RS Especially for web The appeal of Tver to investors

The appeal of Tver to investors

August 2013

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The region's convenient location, the fact that major transport links are close at hand, the presence of highly qualified human resources and, above all, support from the local authorities: these are the elements that make the region attractive to investors. The factors which turned out to play a key role in convincing people to start doing business in Russia, and in Tver specifically, were set out at the Second International Investment Forum in the Tver Region by business representatives themselves.

The issue of how to improve the business climate and attract investors is a standard topic at any economic forum. The essential conditions required are well-known - they are regularly enumerated by civil servants and consultants. In Tver, investors already operating in the region spoke about why they had chosen to conduct business here, of all places.

"I'm amazed how much has changed in Tver in the space of just a year. There was a time when most people in the business world were desperate to get a place in one of the business parks in the south of Moscow. 14 applications have to date been made to work in the business park in Tver," claims the CEO of German Management Group, Jurgen Wirtz. Entrepreneurs are attracted first and foremost by the region's unique location and the fact that a large amount of road construction has been taking place. The introduction of the high-speed 'Sapsan' train has made it much easier to travel to Tver. It now takes roughly an hour to get from Moscow to Tver. "It's easier for me to get from Moscow to Tver on the Sapsan than to travel to the south of the capital," Wirtz confirms.

"There is now a need to develop infrastructure, including transport infrastructure, by introducing mechanisms for public-private partnership," according to Dmitry Tvardovsky, an advisor to the Russian Federation's Transport Minister. "Moreover, a professional management team ought to be working with the regional administration." "Logistics and support from the regional government are important," confirms the CEO of Knorr Bremse, Demandt Atsis.

Civil servants responsible for attracting investment use a range of measures to deal swiftly with any issues arising among members of the business community. "For major investors there is a 'one-stop shop' in operation, with a specific expert attached to a company in order to solve any problems that company may have," says Igor Kozin, the Minister of Economic Development for the Tver Region, as he unveils the secrets of attracting investment. "All major investors have a direct line to the region's governor."

Overall, the steps taken by the regional authorities have led to a situation in which Tver boasts some of the best figures in the country for industrial production and the retail sales index, and is in the top-five regions in terms of development.

"The key decision facing investors is where to locate their plant," says the director of Hitachi Construction Machinery Eurasia Manufacturing Co, Ltd. MasafumiSenzaki. "It is important to be close to the markets and have good road links." Whether the region can provide the right intermediate processes (e.g. painting or welding on the car assembly line) is also taken into account.

"It is absolutely essential that the region's administration provide genuine assistance on issues related to use of the land and the soil," comments Vladimir Galenko, the financial director of the "Upper Volga Brick Plant". After all, it is far from straightforward to re-allocate land plots from one category to another.

For any investor, there are four key considerations: infrastructure, logistics, a well-costed financial model and support from the regional administration

In addition to support from the city administration and convenient transport infrastructure, another pre-requisite when choosing a production site is to have a talented staff pool readily available. "Tver is a city with an excellent location. Moreover, the city boasts staff cadres that are practically fully trained, and a multitude of further education institutions and semi-vocational institutions, with which we work," says Sonosuke Isii, CEO of Hitachi (which manufactures hydraulic diggers in the Tver Region).

The fact that there is a good level of education among those living in the region is also important. The companies collaborate with educational institutions in order to prepare professionals. "Our welders have to satisfy extremely tough requirements," says MasafumiSenzaki. "From among all those taking part, we selected 10 candidates, seven of whom managed to pass the exams."

"There are four things you look for straight away as an investor: infrastructure, logistics, a carefully costed financial model and support from the region's administration," concludes Raymond Fadel, the Director for Russia at AECOM (a company engaged in engineering and project planning and management). For that reason, investors, when they discuss ways of making the region more attractive to investors, talk about the need to accelerate and expand construction of road and other infrastructure. The point is that German companies may come into the frame, but Japanese companies will only invest in places where there is already "a pipeline, and quotas, and the right conditions for ex-pats", adds MasafumiSenzaki.

Formalizing many of these aspects when planning investment projects would reduce investors' losses, according to Robert van der Noordaa, director for development and consulting at Tebodin Russia (a company involved in industrial consulting, engineering, procurement and project management). "It is very hard to provide an overall quote and to cost the project. The discrepancy between the quote and the actual cost may be as much as 40%," he adds.

And the crucial thing is not to forget about those investors who are already here, adds the EBRD's director for industry and agricultural trade in the Russian Federation, Lindsey Forbes. "After all, they might recommend the region to their compatriots as a good area in which to invest," he adds. "So my advice is to give them even more than you said you would."

How do Japanese companies, for example, go about investing in Russia? "First of all we divide up the sectors that are of interest to us, then we look for investors," says OkhasiIvao, CEO of the Japanese Nomura Research Institute, Moscow branch. "It's essential that the region is situated in a convenient location, the transport infrastructure must be well-developed." Investors tend to like plots with an area of 3-5 ha. The plot should already have all the required engineering infrastructure in place. It is also important that experts and a workforce are available, with affordable salaries, and effective tax exemptions, for local investors and others. It is also essential that ex-pats can be provided with good living conditions: a safe environment, good shops and amenities, etc.

Maria Selivanova, editor, www.opec.ru
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