Interviews, INVESTMENT CLIMATE

Marat Safiullin: Tatarstan has its own model of attracting investors

Tatarstan has long been considered one of the most advanced regions of Russia in the field of attracting investment. His experience and practice are largely reference, they could be used by many other Russian territories. We talk about the most important tools for working with investors and the peculiarities of the business climate in the republic with the former Minister of Economy of the Republic of Tatarstan, Vice-Rector for Economic and Strategic Development of Kazan (Volga) Federal University, Director of the Center for Advanced Economic Studies of the Academy of Sciences of the Republic of Tatarstan (CAES), Doctor of Economic Sciences, Professor Marat Safiullin.

“Own Specific Approach”

— Marat Rashitovich, I will start with the main question: what is Tatarstan doing to attract investors to the economy?

— Investments in the Republic of Tatarstan have always received great attention. They were considered as the main tool for the development of the economy of the republic. If we take such an indicator as the investment multiplier, or the ratio of investments to gross national product, in Tatarstan it has always been noticeably higher than the average for the Russian Federation. If we take 2020, this figure amounted to 24.8% in Tatarstan and 18.8% in the Russian Federation.

The Republic has developed its own specific approach, its own model of attracting investors. It consists in the fact that strategic decisions in the investment sector are made at the highest level of Tatarstan management. A commission operates under the President of the Republic, whose members meet with investors, evaluate their intentions, capabilities and jointly develop a policy of assistance in the implementation of an investment project. The main investors who came to the republic came through state channels, state ties, through international activities conducted by the President of Tatarstan.

He regularly meets with heads of international companies that are interested in developing their business in Russia and, in particular, in Tatarstan.

— However, the president cannot do everything. There should be some tools for working with investors!

— In the 1990s and 2000s, special economic zones became an instrument for territorial development. The Alabuga SEZ, then created on the territory of Tatarstan, is the only most successful of the zones, which was created literally from greenfield, on the territory of a tractor plant unfinished with construction in Soviet times.

Its development program of 12 square km has now been completed, now the territory of the SEZ has been increased by another 12 square km. All infrastructure costs associated with bringing communications to the sites, the construction of roads, as well as training of personnel are borne by the republic. The Russian Federation and Tatarstan also provide tax incentives to SEZ residents.

In addition, the investment climate is important: so that enterprises operating in the republic have opportunities for development. Therefore, in the 90s, the law “On the Status of an Approved Investment Project” was adopted in the republic, which allows selectively supporting projects implemented by enterprises. That is, not whole enterprises are exempted from taxes, but only part of the funds that are allocated to an investment project approved by the republic.

— Is it possible to say that the law works effectively?

— It stimulated significant investments of our largest companies such as TATNEFT, TAIF, Kazanorgsintez, Nizhnekamskneftekhim; the same was the impetus for the diversification of the economy of Tatarstan. If in the 90s the mining industry made the main contribution to the economic growth of the republic, now more than 60% of the growth falls on the manufacturing sector – oil refining, petrochemicals, polymer production, and so on.

There is another side to the coin. The fact is that the emphasis on large companies limits the republic’s ability to support the investment activity of smaller enterprises. Large companies, diversifying production, are beginning to actively invest in social industries, food production, health care, thereby displacing small and medium-sized enterprises from there. The Ministry of Economy of the Republic is trying to correct the distortion by annually allocating from 1.5 to 2 billion rubles to small and medium-sized enterprises so that they compete on equal terms with large enterprises, but this is not enough.

Projects to be proud of

— As a result: what successes has the republic achieved in the investment sphere? What are, in your opinion, the most important investment projects implemented or being implemented in Tatarstan?

— As I said, this is the successful development of the Alabuga SEZ, as well as the launch of the Innopolis technical implementation zone. New growth poles appear in the republic. With the help of investments, the economy of Naberezhnye Chelny was seriously diversified, and earlier it was almost completely tied to the automobile giant KAMAZ. The production of cabins, transmissions, spare parts is localized there. Another of the largest enterprises of the republic – Nizhnekamskneftekhim – increased the physical volumes of processing six times.

There is such an indicator as the tax return from 1 ruble of gross regional product. When GRP grows, it is important to ensure the quality of growth in the form of tax returns to the budget of the republic. In 2019, this figure amounted to 40 kopecks of tax revenues per 1 ruble of GRP. For comparison – in the Russian Federation, this figure was 36 kopecks, although we work in one tax field. Good tax administration and tax discipline allow you to implement social programs, develop public institutions and create public goods. The most important in the investment sector are projects related to oil refining and petrochemistry, as well as the Alabuga SEZ and the Innopolis technical implementation zone.

— Innopolis is now known to all of Russia…

— The importance of Innopolis for the republic cannot be overestimated, since it is there that the digital future of Tatarstan is laid: what has never been associated with the republic before. There are educational institutions that prepare personnel, generate startups. All this is the material basis for future investments, projects and enterprises.

One cannot fail to mention such important projects for the republic as the elimination of dilapidated housing and social mortgages. The program of eliminating dilapidated housing allowed Tatarstan in the 90s to maintain the level of social support for the population, as well as to pass the 2008 crisis more gently.

The construction sector needs a lot of labor resources, which affects employment; it also gives impetus to the development of infrastructure, related industries – the construction materials industry, the production of components, accessories, and so on. Investments made by the republic in the field of housing construction not only supported the economy, but also improved the social well-being of the population and improved the quality of life. Maintaining a low level of housing value allowed public sector and low-income people to get mortgages.

Tatarstan and Innovation

— Is it possible to talk about Tatarstan model of innovative system? What do you think are its main features?

— Unfortunately, now the enterprises located in the republic belong to the previous technological layouts. They generate demand for technologies and products of “fading” technologies, which imposes an imprint on the economy of Tatarstan. There are no innovative enterprises that would be among the top of the Russian Federation in Tatarstan. I would say that this is a problem not only of the republic, but in the whole of the Russian Federation. Therefore, the innovative model in both Tatarstan and the Russian Federation is essentially similar. It is called “forcing innovation.” That is, the state uses somewhere economic, somewhere political tools to diversify companies, force them to technological renewal. Otherwise, companies that feel so well in the current conditions are distrustful of innovations, which, moreover, do not always provide high profitability, reliability of investments, demand for new products, and so on.

One cannot but say about a certain inertia in relation to entrepreneurs – since the 90s they have been assigned the image of unscrupulous stragglers, a kind of “negative heroes.” The difference between an entrepreneur and a merchant is that the first one acts as an “agent of change,” tries to improve something, and at the expense of his own funds and forces. The most important thing for the development of entrepreneurship is economic freedom and competition. Unfortunately, in recent years they have been significantly squeezed out.

For example, under the law on public procurement, small and medium-sized enterprises are completely uncompetitive in receiving orders. Only now they are trying to fix the situation. As a result, there are currently very few material incentives for the development of small innovative companies. The Russian economy, due to its specificity, does not generate enough demand for innovation, on the other hand, administrative and economic barriers remain. To this are added foreign policy barriers related to the sanctions regime.

— What know-how of Tatarstan in the field of innovation could you mention?

— I want to say first of all about the model of Kazan Federal University (KFU), which is based on the creation of so-called translational sites. Since the economy of the Russian Federation and Tatarstan generate a generally small demand for innovation, KFU has taken the path of developing practical entrepreneurial skills among teachers, students, researchers through the integration of theoretical, educational and practical units of the university. An example is the Institute of Fundamental Medicine and Biology of KFU and the Republican Clinical Hospital, which by the decision of the republic was transferred to the university. This is a unique symbiosis not only for Tatarstan, but in general for the Russian Federation.

Another translational platform was created on the basis of the Institute of Geology and Oil and Gas Technologies of KFU, where companies operate in which senior students can not only work, but also implement their master’s projects.

The most important direction for us is pedagogy. The KFU Institute of Psychology and Education has three lycées, where future teachers practice skills in a real environment, with real schoolchildren; it’s on the one hand. And on the other hand, all innovations in terms of equipment, educational programs and technologies are tested there.

Another know-how is Innopolis. In my opinion, this is an effective tool to create ideal conditions close to those that exist in economically developed countries, and to form an ecosystem for young companies that want to realize their ideas and projects in the field of digital technologies. It is not only about financing, but also about choosing a team with which you can bring your idea to a commercial result.

Role of the university

— Since we started talking about the university: what is the role of KFU in the republican innovation system?

— It all depends on what we take as a tool to measure innovation activity. The most obvious indicator is publications. Especially publications in independent foreign publications included in the bibliographic databases Scopus and Web of Science. Publication activity is measured by the number of publications, as well as such an indicator as FWCI: it is designed in such a way as to exclude all kinds of twists, self-citations, and it estimates the number of citations of university publications in a certain subject area compared to the global average.

If we take this indicator in the whole republic, KFU accounts for 72% of publications. Interestingly, the second place is not held by other universities in Tatarstan, but by academic structures of the Russian Academy of Sciences, as well as the largest enterprises, for example TATNEFT, which have significantly intensified their patent activities.

The second indicator is how much revenue the republic receives from the commercialization of innovation. Here, KFU is still inferior to large enterprises. But the situation, I hope, will soon change: by the decision of the Board of Trustees of KFU, the Kazan Expo technopark is transferred to the university, there we plan to implement an extensive program of training in innovation and project management.

We set an ambitious task to generate annually up to a hundred successful startups that have reached the stage of enterprises, and so that graduate diploma projects are associated with these startups. That is, the startup becomes a diploma: an assessment of the success of training a graduate of KFU.

International rankings are also very important for KFU, which also make it possible to assess the success of the university’s innovative potential. KFU is the only university in Tatarstan that is in the top 100, especially in the field of pedagogy, petrochemistry, petroleum engineering, linguistics, economics.

We set the task of entering the top 100 in computer science too. 20% of KFU students are foreigners, this contributes to the influx of intellectual capital into the republic. KFU is one of the main employers in the high-tech sphere in the capital of the Republic, Kazan. The share of invited foreign scientists at KFU relative to other universities of the republic is more than 90%. Innopolis is in second place in this indicator in Tatarstan.

— What scientific directions develops the KFU in the interests of the economy of the republic?

— The priorities of the Republic and the University are closely linked. This is primarily biomedicine. To implement this direction, the republic transferred to KFU several large clinical institutions that serve the population of Tatarstan, and not only students and teachers. On average, over 70 thousand surveys of 40 thousand citizens are carried out on this base. The Republic is interested that residents receive high-tech medical care in Tatarstan, rather than go to other regions.

For this purpose KFU supports open innovation technology; if it is necessary to consult with specialists in other regions or even countries, consultations can be received remotely without leaving anywhere. We set the task on the basis of the synthesis of theoretical and practical competencies to turn the clinical division of KFU into the top in the Russian Federation in the field of accurate diagnosis. More promising areas are gene research and regenerative medicine.

The second priority is oil and petrochemistry. We aim not only to increase the efficiency of oil production, but also to reduce the burden on the natural environment due to the search and introduction of appropriate innovative technologies. We plan to enter the top 5 leading world research centers on underground combustion technologies. With this technology, not water is pumped into oil-bearing formations, but catalysts that heat up the formation, which allows oil to be produced in a more environmentally friendly way.

The third direction, of course, is education. Teachers are lacking, as are doctors. Therefore, the university acts as the main basis for their training in the interests of the republic.

— What is the role of research centers such as CAES in the economy of the republic? What is their market niche?

— The paradox is that large universities have little interest in regional studies. They are aimed at the Russian Federation as a whole, in addition, they have great international ambitions. At the same time, the task of finding and analyzing the best regional practices that ensure balanced economic development is urgent. CAES is committed to this task.

Despite the modest number of researchers, 16 only, the center is a respected republican leader in economic and sociological research of processes that take place not only in Tatarstan, but also in other regions of the Russian Federation. The task we realize is not only to position the republic in the Russian space of economic development, but also to timely identify emerging problems and develop ways to solve them.

Interviewed by Mikhail Savelichev

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