# REGIONAL CORNER: TVER OBLAST, RUSSIA

 

## By Olga Ananina

 

Tver oblast, with 1.6 million inhabitants, isthe largest region in Central Russia, covering 84,100 sq. kms. Although itsmoderate continental climate and landscape are typical for Central Russia, Tveroblast does have unique characteristics. It is very rich with forests andwater: over 800 rivers cross the oblast, including the beginning of the VolgaRiver, and 1,769 lakes attract tourists and fishermen. It is the natural sourceof fresh water for Central Russia and Moscow. 

 

Tver is an important transportation hubbecause of its location between the two largest metropolitan areas inRussia—Moscow and St. Petersburg. The road linking the cities has traditionallybeen well maintained and is heavily used for cargo transportation. The Moscow‑Rigahighway connects Tver with the Baltic States and Finland. Tverskoy Port, thelargest port on the upper Volga, is equipped with cargo decks and is fitted toserve river‑sea ships. Tver also has an international airport.

 

InvestmentClimate

The Tver Oblast Government is activelyseeking to attract foreign investors. The Governor’s Office for ExternalEconomy and Investments has published *Invest‑100International Investment Magazine*, which discusses investment opportunitiesin the oblast, publishes interviews with Tver businesspeople, and highlightslocal legislation. The Office for External Economy and Investments is in theprocess of organizing an international forum of technology brokers, “Investmentand Technologies/Tver‑99,” to bring together representatives of local andforeign companies, potential investors, and government officials. **FES International, Inc.** (Glendora, CA)is helping the Tver Government organize the event. 

 

The regional law on “Tax Privileges to Investorsin Tver Oblast” supports foreign investors by reducing the profits tax forcompanies investing in renovation, modernization, or creation of productionfacilities, and for leasing companies. 

 

By 1998, 37 companies with foreign investmentwere registered in the oblast. These joint ventures were mostly with Europeancompanies, including some from Bulgaria and Italy. German companies are activein selling technologies for producing construction materials and equipment toTver companies. German construction firm **Tver‑Osnabryuk**,which united 20 entrepreneurs that collectively invested over 1 million DM,built the three-star Osnabryuk hotel. Canadian companies are also investing inconstruction of private homes and assembly of construction materials in theoblast.

 

PromisingIndustry Sectors

Machine-building, agribusiness,wood-processing, construction, and tourism are considered the most promisingsectors for investment in the oblast.

*Machine-building*: Into the 1990s, machinery and metal processing enterprises in Tveroblast were among Russia’s leading manufacturers of passenger train cars,excavators, tower cranes, fire‑prevention equipment, steel frames, and more.Mainly due to Russia’s general economic situation, output has fallen in recentyears. Companies must search for new products, customers, and equipment to stayafloat. As larger plants would need prohibitive amounts of new investment foroverhaul, smaller companies that are forming out the facilities of a largeplant are the best candidates for investment. 

 

*Agribusiness*: Agribusiness is mainly concentrated in two sectors: flax breeding anddairy and meat processing. Tver oblast used to produce up to 40 percent of allflax in Russia. Despite the 35 textile plants in the oblast, not all flax isprocessed locally, and the majority of the local mills work with resourcespurchased elsewhere. Major mills produce cotton, wool and silk fabrics, and man‑madeleather. All of these mills need modern technologies.

 

*Wood Processing*: The timber and wood processing industry holds great potential forregional industrial development. Forest covers 53 percent of the oblast (5.1million hectares). Currently, only 30 percent of the viable woodcutting area isutilized. Tver has 27 large forestry farms, 23 saw mills, and some 400companies producing veneer, paper, cardboard, and furniture. Most local wood isexported as timber, lumber, and veneer. The opportunities for foreigninvestment in this sector are concentrated in pre‑export wood processing andsupply of various wood-processing equipment.

 

The local industry overall is limited to thelower value‑added end of the production cycle, with exports of timberprevailing and weakly established processing of recycled paper products.However, Tver’s **Kamenskoe**companyprocesses recycled paper into corrugated cardboard, and produces cellulose andmanufacturers paper, polygraph goods, and packaging materials. The companyseeks investment to expand production of cardboard and refurbish equipment.

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*Construction*: Major construction materials plants are currently experiencingdifficulties because old technologies produce outdated, noncompetitiveproducts. Significant investments would be needed to overhaul large productionfacilities, but smaller firms are appearing and successfully competing byimplementing new technologies. Also, strong potential exists to build privatehousing and hotels. 

 

*For additional information on Tver and other central Russian regions,visit **BISNIS Online** atwww.bisnis.doc.gov/bisnis/country/Central.htm.*

 

*Olga Ananina is a **BISNIS**representativein Moscow.*