Rostov Region has several competitive advantages, which create favorable conditions for attracting investment and constant development.
The main advantages are:
- its favorable geographical position, which gives the region the status of being the gateway of Russia to the countries of the Black Sea area, the Mediterranean and the Caspian region;
- the great geopolitical importance of the region for the whole of Russia;
- the well-developed transportation infrastructure, represented by the railroad and the motorways of federal importance, sea and river ports and the international airport in Rostov-on-Don;
- favorable and abundant natural resources in the region (moderate continental climate; chernozem comprising 65% of the soil resources)
- well-developed production industry, led by machine building;
- a rich raw materials base for the processing industry;
- a wide variety of raw materials and mineral resources;
- the existence of a highly-qualified and active workforce;
- the dynamic formation of a market institutions infrastructure (banks, insurance firms, investment companies, leasing organizations, etc.);
- the existence of a good legislative basis that contributes to the investment appeal of the region;
- high consumer demand; and
- a stable social and political situation.
At the beginning of 1998, Rostov Region became one of the first federal units in Russia to adopt the Regional Law “On Supporting Investment Activities in Rostov Region”. Adopting this law made a foundation for the formation of the legislative basis in the region that was mainly directed towards creating a favorable situation for the development of competitive business that would fit into the framework of the rigid demands of the world market. The legislation was also meant to ensure that the financial situation of the real sector of the economy would be strengthened, along with creating stable income sources for the budget.
Today the following regional laws make up the core of the investment legislation in the region:
- “On Investment in Rostov Region“ (adopted in September 2004);
- “On the Development Budget of Rostov Region“ – regulating the basic features of the formation and spending of the part of the regional budget allocated for investment;
- “On the Investment Tax Credit in Rostov Region“, describing the procedures of giving an investment credit for regional tax payments (to the extent of the federal unit’s authority);
- “On the Priority Development of the Mining Territories in Rostov Region“ (adopted in April 2004).
Adopting these laws introduced much greater variety into the inventory of the forms of state support given to the enterprises that are involved in investment projects. Those forms include:
- providing state guarantee for credits and loans;
- giving investment tax credits;
- providing the enterprises with tax advantages (in the amounts equal to the transfers to the regional budget: the property tax, the income tax and the land tax);
- subsidizing the enterprises for the part of the expenses connected with the interest payments on the loans and credits taken by the enterprise:
- for the implementation of investment projects;
- for replenishment of circulating assets;
- making investments from the budget on the condition of creating regional property.
The formation of the legislative basis of investment activities was firmly founded on the principles of full compliance of the regional laws with the legislation of the Russian Federation. This creates an opportunity to consolidate the funds of the budgets on all levels for the purpose of solving the most important, highest-priority tasks both on the regional and on the federal levels.
Foreign investments in the region enjoy full and unconditional legal protection. Foreign investors can direct their funds to the enterprises representing any branch of the economy, they can participate in all kinds of activities, with the exception of those branches, industries, activities and locations in the region, where investment activity is limited by the laws of the Russian Federation.
In 2004, the Regional Administration together with the National Agency for Direct Investments (Moscow) created the Strategy for Attracting Investments in Rostov Region. (The agency was selected for this project by means of a tender in September 2003).
The creation of this document is a new step in the development of the investment processes in the region. It illustrates the general changes in the approach to the regional investment policy itself.
The strategy defines the aims of developing the investment activities in the region and the necessary volumes of investment resources to be attracted. It also describes the advantages that the region can offer to potential investors. In addition, the document reveals the priority sectors and industries for investment, the target investors and the main directions of the region’s marketing program. The strategy includes an action plan for creating favorable conditions for investment in the area and promoting the positive image of Rostov Region in Russia and abroad.
The fact of bringing in an outside organization that would deal with attracting investments and developing investment activities in the region by means of a tender became part of an absolutely new concept of organizing the work in this area in Rostov Region. In this case, it was the Agency for Investment Development of Rostov Region.