[INTERVIEW] Korea asked to join Russian Far East projects - Korea Times
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[INTERVIEW] Korea asked to join Russian Far East projects

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Alexei Chekunkov, the minister for the Development of the Russian Far East and Arctic
Alexei Chekunkov, the minister for the Development of the Russian Far East and Arctic

Russia vows to provide large tax breaks and subsidies for new projects

By Kim Hyun-bin

Russia is calling on Korean companies to enhance economic cooperation further to develop the Russian Far East and the Arctic, providing opportunities to build a new residential complex and establish an industrial zone near Vladivostok, among other business opportunities.

To further enhance economic cooperation, Alexei Chekunkov, the minister for the Development of the Russian Far East and Arctic, is in Korea from Nov. 1 to 4 to take part in an inter-regional forum between Korea and Russia.

"We first held the 2018 forum in Korea and the 2019 one in Russia. We missed 2020. We agreed to hold it in Ulsan and we are grateful to the Korean side for helping us organize a pretty large delegation to discuss prospective projects of economic cooperation between the regions of Far East and Arctic and Korea," Minister Chekunkov said in an interview with The Korea Times at the Sofitel Ambassador Seoul Hotel, Tuesday.

The minister says that the Russian Far East has vast business opportunities for Korean firms to take advantage of, with an abundance of natural resources available and mutual interests that could be served.

He emphasized beneficial factors, including Korean shipbuilding companies such as Samsung Heavy Industries and Hyundai Heavy Industries taking part in major shipbuilding projects, constructing state-of-the-art LNG carriers to transport LNG from the Russian Far East and Arctic to Asian markets.

Secondly, Korea could utilize the vast energy resources of the Russian Far East and Artic, which the minister calls, "the richest such region on the planet in terms of energy resources," as well as special metals used in new energies and batteries.

The minister also emphasized the importance of working with the Russian government early on to provide a smooth business environment for Korean companies doing business there.

"We help companies with all sorts of permits navigating through regional, federal, second specific laws, immigration policies. So, we basically are a one-stop shop for any company to do business in the Far East and the Arctic," Chekunkov said.

"By federal law we have a large range of responsibilities and powers in concerns of economic development of the Far East. We can carve out land for any investment project. So when an investor comes to us, this investor will get land much faster than going through the usual process. We provide infrastructure to companies who invest, give them what they need such as transport links, roads, power, water, gas and heat."

The special economic zones in the Russian Far East have inked cooperation agreements with around 2,700 companies committed to investing $90 billion, $30 billion of which has already been physically invested, the ministry said.

It is a clear priority set by President Putin who has referred to the development of the Russian Far East as "the national priority of the 21st century." The minister added, "He consistently stays on that position and really committed to helping us in a very big way."

However, among the 2,700 companies, only nine are Korean, and so the ministry seeks to increase the number of Korean firms, vowing to provide large tax breaks to companies launching new projects in the region.

"For the first five years, there are no taxes except for a value-added tax. They don't pay any profit, land property tax, nobody pays for the first five years, and after five years, a reduced rate," Chekunkov said. "Also, in the past three years, (we have) achieved subsidized rates for electric power, which is three times cheaper than in Korea. Given that we subsidize loans and capital, our loans come (with) 2 percent (interest) a year in rubles and given the inflation rate of 5 to 7 percent, it means the Russian government is paying investors to work."

Kim Hyun-bin hyunbin@koreatimes.co.kr

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