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Investment Activity
In modern conditions one of the key factors of a successful development of any territory is establishing priorities of the regional policy in the sphere of investments. After the Program of Investment Policy of the Government for 2003-2006 was completed, in 2007 there were developed and approved the Major Areas of Investment Policy of the Government of the Republic of Karelia for 2007-2010; the main goal of this document was to achieve high investment attractiveness of the Republic, on all of its territory and in all types of economic activity.
The main priorities in the sphere of attracting investments for 2007 were the following:
- developing of complex processing of timber;
- expanding the developed mineral resources base of the Republic;
- development of the affordable housing market;
- developing of tourism.
Solving these problems made it possible in 2007 to increase the production of iron ore pellets by 6%, lumber by 6%, and gravel by 38%. The volume of export of raw timber decreased by 25%.
Developing of investments in industrial sphere caused structural changes, increasing investments in processing industries – 20.6% in 2007 as compared to 10.8% in 2006.
In terms of the sources of investments, the share of investors’ own money grew considerably larger – from 34% in 2006 up to 54% in 2007, which is explained by increase in investment activity in the region, caused by accumulation of the financial recourses of business entities.
In 2007, the Republic received $157.5 million of foreign investments, over 45% of them were investments in industrial production. The largest share of foreign investments was in processing industries – 44% ($70 million) and logging – 31% ($48.5 million).
The largest part of investments comes from Sweden – 37.5% and Finland – 34%.
In 2008-2011 the average annual index of increase in the volume of capital investments will be 4.5%, while inflation influence will be decreasing, from 112% in 2008 to 107% in 2011. Comparing to 2007, the overall volume of capital investments during the planned period will increase by 12.9 billion rubles and will reach 31.5 billion rubles in 2011. Substantial rate of growth of capital investments in 2008-2011 will be provided by means of intensifying of investment activity in the region with the help of the measures determined by the regional policy in investment sphere, as well as by means of implementing large industrial and corporate investment programs in the fuel and energy complex, forest industry, mining, agro-industrial complex and transport.
The expected volume of capital investments in the Republic of Karelia, from all sources, will comprise 22 billion rubles in 2008, or 106% of the level of 2007 in comparable prices.
It is expected that the tendency of the growth of investments in processing industries will continue in 2008, and the share of such investments will be 33%, and will be the dominant part of capital investments in all types of economic activity. The increase of investments in processing industries will be made mostly by the high rate of growth of investments into pulp and paper industry and wood processing, by means of implementing corporate program of “Investlesprom” joint-stock company of reconstruction of Segezhsky pulp and paper mill, modernization of “Kondopoga” joint-stock company, and construction of furniture factory of “Svedwood Karelia” joint-stock company.
Partnerships of the state and private companies is indispensable in order to overcome the negative influence of infrastructure limitations which slow investments in the region, taking into account the limits of regional and local budgets. Thus, creation and functioning of the Corporation (Agency) of Development of the Republic of Karelia is becoming the key tool in solving infrastructural and financial problems. The idea of this project is investing state resources of the Republic into developing of its own territory by means of creating state-private entity, the activity of which must provide multiple investment effects by means of attracting large private investments into the economy of the republic.
Direct interaction of regional and local governments with investors, as well as creating the system of organizational and technical preparations for accepting investments, is another key element of the investment policy.
As part of the support of investment projects in the Republic, the interdepartmental group on encouraging investments into the economy of the Republic of Karelia is carrying out its work to promote solution of problems appearing at various stages of investment projects.
Overall, implementation of the investment policy of the Government of the Republic of Karelia promotes attaining and developing of a number of positive tendencies in the investment sphere:
- increasing investment activity in the region, due to the regional policy of support and creating favorable investments climate;
- increase of the share of investments into industry, and first of all, processing industries;
- increase of the share of the capital of large Russian corporations in joint financing of regional investment projects.
Dynamically developing economy of the Republic urgently needs increase of the amount of investments, by means of, among other things, overcoming infrastructural limitations in the area of fuel and energy, as well as transport.
Obviously, speeding up and quality development of investments renovation requires consolidation of the efforts of all the regional and local authorities in solving urgent problems of investment development. Overcoming inertia and developing local initiatives in increasing investment attractiveness of municipal entities, in widening the participation of territories in federal target programs, in the system of state-private partnership and coordination of the interests of the population, government and businesses will lead to progressive movement of the Republic towards investment development.
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