Economic development is impossible without domestic and foreign investments. Favourable investment climate, assistance to enterprises in attracting investors will remain a priority objective for the Vologda Oblast Government over the coming years.
Investment from foreign investors into Russia is on the increase, although at a moderate pace. The reasons stymying investments into Russia are known. No other economy has undergone so large and sudden a change in direction in modern history, save Russia itself. But the effects of the 1998 financial crisis have largely worn off, and real incomes have increased beyond pre-crisis levels.
Stable economy, certainty of legal system and tax code, an adequate banking system and succession of political power are key factors for stepping up investments.
Main factors providing investment attractiveness of the Vologda Oblast are as follows:
- industrial potential characterized by highly-developed machine building and metalworking, chemical industry, light industry and timber industry;
- perfect natural conditions - water resources (numerous rivers and lakes), forests covering some 70% of the total land of the region and a number of perspective exploitations of minerals;
- presence of highly skilled scientific and technical potential;
- favorable geographical location and advanced network of communications - the oblast is one of the most important junctions of railways, automobile roads and airways in the North of Russia;
- stable political situation;
- availability of a developed legal basis of the State support of domestic and foreign investors, including issues of providing taxation and other privileges.
As far as the Vologda Oblast is concerned, first the Law "On Investment Activity in Vologda Oblast" (passed in 1997) and at present the Law "On State Regulation of Investment Activity on the Territory of the Vologda Oblast" that came into force in October of 2002 provide guarantees and preferential policies for enterprises that attract investments or deposit investments into production. The law:
- provides a wide range of forms of state financing of investment projects;
- grants privileges to the entities involved in investment activity;
- applies the principle of "non-deterioration of conditions for investors in case new acts of law are passed";
- provides dataware to would-be investors.
Amendments into the law mentioned above are introduced according to changes in the economic development of the region and Russia as a whole.
The Vologda Oblast Government has worked out a number of measures for increasing investment inflow in the regional economy:
- governmental support of investment activities (including tax privileges);
- establishment of transparent investment procedure;
- development of tools for dealing with regional investment projects.
The main objective of the investment policy of the Vologda Oblast is to increase the competitiveness of the region due to creation of favourable conditions for conducting effective business and, consequently, to increase the tax basis and to create new jobs.
Since 1999, the volume of investments into the region's economy has been continuously growing. In the aftermath of the global financial crisis and completion of several large investment projects that coincided with it, in 2009 the volume of investments declined to RUR 55.8 bn (almost 30% compared to 2008).
Since 2010 appeared the tendency of increasing investments into the Vologda Oblast. In 2012 the volume of attracted investments into the region reached a peak of RUR 151 bn.
In 2013, the region saw a decline in investments in fixed capital. In 2014, the volume of investments into fixed capital from all sources amounted to RUR 64,891 bn (80,5 % compared to the figure in 2013).
In 2015 researchers of the EXPERT-RA rating agency indicated that the region represents a ‘3В1’ rating (lowered potential – moderate risk).
Moody's Investors Service released a survey and assigned the Vologda Region foreign and local currency 'B' ratings and a 'A2.ru' Russia national scale rating.
The National Rating Agency indicated that in 2014 the region represented a ‘IC6’ rating (medium investment attractiveness – the third level).