The Republic of Tatarstan is one of the most economically developed Republics of the Russian Federation being very rich in natural resources. What industries are the leading ones in the economy of the Republic?
Firstly it is oil production, secondly it is oil chemistry, then machinery manufacturing, which includes the automotive industry. There are three automobile factories on the territory of the Republic: KAMAZ, and Elabuzhsky Automobile plant; I would also like to mention OKA separately even though its light car production is operated within KAMAZ complex. Finally we have military industrial complex plants as well as a developed agricultural sector.
The oil sector accounts for 40% of the country's revenue. Tatarstan produces some 28 million tonnes of oil. To date TATNEFT is within the top five oil production companies. Presently we are finishing the construction of their Nizhnekamsky oil refinery. TATNEFT has decided to take the course of vertical integration, so that the extraction, refining, and sales of oil products were balanced to the maximum. With the Nizhnekamsky oil refinery constructed, with refining capacity of 8 million tonnes of crude oil per year, we will be able to partially fulfil this task. The huge complexes of NizhnekaskNefteKhim, and the plant complexes of the Joint Stock Company "KazanOrgSintez" symbolize the oil chemistry in the Republic.
Regarding machinery construction, I have to point out that KAMAZ accounts for 47% of the Russian automotive market. The only real competitor to KAMAZ is the Byelorussian company MAZ (Minsky Avtomobilny Zavod). Now a cooperation agreement has been concluded with MAZ regarding the production of unified units for trucks. The market is now shared in a more civilised manner. Up to 10% of KAMAZ's production is distributed abroad. Their production volume is around 25.000 trucks per annum. Today KAMAZ has started elaborating a new model line, bringing its standards up to the European ones for ecology, speed, and payload capacity. One third of KAMAZ's production are basic chassis for special equipment and machinery, like special automobiles for the Ministry of Emergency Situations, technological equipment for oil extraction and so on.
The military industrial sector of Tatarstan is represented by shipbuilding, a gunpowder plant, a radio equipment factory, etc. The Military industry is now in a tough situation as it is undergoing a conversion process and today this still remains one of the crucial issues for the further economic development of Tatarstan. For example, in shipbuilding we found a niche in the market and we produce river-sea vessels. Recently in the Caspian Sea a vessel was launched, titled "Tatarstan", and it took part in military marine trainings there. I want to lay a special emphasis on the aviation industry; Tatarstan is one of the major helicopter producers in Russia. 97% of the production is sold abroad. Tatarstan is the only republic that has during the years of reforms kept developing and producing new types of aircraft - such as TU-214, a Boeing analogue. Today these aircrafts are leased to third world countries and Russian aviation companies. We strongly hope that the volume of orders will increase. A special program needs to be adopted to support domestic aviation construction. Leasing has to be developed; otherwise the aviation industry will face some difficulties in returning to economically optimal volumes, because you cannot always fund the industry from the budget.
On the whole, Tatarstan is firmly within the top five developed regions of the Russian Federation, and over the years of independence we have managed to stand out from the mediocre and to occupy one of the leading positions. Economic independence, gradual entrance into the market, and state regulation all played its part during that period. Also, a large number of projects of federal importance were carried out, as well as the handling of many social issues - such as the Dilapidated Residential Houses Liquidation Program. In total, from 1996 to 2001, under this program 31 thousand Tatarstan families moved to convenient residential houses. This program is now at its completion. Another program - bringing gas to settlements has been fulfilled up to 90%. Over the years, mobile facilities were built to bring gas to all settlements, and to install systems of low-pressure gas supply.
It is well known that in the Republic of Tatarstan large-scale target economic programs are carried out; most of which have no equivalents in the Russian Federation. Could you tell us in more details about these programs?
We currently have several large-scale programs underway. For example, the program encouraging the creation and development of export oriented and import substituting industries in Tatarstan for the period up to 2003. The strategic objective for the program is the stage-by-stage securing of economic self-sufficiency in the Tatarstan Republic. This program will give an impetus to implement new technologies, to launch new type of products, to create new jobs, to boost the Republic's industrial production development, and to strengthen the positions of Tatarstan in the Russian and international markets.
Another current target program is "Energy Saving in Tatarstan for 2000-2005". The Energy system of Tatarstan is an independent structure, outside of RAO Unified Energy Systems (UES). Now the process of issuing Tatenergo's shares is underway. Now the issues of transporting energy, the joint operation of high-tension electricity transmission lines, and the issues pertaining to joint energy sale are being discussed with RAO UES. The Republic produces 200 million tonnes of kilowatts more than it consumes, which means that we are principally suppliers, although energy saving is an important issue as well. Through the years of economic reforms and the transition to a market economy, Tatarstan's energy system has retained its self-sufficiency in electricity and heat production. The reliable functioning of the energy system would be impossible without the proper natural gas supplies under the aforementioned program. The experience of energy efficiency raising projects shows that, with the application of organisational and energy saving measures, not more than 15% of energy saving potential can be utilised. That is why it is a strategically important point in Tatarstan's policy to shift from energy savings to resources savings. We need to take measures that will substantially redistribute labour, and material and financial resources of the Republic in favour of resources saving technologies. A way to reach higher results in resources saving can be by creating a unified wholesale market for energy distribution. The main guidelines today for resources savings are implementing scientific, technical, and technological achievements as well as improving organisation and management processes.
The investment risk ratio is minimal in the Republic of Tatarstan among the Povolzhsky regions. How do you assess Tatarstan's investment climate and what measures do you undertake to attract foreign investment to the Republic's economy? What countries are Tatarstan's major foreign trade partners?
It is the stability in major economy sectors and the Tatarstan society that make the Republic attractive for trade with foreign business partners and for investments. The results of the foreign economic relations for 2001 showed that the Republic firmly retains its positions and offers further development of mutually beneficial cooperation with trade partners. Tatarstan's trade turnover was estimated at just over three billion USD. Thus, Tatarstan's trade balance was positive. The Republic sells more products and services than it purchases from business partners or other countries. The Republic's foreign trade turnover with its major partners in 2001 breaks down as follows:
· Switzerland accounts for USD 820 million, (26,4 % of the total foreign trade turnover),
· Germany - USD 410 million. (13,2%),
· Finland - USD 248 million (8,0%),
· Poland - USD 205 million (6,6%),
· Slovakia - USD 128 million (4,1%),
· India - USD 110 million (3,5 %).
And in CIS countries:
· Ukraine - USD 321,0 million (10,3%),
· Kazakhstan - USD 63 million (2,0%),
· Byelorussia - USD 30 million (1,0 %).
We also pay much attention to the development of relationships with Asian countries. Tatarstan by its spirit is the Asian part of Russia.
The attraction of investment resources is crucial for the successful development of the economy of the country. So far, Tatarstan has created a favourable environment to realise investment projects of high efficiency and quick return, and to develop modern facilities to manufacture competitive products. In our legislation, many relevant laws have been adopted such as the laws of "Investments activity in Tatar Republic", "Foreign investment in Tatar Republic", "Oil and gas", "The status of approved investment project with foreign investors' participation". Priority investment directives are in:
· Oil production and oil refining industries,
· The conversion of military industrial enterprises,
· Agricultural production and processing,
· The implementation of new technologies in consumer good production,
· The development of telecommunication and transport networks,
· The development of import substituting and export oriented industries.
What would your final message be to the readers of our report, keeping in mind that they are potential investors in the economy of the Republic?
At present Tatarstan enjoys favourable investment climate, which has been created on the basis of stable political and economic life, rich natural resources, strong industrial and scientific bases, a highly qualified workforce, beneficial natural geographic position, a stable regulatory framework, investments protection, and the considerable tax exemptions and security granted to investors.
We welcome any proposals from foreign investors and we lay much hope in a successful cooperation.
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