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- Alexei Chekunkov: “Today is the right time to invest in the Far East”
In Asian business community Mr. Aleksey Chekunkov is known as one of the founders of the $2Bn Russia-China Investment Fund and from October 2014 as the Head of the Far East development fund, a subsidiary of the State-owned Vnesheconombank (3.8 trillion rubles in assets).
Mr. Chekunkov gave an interview to rasia.com and told about the Fund’s current operations and the potential of the integration of the Russian Far East into the global pacific economy.
What are the Fund’s assets for now and how you plan to manage them?
- The Fund chartered capital is over RUB 15,5 bln. Majority of this capital will be invested into infrastructure projects. Primarily in the long-term pay-off period projects which could be hardly financed solely by private investors. Our key mission is to eliminate infrastructural restrictions in the Far East which keep down the development of the projects with high multiplicative effect. As of now the Fund has several projects over 700 billion rubles under consideration.
Does it mean that the Fund is able to finance less than 3% of the potential portfolio?
- Not exactly that way. The Fund’s capital is a leverage for support of privately initiated projects. On each invested ruble we plan to rise up to 10 rubles of private investments. Moreover, according to instruction of the Russian President, Mr. Vladimir Putin, the Fund’s capital increase is scheduled. This will significantly allow to expand the opportunities of the governmental support of the infrastructure projects at the Russian Far East. The elaborated scheme is globally known «TIF» - Tax Increment Financing, i.e. infrastructure projects to be financed by upcoming taxes obtained by the implementation of these infrastructure projects. This model is not just a source of the Fund’s capital increase but a new mechanism of investments the regions’ development.
How do you select the projects?
- We focus on investment initiatives which aline with the state policy, and are aimed at establishing new businesses with significant development impact. Furthermore we aim at creating alliances with the companies we call "locomotives." These are the companies with both relevant professional expertise and with initial startup capital.
Can you list the projects which are currently at the Fund’s assessment?
- It is the development of Khabarovsk airport, for example, Bulk cargo (coal) handling facility in Mutchke Bay, Development of the “Beringovsky” coal deposit (construction of transportation infrastructure), Cross-border railway bridge Nizhneleninskoye-Tongjiang at Amur river.
If the Fund cooperates with international investors?
- International cooperation is one of our priorities. It is no secret that immense financial resources are centralised in Asia. The entire economy of the Far East is estimated at 0.1 trillion dollars, whilst the GDP of neighboring China is $10 trillion, Japan - $5 trillion, Korea - $1.3 trillion, the ASEAN countries - $2.4 trillion. Furthermore the Fund attracts not only the investments but the partners with expertise in order to create large-scale contemporary economic hubs at the Russian Far East.
What makes the Far East interesting for foreign investors, and what are the benefits of their cooperation with Russia?
- I am confident that today is the right time to invest in the Russian Far East. And many international investors we cooperate with share this view. Currently the regional economy of the Far East faces very low competitiveness. At the same time, owing to measures of State support, new horizons and true perspectives for businesses appear. Priority development areas are being actively established in the Far East. These areas offer companies various incentives including reduced tax rates, customs privileges, simplified administrative procedures. Vladivostok will be granted a free port status.
What do you think will determine the economic growth in the region next year, in 5 years? What growth zones you have determined?
- Growth in the Far East will be determined basically by the world-class projects, some of them have been already rolled out at the priority development areas. These projects vary at industrial purposes and are implemented in agriculture and bio-resources, Processing Industries, Mining (extraction and processing). The unique natural surroundings and the unique geographic position of the Far East provide excellent opportunities for development of domestic and international tourism, I believe, this is one of the most attractive investments field. You know, in just 1000 km from Vladivostok, at Asia-Pacific and ASEAN countries, with their fast-growing international tourism, living more than 400 million people!
What do you think about rasia.com Forum perspectives? What would you wish to this Project?
- The project gains attention by its novelty and global scope. The forum has already become one of the leading Russian venues for discussing contemporary trends and future technologies in various scope of business. I wish the organizers further success and taking this opportunity invite all rasia.com participants to take part in the East Economic Forum which will be held in Vladivostok on September 3-5, 2015.