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«New Industrialization» on an industrial scale: what is waiting for the industry of the Voronezh region?

The Voronezh Region is on the 26th place among the regions of Russia in terms of the pace of industrial development. It is planned to enter the top 20 leaders. How is it planned to realize such an ambitious goal and what will it give to the business and economy of the region?

How should the region's industry change by 2024?

It is considered that the Voronezh region is one of the leading agricultural regions of country. However, despite the fact that the agricultural potential has not yet been completely exhausted, there is practically no place left for a breakthrough in the sphere. Therefore, the development of other sectors, primarily industrial, can have a profound impact on the economy of the region. So, the project «New Industrialization» was launched in 2020. What goals does it pursue?

Alexander Gusev, Governor of the Voronezh Region

«The region’s production volumes should increase by more than 25%. It is difficult to achieve such results, but is possible with the growth of the regional economy at a rate of at least 10% per year, taking into account inflation. The industrially developed regions will not have such a pace, since they have developed production base. Voronezh reached 10% at the end of the difficult 2020. In general, the region’s average industrial growth has been about 7% over the past ten year, thus there are all prerequisites for the production pace increasing».

How are these goals planned to be achieved and what will the industrial enterprises receive?

The SEZ «Center», the industrial park «Maslovsky» and the territory of advanced social and economic development «Pavlovsk» are already operating in the Voronezh region.

There are 6 residents in the «Pavlovsk»: «Agroeco-Yug» is building a pig-breeding complex, «Lada» plans to launch the production of flour and cereals, «Sladunika» specializes in the production and primary processing of berries, «TeKa» will grow vegetables and greens in the greenhouse complex, «TANAIS» will be engaged in seed processing, and the 6th resident – «MARINEL» will produce fish and seafood.

5 companies have already become residents of the special economic zone, including manufacturers of children's, park and sports equipment «Ball’i» and LCD TVs «Sinokvant». In the industrial park «Maslovsky» at the moment there are 20 residents.

What are the authorities doing to encourage investors to enter these sites?

One of the traditional requirements of investors for sites of this type is the availability of an engineering infrastructure in order to ease significantly the installation of communications, so the constructed enterprises could immediately start working. It is planned to spend 1.2 billion rubles to continue the construction of water supply, sewerage system, communication networks, a transformer substation and other infrastructure on the territory of SEZ in 2021.

New investment sites are also being created in the region. For example, industrial park «Maslovsky» is already 87% full with enterprises, so the region needs to develop new territories for the further settlement of potential industrial investors. So, the government of the region is planning to create an industrial park with an area of 1000 hectares in the Kashirsky district. It will become a kind of branch of the SEZ.

Danil Kustov, Head of the of Economic Development Department of the Voronezh Region

«The Voronezh region has already managed to achieve tangible results. Nowadays the Voronezh Region occupies the 3rd place in the Central Federal District (1st place - Moscow, 2nd - Moscow region) by the annual volume of attracted investments. The region has been included in the top 20 leading regions in the National Rating of the Investment Climate for the fourth year in a row. But the work should be continued: any stoppage of activity is equivalent to moving backward. The «New Industrialization» project should become a driver of further industrial development. For example, we are actively working to reduce the timing of the approval of the launch of new production facilities. Previously the investor had to agree on the project at the regional level first, and then negotiate with the authorities of the district where the enterprise was planning to be located. Nowadays, we have combined these processes and work on the «one window» principle. We are working both to increase the investment attractiveness of the region and resolve the investor’s issues».

Each of the listed sites has its own set of benefits for investors.

For example, for those who plan to enter the SEZ, the income tax will be 0% in the period from 1 to 5 years, 5% - from 6 to 10 years, 13.5% - from 11 years in the «Center». In addition, the resident will be exempt from paying property tax for 10 years and will be able to pay at reduced energy tariffs.

Support for industrial enterprises

Residents of  the industrial park «Maslovsky» are exempt from paying transport tax for 5 years, can use land and other natural resources on preferential terms, apply for subsidies that will cover the costs of construction or reconstruction of engineering and transport infrastructure facilities. Residents also gain subsidies (2/3 of the refinancing rate) from the regional budget, which cover part of the interest on loans. And these are not all supplied preferences.

Roman Karpenko, General Director of «Voronezhselmash»

«The pandemic haven’t caused the decrease in demand of the region, on the contrary, it has grown this year by about 15%. Our plant has received orders six months in advance for the first time. Products are supplied to the Far East, the Urals, Siberia - we have customers in all regions of Russia. In many ways, the development of production is facilitated by the fact that the administration of the industrial park helps us to solve everyday issues. We have been working at «Maslovsky» since 2012. The infrastructure of the park is constantly being updated, and it is much more comfortable to work here than on our own site «in an open field». Nowadays the region has very convenient conditions for the entry of new investors, in addition to industrial parks, there is also a SEZ. But, in my opinion, it is worth paying more attention not only to third-party investors from other areas, but also to those already operating local once. Voronezh companies have the opportunity to implement large-scale projects».

Enterprises located in the territory of advanced social and economic development «Pavlovsk» are provided with reduced insurance premiums (7.6% if the company became a resident in the first 3 years of PSEDA formation), exempted from income tax payment to the federal budget from the moment of profit, giving only 5% to the regional budget in the first 5 years.

In addition, the regional authorities support especially significant investment projects – 1,4 billion rubles was allocated for their implementation in 2020. These funds were used to reimburse the cost of creating infrastructure facilities, income and property tax benefits.

Now more than 300 investment projects are being implemented in the region, of which more than 70 are considered to be of particular importance. Their total cost is about 248 billion rubles.

However, despite the fact that benefits and other support measures are crucial for the production sector, one of the key issues for the industry is personnel. How is it solved?

Acting Director of the Voronezh branch of «Arkhbum» Alexander Ivanov notes that the problem will be partly solved automatically with the emergence of benefits for industrial enterprises: companies will be able to invest in new equipment, while the level of salaries will increase. And this, in turn, will increase the motivation of employees to go to industrial enterprises. The company has a young specialist who has returned to Voronezh from Moscow: the salary level and working conditions were quite comparable, while in Voronezh he can afford a much higher standard of living for the same salary than in the capital.

Assistance in solving personnel problem

According to Danil Kustov, personnel problem is being solved due to the deep integration of educational institutions of secondary specialized and higher education with industrial enterprises. Case-championships containing topics proposed by residents of industrial zones are organized and held for students and postgraduates of Voronezh universities. Students undergo practical training at industrial enterprises. The regional government initiated the creation of Competence Centers on the basis of partnerships between universities and enterprises. Their main task is to develop new technological solutions: both at the current and future requests of enterprises. Seven universities have already joined the work of these centers in the Voronezh region.

Vladimir Slatinov, political scientist

«The project is seemed to be very ambitious and, what is more important, realistic. I think the region will be able to take 20th line in the ranking of leaders in industrial production. Nowadays it is in 26th position. It is noticeable that «New Industrialization» is the program of Alexander Gusev. He found his own political and managerial style which allows him, on the one hand, to continue the line of Aleksey Gordeev, and on the other, to offer something new, significant for the region».

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