The development of the economy of the regions of the Far East and the Arctic area is today in the zone of special attention for many reasons — as here is the direction of development of Russia in general, and as here any projects come across serious natural and geographical difficulties. Invest-Foresight talks on the development of the largest in the Russian region — the Republic of Sakha (Yakutia) – with the head of the region, Aisen Nikolaev.
— Aysen Sergeevich, which of the republic’s recent events of the economic life you consider the most important? In particular, which of the investment projects launched in the region, would you like to note?
— The economy of Yakutia to date has almost returned to the growth trajectory. The republic is implementing an action plan aimed at restoring employment and incomes, economic growth and structural changes. According to the results of the first quarter of 2021, the industrial production index was already 112% compared to the same period of the previous year. The diamond industry is increasing its volumes: in January-February we observed an increase in the diamond production index by 118.3% compared with the corresponding period of 2020.
In general, for our industry, last year turned out to be good, excluding diamond mining the industrial production index in Yakutia was 105.7%. Here we set a number of historical records in terms of mineral production. The indicator increased by 12.2%, primarily due to gas (growth by 2 times) and coal (growth by 72.1%). Indicators also increased for oil and gold — by 4.9% and 2%, respectively.
If we talk about the near future, a powerful economic driver for the republic will be the activation of the construction of infrastructure facilities. Among them we can distinguish construction of the Lensky bridge, modernization of the Zhatai shipyard, reconstruction of international terminal of Yakutsk airport. In the industrial sector there are launch of enrichment plant at Nezhdaninsky gold deposit and development of Elginsky coal deposit, construction of the main gas pipeline “Kysyl-Syr — 84 km”. The construction of the Lensky bridge, alone, will provide investment growth of more than 200 billion rubles and will contribute to the emergence of at least 4.5 thousand jobs.
The most important project of last year for us was the launch of the first stage of the Inaglinskaya mine and Inaglinskaya-2 enrichment plant, whose production capacity is now 6 million tons per year. The mine will become the largest in the Far East and in Russia. And if today 1.7 thousand people are employed here, then by 2023 another 2.3 thousand jobs will be created, and investment by 2027 will increase from 23.7 to 72.2 billion rubles.
And of course, the implementation of the socio-economic policy of Yakutia is tied to the goals of national projects. I would like to note that the republic implements a program for the resettlement of citizens from dilapidated and emergency housing that is the largest among similar programs in all the regions of Russia. And we here have already achieved some results. So, the urban district of Zhatay, located near from Yakutsk, became the first municipality in the country where there was no emergency housing. But we still have a lot of work to do in this direction: by the end of 2024 we intend to resettle 888.5 thousand square meters of emergency housing and improve housing conditions for 49 thousand citizens.
— What did you do to “return to the growth trajectory”? Which of the measures taken by your republic to attract investors and improve the business climate, you consider the most important?
— We carry out systemic work in this direction, its focus being on attracting investors in small real projects and human capital development. The Agency for attracting investment and supporting exports is in charge of these issues in the republic, it is a kind of “entrance window” for project groups interested in the development of Yakutia’s business.
To improve the business climate and reduce bureaucratic barriers, we carried out serious work to restructure support mechanisms and key decision-making. In particular, the Project Office for Improving the Investment Climate was created, including entrepreneurs from Yakutia. The result of joint efforts was the “Quick Victory Plan”. We also updated the Coordinating Council for Entrepreneurship, now 92% of its members are business representatives and it covers all municipal districts and cities of the republic.
The changes clearly helped us better cope with the specifics of last year. In 2020, entrepreneurs were given serious support — about 2 billion rubles were allocated, of which 1.3 billion are regional activities. Another 98.45 million rubles in the format of subsidies from the regional budget were allocated to 912 entrepreneurs. It allowed us to maintain more than 1.5 thousand jobs, thanks to additional financial support in 2020, the Enterprise Development Fund issued 391 soft loans totaling 584 million rubles. We have learned from the pandemic period. Now, as I have already noted, we returned to growth trajectory.
— What, in your opinion, are the competitive advantages of the republic that attract external, in particular foreign, investors?
— I think the natural and economic potential of the region in combination with the scientific and technological development of Yakutia and substantial support from Government of the Republic are of special interest for investors. Since 2014, special conditions and fiscal and legal frameworks have been in force in Yakutia modes for business. We have created two territories of advanced development, for their residents there is a notification procedure for receiving benefits, which simplifies the administration of their application. To date, all residents’ investments have actually totaled 2.9 billion rubles, plans for 2021 for this indicator are 2.72 billion rubles.
Mechanisms of the established investment policy allow you to work with a minimum tax burden during the period before the project starts receiving profit and for the next 5–10 years. It gives ability to significantly reduce the implementation time and payback of the project, increasing its profitability.
Well, in general, I should note that Yakutia is the largest economy in the Far Eastern Federal District: according to the results of 2019, the share of gross regional product of the republic in the total GRP of the district amounted to 20.4%. We are the only Far Eastern region included in the top 20 of the National Ranking of the state of the investment climate in the constituent entities of the Russian Federation in 2019.
— “Yakutia” and “new technologies”: why should these words be written nearby?
— Large territory of the republic, complex transport infrastructure and harsh natural climate conditions objectively put Yakutia in unequal conditions in terms of social and economic development with most Russian regions. Therefore, the creation and the widespread introduction of new technologies and digital services is not a tribute to fashion, but a lifetime necessity.
We deliberately relied on digitalization and achieved real success. Now Yakutia is a leader in the export of information services in the Far East. In 2019 the region exported 82% of IT services, and in 2020 this figure increased to 85%. Actually the program corresponding to the “Year of Science and Technology” has already begun in Yakutia several years ago.
Two and a half years ago, we opened the first high-tech park in the Far East: IT park “Yakutsk.” Today there are 119 residents, whose total revenue since the creation of the park amounted to 764.1 million rubles. In addition, IT companies already widely known abroad — inDriver, MyTona and Fntastic — have grown and continue to develop in our republic.
In addition to the development of IT in cities, we rely on the countryside. To involve the village in digital economy we created 10 support centers for small and medium-sized entities entrepreneurship, where residents can not only receive advice, but also create, and scale their projects. The task of such centers is to become the core of information communities in areas and small towns.
We also do a lot of work in training local personnel, and involvement comes from the school bench. For almost five years of consistent policy in this direction, the share of Yakut graduates wishing to enter IT specialties increased by 2.7 times. By 2024, we set ourselves the task of multiple-fold growth in number of IT specialists: up to 10 thousand people.
One of the priorities for us now is to overcome digital inequality on remote areas and provide residents of the republic with access to high-speed Internet and quality communication. In 2020 alone, about 2 thousand km of fibre-optic communication lines were laid. This allowed for residents of more than 50 settlements to work remotely, including in the IT industry, as well as to conduct 15 thousand telemedicine pandemic consultations.
— What are the most important infrastructure projects in the regional territory today, what is the role and amount of federal funding for these projects?
— Earlier I told about our key infrastructure projects, but again I emphasize that their implementation will become a driver for the entire economy of the republic. If we talk about bridge over Lena, the most important project not only for Yakutia, but for the whole North-East of the country, then it is planned to finance half of the cost of the facility from the budget of the Russian Federation. In addition, as part of a federal targeted investment program for infrastructure projects in 2021 more than 13 billion rubles will be provided from the state budget, in particular — 4.1 billion rubles for Zhatayskaya shipyard, 800 million rubles for the creation of the Yakutsk Republican Oncological dispensary. If we talk about the shipyard, then the construction and commissioning periods of the complex project are extremely short: by 2036 it is planned to produce 130 vessels.
— How does the republic’s budget feel today and what is the dynamics of federal transfers in region?
— This year we plan to continue the practice of last year in terms of system work on increasing the revenue base of the regional budget, its balance and sustainability. We expect that in 2021 its revenue part will be about 253 billion rubles. It consists of a substantial share of tax payments from export-oriented enterprises of Yakutia, and about half – 116.2 billion rubles – are free transferts from the federal budget.
In the structure of funds sent from the federal budget, subsidies accounted for 80% (or 48.3 billion rubles) in 2018, 73% (or 49.7 billion rubles) in 2019 and 64% (or 61.8 billion rubles) in 2020. That is, we are going to reduce the subsidy in terms of percentage. At the same time, subsidies, subventions and other inter-budget transfers over the past 3 years ranged from 20% up to 36%.
As of 2021, the total amount of funds received under federal programs in the republic is 1.5 twice the level of 2019 and reaches 64 billion rubles.
— Is it possible to say that the city of Yakutsk today acquires a certain significance in the scale of not only the republic, but the entire Far East?
— Yakutsk is a unique city with huge potential of continental transport hub level. This is the only urban center of a colossal area of more than 3 million square kilometers on permafrost.
Almost four centuries ago, it became the reference point of Russian development of the Far East and Russian America – from here Russia reached Amur and Primorye, and through the Pacific Ocean – North America. One of the strongest impetus to the rapid development of the city will be construction of the Lensky bridge. The project will allow the capital of the republic to become one of the largest transport centers of Northeast Eurasia.
But the city is still a space for people to live. Since 1991, the population of Yakutsk has increased by 67% (130 thousand people) and today amounts to almost 323 thousand. Urban development challenge is to ensure the comfort and safety of every resident. That is why today we are focused on building not just an industrial strong region, but a region with a strong creative and digital economy. I think this is the value of Yakutsk for Far East and the whole country.
By 2032, Yakutsk should become a creative city with rich human capital, and we will do our best to ensure it.
Interviewed by Konstantin Frumkin