Business in National Development Projects: Ways to Succeed
KEY CONCLUSIONS
Infrastructure projects serves as a foundation for attracting private investment and economic development
“By implementing important infrastructure projects we set off a whole cycle of other projects that become possible in different sectors of the economy. [...] How effective national projects are depends on how many business projects are then implemented based off of them”, Minister of Economic Development of the Russian Federation Maxim Oreshkin said.
“The PPP model can be very useful for mobilizing public and private sector resources to build infrastructure. This is an innovative approach [...] and now it is in use in many countries”, Director General of the United Nations Industrial Development Organization (UNIDO) Yong Li said.
“National projects are key. If we carry them out, we will achieve a different pace of development and a jump in the economy; it is very important to carry them out”, President, Chairman of the Management Board, Member of the Supervisory Council, and Member of the Strategy and Corporate Governance Committee of VTB Bank Andrey Kostin said.
PROBLEMS
An imperfect legal framework
“We are waiting for an investment support law, so that major investment projects can receive support for a return on investments in infrastructure. The government has this bill [...] [Its adoption] will kick-start the many of our projects”, President of the Republic of Tatarstan Rustam Minnikhanov said.
“The framework for PPPs in our legislation is very narrow”, Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Natural Resources, Property and Land Relations Nikolay Nikolaev said.
Turning public-private partnerships towards big business
“Business is on alert right now. PPP in its present form is for big business. [...] If it’s a step lower, then it is an almost impossible form of cooperation [...] There is a systemic problem - the goals that we set as part of national programmes are often changed. [...] Priorities can change locally. And this worries the business community”, Chairman of the Committee of the State Duma of the Federal Assembly of the Russian Federation on Natural Resources, Property and Land Relations Nikolay Nikolaev said.
A lack of experience and coordination when implementing PPP projects
“There are a lot of development institutions, especially in the area of innovation [...] We proposed creating horizontal management lines and supporting each other [corporation members] with skills and capital”, Chairman of the State Development Corporation VEB.RF Igor Shuvalov said.
“If we consider 5 years for the implementation of national projects, then for infrastructure this is an awfully short time [...] We need to get started [implementing national projects] [...] right now, urgently. Otherwise, the money that has been allocated will be lost”, Kostin said.
“Projects are often incorrectly structured in order to make the quality such that the bank will agree to work with them”, Russia 24 TV Channel Economic Observer Nikolay Korzhenevsky said.
SOLUTIONS
Creating the necessary conditions for national development projects at all levels of government
“It’s not for businesses to participate in national projects but for national projects to create platforms upon which businesses are able to implement their projects [...] The state must participate and make the first contributions and capital grants for projects of this kind, and that includes the use of mechanisms of public-private partnership (PPP)”, Maxim Oreshkin said.
“In 2015, we approved our strategy [of the socio-economic development of the Republic of Tatarstan up to 2030] [...] Petro-chemicals and natural gas look to be the primary areas of growth. Engineering comes next [...] All of these projects are based on the fact that over the past 10–15 years we have created a regulatory framework, besides federal preferences a number of preferences have been developed in our republic and infrastructure — two federal Special economic [industrial] zones: Alabuga and Innopolis [...] Industrial sites have been created in almost every municipality”, Minnikhanov said.
“From the major projects we are accustomed to and know how to finance, we need to [move] to projects in specific municipalities, where you can create both transport infrastructure and a modern city block. This is our job now”, Shuvalov said.
Attracting small and medium business
“We really focus on supporting small and medium businesses”, Minnikhanov said.
“We are currently creating centres, hubs, and incubators for small and medium businesses [...] especially service providers, to serve the World Cup [World Cup 2022 — Ed.] so that for them it would be an opportunity to set up a sustainable foundation and enter the international market”, Secretary General of the Supreme Committee for Delivery and Legacy for the 2022 FIFA World Cup Hassan Al Thawadi said.
Attracting foreign partners
“We are actively working with China [...] A memorandum was signed with the leaders of our states for Haier to establish smart production and an industrial park [in the Republic of Tatarstan]”, Minnikhanov said.
“We have announced a project at the St. Petersburg Forum aimed at entering into a new era of comprehensive strategic cooperation and partnership [with Russia], and we hope that we can work more closely together with the Russian government and with Russian partners” Chairman of the Board of Directors of the China Railway Construction Corporation Chen Fenjian said.
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