Prepared by for

9.5.3.2  Coastal Fishery 
The establishment of infrastructure for coastal fishery and processing for the regions of 
the European North and Russian Far East has always been a complicated issue. In Soviet 
times all attempts to solve this problem failed. Both in the North and especially in the Far 
East fishing communities are located in remote areas which are difficult to access.  
 
Russian Far East 
The active fishing season in the RFE is limited due to packed ice. Coastal processing 
operations are just primitive fish salting, as for example in the East Koryakia and South-
East Chukotka. During the fishing season local co-operatives have to recruit factory-
vessels to process the catches. Back in 1990 the Soviet-American Joint venture, “Marine 
Resources Company International” tried to arrange the construction of small autonomous 
fish-processing modules (40-feet containers) for the distant regions. Later, these mini-
factories were used by the Russian companies and installed on board the middle and 
large-scale vessels to extend productivity and output for export. 
  
One option for a programme could be in the framework of one or two regions (Chukotka 
and Koryakia) and be coordinated at the level of regional governments. In addition to the 
coastal module factories, the programme should engage small fishing vessels. The 
advantages of this approach are: compactness of the project and possibility to trace the 
fish all the way to the processed product. As for investments, individual projects within 
the framework of the program could be within the reach of individual investors. The 
settlements Khatyrka and Meinepylgino (Chukotka) could be suggested for consideration. 
This region could provide coastal catches of cod, halibut, flatfish, wild salmon and fresh-
water fish from June to October-November. 
 
Murmansk 
As described in section 9.3.1.1., increasing volumes of cod, haddock and other fish are 
landed in coastal fisheries, and one company is quoted as planning to acquire vessels for 
coastal fishing. 
9.5.4 
Fish farming 
As described in the chapter on Fish Farming there is a growth in inland and marine fish 
farming in Russia. The Republic of Karelia seems to be the most dynamic area, 
particularly for trout farming. The Moscow and St. Petersburg regions are also emerging. 
The prospects for salmon and cod farming in the Barents Sea appear, however, less 
promising in the medium term.  
 
The ranching industry for Pacific salmon in the Far East is significant. This sector is also 
subsidised by the state, which according to sources in the sector, have received 180 
million roubles (6.3 million USD) by the state in 2005. 
 
On the website of the Federal Agency of Fisheries (www.fishagency.ru) there is a list of 
projects under the execution of investment programme of the Fishery Agency for 
construction projects, with a total planned budget of 4.9 million USD, of which approx. 

 
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50% was executed in Jan-Oct 2004. 85% of the allocation is earmarked  for fish farming 
enterprises, mostly to Far East salmon hatcheries.  
 
As mentioned in the chapter on Fish Farming, investors are reluctant to invest in 
hatcheries in spite of the state support given to this sector, because federal legislation 
does not yet offer any clear definition of the rights of the investors to harvest the ranched 
salmon. 
 
9.6  International Financing Institutions  
The record of international and bilateral financing initiatives in the Russian fisheries 
sector is very limited. 
9.6.1 
Bilateral instruments 
In the course of the 1990’s several European countries set up funds for technical 
cooperation with Central and Eastern European countries, including Russia. Some of 
these funds are now closed, partly as a consequence of the EU-enlargement, partly 
through the increasing role of EU funding instruments. 
 
Investment funds of European countries are listed on www.edfi.be. The former 
Norwegian Industrial and Regional Development Fund has been taken over by 
Innovation Norway (www.invanor.no). 
 
According to the Danish Investment Fund for Central and Eastern Europe, Russia is rated 
on a “low” to “medium” investments grade by international financing institutions. 
Investments in Russia need substantial additional deposits to cover risks. The fund has 
been involved in a joint venture project between Royal Greenland, a Danish shipyard and 
Sevryba (Murmansk) consisting in the supply of 4 trawlers with allocation of fishing 
quotas in 1999 – 2001 in the Russian EEZ of the Barents Sea. The quota allocation was 
withdrawn and the project failed. 
 
The Norwegian Industrial and Regional Development Fund has financed the Gigante 
Murmansk project described in section 9.3.1.3 
 
Export guarantees for supplies are provided by both public and private organisations.  
The Austria Control Bank (http://www.oekb.at/control/index.html) mentioned in section 
9.3.4.2, which in 2002 had issued and outstanding guarantees in Russia for EUR 2.8 
billion, lists the following Russian banks as “acceptable banks”: 
•  Alfa Bank Holdings (ABHL)  
•  Gazprombank Group 
•  International Moscow Bank (IMB)  
•  Joint Stock Commercial Bank (Bank of Moscow) 
•  MDM Bank 
•  Moscow Municipal Bank  
•  ZAO Raiffeisenbank Austria  
•  Sberbank (Savings Bank of the Russian Federation)  

 
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•  Vneshtorgbank (Bank for Foreign Trade)   
9.6.2 
Institutions of the Nordic Countries  
The Nordic financing institutions offer different kinds of financing facilities with the aim 
of promoting the establishment of enterprises, trade and occupation, involving partners 
from the Nordic countries. A good share of activities goes to Russia, both in the North 
Western region and more remote areas. 
9.6.2.1  The Nordic Investment Bank (www.nib.int) 
NIB is also owned by the Baltic States. As a development bank NIB can participate with 
direct loans with up to 50% in large projects (10 million USD level) in Russia or with 
indirect loans to smaller projects through Russian banks. Currently NIB has a cooperation 
with Sberbank, Vneshtorgbank and Proimstroi
 
Bank, but other banks are not excluded 
from channelling loans from NIB. 
 
Fish industry projects in Russia are in principle eligible for NIB lending, providing there 
is a partner from one of the Nordic countries involved. There is a special facility for 
projects in the North West region of Russia with a clear environmental conditionality, 
which also could apply for fishery related projects.  
 
In general loans can be given to projects that are related to the member countries such as:  
a) investments and supplies by NIB member countries, b) supplies of commodities from 
Russia to NIB member countries and c) loans related to projects where member countries 
are owners. 
 
Enterprises admitted to lending from NIB have to be creditworthy, incorrupt, and the 
projects should comply with good environmental practices. 
 
There are no fish industry projects on record, but the bank is currently examining a 
proposal for the delivery of 3 trawlers to the RFE for distant water fisheries.  
 
There is no clause against investments made in the catch sector involving dependence on 
quotas. As a development bank NIB is also prepared to take political risks. 
9.6.2.2  The Nordic Environmental Finance Corporation (www.nefco.org) 
NEFCO contributes with loans (in some cases soft loans) and equity to projects that have 
a clear environmental benefit. In principle fishery related projects in Russia could be 
supported, but there are currently none on record or in the pipeline (some projects have 
earlier been screened and approved in principle, but have not been carried out). Emission 
control and pollution abatement are key criteria, but not conservation of fish stocks. 
Investment in clean processing technology could be an eligible project task. In fish 
farming improvement of existing sites could be considered, but greenfield farm projects, 
even with state of the art clean technology would be less likely to be supported, as no fish 
farming at all would be a better option from an environmental point of view. However, 
greenfield projects with a clear demonstration value of superior environmental 
technology and likely to be replicated could also be considered for support as 

 
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demonstration projects. The projects should always have some degree of Nordic 
partnership. 
9.6.2.3  The Nordic Project Fund (www.nopef.com) 
NOPEF provides loans for project feasibility studies and business plans in a wide range 
of areas, including fisheries, fish processing and fish farming. Russia accounts for 
approx. one fifth of approved projects in 2002-2004. A declining share (about 10%) of 
the programme is dedicated to project export, i.e. supplies of turnkey solutions. A number 
of fishery related projects, including salmon farming, have been financed or supported by 
the fund, totalling 7 projects from 2002 to 2004. 
 
9.6.3 
European Union  
Launched by the EC in 1991, the TACIS Programme provides grant-financed technical 
assistance to 12 countries in the CIS countries (former Soviet Union). Further 
information is available on the TACIS and the EU delegation in Russia websites: 
 
(http://europa.eu.int/comm/external_relations/ceeca/tacis/index.htm) 
(http://www.delrus.cec.eu.int/index.htm) 
 
Under TACIS there is a priority assistance programme for Kaliningrad Oblast, covering 
among others the private sector, focussing assistance on enterprise restructuring, human 
resource development, promotion of innovative Small and Medium-sized Enterprises, 
and support for the energy sector. A development project for the Kaliningrad port has 
been supported. 
 
TACIS support has been given to agricultural programmes but not to fisheries.  
 
TACIS has an open tender for Support to Russian Export-oriented SMEs in the Russian 
Federation with an indicative maximum budget of € 3 million. 
 
One of the TACIS tenders addresses institutional capacity-building and training related to 
Russia’s WTO accession. 
 
The TACIS BISTRO Programme aims at complementing the main TACIS programmes 
by providing a rapid and flexible mechanism for supporting small-scale technical 
assistance projects. Examples of BISTRO projects are: data gathering, analysis, 
identification of solution, implementation and dissemination. 
9.6.4 
European Bank for Reconstruction & Development (www.ebrd.com) 
EBRD can contribute with direct loans to large projects (minimum 10 million USD), but 
can also channel loans through local banks for smaller projects. This is done through 
small business funds, regional venture funds and equity capital managers. 
 

 
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The only example of a fishery project to have received EBRD financing is the 8 million 
USD loan to ROK 1 mentioned in section 9.3.5.1  done in cooperation with the equity 
fund manager Quadriga in St. Petersburg.  
 
According to the Russian Far East regional EBRD representative small business funds 
can be used to provide equity into the processing industry but not the catch sector. Until 
now this opportunity has not been utilised. The small and medium processing sector in 
the Far East is insignificant, but is expected to develop in the next few years.  
 
EBRD sees no obstacle in principle to finance investments and small business projects in 
the fish sector, but full transparency from the beneficiaries is required. 
 
EBRD operates a Russian Small Business Funds (RSBF) scheme (see 
www.microloans.ru) which normally provides loans of up to USD 10 000. The most 
common sector to get loans is trade businesses. Fisheries businesses are not listed as a 
specific sub-sector for this type of loans. 
 
9.6.5 
The International Finance Corporation (www.ifc.org) 
IFC follows similar criteria to EBRD for financing large and small business projects. 
IFC considers Russia as a low Investment Grade Country and for each 100 USD invested 
50-60 USD should be set aside to cover risks. Russia has no net debt as a country – but 
this not the case for the companies. 
 
The most active western European banks that are active in Russia are from Austria, 
Germany and the Netherlands. 
 
IFC has no record of investments in the fisheries sector. Beneficiaries have to comply 
with good governance standards and environmental concerns. 
9.6.5.1  Links to web pages on investments in Russia: 
http://www.ivr.ru/ - "Investment Opportunities in Russia" – site by the Ministry of 
Economy of the RF and the Russian Federal Commission for Securities Market 
http://www.runa.info/eng/press-center/ - Market and investment monitoring 
http://www.siva.no/ - SIVA - The Industrial Development Corporation of Norway – 
including many useful links 
http://www.bizbarents.com/default.asp?id=2404 – Swedish Centre Business 
Development Barents region (in Swedish) 
http://www.bizbarents.com/Global/Filer/SC-financial_sources_barents.pdf - Overview 
over financing opportunities in Russia and other CEE countries (2003) 
http://www.sakhipa.ru/ - Sakhalin Investment Promotion Agency. In Russian, but project 
proposals are listed in English 
http://fishdep.petropavlovsk.ru/p011.php - Kamchatka Fishery Department 
Hamburg chamber of commerce – Kaliningrad 
http://www.bisnis.doc.gov – A US Government site to facilitate business in Eurasia  

 
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http://www.npacific.ru/np/industriya/homeindustry.htm - fishing companies in RFE (in 
Russian) 
 
9.7  Issues that limit or are needed to encourage private investment 
9.7.1 
A transparent fisheries sector 
There is a general perception of lack of transparency in the fisheries sector, perhaps 
mostly in that part of the industry which is involved in capture fishery. This is reflected 
by investment institutions which see limited possibilities for participating in fisheries 
projects, and unwillingness by the banks to give loans to the sector. 
 
The lack of transparency is linked to a number of factors related to property rights, to 
policies and bureaucracy of local administrations, to customs and tax regulations and 
sometimes to corruption.  
 
The 5 year quota allocation system introduced with the new fisheries law in 2004 is seen 
by fishing companies and analysts as a positive development with a potential for creating 
transparency and stability in the sector. There are signs that mergers and takeovers are 
taking place in the industry, and that time is still needed before a clearer structure of the 
industry emerges. Some analysts point at the positive perspective of a sector with fewer 
and larger companies with an obvious interest in protecting their quota allocations against 
illegal fishing. 
 
The new fisheries law paves the way for more responsible and efficient management of 
the resources and as far as coastal fisheries are concerned, it should lead to a better 
utilisation of inshore resources for the benefit of smaller fishing companies. 
 
The confidence of investors and financing institutions in the fishing industry will depend 
on positive developments in some key areas as mentioned above. 
9.7.2 
Special Economic Zones 
The concept of Special Economic Zones (SEZ) is widely seen as a catalyst for developing 
regional economies including fishing. A draft law on Special Economic Zones is 
currently under preparation by the Russian government. Typical areas eligible for SEZ 
status according to the new law are Kaliningrad, the Murmansk port and the industrial 
port of Nakhodka (Vladivostok). 
The new law would introduce to kinds of regimes: 
•  Industrial and production zones within areas of 10 sq. km. 
•  Technical and innovation zones within areas of 2 sq. km. 
The SEZs would operate as free customs areas where foreign goods are stored and used 
duty free and without bans or economic restrictions otherwise enforced in accordance 
with Russian Law. 
 
Fishery industrialists both in the RFE and in the North West see the establishment of 
industrial-and-production zones in fishing ports as favourable for improving conditions 

 
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for vessel calls in ports and associated services, and for promoting export-oriented on 
shore fish processing plants. The fishing port of Murmansk has already prepared a project 
along these lines. 
 
Kaliningrad Oblast has presently the status of Free Economic Zone (FEZ) according to a 
law from 1996. The FEZ has given a high degree of stability to the region and has 
favoured the development of the fish processing industry which was already concentrated 
in the Baltic area in the former soviet period. As mentioned in section 9.3.4 above, critics 
find that Kaliningrad’s special regime has contributed to distortions in the supplies of raw 
material in favour of foreign suppliers and at the expense of the development of the 
industry in other regions. On a general level there are inconsistencies between the Federal 
FEZ law and other Federal laws, leading to frequent changes to and unpredictability of 
the basic conditions for investments. See also “Investment Opportunities in the 
Agriculture and Food Processing Industries in Kaliningrad Oblast”, a study under 
EuropeAid BIS/02/012/009, October 2004. 
 
A widely discussed issue is the establishment of business incubators and techno-parks, 
but they are still at a very early stage with no practical investments. 
  
9.7.3 
Commercial transactions 
Traders and exporters seem to be generally happy with their Russian partners or by 
working through own subsidiaries or distributors in Russia. One key element, however, 
for foreign companies doing business in Russia has been related to the issuing of letters 
of credit and other guarantees for payments. Foreign companies frequently require a letter 
of credit when dealing with markets which are considered more risky than others, or with 
new trading partners. This has also been the case in Russia. However, when problems 
have occurred, Russian banks have not been able to issue LoCs efficiently, in spite of 
reassurances by both the banks and the clients. 
 
Some countries only issue export credits and insurances if the trade relationship with the 
Russian partner is at least 3 years old, so exporters and investors rely on proper payment 
instruments when entering the deal with new partners. 
 
From the Russian side the problem is related to requirement by the Russian banks that a 
Russian company must deposit an amount equal to the LoC value on a special account. 
As a result of this Russian companies avoid LoC, preferring cheaper forms of payment. 
 
EU importers can expect the requirement of pre-payment from the side of Murmansk and 
Kaliningrad producers/exporters of white fish (cod, haddock, pike-perch). Financially 
strong and well-know major European importers are in the best position to negotiate the 
terms. 
 
Sometimes payment is required 3 days after delivery, or in the best case (but very 
seldom) 1 week after delivery to the place of destination. 
  

 
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References 
 
Business Analytica  
Business Directory of Moscow 
Delovoi Peterburg, 27 May 2005, 07 Feb 2005 
Eurofish Magazine, Issue 4, Jul-Aug 2004 
EuropeAid BIS/02/012/009, “Investment Opportunities in the Agriculture and Food 
Processing Industries in Kaliningrad Oblast”, Oct 2004 
Fiskeribladet, 09 Feb 2004 
Fiskeriforskning, No.4 Jun 2005 
Fiskeriforskning, Report 7/2005, “Produkt-og markedstilpasning av pelagisk fisk i 
det russiske markedet”, March 2005GfK Rus - Institute for marketing research 
“Moscow, Russia: A taste of comfortable shopping”, April 2004 
GLOBEFISH Research Programme Vol. 80 Fishery Industry Profile – Russia, FAO, 
Jun 2005  
ICES, Report of the Arctic Fisheries Working Group (AFWG), 19-28 April 2005, 
Murmansk, Russia. 
Interfax 08 Jun 2005, 02 Feb 2005, 13 Jul 2005 
Lonely Planet, http://www.lonelyplanet.com/worldguide/destinations/europe/russia    
Norwegian Seafood Export Council, “Global trade in herring” presentation by Kristin 
Lien, Pelagic Days, Aalesund 24-25 August 2005  
PricewaterhouseCoopers, 2003/2004 “Global Retail and Consumer Study from Beijing 
to Budapest” 
Prime-Tass/Esmerk, Jan. 2005, Feb. 2005 
Raiffeisen Bank, Presentation on the food industry, in an Adam Smith conference in 
Moscow, 16 Nov 2004 
Russian Fish Report, May 2005, Apr 2005, Mar 2005, Nov 2004, Oct 2004, Oct 2003, 
Apr 2003 
Schleifer and Triesman (2004)  
University of Stavanger, “Increased volumes and price effects” presentation by Frank 
Asche, Pelagic Days, August 2005 
USDA, Foreign Agricultural Service “Russia: Retail Food Sector Report” 2004  
Vitrina / Restoranny biznes, March 2005 
VNIERKH, VNIRO, GYPRORYBFLOT and the State Customs Committee, White 
Book “Russia’s Fishery Complex in 2003” 
Worldfish Report, Dec 2004, Nov 2004, Jul 2004, Jun 2004 
 
Links 
www.mbnews.ru   
www.barentsobserver.com 
www.nwfish.ru/ 
www.fishproducts.is/fleet.htm 
www.dalryba.ru 
www.fishagency.ru 
www.seac.se  
www.adamsmith.org/policy/ 
www.Fishnet.ru  
www.cia.gov  
www.fiskeriforskning.no 
 

 

 
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Survey of the Fish Industry in Russia 
 
 
 
ANNEXES 
 
 
The numbering of the annexes refers to the chapter numbers in the survey