News
Economic News and Opportunities | Russia
Follow on my Telegram channel
with daily news and insights about Russian economy:

January 9, 2024

Russian Far East. Results and forecast

The Far Eastern Federal District accounts for 40 percent of Russia’s territory. Almost half of forestland and gold reserves, more than 70 percent of fish, diamonds, and over 30 percent of titanium, copper and so on are located here and is key region of rapid development in the next decade.


By the end of 2023 investment agreements have been signed for over 7.7 trillion rubles, 3.4 trillion of which have already been invested. About 125,000 jobs have been created. Among them are landmark projects such as one of the world's largest gas processing plants and a gas chemical complex in the Amur Region, the Nakhodka Mineral Fertiliser Plant and the Zvezda Shipbuilding Complex for large-capacity vessels. Copper and other mineral deposits, including Udokan, Baimskoye and Malmyzhskoye, are being developed.


The investment dynamics in the Far East are three times faster than in Russia as a whole. While from 2014 to 2022, the growth in investment in fixed capital across the country was 13 percent, in the Far East it was 39 percent. Industrial growth rates in the Far East also exceed the Russian average.

According to the results of the last five years, most of eastern regions are among the top 20 constituent entities of the Russian Federation in terms of gross regional product growth rates; the Magadan Region tops this rating.


The average percentage of explored subsurface resources in the Far East is now 35 percent. It shows that there is every opportunity for the mining industries to grow by leaps and bounds, including the strategic raw materials.


Important projects have been launched in the agribusiness sector. These include greenhouse farms in the Sakhalin Region and the Primorye Territory, fish processing in Kamchatka and Magadan, pork production in the Amur river basin, and increased soy bean production in the Amur Region. All of these are also promising areas both for supply to domestic market and for export.


Russia is building capacity to produce and export liquefied natural gas. Last year, our LNG exports grew by over 70 percent and amounted to almost 27 billion cubic metres. Within the next 20 years, we expect this volume to reach 100 billion cubic metres. Work will be implemented to build new plants in Russia's northern territories – Yamal LNG and Arctic LNG.


Development of the Northern Sea Route has special priority. Thirty-four million tonnes of cargo were shipped using the route last year.


By 2030, we expect the general capacity of seaports in the Arctic waters to double. While last year, this capacity stood at 123 million tonnes, by the end of the decade it is expected to reach 252 million tonnes, in part thanks to the construction of new terminals and the expansion of railway access. By 2027, the government plans to substantially ramp up the capacity of the Murmansk port, from 56 to 110 million tonnes per year.


Russia will continue to modernise the Baikal-Amur Mainline and the Trans-Siberian Railway. The pace needs to be stepped up, including through concessions and by attracting private capital for the construction of bridges, tunnels and overpasses. They plan to raise their capacity 1.5-fold and increase the volume of annually transported cargo to 210 million tonnes by 2025.


Russia is building the Pacific Railway and a new port on the Sea of Okhotsk, which will allow to secure direct access to Asia-Pacific markets.


The development of the Northern Sea Route and connecting it to China's Maritime Silk Road will create a global and competitive route that will connect Northeast Asia, East Asia and Southeast Asia with Europe.


A separate matter is the development of air travel between the Far East and the European part of Russia, especially a creation an integrated Far Eastern airline.


There are special tax, administrative and customs preferences in the Far East. In 2022 a special preferential regime was launched on the Kuril Islands.


A number of mechanisms have been launched, including the Far Eastern Hectare programme. More than 119,000 people have received land plots for doing business, opening production and tourist facilities, or building housing.


Special mortgage terms are available in the Far East with the loan amount being up to six million rubles, the term, up to 20 years, and the interest rate, two percent. With the help of this tool, more than 78,000 families have purchased or built new housing.


Initially, the Far Eastern mortgage lending programme was designed only for young families, but since 2022 teachers and doctors working in the Far East are eligible for such a loan as well.

Bolstered by the mechanisms of the Far Eastern Quarter, a satellite town is being built near Vladivostok. It will accommodate some 80,000 people.


The so-called presidential subsidy has been introduced to help bring development of the social infrastructure in the Far East. As part of this programme, over 1,500 facilities have been built, repaired and equipped in all Far Eastern regions. Here are several facilities that have opened recently - a cardiovascular centre in Yakutsk, a nuclear medicine centre in Ulan-Ude, etc.


Russia’s Far East has more than 60 specially protected natural areas of federal significance, many included on the World Natural Heritage Sites list such as Lake Baikal, Lena Pillars Nature Park, Wrangel Island Reserve, volcanoes of Kamchatka, and others. All this is Russia’s national wealth and at the same time it is global heritage. The Russian Far East should become a platform for new economic sectors, including the development of tourism in national parks in the Primorye and Khabarovsk territories, Yakutia, Buryatia, Kamchatka, the Kuril Islands and other regions.


Join my Telegram channel with daily news and insights about Russian economy: https://t.me/ImportExportRussia2024

August 8, 2023

Communication in Russia

Russians speak quite matter-of-factly and are generally comfortable with directness. In written communication, try to get to the point with the first phrase. Rarely will a business owner or CEO read a letter to the end unless he or she has seen valuable information in the first 3-4 sentences. Be able to fit your key idea into a short letter.


In Russia, it takes longer than 24 hours to respond to emails. Give your contact person 3 days to respond if this is your first contact.


Don't text WhatsApp messages at night - google what time it is in the country where your partner is. Late messages are acceptable only with close business partners whose late working hours you know.


Russians respect work and life balance - don't text business messages after 7 pm and at the weekend.


In face-to-face communication follow etiquette rules - give a compliment for women, if you met at the airport, offer to help with the suitcase, etc. - this will break the ice.


Topics of corruption, oligarchs, shortcomings in the social system, and criticism of foreign or domestic policies are not acceptable. Russians like to criticize their government and authorities, but they don't like to do it with citizens of foreign countries. In Russia, there is a saying - don't wash your dirty linen in public. Don't discuss Russian internal problems with business partner.


Russians respect math and do not like lengthy discussions at the first stage of negotiations. Show where is money in your proposal without long talks, then go to the details. Talks about philanthropy and green economy begin after the primitive accumulation of capital - not relevant to Russia.


In doing business in Russia, time is money. Not regarding the hour price, but because environment in Russia has historically changed quickly. I think that's why Russian businessmen are quick-thinking, savvy, and improvisational. Russians have high financial discipline in closing deals and very friendly business culture if you arouse interest and trust.


Don’t speak about vodka. Russia has not been among the leaders in alcohol consumption for a long time, and joking about vodka with unfamiliar people make them thinking about your backwardness. During the negotiations Russians drink water and green tea / coffee.


As a rule Russians are distrustful and unsmiling at the beginning of communication. But if you win their trust, you will find out that they are very warm-hearted people, ready to help, with a beautiful soul, traditional values, very sincere and straightforward.


If you plan to work in Russia, set up WhatsApp. It is the most widespread messenger in Russia with 76 million users. They don't use Telegram for business chats, only for reading channels.


Russia is a high-context culture. To be understood correctly, try to be specific.


Observe and listen carefully before you speak.

August 8, 2023
Russia's foreign debt has fallen to its lowest level since 2006
Russia's foreign debt has fallen to its lowest level since 2006.

As of April 1, it was $355 billion, down 6.8% since the beginning of the year, - the Central Bank of Russia.

Foreign debt reached an all-time high on July 1, 2014. At that time it was $732.8 billion.

According to consulting company Nikoliers, in the first half of 2023 the volume of investments into commercial real estate in Russia was a record for the last five years and amounted to $3149 million, or 242 billion rubles.

More than 80% of Western companies continue to work in Russia, - Frankfurter Allgemeine Zeitung. As stated in the article, 1,146 foreign companies out of 1,387 are still operating in Russia. The total turnover is estimated at $213.9 billion and profits at $14.1 billion. Among the major Western companies remaining in Russia are Philip Morris, Japan Tobacco, Pepsi, Danone, Metro, Mars, and Procter&Gamble.

The Russian group of companies "Osnova" by 2026 together with a partner from China will build a large logistics center for goods imported from China in the Moscow region, which will be able to take 600 thousand containers a year. China is ready to invest on a parity basis, that is, "50/50". Approximate investments at the first stage will amount to 15 billion rubles.

Russia's expansion of cash settlements in foreign trade transactions will facilitate its inflow into the country. Importers can now receive cash as a refund of the advance payment made by them abroad for the goods that couldn't be imported into Russia. In addition, residents have the right to receive cash refunds of loans given to non-residents.

The cost of the new Russian MS-21 aircraft with delivery in 2028-2030 is estimated at 4.3-4.6 billion rubles. GTLC sent such a proposal to airlines that are not part of Aeroflot. It's more expensive than aircraft from Airbus and Boeing, although the price takes into account subsidies from the National Welfare Fund.

Aeroflot will get the planes cheaper: Rostec's leasing company will buy the MS-21 for it at 3.2 billion rubles with delivery in 2023-2026, the deal will be fully financed from the National Welfare Fund. Market participants call the high price of MS-21 "understandable at this stage" but expect that the government's efforts to subsidize it will not be limited to Aeroflot.

Tour operators of domestic and inbound tourism will be relieved of the obligation to pay VAT. The bill of the Ministry of Finance was supported by the government commission.
March 21, 2023
Chinese President Xi Jinping meets with Vladimir Putin in Moscow
President Xi Jinping at a meeting with Mikhail Mishustin:

China-Russia relations are a priority in the diplomacy and foreign policy of the two countries as great powers. Their progressive development is China's strategic choice.

- Russia was chosen as the first country of the visit because it corresponds to the historical logic: "We are the largest powers and strategic partners";

- It is necessary to intensify the work of intergovernmental mechanisms of Russia and China this year;

- The new premier of China's State Council will prioritize the development of partnership with Russia.

Vladimir Putin at talks with Xi Jinping in the Kremlin:

- Russia and China could become world leaders in IT and artificial intelligence;

- RF and China are ready to create joint working body on Northern Sea Route development;

- Russia counts on the multiple growth of student exchanges with China in the context of the abolition of anti-Chinese restrictions;

- Russia supports the development of Chinese yuan in trade with other countries.

Mikhail Mishustin at the meeting with President of China Xi Jinping:

- Russia and China are preparing new projects that will significantly increase transportation along the Trans-Siberian and Trans-Asian routes;

- Investment portfolio of the intergovernmental investment commission of Russia and China consists of 79 projects worth more than 165 billion dollars.
February 18, 2023
"Fast track" for import substitution projects will be created in Moscow
"Fast track" for import substitution projects will be created in Moscow, - Sergei Sobyanin, Mayor of Moscow.

The period of administrative procedures will be reduced by half. Tax incentives are already in place. Land plots for factories construction are allocated for 1 ruble.

The decision applies to facilities with area of at least 1.5 thousand square meters.

According to the decision total period of key administrative procedures will be halved. In particular the time for preliminary approval of land plot allocation will be reduced from 12 to seven working days.
The term of procedures for signing, the assignment of registration numbers and sending to Rosreestr for consideration of a draft agreement on land lease will be reduced from 30 to seven working days.
The execution of permits for land works and installation of temporary fences will be carried out in a notification procedure. This will reduce the time for carrying out these procedures from 60 to six working days.
The term of coordination of projects of the organization of road traffic necessary for carrying out of civil work will be reduced from 30 to 15 working days.
The term of state expertise of the design documentation and (or) results of engineering surveys will be reduced from 42 to 20 days.
The term for providing technical expertise on the compliance of project documentation with the summary plan of underground utility lines and constructions in the capital will be reduced from 10 to seven working days.

In addition, the executive authorities of the city will conduct explanatory work with developers about the possibility of parallel execution of several administrative procedures. This execution of the permit for excavation works, the conclusion of the contract on connection to the networks, the issuance of a certificate of approval of the architectural and urban planning decisions and the coordination of the project of the organization of the road traffic. As a result, the total duration of procedures will be reduced from 82 to 25 working days.

The period of the cadastral registration and issuance of the permit for the commissioning of the object will be decreased from 17 to 12 working days.

The creation of the fast track will contribute to the implementation of the key projects of the new industrialization of Moscow, establishing of new industries ensuring technological sovereignty and the import substitution of critical products.

*From 2011 to 2022 in Moscow 222 production facilities with a total area of 2.2 million square meters and 70 thousand workplaces were built and reconstructed.

In 2023 in the city it is planned to build and reconstruct 25 manufacturing facilities with a total area of 300 thousand square meters. Among them are five large-scale investment projects which will create more than 3.4 thousand jobs. Press Service of the Mayor and Government of Moscow
February 12, 2023
Russia's foreign debt as of January 1 was $381.8 billion

Russia's foreign debt as of January 1 was $381.8 billion, a decrease of $100.4 billion over 2022 - Central Bank of Russia


Value of bank deposits of individuals in Russia amounted to 37.8 trillion rubles as of December 1, 2022 ($0,54 trillion). This is 1.4 trillion more than a year earlier.


Russia ranked fourth in the world in terms of gold and foreign exchange reserves by the end of 2022.


China remains the leader in terms of this indicator for the 17th year in a row. Japan ranked second and Switzerland third, - RIA Novosti.


Avtovaz acquired Nissan assets in Russia from NAMI for 1 euro.


American International Paper, the largest foreign investor in the Russian timber industry, has agreed to sell assets. The company announced that it would sell 50% of Ilim Group to Russian partners for $484 million. International Paper bought that share more than 15 years ago for $650 million.


Novatek signs memorandum with Deepak India on cooperation in LNG and low-carbon ammonia supply.


The creation of a pharmaceutical cluster, which should provide import substitution in medicines was announced in Moscow. In particular, 80% of the country's needs in cancer drugs will be covered.


At the site of SEZ "Technopolis Moscow" in Zelenograd will unite 9 leading Russian pharmaceutical companies. Six production facilities have already been launched, 9 more are in the process of construction. The volume of drug production will grow 15-fold in just a few years.


Business will invest more than 25 billion rubles in the creation of the cluster, about 3 billion will contribute to the mayor's office and the Russian government in the form of soft loans and subsidies. Also, Moscow has signed offset contracts with manufacturers, they guarantee the supply of products produced for the state needs.


Russian airlines continue to buy aircraft from foreign lessors. The fleet of Russian airlines is 1,164 aircraft, it fully meets all the demand - Head of the Ministry of Transport


Belarus legalized parallel imports.


The share of the dollar in Russia's international settlements in January showed the lowest value since last February - 40.12% of international settlements.


Federal Customs Service of the Russian Federation: The main trade partners of our country in 2022 were China, Turkey, Netherlands, Germany and Belarus.


The trade turnover with China increased by 28%, with Turkey - by 84%, with Belarus - by 10%. The trade turnover with the Netherlands slightly decreased - by 0.1%, with Germany decreased by 23%.

The U.S. share in Russian foreign trade in 2022 was less than 2%.


The Russian market of cut flowers shows a positive trend of import substitution. Over the past 5 years, florists have used mostly imported products, the figure reached 90%.


But in 2022 the share of Russian flowers has risen to 18% and the gross output was 400 million pieces. By the end of 2023 this figure could reach 500 million pieces.


Russia is conducting a radical revision of all its obligations to international organizations that have shown a discriminatory approach - Sergey Lavrov.


The United Aircraft Corporation is planning to recruit 12 thousand specialists in connection with the ambitious plans to build domestic civilian aircraft, the press service of the State Corporation told RIA Novosti. Rostec noted that the company is to provide the country with aircraft of its own production, including the delivery of about 500 airliners by 2030.


"This is a huge order, additional personnel are needed to fulfill it. In the coming years, the UAC alone plans to employ 12,000 specialists at its enterprises," - the press service.


*There is a shortage of qualified engineering staff in Russia.

January 20, 2023
Vladimir Putin signed a Decree No.16 of January 17, 2023

​Vladimir Putin signed a Decree No.16 of January 17, 2023 establishing a temporary procedure for decision-making in large Russian joint-stock companies in the energy, machine-building and trade sectors. Their management bodies will be able to make decisions without taking into account the votes of shareholders from unfriendly countries.


The temporary procedure will be effective until and including December 31, 2023. The decree enters into force from the day of its official publication.


One example is the actions of the Finnish energy holding Fortum, which still partially owns the largest energy companies in Russia. The Finnish holding blocks decisions on dividend payments.


Japanese natural gas distributor Osaka Gas has signed a contract to supply 200,000 tons of LNG with the new Sakhalin-2 operator.


Iran and the EAEU signed a memorandum on free trade.


The share of trade between Russia and China in national currencies has reached about half of the turnover, it will increase. - Sergey Lavrov.

____

Russians are switching to domestic video conferencing services. In 2022 mobile traffic of foreign video conferencing platforms fell by 19% compared to 2021, while Russian traffic increased by 41%.


The biggest drop was shown by Webex - 81%, Microsoft Teams - 39%, Google Meeting - 36%, Zoom - 16% and Skype - 10%.


The biggest growth came from Webinar Group - 44%, Yandex.teleconference - 32%, and VK.calls - 23%.


Deposits of Russians in foreign banks abroad, according to the reports of November, reached a record $81.7 billion, having jumped 2.7 times since the beginning of the year.

____

Putin said that Russia will not give up the dollar, but will dramatically reduce its shares.


Already a third of all mutual settlements with other countries are made in rubles. Which countries were the fastest to switch to roubles?


Turkey

Turkey is already paying for Russian grain in rubles. They started paying for Russian gas back in November, the republic's energy minister Fatih Donmez said. Ankara will pay 25% of the blue fuel supplied by Russia in rubles.


India

India and Russia fundamentally refuse not only the dollar, but also the euro in their mutual settlements.


Nine Russian banks have already opened special accounts in India for settlements in rupees. This will make trade transactions much easier. After all, at the beginning of the year, when Russia refused to use the dollar, Indians were paying for Russian coal even in Hong Kong dollars and UAE dirhams.


China

The biggest share in Russia's mutual settlements is the yuan. In November, China and Russia agreed on a full transition to national currencies in energy payments.

Russia also uses yuan in trade with third countries. For example, Uralchem, a producer of mineral and potassium fertilizers, sells its products to Brazil for yuan.


EAEC countries

Most Eurasian Economic Union partners are also abandoning dollars and euros in trade with Russia. For example, Kyrgyzstan has already completely switched to payments in rubles, said Minister of Economy Daniyar Amangeldiyev.


All the agreements on switching to national currencies will fully work only next year. This gives us reason to expect that the ruble will strengthen significantly.


The State Duma proposes to liberalize access to the Russian currency exchange for banks from friendly countries so that Russian importers could buy foreign money cheaper. This will make imported goods cheaper, - chairman of the State Duma Committee on Financial Market Anatoly Aksakov. The bill passed in the first reading

____

Russia and Iran will invest $20 billion in the development of the North-South corridor, which will facilitate trade with India.


Russia will invest $1 billion to modernize the Volga-Don route, which will allow it to include southwestern territories in its transport network.

______

Luxembourg Ministry of Finance allowed to unfreeze Russian assets - funds of Russian brokers frozen in the Clearstream depository in the amount of €4.3 billion. The Ministry of Finance has given 10 working days for the transfer of assets.


The second part of funds of Russian brokers are frozen in the Belgian depository Euroclear.


The European depositories froze assets worth nearly ₽6 trillion, mostly the money of private investors - ordinary Russians who believed in the stock market. Russians invested in stocks, Eurobonds and other securities. It looks like a profitable business for freezing foreign assets - the income from the securities (in particular, dividends) are received not by the Russians, but by the European financiers.


Only Euroclear alone has earned on Russian assets €340 million till early October. This is half of all investment income of Belgian financiers.

_______


Trading on the Moscow Exchange has exceeded 1 quadrillion rubles since the beginning of the year. This is more than the whole of last year - and this despite the fall of the Russian stock market.


The Moscow Exchange index fluctuated during the year from 3,815 points at the beginning of January to 1,944 at the beginning of October.


There was only one IPO - that of scooter rental company Whoosh. The company was able to raise just over ₽2 billion - half of what it had planned at the start.


Since the beginning of the year, almost ₽5 trillion worth of bonds have been placed on the Moscow Exchange, with almost ₽3 trillion worth of federal loan bonds (OFZ). Their main buyers were the banks financed by the Central Bank.


A new type of securities became ‘substituting bonds’: Russian companies placed them instead of Eurobonds. Gazprom, Lukoil, Sovcomflot and others did so.


There are about 23 million private financial investors in Russia now. Every seventh inhabitant invests free funds in the financial market.

​____

Henkel AG intends to spin off its Russian business into a separate company.

Henkel's Russian enterprise will change its name to Lab Industries and will operate independently from the German group starting in January.


The Lebanese company Daher, a buyer of Inditex Group's domestic business, will create local clothing brands specifically for Russia. Some of these products will be sewn by domestic enterprises. Eight Inditex brands are represented in Russia: Zara, Zara Home, Bershka, Pull & Bear, Massimo Dutti, Oysho, Stradivarius and Uterque.


The possibility of importing medicines in foreign packaging into Russia has been extended until the end of 2024. Such permission was previously valid until December 31, 2022.


The work of the former Nokian Tyres plant in the Leningrad region will resume in the second quarter of 2023 with a new owner, - the governor of the region Alexander Drozdenko.


Rosatom has submitted tender documentation for the construction of a Saudi Arabia’s first nuclear power plant.


Despite the sanctions, wine imports to Russia fell by only 6% over the year. The market share of the suppliers who left were quickly taken over by competitors, often from the same European countries.

Italy remained the main supplier. It reduced imports (-4%), but still has twice as much market share as its nearest competitor.

Second place was shared by Georgia and Spain, followed by France and Portugal.

Russia increased its own production by 10%.


The Central Bank will not fight the outflow of currency abroad. The Central Bank will focus on creating "normal market motivation" for the return of these funds. - Elvira Nabiullina, Chairman of the Central Bank


Tourist flow from Russia to Europe decreased by 95% - ATOR.


The Ministry of Finance is ready to discuss the exclusion of the UAE from its black list of offshore jurisdictions only after the introduction of income tax in the country. Russia has already sent an official request to the UAE on this topic - Alexei Sazanov, Deputy Finance Minister.


The Ministry of Finance is forming a list of low-tax jurisdictions that are used for offshore ownership of Russian assets.


Last year Russia adopted a law that prohibits companies that are 25% or more directly or indirectly controlled from these offshore jurisdictions to use state support.

November 14, 2022
China and India will be Russia's main partners in the Arctic in the coming decades

​​China and India will be Russia's main partners in the Arctic in the coming decades. This is the forecast made by the Ghent Institute for International Studies.


The Chinese are investing in the largest LNG projects. Investments made by offshore Penglai Jutal and Tianjin BOMESC, as well as state corporations. The Chinese own 10% in the petrochemical giant Sibur.

Sinomec Corporation has invested in alternative energy in Karelia: windmills and geothermal stations.


China is going to invest in the most important ports of the Northern Sea Route - Arkhangelsk, Sabetta and Murmansk.


China acts in the Russian Arctic not only as an investor and consumer of services, but also as a military partner. Russia and China have been conducting the largest Arctic exercise in history since 2018.


India has significant interests in the Arctic. The targets for India's Arctic investments are the Northern Transit Corridor, the Arctic LNG-3 project, Taas-Yuryakh Oil and Gas Production and Vankorneft.


* The Arctic holds 25% of the world's hydrocarbon reserves. According to the Russian Gas Society, the territory of the Polar Region is 2% developed in terms of production. The economic value of the region is in the production of natural gas: 80% of the total Russian volume is extracted here. Second most important is the mining industry, in particular non-ferrous metallurgy: nickel, copper, gold and platinum. The Arctic produces diamonds, phlogopite, apatite, 100% of antimony. Fishing industry. 30% of fish and seafood is caught in the Arctic.

China will completely abandon the dollar in payments for oil and gas. It will pay in yuan, Chinese leader Xi Jinping said during a visit to Saudi Arabia.


The raw materials will be traded for yuan on the Shanghai Energy Exchange.

Xi wants to make the yuan the world's main currency.


Russia has been without a dollar for almost a year. Dollar reserves are frozen. China, Russia's main foreign trade partner, pays for Russian oil, gas, and grain in yuan.


Brazil also pays in yuan for Russian fertilizers. The trade turnover between Brazil and Russia since the beginning of 2022 was $8.8 billion as of November.

Turkey and Iran will soon start using yuan in trade with Russia.


The yuan's flow to Russia will grow along with the growth of commodity supplies. Gazprom has announced that in December alone there were several historical records of gas supplies to China.

​____

A big event happened in the Russian industry some weeks ago. The BN-800 reactor was brought to nominal power level with a full load of innovative mox fuel and a closed nuclear fuel cycle.


This means that the Russians created the eternal nuclear reactors. The fuel is recycled and reused. An example of the atom for the benefit of Mankind.


Alexander Ugryumov, Senior Vice President for Scientific and Technical Affairs at TVEL said completing conversion of BN-800 to mox fuel is a long-awaited event for the nuclear industry. “For the first time in the history of the Russian nuclear power industry, we will be able to operate a fast neutron reactor with a full load of uranium-plutonium fuel and a closed nuclear fuel cycle. This is exactly the milestone for which the BN-800 was originally designed, a unique nuclear power unit supported by automated fuel production at the Mining and Chemical Combine.


Great news. The Russian scientists create the future.

____

The Russian Ministry of Finance is ready to consider the liberalization of cash currency imports into Russia.


The Government has formed a pool of 162 projects in critical import substitution areas worth a total of 5.2 trillion rubles until 2030. - First Deputy Minister of Industry and Trade Vasily Osmakov.


2.3 trillion rubles out of the total amount of planned investments will be provided in the form of soft loans, the rest 2.9 trillion rubles will be investor funds.


The federal budget for 2023 earmarked 5 billion rubles for subsidized rates for import substitution projects, as well as government guarantees.


The Ministry of Economic Development proposed barter trade with non-paying countries. The department suggested to work out the issue of whether this would require changes in the law.


The withdrawal from the Russian market has cost Western companies $240 billion. These are losses from unprofitable deals to sell the business and other force majeure losses. Large Western companies can easily cover these losses, but the figure of $240 billion is indicative of the scale of shifts in the market. 75% of these brands are on the list for parallel imports.


The former Russian subsidiary of Tetra Pak has resumed production of full-color packaging in Russia. The plant in Lobnya, Moscow Region, is operating smoothly, the company’s press service reported. (earlier they reported problems with the supply for color printing).


Exports of goods from Iran to Russia have increased by 70% over the last six months.


Trade between Russia and Brazil is reaching a new record despite the sanctions. Last year it was $7.5 billion. At the end of 9 months of 2022 the trade turnover has already reached $7.2 billion. Brazil itself has not imposed sanctions against Russia, but other countries' bans have led to problems in payment, insurance and logistics, which both sides are rather bracingly solving.


The need for import substitution in road construction is acute. The approximate ratio of domestic and imported equipment today is 70 to 30%, where 70% is imported equipment.


Domestic share is high enough for some types of road construction equipment, for example, dump trucks makes 60%, motor graders 70% and combined road machines 90%. The share of domestic road construction equipment in some positions, however, is low: backhoe planners - 7%; road rollers - 20%; drill and pile-driving machines - 28% of the market. There are also such equipment which is not produced in Russia at all - road cutters, recyclers, wide grip pavers.


Fishery Union fixed a sharp fall in salmon prices in Russia due to the resumption of logistics of supplies from Chile, as well as increased imports from other countries.


There are problems with the supply of musical instruments in Russia, including grand pianos. The issue of import substitution here will not be solved even in ten years, - market players.

​____

The largest Russian marketplaces are going to increase revenue by an amount comparable to the turnover of the 20 offline stores which have left Russia. Such brands include Adidas, Puma, Zara, H&M, Massimo Dutti, Christian Dior, IKEA and Uniqlo. Their trade turnover amounted to almost 1,54 billion USD - this amount can be distributed between marketplaces, which will start to bring brands products on a parallel import schemes.


Computer prices are almost back to February prices. Russian stores began to sell MacBook laptops imported in parallel. Moreover, there is no difference in price between "white" laptops imported before the sanctions and "parallel" MacBooks. The volume of guarantees is the same - only in the first case, they are given by the manufacturer, and in the second - by the seller.


By the end of the year in Russia it will be possible to sell some gadgets without pre-installed Russian software - the Ministry of Finance. The Ministry suggested introducing a moratorium on penalties for such sales of devices until the end of the year. The corresponding bill is ready.


Resource of construction equipment available in Russia is designed for a maximum of 3 years, it is necessary to provide a plan for its import substitution due to the strong dependence on the West - Deputy Prime Minister Marat Khusnullin.


The Government has provided an unprecedented amount of import financing for metallurgy, automotive industry, chemical and pharmaceutical industry, the total amount of the program – 12,5 billion USD - Maxim Reshetnikov.


The volume of yuan trading on the Moscow Exchange exceeded the volume of euro.


The State Duma passed in the third reading a law which would allow to limit dissemination of information about transactions of Russian participants of foreign trade activities, to help them to avoid restrictive measures against Russian companies by the West.


The State Duma passed in the third reading the law to increase the threshold for cash transactions subject to mandatory control by Rosfinmonitoring from from 9230 to 15390 USD.


Maritime traffic between Russia and Turkey opens in Sochi on July 16.

June,29, 2022
The Russian government legalised parallel imports
​The Russian government legalised parallel imports. They explained it on improving the sustainability of the Russian economy in the face of sanctions. The list of goods and brands was approved by the Ministry of Industry and Trade, they reported yesterday.

They approved the parallel import of Tesla, Land Rover, Jeep, Jaguar, Chrysler, Bently, Cadillac, Chevrolet, Dodge, Hummer, Rover, GMC, Freightliner, Peterbilt, Kenworth, Mack; spare parts from Cummins, Deutz, Hyundai, Nissan, Volkswagen, Toyota, Volvo, Scania, tires Continental, Michelin, Goodyear, Bridgestone, electronic components, consumer electronics Electrolux, Miele, Siemens, Dyson, Apple, Samsung, Nokia, Sony, Siemens, HP, Huawei, Lenovo; game consoles XBox, PlayStation, Nintendo, totally more than 50 groups of products, including textiles, leather goods, clothing, fur, perfumes, equipment and mechanical devices.

The list of goods includes industrial equipment, including mining, electricity, rail, shipping, and agriculture.

Parallel imports are the importation of original goods into the country by persons who do not have documented consent from the right holder to import the goods. Products are imported not through an accredited distributor, but through alternative channels. According to the Russian law, for parallel imports the company-importer must pay compensation to the right holder in the amount of up to 5 million rubles (about 65k USD), and the goods must be destroyed. Now import of products without the right holder's permission is legalized.
____
In Russia, the individual entrepreneurs and companies under the simplified system of taxation pay tax on income at the rate of 6% in total.

There are two types of simplified taxation in Russia:
Income. You pay taxes under the simplified tax system only on the income received. Earned 10 million rubles - paid 600 thousand rubles at a rate of 6%.
Income minus expenses. Pay taxes only on the profits. Earned 10 million rubles, spent 5 million rubles - paid 750 thousand rubles at the rate of 15%.
Companies and individual entrepreneurs who comply with the two limits can work on the simplified tax system:
Annual income - no more than 150 million rubles (2 million USD);
The average number of staff for the year - not more than 100 employees.
____

Representatives from more than 130 countries, including "unfriendly countries," attended the annual SPIEF-2022, St. Petersburg International Economic Forum from June 15-18, which resulted in the signing of contracts worth 5.6 trillion rubles ($97 billion) - 30% more than last year.

The Russian Finance Ministry expects the experiment to create bond warehouses in Russia to be launched this fall.
Bonded warehouse is a storage and distribution zone for goods sold through Internet sites with a special customs status, which allows not to pay duties and taxes on the imported range of goods before they are purchased by the end buyer.

Businessmen from "unfriendly countries" interested in the Russian market will be highly welcomed and the object of special care of Russia - Dmitry Peskov, press secretary of the President of Russia.

The Russian government has allocated more than 37 billion rubles for the program of preferential crediting of priority imported products. They talk about issuing concessional loans to importers at a rate of about 6%. The funds allocated by the Government will allow to subsidize such loans for a total amount of not less than 800 billion rubles. For the purchase of raw materials and components the preferential rate will be valid for one year. For equipment and means of production - three years.
The list of priority imported products includes food products, medicines, pharmaceuticals, vehicles, construction materials, machines, agricultural machinery and electronics. (https://lnkd.in/gN7RRyET)

Russia will allow the use of cryptocurrency as payment for foreign trade activities of legal entities. The government has prepared a bill on digital currencies.

- Russia is introducing a moratorium on inspections by tax authorities of compliance with currency legislation. It will come into force on June 1 and will be valid until December 31, 2022.

Vladimir Putin signed a law which prohibits registering brands if the brand name may mislead consumers as to the place of origin of goods.
​June 1, 2022
The Central Bank of Russia has changed process of dollar/ruble rate calculation
The Central Bank of Russia has changed process of dollar/ruble rate calculation.
The USD/RUB exchange rate will be set based on the Moscow Stock Exchange data on the weighted average dollar/ruble exchange rate for transactions concluded from 10:00 to 15:30 Moscow time. Previously, since March, 2022 the calculation period was 10:00-16:30 Moscow time.
The exchange rate of the euro and the yuan to the ruble will be set similar to the calculation of the official U.S. dollar rate - based on the weighted average euro and yuan to the ruble rate.

- The Federal Tax Service of Russia supported proposal to allow legal entities to pay in digital currency with foreign companies. The initiative was also supported by the Russian Ministry of Finance. A new decree is expected soon.

- The Central Bank has eased currency restrictions for all exporters. Now the companies are obliged to sell the currency within two months instead of three days after payment has arrived. The volume has not changed - 80% of foreign currency income.

- A zero rate of import customs duty for fiber-forming polyethylene terephthalate was set for a period of 1 year (HS code 3907 69 000 1). The decision comes into force on April 28, 2022.

- The Russian Government increases export quotas for mineral fertilizers.

The measure is necessary to support producers who face the risk of downtime: due to sanctions they have lost part of their export markets, and production volume exceeds domestic demand. Companies are counting on interest in fertilizers from states that have not joined the sanctions.
- For nitrogen fertilizers, the quota will increase by 231 thousand tons and reach about 5.7 million tons.
- For compound fertilizers, the quota will increase by 466,000 tons. The quota will be about 5.6 million tons.
The decision will be valid until May 31, 2022.

- Weight and size controls for trucks at the border will be canceled.

The new rules will be in force until September 1 for carriers of food and non-food essentials. "Today, in conditions of external pressure, it is necessary to ensure unimpeded imports of socially important products into our country," Mikhail Mishustin.

- The Ministry of Internal Affairs and the Ministry of Labor have developed a bill on simplified receipt of residence permits for foreign employees of IT companies.

Specialists will not need to obtain a temporary residence permit and employers will not need to obtain permission to hire foreign workers.

- Volvo Cars is cutting back Russian offices following General Motors. The Swedish brand intends to continue its warranty support and is ready to pay for parts imported in Russia within parallel imports rules.
​____
The Eastern Economic Forum was held in Vladivostok. The key topics are the pivot to the East and the development of import substitution. Participants concluded 290 contacts worth $54.5 billion.

In the first half of 2022 the trade turnover of Russia with the BRICS countries - Brazil, India, China and South Africa - increased by 40% compared with the previous year and reached $98 billion. Iran and Argentina are the next to join BRICS.

Excess foreign currency proceeds, which are coming to Russia in quite large quantities, should be used as soon as possible to import advanced technologies, machine tools and complete equipment.

The problem is that the Russian legislation is critically unprepared for prompt investment in the industrial sector. It a priori lacks such an area as project financing, i.e. obtaining money against the future results of the economic activity. Today Russian industry can take it only on collateral principles. But this vestige of the banking system of the last century needs to be eliminated - the Russian government.

Negotiations on a free trade agreement between the EEU and Iran have entered the legislative stage in each country and will be completed within a few months.

Industry associations wrote an open letter to President Vladimir Putin about the draft government resolution on quotas on seed imports. They consider the adoption of the document inexpedient and counterproductive.

At present the share of seeds of foreign selection sown in Russia for sugar beet exceeds 97%, for vegetables - 80%, for sunflower - 73%, for potatoes - 65%, for spring rape - 49%, for non-GMO soybeans - 45%. Restricting their use will lead to disastrous consequences for the industry, given that serious shares of the sown areas are accounted for by outdated, inefficient varieties of Soviet breeding.

In Russia, since 1996, there is a government moratorium on industrial genetic engineering, and since 2016 the import and cultivation of genetically modified crops are prohibited.

Exports of goods from Turkey to Russia totaled more than $738 million in August, almost twice as much as in August last year.

The trade turnover between Indonesia and Russia in this period increased by 42% and totaled more than $3 billion.

Russian-Serbian trade turnover from January to July 2022 was $2.4 billion - an increase of 56.94% compared to last year.

The Russian government is preparing the ground to switch to the currencies of the friendly countries. Deputy Finance Minister Alexei Moiseyev told RBC in an interview that Russian banks are actively considering not only the yuan, but also the UAE dirhams.

All import support measures that helped Russia this year are being extended to 2023. Parallel imports and simplified declaration procedures remain. The extension of zero duties in the EEU is under discussion and is likely to be adopted as well.

August 25, 2022
Interview with Sergey Galitsky, the founder and co-owner of Magnit, the Russia's largest retailer

Forbes estimates his fortune at $3.5 billion in 2021. I hope it will be insightful for everyone who wants to enter the Russian market.


There is no one perfect country for doing business. Where there are good conditions, there are small opportunities. Where there are a lot of opportunities, conditions are an issue.


Yes, we have 10 million customers a day. Considering they're families, that's 25-30 million people coming in every day. But it's a real race for customers. We have very strong competitors.


When we cut the price for bananas by 1 ruble, we sell 100 tons a day more. There are people who live within their budget.


Cucumbers last 7-8 days. We had losses of up to 50% in the winter. So we were forced to start our own production. Now we have the biggest greenhouse in Europe (80 ha).


We do not have more than 10% direct imports. It is not a very significant segment of Russian retail.


Thanks to the government, they did not impose sanctions immediately, we had time to readjust. We added Central Asia, Iran, and found products in other countries [2016].


We've been opening three or four stores a day for over three years now. It seems amazing, even to us.


In order not to be disappointed, you don't have to be fascinated. In business, every day is like a war.


I don't see anything Wal-Mart can do that other retailers can't.


The miracles ended two thousand years ago. If the price is lower, the quality is lower. We have to be objective and be honest about it.


In business, you have to not be afraid to go out every day with an open mind and have a chance to lose everything. When you are afraid to lose everything, you have to admit that you no longer have the will that you had.


I only believe in daily, hard work. It's not self-learning. It's just hard work. And whoever spends more time on it has more effect.


Over time, I began to realize that I began to lose speed. At some point you have to tell yourself that operational management, with the intensity you've had for the last 25 years, is no longer for you.


In business, the element of logic is incredibly important. Chess is a good game model of logic. You should also fantastically love what you do and have an incredible sense of purpose.


Entrepreneurs are a special biological breed. Two, four percent at the most, have entrepreneurial potential. In our country, whoever thought they needed more money in this life declares themselves an entrepreneur, and when it turns out they're not ready for these risks and these stresses, they start complaining about the FSB or conspiracies by government agencies, just like a person who complains about the weather.


I could do nothing without the team, I'm just an ordinary man.



August 2, 2022
How do you source or rich out to the buyers in Russia?
The search for dealers and customers in Russia is similar to the international market, but it is highly desirable to have an employee with knowledge of the Russian language and mentality.

What sources I would recommend:
It works well in Europe and North & South America with high value accounts, but I receive requests from Russia and CIS-counties too. You receive an Excel-file with all accounts visited your online-stand with insightful information about your visitors and product of interest, which you can use further for creating your own newsletters. They provide excellent customer service and very user-friendly interface for quick reply to the inquiries [contact Imane Hadj-Fradj ]
  • In the B2B industries and niche markets, you can buy a market report. There are good providers of market research in Russia that usually provide lists of major suppliers and consumers of products in their reports. So you gain market information and a list of potential clients.
  • For more sophisticated search and competitive intelligence, you can use customs database. In customs statistics you can see which companies, both end customers, and dealers buy products of your competitors and in what volume & customs value. Then you can contact these companies directly with your offer. In such market investigation you receive not only figures by brand for market estimation, evaluation of market share of your competitors and average price, but also a list of supplies and suppliers with all data necessary for further processing. HS code required.
  • The Russian Ministry of Trade developed a new online-platform for search of manufacturers and suppliers of import substituting goods, analogues of sanctioned products - https://lnkd.in/ghg2Jiir . I haven't experience with this service, but I guess it will work well too.

If you have questions, feel free to ask, and let's discuss how I can contribute to your sales growth in the new markets.

© All Right Reserved. My company Inc.
e-mail us: anna.shebanova@mail.ru
Made on
Tilda