Translated material
Factories to workers!
Moscow will prohibit investors from liquidating enterprises being removed from the center
Yuri Luzhkov’s emotional speeches addressed to the owners of industrial enterprises who are repurposing and moving their production facilities out of the center of the capital were promptly formalized into an entire city program. Already on March 18, the Moscow government will consider the PromCity program. This was announced yesterday by the head of the Moscow City Duma Commission on Economic Policy, Irina Rukina.Let us recall that in recent months, Moscow Mayor Yuri Luzhkov has repeatedly harshly criticized investors who are liquidating enterprises in the city center and developing vacant land based on their own interests. According to Moscow officials, the process has assumed alarming proportions and has already led to a noticeable drop in tax revenues for January and February. Investors are in no hurry to build new industrial buildings near the Moscow Ring Road, but are actively buying up shares of minority shareholders and, having taken possession of the enterprise, either repurpose production and sell it off in parts, or bring it to bankruptcy and give the site to the developer. As a result, officials point out, over the past year and a half, the light industry of the capital alone has lost 14 enterprises, including the only fine cloth factory in Russia named after. Petra Alekseeva. Last Thursday, Mr. Luzhkov, having convened a meeting, once again slammed his fist on the table and said that the relocation of factories to the outskirts should not be spontaneous and that investors would first have to build new enterprises in industrial zones, and only then raise the issue of vacating plots in city center.
The Industrial City program prepared by the Moscow City Duma and the city government involves fixing the status of newly created industrial zones - the owners of enterprises relocated there will be required to maintain their production profile. The problem, however, is that mostly dilapidated plants and factories are being “relocated” from the historical center of the city, the depreciation of their fixed assets ranges from 70 to 90%. Transporting such old equipment is sometimes more expensive than installing new equipment. As a result, investors need to invest money not only in the construction of workshops, but also in updating funds. Naturally, construction companies are not eager to have such non-core assets with very questionable profitability compared to construction. In addition, the economic meaning of the mandatory preservation of the previous profile of liquidated enterprises is not entirely clear: one would think that no one would mind investing in production that produces competitive products and brings good profits. In turn, the use of vacated areas for attractive, especially in the center of the capital, infrastructure and services, will quite possibly bring more taxes to the city treasury than old industrial production.
Nevertheless, in a conversation with a correspondent of the Vremya Novostei newspaper, Irina Rukina argued that the Industrial City program will attract Russian and foreign investors interested in updating the assets of the oldest Moscow factories, and link the modernization of these enterprises with their relocation. Although she did not deny that investors usually show increased interest in such enterprises only as long as they are located within the boundaries of the historical center of the city.