A free economic zone will appear in new regions: what does this mean for the regions, what advantages will businessmen have, why is it profitable

March 24, 2023, 01:46

Political scientist Dudchak: the creation of the SEZ will have a positive impact on the whole of Russia

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A free economic zone (FEZ) may soon appear on the territory of new regions. Prime Minister Mikhail Mishustin said that the Cabinet of Ministers is going to submit a bill on this to the State Duma on March 24. He asked the deputies to support the initiative. Economist and political scientist Alexander Dudchak explained to 360 what a free economic zone is and how it can affect the development of the regions annexed to Russia.

Speaking to deputies with an annual report, Mishustin said that the government would submit a bill on the creation of a free economic zone to the State Duma on Friday, March 24.

“Tomorrow, at a government meeting, we will consider a bill on creating a free economic zone in these regions. And we will submit it to the State Duma. We are counting on your support here,” Mishustin said.

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How Free Economic Zones Work

A free economic zone is a territory where there are preferential tax conditions for entrepreneurs. They create such points to solve the problems of socio-economic development of the whole country or individual regions.

They are in many countries. For example, in the USA there are 50 such zones, in South Korea – 170. In neighboring Belarus, one free economic zone was opened in each of the administrative regions. There are already 45 of them in Russia. Basically, these are industrial-production and tourist-recreational economic zones.

As political scientist Alexander Dudchak explained, it is much easier to attract investors to such zones. It is very profitable for them, as they pay less taxes. This means that, if possible, businessmen, ceteris paribus, will choose the FEZ to locate their offices and industries.

“New territories need to be developed, and President Vladimir Putin has repeatedly said that Russian entrepreneurs have the opportunity to apply their talents and capital on the territory of the country, that there is nothing to seek happiness abroad, that in Russia it may well be profitable,” Dudchak said.

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Advantages for all Russia

Attracting business to new regions will have a positive impact both on the territories where the SEZ has been created and on the whole of Russia, Dudchak is sure. Firstly, it will become an incentive for those wishing to start their own business – this will be facilitated by tax breaks and other benefits offered by the state. Secondly, entrepreneurs who have left can return to the country if it turns out that it is more profitable to build their business here, which means the return of capital to Russia.

“In principle, the development of Russia, at whatever point it occurs, has a positive effect on the development of the entire country, so, God forbid, that such an initiative be continued and implemented,” the economist noted.

Make new regions “candy”

According to Dudchak, this initiative is not aimed at local residents. First of all, it should become an incentive for those who left but want to return.

“It is aimed rather at ensuring that the people who lived there return there. Because some territories require restoration, there is destruction after the hostilities. This is just aimed at ensuring that people return faster, and life boils there, ”said the 360 ​​interlocutor.

Dudchak believes that another goal of creating a free economic zone is to make new regions a model of the changes that came after joining Russia.

“In general, it would be nice to make “candy” out of these regions, an example of the fact that “Russia came and everything changed.” In principle, this is how many already react to these new territories even without this initiative. Local residents post videos on the Internet, how much their lives have changed [после присоединения к России]. Changes are taking place, but we need to make sure that these territories are a model of how Russia operates and how the region is developing in comparison with what it was before the hostilities on the territory of Ukraine, ”Dudchak believes.

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“Soft Power”

The political scientist called such steps a kind of “soft power”. It will even affect the minds of Ukrainians, who are pumped up today with propaganda about “terrible Russia” and “aggressor country”.

“And then again, the locals who stayed there to live say:“ God, we don’t want to return back under any sauce. This is also very important, ”the expert emphasized.

Speaking about the cons, the expert named only one. We are talking about a situation where an already existing and successful business moves to a more profitable free economic zone, thereby taking capital with it. That is, the budget of some other region may suffer. However, if this is a new enterprise or one that has returned from abroad, then only pluses remain.

During his speech, Mishustin also said that the authorities expect that over the next eight years, Donbass, Kherson and Zaporozhye regions will reach the all-Russian level in all indicators.

The interlocutor of “360” is sure that such bold goals are quite realizable. But it’s worth thinking carefully, since our opponents – Western countries – have completely different plans.

“They want to shit more. But, as practice shows, despite all the efforts, they still cannot achieve the result they want, ”Dudchak concluded.


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