Investment climate in the Adygey Republic

Adygey has quite good potentials for increase of economic co-operation with foreign countries and attraction of foreign capital. The Law on investment activity in the Adygey Republic has been recently adopted. It provides protection of rights of domestic and foreign investors. The law provides them with guarantees of safety of their own investments and privileges under profit tax and property tax in the part subject to transfer to the budget of the Adygey Republic. The Ministry of Economy of the republic has introduced changes to this law. Thus, the legislative basis for attraction of investments is created.

According to the Law on forest adopted in the republic Adygey may attract buyers in auctions, including foreign ones. Pursuant to this law the Adygey Republic plans to join the global market of timber sale where the sales amount of standing timber will make at least 50% of all deals.

A catalogue of investment projects has been prepared. It shows requirements for foreign investments under each project, possible forms of investment and investment payback time, as well as ways of cost reimbursement through the export of finished products. the list of the largest investment projects includes:

• Construction of a pectin production plant;
• Creation of national tourism infrastructure;
• Renovation of Maykop airport, a number of large industrial companies, etc.

The most reasonable forms of partnership, from the point of view of Adygey, may be attraction of direct investments, supply of equipment, leasing, transfer of technologies.

In Adygey the concept of creation of a free economic area Adygey in Maykop and Maykop region is designed, however, pending decision at the federal level impedes the implementation of the concept in practice.

The amount of accumulated foreign investments in the region by the beginning of 1997 was only 184 thousand USD. During 1996 the republic received 31 thousand USD of investments, and for the period from 1993 to 1995 ? 153 thousand USD. During 1997 13 thousand USD of foreign investments were received in the form of direct investments. The amount of foreign currency investments in 1998 was 405 thousand USD, or 0.9 USD per capita (in Russia ? 67.9 USD).

According to the Expert magazine, Adygey belonged to the number of regions with rather unfavourable investment climate: low investment potential is combined with moderate risk. In the rating of regions of the Russian Federation the republic occupies 73rd place by potential and 56th place by risks.