Results of the Activity / 2007

Results of the External Economic Activity, year 2007

Krasnodar Region is one of the subjects of the Russian Federation whose development, thanks to its geo-political position, is of strategic importance to the Federation, as the largest transport centre and a region guaranteeing food supplies to the country. Dynamic development of the economy of Krasnodar Region today is directly dependent on the presence of stable relations with both subjects of the Russian Federation and with foreign countries. Significant support in the external economic activity of the Administration of Krasnodar Region is given by the Ministry of Foreign Affairs of the Russian Federation, the Ministry for Economic Development and Trade of the Russian Federation and the Chamber of Trade and Industry of the Russian Federation and their representatives in Russia and abroad, who generally act as the main co-organisers of events.

At a regional level the priorities of external economic activity are broadening the geography of international contacts, supporting Kuban manufacturers, creating systems for regional branding, and organising systems for training and retraining of personnel. In addition, one of the most important tasks of the department in connection with Sochi having been chosen to be the host of the XXII Winter Olympic Games is creating systems for ‘Olympic communications'.

Results for 2007 show that 225 billion rubles was invested in the economy of the Region, a growth rate of 126% compared to 2006. This is higher than the average for the Russian Federation, where the growth rate was 121%. It includes 150.2 billion rubles invested in large and medium sized business, a growth rate of 130%. The Region is consistently the leader by volume of investment in the Southern Federal District.

Today, Krasnodar Region is interested in attracting investment in the main areas of the economy of Krasnodar Region: agriculture and the processing industry, transport and communications, construction, the fuel and energy field, and tourism and entertainment, and is also interested in the market for products manufactured in the region and the setting up of joint businesses.

The main events of 2007

Taking into account its acquired experience in presentation activity and the necessity of informing the public regularly about the socio-economic position of the region and its investment potential, the Administration of Krasnodar Region: takes part every year in the world famous investment exhibitions Green Week (Germany), MIPIM (Cannes), Cityscape (Dubai), the World Economic Forum in Davos; carries out presentations of the Region in Germany, Austria, Italy, China and other countries; and on an ongoing basis also actively carries out meetings and negotiations with foreign diplomatic bodies and trade missions which are not only political in nature but make it possible to draw the attention of foreign business circles to our region, and provide a basis and opportunity for development of commercial and economic cooperation.

In 2007 the Department of External Economic Activity of the Region organised visits by more than 25 official delegations and business missions from 15 countries in Europe, America and Asia: Austria, Bahrain, Germany, Denmark, Italy, China, the Netherlands, Pakistan, Rumania, Serbia, the USA, Turkey, Finland, Sweden and Japan.

Among these the following should be noted:

  • In June 2007 the town of Sochi was visited by a delegation from the People's Republic of China led by Vice Premier of the State Council of China Wu Yi. A meeting with Vice Governor Evgenii Muravev and the Mayor of Sochi Viktor Kolodyazhnii was held during the visit. At the meeting priority directions for cooperation between Krasnodar Region and the People's Republic were identified - construction, forestry, and fisheries.

  • In July 2007 a business tour of the South of Russia was organised for a delegation from the Association of European Businesses in Russia led by Chief Executive Officer of the Association Frank Schauff. The aim of the visit was to discuss questions of bilateral cooperation, including private investment by European companies in the Special Tourism-Recreational Economic Zones, the gaming zone, and reconstruction of sea ports on the Azov and Black Sea coasts. A range of companies suggested opening their own representations in the Region and creating working groups for providing information to the European market about businesses in the Region.

  • In August 2007 a visit took place by a delegation of representatives of business circles in Upper Austria led by President of Raiffeisen Landesbank Linz AG (Austria) Ludwig Scharinger. The aim of the visit was to meet with the leaders of the Region on questions of future development of partnership relations between the Administration of Krasnodar Region and Raiffeisen Landesbank Linz in realising the Agreement on Cooperation signed on 12 April 2007 in Linz, Austria, and to discuss questions of attracting large companies in Upper Austria to carry out investment projects in the Region. As a result of these talks a further Agreement was signed, focusing on future practical realisation of projects, attracting new investment into the region, and creating more work places. Key directions for cooperation with companies from Upper Austria were identified, being construction, agriculture, industry, and banking. In May this year Mr Scharinger will make a second visit, and plans to bring with him a delegation of 60 representatives from major Austrian businesses interested in developing relationships with Krasnodar Region.

  • In October 2007 a visit was made by a delegation of representatives of business circles in Finland led by Minister Counsellor at the Embassy of Finland in the Russian Federation Soili Mäkeläinen-Buhanist. The aim of the visit was for the Finnish representatives to learn about the main areas of the economy of Krasnodar Region and to discuss prospects of cooperation between Krasnodar Region and Finland. With the assistance of the Finno-Russian Chamber of Commerce working meetings were carried out between businessmen from Finland and their Kuban colleagues. During the visit directions for future cooperation between the Kuban and Finnish businessmen were identified. As a result of the interest expressed by the Finnish side in developing bilateral links the possibility of carrying out a presentation of Krasnodar Region in the Scandinavian countries in the first half of 2008 is currently being developed.

  • Traditionally the main economic event of the year for local meetings between Russian and foreign business is the International Investment Forum held in September in Sochi. In 2007 the Forum again confirmed its status as the main investment forum of the country.
    More than 10 000 people from 40 countries took part in the work of the Forum:

    • more than 10 foreign delegations (Austria, Germany, Italy, China, Moldavia, Serbia, Ukraine, Turkey, France) including: 7 Ministers, 1 Vice Premier, 1 Secretary of State, 18 Heads of Diplomatic Missions of foreign delegations accredited in Russia;

    • delegations from 56 regions around Russia, including 38 Heads of subjects of the Russian Federation;

    • 2 Vice Premiers and 4 Ministers of the Government of the Russian Federation;

    • 46 executive officers of large Russian and foreign companies;

    • 39 Russian regions and 5 foreign countries organised their own presentations, round tables and exhibition displays at the Forum.

During the VI International Investment Forum Sochi 2007, in addition to investment agreements, a range of documents of importance in developing bilateral cooperation were signed with the Republic of the Crimea (Ukraine) and the Turkish Republic for 2007-2008.

As part of the presentation activity of Krasnodar Region in 2007 the organs of executive power in the Region signed a range of 280 agreements with an overall value of more than 20 billion Euros.

Border territory cooperation

One of the main directions of international activity of Krasnodar Region is strengthening friendly relationships and partnerships with the border territories of neighbouring states, and participating in programmes and projects aimed at improving border territory cooperation.

In October 2007 the Department of External Economic Activity organised a visit by the Deputy Head of the Administration of Krasnodar Region Evgenii Muravev to Belgorod to take part in a meeting of Ministers for Foreign Affairs of Russia and the Ukraine and Heads of border territories. During the meeting representatives of the Administration of the Region submitted for consideration a project to construct transport facilities across the Kerchenskii Strait which would resolve problems in increasing the flow of transport between Krasnodar Region and the Crimea. Realisation of this project could also be the key link in construction of a motorway network around the Black Sea.

At the present time the idea of creating the Azov Euroregion is very promising. Practical realisation of this project will make it possible not only to concentrate on such important issues for the regions as the ecology, environmental protection and reestablishing the ecosystems of the Azov Sea, but also to improve border territory cooperation in the Azov-Kerchenskii region with the main role being undertaken by Krasnodar Region.

Plans for 2008 include monitoring execution of points contained in Protocol No3 to the Agreement signed in 2002 between Krasnodar Region and the Autonomous Republic of the Crimea on principles of commercial-economic, scientific-technical and humanitarian-cultural cooperation, and also taking part in joint meetings of the Council of Heads of Border Territories as well as congress and exhibition events of both parties.

In questions of improving cooperation between regions and international regional organisations, development of relations with the Black Sea Economic Cooperation Organisation (BSEC) and with the European Union should be noted. Presently Krasnodar Region is a participant in the project RCBI (Regional Capacity Building Initiative) within the EU Programme European Neighbourhood and Partnership Instrument, which aims to give assistance to organs of power and organisations within and outside of the European Union in joint work to improve socio-economic conditions in border territories. Krasnodar Region, as one of the important subjects in realising the aims of BSEC, takes an active part in events carried out as part of this organisation.

In 2006 Krasnodar Region, Rostovskaya Oblast and the Republic of Adigeya joined the Black Sea Euroregion Programme. With the support and organisational assistance of the Administration of Krasnodar Region, on 5 February 2007 the Ministry for Foreign Affairs of the Russian Federation and the Ministry for Regional Development of the Russian Federation held a seminar meeting on the Black Sea Programme for border territory cooperation, the main aim being to introduce potential partners from Krasnodar Region, Rostov and Adigeya to this programme and to carry out information giving and consultative events. As a result of the discussions possible directions and the most pressing areas for cooperation with the states of the Black Sea basin within the given programme were identified, and representatives of Departments of Krasnodar Region publicised several promising projects aimed at developing border territory cooperation by partner-states on the Black Sea. The region was interested in realising the BSEC programme to construct a single transport network running through the territories of the participating countries, and in creating a pool of cruise ports on the Black Sea to revive cruise tourism as well as coastal infrastructure for operating passenger craft.

External trade activity

Efforts made by the Administration of Krasnodar Region in developing external economic and inter-regional contacts bring their own positive results which are demonstrated by stable growth in the indicators of external trade activity of Krasnodar Region, from $1.62 billion in 2001 to $6.15 billion in 2007. Of this export operations were carried out to a value of $3.58 billion, and imports valued at $2.58 billion. In 2007 the share of Krasnodar Region businesses in the trade turnover of the Southern Federal District reached 32%. Customs statistics show that the external trade turnover of Krasnodar Region for 2007 rose by almost $2 billion compared to 2006. Non-CIS countries dominated external trade with a share of more than 80% of total trade turnover. The most important in terms of value were Turkey, France, Italy, Germany, Egypt, China and Ukraine.

The trade structure of exports was represented by products in the following leading fields of industry: mineral products, food stuffs and raw materials for their manufacture, metals and metal goods, machine engineering, timber, and chemical products. The main import were food stuffs, machine engineering, metals and metal goods, textiles and textile products.

Inter-regional cooperation

In analysing the positive dynamic of the socio-economic development of Krasnodar Region it is necessary to take note of the important role played by the commercial, economic and cultural links of the region with other subjects of the Russian Federation.

In 2007 the Administration of Krasnodar Region signed over 70 Agreements with other regions in Russia. The Department of External Economic Activity of the Region carried out the setting up and updating of an important base of agreements, and with the assistance of municipalities and the organs of executive power of the various fields plans events and supervises their implementation, and has also created a data base of Kuban manufacturers and service providers interested in development of inter-regional cooperation. In addition, the development of relations between the Region and other regions of the Russian Federation is planned not only for the economy but in health care, culture, education, media, and youth services.

Agreements have been reached on continuing relations with the Republics of Bashkortostan and Tatarstan, Moscow and St Petersburg, Krasnodar Region, and Moskovskaya, Leningradskaya, Nizhegorodskaya, Irkutskaya and Chelyabinskaya Oblasts. Drawing up and signing new Agreements and Plans for events for these will make it possible to precisely define relations with given regions and will act as a link between different subjects of Krasnodar Region and regions of the Russian Federation in forming mutually beneficial relationships.

Kuban delegations, which include heads of municipalities and organs of executive power, as well as representatives from businesses in Krasnodar Region, traditionally take part in the work of the economic forums in St Petersburg and Krasnoyarsk. In November 2007 for the first time the Kuban sent a delegation of its representatives to the International Week of Private Entrepreneurship and Business in the Republic of Bashkortostan.

In Krasnodar Region there are representatives from five Republics of the Russian Federation: Adigeya, Bashkortostan, Dagestan, Koma and North Ossetia-Alania. Questions of opening representations and trading houses from Krasnodar Region in these regions are addressed within the existing Agreements.

Twin town links

In 2007 active development of cooperation between twin towns was noted in Krasnodar Region. The towns most intensively involved in this movement are Sochi, Krasnodar and Gelendzhik.

Krasnodar continues to successfully develop cooperation with the German town of Karlsruhe. On the initiative of the Embassy of the German Federal Republic in the Russian Federation, and with the support of the Robert Bosch Foundation, the German Days event was held in Krasnodar from 24 to 30 September 2007. The economic part of the German Days programme included business meetings aimed at creating direct contacts between businesses in Germany and the Southern Federal District. As part of German Days a visit took place by the Oberburgomeister of Karlsruhe, Heinz Fenrich, timed to coincide with Krasnodar City Day and the 15th anniversary of the twinning of Karlsruhe with Krasnodar, and a delegation of Karlsruhe citizens visited under the aegis of the Getting to Know the Twin City project.

From 26 October to 4 November the economic forum Karlsruhe-Krasnodar was held in Krasnodar's twin city Karlsruhe as part of the exhibition fair Oferta 2007. In addition, students from the Kuban State University's Faculty of Romano-Germanic Languages took part in the annual placement programme in the Administration of Karlsruhe.

As part of the Russian Culture Days event in Krasnodar's Bulgarian twin town Burgas a visit took place by the Vice Mayor of Krasnodar Viktor Kudinov. The parties discussed prospects and opportunities for future development of twinning and partnership links between Krasnodar and Burgas, including in the field of culture.

During participation in the Presentation of Krasnodar Region in Italy (Rome and Milan from 19 to 22 May 2007) an official visit took place by the Vice Mayor of Krasnodar Aleksandr Dombrovskii to the twin town Ferrara.

Sochi is also actively developing cooperation with its own twin towns, and is currently evaluating a further three agreements for setting up links, with the towns of Odessa (Ukraine), Vancouver (Canada) and Volos (Greece).

As part of its celebrations of the 30th anniversary of its friendship with twin town Angouleme (France) and the 15th anniversary with twin town Hildesheim (Germany), Gelendzhik organised a range of educational trips and placements, took part in ceremonial events, and welcomed delegations from its twin towns.

A range of municipalities in the Region are considering suggestions for participating in twinning in 2008, being Eiskii, Buyukhovetskii, Krimskii and Kuschevskii Districts.

Cooperation between Russian and foreign partners

Understanding the importance of cooperation, as an organ of executive power as well as a straightforward subject of the Region, the Department carries out a range of functions aimed at establishing effective links with business circles. In 2007 in order to help effective development of cooperation with foreign partners the Department of External Economic Activity of Krasnodar Region voted for accreditation in its territory of 7 branches and representations of foreign companies and provided visa support to 115 foreign visitors representing political and business circles, as well as rendering assistance:

  • to regional companies in identifying business partners abroad;

  • in providing information through the Ministry of Foreign Affairs and trade representations of the Russian Federation about the business reputation and main areas of activity of foreign companies planning to realise joint projects in the Region (at the request of Russian companies);

  • in organising business contacts and meetings for the Region's businesses as part of international image building events carried out by the Administration of Krasnodar Region.

External economic activity by municipalities of Krasnodar Region

A range of municipalities in Krasnodar Region take an active part in the external economic life of the region: they participate in presentations of the economic potential of the Region abroad, welcome foreign delegations, realise joint projects in the Region, export Kuban products, develop twin town contacts, engage in cultural cooperation, etc.

In 2007 the most active participation in the external economic activity of Krasnodar Region was by the municipalities of Krasnodar, Armavir, Anapa, Gelendzhik, Novorossiisk, Sochi, Tuapse, and Belerechenskii and Tuapsiiskii Districts.

As part of their work the municipalities took part in various national Russian and international events, and also welcomed numerous government and business delegations with the aim of establishing and developing bilateral mutually beneficial relations. The most intensive contacts were those of the town of Sochi, which was host to approximately 70 foreign delegations in 2007.

Successful results of development of cooperation are the agreements reached and the signing of the corresponding contracts. A range of municipalities (Krasnodar, Anapa, Armavir, Gelendzhik, Eisk, Apsheronskii District, Belorechenskii District, Viselkovskii District, Korenovskii District, Krimskii District, Novopokrovskii District, Tbilisskii District, Tikhoretskii District) signed contracts for realisation of investment projects.

An important component of international cooperation is the adopting of the newest foreign technologies by businesses in the Region, in particular in Belorechenskii, Krimskii, Kuschevskii, Tbilisskii, Pavlovskii and other Districts in Krasnodar Region.

Main prospects for development of external economic activity

The main aim of the work of the Department of External Economic Activity in the medium term is creating through effective international and inter-regional activity of favourable external conditions for improving competitiveness and developing the economy of the Region, increasing Regional budget revenues, and improving the well-being of the Region's population.

To achieve this aim it is essential to carry out activities and events in the following areas:

  • improving the system of disseminating the interests of the Region on the external market, including:

    • exhibitions, fairs, congresses and presentations;

    • a full-fledged image building policy;

    • regional branding;

    • detailed analysis of external markets for goods, services and capital;

    • completion of complex work to define the export potential of businesses in the production sector of the economy of the Region:

  • On a basis of detailed analysis of the markets for goods, services and capital, to raise the export opportunities of businesses in the production sector of the economy by creating real conditions for publicising products of the Region suitable for and intended for export on the international market.

  • In order to realise these aims, to raise the question of creating a regional organisation of exporters in the Region and prepare proposals for creation of a Kuban Export-Import Corporation.

  • Improving the quality of investment attracted to the Region by more effective use of the natural competitive advantages of the Region and joining the worldwide system of technological division of labour, directing investment to resolving pressing socio-economic problems in the Region and raising Regional budget revenues.

  • With the support of the Ministry for Foreign Affairs of Russia, increasing the level of participation by the Region in Federal events in order to realise the external political line of Russia.

  • To improve and structure the international communications of the Region:

    • to increase the work of the Region with the Black Sea Economic Cooperation (in particular, to take part in the initiative to organise and hold the International Congress of towns of the Black Sea region in Krasnodar Region);

    • to increase the level of involvement in the international programmes of the UNO, the European Union and other international organisations;

    • to broaden the geography of the Region's international relations by organising cooperation with a range of promising countries from the EU (Bulgaria, Rumania, Spain, Sweden, Finland), the CIS (Azerbaijan, Uzbekistan, Kirgizia, Tajikistan), Asia (Republic of Korea, Vietnam, India, Iran, UAE), Northern and Latin America (the USA, Brazil, Mexico, Argentina, Chile, Venezuela, Cuba).

Inter-regional cooperation

Setting up a data base of businesses in Krasnodar Region interested in development of cooperation with businesses in other regions of the Russian Federation.

To complete drawing up agreements with regions in the Russian Federation, preparation of Plans for events and Protocols for these agreements. Monitoring execution of previously signed Plans for events and Protocols.

Development of normative legal bases and creating an institution of representatives of Krasnodar Region developing commercial-economic, scientific-technical and cultural relations with regions in the Russian Federation, as well accreditation of representatives from other subjects of the Russian Federation with the participation of the Head of the Administration of Krasnodar Region.

Business cooperation

Assistance to Regional companies in identifying business partners abroad, and also attracting businesses and organisations in the Region to international congress and image building events run by the Administration.

Broadening the geography of business cooperation and more active attraction of representatives of business circles from Scandinavia, countries from the Middle East and Asia to bilateral trade-economic relations.

Monitoring of the execution of achieved understandings and signed agreements of intention between organs of executive power of the Region and representatives of foreign companies.

Border territory cooperation

In the field of transport and communications: assistance in coordinating development of transport infrastructure in the region, linking of major trans-European and Asian roads, formation of a Black Sea transport corridor; assistance in establishing regular passenger services between ports on the Black Sea and major water ways, including internal water ways in the region; realisation of the international transport corridor project Sever-Yug and other major roads which will make it possible to use the transit potential of the region, as well as formation of corresponding manufacturing and social infrastructures in the border territory regions of participating countries for provision of safe transit and freight facilities in the territory of another state.

In the sphere of border territory trade: creating normative, financial and operational information in the sphere of external economic operations, and also setting up a single data base of participants in external economic activity.

In the sphere of rational use of natural resources and environmental protection: coordination of commercial fishing in the Azov Sea, the Kerchenskii Strait and the shared Black Sea fishing zone, improving its rules, determining a regime for fishing, and also joint work to resolve questions in the field of industrial ecology.

In the field of humanitarian cooperation: to improve the level of qualification of teachers, broaden student exchange programmes and exchanges of professorial and teaching staff, reduce differences in educational standards by exchanging experiences with border territory states and organisation of scientific research and publishing projects by attracting grants from major international organisations.