop the whole of Russia.