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. Last Updated: 07/27/2016

Cell Phone Parts Maker Plans Factory in St. Pete

ST. PETERSBURG -- A Finnish manufacturer of cell phone components has tentatively announced plans to build an assembly plant in St. Petersburg, a move local media reported would entail the investment of some $100 million.

Officials from Elcoteq Network Oyj refused to provide details on the project, including the planned amount of investment.

"While there is a general desire to build a plant in St. Petersburg, the decision that our company took is only a protocol of intention," said Sergei Petrov, human resources director at Elcoteq's existing St. Petersburg plant. "We have no concrete date to begin manufacturing."

Little progress on the project is expected before the spring, he added.

One of the details that Elcoteq is working on is the serious issue of securing a customs-duty exemption for electronic parts imported into Russia. The company plans to assemble telecoms equipment in St. Petersburg that would then be exported to world markets.

The deputy chairman of the St. Petersburg External Relations Committee, Valery Makarov, said that City Hall is working to secure such an exemption from the State Customs Committee, but that such work will take some time since the body is a federal organ with its own bureaucratic interests.

Makarov, like the Elcoteq officials, was not forthcoming as to the possible price tag of the project, but did say that the company's investment will be made slowly, in stages.

"The final amount invested will depend in large part on whether the government can create the proper investment climate," Makarov added. "If the right conditions can be provided, then it is possible that the company's investment will even exceed $100 million."

The prime choice for the new plant's location is the Parnas industrial zone in the north of the city where, since 1997, the company has run a pilot project assembling parts for local telecom companies.

Elcoteq is in the midst of a global expansion program and it has 10 plants outside Finland. Elcoteq supplies companies such as Sweden's Ericsson, and Finland's Nokia.

The company's choice of St. Petersburg is hardly unexpected. For the past century, the city has been one of Europe's major centers of science and learning. Today, with its many scientific research centers and universities, it is considered to have the potential to become the center of a modern electronics industry in Russia.

There are other reasons, however, that are relevant to Elcoteq's plans.

"One of the main attractions for investors to come to St. Petersburg is the fact that it is a major transportation hub, which greatly facilitates export," said Alexander Golovtsov, head of over-the-counter operations at Lenstroimateriali, a local brokerage.

Golovtsov, however, cautioned that corruption and criminality were major deterrents for investors who would like to set up shop in the city.