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n early October, Russian- owned OAO Gazprom, the world's largest natural gas producer, announced it would not be partnering with any of the major energy multinationals as it moves forward with developing the Shtokman field in the Barents Sea, a US$20- billion project. Russian regulators, meanwhile, had already stalled expansion of Exxon Mobil's $12.8- billion Sakhalin- 1 oil development project. At the same time, the U.S.- based National Association of Homebuilders called on new partnerships with Russia in order to assure a steady supply of lumber.
   Certainly energy, automobiles and materials are dominating Russia's corporate facility investment landscape – even as more restrictive rules about foreign participation in strategic sectors and others under the moniker of "resource nationalism" loom on the horizon. The OECD reports that manufacturing and energy accounted for 77 percent of total foreign direct investment in Russia in 2005.
   Ukraine, meanwhile, has its own momentum, helping drive an overall CIS GDP growth rate of 6 percent in 2006, says UNCTAD. Oxford Intelligence reports that Ukraine showed a 69- percent increase in investments in 2005 over 2004. And it's not all coming from the U.S. either, as corporations from fellow BRIC territories like India also get active in an active territory.
   It's now been 15 years since the Commonwealth of Independent States came into being in concert with the dissolution of the Soviet Union and the recognition of the independent states of Estonia, Latvia and Lithuania. What corporate projects are now coming into being in the 12 countries of the CIS, even as the organization itself seems on the brink of obsolescence?

   At present the Commonwealth of Independent States (CIS) unites: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. But no matter what you call the region, Russia is always the mother bear. A quick summary of recently announced industrial projects in Russia tells the story:
   Automotive: In August, Ford announced a $250- million investment at its Vsevolojsk plant near St. Petersburg, after opening a parts distribution complex in the city in 2005. In June, St. Petersburg hit the trifecta with a $50- million car kit plant from Magna International, General Motors' first solely owned Russian plant in the suburb of Shusharry and Nissan's announcement of a $200- million plant in the suburb of Kamenka. Finnish tire maker Nokian will expand its tire plant in Vsevolozhsk, outside Saint Petersburg. In May, Volkswagen announced a $500- million plant investment in Kaluga, near Moscow. Other new plants have just started up in Russia from Toyota, Kia and Renault SA. Nizhny Novgorod is in the running for a new plant from PSA Peugeot Citroen. And in September, China's Great Wall said it would invest $85 million in a new car assembly plant in Tatarstan.
   Materials: In August, Germany's HeidelbergCement announced it would invest $179 million in a new cement plant in Leningrad Oblast, Russia. Austria's Wienerberger AG announced in July a $30.1- million investment in a brick plant in the Russian constituent republic of Tatarstan. Poland's Pfleiderer Grajewo, a producer of wood materials and a subsidiary of the German firm Pfleiderer AG, will invest $113 million in a chipboard factory in Russia, and plans major annual investments from 2010 forward to satisfy growing regional demand.
   Logistics: In July, the International Finance Corporation (IFC), the private sector arm of the World Bank Group, provided financing of $119.5 million to the Eurosib Group to support the first phase of the development of Russia's first private network of inland logistics terminals. According to IFC, Eurosib will use the financing to build and operate six inland container terminals at cargo processing hubs in the Urals, Siberia and outside Moscow and St. Petersburg. The group plans to build approximately 20 terminals in Russia and the Commonwealth of Independent States. Each terminal will have a rail and road connection, a warehouse, and a container yard designed to handle up to 60,000 20- foot containers per year. "Upgrading the transportation and logistics infrastructure is a priority for Russia to maintain its growth. The construction of Eurosib's inland terminal network will contribute to further development of local multimodal transport services and will have a substantial positive impact on the Russian economy through lower transport costs and more efficient intermediation of goods," said Francisco Tourreilles, the director of IFC's infrastructure department. Belgium- based Ahlers Logistic and Maritime Services, a subsidiary of the Axe Group, has invested $18 million in the construction of two logistics centres in the Lomonosov district of Leningrad Region, The firm plans to build four more facilities, with a total Russian investment of up to $70 million.
   Consumer Goods and Packaging: In June, Italy's Candy SpA completed the $3.1- million first phase of a washing machine plant expansion in the Kirov region in central Russia, after purchasing the plant for $18.8 million from Vesta in 2005. Finland's Raisio announced in June it would build an $18.8- million oatmeal plant in Burunduki, Tatarstan. Sweden's IKEA is investing in a forest products plant in Kostomuksha in Karelia. Spain's Roca Corporacion Empresarial SA is investing $50 million in a (100,000- sq.- m.) ceramic bathroom accessory plant in the St. Petersburg suburb of Tosno. Rexam is investing $73 million in an aluminum can plant in Chelyabinsk in the Urals.
   Technology: Malaysia's Kedah Wafer Emas will invest $1.2 billion in a microelectronics project in Nizhny Novgorod in central Russia. IBM Corp. opened its first development center in Russia, a $40- million investment that will take employment from 40 to 200 by 2008. True to many multinationals' BRIC strategy, the company announced that the new center would join other R&D outposts in Brazil, India and China. The Center for Nanotechnology Excellence opened in Moscow in June, part of a $400- million investment in nanotech by the Russian Federation through 2007.
   Resources: There is more than oil and gas. Peter Hambro Mining plans to invest $327 million in gold mining operations in the Amur region. Finnish firm Stora Enso is investing in a pulp mill. Tatarstan is seeing the development of a $3- billion new oil refinery complex in Nizhnekamsk, as well as a new ethanol plant.
   Services: As if to capitalize on all of the above, CB Richard Ellis in April acquired a majority stake in leading Russian real estate services firm Noble Gibbons.    In Pavlodar, Kazakhstan, GE will construct a new locomotive plant that will supply 300 locomotives as part of a new contract between the firm and national railway Kazakhstan Temir Zholy.
   Even as its dispute with Russia comes to a head, the Republic of Georgia was identified by the World Bank "Doing Business" index as the most reformed territory in the world for doing business. "Georgia's new labor regulations help workers move to better jobs," reports the World Bank. "The social security contributions paid by businesses decreased from 31 percent of wages to 20 percent, making it easier for employers to hire new workers. Better collection of corporate taxes, which shot up by 300 percent, more than made up for the loss in government revenue. And unemployment has fallen by 2 percentage points."
   CRU International data show that CIS countries lead the world in low- cost power for smelters. Helping the traditional oil and gas supply matrix will be between 42 and 58 new nuclear reactors by 2030 in Russia, according to the head of that country's atomic energy agency.
   There has been no shortage of odd stories about the autocratic leadership in Turkmenistan, where months are renamed for loved ones, opera is banned and the president was approved as president for life in 1999. But that hasn't prevented industrial investment in the country. According to the CIS, industrial production in the first half of 2006 increased on average by 5.5 percent over the first half of 2005. The highest growth rates occurred in Azerbaijan (141.1 percent), Belarus (112.6 percent) and Turkmenistan (122,4%). Production of industrial output decreased in Armenia (by 1 percent), Kyrgyzstan (by 6.8 percent) and Moldova (by 6.4 percent).
   While the World Bank's "Doing Business" index didn't even consider Turkmenistan among its 175 examined nations, it is still an associate member of the CIS. China is building on natural gas supply pipeline projects with Russia and with Kazakhstan with a new supply agreement with Turkmenistan, reports The Wall Street Journal. The Turkmenistan pipeline route has not been officially announced. And a $13.8- million investment in a drinking- water plant will mean 300 new jobs in the capital city of Ashgabat. That same city is seeing a $14.5- million investment by Chinese concerns in a velvet manufacturing plant.

Country Notes    The quarterly update of PriceWaterhouseCoopers' "CEE- CIS Tax Notes," published in the second quarter of 2006, contained the highlights below on selected CIS countries. Click the hyperlinked country names to access Site Selection's International Guide resource for more country data and economic development contact information. Azerbaijan    The nation's Social Insurance Fund has raised eyebrows with newly authorized auditing power and an attempt to limit the amount of social security allowances payable to individuals to US$33 a day, regardless of pay level. In addition, new tax return and declaration forms for corporate tax and VAT, coming into use in the second half of 2006, require much more detailed information. Georgia    The government plans to follow a recent reduction in its import tariff scale with a complete removal of import tariffs by 2008. Kazakhstan    A new securitization law came into effect in early 2006, permitting certain tax advantages for special purpose vehicles. Russia    One recent change allows tax authorities to penalize taxpayers without a court decision and without the taxpayer's consent if the penalty amount is less than US$1,900. Property intended for lease by third parties is now considered a fixed asset and is likely subject to property tax. Also, a new Russian statute now defines fixed assets as "intended for use" as opposed to "used," which may affect the property tax base.    VAT changes include clarifying the procedure for applying the 0- percent VAT rate to goods placed under the Special Economic Zone customs regime; recovery of input VAT when assets are booked as fixed, "equipment for installation" and/or intangible assets; and VAT exemption on the importation or sale of ships.    In July 2006, new customs tariff amendments came into effect, improving the customs valuation procedure.    In August 2005, regional state inspectors were stripped of the right to limit or suspend activities if environmental laws have been violated. "These sanctions may now be applied only by a competent court," says PricewaterhouseCoopers. However, regional environmental authorities in January 2006 were given more powers to set standards and to ask those courts to limit or suspend activities and impose damage penalties.    Finally, companies in services provision, manufacturing and construction are now subject to new regulations concerning public hygiene and sanitation, including a new inspection and documentation regime. Uzbekistan    A project investment of over $10 million in certain target industries (computer components, textiles and construction materials, among others) receives a seven- year exemption from corporate income tax, property tax, infrastructure development tax, unified tax payment for micro- firms and small enterprises and mandatory contributions to the Republican Road Fund. Among the conditions: The investment must be in specific "labor surplus" regions spelled out in the legislation, and/or in the rural areas of Navoia, Andijan, Namangan or Ferghana. For projects between $3 million and $10 million in investment, the exemption period is five years.