Image vs. Reality: 7 reasons to invest in Moscow

Moscow has always been known as a city with formidable political and economic clout on the nationwide and international scales, as a major transportation hub and cultural heritage of Russia. Now it starts pursuing an ambitious target to become an “International Financial Centre” and work out clear tourist and investment brands, thus taking more and more responsibilities every day.

Undoubtedly, the megalopolis enjoys a plethora of opportunities and facilities for investment and entrepreneurship sector. The 7 advantages of running business here are following:

  • 1. Moscow is a rich city (its GDP in 2012 was $520.1 billion; roughly 80% of financial operations pass by Moscow; the Gross Regional Product of Moscow and the Moscow region comprise about 27% of the general Russian GDP rate). Hence, the city can easily afford to conduct different support and mentor programmes for start-up projects, guarantee credits and loans for small and medium enterprises, provide innovation companies with subsidiaries, support business incubators programmes in the city universities, etc.
  • 2. Easy access to political institutes, advanced industries and research centers in different industrial parks and innovation clusters. For example, the Skolkovo Innovation Centre was set in order to provide investors and projects participants with tax benefits, R&D facilities along with assistance in customs operations, legal protection. Moreover, administrative bodies, especially the national ones, are quite accessible, as they are situated densely within the framework of one city (whether they are the bodies of the city or the region or the country).
  • 3. The service sector is gradually becoming the city’s economic driving force, since wholesale and retail industries along with real estate and financial sectors provide jobs for a great part of employed population of the city.
  • 4. Moscow is a magnet for international investments. Today, the city accounts for 62% of the total incoming investments into the country (about $5 billion of FDI was received in the six months of 2013). The real estate area together with manufacturing industries, transportation and financial sectors are the points of attraction of foreign investments. The more the region is considered to be lucrative and advantageous, the more international companies establish their regional headquarters here (like Microsoft, Ericsson, LEGO group, Morgan Lewis, etc.)
  • 5. There is a high concentration of workforce in the city. Unemployment rate is set at 0,7%. And the level of education is undoubtedly high in comparison with other Russian regions. What is more, an enormous population seize (above 12 million) forms a formidable market outlet.
  • 6. Interactions between public sector and business communities are also encouraged here as they show a certain degree of progress in the fields of city development and investment attraction. For example, the representatives of the local and national communities conducted a set of presentations “Destination Roadshow Moscow 2013” in Singapore, Tokyo, London, Frankfurt, Boston and New York. Cooperation in the business and public sectors is also supplemented with academia – the cases of different industrial and innovation parks are worth mentioning.
  • 7. The idea of creation the «International Financial Centre” in Moscow proclaimed in 2008 is supposed to bring on positive transformations in improving the Russian banking system, reducing bureaucratic barriers, enhancing business environment. The implementation of this project is also believed to facilitate the process of building strong investment image of the city and the country as a whole.

However, Moscow is not successfully rated in different world rankings (such as Ease of Doing Business Index, Standard&Poor’s; Moscow universities and business schools are hardly represented in Top Universities ranking). What is more, the city brand of Moscow is always mixed and even confused with political image of Russia and image of the Russian political elite. In addition, the negative perception of the city is also exacerbated by hectic, expensive life in megalopolis (it is ranked as the 2nd costliest city for expatriates in the world), traffic congestion, scare climate-smart projects and the lack of flexibility in getting travel or business visa.
Moscow is considered to be a world city (the assumption is based on its population size, political influence in the world affairs, quite strong financial sector, formidable mega-event-portfolio, etc.) and despite some prejudices and real obstacles there are still a lot of opportunities for entrepreneurs and investors. The most prominent industries aside, the areas of insurance, planning of urban spaces, New Moscow development, social projects, IT sector, exhibition business, creative clusters, or even city apps development (the government has started the implementation of the concept – mobile city) are considered to make the city advance economically in a sustainable and innovative way.

 

Learn more about Russia’s presence at MIPIM 2014

 

Image credit : Photobank gallery

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