A big city open for investment: what Moscow has to offer

A big city open for investment: what Moscow has to offer
In recent years, Moscow has become one of the most attractive cities for investment. Business development costs are falling, and the city is introducing investor incentives.

Direct foreign investment in Moscow accounts for half of the country’s total. Of all of Russia’s foreign corporate offices, 60 percent are in Moscow and 90 percent of foreign banks and other international financial organisation head offices are also in Moscow.

Moscow rivals other big cities of the world in terms of investment opportunity. This major financial centre continues to develop its infrastructure and welcomes companies from all over the world to join its projects. The city offers benefits for foreign investors. This policy has pushed Moscow to the 40th place, up 84 positions, in the Doing Business 2017 ranking compared to 2010.

Another factor behind Moscow evolving into one of the most attractive cities for investment is its revised economic policy: in the past few years, business development costs in the city have decreased due to currency rate valuations. The costs of infrastructure, salaries and property leases plummeted by 30-60 percent between 2014 and 2016.

Where investors are most welcome

The city of Moscow is working to attract investment into the real economy sector, namely import replacement, exports and public-private partnership in transport and social infrastructure, and also development of the city’s new districts. Investors in these projects can expect favourable treatment, including tax incentives.

Moscow offers foreign businesspeople projects in a variety of areas, including the traditional construction sector. On the international market, the Russian capital presents projects for developing the city transport system, redeveloping industrial zones and residential areas, and improving embankments and parks. Investors are welcome to help in creating the relevant infrastructure (car parks, transport interchange hubs, office centres), landmark restoration, and construction of private hospitals, nurseries and schools.

Another promising sector for investors is industry – the city supports innovation companies. The city continues to open techno cities and techno parks for high-tech business in Moscow where investors enjoy benefits and can receive consultations, equipment and services.

Incentives for investors

Moscow has become an attractive investment destination due to its stable budget policy, curbs on tariff growth, growing budget investment, removal of administrative barriers and favourable conditions for business development. Comprehensive support is offered to companies working in the real sector. If run efficiently, businesses enjoy local tax breaks of between 17 and 25 percent. They also have preferential treatment in income tax, property tax, land tax and land lease tax.

Innovation companies are brought together in techno cities and techno parks - Moscow already has about 30 of them. Techno park residents enjoy tax benefits and lower lease rates, they also have access to commercial real estate, land for construction, and other privileges.

Businesses that are in the project design phase, or have facilities under construction or technically upgrading are also eligible for the Moscow Government’s backing. They can be granted the status of investment priority project, which entitles them to additional benefits and preferential treatment.

The city is also working to set up a special economic zone in Zelenograd to encourage scientific research and high-tech production. This area will be a customs-free zone with no customs duties or VAT on imported materials and equipment.

Where to find information

Foreign businessmen looking to invest in Moscow-based projects are advised to visit the Moscow investment portal, which provides the latest statistics, analytical materials, information on government support measures, the city’s industrial and innovation infrastructure and other data.

Since it was launched three years ago, the website has attracted 3 million users, including 15 percent foreign users. The portal “speaks” five languages: Chinese, German, English, Arabic and Spanish.

The most popular sections include: Auctions, The Investor’s Guide, The City’s Interactive Investment Map, News and Events, Success Stories of Companies in Moscow, and also online services. Users can find information here on auctioned properties, procedures for start-ups in Moscow, investment project profiles, and other useful information.

This information resource is designed to help businesspeople save time and enjoy efficient cooperation with the city’s authorities. They can set up a personal investor account and use the direct online messaging option.

Transparent purchases

Moscow is a major European consumer market: the population is nearing 20 million, and its consumer spending (10 trillion roubles per year) puts it in third place among European nations. Therefore, apart from investment, the Russian capital invites businesses to cooperate in government purchases.

In terms of transparency, Moscow has been at the top of the national ranking for five years. In 2016, city contractors held auctions worth 1.45 trillion roubles – one in five purchases is made in Russian regions.

The city seeks to engage an increasing number of small and medium-sized businesses in government purchases. To make the process more convenient, the authorities have set up a supplier portal to introduce electronic contract procedures thereby saving entrepreneurs’ time.