Focus on South Korea

–13.07.2015

Vladivostok Free Port

The law on the free port of Vladivostok was signed by Russian President on 13 July 2015

On 13 July 2015 Russian President Vladimir Putin signed two federal laws regulating activities in the free port of Vladivostok, which will come into force on 12 October 2015:

1) The Federal Law of the Russian Federation from 13 July 2015 № 212-FZ "On Free Port Vadivostok";

2) The Federal Law of the Russian Federation from 13 July 2015 № 214-FZ "On Amendments to Part Two of the Tax Code of the Russian Federation in connection with adoption of the Federal Law "On the free port of Vladivostok"

The Free Port is established for 70 years, and a further extension is possible. As a free trade zone, it will have no customs duties, taxes, or fees. It will encompass 13 districts and urban districts of the Primorsky Territory, including: the Artyom and Vladivostok city districts, the Nadezhdinsky and Shkotovsky municipal districts, as well as the Partizansky (Partisan), Pogranichny (Border), and Khasansky districts. There is also a plan to create four specialized areas: port; industrial; scientific and promotional; in addition to tourism and recreation.

The territory of the Free Port overlaps with Areas of Priority Social and Economic Development (APSEDs), and future residents may choose either to act within the framework of the Federal Law No. 473-FZ, On the Areas of Priority Social and Economic Development in the Russian Federation (the APSED Law) or under the laws of the Free Port.

The goal is to create favorable conditions for the socioeconomic development of Primorsky and the Far Eastern Federal District (FEFD), taking into account the experience of similar economic zones of South Korea in the areas of customs and administrative and tax regulations. Other goals are:

to develop cross-border trade and transport infrastructure;
to attract investments;
to create a network of logistics centers, with special support for the transport, storage, and processing of partial loads; and
to integrate further the Russian economy into the international economy of the Asia-Pacific region.

The East Russia Economic Forum to become an annual event

On 19 May 2015, President Vladimir Putin decreed that the East Russia Economic Forum shall be an annual event in Vladivostok. Its purpose is to promote the economic development of the Russian Far East and to expand of international cooperation in the Asia-Pacific Region. This year, it will be held from 3 to 5 September 2015.

Venue: Russian Island, Primorsky krai
Organizers: Ministry for the Development of the Russian Far East, Ministry of Economic Development, Ministry of Foreign Affairs, the Primorsky Administration, and the Far Eastern Federal University
Central theme: new conditions for investments in the Far Eastern Federal District
Goals: to attract investors in new businesses in the FEFD, increase business activity in the region, and generate trade and investment agreements, with a particular focus on APSEDs and the Vladivostok Free Port
Expected participants: representatives of the business communities of China, Japan, South Korea, Malaysia, Indonesia, and Singapore, as well as from banks, investment funds, and other financial institutions

The conference program will be available on 15 July at the official Forum website, where on-line registration is now open. Forum participants will be permitted to enter the Russian Federation without a visa.

The Russian Government approves six new territories for priority social and economic development

On 28 April 2015, a meeting in Vladivostok approved five new Areas of Priority Social and Economic Development (APSEDs), and a sixth area received conditional approval, subject to further definition of one of its two included territories.

APSED and Location	Specialization	Private (first investors) Investments (RUB billions)	Public (total) Investments (RUB billions)	Jobs Created	Area (hectares)
Predmostovaya Blagoveshchensk District, Amur Area (conditional approval)	industrial and logistics	128.9	0	1.530	857.3
Belogorsk Belogorsk, Amur Area	agricultural	1.45	0.086	275	702.3
Kamchatka Petropavlovsk-Kamchatsky, Kamchatka Area	industrial, logistics, and tourism	28.1	8.3	2.918	1.276
St. Michael Mikhailovsky Spassky, Chernigov Region, Primorsky Area	agricultural	39.03	4.44	2.401	3.151
Bering Bering District, Chukotka	mining and quarrying	8.00	0	450	5.960.000
Industrial Park Kanglassy Yakutsk, Republic of Sakha	industrial	1.11	0.2	350	16.9
Totals		206.59	13.3	7.924	5.966.003.5

These six APSEDs will create almost 8,000 new jobs in the Far East Federal District. Investors now are ready to invest more than RUB 200 billion from private funds, while only RUB 13 billion of public investment will be needed.

The Russian Government defines the procedure for transferring real estate to the management company of an APSED

On 24 April 2015, the Russian Federal Government adopted Resolution No. 390, which regulates state or municipal real estate, structures, and infrastructure that are transferred to the management companies of Areas of Priority Social and Economic Development (APSED).

Resolution 390 establishes:

the order of transfer of lands, buildings, and structures located in the APSED from state or municipal bodies to the APSED management company; and
the disposal procedures for state- or municipally-owned land, buildings, structures, and facilities, as well as infrastructure facilities located in the territory of the APSED by the management company.

The management company of may dispose of real estate, in accordance agreements governing its activities in the APSED. Management companies may provide infrastructure subjects to APSED residents through the transfer of ownership or lease, as each resident prefers.

The resolution also provides regulations for governmental bodies to consider applications for the transfer of state or municipal property to an APSED management company.

The Russian Federation reduces the fishing quota for South Korea

In April 2015, the Russian Federation and the Republic of Korea agreed to reduce South Korea's fishing quota for 2015 by 36.6 percent, from 60,000 tons to 38,000 tons. According to the Federal Agency for Fishery, the decrease resulted from South Korea's failure to deliver promised investments in Russian ports.

Green Cross and Nanolek become strategic partners

On 26 March 2015, Green Cross, a South Korean biopharmaceutical company that specializes in the design and manufacture of plasma-derived vaccines and recombinant proteins, entered into a strategic partnership with Nanolek, a Russian pharmaceutical company, to introduce Green Cross products into the Russian market. Under this agreement, Nanolek will have the permission to market a number of Green Cross biological products in the Russian biopharmaceutical complex, which started in December 2014.

The parties expect that, as a result of the strategic partnership, socially important biopharmaceutical products will become less expensive and more readily available in the Russian Federation.