Snowy Siberian outpost aims for Silicon Valley status

TOMSK, Russia — If there was a place for a cutting-edge innovation hub, this snowy Siberian outpost with a population of 500,000 probably wouldn’t be the first choice.

Deep in the Russian hinterland, it sits at the dead end of a train line off the Trans-Siberian Railway. Its airport serves only Moscow, a few other Russian cities, and a small handful of foreign charter flights. Local business is not really booming. He does have one thing though: smart people, lots of them.

As Russia feels the effects of Western sanctions, it hopes to revive the economy by reviving its fledgling tech industry. This includes a government project to create what it calls a Russian Silicon Valley in a suburb outside of Moscow.

But some 3,000 kilometers to the east, Tomsk, a historically bustling university town, has the advantage of being home to some of Russia’s best science and technology programs, which regularly produce top-notch graduates. Here, one inhabitant in five is a student.

Officials are trying to capitalize on this to cement this bookish city as a regional engine of innovation and economic growth. Not the worst idea, say observers. If only the area were less remote and better developed.

“And so it turns out that cadres are being raised here, and these cadres are quietly hitting the road,” says Elena Fatkulina, a local journalist.

Beginning with the fur traders who first ventured into Siberia centuries ago, Russia has a long history of trying to develop the remote regions that make up its vast heartland, usually against thick and thin. Under communism, the Soviets built a network of sprawling, bland cities across Siberia to support heavy industry and oil and gas production.

Now officials here in the Tomsk region – about 600 miles north of where the Kazakh, Chinese and Mongolian borders meet – are taking a more modern approach. With a long-term strategy called INO Tomsk 2020, they hope to harness the intellectual capital of the local population to attract investment and cultivate a strong start-up climate that would contribute to the regional economy.

Andrey Antonov, deputy governor for the economy, said the plan – originally approved in 2011 – aims to tap into the “knowledge economy” to boost local industrial and business capacity.

“We need to direct our research and development and educational institutions towards import substitution programs,” he said in an interview.

This is particularly important now, since the price of oil – the lifeblood of the Russian economy – is gradually slipping amid a general economic slowdown. Costing around $4.5 billion, the Tomsk project is expected to create the economic, social and logistical infrastructure needed to make this possible. This means everything from developing new campuses and building regional transport links to supporting major state-owned enterprises.

Fortunately, officials have a solid starting point. Tomsk is already something of an anomaly in resource-rich Siberia: teeming with human capital, it’s home to dozens of local start-ups and an IT sector that’s the region’s second-largest. With its imperial charm and elegant gingerbread-style houses, it’s not your dreary urban jungle either.

“It’s not a city in the mud that arose during the Soviet era where you can do nothing but extract oil and leave quickly,” says Fatkulina, editor of Tomsk Review, a site information online.

A key part of the development strategy is a special economic zone – a large purpose-built site that offers office space and tax benefits to entrepreneurs wishing to expand their business.

Launched in 2009, the area is home to 59 resident businesses, about two-thirds of which are in the IT sector. According to Konstantin Kaminsky, the zone’s acting general director, one in five companies is at least partly financed by foreign capital, but all companies here must be registered in Tomsk, once a closed city in Soviet times.

“We understand that we are not Singapore or Hong Kong”

Kaminsky prefers to remain realistic about the region’s potential.

“We understand that we are not Singapore or hong kong, points at the crossroads of trade routes that naturally see a flow of labor and investment,” he says. But he adds that the area is ideal for local students and young researchers already involved in successful projects and looking for a boost, especially from enthusiastic investors.

“The economy of our science education complex is no less interesting than the extraction of mineral resources,” says Kaminsky.

Whether they will actually come is another question. The high quality of local universities – which include Tomsk State University (TSU) and Tomsk Polytechnic University – allows their graduates to aim for Moscow or even abroad. It’s not uncommon for alumni to end up at Microsoft, Google or Facebook, locals say.

TSU, the oldest university in Siberia and the largest of the six major institutions here, offers many double degree and exchange programs with foreign universities. It also seeks to strengthen its international influence.

While it might be good for the students, it’s also the reason many of them don’t come back here after graduation, says Diana Kozikova, project manager at TSU.

His project aims to stem the leak by advising students and aspiring entrepreneurs on how to start their own businesses here, in part by inviting foreign experts. He is part of a small network of business incubators here that trains future executives for careers in innovation. But it’s a difficult task, she says, not least because her project is still in its infancy and traveling is easier than ever.

“At the moment, there are plenty of opportunities beyond Tomsk that students take advantage of freely,” says Kozikova.

Russia’s growing isolation from the world can also be a motivating factor, at least for those who choose to emigrate. The educated, often liberal classes, have invariably been the first to leave during what is shaping up to be one of Russia’s worst brain drains since the fall of the Soviet Union. More than 200,000 Russians emigrated in the first eight months of 2014, according to official statistics – more than any previous year during Putin’s 14-year rule.

Politics aside, some local entrepreneurs say Tomsk’s relative remoteness contributes to slow business growth.

“That doesn’t mean we don’t have internet or we can’t make phone calls,” jokes Roman Malakhov, a 33-year-old computer programmer. But he adds that many of his peers have left Tomsk, in part because of a lack of local capital and access to markets. Although he is based here, Malakhov launched his first company – Zoom, a software start-up – in Moscow.

Yet he cautiously commends local officials for having a development plan for the area. Others agree that attempts to shape the region into a hub of innovation are not entirely unrealistic.

Fatkulina, the journalist, credits local authorities with boosting the city’s image in recent years. It’s up to them to finish the job and convince people to stay, she adds.

At the very least, it’s not near Omsk, which has the sad reputation among Russians of being an oppressed backwater.

“People have stopped confusing the two now,” Fatkulina says with a smirk.

This article first appeared on Global Post.

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