13 November 2006 St. Petersburg Market Value Proposition
This document has been prepared by the Representative of the City of Saint Petersburg (Russia) in the United States, Veronika Krasheninnikova. Pursuant to the FARA, additional information is on file with the U.S. Department of Justice, Washington, District of Columbia.
St.Petersburg Value Proposition Veronika Krasheninnikova Representative of the City of Saint Petersburg (Russia) in the United States
St.Petersburg offers a compelling value proposition:
Large market size: with its population of 4.8 million people, St. Petersburg is more than a major metropolitan consumer market: it is a lucrative gateway into the densely-populated North-Western district and, beyond, to 145 million consumers throughout Russia. In 2005, consumer spending grew over 20% in real terms over the 2004 level. St. Petersburg’s consumers are highly educated and are quick to develop loyalty to Western brands. Goods manufactured in St.Petersburg are also often exported to Eastern European markets.
Extensive business networks: St.Petersburg is the ground for the leading financial, high-tech, manufacturing, industrial, consulting companies. The City is headquarters to a growing number of Russian companies (moved from Moscow: Gazprom, Vneshtorgbank, Transaero, Lukoil Trading, Rosneft Trading, etc). Global companies operating in St.Petersburg include GE, Hewlett-Packard, Sun Microsystems, Intel, AIG, Citibank, Gillette, Procter & Gamble, Phillip Morris, Coca-Cola, Pepsi Bottling, Wrigley, Kraft Foods, Heineken, Heinz, Lucent Technologies, 3M, Corning, Motorola, OTIS, Honeywell, Ford (Leningrad region), Nissan; Caterpillar – new coming (summer 2006): Toyota, GM, Bosch, and others.
Educated and talented workforce: Saint Petersburg boasts one of the most technically qualified labor forces of any location in the world. An astonishing fifteen percent of Russia’s universally-admired engineering corps is concentrated in Saint Petersburg. Each year, 10,000 creative and multilingual IT specialists enter the workforce. The presence of nearly 100 institutions of higher learning in the city and environs does more than create a pipeline of engineers, scientists and programmers who are ready to research innovative technologies and creatively solve sophisticated problems. These universities and technical institutes can be partners in joint ventures, venues for technology summits and expositions, and centers for cutting-edge research.
Competitive operational costs: rental rates are substantially lower than in Moscow, salaries 20-40% lower, than in Moscow; municipals services, supplies, as well as other operational expenses are also lower.
Investment Environment: City investment law establishes the principles for investment support, open and free access to official information, inalterability of adopted decisions, the mutual responsibility of St.Petersburg and investors, and presumes the good faith of investors. Adopted in March 2005, the landmark legislation “On Strategic Investment Projects of St. Petersburg” establishes a cohesive process for foreign investors and developers to secure approval and receive guidance from St. Petersburg’s government on large-scale investment projects.
Competent and investor-friendly City Government: St.Petersburg Governor Valentina Matvienko, a visionary leader, has transformed St.Petersburg into one of the most thriving and attractive European capitals. In an effort to forgo the bureaucratic delays that have been encountered elsewhere in Russia, the Committee on Investments and Strategic Projects (CISP) was designated to oversee strategic ventures at every stage.
Access: The city enjoys a strategically advantageous location in terms of geographic and logistical access. As a major European port, St. Petersburg engages in extensive foreign trade and port operations.
High-tech sector: Saint Petersburg was recently designated a Special Economic Zone (SEZ) for technological innovation, a status it will maintain until the year 2026. Besides conferring tax benefits on investors and participants in the SEZ, this important designation has jumpstarted the construction of IT parks throughout the region, to which contribute stable infrastructure, well-developed telecommunications networks, modern office buildings, prime transportation means and favorable market conditions.
Ratings: Expert RA, the largest independent rating agency in Russia, recently designated St. Petersburg first among all Russian regions for Lowest Investment Risk and Best Social Climate. Both Standard & Poor’s (BB+) and Moody’s (Baa3) have upgraded St. Petersburg’s rating.
Quality of life: With its rich history and world-class cultural attractions, St.Petersburg is a major world center of culture and arts. Russian, European and world cultures are reflected throughout the 4,000 monuments and ensembles, 250 museums, 80 art galleries, 50 theaters and numerous festivals in the city and environs.
Also: Trade with USA saw a 50% spike in 2005, up nearly a billion USD. Foreign investment has increased by 44% in 2005 - up to $1.4 billion in 2005. The US is the largest foreign investor in St. Petersburg, responsible for almost 20% of total investment.