Investments and state support of investment activities

Within the last few years there have been developing a marked tendency of progress in the investment activity in the branches of real economy sector. At the stage of realization there are over 200 most significant projects of enterprises in Smolensk, Vyazemsky, Yartsevsky, Dorogobuzhsky rayons and city of Desnogorsk. The period of project realization is from 2 to 5 years, the volume of investments planned by them makes up 11 bln. rubles. On the whole, all the investment projects, being under realization now, will be fulfilled by 2008.

In 2005 14 769 million rubles of capital investments were used for the development of eco-nomics and social sphere of the oblast, 19.6% of which were invested into the building of a section of the gas pipeline Yamal-Europe, passing through the territory of the oblast.

The major sources of financing are still the own resources of enterprises and establishments of the oblast. In 2005 they invested 4 160.5 million rubles, which made up 35% of the total sum of in-vestments in the fixed capital (big and medium enterprises).

The Administration of the Smolensk oblast takes measures for creating favorable investment climate on the territory of the oblast which will contribute to its economic potential growth.

This task is being solved by building the regional investment legislation, stimulating invest-ment activity on the territory of the oblast.

High economic effect and safety of investments are provided by acting regional laws:

"On state support of investment activity on the territory of the Smolensk oblast"(the law provides guarantees of safety and legal protection, different kinds of state support, including tax privileges, subsidies on compensation of expenses on credit rate payments, leasing payments and corpo-rate bonds).

"On tax privileges, provided for investors, acting in accordance with the oblast law "(the law provides privi-leges for investors: exemption from tax on property and 4% corporate tax reduction to be paid into the budget of the oblast.)

Foreign investments

The regional economy had an influx of foreign investments in 2005 in the amount of USD 29.75 mln., which is 9.5% more than in 2004. The major part of those investments - USD 29.9 mln. came as loans. About USD 29.71 mln. out of the total investments was channeled to the development of processing industry.

Among newly open enterprises with foreign capital the dominating are engaged in the sphere of trade, the biggest of them are: Russian-Byelorussian OJC JV "Trading House "Byelarus", Russian-Polish CJC JV "ETS".

Within last several years in the oblast there have been established and work a number of industrious joint ventures:
• production and sales of diamonds and jewellery of OJC JV "Smolensk-Tashe"(Smolensk);
• OJC "Sitall"(Roslavl) works jointly with the French company "Saint Goben" and produces glass tare for Russian producers of drinks. The production was started by the European Bank of Reconstruction and Development, which invested in it 1.885.000 dollars;
• in the town of Vyazma a joint Russian-Chinese enterprise "Vyazma-Sea-Lion", producing dry-cleaning equipment, is established and OOO "Artmetallica" with German capital;
• in OJC "Safonovokhleb" joint ventures with Israel and Bulgaria producing snacks, cakes, ralls are established - OJC JV "Elis" and OJC "Royal-Cake";
• Russian-Bulgarian enterprise producing macaroni - OJC "Smolenskiye macaroni" is established;
• in Demidovsky rayon jointly with American and Byelorussian firms there works OJC "Kometa-plus", producing soft toys;
• 3 enterprises were established and financed by foreign companies in Gagarin: OOO "AST-Gagarin", OOO "La Crua Packaging" and OOO "Dikaya Orkhidea", and in 2005 a logistics center way established by the German company "Classen Rus";
• A major investment project with participation of the German company OSRAM is being implemented at the JSC "Svet" in Smolensk.. About 1 bln. rubles will be invested into manufacturing of luminous tubes.