MIL OSI Translation. Region: Russian Federation –
To restore investment activity, along with the launch of new mechanisms, the authorities are also modernizing existing ones – as the head of the Ministry of Economy Maxim Reshetnikov said yesterday at a meeting with the President, it is proposed to expand the possibility of business reimbursement within the framework of the investment tax deduction and expand the planning horizon of compensation for expenses on it to the regions. Investors themselves are still waiting – in September, after a slow growth in the balance of investment intentions, polls again record companies’ refusal to restore investment plans.
The basis for launching a new investment cycle should be support for specific projects in industries and regions, the head of the Ministry of Economy Maxim Reshetnikov said yesterday at a meeting with the President. For this, each constituent entity of the Russian Federation must have a register of investment projects associated with all support measures. These measures themselves are basically defined – they, according to the minister, are included in a single plan for economic recovery.
So, the authorities are betting on the launch of a mechanism for agreements on the protection and encouragement of investment to guarantee investors the invariability of their working conditions – from April 1 it is planned to scale it up to the regions.
So far, the Ministry of Economy has received applications for 15 projects worth 850 billion rubles. This mechanism will be supplemented by an existing instrument – a project financing factory, which assumes covering 80% of the project cost with syndicated loans (decisions have already been made to finance ten projects for 760 billion rubles, another 12 – for 1.4 trillion rubles – are under consideration). The authorities are considering expanding the factory’s mandate to include project pools and projects with long payback periods.
To increase investment activity in the regions, the Ministry of Economy proposes to extend the investment tax deduction for corporate income tax on the costs of industrial buildings. Extension of the terms of planning the payment of compensation deductions to the regions is also being discussed – the center covers them up to 67% of lost income. Now funds for this are provided only for 2021 – 27 billion rubles. However, as the minister explained, “the governors are asking for a medium-term perspective.” The idea was supported by the presidential aide Maxim Oreshkin, proposing to expand planning “at least” to three years.
Infrastructure bonds should become a new measure to support investments – the mechanism, said Maxim Reshetnikov, is now being worked out.
In particular, the Ministry of Constructionalready publishedthe draft program for the issue of such securities to finance utility facilities required for the implementation of large-scale housing construction, the agency estimates potential placements at 300 billion rubles. in 2021–2023.
So far, however, the new investment cycle does not show itself in economic statistics. According to CMASF, in August, the recovery of investment activity slowed down, the supply of investment goods increased by only 0.7% in July (a month earlier – by 6.6%, and on average from May to July – by 4.3% per month, all estimates from elimination of the seasonal factor), and mainly due to the growth of imports of machinery and equipment. Their domestic production stagnated, and the supply of basic building materials even decreased. According to these data, analysts of the center estimate the decline in investment in fixed assets in August by 1.6% in annual terms. According to Rosstat, in the second quarter, capex fell by 7.6% after rising by 1.2% in the first.
The September polls by the Gaidar Institute confirm the companies’ refusal to restore investment plans.
After the growth of the balance of investment intentions in May-August (by 24 points out of 40 lost in April) in September, the indicator again fell by 14 points. At the same time, the first place in terms of interest in measures to stimulate capital investment (64% of enterprises – an absolute record) was taken by “the clarity and predictability of the macroeconomic situation.” The weakening of the ruble and the deterioration of financial results increased the “demand” of the industry for lower prices for equipment (55% of companies), while the “demand” for the protection of the domestic market from imports also fell from 34% to 25%. “The active use by the authorities in the context of the crisis of lending support for current activities has shown enterprises the possibility of obtaining or expanding such support and for investment activity,” notes the study’s author Sergei Tsukhlo. A decrease in interest on loans, subsidies, guarantees, state participation could stimulate capital investments in almost half of enterprises, and tax incentives are mentioned by only 42% of companies.
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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.