Russian Oligarch Has Big Hopes for ‘Krasnoyarsk Technology Valley’

Russian Oligarch Has Big Hopes for ‘Krasnoyarsk Technology Valley’


Krasnoyarsk Technology Valley, a new Special Economic Zone (SEZ,) is being established on the basis of RUSAL, one of the world's largest manufacturers of low-carbon aluminum. Aluminum processing and machine building are its two main components. Despite the fact that the economic prospects are obvious, this project is unlikely to make lives of ordinary people more comfortable.

The establishment of the Krasnoyarsk Technology Valley was initiated by the Kranoyarsk authorities and the aluminum industry. It is to be part of the Yenisei Siberia Integrated Investment Project which brings together many other projects in the Krasnoyarsk territory and the republics of Khakassia and Tuva. The original SEZ project was made public back in the summer of 2020. Then it underwent an independent expert examination. The official decree on its establishment in Krasnoyarsk on the basis of RUSAL appeared at the beginning of this year. According to the government of the Krasnoyarsk territory, six large companies will presumably become residents of the Valley. However, earlier, it was reported that there would be 17 of them. RUSAL has not announced the names of these six companies yet.

The total amount of investment declared is almost 7 bln rubles ($94,92 mln.) In three years, the plan is to create 1,700 new jobs. By comparison, according to the latest data, more than 4,000 employees work at RUSAL. According to the plan, the Krasnoyarsk Technology Valley will produce industrial equipment for the extractive industries and metallurgy as well as manufactured products for the aircraft and machine building industries. The Krasnoyarsk territory was going to invest about 930 mln rubles ($12,61 mln) in the creation of engineering, transport and social infrastructure for the zone. The investment is expected to be made for the next seven years.

According to Yegor Vasilyev, the Minister of Economy and Regional Development of the Krasnoyarsk territory, the city of Krasnoyarsk is the most attractive territory for investors in the area. It accounts for about a fifth of all business investments in the Krasnoyarsk territory.

"In 2020, investments in the energy complex are of importance,” said Vasilyev. “More than 1 bln rubles ($13,56 mln) was invested in upgrading the infrastructure. However, in terms of investments the government decision to create the Special Economic Zone became the most significant event of the year for Krasnoyarsk. The enterprises that produce rolled aluminum and profiles, automotive components, packaging materials, cable and wire products, building structures and products will be concentrated in the Valley. They are new to the domestic market."

"Despite all the organizational difficulties, we have implemented the absolute majority of our investment plans and initiatives. The Krasnoyarsk territory has become one of the five most active areas in the country. I believe that the Special Economic Zone we are creating in Krasnoyarsk will be a good example and a role model," said Alexander Uss, the government of the Krasnoyarsk territory.

However, these assertions seem arguable. Russia started introducing special economic zones in 2005. There are now 36 of them across the country. One of them, SEZ Baikal Harbor, has been under construction for many years in the Irkutsk region. Alas, it has failed to meet its objectives, namely, to boost the tourism sector, despite the presence of all the mechanisms provided for that such as minimized administrative barriers, tax benefits, and preferential custom tariffs. Baikal Harbor’s performance is not efficient. Some time ago, the prospects for establishing a SEZ in the Krasnoyarsk territory were associated with aviation industry. However, those plans were never fulfilled due to the collapse of AirUnion, one of the local holding companies. Independent experts have serious doubts over the general feasibility of the model in Russia.

"I am very skeptical about all kinds of ‘economic zones’," Arkady Bryzgalin, an expert and the head of the Yekaterinburg Tax and Financial Law Group of Companies, said in his interview with “This is an attempt to solve economic issues in a purely red-tape way. Such as let’s create a special zone with tax benefits in it. Actually, tax remissions are available not only in these zones. But what is the point of them? We have special economic zones, special administrative regions, priority social and economic development areas, various techno-parks and industrial parks. However, only a few of them actually work due to a fortunate concourse of circumstances. Wars are not won by the Special Forces. They won by the infantry. So, when all the economic agents in Russia will feel comfortable and safe, and taxes will be sustainable for everyone and adequate, it can be said that the economy will grow. In the meantime, the experiments, as a rule, end up solely with the injections of public finance without any real return. The SEZ, of course, might be used for solving some short-term and tactical tasks. For example, in a small area or to attract one or two big investors. However, this method does not work state-wide."

Of course, local environmentalists are wary of Oleg Deripaska's plans. RUSAL itself is already seriously affecting the environment in Krasnoyarsk. Even though the company has made huge investments in upgrading production facilities in recent years, it is still one of the main polluters of air. The emergence of new plants around it, albeit technologically advanced ones, is unlikely to improve the situation.

"The main complaint about the Krasnoyarsk Technology Valley SEZ is the same as the Yenisei Siberia integrated project. For new production clusters, only economic factors are considered at the planning stage. No preliminary assessment of the cumulative impact of all the expected economic activity on the environment is taken into account. In the worst case, this approach might lead to the Krasnoyarsk Technology Valley will literally become 'scorched earth,' an area of the victorious technosphere, an area of enormous anthropogenic load, and a special economic zone where nature has been evicted from," says Krasnoyarsk environmentalist Alexander Kolotov.

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