The Far East (General Information)

The Far-East means all of the territory of the Far-Eastern Federal District including nine independent subjects of the Russian Federation: the Republic of Yakutia, Primorski and Khabarovsk Territories, Amur Region, Kamchatka Region, Magadan Region and Sakhalin Region as well as the Jewish Autonomous Region (AR) and the Chukotski Autonomous Area (AA).

All these regions are represented in the Inter-Regional Association of Economical Cooperation of the subjects of the Far East and the TransBaikal area. The territories of the Jewish AR and Sakhalin Region operate as free economic zones. A local free economic zone named "Nakhodka" has been created in Primorski Territory.

The Far-Eastern regions possess a series of advantages. Amur Region and the Jewish Autonomous Region have a common border with China which makes it possible to establish close ties with this state. The regions of the Far East occupy a key transport and geographical location. Here, the Transsiberian and Baikal-Amur railroads, a highway from Khabarovsk to Blagoveshchensk are running, there is the navigable Amur River here; the bases and depots used for the construction of the Baikal- Amur and Amur-Yakutia railroads are located in this area. The terminal point of the Baikal-Amur railroad is Vanino seaport, which operates a train/car ferry to the Sakhalin island. The airport of Khabarovsk is the most important international junction for domestic and foreign air traffic in all the Asian part of Russia. Primorski Territory plays the role of an "Eastern sea-gate" to and from Russia, whereas the cities of Vladivostok and Nakhodka are terminal points for the Arctic shipping.

The Far East possesses rich reserves of timber. Its subsoil contains the richest deposits of gold, various metal ores, diamonds, bituminous coal, natural gas, ferrous, non-ferrous and rare metals. The coastal waters abound in fish and other sea-food. The rivers of Kamchatka are natural spawning-grounds for valuable fishes of the salmon family. Besides, the Sea of Okhotsk is one of most productive seas in the world. On the shelf of the Sea of Okhotsk, considerable extractable reserves of gas and oil of international importance have been discovered.

The key industries are power industry, mining industry, timber industry, wood-working industry, food industry, fish-processing industry, light industry, pulp-and-paper industry, chemical industry, fuel industry. Primorski Territory possesses the operating capacities of ferrous metallurgy and petroleum refining, unique in the Far East. The potential electric power reserves of water resources in the Republic of Yakutia exceeding 70 GWt make it a leading place in Russia for perspective energy development. Machine-building and metal-working as well as production of building materials and structures are being developed.

The territory of the Far East houses nuclear & heat-electric generating plants of Arkagaly and Bilibino, Vilyui Hydro, Kolyma Hydro, urban district power plants of Neryungri, Chulman, Yakutia. The geothermal power plant of Pauzhet, being the first of this kind in the country, is already operating on the territory of Kamchatka Region. The regions of the Far East are the Russian monopolists in the production of brucite, microbiological agar, fluorite concentrate, lead concentrate, datolite concentrate, boric acid, antimony concentrate, food/nutrient agar.

The agriculture is practiced mostly in Primorski Territory, in the Republic of Yakutia and the Jewish AR. There are fields of cereals and forage crops, soy as well as cattle breeding, dairy farming, fur farming, deer breeding, apiculture on their territories. Amur Region accounts for almost 50 per cent of all the soy growing soil in Russia. The main disadvantages of the economic development and human life in the Far East are related to difficulties of accessing those regions, rigorous natural & climatic conditions and complicated terrain. Negative factor in considering the development of Kamchatka Region is its high seismic volatility as well as a deficit of fuel and power resources in Primorski Territory. Besides, both regions are saturated with defense and military facilities. A very special feature of the Far East is the dependence of its economy and the people on the deliveries of fuel and foodstuffs. Moreover, it is not possible to establish closer and mutually advantageous ties with Japan due to the fact that the question of the status of the Kuril Islands has not been settled yet.

As a whole, the volume of industrial output increased by 6.8 per cent in 2000 compared to 1999 in the Far Eastern Federal District, Khabarovsk Territory showing the maximum growth (14.6 %) and Magadan Region with the minimum one (0.8 %). In 2000, the retail trade turnover grew in comparable prices 2.8 % compared to 1999 and amounted to RUR88.676.9 million. The maximum growth (16.4 %) of this index was achieved in Sakhalin Region; the greatest drop was registered in Chukotski AA (18.2 %). In 2000, the services provided to the population reached the total figure of RUR36,776.7 million which is by 1.7 % less than last year. The maximum growth was registered in the Republic of Sakha (Yakutia) (19.1 %) and the biggest downfall occurred in Magadan Region (13.8 %). According to 2000 statistics half of all the enterprises in the Far East are unprofitable. The biggest number of unprofitable enterprises and organizations was located in Chukotski AA (82.6 %), with a smaller amount of such enterprises in Khabarovsk Territory (42.6 %).

According to the "Expert" magazine, only Primorski Territory is among those with favorable conditions for investment: it has an average investment potential and a moderate risk. Amur Region has mediumfavorable conditions for investing: it has a lower investment potential and a moderate risk. Among the regions with poor conditions for investment are the Jewish AR (a low investment potential and a moderate risk), the Republic of Yakutia (an average investment potential and a high risk) and Khabarovsk Territory (a low investment potential and a stable and high risk).

The initial "boom" of foreign investments in 1991 through 1993 connected with declaring the Jewish AR to be a free economic zone has changed to nearly total absence in the recent years. From 1995 the Federal budget ceased investing into this region as well.

At present, the rest of Far Eastern regions are rated among the regions with unfavorable conditions for investments: they have a low investment potential and a high risk. These are Kamchatka Region, Magadan Region, Sakhalin Region as well as the Chukotski AA. Nevertheless, the economy of Magadan Region is able to attract investments largely (in its mining industry) because of a heavy demand for raw materials excavated. Also considerable investment is flowing into the economy of Sakhalin Region related to the projects of oil and gas production from its off-shore fields in the Sea of Okhotsk on the basis of production sharing. The economy of Chukotski AA gets no foreign investments at all with the Federal budgetary funds prevailing in the structure of the local treasury.