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The Moscow region has decided to fight tooth and nail for the right to provide land for a Volkswagen car plant
The Moscow region has decided to fight tooth and nail for the right to provide land for a Volkswagen car plant, a leading business daily reported wednesday. Vedomosti wrote that the regional authorities had proposed establishing a special economic zone for the German carmaker. However, the federal officials are not ready yet to support the initiative. VW has been eyeing Russia for several years. Both the government and the concern have repeatedly named the models it could make in Russia, as well as the feasible output, ranging from 50,000 to 200,000 cars a year. The only thing that remains unchanged in the noise about VW's arrival in Russia is the proposed construction of a plant in the Moscow region town of Stupino. On Tuesday, the head of the new Agency for Managing Federal Special Economic Zones, Yury Zhdanov, said the Moscow region had submitted an application for permission to establish an industrial zone to assemble foreign-made cars. "The most important thing for us is to persuade VW to build the factory near Moscow," said Norair Bludyan, a senior transport official in the region. "Therefore, we want to provide several options for the company. Let it use the one that suits it best." However, Zhdanov disagreed: "This would give VW preferences that were not granted to Ford, Renault and Toyota in Russia." A source in the Economic Development and Trade Ministry supported this view, the daily added. Experts told the paper that the Moscow region had come up with an attractive incentive for VW. "The special economic zone would enable VW to import components and equipment free of customs duties," said Konstantin Pavlovich, a manager with the Energy Consulting auditing company. In addition, it would be able to expect a 4% profit tax reduction and property tax breaks. Vyacheslav Smolnikov, an analyst with the UralSib financial group, said the VW project's recoupment period could be halved if it produced 50,000 cars a year. VW is Europe's leading carmaker. In 2004, it sold 5.14 million vehicles with revenue of $121.3 billion and a net profit of $923 million. The concern sold 2,597 cars in Russia in the first quarter of 2005.
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