ДОБРО ПОЖАЛОВАТЬ В РЕСПУБЛИКУ ТАТАРСТАН! HERZLICH WILLKOMMEN IN DIE REPUBLIK TATARSTAN! WELCOME TO THE REPUBLIC OF TATARSTAN!

to 2005 % Gross Domestic Product Manufacture of industrial products Capital investment Real disposable income of population Retail trade turnover Volume of exports Volume of imports R USSIA: Main Social and Ec onomic Indices ( in per cent)

Development of the Economy in GDP Pattern ( %)

 In volumes of Gross Regional Product, industrial output and capital investments the Republic of Tatarstan ranks 5th in the Russian Federation  In total volume of agricultural production the Republic of Tatarstan is on the top 3 list among all regions of the Russian Federation  The share of processing industries in industrial production is growing dramatically Competitiveness Competitiveness

Billion roubles GRP of the Republic of Tatarstan GRP of the Republic of Tatarstan Billion roubles Capital investments

Gross Regional Product (Forecast)

Caa1/CCC+ B3/B- Ba1/BB+ Ba2/BB Ba3/BB- B1/B+ B2/B Moody’sS&PFitch  Average annual growth of Tatarstan’s GRP over last 6 years has been 6.7%  Average annual growth of industrial production in Tatarstan over last 3 years has been some 7%  From 1998, average annual growth of capital investments has been 9.9%  From 2000, the investment rating of Tatarstan was improved 5 times Investment Ratings of Tatarstan Predictability Predictability

Why Tatarstan? Favourable geographic location Political stability Well-developed transportation infrastructure Rich natural resources Advanced industrial production Highly skilled labour force

REPUBLIC OF TATARSTAN Tatarstan is a centre of East European part of Russia Republic of Tatarstan is situated in the centre of a large industrial area of Russia, 800 kilometres away to the East from Moscow, at the junction of the Volga and the Kama rivers. Republic of Tatarstan is situated in the centre of a large industrial area of Russia, 800 kilometres away to the East from Moscow, at the junction of the Volga and the Kama rivers.  It borders with 8 Russian regions.  It has free access to the markets of regions with over 40 million customers.

The Republic of Tatarstan  Territory - 67,800 sq. km.  Population – 3.8 million  Population density - 55,8 persons per sq. km. Natural Resources Oil – 1 billion tonnes Gypsum - 72 million tonnes Oil bitumen billion tonnes Peat peat bogs Construction stone - 35,3 million cubic meter Brick clay - 73,5 million cubic meter Chalkstones, dolomites, etc.

Share of enterprises of Tatarstan in the total industrial output of Russia 3 %

Kazan State University, Kazan State Technological University, Kazan State Technical University, Kazan State University for Finance and Economics are among the best universities of Russia. Growth of number of students Tatarstan is a region with strong educational and scientific potential. Some 170,000 people are engaged in the field of education. Education and Science

Growth of investment activity through innovations  New production technologies  Changes in forms and methods of management  Creation of innovation infrastructure  Creation of a system of innovation education

Programme for Development of Innovation Activities for ; Development of economic clusters which ensure the competitiveness of the republic’s economy; Creation of a network of technoparks and business incubators, industrial production areas, technology transfer and new production mastering centres; Development of scientific research centres based on institutions of higher education as research centres; Increase in the proportion of scientific sector in the gross regional product; Organisation and conduct of fundamental and applied R&D aimed at republic’s programmes. Promotion of innovations %

Areas of growth in the economy Programme of Social and Economic Development of Tatarstan in Over the last 4 years the contribution of small business has grown by 3.8%. By 2010 the contribution of small business to the growth of GRP should be at least 30%, and 37% by the year Over the last 4 years the contribution of small business has grown by 3.8%. By 2010 the contribution of small business to the growth of GRP should be at least 30%, and 37% by the year Oil-gas-and-chemicalcomplexOil-gas-and-chemicalcomplex Power engineering Aircraft building Automotive industry Agro - industrial complex

Integrated programmes  Programme of development of innovative activity in ;  Programme of development of the oil-gas-and- chemical complex;  Programmes of resource-saving, reform of fuel and power complex, reform of municipal economy;  Main guidelines of state policy in the field of informatisation, communications, etc.;

Gross Regional Product Investment to Fixed Capital (%) to GRP Ratio Percentage of Manufacturing Industries in the Total Industrial Output Percentage of Non-Raw Material Products in the Total Volume of Tatarstan Exports Contribution of Small Businesses to the GDP of Tatarstan Growth Rates of Tatarstan Economy (%)

Investment initiatives Targeted Projects Investment initiatives Targeted Projects Investment and Venture Fund Special Economic Zones Cluster policy Technology parks in the field of high technologies Technology parks in the field of high technologies Business incubators and innovative technology parks innovative technology parks Business incubators and innovative technology parks innovative technology parks Large-scale production treatment treatment Large-scale production treatment treatment

Power Engineering Aviation Petrochemical Chemistry Industrial Clusters Management of strategic planning Automotive industry

KhimGrad Industrial Park Anchor companies of the Park Kazanorgsintez, Nizhnekamskneftekhim and other sectoral enterprises. Their task is to provide small companies of the sector with raw materials and orders Result Increasing number of processing and service companies in the petrochemical industry which manufacture products to be competitive in domestic and foreign markets. By 2012, at least 10,000 new highly-qualified jobs will be created Objectives Was created to render innovation support to small and medium-sized businesses in the Tatarstan’s petrochemical sector; Is instrumental in the formation of an efficient petrochemical cluster Total Financing 4,579 million roubles

Creation of Automotive Cluster   Expansion of OAO KamAZ production   Implementation of projects of OAO Severstal-Auto for auto assembly of Fiat Albea and Fiat Ducato motor vehicles per year   Assembling of Rexton and Actyon cars under license from Korean company «Ssang Yong Rexton», Korea  20  “Alabuga” Special Economic Zone of Industrial Production Type; 20 sq km in area Within the Framework of Automotive Cluster Creation:

The Special Economic Zone of Industrial Production Type in the territory of Yelabuga District of the Republic of Tatarstan. The area of the Special Economic Zone is 20 sq. km.

Complex of Oil-Refining and Petrochemical Plants in Nizhnekamsk –Estimated project cost: billion roubles 10 –Pay-back period: 10 years 16,5 –The Investment Fund issued a grant in the amount of 16,5 billion roubles

Infrastructure of support of investment and business investment and business Investment and Venture Fund Pledge and Insurance Fund Agency for Business Development Leasing Company for Small Business Fund for Support of Development of Venture Investments in IT Sector Business incubators and innovative technology parks Fund for Encouragement of Venture Investments in Small Businesses Engaged in Science and Technology Sector

Technology Parks of the Republic of Tatarstan Innovative Technology Park “Idea” KazanKazan Industrial Park “Master” NaberezhnyeChelnyNaberezhnyeChelny Mechanical Engineering Technology Park “Idea South-East” LeninigorskLeninigorsk NizhnekamskNizhnekamsk Technology Park of Chistopol Watch Factory ChistopolChistopol Technology Park for Energy-Saving Technologies “Energy” ZainskZainsk ZelenodolskZelenodolsk

Technopark in the Field of High Technologies Total Financing 6.7 billion roubles Focus on: - Petrochemistry - IT - Biotech - Nanotech Result At least 5,000 new jobs will be created by 2009; over 130 companies will become residents of the high technology park

OAO Kama Industrial Park “Master”  107,000  up-to date production buildings with floor space of 107,000 sq. m.  20,000  office and on-site premises with floor space of 20,000 sq. m. KIP “Master” is the only technology park focused on mechanical engineering sector

Credit Rating of the Republic of Tatarstan :  Foreign exchange borrowings rating Ba1 stable outlook  Long-term credit rating «BB-» - stable outlook «BB-» - stable outlook Investment rating among Russian regions:  9th in investment risk  10th in investment potential Investment Rating of the Republic of Tatarstan Long-term rating in foreign exchange and local currency:  «BB+» –stable outlook (“Expert RA”, a Russian rating agency ) Since 2005 the rating of Tatarstan was raised five times

Investment Legislation of the Republic of Tatarstan TaxRate 1. Profit Tax24% for investors20% 2. Property Tax2.2% for investors0.1% Granting of privileges for transportation tax, land tax, and import duties is also possible. Law No.2180-XII of the Republic of Tatarstan of July 19, 1994 "On Foreign Investments in the Republic of Tatarstan" (as amended on June 27, 2001 and on September 23, 2003) Law No.2180-XII of the Republic of Tatarstan of July 19, 1994 "On Foreign Investments in the Republic of Tatarstan" (as amended on June 27, 2001 and on September 23, 2003) Law No of the Republic of Tatarstan of November 25, 1998 "On Investment Activity in the Republic of Tatarstan" (as amended and added on June 24, 2003) Law No of the Republic of Tatarstan of November 25, 1998 "On Investment Activity in the Republic of Tatarstan" (as amended and added on June 24, 2003) Resolution No. 123 of the Cabinet of Ministers of the Republic of Tatarstan of March 11, 2001 "On Additional Measures of State Support for Enterprises (Organisations) of the Republic of Tatarstan Implementing Investment Projects" Resolution No. 123 of the Cabinet of Ministers of the Republic of Tatarstan of March 11, 2001 "On Additional Measures of State Support for Enterprises (Organisations) of the Republic of Tatarstan Implementing Investment Projects"

Legislative Mechanisms of Investment Activity Support in the Republic of Tatarstan Tax Privileges Special Tax Treatment (SEZ) Granting Governmental Guarantees and Loans Security Public-Private Partnership Partial Funding of Credit Interest Rates Public Private Partnership Byyjdfwbjyysq gjntywbfk Engineering Infrastructure Personal Support to Implementation of Investment Projects

Advisory Board for Foreign Investments Supervisory Council Chairman of Supervisory Council– Prime Minister of Tatarstan R.N. Minnikhanov Government authorities Enterprises and organisations of the Republic of Tatarstan Large foreign investors Advisory Board for Foreign Investments Goals :  to protect interests of domestic and foreign investors  to contribute to creation of a favorable investment climate in the republic through timely resolution of issues arising in the course of attraction of foreign investments and implementation of topical investment projects.

Large Foreign Investors in the Republic of Tatarstan Building Materials Industry - OMYA Concern (Austria) – establishing the calcium carbonate production at Alabuga Industrial Site. - «Wienerberger AG» (Austria) – Construction of a brick works in the Republic of Tatarstan rated at approximately 140 million bricks per year. The estimated investments of OOO Wienerberger Brick Company are 26 – 30 million Euros. - ZASS Alabuga – joint Tatarstan-Turkish enterprise for production of heaters under license of De Longhi, Italy. Foreign partner contributed US$18 million to the authorised capital in 2005.Trade - Ikea (Sweden) – “Mega-Kazan” Mega Mall - US$124 million. - Metro Cash&Carry (Germany) – trade outlets – US$20 million. - “Mega-Kazan” Shopping Complex - total investments are nearly US$200 million. Food Processing Industry - Efes Pilsener (Turkey) – Purchase of shares of OAO Kransny Vostok to the amount of US$390 million.

Project DescriptionCredit Amount A credit to AKB Spurt Bank for crediting of small- and medium-sized enterprises of the Republic of Tatarstan for the term of 4 years and grace period of 2 years. 280 million roubles (US$ 10 million) A credit to AKB Spurt Bank. Energy-saving programme. Purpose: increasing the efficiency of client enterprises through reducing the energy consumption and environmental protection. Energy audit of potential borrowers is conducted at the expense of TACIS Programme. If the opinion is positive, the investment programmes are financed under the credit line for financing of small- and medium-sized enterprises. A credit to AKB Spurt Bank for crediting of trade-related projects of the Bank’s clients for the term of up to 1.5 years and a grace period of 2 years. Acceptance of letters of credit and guarantees, arrangement of post- financing in over 500 largest banks of the world. US$ 4 million Cooperation Projects with European Bank for Reconstruction and Development

ProjectProject CostPurpose Competition of innovation development projects “Innovations for Sustainable Development of the Republic of Tatarstan” Grant Fund (on parity basis with Republic of Tatarstan) US$ Grants from 10,000 to 30,000 US dollars for support of projects aimed at commercialisation of innovations at the post-R&D stage in the field of energy- saving, bio-technology, environmental protection, etc. Increasing the Investment attractiveness of Kazan 1 tranche of US$ 125 million (provided in 2005) 2 tranche of US$ 75 million (December 2006) Formation of local self- government, Increasing the Investment attractiveness of Kazan Cooperation Projects with Institutions within the World Bank Group

There are 27 independent credit institutions with 56 branches in the Republic. In terms of the total number of credit organisations, Tatarstan ranks 4th in Russia. Such banks from Tatarstan as Ak- Bars Bank, Tatfondbank, AKI Bank, Avers Bank, Bank “Kazansky”, and Spurt Bank at all times are on the list of Russian largest credit organisations. Banking System

Hafiz Salikhov Address: 4, Ostrovsky St., Kazan TEL.: FAX: Url: Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan