Translated material
Field for miracles
The President finally gave the Kaliningrad region the status of a special economic zone
Yesterday, Russian President Vladimir Putin signed the federal law “On the special economic zone in the Kaliningrad region and on amendments to certain legislative acts of the Russian Federation.” Let us recall that the law was adopted by the State Duma on December 23, 2005 and approved by the Federation Council on December 27.However, the new law will come into force only on July 1, 2006. Until then, it is planned to adopt a number of amendments to the Tax and Customs Codes - without them, the document will remain a dummy. After all, the beauty of the new law on the Kaliningrad Special Economic Zone lies in tax and customs preferences. As a general rule, only the investor who proposes a project worth at least 150 million rubles can become a participant in a special economic zone. Moreover, not every type of business can qualify for participation in a special zone. Thus, Governor Georgy Boos tried to get benefits for the oil industry (he wanted to open a giant oil refinery), but nothing worked. Trade enterprises and small entrepreneurs are not among the potential participants. The latter has already caused negative comments in the region, since there are few oligarchs there, but there are plenty of mediocre businessmen. However, their time is apparently running out. And the Kaliningrad politicians who most clearly grasp the market conditions are already openly advocating for large and, which is significant, far from local business.
“The new law will allow large investors from Russia to come to the region, for whom investments of millions of euros in production, transport, and infrastructure complexes are the norm. Ours cannot afford this yet,” Sergei Kozlov, vice-speaker of the regional Duma and chairman of the SEZ development committee, told Vremya Novostei. In his opinion, large Russian businesses will be able to “integrate” the region into the domestic economy.
The Kaliningrad economy is really different from the “mainland”. Many goods in Kaliningrad are significantly more expensive than in the main part of Russia. Sellers are forced to factor into the price of their products the cost of transportation across several borders. The SEZ law introduces tax preferences: it exempts people from income tax for six years and reduces the tax rate by half for the next six years. The new law is valid for 25 years, with a transition period provided - those companies that continue to operate under the old legislation can do so for another ten years.
The old legislation is the law on a special economic zone in the Kaliningrad region, adopted back in 1996. It never gave a powerful impetus to the development of the regional economy. However, his task, as the developers now say, was to somehow keep the region afloat. If so, then this task is completed. But the new document, apparently, will give this impetus to the region. The impulse, however, must be really powerful. After all, the governor of the region, Georgy Boos, has stated several times that the task for the coming years is to equalize the standard of living of Kaliningrad residents with the standard of living of their neighbors in Lithuania and Poland.
Not everyone, however, is confident that an economic miracle will happen. President of the Kaliningrad Chamber of Commerce and Industry Igor Tsarkov, for example, is very skeptical about the new law: “I don’t see any particular prospects for an investment surge. This law is not directly applicable, it is very dependent on government regulations. There are too many complaints about the document, which could lead to trouble later. But, unfortunately, nothing depends on us here.”