The following information was provided courtesy of Nikolay G. Lukichev, an official with the Vologda Oblast Administration. Mr. Lukichev can be reached at tel. 7-8-172-725-035 or fax 7-8-172-722-259. The Economic Department of the Vologda Region Administration can be contacted at tel. 7-8-172-722-719 or fax 7-8-172-251-454/251-554.

The Vologda region was established on September 23, 1937. It is situated in northwestern Russia 500 Km (311 MI) off Moscow and borders on the Republic of Karelia and Arkhangelsk, Kostroma, Yaroslavl, Tver, Novgorod and St. Petersburg regions. The region occupies the territory of 145.7 thousand square kilometres, which is equal to the territories of Belgium, Denmark, the Netherlands and Switzerland taken together. The Vologda territory is crossed by important ways connecting central Russia with the Urals and Siberia. The rivers flowing through the region's territory carry their waters to the Baltic, White and Caspian seas.

Seasons change each other and the Vologdians experience the so-called moderate-continental climate: a cold snowy winter followed by a short summer. During a year precipitation quantity makes 650-800 mm. In summer it makes 3/5s of this amount.

Today 1,345,000 inhabitants of the region are being proudly named "Vologdians". From ancient times the Vologdians have been and still are famous for the love to their Motherland and their families and for their quiet, imperturbable, and hardworking nature.

The Vologda region is divided into 26 districts. Cities of regional importance are Vologda, Cherepovets, Veliky Ustiug and Sokol. There are also: 11 towns of district importance, 14 smaller towns and 375 settlements.

Industrial Base

During the nineteen fifties totally new industries were introduced into the region. Production of mineral fertilizers began in Cherepovets, now there are two major producers of these fertilizers - joint stock companies Amnophos and Azot. Vologda Bearing Plant has an output of up to 98 million bearings per year and Vologda Optical and Mechanical Plant produces intricate optic devices. A large iron and steel making centre was built in Cherepovets in 1955 which produced 60 percent of all industrial output of the region. Now the industry is represented by joint stock companies Severstal and Cherepovets Steel Rolling Plant and their share of the total Russian output for pig iron, steel and rolled stock is 17 percent. The main natural resource in the region is wood. It provides employment for 50,000 people in all cities and districts. Wood-working companies produce all sorts of goods, anything that requires wood or a wood derivative, such as resonance boards for musical instruments, wood for furniture and wall paper.

Industrial output of the Vologda region constitutes 1.9% of Russia's gross industrial product. The region's contribution to Russia's production of iron is 20%, steel - 18%, rolled products - 19%, mineral fertilizers - 10%, and timber - 6%.

Major industries of the region are ferrous metallurgy and chemical industry (Cherepovets), machine building and metal processing (Vologda), woodworking industry (districts of the region), and pulp and paper industry (Sokol).

Light industry is represented mostly by flax processing enterprises, two big flax spinning integrated factories (Vologda and Krasavino), lace firm "Snezhinka" and linen enterprises.

Ferrous metallurgy is concentrated in Cherepovets. People used to work with metal here since long ago. One of the first metalworking enterprises in the city was the iron-cutting plant of Cherepovets merchant Krasil'nikov. The Cherepovets Integrated Iron-and-Steel Works, built in 1955 and recently transformed into Severstal joint-stock company, continued this old tradition.

Wood is the most precious treasure of the Vologda region. Woods occupy a total area of 11.7 million hectares (72% of the total). A total potential timber stock equates 1,517 million cu. m. There are 649 million cu. m. of mature and over-mature timber, including 318 million cu. m. of conifers (49%).

There is a potential to harvest 19 million cu. m. of timber annually, including 7 million cu. m. of conifers.

The region's wood industry produces 6% of the gross industrial output and employs over 50 thousand people who work in more than 200 wood harvesting and processing enterprises.

Foreign Investments

Vast territory, tremendous nature resources (especially wood), skilled and cheap labor, big scientific and technical potential and advantageous geographical location (at the juncture of important transport routes: Moscow - Arkhangelsk and St. Petersburg - the East) are indisputable favourable conditions for profitable investments in the Vologda region.

The final report "Analysis of development trends of Russia's regions" (October, 1996) made jointly by the Expert Institute (Russia) and Russia & Eastern Europe Study Centre of the Birmingham University (the UK) within the framework of the TACIS programme Economic Reforms in Russia: regional aspect states that Vologda region has a rather high rating by major economic indexes. In the tables of comparison the Vologda region neighbours, as a rule, with the most developed Russian regions: Krasnodar and Nizhniy Novgorod regions, Moscow and St. Petersburg, Tula and Tumen regions. According to the report the investment attractiveness index of the Vologda region is 0.9 (the same is for the Tula, Yaroslavl, Omsk, Krasnoyarsk and Khabarovsk regions).

It is planned to set up the Agency of Russia's Western Venture Fund in 1997 to be financed by the European Bank of Reconstruction and Development and the Italian Government. Similar regional venture capital funds already operate successfully in Russia.

At present there are 160 CFI's registered in the region. More than a half of them have been jointly founded with Finnish, Swedish, Swiss, German and American companies.

Collective investment funds (authorized capitals) of CFI's totaled USD 5.4 million as of January 1, 1997, the foreign collective investment share being 54% of the total.

The majority of CFI's operate in the industrial sector (44%) and trade and catering (28%). The most attractive industries are wood processing (28%), collective investments funds of CFI in this sector being 56% of the total.

The most profitable and successful industrial CFI's are: the Russian-American wood harvesting and wood processing enterprise AVSTROFOR, Russian-Czech trolley buses producing enterprise SKODA-VMZ, and Russian-Norwegian VOLNOTRANS, one of the major lines of its activity being the reconstruction of the Vysotsk port in the Gulf of Finland enabling the Vologda region's enterprises to have a direct water access to Europe.

The foreign trade-turnover of CFI's in 1996 against 1995 increased by 1.2 and amounted to USD - 35.6 million or 2.6% of the total region's trade-turnover. A major export of CFI's is round timber. In 1996 554.5 thousand cu. m. of round timber was exported by CFI's of the Vologda region.

To favour the attraction of foreign investments in Russia's economy the Russian legislation provides a number of incentives for CFI's. For instance, goods imported in Russia as a contribution of the foreign founder to the collective investment fund (authorized capital) of the CFI's are free from customs duties and VAT; there are some other incentives for CFI's engaged in the production activity.

Within the territory of the Vologda region CFI's are to be registered by the Economic Department of the Vologda region Administration. Besides registration, the personnel of the Economic Department carries out monitoring over the production and other activities of CFI's and render consulting services for CFIs' representatives.

Last Updated: June 10 1999. Copyright Russian-American Chamber of Commerce® 1995-1999. All rights reserved.