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Russia’s capital Moscow has taken the top spot in the latest national investment climate rankings, as a result of its efforts to continually improve the operating environment for business. These improvements, along with an ambitious city development plan, are paying dividends in increased investor interest. 

Moscow is confirmed as having the best environment for investors in the Russian Federation. The capital took over the top spot in the National Investment Climate Ranking produced by the Agency for Strategic Initiatives (ASI). The results were disclosed within the framework of the St Petersburg International Economic Forum in early June.

Thanks to strong efforts by the city to improve business conditions and the investment climate, Moscow has been improving its position steadily in the past few years: in 2016 it was ranked 10th, in 2017 third and in 2018 second. 

“Statistics indicate constant progress of the investment activities in Moscow: as of 2018 the volume of investment in equity totalled $37.6bn, which is 15.3% higher than in 2017. In the first quarter of the current year, the volume of investment in equity in Moscow went up 25.8% compared with the same period of the previous year and compounded $6.2bn. In eight years [from 2010 to 2018] the investment in equity in comparable prices more than doubled. Today, Moscow accounts for 14% of the nationwide volume of investment in equity and around half of foreign direct investment in Russia,” comments deputy mayor of Moscow Vladimir Efimov.

Consistent measures

According to Mr Efimov, the leadership of the ASI ranking is the natural result of longstanding and consistent work to create institutions and support measures to encourage investment, a digitisation process for city administration, and the city’s own investment into infrastructure and urban development.

A key driver of investment activity is the major programme of city development that is being pursued; there are priority projects in transport, social services, provision of public amenities, development of new areas and other activities for which an investment target of $24.8bn has been set for 2019-21. Today, every ruble invested by the city in infrastructure manages to attract three rubles in private investment.

“Various support measures, which the Moscow government offers investors, facilitate the growth of investment attractiveness of the capital. Thus, the mechanism of support of the current effective enterprises, technological clusters and new investment project in the real sector of economy was restarted in 2016. The enterprises that actively invest are being assigned a status of technological cluster, industrial estate, industrial park and can lower the regional tax burden by up to 17%-25%,” stated the head of the Department of Investment and Industrial Policy of Moscow, Alexander Prokhorov. 

“The same mechanism is used in relation to new investment projects. As of today, 99 companies are subject to different subsidies: 48 industrial estates, 35 technological clusters, eight anchor residents, seven investment priority projects, one vehicle manufacturer. The volume of investment conducted by industrial estates, technological clusters and anchor residents for the last five years amounts to $1.4bn,” says Mr Prokhorov.

Moscow’s business environment

Moscow leads a UN ranking of electronic governments, thanks to the efforts to digitise information and services in order to save time for entrepreneurs and keep costs down. City organisations provide more than 90 types of services for business, 55 of which are purely digital.

All main state services in the construction field have been digitalised and are now provided through a single point of contact – www.mos.ru. It is prohibited to ask an applicant for documents which are at the disposal of other government agencies.

In order to establish convenient interaction between business and government and for operative feedback, Investment Portal of Moscow (www.investmoscow.ru) is actively under development.

One can find full information on the investment projects being implemented.

Other reputable international rankings also prove the investment attractiveness of the city. In the World Bank's Doing Business ranking, Russia climbed four places in 2019 and took 31st place thanks to Russia being 70% dependent on Moscow. According to the ranking of attractiveness of European cities for FDI (fDi’s European Cities and Regions of the Future 2018/19), Moscow is in the top five leaders of investment attractiveness among the biggest cities of Europe, and is the first among the cities of eastern Europe.

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