Director, ANO Vnesheconombank Research and Expert Review Institute, Director of Economics
ON THE PROSPECTS OF THE FAR EASTERN HECTARE PROGRAM EXTENSION TO THE RUSSIAN ARTIC REGIONS
The work on the formation of national projects and search for the most effective mechanisms to complete the objectives the government was tasked by the President of the Russian Federation V. Putin for 2018-2024. One of those, proved effective at macroregional level, seems to be the long term Far-Eastern Hectare Program adopted in 2016, by which every Russian national is entitled to a free lot of land up to a hectare in area in the Far East. As per the Program, lots are either transferred into ownership or leased out in five years when properly used, for example, for farming, forestry, hunting, establishing business and other legitimate economic activities.
Over its short duration the program already yielded the first results:
- the number of lots claimed is gradually increasing and by 2025 the total may reach a million;
- the number of small enterprises and self-employed persons is growing: average annual increase amounts to nearly 6 percent agains the number of small and medium-sized business entities (SME) across the Far Eastern Federal District (FEFS);
- there has been growth in private housing sector; it is expected that by 2025 additional 120,000 new residential and 85,000 vacation houses may appear.Other economically viable types of activities on the lots handed over are ecotourism, development of recreational sphere and establishing of wild-parks. According to the emerging trend, by 2025 about 40,000 new jobs will be created. The estimate is based on 80,000 recreational areas registration requests submitted in FEFD, 550 major projects among them ( holiday hotels, recreation camps, wild animal and bird parks). Thus, an influx of labor to the travel industry from other regions may well be expected. Supposedly, the investments in this field will amount to 187 billion rubles. Housing projects on the claimed lots, as per experts’ estimates, will require 190 billion rubles in investments, including 110 billion rubles from financial institutions. To support housing projects, some 75 new small businesses producing prefabricated houses are being established. The surveys show that the building of 120,000 residential and 85,000 vacation houses is scheduled on the designed territory. Consequently, it may be expected that the additional housing supply will amount to 9 billion square meters by 2023, while the volume of private housing projects will go up 1.5 times by 2025. The Far Eastern Hectare Program became an effective instrument of levelling-off the demographic situation and showcased its capability in the Far Eastern Federal District. In the Artic, the same population problem exists. A variety of efforts has been made to tackle the issue, but to no visible success so far. A program similar to the Far Eastern Hectare may make the difference in the region’s demographics as well. The population of the Russian Arctic is 2.5 million. That accounts for 54 percent of the Artic zone and only 2 percent of population of Russia. In the recent years, in the Artic zone of the Russian Federation (AZRF) a negative demographical trend is on display. To that end, the extension of the Far Eastern Hectare Program geography may provide additional drive to the advantages of the Artic. It is essential to adopt the advantages of the far eastern practices and adapt them to all the Russian Artic territories. For example, taking into account the climatic conditions, the Artic hectare should be close to the pillar zones. To achieve the indices of rapid economic development, clear the hurdles slowing down the growth in the Far East and the Artic, the development of a complex of measures should be included in the list of 12 national projects the government is currently working on. In present-day conditions, a special emphasis is placed on detailing the Ecology national project, since the Far East and the Artic seem to be among regions most sensitive to climate and natural changes in macroregions. In this respect, projects introducing alternative generation and gas as a motor fuel are of the most interest for the investors, foreign included.
- Establishment of new financial infrastructure mechanism is of paramount importance for the development of the Far East and the Artic. For example, an impact of offshore area establishment on the Russky Island on the macroregion and prospects of fat eastern cryptocurrency creation is currently in discussion. The role of international organizations and institutes in developing and implementing such projects is growing.
- The experts estimate that additional 30 billion rubles of federal funding is required by 2020 alone to supply the growing area in the Far East and the AZRF. Capital capacity of national project measures varies from one to another. In such manner, the development of main transport infrastructure for the purpose of BAM and Transsib modernization with carrying power of up to 180 millions tons, providing 80 millions tons of transportation volume via the Northern Sea Route, support of regional air fleet will require consolidation of financial efforts of treasuries at all levels and business. Providing far eastern hectares with transport infrastructure should d be attributed to this type of tasks. As to development of science, education and healthcare, aside from resources’ provision at a breakthrough in the field of intelligent technologies is required.
- Pillar zones is a term from the draft law On the Development of the Artic zone of the Russian Federation implicating a regional regulation aimed at supporting an array of projects. Pillar zones are a new type of partnership between the government and major corporations, under which a company makes an investment agreement with the region, obligations of parties provided in the arrangement. Upon criteria supposed by the Russian Ministry of Economic Development, the project cost will exceed 100 billion rubles, and other projects in the pillar zone will depend on its implementation. Within the narrative, there is no economic niche for small and medium-sized business under the pillar zone framework, and it is precisely a program similar to the Far Eastern Hectare that will allow small companies to fit in the new management model, a task set by the Russian President’s May 7 2018 Executive Order On the National Priorities and Strategic Objectives of the Russian Federation by 2024.
- The Far Eastern Hectare Program makes a positive impact on the quality of life on the Far Eastern regions population, including small indigenous peoples of Far East. Now that all the necessary perquisites have been met for the development of farming industry, investments in housing projects, development of recreation areas, number of farming holdings, prefabricated house production and many other things will grow significantly with each year. Local cooperative farms grow wild corps, which has a good effect in traditional habitats of the small indigenous peoples of the North, Siberia and the Far East ( SIPN).
- In the framing industry the investments secured may reach 120 billion rubles owing to the Far Eastern Hectare Program. The gross output will top 670 billion rubles, while the export - 60 billion rubles. It is assumed the 380,000 residents will use the obtained hectare for farming, among them collective farms and commercial private farm holdings will amount to 25,000 which indicates an increase by a factor of 1.3. According to the Ministry of Agriculture experts’ assessments, over 110,000 new jobs in farming will appear thanks to the Far Eastern Hectare Program.
- As per ANO Vnesheconombank Research and Expert Review Institute estimates, the Far Eastern Hectare Program implementation mechanism in 2018-2025 may additionally secure more than 850 billion rubles in investments for FEFD. Of them, the maximum amount in investments ( about 350 billion rubles) is expected in SME. At that, it may be expected that the share of investments in gross regional product (GRP) will increase over the implementation period by 1.4 percent on average.
The goal go maximising the effort from the implementation of national projects along with other measures of government support are set to be discussed at the September presidium meeting of the State Council with the agenda On the Measures on Accomplishing Strategic Objectives Determined by the President of the Russian Federation May 8 2018 Executive Order to Provide Priority Socio-Economic Development of the Far East. Changes to be better in population’s quality of life in the Far East today depend more than ever on consistency of approaches of federal, regional and local authorities, business and general public, each macroregion resident.