Translated material
Potential energy
The Kaliningrad region may become a special economic zone by April 2006
The long-suffering draft law on a special economic zone in the Kaliningrad region was adopted yesterday by the State Duma of Russia in the second reading. With the required minimum of 226 votes, 409 deputies voted for the document, there were none against, and one abstained. It is planned that on December 23 the law will be considered and approved by the State Duma in the third and final reading. And on December 27, the law will appear in the Federation Council.If the document finally passes the Russian parliament and is signed by the president, it will come into force in April 2006 at best. Until then, amendments to about 30 legislative acts will have to be adopted. These include the Tax and Customs Codes. The law on the SEZ in the westernmost Russian region was adopted back in 1996. But local economic realities changed, and the law no longer met the requirements of the time. At the same time, despite the presence of gigantic economic potential - ice-free ports in the Baltic, huge deposits of amber, oil, tourist attraction, inexpensive and skilled labor, “connections” to all the main transport routes in Europe - the economy of the region remained in its infancy condition.
Several years ago (still under Governor Vladimir Yegorov) it was decided that the law on the SEZ should be changed. However, only the new Kaliningrad governor, Georgy Boos, the former vice-speaker of the State Duma, managed to lobby for the adoption of the law in parliament. The main disagreements arose over two problems - preferential customs clearance of foreign cars imported into the region and the provision of the giant oil refinery planned by Mr. Boos with the benefits of a SEZ participant. There were intense discussions with the federal government on these points. Mr. Boos, however, was ready to “surrender” customs clearance - it has too bad a reputation in the region. It is because of the distribution of lots for the import of foreign cars that one of the deputies of the former governor, Savva Leonov, has been in prison for the second year. However, after some consideration, the life of customs clearance was extended for another year, with the condition that all businessmen are removed from automobile affairs, and only ordinary Kaliningrad residents will be able to import cars on preferential terms.
Yesterday, the State Duma, despite protests from government officials, supported this proposal. However, there is no talk of an oil refinery yet. Mr. Boos is going to build a giant oil refinery in the Kaliningrad region with a transshipment volume of up to 18 million tons per year. According to the Kaliningrad governor, Vladimir Putin has already supported this oil project. All that was left to do was to include the oil industry among the SEZ participants. Only thanks to this status, which implies substantial tax benefits, would it be possible to implement such a large project for the small Kaliningrad region. And with this, according to Mr. Boos himself, not everything is so simple. The government of Mikhail Fradkov has not yet met the Kaliningrad governor halfway.
According to the chairman of the regional Duma committee on economic policy, Yuri Matochkin, who developed the first law on the SEZ in 1996, the new document will be finally adopted no earlier than January 2006. “But this is only if political will is demonstrated at the highest level. We still have many opponents, even in the same government. After all, the federal center loses about 20 billion rubles annually on customs benefits alone,” noted Mr. Matochkin.