The Orenburg Region, one of Russia’s donor regions, channels 63% of local proceeds into the federal budget. Its Governor, Alexei Chernyshov gave an interview to RIA Novosti’s New Theme on Russian-Indian Affairs magazine during his visit to New Delhi

Q: Mr Chernyshov, the Orenburg Region has been posting sustainable growth rates in the last few years. How do you manage to ensure such growth?

A: True, the gross regional product (GRP), industrial and agricultural output has swelled by 80%, 100% and 50%, respectively, since 2000. The investment climate has improved considerably. In all, the regional economy has received 270 billion roubles ($10 billion) since 2000.
The 2009 consolidated budget’s projected revenues are estimated at 67 billion roubles ($2.5 billion), a 38% increase on 2007. This allows us to fulfil our growing social commitments, primarily efforts to raise average income.

Positive socio-economic development trends are facilitated by a sustained recovery in all production sectors. The fuel and energy sector, agriculture, the processing and construction industries have been chalking up sustainable growth for many years.

Q: What, in your opinion, are the most ambitious regional investment projects?

A: The Orenburg Region implements several large-scale projects. Merloni Progetti, a world-famous Italian engineering and general contracting company, and Russia’s Vnesheconombank have established a joint venture manufacturing household appliances in Orsk. A plant with an annual capacity of 1.5 million refrigerator compressors will be commissioned soon, helping meet retail demand for these scarce products in the Orenburg Region and beyond.

We are planning a joint Russian-Kazakh venture that will soon start operating at the Orenburg gas refinery capable of processing up to 17 billion cubic metres of natural gas from the Karachaganak deposit in West Kazakhstan.

We consider another major project, namely, construction of the Western Europe – West China transport corridor via St Petersburg, Kazan, Orenburg and Kazakhstan, to be a high-priority issue. The transport corridor will cut delivery costs, will attract sizeable infrastructure investment and will also create new jobs.

In all, the regional government’s investment portfolio is worth over 500 billion roubles ($18.5 billion).

Q: What, in your opinion, makes the Orenburg Region so attractive to foreign investors?

A: Our region abounds in natural resources, has a developed industry and a diverse transport infrastructure. The regional government and legislative assembly are doing everything possible to create a comfortable investment climate. We are passing legislation, including a bill on 4% profit-tax reductions, to encourage investors.

Major transnational companies, including British Petroleum of the United Kingdom, France’s Schneider Electric, Deere & Company (John Deere) of the United States, Italy’s Merloni Progetti, Heineken of the Netherlands and Germany’s Dyckerhoff AG, operate in the Orenburg Region.

In all, 161 companies with foreign investment are registered on the territory of the Orenburg Region. The statutory capital of companies with foreign investment includes contributions from 42 foreign legal entities.

The Orenburg Region ranks 20th among Russian regions in terms of investment risk and 28th in terms of its investment potential.

Q: How much investment will the Orenburg regional economy receive in 2008?

A: In the last six months we have attracted over $250 million worth of investment, and we hope this sum will double by the end of the year. Investment volumes will grow by 28% on 2007. At the same time, we predict a 20-25% foreign investment increment in the next five years.

Q: Orenburg has always been considered the main Russian gateway for trading with the East. Is this name justified today?

A: Commercial routes linking Europe and Asia have always passed through the Orenburg Region. After the break-up of the Soviet Union, the region once again became a border-line Russian territory. This status facilitates the active development of international and foreign economic ties. Foreign trade operations now account for 20% of GRP.

Foreign countries and CIS states account for 61.1% and 38.9% of the Orenburg Region’s foreign trade turnover, respectively. Since 2000, the regional foreign trade turnover has tripled, reaching $5 billion in 2007. The Republic of Kazakhstan accounts for nearly a third of the Orenburg Region’s foreign trade turnover.

Q: How have your relations with India developed?

A: In 2003-2007, the foreign trade turnover between the Orenburg Region and India soared almost 5.4 times to reach $22.4 million.

Foreign trade patterns are dominated by exports. A $21.7 million foreign trade surplus was posted in late 2007.

The Orenburg Region mostly exports metallurgical equipment manufactured by the engineering concern ORMETO-YUMZ, asbestos from Orenburg Minerals company, rolled sheet steel from Urals Steel company, and defence industry products from the Strela Production Association to the Republic of India.

India mostly exports medical preparations, tea, coffee and consumer goods to the Orenburg Region. However, Indian investment in the regional economy still accounts for just 0.35% of the grand total. One wholesale trade company with Indian capital, Pervaya Pomoshch (First Aid) Ltd, is registered in the region.

The Orenburg Region and the Republic of India continue to expand their cultural contacts. In May 2002, the regional government and the Embassy of the Republic of India in the Russian Federation signed a cooperation memorandum during the Days of India in the Orenburg Region. The relevant agreement was also signed between the Orenburg Region’s Chamber of Commerce and Industry and the India Business Alliance.

We hope that our involvement in the New Delhi exhibition will invigorate our contacts.

Q: Does your involvement in such exhibitions meet expectations?

A: Such forums make it possible to chart high-priority aspects and interests from strategic partnerships, and to assess one’s bearings in the global economy.

The Orenburg Region’s small and large businesses have developed actively in the last few years. The region has created a more attractive investment climate; and we are interested in expanded business contacts.

We are inviting business-community representatives to take part in mutually beneficial partnerships. In the Orenburg Region you will meet with competent people and will gain an insight into its unique resources. I am convinced that you will find many new opportunities here.

Orenburg Region

The Orenburg Region, one of the largest regions in the Russian Federation, is a part of the Volga Federal District. Its area is 124,000 square kilometers, and the population is 2,119,000.
Regional boundaries are within both Europe and Asia. Orenburg is adjacent to the Republic of Tatarstan, the Republic of Bashkortostan and the Chelyabinsk Region in the north, the Republic of Kazakhstan in the south and south-east, and the Samara Region in the west.
The state border with the Republic of Kazakhstan is 1,876 kilometers long.
The Orenburg Region has a diverse transport network which includes highway, rail, air and pipeline transportation. Cargo and passenger traffic pass through the region via two corridors: the Center-Central Asia route and the East-West route.
The Orenburg Region has over 2500 mineral deposits, extracting 75 different minerals. The rich natural resources provide a sound foundation for implementing major investment projects and have a favorable impact on the region’s economic development. Gas, oil, steel, engineering and energy production are the key industries.
Accounting for 5.5% of the country’s farmland, the Orenburg Region is one of Russia’s primary grain sources, with an annual harvest of more than 3 million tons of highest-quality grain crops.
The region’s economy is heavily involved in global trade with over 80 different import-export partners.
Over 100 ethnic groups live in the region. At the initiative of the regional Governor Alexei Chernyshev, a unique cultural, historic and ethnic complex National Village, one of its kind in Russia, was built in the territory of the region. In 2007, it received the Tourist Industry Leaders award.
Leading experts recognize the region’s high reliability, low risk investments and positive development prospects. The Orenburg Region won the Russian National Olympus award in the “Regions of Russia – 2007” category.