Gavrilov-Yam 54085965 Eng

8/6/2019 Gavrilov-Yam 54085965 Eng

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Comprehensive Investment Plan forModernization of Gavrilov Yam

(in Yaroslavl oblast)

Summary presentation for the Working Group

June 15, 2010


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Preconditions and potential for economic modernization ofPreconditions and potential for economic modernization of

GavrilovGavrilov YamYam

Favorable investment image of the area

Convenient location in the MoscowArchangelsk transport

corridor (20 km from the 8 North federal highway)

Proximity to large cities and markets; Gavrilov Yam is about 40

km from Yaroslavl and about 250 km from Moscow

Low cost of local labor (30-40% cheaper than in Yaroslavl and 2.6

times cheaper than in Moscow)

Availability of unutilized workforce ready for employment (about

700 people) More favorable taxation conditions for doing small business as

concerns rates of the unified tax on imputed income compared

with nearby municipal districts

Availability of an educational framework for training of specialists

for high technology production operations

Key weaknessesKey strengths

Main socioeconomic indicators of the monotown

I

ndicator 2007 2008 2009

Share of core enterprises in local output 62% 40% 39%

Share of small and medium enterprises 17% 19% 15%

Turnover of towns enterprises, billion rubles 2,45 2,78 2,21

Working-age population, thousand people 11,2 11,0 10,8

Unemployment rate, % 2,5% 3,9% 9,1%

Weak economic diversification by sectoral structure: the share

of core enterprises in the pre-crisis 2007 year reached 62%

Insufficient share of small and medium business in the

economic structure (15-20%)

Decline in working-age population by 1.5% every year

Low level of household incomes (salaries are 30-40% lower

than in Yaroslavl and 2.6 times lower than in Moscow) Inadequate level of skills to develop modern production

operations

High degree of deterioration of infrastructure

Predominant reliance of the local fiscal system on transfers from

higher level budgets (about 70%)

Large share of public sector employment (40%)


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Key areas of economic modernization ofKey areas of economic modernization of GavrilovGavrilov YamYam

Main areas of economic

development of Gavrilov

Yam

Stabilizing and diversifying

operations of core enterprises

Creating new industrial

enterprises in the mediumbusiness segment

Supporting small business

Social and economic

development of the monotown

Setting up an industrial park at vacant land plots and premises of the

Gavrilov Yam Flax Processing Plant provided by the plant inexchange for cancellation of its tax arrears to the local budget

Implementation of an investment project of the Agat machine

building plant, envisaging the expansion of the mix of products foraircraft manufacturers with penetration of new markets

Setting up an industrial park for siting new production andwarehousing facilities

Granting deferrals for some taxes to industrial park residents

Implementing medium business support programs (subsidizingnetwork connection fees, loan rates and leasing payments, provisionof guarantees and sureties)

Implementing educational programs to boost employment ofresidents

Providing financial support to small businesses (grants, subsidizationof leasing payments, provision of sureties, network connections, etc.)

Developing infrastructure for small business support (roundtables,information and counseling assistance, exhibitions, contests, media

relations, etc.)

Pursuing rehabilitation and upgrading of communal infrastructure inthe town

Construction of phase 2 of the central district hospital

Housing construction with the aim of relocating residents fromdilapidated and unsafe houses, preparing land plots to implement aprogram of individual housing construction


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Target indicators of the Comprehensive Investment Plan forTarget indicators of the Comprehensive Investment Plan for

economic modernization ofeconomic modernization of GavrilovGavrilov YamYamNo. Indicator Meas.

unit

Actual Plan

2009 2010 2012 2015 2020

1 Core enterprise employment as a percentage of the total working age population % 17,6% 20,2% 20,1% 22,3% 22,8%

2 Small enterprise employment as a percentage of the total working-age population % 7,6% 11,5% 13,5% 14,6% 16,5%

3 Registered unemployment % 9,1% 2,9% 2,3% 1,7% 1,7%

4Total number of newly created temporary jobs during implementation of the projects

(cumulatively)people - 564 600 600 600

5Total number of newly created permanent jobs during implementation of the projects

(cumulatively)people - 681 1403 2415 2630

6 Average monthly salary of workers at large and medium enterprisesthousand

rubles11,6 14,0 16,9 21,1 24,6

7 Amount of local goods, works, and services shipped/completed/provided in traditional industriesMillion

rubles2 207 2 675 3 289 4 464 5 780

8Share of traditional industries in total local amount of shipped goods, completed works and

provided services% 100% 71% 55% 46% 51%

9 Amount of goods, works, and services shipped/completed/provides by core enterprisesMillionrubles

864 1 232 1 660 2 670 3 400

10Share of core enterprises in total local amount of shipped goods, completed works and provided

services% 39% 33% 28% 28% 30%

11 Share of SMEs in total local amount of shipped goods, completed works and provided services % 15% 20% 25% 29% 28%

12 Share of medium enterprises in total locally produced shipped goods % 46% 48% 47% 43% 42%

13 Number of small enterprises . 24 35 40 42 45

14 Total additional revenues to the municipal budgetMillionrubles

- 41,1 77,5 115,2 150,0

15 Amount of investments from extra-budgetary sourcesMillion

rubles- 710 476 174 350

16 Share of municipalitys own revenues in total municipal budget revenues % 16,7% 23% 35% 56% 58%


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Creation of new jobs as a result of implementingCreation of new jobs as a result of implementing

thethe GavrilovGavrilov Yam CIPYam CIP

389

1070

904

52

2415

Agat Plant Medium

business

Small

business

2010-2015

Number of new jobs 2010 2011 2012 2013 2014 2015 Total

Core enterprise (Agat Plant) 149 18 7 57 55 103 389

Medium business 130 210 195 295 120 120 1070

Small business 402 131 137 86 74 74 904

Lost jobs 0 0 0 0 0 0 0

Completion of construction of the Central District

Hospital (CDH)0 0 24 12 13 3

52

TOTAL, annual jobs gain 681 359 363 450 262 300 2415

Central

districthospital

New jobs


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Key investment projects under theKey investment projects under the GavrilovGavrilov YamYam

Comprehensive Investment PlanComprehensive Investment Plan

Investment projects Annual

proceeds,

million rubles

New jobs Annual tax

payments,

million rubles

Investment

per new job,

million rubles

Payback period,

years

Expanding Manufacturing of

Aircraft Products 2,228 389 348 1.9 3

Setting Up the Industrial Fabrics

Technopark*1,800 600 300 2.1 7

Developing Production of Semi-

finished Varnishes940 170 105 1.7 4

Construction of a Factory forManufacturing Ceramic Bricks

Using a VacuumExtruder

732 300 136 3.6 6

Development of Small Business 622 522 77 0.4 1-5

Total for the projects 6,322 1,981 966 1.8 3-4

Project targets for 2015

* The targets take into account activities of potential residents of the industrial park.


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Targeted programs under theTargeted programs under the GavrilovGavrilov Yam CIP forYam CIP for 20102010--20152015

Program Objective Financing, million

rubles

Targets

Employment promotion programs

for 2010

Create preconditions for

employment of non-

employed people

23

y Training of ~ 340 people

y Public works for ~ 1,330

people

y Temporary employment of

884 people

SME support programs for 2010-

2012 and for 2013-2015

Create new jobs in small and

medium businessIncrease the share of small

business in the towns

economy

182

(for 2010-2012)

181

(for 2013-2015)

y Creation of ~ 160 jobs by

2013 and ~ 380 new jobs by2016

y Share of small business

increased to 30%

Programs for upgrading the

housing and communal services

sector for 2010-2013

Improve housing conditions

and communal services for

residents

106

y Capital repairs of the

housing stock

y Relocation of residents from

hazardous houses

y Rehabilitation of water

pipelines

y Gasification

Program for strengthening physical

infrastructure of health facilities

(completion of construction of the

central district hospital) for 2010-

2015

Improve the quality of

healthcare services175

y 415 visits per shift

y 45,000 bed-days/year

y Creation of up to 50

temporary jobs


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Main financing sources for theMain financing sources for the GavrilovGavrilov Yam CIP for 2010Yam CIP for 2010--20152015

Share of budgetary sources in the projects is 42%

Share of budgetary sources in the programs is 99%

Share of budgetary sources in the CIP overall is 50%

Funding sources, million rubles

Total Federalbudget

Region.budget

Municip.budget

Extra-budget

Expanding manufacturing of aircraft products 730 0 0 0 730

Setting up the Industrial Fabrics Technopark 1719 1264 455 0 0

Manufacturing of semi-finished condensation resin based

varnishes287 0 0 0 287

Construction of a factory for manufacturing ceramic bricks

using a vacuum extruder

1082 0 0 0 1082

Small business development projects 234 4 0 0 230

Completion of construction of the Central District Hospital 175 100 75 0 0

Employment promotion programs 23,3 23 0,3 0 0

SME support program 364 336 20 3 4

HCS upgrading programs 106 71 24 7 3

Total for the projects 4049 1264 455 0 2329

Total for the programs 668 531 119 10 7

Total for the Gavrilov Yam CIP 4716 1795 574 10 2336


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Structure of financing sources for theStructure of financing sources for the GavrilovGavrilov Yam CIPYam CIP

forfor 20102010--20152015

Funding sources, million rubles

Total Federalbudget

Region.budget

Municip.budget

Extra-budget

I. Ministry of Economic Development (subsidies for

government support to SMEs)

594 336 20 3 234

Cofinancing of the local targeted program for SME

support

364 336 20 3 4

Targeted support of SME projects (budgetary funding is

incorporated in activities under the SME support

program)

235 4 0 0 230

II. Ministry of Regional Development (federal subsidies for

upgrading engineering infrastructure in monocities)

398 378 20 0 0

III. HCS Reforms Support Fund 86 71 10 2 3

IV. Ministry of Health and Social Development 198 123 75 0 0

Federal Employment Service 23,3 23,0 0,3 0 0

Completion of construction of the Central DistrictHospital

175 100 75 0 0

V. Programs for HCS upgrading in the Yaroslavl oblast 20 0 14 6 0

VI. Projects without budgetary funding 2099 0 0 0 2099

VII. Ministry ofFinance (budget loans) 1321 886 435 0 0

Total for the Gavrilov Yam CIP 4716 1795 574 10 2336


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Structure of financing sources for theStructure of financing sources for the GavrilovGavrilov Yam CIPYam CIP

forfor 2010, 20112010, 2011--2012,2012, andand 20132013--201520152010 2011-2012 2013-2015

Total FB RB MB Extr

a

Total FB RB MB Extr

a

Total FB RB MB Extr

a

I. Ministry of Economic

Development (subsidies for

government support to SMEs)

201 48 2 0 150 212 119 8 2 83 181 169 10 1 2

Cofinancingof the local targeted

program for SME support

52 48 2 0 1 131 119 8 2 2 181 169 10 1 2

Targeted support of SME projects

(budgetary funding is incorporated

in activities under the SME support

program)

152 3 149 83 2 81

II. Ministry of Regional

Development (federal subsidies for

upgrading engineering infrastructure

in monocities)

120 114 6 278 264 14

III. HCS Reforms Support Fund 86 71 10 2 3

IV. Ministry of Health and Social

Development

23 23 75 50 25 100 50 50

Federal Employment Service 23 23

Completion of construction of the

Central District Hospital

75 50 25 100 50 50

V. Programs for HCS upgrading in

Yaroslavl oblast

12 9 3 6 4 2 1,6 1,1 0,5

VI. Projects without budgetary

funding

557 557 881 881 661 661

VII. Ministry ofFinance (fiscal

equalization grants from the federal

budget)

142 142 807 517 290 372 227 145

Total for the Gavrilov Yam CIP 1141 399 27 5 710 2259 950 341 4 964 1316 446 206 1 662


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Funds additionally sought from theFunds additionally sought from the MoFMoF are expected to be usedare expected to be used

for setting up the industrial parkfor setting up the industrial park::

Purchase by the municipality of engineering infrastructure facilities (boiler plant,

treatment facilities for water intake and sewage runoff), land plots, and production

premises, now owned by the Gavrilov Yam Flax Processing Plant, with the aim of

setting up the industrial park: 15 million rubles

Financing of work related to the development of design specifications and

estimates for rehabilitation of engineering infrastructure and production premises in

the industrial park: 51 million rubles

Co-financing of rehabilitation and construction of production facilities needed for

implementation of business projects: 820 million rubles


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Funds requested from the Ministry of Regional Development areFunds requested from the Ministry of Regional Development are

proposed to be used for rehabilitation of engineeringproposed to be used for rehabilitation of engineering

infrastructure in the industrial parkinfrastructure in the industrial park

Rehabilitation of facilities for transportation and treatment of effluents: 133 million

rubles

Rehabilitation of intake treatment facilities: 143 million rubles

Rehabilitation of the heating system: 103 million rubles

The calculations have been done under the assumption that the federal budget will

co-finance 95 % of the costs and the subnational budget, the remaining 5 %.

Engineering infrastructure facilities are planned to be used both for HCS needs of

Gavrilov Yam and for operations of the industrial park to be created


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Cost effectiveness and budgetary efficiency of implementation ofCost effectiveness and budgetary efficiency of implementation of

CIP projects forCIP projects for 20102010--20152015

Indicator Amount,million rubles

Budgetary investments for projects 1719

Gain in sales proceeds 17234

Additional tax collections, total 2978

Federal budget 1733

Regional budget 918

Local budget 328

Budgetary investment per new job 0.87

Additional tax collections for every one million rubles in budgetary investment 2.3

Extra-budgetary investments for every one million rubles in budgetary

investment1.35


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Implementation management arrangements for theImplementation management arrangements for the GavrilovGavrilov YamYam

Comprehensive Investment PlanComprehensive Investment Plan

Yaroslavl Oblast Governor

Deputy Governor of Yaroslavl

oblastDirectorate for Comprehensive

Investment Plans (CIP Directorate) at the

Yaroslavl Oblast state autonomous

institutionAgency for Supporting

Investment Projects

Coordinating Council

(town and district administration

officials; members of the general

public; business community)

Communication with the federal

government

Administrative support

Adoption of decisions

concerning co-financing of

projects and development of

regional targeted programs

Expert review of CIP business plans and

investment projects

Ensuring timely financing of CIP

projects and programs

Overseeing how the core enterprise is

addressing its production diversification

plans

Attracting investors to the Industrial

Fabrics Technopark

Overseeing how municipal programs forcreating a new economy are being

implemented

Ongoing monitoring of CIP deadlines

and targets

Management of CIP risks

Producing reports for the federal

government

Advisory and analytical support

Creation of non-economic drivers

for development of the region

Organizing public hearings and

creating a positive public opinion

Monitoring social impacts from

the CIP


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Expanding Manufacturing of Aircraft Products: project information sheetExpanding Manufacturing of Aircraft Products: project information sheet

((GavrilovGavrilov Yam Machine Building PlantYam Machine Building Plant AgatAgat))

Key project indicators

Amount of investments Total 2010 2011-2012 2013-2015

All sources 730 83 218 429

- Federal budget 0 0 0 0

- Regional budget 0 0 0 0

- Local budget 0 0 0 0

- Extra-budgetary

sources730 83 218 429

For reference:

MoED 0 0 0 0

MoF 0 0 0 0

Sales proceeds (without

VAT and excise taxes)1,232 million rubles in 2015

Profit before tax 258.7 million rubles in 2015

Payback period 3 years

Project benefits

Indicator Total: 2010 2011-2012 2013-2015

New jobs created

(cumulatively)389 149 174 389

Tax collections 1,460.7 165 404.4 891.3

including to the

local budget180 21 52 107

Project description

Project

participantsPrivate investor

Implementatio

n period2010-2015

Project

purpose

Retrofitting of the enterprise, assimilation and

manufacturing of new products to be used by motor

and aircraft makers

Project

products

Units and assemblies for aircraft and gas turbine

engines, component parts for ground-based air

defense and for surface-to-air missiles

Potential

consumers of

project

products

Aircraft motor manufacturers: Salut, Chernyshev

Moscow Machine Building Plant, Ufa Engine

Building Production Association, Novosibirsk

Aviation Production Association, Energiya

Corporation, Proton, Signal research institute

Structure of

investmentexpenditures

ActivityAmount,

mln. rub.

Acquisition of primary and ancillary

equipment

300

Equipment installation and checkout 82

Certification of production

operations, R&D100

Working capital 100

Modalities of

government

support

VEB guarantees for 582 million rubles

Granting tax privileges, spreads/deferrals for profit

tax and corporate property tax

Subsidization of a portion of interest payments


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Key project implementation stages:Key project implementation stages:

Expanding Manufacturing of Aircraft ProductsExpanding Manufacturing of Aircraft Products

((GavrilovGavrilov Yam Machine Building PlantYam Machine Building Plant AgatAgat))

Indicator Commencement Completion

Project works - -

Preparation of the construction site, laying communication lines,

connections to resource supply sources- -

Construction (rehabilitation or capital repairs) of productionpremises - -

Acquisition of primary and ancillary equipment 2010 2015

Equipment installation and checkout 2010 2015

Personnel training 2011 2015

Certification of production operations, research and development 2010 2015

Working capital 2010 2015

Commencement of manufacturing 2010 2015


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Setting Up the Industrial FabricsSetting Up the Industrial Fabrics TechnoparkTechnopark: project information sheet: project information sheet

Key project indicators

Amount of investments Total 2010 2011-2012 2013-2015

All sources 1,719 262 1,085 372

- Federal budget 1,264 256 781 227

- Regional budget 455 6 304 145

- Local budget 0 0 0 0

- extra-budgetary sources 0 0 0 0

For reference:Minregion 378 114 264 0

MoF 886 142 517 227

Sales proceeds (without VAT

and excise taxes)665 million rubles in 2015

Profit before tax - 33 million rubles in 2015

Payback period 7 years

Project benefits (including residents operations)

Indicator Total 2010 2011-2012 2013-2015

New jobs created

(cumulatively)600 50 200 600

Tax collections 1,023 58 224 742

including to the local

budget83 7 19 57

Project description

Projectparticipants

Yaroslavl oblast

Implementatio

n period2010-2015

Project purposeSet up an industrial park to site new production

operations

Project

products

Production and administrative facilities of class

B with a total floor space of up to 100,000 sq. m.,

transport, electricity and services infrastructure

facilitiesPotential

consumers of

project

products

Russian enterprises from various sectors for

which the established sanitary protection zones

are 50-100 meters

Structure of

investmentexpenditures

Activity Amount, mln. rub.

Buyout of land plots and

premises100

Project works 65

Construction of production

facilities1,201

Total 1,276

Modalities of

government

support

MoF fiscal equalization grants

Granting tax privileges and spreads/deferrals for

the profit tax and corporate property tax


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Schedule for preparationSchedule for preparation of project documents for the Industrial Fabricsof project documents for the Industrial Fabrics

investment project from the time of decision on approval of the amount andinvestment project from the time of decision on approval of the amount and

form of government supportform of government support

No Activity Year 1 Year 2 Year 3I II III IV I II III IV I II

1.

Activities related to the purchase by the

regional government of land plots and

production premises for setting up the

industrial park

2.Development of design specifications and

estimates for phase 1





5.Development of a business plan for the

investment project


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Thank you very muchThank you very much

Documents

Gavrilov-Yam 54085965 Eng