30.11.2012 Financial Forum: The state should support the construction of mass housing
The 4th Annual Russian Financial Forum, organized by the newspaper Vedomosti, was held in Moscow in the last days of autumn, on November 28–29. It gathered 100 speakers from different sectors of the Russian economy in the Ritz-Carlton Hotel, in order to sum up the results of 2012, to discuss the upcoming changes in public policy, as well as the key issues in improving the regulations of the banking system.
Anton Siluanov, head of the Ministry of Finance of Russia, said during the plenary session that the amount of domestic long-term money in the Russian economy is not as significant as in other countries, making only 8% of the GDP. The reasons for such a small amount of money, in his opinion, are the high inflation, the financial illiteracy of the population, and underdevelopment of institutions that manage these funds. Currently, there are different tax requirements, in respect of interest on bank deposits, bonds and the sale of securities. Providing equal conditions for investors, in terms of fair taxation, is on the list of the Ministry’s priorities.
At the same time, during the Financial Forum speakers spoke about public-private partnerships in financing the construction of housing. While answering the question – addressed by Alexander Puzanov, general director of the Urban Institute Fund – about whether it was possible to build low-cost housing in Russia, the speakers pointed out that the existing gap between demand and the supply of economy-class housing makes this an attractive market segment (more than 30 years are necessary to cover the shortage of housing). Developers will use every opportunity to build comprehensive and inexpensive housing. Therefore, M. Semenov, general director of the RENOVA-StroyGroup GC, announced the mechanisms that the company uses to reduce costs per square meter in new buildings: "The implementation of integrated housing projects, aimed at the mass consumer, is realistic, provided that the government will support them. Currently, the key instruments, which help us to provide a significant reduction in the cost of apartments, are the state interest rate subsidies on loans used to construct utilities, as well as state financing of the social and transport infrastructure through regional target programs. New tools to support state constriction projects can be non-repayable transmission of land for housing development and co-financing/funding to develop civil engineering infrastructure, including by introducing commitments for engineering infrastructure into investment programs of public monopolies.”
Indeed, analysts have pointed out that over the past 5 years, the average investment into construction has grown by more than 100%, mainly due to such programs.
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