The Republic of Tatarstan has adopted a new strategy to attract foreign investments. Now the Republic will actively seek partners in the East, China and Southeast Asia.
The Republic of Tatarstan has adopted a new strategy to attract foreign investments. Now the Republic will actively seek partners in the East, China and Southeast Asia. Choosing a new policy direction to attract investments has become a logical result of a succession of pilot projects of Tatarstan with the Eastern partners, including several educational journeys of the republic’s establishment to Singapore, two international Islamic forums in Kazan and Tatarstan leadership’ meetings with governors and businessmen of old and new "Asian tigers" - Malaysia, Hong Kong, South Korea and Singapore.
Giving a speech at the session on "Development of the Republic of Tatarstan: A New Strategy for Development and Investment", which took place in the Cabinet on 25, November, President R.Minnikhanov stated that the Republic will now focus on the financial markets in China and Southeast Asia. Rustam Minnikhanov said that the republic has always paid an attention to the Islamic banking and stock markets of Southeast Asia. "In the past, we believed that those markets are far from us, but now we are seriously considering this as an opportunity," - said Mr. Minnikhanov.
Indeed, the main partners of the Republic, until now, were the Western markets - Europe and the USA. According to the Statistics Service of the Republic of Tatarstan, the main foreign investor in Tatarstan in 2009 was Luxembourg, which has invested into the economy of the Republic $1.14 billion of the total $5.8 billion, followed by France ($541 million), Germany ($289.7 million) and the Netherlands ($150 million). In the first half of 2010, 82% of all admissions from the overseas investments - $3.1 billion from total $3.9 billion were invested from Germany (they went on mineral extraction). Even the name of the largest industrial investment holding company of the Republic of TAIF, which includes Kazanorgsintez, Nizhnekamskneftekhim, TVT, and several other companies, stands for "Tatar-American Investments and Finance."
Meanwhile, the share of the investments from the eastern countries accounts only 1% of the total amount of the foreign investments borrowed by Tatarstan in 2009, and none of Tatarstan’ enterprises work with the Hong Kong Stock Exchange. At the same time there are more than 1300 companies from around the world representing their businesses at the Hong Kong Stock Exchange today.
Snow leopard and Asian Tigers
Vectoring of the Republic’s foreign policy towards the South-East Asia is absolutely identical with the position of the federal government. On 2, December Government of the Russian Federation issued a report, stating that Russia will contribute an annual $1.5 million to the Financial Partnership Dialogue Fund of Russia - ASEAN (Association of Southeast Asian Nations) in year 2011, under an agreement in the field of economy and development, signed in 2005. The population of the ASEAN countries is around 500 million, total area - 4.5 million square meters. km, with the combined GDP about $ 737 billion.
In the mid-November, Tatarstan has found a partner in no less powerful Asian organization - APEC (Asia-Pacific Economic Cooperation). Russia, Japan and China on 13, November in Yokohama, signed in the presence of President Dmitry Medvedev, a tripartite agreement on the construction of Mendeleyevsk plant to produce urea fertilizer worth $1billion. First of its kind in Russia, the chemical complex will open in 2015 at the production site of the bankrupted in early 2000-ies Mendeleevskazot, which produced ammonium nitrate (a component for fertilizer). The complex will include a combined unit of ammonia/methanol with the capacity of producing 717.5 thousand tons of ammonia (without methanol production) per year, or 455 thousand tons of ammonia and 238 thousand tons of methanol, as well as to assembly granulated urea with the capacity of 717.5 thousand tons per year. Capacity of the existing production of ammonium nitrate is projected to reach 450 thousand tons per year.
On the eve of the summit in Yokohama, Tatarstan delegation visited South Korea, where inspected were the refinery GS Caltex Corporation in the city of Yeosu. Depth of refining at this refinery is 96%, although two months ago it was 20% lower. The company recycles 35 million tons of oil per year and provides a third of the needs of South Korea in motor fuels. Perhaps the Korean technology will be implemented on the processing of the tars at TANEKO. According to R.Yarullin, the director of Tatneftekhiminvest holding, Tatarstan, and Korea are similar in the sense that both republics are dealing with a "heavy" oil with virtually the same content of sulfur and tar similar quality.
By the way, the population of the potential strategic partners of Tatarstan (Japan, China and South Korea) - is about 22% of the world’, the combined power of their economies - 19%, while foreign exchange reserves - 47%, respectively. "Tatarstan is particularly interested in China investments, which, according to various sources estimate $2.3 trillions and are ready to be invested in real projects associated with the extraction of raw materials and construction", - said the deputy chairman of the Commerce and Industry of Tatarstan Arthur Nikolaev. Malaysia, according to Mr. Nikolaev “…is interesting for Tatarstan too, in sense that this Muslim country is the most "suitable to our own business in mentality”.
Brothers in faith
Compared with other regions of Russia in its relations with the East, Tatarstan has one of the significant advantages - the state religion of the Republic is Islam. Recently this factor has received an increasing attention. In September, the State Council of Tatarstan adopted a new state holiday - Day of acceptance of Islam by Volga Bulgaria, which will henceforward be celebrated on May 21.
In late June Tatarstan held a second in a row International Summit of Islamic business and finance Kazansummit 2010. It was then, where the representative of Russia to the Organization of Islamic Conference, ex-mayor of Kazan Kamil Iskhakov made an official remark on the financial capacity of Islamic countries. According to him, the assets of the banking system of the Islamic world amounted $639 billion in 2008 with an increase to $822 billion in the crisis year of 2009 and with estimated growth by 22% - to $ 1 trillion in 2010.
In 2010, Tatarstan has launched its first joint projects with Muslim partners. In March of this year Tatarstan International Investment Company (TIIC) was set. The agreement of the establishing was signed by Islamic Development Bank Companies Group and Venture Investment Fund of the Republic of Tatarstan and the Directorate of non-budget programs of the city of Kazan. At the Kazansummit forum on the grounds of the Q-Park logistic complex the first specialized logistics center "Kazan Halal HUB" has opened.
During the Islamic Summit, the first President of Tatarstan Mintimer Shaimiev and Minnikhanov met with the legendary former Malaysian Prime Minister Mahathir Mohamad. During the presidency of Mr. Mahathir Mohamad Malaysia turned from a country with an underdeveloped agrarian economy into one of the "Asian tigers". At the meeting with "Dr. M" president Minnikhanov admitted that, until now, Tatarstan can not be proud of making serious steps towards holding large-scaled projects with the countries of the Islamic world. "In Russia we are talking about future reforms, but do not yet know how we're going to hold them. You have passed this way before, so looking forward to your advice, "- addressed president Minnikhanov to Mr. Mahathir Mohamad. The main advice sounded from the Asian guest was to target the regional economy not only towards the West, but also to East – Kuala Lumpur, Singapore and China.
In early November, Kazan was visited by another reputable economist of the Islamic world - a billionaire from the UAE, the founder and the head of the Al Habtoor Group, Khalaf Al Habtoor. Tatarstan authorities have suggested one of the richest people in the world to become a member of the Kazan executive committee, particularly in participating in “Millennium Zilant City” project. The project involved in constructions of sensational range of buildings on the right banks of Kazanka river and two projects on integrated residential housing "Watercolor". Whether Mr. Al Habtoor is accepted the proposal to participate in funding of these projects is still unknown.
According to the head of Prime Capital Investment, Sergei Demidovich, opening a logistics terminal of halal products, the establishment of the Islamic Investment Company and approval of a new state holiday - Day of the adoption of Islam in Volga Bulgaria - is "well-organized and planned PR-campaign in the long-term project on attraction of investments from the East”. "The really large-scaled joint projects in key sectors of the Tatarstan's economy are yet to come” - he said to Kommersant-Itogi Goda – “but there is a definite need for branding activities too".
Translated by Islamic-finance.ru