Russia to have its own "silicon valleys"

Four IT parks to come on stream in Russia over the next 2-3 years

A round table meeting "Development of information technologies and the creation of IT parks in Russia" was held by Russia's ministry of information technologies and communications on Thursday. Deputy minister Dmitry Milovantsev said the meeting was necessitated by not quite correct media coverage of the President's initiative to create several IT parks in the country. On January 11, Vladimir Putin made a short visit to Novosibirsk to hold an IT conference. He said the creation of IT parks was Russia's national goal. For their part, Communications ministry officials say most media reports covering Putin's visit cast IT parks as offshore centers for domestic software firms. Milovantsev argued this was not quite correct. He said every industrial park would include modernized office facilities and necessary infrastructure. The main idea of IT parks is to create an atmosphere of intellectual competition in the country's largest scientific centers. IT parks will allow Russian software companies to raise their capitalization, which boost country's economic growth.

The world's IT market totaled about $915 billion in 2003, but Russia's share was small - less than 1 percent. "For Russian companies, with their restricted resources, it is difficult to compete not only on foreign markets but - which is most shameful - also on the domestic market," Vladimir Putin told the meeting noting Russia had personnel potential and significant scientific achievements in the area. "I am convinced that if we use those opportunities in an effective and reasonable manner, the country could achieve significant breakthrough in the sphere of information. We just cannot miss this chance," he said. According to him, the creation of advanced IT sector infrastructure should become a "large national project", the implementation of which will demand "an effective partnership and joint responsibility of science, business, the state, and corresponding legal and organizational mechanisms." This partnership will find expression in the creation of IT parks in Russia, with active support from the state. Officials say this support is needed urgently, with Russia's IT market growing 8 percent a year, against the oil industry's 2 to 3 percent. Four IT parks are on agenda: in Moscow region, St. Petersburg, Nizhny Novgorod and Novosibirsk - Russia's traditional scientific centers.

The main idea of the project is to put the IT region on par with other industries, making Russia's software market competitive on the world market. The project also includes passing necessary laws. In particular, Milovantsev urged changes to Russia's tax laws claiming that payroll costs were too high in the domestic IT sector. He said IT companies operating in Russia paid up to 70 percent of their profits in wages, while oil companies paid 5 percent. As a result, most of Russia's successfully performing IT companies are registered in foreign offshore centers. Along with a special taxation system, new IT centers will have the necessary living and working infrastructure.

The IT parks will be built by regional authorities, with financial support and control provided by the federal government. In the estimation of the IT and communications ministry, the federal budget quite could afford the four IT projects. So, the Novosibirsk park is estimated at $100 million to $150 million, and the Dubna center is priced at $80 million. The IT projects will be implemented quickly. "The bill 'On special economic zones in Russia' will be submitted to the State Duma in March 2005," Milovantsev told RBC Daily. Careful planning will be done in 2005, including the construction of IT park models, financing provided by the federal government. Starting 2006, the government will allocate funds for the implementation of the projects.

If everything goes as planned, both Russia's IT industry and the state will benefit from the construction of IT parks. "The main goal is to increase the capitalization of Russian companies. High concentration of experts and favorable working conditions will build a creative environment, which will lay ground for intellectual competition in IT parks," Milovanstev said. Russia would have at least 1 percent of the world's IT market soon after the parks were built, and this was only the beginning, he forecast.