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Main | Archive | Issue 6/2008

Lemkon Company Chose Kaluga
Column: Kaluga Phenomenon

The participants in the Fifth Kaluga Investment Forum showed a keen interest in the presentation of the Finnish company Lemkon. D.N. Abakumov, the business development director of AO Lemkon, told Diplomat about the projects of the company underway in Kaluga.

Mr. Abakumov, it is not the first year Lemkon has been implementing projects in the Northwestern region of Russia. Why did it choose exactly the Kaluga Region to create an industrial park?
Besides the Northwestern region, we have been and are implementing projects in many other regions in Russia, especially in the Central region. Lemkon has had a Moscow representative office for quite a while that has coordinated projects around the country. True, Finnish companies are mainly operating in Russias northwest, but we had also been purposefully looking for a suitable area in the countrys central part. First of all, we focused on the location of the jobsite on the map of Russia and the investment attractiveness of the region concerned. After considering many locations, we concluded that the Kaluga Region and the city of Kaluga, specifically, would be the optimal choice, which would meet the requirements that we know many investors have.

First of all, Kaluga has an extremely favorable location. It is just 180 kilometers from Moscow, and lies at the junction of main highways and railroads making it a transportation link to nearly all regions in Russia, as well as to the territories of Ukraine, Belarus, and Baltic States. Federal route M3 Moscow-Kiev crosses the Kaluga Region and connects the capital of Russia with European countries via Ukraine. Moreover, the Kaluga Region is able to provide electricity, gas, and water in the amounts required for operating an industrial park at a relatively affordable cost.

The Kaluga Regions government staked on the regions industrial development already several years ago. To that end, the government bodies were restructured so that their functions would be understandable to foreigners and meet their needs as well as possible. The region brought down numerous bureaucratic barriers, created a favorable investment climate and is currently reviewing local tax laws. It is mainly thanks to this policy that industrial clusters are mushrooming there. A large auto parts cluster has begun forming around such world automobile giants as Volkswagen, Peugeot-Citroen, and Volvo. Among the manufacturers of other products, Nestle, Samsung, SAB Miller, Lafarge, as well as the Finnish companies StoraEnso and Ruukki should be mentioned. The city of Kaluga is a large old provincial center that is vigorously developing now. We think life in this city will be pleasant for our clients and their family members. It is all the above-mentioned factors taken together that determined our choice.

There are currently several industrial parks projects in the Kaluga Region. What is it that distinguishes the Lemkon project from the rest?
It is the only project that is being fully implemented by a private investor, whereas all the others are being implemented by the regions administration on land owned by the municipalities. Following thorough legal, commercial and technical verification of the project, we bought a lot, changed the category and kind of permitted use of the land, and concluded an accord on investment cooperation with the Kaluga Regions government so we would be guaranteed connection to all the needed networks, and started constructing the infrastructure. We are doing everything with our own investment money. Whats more, our project is unique in terms of its volume and the nature of our offer. We are arguably the first developer in Russia to offer a comprehensive approach. Our service package includes a lot answering the specific needs of the enterprise, a project design, all the approvals of the authorities needed for the project, getting a construction permit, the construction of the object itself, its handing-over to a state acceptance commission, and the transfer of the finished object to the ownership of the customer. Most of the other projects in Russia are so-called land development projects, that is, making land available for the development of an industrial area and meeting the minimum needs in terms of infrastructure and supply lines.

Our approach enables the investor to minimize the risks associated with entering the Russian market, since the majority of our potential clients have no experience working in Russia. Since all the preparatory work has already been done by our company, the plant commissioning time is shortened considerably. And finally, the quality of the design and construction done by our company is high. Our company has projects in 70 countries worldwide.

The creation of a high concentration of manufacturers requires the development of the social infrastructure, too. Due to the industrial park project, Kaluga is the most promising location in this respect. Lemkon will most likely start taking part in building residential housing in Kaluga in the near future.

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