(QHA) -

The Cabinet on Thursday approved the establishment of a free economic zone in Crimea to attract investors to the region, which Russia annexed in March.

As part of several bills being prepared on a free economic zone in Crimea, investors will be exempt from a number of taxes for 10 years, and a flag of convenience regime could be introduced at harbors, Russian Prime Minister Dmitry Medvedev said at a governmental meeting on Oct. 30.

Russia is eager to attract foreign investment to the underdeveloped peninsula, which so far has been more of a money pit than a treasure trove for its new owners. 

According to the government program for the development of Crimea until 2020, the region will need a total of 660 billion rubles ($15.6 billion) of state funds to develop its long under-financed energy and transport infrastructure, as well as health care and education systems.

Besides these gigantic expenditures, Crimea will also need over 50 billion rubles ($1.2 billion) of additional federal budget spending per year to compensate for the financial hole in the regional budget, making it Russia's most highly subsidized region.

But even with all these subsidies, Crimea needs private investment, which Medvedev said is "currently strained for obvious reasons."

A free economic zone could potentially draw some investors to the peninsula, although the draft document has yet to be finalized by the State Duma and responsible ministries.