The case for trillions: investments in the development of the Far East should double
The authorities plan to increase investments in the economy of the Far East by more than half — from the current 4.1 trillion to 9.2 trillion rubles per year. This follows from the draft Strategy for the socio-economic development of the Far Eastern Federal District until 2030 with a forecast plan until 2036 - the document is currently being finalized by the government. Among the major projects, the strategy includes an increase in the region's electric capacity from 18.6 GW to 34.8 GW, the launch of mass production of short-range aircraft with domestic components, and the overhaul of 37 airfields. At the expense of what resources it is planned to do this, see the Izvestia article.
How do the authorities plan to develop the Far East
The government may soon approve a draft Strategy for the socio-economic development of the Far Eastern Federal District until 2030 with a forecast until 2036. The State Duma Committee on the Development of the Far East and the Arctic told Izvestia that the document had been discussed in parliament and was in a high state of readiness.
Last year, Mikhail Mishustin, the head of the Cabinet of Ministers, instructed to develop a strategy. It should replace a similar document that was in force until 2025.
— I don't think any major changes will be made. The main task is to create an effective preferential treatment for businesses (a system of benefits, special tariffs and discounts). So that it is no worse than in the countries of the Asia-Pacific region. Work on this will continue," Nikolai Kharitonov, head of the State Duma Committee on the Development of the Far East and the Arctic, told Izvestia.
Nikolay Kharitonov, Chairman of the State Duma Committee on the Development of the Far East and the Arctic
According to him, the goal is to make business conditions as transparent and accessible as possible, since the main investments will have to come from his side.
"The draft strategy has been submitted to the government and will be approved in the near future," the press service of the Ministry of Regional Development told Izvestia.
They also noted that in 2013-2025, an unprecedented system of state support instruments was deployed in the Far East: priority development territories, the free port of Vladivostok, the Far Eastern Hectare, preferential mortgages, a single presidential subsidy, and a mechanism for master city plans. During this time, 3 thousand new investment projects were launched, more than 1.1 thousand enterprises were put into operation, 190 thousand new jobs were created.
— The purpose of this stage was to create basic conditions for development. Today we face a qualitatively different task. It is due to a fundamental change in the geo-economic context in the 2020s — the turn of Russia's foreign economic relations to the East and the establishment of the Asia-Pacific region as the largest center of global economic growth, the ministry explained.
Static tests of the import-substituted Superjet-100 (SSJ-New) at the Siberian Aviation Research Institute in Novosibirsk
According to the draft strategy (Izvestia has it), its main goals are the formation of a high—tech diversified economy, the development of modern infrastructure, and the achievement of a key role for the Far Eastern Federal District in cooperation between the Russian Federation and the countries of the Asia-Pacific region. And one of the main tasks is the transition from a raw material model of the economy to a high proportion of deep processing of local resources. This includes industries such as petrochemistry, metallurgy, forestry, fishing, and agriculture. According to the document, by 2036, the share of manufacturing industries should be at least 10%.
According to the authors of the strategy, the Far East should become a center of high-tech cooperation, including with the countries of the Asia-Pacific region. It can develop in shipbuilding, aircraft construction, space infrastructure, robotics and other fields. By 2036, the share of products from high-tech and knowledge-intensive industries should range from 14% to 17.1%.
To this end, the Far Eastern Federal District plans to create radio electronics centers, modernize the shipbuilding industry, and organize the serial construction of icebreaker-class vessels, fishing vessels, and vessels to support the Arctic and the Northern Sea Route.
Who will finance the new projects?
One of the important points of the strategy is the development of the transport and energy sectors. They should become the driving forces of many investment projects. By 2036, the authorities want to fully ensure the intraregional and interregional connectivity of the Far Eastern Federal District with integration into international logistics systems.
For this purpose, it is planned to carry out major repairs of 37 airfields and reconstruct at least 26 airfield facilities by 2030 with the involvement of federal funding. In addition, it is planned to organize mass production of short-range aircraft with domestic components, as well as create a domestic long-range aircraft and ensure its mass production in the Far Eastern Federal District.
At the same time, the strategy also implies updating the fleet of aircraft and helicopters that have already been adapted to operation in hard-to-reach areas, namely SSJ-NEW, IL-114-300, and LMS-901 Baikal aircraft.
The authorities want not only to preserve, but also to expand the state program of subsidized transportation and Aeroflot's social program at flat fares on mainline and interregional routes.
The territory's electric capacity is expected to double from 18.6 GW in 2024 to 34.8 GW by 2036. One of the main projects here will be the construction of a DC power bridge from the central part of the Unified Energy System of Siberia to its southeastern part.
The gas industry also has a special role to play. According to the document, it will be necessary to eliminate the shortage of natural gas in the territory. In this regard, it is proposed to accelerate the development of the Sakhalin shelf deposits and attract independent fuel suppliers. The level of gasification of the population by 2036 should be at least 50%.
To solve all these problems, it is necessary to increase investments from 4.1 trillion rubles (the indicator for 2024) to 9.2 trillion rubles in 2036. It is assumed that most of the funds will be invested by large businesses, not only Russian, but also foreign. To do this, the authorities want to create "the best conditions for the implementation of investment projects" in the Far Eastern Federal District. In particular, it provides for the phased formation of a single preferential treatment, which will combine existing mechanisms (priority development territories, the free port of Vladivostok, the Arctic zone, the Kuril Islands).
It also provides for reducing regulatory and tax risks for investors by securing long-term guarantees and stabilization mechanisms.
To increase investor confidence, it is planned to introduce stabilization clauses for the entire duration of the investment project, as well as insurance mechanisms against adverse changes in business conditions. The principle of the immutability of the parameters of state support is fixed, provided that the investor fulfills the obligations assumed.
Izvestia sent requests to the government and the Ministry of Regional Development with a request to comment on the timing of the document's approval. The press service of the Cabinet of Ministers told the editorial staff that the document had been submitted to the government office for consideration.
What does business want in the Far East?
Over the past 10 years, revolutionary changes have taken place in the region in terms of attracting investments, Alexander Kalinin, president of Opora Russia, told Izvestia.
— A whole network of business support has been created in the form of priority development territories and special economic zones. In addition, many recruitment tools and other mechanisms are already in place. Therefore, the main thing for business is that this trend continues," says Alexander Kalinin. — At the same time, new challenges have emerged that still need to be answered. This is a significant increase in the cost of logistics, sanctions, and the need to build closer cooperation with our partners in the East, such as China and Malaysia.
According to him, unfortunately, these countries and their technology parks now offer businesses more favorable tax rates and more powerful government support. Meanwhile, Russia is losing the competition, and it is necessary to create conditions so that Russian startups do not register even in friendly jurisdictions, the expert believes.
— You also need to pay attention to the footage. By 2030, Russia is expected to have a shortage of workers, which is particularly acute in the Far East. Today, this Territory needs foreign labor. The mechanism of its import needs to be expanded and a law should be adopted that makes it easier for employers to hire qualified employees, for example, Indian specialists," emphasized Alexander Kalinin.
State support for exports is also important, the expert noted. The government understands this too — the Ministry of Industry and Trade recently made a statement about the need for such support. The Ministry of Agriculture was able to convince the government to allocate 10 billion rubles to compensate for the logistical costs of food exporters, but this is not enough, Kalinin stressed.
Is business ready to invest in the Far East
The willingness of the business to join the strategy implementation will largely depend on clear long-term conditions and a predictable return on investment model, says Inna Ryndina, Commercial Director of the Russian Seasons Hotel group.
"The interaction between the government and the private sector should become effective: the creation of an infrastructure base by the state and the further filling of territories with commercial projects, services and jobs," she believes.
The role of the Far East in the development of the country is not the main one, but one of the main ones, so investments are needed, of course, and only they can guarantee further growth and development, says economist Georgy Ostapkovich.
— But in order for business to get involved, it is necessary to create comfortable conditions for it. Namely, such an entrepreneurial climate so that businesses are not afraid to invest and are interested in these projects," the expert said, noting that this is not easy to do in the current geopolitical situation.
The key areas emphasized in the strategy are deep processing of raw materials, elimination of energy and logistics shortages, development of high—tech industries and improvement of the quality of life, Ekaterina Movsesyan, CEO of KROS, drew attention.
For businesses, this means a fairly wide range of industries in which to invest. For example, the construction and modernization of energy networks, gasification, port expansion, aircraft and shipbuilding, radio electronics, and others.
For its part, the business as a whole signals readiness, but there are also counter requests to the state, the expert noted. We are talking about eliminating energy shortages, clear logistics, stable preferences, and the general trust of the state in investors. In those areas and industries where there are already anchor projects, infrastructure and benefits, the willingness of businesses to connect is higher than in areas without energy solutions. And this is understandable caution, the expert believes.
Olga Kuzmicheva, Director of Strategic Projects at the Skolkovo School of Management, drew attention to one of the sections of the new strategy devoted to supporting entrepreneurship, which means that business becomes an integral element, without which the implementation of tasks is literally impossible. According to her, agriculture, creative, high-tech industries, and especially the tourism sector are opening up good prospects.
The draft strategy also clearly outlines financial support for SMEs through the provision of umbrella guarantees, preferential lending programs and equipment leasing, to which tax and administrative preferences are added. According to Olga Kuzmicheva, the main thing that business representatives should have is a desire to develop and offer their ideas.
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