January 2000

DISCOVER CHUVASHIA

The Beer Museum in Cheboksary, Chuvashia

UKRAINIAN PARLIAMENT

PASSES PSA LEGISLATION

(continued on p. 4)

by Victoria Sergeeva

(continued on p. 5)

On September 14, 1999, the Parliament of Ukraine

passed a long-awaited law on production sharing agreements (PSAs). The law came into effect on October 14,

1999. The PSA law includes benefits for investors—for

example, exemptions from profit repatriation tax for PSA

profit and from value-added tax (VAT) and customs duties

for exported PSA product—while bringing badly needed

income to government coffers through excise duties and

through VAT on the product sold locally. The Ukrainian

Government expects the PSA law to attract strategic investors for the extraction of mineral resources, particularly

for oil and gas resources.

Although Ukraine’s hydrocarbon reserves do not rival

those of Russia and Azerbaijan, significant opportunities

exist for foreign companies in this sector. Estimates indicate that Ukraine has about 5 percent of the world’s mineral wealth. The state budget, however, lacks funding for

the exploitation of these deposits. Some Western companies have already expressed an interest in the exploitation

of gas deposits in the Dnipro-Donetsk area. Gas deposits

in the area are estimated at 500 billion cubic meters, and

unexplored gas resources are estimated at another 600

billion cubic meters.

Major Provisions of the PSA Law

Under the newly adopted PSA law, a production-sharing agreement regulates the relationship between parties

involved in mineral resource exploration and extraction.

The law outlines the division, transportation, processing,

storage, utilization, and sale of the extracted product. The

state parties to a PSA are the Cabinet of Ministers

and relevant local authorities of the region where the PSA is

performed. The investor could be one or more Ukrainian

Russia’s Republic of Chuvashia is located 400 miles

east of Moscow in the Volga-Vyatka region. The Republic has 1.36 million inhabitants, with 458,000 living

in the capital, Cheboksary, and 123,800 in the second

largest city, Novocheboksarsk. Cheboksary is situated

between the cities of Nizhny Novgorod and Kazan. Many

business opportunities exist in Cheboksary, some of

which are already being taken advantage of by European companies.

Certain industrial sectors are well developed, such

as engineering, metalworking, electric power generation,

food processing, and chemicals. Chuvashia mostly exports raw materials, textiles, and consumer goods. Its

main imports are organic and inorganic chemicals, electronic equipment, and electrical measuring instruments.

by Philip H. de Leon

Published by the Business Information Service for the Newly Independent States (BISNIS)

U.S. Department of Commerce • International Trade Administration

BISNIS

BULLETIN
BISNIS BULLETIN - January 2000

2

BISNIS is an information center for U.S. companies doing business in the Newly Independent

States of the former Soviet Union. Operated by the Market Access and Compliance unit of

the International Trade Administration, BISNIS disseminates information in print form, electronically, and through consultations by its staff of trade specialists. For more information,

please contact:

202-482-4655 (phone)

202-482-2293 (fax)

bisnis@ita.doc.gov (email)

To call BISNIS toll free, dial

1-800-USA-TRADE (872-8723)

press 3 and then press 2

or visit the BISNIS Online website at

www.bisnis.doc.gov

BISNIS

The Business Information Service for the Newly Independent States

In This Issue

Ukrainian Parliament Passes PSA

Legislation

Discover Chuvashia

Finding Kazakhstan’s Laws on the

Internet

Moldova to Introduce Pre-Shipment

Inspections

Tricks of the Trade: Opening an

Office in Samara

Regional Corner: Tver Oblast,

Russia

Trade Events Calendar

Articles by non-U.S. Government employees express the views of the authors and

should not be construed as a statement of U.S. Government policy.

Director

Anne Grey

Deputy Director

Trevor Gunn

Managing Editor

 Ellen S. House

Assistant Editors

Juliana Kinal, Kelly Raftery

Contributors

Olga Ananina, Philip H. de Leon, Dimitry

Melnikov, Derek Nowek, Victoria Sergeeva,

Judith Robinson, Ekaterina Solovova

Kyrgyzstan Investment Event at the USA Trade Center

On December 7, 1999, some 50 U.S. company and

organization representatives attended an “Investment

Opportunities in Kyrgyzstan” event, hosted by BISNIS

at the USA Trade Center in Washington, DC. The event,

organized by BISNIS and the Embassy of the Kyrgyz

Republic in the United States, featured a large Kyrgyz

delegation, including Deputy Prime Minister/Trade and

Industry Minister Esengul Omuraliev, State Investment

Committee head Urkaly Isayev, KyrgyzAltyn state mining company president Kamychbek Kudaibergenov, and

the CEOs of major mining, trade, food processing, construction materials, tourism, and textile companies.

Jan Kalicki, Counselor to the U.S. Department of

Commerce on the NIS, opened the event, noting that

“the United States and Kyrgyzstan enjoy a friendly

relationship...and we look forward to increasing business

ties.” Keynote speaker Mr. Omuraliev expressed hope

ENTEREX 2000

March 13-16, 2000

Kyiv, Ukraine

Enterex 2000, the main information technologies (IT) event in

Ukraine, promotes information

exchanges in the IT industry, and

offers technical seminars and a

trade show and exhibition.

The U.S. & Foreign Commercial

Service in Kyiv will stage a business information office (BIO) at

Enterex. U.S. computer and communications technology and services companies, and related

trade and industry associations,

that are interested in market exposure in Ukraine are invited to

send catalogs and promotional

materials for display in the BIO.

For instructions on sending catalogs,

contact your nearest U.S. DOC Export

Assistance Center (find an EAC at

www.ita.doc.gov/uscs/domfld.html)

or the Commercial Service in Kyiv at

ruben_beliaev@mail.doc.gov.

For further information on the exhibition itself, visit euroindex at

www.euroindex.com.ua.

that “links between our countries and business circles

of the USA and Kyrgyzstan” will grow.

Kyrgyz company representatives then described

their operations and suggested possible partnership

opportunities. U.S. presenters who spoke of their activities in Kyrgyzstan included USAID, Tour Designs,

Charrier, Gibson & Associates (a shipping company

that stressed that, despite Kyrgyzstan’s extremely landlocked position, it is possible to get goods there safely

and within set timeframes), and Booz-Allen & Hamilton.

In the afternoon, Kyrgyz and U.S. businesspeople networked and held one-on-one meetings.

A list of the Kyrgyz delegation, with contact information,

can be found on BISNIS Online at www.bisnis.doc.gov/

bisnis/country/cntasia.htm#Kyrgyzstan.
BISNIS BULLETIN - January 2000

3

FINDING KAZAKHSTANS LAWS ON THE INTERNET

by Judith Robinson

U.S. companies and law firms should be aware that it is

possible to find information on Kazakhstan’s laws, and sometimes even the full text, on the Internet. However, they should

keep in mind that documents come and go, depending on a

specific website’s archive policy, and not everything on the

Internet is free. That said, quite a number of websites contain

English translations of Kazakhstani laws, often along with

other materials. BISNIS Online has a few laws at

WWW.BISNIS.DOC.GOV/BISNIS/ISA/ISA-LEGAL.HTM, but defers to privately maintained websites.

The most developed source of online Kazakhstani laws

in English is the USAID-developed database of commercial

laws at WWW.KAZECON.KZ. Included on this site are Kazakhstan’s

Constitution, the Foreign Investment Law, corporate law, and

all of the laws relevant to the creation of Kazakhstan’s securities market. The website is currently operated from Almaty

by Golden Eagle Services. It also publishes excellent daily

business and economics newsletters in English, called the

Kazakhstan NewsWires (access available by paid subscription only). Kazecon contains a wealth of additional free commercial information and data, including a weekly news update, but appears to have fallen somewhat behind in publishing the laws themselves.

The U.S. House of Representatives Internet Law Library,

a U.S. taxpayer-paid effort, resulted in a very well-developed

database of laws that included laws of Kazakhstan. This database is no longer maintained on the Internet by the House

of Representatives, but it has been distributed to various other

law libraries, some of which carry it on their websites. For a

list of these sites, visit HTTP://LAW.HOUSE.GOV/89.HTM.

One excellent website incorporating the House of Representatives Internet Law Library is maintained by the University of New South Wales/University of Technology in Sydney,

Australia (WWW.AUSTLII.EDU.AU/LINKS/HRILL/). In addition, this

site offers the prototype of the Asian Development Bank’s

Project DIAL (Development of the Internet for Asian Law),

which offers free access to an incredible number of legal

sources and a powerful search capability in the area of Asian/

Central Asian law at WWW.AUSTLII.EDU.AU/AU/SPECIAL/DIAL/.

Note: Read the search instructions carefully.

The Australian National University maintains the

Kazakhstan mirror site ICARP (Interactive Central Asia Resource Project), which is a good search mechanism for

Kazakhstan legal materials, among other information: HTTP:/

/PERSONAL.ROCKBRIDGE.NET/BICHEL/WELCOME.HTP.

The Kazakhstan Legal Information Institute online

(WWW.RELCOM.KZ/KZCOURT/), maintained by Southern Illinois

University at Carbondale, contains a wealth of Kazakhstani

laws and legal information for use by judges and lawyers in

Kazakhstan and worldwide.

Good sources for economy-related laws include:

 ̈ The International Tax and Investment Center website

(HTTP://ITICNET.ORG/CONTENTS) has Kazakhstan’s Tax Code.

 ̈ Eurasian patent information and decrees can be found at

WWW.IPMENU.COM/KAZAKHSTAN.HTM (the website is owned

by an Australian law firm).

 ̈ A website administered by the Law Faculty of Southampton

University in the United Kingdom offers banking laws and

financial papers (WWW.SOLENT.AC.UK/LAW/NETLAWLIB/).

For lists of laws just passed (but in Russian), the

WWW.CONLEX.KZ site of the Urios enterprise is free with a twomonth archive, with links to other sites that contain Russian-language laws both free and for a fee.

Other sources:

 ̈ Kazakhstani newpapers occasionally publish information

on laws: Panorama and the Almaty Herald in Almaty

(search on their names) and The Times of Central Asia in

Bishkek (WWW.TIMES.ELCAT.KG). For Russian language readers, the newspaper Kazakhstanskaya Pravda usually publishes newly passed Kazakhstani laws (WWW.KAZPRAVDA.KZ).

 ̈ U.S. and Western European law schools often maintain legal databases, including Kazakhstan laws, for example,

Cornell or University of Chicago.

 ̈ American law firms with practices in Kazakhstan (some

of which can be found by visiting BISNIS Online at

WWW.BISNIS.DOC.GOV/BISNIS/COUNTRY/9806USKZ.HTM) sometimes have copies of their excellent newsletters online, although they usually contain analyses rather than law texts.

U.S. treaties with other governments, including

Kazakhstan, are in a Senate, House, and Treaty Documents

database located at WWW.ACCESS.GPO.GOV/CONGRESS/

CONG006.HTML. The Department of State’s legal publications

can be obtained at WWW.STATE.GOV/WWW/PUBLICATIONS/DISPATCH/

INDEX.HTML. The Department of Commerce also maintains

copies of various commercial treaties at WWW.MAC.DOC.GOV/

TCC. U.S. treaties are available free from Oceana Publications

(WWW.OCEANALAW.COM), but you must register with them.

Bilateral and regional treaties between Kazakhstan and

countries other than the United States can be found at

WWW. AUSTLII. EDU . A U / LINKS /WORLD /I NTERNATIONAL /

TREATIES_AND_INTERNATIONAL_AGREEMENTS/, or in the

United Nations Treaty Collection at WWW.UN.ORG/LAW/.

Judith Robinson covers law and Kazakhstan for BISNIS in

Washington, DC.
BISNIS BULLETIN - January 2000

4

(CHUVASHIA, continued from p. 1)

REMINDER

For regular email updates on the

NIS, subscribe to industry- and

region-specific reports via

BISNIS Online at www.bisnis.doc.

gov/bisnis/Data/bismail0.cfm

Electronics and Machinery

The Electronics and Mechanics Plant ZEIM PLC

(www.zeim.ru) is a major company specializing in manufacturing electronic devices and controlling equipment, such as

electric actuating mechanisms, microprocessor controllers,

water flow and heat meters, transducers, and controlling devices for automated process control systems, electric stop and

control valves. ZEIM PLC, as a production and financial

holding, employs several thousand people both directly and

through its subsidiary and affiliated companies.

Chemicals

Khimprom, one of the largest chemical plants in Russia

producing consumer goods and goods for different branches

of industry, is a key producer of cationic dyes and

methylenechloride. In a 1999 Chuvash Republic investment

guide, called Handshake, Khimprom said it was looking for

investment to introduce polycrystal silicon production to satisfy the needs of the home electronic industry, to establish a

facility to satisfy the needs of the technical rubber production

and tire-making industries, and to introduce specialized production of pharmaceutical preparations and substances.

Heavy Machinery

Anyone visiting Cheboksary can only be impressed by

the size of the Promtraktor plant, which produces tractors

for agricultural and industrial purposes similar to Caterpillar’s

equipment and machinery. Promtraktor also produces several versions of tracked and wheeled bulldozers, pipe layers,

and mechanical lift trucks.

Agribusiness

Chuvashia has huge potential in beer production as the

region grows two-thirds of Russia’s hops. Cheboksary brewery

Buket Chuvashii is a major producer of beer, as well as of

nonalcoholic beverages. The company is interested in creating

a joint venture to install new equipment to increase beer output. The brewery Yantar has a similar goal. The Association

of Hop Growers of Russia, founded in 1994 and based in

Cheboksary, aims to increase production and processing of hops.

Banking in Cheboksary

One of the largest banks in the region is the Chuvash

branch of the Savings Bank of Russia, Chuvashsberbank.

Chuvashsberbank benefits from the widest network of

branches available in Russia. Another major bank is

Chuvashkreditprombank, which is an independent regional

bank with branches throughout the Republic. It works closely

with the Chuvash Republic Government. Both banks have

correspondent relationships with major foreign banks.

Travel Tips for Cheboksary

One can fly to Cheboksary from Moscow on Aeroflot

three times a week (via Bykovo and Domodyedovo airports).

There is a direct train from Moscow five times a week (via

Kazansky train station).

Cheboksary is also about a two-hour drive from Nizhny

Novgorod. A car with a driver is recommended for this trip

and for around the city to save time. It can also be used to

reach neighboring cities such as Nizhny Novgorod and Kazan,

which also offer good investment opportunities.

There are no hotels meeting international standards in

Chuvashia at this time. However, the Atal (meaning Volga

in Chuvash) hotel in Cheboksary is very nice, and its room

prices are reasonable.

A unique tourist experience in Cheboksary is the Beer

Museum, which serves as a showcase for the Cheboksary brewery Buket Chuvashii. Beware that if you go for a beer tasting,

the standard serving is 1.5 liters of beer.

Local Assistance

The Republic has been proactive in compiling useful information for potential investors, some of which can be found

on the Internet, including on the website of the Presidential

Administration of the Chuvash Republic (www.chuvashia.com).

The site contains local companies’ business proposals listed

by industry sectors, although they are mostly in Russian.

A strategic approach to doing business in Russia’s regions is to closely interact with the local Chamber of Commerce and Industry (CCI) (tppchr@chuvashia.ru) and the

local city administration, especially the Department of Foreign Relations (torg@chuvashia.com). Both usually have close

contacts with local companies and would be able to discuss

your interests, study your business proposals, and arrange

meetings for you with the right decisionmakers.

The CCI provides a wide range of services such as certification of goods, organization of events, and company

matchmaking services. It also acts as a trade facilitator by

compiling a database of “Commercial Proposals” consisting

of business proposals submitted by local companies.

For contact information for Cheboksary companies and additional information on the Volga region of Russia, visit

www.bisnis.doc.gov/bisnis/country/Volga.htm.

Philip de Leon covers the Volga Region for BISNIS in Wash., DC.
BISNIS BULLETIN - January 2000

5

(UKRAINE PSA, continued from p. 1) Moldova to Introduce

Pre-Shipment Inspections

by Derek Nowek

Moldova is planning to introduce pre-shipment inspection of certain goods imported into the country during

the first quarter of 2000. The pre-shipment inspections will be conducted by Société Générale de Surveillance (SGS), a Swiss goods inspection company,

which administers similar services on behalf of about

140 countries, including some in the NIS region.

According to Dumitru Braghis, Moldova First Deputy

Minister of Economy and Reform, the pre-shipment

check of imported merchandise will ensure that commodities meet Moldova=s quality, conformity, pricing,

and customs codes requirements. The new inspection checks are related to Moldova=s efforts to join

the World Trade Organization (WTO). The system is

expected to improve the country=s customs revenues

collection, professionalize its customs personnel, reduce corruption and smuggling at the borders, and

identify overinvoicing. Companies exporting to

Moldova will have to hold a Pre-Shipment Inspection

Certificate before the goods are shipped and cleared

through local customs.

Moldovan officials are now drafting the list of goods

that will be subject to the inspection and the amount

of the inspection fee. Pre-shipment inspections are

usually carried out on a fee-for-service basis. Since

they can be expensive, the sales contract should

clearly designate which party bears inspection costs.

BISNIS will provide updates on new developments.

More information on SGS is available at the company’s

website at www.sgsgroup.com.

Derek Nowek covers Moldova for BISNIS in Wash., DC.

or foreign citizens, or legal entities or corporations carrying

mutual responsibility for the assigned PSA. Investors are commissioned by the State of Ukraine to perform all work at their

own expense and risk, and is to be compensated with

the product after it has been extracted and divided among

parties. The law is believed to correspond to international standards for PSAs.

Some key features of Ukraine’s PSA law are:

 ̈ The list of mineral deposits allowed for exploitation in

accordance with a PSA, and their size, is to be approved

by the Cabinet of Ministers. The investor can apply to the

Cabinet or to the State Interagency Commission (SIC) to

add any new mineral deposits to the list. The Parliament

has yet to approve a list of subsoil areas prohibited from

being used in PSAs.

 ̈ The Cabinet decides on a tender for a PSA. Within two

months, SIC works out the tender documents and announces

the tender. SIC then evaluates the submitted bids, and sends

recommendations to the Cabinet, which selects the winner.

 ̈ Investors and subcontractors are exempt from licensing and

quota limitations when importing into Ukraine equipment

necessary to perform work under a PSA, as well as when

exporting this equipment out of Ukraine after completion

of the PSA. This equipment is not subject to VAT and custom duties (except customs fees). 

 ̈ The Ukrainian state retains ownership of the product before

it is distributed among the PSA parties. At the time of production sharing, the ownership rights for the compensation portion of the product and the profit portion of the

product (determined by each specific PSA) are vested in

the investor. The product obtained by an investor is subject

to VAT when sold locally, but not subject to any tax and custom duty payments (except custom fees) when exported.

 ̈ The Cabinet can terminate, suspend, or restrict an investor’s

right to utilize mineral resources under a PSA “in case of a

direct hazard to human life and health or to the environment.” This right is restored as soon as the investor remedies the factors that caused the rights restriction.

Further Steps to Be Taken

The adoption of the PSA law is expected to improve opportunities for foreign oil and gas extraction firms

interested in opening or expanding operations in Ukraine.

However, some steps still need to be taken. Ukraine’s Parliament is currently considering enabling legislation that will

make relevant laws consistent with the PSA law. The enabling amendments are expected to be passed in early 2000.

In addition, the Cabinet of Ministers (advised by the relevant

ministries and committees) must approve a list of deposits that

can be used for PSAs, and the Ukrainian Government needs

to delineate the investment tendering procedures.

It is expected that oil and gas deposits on the Black Sea

shelf will take precedence on the list of PSA deposits. The

geology committee of Ukraine conducted an international

tender in 1996 for oil and gas extraction on the shelf. A geological survey was conducted by Western Geophysical (Houston, TX) and sponsored by the geology committee. Shell Oil

Co. affiliate Pecten International Company (Houston, TX)

won the tender, but the joint activity agreement was not signed

because the PSA law was not yet adopted at the time.

For more information on the PSA law, visit BISNIS Online

at www.bisnis.doc.gov/bisnis/country/wstnis.htm#Ukraine.

Interested investors are encouraged to contact their nearest

Export Assistance Center (www.ita.doc.gov/uscs/domfld.html)

for detailed information on Ukraine’s oil and gas market.

Victoria Sergeeva is a commercial assistant at the U.S. Embassy in Kyiv.
BISNIS BULLETIN - January 2000

6

TRICKS OF THE TRADE

Tips for Opening an Office in Samara

by Ekaterina Solovova & Dimitry Melnikov

Foreign companies and some large Russian corporations

are increasingly moving or expanding their activities away

from Moscow into the Russian regions. The regions attract

companies by their great commercial potential and, at the

same time, lower costs of doing business. Recently, several

small- and medium-sized companies, both Russian and foreign, have emerged in Samara, a city of 1.2 million people

that is located some 600 miles southeast of Moscow on the

Volga River. As a result, the demand for high-level office

services has increased. The existing supply sometimes cannot satisfy the needs of every customer. However, office services are rapidly developing in Samara.

Office Rental

In spite of its vast commercial and business activities,

the city of Samara lacks first-class office space. Nevertheless, there are several ways to find suitable office space.

First, one can lease space in various business centers,

which in Samara sometimes combine the functions of trade

centers. Stores are located on the lower floors, and available

office space is situated on the upper floors. Business centers

usually offer well-decorated and convenient suites with telephone lines, security, cleaning, and sometimes a parking

space. Furniture, air-conditioning, garage, and additional

security are available for an extra fee. The monthly rent in

business centers is $7-20 per square meter.

Another option for finding an office space is to contact a

real estate agency. Such agencies will locate office space for

a small fee (usually not more than 20-60 percent of a single

monthly rent payment). These agencies often offer office space

in former state enterprise buildings. Telephone lines and security are also available there. The main drawback of this

option is that upkeep of the office might not be up to Western

maintenance standards. Rent in these buildings usually does

not exceed $6 per sq. meter monthly and depends on the distance from the city center. Due to a shortage of office space in

Samara, some foreign companies rent apartments and convert them into offices.

Labor Market

There are 11 higher education institutions located in

Samara. Traditionally, Samara is famous for its technical

specialists because of the high concentration of defense industry facilities that used to develop and apply high technologies. At the same time, business and management courses

are relatively new for Samara universities. Thus, it is easy to

find highly qualified technicians, but hard to find people with

Western-type management skills. It is especially difficult for

companies to find an English-speaking accountant, for example. Most of the bilingual work force graduated from the

Philological and Foreign Languages Departments of local universities. Usually, they need to be trained to fulfill the required work. One of the informal ways to find office staff is

to contact U.S. companies operating in Samara, which might

have resumes of previous applicants available. Another way

is to advertise in the local newspapers or contact employment agencies. Employment agencies usually charge a percentage of the annual salary of each position.

Telecommunications

All types of telecommunication services are available in

the Samara region. Installation of an additional telephone

line costs $80-400. The fee depends on waiting time and service quality. The main local phone companies are SamaraSvyazInform, SamaraTelecom, TeleRoss, and GlobalOne.

Three major cellular phone operators work in Samara:

Mobitel (using GSM-900 standard), BeeLine (AMPS/

DAMPS), and Samarskiy Radio Telephone (NMT-450). The

connection costs $100 on average, and the per minute rate

ranges from $0.14 to $0.30. Monthly payments are usually

under $5. Cellular phones are expensive in Samara, but it is

important to note that many cellular telephone companies

charge lower fees to customers that buy telephones from them.

Of the 10 Internet service providers in Samara, the main

companies are: Kraft-S (www.kraft-s.ru), Samara Internet

(www.samara.net), and Samara Infonet (www.saminfo.ru).

Most Internet service providers do not charge for connecting

customers or a monthly fee. A per minute payment scheme is

possible, as is unlimited access. The cost of a one-minute call

does not exceed $0.02, and unlimited access costs about $50

a month. Reserved lines are also available.

Business Services

Several companies design and print various types of business cards, leaflets, seals, etc. Printing of 200 tricolor business cards costs about $165. The cost to produce 1,000 leaflets is around $300. Prices for advertising in the local press

in Samara are much lower than in Moscow.

Some information in this report was provided by the CARANA

Corporation, which is funded by USAID.

A list of useful contacts and additional information on Samara can be found at BISNIS Online at www.bisnis.doc.gov/

bisnis/country/regions.html#VolgaUrals.

Ekaterina Solovova is the BISNIS representative in Samara.
BISNIS BULLETIN - January 2000

7

REGIONAL CORNER: Tver Oblast, Russia

by Olga Ananina

Tver oblast, with 1.6 million inhabitants, is the largest

region in Central Russia, covering 84,100 sq. kms. Although

its moderate continental climate and landscape are typical

for Central Russia, Tver oblast does have unique characteristics. It is very rich with forests and water: over 800 rivers

cross the oblast, including the beginning of the Volga River,

and 1,769 lakes attract tourists and fishermen. It is the natural source of fresh water for Central Russia and Moscow.

Tver is an important transportation hub because of its

location between the two largest metropolitan areas in Russia—Moscow and St. Petersburg. The road linking the cities

has traditionally been well-maintained and is heavily used

for cargo transportation. The Moscow-Riga highway connects

Tver with the Baltic States and Finland. Tverskoy Port, the

largest port on the upper Volga, is equipped with cargo decks

and is fitted to serve river-sea ships. Tver also has an international airport.

Investment Climate

The Tver Oblast Government is actively seeking to attract foreign investors. The Governor’s Office for External

Economy and Investments has published Invest-100 International Investment Magazine, which discusses investment opportunities in the oblast, publishes interviews with Tver businesspeople, and highlights local legislation. The Office for

External Economy and Investments is in the process of organizing an international forum of technology brokers, “Investment and Technologies/Tver-99,” to bring together representatives of local and foreign 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 Investors in Tver

Oblast” supports foreign investors by reducing the profits tax

for companies investing in renovation, modernization, or creation of production facilities, and for leasing companies.

By 1998, 37 companies with foreign investment were

registered in the oblast. These joint ventures were mostly with

European companies, including some from Bulgaria and Italy.

German companies are active in selling technologies for producing construction materials and equipment to Tver 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 in construction of private homes

and assembly of construction materials in the oblast.

Promising Industry Sectors

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

Machine-building: Into the 1990s, machinery and metal processing enterprises in Tver oblast 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 recent years. Companies must search for new

products, customers, and equipment to stay afloat. As larger

plants would need prohibitive amounts of new investment

for overhaul, smaller companies that are forming out the facilities of a large plant are the best candidates for investment.

Agribusiness: Agribusiness is mainly concentrated in two

sectors: flax breeding and dairy and meat processing. Tver

oblast used to produce up to 40 percent of all flax in Russia.

Despite the 35 textile plants in the oblast, not all flax is processed locally, and the majority of the local mills work with

resources purchased elsewhere. Major mills produce cotton,

wool and silk fabrics, and man-made leather. All of these

mills need modern technologies.

Wood Processing: The timber and wood processing industry

holds great potential for regional industrial development.

Forest covers 53 percent of the oblast (5.1 million hectares).

Currently, only 30 percent of the viable woodcutting area is

utilized. Tver has 27 large forestry farms, 23 saw mills, and

some 400 companies producing veneer, paper, cardboard, and

furniture. Most local wood is exported as timber, lumber, and

veneer. The opportunities for foreign investment in this sector are concentrated in pre-export wood processing and supply of various wood-processing equipment.

The local industry overall is limited to the lower

value-added end of the production cycle, with exports of timber prevailing and weakly established processing of recycled

paper products. However, Tver’s Kamenskoe company processes recycled paper into corrugated cardboard, and produces

cellulose and manufacturers paper, polygraph goods, and

packaging materials. The company seeks investment to expand production of cardboard and refurbish equipment.

Construction: Major construction materials plants are currently experiencing difficulties because old technologies

produce outdated, noncompetitive products. Significant investments would be needed to overhaul large production facilities, but smaller firms are appearing and successfully competing by implementing new technologies. Also, strong potential exists to build private housing and hotels.

For additional information on Tver and other central Russian regions, visit BISNIS Online at www.bisnis.doc.gov/

bisnis/country/Central.htm.

Olga Ananina is a BISNIS representative in Moscow.
Penalty for Private Use, $300

Sender ________________

U.S. DEPARTMENT OF COMMERCE

International Trade Administration

Washington, D.C. 20230

BISNIS - RRB

OFFICIAL BUSINESS

FIRST-CLASS MAIL

PRE-SORTED

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ITA/DOC

PERMIT No. G-54

This notice is provided solely as an informational resource and does not constitute U.S. Department of Commerce endorsement of these events. For a more

complete listing of NIS trade events, visit BISNIS Online at www.bisnis.doc.gov/bisnis/leads/tradecal.htm. All information published in the BISNIS Bulletin

regarding trade events is subject to change without notice by the organizers of those events.

Turkmenistan Intl. Oil &

Gas Exhibition 2000

Trade & Warehouse 2000 Feb. 29–March 3, 2000 Moscow

Organized by:

Telephone:

Email:

Website

Sector:

 ExpoService -F

+7 (095) 924-4556

softool@garnet.ru

www.softool.ru

Retail, wholesale trade, and

warehousing

March 15–17, 2000

Organized by:

Telephone:

Facsimile

Email:

Website

ITE Group

+44 (207) 596-5231

+44 (207) 596-5106

fred.malgoire@ite-exhibitions.com

www.ite-exhibitions.com

Yekaterinburg

TRADE EVENTS CALENDAR

Organized by:

Telephone:

Facsimile:

Email:

Website:

Comtek International

(203) 834-1122

(203) 762-0773

worldfoodtech@comtekexpo.com

www.comtekexpo.com

Informatika 2000

World Food Technology February 14–17, 2000

Organized by:

Telephone:

Facsimile

Email:

Sectors:

Feb. 29–March 3, 2000

Uralexpocenter

+7 (3432) 49-30-7, 49-30-27

+7 (3432) 49-30-19

uralexpo@dialup.mplik.ru

IT, computer hardware &

software, telecom

BISNIS

Wishes

All of Our

Clients

a Happy,

Prosperous

New Year!

Moscow

Ashgabat