FACE TO FACE

Sergey Sobyanin:

Moscow is open to investments and joint projects

The Mayor of Moscow answered our questions in an exclusive interview with Capital Ideas.

Mr. Sobyanin, the main topic of the 2017 Moscow Urban Forum was city agglomerations, which are playing an increasingly more important role in the development of the modern world. How does Moscow fit into this global process?

The Moscow agglomeration, which encompasses Moscow and the Moscow region, is the biggest agglomeration in Europe and one of the largest agglomerations in the world. It’s home to about 20 million people.

At the last Moscow Urban Forum, the prestigious international company PwC presented the first global agglomerations ranking. The Moscow agglomeration placed second in terms of development pace and is one of the leaders in the sphere of education and creative sectors of the economy. Moreover, the study showed Moscow’s powerful (compared to other agglomerations) influence on the rest of the country’s development.

Could you talk more about this?

Here are some figures. The Moscow agglomeration, which houses 13% of Russia’s population, accounts for 26% of country’s GDP. Thanks to high demand for goods and services, Moscow residents create 3.5 million jobs in other regions, from the Northwest to the Far East. It’s the country’s largest job generator.

The modern economy is, before anything else, the economy of big cities. Moscow’s gross regional product has increased 15% more than Russia’s GDP over the past 20 years. This happens due to the concentration of investment and export manufacturing, creating a diversified economy with good labor efficiency.

Our most important asset is human capital. The Moscow agglomeration, like other agglomerations in the world, attracts the most active, talented, and ambitious people and therefore is the main driver of the country’s development.

But attracting talented people doesn’t happen on its own. How can we make sure that “active, talented, and ambitious” people come to Moscow instead of Paris, for example?

You’re right to point out that Moscow for the most part doesn’t compete with Russian cities, but with other big international cities. In order to come out ahead in this competitive environment, it’s important to create a good living and working environment where people can realize their potential and expect career growth.

We are aiming to make our city comfortable, appealing, and successful. In order to do this, we are prioritizing the development of transportation, business, utility, and other infrastructure, upgrading healthcare and education, and creating quality public transportation. All of these issues need to be addressed comprehensively. Otherwise, instead of synergy and development we will have degradation, delays, and social and economic problems.

Over the past 6.5 years, we’ve built 55 new metro stations, including the Moscow Central Circle, which is very popular and transports 370,000 passengers every day. Old metro and public transportation units are being replaced with modern and comfortable cars, buses, trams, and trolleys.

500 km of new roadways and over 160 new bridges, ramps, and tunnels have improved and expanded Moscow’s road network. And these aren’t roads in an open field somewhere. These are extremely complicated projects that are woven into the living fabric of a major city. This entails taking into account existing roadways, residential areas, and commercial property.

Over 500 new kindergartens, schools, clinics, theatres and other establishments that will serve the city’s residents for a long time have supplemented Moscow’s social sphere. The Russian capital’s hospitals are on par with leading European clinics in terms of equipment. And according to PISA test results, Moscow schools are in the top ten in the world.

Foreign guests who come to the Russian capital are especially impressed with changes to the city’s appearance. Beautiful streets with wide sidewalks, cozy green parks, clean courtyards…

It’s true, Moscow has made major breakthroughs in terms of creating a liveable environment.

In the past few years, 580 parks and other green areas, as well as 300 streets, have undergone improvements. As a result, the city’s historical center now has new popular places for walking and leisure.

The number of pedestrians on city streets has increased several fold, and open-air Moscow Seasons festivals draw over 60 million Muscovites and city guests annually. For example, over 10 million people visited the international “Journey to Christmas” festival this year. People come with friends and family, have a great time together, learn something new, buy treats, and go back home with great impressions.

It’s important to point out that a comfortable environment not only changes a city’s appearance, but also creates a welcoming atmosphere and cheerful mood.

In less than a year, World Cup fans will have the chance to experience this atmosphere. Is Moscow ready to host tourists and hold such a large-scale competition?

It’s ready. We expect over 500,000 tourists to come to Moscow for the World Cup in 2018. Right now we have 1,020 hotels and similar establishments that have gone through the classification process and have received star ratings. This amounts to 159,000 rooms. In the next few months, we plan to increase this number to 185,000 rooms through the construction of new hotels and renovations to existing hotels.

The athletic infrastructure is ready to go. The Spartak stadium successfully hosted FIFA Confederations Cup matches this summer. The reconstruction of the Luzhniki stadium, a key championship location that will host the opening ceremony, one of the semi-finals, and the final match, has been completed. Now, this ultra-modern stadium is one of the best in the world. It will be comfortable for the players (playing on a natural lawn is better than on plastic) and for the fans (an excellent view of the stadium from any point, media screens, and other amenities).

Moreover, practice football fields have been built for participating teams. These are essentially mini-stadiums that will be used for amateur and professional games after the World Cup is over.

Moscow has extensive experience with holding large-scale international competitions that require thorough coordination of issues like transportation and safety. I am confident that the World Cup will be extremely well organized so that the participants and guests of this athletic holiday will have only the best impressions of the tournament, and of Moscow.

Let’s talk about investments. In 2017, Moscow placed 3rd in the National Investment Climate Rating, moving up 7 places. What made this kind of progress possible?

The consistent and systematic work on supporting small business, elimination of excessive administrative barriers, and improvements to the quality of business infrastructure.

The Investment Climate Rating is put together based on surveys filled out by entrepreneurs, which means it reflects the opinions of people doing business, not officials. So the fact that Moscow moved up 7 places serves as evidence of the fact that business community representatives see real improvements in the capital’s investment climate.

By the way, this corresponds to an important positive trend - an increase in investment. In spite of the economic crisis in the past few years, Moscow has managed to avoid a drop an investment volumes. Investment volumes in the city’s economy have grown for six years in a row, reaching the astronomical figure of 1.7 billion rubles in 2016. 70% are private investments.

So what exactly is the formula for improving the investment climate in the capital?

We developed a network of communication platforms that allows every entrepreneur to get the information they need and get their point of view across to the Moscow government.

The Business Protection Headquarters responds to individual complaints and puts together proposals for resolving systemic issues that entrepreneurs encounter. There is a network of internet portals created to help entrepreneurs make decisions, access government services, and take part in tenders without leaving the office or having to meet with officials.

Moscow has made a lot of progress in solving serious problems that are important for business. Problems like insufficient space for work and high rent.

In the past 6 years, we added over 12 million square meters of commercial real estate: office spaces, stores, hotels, and multipurpose centers. Today there is almost no deficit in space for business development.

It used to be that entrepreneurs in the manufacturing or innovation sector ran into a lot of problems due to a lack of specialized spaces. Just a few years ago, Moscow only had 2-3 technoparks. Now we have 30 technoparks, which house 1,500 companies. They receive special tax benefits that allow them to cut down on regional tax payments by 25%.

We pay a lot of attention to financial support and providing access to state purchases, which is especially important for small and medium-sized business. We are actively working to eliminate excessive administrative barriers. Thus, compared to five years ago, the time it takes to obtain a construction permit has been reduced by 3 times, and the cost of connecting to power lines has been reduced by 2 times.

What advice would you give to businessmen who are thinking about whether or not they should come to Moscow with their ideas and capital?

Don’t hesitate to come to Moscow. It’s a liveable city that’s great for business and investment. It’s a global metropolis that is implementing one of the largest city infrastructure development programs in the world.

The 7th Moscow Urban Forum, which was attended by over 11,000 professionals from 68 countries, confirmed that there is a lot of interest in the changes made to the Russian capital. Participants included developers, investors, directors of financial companies, city mayors, city administration representatives, and expert community leaders.

Moscow is open to dialogue, investment, and new joint projects.

 

CAPITAL IDEAS

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