Soviet Union Information Bureau
THE vast undeveloped resources of the Soviet Union and the lack of facilities
for full development in certain industrial and constructive lines afford a broad
field for the foreign concessionary. The concession policy is being carefully
Concessions may be secured by responsible foreign interests from the Chief
Concessions Committee (18 Malaya Dmitrovka, Moscow), attached to the Council of
People's Commissars. As a rule the concessions run for a limited period of
years. The concessionary furnishes the capital for development and the "know
how." The Government, in addition to the valid lease, usually affords special
facilities for transport and for the importation of equipment and materials.
Some concessions are in the form of mixed companies, in which the Soviet
Government has a participating interest. Some concessions take the form of
engaging foreign engineering firms for technical assistance. Concession
agreements, which are drawn up jointly by the Chief Concessions Committee and
the applicant, must be ratified by the Soviet Government.
For the convenience of firms and individuals interested in obtaining
concessions in the U.S.S.R. the Chief Concessions Committee has representatives
in the principal European cities (Berlin, London, Paris) who are empowered to
conduct preliminary negotiations.
The Amtorg Trading Corporation is the representative of the Chief Concessions
Committee in the United States and is empowered to negotiate concession
agreements. The Amtorg is in close touch with the Soviet Chief Concessions
Committee and has detailed data in regard to a number of concession prospects in
The Amtorg is in a position to supply American business men with complete
information in regard to concessions in the U.S.S.R. and has copies of standard
concession agreements which will enable prospective concessionnaires to acquaint
themselves with the basic provisions of agreements covering various types of
concessions in the U.S.S.R.
After the basic conditions have been determined as a result of preliminary
negotiations conducted in this country, the final form of the contract is drawn
up in Moscow in agreement with the Chief Concessions Committee which in turn
presents it for ratification by the Council of People's Commissars.
During the five years ending November 1, 1927, the Committee received a total
of 2,211 applications for concessions, of which 35 per cent came from Germany,
10 per cent from British concerns and 954 per cent from American firms.
During the same period 163 concessions were granted, of which 113 are at
present in operation.
On June 1, 1928, there were 97 concessions in operation, distributed as
|(as of June 1, 1928)
|Number of Concessionaries from:
Of the total number of concessions 40 were for mining and manufacturing, 28
for technical services, and 8 were trading concessions.
The capital invested, as of July 1, 1927, in 39 of the total number of
concessions (including 5 mining, 20 manufacturing, timber and agricultural and 3
building concessions) is estimated at $30,000,000, amounting to slightly less
than one per cent of all capital invested in these industries in the U.S.S.R.
The number of workers employed in 27 concession enterprises (including 7 mining
and 20 manufacturing concessions) was, on the same date, 19,658.
On October 1, 1927, the balance sheets of seventeen manufacturing enterprises
operated through the fiscal year showed net profits of 4,752,000 rubles
($2,447,280), or 35 per cent, on a total invested capital of 13,484,000 rubles
RULEs GOVERNING CONCESSlONs.-
Concessions may be granted for the construction and operation of factories,
mills and mines, for the building of houses and roads, and for the development
of forest, mineral and other of the natural resources of the Union. The
concessionary may supply the entire capital necessary for the project or may
enter into a "mixed" company in conjunction with a Soviet state organization or,
in the case of technical advisers, may not be required to invest any capital at
Concessionaries engaged in production are usually permitted to dispose freely
of their product on the Soviet market and also to export a certain specified
proportion. In cases where the concession enterprise produces commodities for
which there is a large demand in the U.S.S.R., the concession agreement usually
contains a provision giving an option to Soviet organizations for a part or the
whole of the output on conditions specified in the agreement.
The concessionary is permitted to export from the country the entire net
profit of the enterprise, the transfer of money to be effected through the State
Bank of the U.S.S.R. or any other bank in the country.
The policy and the practice of the Soviet Government has been to especially
favor concession enterprises which can obtain the needed raw materials and
semi-manufactured products within the country. In the event, however, that the
required materials are not available in the U.S.S.R., the concessionary is
granted the right to import such materials, the quantity and procedure of
importing being specified in the concession agreement. In these cases imports
are allowed until such time as the production of the required materials is begun
in the country. Imports of equipment are usually exempt from customs duties for
a specified length of time after the granting of the concession.
In regard to the payment of taxes and duties the concessionary is placed in
the same category as similar Soviet enterprises. Exess profits are usually taxed
according to a scale specified in the agreement.
One of the principal provisions of concession agreements is that the
enterprise employ the most modern production methods.
The life of the concession, depending upon the nature of the industry and the
amount of capital invested, is sufficiently long to allow the concessionary to
utilize fully the imported equipment and to receive an adequate return on the
invested capital. Upon the expiration of the term of the concession, all the
concession properties are turned over to the Government without compensation.
Concession agreements, upon ratification by the U.S.S.R., have the power of a
special law. The provisions of such agreements cannot be changed by any decrees
or rulings of central or local government organs.
In accordance with the existing laws the Government of the U.S.S.R.
guarantees that the properties of the concessionary invested in the enterprise
are not subject to nationalization, requisition or confiscation. The
concessionary is allowed to hire the necessary working staff on the basis of the
provisions 0f the Soviet Labor Code and of the collective agreements made with
trade unions. The experience of a number of years shows that concessionaries
have had no difficulties in hiring and employing labor in the U.S.S.R. The
concessionaries are permitted with certain limitations, to bring in foreign
skilled workers and higher administrative and technical personnel. The
proportion of foreign workers to the total number of workers is set forth in the
CONCESSION POSSIBILITIES.- In
September, 1928, the Soviet Government announced a program of extension and
liberalization of the policy of granting concessions to foreigners. The new
policy included the importation of construction materials duty free and the
simplification of the taxing scheme. In most cases the concessionaries may sell
their products on the domestic market on their own terms and may export subject
to the laws existing for external trade. The concessionaries may remit their
profits abroad at current rates of exchange prevailing in Moscow.
A list of available concessions was submitted, drawn up by Gosplan to fit in
with the five-year plan of industrial development. The list included the
Eleven concessions for land development, for the growing of
cotton, sugar beets, grain and other agricultural products.
Five concessions for the building of railways, some with
collateral oil and forest exploitation rights; three for the building of
Four large concessions for the exploitation of black metals
in the Krivoi Rog, Magnetic Mountain, Telbess and Dnieprostroy districts.
Sixteen other metallurgical concessions.
Concessions for foreign capital and technical assistance in
the construction of a number of industrial plants, including: A tractor works,
lathe construction works, tool-making plant, automobile and auto-truck works
(xo,000 to 100,000 units per annum), wagon works, aeroengine construction works,
agricultural implement plant, shipyard for river tonnage, steam boiler factory,
printing machine construction plant, watch and clock factory, typewriter and
adding machine plant, factory for dental and surgical instruments, factory for
heat and pressure gauges, plant for sugar and distilling machinery, plant for
machinery for the silicate industry, another for machinery for the leather
industry, another for sawmill equipment, another for machinery for the match
industry, plant for making elevators, conveyors, etc., a bicycle factory, plant
for roadmaking machinery, plant for railway rolling stock repairs.
Five concessions for production of cement and one for cement
Three concessions for cellulose, one for rayon silk, one for
treatment of flax for the market.
One tannery concession and a multiple concession for
production of vegetable extracts used in tanning.
Four concessions for window and bottle glass, two for
pharmaceutical and domestic glass.
Concessions in the mining and fuel industries as follows:
iron ore (5), copper (5), lead and zinc (4), gold (3), nickel (1), graphite (1),
coal (2), oil (5), asbestos (2).
Nineteen forest concessions.
Eight concessions in the electrical industry.
Eleven concessions for the construction of electric power
plants, including a hydroelectric plant of 80,000 kw. on the river Svir, and a
steam plant of 60,000 kw. near Cheliabinsk in the Urals.
Concessions for housing in crowded urban centers.
Public service concessions in over sixty cities and towns,
including tramways, gas works, electric plants, waterworks, sewers, slaughter
houses, etc. The aggregate investment involved is over 2OO,000,oco. The cities
in the list include Moscow, Leningrad, Odessa, Kharkov, Tiflis, Kiev, Tashkent,
Vladivostok, Novosibirsk, Sverdlovsk and Rostov-on-Don.
Full description of each concession in the above list, with capital required
and approximate production, may be obtained from the Amtorg Trading Corporation,
165 Broadway, New York City.