Putin orders state-owned firms to get out of Moscow

26.07.2024 13:54

Photo: Sputnik / Mikhail Voskresenskiy

Russian President Vladimir Putin has ordered plans to be developed for major state-run companies to relocate their headquarters from Moscow to other parts of the country. The move is aimed at boosting regional budgets and helping alleviate labor shortages.

Moscow is home to most of Russia’s state-run giants, including the country’s top lenders Sberbank and VTB, energy majors Gazprom and Rosneft, defense and technology giant Rostech, Russian Railways, and others.

The president on Thursday ordered the development of a roadmap on the phased relocation of the head offices of major corporations and state companies to the regions by October, according to a document published on the Kremlin website.

Putin suggested that companies should prioritize Siberia, the Urals, and the Far East.

The initiative to transfer company headquarters to the east of the country comes amid strengthening economic ties with Asia. Russia has redirected the bulk of its trade flows away from the EU following Western Ukraine-related sanctions.

The Russian leader first floated the idea in 2021 and reiterated it during the St. Petersburg Economic Forum in June. Russian regions outside the capital need more economic opportunities, Putin stressed at the time.

“The idea certainly needs to be worked out, but it deserves attention and support,” the president said at the forum.

He lauded RusHydro, one of the world’s biggest producers of hydro-electric power and whose portfolio includes geothermal power plants in Kamchatka, which is moving 1,500 head office jobs to the Siberian city of Krasnoyarsk.

Depending on the scale of the company, the relocations could take up to ten years and would give a boost to regions, especially where unemployment rates are high, experts say.

“The first company that comes to mind as a candidate for relocation is Rostech. The second most powerful state corporation is Russian Railways,” the director of Tax Global Consulting’s Moscow unit, Eduard Savulyak, told Kommersant. “In theory, relocation is feasible for many companies.”