P. Fradkov: “Our task is to create a single window for exporters, where they could receive all measures of government support”

TV Channel Russia 24
19.06.2015, 00:12

HOST: We are getting back to a main topic of our program. An International Economic Forum has opened in Petersburg. Vnesheconombank First Deputy Chairman Petr Fradkov told my colleague EvelinaZakamskaya about the Forum’s work.

CORR: Good afternoon Petr Mikhailovich.

Petr FRADKOV, Vnesheconombank First Deputy Chairman, Member of the Board: Good afternoon.

CORR: You became head of a new center –the National Export Center. This means that all measures of state supportare united ina single window. What are the tasks of the new Center?

Petr FRADKOV: You’re absolutely right. Our task is to create a single window for exporters where they could receive all measures of state support that exist now. It is very important. These measures are a bit isolated – they are provided by various institutions. They apply different procedures and different approaches. Exporters and especially medium-sized exporters (and we focus on medium-sized exporters because we believe that this segment of companies is our basic potential for developing Russian exports) often find it difficult to make sense of both aprettylonglist of these supportmeasures and of procedures for receiving them.

CORR: And make sense of those who provide them?

Petr FRADKOV: A problem here is where to go and what to do.

CORR: Could you listinstruments at the disposal of the state today. What kind of support can be provided to business?

Petr FRADKOV: Globally, all types of support can be divided into two blocks: financial support measures and non-financial ones. I’d like to start with financial support measures and here we have made a big step forward in the past two-three years when we started to understand that quality of products and access to a market are very important but without adequatefinancial offers products become uncompetitive. And we have done a lot in this respect. First, we have established EXIAR (the Export Insurance Agency of Russia). EXIAR is Vnesheconombank’s subsidiary and we can say that it is operatingto the max.

CORR: This is a main instrument,isn’t it?

Petr FRADKOV: In terms of readiness to offer mass products, this is a fully functioning mechanism. The company is operating efficiently, they have developed a product line and its main segment is comprised of medium-sized companies. A mechanism for subsidizing interest rates upon providing export financinghas been launched. Vnesheconombank has already been using this mechanism actively and Roseximbank, a member of Vnesheconombank Group, is to start applying it this year. These measures are fully allowed by the WTO and the OECD on the one hand and on the otherhand,they help financing banks to provide decent funding without sustaining losses. In 2015, Vnesheconombank was provided with 4.5 billionrubles to subsidize interest rates, Roseximbank received 3billon rubles. This is a new, I would say,innovative mechanism, which did not exist in the past.We are working on it and the government helps us. Roseximbank’s capitalization is going on. This year 10 billion rubles were allocated from the federal budget to Roseximbank’s capital in the form of subsidies for it to be able to fund medium-sized companies.As a head institution, Vnesheconombank focuses more on major, complex-structured projects. This work is in progress, the portfolio is growing steadily.

CORR: How many projects are there in your portfolio and what’s the percentage of non-raw materials exports?

Petr FRADKOV: The amount of no-raw materials exports is growing. We would like high-tech exports to grow more rapidly and we are working on it. We plan to use measures I’ve mentioned before especially subsidizing interest rates to help companies which are involved in high technology exports. Unfortunately, now the proportion of high technology companies exports amounts to less than 10 percent of all exports. But I’d like to stress that non-raw materials exports amount already to almost a half.

CORR: What about the proportion of small and medium-sized enterprises?

Petr FRADKOV: Here we mean aboveall medium-sized business enterprises. The proportion is very insignificant, may be several percent of the whole exports. But I’d like to stress that it is medium-sized enterprises that are growing pretty fast because favorable economic conditions are now developing for companies to refocus their production facilities on foreign markets. The main factor is of course the devaluation of the ruble that is always beneficial for exporters as well asthe domestic market saturation. And the companies that to some extent think about their future are trying to refocus at least part of the production facilities on exports. We believe that if at least 20-25 percent of company’s receipts account for exports, it’s a great success, a very great success.

CORR My understanding is that another way of boosting support for non-raw materials companies and medium-sized enterprises is to work with regions?

Petr FRADKOV:You are absolutely right.

CORR: And this work accounts for a significant part of your activity.

Petr FRADKOV: Of course, we set ourselves this task. Financial support measures are important but in one form or another they existed in the past, we worked on them. Along with financial support measures,it’svery important to develop a range of non-financial support instruments. These are very important issues - a long list of issues starting from support for companies in tax administration. Acompany should be well versed in taxation because it is one of company’s attributes, a company should be a responsible taxpayer but the fact is that when you deal with exports there are a bit different procedures, different approaches…

Companies don’t know about it.

Customs clearance is a very serious matter. In the past when we talked about optimizing customs clearance procedures, we meant imports. We seldom talked about exports because it was power engineering, a sector, which was a domain of very large enterprises and they had competence.It turns out that medium-sized enterprises have a lot of problems dealing with certification, intellectual property rights, patents – we regard all these issues as being non-financial ones. And now, they are as topical as issues of financial support.And the center should deal with these issues and assist exporters in receiving relevant support in relevant institutions through a single window.

CORR: What markets do Russian businesses choose irrespective of their core activity and size?Can we say that we are making a turn to the East?

Petr FRADKOV: I think so.

CORR: Is it obvious and objective?

Petr FRADKOV: Maybe. I wouldn’t say it is only aturnto the East. It’s a turn to other directions other than the West – Latin America for example. Our partners from Latin America for various reasons would like to cooperate with us in implementing a great deal of projects in power engineering, transport mechanical engineering, infrastructure including railway one. CIS is making a revival now. The work with regions is becoming interesting because of the ruble devaluation. And I believe that our partners in CISrealized that, given comparative quality, our products are less expensive. And in this region a contract’s value is of great importance.And Asia of course.And I wouldn’t like to limit myself to China, I would talk about the Asia Pacific region, about the South-East region, Indonesia and Vietnam.

CORR: I’m sure you are still interested to cooperate with Europe. To what extent would you recommend to work with European partners in the current atmosphere of pressureand alarming signals that keep on coming?

Petr FRADKOV: We are ready to cooperate. We always side with exporters. If the exporter has made a decision, if the exporter believes that he is competitive, if he is in a position to work on the European market, we’ll do our best to help him. Technically, there are no financial limitations in terms of exports but we shouldn’t ignore the current situation. By no means we are going to dissuade people from working in Europe.

CORR: How do you assess the risks of insurance events?Do they exist today?

Petr FRADKOV:Even before we started to discuss issues of sanctions pressure we had placed our stake onmarkets of Latin America and South East-Asia with rather low sovereign rating but it was a revelation to me to find that our partners who were in a difficult financial position worked with Russian exporters in the most responsible way. What the eye fears the hands do. To tell the truth, I didn’t feel any radical change in the approach after sanctions were imposed. Paradoxically, exports are rather safe business activity.

CORR: This means that a lot depends on us.

Petr FRADKOV:Everything depends on us ourselves.

CORR: Thankyou. I wish every success.

Petr FRADKOV: Thank you very much