Presentation of Perm region

Perm Region occupies the area of 160,000 sq.km, which is about 20% of the area of the Urals and  1% of the whole territory of Russia.

The population of the Region is over  3 mln people (2% of Russia's population), with 77%  being urban residents.

Perm City, the administrative center of the region with the population of over 1 million is located on the banks of the Kama river, one of the largest and most picturesque rivers in Russia. The Kama gives the region its unique position with the access to the five seas (the Azov, the White, the Caspian, the Baltic and the Black seas)  through the system of canals. Perm Region has about 30, 000 rivers and ranks the first in the Urals in water resources. 

Perm Region has a good potential  for   dynamic social and economic development, especially in terms of natural resources. It occupies  one of the leading places among Russia's regions in diversity and quantity of natural resources.   

The Region is rich in minerals and raw materials. It has both ores and non-ore minerals. 

The region has over 160 prospected deposits of oil and gas and produces annually   over 9 mln tons of oil, and  over 500 mln cu.m. of gas. 

Prikamye boasts the unique Vekhnekamskoye deposit of potassium, magnesium and potassium chloride salts, which is considered as the largest  in the world.   This is the only deposit in Russia where the salts are  mined in strategic volumes. The deposit also contains  substantial quantities of rock salt (about half of Russia's resources).

 Deposits of lime, dolomite, gypsum and other construction materials, as well as decorative and trim stones, have been explored and are  under operation. 

In Perm Region non-ferrous and rare-earth  metals  are extracted and processed, such as chromium, copper, lead, zinc, tin, aluminum, nickel, manganese, magnesium, titanium, and precious metals: gold and platinum. In the Vishera  area diamonds are extracted, cut and made into jewelry in Perm.

Vast forest resources give the region the status of one of the leading timber-industrial bases in Russia. About 60% of the region's territory is covered by forests, which is about  12 mln hectars.  Operation reserves of timber amount to 400 mln cu.m.  About  70% of forests are coniferous, which is most valuable  in terms of industrial use. 

 Perm region has a developed transport system.

Perm City has a large port, and the Kamskasya Shipping Company owns comfortable high-class passenger boats and cargo ships of "river-sea" type.  Navigable waterways of the region stretch for 1,100 km. Annual cargo turnover for water transport is 5,000,000 tons.

Prikamye is crossed by two big railway lines, of which the Transsib railway line  gives access to Central and Western regions of European Russia as well as to Siberia and the Far East.

Transport system of the region also includes two airports, one of which is of international status.  In addition to Russian airlines there are regular flights to Perm operated by Lufthansa.

The region has an expanding network of motorways with asphalt/concrete finishing. Trucks carry up to 12 mln tons of freight every year. 

Modern telecommunication technologies help break the boundaries between regions and countries, bringing people closer together.  Business is becoming more dependent for its success on high-quality and reliable communication systems. 

Western Urals largest telecommunication operator, "Uralsvyasinform", aims at increasing quality of its services and introducing the most advanced  technologies .

A new  distant calls telephone station using Alcatel 1000S- 12 standard  was put into operation  in 1995.  In 1996-97 mobile cellular  systems NMT-450, AMPS-800, GSM-900 were installed, and in 2000 the company started Intellectual Network,  second after the one in  Moscow.

Its  rich natural and economic potential makes Perm Region one of the most economically developed  regions in Russia.   The region is industrial in terms of economy type.  There are over 500 large and middle-scale companies representing a range of industries. Gross regional product  in 2002 amounted to  198.8 bln roubles (over 6 bln USD). The Region ranked the 3th among the regions in Privolzhsky Okrug  in profits gained in 2002  (over 28.8 bln roubles). The region ranks ten among  the top  federal territories in terms of   payments  into the federal budget.  It occupies the 11th  position in Russia in  manufacturing. 

In contrast to many other regions in Russia  which developed through  specialization and are by now totally dependent  on one or two industries, Perm Region has a diversity of industries as the basis for its economy.

"Manufacturing  structure by  industries, 2002 (%)"

Power industry    - 13.6%

Fuel industry                   - 23.2%

Ferrous metallurgy           - 4.59%

Non-ferrous metallurgy     - 5.3%

Chemical and petrochemical industry - 17%

Machine-building and metal working - 14.1%

Wood, wood-processing and paper-and-pulp industries - 8%

Building materials production- 1.8%

Light industry      - 1.2%

Food industry      - 7.1%

On the Russian and world markets Perm Region is represented by its leading industries such as machine-building, chemical and petrochemical production, fuel industry, timber, wood-processing, pulp-and-paper  industry. 

Fuel industry and chemicals production are developed  mostly on the basis of local raw materials.

Enterprises of oil and gas industries make the bulk of fuel products. In the region there has  been established a powerful modern complex of diversified companies involved into oil and gas production and processing.   8 heavy-duty oil- and gas pipes of federal and international significance cross  the territory of the region.

There are about 30 chemical and petrochemical enterprises in Perm Region. Among them a special place is taken by  manufacturers of mineral fertilizers producing  about one-third of total Russian output.   

An important feature of energy production is the combination of hydro- and heat- power stations. 

The aerospace  production complex dominates in machine-building. The enterprises in this sector are leaders in production of aircraft and rocket  engines, navigation systems and devices for  for aviation, navy  and  overland equipment, gas pump and turbine units, digital and fibre-glass communication systems. 

Metallurgy industry is represented by enterprises processing ferrous, non-ferrous and rare-earth metals and by powder metallurgy plants. The only Russian production of titanium sponge is located in Perm Region. The companies of the region yield half of Russian magnesium output.

The timber-industrial complex in Perm Region is the Russian leader in  in wood production and processing. The pulp-and-paper mills manufacture about 20% of total output of Russian paper used for various purposes. 

Light industry is represented by 38 large and medium companies manufacturing  clothes, textiles, leatherwear, furs and footwear. 

There is a brisk demand on handicraft production - articles made of stone, wood and ceramics manufactured by  traditional  folk technologies.

Over 60 companies in food industry produce confectionery, alcohol and soft drinks, ice-creams, margarine, etc. These products are well-known in Russia and CIS countries for their high quality. 

In 2002 the region's  output growth rate increased steadily with last year production volume index at  99%.

Production volume  exceeded 140 bln roubles ( over 4.6 bln USD). The most dynamically developing  industries (compared with 2001) were  fuel industry, power industry, timber, chemical, ferrous and non-ferrous metallurgy. 

With an efficiently-structured economy   and intensive  development  Perm Region is an active participant of the world trade . In 2002 the region maintained links with companies in more than 107 countries. 

In international trade the region's main partners are developed industrial countries. 

Annual foreign trade turnover (exports and imports)  is about 2 bln USD  with a positive balance   of 1.6 bln USD in 2002.

 Export/import structure  has been relatively stable for a number of years.   The volumes for certain goods may vary in response to home and foreign market conditions; however, this does not   significantly influence export/import structure. 

Major exports from Perm region are fuels, chemical and petroleum products. A significant proportion in exports belongs to mineral fertilizers.

 Exports include cast iron, rolled metal, bimetals, ferrous alloys, magnesium, titanium and their alloys. 

Perm Region is one of the largest exporters of newsprint paper.

Products of machine-building amount to 3 % of total export volume.  

In imports a major proportion is taken by machine-building  (45%). This is explained by a strong need of enterprises in the region in upgrading  production facilities.  

Distribution of export/import flows of Perm region throughout the world  is as follows:

Perm Region exports goods into the following areas (2002) : 

Europe - 62 %

Asia - 21%

Central and South America - 4 %

USA - 5 %

CIS countries - 7 %

Africa - 1 %

Imports to Perm region come from the following areas:

Europe - 53 %

USA and Canada - 4 %

CIS countries -  38 %

Asia - 4%

Perm Region can be viewed as having favourable prospects for investments . Investment potential of Perm Region is determined by a number of attractive features of the area: 

 - political stability and  consistent  policy of government bodies to refuse from  direct administrative interference into economic activities of the companies;

- financial independence from the federal centre (the region is the donor for the federal budget) ;

- developed transport infrastructure, access to major river-, rail- and motorways  transport lines;

- scientific  and technical potential  of the former military industry enterprises;

- highly-qualified  labour force;

- unique natural resources combined with a powerful complex of processing industry.

A number of rating agencies place Perm Region among the top 20 Russian regions which are considered most attractive in terms of investments listing it  the 8th. The Region ranks  among  the top three in the Urals by the volume of attracted foreign investments. 

The overall estimated  investment capacity of the economic agents (of all types of ownership) and infrastructure  in Perm Region amounts up to 2-2.5 and 6.5 bln USD respectively.

In 2002 the companies  invested 37.6 bln roubles or over 1 bln USD into fixed capital funds. The volume of attracted foreign investments  reached 56.0 mln USD.  Total investments into region since 1995 are about 404 mln USD.  

 The bulk of investments goes into reconstruction and upgrading industrial production and is concentrated in several industries such as oil extraction, oil and gas processing, telecommunication and processing industries. These  industries comprise businesses most suitable for investment (and having their own investment resources).

"Structure of foreign investments into Perm Region  by industries, 1994-2002"

petrochemical and chemical industry - 36%

metallurgy - 15%

electronics (communication)  - 22 %

machine-building - 12 %

food industry - 4.2 %

other industries - 5 %

 "Foreign investment breakdown by countries for 1995-2000"

USA - 50%

Germany - 20%

Austria -17%

UK - 5%

Israel- 4%

Belgium- 2%

Switzerland - 1%

Italy -1%

The Region has over 360 registered enterprises with participation of foreign capital. Total foreign investments in the form of investment into equity capital of joint ventures in 1992-2002 reached  about 100 mln USD. Joint ventures are established by both companies and individuals from 59 countries.  Major part of joint ventures was set up with investments from Germany, the USA, China, the UK, Italy, France.  Foreign investments are concentrated in the following industries: machine-building, fuel industry, food industry, chemicals, wood-processing.

The following can be listed as examples of successful cooperation of  Perm enterprises  and foreign partners:

1) Joint ventures AO “Perm Motor Works” and AO “Iskra-Energetika”  established by AO “Perm Motors” and AO “Iskra”  respectively  with participation of  “Pratt & Witney”(the USA). Contribution of American partners into implementation of joint projects amounts to 33 mln USD. 

2) activities of AO “Perm Brewing Company”  in partnership with “Sun Interbrew” (Belgium, UK, India) ;

3) upgrading production project  at AO “LUKOIL -Permnefteorgsintez” within the framework of credit line of “Eksimbank”   of 100 mln USD.

An  investment activity will not be possible without establishing and development  of adequate  infrastructure.

The region has built and is successfully expanding the network of banking institutions, which includes 11 regional banks and 31 branches of the largest Russian banks. Among them are : “Sberbank”, “Vneshtorgbank”, “Rosbank”, “Alfa-bank”, “Bank of Moscow”,  “Gazprombank”, “Bashkircreditbank”. 11 Russian banks, having branches in the region, belong to  50 largest banks in terms of  aggregate assets.

There has been established a network of investment  funds, consultancies and insurance companies.

As an example one can name the “Ural-AIL”  insurance company set up with participation of  an American company, "New York Trade Exchange Ltd". “Ural-AIL” has been operating on the Russian insurance market for over 8 years and keeps its place among the top companies, being the leading insurance company in Prikamye.

Executive and legislative branches in Prikamye are most actively using available means and instruments to support and encourage development of investment activities in the region.  

The region has the necessary regulatory and legal base  for investment activities. The amended  Law “On Foreign Investments in Perm Region” provides for up to 100% local tax relief for  investments  attracted for  concrete projects at the start-up stage. 

The administration is rather active in attracting target financial  resources  from international credit institutions for realization of perspective regional programs.  An example of these activities is the investment of European Bank for Reconstruction and Development into OOO “Permtex” joint venture under the credit agreement signed in May 1999 of total USD 45 mln for the term of over  8 years.  

Perm Region can be proud of this credit agreement as it is one of the first signed by EBRD in Russia after the financial crisis of 1998.

One of the directions of cooperation with EBRD is the program “Reconstruction of water-purifying facilities in Perm City”.

 In conclusion I would like to say  that our region has  a huge  potential , we have gained successful experience in attracting investment and are creating favorable conditions for that. We mean to be flexible in negotiating with the partners.     We are well aware that realization of the existing positive potential of the region is only possible through integrating into the world community.  

We hope that this meeting will become an important step towards establishing mutually beneficial relations.