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Kaliningrad Region

Kaliningrad is a federal region of Russia situated on the Baltic coast. The region is surrounded by Poland, Lithuania and Baltic Sea. The economy of the region is positively influenced by various factors such as ice-free ports, proximity to European countries and world’s largest amber deposits.  The region is also known for its unique museums, monuments that attract tourist to this region on a large scale. Fishing and power generation are some of the important regional industries that drive the economy.

Foreign Direct investments in Kaliningrad region are not new. Foreign investments started pouring in the region since year 1992. The largest investors in the region are Germany, Great Britain, Cyprus, Poland and Lithuania. The statistics show that majority of the investments from foreign investors goes to supply of machinery and material and distribution spheres (it accounts to 78% of the foreign investments). The industrial sectors received investments that accounted to 16% of the overall investments in the region. The investment in industrial sector mainly went to metal working enterprises and machine building. Foreign capital investment in Kaliningrad region is mainly intended for procurements of inventory, machinery, equipment and cars.

The Kaliningrad region provides wide range of opportunities to foreign investors in different sectors. The sustainable growth and the investment activity prove the attractiveness of the Kaliningrad region for Foreign Direct investments. The Kaliningrad region attracted $376 million of foreign investments in year 2008 alone, which was a 25.8% increase than previous year.  Today investors over 700 countries conduct different business activities in the region.

The governing authority of the region has created "The Tourist and Recreation Special Economic Zone" to make the region attractive for foreign investments. The Governing authority has taken firm steps to develop a special economic zone that has modern engineering and transport infrastructure. The government has taken concrete steps to improve power supply, water supply, heating and gas supply for external networks and facilities and wastewater disposal. The government also intends to build good road infrastructure for development of the region.

The Kaliningrad   governing authority has introduced SEZs with primary objective to encourage private investment and economic development of the region by offering preferential government policies. The benefits of SEZs include elimination or reduction of corporate tax, deregulated labor markets and tariff free trade.

Some of the benefits offered by Kaliningrad SEZ zones are

  1. Free customs zone  with no import taxes.
  2. Goods that involve 100% local manufacturing can be transported to mainland Russia without paying any custom duties.

Investment Opportunities:

The government of Kaliningrad region intends to increase the energy security of the region through construction of Baltic atomic power plant (BAPP). The power generated in this plant will be sold in regional markets as well as European markets. Government expects foreign investors to contribute 49% to the construction of this power plant.

Kaliningrad region has a characteristic furniture sector, which exports 60% of the furniture to Russian market and rest to European market. The Kaliningrad factories are required to quickly adapt to ever-changing market demands and these companies need external investment for technological modernization of the manufacturing units.

Similarly foreign investors also have opportunities for investment in agriculture, real estate, information and hi-tech, transport and logistics and retail sector.

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