Lobby for Business

Azat Fazlyev, president of the Chamber of Commerce of the Republic of Bashkortostan, talks about the region’s potential, what is needed to develop import substitution, and what must be done to help business.

How well are local businesses coping with import substitution? Could you mention a few successful projects in this area? What has already been achieved, and what remains to be done?

Everyone understands that many industries cannot function without imported components, technologies, or chemical agents. It is therefore logical that the process of transition to domestically manufactured products is long and arduous. It is probably a manual process every time. Switching to domestic chemical products requires endless negotiations and product testing.

Of course, our region is pursuing a policy of import substitution. We have developed a road map for our Gazprom Transgaz Ufa enterprise. There is a new cooperation agreement between Gazprom and Bashkortostan manufacturers: Our republic receives long-term and, more importantly, predictable funding and a guaranteed market. Gazprom, in turn, will secure supplies of high-quality equipment at competitive prices.

In order for import substitution to be successful, it is necessary to strengthen interregional, mutually beneficial production ties. Tax breaks and compensation schemes should be developed. This also applies to loans for the purchase of equipment using existing budgets, reducing the terms of payment, and advancing capital to small and medium-sized businesses.

Who can be considered the region’s key foreign trade partners? What will be the main areas of cooperation and development plans for the coming years?

Our key partners have always been the countries of the former Soviet Union and, of course, Europe. Today, the economic relations vector has turned toward the Asian region and the Middle East. We are in constant contact with them; there are delegation exchanges, regular business visits of our businesses and authorities to those countries, as well as regular visits from them. I believe that these exchanges will grow into actual large-scale projects in the very near future. We see a lot of niches for interaction and real areas for potential growth in agriculture and heavy engineering, the light industry, and projects in transport logistics.

What kind of investment is lacking in Bashkortostan?

It is necessary to build new and efficient production lines for the chemical industry, as well as in agriculture and mechanical engineering. Investment in real economy is also needed. It will create new jobs and increase tax revenues.

Investments in the social sector, health, and sports are also needed. We understand that the government is limited in its budgets, but public expectations of household and living conditions are growing. Therefore, I believe that this is a perfect opportunity to attract private investors. One way to go about it is to develop public-private partnerships. This instrument has not yet been developed in full measure in the region, but there have been positive steps in this direction. PPP projects are very complex from a legal standpoint as they are formalized relationships of business and government. So, such projects should be handled by experienced development institutions. At the Chamber of Commerce of the Republic of Bashkortostan, we have experience driving the only PPP project in the region so far, and we will continue working in this area.

How do you assess the production potential of the republic?

I think it has not been fully realized. We have many companies that are actually underutilized; it is possible and necessary to send more orders their way. Our potential in the chemical industry is huge: We have a lot of competencies, and major manufacturers of raw materials are located in our region. On this basis, we need to help implement the projects of small and medium-sized businesses.

The republic boasts a good construction sector. Today, a large number of housing developments are being built, so we should promote the production of construction materials.

We have huge potential in agriculture. The region’s position in this industry has always been strong within Russia. One area, for example, is the cultivation of vegetables in greenhouses. We need to develop this further, starting with the issues of packaging and logistics to building vegetable warehouses and distribution centers. It is possible to develop capacities for the deep processing of raw materials, grain in particular.

What kind of relationship do the regional authorities have with local entrepreneurs?

The relationship, of course, is different for everyone. The relationship with big business has long been there. Some others do not have any relations in principle, except for communion with the fiscal authorities. Of course, nowadays there is a lot of talk about the need to support the real economy. This topic is being pushed both by the federal and local media.

But when businesses try to communicate with an industry ministry directly, they generally cannot get information about such support. They have to look for it themselves, try to find it somewhere, and find someone to contact with questions. So, to actually get the help you need to jump through hoops. The process is complicated since most of the assistance is concentrated in the federal center; it becomes necessary to communicate with the federal development institutions. Businesses are unhappy that the region has no “single window” to communicate with the government.

What is the role of the Chamber of Commerce in these relationships? How can the Chamber of Commerce help solve business problems in the region?

The key role, of course, is in “lobbying” business interests and establishing contacts with the government. Businesses need an assistant who speaks the same language as they do, understands their problems, and is able to explain all existing government programs and pass on questions to the authorities. The Chamber of Commerce is such an assistant and such a “single window”.

What will be done to improve the business environment in the region?

Currently, we can talk about a kind of “reset” of the Chamber of Commerce of the Republish of Bashkortostan. We’re working to expand our competence in consulting. Businesses need to understand the support programs that exist.

Today, SME Corporation is more active, the Industrial Development Fund and the Single-Industry Town Development Fund are working very well and they have already financed several projects in the region. The funds have a cooperation agreement with the Russian Chamber of Commerce. We need to more actively represent the business of Bashkortostan within these structures.

One of the strategic priority development directions of the economy and industry of the Russian Federation is the promotion of economic cooperation with other countries, as well as support for small and medium-sized enterprises that export goods abroad.

The Chamber of Commerce has accumulated vast experience in the field of exports and external relations. Among the services the Chamber offers is certification of export products and the integrated activities of the Regional Center. The Chamber is the operator of the JSC Russian Export Hub educational program – it helps teach export-oriented companies in our region.

The Russian Export Center (REC) is a new federal institution, and we are working with it today not only in the area of training, but also on programs of financial and non-financial support to small and medium-sized, export-oriented businesses. Further down the line, we will have a network of regional REC representatives, and the regional Chamber of Commerce will act as a strategic partner. This will give a strong impetus to the development of exports in the region as a promising and mutually advantageous partnership. The regional Chamber of Commerce will receive methodological assistance from the center, and the REC will gain access to the broad mass of entrepreneurs and a partner experienced in foreign trade via the regional Chambers of Commerce.

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