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Despite various legal preparatory activities, the Special
Economic Zone has not become “Hong Hong on the Baltic
Sea” as it was lately called again by Mr Chernomyrdin,
former prime minister. In 1999, the volume of foreign investment
was US$ 18.0 million, which is more by about 55% compared
to the previous year. The restrained position of the Russian and foreign
big and medium investors can be explained by many reasons.
These are:
- The economic framework in the Russian Federation is
quite complex. Entrepreneurial activity in the Region
is especially hampered by the legal discrepancies and
“confiscation” tax policy in the Russian Federation.
- The Russian policy keeps an eye on possible separate
tendencies, which may result from the special economic
status.
- Until now, the Regional Administration has been unable
to receive adequate funds from the Russian government
for the Region development.
- Infrastructure as well as the most important logistic
prerequisites have not been established.
- The Regional Administration’s involvement in entrepreneurial
activity is too obvious and its adherence to projectionist
measures instead of introducing more favourable economic
conditions is becoming more significant.
- The activities of the Regional authorities are not
transparent enough and are often too bureaucratic.
- Contradiction between laws at the federal and regional
levels may also arise (e.g. calculation of value-added
tax by the federal and regional tax authorities).
Thus, despite the favourable legal prerequisites under
the status of the Special Economic Zone, the Region lost
its attractiveness compared to other regions of the Russian
Federation where the investment climate made a better progress.
However, due to its high potentials, the Region is at the
top among other Russian regions. This is, probably, how
the problem of the Russian policy under Mr Chernomyrdin
was solved, that is whether the Region should get more economic
flexibility. The time will show if the privileged status
of the Special Economic Zone remains unchanged under the
new government in Moscow.
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