Law Firm Pepeliaev Group advises that on 2 August 2016 Yu. P. Trutnev, the Deputy Prime Minister and the authorised representative of the Russian President in the Far East Federal District, announced that a project involving the creation of a fishing cluster is being prepared for implementation in the context of the Free Port Korsakov.
The Free Port Korsakov
We have previously advised that 4 July 2016 saw the entry into force of Federal Law No. 252 dated 3 July 2016 “On amending the Federal Law ‘On areas of advanced social and economic growth in the Russian Federation’” and the Federal Law “On the free port of Vladivostok”*. Pursuant to these amendments the port of Korsakov gained the status of a free port.
To stimulate the investment activity of residents of the free port Korsakov, a special legal regime will be activated for implementing business and investment activity. Investors of the free port will receive a number of preferences, including tax benefits, and simplified customs and visa procedures. Meanwhile, administrative barriers will be lowered to the greatest possible extent.
According to Yuri Trutnev, preparation is currently under way to implement a project to create a fishing cluster**. This cluster will include a logistics terminal, refrigerated storage, processing facilities, and a ship repair base.
The Free Port Korsakov project has already attracted attention from representatives of the Japanese and South Korean fishing industries.
The Free Port Korsakov and the Russian Fish project
The Free Port Korsakov should help to give a boost to the slowed down project to create a fishing cluster on Sakhalin.
During the year since the auction platform started working, a number of problems have been identified. Out of more than one hundred of lots put forward by fishing industry representatives on auction only ten of them were sold, with this resulting in sales turnover of only around RUB 30 million. The main problems in implementing the project were the absence of a proper logistics, which is borne in full by the buyer, and the absence of refrigeration and of a shipping network for the goods.
In view of this, the second stage of the project to develop a fishing cluster needed to be the agreed proposal of Sberbank and the Government of Sakhalin Region to create a structure to manage the Russian Fish project within the framework of which the supplies of fish from the Far East to other Russian Regions are planned to be arranged. The newly created Russian Fish company will be in charge of managing the exchange, developing the port of Korsakov and creating logistics centres across Russia for delivery, shipment and storage.
According to the report of the Government of Sakhalin Region***, the complex being created should bring together the acceptance and processing facilities for fish and seafood in the port of Korsakov and logistics centres for the delivery of fish products in other regions.
This project plans to attract at least RUB 50 billion from private investors, financial structures and foreign investors. The financing sources of the project will become both public funds at regional level and debt financing. It is assumed that the Government of the region will support investors with subsidies, and Sberbank will provide financial services to them, including leasing and factoring services.
Help from your advisers
Pepeliaev Group’s lawyers are ready to provide full-fledged legal support, including in obtaining the status of a resident of the free port, legal due diligence and drafting of any contracts that are entered into, and assisting in interacting with supervisory authorities, and providing other legal services when activity is carried out.
We will keep you posted about the development of legislation aimed at stimulating investment activity in the Far East.
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