Siberian Rules

Tomsk Oblast seems to have found a way to successfully combine its raw-materials-based economy with innovative projects, says the region’s governor Sergey Zhvachkin. He invited foreign investors to engage in dialogue.

On investments

I talk a lot with foreigners and I can say with satisfaction that, fortunately, the association of Siberia – and the Tomsk region in particular – with bears, vodka and balalaikas is becoming a thing of the past.

Today we are known as a region boasting a powerful oil and gas complex: companies with Indian, Swedish, Irish, Hungarian, and Czech capital extract natural resources from the Tomsk soil.

Foreigners are also well aware of our higher education institutions. The recent celebration of Tomsk State University’s 135th anniversary stands as proof: a great number of presidents of leading European universities took part in the anniversary session of the Academic Council.

Obviously, over the last 50 years, one of our largest nuclear industrial facilities – the Siberian Chemical Combine – has also attracted a lot of attention in the West.

But many foreigners have no idea about our hospitality and our beautiful attractions. Sometimes they come here on a business trip and leave the region in awe. For instance, this was recently the case with Michèle Bellon, president of ERDF – a French energy company that leases distribution networks in the Tomsk region.

Today we have launched a special programme to stimulate domestic and foreign tourism. The programme will include historical tourism – next year Tomsk will be celebrating its 410th anniversary; environmental tourism – over 60% of the region’s territory is forest, with half the population living in the boreal Taiga forest or rural areas; and educational tourism. We are currently in the throes of integrating into our programme all the exciting projects offered by our travel agencies, to help them promote their services. Without a doubt this will make our region more recognisable and attractive.

However, I will be honest with you. We are only beginning to develop an efficient formula to enable us to work better with investors. In the meantime our interaction with the business community is still managed ‘manually.’

And yet the region is running a number of interesting investment projects. Recently we held negotiations with representatives of the Hilton hotel network to build a medium-priced hotel in the region’s centre. This year McDonald’s will open two restaurants. We have joined forces with Gazprom to launch an ambitious programme to supply gas to 40 communities in the region. Rosatom (Russia’s state nuclear energy corporation) is already running two important investment projects in the region valued at 100 billion rubles – we battled for these projects in competition with the Beloyarsk Nuclear Power Station in Sverdlovsk Oblast and Mayak Production Association in Chelyabinsk Oblast. SIBUR built a facility from scratch and has already launched production of BOPP film – a state-of-the-art packaging material used across the board in the food industry. That is why I believe Tomsk Oblast is highly attractive for investors and representatives of a broad range of different businesses.

On the new economy

The universities of Tomsk are both the region’s pride and its brand, ranking among the world’s leading educational establishments. Innovations are also one of the region’s development priorities. Even though demand for innovative products is driven for the most part by businesses, the government is pursuing an aggressive policy to stimulate it. For instance, the region’s universities and industrial enterprises are taking an active part in the government-run programme implementing complex investment projects to create high-tech production facilities. The federal government supports this cooperation between universities and businesses, meeting half of the costs of opening new technological facilities. Since the launch of the programme we have already implemented 15 such projects.

Having said that, I would like to point out that our region’s budget is also used to shape greater demand for innovative products. We decided that at least five per cent of the funds earmarked for government procurement would be diverted into acquiring new technologies. Experts – and Anatoly Chubais in particular – say that Tomsk Oblast is one of the trailblazers in this area.

Innovations that originated in our region are already sought after on the market. One of our first innovative companies, EleSy, developed an automation system that is used to operate the Eastern Siberia–Pacific Ocean oil pipeline. Akvelit – a company based in Tomsk’s technology development special economic zone – produces a nano-gauze called VitaVallis; this product significantly reduces the healing time for various wounds, burns, oncological sores and other lesions. The LED systems manufactured by a local company called Fiztekh-Energo are used to illuminate the Olympic rings at Sochi airport. Scientists from Tomsk developed a glyoxal technology and are now in commercial production – it is the only glyoxal production facility in Russia. The project was headed up Alexey Knyazev, a scientist from Tomsk State University. In 2009 he won the President’s Prize for Young Scientists, and in 2012 he was appointed my deputy in charge of innovations policy and the scientific and industrial complex.

In recent years the fuel and energy complex has accounted for approximately one quarter of our consolidated budget. If we add the tax revenues that we receive from pipeline production facilities the figure would go up to nearly 30%. Every year the share of the fuel and energy complex in regional finances is falling by a fraction of a per cent. I believe this is a positive sign. The fact that this industry continues to operate in a stable manner enables the government to meet its social obligations and at the same time develop the innovations sector which we bank on heavily. Today the share of this ‘new economy’ in the region’s gross product is estimated at eight per cent. This is 2.5 times higher than the country’s average; however, we are planning to reach 25%. And we are able to do it.

A special economic zone has been set up in the Tomsk region with more than 60 registered residents, six universities – two of which have National Research Facility status and are included in the Education and Science Ministry’s Top 15 list – and a network of business incubators. We won the Education and Science Ministry’s tender to build industrial parks. These will offer a realistic platform for developing the high-tech production facilities that the residents of our special economic zone need so badly.

On big business

Several subsidiaries of large oil companies are operating in Tomsk Oblast. In expanding their oil production and making significant investments in the development of new fields, they help to address social problems in the territories where they maintain their presence. I am most happy with the way this sector operates. The government has legislated maximum levels for associated gas flaring, and there are environmental considerations to be taken into account. But common sense should ultimately prevail; after all, associated gas is a raw material that can bring profit.

In my relations with the business community I do not have any favourites: all companies are equally important for the region and we demand that all of them meet their obligations equally. I think that entrepreneurs and CEOs are happy with this policy. I always maintain an honest dialogue. Recently, I was shown a memo stating that several oil companies that had been operating on the market for six to eight years were forecasting losses. As a result the region stood to receive 6 billion rubles less in revenues. I convened a meeting and told them, “I am not a rookie in your business. I will personally audit your books.” Following that meeting, 20% of the companies that had been ‘planning to sustain losses’ showed a profit. We continue to work with the remaining companies, trying to understand the reasons behind their production losses. I have no intention of merely shooting from the hip.

The business community expects us to come up with clear-cut rules of the game. We are establishing these rules, and have given the green light to many projects. In return we demand compliance with the rules; we expect entrepreneurs to remember their commitments

Sergey Zhvachkin is Governor of Tomsk Oblast, Russia.

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