On April 1, the Law
"On Investment Protection and Promotion Agreements in the Russian Federation" (IPPA) was adopted, aiming to support and encourage large-scale investment projects in Russia, as the country looks to grapple with the twin pressures of a sustained fall in inward investment and the economic impact of the pandemic crisis. Over the last two months the Government has intensified the development of the necessary by-laws, as it turns attention to the implementation of the new program ahead of its true launch in 2021  .
The new law unveils a set of incentives aimed at both existing and potential future investors. IPPAs will take a similar form to SPICs (Special Investment Contracts), first launched in 2014 and updated last year, but with some crucial differences (discussed below). This document examines some of the key criteria and features of the new regulation surrounding IPPAs, as well as their potential impact on the investment climate. Overview & Background
An IPPA will effectively be a bespoke contract between a company and the State that outlines a range of state support measures dedicated to a particular investment project, whether directly (via compensation from the state budget) or indirectly (via regulatory adjustments). The new mechanism is applicable both to new and existing projects (as long as they have commenced after May 2018), although the first wave of IPPAs are expected to be signed no earlier than 2021 and a range of sectors are excluded (including retail, construction, gambling, tobacco, alcohol – see below for full list). There are three potential state parties to an IPPA - governmental bodies at the regional level, although both federal and municipality agreements may also form part of the overall support. In reality, of course, all decisions on major investments will require blessing on the federal level as before.
Formally, the stated objectives of the new IPPA regulations are to  :
The law was originally conceived as an entire new investment code
- increase the share of investment in GDP (from 20% to 25% according to President Putin's decree in March 2018);
- intensify the investment infrastructure the Government has been relying on in recent years to stimulate economic growth;
- attract long-term investments by improving the investment climate.
, intended to reconfigure a new range of instruments between the State and businesses involved in large investment projects. However, the new policy has been diluted solely to the introduction of the IPPA, thus losing "investment code" status and suggesting that additional investment promotion measures may well be introduced later on.
As such, it appears that the Government will remodel its inward investment policy incrementally
, rather than in one systematic and holistic move. It is important to note, therefore, that IPPAs may be used alongside other, pre-existing investment support mechanisms (such as SPICs, public-private partnerships, special economic zones, etc).
Kesarev's analysis of the new legislation reveals it to be quite a complex policy move, both in form (there is no executive legislation) and content. It has been drafted over the past two years and originally focused on a set of objectives which have since largely become irrelevant, particularly so since the onset of the pandemic crisis. The State's needs have also changed dramatically in recent months: the challenge now is less one of attracting immediate investment, rather one of preventing outflow and maintaining current levels
The current wording of the Law fails to reflect this new agenda, proving again that economic instruments alone will not transform the Russian investment climate. Far-reaching cultural changes around the sanctity of the rule of law, an independent judicial system and protection for intellectual property are just a number of the remaining, significant hurdles for investor confidence. Without major political will and support from the highest levels, it remains to be seen how much of an impact the IPPA mechanism can be expected to make.
Despite these and other significant reservations, though, it is clear that a new investment infrastructure in Russia may be formed primarily around this law, possibly to be complemented by a set of other options (connecting financial and development institutions, the Central Bank, etc.). Earlier this year, the Ministry of Finance announced it intends to use the new mechanism to attract 30 trillion rubles (approximately $424bln) of inward investment, concluding 100-150 IPPA agreements annually. This creates a window of opportunity and certain incentives for companies considering large investments into Russia. Understanding and engaging with the IPPA program, therefore, will now be crucial for potential investors.
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 Please see the timetable for adoption of the by-laws necessary to implement the law in Appendix. Table 3 of the full memo.
 Interestingly there were no calculations published on whether other investment instruments previously launched in Russia like SPIC 1.0 etc. managed to achieve the objectives set for them.