1. Tatarstan won’t be able to find substitutes for every imported petrochemical product

    30 July, 2014

    Tatarstan government officials and representatives of major firms based in the region have met at a session of the Republic’s Economic Council to discuss steps aimed at supporting Tatarstan’s industry. Tatarstan’s President pointed out in his opening speech that the Republic spent more than RUB 160 bn last year on products brought from abroad, with almost a third of the sum expended on petrochemical products. An additional RUB 200 bn per year is being spent on buying products in other regions of the Russian Federation (RF), with the list of purchases composed mainly of mechanical engineering goods, transport vehicles and food items. In Tatarstan itself, business output totaled just over RUB 1.5 trillion in 2013, including intangible products (services and trade operations).

    “Tatarstan’s import substitution potential is most prominent in two fields, the machine building and the chemical industry. The region’s machinery imports currently amount to over $4 bn per year, chemical and petrochemical imports, to some $450 mn per year,” said the Republic’s Trade and Industry Minister Ravil Zaripov.  He pointed out that efforts are underway to locate firms able to become substitute makers of 300 chemical and petrochemical products currently imported from abroad. “We’ve combed through some 300 product names in a list that contains over a thousand. We’ve sent the results of our review to our leading universities in order to organize domestic manufacture of these products,” said he. In his words, Tatneft will be able to substitute 108 products out of the 300, TAIF Group, 127, and NEFIS Group, about 49.

    There are pressing issues precluding the use of domestically produced plastics in the machine-building field. By year-end, the ministry intends to devise a scheme allowing the Fold Sollers plants to use polymers and ABS plastics produced at Nizhnekamskneftekhim (NKNH) and Kazanorgsintez instead of those that the company currently imports from Turkey and Europe. “As of today, NKNH and Ford Sollers have completed the certification process, and a shipment of 480 tires is already on its way to Ford, substituting the previously used Michelin tires,” reported Mr. Zaripov.

    Representatives of the Republic’s companies have in their turn voiced their complaints before the President, pointing at a lack of funds for modernization and the absence of protective import barriers. To cite one example, Nur Shakirov, General Director of the Kazan Medical Instruments Plant, said that its facilities make products worth RUB 400 mn each year, while the plant’s capacities allow for the tripling of the volume. The domestic market’s import substitution demand includes the need for disposable medical instruments, and these should be competitive, said he, but in order to achieve that, “sterilization is necessary, and the cost of a sterilization center, including the cost of the rooms to house it, amounts to EUR 10 thousand”.

    “One big problem at hand is the cluttered state of the market. Anyone having money can order any item from China and have it delivered in a month’s time,” said he. Answering to the president’s question regarding the quality of such items, he said that “they put lives in danger”. “They are extremely dangerous, that’s why barriers are necessary. We should turn to the federal government and ask that strict steps be taken,” replied Mr. Minnikhanov.

    The President stated his intent to appeal before the country’s leaders for the provision of financial help to newly-launched plants. “It is my hope that the federal government today turns to face these issues. We cannot be competitive without modernization. We should formulate our requests and substantiate their necessity,” said the head of the Republic.

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