The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 1 REPUBLIC OF TATARSTAN – INVESTMENT IN FUTURE Kazan Geneva

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 2 Most attractive FDI destinations 2005 FDI Confidence Index 2005, top 25 Low ConfidenceHigh Confidence Values Calculated on a 0 to 3 Scale Source: A.T.Keamey

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 3 Казань 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 Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 4 The Republic of Tatarstan  Territory - 67,800 sq. km.  Population – 3.8 million  Population density - 55,8 persons per sq. km. Natural Resources Oil million 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.

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 5 Investment Attractiveness Favourable geographic location Well-developed transportation infrastructure Availability of raw material resources Advanced manufacture Legislation supporting investment activities Significant industrial and scientific potential, qualified labour resources

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 6 GRP of the Republic of Tatarstan and Russia per capita GRP of the Republic of Tatarstan and Russia per capita Real Growth of Gross Regional Product Real Growth of Gross Regional Product

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 7 GRP Structure of Tatarstan Industry47% Trade & Food 11,7% Construction9,0% Agriculture8,0% Transport6,0% others18,3%

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 8 Financial Stability Predictable business environment Improvement of business climate and growth of economy Promotion of consumption Quality of life: Quality of life: consumer price index Quality of life: real wages

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 9 «Quality of life» index 1. Tyumen Region 2. Moscow 4. Saint-Petersburgh 3. The Republic of Tatarstan

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 10 «Quality of life» (2005 in % to 2004) Income of population Retail business turnover Growth of purchasing capacity

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 11 Raising the competitiveness of production Main Areas of Economic Development of the Republic of Tatarstan Rise in living standards Maintaining stable economic growth Doubling the GRP

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 12 ACHIEVEMENT OF MAIN OBJECTIVE Doubling the GRP by 2010 Promotion of innovations Attraction of investments Development of hi-tech production SME Support

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 13 Programme of Social and Economic Development in Oil-Gas-and- Chemical Complex Chemical and petrochemical companies of the republic produce about 10 per cent of Russia’s chemical and petrochemical products. Mechanical Engineering Complex Represented by aircraft-building, automotive industry shipbuilding, and production of equipment. Areas of growth of the economy Small and Medium- Sized Enterprises In the last 4 years, the contribution of SME to the GRP has increased from 12.7 to 16.5 per cent. By 2010, the figure should not be less than 30 per cent and 37 per cent by 2015.

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 14 Share of enterprises of Tatarstan in the total industrial output of Russia

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 15 PROMOTION OF INNOVATIONS u Programme for Development of Innovation Activities for ; u Development of economic clusters which ensure the competitiveness of the republic’s economy; u Creation of a network of technoparks and business incubators, industrial production areas, technology transfer and new production mastering centres; u Development of scientific research centres based on institutions of higher education as research centres; u Increase in the proportion of scientific sector in the gross regional product; u Organisation and conduct of fundamental and applied R&D aimed at republic’s programmes.

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 16 Share of innovative production in GRP of Tatarstan %

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan Kazan State University, Kazan State University of Technology, Kazan State Technical University, Kazan University of Economics and Finance are among the best Russian universities. Education and science Number of Students per 10,000 persons Tatarstan is the region with strong educational and scientific potential. 170,000 persons are engaged in the sphere of education Tatarstan is the region with strong educational and scientific potential. 170,000 persons are engaged in the sphere of education.

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 18 PROMOTION OF SMALL BUSINESS  small business crediting  direct promotion of small business  creation and development of the infrastructure of support to small businesses engaged in the field of research and technology;  favourable conditions for working in business incubators  subsidising exporter companies  competition «The best exporter of the Republic of Tatarstan» in the category «small business enterprises »

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 19 Investment Venture Fund of the Republic of Tatarstan Stabilisation Pledge and Insurance Fund of the Republic of Tatarstan provides financing for investment programmes and projects of economic аnd social development of Tatarstan including projects of small and medium-sized businesses Innovation Production Technopark «Idea» Innovation Production Technopark «Idea»  supports the introduction of innovations into the manufacturing industry  accumulates investment resources and directs them to the implementation of innovative projects Innovation Activities in the Republic of Tatarstan  concentration of the most promising and perspective innovative companies  coordination and support on every stage of development  commercialization of innovative ideas

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 20 Share of small and medium enterprises in GRP of Tatarstan

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 21 Credit Rating of the Republic of Tatarstan :  Foreign exchange borrowings rating Ba1 stable outlook  Long-term credit rating BB - positive outlook Investment rating among 89 Russian regions:  5th in investment risk  8th in investment potential Investment Rating of the Republic of Tatarstan Long-term rating in foreign exchange and local currency:  «BB» – forecast ”stable” (“Expert RA”, a Russian rating agency ) Since 2005 the rating of Tatarstan raised five times

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 22 INVESTMENT FOCUS Republic of Tatarstan is a “supporting leader region”;Republic of Tatarstan is a “supporting leader region”; 6th place in the general rating of Russian regions;6th place in the general rating of Russian regions; 5th place in the minimal investment risk in 2004/05;5th place in the minimal investment risk in 2004/05; 5th place in the steadily low investment risk over the last decade ; 5th place in the steadily low investment risk over the last decade ; STUDIES of Expert RA Rating Agency Risk rank Potential rank

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 23 Capital investment $ Billion %

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan Accumulated Direct Investments Accumulated Direct Investments

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 25 Accumulated Investment ( ) As of 1 January 2006, Tatarstan has accumulated foreign investment in the total amount of US$1.43 billion

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 26 Advisory Board for Foreign Investments in the Republic of Tatarstan 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. 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

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 27  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) Investment Legislation of the Republic of Tatarstan 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"

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 28 u The guarantee of legal protection of foreign investors; u The guarantee of compensation in the event of nationalisation and requisitioning of assets of a foreign investor or a commercial organisation with foreign investments; u The indemnification and compensation for damages to foreign investors; u The guarantee of transfer of payments in connection with foreign investments; u The guarantee of use of payments in the currency of the Russian Federation in the territory of the Republic of Tatarstan; u The guarantee against unfavourable changes in legislation of the Republic of Tatarstan. (Provided for by Chapter 2 of the Law No.2180-XII of the Republic of Tatarstan of July 19, 1994 "On Foreign Investments in the Republic of Tatarstan " ) State Guarantees for Protection of Foreign Investments

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 29 Tax Privileges for Foreign Investors TaxRate 1. Profit Tax 24% for investors 20% 2. Property Tax 2.2% for investors 0.1% Granting of privileges for transportation tax, land tax, and import duties is also possible.

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 30 The Special Economic Zone of Industrial Production Type in the territory of Yelabuga District of the Republic of Tatarstan is situated near Yelabuga of Yelabuga District of the Republic of Tatarstan, 25 km. from Naberezhnye Chelny, 40 km from Nizhnekamsk, and 215 km. from Kazan (capital of the Republic of Tatarstan). The area of the Special Economic Zone is 20 sq. km. Nizhnekamsk Elabuga Nizhnekamskneftehim Airport Naberezhnye Chelny Kamaz Symbols Railway Highways River port Airport Polyanka Distance up to locality Territory of SEA «Alabuga» Elabuga Mendeleevsk Nizhnekamsk Airport “Begishevo” Naberezhnye Chelny Krugloe pole Naberezhnye Chelny Kazan 210 km Chistopol 170 km Izhevsk 180 km Ufa 385 km River port Kazan 210 km r. Kama r. Tojma Kazan TATARSTAN Elabuga Nab. Chelny Nizhnekamsk Railway station

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 31 Tax Privileges for Participants of Special Economic Zone TaxRate Distribution by Budgets FederalRegionalLocal 1. Profit Tax24.0%6.5%17.5%- For SEZ residents 20.0%6.5%13.5%- 2. Property Tax 2.2%-1.1% For SEZ residents (for 10 years) 0%- 3. Land Tax 1.5%-- For SEZ residents 0%-- 4. Transport Tax Rates depend on type and horse power capacity of the vehicle - - For SEZ residents0%- -

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 32 To become a resident of Special Economic Zone, one should: Sign an agreement on industrial production activities with SEZ management authority Sign an agreement on industrial production activities with SEZ management authority Invest in its production assets no less than EUR 10 million, of which at least EUR 1 million during the first year of development. WHY MAKING BUSINESS IN THE SEZ?  Advantageous geographical location  Readily available complete industrial production structure  No importation and exportation customs duties  Exemption from some taxes  Privileges for basic taxes  Up-to-date equipment and efficient services  Closely adjacent potential users of the products

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 33 INVESTMENT PROJECTS Chemical and Petrochemical Industry ProjectParticipantsDescription Complex of oil-refining and petrochemical plants in Nizhnekamsk Estimated cost of the project – billion roubles. Payback period – 10.1 years Estimated cost of the project – 1.75 billion roubles Payback period – 4.75 years Total cost of the project – million US dollars Payback period – 5.4 years OAO Svyazinvestneftekhim Construction of an oil- extraction plant rated at 300,000 tonnes of seeds per annum OAO Kazan Fat Production Plant Establishing the production of expandable polystyrene (EPS) rated at 50,000 tonnes per annum and ABS plastics rated at 70,000 tonnes per annum OAO Nizhnekamskneftekhim OAO Tatneft ZAO Nizhnekamsk Refinery OAO Nefis Cosmetics

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 34 INVESTMENT PROJECTS Transport and Logistics ProjectParticipantsDescription Toll road “Alexeyevskoye- Almetyevsk” (140 km) Total cost of the project - 16 billion roubles Payback period - 9 years Investment required - 16 billion roubles. Total cost of the project – billion roubles Payback period - 15 years Investment required – 7 billion roubles Ministry of Transport and Roads of Tatarstan Toll road “Shali-Sorochy Gory” Ministry of Transport and Roads of Tatarstan Sviyaga Interregional Multimodal Terminal- Logistics Centre of Kazan Transport Hub Ministry of Transport and Roads of Tatarstan Total cost of the project – 5.99 billion roubles Investment required million roubles Form and volumes of state support requested – billion roubles

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 35 Foreign Trade Turnover Billions of dollars More than 100 countries are trading partners of TATARSTAN

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 36 US$ million COMMODITYEXPORTS Mineral fuel, crude oil and oil products 97.3% Plastics and plastic products 2.6% Other 0.1% COMMODITYIMPORTS Mechanical equipment 52.5% Ferrous metals and products 19.9% Electric equipment 11.9% Other 15.7% Exports in 2005 Imports in 2005 COMMODITY TURNOVER BETWEEN TATARSTAN AND SWITZERLAND

The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan 37 Khafiz Salikhov Address: 4 Ostrovsky St., Kazan TEL.: FAX: Url: The Ministry of Trade and Foreign Economic Cooperation of the Republic of Tatarstan