LOGISTICS RELATED BUSINESS OPPORTUNITIES BETWEEN EAST WEST TRANSPORT CORRIDOR AREA AND SIBERIA REGION

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1 LOGISTICS RELATED BUSINESS OPPORTUNITIES BETWEEN EAST WEST TRANSPORT CORRIDOR AREA AND SIBERIA REGION Content 1. INTRODUCTION The Russian Federation extended in latitudinal direction is geographically located as the bridge between Europe and Asia. The extremely favorable geographical position of the Russian Federation in a geostrategic triangle between EU, South East Asia and the North America gives Russia the quite good competitive advantages. Having the system of the seaports, the developed railway and highway networks, shipping lines of communication in river transport, the international airports, air lines over territory of the country, Russia as a whole has a huge transit potential. East West (Asia Europe) transport flows will increase very dynamically despite the current global economic crisis gave its effect. In this connection transport systems and infrastructures as well governmental structures (which should support this development) have to be prepared for these cargo flows rising. In the conditions of Russia transition to an innovative way of development, the transport becomes the most important factor of social and economic growth providing the unity of socioeconomic space in the country, inter-regional and international connections, increase of efficiency of natural resources usage, expansion of business and international cooperation. Transport Strategy of Russia until 2030 has an crucial role in the country's transport sector development. Support of development of the basic transport network is thus provided on principles of national transport corridors which are joined subsequently with international transport corridors of the European and Asian transport systems. Taking advantage of East-West 1

2 corridor to the full, Russia could switch over to itself 10-15% of the total trade turnover between Europe and Asia. The logistics approach implementation in the transport strategy till 2030 will provide, first of all, the acceleration and continuity of material flow movement, decrease on 30-40% of the costs in distribution related with goods promotion from producer to consumption places, the development of container and piggyback transportations in inter-and multi-modal transport routes, providing of logistics services at level of international standards. One of the best ways for development of cooperation between East West and Northern Central Asia is development of the Trans-Siberian railway corridor (Trans-Sib) which is the longest railway in the world as well the main transport corridor from West to East through Russia (cover the distance of 9244 km). The unique geopolitical location of the Trans-Sib allows becoming the very important bridge connected Europe with lots of countries such as Chine, Mongolia, Japan, Republic of Korea, Kazakhstan and Russia. However, transit and logistics potential is used not enough in present time. The development strengthening of logistics depend and directly relate with business opportunities of industry and economy opportunities in the territories and places along this corridor. The most interesting and industrial developed places along this railway corridor in Siberia area are Yekaterinburg, Omsk, Novosibirsk. This study presents economy situation in these key places as well as logistics related business opportunities and prospects of deliveries of the equipment and goods, which could be to eliminate bottlenecks and show the perspective of using of this corridor for East West and Northern Central Asia cooperation through Siberian region of Russia. 2.1 Novosibirsk Region An Overview of the Present Situation Novosibirsk region is a part of the Siberian Federal District, and this region is one of the largest regions of Russia. The region consists of 490 municipalities, including 30 municipal districts, 5 urban districts, 455 residential locations (urban settlements) and rural settlements. The Novosibirsk region is located in the southeastern part of Western Siberia, mainly in the area between the river Ob and river Irtysh. The length of the field from east to west is 600 kilometers, from south to north more than 400 kilometers [2]. According to statistics of Federal Agency for the Cadastre of Real Properties on January 2007 [7], the area of the region is thousand square kilometers. On 1 January 2009 the Novosibirsk region has a population of people. The largest cities of the Novosibirsk 2

3 region, as of Jan. 1, 2005, are Novosibirsk ( million people), Berdsk (90.7 thousand), Iskitim (63.8 thousand people) and Kuibyshev (48.5 thousand people). Figure Novosibirsk region [29] Advantages of the region are defined by its boundary position with Kazakhstan, its proximity to the fuel resources (Tyumen region, Kuzbass) and the northern territories of China. The region is surrounded by the Omsk, Tomsk and Kemerovo regions and the Altai region and obviously at the present level the Novosibirsk region is the heart of the southern Siberia and the large multi-modal transportation hub and the centre of the region with a population of 11.5 million people and a radius of km availability [1,9]. Novosibirsk is the only city in Siberia, where the area of logistics centers with class A is more than 350 thousand square kilometers [9]. The Novosibirsk region is the largest in Siberia administrative and financial center (about 80 banks and their branches, 30 insurance companies, 30 financial companies, 22 leasing companies, 100 companies providing services in audit and so on). The concentration of scientific personnel in Novosibirsk is 2.2 times more nationwide total. The region is one of the leaders in Russia in research and development. The aggregate cost of performing research and development in the Novosibirsk region from all sources in 2009 amounted to more than 10 billion rubles. The core of the innovation system in 3

4 the Novosibirsk region is Technopark Novosibirsk Akademgorodok. Enterprises of the Novosibirsk region are active in the markets of high technology products. Positions taken by the international and national ratings show the effective policy in the region [9]. In May 2011 the rating agency «Fitch Ratings» [9] revised its outlook on long-term ratings of the Novosibirsk region from «Stable» to «Positive». According to the magazine Forbes [9], Novosibirsk region has entered the top 10 best regions for business. The main outcomes for the past 10 years has been [9]: doubling the gross regional product (at constant prices), double-digit growth in industrial production, fourfold increase in investment in fixed assets (in constant prices) and formed legal and regulatory framework that encourages the development of investment processes and innovation General Economic Trends, Leading Industries In the Soviet times the Novosibirsk region was one of the most economically developed regions of Russia and in the late 80's it was a region that had the progressive structure of the economy, a high level of scientific, educational potential and an intensive level of agricultural development [1]. Potential of the region rapidly began to lose its level in the reform period and particularly affected industrial production facilities. As a result, in the early 90's the region ceased to be an industrial area and evolved into the region, serving the sphere of circulation, finance and inter-regional trade. Modernization of economic policy from 2000 to 2011 had led to very high growth in industry, agriculture, trade, increased investment in the real economy, as well as an increase in real incomes and improved the financial performance of companies region [2]. It should be noted that 2010 was a period for the region for gradual recovery from the crisis, volumes of production are stopped falling, but also there is a trend to an increase in key performance indicators [13]. Since the beginning of the year a stable positive trend shows the construction sector (an increase of 8%), transport (increase of 5%) and other industries [3]. Since 2001 the growth rates of major economic and social indicators exceed the all- Russian figures. Over the last decade [9] (Figure 2): Growth rate of gross regional product in the region reached 211.5% (in Russia %); Growth rate of industrial production - 202,5% (in Russia %); Growth rate of agricultural production % (in Russia %); Growth in retail turnover % (in Russia %); 4

5 Growth rate of investments % (in Russia %); Growth rate of real income % (in Russia %). Figure Growth rates of major economic indicators of the Novosibirsk region and the Russian Federation over last decade (in constant prices) The volume of gross regional product in the Novosibirsk region according to preliminary estimates amounted to billion rubles, up 4% over The volume index of gross domestic product of Russia in 2010 also was 104% [13]. Figure Gross regional product of the Novosibirsk region Growth in industrial production in June 2011 exceeded 9 percent over the same period in 2010 (the average for Russia - 5.2%) and a significant share of this growth had given the manufacturing industry - increase of nearly 20% [3]. There is a growth for index, which reflects the dynamics of industrial production [5] (Figure 4). Thus, the Novosibirsk region ranks fifth place on the index of industrial production in the Siberian Federal District [6]. 5

6 Figure 4 - Dynamics of industrial production Despite the strengthening of services in the past two decades the economy of the Novosibirsk region has a diversified structure [1,9] (Figure 5). Figure - Structure of gross regional product of the Novosibirsk region in 2010 Industrial production has also diversified structure and now represented by the following production [9] (Figure 6): 6

7 Figure Diversification of industry in the Novosibirsk region in 2010 In 2010 the manufacturing production index reached 111.3% by 2009 [4] and for the period from January to May 2011 it reached a value of 118.6% compared to the same period the previous year [5]. In 2010 for all activities in the manufacturing sector was recorded growth of industrial production. The largest increase occurred in steel production and manufacture of fabricated metal products (production index reached 121.9% in 2009), chemical industry (124.3%) and in the manufacture of rubber and plastic goods (124.5%) in the manufacture of other non-metallic mineral products (130.6%) [4]. Figure - The greatest growth industries in the production index In other kinds of manufacturing a positive trend noted: in the manufacture of electrical and optical equipment 109.8%, production of food, beverages and tobacco 7

8 110.9%, production of vehicles and equipment 107.9% in leather, leather products and footwear 110.3%, in the textile and clothing industry 107% [4]. Figure - Some manufacturing industries of the Novosibirsk region In the manufacture of machinery and equipment, the production index for 2010 amounted to 109.8% by 2009 [4]. The metallurgical industry, which as noted above, recorded the highest increase (121.9%) is presented in two industries steel and nonferrous metallurgy. The largest enterprises in steel (ferrous) metallurgy in the region are JSC «Novosibirsk Tin Plant», JSC «Novosibirsk Chemical Concentrates Plant» and JSC «Novosibirsk refinery». In the region there are up to 50 organizations and enterprises of the military-industrial complex. Federal State Unitary Enterprise «Chkalov Novosibirsk Aircraft Production Association» is the largest defense company in the region [11]. The largest enterprise of ferrous metallurgy in the region is JSC «Kuzmin Novosibirsk Metallurgical Plant» (more than 95%) and CJSC «Association Vtorchermet» engaged in logging and processing of ferrous and nonferrous metals. State of JSC «Kuzmin Novosibirsk Metallurgical Plant» in 2010 stabilized and by end of 2010, the total volume of steel products amounted to more than 166 thousand tons, which roughly corresponded to the data in Planned growth in the volume of finished products for 2011 is up to 200 thousand tons. Machinery-producing industry of the Novosibirsk region provides 20% of engineering products in Siberia. The growth production index grows back quite small (109.8%) since the fall of the industry in 2009 was too serious. It is therefore quite understandable that in 2010, although quite successful, was not a long period to ensure that the industry can recover [16]. Production index of electrical and optical equipment in 2010 amounted to 109.8%. The organization that produce electrical, electronic and optical equipment in 2010 have shown very impressive growth performance indicators: output in physical terms increased by 9.8%. In monetary terms, despite a modest rise in prices in the industry at 2.9%, the volume increased by 8

9 22.4% in all. In many ways, this contributed to a large-scale program of modernization the industry, implemented with the support of the regional government [16]. The production index of the chemical industry in 2010 amounted to 124.3%. As the study of industries, the chemical industry one of the most stable: its products are in demand even in a difficult 2009, as well as improvement in its demand only increasing - both in Russia and abroad. Although the end of 2010 the share of chemical industry in the gross regional product of the Novosibirsk region was only 1.69%, less impressive growth rates show significant potential for the industry. Given that 2011 is scheduled commissioning of the largest production of lithium-ion batteries, we can assume that the positive trend will be long-term [16]. Production index for pulp and paper production, publishing and printing activities in 2010 amounted to 107.8%. The growth of output in industry was the largest compared with other activities: it was 8.6%. Because of this, as well as the momentum conservation in 2010, the industry was able to demonstrate to overcome even falling output in monetary terms by 17% in 2009, achieving stability in the share of gross regional product [16]. The production index of the skin, leather goods and footwear in 2010 amounted to 110.3%. Leather industry is hardly a leader of the Novosibirsk region economy the volume of production in the industry by the end of 2010 amounted to only 540 million rubles, while, for example, the food industry made the product almost $70 billion. However, the dynamics of all key indicators of the manufacture of leather looks quite positive: despite a slight (-3.5%) decline in production in 2009 and in 2010, the industry managed to surpass pre-crisis level of production. Due to continued growth in prices for leather goods, production growth in monetary terms amounted to more than 30% compared with the pre-crisis figure. However, one must admit that the Novosibirsk tanning industry is still difficult to withstand competition from foreign producers: the volume of imports of this product in the millions of dollars and continues to grow [16]. The leading enterprise is the JSC «CORS» [2]. Production index of vehicles and equipment in 2010 amounted to 107.9%. Organizations that produce vehicles and equipment, could not escape the crisis in 2009: the production index for the year decreased by 12.7% compared to However, in 2010, targeting the industry confidently out of adversity, an increase of indicators: the number of units produced vehicles and equipment rose by 7.9%, the increase in output was even more impressive % in 2010 [16]. The production index of food, beverages and tobacco in 2010 amounted to 110.9%. The unstable situation in the economy, reduced income and other negative factors are not able to reduce the demand for food for the past two years. This industry is one of the few industries in which the parameters analyzed were positive in both 2009 and in It was the result of 9

10 massive investment programs in 2010, which created favorable conditions for the development of the industry and to future periods. The index of textile and clothing production in 2010 amounted to 107.0%. The textile industry of the Novosibirsk region cannot satisfy the needs of people in the region by the end of 2010, imports of textiles, textile products and footwear up 21.9% of total imports, or million dollars, taking thus the second largest in total volume of imports. Compared with 2008, such goods imported by almost 2 times larger [16]. Production index of rubber and plastic products in 2010 amounted to 124.5%. The amplitude of the fluctuations of industry key performance indicators of rubber and plastic products is truly impressive: in 2009, the sector's production in physical terms decreased by 26.3% compared to 2008, and on the contrary, increased by 24.5% compared to However, up to two years the pace of recovery has been insufficient to reach pre-crisis indicators [16]. The production index in construction in 2010 amounted to 113.6%. Construction is one of the most important parts of the Novosibirsk region economy. In 2009, the volume of housing construction in the region declined by more than a third, but the measures taken by the provincial government allowed to reverse the negative trend in As a result, the total amount of funds allocated for the purchase by citizens developers accommodation - 9 billion 634 million rubles [16] Energy, Mineral, and Other Natural Resources Among the 523 mineral deposits of the Novosibirsk region, it currently operates 83 fields [17]. Thus, the Novosibirsk region has the fourth largest producer of mineral deposits in Russia after the Kemerovo and Tomsk regions and Krasnoyarsk Territory. In the Novosibirsk region are coal, peat, anthracite, oil, natural gas, ores, nonferrous metals, gold, marble and other minerals. Zavyalovskoye (reserves amount to more than 50 million tons) and Listvianskaya fields have coal reserves,with total proven reserves of 905 million tons and forecast million tons [21]. Peat reserves are a major resource for the region. The largest deposit is Vasyugan field [18], which accounts for about 7 billion tons (80% of total reserves), including 1 billion tons of proven reserves at the deposit area of 1.6 million hectares. The high costs of extraction and processing of peat leads is the reason that the development of peat deposits is at minimum levels, mainly for agriculture [18]. Anthracite is a source of raw materials for steel, nonferrous metals, as well as the electrode industry. Explored reserves of high quality anthracite coal from Gorlovsky field are 800 million tons, and looking - more than 5 billion tons. 10

11 Oil fields are in the north-west of the region (seven fields Verkh-Tarskoe, Maloichskoe, East Tarskoye, the Tai-Dassokoe, Rakitinskoe, Eastern and East Mezhovskoe fields), and oil reserves are about 113 million tons [17] (47 million tones proven reserves). All fields, except the Verkh-Tarskoe, Maloichskoe and Rakitinskoe fields, are conserved [20]. The largest deposit is the Verkh-Tarskoe oil field and according to preliminary estimate, it contains 60% of the area. The recoverable reserves of Verkh-Tarskoe field are 32 million tons of oil, geology 68 million tons. Since 2008, Rakitinskoe field developed with volume production in the first year 439 tons of oil [20]. The area is relatively poor in hydrocarbon resources. Natural gas contained in the northwest area with a free gas (Veselovskoe field) and four oil and gas fields with total dissolved gas from the gas reserves of about 2.9 billion cubic meters [18]. Ordinskoe placer deposit of non-ferrous metals (zirconium oxide and titanium dioxide) was opened at 10 kilometers from the Novosibirsk reservoir. Explored reserves of titanium dioxide are about 45.4 million tons, and zirconium oxide million tons. However, a useful layer of deposits located 150 meters underground in an area of 50 square kilometers, making it difficult to develop. Industry stocks of gold in the Novosibirsk region are small and estimated at 17 tons. Production at Yegoryevsky field continues over 150 years, annual production in the last decade is kg. There are two deposits of bauxite (Maslyaninsky area) with off-balance sheet reserves of million tons, two deposits of alluvial tin (Kolyvan and Novosibirsk regions) with offbalance sheet reserves of 588 tons. There are four marble deposits with reserves of over 8.5 million cubic meters, and the marble of two of them belongs to high demanded. Novosibirsk region has sufficient resource base of most common minerals to satisfy their own needs. Production index of extractive industries took a course on the decline in 2010 and was minimal compared with other industries (86.7%). In 2010, mining declined from the previous year by 13.3% (in monetary terms is 15.2%), all as compared to pre-crisis year 2008 production volumes fell by 23.2%, despite significant (34.5%) increase in prices for the products sector on the basis of a two-year period [16,19]. The basis of the mining complex of the Novosibirsk region is fuel and energy minerals. But the company involved in oil production by the end of 2010 reduced the scope of its activity [16,19]. Active growth of oil production from 2000 to 2008, was replaced in 2009, a 11

12 continuous decline in production. In 2010, the oil extracted from the Novosibirsk region 1.1 million tons of oil (less than in 2009 at 684 tones) [22]. The extraction of natural construction materials - sand, stone, brick loam - on the contrary, increased as compared to the year 2009 to 26.4%, but this could not offset the fall in the oil complex [16,19]. Figure Dynamics of mining operations Electricity, gas and water in the Novosibirsk region is a sector that characterized by high degree of monopolization [16]. Grid of the Novosibirsk region has a number of additional problems due to the presence of the deficit on the power and electricity [23]. The production index of production and distribution of electricity, gas and water was in %. It must be recognized that organizations working in this industry, seeking efficiency not by increasing prices for their products, but also through increased production, which, in turn, provided demand from the population [4,16]. 12 Figure - Dynamics of production and distribution of electricity gas and water

13 2.1.4 Strategy and Perspective Economy Development The strategy of economy development of the Novosibirsk region is represented by: Strategy for Socio-economic development of the Novosibirsk region in 2025 [1]; Program of socio-economic development of the Novosibirsk region in [14]; Scheme and long-term program of development of electric power of the Novosibirsk region for the period [23]. The strategy of economy development of the Novosibirsk region [1] reflects the specifics of the region and aims at the realization of its main advantages. The development strategy of the area is aimed at achieving several objectives: to ensure significant growth in gross regional product and the best approximation to the national performance indicators for economic growth; creation and use of knowledge-based economy for the formation of the Novosibirsk region as one of the most investment-attractive regions of Russian Federation; to develop competitive in domestic and global scale territorial industrial clusters; establishment in the territory of one of the main transport and logistics centers of the East of Russia; improvement of institutional and legal frameworks to reduce the risks of doing business and to ensure the security of economic agents. To achieve its goals should be solve the following problems [1]: to revive the industry by making it more innovative, to provide the organization of innovation centers and technopark zones in the region; to ensure the effective integration of Novosibirsk enterprises in domestic and global economy; to create the modern facilities that meet the strategic needs of social development, ensuring high quality of life and national security; to create a modern transport and telecommunications infrastructure that meets the requirements of the XXI century and dramatically increases our transport and accessibility for all residents of the area; to ensure the implementation of a new spatial strategy for the Novosibirsk region, based on the placement of a number of enterprises in the administrative regions and set up new industrial areas and recreational centers. Socio-economic development of the Novosibirsk region in [14] develops, supplements and specifies the period to 2015 the main strategic guidelines, territorial priorities, 13

14 goals and objectives, as reflected in the Strategy [1], ensuring the continuity of multi-level planning and forecasting documents. The main principles of the program are [14]: strengthening the competitiveness of regional socio-economic system and the whole management system due to its consistent and systematic modernization, the priorities of the strategic development of the Novosibirsk region are to focus on innovative development and overcoming the technological backwardness of chronic, large-scale upgrading of production as well as social workers; the principle of «self-reliance» - using such a model of economic policy and cooperation with federal authorities makes it more stable financial and economic system of the Novosibirsk region and protects against the negative impact of external factors, changes in economic and price situation. Prospects for further dynamic development of the Novosibirsk region associated with the solution of problems, among which the most important are [14]: low level of innovative activity of enterprises, inadequate use of scientific potential, low productivity and outdated fixed assets in the economy of the Novosibirsk region, which highlights the problem of overcoming the technological backwardness of certain sectors and the industries; high level of differentiation of social development and economic potential of the Novosibirsk region, the concentration of economic activity in the metropolitan area of Novosibirsk with relatively poor development of other areas of the Novosibirsk region; insufficient development of the energy and engineering facilities in the Novosibirsk region; poor transportation infrastructure in terms of compliance with the road network with modern international standards. To implement the strategic goals and priorities of the program area should provide a solution to these problems [14]: intensification of innovative processes in traditional industries and the development of innovative economy, the development of innovations in social and technological innovation in the Novosibirsk region; 14

15 ensuring the growth of competitiveness of operating in the territory of the Novosibirsk region businesses, including through support for initiatives to build research and production and technology clusters, support the integration process; efficiency of energy resources and energy security; intensification of investment activities, including through the fullest implementation of existing competitive advantages and the formation of an image of the Novosibirsk region as a dynamic region that has significant economic potential. Figure Program administrative support The solution of these problems will allow the program to achieve in 2015 following the dynamics of economy development of the Novosibirsk region. Table 1 Dynamics of main indicators of the Novosibirsk region [14] Year Indicator 1 Gross regional product 2 Growth rate for gross regional product average per capita 3 Investments in fixed assets from all sources 4 Index of physical volume of capital investments 5 Industrial production index 6 The share of innovative products of industrial enterprises in the total volume shipped product Unit %, compared to last year %, compared to last year billion rubles %, compared to last year %, compared to last year % ,5 111,6 113,6 194,8 286, ,5 108,

16 2.1.5 SWOT Analysis of Logistic Development in Region Table 2 Strengths Weaknesses 1. Advantageous geopolitical location (Transib on the way of goods movement of from Europe to Asia); 2. The presence in the region of all transport modes; 3. The presence of the concept of transport and logistics system development till The presence of a special program "Development of motorways in Novosibirsk region for " 5. Active policy of transport infrastructure development; 6. Active development of trade networks and storage facilities; 7. High level of Internet and mobile networks; 8. Regular holding of international transport exhibition and forum, etc.; 9. Active development of services for foreign trade by brokering, consulting firms, chambers of commerce; 10. Dynamic development of foreign trade in goods and services 11. Presence in the region, industries and factories which use high technology and needed to use the techniques of modern logistics; 12. Arrival in the region of large Russian and foreign trading companies; 13. Developed region transport infrastructure, presence of major transport hubs; 14. Potential access to significant volume of export and import cargo, including container 15. Weak competitive environment; 16. The natural resources wealth. Opportunities 1. Largest transport-logistic complex Creation not only Federal, but also the International value; 2. Development of the navigating management system by passenger transport by means of GLONASS/GPS; 1. Insufficiently developed network of high quality highways; 2. High degree of the infrastructure depreciation of railways and waterways as well the irrational configuration of the existing railway motorway networks; 3. Poor technical equipment of customs and border infrastructure, cargo shiftment points; 4. The regional logistic market is limited by separated types of service entering into logistics sphere: transport, forwarding or warehouse; 5. The lack of needed storage infrastructure of Class A and B. 6. Insufficiently developed transport and terminal warehouse infrastructures; 7. Local logistics organizations have not enough experience with logistics services providers, big international and Russian retail chains and freight forwarding companies; 8. Insufficiently developed transport and terminal warehouse infrastructures; 9. Administrative and legislative difficulties of the land areas registration for objects building of the transport-logistic infrastructure Threats 1. Interregional competition growth (the leading position occupation on servicing cargo from other regions as well concerning human resources, migration for work in others regions); 2. Potential rising cost of workforce; 16

17 3. Transport and logistics cluster creation of Novosibirsk region (under the concept of social and economic development until 2025) 4. Full-scale project implementation "Euro-Asian international transport-logistic center"; 5. Transit and multimodal transportation growth in the region as a consequence of transport and logistics infrastructure and the service complex; 6. Full complex quality logistics services Providing to international, Russian, local commercial and industrial companies, including value-added services; 7. Interregional and international integration. 3. International competition Increasing due to joining in region of foreign logistics operators; 4. Insufficient federal support for majority of infrastructure projects, 5. Increasing competition for the Russian regions to attract financial resources and investment in the transport sector; 6. The dependence of consumer warehouse and logistics services from retailers and industrial companies; 7. The high traffic load on the Novosibirsk city. Thus, the current transportation infrastructure situation is the result of features of its forming occurring under the influence of is natural-geographical, territorial, economic and urban planning factors and conditions. Existing transport infrastructure consists of: - motoway network with total length of 1391 km (including hard surface km), including two road bridges over the Ob River, the bridges over the river and Inyu Kamenka, overpasses and other transportation engineering works; - Novosibirsk subway length km, which has 12 passenger stations; - Tram lines length 62,2 km; - Railway lines with stations and boarding platforms, the length of 56.0 km, providing intercity passenger transportation; - Routes and waterways marinas on the river Ob Logistics and Procurement Issues Транспортная отрасль играет важную роль в обеспечении социальноэкономического развития области, ее доля составляет около 12% в структуре валового регионального продукта. The transport sector plays an important role in the regional socio-economic development; its share is about 12% of the GDP. In 2010, it was transported 23.5 million tons of cargo by all types of transport. Cargo turnover amounted to 93 billion ton-km, or 99.9% compared to The leading place in the cargo turnover structure, as in previous years, is the railway %. 17

18 In 2010, million passengers were carried by public transport. Passenger traffic turnover totaled 19.8 billion passenger km, or 98.7% compared to Motor transport enterprises were transported 3.2 billion passengers, which is 103.1% compared to Transport System Development of Novosibirsk and the region is primarily determined by unique geographical location at the crossroads of major transportation routes, as well as the wealth of natural resources. More magisterial lines are converged in Novosibirsk than in the other "cities of the competitor" along the Trans-Siberian Railway. Novosibirsk harmoniously integrated into the international transport corridors, existing and prospective [24]: Yekaterinburg - Novosibirsk - Vladivostok (Trans-Siberian Railway + motorway); Novosibirsk - Central Asia (Railway + motorway); Novosibirsk - a perspective on China's border area of the Altai Republic (motorways); Novosibirsk - South-East Asia (air), Novosibirsk - North America (air); Novosibirsk - Northern and Western Europe (air); Novosibirsk-Mongolia border (motorway). The transport complex is one of the sectors of the regional economy specialization, its share in gross regional product is 12.1%, 4.5% points higher than the all-russian figures (GDP share of transport in Russia - 7.6%). At the Novosibirsk Region, during 5 years, the transport cargo turnover grows 5-9% per year. Investment to transport infrastructure has been grown over the past 5 years, more than 2.5 times. Cargo turnover is 16% of the total turnover of the Siberian Federal District. Novosibirsk region has all the modern types of transport. The transport complex has 1,510 km of railways, 647 km of inland waterways, 13,508 km of public motorways, over 10,000 km of municipal road network, 199 km of tram and trolleybus lines, 15.8 km subway routes and 12 subway stations, 74 railway stations, 19 bus stations and bus stations in 10 districts operated service stations combined with the railway. The regional transport sector has local centers of the cargo accumulation, processing and distribution as well passenger traffic flows, with complexes of warehouses and customs terminals, railway stations, terminals, stations, airports, thus serves as a concentrating and distributing hub. Currently, Novosibirsk is located in the heart of uncharacteristic on region densities for the eastern region where million people live on the territory with a radius of km. Novosibirsk region is also the largest freight distribution hub of Siberia and the Far East. Station Novosibirsk-Main and the airport "Tolmachevo" location on the main course of Trans- Siberian railway (TRANSSIB) and it allows the passenger flows concentration from neighboring regions (Tomsk, Omsk, Kemerovo and Altai region) by means the movement of 18

19 new high-speed trains a as well provide the movement optimum in recreation area of Gorny Altai domestic and foreign tourists. The city has 12 hubs - the local accumulation centers of the cargo processing and distribution and passenger traffic flows within the corridor, focused on four areas, or zones. The most intense focus is currently the West, providing the main traffic flows and including from Moscow to St. Petersburg, as well as having the most developed transport and warehousing infrastructure. At present, industrial and Logistics Park is formed here. All types of air, water and land transportation presents in Novosibirsk region. Trans- Siberian railway passes via region, there is railway access to the Kuznetsk Basin and Central Asia (Turkestan-Siberian Railway) line Ob river in the Ob-Irtysh water basin, a place of convergence of three federal highways (M-51 Chelyabinsk, Novosibirsk, M-52 "Chuysk "Novosibirsk-Tashanta, M-53" Baikal "Novosibirsk-Irkutsk), as well as several regional highways (Novosibirsk, Kamen-na-Obi, Novosibirsk Leninsk-Kuznetsk, Novosibirsk Kolyvan). Oil pipelines, product pipelines and gas pipelines are important part of the regional integrated transport system. In the north of the Novosibirsk region is open seven oil fields with recoverable reserves of 43 million tons. - The important transport and distribution hub in Western Siberia formed in Novosibirsk region. Here there is largest terminal complex. It performs a sixth part of whole transportation process of the Siberian Federal District (which consists of 16 federation subjects). City is capable to serve dozens of cities in Siberia, Kazakhstan and Central Asia for 10 hours of the motorcar course. The main city task is to form Novosibirsk city as the largest transportation logistics hub of federal and international value. This goal is priority in long-term strategy of social and economic development of the Novosibirsk region, and consistently implemented. Development and modernization of transport network is an important factor in the socioeconomic development of the eastern territories [25]. It is also important for strengthen of the country integrity and providing its geopolitical interests. Therefore, regions of the Urals, Siberia and the Far East should definitely be areas of advanced transport development. Concept of the transport infrastructure development of the Novosibirsk region till 2025 for the region development was adopted and implements (hereinafter - Vision) [27]. The Concept direct on: - creation of the optimal functioning transport network which should combine the work of all types of transport; - reasonable tariff policy introduction to ensure efficient transport of goods, update worn out fixed assets; - normal state of the motorways and traffic safety providing. 19

20 The concept of the transport infrastructure development of Novosibirsk region is interconnected with a number of departmental target programs, as well as needs and opportunities of the main directions of nationwide transport development strategy. Thus it can combine the efforts of federal and regional authorities, concentrating all administrative and financial resources. The state order and public investment plays a leading role in the development of transport infrastructure. But private sector investments also are attracted [25]. For example, the airport Tolmachevo project is success of such public-private partnership. Transportation and Logistics Cluster of Novosibirsk Region Transport and logistics cluster (TLC) creation is the most important action of socioeconomic Strategy of the Novosibirsk region development until This action direct on the transformation of the Novosibirsk hub (NTU) in one of the leading transport and logistics centers of East Russia. Transport-Logistics Center (LC) is one of the system element of the TLC and has to coordinate cargo-and passenger-traffic through the hub in the interests of customers and carriers. The main TLC goals are provide: - speed; - reliability of the goods and passengers delivery on time; - the tariffs justification; - the transportations profitability; - the transportations volume; - saturation level by IT Technologies of transportation processes. The largest container terminals in Russia Kleshchiha is located on territory of region. Container terminal Kleshchiha on volume of processed containers occupies 4 place along a network of the railways of Russia. Now there is the project of its modernization and development for implementation. Company "Eurosib" builds a modern LC, "Eurosib-Terminal-Novosibirsk" in the immediate vicinity of the federal highway M-53 "Baikal" and the Northern Bypass motorway Novosibirsk. It is the largest terminal and logistics center in region, which focuses on interregional cargo flows and services and has to work with container and other goods coming from Russia, Europe, South-East Asia, China, Mongolia and Central Asia. In connection with the completion in 2010, construction of the second extension of the railway infrastructure of railways complex increased to 6 km. Capable of handling complete trains increased to two trains per day and 150 motorcars. By upgrading its container yard capacity for simultaneous storage increased to 3,000 TEU. 20

21 It is expected to be set up well-developed infrastructure with a network of motorways interchanges with multi-tiered federal highway M-51 "Baikal" for implementation of project of industrial and logistic park in an area of two thousand hectares. At the present time the first objects of engineering and transport infrastructure of the 1st stage of the complex: 7 km from the railway station Chick (Transsiberian), 5.2 km high pressure gas pipeline, electric power facilities (air-line 20 KW substation 6 MW). Built warehouses "A" class with a total area m2, of which m2 have been commissioned. In the summer of 2010 launched the investment phase of four projects: sorting center FSUE "Russian"; warehouse complex "Himleksnab"; water treatment systems (JSC "Rosa"), LLC "Sladomir" are put into exploitation. To the end of 2011, all conditions for the realization of 8 industrial and logistics projects with a total investment of 20 billion rubles and the number of jobs for at least 5000 will be created. The main objectives in the transport sector in are: creation of optimal functioning transport network, which links the work of all types of transport; the transport accessibility providing for the population of the Novosibirsk region; introduction of a reasonable tariff policy to ensure the efficient cargo transportation; update worn out fixed assets; strengthening the Novosibirsk position as the largest transport hub in the East Russia; attraction of finance from the federal budget as well private investors on the transport complex development. Railway Infrastructure Novosibirsk is big railway junction in Siberia. Novosibirsk region passes through the Trans-Siberian railway, here there are outputs to Kazakhstan and Central Asia. In 2010, 14 million tons of cargo throughput amounted to 89 billion ton-km was transported by railway, or 98.4% compared to Railway transport is essential for peri-urban and inter-regional passenger traffic. High-speed communication between the Siberian city of Novosibirsk and Omsk will be established in perspective. Passenger railway transportation has played a leading role in the organization of passenger transport in suburban transportation; it provides 57% of the traffic volume and more than 73% of passenger traffic. 21

22 Highway Transport Infrastructure The motor way network of the Novosibirsk region is directed on provision of following tasks: - providing of Novosibirsk agglomeration and Novosibirsk Transportno-logistic hub development; - providing of intraregional transportations in interests of economy and the region population, including rural population. In present time the road network is not consistent with trends of motorization and future challenges of the transport complex development in Novosibirsk region. The radical modernization and rehabilitation of the road network is required. Indicators of the road network development in Novosibirsk region (as at ) are presented in Table 3 [27]. Table 3 Public road density per 1,000 sq. Public road density with solid Road specific weight with solid km coating per 1,000 sq. km covering in total length of highways of general using (%) ,7 The density of public roads per 1,000 sq. km in Novosibirsk region yields to Altai Territory in 40%, to Omsk region on 34%, to Kemerovo on 11%. The density of public roads paved in 1,000 sq. km in the Novosibirsk region yields to Altai Krai on 41%, to Kemerovo on 28%, to Omsk region on 25%. Motorway construction is an important part of the transport complex development The main problem is in non-compliance of the road network motorization to rates of automobilization. Therefore, a special program "Road development in the Novosibirsk region for " was adopted for this problem solving and road infrastructure development. In 2006 the volume of investments in the sector at the expense of all the budgets of around 5 billion rubles., then in 2010 it increased to nearly 11 billion large share of investments - nearly 7 billion rubles. It are the means of the consolidated budget [25]. Large finance are allocated from the federal government for federal road network maintain and reconstruction in the region. This funding is quite seriously affect to the loading of road-building complex in the region, determines the technical level of the road organizations, the stability of labor collectives. The unique technology of cement concrete in road construction is applied in the region. Air Transport Infrastructure 22

23 Two airports are located In Novosibirsk region: one of which airport "Tolmachevo" has international status and is the largest airport in Siberia and the Far East. Today it is a distribution center of passengers and cargo flows in Western Siberia, the air lines are connected with 80 cities in Russia, NIS as well foreign countries. In 2010, JSC "Airport Tolmachevo" served about 2.25 million people, which is 24.7% above In 2010, flights were opened from the airport Tolmachevo to 6 out of 12 subjects of the Siberian Federal District. In September 2010, second runway was commissioned so the airport today can accept all types of aircraft without any restrictions on take-off weight, even in difficult mete conditions. With the commissioning of the runway-2 airport capacity Tolmachevo increased till 40 take offs and landings per hour. The plans of the airport on 2011 to expand the network of international routes: - to open flights to Kiev; - to develop routes to Asia - Tokyo, Seoul; - as well as to attract at least 10 known foreign cargo airlines. There is project of the design and operation of new passenger terminal at the airport in Novosibirsk (Tolmachevo) in according The International Civil Aviation Organization (ICAO) and based on the modern technologies. The total area of Air Terminal will be 81,4 thousand sq m. The project cost is 3.7 billion rubles. The first phase of construction involves the creation of the terminal area of 47.4 thousand sq m, capacity 3 million passengers per year. In frame of the program of the prospective airport development till 2026 there are next directions: - new terminal building; - the first runway reconstruction; - construction of new four star hotel; - design of the exhibition and congress center; - creation of board catering shop; - design of the covered car parking; - creation of new apron; - design of shopping and logistics centers; - new passenger terminal of C class; - and others. Novosibirsk became the district aviation center of Siberian Federal District. Novosibirsk (airport "Tolmachevo", Figure 12) is the basic of one of the largest airlines «S-7 Airlines», which serves numerous domestic and international routes, carrying flights to cities such as Munich, 23

24 Frankfurt, Dubai, Beijing, Seoul and others. In fact, the airline has already mega company serving the entire Siberian region. airport "Tolmachevo" connects the air lines of 80 cities in Russia and abroad. Its services are used by 85 airlines in the world. Creation of air corridors is a very important for airport. Existing project Eurasian air corridor: in Asia - Novosibirsk - Europe of International Air Cargo Association has perspective too. For the project implementation n "Tolmachevo" it is needed: - to finish the second runway; - to create more favorable conditions for freight forwarders; - to create a regime of free customs warehouse for storage terminal complex in the airport; - to complete the second stage of the cargo terminal. It is also essential to engage Novosibirsk in cross-polar air corridor: South-East Asia - Novosibirsk, Canada - United States and "avoid" Krasnoyarsk and Irkutsk in this direction. Figure 12. New airport terminal [30] In 2011, the airport will serve more than two million passengers, more than 20 tons of cargo. These figures are higher than all previous years. But complex has much more possibilities, it can become a powerful center of business activity of the Russian scale and it can annually serve nearly 5 million passengers and more than 50 thousand tons of cargo. 24

25 Development of powerful avia complex in Novosibirsk will promote to the problem solving of inter-regional transportations. While most of the air transportation market continues to focus on the Moscow direction serving, reflecting in its development monocentric tendencies generated last decades. River Transport Infrastructure The main mineral construction materials (crushed stone, gravel, sand, rubble stone, precast concrete objects, industrial and civil construction, cement, concrete products, oil products) are delivered basically by river transport so that river transport can keep the markets for the enterprises of the building industry of area. In 2010, 3328,2 thousand tons of various cargoes that has constituted 183 % to level of 2009 was transported by an internal water transport ways. The cargo turnover of an internal sailing charter has constituted 2205,1.million in ton-km or 267,4 % by The main problem of the river transport development is insufficient level of connections with the railway at performing transporting of the loose cargo from open-cast mines to the ports. The important role in transport system of region plays the Novosibirsk sluice, which provides the uninterrupted connection with neighbor regions the summer period. Prospects of Transport Complex Development Transport infrastructure development is important both for providing of the economy needs of the Novosibirsk region, the transit and logistics implementation as well inter-regional relation. In this regard, great importance has the development of motorways in the area of the Novosibirsk transport hub, including for linking it with neighboring regions. No less important task of the motorway networks development is the provision of intraregional transportations in the interest of economy development and population needs, including the rural population [28]. The Novosibirsk Region needs in creation the complex of modern transport and logistics centers. The total amount of warehousing Novosibirsk hub of more than 700 thousand square meters. m. However, it is not enough for high-tech warehouses and terminals. Common for all types of transport problem is the aging of assets, infrastructure and rolling stock. The fixed assets of all types of transport of the Novosibirsk region updated insufficiently, its deterioration is currently 60-68% (which corresponds to the all-russian figures.) The strategy of socio-economic development of the Novosibirsk region till 2025 identified a number of key objectives, the attainment of which requires the rapid development and modernization of the transport complex. The main concept purpose is the ensuring of transport infrastructure development by adequate economic development and needs of the 25

26 region's population, use of favorable transport position of the Novosibirsk region as a major transportation and distribution hub in Siberia, the implementation of its transit capacity. References: [1] The strategy of socio-economic development of the Novosibirsk region untill [2] Information Memorandum for the Novosibirsk region of KIT Finance Investment Bank (December 2007) [3] Press Conference of the Governor Vasily Yurchenko June 23, 2011, dedicated to the key results of the Novosibirsk region for the last period of the year. [4] Statistics and indicators of the Ministry of Industry, Trade and Business Development of the Novosibirsk region for the period [5] Operational information, dynamic tables and methodology of the industrial production of the Novosibirsk region in [6] Socio-economic indicators of regional development for the period from January to May [7] General characteristics of the Novosibirsk region %2Fgks%2Enovosibstat%2Eru%2Ffederal%2Fdefault%2Easpx [8] [9] Decision of the Government of the Novosibirsk region of p «About measures on creation of favorable conditions for attracting investments in the Novosibirsk region in » [10] Annual Report of OJSC «Novosibirsk Tin Plant» for [11] Industry and Enterprise of the Novosibirsk region [12] The annual and quarterly reports of JSC «Novosibirsk Chemical Concentrates Plant» [13] The economy of the Novosibirsk region 26

27 [14] The socio-economic development of the Novosibirsk region from 2011 till [15] Interview with head of industry and enterprise of the Novosibirsk region Yuri Sokolov (September 2010) [16] Rate of growth sectors of the economy of the Novosibirsk region [17] Minerals of the Novosibirsk Region (Federal Portal) [18] Novosibirsk region (national portal «Nature of Russia») [19] Race branches of economy of the Novosibirsk region ( ) [20] JSC «Sibirskneftegaz» [21] The list of companies involved in coal mining [22] «Novosibirskneftegaz» reducing production at a record pace ( ) [23] Scheme and the program long-term development of electric power of the Novosibirsk region for the period %D0%B5%D1%80%D0%B3%D0%B5%D1%82%D0%B8%D0%BA%D0%B0.aspx [24] Novosibirsk transport and logistics cluster and assessment strategies for its formation (March 24, 2010) [25] Report of the Governor of Novosibirsk region Vasily Yurchenko, «Concerted action by federal and regional authorities as an important condition for successful implementation of the transport strategy of Russia» at the IV International Forum «Russian Transport: the challenges of the economy of the future», «All of the new buildings», 1 (80) January 2011 [26] The strategy of socio-economic development of the Novosibirsk region in 2025 ( ) [27] The concept of development of transport infrastructure of the Novosibirsk region in 2025 ( ) [28] «Transport Safety and Technology » 27

28 [29] Map of the Novosibirsk region %20OBLAST%27/MAP%20-%20EARTH%20-%20COUNTRY%20-%20RUSSIA%20- %20NOVOSIBIRSKAYA%20OBLAST%27%20-%20www.itlibitum.ru%20-%20002.jpg [30] Source Yekaterinburg Region An Overview of the present situation The Yekaterinburg (Sverdlovsk) region is one of the most dynamically developing Russian regions located on the border between Europe and Asia. The powerful industrial production, natural resources, large traffic flows, a solid scientific and human potential are traditionally concentrated in this region. The ranking of investment attractiveness of the region surely has one of the first places in Russia. The level of industry concentration is four times higher than the national average [5]. The Sverdlovsk region is located in the north-east of the Ural region. As the largest surface area of the Urals region, its area is thousand square kilometers. The region forms the border between Europe and Asia. The Sverdlovsk region is bordered: to the south with the Kurgan and Chelyabinsk regions and the Republic of Bashkortostan, in the west from the Perm region in the north-west the Republic of Komi, in the north-east - the Khanty-Mansi Autonomous District, in the east the Tyumen Region [6]. Figure 3 - The Yekaterinburg (Sverdlovsk) region [1,2,3] Average annual population of the Sverdlovsk region is thousand people. The regional center of the region is Yekaterinburg. Until 1991, the center of the Sverdlovsk region was called Sverdlovsk. Population of Yekaterinburg is over 1 million 300 thousand persons [5]. 28

29 In the region there are 47 cities (34 regional and 13 district importance), 30 districts, 97 urban villages and rural settlements 1849, divided between 93 municipalities, which, in turn, divided (with the exception of five of them) for six administrative districts [6]. The Sverdlovsk region is one of the largest by population highly urbanized region of Russia. Only 13% of the population lives in rural areas. National composition of population of the region is varied. It is inhabited by more than 50 nationalities and ethnic groups. Most of the region's population is Russian (89%). Fifth-largest population group are Germans. They constitute 0.67% of residents of the area [6]. The Sverdlovsk region is one of the largest research and education centers in the Russian Federation. Different kinds of scientific, technical and design work involved more than a thousand organizations [12]. In the Sverdlovsk region there are more than one third of all scientific institutions of the Urals. The Sverdlovsk region has significant innovative resources that can be used to manufacture new products, competitive in domestic and foreign markets. Research and development activities aimed at creating a technological innovation, high technology and other innovative products that perform 138 organizations. There are network of parks and innovation and technological centers. In December 2009, the rating agency Standard & Poor's confirmed the long-term credit rating of the Sverdlovsk region of the «BB» rating outlook of the Sverdlovsk region «Stable» [11]. In December 2010, the rating agency Standard & Poor's confirmed the long-term credit rating of the Sverdlovsk region of the «BB» ratings outlook for the field has changed from «Stable» to «Positive» [10]. Foreign trade turnover in value terms in the Sverdlovsk region only in the first half of 2010 amounted to 5.5 billion dollars. Exports exceeded 4 billion dollars, and imports reached 1.4 billion dollars. Total turnover grew by 20 percent over the same period last year and the trend of growth continues [14]. The main exports of the Sverdlovsk region's foreign trade with all countries from January to June 2010 amounted to traditional metals and its products, chemical products and machinery. Dynamics of growth of exports is outstripping the growth of industrial production in the Sverdlovsk region [14]. Ten of the leaders of the largest trade partner of the Sverdlovsk region is traditional: the USA, Kazakhstan, Turkey, India, Netherlands, Italy, Germany, China, Ukraine and France [14]. The Sverdlovsk region has a number of effective tools to attract investment. One of the most famous is the forum of industry and innovation «INNOPROM», which in 2011 took place from July and included representatives from Austria, Algeria, Azerbaijan, Belarus, 29

30 Great Britain, Hungary, Vietnam, Denmark, Iraq, Iran, Italy, Kazakhstan, Canada, China, Kyrgyzstan, the United States, Tajikistan, Ukraine, Germany, Finland, France, Czech Republic, Switzerland, the community of South Africa (SADC). Last year, «INNOPROM» was signed by only 43 billion rubles, but at the second forum «INNOPROM-2011» signed an agreement of almost 180 billion rubles [13]. Also of special interest is a project to create a special economic zone of industrialproduction type «Titanium Valley», the investment potential of which was highly appreciated by foreign partners [9] General Economic Trends, Leading Industries In general, the results of 2010 showed that the economy of the Sverdlovsk region had overcome the negative effects of financial crisis and almost reached the pre-crisis level. Gross regional product line had exceeded 1 trillion rubles and amounted billion rubles at current basic prices, or 109.8% compared to 2009 at constant prices. This was well above the national average (104%). There was a stable positive dynamics of most major social and economic development indicators in the region and a significant recovery in all types of economic activity [9]. From January until May 2011 remains growth in all major sectors of the economy. The industrial production index for the full range of organizations of the Sverdlovsk region in January May 2011 amounted to 111.7% as against January May 2010, including in the manufacturing sector 115.1% [7]. 30 Figure 14 - Industrial production index of manufacturing activity in January-May 2011 compared to January-May 2010,%

31 From January until May 2011, a number of industries not only reached the pre-crisis volumes, but also exceeded them. Among them: production of transport equipment (vehicles) 132.6% as against January-May 2008; mining and quarrying, except of energy (111.9%); manufacture of electrical and optical equipment (108.5%); food industry (106%) [7]. The volume of industrial products shipped to the full range of organizations in January -May 2011 amounted to billion rubles, or 32.3% more than in January - May 2010, including in manufacturing 390 billion rubles, or 132 % as against January - May 2010 [7]. The share of machinery-producing and metallurgical industries is 22.7% in the industrial production. Enterprises produces a wide range of products: trucks, cars, excavators, forging machines, power transformers, diesel engines and diesel generators, steam and gas turbines, large electric machines, oilfield and drilling equipment, electric motors, etc. Priorities of development the industry are the implementation of major business projects in metallurgy, the military-industrial complex, technological renovation industry, the development of transport and agricultural machinery, machine tools for construction industry enterprises, expansion of export capacity. The military-industrial complex is implemented conversion programs, introducing new technology. Promotion of products to foreign markets designed to provide the federal government organization of arms and military equipment. In cooperation with Open Joint Stock Company «Gazprom» and Open Joint Stock Company «Oil Company LUKoil» machine-building enterprises of the Sverdlovsk region are being developed and the production of new advanced technologies for the gas industry. Significantly increased its output of major industrial products [9]: drilling rigs, electric 2 times the level in 2010; freight cars 1.5 times; finished rolled steel 19%; steel, steel pipes, electrical transformers by 15-16%. 31

32 The share of chemical industry accounts for 2.5% of industrial production of the Sverdlovsk region. Plants produce sulfuric acid, fertilizers, plastic film, synthetic resins and plastics, tires, liquid oxygen, etc. Today the company orients to the production of high-tech products, industrial synthetic resins and plastics growing issue of advanced types of polymeric materials (polyethylene, PVC) [ 16]. Building materials industry is 4.2% of industrial production of the Sverdlovsk region. Implemented technical re-equipment and reconstruction of enterprises, introduce new production facilities. There are manufactures of asbestos cement, window glass, building materials, ceramic tiles, etc. and productions are increasing. An export delivery of asbestos is increasing by 20% [16]. The activity of the construction of the Sverdlovsk region is restoring. The volume of construction works in January-April 2011 amounted to 21.2 billion rubles. This is comparable estimate by 15% more than in the corresponding period of The index of industrial production on the full circle of enterprises of food industry in January April 2011 was 98% compared to the corresponding period of Decreased milk production (94.8% compared to January April 2010), sausages (90.4%), beef (86.2%), hard cheese (80.0%), confectionery (78.2%), wheat flour high grade (77.7%) [9]. Sales of goods, that produced the food, increased the level of January-April 2010 to 13.7% and amounted to 17.2 billion rubles [9]. At the end of the March 2011 investment activity in the region was rising. Total investment in fixed assets amounted to 35.4 billion rubles. This is higher than in January March 2010 in current prices by 31.6% and comparable assessment by 29%. Recovery in industrial production led to an increase of financial results of operations. В январе-марте 2011 года объем инвестиций в основной капитал по полному кругу организаций составил 35,4 млрд. рублей. Это выше уровня января марта 2010 года в текущих ценах на 31,6%, а в сопоставимой оценке на 29% [10]. Высокие темпы роста по сравнению с уровнем января-марта 2010 года наблюдаются в следующих видах экономической деятельности: Profit profitable organizations of the Sverdlovsk region in January March 2011 amounted to 47.3 billion rubles, exceeding the level of January March 2010 by 40% and the level of January March 2008 by 16%. 32

33 In January-March 2011, investment in fixed assets amounted to 35.4 billion rubles. This is higher than in January March 2010 in current prices by 31.6% and comparable assessment by 29% [10]. High rates of growth compared with January March 2010 observed in the following economic activities. Table 4 - Economic activities with high growth rate of investment Economic activities January March 2011, million rubles percent compared to January-March 2010, at current prices Mining and quarrying 1021,6 179,7 Production of building materials 907,2 134,5 Pulp and paper industry 49,5 12,7 times Wholesale and retail trade 346,6 2,1 times Transport and communications 6756,8 3,2 times Education 442,0 2,4 times Lower than in January March 2010 level of investment has developed in the following economic activities. Table 5 - Economic activities with lower growth rate of investment Economic activities January March 2011, million rubles percent compared to January-March 2010, at current prices Chemical industry 151,0 41,0 Manufacture of rubber and plastic products 27,3 43,9 Manufacture of electrical and optical equipment 188,0 91, Energy, Mineral and other Natural Resources The Sverdlovsk region is one of the largest regions by volume of natural and mineral resources, which is due to the specific topography of the landscape and territory, as well as a variety of climatic conditions. Forest, land of wealth, subsoil most involved in the sphere of material production, water is used less. 33

34 The region is one of the oldest mining regions of the Russian Federation. Mineral deposits provide the overall balance of 97% of Russian production of vanadium, 70% of bauxite, 61% chrysotile asbestos and 23% of iron ore and 20% of refractory clay. There is a wellestablished mineral resource of iron ore and placer gold. The region has a long-term reserve of non-metallic minerals: precious (emeralds), semi-precious stones and tiles, building materials, as well as peat, sapropel, the flask, diatomite, fresh and mineral underground water and minerals. There are prospects for discovery of large deposits of copper ore, placer gold, platinum and gold in black shale sequences, primary sources of diamonds, oil and gas. The most important task is to develop the exploration industry in the Sverdlovsk region to address the problems associated with the reserves and to conduct search and appraisal work on a new promising site. Particularly relevant is the problem of attracting investment in exploration and mining, as well as the use of modern technologies for extraction and enrichment of raw materials [16]. Oil and gas reserves are negligible. The region had three oil fields with reserves of more than 5 million tons. Gas reserves in two fields (Kedrovskaya and Buharovskoe) and reserves constitute 0.08% of the stock of the Ural economic region. Coal reserves in the Sverdlovsk region provide the 7% of stocks in Russia. General reserve is thousand tones. Off-balance sheet reserves are estimated at thousand tons. Two deposits of brown coal (Bogoslovskoe and Volchanskoe) and two deposits of coal (Bulanashskoe and Egorshinskoe) are developed. Local coal mining area covers the needs of the region only 10%, the vast majority of steam coal imported from Ekibastuz (Kazakhstan). Local coal inferior imported coals even with transportation costs. Peat in the Sverdlovsk region is estimated at billion tons, accounting for 11% of the total peat reserves in Russia. Thus, there is a forced orientation of the Sverdlovsk region on imported fuel natural gas (56%) and Kazakh coal (25%) represents a major factor in reducing the area of energy security. Forecast resource of iron ore is estimated at the Sverdlovsk region 2260 billion tons, accounting the 28.9% of balance reserves of iron ore from the region. Explored reserves are sufficient to satisfy the needs of metallurgical enterprises of the region. Average provision of mining in reserve is about 84 years, and for producing fields 80 years. The same indicator for the open pit is: the entire region 72 years; in producing fields 72 years, for underground mining provision even higher nearly 100 years of producing fields, and more than 100 years for the entire region. 34

35 Reserve areas accounted nine deposits of manganese ore, which located in the Severouralsk basin. The degree of exploration stocks in the Sverdlovsk region is 36%. Based on the needs of the metallurgical enterprises explored the reserve of the Sverdlovsk region is about 50 years. Provision of a single developed in the area (Tyninskogo field) is small; it is only 2 years, which necessitates investment in training entering new fields. The explored reserves of bauxite and probable reserves are concentrated in Severouralsk, Ivdelsk, Karpinsk, Kamensk areas. Availability of proven reserves for mining shaft is high. For the next two decades, North-Urals mine will be operated as the base for the Ural smelters. Later, however, local deposits may cover the need for raw bauxite only partially. Forecast resources of nickel in the Sverdlovsk region are concentrated in four areas Serov, Poldnevskaya, Salda-Sysertskoe, Alapaevsk-Klyuchevskaya and Trans-Ural area. The most explored are the Serov-Poldnevskaya and Alapaevskih-Klyuchevskaya zones, which contain most of the reserves and undiscovered resources. One of the problems for nickel in the Sverdlovsk region is the lack of sufficient ore contact-karst type (Lipovskii and Ufalei types) that contain elevated concentrations of nickel and are the most tech. North-Urals manganese pool is located the region. The state balance includes 9 fields with reserves of 41.9 million tons of ore. Among them, there are five developed and prepared for development fields, one field is explore and three fields are in the state reserve. Total reserves of manganese ore 41.7 million tons. All manganese ore, that consumed by the enterprises of the metallurgical complex area, imported from the Ukrainian manganese ore deposits. Twenty-one fields of copper and copper-bearing ores are accounted in the Sverdlovsk region. Total reserves of copper are million tons. Smelters in the main area use the imported copper concentrates, including from abroad, as well as secondary raw materials (scrap, scrap heaps). The smelting of copper ores from the local is less than 10% of its total production. Balance reserves of lead calculated on the one field (Safyanovskoe) and up tones of lead. The average content of useful component is 0.1%. Ore mining at the deposit is made, but the lead is not extracted. Balance reserves of zinc accounted for nine of copper pyrite deposits and amounted to million tons. The average content of useful component is 1.7%. Cobalt accounted for 11 fields, but it extracted from ores only from Serov field. There are 21 fields of silver, and six of them are being developed. Ural is a major gold and platinum province and the region is the oldest gold and platinum in Russia. However, despite the long period of operation, the bowels of the Urals and to date still contain significant reserves of precious metals. In old fields, where the work has been going on for decades and centuries, after careful exploration reveals new profitable areas. 35

36 The Sverdlovsk region has a rich source of raw materials for manufacturing non-metallic building materials. It is concentrated 50 deposits of building stone (more than 50% of the reserves the Ural economic region), 20 explored deposits of sand and gravel (25% of the reserves the Ural economic district). The prospects for increasing reserves of building stone, sand and gravel are the most favorable. The raw material for production of porous fillers building materials industry of Sverdlovsk region is provided in sufficient quantities and has reserves of first place in the Ural economic region [17]. From January to May 2011 mining (except fuel and energy) has exceeded pre-crisis volumes (111.9%). The volume of industrial products shipped from mining operations in January May 2011 amounted to 32.4 billion rubles, 1.6 times the level of January May 2010 [7]. The volume of industrial products shipped to the production and distribution of electricity, gas and water in January May 2011 amounted to 71.2 billion rubles, or 121.7% as against January May 2010 [7]. However, there is a shortage of generating capacities, which poses serious constraints to the development industry. The energy-deficient area has already appeared [4]. The metallurgy enterprises have 47.5% of industrial production of the Sverdlovsk region. Since the mid-1990s, the leading metallurgical enterprises of the Sverdlovsk region passed into the ownership of large holdings of business groups, closing the entire process chain from mining ore through to final product release. This fact gave a positive impact on the dynamics of production, in particular, non-ferrous metals. Today, active modernization of production, shift to high value products, and the introduction of the secondary industry and the high level of innovative activity provide a stable operation of the metallurgical complex. Mining companies are investing heavily in maintenance, development and modernization of production facilities for mining and ore processing [16]. Particular interest is the project of creation of special economic zone «Titanium Valley» area, which is located between two major cities of the Sverdlovsk region Nizhniy Tagil and Verhnaya Salda. 36

37 Figure 15 - Project «Titanium Valley» The objectives of creating the «Titanium Valley» for the Sverdlovsk region is attracting the world's major producers of innovative industries, creating new modern high-tech industries, creation of conditions for integration of the Russian economy in the globalization process. Creating the special economic zone provide for the implementation of several strategic projects Strategy and Perspective of Economy Development Positive economic trends at the beginning of 2011, as well as favorable world prices for metals and raw materials can improve forecasts of the main parameters of socio-economic development of the Sverdlovsk region in Thus, the index of industrial production for the full range of organizations in 2011 increased by 105.2% to 109.2% compared to Given the trends in recovery of production, the strengthening of domestic demand, conservation (expansion) investment programs, forecast the volume of products shipped increased by 185 billion rubles to the previously projected and will be 1.3 trillion rubles, up 25% over Such high projections are based on the high growth of prices on the London Metal Exchange. Evaluation of the financial performance of organizations for 2011 was developed in two versions to address the risks associated with changes in world prices for metals, and will be billion rubles, which is 43-46% higher than in This will give additional increases to the previously forecast profit of billion rubles. 37

38 The gross regional product is up to 2011 is 1.2 trillion rubles (in the approved forecast trillion rubles), while the volume index of gross regional product will grow in 2011 with 105% expected earlier to 108.7%. However, along with the positive dynamics of the Sverdlovsk region in 2011, it remains some problematic moments, the solution of such moments is extending in accordance with the Strategy of social and economic development of the Sverdlovsk region up to 2020 [4] Industry problems of Sverdlovsk region available at this stage: lag reproduction of mineral resources compared to the rate of extraction; long-term development of the mining industry in the region led to the gradual depletion of the fund deposits of several minerals; current state of the mineral resource base of the metallurgical complex in the Sverdlovsk region in many types of minerals is inadequate and does not ensure the development of the metallurgical enterprises without importation of raw materials from abroad; dependence on imported energy fuels, share of energy in the fuel balance of the Sverdlovsk region does not exceed 3-5%, the bulk components of the fuel balance is imported from other regions; qualitative imbalance of intra-as manifested in a high degree of differentiation of growth production (volume of shipped products) per one employee in one activity, in this variation in growth rates can develop up to multiples; increasing the technical and technological gap between the leading countries in the world due to the slow pace of modernization and technical re-equipment manufacturing, high depreciation funds; inconsistency the major part of industrial output current international standards. Development priorities: an innovative upgrade traditional industries with a view to consolidating and expanding the competitive advantages of the region, forming the base for the modernization of industry and economy as a whole; the growth of labor productivity; 38

39 imply of environmentally no waste technologies, waste disposal. Thus, the main development tasks for 2020 are follows: accelerated development of mineral resources: development of new deposits of ferrous and nonferrous metals, coking coal and other deposits with the development of modern technologies of mining and processing to finished products each field and each type of mineral resources; complex use of mineral resources; large-scale modernization of production, a radical renovation of basic production assets in all sectors of industry; metallurgical complex manufacture of high-strength steels mass destination, increasing the production of high quality steel products for competitive rail transport, commercial production of high added value; wood processing and manufacturing of wood products increasing the depth of wood processing, woodworking introduction of clean technologies, strengthening the position of the region in the world; construction industry (production of other nonmetallic mineral products) providing production of modern high-quality, competitive building materials for the construction of new enterprises and modernization of existing facilities based on the latest scientific and technological developments; chemical industry the commissioning of modern production of deep processing of natural gas, production of new types of drugs, creating a network of domestic pharmaceutical companies. At this stage electricity industry has the following problems: deterioration of the power grid and generating equipment; introduction of unnecessarily high fees to consumers for connection to power grids; presence of power-hungry units in the area, which hinders the economic development of the Sverdlovsk region. 39

40 Development priorities are follows: construction of new generation and power supply network of the Sverdlovsk region, followed by the replacement of worn-out facilities and a largescale reconstruction of the power supply network. Food and light industries at this stage have the following problems: high wear and tear of fixed assets, lack of own funds to carry out large-scale technical and technological re-equipment; low profitability of production and products; high level of counterfeit and pirated products. Thus, the development priorities for 2020 are follows: active investment policy aimed at reconstruction, modernization and technical re-equipment; implementation the new, advanced technologies in the production of food, clothing, footwear and other consumer goods; implementation the international quality management systems and food safety; development the own raw material base of the meat industry; organization of purchasing agricultural products from citizens, the leading private farms, with a view to its further processing; increase the innovation activity of enterprises of light industry; development the resource and raw material supply of light industry; creation an effective quality control system of light industry products in the consumer market; imply to the industry's enterprises effective marketing techniques that preserve and expand market niches and businesses to reduce production costs. The development the foreign economic activity of the Sverdlovsk region will take place against the backdrop of global economic growth taking into account the guidelines of the foreign trade of the Russian Federation contained in the Concept of Socio-Economic Development. 40

41 In the geographical structure of foreign trade in the Sverdlovsk region, industrialized countries remain major players. They are the main consumers of chemical products, metals and products from them, form the basis of the Sverdlovsk region exports to foreign countries. Western European countries continue to be a major supplier of machinery and equipment. The growing competitive pressure on imports in the Sverdlovsk region have a supply of equipment, including electrical and sound recording, as well as a means of land transport (except railways) from China. Among the CIS countries are major trade partners of Kazakhstan, Ukraine, Belarus and Uzbekistan, which accounts for more than 90% of foreign trade with CIS countries. Continued dynamic development of foreign and international relations, given in previous years, the strengthening of international prestige and influence of the Sverdlovsk region in the world is the main objective of foreign economic activity. However, there are some problems at this stage: current model of participation in world exports against the background of the emergence of new markets for goods and services with high added value; large-scale restructuring of the economies of China and India and the transformation of these countries in the main locomotive of global growth. Therefore, the main tasks are: improving the competitiveness of domestic goods in domestic and overseas markets; development of new forms of cooperation in the sphere of international relations; establishment of schemes of direct export-import transactions with foreign countries; increased awareness of investment opportunities and promising projects; output the enterprises of the Sverdlovsk region in the world's major stock exchanges; strengthening cooperation and possible trade diversification Sverdlovsk region with China and India. Development priorities are: development of infrastructure of international cooperation of the Sverdlovsk region; 41

42 development of high-tech industries; activation of attracting foreign investment in infrastructure projects; increase in the international exchange of commercial services; realizing the potential of export of transport services, which account for more than 60% of services exports in foreign trade activities of the Sverdlovsk region; creating conditions for increasing the inflow of direct foreign investment; bringing regional legislation into line with international practice and the expectations of foreign investors; financial support from the regional budgets of municipalities, businesses and organizations of the Sverdlovsk region to participate in overseas exhibitions. 42

43 Strengths SWOT Analysis of Logistic Development in Region Table 6 Weaknesses 17. Advantageous geopolitical location characterized by crossing of directions of a corridor "Trans-Siberian Railway" and under construction Northern transport corridor on a route St.-Petersburg - Medvezhyegorsk - Kargopol - Syktyvkar - Kudymkar - Perm, which will service the Russian and transit cargo flows to Europe, Average and South East Asia, and also in the opposite direction; 18. Presence in the region of industries which use high technology and have to use the techniques of modern logistics; 19. Well-developed transport infrastructure in the region, availability of large transport hubs; 20. Potential access to significant volume of export and import cargo, including container; 21. Rather weak competitive environment. Opportunities 10. The regional logistic market is at initial stage of the development, basically it is limited to the separated types of service entering into sphere of logistics: transport, forwarding or warehouse; 11. Irrational configuration of the existing railway and motorway networks leads to excessive costs of shippers as well also creates a gap between resource-rich regions of the Urals; 12. Absence of necessary volume of a warehouse infrastructure of classes A and B doesn't allow to observe the increasing quality requirements and to scales of servicing of cargo flows; 13. local logistics organizations do not have enough experience of working with logistics services providers, major international and Russian retail chains and freight forwarding companies; 14. Weak technical level of equipment and development of the land infrastructure, poorly used potential of small aircraft, especially in carrying out cargo transportation; 15. Current technical condition of the road infrastructure (including of federal highways) significantly reduces the average speed, bandwidth, automobile transport network; 16. Transport and storage-terminal infrastructures are developed separately from each other, which leads to a local imbalance of capacities of the transport network and transport-logistics infrastructure, particularly in the areas of their connections; 17. Absence of big cities bypasses, especially in Yekaterinburg, Kamensk-Ural. It creates the additional transport and environmental pressure on street-road network; 18. There are administrative and legal difficulties of registration of land plots for construction of transport and logistics infrastructure. Threats 43

44 8. Creation of the multi-modal logistics parks; complex of services providing for cargo multimodal transportation; 9. "Euro-Asian International transport and logistics center" project full-scale implementation; 10. Providing a full complex of quality logistics services to International, Russian, local commercial and industrial companies, including value-added services; 11. Growth of transit and multimodal transportation in the region and as a consequence of transport and logistics infrastructure development and complex of provided service; 12. частичное устранение диспропорций в развитии складской инфраструктуры за счет строительства кольцевой автомобильной дороги вокруг города Екатеринбурга. 13.Partial elimination of disparities in the development of warehouse infrastructure by building a ring road around Yekaterinburg. 8. Expansion of foreign logistics operators to the region; 9. Occupation of leader positions in the cargo service by operators from other regions; 10. dependence of consumers warehouse and logistics services from retailers and industrial companies; 11. Extremely high traffic load on the city. Therefore the degree of development of transport infrastructure in Sverdlovsk region today do not fully to correspond to requirements of regional economic development, constrains of its industrial, resource and transit potential realization. Absence of the development coordination doesn't allow fully applying the principles of the modern logistics process control of goods and cargo transportation, processing and storage Logistics and Procurement Issues Transportation and logistics services Market in and Sverdlovsk region is sufficiently promising, it is determined by: The market of transport-logistics services in Yekaterinburg and Sverdlovsk region 1 is enough perspective, it is determined: - by favorable geographical location of city and region (the location at the crossroads of the European part of Russia to Western Siberia and northern districts); - Yekaterinburg is huge financial, commercial and industrial center. 1 Ekaterinburg (Yekaterinburg), former name is Sverdlovsk ( ). Sverdlovsk Region is around Ekaterinburg city. 44

45 Yekaterinburg became a key point of the Russian logistics. Cargoes from all Euroasian continent are flown down here: by rail, in cars and air transport. At the present time the Sverdlovsk region located in the center of Russia is a huge warehouse a reloading point. The Asian cargoes from here go direct to Europe, European cargoes to Asia. In city and region the majority of cargoes are formed and reformed and then are transported in other big Ural cities, and also to the North to Sverdlovsk and Tyumen regions. Something remains in the country. At the present time, question about prolongation of the international transport corridor Berlin - Brest - Moscow - Nizhni Novgorod to Yekaterinburg is almost decided. It means the infrastructure will be created on all its length. The development of logistics services is quite favorably for the city budget fullness because the so-called transport rent taxes are increased, work places are appeared and so on. Being on the border between Europe and Asia, the region possesses ideal conditions for the organization of transit, processing, storage of Euro-Asian cargo flows. For example, Yekaterinburg is located on the main road Trans-Siberian Railway, a regional center of JSC "RZD" transportation management is located in the Yekaterinburg and there is a large international airport. However, the existing regional transport and storage base does not allow fully to implement the principles of modern logistics management processes of transport, processing and storage. Transport Infrastructure Development Развитие современной транспортной инфраструктуры Екатеринбурга и области осуществляется в соответствии с рядом федеральных и областных программ, так согласно транспортной стратегии Российской Федерации на период до 2020 года [20] перечень приоритетных проектов развития транспортной отрасли в регионе (Рис. 3.6): The development of modern transport infrastructure is carried out in accordance with a number of Federal and Municipal programs. For example, according to the transport strategy of the Russian Federation till 2020 there is list of priority projects of transport industry in the region [20]: 1) The bypass construction around cities Perm and Krasnokamsk cities with a bridge over the River Cama on road of Saint-Petersburg - Kirov - Perm - Ekaterinburg; 2) Organization of large transport and logistics hub at the base of airport "Koltsovo"; 3) Creation of a network terminal and logistics complexes. 45

46 In accordance with Law of the Sverdlovsk region from 8 December 2006 N 77 "About scheme of territorial planning of the Sverdlovsk region" principal planning model of transport corridors and base transportation lines was approved [25], see (Figure 16): 1) Main latitudinal corridor: the continuation of the international transport corridor N 2 (hereinafter - ITC N 2) "Berlin - Moscow - Nizhny Novgorod" in Yekaterinburg to Beijing, presented by existing railway lines of "Trans Siberian railway and Federal motorways Yekaterinburg - Tyumen, Yekaterinburg Kazan ; 2) Meridional transport corridor: the combination of ITC N 2 and the Northern Corridor - railway lines Sverdlovsk-Sortirovochnaya - Smychka - Goroblagodatsky - Serov - Ivdel - Polunochnoe, Polunochnoe - Obskay, Obskay - Salekhard Nadym and Federal motorway Ufa - Moscow - Serov - Severouralsk - Ivdel Labytnangi ; 3) Latitudinal corridor "Northern route", for the organization of the transportation system outputs and related eastern regions to ports of cities Arkhangelsk and Murmansk via Perm region. It consists of a projected railway lines Arkhangelsk - Syktyvkar - Gainy Ivdel with access to the existing motorway Ivdel - Khanty-Mansiysk - Nefteyugansk - Surgut - Nizhnevartovsk Tomsk ; 4) Diagonal transport directions for the integrated interconnection development with neighboring regions and additional communication providing with the Northern regions of the Urals Federal District: roads Ufa - Moscow - Turinsk - Khanty-Mansiysk and Perm - Verkhoturye - Gary - Urai - Khanty-Mansiysk. 46

47 Figure 16 The main transport corridors passing through Yekaterinburg and Sverdlovsk region Railway Infrastructure Sverdlovsk Railway is a powerful transport sector with a huge technical and intellectual potential. This railway connects the European and Asian parts of Russia, it stretches from West to East for a half thousand kilometers and crosses the Arctic Circle on the North. Sverdlovsk Railway is basis of the transport system for Perm, Sverdlovsk, Tyumen Regions and Khanty- Mansiysk and Yamalo-Nenets Autonomous Districts. It enters to first three roads in Russia by main indicators and services the area of 1.8 million sq.km with a population of more than 10 million people. Its operating length (length of track in use) km, total length of track km million of passengers (including 10.2 million - on the long distance) was transported and million tons of cargo was transferred in frame of the Sverdlovsk railway boundaries in The number of employees amounted to people. The Sverdlovsk railway share accounts for 10% from network loading, including such vital goods as oil, nonferrous metals, and timber and construction materials. Railway serves nearly 400 km of access roads, its service is used by more than 12,000 industrial enterprises [22]. 47 train stations, 418 transfer stations, three passenger depots, 4 wagon area, 255 ticket counters work for service providing the passenger traffic on the road. There are all conditions for comfortable travel: opened additional routes, increased service quality, introduce new luxury air- 47

48 conditioned systems, TV, Internet access, a shower room. Every day 1288 freight shuttle, 117 passengers and 455 electro trains freight on the Sverdlovsk railway. With unique geographical location and considerable resources it is assumed that the Sverdlovsk railway can become a huge transit and processing center for cargo flows and passengers in direction of "Europe - Asia". Even today, the Sverdlovsk railway transport service market covers 10.5% of country, 7.4% of population, 7% guarantees the functioning of basic production assets of Russia. In 2010 the Sverdlovsk railway took the 2nd place for the loading, the 2nd largest cargo volume, third place on the passenger in the Russian Federation. At the end of 2010 the volume of loading in 2010 amounted to million tons, up 15.9 million tons, or 15.2% more than in [21, 24]. On the Russian railways Web Portal there is full information about cargo transportation by Sverdlovsk railway [21]. In connection with the decision about organization of the train movement of high weight and length in direction of Kuzbass Center on the Sverdlovsk railway, the work on the preparation and development of infrastructure for freight trains weighing up to 12,000 tons (in parts Druzhinin - Sedelnikovo Kochedan, Cheptsa - Perm Sverdlovsk and Sverdlovsk - Tyumen (Voinovka) Nazyvaevskaya ) is continuing. Maximum cargo traffic are concentrated in parts of railway, which will provide the transportation and economic links of Siberia, the Far East with the regions of the North West, the Upper Volga region and the Centre of Russia. The positive dynamics of the Sverdlovsk region economic development (in zone of the Sverdlovsk railway action) creates a natural need to expedite and simplify the process of the cargo shipment to the final consumer. This issue will provide transport and logistics center to be created on the technical and technological base of the Sverdlovsk railway hub. Basis production growth in key economic sectors - iron and steel, heavy machinery, construction materials industries and cargo transportation in this connection is assumed to primarily in the Lower Tagil and Serov. In this connection the freight traffic from the specified regions in both Western (through Chusovsky, Perm) and in Southern direction (through the Smichka, Sverdlovsk, and also through Alapaevsk, Bogdanovich, Kamensk-Uralsky) will be increased. At the present time the project "Ural Industrial - Ural Polar" started too. The project goal is to provide the transportation access to the Arctic and Sub-Polar Urals resources based on the development of advanced transport infrastructure. Highway Transport Infrastructure The basis directions of highway Transport are: 48

49 1) Formation of federal highway corridors in accordance with current and prospective structure of cargo and passenger traffic (without dividing roads on the territorial and federal); 2) Addition of functioning Federal highway network by the regional level highways based on the principles of "openness" of the region's transportation system with providing the exit in the federal highway network; 3) Creating of conditions for effective functioning of the Euro-Asian highway communications in the region which are formed as a result of the MTK N 2 2 planned extension to Yekaterinburg (modernization of the transport complex). According to the program of modernization and development of highways of the Russian Federation till 2025 the formation of the backbone highway network for link with the regions must be completed, in particular, on routes passing through the Sverdlovsk region: Saint- Petersburg - Vologda - Kirov - Perm Ekaterinburg ; Perm - Serov - Khanty-Mansiysk - Surgut - Nizhnevartovsk Tomsk, Kazan Yekaterinburg. Priority objectives of the highway network development till 2015: 1) Completion of highway corridor Perm - Serov - Khanty-Mansiysk - Surgut Tomsk for economic activity underdeveloped North-Eastern region and providing the access to prospective oil and gas reserves (Taborinsky and Tavdinsky areas); 2) The raise of technical level of the most congested areas (construction of bypass of towns in the network of territorial roads), providing links of the neighboring regions with the regional center; 3) Completion of the Yekaterinburg ring road, which can connect together seven road transport directions of Federal and Municipal importance within the city and relieve the regional center from motorcars; 4) Further reconstruction of the main federal highways Moscow Tyumen, Yekaterinburg Perm ; construction of the road part - Achit - Octyaybrsky to enter on the existing federal highways in the city Kazan; 5) Construction of new directions of Federal highways Ivdel Labytnangi (the exit to raw materials and resources of the Polar and Polar Urals and the Northern Sea ports) and Moscow Ufa, which would strengthen the basis meridian direction of Sverdlovsk region Ekaterinburg - Serov - Severouralsk Ivdel. 2 International transport corridor N 2 (hereinafter - MTC N 2) "Berlin - Moscow - Nizhny Novgorod" in Ekaterinburg 49

50 Air Transport Infrastructure In civil aviation the main objectives are to stabilize and develop the air transportation market, improving the organization of air traffic. The strategic objective of the airport "Koltsovo" construction of the effective interactive system between of all types of transport and business entities performed the operations on the organization and maintenance of international, domestic and regional passenger and freight transport; the creation the air transport hub of the Ural Federal District based on the airport "Koltsovo" for the effective economic and social development in the Sverdlovsk region and its integration into the global economy, expansion of business, culture and tourism. At the present time the airport Koltsovo (Figure 17) is: - Third airport in Russia Federation (after Moscow and Saint-Petersburg); - The biggest airport in territory of the Ural federal district; - Most dynamically developing airoport in Russian Federation. Flight via Koltsovo airport carry out more than 30 leading Russian and foreign airlines, which provides an air communication with 104 cities of Russia, the states of CIS and abroad. At the present time it is planned to create a public corporation, which will combine 48 local airport lines and the revival of small aviation. Figure 17 Airport Koltsovo [26] In the future the reconstruction of several local beginning from the airport "Aramil" (Yekaterinburg), including now closed north airports as well as north-east region airports (city Ivdel, towns Gary, Pelym, Shaburovo, Ponil) is planned. The implementation of plan for integrated development of the Sverdlovsk region air transport in the long term will increase the capacity of the airport "Koltsovo" in 2 times. 50

51 River Transport Infrastructure The basis goal of the internal waterway network is to provide measures to ensure a stable and safe navigation, including the maintenance of the required depth and dimensions of the fairway, modernization and upgrading of river transport fleet. Transportation and Logistics Centers In frame of the project "Euro-Asian International transport and logistics center" the container terminal by capacity of 40,000 containers per year with total area of 18 thousand sq. meters was built in At the present time, renovation of station Sverdlovsk Product is realized with predicted dynamics processing capacity thousand standard 20-foot containers in 209, thousand standard 20-foot containers in In Yekaterinburg city now there is a strategic project of Development of logistic centres. It is planning to realize this project until According to the plan of this project, the JSC Euro- Asian international transport-logistic centre was created in 2002 for development of transportlogistics infrastructure by initiative of Sverdlovsk administration and Administration of the city of Yekaterinburg. Nevertheless, region needed in the construction of modern warehouse space, roads, and tax breaks for local transportation companies. References: [1] Map of the Sverdlovsk region [2] Map of the Sverdlovsk region %20Region/map_sverdlovsk.jpg [3] Map of the Sverdlovsk region [4] The strategy of socio-economic development of the Sverdlovsk region until [5] The passport of the Sverdlovsk region [6] Overview of the Sverdlovsk region [7] The situation in the industry of the Sverdlovsk region for January-May 2011 (Ministry of Economy of Sverdlovsk region) 51

52 [8] The results of the agro industrial complex in Sverdlovsk Region in January-April 2011 (Ministry of Economy of the Sverdlovsk region) PHPSESSID=45f72bf6d889a3a6b4c0fb1eeeb4a488 [9] The materials from the meeting of the Ministry of Economy on the development of the Sverdlovsk region from 2012 until PHPSESSID=45f72bf6d889a3a6b4c0fb1eeeb4a488 [10] Investments in the Sverdlovsk region in January-March 2011 (Ministry of Economy of the Sverdlovsk region) [11] The credit rating of the Sverdlovsk region [12] Science and education of the Sverdlovsk region [13] During the «INNOPROM-2011» signed agreements worth 180 billion rubles (The official website of the Government of the Sverdlovsk region) [14] Analysis of foreign trade (Investment portal of the Sverdlovsk region) [15] Resources of the Sverdlovsk region (Urals Federal District the Sverdlovsk region) [16] Companies of the Sverdlovsk region (Urals Federal District the Sverdlovsk region) [17] The scheme of development and deployment of the productive forces of the Sverdlovsk region in 2015 (Ministry of Economy of the Sverdlovsk region) [18] Special economic zone of industrial-production type «Titanium Valley» (Investment portal of the Sverdlovsk region) [19] Investment projects of the Sverdlovsk region (Urals-Siberian Investment Agency, the article of February 3, 2011) [20] Transport strategy of the Russian Federation until 2020 [ [21] Materials from portal Joint Stock Company «Russian Railways» /download?vp=35&load=y&col_id=121&id... 52

53 [22] Materials from portal Joint Stock Company «Russian Railways» svzd.rzd.ru/isvp/ [23] The concept of development the transport and logistics system of the Sverdlovsk region in (with a view to 2030) [24] rtf [25] "The regional newspaper", 2006, December 12, N [26] %20USSS&newsort=2 [27] Study: Logistic Centres in Yekaterinburg: Transport - logistics infrastructure of Ural Region. Elena Timukhina, Ural State University of Railway Transport; Erkki Hämäläinen, Kymenlaakso University of Applied Sciences; Soma Biswas-Kauppinen, Kymenlaakso University of Applied Sciences. Kouvola 2007/Kymenlaakson ammattikorkeakoulu, University of Applied Sciences. julkaisuja. Sarja B. Nro %20Yekanterinburg_nettijulkaisu.pdf.pdf 2.3 Omsk Region An Overview of the Present Situation Omsk Region is part of the Siberian Federal District and is located in the southern part of the West Siberian Plain; the length of the field from north to south is 600 kilometers from west to east 300 kilometers. The territory of the Omsk region is square kilometers and area population is thousand people. Value for urban and rural residents is 69.3% and 30.7% respectively. The population of the area lives in 6 cities of regional subordination, 32 districts, 21 towns, 1476 villages. More than 120 nationalities and 20 ethnic groups represent national population the Omsk region. The most numerous nationalities are Russian (83.5%), Kazakhs (3.9%), Ukrainians (3.7%), Germans (3.7%) and Tatars (2.3%) [3,7]. There is largest German community in Russia a German national Azov region. In the region there is the second largest in Russia (after the Orenburg region) Kazakh community [4]. The region consists of 32 districts and 6 cities. Most major cities in the Omsk region are Omsk (1134 thousand people), Tara (26.9 thousand people), Isilkul (26.55 thousand people) and Kalachinsk (24.25 thousand people). Thus, the administrative center of the region (Omsk) concentrates more than half the region's population (currently Omsk - the second largest city in 53

54 Siberia), and other cities in the region very small and do not reach for even numbers up to 30 thousand people. The large proportion of the region is a rural population [4]. Figure 17 - Omsk region [5,6] Advantageous position of the Omsk region is a border with Kazakhstan (in the south and south-west), its proximity to the major suppliers of fuel resources (the boundary of the Tyumen Region in the west and north). In the east, Omsk region borders on Tomsk and Novosibirsk regions [2]. The Omsk region is a major industrial region of Russia, located in the top ten regions in terms of industrial output. The entire industry (about 9/10 of all industrial facilities) is concentrated in the Omsk region, and the rest of the region dominated by agriculture [4]. Omsk is a major cultural, scientific, educational and financial center with a developed banking system. Academic, industry and university research and their close relationship characterize research capacity of the Omsk region. Industry science represents by 17 research organizations and many industrial enterprises. University science represents by 4 academies, 6 universities, 9 institutes and 14 affiliated universities. Existing scientific potential is effectively used in solving the problems of socio-economic development of the Omsk region, including the implementation of industrial policy in the region and allows for technology development, and competitive in the global market [7]. In June 2011, the rating agency Moody's Investors Service upgraded the ratings of the Omsk region on a global scale foreign and local currency from the Ba3 to the level of Ba2 and from level Aa3.ru to the level Aa2.ru respectively. Ratings outlook is «stable». 54

55 Assessment assigned to the region, reflects the positive trend of economic development, improving the quality of governance in the region and the stabilization of interbudgetary relations [8]. On the basis of ratings of the consortium «Expert RA - AK&M» has assigned credit rating of the Omsk region at the level of A+ (high reliability) with a stable outlook. The presentation of investment attractiveness of Russian regions of Omsk region on the highest level of investment attractiveness awarded 10th place ranking in total Russian and first place in the Siberian Federal District in terms of investment risk [7]. Today the Omsk region is quite famous all over the world region. In the first quarter of 2010, the amount received foreign investment in the Omsk region increased by 26.1% over the same period of 2009 and amounted to million dollars (accumulated investments million U.S. dollars) [7 ]. Currently, interest in the Omsk region shows investors from CIS countries (Kazakhstan, Belarus, Ukraine, Uzbekistan, Azerbaijan, Kyrgyzstan, and Tajikistan) and abroad (Cyprus, the Netherlands, Austria, Germany, Switzerland, British Virgin Islands). Investment mostly goes to wholesale and retail trade, manufacturing, transport and communications. Thus, the Omsk region has the following competitive advantages [9]: significant resource potential: human, natural, investment; a developed manufacturing activity: chemical and petrochemical, oil refining, food processing, construction materials, machinery, timber processing; advantageous geographical position; transportation system; industrial exploitation of natural resources north of the Omsk region; advanced scientific and educational complex; intensive technologies of production; modern business and industrial infrastructure; considerable potential of small business development; effective foreign economic cooperation, a significant amount of foreign trade. 55 However, the development of the Omsk region is limited to the following factors [9]: significant depreciation of fixed assets in the sectors of the economy and infrastructure;

56 high costs due to economies of severe climatic conditions, low productivity, high material and energy consumption of products, tariffs of natural monopolies; energy dependence of the Omsk region on the supply of coal from the Republic of Kazakhstan; dependence of the regional budget revenues from payments to the main taxpayer Open Stock Company «Sibneft»; «aging» of personnel in branches of material production; decline the population of the Omsk Region; dehydration and contamination of Irtysh river water as the main source of the Omsk region General Economic Trends, Leading Industries At the turn of the 20th century, as a result of installation in Trans-Siberian railroad, Omsk has become a major transportation center that has a favorable geographical position at the crossroads of the Irtysh river and the railway continental significance. During the Great Patriotic War in the Omsk region were evacuated more than 100 companies that changed the structure of production of the Omsk region. Along with the traditional organization of agricultural machine-building complex emerged, which accounted for a large share of the defense industry, power industry. Since the beginning of oil and gas fields in Western Siberia in 1955 in the city of Omsk oil refinery was built, established the country's largest petrochemical complex. Thus, the pre-reform period in the Omsk region has developed specialization in such fields as chemistry, machine building, oriented primarily to military orders, was established east of the country's largest agro-industrial complex. Transformation the economy of the Omsk region was accompanied by a redistribution of ownership, a sharp narrowing of the field of state regulation of economy, a significant weakening of the military-industrial complex, a sharp reduction of state support in all spheres of life, collapse of industrial production and other processes that have affected the economy and social sphere of the Omsk region. Implementation of socio-economic reform has changed the economic structure of the Omsk region. Economy of the Omsk region has no basic characteristics the national economy of other Siberian regions. It has no raw material orientation; the base of the region is manufacturing sector, which is not typical for Siberia. 56

57 The most competitive industries such as export-oriented chemical and petrochemical, oil refining, innovative engineering, food industry, based on the expansion of consumer demand. Light, forest industry, construction industry have the potential for further development. Development of the agro-industrial complex of the Omsk region has some potential. The main natural resource of the Omsk region is agricultural land, with their relatively high infrastructure arrangement [9]. The volume of gross regional product in the Omsk region in 2009 amounted to billion rubles, or nearly 4% above the previous year [21]. The growth of gross regional product in the Omsk region up to 2010 was 7.2% compared to last year [20]. In 2010, the socioeconomic development of the Omsk region abolished the effect of financial crisis and reached a stable trend of growth. The industrial production volume index and the volume of products shipped reached pre-crisis period [18]. Figure 18 Structure of gross regional product of the Omsk region One of the leading sectors of the Omsk region is the region's industrial complex. There are more than 26 percent of the regional capital stock, occupied 21 percent of the working population. Growth in industrial production in July 2011 exceeded the 7.5 percent compared to the same period in 2010 (an average of Russia - 5.2%) and was 116%. Observed following the dynamics of industrial production [14] (Figure 19). 57

58 Figure 19 - Dynamics of industrial production Strong growth of industrial production in the region ensures a steady demand for domestic and foreign markets. Enterprises of processing industry of the Omsk region, trying to meet the growing demand for its products, in proportion to increasing rates of industrial production [19]. The most active participants in the industrial market in January - April 2011 are manufacturing and process areas, which provided 11.8% growth in industrial production index in relation to the past year [19,13]. In 2010, the region introduced over 10 new productions, including the first phase of a glass factory, the largest complex of isomerization of light gasoline fractions of plant, veneer and plywood, a pilot plant for production of bricks with slag materials, cereals and milk processing plants, substation «Pribreznaya». Also it released the first batch of products at the factory for the production of medicinal cotton flax [18]. Table 7 Indices of economic activities in the period January June 2011 January - June 2011, percent compared January June 2010 percent compared June 2010 June 2011 percent compared May 2010 Manufacturing industry 111,8 117,8 109,4 food products, beverages and tobacco industry ,8 110,1 textile and clothing industry 175,8 в 3,5 р. 189,4 leather, leather products and footwear industry 2,2 times more 3,2 times more 190,2 wood processing and manufacturing of wood products industry 111,2 107,8 105,9 pulp and paper production, publishing and printing 105,2 109,2 103,4 111,7 131,1 103,1 coke and petroleum 58

59 chemical industry 124,1 109,5 118,1 rubber and plastic products industry 129,3 110,7 126,6 other nonmetallic mineral products industry 147,7 148,3 123,6 metals and metal products industry 102,8 117,8 117,4 machinery and equipment 126,5 117,1 120,9 electronic and optical equipment 111,9 100,3 109,1 transport equipment 92,7 90,5 84,9 other manufacturing 143,6 160,1 116,2 Thus, in the manufacturing sector has positive dynamics for development, with an increase in performance in 13 out of 15 industries. The biggest increase in the index of industrial production has among the enterprises of the Omsk region, specializing in manufacturing nonmetallic mineral products (147.7%) and plastic and rubber products (129.3%) [19]. In addition, high-tech sector of production rapidly grows in the manufacture of optical, electronic and electrical equipment. During the period from January to June 2011 there was an increase of the index of industrial production by 11.9% [19]. Machinery-producing industry has considerable scientific and industrial potential. Main products: launch vehicles, spacecraft, aircraft engines and accessories, cryogenics, radio stations and radio communications systems, microwave systems, systems and devices of automation of processes, test equipment for power systems, medical equipment, vehicles, railway equipment, for agriculture and domestic purposes [7]. For the production of equipment and machinery recorded growth of 126.5% compared to January June the previous year [19]. Food sector produces in the Omsk region such agricultural commodities as: meat (meat, sausages, canned meat and convenience foods, etc.); milk (manufacture of dairy products, butter, ice cream, cheese, powdered milk, canned milk, baby food, etc.); grains (flour, bakery and confectionery products, ect.). In addition, there is a wide range of beverages: mineral water, beer, liquor and soft drinks. In total sales of goods and services to manufacturing, this sector accounts for more than 59

60 14 percent. Every year export of food products from Russia abroad is increasing. The food industry employs over 22 thousand people, it is more than 21 percent of the average number of employees in manufacturing industries [7]. The Omsk region is a highly developed agricultural region, has one of the largest in the east of the country's agro-industrial complex. The leading sectors of agriculture are: crop (main products - wheat, rye, barley, oats); dairy and beef cattle; poultry; pig. The Omsk region is among the top ten largest producers of milk and meat in the Russian Federation. Production of main agricultural products per capita in the Omsk region for several years is higher than the sum of the Russian Federation and the Siberian Federal District. Agricultural enterprises maintained at the level of 2009 production of meat and milk. In 2010, purchase prices for milk and raw materials significantly increased from agricultural producers in the region, rates of subsidy for the purchase and sale of milk rose were up by almost 5 times the level of However, for most types of food included in the list of socially important foodstuffs of prime necessity, in the Omsk region, consumer prices are the lowest among the subjects of the Siberian Federal District [18]. The chemical industry continued its growth in the industrial production index up to 124.1%. It keeps the high-level production of prefabricated concrete. During January - June 2011 the company released thousand cubic meters of reinforced concrete constructions, which is 71.4% more than the same period last year. In comparison with June 2010, the current index increased by 58.3% [17]. Manufacture of bricks, blocks, tiles and other ceramic products also increased. Their capacity for six months amounted to 75.4 million bricks, which is 28.2% more than six months of The index of the current June exceeded the May index over 50% [17]. 60

61 The volume of timber production for January June 2011 amounted to thousand cubic meters, it is more (7.8%) than the same period last year. The current rate in June fell by almost 8.3% compared to last year [17]. Thus, industrial growth of the Omsk region is higher than the average for the Siberian Federal District, which is 105.9% and average industrial production index for Russia (103%) Energy, Mineral and other Natural Resources The Omsk region has a wide range of some types of minerals. Territorial balance of mineral reserves in the Omsk region accounted for 11 deposits, the balance reserves of building materials in the territory of the Omsk region 115 of deposits. In addition, the region has 151 field and 8 of the manifestations of lake sapropels, 68 fields and 361 promising area of peat, 54 fields and the site groundwater. In 2010, in Omsk region explored deposits of sand 6 new construction, a deposit of sapropel. During the year, operated 21 fields, including: 1 oil, 1 - NGLs, 11 building sand, 6 brick loam, 2 expanded clay materials. It should be noted that mineral resources of the Omsk region is an important reserve for the development of the region's economy, but now demand is only partially [1]. The northern part of the Omsk region has an area of 59 thousand of square kilometers, along with the adjacent territories of the Tomsk and Tyumen regions is in the oil and gas field Kaymysovskiy West Siberian petroleum province. A small portion (northwest region) is a member Priuralsky and Frolovskaya petroleum areas of the West Siberian petroleum province. On the territory of the northern part of the Omsk region allocated to seven oil and gas regions [1]. Initial total geological reserves of oil in the Omsk region are million tons; extractable geological reserves are million tons. Territorial balance of reserves the Omsk region included four oil fields: Prirahtovskoe, Taytymskoe, Yagyl Yahskoe and south-western part of Krapivinskoye field (the other part of the deposit is located in the Tomsk region). The magnitude of the recoverable reserves Prirahtovskoe, Taytymskoe and Yagyl-Yahskoe deposits are small, Krapivinskoye deposit (within the Omsk and Tomsk regions) is medium-sized field [1]. In 2010, the Omsk region produced million tons of oil, which was million tons less than in Since 2001, the Omsk region developed an only one field Krapivinskoye field (south-western part). 61

62 Figure 20 - Dynamics of oil production in Krapivinskoye field in the Omsk region In terms of volume of output of petrochemical complex organization is a leader in the industrial structure of the Omsk region. This sector is concentrated one-third of fixed assets, accounting for about 70 percent of the volume of shipped goods in production, employment sixth of working in the industry. In the volume of regional exports petrochemical products is the dominant [7]. Territorial balance of gas and condensate in the Omsk region in 2010 accounted for one gas condensate field Tevrizskoe field. The deposit is located within the oil and gas Priirtyshskaya area. In 2010, 6.6 million cubic meters of gas was produced on Tevrizskoe field, which is 41% below the design volume. Peat deposits of the Omsk region are diverse in terms of education and development, qualitative and quantitative characteristics of deposits and many other features, a change in which there is a clear pattern associated with the natural zones. Average peat index of the Omsk region is 16%, the highest (40%) is typical for the northern and north western districts of the region, but in the central part of the region, it falls to 1%. The accounting balance of peat reserves in the Omsk region in 2011 accounted for 68 peat deposits with total reserves of tons, off-balance sheet reserves of tons. The total area of fields is hectares. Nonferrous and rare metals in the Omsk region represented by reserves and resources of titanium and zirconium from Tara placer and Borisov Pavlograd placer district, located respectively in northern and southern parts of the region. Titanium-zirconium raws from Tara placer open from search and audit work in Ore minerals are ilmenite, leucoxene, rutile, anatase, brookite and zircon, monazite, wholesome ingredients - titanium dioxide and zirconium. In zircon ilmenite sands of Tara placer there are rare and rare earth elements: cerium, hafnium, lanthanum, ytterbium, samarium, terbium, gadolinium, and others. 62

63 In the Omsk region in 2011, the territorial balance of mineral reserves included reserves of glass sand as a useful component of the same name associated zirconium-titanium-containing parts of Tara placer (experimental unit, northern and southern parts of the left-bank area). Tailings sands of Tare placer are estimated to C2 in the number of thousand tones, including the southern part 834 thousand tons, the northern part thousand tons, southern part (excluding the pilot unit) 3890 thousand tons. In the Omsk region explored by a deposit of bentonite clay Liublinskaya field, located 45 km north-west of the city of Omsk. As of 2011 reserves of bentonite clays Liublinskaya field (20392 thousand tons) transferred to the State Reserve. Balance of reserves in 2011 accounted for one deposit of mineral salts Lake Ebeyty. Territorial balance reserves of building materials for the Omsk region in 2011 accounted for 115 of deposits, of which the sand 33, brick clay (loam) 72, pottery clay 1, expanded clay materials 6, silt for spreading tar paper 1, raw materials for production drainage pipes 1, marl 1. The main raw material for the manufacture of brick and tile production in Omsk region are upper dermal clay and loam. Balance of reserves in the Omsk region in 2011 accounted for 72 field brick raw material, 16 are being developed, 56 are located in the state reserve. Reserves of most of the explored deposits are classified as small (less than 5 million tons), 6 fields - medium (5-20 million tons). Deposits of brick raw material in the north region are located near the district centers and the largest settlements in the southern part of the Omsk region spread evenly. Balance reserves of raw brick account cubic meters. During the period from 2006 to 2010, in the fields of the Omsk region was produced 1801 thousand cubic meters of loam brick, including in thousand cubic meters, in 2007 and thousand cubic meters, in thousand cubic meters, in thousand cubic meters. In 2010 compared with 2006, more than halved production of raw brick, during this period was not explored any new deposits. The raw materials for production of expanded clay gravel are low-melting argillaceous rocks, which swells during rapid firing, forming a lightweight cellular structure material (expanded clay clay). In the absence of natural gravel expanded clay is an essential building material used as fillers in the manufacture of insulating and structural lightweight concrete. Balance reserves of raw materials as expanded clay accounted for six fields with 63

64 reserves of thousand cubic meters. The three fields are developing, the rest are in the state reserve. In the Omsk region explored by a deposit of clay pottery Cherlak field, that located 0.4 km south in the area Cherlak and has an area of 1.23 hectares, with estimated reserves cubic meters. The raw material for production of phosphate fertilizers in the Omsk region are bog phosphates. Bog phosphates identified and explored in 9 fields and total reserves are 8277 tons. The energy sector provides vital functions of all branches of the regional economy and largely determines the formation of the main parameters of socio-economic development of the Omsk region. However, electricity generation power plants, located in Omsk region, covers 70 percent of total electricity consumption in the region. The missing amount of electricity supplied from the wholesale market in Russia. In order to eliminate shortages of heat and electricity of the Omsk region, providing a backup power supply for the developing areas approved (by Decree of the Government of the Omsk region from November 5, rp) investment program for the development of grid infrastructure in the Omsk region in [15]. This document will help attract development of power in long-term investments. In 2010, work continued on the implementation of joint with the Open Joint Stock Company «Gazprom» gas pipeline project under the program of gasification of Russian regions. In order to reduce the energy intensity of gross domestic product, to reduce budget spending to pay for energy and increasing tax revenues to budgets of all levels in the Omsk region, work to establish a comprehensive program to improve energy efficiency of the regional economy and to reduce energy costs in the public sector [7]. Thus, in June 2011 the index of industrial production mining declined over the month by nearly 7% per year 19%. Production and distribution of electricity, gas and water in June, the company also engaged in reluctantly. Compared with last month of their volume decreased by 1.8%, and in relation to the first summer month of last year remained nearly the same level. In 2011, compared with six months of 2010, production of thermal energy decreased at 5%. During the six months to make energy companies had million 100 Gcal. In June, volumes were 0.2% higher than a year ago [17]. 64

65 2.3.4 Strategy and Perspective Economy Development The Strategy of socio-economic development of the Omsk region until 2020 [9] are defined by long-term goals and priorities, objectives and main directions of economic and social development of the Omsk region. Promising opportunities for the development of the Omsk region include: strengthening the position of sectors the «growth points» of the economy of the Omsk region; possibility of (re)production due to some existing «growth points»; organization of special economic zone in the territory of the Omsk region; creating new high-tech industries, industrial clusters; development potential of agriculture; growth of investment attractiveness of the Omsk region, to attract strategic investors in the economy and social sphere; formation of a coherent innovation system of the Omsk region; small business development in the field of innovation, services, housing and utilities; development of transport system the creation of multi-modal transportation hub. Potential risks of the Omsk region are: a sharp decline in tax revenues due to possible regional budget basic registration tax (Open Stock Company «Sibneft») outside of the Omsk region; replacement products with domestic and regional markets for producers of neighboring regions and foreign countries; possibility of reducing the investment appeal of the Omsk region; decrease the competitiveness of individual sectors of the Omsk region after the Russian Federation into the World Trade Organization; brain drain out of the Omsk region; deterioration of the epidemiological situation in the Omsk region. The tasks of the economic development of the Omsk region up to 2020 include: 65

66 improved spatial distribution of productive forces and economic zoning, building and strengthening «growth points» of the economy of the Omsk region; forming a positive image of the Omsk region as a region for long-term investments, with favorable conditions for business; formation of the innovation system of the Omsk region (to increase production of innovative products, increasing the share of innovation active organizations); organization of industrial-production special economic zone (development of high-tech industries); cluster development of key economic sectors (petrochemical, engineering, biotechnology, agriculture, timber-processing facilities); small business development (infrastructure and environment to stimulate entrepreneurial activity); expansion of transport infrastructure (construction of major transport infrastructure, the creation of multi-modal transport hub); development of foreign trade, regional cooperation of the Omsk region, the implementation of the existing building in territorial cooperation with the strategic directions of the Omsk region and neighboring regions. The main indicators of the strategic goal and objectives of the socio-economic development of the Omsk region up to 2020 are: growth in gross regional product of the Omsk region of 2.4 times compared to 2005; increase the share of innovative products (in total production) to 10 percent; increase the share of turnover of small businesses (in total sales organizations) to 25 percent; growth in real income by 2.5 times compared to 2005; reducing poverty to 10 percent. In order to improve the spatial distribution of productive forces an analysis of socioeconomic development of areas of the Omsk region carried out, this analysis defined territory, with the prerequisites for accelerated economic growth, as well as the most problematic areas identified economic areas and their centers (points of accelerated development and concentration of the productive forces). As a result, it was given 5 economic regions and their centers: the central, northern, western, eastern and southern economic areas. An important way to improve 66

67 the spatial distribution of productive forces is the creation of new and strengthening existing «growth points» of the economy of the Omsk region. The aim of industry is the creation of new high-tech industrial complexes, modernization and expansion of existing production facilities, production of new competitive products. The priority tasks of the Government of the Omsk region in this area are: implementation of cluster approach to the development of industrial capacity; encourage the creation of new industries; intensification of industrial development of scientific and technological developments; intensive development of oil refining and petrochemicals, the further deepening of hydrocarbon processing; forming industrial complex biotech industries; creating conditions for sustainable development of wood processing industry; development of machine-building, reform of the military-industrial enterprises on the basis of the formation of integrated structures; involvement in industrial turnover of the local resource base; development of construction materials. Expected results from the realization is the growth of industrial output in 2020 is 2.7 times the In the petrochemical complex promising projects are planned. In the machineryproducing industry in the medium and long term will take place on the one hand, the processes of formation of regional industrial clusters, and with another the process of entering into a vertically-integrated structure and increase the participation of the Omsk region in the interregional division of labor. Regional industry clusters will be formed in the following areas: appliances, communications and automation, medical equipment (release of funds and distance radio communication systems, medical devices, equipment, tools); aviation and space technology; equipment for oil and gas production and processing; 67

68 transport engineering; agricultural machinery. The Omsk military-industrial complex will be integrated in the vertically integrated structure. The new direction of industrial development of Omsk region will be the formation of biotechnology complex that produces high technology products that will enhance the competitiveness of the Omsk region on the biotech market. The purpose of the organization of the Omsk region of industrial-production special economic zone is to create an industrial complex of advanced high-tech industries that use advanced technologies and competitive products with high added value. The most promising areas of development are: biotechnology (organization of bioethanol production, organic acids, amino acids, enzymes, biopolymers); nanotechnology (production of nanoporous carbon having no analogues in the world of technology); high-tech chemical manufacturing (chemical products of high technological added value); modern medical technologies (production of medical products using raw materials as a short flax fiber). Expected results are: attraction of investments in fixed assets of more than 20 billion rubles; additional volume of industrial production: in billion rubles in 2011 more than 20 billion rubles; additional tax revenues to budgets of all levels: in 2008 about 400 million rubles in 2011 more than 1.8 billion rubles; creating more than 1300 highly skilled jobs. The purpose of the agroindustrial complex is a reliable food supply of the Omsk region, strengthening the capacity of agriculture based on sustainable agriculture and food processing industries, strengthening of integration processes in the agricultural sector. Expected results are increasing agricultural output by 1.5 times the 2005 and growth in food production is 2.1 times the

69 The purpose of innovation is the creation of a regional innovation system, creating effective institutional, legal and economic mechanisms for the transition economies of the Omsk region of innovation and technological development path. The priority tasks of the Omsk region in this area are: development of infrastructure to support innovation, including innovation of small businesses; creating a system of financial and technical support to promising innovation projects; development and effective use of scientific, technological and intellectual potential of the Omsk region; formation of a regional information database of innovative projects and products manufactured in the Omsk region of innovative products in order to attract investors and encourage promotion of products to domestic and foreign markets. Expected results are: increase the share of innovative products (in total production) to 10 percent in 2020; increase in the number of innovation active business entities; creating new high-tech industries. The purpose of development of the energy complex is to ensure a reliable power base of socio-economic development of the Omsk region, to prevent energy supply crises in the Omsk region. The priority tasks of the Omsk region in this area are: structural integration of the subjects of electricity, the development of competitive energy market; support the construction of new generating capacity; support the construction of additional transmission lines connecting the Omsk region with other power systems; optimization schemes of heat and electricity of the Omsk region; regulation of tariffs for electricity and heat from the elimination of cross subsidies; introduction of alternative energy sources; energy-saving technologies. 69

70 Expected result is ensuring that people and economy of the Omsk region energy resources. The objective of developing foreign trade, international and interregional cooperation is the strengthening of foreign economic relations of the Omsk region, the increase in foreign trade and inter-regional trade, cooperation in scientific, technical and cultural spheres. The priority tasks of the Omsk region in this area are: more efficient use of foreign economic potential for the sustainable development of economic sectors; geographic expansion of foreign economic cooperation; optimizing the commodity structure of exports and imports of the Omsk region; cooperation with foreign investors, creation of joint ventures; government support of foreign economic activity of the Omsk region on promotion of goods and services; organization and holding of exhibitions and fairs, presentations of the Omsk region; deepening international relations education, health care, culture and sports of the Omsk region. Expected results are foreign trade turnover of Omsk region in billion dollars and growth of interregional trade in the Omsk region 2.4 times the SWOT Analysis of Logistic Development in Region Table 8 Strengths 22. Advantageous geopolitical location, because it is located on the Trans-Siberian Railway and the intersection of two federal highways (1P-402 "Omsk - Tyumen 'and M 51" Baikal "); 23. Omsk has strong transport connections to existing industrial centers of the Omsk region (located within the administrative boundaries of Omsk, Omsk and Liublinsk municipal districts of Omsk region), with neighboring regions, border areas of Russian Federation. 24. The city and region are on the federal highway 1P-402, through this highway go flows trade to the west and east of Russia, south to the Republic of Kazakhstan, the Central Asian republics Weaknesses 19. Regional logistics market is in its infant state, it is mainly confined with its isolated types of services that are included in the sphere of logistics: transportation, shipping or storage. 20. The passage of Transsib through the territory of the Republic of Kazakhstan in the areas "Irtysh - Karasuk" and "Isilkul - Petuhovo", which reduces its transportation and freight capacity. 21. Absence of railway, linking directly the Omsk region with the Republic of Kazakhstan 22. Absence of a bypass road around Omsk city, linking federal highways 1P-402 "Omsk - Tyumen" M 51 "Baikal" and M 38 "Omsk - 70

71 and the states of Southeast Asia. 25. Omsk region has trade relations with 70 countries, foreign trade turnover with these countries is more than U.S. $ 1 billion and shows a positive momentum. 26. Passage across the region of federal-aid highway "Tyumen - Omsk", located in close proximity to the federal road M51 "Baikal". 27. Passage through the territory of the Trans- Siberian Railway (the next station Plamya, Karbysheva with advanced railway infrastructure). 28. Occurrence of industrial railways with a total length of more than 25 km. 29. Occurrence of navigable Irtysh River. 30. Construction of international airport "Omsk- Fedorovka." 31. Sustainable telephone connection, which is provided by the Omsk branch of JSC "Sibirtelecom" technological and communication networks of organizations (located within the boundaries of the most advanced of organization is the telecommunications system of RAO "Russian Railways"). 32. Water facilities and water disposal system of the region have substantial reserves of the payload (60% and 85% respectively). 33. The existing transport infrastructure objects (facilities of building airport "Omsk-Fedorovka") have a steady heat supply system. 34. The occurrence in the region lines of industry and factories that use high technology and they are need in using the methods of modern logistics; 35. Coming to the region of large Russian and foreign trading companies; 36. well-developed transport infrastructure of the region, the presence of major transport hubs; 37. Potential access to significant volume of export and import cargos, including container cargos; 17. Relatively weak competitive environment. Cherlak" bypassing the city of Omsk. 23. Low technical characteristic of federal highways 402 1R "Omsk-Tyumen" (section "Krasny Yar - Tyukalinsk"), M 51 "Baikal" and M 38 "Omsk - Cherlak." 24. Disadvantage and a highness of industrial railways wear (75-80%), and therefore the requires of new construction (20 km) and reconstruction (18 km) sidings; 25. Low-traffic capacity of River Irtysh due to lowing of water levels in river. 26. incompleteness of construction of international airport "Omsk-Fedorovka" 27. Lack of the necessary volume of storage infrastructure of Class A and B can not comply with increasing demands for quality and scope of service flows. 10. local logistics organizations have not enough experience with logistics services providers, major international and Russian retail chains and freight forwarding companies; weak technical level of equipment and development of ground infrastructure, poorly used potential of small aircraft, especially in realization of freight traffic. The occurrence in the field of creation Concept in Omsk multimodal transport and logistics hub (MTLU), long-term target program of Omsk region "Development of transport infrastructure of Omsk Region ( departmental special-purpose program" State support for highway, water and railway transport on the 71

72 territory of Omsk region in 2011 " Opportunities 1. Creation of MTLU in the Omsk region, based on airport-mtlu complex. 2. Due to the increasing volume of international transportation in the direction of Europe - Asia to create a modern complex for processing of goods that meets international standards, in the directions of maximum concentration of foreign trade and transit traffic will allow to secure the break-off and "narrow" places, as well as the integration of transport networks in Russia to transport systems Europe and Asia. 3. Improving the quality of transportation and handling in the direction "East - West." 4. Providing connectivity of the southbound with northern territories of the country, the redistribution of freight flows in the direction of North - South, coming from Europe, the Urals and Siberia in the republic of the CIS, China, Southeast Asia and in the opposite direction. 5. Growth in exports of transportation services through the use of competitive (transport-regional) advantages of the region, development of international transport corridor 2 "Berlin - Minsk - Moscow - Nizhny Novgorod - Yekaterinburg." 6. To start the direction of the route to bypass the Trans-Siberian Railway in Kazakhstan and Omsk railway junction may be the building of a deep traversal "Tatar - Nazyvaevskaya - Konovalov," (585 km) and the strengthening of the existing site Tatar - Karasuk (212 km). 7. Construction of the railway "Tatar - Nazyvaevskaya - Konovalov" will provide development of relations with meridian northern territories of Russian Federation in the future, as well as improving the transport services of municipal districts of the Omsk region (Kalachinskaya, Gorky, Bolsherechensky, Sargatskogo, Tyukalinsk, Nazyvaevskaya). Construction of the railway Irtysh - Pavlodar, which will significantly increase freight and passenger flows from China and South-East Asia in the European part of Russia and back via the Omsk railway junction; 9. Highways Construction of 2 technical category stretching over 70 km, including two bridges over the river Irtysh and river Ob. 10. The growth of air carriers up to 7000 tons of cargo per year. Threats 1. The arrival into the region of foreign logistics operators; 2. maneuvering for leadership position about cargo service by agents from other regions; 3. dependence of consumers of warehouse and logistics services from retailers and industrial companies; 4. potential increases in the cost of labor; 5. Extremely high traffic load on the city Omsk Logistics and Procurement Issues 72

73 Omsk is formed historically as one of the most important transportation hubs in Russia, which provided a link European and Asian parts of the country. There is an international airport and Trans Siberian railway connects with the Central Siberian railway. Transport is represented by rail, road, river and air transport in the region. In terms of the existing national transport network, processing and redistribution of goods in the main areas are the most convenient transportation hub in Omsk. But for the further development of the region's it is needed to improved the transport infrastructure. Like all over the country it is represented by sites and networks, which started to operate in the Soviet era. Of course this high amortization level, which is expressed in the reduction of the airport network, reducing local traffic and a slight reduction of the road sector. It is required to make substantial improvement to improve the investment climate in the region transport infrastructure. RAILWAY INFRASTRUCTURE Omsk had received the further development thanks to Trans-Siberian Railway. Omsk Trans-Siberian Railway has 1.2 thousand kilometers of roads, and from the first years of exploitation is among the most stressful parts of the railway. This is the west part of the Great Siberian way where all cargo flows converge and diverge from east and west of Russia. Omsk railway junction, by the end of the XIX century was considered the largest on the West-Siberian railway. Today, the railroad is one of the components of the economic development of the Omsk region. It is exported an average of almost 45 thousand tons of goods every day from the territory of the Omsk region by rail, freight rates in 2010 increased 14.3%. The growth of rail capacity for the region indicates the emergence of new jobs, new impetus of the production development. Here is the State Transport Academy in the city for training of highly qualified and sought workers for the rail system [ JSC "Russian Railways" is the biggest partner of the Government of the Omsk region. Each year the regional authorities conclude bilateral agreements with the railroad on interaction and cooperation. On an equal footing in the area it is conducted the construction and the reconstruction of social important and railway facilities, and it has been also purchased nine trains for commuter traffic. The Russian government has allocated funds for the design of the branch, bypassing the regional center (i.e., Trans-Siberian Railway will bypass the Omsk railway hub, the new doubletrack electrified line Tatar - Nazyvaevskaya length of 295 km. The new line will be particularly freight-intensive in the field of traffic volume) [28]. 73

74 The Russian government funded engineering construction 295-kilometer stretch of railway bypass the city of Omsk. The funds will be allocated under the federal program to modernize the Russian transport system, calculated before According to analysts, Omsk project from the federal budget will get 25 billion rubles. Funds have been allocated for the beginning of construction. Construction of bypass is necessary in order to "transit goods do not go through the city, creating noise and environmental problems." Project implementation period is 2015 [29]. There are two railway stations according to international standards in Omsk,. TRANSPORTATION AND LOGISTICS CENTER OF THE OMSK REGION Omsk region, being at the intersection of transportation corridors connecting Europe to the Far East, Kazakhstan and China, has all the prerequisites for the creation of the largest transport and logistics center on the base of airport complex in Siberia. Organization of the modern international airport "Omsk - Fedorovka" will not only allow to form the main element of a multimodal transportation hub in the region, but also to ensure the development of related businesses on its territory, to organize a large number of new jobs and increase the investment attractiveness of the region. And beside that, the start of a modern airport "Omsk-Fedorovka" will improve the efficiency of transport and logistics system, will give the desired economic effect and bring the Omsk region to the next level of support and service flows. HIGHWAY TRANSPORT INFRASTRUCTURE Road complex of the Omsk region according to account dates of the State road supervision Office (UGADN) includes 8490 subjects of highway transport and 103 subject of road facilities. There are six checkpoints road for state control of international road transport on the border with the Republic of Kazakhstan. The total number of vehicles in the Omsk region is 86.4 thousand trucks on the period of 01/01/2010 according to the ATC UGIBDD Omsk region. The total length of roads in the Omsk region is sq km, including 11,3 thousand km - common (46.3% of the total length), of which the federal roads are km, and municipal roads are 3 a thousand miles, and local roads are sq km. The density of the public roads network to hard surface make up 56 km per 1000 sq. km. of the area, which is 12.9 thousand km. The total number of man-made structures on public roads is 201 bridges and overpasses. On federal roads thera are 18 bridges and overpasses, the total length of m. The section on regional and inter-municipal roads has 129 and 12 bridge overpasses, the total 74

75 length of running meters. On municipal roads there are located 42 bridges and overpasses, including 16 (7 bridges and overpasses 9) in the city of Omsk, [22]. Following the results of the analysis of economic and social situation of the Omsk region in 2009, road transport of passenger traffic and cargo has maintained its leading position among other forms of transport, which determines its key role in the transport system of the region. The activity in the road sector carries out 103 organizations in Omsk region, among them design and survey work - 9 companies, 94 - perform work on the maintenance, repair, construction of roads and road facilities for them (small, medium and large bridges and overpasses), production of building materials and production quality control. Federal Government Agency Federal Highway Administration "Siberia" executes Customer Options on federal roads, there is its branch office in the Omsk region (Omsk branch of FGU "Sibuprovtodor"). On the roads of the territorial value is the budgetary institution the Omsk region, "Managing Roads Omsk Region" (CU "UDH Omsk region). AIRLINE SERVICE INFRUSTRUCTURE The current airport "Omsk-Central" is located in 3 miles from the center of Omsk, surrounded by residential neighborhoods, that does not comply with safety off and landing aircraft, sanitary standards in terms of noise pollution and electromagnetic radiation, protecting the environment. Airport infrastructure "Omsk-Central" does not provide the service of modern aircraft types. The new international airport "Omsk-Fedorovka" is building in the city [30]. The construction of the airport is carried out under the strategy of Development "Omsk Airport" ( years) [31]. The construction of a modern airport will play an important role in the development of foreign economic relations of the Omsk region, will allow to carry passengers and freight not only in Russia but transit from Europe, the European part of Russia in Central Asian CIS countries, China, South-East Asia. The new airfield complex will be able to take aircraft Tu-204, IL-96 and B-747. The company "Hochtief Airport" (Germany) in 2007 developed the concept of bulding completion of the Airport "Omsk-Fedorovka", which defines the basic characteristics of the main airport, the amount of projected investment billion rubles, the construction period - 4 years. After making the 2007 amendments to federal legislation, allowing to make the transfer of property ownership of airports in Russian Federation, it is decided to complete the construction of the airport through public-private partnership. German consortium of companies Hochtief Aktiengesellschaft, Cushman & Wakefield and Company "Omsk Rufaudit-office" in March

76 is the winner of an open competition to develop a business plan of the airport Omsk-Fedorovka. The business plan is made in the spring of RIVER TRANSPORT INFRASTRUCTRUE Built in 1964, River Station stays in the heart of the city: the birthplace of the Omsk fortress. At present time, after the crisis of 90 years, the city re-connected passenger traffic on the Irtysh. JSC "Irtysh Shipping Company" provides routes for the lines: Omsk - Salekhard (in Tobolsk, Khanty-Mansiysk). Ships' Chernyshevsky "and" Homeland " go for the three-month period of navigation on this route. Today it is one of the few remaining river passenger routes in Russia. High-speed vessels operate Beach Voshod and Zarja on high-speed lines and Omsk- Tevriz Tevriz-Malaja Bicha. TRANSPORT SECTOR DEVELOPMENT PERSPECTIVES IN THE OMSK REGION On the territory of Omsk region it has been formed the objective conditions (organizational, technical and economic) to create a high-tech complex for storing, processing, redistribution of goods. At the same time, the market of transportation and logistics services of the Omsk region has congenerical range, there are mainly the freight forwarding and remain underdeveloped logistics services for freight management on the market. This state of transport and logistics services in the Omsk region inhibits the growth of cargo turnover at the regional, interregional levels, slows the rate of transport export services of Russian Federation on the Trans-Siberian Railway, and in the first place - on the North-South, which provided the link the European and Asian parts of the country. From the point of view of the existing national transport network, processing and redistribution of goods to most major destinations are justified by the Omsk Transport Hub. The formation zone of multimodal hub is on the federal highway 1P-402, through which trade flows go to the west and east of Russia, south to the Republic of Kazakhstan, the Central Asian republics and the nations of Southeast Asia. Omsk has the necessary number of highly qualified personnel for the operation of transport and logistics hub. This is determined by existence of specialized higher educational institutions training which prepare dedicated experts. 76

77 Location of the zone within the city of Omsk and its suburbs will attract the necessary human resources. As a result of investment projects realization by 2012 will create more than 2,500 highly skilled jobs and in the future ( ) an additional 4,000 jobs. The organization and functioning of multi-modal transport and logistics hub will solve several problems in the following areas: - Development of international transport corridor "Berlin - Minsk - Moscow - Yekaterinburg" with entrance to the border areas (Kazakhstan, China) and Central States and Southeast Asia; - providing of the competitiveness and sustainability of transport system of Russian Federation, the West Siberian macro region by means of development of support facilities of transport and logistics infrastructure; - development in the region of large local transport and logistics operators; - Increase of the transit potential of West Siberian macro region, development of international and interregional relations of the Omsk region; - Increasing of investment attractiveness of the Omsk region and improve its image position; - Strengthening of cooperation between the different actors of transport sector, the rationalization of their interaction, development of multimodal transport in the West Siberian macro-region; - Development of customs infrastructure, ensuring optimization of goods transportation costs in international traffic. There will be created the following objects MTLU as a result of realization in the areas of infrastructure of investment projects: - new airport complex "Omsk-Fedorovka" (capacity to thousand passengers in million passengers per year); - Road-rail terminal capacity of 20 million tonnes of cargo per year (till 2020); - Storage centers with capacity of 9 million tonnes of cargo per year; - River terminal capacity of 2.5 million tonnes of cargo per year; - Air terminal with a capacity of more than 10 tonnes of cargo per year. Creation of these infrastructure projects will allow: - to increase in 2012 volume of transported cargo to more than 2 times and 2.5 times - the number of transported passengers by air, to improve the structure and quality of services; - to create the unified network handling terminals and logistics centers in areas of "West-East" 77

78 with a southern (Kazakhstan, Central Asian republics) and the northern areas (northern areas of Western and Eastern Siberia). The total investment in transport infrastructure in the period from 2008 to 2020 will exceed 30 billion rubles. It will create about jobs during the period of realization of investment projects, tax revenues to budgets of all levels (from 2013) will exceed 1 billion rubles annually. The main expected results of zone development till 2020: - Creation of thousand square meters. m of warehouses of "A" and "B +" class, which are capable to provide the storing and the processing up to 20 million tons of transit cargo per year; - Construction and reconstruction of the Omsk region over 160 km of roads, 300 km of public railways, 35 km of industrial railways; - Reduction of the share of transportation costs in the structure of the final price of the goods from the existing 25% to 6% by 2020 (the average European level), reducing of delivery time by increasing the average speed of traffic on 7-9%; - Optimization of transportation process, as well as through the introduction of modern systems of traffic management on the basis of information industry. The share of transport enterprises in gross regional product of the Omsk region in 2007 was 6.5%. In the result of development in the area of transport and logistics infrastructure by 2020 the proportion of goods and services organizations, transportation and logistics in the Omsk region of GRP will increase to %. The list and description of stimulated measures of development of allocated zone, which are supposed to take (with specification: actions taken by federal authorities, authorities of the Russian Federation, municipalities, private initiatives). Measures of zone development will depend on the decision of the Government of Russian Federation, the question of ownership of the airport facilities "Omsk-Fedorovka", shares "Omsk airport." In the case of decision to transfer the shares "Omsk airport" to airport "Omsk-Fedorovka" in the ownership of Omsk Region, it must be made the next decisions by Russian Federation Government: - about the withdrawal of "Omsk airport" from the list of strategic joint-stock companies; - about Non-inclusion of the airport "Omsk-Central" in the list of federal airports. 78

79 It will be provided to build a new airport by the regional and federal (the Investment Fund for the construction of the airfield infrastructure of federal property) budgets, as well as private investors involved in public-private partnership by Government of the Omsk region. It is supposed to carry out in practice the construction of engineering infrastructure in the area (roads, access tracks, the objects of communal infrastructure) by means of federal, regional and local budgets for co-financing under the Federal Program "Development of Transport System of Russia ( )". There will be also involved the extra-budgetary funds - investments of private companies - large energy and resource procuring organizations. State support of the Omsk region Government for investment projects on creation of transport and logistics infrastructure will be implemented through co-financing the construction of highways, facilities of the communal infrastructure including them in the long-term target programs of the Omsk Region, as well as providing benefits to the holders of tax projects of Russian Federation. The amount of all investment billion rubles (costs for the reconstruction of sections of federal highways 1P-402 "Omsk - Tyumen and M 38" Omsk - Cherlak "construction of the Northern and Western bypasses around Omsk, the construction of a deep railroad bypass the section "Tatar - Nazyvaevskaya - Konovalov" are not included) - Reconstruction of the entrance to the existing industrial facilities area - 79 million (budget investments, 2007); - information analysis and preconstruction stage for the development of feasibility studies, including land purchase, project development million (private investment in 2007); - concept formulation, paperwork and design and survey works, participation in exhibition and investment forums - 8 million (private investment funds of the regional budget in 2007) - Investment in transport and logistics infrastructure are estimated at 35 billion rubles. The list and short summary of big investment projects on the territory of separate zones (the name, the core of the project, the stage of realization, the total duration of project implementation, expected results, the amount and sources of funding). OMSK MULTIMODAL TRANSPORT AND LOGISTICS HUB The OMSKY multimodal transport and logistics hub (MTLU) of the Federal level is priority investment projects for the development. 1. Construction of international airport "Omsk-Fedorovka." 79

80 Project also provides the construction of a new airport complex outside Omsk. MTLU will form on the basis of this new. The project concept of the airport design was prepared already(the developer - the company HOCHTIEF AirPort GmbH). It is supposed that owner of this airport will be Omsk region, this step needs for the private investment attraction for the airport construction. Project will be realized in 2011, total investment of about 5.3 billion rubles, including 3.1 billion rubles - the Investment Fund of the Russian Federation, 1.3 billion - money the investor, 0.9 billion - of the regional budget. The project Implementation should provide: - Increasing of transit goods transported by air transport from 3,200 to 10,000 tones; - increase passenger traffic in 2025 to 1.7 million people per year; - the service ability all types of passenger and cargo aircraft; - safety level improving (airport will be located outside city); - regional transportation development; - modern technologies introduction for passenger services, freight transport. 2. Multi-modal terminal and logistics center creating in the region of Druzhina (Omsk region) - high-tech multi-modal complex. Investor purchased the property of land, the feasibility study already finalized. The first phase is realized in with the investment about 7.7 billion rubles. Complex will be complete until 2020 with about 27.7 billion rubles (the project is supposed mainly by the private investor, excluded of engineering infrastructure construction). About 800 thousand square meters. m of warehouse terminals "A" class will be built with worker places, amount of processed goods - about 2.6 million tons per year (2012). 3. Multi-modal terminal and logistics center creating in the area Troetskoe (Omsk region). Investor purchased the property of land and prepared the investment project ( ). The total investment for years is about 2.8 billion rubles. It will be built 200 thousand square meters. m of warehouse terminals of class "A" and "B +" and about 2000 worker places [31]. References: [1] The general condition of mineral resources (minerals) of the Omsk region on 01 January [2] Description of the Omsk region [3] Description of the Omsk region [4] Description of the Omsk region 80

81 [5] Map of the Omsk region [6] Map of the Omsk region [7] Investment Passport of the Omsk region and the program for improving the investment climate in the Omsk region.html [8] Moody's raised the credit rating of the Omsk region (Regnum News Agency on June 22, 2011) [9] The strategy of socio-economic development of the Omsk region until [10] The Omsk region in Siberia is the leader in terms of small business development (regional news feed Siberia, the news from April 28, 2011) [11] General characteristics of the foreign economic relations of the Omsk region (Ministry of Economy of the Omsk region) ummary.html [12] Omsk region: the energy of success, Journal of Gas Business, 1 (January - February), 2011, p [13] The industrial production in the Omsk region in January June 2011http://omsk.gks.ru/public/release/prv_06-11.htm [14] The dynamics of industrial production index of the Omsk region in January June [15] Decree of the Government of the Omsk region on November 5, rp «On investment program for the development of Grid infrastructure in the Omsk region in » [16] Decreased mining and energy production in the Omsk region (Article from June 6, 2011) 81

82 [17] Saw, people from the Omsk region, saw (article from July 15, 2011) [18] Summarized the preliminary results for 2010 in the Omsk Region (Article from January 13, 2011) [19] Omsk region steadily gathering pace of industrial growth promyishlennogo_proizvodstva?print [20] GRP of the Omsk region in 2010 increased by 7.2%, GDP is projected at 4% [21] Валовый региональный продукт в основных ценах, тысяча рублей (Федеральная служба государственной статистики) [22] Gross regional product at basic prices, thousand rubles (Federal State Statistics Service) [23] Documents of the Federal Agency of Railway Transport of Russia [24] The town-planning concept of location and development of industrial zones and related areas of engineering and transport infrastructure in the city of Omsk untill 2025, approved by the Government of the Omsk region of gu, 152-p m.html [25] The target program of the Omsk region (funding the construction costs of engineering and transport infrastructure required for development zones) m.html [26] The concept of creation in Omsk multimodal transport and logistics hub, developed at the initiative of the Government of the Omsk region, long-term targeted program of the Omsk region «Development of transport infrastructure of Omsk Region ( )» 82

83 m.html [27] The departmental target program «State support for road, water and railway transportation in the territory of the Omsk region in 2011» m/64/pagecontent/0/body_files/file/prikaz_64_ pdf [28] [29] A major port on the river Irtysh and a railway junction on the Trans-Siberian Railway. Kommersant (Krasnoyarsk), 162 (4217), [30] [31] The development strategy of «Omsk Airport» ( гг) [32] 3 Prospects of the Equipment and Goods Delivery Related with Business Opportunities of Regions Based on the description of the potential regional economic development (Chapters 1, 2 and 3) it is possible to conclude that the Eurasian transport corridor is of interest and the prospect of not only as a transit for trade between Europe and Asia but also as a corridor that can be used to supply goods and equipment (both industrial and agricultural) in the Russian regions and cities located along the Eurasian transport corridor. Thus, these cities and regions are perspective both in terms of economic development and delivery of equipment in these regions as well the movement of cargo and goods from Europe and Asia. Directions of cargo flows between Europe and Asia are presented on the Figure

84 Figure 21 In the chapter the foreign trade activities and prospect of movement of the goods and equipment supply in industrial regions (Regions of Yekaterinburg, Omsk and Novosibirsk) located along the Eurasian transport corridor in territory of the Russian Federation are presented. 3.1 Novosibirsk and Novosibirsk region Foreign Economic Activity For last five years the Novosibirsk region has made considerable break in adjustment of foreign economic relations, its foreign trade turnover has increased several times, thus the export volume has grown in 1,9 times, and import - in 2 times. For example, only for 2009 the area share in foreign trade of Russia has grown from 0,46 % to 0,48 %, in export from 0,33 % to 0,40 %, in import there was a decrease almost in 2 times (from 0,69 % to 0,33 %) [1,3]. The foreign trade operations in 2010 were performed with partners from 105 countries (including far and near abroad). Export and import operations have arranged about 1,8 thousand participants of foreign trade activities registered in the Novosibirsk region. The number of the largest participants in 2010 included such enterprises as: Joint-Stock Company (JSC) "Novosibirsk Chemical Concentrates Plant", JSC "Airline" Siberia ", JSC 84

85 "Siberian Anthracite ", Federal State Unitary Enterprise (FSUE) "State Scientific-Production Enterprise "Splav", Society with Restricted Liability (SRL) "Siberian plant "Metal Profile", JSC "Novosibirsk Electrode Plant, Institute "International Tomography Center" of Russian Science Academy, JSC "Cathode", SRL "SibirTrans Global", SRL "Eurosib-terminal-Novosibirsk" which provided a value of 61% of the foreign trade turnover [1]. The foreign trade turnover of the basic partners of the Novosibirsk region (in % to the total result) is presented on Figure 22. The foreign trade turnover in 2010 has constituted about 3023,0 mln. dollars of the USA and has exceeded level of 2009 in 1,6 times. Figure 22. The foreign trade turnover in 2010 Table 9 Turnover in a zone of activity of Novosibirsk customs on the countries for 1 half-year 2010 [3] 3 3 The analysis was conducted on ten countries with the greatest value of a foreign trade turnover 85

86 Foreign trade turnover Export Import The country name U.S. $ thousand Specific weight, % U.S. $ thousand Specific weight, % U.S. $ thousand Specific weight, % Total ,70 100, ,30 100, ,40 100,0 Including: The far abroad ,60 66, ,00 54, ,60 85,2 NIS ,00 33, ,30 45, ,70 14,8 From them: China ,40 26, ,40 11, ,00 50,5 Kazakhstan ,70 13, ,20 19, ,50 4,6 Ukraine ,80 11, ,60 17, ,20 1,2 Germany ,60 8, ,90 7, ,70 9,9 India ,90 6, ,80 9,7 698,1 0,2 USA ,10 4, ,70 5, ,40 4,2 Bulgaria ,70 4, ,50 7,9 395,2 0,1 Kirghizia ,20 3, ,90 1, ,30 5,7 Turkmenia ,80 3, ,60 5,1 134,2 0 Japan ,50 2, , ,20 1,4 Others ,00 16, ,60 11, ,40 21,7 The main importer of the Novosibirsk region in 2010 is China (more than half of the total import turnover). Germany is on the second place with a share of the turnover for the import of 9.9%. Other countries have insignificant weight in structure of import of the Novosibirsk region (Table 9). Table 10 Turnover of the Novosibirsk region on import with the countries which have the greatest specific weight in NIS - Newly Independent States 86

87 The country China France Kazakhstan Germany USA Uzbekistan Republic Korea ,5 28,9 50,5 4,8 16,2 2,1 3,5 9,8 4,6 7,1 9,1 9,9 2,3 8,4 4,2 1,4 3,5 2,4 3,8 3,4 1,4 Both exports and import of international services also show a high dynamic development. The dynamics of foreign trade in the Novosibirsk region (U.S. $ million) is shown on Figure

88 Figure 23. The dynamics of foreign trade in the Novosibirsk region (U.S. $ million) For last five years the turnover of the international services was increased in 4,5 times, thus on export of services - in 4,6 times, on import of services - in 4,4 times. In 2010 the machinebuilding product constituted the greatest specific weight (70,5 %) in commodity structure of the region export. Deliveries of chemical product constituted 7,5 % from total amount of export, articles of food and agricultural raw 5,2 %. In imports of the Novosibirsk region the products machine-building complex is dominated, in 2010 its share amounted to 44.7%. Imports of textiles and shoes constituted 22.9%, foodstuffs and agricultural raw materials - 8.8%. In 2010, the trade turnover with the Russian Federation amounted to billion rubles. The most important component of foreign economic activity of the Novosibirsk region is a product group - machinery, equipment and vehicles, second place is occupied by products of 88

89 chemical industry, the third place - food and agricultural raw materials (Figure 24). The commodity structure of import of the Novosibirsk region is presented in Table 11. Figure 24. Structure of the import turnover of the Novosibirsk Region on the product groups in Table 11 The commodity structure of import in a zone of activity of Novosibirsk customs area for 6 months Codes 5 The commodity group name For 6 months of 2009 For 6 months of 2010 Cost, U.S. $ thousand Specific weight, % Cost, U.S. $ thousand Specific weight,% Total ,6 100, ,4 100,0 5 Codes of the commodity nomenclature of foreign economical activities 89

90 Codes The commodity group name including The food and agricultural goods and recourses Mineral fertilizers and recourses For 6 months of 2009 For 6 months of 2010 Cost, U.S. $ thousand Specific weight, % Cost, U.S. $ thousand Specific weight,% ,7 9, ,8 7, ,1 1, ,9 0,8 27 Fuel and energy goods 3 023,6 0, ,1 0, Chemical products industry, rubber ,6 11, ,6 11, Hides, fur and articles thereof 3 486,8 1, ,9 0, Wood and pulp and paper products Textiles, textile products and footwear ,2 3, ,8 2, ,7 20, ,4 25, Other products 4 449,7 1, ,1 0, Metals and articles thereof ,2 4, ,8 13, Machines, equipment and vehicles ,0 44, ,0 34, Other products 9 768,6 3, ,5 2,6 The analysis of import structure for testifies that as a whole the structure hasn't changed (Figure 25). However, some corrective amendments have been introduced. For example, the share of machines, the equipment and vehicles was reduced for benefit of import of metals and items from them, the share of articles of food for benefit of textiles, textile items and footwear. This is consequences of financial crisis reducing of the vehicles purchasing and transition to consumption of goods of own agricultural industry. For example, the first quarter 2009, the supply rate of machine-building products (spare parts for the plane, the mine 90

91 equipment and etc.) was reduced in 1,6 times, however, it constituted half of the Novosibirsk region import, the basic importer Germany. The car import has decreased in 7 times. Import of the food production has fallen to 22,5 %. Import of clothes and footwear which occupy about 20 % of supply rate hasn't fallen, 80 % from them are imported from the far abroad, basically from China). Analysis of 10 months of 2010 testifies about correction of the foreign trade activities of enterprises of the Novosibirsk region, the recovery after crisis and the old priorities restoration. So the import of equipment and vehicles is still far ahead in the imports commodity composition - almost U.S. $ 525 million, or 47 % of total imports. Imports of this group of goods in comparison with the same period last year grew by 1.9 times. In second place is the import of textiles, textile products and footwear % of total imports, or $ 245 million. These goods were imported in 2 times more compared to the same period last year [2,3]. The main supplier of imported goods in the Novosibirsk region in recent years has become China [3]. The following documents were signed in 2010 for the foreign economy activity development: - Agreement about trade-economic, scientific, technical, social and cultural cooperation between c Tomsk Regional Administration and Akimat 6 of East Kazakhstan oblast (Kazakhstan); - Memorandum on mutual cooperation with the People's Government of Xinjiang Uygur Autonomous Region; - Protocol of intent about cooperation in Healthcare Service with the Ministry of Social Affairs and Consumer Protection of Saxony (Germany); - Protocol of intentions with the company «Goodbaby Group» to create a manufacturing facility in Industrial Logistics Park (PLP) in the Novosibirsk region; - Protocol of Intent to establish neighborhoods relationship between Iskitim town of the Novosibirsk region of the Russian Federation and the city of Karamay Xinjiang Uygur Autonomous Region of China; 6 Akimat - regional administration in Kazakhstan 91

92 - Minutes of the Meeting between the Government of the Novosibirsk Oblast (Russian Federation) and the Kherson Regional State Administration (Ukraine) and the visit of R.N.Minnikhanov - President of Republic Tatarstan to the Novosibirsk region. At the present time there are 17 agreements about cooperation with the Novosibirsk region administrative and territorial entities with different foreign countries, with 8 administrativeterritorial units of NIS and with 25 administrative subjects of the Russian Federation. It is very important for the development of foreign trade relations became official visits of the foreign delegations and work of business community from Germany, USA, China, Finland, Poland, Switzerland, Italy, the Republic of Austria, the Kingdom of Denmark, Belgium and Thailand, the Republic of Korea, Indonesia, Vietnam, India, Iran, Israel and the NIS countries and Russian Federation regions. According to preliminary data for 2010 about 567 million U.S. dollars of the foreign investment was attracted in the region's economy [3]. First half of

93 First half of 2010 Figure 25. The dynamics of the import commodity structure in the Novosibirsk customs area for 1st half of On the territory of four areas of the Novosibirsk region (Bagansky, Kupinsky, Karasuksky, Chistoozernom) the cross border cooperation of the Novosibirsk region with Republic Kazakhstan is realized. Here a few the technological schemes accepted and began to realize: 1. Technological scheme for the organization of the admission organization through state boundary of the Russian Federation of persons, vehicles, cargoes, the goods and animals in an air check point «Novosibirsk (Tolmachevo)» 7, 2. Technological scheme of the organization of the admission organization through state boundary of the Russian Federation of persons, vehicles, cargoes, the goods and animals in MAСP "Pavlovka" 8. 7 Airport in Novosibirsk 8 MAСP - multilateral automobile check point 93

94 Activities on of international and interregional cooperation, the presentation of trade and economic, scientific, technological, cultural and educational potential of the Novosibirsk region abroad and in the Russian Federation subjects, build-up of capacity of the foreign trade turnover are continued also in Prospects of deliveries of the equipment and goods related with business opportunities of the Novosibirsk region The mechanical engineering is the basic industry-importer of the Novosibirsk region (about 50 % of total import). At this stage it is connected with modernization and technical reequipment of this indystry. Consumer goods, other vehicles, electronics, etc. constitutes the second part of the imports. The share of chemical production, agriculture, light and food industries is high in the structure of the region import too. In structure of the region external turnover of the service import the basic share is accounted to transportation services (more than 80 %). In turn, in structure of turnover of transportation services the air service of cargoes and passengers is dominated. Automobile and railway transportation practically don't render the service of the international character. Cargo transit by railway has no direct relation to Novosibirsk area, and automobile regional carriers practically don't participate in the international cargo transportation. In import of services without the transport block the basic share is accounted on tourist services and services of hotels and restaurants (more than 90 %). The reasons on which for the near future will be imported goods, food, materials and equipment in Novosibirsk region: Climatic features and geographical location: 1) It is impossible to grow up the majority of the fruit grades in industrial volumes (for imported fruit and exotic vegetables); 2) It is impossible to provide the certain health-tourism and sanatorium-recreational services; The remoteness of the region from the other Russian regions, which growing fruits as well as duration of their delivery; High tariffs on automobile and rail transportation; Lack of necessary technologies; Impossibility (limitation of financial resources) to purchase patents and technologies for production; Lack of necessary kinds of material resources, the equipment, etc. 94

95 The basic share in sphere of service external turnover is accounted (and it is assumed will account to 2013) on transport services, and then on tourist services as well hotels and restaurants. Countries - importers of this type of service: Turkey, the UAE, China, Thailand, Bulgaria, Egypt, Tunisia. The favorable factors of the import development in the Novosibirsk region are [4]: favourable geographical location (in the center of Russia); transformation of region to the transport and logistics hub; strong demand for manufactured goods (mainly the machinery engineering products) of some NIS countries as well countries of Europe and Asia; the activities of the consular, commercial and other missions of several countries; the steady domestic demand for consumer goods and agricultural products not produced in the region territory. Considering the above facts, it is necessary the development of import in the nearest years for the solving of the tasks, such as [4]: the condition creation for the growth of imports of technological equipment, machinery, equipment needs for renovation of the basic assets, technical upgrade and modernization of all sectors of economy - industry, agriculture, transport and communications, electro energy, construction, sphere of services and others; development of import-substituting production of substitute products in processing industries (first of all - the food and light industries) and services of substitutes in the tourism sphere and sanatorium treatment; the imports increasing of the primarily goods for the redistribution purposes in the trading region networks for south of Western Siberia with the development of the transport and logistics cluster development; creation of conditions for the reduction of the illegal consumer goods imports; strengthening of measures to protect domestic market from imports of lowtechnology, obsolete equipment, as well as substandard or the health dangerous goods by means of the introduction of international quality standards GLP, GMP, GCP, quality management system ISO 9001:2000. The solution for these problems involves the further development of the foreign trade geography of the Novosibirsk region. The priority direction will be, first of all, the integration growth with the NIS countries, especially with Central Asian countries on imports of agricultural products. In this case the NIS markets, in the medium term prospect, are considered basically as like markets of sale for innovative, high-tech products of the region enterprises. 95

96 Markets in East and South-East Asia (China, Korea, Japan) are considered as one of basic source of the technological equipment and machinery imported to the region for the needs of modernization and technical re-equipment of enterprises. European countries (Germany, Bulgaria, France, Italy, Switzerland and others) will be considered further as reliable trading partners for the Novosibirsk region in the sphere of the necessary equipment and machinery import. The establishment of foreign economic relations with countries in South and West Asia, America and Australia should be focused on the strategic mission achieving of the Novosibirsk region - transformation into the main innovative center in Eastern Russia. Concerning the various countries, the economy of the Novosibirsk region has certain priorities. The basic priorities on individual countries-importers are presented in the Table 12 [3]. These priorities are considered in accordance with the Concept of development of international and foreign economic relations of the Novosibirsk region for the period up to 2013, which was approved by the Governor of Novosibirsk region [4]. Table 12 Geographical priorities of the Novosibirsk region in the development of import transactions up to 2013 Country groups Countries of Eastern and South East Asia Countries of Eastern and West Europe Countries of South and West Asia Countries of America, Africa, Australia and Import Import of machinery and equipment, construction materials for the needs of modernization and creation of new industries (Priority - China, Korea, Japan); Import of spare parts, raw materials and components for the development of assembly plants in the region; Import of consumer goods of the good quality, the reduction of illegal imports Imports of high-tech equipment, transport, supplies for the needs of modernization of the enterprises and research providing (from Germany, France, Italy, Denmark, Switzerland, etc.); Providing the necessary level of imports of consumer goods, highquality medicines Imports of high-tech equipment (from India, Israel, etc.); Necessary level support of import of consumer goods that are unique to these territories Import of specialized equipment (from the USA, Canada, Australia); 96

97 Country groups Import Oceania Necessary level support of import of consumer goods that are unique to these territories NIS Countries Imports of machinery engineering products (first of all transport and agriculture); Imports of food products for which there are no prospects for import substitution (especially fruits and vegetables) and agricultural raw materials for the needs of the food industry; Providing of uninterrupted supplies of raw materials and components for the needs of manufacturing industry on the basis of established and new relationships The import development of the Novosibirsk region in the future connected with the expansion of intermediary networks, growth their size and the gradual transfer of wholesale purchases for the needs of Western Siberia in Novosibirsk region in connection with consolidating of the status - as a logistics distribution center in the south of Western Siberia. According to expert evaluation, the most attractive spheres for investors are food, light industry, building materials, transportation, communications, trade and services. The implementation of the mega investment projects is supposed in the Novosibirsk region which will also open new opportunities for integration of achievements of science and requirements of real sector as well will help to businessmen to choose the most perspective business directions. These are biotechnology, food and pharmaceuticals, information and communications technology, new technology in the mineral-raw complex, power electronics, intelligent security systems; Siberian ceramics, modern construction and energy efficient technologies, technologies for recycling industrial wastes, non-metallic minerals processing and others. The Novosibirsk region intends to develop sphere of cross-border cooperation for the creation of free economic trade zones. Priority directions of economic cooperation are specified: the deep wood processing, the hydrocarbons processing, mineral raw, metals, power (including renewed sources), tourist-recreational activity, transport logistic and communication directions, ecology, environment and natural resources [5]. References: [1] 97

98 [2] Business Portal of the Novosibirsk region (About outcomes of international and foreign economic relations of Novosibirsk region and Novosibirsk in 2010) [3] "Evaluation of the economy capacity of Novosibirsk in import substitution of goods and services Search and information study of the Institute of Applied Statistics and strategic analysis for the Municipal autonomous agency of the city of Novosibirsk, Town Center Development Enterprise ", Novosibirsk, [4] The concept of international and foreign economic relations of the Novosibirsk region for the period up to 2013, [5] Strategic plan of the sustainable development of the city of Novosibirsk and the complex target program, Yekaterinburg and Sverdlovsk region Foreign Economic Activity of Yekaterinburg and Sverdlovsk region During the present period of time the Sverdlovsk area and Ekaterinburg performs the foreign trade activities with 131 country of the world. The foreign trade turnover in 2010 has constituted 12,3 billion US dollars, that for 20 percent higher than indicators of Export has constituted 8,9 billion dollars, import - 3,4 billion dollars. During the reporting period, foreign trade turnover amounted to more than 34 percent of the gross regional product, and its share has grown over the year 2009 by 5 per cent [1]. The main partners in the region in the foreign trade among industrialized countries: USA, Turkey, Germany, France, China and Italy, with the total turnover of more than 50 percent. These countries are the main consumers of steel products, machinery and chemical industries that constitute the basis of the Sverdlovsk region export. The trade turnover in the second half of 2010 in value term constituted 5.5 billion $ US. Exports exceeded 4 billion $ US, and imports reached 1.4 billion $ US. Total turnover grew by 20 percent over the same period last year. The basis of Sverdlovsk area export in foreign trade with all countries for period January - June 2010 traditionally constituted the metals and products from them, products of the chemical industry and mechanical engineering. Dynamics of the export deliveries growth outrun the industrial production growth in the Sverdlovsk region, whose index have been increased for this period by 10 %. The metal sale value increased by 42 %. For 98

99 example, exports of ferrous metals increased by 31 %, products from them - by 36 %, and the delivery cost of copper grew in 2.2 times. The increase of indicators of the metal export is connected with growth of the world market prices for all types of products. At that the weigh supply rates of metals have grown as a whole only by 10 %. Growth of the mechanical engineering products deliveries constituted 3 %. Indicators of import increase more slowly, thus it was registered the supply reducing from far abroad foreign countries. The increase of turnover with NIS countries was basically due to the export growth to Kazakhstan - by 44 %, Ukraine - 57 %. The trade volume with such countries of the far abroad, as Italy (in 4,8 times), Turkey (in 2,1 times) has been considerably increased. Deliveries to the Netherlands have been grown at 50 %, to China - by 24 %. Import has been grown from China by 98 %. It is necessary to notice that volumes of our deliveries to Germany, India have slightly decreased. Ten of the largest trade partner leaders of the Sverdlovsk region is traditional: the USA, Kazakhstan, Turkey, India, Netherlands, Italy, Germany, China, Ukraine. France [6]. In structure of Sverdlovsk export for 2010 the share of the goods with high value added has increased. Thus, engineering machine exports grew from 10% in 2009 to 18% in Volumes of supplies of engineering products in 2010, the CIS countries grew by 38%. Most important projects, followed by the Ministry are as follows: The technology center opening for the production of municipal and special technics based on car Novouralsk Amur in Tajikistan; the construction of the plant for processing marble and plant for the production of dry mortar companies' OMIA "and" Saint Gobain "in Polevskoy and other projects. In structure of Sverdlovsk export for 2010 the share of the goods with high value added has been increased. So, machine-building export has grown from 10 % in 2009 to 18 % in the past. Supply rates of goods of mechanical engineering, to the CIS countries have grown on 38 % [1-3]. Analysis of the export structure of far foreign countries shows that the basic goods are metals still and their products, exports of which is increased every year, product of a petrochemical complex in the far abroad countries, and also commodity group machinebuilding products Prospects of deliveries of the equipment and goods related with business opportunities of the Novosibirsk region 99

100 THE INVESTMENT POLICY IN SVERDLOVSK REGION AND PROSPECTS OF THE GOODS IMPORT The Sverdlovsk area offers the big possibilities for investments, basically, in sectors with high potential of development, namely in raw production (metals and minerals) and the heavy industry (oil extracting and the pipeline equipment). Trade possibilities were reduced because of the all-russian financial crisis in which course rouble devaluation has undermined the import competitiveness. Nevertheless, interest to import the west goods in sphere of telecommunications, processings of the foodstuffs, systems of protection and safety, the medical goods and building materials remains. The basic subjects of import also are the foodstuffs, the equipment for processing of foodstuff, the packing equipment and chemical goods. Nonferrous metallurgy is a growing industry. Verhne-Saldinsky titanic plant - the largest titanium producer in Russia and second in the world. In the developing industry of food production and processing, many companies are buying foreign equipment for the improvement of its production. The financial crisis has increased demand for domestically produced food, as consumers are unable to afford a more expensive imported products. Many of the Yekaterinburg leading food producers, including Confectionery fabric Confi, manufacturers of ice cream Myasomoltorga, meat complex and brewer Yekateriburgsky Patra, remained financially stable and can look forward to further growth. Heads and Sverdlovsk region and a city of Yekaterinburg promoted foreign investments and have created a favorable climate to business. In region the Department of assistance to foreign investments works successfully and there is web-page on the Internet: / on which it is presented more than 200 local companies. In 1998 the city government was opened the own Center of support of the investments for help to the foreign companies. Despite all reasonable efforts, undertaken at local level, foreign investors face in Yekaterinburg with the same problems as everywhere in Russia. Questions of customs duties and taxes open the list of problems. Sverdlovsk Region has a leading position on attraction of the foreign investment at the the Urals area 9. The five largest investors are the USA, Great Britain, China, Germany and Cyprus. More than 70 foreign companies opened their representative offices in Yekaterinburg, 9 The Urals or Ural Mountains are the heart of Eurasia where Eastern Europe and Northern Asia are connected and divided by a chain of mountains stretching for 1,500 miles (2,400 km) North and South from the Arctic tundra to the deserts of the Caspian Sea. 100

101 such as DHL, Ford, IBM, Proctor and Gamble, and Siemens. Lufthansa airline opened the agency in Yekaterinburg too, which makes a weekly three flights to Frankfurt. America has the highest investment position in the Sverdlovsk region too with an investment of $ 114 million and 79 joint ventures. There are three largest USA investors: Coca-Cola, Pepsi and USWest. In 1998 Coca-Cola and Pepsi were opened a bottling plant in Yekaterinburg. USWest created a joint venture Uralwestcom, which has become a leader in Yekaterinburg market for the sale and servicing of mobile phones. America is the largest trading partner of the Sverdlovsk region. Besides the USA, the five largest trading partners of the Sverdlovsk region are the Netherlands, Kazakhstan, Germany and the Great Britain. According the second quarter of 2010 results, the dynamics of investment performance remained positive. Totally in the first half of 2010, foreign investment increased by 27% compared to 2009 and amounted to 740 million US dollars. In general, it is possible to notice that of the investment activity rates in 2010 reflects the state policy of the foreign investment attracting as well as increased interest of foreign investors in the Sverdlovsk region. Positive trend in the segment of investment may be linked to the gradual recovery of industrial production of regional enterprises, with activity in the construction sector as well as returning to the project implementation which was frozen in the crisis time and new projects. In this connection the most indicative in the first half of the year 2010 is the volume of "other" foreign investments (i.e. trading and other credits). Their general growth by 12,6 % in comparison with the first half of the year 2009 reflects proceeding stabilization of a situation, including in credit markets. Inflow of the foreign direct investment (which in January-June 2010 received 18.6 million US dollars with a 30% reduction in the last year's period) remains weak still. Taking into account sharp falling of sales volumes of the enterprises in excess of volume of direct investments in 2009 over 2010 can be connected with necessity of proprietors for financing of the enterprises at the expense of the means accumulated abroad, which are statistically classified as "foreign direct investment." Besides, the volume of the direct foreign investments, which have been arrived in Sverdlovsk area during the first half of the year 2010, doesn't reflect the planned growth of the given segment of the investments which accurate display is expected in the end of 2010 the beginning of The volume of the portfolio investment in the amount of US $ 105 million and exceeded the same period in 2009 more than 14 times become the hallmark of the first half of Recovery in the stock market is a distinctive feature of the end of 2009, when the company began to actively enter the securities markets. 101

102 It should also notice of the shares sale of large regional enterprises of metallurgical production. In the organization of metal production has received more than 65% of the total foreign investment in the Sverdlovsk region [6]. At the moment in Sverdlovsk the project draft of the development program of foreign economic relations for is developed. The project is directed on fast restoration of import and its further growth in short-term prospect, especially import of the investment goods - mechanical engineering products. Dynamics of attraction of foreign investments in Sverdlovsk area will depend not only on measures of the state support. From the point of view of foreign investors on a domestic market of Sverdlovsk area investors will be to compete with the European part of the Russian Federation, which diverts over major projects, and on world - with China and others speedily developed countries, which promptly modernizing an infrastructure and offering more favorable conditions for investments into hi-tech productions [5]. It is necessary to notice that the situation changes in connection with the Customs union formation. In frame of this union the foreign investors can get of advantage of uniform economic space. In this context the foreign investor can accept the decision for benefit of adjacent regions. Considering all these factors, the international strategy of area should consist in an effective utilization both foreign policy factors, and unique regional features. In this connection the program puts the tasks for more complete using of the export potential of the Sverdlovsk region, actively represent the region at the international level as well as all sorts of assistance to economic entities engaged in foreign trade activities. The special place in the program occupies a direction for attraction of the foreign companies to creation in territory of Sverdlovsk region of joint production of the modern hi-tech goods and to technological re-equipment of the enterprises. For today the region had some new arguments for attraction of the foreign capital. For example, laws on decrease in the profits taxes and taxes on property for separate categories of investors are passed. Besides, new mechanisms of interaction with the foreign branch unions and national consolidations are developed. Already now the ministry actively encourages to take part in the events which are conducted in territory of Sverdlovsk region and abroad: Association of the European business in Russia, the American trade board, the Swiss association of mechanical and electrical engineering industries «SWISSMEM», the Association of Italian Manufacturers of Machine Tools «UCIMU» and others. For the Program realization 14 visits of delegations of Sverdlovsk region abroad, 24 acceptances of official and other foreign delegations, 19 presentations of potential of Sverdlovsk 102

103 area on various platforms, 38 business negotiations of participants of foreign trade activities of Sverdlovsk region with foreign partners annually will be organized. For interaction of participants of foreign economy activities with state bodies of various levels the access to the information on changes of procedures on foreign economy activities, elimination of administrative and other barriers events for information-analytical provision of development international and foreign economic relations of Sverdlovsk region will be organized. In the program it is supposed the basic efforts to direct on expansion and a diversification of cooperation with economically developed countries of Europe (Germany, France, Austria, Italy) and the countries of Asia, first of all with Japan, Korea, Singapore, Taiwan involving in cooperation processes also the countries Southern, Central and the Eastern Europe. The great attention In the program is given to cooperation with the countries of fastgrowing economy of India, Brazil and China which can give a new impulse to development of Economy of Sverdlovsk region, first of all, from the point of view of attraction of foreign investors in perspective infrastructural and power projects in territory of Sverdlovsk region also. It is supposed to raise dynamics of development of cooperation communications with the NIS countries too TITANIUM VALLEY - SPECIAL ECONOMIC ZONE The Titanium Valley in Sverdlovsk region is planned as special economic zone in the Urals Federal District of Russia. The new economic zone will create a new technological base for the titanium maker and allow it to attract new partners which will focus on creating titanium products for the aircraft, automotive, shipbuilding and medical industries. It will be created around the world's largest titanium producer, VSMPO-Avisma.The Russian government plans to invest at least 40 billion rubles ($1.3 billion) for the project [7].The Titanium Valley project is part of Russia's ongoing effort to modernize and diversify its economy, one of the main programs of Dmitry Medvedev's presidency.the main purpose of this Zone is to give enterprises the opportunity to develop and produce value added products in the region and bring international partners to the zone[8]. The special economic zone is located in the city of Verkhnyaya Salda. T Approximately 20 companies (such as VSMPO-Avisma, Arvi, SR Systematics, MAG, and United Aircraft Corporation and etc) will participate in the project. Titanium Valley has to bring about 20,000 new jobs in the Sverdlovsk oblast and new investment [9]. References: 103

104 [1] Official web-site of Government of Cverdlovsk region, (About outcomes of international and foreign economic relations of Sverdlovsk region and Yekaterinburg in 2010) [2] outcomes of international and foreign economic relations of Sverdlovsk region and Yekaterinburg in 2010 (18 March 2011). [3] Business web-portal of Yekaterenburg (About outcomes of international and foreign economic relations of Yekaterinburg in 2010) [4] Department of Foreign Investment Promotion [5] Program development of foreign economic relations, [6] Investment Web-Portal of Sverdlovsk region [7] The Russian Federal Agency - Federal Press, [8] [9] "Titanium valley to draw investment". Russia Today Omsk and Omsk region Foreign Economic Activity The world financial crisis has exerted essential impact on falling of volumes of the foreign trade operations. The foreign trade turnover of the Omsk region in 2009 constituted in current prices of 884,3 million US dollars, including export 463,5 million US dollars, import 420,8 million US dollars. All indicators of foreign trade of the Omsk region have decreased in comparison with 2008: a foreign trade turnover on 38,3 %, export on 28,2 %, import on 46,6 %. The balance of the foreign trade sheet as a result of more considerable reducing of the goods import developed positive in the sum of 42,7 million US dollars. In 2009 the foreign trade turnover of the Omsk region was characterized by increase in a share of the goods export. In comparison with 2008 the export share has grown on 7,4 percentage points and corresponded 52,4 % from all foreign trade turnover for The organizations of the Omsk region performed the trade relations with 78 countries of the world. The goods were exported in 66 countries of the world, delivered from 61 countries of the world. The greatest volumes of the 104

105 foreign trade operations in 2009 had to the NIS countries 61,9 % from a foreign trade turnover. In comparison with 2008 with the Netherlands (volumes of foreign trade have considerably increased by 56,6 %), Japan (in 2,0 times), Gibraltar (in 2,3 times) [1]. Figure 26. Share of the basic countries-partners in a foreign trade turnover of the Omsk region in 2009 (in % to a total result) In 2010, the organization of the Omsk Region performed the trade relations with 77 countries. Foreign trade turnover of the Omsk region for 2010 amounted to million US dollars. At the same time export has constituted million US dollars, imports million USD [2].The main trading partners were: Netherlands, Czech Republic, Germany, Italy, France, Japan, Kyrgyzstan, Kazakhstan, Ukraine, South Korea, Turkey and Thailand. The share of basic partner countries in the foreign trade turnover of Omsk region in 2010 (as a percentage of the total) is shown in Figure Prospects of Deliveries of the Equipment and Goods Related with Business Opportunities of Regions The commodity structure of exports depends on the regional production potential of the region and include three type of the basic export goods. 105

106 First of all the chemical industry, the rubber production (which share corresponded 64,4 % from all export 2009) has the lead positions in export of the Omsk region. Export of the chemical industry and rubber was reduced by 35,2% in 2009 in comparison with The Omsk region has a good potential for the foods and agriculture raw export development. It is second commodity group of the export goods. Production of these goods exceeds consumption volumes that creates preconditions for enter on a foreign market. The third commodity group on the importance in structure of the Omsk region export machines, equipment and vehicles (its share is equal 10,5 % of all export of goods) in 2009 that on 1,0 percentage points more than in Export of machines, the equipment and vehicles was reduced in comparison with 2008 to 20,6 %. The basic exports goods are presented in Table 13. Table 13 The Basic Exports Goods Goods of the chemical industry Carbon (soot) 33,6% Foodstuffs and agricultural raw materials Milk and condensed cream -27,9% Machinery, equipment and vehicles The automatic control devices 7,6% Tires the rubber new - 18,2% Ice-creams 14,9% The isolated wires - 7,2% Ethers and their derivatives - 17,8% Rubber synthetic - 14,8% Wheat both wheaten-rye mix -9,3% Bread, flour confectionery, cookies, cakes 7,6% The demonstration devices 7,2% The telephone devices 5,7% Plastic and items from them - 6,7% Spirit ethyl and spirits - 4,9% Cranes, valves 5,6% Hydrocarbons acyclic - 4,0% Sausage items - 4,6% Machines agricultural for preparation and soil handling 3,9% Pasta - 2,6% The bearing ball and roller 2,6% In the commodity structure of imports of the Omsk region in 2009, there have been changes. In previous years machinery, equipment and vehicles had a dominant position. In present time the 106

107 group of foodstuffs and agricultural raw materials has dominant position. Their share in 2009, increased in comparison with 2008, by 32.9%. The most part of purchases on import of foodstuffs and agricultural raw materials directed for the NIS countries (94.7% of total food imports in 2009). The main imports of this commodity group accounted for fruits and nuts, and vegetables. The Omsk region exports basically the fuel and energy goods, goods of the chemical industry, rubber. Almost 40% in import of the Omsk region occupy machines, the equipment and vehicles. These deliveries allow to create in region the hi-tech productions issuing competitive, modern goods, with good prospects, both on Russian, and on international the markets. About 20% of import consists of deliveries of vegetables and fruit which owing to environmental conditions can't be grown up in the Omsk region. Also in region goods of the chemical industry is delivered; mineral products (coal); metals and items from them [1]. Figure 27. Commodity structure of import of the goods of the Omsk region in 2009 (in percentage to result) 107

108 EXPORT in 2010 IMPORT in 2010 Figure 28. Commodity structure of export and import in 2010 (in percentage to result) Foreign Investments Today the Omsk region is reliable object for economic investments due to the stable economic development, growing consumer capability of the region population, the state support to investment projects and accurate strategy on forming of the favorable investment climate. At all events with participation of representatives of executive authorities of the Omsk region (exhibition or trade and economic mission) the great attention is given to positioning of Omsk region as attractive for investment. As the result today the Omsk region is well known around the world and is one of the economically developed and stable regions of Russia for the attraction of foreign investors. Investments from 59 countries of the world were received in 2009 (on 4 countries more than in 2008). Foreign investments in economy of the Omsk region for

109 consists of 489,4 million US dollars. The share of direct investments has constituted 32,2 %. The saved up foreign investments for January, 1st, 2010 constituted 862,7 million US dollars. The largest investments came from the partners of Kazakhstan, Cyprus, the Netherlands, Austria, Switzerland, British Virgin Islands, Germany and Ukraine. By volume of the foreign investments saved up for January, 1st, 2010 eight countries were in the lead: Cyprus, the Netherlands, Kazakhstan, Austria, Switzerland, Slovakia, the United Kingdom, Germany. Processing productions and wholesale trade were as the most attractive to an investment of the foreign capital in The volume of the saved up foreign capital by the end of December, 2010 constituted 1074,4 mln. dollars of the USA that on 24,5 % more than on the end of December, On volume of the foreign investments saved up for January, 1st, 2011 were in the lead: the Netherlands, Cyprus, Kazakhstan, Austria, Switzerland, Germany, Great Britain. The indicator on 11,2 % exceeds previous year level. The share of direct investments constituted 18,4 %, for comparison in 2004 it constituted 1,4 %. The dynamics of foreign trade in the Omsk region (US $ million) is presented on Figure 29. The basic countries investors: Kazakhstan, the Netherlands, Germany, Cyprus, Austria, Ukraine, Belarus, Uzbekistan, Switzerland. Investments came in wholesale trade, including trade through agents 181,6 mln. US dollars (33,4% of all receipts), production of foodstuff 168,3 mln. US dollars (30,9 %), chemical production 63,9 mln. US dollars (11,8 %), transport and communication 41,0 (7,5 %) production of rubber and plastic items 20,3 mln. US dollars (3,7 %). 109

110 Figure 29. The dynamics of foreign trade in the Omsk region (US $ million) In present time the development of foreign trade cooperation as one of the priorities of the Government of the Omsk region will be in the following areas: Promotion of products and services to the Omsk region to external markets; Implementation of existing competitive advantages of the Omsk region in international and interregional cooperation; Strengthening the positive image of the Omsk region; Activization of cross-border cooperation with regions of Kazakhstan. Since 2010 Omsk Region worked in the conditions of the Customs union forming and changes of standard-legal base in this connection. On January 1, 2010 the Customs code of Customs union has been introduced and since December, 29th the Federal low «About customs regulation» is acted. This act almost completely abolished the Customs Code of the Russian Federation. In 2010 it has been arranged 19 thousand declarations on the goods. It approximately on 2,5 thousand declarations is less, than 2009 as in the second half of the year declaring of the goods which moved participants of foreign trade activities from Kazakhstan to the Omsk region and on the contrary has been cancelled. Thus the foreign trade turnover grew and constituted 1,703 млрд US dollars for year. Export 1,338 billion US dollars, import 364 billion US dollars. Thus, the balance of a trade turnover was positive last year and constituted as a result of 973 billion US dollars. 110

111 The positive dynamics turned out by the increase in exports of light oil. For example, jet fuel was exported to Afghanistan in large quantities. So, in 2010, Afghanistan became too one of leader country with which the Omsk region had the largest trade volumes (in the list of 10 these countries also Kyrgyzstan, Uzbekistan, Ukraine, China, Germany, Poland, etc.). Among participants of foreign trade activities by the leader of export deliveries still have OSS «Gazprom oil» with the affiliated undertakings JSC "Gazpromneft-Aero", OSS "Gazpromneft-ONPZ", "Gazpromneft-sm". 3.4 Situation with Customs and the Customs Union Formation (Exports and Imports) Since 1st Jul, 2011 on internal borders of the countries of Customs union the customs control concerning the goods of the third countries issued in free circulation in territory of the Russian Federation, Republic Kazakhstan and Byelorussia was canceled. The customs supervision functions were transferred on the Customs union outline borders [5]. LEGAL DOCUMENTS FOR THE CUSTOMS PROCEDURE REGULATION The Customs Code of Customs Union between the Russian Federation, Belarus and Kazakhstan began to operate from July 1, 2010 on the base the next documents [6]: - Agreement between the Governments of the Republic of Belarus, Kazakhstan Republic and the Russian Federation from "On principles of levying indirect taxes on exported/ imported goods, performed works and provided services in the Customs Union " (hereinafter - Agreement); - Protocol on the procedure for levying indirect taxes and the mechanisms of their payment for exported/import goods in Customs Union of (hereinafter - the Protocol); - Protocol on the procedure for levying indirect taxes in the performance of works and services in the Customs Union of 11/12/2009; - The report on modification of the Agreement of 1/25/2008 in Protocol on the procedure for levying indirect taxes in the performance of works and services in the Customs Union of 11/12/2009 ; - The Denunciation of international treaties and regulations governing the indirect taxes in mutual trade (in accordance with Art. 59 of the Vienna Convention on the Law of Treaties, 05/23/1969). Now in addition to these basic regulations in the structure of the customs laws there are 79 international treaties, they have been issued for development of the Customs Code of the Customs Union and clarify certain provisions of customs laws. 111

112 The main goal of taxing authorities is the fiscal control introduction over of goods, works and services movement in mutual trade between countries - participants of the Customs Union. Before, the cargo customs declaration (CCD) was the basic document which could regulate the goods movement through a state customs border, now (with Customs Union creation) the tax declaration (TD) - the statement for the goods import and payment of indirect taxes (further - the statement) - the basic document. The standard-legal basis of the indirect taxation regulation of in the customs union is considered in [6]. THE INFORMATION EXCHANGE IN ELECTRONIC FORM At the present time, the Protocol on the exchange of electronic information between tax authorities of the States - the Customs Union about payments of indirect taxes sums determines the information interchange order in electronic form via communication channels with applying of the information security means for the procedure safety. Application Form and Rules (the order) of the application form filling on the goods import and payment of indirect taxes are Appendices named above Protocol [12]. Protocol accepting has been caused by interest of the parties in control strengthening over goods import/export, accomplishment of works, rendering of services, timely and complete receipt of indirect taxes to budgets of state members of Customs union. DECLARATION VIA INTERNET Initially in the Law «About customs regulation» was assumed that all goods declarations since January 1, 2011 will be submitted in electronic form. But date has been moved to January 1, 2014 year because it is necessary complete equipping traders with necessary equipment, software, possibility for electronic signature applying. However, the amount of goods declarations filed in Omsk customs in electronic form, is growing very quickly. This form of declaration used by all customs offices empowered to accept the declaration of goods, and today has 52% of goods declarations are made already via Internet. Soon OJSC "Gazprom oil" finishes the software installing and export of petroleum products will also be formalized using the Electronic Declaration. ABOUT BORDER WITH KAZAKHSTAN According to the order of Russian Federal Customs Service of April 2011 in the area of responsibility of the Omsk Customs three posts - "Isilkulsky", "Novovarshavsky" and "involuntary" three posts - "Isilkulsky", "Novovarshavsky" and "Nevolnoe" were liquidated. 112

113 Since 1 July 2011, the customs registration on the Russian-Kazakhstan site of the customs border completely abolished. There is only the customs control. At the border is only checked the goods status (that is, it is produced in Kazakhstan or it is imported into Kazakhstan from the third countries). «If it will not be accepted other decisions since July, 1st, 2011 from border customs supervision and then on the Russian-Kazakhstan border there are only boundary bodies will leave also. But it is in ideal. It is quite probable that some functions at customs will be kept and then in those check points which are available, can remain and separate public officials of customs. Still there are a lot of questions.» [5]. Not completely clear, for example, how will be move across the customs border with Kazakhstan the dual-using goods that can be used for weapons and military equipment creation. Remain and excisable goods, the same alcohol. In addition, today there is a list of 406 headings, which are imported into the territory of Kazakhstan from third countries with a rate lower than the uniform rate of customs union. And if the products in this list are imported from Kazakhstan to Russia, then in this case it is necessary to make customs clearance. Siberian Customs Department sent proposals to the customs office checkpoint "Olkhovka." Through this checkpoint not only the Kazakhstan goods are imported, but also goods from third countries - Kyrgyzstan and Uzbekistan. It makes sense the customs office to keep. Options are there for the conservation and customs offices in Odessa and Isilkul. Logistically, it would be reasonable. Via Odessa, for example, there is direct route to Astana. [5]. But it is still not clear. Customs checkpoint Omsk" and "Airport Omsk", of course, remain. In addition, in the Omsk region is assumed to retain the two customs posts on the border - the post "Odessa" and checkpoint "Olkhovka." About checkpoint "Olkhovka" the decision has been taken already and after July 1, it became an internal customs post and was renamed to "Cherlaksky." In Cherlak there is a warehouse of temporary storage, and on this post auto car and machine with cargo from third countries will continue to come, for example from Kyrgyzstan or Uzbekistan, completed the procedure of customs transit. However, there are no customs officers on the checkpoints. In addition, since June 29, the joined the Federal Law 394-Federal Legislation, which introduced major changes to some legislative acts concerning the veterinary, sanitary-quarantine, phytosanitary, transport control. All these controls on Russian sector of the Russian-Kazakhstan border after July 1 will not be implemented. At the border will only border guards. [5]. ABOUT COUNTERFEIT In 2010, Omsk Customs identified 20,940 units of counterfeit goods. Mainly It was alcohol and consumer goods imported from Kazakhstan and which were made in China. Splash 113

114 importation of counterfeit products after July 1, 2010 (when the Customs Union Customs Code began to perform) does not occur because the customs control at the border crossing points still exists and remains and carries out in full. The border authorities in any case remain at checkpoints across the state border even after the removal of the customs control. The Border protection service also has control over the import into Russia of counterfeit goods. Omsk Customs continues to work in this direction but the work methods changed. The counterfeit products can detect not only on the border but also in domestic markets [5]. Since July 1, 2010 customs service controls at the border: - only the movement of dual-use goods and the so-called withdrawal goods (406 commodity items for which import duties in Kazakhstan is lower than in Russia); - the movement of individual autocars (because the control over the import into Russia of autocars, according to agreements within the Customs Union of Russia, Belarus and Kazakhstan, will remain until January 1, 2013 with respect to vehicles imported and executed on the territory of Belarus and Kazakhstan after ). Only since it will be possible to transport cars freely through border without payment of difference in car payments. At present time cross-border transportation of dual-use controls - The Kazakhstan side. The Kazakhstan authorities ensure that the July 1, 2011, they developed the administrative measures which prevent the ingress of these goods to Russia in general and in the Omsk region, in particular. STATEMENT ON GOODS IMPORT AND PAYMENT OF INDIRECT TAXES The cargo customs declaration (CCD) was one of the basic documents for goods transporting through a state customs border. After the Customs union creation and the formation of unit customs territory the main document is Statement of imported goods and the indirect taxes payment. The Statement contains 20 essential requisites as like in CCD. For example: the name of the supplier of goods and their quantity, the amount of indirect taxes to be paid, i.e. a document confirming the payment as indirect taxes on imported goods, and committing turnovers on exports. The basic function of the Statement - evidence of the transaction legality, i.e. conformity all actions in the export / import operations to the legislation of States - members of Customs union. 114

115 The following function of the Statement - confirmation of the legality of goods import/ export under the bodies of tax control. The Statement is also the registration-statistical documents of mutual trade. The Statement consists of three sections and appendices: the first and third sections are filled by a taxpayer, and the second is required to fill the tax authority. The Statement must be submitted by the taxpayer on paper in four copies and in electronic form to the tax authority in the place of registration. The statement must be signed by the head of the organization or its representative and the chief accountant or an individual entrepreneur. The representative's authority must be confirmed in accordance with the legislation of the State - a member of the Customs Union [6]. RULES OF FILLING OF THE STATEMENT FOR GOODS IMPORT AND PAYMENT OF INDIRECT TAXES present in [6] on the official web-pages. THE INFORMATION EXCHANGE REGULATIONS For information exchange about sums of the indirect taxes which paid in the state budgets, the tax benefits (the tax exemption from taxation) uses the registry of applications for the goods import and the indirect taxes payment in the electronic form.the information interchange between taxing authorities is performed monthly (not later than 15th date following after month in which the taxing authority mark in the statement for the goods import and the indirect taxes payment has been produced). Taxing authorities are obliged to provide the information completeness and reliability about sums of the indirect taxes paid in budgets of state - members of Customs union. If errors in the control report are revealed, the taxing authority - the sender should take the action to address them and send the correct and updated information to the tax authority - to the receiver within 10 working days from the date of this report reception. The answer to the inquiry in the statement form or the notification of its absence goes to the receiving party not later than 10 working days from the moment of inquiry reception (the Report from ). Thus, the mutual information interchange by inquiries is performed by the parties by the communication channels to 25-th day of each month. In the course of information interchange the taxing authorities undertake to inform each other about the information interchange infringements as well as the data integrity and security, within two working days from the moment of detection of the mentioned infringements. The information exchange is carried out in Russian.Application of the information protection means 115

116 for the information security providing during the exchange is agreed by taxing authorities in according to the legislation of states - members of Customs union. Disputes and disagreements between the parties during electronic information exchange between tax authorities of the States - the Customs Union members are left in Court of the Euroasian economic community. FEATURES OF TAX ADMINISTRATION Since July 1, 2011, after implementation of information exchange with competent authorities, who hold information about the transport of goods (freight) across the border of the Republic of Kazakhstan, if exporters of Belarus or the Russian Federation will not receive an application, this information will be sent to the tax authorities of the Republic of Belarus Russian Federation, who will have to inform the tax authorities of Kazakhstan to import importer of goods and nonpayment of indirect taxes by means of an information system. For the effective interaction in Moscow and Minsk the tax representations of Republic Kazakhstan were created. Today the countries-participants executed already interstate procedures of coming into force of the intergovernmental acts accepted by the decision of the Interstate Council (the supreme body of the Customs Union) from N 26 [6]. The procedures and principles of the indirect taxes levying in the Customs union, import/export of excisable goods: alcohol import (export) in the Customs Union and the rules of calculation of excise in the Customs Union are presented in Appendix 1. APEC Website on Tariffs and Rules of Origin (WebTR) is presented in Appendix 2. The future plans - Unit Economic Space (UES) creation since January 1, UES will be providing free movement of not only goods but services, capital and labor. THE CUSTOMS UNION LAWS AND REGULATION The Normative base became more branched out and structured with the Customs union formation. The Customs code of Customs union is the basis of all normative base. It began to operate since July, 1st, 2010, in its preparation process the formulations which directed on elimination of any ambiguities, discrepancies were perfected. The additional simplifications have been included in it. A number of the international agreements in more details regulating those or other questions, for example, free economic zones, principles of determination of customs value, customs transit should be applied with the customs code of Customs union.таких соглашений достаточно много около двух десятков [8]. 116

117 The next type of regulations which never existed earlier - it is the Commission's decision of the Customs Union. It is the new coordinating body establishing uniform rules of customstariff adjustment, in many cases non-tariff regulation. It is body for solving of based questions and eliminating the contradictions and misunderstandings between positions of three countries. Decisions of the Commission also is sufficiently regulate many areas of customs legislation, for example, filling out customs documents and goods transit declaration, as well as specific issues such as the collection of customs duties and taxes, the classification of goods types. In addition to international regulations the Russian Federation normative base are still relevant, there is the new law «About customs regulation in the Russian Federation» which replaced the Customs Code of the Russian Federation [9]. In this law rates of the Customs code of Customs union are implemented. The Customs Code, unfortunately, cannot take into account all national characteristics, since in addition to customs laws there is tax, criminal, administrative, intellectual property law and so on. ADVANTAGES AND DISADVANTAGES OF CUSTOMS UNION FROM BUSINESS POINT OF VIEW Work in Customs union conditions has shown doubtless advantages of clear advantages of business doing on uniform custom territory, however and has revealed disadvantages of rapid integration (see Table 14) [10]. Table 14 ADVANTAGES 1. Institute of authorized economic operator was developed in the new law, which became an innovation for the members of the Customs union. It was created in accordance with European standards and testifies to the significant increase in confidence of regulatory bodies to business 2. There is a number of the simplifications connected with the DISADVANTAGES 1. Among the participants of foreign economy activity only half of participants mastered the new technology of electronic workflow, mostly representatives of middle and big business, only who were able to purchase the new software and has wide channels of communication 2. Tax authorities are still required to provide the reports and documents in 117

118 ADVANTAGES goods declaring and directed on acceleration of release dates 3. The complete transition to paperless turnover and electronic submission technology of the cargo customs declaration (CCD) and documents on which basis CCD is filled is provided since 1 January 2014 (100 % of the Russian customs bodies already are technically ready) 4. The new rules will give the possibility to carry out the periodic declaration of the exported goods (which with export customs clearance fees) as well the right of the declarant to the single documents submission to the customs authority of confirming its capacity to perform customs operations, including to the filing, in the preparation of which such documents will be used 5. Simplification of non-recourses goods export, production of goods within 4 hours of registration of CCD by customs authorities, instead of taking the invoice of the contract. DISADVANTAGES paper form as well 3. It is still not clear how can pay taxes in Russia by foreign companiespurchasers which have not registration in our country and importing goods from here in other members of the Customs Union. This situation does not provide by the tax legislation of the Russian Federation and the Customs Union 4. Similarly, when goods are exported from Russia to Belarus or Kazakhstan by foreign company which has no presence in the Republic of Belarus or Kazakhstan, could not confirm the seller a zero rate of VAT 5. Not quite cleared up all issues of joint enterprises (joint ventures in the countries participating in the Customs union), including VAT 6. The main obstacle for the acceleration of the import-hold goods until the check completing and the decision-making: weak institutions, financial guarantees, limited rights to a customs broker (agent). All agreements within the framework of the Customs Union and Common Economic Space (CES) were designed in accordance with regulations and requirements of the World Trade 118

119 Organization (WTO). The order of the customs operations fulfillment for the goods customs transit it is possible to find on web-site of Virtual Customs [11]. References: [1] Results for Foreign Economic activities of the Omsk region in 2010 (according to the Regional Department of the Federal State Statistics Service of the Omsk region). printversion=true [2] Omsk Region in Figures "2011". Short Statistical Book. [4] Commercial News (interview with the head of the Omsk customs) [5] Everything about customs. [6] Magazine "Customs broker" [7] Materials of the Economic Development Ministry of the Russian Federation tion/doc _005 [8] What has the Customs union changed? ; 14:48 - Онлайн-интервью c начальником Главного управления организации таможенного оформления и таможенного контроля Федеральной таможенной службы Дмитрий Викторович Некрасов. Опубликовано 30 сентября. Online interview wiyh Chief of the organization of customs clearance and customs control of the Federal Customs Service, Dmitry V. Nekrasov. Published on 30 September [9] New law About customs regulations in the Russian Federation", which replaced the Customs Code of the Russian Federation [10] " Rossiyskaya Gazeta " (www@rg.ru) 119

120 Published in WP-N782 of Business, 28 December 28, [11] Virtual Customs 4 Development of Network of the Multimodal Logistic Centers and Operators along Trans Siberian Corridor 4.1 Transport Hubs in the Russian Federation According to experts evaluation already this year in the world should operate about 70 international logistic centers (LC) which will be connected by intermodal transport corridors with connection of the regional logistic systems providing an exit to each consignor and the consignee. Such scheme of the cargoes delivery organization as a whole will improve the effectiveness by on average of 30-40%. Cargo flows of any state are objectively formed to system of the transport hubs and transport corridors which is formed on the basis of objects of the transport infrastructure: networks of automobile roads and the railways, sea and river ports, customs checkpoints, terminals. Russian transport system is characterized by the fact that the main traffic flows pass through a small number of the largest transport corridors and transport hubs. As a rule, the established transport hub (big city) provides a sufficiently large traffic flows in the region - a number of neighboring regions, despite the presence in the neighboring regions of other major cities, including with a population of over one million inhabitants. For example, in the Russian Federation, Yekaterinburg is the Urals logistics center, which provides traffic flows, including the Perm and Chelyabinsk region (both the Perm and Chelyabinsk have more than one million inhabitants). It is possible to allocate already formed, generally acknowledged transport hubs Moscow, St.-Petersburg, Novosibirsk and Yekaterinburg. The part of cities has sufficient economic and transport potential to act as the region transport hub however the role of these cities still definitively have not yet fully formed. It is such cities as Samara, Nizhny Novgorod, Kazan, Rostov-on-Don, Krasnodar, Krasnoyarsk, Irkutsk and Khabarovsk. The basic transport hubs are interconnected by stable and enough massive transport flows. The accumulation, the distribution and cargo flows distribution, the transport batches formation and sending in other regions, customs registration takes place at the transport hubs. From transport hubs cargoes follow directly to the consumer or on wholesale warehouses on rather small distances (to km.). In Russia, due to the fact that the transport system still don t formed finally, the cargo may follow from the transport hub by auto transport to the final destination more than a thousand kilometers. 120

121 With the development of transport infrastructure in Russia the number of the basic transport hubs will be increased. Respectively, transport flows will be changed too. First of all, possibly, value of Moscow like the basic transport distribution center of Russia will be changed and big part of the cargo flows will be sent immediately and directly to the regions consumer bypassing Moscow. Russia develops the transport-logistics infrastructure for realization of itself huge transit potential. 10 big multi-modal transportation logistics centers (MMTLC) of federal and international ranking in the largest transportation hubs in Russia, located along Eurasian corridor, and about 20 big regional logistics centers (RTLC) at transport hubs regional or regional levels will be created according of the Transport Strategy of Russia up to It is assumed that LCs will operate, as rule, on the commercial corporate basis and provide a coordinated interaction between all kinds of transport and logistics process participants. This will reduce the cargo delivery time in 2-3 times compared with seaway. Considering huge territory of Russia, features of administrative-territorial system, availability of the big transport hubs located in the international transport corridor (ITC) of the Euroasian direction, LCs can become like points of the business attraction connected with warehousing, servicing of vehicles, customs clearance. For another thing, in Moscow, St. Petersburg, Novosibirsk, Yekaterinburg, Omsk and other cities of course, should be operate not one even large MMTLC. Thus, according to the Transport Strategy of Russia until 2025 it is necessary to create a support network of terminal MMTLC and RTLC combined in an integrated regional transport and logistics system based on the united organizational and economic, informational, legal, personnel and financial space. 4.2 Creation of a Network of Multimodal Logistics Centers for Country s Transit Potential Increasing the Construction of terminals in transport hubs is a part of the concept development of terminal business as the Russian Federations (government programs) as well and big private companies, such as EUROSIB, Transcontainer, National Container Company», Company Module and etc. At the first stage of the terminal network development Moscow, St.-Petersburg, Novosibirsk and Ekaterinburg were chosen as regions for building of terminals. These cities already are the developed transport hubs where the significant transport flows are concentrated. In addition on the first stage of the terminal network creation is considered the variant of building of the terminal in Zabajkalsk. In this region concentrates a significant container flow directed on Asia Pacific countries (mostly China) Russia. Moscow 121

122 In the system of economic relations of Moscow region interacts with all regions of Russia (75% - fall on the region's external relations). Via Moscow passes transport corridor 9 - part of North-South Corridor (Figure 30). Helsinki-St-Petersburg-Moscow - a significant part of the flow of the Moscow transport hub - 34% pass through this corridor. Via the western route Berlin- Warsaw-Brest (Transport Corridor 2) passes 8% of the traffic flow. The southern part of North-South corridor, the Novorossiysk direction, Astrakhan, Kiev, occupies 42% of the traffic flow. The remaining part - 16%, occupies the eastern direction - Trans-Siberian corridor. Saint-Petersburg The city is the large transit center and has the economic relations of the majority of Russian Federations regions. The Northwest region accumulates almost all kinds of industrial production, has the large capital center and deep peripheral structures and has outline borders with abroad. The major object of a transport infrastructure is the seaport of Saint-Petersburg the second transfer port of the Russian Federation. The seaport of Saint-Petersburg concerns corridors the Trans-Siberian Railway and the North-south, through it there passes a great bulk of cargo flows of the St.-Petersburg transport knot - 75 %. Also the crucial role in transport system of SPb plays a pan-european transport corridor 9 Finland - St. Petersburg, through which passes 15% of traffic, 10% form the other direction. Transport corridor 9 TransSib Transport corridor 2 North-South коридоров Figure 30. Положение Москвы и Санкт-Петербурга в системе транспортных 122

123 Yekaterinburg Yekaterinburg is one of leaders (after Moscow and St.-Petersburg) industrial centers of Russian Federation has unique geographical and economic situations from the logistics point of view: approximately equal distance from Urals big cities: Perm, Tyumen, Nizhny Tagil, Chelyabinsk, Kurgan; location of Yekaterinburg in the main track of Trans-Siberian Railway; entry into the international transport corridor 2 (ITC-2), Berlin-Warsaw-Minsk- Moscow-Nizhny Novgorod, Yekaterinburg. Yekaterinburg is the Ural region traffic center due to of the favorable geographic location of the city, well-developed infrastructure and the existing cargo handling capabilities. Sverdlovsk 10 railway Administration is located in the city and coordinates the rail transportation on the territory of Perm, Sverdlovsk and Tyumen regions. Yekaterinburg Intermodal Logistics Center (Governmental program) Prospective location of intermodal transport logistic center (ITLC) in the Sverdlovsk region can be Yekaterinburg city where large traffic and transit flows are formed. Population in ITLC service area million people. ITLC of Yekaterinburg distributes cargos on eight smaller storage terminals in other cities in the region. From there the goods of hundreds of shippers in Russia and abroad spreading over the surrounding regions: go to Chelyabinsk, Kurgan, Tyumen, Perm, Ufa, Izhevsk. Sverdlovsk region is built up high warehouse of class A and B. Their total area exceeds 1.6 The authorities in Yekaterinburg and the Sverdlovsk region approved the overall concept of transport and logistics system [7]. The concept is based on 15 federal and provincial programs. In particular, it considers: plans of strategic development Railways, the construction program of federal and regional highways, is focused on expanding production capacity forecasts for the Sverdlovsk region. On the base of this concept nine big logistics hubs have to form and start to work till The main ITLC have locate in Yekaterinburg. It is a huge warehouse area, inside which 10 Sverdlovsk previous name of Yekaterinburg city during Soviet Union time (railway Administration still has name Sverdlovsk railway Administration, as well as Sverdlovsk part of railway) 123

124 lots of transportation and logistics company store and, more importantly, process and redistribute the cargo to other regions. Center on the idea of the concept should be accommodated on two key areas: near the airport Koltsovo and Sortirovka - near the railway station Gipsovaya. Additional storage capacity should be available along the future ring road around the city. In particular, Berezovsky, Verhnee Pyshma, town Istok. Similar complexes but smaller will be created in Ivdel, Serov, Irbit, Krasnoufimsk, Kamensk Ural, Bogdanovich, Tavda, Nizhny Tagil towns. Eventually. Novosibirsk Novosibirsk - one of the largest integrated transportation hubs in Russia, which is the actual freight distribution center in Siberia. City fits into the existing system of transport corridors as well in perspective into of the new international transport corridor linking Europe and Southeast Asia, North America, China, Mongolia and Central Asia. Novosibirsk has a very high industrial, manufacturing and financial potential. The Trans-Siberian Railway is main transport corridor for Yekaterinburg and Novosibirsk (Figure 31), the main cargo flows of these cities pass via this corridor. The transport corridor 2 was extended to Yekaterinburg and it allows combining the transportation system of this city with European countries. Trans Sibirian railway, (branch) Санкт-Петербург) Trans Sib 124

125 Transport corridor 2 Рис. 31. Положение Екатеринбурга и Новосибирска в системе транспортных коридоров 4.3 Transport and Logistics Centre of the Novosibirsk region (Governmental program) The main objective of logistics infrastructure development of the Novosibirsk region is creation of the large modern highly mechanized transport and logistics centers and their concentration around Novosibirsk, on entry and exit to the town near main road and rail ways. The Industrial and Logistics Park creation is most extensive and significant logistics project of the Novosibirsk region, aimed the improving the region investment attractiveness. As part of the Novosibirsk Region Development Strategy also is organization of the transport and logistics cluster (TLC), which provides: basic goods movement of TLC; work of warehouses; work of terminals; work transaction companies (customs, insurance, business center, etc.) serving the function of TLC. Transport and Logistics Centre (TLC) is the basic structure of the TLC which includes: network infrastructure for the information collection support about TLC state of in the balanced scorecard; resource center for data processing and store about the TLC dynamics; methodological center, including a group of analysts, who on the basis of data collecting can form an adequate model of the TLC and support its validity; Situation Centre for strategic and tactical decision-making at both the regional administration level and business structures level. Approximate investments volume in the first five years ( ) billion rubles., TLC parameters overlap with the planned indicators of a multi-modal transport hub of Novosibirsk, the total estimated value of investments - 60 billion rubles till 2015, 140 billion 125

126 rubles , of which 62 billion rubles come from private investment over the period gg.) [4]. Zabajkalsk The Zabaikalsk geographical location provides the shortest and profitable land communication between Pacific Rim countries and Russia. Branch of Trans-Siberian Railway connecting northern areas of China with the Russian railways takes course via Zabaikalsk (Figure 32). Terminal in Zabaikalsk involve to the terminal network and receive/transfer the traffic flows from one of the most capacious cargo markets. Target regions settle down in central points of two corridors "Trans-Siberian Railway" and "North-South", thus, the system of interterminal logistics will be coordinated according to transport flows of these corridors. Figure 32. Zabaikalsk in the transport corridor system 4.4 Own Potential of Target Regions Moscow, St. Petersburg, Novosibirsk and Yekaterinburg are target regions of the first stage of the terminal business of Russia. On the Figure 31 the first stage terminals location is presented. Cities where these terminal s business are developed occupy 39% of Russia's GDP, 126

127 39% of retail turnover, 17% industry, 45% of the turnover of foreign trade and are the centers of gravitation of material, product, technology and human resources. The cargo turnover of Moscow, St.-Petersburg, Yekaterinburg and Novosibirsk grows on % a year. At the moment this is facilitated the increasing of the consumption level, the value of foreign trade turnover (the average for the target areas: import - by 34% and exports by 55%), industry volumes (average for the region - by 11% compared with ). 127

128 128 Figure 33. Scheme-map of the first stage terminals location