Andrey Mikheev: We should work hard, rather than talk and think about stagnation important

Andrey Mikheev, Head of the State committee on economic development and investment policy of the Pskov region, proved the Regional Assembly of Deputies the reasonability of creation of Pskov Region Development Agency.

Q: This year began with the news of the Pskov region having won the 8th place among the regions of Russia by investment dynamics, according to the rating of the Ministry of Regional Development. Before that the authorities were one way or another concerned about attraction of investments, however, no such results seemed to be observed. Was such evaluation of the Ministry a surprise to you?

AM: Certainly not. This result is not just deserved but hard won by the Administration. However, I should make a correction. In the news it was not quite correctly said that it was the result of 2012. In fact, the methodology of the Ministry of Regional Development took into account data for three years. And they were speaking not of the volumes of investments, but of the growth rates. The evaluation wasn’t unexpected. Attraction of investors has been one of the priorities of the Administration of the region since Andrey Turchak took up the post of the Governor. Of course, we had no opportunity to collect data to compare ourselves with other regions but we could see the results demonstrated by the growth rates.

Q: Much is being said about infrastructure problems in the region, namely capital-intensive energy systems and therefore high energy tariffs, issues with human resources, etc. Do such results mean that these problems are no obstacles?

AM: If any factor dissatisfies an investor, we try to make the conditions more favorable by means of other factors. Investors evaluate conditions as a whole and it depends on the peculiarities of specific projects. Infrastructure is always both an advantage and a shortcoming at the same time. On the one hand, extensive energy network involves high tariffs, and on the other hand, it gives more opportunities for connection. High road mileage is a great burden of repairs and maintenance but it is good for transport and logistics. And we are working systematically. For the past few years we’ve made a breakthrough in gasification. Today already half of the region is supplied with gas. Works on repairs of roads are being carried out on a large scale. It is important for investors. They also pay attention to modernization of the social sphere, the level of development of education, culture facilities – it is also crucial from the point of future employees’ social welfare. We are moving forward in all these areas. And this positive dynamics is important for investors.

Of course, we face many challenges compared to other regions and have heavy economic heritage. But if we work, we can overcome everything.

Q: How exactly do you attract investors, so they could not only bring funds to the region, but also apply them here, create something and make much of their investments?

AM: You are right to say that investors put money to make much o it. Thus, we have to prove them that if they invest, they will surely receive profit. We study projects and render all assistance possible, so that investors don’t have to rush from pillar to post on their own. We help them to find adequate land plots and propose several to choose from, prepare technical requirements for investors to connect to gas, power and water supply systems, take on obtaining of various approvals. All this is done to protect investors from administrative barriers.

Q: And what if some con man comes to you and says: “I’m going to start a great project, give me the land and all the connections” and in the end no production is set up?..

AM: No one is impervious to fraud attempts. But we view each investor as a person who would like to be employed by us. And we regard each project very closely, study and analyze economic and financial parameters, number of jobs, social responsiveness aspects… It is very important that a project would not affect the environment. In this respect, everything is thoroughly analyzed. And the final decision is made by a public authority – the investment commission.

Q: But investments are attracted not only for the sake of investments. Enterprises are expected to bring taxes to the budget. But now we hear that investors should be exempt from taxes as much as possible, otherwise they will not come…

AM: Every stick has two ends. We provide tax privileges. The President in his address stated the need to introduce 5-year tax holidays for investors. Of course, it would be easier for us if these tax privileges were related to federal taxes. It is more complicated in case they are provided on regional ones. In any case we should remember that, apart from taxes, activity of any company has a so called “cumulative effect”. Its employees spend earnings in our economy; companies settle other accounts with our suppliers. This way we get an inflow of resources to our economy in any case.

By the way, we have several major projects to be launched in 2014. That’s when we see the results.

Q: It is often stated that investors are a threat to local business because they can compete with local companies in some areas…

AM: We must get a new angle on this problem. It is important for the regional administration that general economic results should improve. One of the most crucial indicators is the level of salaries in the region. It is impossible to increase it significantly and at a comparatively rapid pace without investments. On the contrary, the inflow of business should drive economic activity in the region – this is the only outcome.

Besides, we should set a goal to return workforce that left to work in large cities and Baltic countries. Without investments and creation of high-tech jobs with higher salaries it is also impossible.

That’s why we subject every project to thorough analysis from this standpoint, so that it could not harm the economy, but benefit it.

Q: Economic experts forecast a new crisis. Aren’t you afraid that instead of supporting investors you end up just hopelessly waiting for them to appear?

AM: To be honest, however much is talked about stagnation, we don’t experience any lack of work. There are companies which are overcome by decadent mood. But we have to find out why, in each particular case. There are both objective and internal reasons. Ten major companies recorded growth last year.

In my opinion, we should work hard, rather than talk and think about stagnation. After all, our thoughts can materialize if we do.

Q: Now you are asking the Assembly to create the Investment Development Agency. You do have significant results even without it. What is the purpose of such an institution?

AM: As a matter of fact, the agency has been functioning for the past few years and helped us to achieve the results. But it used to be a joint stock company surviving on accounts receivable from the previous years. Now these funds are exhausted. Logic suggests that the agency should begin to be self-sustainable – that means receiving payment for its services from investors. However, there is yet no queue of investors in the region and, unless we nurture and cherish every investor, we won’t succeed. And if the agency asks for money for its services, we’ll lose the investment dynamics. We can’t afford that. In order to retain and maintain our social network and our infrastructure in future, we lay strong emphasis on economic development and appearance of new enterprises.

That’s way we’re asking to change the form of ownership for the agency to become a public institution, so that it could receive public financing.

To make it clearer, one could draw a parallel with the education and healthcare systems – services in these spheres are rendered also by state institutions.

Similar agencies successfully operate in other regions and countries. We don’t really invent the wheel.

And now it is especially important for us to show by means of this agency that we are active, self-confident and we’re in combative mood.


Original article (Russian):