Research: 50% of RF regions confirm high demand for offset contracts
30.06.2022You & Partners and FOK Company, with the support of the Agency for Strategic Initiatives (ASI) and the City Investment Management Agency of Moscow, have released a study on the topic “Offset Contract 2.0” for the anniversary X St. Petersburg International Legal Forum.
More than half of the surveyed constituent entities of the Russian Federation noted the presence on their territory of promising objects for the use of an offset contract.
An offset contract is a contract according to which the parties build long-term relationships for a period of up to 10 years to create new production facilities in the Russian regions in exchange for providing the investor with a long-term guaranteed volume of purchases of manufactured products.
The participants of the survey were representatives of small and medium-sized businesses, as well as employees of administrations from 55 regions. In total, more than 100 questionnaires were received and processed.
The survey showed that 90% of respondents have information about the possibility of implementing projects in the form of an offset contract; One third of the respondents plan to conclude such contracts.
In 2022, significant changes were made to the regulation of the offset contract mechanism. The investment threshold has been reduced from 1 billion rubles up to 100 million rubles; it is possible to conclude an offset contract jointly with several constituent entities of the Russian Federation (interregional offset).
The survey showed that representatives of regional authorities most often indicated 100 million rubles as the desirable threshold for the volume of investments for offset contracts, which corresponds to the amendments. At the same time, 26 constituent entities of the Russian Federation named an even lower threshold - 50 million rubles.
According to Alexander Smekalin, Director of the Regional Development and Investments Division of the ASI, the form of the offset contract must be popularized and developed.
“The changes made are part of this work. As noted by most regions, clear and practical recommendations are needed on the preparation of offset contracts from entities that have gone through this path. This study provides answers to the most difficult questions received from the regions during the survey. I thank the authors of the study - You & Partners and FOC for the work done. I hope we will see an increase in the number of projects in the form of an offset contract in the near future,” Alexander Smekalin said.
Many respondents are considering plans to conclude offset contracts not only for the production of goods, but also for the provision of services (such an opportunity opens up as part of the adopted changes in legislation): 24 respondents plan to implement projects in relation to the production of goods, 15 - in relation to the provision of services, 10 - both variants.
Director of the State Budgetary Institution of Moscow "City Investment Management Agency" Artyom Barashev, as a representative of the region-leader in the use of offset contracts, noted that despite the serious selection, it is profitable for investors to conclude offset contracts.
“For business, this is a high reliability of the buyer, since the state is the customer. In addition, the supplier receives a guarantee of long-term sales of manufactured products. For a constituent entity of the Russian Federation, an offset contract is import substitution in socially significant areas, stimulation of investments in the real sector, localization of production, increased industrial safety, job creation, an increase in the tax base and a reduction in public procurement costs,” Artyom Barashev explained.
Evgenia Zusman, The Partner of You & Partners, believes that the results of the study indicate the demand for various investment mechanisms.
“Despite the crisis, the regions are planning to use not only offset, but also other investment mechanisms. Priority is given to concessions and PPP agreements. For the successful implementation of offset contracts, the regions lack more detailed legal basis at the regional level. In total, 10 constituent entities of the Russian Federation provide for the procedure for preparing and agreeing on a project in the form of an offset contract. In the study, we systematized the law-making experience of the constituent entities of the Russian Federation as an experience worth paying attention to.
Moisey Furshchik, Managing Partner of FOK, emphasized that “promising areas for using offset contracts, in addition to those areas where it is already used, are: mechanical engineering, transport, energy, equipment and materials for housing and communal services, for household waste disposal, IT equipment and other high-tech products. In our opinion, we can expect an increase in the spread of the use of the offset contract mechanism after the amendments to the legislation and the lowering of the investment threshold to 100 million rubles, as this is the most restrictive factor for its use according to the survey.”
More detailed material on the use of offset contracts in Russian can be found here.
You & Partners Press Service
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