* 2008* 2009*

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2 Main social-economic indicators (rate of growth, %) * 2008* 2009* 2009 to 2005, % GDP Industrial Production Capital Investments Real Personal Disposable Income Retail Trade Turnover *estimate 2

3 Economic Development Results Steady macroeconomic stability achieved : Federal Budget Profitability in ,4% of GDP Stabilization Fund by the end of 2006 $ 81,8 bln. Gold Reserves as of April 2007 $ 346,3 bln. 3

4 Russia as investment opportunity 2000 year State GDP - $ 260 bln. Consolidated budget - $ 40 bln. State Debt over 50 % of GDP and over 120% of Federal Budget Gold and currency reserves - $ 25 bln. Short-terms goals logic Lack of PPP s legal base and practice Macroeconomic instability Business RTS Index 190 points Large holdings establishment (raider expansion), high legal risks Minimization of taxation, use of internal offshore and transfer pricing Lack of long-term strategies in companies 2006 year State GDP - $ 900 bln. Consolidated budget - $ 260 bin. State Debt less than 10 % of GDP and less than 28% of the Federal Budget Gold and currency reserves $ 272 bln. Long-term strategic planning on federal and regional levels New legal base and practice for PPP Macroeconomic Stability Business RTS Index 1500 points Finalized establishment and restructuring of large holdings Creation of competitive development strategies Numerous completed and planned IPO Companies have substantial investment programs and plans 4

5 Stock market growth Stock market capitalization, $ bln. 900 Stock market capitalization, % of GDP ,7 17,2 27,6 33, , (estimate)

6 Foreign Investments Growth $ bln ,8 14, ,7 3, Foreign direct investments 6

7 Legal Base Establishment of legal base and authorities for market regulation, de-bureaucratization of economy and competition development Tax Code, Customs Code Legislation on licensing and valuation activity Legislation on Natural Resources : Entrails, Water, Forest (draft) Land legislation Legislation on bankruptcy, currency control, new edition of the law on joint-stock companies Law on state purchases Law on competition protection Law on autonomic organizations (draft) 7

8 Diversification of economy Industrial Investment Fund Concessions Special Economic Zones Industrial assemblage Diversification of Economy Innovation Special Economic Zones Russian Venture Company Technoparks Federal Target Programs 8

9 Investment Fund 2006 $ 2,5 bln $ 4,2 bln $ 4,1 bln. 9

10 Approved Investment projects Projects Total Cost of the project ($ bln.) State investments (Investment Fund) ($ bln.) 1 Motorway Odintsovo in Moscow region 0,64 0,37 2 Transport Infrastructure for mineral resource development in Chita region 5,2 1,5 3 Orlovsky Tunnel in St.Petersburg 0,97 0,3 4 Western High Speed Diameter in St.Petersburg 3,1 1,0 5 Nizhnikamsk Complex of Oil-refinery and Chemical works 4,8 0,6 6 Complex Development of the Lower Angara Region 8 1,3 7 Moscow - St.Petersburg Highway (km 15 - km 58) 8 Project documentation for construction and exploitation of the motorway M-4 Don 2,0 0,95 0,07 0,07 9 Construction of water-supply system in Rostov-Don 7,36 0,19 10 Project documentation for construction and exploitation of the motorway Krasnodar-Abinsk-Kabardinka 0,6 0,6 Total ($ bln.) 32,74 6,88

11 Construction of the motorway «Western Speed Diameter» in St.Petersburg Based on The Law on Concessions Initiate organization «Western Speed Diameter» Investor of the project will be chosen on concession tender Total investments value $ 3,1 bln. Investment Fund financing $ 1 bln. Potential concessionaires: Strabag SE, Vinci Concessions, Marubeni Corporation, Aldesa Construcciones, S.A., Autovie Venete S.p.A., Lotte Engeneering & Construction etc. Project's basic characteristics: Motorway length 46,4 km, including 13 bridges and viaduct Up to 8 lanes Estimated traffic speed km/h Construction time 6 years Approved Investment Projects Fare $ 0,05 for 1 km passenger car $ 0,11 for 1 km tracks 11

12 Approved Investment Projects Complex development of the Lower Angara region Initiate organization «Corporation for Krasnoyarskiy region development» Investors «Russian Aluminum», «Gidro OGK» Total investments value $ 8 bln. Claim on Investment Fund $ 1,3 bln. Objects for investment Industrial enterprises (at the cost of investor) - Boguchanskaya HPS 3000Мvт - Aluminum plant tones of primary aluminum - Tagar metallurgical union - Gorevskoe metallurgical union - Pulp and paper mill in Yarky - Cement works - Gas-transfering plant in Karabula Infrastructure (at the public cost (Investment fund) - Electric main for Boguchanskaya HPS - Reconstruction of the Kansk-Aban-Boguchany- Kodinsk highway - Bridge over Angara river and Boguchany-Yarky- Angarsky highway sector - Railroad Karabula-Yarky 12

13 Approved Investment Projects Oil processing and petrochemical plants in Nizhnekamsk Initiate organization and Investor «TATNEFT» Total investments value $ 4,8 bln. Claim on Investment Fund $ 0,6 bln. Objects for investment Industrial enterprises (at the cost of investor) Oil refinery plant Petrochemical plant Infrastructure (at the public cost (Investment fund)) rail-roads transportation pipe-line and delivery duct PETROCHEMISTRY Project's basic characteristics: processing per year 7000 thousand tons oil processing level up to 95% quality Euro-4, Euro-5 13

14 Subjects to Concession Agreements 14

15 Concession Project scheme 15

16 Special economic zones in Russia St. Petersburg Moscow (Zelenograd) Moscow region (Dubna) Lipetsk region (Lipetsk) Tatarstan (Elabuga) Tomsk region (Tomsk) 16

17 Special economic zones advantages for investors Corporate profit tax: Accelerated amortization Removing restrictions on losses transfer to future periods Accelerated recognition of R&D expenses Reduced uniform social tax rate in technological zones Property and land tax exemption for 5-years Administrative Advantages provided by special economic zones One window approach Protection from non-favorable changes in tax legislation Taxes VAT and duty free imports to special economic zone territory Customs 17

18 Industrial Assemblage Planned Investment 400 $mln Total Investments 2 $ bln Total output in thousand vhl Custom Tariffs Import of vehicles - 25 % Import of components 12,5 % Import of components for industrial assemblage - 0% for basic components Thousands vhl. 18

19 Federal Target Programs $ 13,7 bln.* $ 18,9 bln.* 8,1 10,8 1,2 0,6 1,5 2,3 1,7 3,6 2,2 0,6 Infrastructure development New generation Vital functions security and environment preservation Science, innovations and "know-how" Regional development * Open share, including national projects 19

20 Russian venture company Russian venture company Venture projects Private venture funds Private Co-investor Main goal to support venture investments in Hi-Tech industry 20

21 Russian venture company Investment fund Venture capitalists management Right for RVC shares acquisition Acquisition price : initial price + 3% per year 100% $ 15 bln. JSC Russian venture company 49% $ mln. Right for RVC shares acquisition Acquisition price : initial price + 3% per year Up to 10 funds 51% Venture managing companies management Bonus (~20% of profit) Venture funds Venture investments Innovation companies at early stage $ mln. Profit share (~80%) Private venture investors 21

22 Bank for Development Organization Purpose Charter capital sources State corporation (special law) Development of production and financial infrastructure, innovations, exports and small and medium-sized business USSR VEB assets, Russian Development Bank and Roseximbank shares Equity sources Bank for Development bonds, loans attraction Investment priorities Restrictions To be established by RF government No activities with individuals, some restrictions in bank and securities operations 22

23 Opportunities offered by PPP in Russia 23

24 Sovereign credit ratio growth Standard&Poor s B- B+ BB BB BB+ BBB ВВВ+ Moody s В2 Ва3 Ва2 Ваа3 Ваа3 Ва1 Ваа2 Fitch В В+ ВВ- ВВ+ ВВВ- ВВВ ВВВ+ 24

25 Welcome to cooperation Ministry of Economic Development and Trade of the Russian Federation Investment policy Department Tel. +7 (495 ) , fax +7 (495) , 25