Newsletter for the Turkish businesses and investors (Issue 2, 2014)
Ufa invites Turkish investors to participate in public private partnerships
The city of Ufa, which is the capital of Bashkir, actively attracts foreign investors, primarily Turkish enterprises, to participate in public private partnerships (PPPs) for the city's development.
According to the Ufa administration press center, the city is now searching for investors in order to implement PPP infrastructure projects for the development of public transportation. Turkish companies, such as KAPITALNET A.S and Yorum Construction, have already indicated their willingness to finance the construction of metropolitan bus lines. The Ufa city administration has announced that the municipal authorities are currently expecting more applications from Turkish partners. It is understood that KAPITALNET A.S plans to coordinate the project and to form a consortium with other investors if KAPITALNET A.S. wins the tender proceedings.
The Government of the Republic of Bashkortostan is also striving to establish business ties with the Turkish business community.
On 6 February the three-party meeting with Rustem Khamitov, President of the Republic of Bashkortostan, Hurkan Donat, Head of Yps Otomotive, and Alexei Kozlov, Chair of the AvtoVAZagregat Board of Directors, was held in Ufa. The officials discussed the feasibility of a project to produce vehicle components in Belebey, which then could be supplied to Ford and Renault factories. The President of the Republic promised administrative and organizational support for the project.
In return, the leader of Turkish enterprise showed his appreciation of the Russian economic incentives and again confirmed that the first investment will be up to US$ 10 million.
Just before the meeting, the President of the Republic of Bashkortostan had conversations with Mahmoud Civelek, the Kocaeli Province President of the Justice and Development Party. During official talks, both parties promised simultaneous collaboration in various ways, so that Turkish and Russian authorities would be able to stimulate cooperation among businesses, as well as to provide administrative support for investors and for the transfer of advanced technology.
Turkish company becomes one of the first Tolyatti Special Economic Zone developers
Nobel Automotiv Russia, a Russian subsidiary of Turkish Orhan Holding A.S., has become one of the first two companies (with Edscha from Germany) to invest in the Tolyatti Special Economic Zone. The whole economic zone is going to be fully operative in the second quarter of 2014.
In July 2013 Nobel Automotiv Russia filed an application with the Tolyatti SEZ authorities for a land lease of 3.25 hectares and registered their land use right by the end of August. Then the Turkish company began preliminary work for the project launch.
Orhan Holding plans to produce a wide range of diversified goods such as fuel-supply pipes, windshield washers, flexible cables, saddle frames, and engine mount springs in the Tolyatti SEZ.
Many foreign investors seek to invest in the Tolyatti SEZ because of its special economic incentives provided by the federal law on special economic zones. One such benefit is a guarantee against unfavorable changes in the law. Moreover, SEZ investors are exempt from land and transport taxes, as well as property tax, for first ten years. The rate of income tax payable to the Samara Oblast is reduced to 0%, and this reduction will continue until the end of 2018. Investors in the Tolyatti SEZ also enjoy a customs policy that helps them avoid excessive payments for imported goods, resources, materials, or exported manufactured products.
Penza Oblast's pleasant investment climate attracts a Turkish-German business consortium
The Government of Penza Oblast announced that the Turkish-German company SEN Group has decided to execute an agro-industrial project. The project provides for construction of fruit and vegetable greenhouses on 100 hectares. The foreign partner invested a total of 300 million euros.
According to Zekeriya Kökdemir, the General Director of SEN Group GmbH, there were several reasons why the SEN Group decided to launch this project. It was not just because of fine weather for farming fruits and vegetables, but also the pleasant investment climate in Penza Oblast.
Penza Oblast is considered one of the most attractive regions for investment in Russia. In particular, the German economics journal Ost–West–Contact pointed out that Penza Oblast is one of 83 prosperous regions of the Russian Federation. Its investment climate is highly rated and there is low investment risk. There is well-designed investment legislation providing a wide range of government support for foreign investments. The current tax incentive system is considered to be one of the most progressive in Russia. Investors pay no property tax, are free from transport tax, and enjoy lowered regional tax rates. Moreover, the Investment Strategy prepared by the Penza Oblast government and the newly established Penza Oblast Development Corporation also encourage foreign investment.
Turkey and Chechnya set up business relations and cooperation in special economic zones
On 7 February 2014, a working group of representatives from the Ministry of Science, Industry and Technology of Turkey visited Chechnya.
The day before, a delegation headed by Khasan Khakim, Deputy Prime Minister of the Chechen Republic, returned from Turkey. From 12 to 17 January 2014, the Chechen delegation visited four major industrialized regions, where meetings with representatives of business communities and Turkish chambers of commerce and industries were organized in order to expand economic relations between Turkey and Chechnya. The Chechen delegation introduced the recent socio-economic development of the Chechen Republic to Turkish representatives and presented the region's potentials for tourism, recreation, and other investments.
All the Turkish provinces welcomed their Chechen guests. Issues regarding the future development of bilateral economic relations were discussed in meetings with Governors of Adana, Mersin, Afyonkarahisar and Kütahya. On the first day of visit, the Chamber of Commerce and Industry of the Chechen Republic and the Chamber of Commerce of Kütahya signed a cooperation agreement. The Chechen delegation visited the first special economic zone and industrial zone in Mersin, as well as other industries in Adana and Kütahya.
During their visit to Turkey in February, the Chechen delegation visited a number of factories and plants including Automatstrom, Berkat, Orgtechnika, and Electropult. The Chechen delegation also attended a seminar on special economic zones in Turkey and they plan to participate in a conference on joint industrial production, organized by the Ministry of Industry and Energy of the Chechen Republic.
These latest developments are part of a joint effort by Turkey and Chechnya to promote bilateral trade and cooperation. In July 2013 both sides agreed to establish greenhouse complexes using thermal energy.
Turkish contractor wins construction tender for Russian-American enterprise in Kostroma
Tri Morya Construction and Trade Company, a joint venture with Russian, Turkish, and Kazakh investors, has won the competitive tender to be the general contractor in the construction of an American-owned factory, National Oilwell Varco, which will produce drilling machines. The tender was organized by the Kostroma Oblast administration.
The Turkish company has already launched the project and the construction is starting in Volgorechensk, Kostroma Oblast. The general contractor agreement provides that the project must be executed by the second half of 2015.
Tri Morya established a structural subsidiary in Kostroma Oblast to construct the factory. All taxes arising from the construction will be paid to the city and regional budgets.
Tri Morya was founded in 2005 by professionals with 20 years of expertise in the construction sector. The company has been carrying out business activities in Russia, Kazakhstan, and Turkey since then.
Turkish investor involved into Moscow-City skyscraper complex project
The Russian newspaper Commersant recently announced that Renaissance Construction, one of construction giants in Turkey, has acquired a 50% stake in the Russia Tower construction project in the Moscow-City business center. Renaissance Construction also might become a general contractor in charge of the entire tower construction.
It is believed that the Turkish company intended to be involved into the project as early as the close of 2012. Erman llicak, Chair of Renaissance Construction Management Board, claimed that the firm is planning to invest US$ 1.1 billion in the Moscow-City project, where 330 square meters of office premises will be built in cooperation with a partner.
Governor of Nizhny Novgorod Oblast attracts Turkish investors
Nizhny Novgorod Oblast is currently looking for a partner to construct a new ice rink in Nizhny Novgorod. Two undisclosed construction companies from Turkey and Korea are reported already to have filed applications.
Valery Shantsev, the Governor of Nizhny Novgorod Oblast, announced that the utility engineering work has been completed and the land is ready to be developed by the project investor.
In order to intensify the investment attractiveness of the project, the local government could offer other infrastructure projects nearby, such as parking, trade centers, and other accommodation facilities.