INVESTMENT AUDIT OF THE UDMURT REPUBLIC VERSION 2.0
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INVESTMENT AUDIT OF THE UDMURT REPUBLIC VERSION 2.0
UDMURTIA ON THE MAP OF RUSSIA
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MADE IN UDMURTIA
41,200 SQ KM
Moscow
Kirov
Perm
Nizhny Novgorod
Area Izhevsk
(56th/85*)
Kazan Ekaterinburg
Ufa
1.5 M
Samara
Population
(30th/85*)
RUB 622.7 BILLION1 UDMURTIA’S LARGEST CITIES
970 KM
GRP IZHEVSK 650,000 Distance from Izhevsk to
(33rd/85*) Moscow:
SARAPUL 98,000
2 hours
VOTKINSK 98,000
18 hours (1200 km)
412,3001
GLAZOV 93,000
RUB
GRP per capita
(42nd/85*) KEY TRANSPORT INFRASTRUCTURE:
Trans-Siberian Railway (Balezino Station, Glazov Station)
¹P
reliminary data for 2018, Ministry of P320 Elabuga-Izhevsk regional highway, connection to M7 Volga
Economy of the Udmurt Republic
Udmurt Republic
* Ranking among Russian regions in 2017
Volga Federal District (VFD)
Source: PwC analysis on the basis of Rosstat data and geodataIGOR SHUVALOV MAKSIM ORESHKIN DENIS MANTUROV DMITRY PATRUSHEV
THE REGIONAL ADMINISTRATION HAS INITIATED
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Chairman of VEB.RF Minister of Economic Development Minister of Industry and Trade of Minister of Agriculture of the
of the Russian Federation the Russian Federation Russian Federation
AN INVESTMENT AUDIT TO SUPPORT UDMURTIA’S
MADE IN UDMURTIA
LONG-TERM ECONOMIC DEVELOPMENT
2014 2017 2019 2020
“VEB.RF, the Russian Export “Udmurtia’s focus on driving non- “Udmurtia is a region with “Udmurtia’s climate and
Centre, DOM.RF and the SME resource-based exports, training enormous investment potential environment provide an excellent Investment strategy Map of investment Investment audit Udmurt Republic 2027 Social
Corporation are providing the entrepreneurs and promoting and ambitious goals to develop foundation for the further opportunities and Economic Strategy
Udmurtia’s 2025 An investment audit of the
people of Udmurtia with essential entrepreneurship, enhancing the manufacturing sector. There development of the agribusiness, Investment Strategy is The Udmurt Republic Udmurt Republic has been The strategy will be based on
tools to attract investors, open new productivity and adopting best is intense demand for investment food, raw materials and consumer aimed at enhancing the undertook a massive conducted, resulting in the growth areas identified during
manufacturing sites, create new practices from other regions, with among companies in Udmurtia goods sectors. Fast growth republic’s investment stock-taking of its following outcomes: the investment audit.
jobs, upgrade existing enterprises the proper implementation, is and strong collaboration between has helped to drive promising appeal and nurturing a investment resources
━━ the leading ━━ a roadmap of priority
and promote goods made in definitely the right way to develop the regional administration and investments in Udmurtia’s favourable environment for and developed a map of
factors promoting investment areas
Udmurtia in foreign markets. VEB. the region’s economy.” the Industrial Development Fund agricultural sector, where there investment projects. investment opportunities:
the investment has been developed,
RF has forged a comprehensive established by the Russian Ministry are vast opportunities on both the madeinudmurtia.ru
The strategy’s main attractiveness of the including a set of
partnership with the regional of Industry and Trade. Regional Russian and international market.”
objectives are to: Udmurt Republic measures for targeted
administration. We are ready companies are participating in
have been confirmed, work with investors,
to participate in the region’s joint modernisation initiatives and ━━ improve the
including in the five as well as a set of
priority investment projects on setting up new production lines competitiveness
industries selected for measures to improve
transport infrastructure and urban and import-substitution products. of regional
an in-depth audit; the investment
development, including a major As a result, Udmurtia today is one manufacturing;
━━ based on an analysis environment.
upgrade of public transportation of the 10 leading Russian regions ━━ ensure a better quality
networks. Another economic in terms of private equity raised of the market and
of life for the people;
priority is the diversification via the Industrial Development resources in the
of Udmurtia’s defence sector. Fund. In 2018, companies filed ━━ retain and develop Udmurt Republic, 10
The region’s highly educated RUB 1 billion worth of requests human capital; priority areas have
population and human capital with the Fund and signed RUB ━━ develop small and been identified (out of
resources provide Udmurtia 500 million worth of contracts. medium enterprises; 100) to attract strategic ALEXANDER BRECHALOV
with the opportunity to enhance In 2019, Udmurtia plans to attract investors to the Udmurt
━━ drive well-balanced Governor
existing manufacturing capacities around RUB 750 million via the Republic, and related of the Udmurt Republic
regional development.
and produce highly competitive Industrial Development Fund to areas have been
civilian-use goods using low-cost develop manufacturing projects. determined for further
financing tools.” The region’s cluster of oil and investment;
gas equipment manufacturers ━━ the advantages of
is going to be a powerful driver the Udmurt Republic
in developing the oil and gas have been identified
sector. Furthermore, the region to attract strategic
is successfully facilitating the investors for the 10
conversion of military enterprises priority areas, including
to civilian-use manufacturing, and, a list of potential “We will use the results of PwC’s investment
in the process, creating jobs and regional partners;
demand for further investment.” audit to build a new strategy to develop the
regional economy through 2027.”THE FIRST RESULTS OF THE INVESTMENT AUDIT
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OF THE UDMURT REPUBLIC
MADE IN UDMURTIA
MADE IN UDMURTIA
ESTABLISHMENT OF OOO SOFTLINE OUTSOURCING Project Description:
Establishment of OOO Softline Outsourcing, which provides a range of staffing and
SOFTLINE IS OPENING AN OFFICE IN UDMURTIA TO OUTSOURCE ACCOUNTING SERVICES accounting outsourcing services.
400 JOBS
Investor: Softline
UP TO
Number of jobs: up to 400
Taxes to the Consolidated Budget of Udmurtia: RUB 46 million a year
Status: The office has been launched and the first employees hired.
ESTABLISHMENT OF A RUSSIAN POST R&D CENTRE Project Description:
Establishment of a Russian Post R&D Centre to develop end-to-end digital
THE RUSSIAN POST IS OPENING AN R&D CENTRE TO DEVELOP END-TO-END TECHNOLOGIES technologies.
300 JOBS
Investor: Russian Post
Number of jobs: up to 300
Taxes to the Consolidated Budget of Udmurtia: RUB 44 million a year
Status: Office is being arranged and advance team hired.
IZHEVSK AIRPORT RENOVATION Project Description:
Izhevsk Airport renovation
NEGOTIATIONS WITH A STRATEGIC INVESTOR ARE UNDERWAY TO ATTRACT PRIVATE INVESTMENT
Implementation term:
TO A PROJECT ON RENOVATING THE IZHEVSK AIRPORT 2019-2024 (2019-2020: design and price audit, 2021-2014: reconstruction and construction)
3.4 BILLION IN PRIVATE INVESTMENT
Total investments:
RUB 6.8 billion, including:
RUB Federal budget funds, RUB 3.4 billion
Private investments, RUB 3.4 billion
Status: Negotiations with the strategic investor are underway.
Source: Development Corporation of the Udmurt RepublicMIKHAIL BAZHENOV
THIS INVESTMENT AUDIT OF THE RESULTS OF THE INVESTMENT AUDIT HIGHLIGHT UDMURTIA’S
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PwC Partner
THE UDMURT REPUBLIC IS AN FAVOURABLE INVESTMENT CLIMATE
MADE IN UDMURTIA
MADE IN UDMURTIA
INDEPENDENT ASSESSMENT
OF THE REGION’S POTENTIAL
FROM THE INVESTOR’S POINT
“We are pleased to present the final results of our investment audit
of Udmurtia. The project was initiated by the regional administration
to benchmark the republic’s investment potential and identify high-
OF VIEW Key advantages of Udmurtia identified in the
potential and promising investment and growth areas. investment audit:
In the fall of 2017, Alexander Brechalov was appointed the governor 1. Our retrospective analysis has demonstrated that the 9. Udmurtia provides investors with the opportunity
of Udmurtia. One of his first announcements was to focus on
region’s favourable business climate can already be to get their businesses up and running quickly at
budget optimisation, business development and the ambitious goal
credited with fostering investment successes. launch-ready sites.
of attracting additional direct investment. Much has already been
done to improve the region’s investment appeal — administrative Key objectives of the investment audit: 2. The regional administration is highly accessible for 10. Udmurtia has a highly educated population to
barriers have been reduced, a package of tax and financial benefits everyday work with investors. support investment projects, including 16 universities,
1. Identify the competitive advantages of
has been developed and investment sites at our industrial parks and with 67% graduates working in the region.
priority social and economic development areas (PSEDAs) have been
Udmurtia for direct investment 3. The regional administration has taken special
established. These initiatives are ongoing. 2. Identify direct investment growth points in measures to focus on important dimensions of social 11. Udmurtia offers a wide range of tax benefits to
Udmurtia and economic development. investors, including tax incentives in the Glazov and
Based on the results of the investment audit in the Udmurt Republic,
we identified 10 key areas to attract strategic investors and prepared 4. Udmurtia provides investors with relevant Sarapul priority social and economic development
3. Prepare recommendations on the
a Roadmap for the Udmurt Republic to work with these investment information about opportunities in the region via the areas (PSEDAs).
development of regional infrastructure
areas, including targeted work with potential investors and other
modern communication channels. 12. Ivestors and their projects receive turn-key support in
interested parties, as well as a range of measures for additional 4. Develop a roadmap for priority investment
5. The consumer market in and around Udmurtia is Udmurtia with the help of a one-window system.
support of investors, including financial and administrative support areas
measures, providing the necessary infrastructure and personnel for more than RUB 2 trillion. 13. Over the last three years, investment projects in
new projects. Udmurtia have received more than RUB 2.5 billion
6. PwC analysis has identified investment appeal factors
The description of investment opportunities includes: justification across five industries selected for an in-depth audit. from federal development institutes and more
of market potential, required investment volume, range of potential than RUB 2 billion from regional and municipal
profitability, list of potential partner companies in the region, 7. PwC analysis has identified ten top priority
development institutes.
description of the production, research and personnel base in the investment opportunities to attract strategic investors
region, description of specific investment sites, support measures in to the Udmurt Republic. 14. In 2018, for the first time in the last five years, the
the region. growth of capital investments was above 10%.
8. The transport infrastructure in Udmurtia offers
This information is intended for potential investors and partners,
significant advantages to investors.
development institutes and federal authorities.”CONTENTS 3
BENEFITS FOR INVESTORS
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IN UDMURTIA — 53 P.
MADE IN UDMURTIA
MADE IN UDMURTIA
3.1 Rankings — 54 p.
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WHERE TO INVEST 3.2 Transport infrastructure — 56 p.
IN UDMURTIA — 11 P. 3.3 Human capital — 60 p.
3.4 Investment sites and industrial parks — 62 p.
1.1 High-potential investment areas
APPENDICES — 79 P.
in Udmurtia — 12 p. 4
1.2 Investment opportunities in Udmurtia — 14 p.
1.3 PPP opportunities in Udmurtia — 36 p. 4.1 Business success stories in Udmurtia — 80 p.
4.2 Advantages of investing in five industries selected
for an in-depth audit — 95 p.
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REGIONAL SUPPORT FOR INVESTORS 4.2.1 Dairy farming — 96 p.
IN UDMURTIA — 39 P. 4.2.2 Wood — 100 p.
4.2.3 Machinery — 104 p.
4.2.4 Food production — 108 p.
2.1 Tax incentives — 40 p.
4.2.5 Petroleum refining — 110 p.
2.2 Financial incentives — 42 p.
4.3 Investment projects of the Udmurt Republic proposed for joint
2.3 Infrastructure incentives — 48 p. implementation — 113 p.
2.4 Administrative incentives — 51 p. Key contacts in the regional administration — 136 p.11
MADE IN UDMURTIA
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WHERE TO INVEST
IN UDMURTIAHIGH-POTENTIAL INVESTMENT AREAS IN UDMURTIA
For detailed advantages of investing in the five key industries in Udmurtia, please
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PWC ANALYSIS IDENTIFIED THE INVESTMENT APPEAL refer to Appendix 4.2
FACTORS ACROSS FIVE INDUSTRIES SELECTED
FOR AN IN-DEPTH AUDIT
ECONOMIC PERFORMANCE AND INDUSTRIAL PRODUCTIVITY HUMAN CAPITAL BUSINESS EXPENSES
DAIRY FARMING
4%
Livestock breeding makes up a larger share
5.9 TONNES
Milk yield per cow at regional farms is higher than in the most
Izhevsk State Agricultural Academy
A field-specific university that provides
education programmes specialised for the
4%
The employment rate in the sector is higher
RUB 1.2/SQ M Priority industry in
the Sarapul PSEDA
The average cost of acquiring industrial land is lower
of regional company revenues in Udmurtia other leading dairy production regions. agricultural sector. than the national average and at the level of than in comparable leading regions. The total cost of
than in other leading milk production leading peer regions. connecting a standard production facility to utilities
regions. (electricity, water, waste disposal, heating) in the Udmurt
Republic is lower than in four out of five comparable
regions.
PETROLEUM REFINING Udmurtneft
Belkamneft Gutseriev Oil and Gas Institute
Annual oil production in Udmurtia is 11 million Oil production at two new fields in Udmurtia is scheduled to A field-specific university that provides specialised
tonnes. launch in 2021. education programmes for the oil and gas sector.
WOOD
9%
Investment as a share of company revenues is
1.3 %
Industry’s share in the revenue of all Udmurtia companies is
Izhevsk State Agricultural Academy
Job placement rates over the last three
years have been above 90%.
0.5 %
Employment in the sector is higher than the
higher than the national average. higher than the national average. national average.
190/SQ M
Priority industry
RUB in the Glazov and
2% >10 % 12
Sarapul PSEDAs
MACHINERY Kalashnikov Izhevsk State Technical University
The average cost of acquiring industrial land is
A field-specific university that provides education
lower than in comparable leading regions.
for machine building industries.
Machine building as a share of a company Of the Russian rolled steel is produced in the Volga Federal Companies have signed specialist education The total cost of connecting a standard production
revenues is higher than the national average. District. contracts with the university. facility to utilities (electricity, water, waste disposal,
The regional administration supports machine building heating) in the Udmurt Republic is lower than in 12
companies in obtaining reduced-rate loans from federal out of 13 comparable regions.
development institutes, including the Industrial Development
Fund.
FOOD PRODUCTION
2%
Investment as a share of company revenues is
>80 %
The share of profitable businesses in the sector in
at the level of most peer regions. Udmurtia is at the level of comparable leading regions.
Sources: refer to Appendix 4.2INVESTMENT OPPORTUNITIES IN UDMURTIA
PWC ANALYSIS IDENTIFIED 10 PRIORITY INVESTMENT
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OPPORTUNITIES TO ATTRACT STRATEGIC INVESTORS
MADE IN UDMURTIA
MADE IN UDMURTIA
TO UDMURTIA
GENERAL MACHINERY DEVELOPMENT OF METAL-PROCESSING MACHINES GENERAL MACHINERY LAUNCH OF EQUIPMENT PRODUCTION FOR MUNICIPAL SOLID WASTE PROCESSING AND
Processing centres:
━━ Metals-processing presses
SORTING
1. Separators for automatic waste sorting
━━ Small presses for solid municipal waste processing
2. Non-technology-intensive components for waste sorting plants:
━━ Turning machines
━━ Conveyors
The second stage of the project may include localisation of additional niche products, including
━━ Hydraulic drives
industrial robots and 3D printers for handling metal.
━━ Metal structures, etc.
GENERAL MACHINERY EXPANSION AND LOCALISATION OF PUMP AND COMPRESSOR PRODUCTION ELECTRICAL LAUNCH OF PRODUCTION OF DIGITAL EQUIPMENT AND EXPANSION OF LOW-VOLTAGE
━━ Rotor pumps
━━ Screw compressors ENGINEERING DISTRIBUTION EQUIPMENT PRODUCTION
━━ Cryogenic pumps 1. Equipment for digitalisation of electrical grids:
━━ Product pumps ━━ Digital substations with automatic control systems
━━ Block oil pump stations ━━ Digital current and voltage transformers
━━ Other types of products in accordance with the sectoral plan for import substitution issued by the 2. Low-voltage devices (circuit breakers and relays)
Ministry of Industry and Trade of Russia for the oil and gas sector 3. Low-voltage equipment sets
ELECTRONICS LAUNCH OF DEVICE AND SENSOR PRODUCTION, INCLUDING SMART ELECTRONICS LAUNCH OF TELECOMMUNICATION EQUIPMENT PRODUCTION
CITY SOLUTIONS ━━ Traditional telecommunication equipment, including base stations, switches and routers
━━ Pollutant emission control devices at enterprises (part of automatic emission control systems) ━━ Equipment for 5G new generation networks, including micro- and macrobase stations, 5G modules
━━ Smart city devices and sensors (noise and temperature sensors, smart lighting, smart traffic lights)
━━ Smart utility meters (electricity, water, gas)
PHARMACEUTICALS LAUNCH OF PHARMACEUTICAL PRODUCTION WITH SUBSEQUENT DEEPENING OF
LOCALISATION AND SUBSTANCES PRODUCTION
ELECTRONICS LAUNCH OF MEDICAL EQUIPMENT PRODUCTION ━━ Antibiotics
━━ Equipment for oncological diagnostics ━━ Hormonal drugs
━━ Equipment for cardiovascular treatments ━━ Vitamins
━━ Medical robots ━━ Insulin-based drugs
━━ Portable medical devices ━━ Other drugs that are currently imported to Russia
━━ Implantable items The second stage of the project will include production of pharmaceuticals for specified items.
CHEMICALS LAUNCH OF INDUSTRIAL PAINTS AND VARNISHES PRODUCTION FOOD PRODUCTS LAUNCH OF SERUM PRODUCTION FOR DRY INFANT MILK FORMULAS AND CONSTRUC-
Industrial paints and varnishes: TION OF DAIRY FARMS
━━ for protection of metals and pipes
━━ paints for automobile production ━━ Dry infant milk formulas with subsequent deepening of localisation and serum production for dry
━━ paints for shipbuilding milk formulas and dry milk
━━ paints for furniture production ━━ Creation of dairy farms that will meet the needs of new projects for processing raw materials
━━ paints for rail transportINVESTMENT OPPORTUNITIES IN UDMURTIA
DEVELOPMENT OF METAL-PROCESSING MACHINES
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MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
Creation of a joint venture by expanding the current Kalashnikov Engineering (part of the Rostec Group) manufactures manufactures its own machines.
production of Kalashnikov Engineering with the involvement
of a foreign strategic partner or creating a new production RUB 95 BILLION OAO NITI Progress and the Votkinsk Factory manufacture metalworking machines and parts upon
using the AO Bummash metal processing enterprise. Machines market in Russia in 2018. individual orders, including internally-designed machines.
Partners in project development could be attracted,
including the Votkinsk plant or OAO NITI Progress.
RUB 42.1 BILLION INTEGRATION OF THE NEW PROJECT IN THE REGIONAL ECONOMY
Niche market for import substitution in
POTENTIAL PRODUCTS Russia in 2018. AO Bummash and Votkinsk Factory Cast metal parts of machines
━━ processing centres
━━ High moral and physical depreciation of capital assets
━━ metals-processing presses Enterprises from the Ural Federal District Supply of metals to Udmurtia
in Russian machine building (about 50%). Digitalisation
━━ small presses for solid municipal waste processing (up
of enterprises requires renovation of a vast amount of
to 3 tonnes)
machines.
━━ turning machines
━━ Imported machines accounted for 96% of purchases in
2018. SITE AND REGIONAL PREFERENCES
━━ Legislation stimulating localisation is being updated,
The project may be implemented using the production facilities of Kalashnikov Engineering or AO
including the import substitution plan of the Ministry
of Industry and Trade of Russia as of 2015, soft lending
Bummash, or at the Sarapul or Glazov PSEDAs, with appropriate benefits.
(at 5% rate since 2018) by the Industrial Development
Fund for launching machine-tool building projects, and
prohibition on purchasing foreign machines if there are HUMAN CAPITAL
Russian analogues (since March 2019).
Graduates of Izhevsk State Technical University with a degree in design and technological support for
engineering production (1,784 students in 2018), as well as graduates of Votkinsk Industrial and Izhevsk
POTENTIAL MARKET Engineering Schools with a degree in adjuster of machines and equipment in machining (49 and 90
Consumers of the machines may include enterprises students, respectively, in 2018) could be involved.
engaged in metalworking, machine building and automobile
manufacturing. Udmurtia is favourably located in the Volga
Federal District and near the Ural Federal District, which
KEY PROJECT PARAMETERS are key engineering centres. In the region, machines are
purchased by Kalashnikov Concern, Izhmash Concern,
RUB 0.5-3.0 BILLION
Votkinsk Plant, Izhneftemash, Izhstal, LADA Izhevsk, etc.
In the Volga Federal District and closely located regions
in the Ural Federal District, potential consumers include
potential investment volume ChTZ, ChTPZ, Uralskaya Kuznitsa (Chelyabinsk Region),
10.7-27.4 %
Uralmashzavod and Uralvagonzavod (Sverdlovsk Region),
AvtoVAZ and RCC Progress (Samara Region), KAMAZ and
KVZ (Republic of Tatarstan), and GAZ and Sokol (Nizhny
range of potential profitability Novgorod Region).
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF EQUIPMENT PRODUCTION FOR MUNICIPAL SOLID
1
Dragunov Izhevsk Industrial College, Izhevsk Polytechnic College, Sadovnikov Votkinsk Engineering College, Glazov Polytechnic College,
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Sarapul College of Mechanical Engineering and Information Technology, Izhevsk Assembly College and Shutov Radiomechanical College.
WASTE PROCESSING AND SORTING
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
70 MILLION TONNES
The launch of production of separator equipment for OOO Spetsavtohohozyaystvo is the regional municipal solid waste management operator responsible
automated waste sorting with the involvement of a foreign
for establishing waste sorting facilities in the Udmurt Republic. Kalashnikov Engineering, AO SEGZ and
partner (technology owner). Localisation is possible at the amount of municipal solid waste generated in
facilities operated by Kalashnikov Engineering, AO SEGZ (part
NITI Progress have facilities for tool production and machine building (localisation of separators is
Russia in 2018 possible).
of the Rostec Group) and NITI Progress.
220 PLANTS
The production of non-technology-intensive components
on contract for waste sorting facilities is possible at
facilities operated by OOO IzhMSK, AO Bummash, OOO
for municipal solid waste processing and disposal
INTEGRATION OF THE NEW PROJECT IN THE REGIONAL ECONOMY
Donvard Hydraulic Systems, OAO Izhneftemash, OOO NPO
are planned to be built by 2024 in Russia
Gidrosistemy, Votkinsk Factory and NITI Progress.
━━ As part of the National Ecology Project, Russia is
OOO IzhMSK Conveyors
planning to increase the share of sorted municipal solid
POTENTIAL PRODUCTS waste from 7% to 60% by 2024. AO Bummash, Votkinsk Factory Shaped casting, metal structures, metal processing
━━ The Russian Environmental Operator (REO) plans to metal processing
━━ Separators for automatic waste sorting
stimulate localisation of equipment for sorting plants.
━━ Non-technology-intensive components for waste
By 2024, it is planned to achieve reduction in the share
sorting complexes, including conveyors, hydraulic OOO Donvard Hydraulic Systems, Hydraulic equipment
of equipment imported to process municipal solid waste
drives, metal structures, grinders (shafts and knives),
from 50% in 2018 to 22% in 2024. OAO Izhneftemash,
presses, tanks and storage containers, etc.
━━ The REO also plans to stimulate consumption of OOO NPO Hydrosystems
domestic equipment among regional municipal solid
waste operators by providing beneficial loans and
leasing.
SITE AND REGIONAL PREFERENCES
POTENTIAL MARKET Separator production could be implemented at sites operated by Kalashnikov Engineering, AO SEGZ,
The territorial distribution of 220 plants is assumed to NITI Progress, or at the Sarapul and Glazov PSEDAs, which offer tax and other benefits.
be proportional to the volume of municipal solid waste
generated in the regions. In Udmurtia, the launch of two
KEY PROJECT PARAMETERS waste sorting facilities and eight waste sorting stations is
expected. HUMAN CAPITAL
RUB 0.5-5.0 BILLION
Since separators are expensive products, Russia as a whole
and the Volga Federal District in particular may form a Graduates of Izhevsk State Technical University with a degree in engineering, technological machinery
potential investment volume market for them. and equipment, design and technological support for engineering production (2,418 students in 2018)
Udmurtia and neighbouring regions should become
may be involved. Graduates of technical schools with a degree in Engineering Technology (1,075
10.0-18.2 % a market for non-technology-intensive components,
since the production of such components is planned to
be concentrated in close proximity to the plant under
students in 2018) could also be involved.1
range of potential profitability
construction.
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
EXPANSION AND LOCALISATION OF PUMP
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AND COMPRESSOR PRODUCTION
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
INVESTMENT OPPORTUNITY KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
RUB 300 BILLION
Expansion of the current production of pumps, pumping OAO Izhneftemash, AO Votkinsk Factory, Izhdril Holding, AO IEMZ Kupol and GP Reduktor produce rotor,
equipment and compressors for the oil and gas and
drilling and electric pumps, and pumping assemblies.
utilities sectors and the localisation of new products using Pumps market in Russia in 2018.
existing enterprises with the participation of a foreign
OOO Donvard Hydraulic Systems, NPO Gidrosistemy and OOO ORION produce hydraulic equipment,
RUB 144 BILLION
partner (technology owner). Localisation is possible at including pumps and pumping stations.
facilities operated by OAO Izhneftemash, Izhdril Holding,
GP Reduktor, OOO Donvard Hydraulic Systems, NPO Market niche for import substitution
Gidrosistemy and OOO ORION. in Russia in 2018
INTEGRATION OF THE NEW PROJECT IN THE REGIONAL ECONOMY
POTENTIAL PRODUCTS ━━ Imports of pumps and compressions accounted for 68%
of consumption in Russia in 2018. As regards separate The above mentioned companies Components for pumps and compressors
━━ Rotor pumps
categories of equipment in the oil and gas sector,
━━ Screw compressors
imports make up 95% of the consumption market.
━━ Cryogenic pumps Votkinsk Factory, AO Bummash Metal cast
━━ In April 2019, the Russian Ministry of Trade adopted a
━━ Product pumps
plan for import substitution in the oil and gas sector
━━ Block oil pump stations OAO NITI Progress Equipment for service maintenance and diagnostics
(selection of enterprises and measures to stimulate
━━ Other types of products, in accordance with the sectoral
localisation are planned). of oil production equipment
plan for import substitution issued by the Ministry of
━━ The National Ecology Project includes large-scale
Industry and Trade of Russia for the oil and gas sector
modernisation of water treatment facilities. As part of
adopted on 16 April 2019 (Order No. 1329)
the comprehensive plan for Magistral, modernisation of
key oil and gas industry infrastructure is planned. SITE AND REGIONAL PREFERENCES
The project may be implemented at facilities operated by specified enterprises in the region or at the
Sarapul and Glazov PSEDAs with tax and other benefits.
POTENTIAL MARKET
The potential consumers of pumps and pumping equipment
may include oil producers in the Republic of Tatarstan,
KEY PROJECT PARAMETERS Republic of Bashkortostan and Perm Territory, as well as
water treatment companies. HUMAN CAPITAL
RUB 0.7-4.1 BILLION
Oil production is developed in the Udmurt Republic. The
key consumers of pumps and compressors include OAO Graduates of Izhevsk State Technical University with a degree in power engineering may be involved
potential investment volume Udmurtneft (Rosneft), OOO UDS Neft (UDS Group), AO (74 students in 2018).
Belkamneft (AO NK Neftisa). High margins would enable the
6.6-28.0 %
region to send supplies throughout Russia.
range of potential profitability
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF PRODUCTION OF DIGITAL EQUIPMENT
22
23
AND EXPANSION OF LOW-VOLTAGE DISTRIBUTION
MADE IN UDMURTIA
MADE IN UDMURTIA
EQUIPMENT PRODUCTION
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
RUB 269 BILLION
Launch of production of digital distribution equipment AO SEGZ produces electrical equipment, electric motors, etc.
and solutions for smart grids through localisation of
OOO ETZ Vektor and OOO ZETO ENKO are engaged in the production of low-voltage switchgears and
foreign technology could be done in partnership with local Electrical equipment market
manufacturers, including AO SEGZ, OOO ETZ Vektor, OOO
transformers.
in Russia in 2018
ENKO Plant of Electrotechnical Equipment and OOO Sarapul OOO SEMZ is implementing a project in Sarapul PSEDA on the production of complete transformer
RUB 97 BILLION
Electromechanical Plant, as well as expansion of the current substations.
capacity of low-voltage distribution equipment production
companies. Market niche for low-voltage equipment
import substitution in Russia in 2018
INTEGRATION OF THE NEW PROJECT IN THE REGIONAL ECONOMY
POTENTIAL PRODUCTS ━━ Imports account for 48% of low-voltage equipment AO IMZ Axion-holding Automated systems for electro-radio equipment
1. Equipment for electrical grid digitalisation: sales in Russia (RUB 27.3 billion) and 77% of low-voltage monitoring and diagnostics
━━ Digital substations with automatic control systems sets (RUB 69.9 billion). At the same time, low-voltage
━━ Digital current and voltage transformers devices have been included in the import substitution
AO IRZ Production of cable products and winding products
2. Low-voltage devices (circuit breakers and relays) programme under the Ministry of Industry and Trade of
3. Low-voltage equipment sets Russia (as of 2015)
━━ By 2030, PAO Rosseti is planning to modernise and
digitalise power grids by investing over RUB 1 trillion
(“Digital Transformation 2030”), which will create
demand for smart transformers and substations.
SITE AND REGIONAL PREFERENCES
The project may be implemented at sites operated by AO SEGZ, OOO ETZ Vektor, OOO ZETO ENKO or
OOO SEMZ or at the Glazov and Sarapul PSEDAs with tax and other preferences.
POTENTIAL MARKET
Low-voltage equipment can satisfy the demand from
network companies, power supply network service
companies, industrial companies, construction companies
KEY PROJECT PARAMETERS in the construction of residential areas and the population in HUMAN CAPITAL
the the Volga Federal District.
RUB 0.6-1.5 BILLION Under the digitalisation programme for electric grids, PAO
Rosseti and its subsidiaries (in particular PAO FGC UES)
Graduates of the Izhevsk State Technical University and Udmurt State University with a degree in
electrical engineering and electrical equipment (633 number of students in 2018) may be involved, as
potential investment volume may become consumers of equipment for smart grids. AO
Udmurtenergo, a branch of PAO IDGC of Centre and Volga
well as graduates of the Izhevsk Assembly and Radio-Mechanical Technical schools may also be involved
19.2-27.8 % Region (a subsidiary of PAO Rosseti), is located in the Udmurt
Republic, which could become a pilot training ground for
testing and marketing of equipment.
with specialisations in technical operation of electrical equipment, electrician, and installation and
operation of industrial equipment (1,095 people).
range of potential profitability
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF MEASURING DEVICES AND SENSORS PRODUCTION, Note. 1 Russian Ministry of Natural Resources and Ecology Order No. 154 of 18 April 2018.
24
25
INCLUDING SMART CITY SOLUTIONS
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
RUB 120 BILLION
Launch of measuring device and sensor production, AO Izhevsk Radio Plant (communication and navigation equipment, visual control devices), AO Sarapul
including smart city solutions and ecological instrument
Radio Plant (gyrostabilizers, communication equipment), AO Axion Holding IMZ (printed circuit boards,
engineering. A joint venture may be established in PAO Rosseti investments in smart meter
partnership with Izhevsk Radio Plant (IRZ), Sarapul Radio
energy-saving technologies) provide an existing manufacturing base for the innovative production of
production through 2022
Plant, and AO IMZ Axion Holding. instruments.
RUB 239 BILLION
POTENTIAL PRODUCTS funds for Smart City project in Moscow
through 2021 INTEGRATION OF THE NEW PROJECT IN THE REGIONAL ECONOMY
━━ Pollutant emission control devices at enterprises (part of
━━ In January 2019, emission fines were increased by four
automatic emission control systems)
times and the Ministry of Natural Resources of Russia OOO AMMOLIT, OOO Izhprest, OOO High Software
━━ Smart city devices and sensors (noise and temperature
ordered the largest enterprises to install automatic
sensors, smart lighting, smart traffic lights) Technology Centre, etc.
systems to control pollutant emissions.
━━ Smart utility meters (electricity, water, gas)
━━ Russia has launched a smart city project that involves
the introduction of smart solutions in 58 pilot cities, with AO IMZ Axion-holding, Component base
an emphasis on Internet of Things technology. AO Elekond, AO IEMZ Kupol,
━━ Starting from 1 July 2020, installation of smart electricity
meters will be mandatory. PAO Rosseti will install about
AO Chepetsk Mechanical Plant
22 million smart meters by 2025.
SITE AND REGIONAL PREFERENCES
The project may be implemented at facilities operated by the Izhevsk and Sarapul Radio Plants, AO IMZ
POTENTIAL MARKET Axion-Holding, or at the Sarapul and Glazov PSEDAs with tax and other benefits.
Pollutant emission control devices: 300 largest enterprises
included in the list of the Ministry of Natural Resources of
Russia through 2026 and then all first-category pollution
KEY PROJECT PARAMETERS facilities (7,406) through 2029.¹
Smart city devices: purchases will be made by Russian HUMAN CAPITAL
RUB 0.1-0.7 BILLION
regions (implementation is planned in 58 pilot cities,
including Sarapul and Izhevsk), as well as by companies that Graduates of Izhevsk State Technical University with a degree in instrumentation may be involved (176
potential investment volume are launching smart city pilot projects (PAO Rostelecom, students in 2018), as well as graduates of the Sarapul Technical School of Mechanical Engineering and
Rostec GK, Cisco).
Information Technology and the Shutov Radiomechanical Technical School with a degree in radio
20.2-37.7 % Smart electricity meters: PAO Rosseti is planning to
independently purchase and install meters (and to invest
RUB 120 billion through 2022).
equipment engineering (163 students in 2018).
range of potential profitability
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF TELECOMMUNICATION EQUIPMENT PRODUCTION
26
27
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGIONINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF MEDICAL EQUIPMENT PRODUCTION
28
29
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
RUB 281 BILLION
Launch of medical equipment production with involvement AO Izhevsk Mechanical Plant produces implantable cardiac pacemakers.
of a foreign strategic partner (technology owner). A joint
AO Izhevsk Motor Plant Axion-Holding produces cardiographs that transmit information over wireless
venture may be established with existing companies, Medical equipment market
including AO Izhevsk Mechanical Plant, AO IMZ Axion-
networks, as well as portable defibrillators.
in Russia in 2018
Holding or Kalashnikov GK). Kalashnikov GK produces single-chamber and two-chamber pacemakers and devices for therapeutic
RUB 219 BILLION
hypothermia.
POTENTIAL PRODUCTS Market niche for import substitution
━━ Equipment for oncology diseases diagnostics in Russia in 2018 INTEGRATION OF THE NEW PROJECT IN THE REGIONAL ECONOMY
━━ Equipment for cardiovascular diseases treatment ━━ The market is dynamic, with growth of 5.4% per year
━━ Medical robots between 2011 and 2018. AO Chepetsk Mechanical Plant Titanium powders
━━ Portable medical devices ━━ At the same time, growth in demand is expected to
━━ Implantable items (component base for implantable devices)
reach 5.7% on average from 2019 to 2030 following
implementation of the National Healthcare Project,
which provides for the large-scale upgrading of
equipment at medical facilities.
━━ Imports accounted for 77.8% of the market in 2018. SITE AND REGIONAL PREFERENCES
Since 2015, foreign-produced medical devices have
The project may be implemented at facilities operated by Izhevsk Mechanical Plant, AO IMZ Axion-
faced restrictions in the state procurement process,
which has helped to support localisation. The list of Holding or at Sarapul and Glazov PSEDAs, with tax and other benefits.
equipment affected by such restrictions is constantly
expanding.
HUMAN CAPITAL
POTENTIAL MARKET Graduates of the Izhevsk State Technical University and Udmurt State University with a degree in
KEY PROJECT PARAMETERS State procurements currently make up more than 80% of the radioelectronic systems and complexes, nanotechnologies and nanosystem engineering, and the design
market, and up to 99% for medical equipment for diagnosis and technology of electrical devices (780 students in 2018) may be involved.
RUB 0.2-1.7 BILLION
and treatment of cancer and cardiovascular diseases.
Sales of portable devices are possible through pharmacy
potential investment volume chains and household appliances stores. Transport expenses
make up a small share of the cost of medical equipment, so
12.1-20.5 % the deliveries may extend beyond 1,000 km.
range of potential profitability
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF PHARMACEUTICAL PRODUCTION WITH SUBSEQUENT
30
31
DEEPENING OF LOCALISATION AND SUBSTANCES PRODUCTION
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
RUB 958 BILLION
Creation of new medical drugs production by localising ZAO Rester (a subsidiary of the defence enterprise AO IEMZ Kupol).
a foreign manufacturer in the Udmurt Republic. A joint
Production of full-cycle infusion solutions was organised in 2008 jointly with the world leading Fresenius
venture may be established in partnership with ZAO Rester, Pharmaceutical market
a manufacturer of infusion solutions. The second stage
Medical Care. Manufacturing of other dosage forms (tablets, capsules) is one of the priorities for the
in Russia in 2018
of the project may include deepening of localisation and company.
RUB 424 BILLION
launch of pharmaceuticals production to meet the needs of
enterprises.
Niche market for import substitution INTEGRABILITY OF THE NEW PROJECT IN THE REGION’S ECONOMY
in Russia in 2018
POTENTIAL PRODUCTS ━━ The market is characterised by the high share held by
━━ Antibiotics imports (66% in 2018). AO IEMZ Kupol Plastic tare, containers and packaging
━━ Hormonal drugs ━━ At the same time, measures to stimulate localisation for medical products
━━ Vitamins came into force in January 2019, for example, 25%
━━ Insulin-based drugs price preference in public procurement for domestic Food industry companies Meat industry waste as a raw material
━━ Other drugs that account for a significant share of producers.
━━ The industry is also characterised by highly dynamic
for gelatine capsule production
imports to Russia
At the second stage of the project, pharmaceuticals for demand (real aggregate average annual market growth
specified items will be manufactured. rate was 5.5% in 2008-2018).
━━ An increase in demand for drugs is expected during
implementation of the National Healthcare project SITE AND REGIONAL PREFERENCES
(for treatment of cancer, cardiovascular and children’s
diseases). The project may be implemented at the Sarapul PSEDA with relevant benefits.
POTENTIAL MARKET
The Volga Federal District is the second largest medical
KEY PROJECT PARAMETERS drug market in Russia, as it covers 29.9 million people. The
District accounted for RUB 12.2 billion of imports (2018)
HUMAN CAPITAL
and RUB 16.6 billion of deliveries from other regions (2016). Graduates of Udmurt State University with a degree in pharmaceutical biotechnology, general
RUB 0.2-15.5 BILLION The largest markets include Nizhny Novgorod Region, the
Republic of Bashkortostan and the Republic of Tatarstan,
biochemistry, immunobiotechnology, biotechnology (43 students in 2018) and chemistry (108 people)
potential investment volume which together accounted for 94.6% of imports. Medical may be involved.
drugs are a high-margin product, so all of Russia could Graduates of higher educational institutions in the Volfa Federal District (Perm State Pharmaceutical
20.1-43.0 % be considered a market (the niche for import substitution
amounted to RUB 424 billion in 2018).
Academy, Samara State Medical University) may also be involved.
range of potential profitability
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the
profitability of Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF INDUSTRIAL PAINT AND VARNISH PRODUCTION
32
33
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
RUB 112 BILLION
Launch of industrial varnish and paint production with OOO Nort: production of paints and varnishes for corrosion and fire protection of
participation of a foreign company (technology owner)
wood and concrete.
in partnership with existing manufacturers in the Udmurt Industrial paint and varnish market
Republic or as a separate plant.
OOO Novy Dom: production of decorative paints and varnishes.
in Russia in 2018
Stena GK: production of innovative paints and varnishes with its own R&D centre. The company’s paint
RUB 50 BILLION
produced with nanoparticles was the only one in its niche to receive approval from Roskachestvo.
POTENTIAL PRODUCTS
Industrial paints and varnishes: Market niche for industrial paint and varnish
(import substitution) in Russia in 2018
━━ for metal and pipe protection INTEGRABILITY OF THE NEW PROJECT IN THE REGION’S ECONOMY
━━ for automobile production
━━ In 2014-2017, the industrial paint and varnish market
━━ for shipbuilding
grew by 8.8% per year, which could drive dynamic
━━ for furniture production OOO Arteko Colorants and industrial pigment concentrates
growth for the project in the future.
━━ for rail transport
━━ Localisation of production takes place mainly in the
decorative paint segment, while industrial paints and
varnishes account for almost all imports. In 2018, OOO Novy Dom Colorants and pigment pastes
imports account for 10% of the decorative paint market
and up to 45% of the industrial paint market.
━━ Industrial paints are more expensive and marginal, with
the cost per tonne exceeding the cost of decorative
paints by a factor of three or four. SITE AND REGIONAL PREFERENCES
The project may be implemented at facilities operated by OOO Nort, OOO Novy Dom and Stena GK, or
at Sarapul PSEDA with tax and other benefits.
POTENTIAL MARKET
Key consumers of industrial paints and varnishes in Udmurtia
included machine-building and metallurgical enterprises
KEY PROJECT PARAMETERS such as Izhevsk Automobile Plant, Pruzhina PNTs, Izhstal,
Axion-Holding, Izhevsk Mechanical Plant, Izhevsk Plant of HUMAN CAPITAL
Plastics, SEGZ and ChMZ.
RUB 0.5-2.0 BILLION Enterprises located in the Volga and Ural Federal Districts
may also constitute a market, including AvtoVAZ (automobile
Graduates of Udmurt State University with a degree in chemistry, as well as in chemistry, physics and
mechanics of materials (214 students in 2018) may be involved.
potential investment volume production), KAMAZ (truck manufacturing), Ural-
WagonZavod (railway engineering), ChTPZ (pipe industry),
22.0-29.3 % MMK (metallurgy), and aviation enterprises in Tatarstan and
the Ulyanovsk and Sverdlovsk regions.
range of potential profitability
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the profitability of
Russian and foreign companies in this industryINVESTMENT OPPORTUNITIES IN UDMURTIA
LAUNCH OF SERUM PRODUCTION FOR DRY INFANT MILK FORMULAS
34
35
AND NEW DAIRY FARMS IN THE REGION
MADE IN UDMURTIA
MADE IN UDMURTIA
INVESTMENT MARKET PREREQUISITES FOR NEW PROJECT ADVANTAGES
OPPORTUNITY IMPLEMENTATION OF THE UDMURT REPUBLIC
OPPORTUNITY DESCRIPTION KEY PROJECT PREREQUISITES POTENTIAL STRATEGIC PARTNERS IN THE REGION
>90%
Launch of production of demineralised serum and dry milk The Udmurt Republic is the third largest milk-producing region in Russia and one of the largest milk
for dry infant formula in partnership with a foreign company Imports account for a processors.
to localise production of breast milk substitutes (BMS) in share of dry milk formulas
Russia. in 2018 in Russia KEY CONSUMERS OF RAW MILK:
Creation of dairy farms to provide raw materials for new milk
processing projects in the Udmurt Republic expected to be
implemented in 2019-2028.
+180,000 TONNES
increase in demand for raw milk
OAO MILKOM (Sarapul-moloko, Milk processing
Izhmoloko, Glazov-moloko)
in the Udmurt Republic by 2021
POTENTIAL PRODUCTS More than 90% of breast milk substitutes on the Russian
market are imports. A number of measures to stimulate
OOO Uva-Moloko Processing Milk
and OOO DMS Vostok
━━ Demineralised serum D90 for dry infant formulas localisation in Russia is expected:
━━ Dry milk ━━ In November 2018, a Russian Government Decree was
issued on providing compensation of up to 20% of the
━━
━━
Dry infant milk formulas
Raw milk for further processing
costs to construct BMS plants in Russian regions POTENTIAL MANUFACTURERS OF D90 SERUM:
━━ Since June 2019, proposals to increase import
duties from 5% to 15% on formulas have been under PP Glazov-Moloko (OAO MILKOM) Dry milk, D70 serum
consideration.
In Udmurtia, the demand for raw milk is expected to grow by
23% (180,000 tonnes) by 2021, with a subsequent increase OOO Uva-Moloko Dry milk products
due to new processing projects in the region: and OOO DMS Vostok
━━ Construction of a plant for dry dairy products (OOO
DMS Vostok) in 2019-2028
━━ Construction of a dairy production plant (OOO Uva- SITE AND REGIONAL PREFERENCES
Moloko) in 2018-2021
━━ Modernisation of four OAO MILKOM processing facilities The project could be implemented at the Glasov and Sarapul PSEDAs with relevant tax benefits.
KEY PROJECT PARAMETERS in 2018-2024
RUB 8.7-10.0 BILLION POTENTIAL MARKET
One of the key consumers of D90 serum would be the
HUMAN CAPITAL
potential investment volume Graduates of the Izhevsk State Agricultural Academy with a degree in technology of production and
potential investor and BMS producer in Russia. The total
processing of agricultural products and in the technology of production and organisation of food
19.8-36.6 %
niche market for BMS import substitution in Russia is RUB
15.2 billion. production (625 students in 2018 was 625 people) may be involved. Graduates of the Izhevsk Trade and
The target market is CFD (99% of imports). Economic College and the Sarapul Industrial College with a degree in Technology of Milk and Dairy
range of potential profitability The key raw milk consumers include several new projects
Products (69 people) may also be involved.
involving OAO MILKOM, OOO DMS Vostok, OOO Uva-
* launch of serum production for dry infant milk formulas
Moloko and the D90 serum production project.
Source: PwC analysis based on data from similar investment projects implemented in Russia over the past five years and the profitability of
Russian and foreign companies in this industryPPP OPPORTUNITIES IN UDMURTIA MAKSIM TKACHENKO
36
37
Executive Director of ANO PPP
UDMURTIA IS ONE OF THE 20 LEADING REGIONS IN TERMS OF PPP National Centre
MADE IN UDMURTIA
MADE IN UDMURTIA
MATURITY, WITH TESTED INVESTOR SUPPORT MEASURES AND
A SUCCESSFUL PPP TRACK RECORD
“The Udmurt Republic is one of the According to the PPP development
PPP IN UDMURTIA IN NUMBERS leaders in terms of development of its rating of Russian regions as at 2019, 36
PPP institutional, regulatory and legal PPP projects with a total of RUB 21.8bn
19 36 21.8 17.8
framework. In particular, the region (including 17.8bn in private investments)
has enacted a comprehensive and in investments are underway in
RUB RUB extensive PPP project support system Udmurtia. Social infrastructure projects
TH PPP BILLION BILLION for all project stages. Under this system,
functions are allocated between
raised RUB 1.1bn in private equity,
including three sports facilities (RUB
out of 85 regions in the projects with private total PPP investments as at PPP private investments as at dedicated structures. The Ministry of 800m) and three dialysis centres (RUB
PPP development rating investments over RUB the beginning of 2019 the beginning of 2019 Economics coordinates and monitors 200m). Most projects are focused on
of Russian regions 1 million as at the beginning PPP projects on an interdepartmental utilities infrastructure, with 25 raising a
(2018-2019) of 2019 level; the Development Corporation total of RUB 6bn in private investments.”
provides comprehensive PPP project
support and the Investment Activity
and Competition Policy Council
BEST PRACTICES makes decisions on PPP projects and
developments. In addition, a wide range
Heating supplies in Izhevsk Nephrology and dialysis A sports centre with a swimming of private investor support measures
departments in Izhevsk and Sarapul pool in the village of Pirogovo has been adopted in Udmurtia, and the
Thanks to a city-wide project
regional administration has a highly
Izhevsk, all residential buildings and A project has made dialysis services This sports centre has a swimming
qualified team of PPP subject-matter
public buildings are connected to more accessible to the public. pool, gym, athletics track and
experts.
centralised heating and hot water. Next generation services are cafeteria. The 25-metre pool was
The frequency of downtimes in provided under OHI (obligatory built in compliance with FINA
heating networks and other public health insurance) policies. A total standards. The centre’s capacity is
utilities has been reduced. The total of RUB 90m was raised in private 2,500 people per day. A total of RUB
investment in the centralised heating investments. 200m in private investments was
system is RUB 5.16 billion. raised.
━━ This project won the Best PPP
━━ In 2018, the Russian Ministry Healthcare Infrastructure Project
of Construction of recognised from the Ministry of Health of the
this project as one of the most Russian Federation
effective in the country
Sources: ANO PPP National Centre, Development Corporation of the Udmurt Republic39
MADE IN UDMURTIA
2
REGIONAL SUPPORT
FOR INVESTORS IN UDMURTIATAX INCENTIVES
40
41
TYPE OF BENEFIT LARGE INVESTMENT PROJECTS INSTALLATION OF SOCIAL, CULTURAL OR UTILITY FACILITIES
UDMURTIA OFFERS A WIDE RANGE OF TAX PREFERENCES AND Land plot lease
without bidding
Application criteria
(minimum investment volume):
Application criteria (falls under one of the following categories):
━━ Social and cultural infrastructure (healthcare, culture,
MADE IN UDMURTIA
OTHER BENEFITS TO INVESTORS, INCLUDING SPECIAL TAX ━━ Agriculture, forestry, hunting, fishing and fish farming:
from RUB 3 to 10 million. 1
━━ Food production and Beverages production: from RUB 10
education, etc.)
━━ Utility infrastructure (electricity, gas, etc.)
INCENTIVES FOR INVESTORS IN PRIORITY SOCIAL AND ECONOMIC to 50 million. 2
━━ Other types of activities: from RUB 10 to 100 million. 3
DEVELOPMENT AREAS (PSEDAS) TYPE OF BENEFIT
Reduced-rate rent for
INVESTMENT PROJECTS
Land Plots:
PPP
Land Plots:
use of land plots and 75% of the annual rent amount from the date of the decision to 75% of the annual rent amount from the date of the decision to provide
real estate provide the benefit until the date of the commissioning permit the benefit until the date of the commissioning permit
Real estate:
Preferential rental rate for the payback period of the
investment project, but no more than five years from the date
of the decision
1
RUB 3 million for municipal districts; RUB 50 million for Izhevsk, Glazov, Votkinsk, Sarapul, Mozhga and Kambarskoye
2
RUB 10 million for municipal districts (except for Zavyalovsky District); RUB 50 million for the cities of Izhevsk, Glazov, Votkinsk, Sarapul and Mozhga and the municipal settlements of
Kambarskoye and Zavyalovsky
3
RUB 10 million for municipal districts (except for Zavyalovsky District); RUB 50 million for the cities of Glazov, Votkinsk, Sarapul and Mozhga and the Zavyalovsky District municipal settlement;
RUB 100 million for Izhevsk
CATEGORIES OF REDUCED RATE RECIPIENTS
TAX TYPE STANDARD REGIME INVESTMENT PROJECTS PPP INDUSTRIAL PARKS PSEDA 4
Income tax
20 % including: 2 % federal 0 % under federal special investment contracts Standard regime
0 % years 1-10
3% until 2020
18 % regional 10 % under regional investment contracts 13.5 % over five tax periods (for PPPs involving social 5 % for five tax periods
17% until 2020 and cultural facilities, no more than 10 tax periods) glazov-gov.ru/city/
13.5 % under special investment contracts 12.5 % to 2020 10 % for the following five tax economy/TOSER
12.5 % until 2020 periods
Land tax
1.5 % Standard regime Standard regime Standard regime
0 % for the first ten years
Insurance contributions
30 % 22% for the Pension Fund, 2.9% for the Social Standard regime Standard regime Standard regime
7.6 % for the first ten years
Insurance Fund and 5.1% for the Medical Insurance Fund
Property tax
2.2 % 0 % from the beginning of the tax period, in which the company was 0 % from the beginning of the tax period in which the 0 % for five years (property on 0 % years 1-5 adm-sarapul.ru/
included in the register of regional investment projects’ participants for the investment contract is concluded for the project payback the balance sheet of the resident/ city/invest/toser-
project payback period, but no longer than 10 years period, but no more than five years (for social and cultural management company located at up to 1.1 % (additional years) sarapul/index.php
projects and/or utility projects: no more than for 10 years; the park)
for social and cultural projects and/or utility projects: no 4 There are two PSEDAs
more than for 10 years) in Udmurtia (Glazov and
MET
5.5 % (rock, sand, clay) Standard regime Standard regime Standard regime
up to 0.8 % (rock, sand, clay) Sarapul) and the support
measures are similar.
See the list of permitted
Transport tax — — —
0 % five years (for residents, —
activities in PSEDAs on
excluding cars manufacturers) p. 76-77.
Investment tax — No more than 90% of fixed asset acquisition, construction, manufacturing, delivery, the assessed tax to be paid to the regional budget for the — —
deduction additional equipping, reconstruction, upgrade or technical re-equipping costs tax (reporting) period at a 17% rate and the assessed tax to
in the current period. The threshold value is defined in the difference between –› be paid to the regional budget at a 5% tax rate.
Source: PwC analysis based on federal and regional laws, April 2019.You can also read
