Genesis of Terxritories with a Special Business Regime

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 1112-1116

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal web link: http://www.jett.dormaj.com

Genesis of Terxritories with a Special Business

Regime

Gulia F. Galiullina*, Anatoly N. Makarov, Aliya A. Mullakhmetova

Kazan Federal University, Naberezhnye Chelny Branch, Naberezhnye Chelny, Russia

Received: 13/09/2019

Accepted: 22/11/2019

Published: 20/12/2019

Abstract

The article considers the emergence and classification of numerous "dispersed" territorial development institutions of Russia as a

tool for economy diversification in order to improve partnership between the state and entrepreneurs. The first Russian territories

with a special regime of functioning were created in 1990 in the form of free economic zones, and there were already 14 types of

special territories in the country, including more than 600 management objects, by mid-2019. The article considers the problem of the

lack of mechanisms for extrapolating the positive experience of the previously created territories with a special regime of doing

business to increase the efficiency of using state and municipal investments in creating new types of similar territories. A

comparative characteristic of the special factors of doing business in the special economic zones, territorial development zones,

territories of priority social and economic development, and free port of Vladivostok revealed both differences and similar state

preferences. In particular, tax incentives, a minimum level of investment, preferential connection to infrastructure facilities, etc. were

established for residents of special territories. Based on the study results, it was concluded that it is necessary to develop a strategy

for the functioning of territories with a special regime for conducting entrepreneurial activities based on the implementation of

industrial policy.

Keywords: Development institutions, Territories with a special regime of doing business, State preferences

In the context of transition to a market economy in the

Introduction

early 90s of the last century, the first attempts were made to

create territories with a special regime of doing business in

order to solve certain problems of the country's socio-

economic development. (3, 19) The first Russian territories

with a special regime of functioning were created in 1990 in

the form of free economic zones (FEZs), and there were

already 14 types of special territories in the country,

including more than 600 management objects, by mid-2019.

Innovative modernization, restructuring of the sectoral

and spatial structure of the country's economy, as well as

development and support of small business, suggest the

formation and strengthening of the role of all types of

development institutions (1), which represent the most

progressive trends in the implementation of modern state

economic policy. Along with the “central” development

institution (Vnesheconombank, the Direct Investment Fund,

the Investment Fund, the Industrial Development Fund, the

Single-Town Support Fund, etc.) and the numerous state-

owned corporations, there are “dispersed” development

institutions, such as science cities, special economic zones,

territorial development zones, territories of priority social and

economic development, industrial districts and a number of

others in Russia today.

2 Methods

It is important to note that various territories with a

special regime of doing business, created in large numbers in

recent years in Russia, are becoming competitors among

similar activities and provided state preferences. However,

there are no mechanisms for extrapolating the successful

experience of creating and functioning of various types of

“special” territories to similar territorial development

institutions (4, 16).

Historical experience has shown that priority

development territories were created in the 1920-1980s on the

basis of state priorities and available resources. The missing

resources in the planned economy were centrally supplied

from all over the country (2, 20).

The genesis of territories with a special regime of doing

business, their classification and standardization of the

regulatory framework are due to the negative results of the

activities of previously created special territories.

Corresponding Author: Gulia F. Galiullina, Kazan Federal

University. Email: gulia-fag@yandex.ru.

112

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 1112-1116

Results and Discussion



one workplace of the SEZ cost 10.2 million

roubles for budget, and a number of other negative factors (6,

1,18).

In 1999, a number of municipalities with developed

1 free economic zones (FEZs) were created in 1990-

1992, in order to attract foreign investments and technologies,

promote Russian goods for export. The main difficulties in

the implementation of the FEZ development project are the

lack of a well-developed legislative base and a systematic

approach to the project implementation; the constant struggle

of the regions for maximum benefits; the lack of funding.

Since 2005, all free economic zones have been closed, except

for two - in Magadan and Kaliningrad. In 2014, the third free

economic zone was opened - in the territories of the Republic

of Crimea and the city of federal significance Sevastopol.

Since 2005, the special economic zones (SEZs) began to

enter the country's economic life. They were created and

developed, basing themselves (like FEZs) on tax benefits,

preferences and direct investments from the state, regional

and municipal budgets invested in energy, transport, logistics

and social infrastructure. Four types of SEZs were created:

scientific and technical potential transferred to the status of

science cities. In 2019, their number was 73. The main

specialization of science cities is represented by the following

sectors: aircraft manufacture and space research; electronics

and radio engineering; automation, machine and instrument

making; chemistry, chemical physics and creation of new

materials; nuclear complex; biology and biotechnology.

Since the late 1990s, Russia has tested technoparks and

industrial parks as “locomotives” of accelerated development,

which are usually created in the territories of plants that have

found themselves in depressed and conversion situations. For

012-2017, the number of existing and created industrial

parks in the country amounted to 166 (Table 1). The

industrial parks appeared in Novosibirsk, Tomsk, Moscow,

St. Petersburg, Nizhny Novgorod, some cities of the Moscow

Region and other regions of Russia. They are created in two

types:

industrial-production,

technical-innovative,

tourist-

recreational and port. As of 01.01.2019, there are 25 SEZs, in

which 650 resident companies are registered. The volume of

investments declared by residents is about 850 billion

roubles, of which more than 306 billion roubles are accounted

for 102 companies with foreign capital from 34 countries.

Over 12 years, about 290 billion roubles have been invested

in the creation of resident productions; 446.0 million roubles

per 1 resident (5, 8,17).

greenfield. They are created on the newly

allocated undeveloped land plot, not initially provided with

infrastructure, as a rule.

brownfield. They are created on the basis of

previously existing production sites, provided with buildings,

structures and infrastructure, as a rule.

The audit of the SEZ activities by the Accounts Chamber

of the Russian Federation revealed the following negative

facts:

The industrial parks differ from technopolises and

technology parks either by complete absence of scientific and

technical infrastructure, or by its weak manifestation. The

economic mechanism for the functioning of industrial parks

includes equipment leasing, rent of production facilities,

rental and tax benefits, and public-private partnerships.

According to the report of the federal government, the

number of industrial technoparks has more than doubled

since 2014 (the year of legislative determination and the

beginning of state support) and reached 45 facilities in 22

regions (2018). There are 3,156 companies operating in high-

tech industries: instrumentation, electronics, laser technology,

chemical and medical industries, biotechnology and new

materials on their territory.

According to the assessment of the Association of

Clusters and Technoparks, there are 192 organizations that

possess certain features of technoparks in the field of high

technologies in Russia. Of them, 125 technoparks in 44

regions of the Russian Federation meet the existing

requirements and recommendations to the greatest extent. In



186 billion of budget funds were invested in the

creation of 33 special economic zones (2006-2015).

Moreover, the return in the form of customs and tax

payments amounted to 40 billion roubles, that is, 4.65 roubles

of investments from the budget account for 1 rouble of

received funds;



SEZ management companies were actively

engaged in financial activities for the placement of

temporarily free funds in the period from 2006 to 2015, and

received a total interest income of 29.3 billion roubles. At the

same time, the financial transactions were highly risky;



as of January 1, 2016, only 526 SEZ

infrastructure facilities were commissioned out of 758 ones

planned for construction. At the same time, the planned

values of the objects to be commissioned were annually

adjusted in connection with the postponement of object

construction to later periods;



129.6 thousand hectares have been utilized,

012, the creation of 25 innovative territorial clusters was

approved.

which is 60.1% of the 214 thousand hectares allotted for the

special economic zones;

Table 1: Performance of industrial parks

Years

2012

14315

0.9

45.0

2017

166

23572

2.5

146.0

Growth rates

At 2.6 times

At 1.9 times

At 1.6 times

At 2.6 times

At 3.2 times

Number of industrial parks, units.

Number of regions that have established industrial parks, units.

Area parks, ha

Number of residents, thousand units

Created jobs, thousand pers.

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2019, Special Issue on Environment, Management and Economy, Pages: 1112-1116

Funds are allocated from the federal budget to finance the

programs that provide for the implementation of activities to

support the activities of specialized organizations, carrying

out methodological, organizational, expert-analytical and

informational support for the development of territorial

clusters; professional retraining, advanced training and

internships for the employees of organizations specified in

the program as its participating organizations, in the areas of

program implementation (including abroad) and in other

areas.

Since 2011, in order to reduce differences in the level of

socio-economic development of the constituent entities of the

Russian Federation by creating favorable conditions for

attracting investments in their economy, it has been

announced that the territorial development zones (TDZ) will

be opened. Since 2015, the port territories of Vladivostok,

Petropavlovsk-Kamchatsky, Vanino, Korsakov and Pevek

entered the Free Port of Vladivostok. Free Port of

Vladivostok (FPV) is a port zone that enjoys special regimes

of customs, tax, investment and related regulation (“port-

free”).

Table 2: Comparison of the operating conditions of territories with special regime of economic activity

Advanced development

territory in the Far Eastern

Federal District and closed

administrative territories

Advanced development territory in a one-industry

Оperating

conditions

A special

economic zone

SPV

ZTR

town

The

deadline,

years

A separate

territory is

allocated within

the boundaries of

the municipal

entity

Within the boundaries of one or more municipal

entities of one region

Territory

Within the boundaries of the municipality

Controllin

Customs

regime

Fiscal

Is created

Not created

Free customs zone

Normal mode

infrastruct

ure

investmen

Investmen

t platform

type

Envisage

Not provided

Greenfield and brownfield

brownfield



each advanced development territory

has its own list of economic activities;

as a result of the implementation of the



investment project there is no provision for the

execution of contracts concluded with the city-

forming organization of a single-industry town,

and (or) profit from the sale of goods of the city-

forming organization of a single-industry town in

the amount exceeding 50% of the total proceeds

from the sale of goods produced as a result of the

implementation of the investment project;



development of

mineral deposits is not envisaged,

except for the development of

mineral water deposits and other

natural healing resources;

Any business

activity not

Each advanced

development

territory has

its own list of

economic

Restrictio

ns by type

economic

activity

prohibited by

the legislation

of the Russian

Federation is

allowed



production and processing of excisable

goods is not envisaged (except for cars and

motorcycles), as well as production of the



production and

processing of excisable goods is

not envisaged (except for cars and

motorcycles)

activities

following types of economic activities: crude oil

and natural gas production; provision of services

in the field of oil and natural gas production;

pipeline transportation; production of oil products;

wholesale and retail trade; logging; real estate

operations; economic activities that employ 20 or

more than 20% of the average number of

employees

Recruiting

foreign

workers

Does not provide for the attraction of foreign labor

by a resident in the amount exceeding 25% of the

total number of employees

Normal

mode

Normal mode

simplified visa regime

114

Journal of Environmental Treatment Techniques

2019, Special Issue on Environment, Management and Economy, Pages: 1112-1116

Its regime is aimed at implementing infrastructure

projects for the construction and reconstruction of port

terminals, transport and logistics, as well as warehouse

complexes and other investment projects related to port

activities. Since 2014, the territories of advanced social and

economic development (TASED) began to be created in

Russia, first - in the Far Eastern Federal District, then - in the

single-industry towns (7, 12, 13). At the beginning of July

functioning of territories with a special regime for doing

entrepreneurial activity based on the implementation of

industrial policy (9).

Conclusions

Today, the government is betting on TASED, which,

however, run the risk of repeating the fate of special

economic zones, which turned out to be an inefficient way to

attract investments due to management problems. TASEDs,

unlike the SEZs, were created for specific investors at the

request of the region, and they were given a lower threshold

for the necessary investments. However, similar problems

remained: budget funds were used inefficiently, infrastructure

construction lagged behind the plan; regions do not cope with

their responsibilities, in particular, documents for their

planning have not been developed for most of the land plots.

At the same time, there are problems associated with the

federal center itself, for example, there are no clear criteria

for the TASED operation, selection of territories for its

creation, as well as assessment of the effectiveness of

allocated budget funds. At the same time, the investors

themselves are not responsible for the failure to fulfill their

obligations, in particular, no penalties are provided for the

untimely preparation of documents or delivery of objects

019, decisions of the federal government on the creation of

8 TASEDs in the Far Eastern Federal District and 89 - in the

single-industry towns and CATUs (closed administrative-

territorial units) were issued. Comparative characteristics of

the special conditions for doing business in the SEZ, TDZ,

TASED, and FPV are presented in Table 2.

Summary

Ten years of experience in the existence of special

economic zones have shown that they have not become an

effective tool to support the national economy. The process of

creating and managing SEZs was characterized by formalism,

irresponsibility and impunity, lack of executive discipline and

demand for decisions made and their consequences. The real

economic effect of special economic zones has not been

achieved. Now 14 tools for the territory development have

been created and are functioning in the country: SEZ,

TASED, innovative territorial clusters, industrial parks,

technoparks in the field of high technologies and others (5,

(

10).

The main reasons for the unsuccessful functioning of

territories with a special regime of doing entrepreneurial

activity are inconsistent actions between investors and

authorities, problems with managing, transparency and

determining sources of financing, underdeveloped

infrastructure, as well as such special territories are often

created artificially without studying the needs of investors

and the profitability of possible projects. In recent years,

potential and current investors have faced a new challenge -

the lack of highly qualified specialists in the profile of the

opened production. In many special territories, both a

negative migration balance and a natural population decline

are noted. The complex of identified problems is inherent in

the special zones operating for more than 10 years and the

new territories with a special regime of doing business.

14). We have 572 management objects only in 10 types of

these territories (Table 3).

The formation of a particular form is actively lobbied and

then overseen by various federal ministries. Thus, the

Ministry of Economic Development deals with the

functioning of special economic zones, free economic zones,

territorial development zones, and TASED created in single-

industry towns and CATUs. The Ministry of Development of

the Far East oversees the development of the Free Port of

Vladivostok and TASED. Moreover, the more institutes of

territorial development of various typologies are created, the

greater the impression is that there is clearly a shortage of

systematic approach and reasonable goal-setting in this

process. The solution to this issue is possible through the

formation and implementation of

a strategy for the

Table 3: Timeline of creating areas with a special regime of economic activities

Type territory with a special regime of

economic activities

Free economic zones

Science cities / technopolises

Industrial parks

Special economic zones

Zones of territorial development

Innovation clusters

Technoparks

Year of

creation

1990

1999

2004

2005

2011

2012

2014

Number of

control objects

166

199

Supervising Ministry

Ministry of Economic Development

Ministry of Science and Higher Education

Ministry of Industry and Trade

Ministry of Economic Development

Ministry of Industry and Trade

Ministry of Industry and Trade and Communications ministry

Ministry of East Development

Free port of Vladivostok

2015

Advanced development territory in the Far East

Advanced development territory in a one-

industry town and closed administrative

territories

2015

Ministry of East Development

2016

Ministry of Economic Development

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2019, Special Issue on Environment, Management and Economy, Pages: 1112-1116

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