nvesting in a small place.
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Pushkin pushes for foreign investment.17 JAN 97 1. SUMMARY: PUSHKIN, A SMALL TOWN SUBORDINATED TO ST. PETERSBURG, IS FAMOUS MAINLY AS THE SITE OF A MAGNIFICENT IMPERIAL PALACE. ITS MAYOR (PRESENTLY APPOINTED BY THE GOVERNOR OF ST. PETERSBURG, BUT SOON TO FACE LOCAL ELECTIONS) HAS A PROGRESSIVE REPUTATION. THE LOCAL ADMINISTRATION AND CHAMBER OF TRADE AND INDUSTRY ARE EAGER TO PROMOTE PUSHKIN AS A SITE FOR FOREIGN INVESTMENT NOT ONLY IN TOURISM, BUT ALSO MANY OTHER AREAS. THE DIRECTOR OF THE LOCAL CHAMBER EMPHASIZED THE TOWN'S EXCELLENT TRANSPORTATION LINKS, ITS "FREE ECONOMIC ZONE" WHICH OFFERS TAX BREAKS, AND, ABOVE ALL, ITS FLEXIBLE AND NON-BUREAUCRATIC ADMINISTRATION. END SUMMARY. 2. PUSHKIN, FORMERLY KNOWN AS TSARSKOE SELO, IS MAINLY KNOWN AS THE HOME OF THE LAST TSAR AND AS THE SITE OF THE MAGNIFICENT CATHERINE'S PALACE. HOWEVER, THE TOWN SEES ITSELF AS MORE THAN A TOURIST DESTINATION AND IS TRYING, WITH SOME SUCCESS, TO ATTRACT FOREIGN INVESTMENT. POLOFF SPOKE WITH VIKTOR AFANASENKO, DIRECTOR OF PUSHKIN'S CHAMBER OF TRADE AND INDUSTRY. THE CHAMBER WAS FOUNDED IN 1994 ON THE INITIATIVE OF THE LOCAL ADMINISTRATION AND ENTREPRENEURS AND IS ONE OF ONLY EIGHT SUCH CHAMBERS IN NORTHWEST RUSSIA. CONSIDERING THAT PUSHKIN IS A RELATIVELY SMALL TOWN, SUBORDINATE TO THE CITY OF ST. PETERSBURG WHICH HAS ITS OWN CHAMBER, THE CHAMBER'S EXISTENCE IS A TRIBUTE TO THE ENERGY AND EFFECTIVENESS OF ITS LOCAL BUSINESS COMMUNITY. PUSHKIN: A TOWN WITHIN A CITY 3. ADMINISTRATIVELY PUSHKIN IS A RAION (DISTRICT) WITHIN ST. PETERSBURG. ITS MAYOR, YURIY PARFONOVICH NIKIFOROV, WAS APPOINTED BY EX-MAYOR OF ST. PETERSBURG, SOBCHAK. HOWEVER, PUSHKIN IS GEOGRAPHICALLY DISTINCT FROM THE MAIN URBAN AREA OF ST. PETERSBURG AND HAS ITS OWN ADMINISTRATION. UNDER THE NEW LAW ON LOCAL SELF GOVERNMENT, THE MAYOR OF PUSHKIN WILL FACE ELECTIONS IN SPRING 1997. 4. ACCORDING TO AFANASENKO, NIKIFOROV, WHO IS NOT AFFILIATED WITH ANY PARTY, HAS BEEN AN ENERGETIC AND PROGRESSIVE MAYOR. HOWEVER, HE ADMITTED THAT NIKIFOROV MIGHT FACE STRONG COMPETITION IN THE ELECTION, BECAUSE MANY PEOPLE BLAMED HIM FOR NOT DOING ENOUGH TO OVERCOME PUSHKIN'S ECONOMIC DIFFICULTIES. AFANASENKO DOUBTED THAT EITHER THE COMMUNISTS, EVEN WITH SOME SUPPORT FROM PUSHKIN'S NUMEROUS PENSIONERS, OR THE NATIONALISTS WOULD BE THE MOST SERIOUS CHALLENGERS TO NIKIFOROV. INSTEAD HE EXPECTED COMPETITION TO COME FROM A SUCCESSFUL BUSINESSMAN. 5. THE CHAMBER PLAYS AN ACTIVE ROLE IN LOBBYING FOR A BETTER BUSINESS ENVIRONMENT BOTH IN PUSHKIN AND IN THE CITY AS A WHOLE. AFANASENKO BOASTED OF THE CHAMBER'S CLOSE TIES TO NIKIFOROV. RELATIONS WITH THE ST. PETERSBURG ADMINISTRATION ARE ALSO GOOD, ALTHOUGH NOT AS CLOSE AS UNDER EX-GOVERNOR SOBCHAK'S ADMINISTRATION. AFANASENKO ADMITTED TO HAVING PERSONALLY SUPPORTED SOBCHAK, WHOM HE PRAISED AS INTELLIGENT AND INDEPENDENT, BUT HE EMPHASIZED THAT THE CHAMBER HAD REMAINED NEUTRAL. RELATIONS WITH THE NEW GOVERNOR YAKOVLEV ARE MORE DISTANT BECAUSE WHILE SOBCHAK PERSONALLY HEADED AN ADVISORY COMMITTEE ON SUPPORT FOR ENTREPRENEURS, YAKOVLEV HAS DELEGATED THAT JOB TO FIRST DEPUTY MAYOR SERGEYEV. MAYOR NIKIFOROV, DESPITE BEING APPOINTED BY SOBCHAK, HAS GOOD RELATIONS WITH GOVERNOR YAKOVLEV. SMALL IS BEAUTIFUL (AND NON-BUREAUCRATIC) 6. AFANASENKO EAGERLY TOUTED PUSHKIN AS A PLACE FOR FOREIGN INVESTMENT. PUSHKIN IS AT THE INTERSECTION OF ROADS TO MOSCOW, KIEV AND THE BALTICS. IT IS MINUTES FROM ST. PETERSBURG'S INTERNATIONAL AIRPORT AND IS CONNECTED BY RAIL TO THE PORT OF ST. PETERSBURG. THE TOWN HAS A "FREE ECONOMIC ZONE" WHICH OFFERS FIRMS A 40 PERCENT BREAK ON LOCAL (NOT FEDERAL) TAXES. IT IS CLEANER AND MORE PEACEFUL THAN ST. PETERSBURG. MOST IMPORTANT OF ALL, ACCORDING TO AFANASENKO, A FOREIGN INVESTOR WOULD FIND THE LOCAL ADMINISTRATION MORE FLEXIBLE AND LESS BUREAUCRATIC THAN ST. PETERSBURG'S. AFANASENKO URGED INVESTORS NOT TO START WITH CONTACTS AT THE TOP (I.E., WITH ST. PETERSBURG'S GOVERNOR YAKOVLEV) AND WORK DOWNWARDS. THAT APPROACH WOULD TAKE LONGER, HE ARGUED. INSTEAD INVESTORS SHOULD START WITH LOCAL (RAION) OFFICIALS AND WORK UPWARDS. PUSHKIN'S OFFICIALS AND CHAMBER ARE WELL CONNECTED IN THE CITY ADMINISTRATION AND CAN HELP A FOREIGN INVESTOR TO NAVIGATE THE BUREAUCRACY. AFANASENKO CITED AS AN EXAMPLE THE CHAMBER'S ASSISTANCE TO USAID IN ESTABLISHING A LAUNDROMAT TRAINING CENTER. USAID WORKED WITH TOP CITY OFFICIALS FOR A YEAR BEFORE APPROACHING PUSHKIN OFFICIALS WHO WERE ABLE TO HELP THEM OVERCOME OBSTACLES QUICKLY. MORE THAN A TOURIST DESTINATION 7. WITH THE BEAUTIFUL CATHERINE'S PALACE, ALEXANDER'S PALACE AND MANY PARKS AND MUSEUMS, PUSHKIN'S MOST OBVIOUS AREA FOR FOREIGN INVESTMENT IS TOURISM. HOWEVER, WHILE PUSHKIN USED TO ATTRACT 5 MILLION TOURISTS PER YEAR, IT NOW ONLY ATTRACTS ABOUT 1.5 MILLION. ABOUT HALF THESE TOURISTS ARE WESTERNERS. DUE TO THE LACK OF HOTELS AND RESTAURANTS, VISITORS USUALLY COME TO PUSHKIN BY BUS AND STAY ONLY A FEW HOURS, SPENDING VERY LITTLE MONEY. AFANASENKO ARGUED THAT MANY TOURISTS MIGHT PREFER TO STAY IN PUSHKIN, WHICH IS CLEANER, QUIETER AND SAFER THAN DOWNTOWN ST. PETERSBURG, IF SUITABLE ACCOMMODATIONS WERE AVAILABLE. 8. THE LOCAL ADMINISTRATION IS EAGER TO EXPAND IN DIRECTIONS OTHER THAN TOURISM. SO FAR, PUSHKIN'S ONLY MAJOR FOREIGN INVESTMENT IS A COCA COLA PLANT, LOCATED ON THE HIGHWAY BETWEEN PUSHKIN AND DOWNTOWN ST. PETERSBURG. AFANASENKO REGRETTED THAT COCA COLA HAD NOT BUILT THE PLANT WITHIN THE FREE ECONOMIC ZONE SO THAT IT COULD TAKE ADVANTAGE OF TAX PRIVILEGES. (NOTE: INDEED, THE FREE ECONOMIC ZONE HAS NOT YET MANAGED TO ATTRACT ANY INVESTORS.) WRIGLEY PLANS TO CONSTRUCT A CHEWING GUM PLANT ALONG THE HIGHWAY. AFANASENKO HOPED THAT UPJOHN, WHOSE CORPORATE HEADQUARTERS ARE IN KALAMAZOO, MICHIGAN, ONE OF PUSHKIN'S TWO U.S. SISTER CITIES, WOULD DECIDE TO LOCATE A PRODUCTION PLANT IN PUSHKIN. FINALLY A FINNISH COMPANY PLANS TO ESTABLISH AN "AQUA PARK" NEAR PUSHKIN. 9. A FORMER MILITARY AIRPORT NEAR PUSHKIN ALSO OFFERS OPPORTUNITIES, ACCORDING TO AFANASENKO. IT IS CAPABLE OF HANDLING SMALL AIRCRAFT AND COULD HOST EXHIBITS AND AIR SHOWS AS WELL AS SERVING AS AN INEXPENSIVE ALTERNATIVE TO PULKOVO, ST. PETERSBURG'S MAIN INTERNATIONAL AIRPORT. NO WESTERN AIRCRAFT ARE CURRENTLY USING THE AIRFIELD, BUT A RUSSIAN COMPANY, FEODOR TRANSPORT, USES IT FOR SHORT TOURIST FLIGHTS OVER NEIGHBORING PETERHOF PALACE AND FOR LONGER COMMUTER FLIGHTS. POLOFF SUGGESTED THAT AFANASENKO MIGHT WANT TO CONTACT RECREATIONAL FLYING CLUBS TO LET THEM KNOW ABOUT THE AIRPORT. USE YOUR LOCAL CHAMBER 10. PUSHKIN'S CHAMBER CAN ASSIST FOREIGN BUSINESSES IN MANY WAYS, CLAIMED AFANASENKO. BESIDES HELPING A FOREIGN BUSINESSMAN NAVIGATE CITY BUREAUCRACY, ITS MEMBERS CAN ALSO HELP DEAL WITH THE LESS SAVORY ASPECTS OF DOING BUSINESS IN RUSSIA. THE CHAMBER'S MEMBERS INCLUDE A LICENSED, REPUTABLE SECURITY FIRM. ANOTHER MEMBER DOES BACKGROUND INVESTIGATIONS ON PROSPECTIVE RUSSIAN PARTNERS OR CLIENTS. THE LATTER'S EMPLOYEES, ADMITTED AFANASENKO, WERE MAINLY FORMER KGB EMPLOYEES. COMMENT 11. WHILE INVESTORS UNDERSTANDABLY TEND TO FOCUS ON WELL-KNOWN CITIES LIKE ST. PETERSBURG AND MOSCOW, RUSSIA'S SMALLER TOWNS CAN OFTEN OFFER A BETTER DEAL. PUSHKIN IS UNUSUAL IN BEING ACTUALLY A PART OF ST. PETERSBURG, WHILE OFFERING SOME OF THE ADVANTAGES OF A SMALL TOWN. MANY OTHER SMALLER TOWNS SUCH AS VOLKHOV OR NOVGOROD ALSO HAVE PROGRESSIVE, BUSINESS-ORIENTED ADMINISTRATIONS, AND ARE CLOSE ENOUGH TO ST. PETERSBURG TO BENEFIT FROM ITS CONCENTRATION OF RESOURCES.
Provided courtesy of the Business Information Service for the
IMI:FACTS AND STATISTICS ON SMALL BUSINESS DEVELOPMENT IN RUSSIA. 17 JAN 97 SUMMARY 1. THIS REPORT OFFERS STATISTICS ON ECONOMIC DEVELOPMENT OF AN IMPORTANT SEGMENT OF THE RUSSIAN ECONOMY - SMALL AND MEDIUM-SIZED BUSINESSES. IT ALSO CONTAINS INFORMATION ON RUSSIAN LEGISLATION CONCERNING SMALL BUSINESS DEVELOPMENT. THE INFORMATION FOR THIS REPORT WAS OBTAINED FROM THE RUSSIAN STATE COMMITTEE FOR SUPPORT AND DEVELOPMENT OF SMALL AND MEDIUM-SIZED BUSINESSES AND MEDIA PUBLICATIONS. END SUMMARY. DEFINITION OF A SMALL BUSINESS IN RUSSIA 2. IN RUSSIA, A SMALL BUSINESS IS DEFINED AS A SELF-EMPLOYED GROUP OF INDIVIDUALS OR AN INDIVIDUAL, ORGANIZED INTO AN ENTITY, IN WHICH AUTHORIZED CAPITAL OF PUBLIC SECTOR BODIES, CHARITIES, OR BUSINESSES DOES NOT EXCEED 25 PERCENT OF SHARES, AND THE AVERAGE NUMBER OF EMPLOYEES DOES NOT EXCEED THE FOLLOWING LIMITS: 100 FOR MANUFACTURERS AND CONSTRUCTION COMPANIES, 80 FOR AGRICULTURAL FIRMS, 60 FOR SCIENTIFIC AND TECHNICAL FIRMS, 50 FOR WHOLESALE TRADERS, 30 FOR RETAIL SELLERS AND DOMESTIC SERVICES, 50 FOR OTHER SECTORS. GOVERNMENT OF RUSSIA SUPPORTS SMALL BUSINESS DEVELOPMENT 3. AS STATED IN THE RUSSIAN FEDERAL PROGRAM OF STATE SUPPORT OF SMALL BUSINESS, THE RUSSIAN GOVERNMENT RELIES ON SMALL BUSINESSES TO CREATE JOBS, TO PROVIDE THE RUSSIAN MARKET WITH COMPETITIVE PRODUCTS, TO CONTRIBUTE TO REGIONAL DEVELOPMENT, TO PROVIDE TRAINING FOR WOMEN, YOUTH, HANDICAPPED, MILITARY PEOPLE, AND TO DEVELOP FRANCHISING, HIGH TECHNOLOGY, AND INNOVATIVE BUSINESSES. TO CREATE FAVORABLE LEGAL ENVIRONMENT FOR SMALL BUSINESS DEVELOPMENT IN RUSSIA, THE RUSSIAN GOVERNMENT ADOPTED SEVERAL LAWS AND DECREES: - A FEDERAL LAW ON STATE SUPPORT FOR SMALL BUSINESSES IN RUSSIA, ADOPTED IN JUNE, 1995; - A PRESIDENTIAL DECREE TO CREATE THE STATE COMMITTEE FOR SUPPORT AND DEVELOPMENT OF SMALL AND MEDIUM-SIZED BUSINESSES, SIGNED IN JUNE, 1995; - A PRESIDENTIAL DECREE ON IMMEDIATE MEASURES OF STATE SUPPORT FOR SMALL BUSINESSES OF RUSSIAN FEDERATION, SIGNED IN APRIL, 1996; AND - A FEDERAL PROGRAM OF STATE SUPPORT OF SMALL BUSINESS FOR 1996-1997, ADOPTED IN DECEMBER, 1995. STATE COMMITTEE FOR SUPPORT AND DEVELOPMENT OF SMALL AND MEDIUM-SIZED BUSINESS (GKRP) 4. CREATED BY A PRESIDENTIAL DECREE IN JUNE 1995, - GKRP PLAYS A LEADING ROLE IN IMPLEMENTATION OF THE FEDERAL PROGRAM OF STATE SUPPORT OF SMALL BUSINESS. IT ALSO COORDINATES AND OVERSEES THE FEDERAL FUND FOR SMALL BUSINESS SUPPORT (TENTATIVELY: 1997 - 200-250 BLN RBLS) AND EXECUTES THE SMALL BUSINESS LOAN PROGRAM IN ALL REGIONS OF RUSSIA. GKRP PLANS TO ATTRACT FOREIGN INVESTMENT INTO RUSSIAN SMALL BUSINESSES THROUGH ITS ONGOING RELATIONSHIPS WITH SIMILAR INSTITUTIONS IN OTHER COUNTRIES (THE U.S. SMALL BUSINESS ADMINISTRATION WORKS CLOSELY WITH GKRP WITHIN THE FRAMEWORK OF THE GORE-CHERNOMYRDIN COMMISSION.) ORGANIZATIONS INVOLVED IN SMALL BUSINESS DEVELOPMENT IN RUSSIA 5. THERE IS A COMPREHENSIVE NETWORK OF SMALL BUSINESS SUPPORT ORGANIZATIONS IN RUSSIA: GKRP, CHAMBERS OF COMMERCE, INSTITUTIONS FUNDED BY USAID (8 REGIONAL CENTERS, 144 UNITS FOR TECHNICAL SUPPORT FOR SMALL AND MEDIUM-SIZED BUSINESSES, 19 BUSINESS INCUBATORS), 23 SMALL BUSINESS DEVELOPMENT AGENCIES FUNDED BY THE EUROPEAN UNION'S TECHNICAL ASSISTANCE FOR THE CIS PROGRAM (TACIS), BUSINESS TRAINING CENTERS (MOROZOV PROJECT), REGIONAL INFORMATION CENTERS (GKRP, FEDERAL/REGIONAL FUNDS FUNDED), AND FEDERAL EMPLOYMENT CENTERS. ECONOMIC STATISTICS ON RUSSIAN SMALL BUSINESS DEVELOPMENT 6. - AS OF JANUARY 1996, THERE ARE 877,300 SMALL BUSINESSES REGISTERED IN RUSSIA; - THERE ARE ABOUT 1.5 MLN UNREGISTERED SMALL BUSINESSES LIKE INDIVIDUAL TRADERS; - SMALL BUSINESSES EMPLOY ABOUT 9 MLN PEOPLE - 15 PERCENT OF THE WORKING POPULATION; - SMALL BUSINESSES CONTRIBUTED 12 PERCENT OF GDP AND GENERATED 20 PERCENT OF RUSSIAN EXPORTS IN THE FIRST HALF OF 1996; - MORE THAN 50 PERCENT OF MOSCOW TAXES COME FROM SMALL BUSINESSES; MORE THAN 36 PERCENT OF MUSCOVITES ARE EMPLOYED IN SMALL BUSINESSES; - RUSSIAN SMALL BUSINESS PROFITS CONSTITUTE 35 PERCENT OF TOTAL RUSSIAN INDUSTRY PROFITS; - APPROXIMATELY 35 PERCENT OF RUSSIAN SMALL BUSINESSES ARE OFFSPRING OF THE LARGE SOVIET ENTERPRISES; THE REST (65 PERCENT) ARE NEWLY FOUNDED BUSINESSES; - SMALL BUSINESSES CONSTITUTE 60 PERCENT OF ALL ENTERPRISES IN RUSSIA;
- RUSSIAN SMALL BUSINESSES BY INDUSTRY:
CONTACTS
7. GKRP
8. CHAMBER OF COMMERCE AND INDUSTRY OF RUSSIAN
CONTACT: ALEKSANDR MURYANOV,
9. ASSOCIATION FOR SMALL BUSINESS DEVELOPMENT
Provided courtesy of the Business Information Service for the 
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