External economic activity

As the data of the customs statistics read, the external turnover of Krasnodar Territory amounted to 2.1 milliard US Dollars, and the growth with respect to the last year made 465.7 million US Dollars. By the end of the year the black ink of trade balance formed to achieve USD 106.9 million. The orientation of international economic relations participants to their partners from the non-CIS foreign countries is still retained. It is due to the fact, that the large part of the foreign trade transactions fall on crude oil and oil products, that in bulk are exported to the non-CIS foreign countries, and in import part about 40% fall on the products of mechanical engineering. The main trade partners are Italy, Turkey, Liberia and Ukraine.

As the data of the customs statistics read, the participants of external economic activity in Krasnodar Territory carried out export operations in January through December of 2002 to the sum of USD 1095.2 million to exceed 2001 by 10% or by USD 102.0 million.

The proportions of CIS and non-CIS countries in the structure of export are 91% and 9% respectively. The export to the non-CIS countries is valued at USD 998.1 million (109% against the respective period of 2001) and to the CIS countries it is valued at USD 97.2 million (123% against the respective period of 2001).

The major portion of the goods structure in export falls on the mineral products (48.6%), foodstuffs and raw material for production of those (17.6%) and the produce of mechanical engineering (22.3%). The decrease in the volume of export touched on such industries as mineral products, textile and footwear. The export of the mineral products is 96%, represented by crude oil and oil products, all the volumes of which are dedicated to the non-CIS countries.

The largest trade partners in the purchase of products in Krasnodar Territory are Italy, Liberia, Virgin Islands and Turkey.

The foreign trade volume of Krasnodar Territory enterprises for import ran as high as USD 988.3 million in 2002, 158% against the respective period of the previous year. The figure of the products imported from the non-CIS countries against the respective period of the previous year made 162% or USD 907.3 million. The import from the CIS countries was 121% against the same period of the previous year, i.e. USD 81.0 million. The basis of import to Krasnodar Territory comprised the produce of mechanical engineering (39.6%), foodstuffs and raw material for production of those (29.3%), metals and metal ware (14.4%).

The largest trade partners for supplies of the products to Krasnodar Territory are Brazil, Germany, Italy and Turkey.

The dynamic development of the regional economy is promoted by creation of the favorable investment climate.

The efficiency of the chosen strategy was backed by practice and grown rating estimates. In 2000—2002 Krasnodar Territory was steady among the best ten regions of Russia according to the rating. To a large extent it was favored also by the stable political climate in the region.

Krasnodar Territory is a subject of great strategic importance for the Russian Federation as the most powerful road junction and the region, providing food security of the country.

Kuban is at the top of South Federal District regions by the volumes and growth rates of investment. For example, the rate of investment in the Territory in 2001 was 3.9 times as great as the similar parameter in Stavropol Territory and was twice as large as in Rostov Region. The share of Krasnodar Territory in the national volume of investment ran as high as 4 per cent in 2002. In 2002 about 73 milliard rubles were invested in economy of the Territory.

Stirring up of investment activity in the last year’s results to a great extent from realization of the large international projects in Krasnodar Territory, such as the construction of the Caspian oil delivery pipeline from Tenghiz oil field in Kazakhstan to Novorossiysk and that of Russia — Turkey gas pipeline. Their share in the total volume of investment amounted to 21 percent in 1999, 40 — in 2000 and 42 — in 2001.

Even exclusive of the listed projects, the investments in the capital stock increased 1.5 times for this period. The revival of investment activity took a shape in oil producing industry, production of building materials, agriculture, construction, communications, trade, municipal engineering, science and other fields.

The basic sources of investment resources are the own means of enterprises (profit, depreciation), debt and borrowed capital. These account for 75.4 per cent of the total investment volume. Almost 15 per cent of investments fall on the funds of population, participating in residential construction.

Among the large investors in Krasnodar Territory one should mention ОАО «Chernomortransneft», carrying out reconstruction of petroleum storage depot in petroleum harbor of Sheskharis and also Tikhoretsk-Novorossiysk and Tikhoretsk-Tuapse pipelines, ОАО «Rosneft-Tuapsenefteprodukt», investing funds in reconstruction of petroleum storage depot and deep-sea terminal in the port of Tuapse, ОАО «Rosneft-Krasnodarneftegaz», investing funds in development of Sladkovsko-Morozovskaya group oil and gas fields.

The great volumes of the funds were invested in Krasnodar Territory by the enterprises of transport and communications. Novorossiysk and Tuapse trade ports carry out projects of the transport infrastructure development. The investments of ОАО «Yuzhnaya Telekommunikatsionnaya Kompamiya» and OAO «MTS-Kuban» have been directed to improvement of quality and expansion of communication service capacities.

In agribusiness the successful headway was made for the project of alcohol-free and soft alcoholic beverages industrial engineering in Krasnodar carried out by the first affiliate of ZAO «Ochakovo», for establishment of dairy procurement and processing complex in the city of Timashevsk — by ОАО «Integrated dairy works», for the technical re-equipment of Labinsk, Armavir solvent-extraction plants, Integrated fat-and-oil works in Krasnodar, as well as for the Russian largest enterprise to produce the canned fruits and vegetables for infants — «Dinskoy» cannery.

A series of processing enterprises of Krasnodar Territory — CJSC «Meat-preserving factory «Kanevsky»; OJSC «Galan», Kurganinsky district; CJSC «Cheese-maker», Starominskoy district; OJSC «Medvedovsky meat-preserving factory», Timashevsky district; OJSC «Kubarus-moloko» and OJSC «Confectionary «Armavirskaya», city of Armavir; OJSC «Dairy «Ghelendjiksky»; CJSC «Kropotkin fat-and-oil works»; CJSC «Integrated cheese-making plant «Tikhoretsky» and other enterprises — experienced technical re-equipment.

The major part of foreign investments (91%) enters Krasnodar Territory in the form of direct investments. Kuban ranks third in the country in the volumes of direct foreign investments. The part of the region in the All-Russian volume grew from 1.5 in 1998 to 11 per cent in 2001. The great part of foreign investments — USD 1.3 milliard — was invested in construction of the Caspian pipeline for oil delivery from Kazakhstan to the world market through the port of Novorossiysk.

Another large international project is the construction of Russia-Turkey gas pipeline over the Black Sea bottom. Its length over the area of Krasnodar Territory makes 370 km. The tank gas capacity of the gas pipeline first stage is 500 million cub.m. a year and it will be 16 milliard cub.m. a year upon the completion of the pipeline.

Over 300 joint ventures with the participation of foreign firms, that invest their funds in the promising industries of the regional economy, operate in Krasnodar Territory. The attraction of investments through the creation of joint ventures is a mostly preferable form of cooperation with the foreign firms. The large strategic foreign investors of Kuban are the companies as follows: «Philip Morris», carrying out the development of tobacco factory in the city of Krasnodar, «Knauf», realizing project of the shop construction to produce formed metal section at the integrated works «Kubansky gyps-Knauf».

The large volumes of the foreign investments were put into «Pepsi-Cola» plant in Sochi, «Cargil-Yug» LLC, «Fait-Kuban» LLC, «Alfatec» LLC, ZAO «Tetra-Pack Kuban», ZAO «Neopack Kuban», ZAO «Okerlund & Rausing Kuban», ZAO «Export Les», etc.

The successful joint activity has been exemplified by industrial project of the coffee prepackaging shop of the «Nestle Food» company in the areas of ОАО «Khladoproduct» (Timashevsk). Within the limits of the project «Nestle Food» company undertook the obligations on deliveries of packing materials and coffee and also on realization of the products, and ОАО «Khladoproduct» undertook the obligations on packaging, storage and shipment of produce. The combination of the world experience accumulated by «Nestle» in food industry, production possibilities of ОАО «Khladoproduct» and significant investments in infrastructure enabled the enterprise to become quickly one of the leaders in the industry. The project obtained the status of «approved» one by administration of Krasnodar Territory.

Another example of effective cooperation of foreign and Russian capital is the project of ОАО «Novorosmetal» for construction of the arcfurnace melting shop to produce the marketable casting block at the capacity of 150 thousand tons a year in the city of Novorossiysk. The project was carried out with the participation of Turkish company «Barmet Demir Celik Sanai A.S», that performed the delivery of equipment. The project was approved too by administration of Krasnodar Territory.

In the town of Timashevsk ZAO «Okerlund & Rausing Kuban» arranged the production of the modern kinds of the flexible packing materials for food industry.

In an effort to create the favorable conditions for attraction of investments a series of the statutes and command papers were adopted to protect and guarantee the rights of investors.

The primary competition advantages of Krasnodar Territory, creating the prerequisites of successful partnership, are as follows:

• advantageous geopolitical position at the joint of Europe, Asia and CIS countries. Krasnodar Territory is advanced post of Russia in the Azov and Black Sea basin;
• direct exit to the international sea ways through eight ports on the southern borders of the country, transit ways from Central Russia and Europe to the Caucasus and Transcaucasia, from Central Asia and Transcaucasia;
• three international airports;
• highway network, one of the best in Russia
• agroclimatic potential, fertile agricultural arable lands, permitting to grow all the crops line of moderate climate and some subtropical cultures; the natural and climatic conditions of Krasnodar Territory are similar to those of middle France and northern Italy;
• the richest raw-material base for processing industry;
• unique recreation potential, providing the development practically of all the kinds of tourism and recreation industry — maritime, mountainous, mountain-skiing and balneary;
• multi-various natural resources, permitting to minimize the expenditures on realization of investment projects in combination with the high degree of development;
• high degree of population density, especially rural, availability of highly skilled labor force, permitting to develop the network of the labor-intensive manufactures;
• dynamically forming normative legal basis of Krasnodar Territory economic development;
• high social stability;
• committal of the regional authorities to the course of reforms.

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