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Residents in the free zone
They came to Pushkin three years ago. At first, they stayed in the shadows but slowly began to expand their activities so that today they are well known not only in St.Petersburg and Pushkin but also beyond the bounds of these cities. People come to see them, get to know them, show interest in them. What does it mean — a failure? Not in the least, it’s a success. Those who have ever heard anything about the free economic zone, already understood what I was talking about. Not only high-class spies are called residents but also the enterprises that belong to such a zone and work in it. To chose the residents for the first sub-zone for export-oriented industries in St.Petersburg and in Russia was not an easy task. The city took a great risk: the enterprises that paid taxes accurately, were to be given taxation privileges with the hope that they would increase production volume and the amount of deductions to the city’s treasury will grow instead of diminishing. But what if the hopes do not come true? That is why we chose relatively small enterprises, — Sergei Sergeevich Odokienko, head of the Free economic zones department of the St.Petersburg Committee for economy and industrial policy explains.— If the experiment had failed, the losses would not have been too noticeable. After long disputes, the taxation privilege was defined to be 40%. This was based on the same argument — so that a failure does not become a catastrophe. Today’s Pushkin (Tsarskoye Selo in the past) is not only famous for its parks and palaces but also for its civil and defense industry. So, we had a variety of enterprises to choose from. However, it was clear that in a zone of free export-oriented business the enterprises which already had some experience of cooperation with foreign partners could work with greater success. The Pushkin machine-building plant was meeting this condition. It had already been supplying the German firm Schwing-Stetter with metal constructions, concrete mixers and towers for cement for several years. The plant was also cooperating with the firm Putzmaster — the producer of asphalt-making equipment. The Railway repairing and mechanical plant (now called simply “Tsarskoselsky” plant) had been supplying building firms of Scandinavian countries and Holland with various containers for transporting cargo either by railway or by car and repairing machines for levelling railway tracks. Both enterprises were equipped with modern machinery, — Vasily Lvovich Ragozin, General Manager of the sub-zone “Pushkinskaya” remarks. — Today, the representatives of western firms, who often visit us, tell us that in Europe they can seldom find the electric and mechanical services that we have here. Our workers have been to Germany for probation and handle these jobs perfectly well. The quality of our products meets European standards pretty well and so do the discipline and organization of the work. So, the enterprises that were well equipped, had experience in establishing foreign connections and produced goods that were in demand abroad, received taxation privileges. What good has it done for them and the city? We have permanent partners in Germany and in Scandinavian countries, we are carrying on negotiations with US firms. I would not say that there’s such a crowd of people wishing to invest in our business, — Ragosin explains. — Our taxation privileges are not so great as to be a better attraction for investors than, for instance, Chinese free zones. But those western firms who want to enter the Russian market, and there are quite a lot of them, show serious interest in us. As a result of this, the production volume has increased by 2.5 times during the last three years and the number of jobs has grown by 11%. As for the budget deductions, they have grown from 620 thousand dollars in 1994 to 2295 thousand in 1996. As we see, the city has not lost. Then why isn’t the number of residents increasing? According to the rules of this game, the enterprises that work within the city bounds need the permission of the city authorities to become residents. There were three candidates and none of them have received permission yet. There are various reasons for this and one of them is that one cannot be sure that the city will not lose the money it is getting now. But the enterprises located outside the city and newly created firms can also become residents. We are keeping that in mind when we make our plans. The general plan of the development of Pushkin suggests interesting opportunities. They are broad and quite varied: the city is located at the entrance to St.Petersburg, the highways crossing it, lead to Europe and to the center of Russia, a railway with a switching terminal is close to the city, there is an airfield available. We are hoping to transform Pushkin into a business-tourism center. Pushkin’s sights now attract many of those who come to St.Petersburg. What if there is a business-center, hotels and restaurants? Let’s recall recent history. In Tsarskoye Selo, there used to be the famous Emperor’s flying school — the Nesterov’s school. We want to restore it, and start to produce gliders, small airplanes and parachutes using the potential of our defense industry. We’ll open an aviation museum and begin to host international flying competitions. As for earthly plans, they are connected with house-building, and the firm Miniagrostroi was created for that purpose.” As Sergei Sergeevich Odokienko thinks, caution and precise calculations are especially necessary when the question is about the sub-zone in Pushkin. It is a ground where the techniques for the future are being tested. That is why the members of the Observation council for the zone consider all its problems very carefully, and make sure that the investments that were received, are used in the most efficient way, though they understand that it is very hard to work without legal stability. In St.Petersburg, there are three more free zones: “Lenexpo” in Gavan, “Northern shipyard” and “Polustrovo”. “Lenexpo” has received a loan under advantageous terms and due to that managed to increase the number of services very rapidly. The results are evident enough. “Northern shipyard” and “Polustrovo” are now in the stage of formation. But it is clear that St.Petersburg as an industrial city and large transport center has a lot of opportunities of establishing sub-zones for free enterprise. Now the projects of a seaport zone, an electric train building plant and, possibly, a car-making plant for subway trains are being worked out. In order to attract investors, we need to do everything necessary for the money to work better with us than in any other place. They can find these conditions in free enterprise zones. If it is true, then new residents will soon appear in our city. They will produce competitive goods and bring a steady inflow of money into the budget.
Interview
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