Will Russia IT Benefit With Special Economic Zones?
The State Duma will quite soon receive a bill on special economic zones. The national information technology sector has long been looking forward to legislative moves to promote it.
Apr 04, 2005
MOSCOW, March 31 (RIA Novosti economic commentator Nina Kulikova) - The State Duma, Russia's lower parliamentary house, will quite soon receive a bill on special economic zones. The national information technology sector has long been looking forward to legislative moves to promote it. Some aspects of the bill, however, do not completely meet its expectations.
In January President Vladimir Putin gave an instruction to draft a special economic zones law. The draft ready at the Ministry of Economic Development and Trade also considers the IT sector, and is expected to encourage high tech export-oriented companies. It stipulates areas assigned for technoparks in particular parts of the country, with latter-day office centers to rise there. The parks will try to attract top-notch Russian and foreign IT companies, which are expected to snatch at the proposal-few markets are so wide open to Western investors as the Russian IT.
To create an atmosphere of intellectual competition in Russia's long-established research centers is the basic target of IT-oriented technoparks. They are expected to increase Russian corporate capitalization and so boost economic progress.
But, in the opinion of IT market players, the law was not written for them. Special economic zones mostly aim to promote progress in Russian provinces, believes Dmitry Milovantsev, Deputy Minister of Information and Communications. The new law will be hardly applicable to information technologies. It better suits other economic sectors. "The bill will cope with many essential problems, but it entirely proceeds from material production, while IT offers services," he stressed. Whatever Russia is doing in that sphere means services, with few exceptions-the Kaspersky anti-virus, the 1C accounting program, and some games.
IT technoparks will be good for transnational teamwork and exchange of ideas between Russian and overseas companies. However, the services sector demands an approach somewhat different from what the bill is offering. "One model can't work in four or even five sectors. Now, the bill concerns industrial zones and technical implementation ones - these are different kinds of business," pointed out Milovantsev.
President Putin has made another IT-related order-to blueprint measures for its customs and fiscal support. Efforts are underway, but it is hard work, says the deputy minister. Thus, there is an idea to bring unified social tax rates in special economic zones down to 20% from 26%. That will allow high-tech companies to increase capitalization. The arrangement implies a danger, however: the longer-established sectors may shift to join the nascent, and thus cause social problems.
"Tax benefits are not what matters most in this particular instance," insists Milovantsev. Special economic zones ought to offer privileged terms because Russia is not comparable to its rivals-India, China and certain European countries. "The most important thing is different: if somebody invents a new Tetris, his sales profits will be incomparable to the expenditures, and will make the venture economically expedient."
Next year, when pioneer projects start working, will show whether the special economic zones law will encourage Russian information technology progress.
In January President Vladimir Putin gave an instruction to draft a special economic zones law. The draft ready at the Ministry of Economic Development and Trade also considers the IT sector, and is expected to encourage high tech export-oriented companies. It stipulates areas assigned for technoparks in particular parts of the country, with latter-day office centers to rise there. The parks will try to attract top-notch Russian and foreign IT companies, which are expected to snatch at the proposal-few markets are so wide open to Western investors as the Russian IT.
To create an atmosphere of intellectual competition in Russia's long-established research centers is the basic target of IT-oriented technoparks. They are expected to increase Russian corporate capitalization and so boost economic progress.
But, in the opinion of IT market players, the law was not written for them. Special economic zones mostly aim to promote progress in Russian provinces, believes Dmitry Milovantsev, Deputy Minister of Information and Communications. The new law will be hardly applicable to information technologies. It better suits other economic sectors. "The bill will cope with many essential problems, but it entirely proceeds from material production, while IT offers services," he stressed. Whatever Russia is doing in that sphere means services, with few exceptions-the Kaspersky anti-virus, the 1C accounting program, and some games.
IT technoparks will be good for transnational teamwork and exchange of ideas between Russian and overseas companies. However, the services sector demands an approach somewhat different from what the bill is offering. "One model can't work in four or even five sectors. Now, the bill concerns industrial zones and technical implementation ones - these are different kinds of business," pointed out Milovantsev.
President Putin has made another IT-related order-to blueprint measures for its customs and fiscal support. Efforts are underway, but it is hard work, says the deputy minister. Thus, there is an idea to bring unified social tax rates in special economic zones down to 20% from 26%. That will allow high-tech companies to increase capitalization. The arrangement implies a danger, however: the longer-established sectors may shift to join the nascent, and thus cause social problems.
"Tax benefits are not what matters most in this particular instance," insists Milovantsev. Special economic zones ought to offer privileged terms because Russia is not comparable to its rivals-India, China and certain European countries. "The most important thing is different: if somebody invents a new Tetris, his sales profits will be incomparable to the expenditures, and will make the venture economically expedient."
Next year, when pioneer projects start working, will show whether the special economic zones law will encourage Russian information technology progress.