Ravil Zaripov, Tatarstan's Deputy Prime Minister and Minister of Industry and Trade, speaks to Upper Reach about the country's vast array of opportunities for foreign investment and its push to raise IT and advanced technology levels in its industries.
Tatarstan has highly developed petroleum, petrochemical and heavy manufacturing industries. Traditionally, its economy has relied heavily on these industries. But despite these industries still making up the significant part of Tatarstan’s GRP, and production in these sectors remaining high, the republic in recent years has been pushing to develop other industries so that it will become less reliant on these traditional sectors. Most notably it has been highlighting the potential for investment in the country’s high-technology industries. What investment opportunities exist in Tatarstan’s industrial sector?
Regarding the development of industry, we have defined four key areas, also called cluster approaches. Nowadays, the bases of our industry are oil production and petrochemistry, accounting for nearly 60% of the volume. Last year, the GRP of Tatarstan increased by 5.5% to RUR 1.415 trillion ($45.6 billion). The aim, set by the leadership of the republic, is to increase the amount to achieve 2 trillion roubles by 2016.
In the range of oil and oil production, we do not try to increase the volume of hydrocarbons production, but pay more attention to the deep processing of it. In other words, we will process the light oils like gasoline and kerosene, and also preparing polymers, for example rubbers or polyethylene, and their further processing as a finished product.
Stable production is 32 million tons of oil per year, and we refine half of it. So, the aim is to reach 49% usage of local petrochemical products. Therefore, we set particular conditions for businesses. For example, in a site in Himgrad we made photographic film. But then the need for these products disappeared, and this territory was used to create a modern investment Technopark. There we put in place particular conditions too, and generally business is attracted by the faster production of various kinds of products.
Thus we try to increase the added product in the field of chemistry.
The second direction is machinery. In this direction are large corporations such as Kamaz and Ford-Sollers. In Tatarstan we also produce special equipment for the oil industry, for the repairing of wells, for service and for the drilling of oil wells. The production of special equipment is engaged in Elabuga’s company ‘Еlaz’.
Our main tasks in the automotive sector are the increase of competitiveness and compliance with European standards. In connection with this, Kamaz has quite large investment projects. Kamaz has several large joint venture companies, for example with the American company Cummins for the production of engines and the German Company Zanrad Fabrik for the production of automatic brake systems, among other serious projects. From them we get modern utilities, as well as raising Kamaz’s competitiveness.
Ford-Sollers is a joint-venture company that produces 350,000 cars per year as a whole in Russia. About 200,000 of them will be assembled in Tatarstan: one part in Elabuga and another part in Naberezhnye Chelny. Today the assembly is already in progress. Last year we harvested 18,000 systems. We also agreed on the construction of a new building for the stamping of car bodies, and a factory for manufacturing engines.
In connection with this there is a number of offers in order to activate the auto component sector. We have had some meetings with Turkish auto components producers, more than 50 enterprises have come with their offers. The most recent active meeting was with the Ambassador of Great Britain, here in Tatarstan, which has strengthened the field of engineering. Very qualified support is provided by a UK company called Lean Coaching. They are teaching us the systems of lean production. This is a system that allows us to optimise the expenses within enterprises, with the assistance of a dedicated team, which considers the specific problematic issues within the enterprise. Our Ministry is responsible for the implementation of modern technologies and supporting enterprises in the reduction of production costs.
We pay special attention to the competitiveness of our enterprises, to produce a quality product at a reasonable price in the desired date. So we are actively working with the consulting companies Ernst & Young and PriceWaterhouseCoopers, which conduct highly skilled consultations and audits. If you have passed their audits, you have an open road for investment, working with banks, and with a more acceptable percentage of credits and so on.
We are continuously working on the creation of new projects, new products. For example we have the very successful work of our helicopter factory, which exports to more than 80 countries. We produce the MI-8, MI-17 and Ansat helicopters. We are using new management technologies, and we carried out quite a far-reaching modernisation of the plant, purchasing new equipment and training staff, in order to adapt it to global standards. In the past some helicopters were delivered to NATO, which were used mainly in the mountains. They passed the corresponding certification at the international level. Thus, through continuing international cooperation, we try to live up to their standards, to refine their products.
Tatarstan strives to create the best conditions for businesses, and we have such special economic zones as the SEZ Alabuga. The SEZ Alabuga has 200,000 square metres, and we will enhance the area, as there is demand on the part of the residents. There, we have created the ideal conditions for business, offering the entire infrastructure, electricity, gas, railway, etc. For any investor, regardless of the country, there are certain clear rules. They get the land plot, according to their business plan, and we summarise their communications. They build the plant and put the equipment from their own funds, and the entire infrastructure comes from the government. We also provide them with energy security for all their activities. Currently we are preparing a program to modernise our power system. And we are ready to discuss the reconstruction of it with our colleagues from England. We are carrying on consultations with Siemens about their participation in this program.
And of course, we try to accompany all the projects personally, especially where you need the approval of supervising authorities. We have systematic meetings at the Ministry of Industry and Trade and meetings at the presidential level.
Another area, which is growing fast, is the development of information technologies. This also means the attraction of modern IT technologies to the economy of Tatarstan. There have been certain actions, such as the creation of the IT Parks in Kazan and Naberezhnye Chelny, and we have a master plan to create a big IT city, Innopolis.
We are interested in IT; we actively implement it into our enterprises, for example in our flagship large-scale enterprises as Tatneft, TAIF, Kamaz, Kazan Helicopters Plant and Elaz. These enterprises do not set up their IT inside their factories, but transfer it to IT parks. Inside the IT parks we have concentrations of small businesses that are ready to provide services in the IT sphere, building the programmes of the products. Given the experience of the UK in these technologies, we also have the possibility to work in this area.
Tatarstan will take part in the creation of machine tools for metalworking. After the collapse of the Soviet Union, this business is not at the best level in Russia. Now measures are being adopted to create our own machine tool industry with the participation of foreign manufacturers, such as European companies and, perhaps, the participation of those in other countries such as Japan and Korea. In the next few years this topic will be very important. Therefore, when we talk about modernisation of the industry, we mean the installation of new equipment, of new technology and the improvement of the education management system. A quite difficult process is to change the mentality of people. The most important thing is that the general director or the first deputy introduces new technologies. This means success.
We are very open in communication with foreign colleagues. We visit major international exhibitions. Many of our colleagues go to the UK regarding to the fields of education and equipment, but also a lot of exhibitions are held here in Tatarstan.
Such new technologies as new polymers and composite materials are what we are trying to introduce in Tatarstan too. This year, in one of our plants, we will build and launch the production of composite products for aircraft. In this context we cooperate with Airbus and with Boeing. We try to use this material in the automotive industry and other industries.
Today, to be successful and competitive in the world market, the potential we had in the past years is insufficient. First, we must change our mentality to be able to perceive new conditions, from a market point of view. And we need to develop small and medium businesses, to raise the middle class.
David Cameron, the UK Prime Minister, said he wants to rebuild the relationship between Russia and UK, and Lord Green, Minister of Trade and Investment, said it is time for British businesses to build a legacy in Russia and that Russia’s membership of the WTO will make it easier for business to operate in Russia. How can Russia’s WTO membership benefit particularly Tatarstan?
Being a member of the WTO will have a positive effect for Tatarstan. Last December we visited the WTO headquarters in Geneva and we were given a special training session. It was very useful and interesting. This organisation is open; it takes all decisions collectively through approval. Through communication with colleagues of the WTO we are trying to eliminate some of the republic’s problems. First, we could offer technologies in the field of mechanical engineering, chemistry and petrochemistry. Those items make us transparent to foreign companies, and certain benefits should not only be offered to federal authorities, but also be available for foreign partners, and this will increase confidence in our country. But, on the other hand, we must take into account the positions that determine our competitiveness. It is a stimulus joining the WTO; we can work harder, not limited to the outside world.
The agriculture sector has big competition. In Tatarstan we have a peculiar climate; summers are quite hot and winters very cold. It is a risky area for agriculture. We will use our grain for growing cattle in the future, for meat products. In this sphere we must work with the operational costs, reduce the prime costs.
What would you like to say to our readers, potential investors or tourists, in order to encourage them to visit Tatarstan?
I would like people to know that the Republic of Tatarstan, as a part of the Russian Federation, is developing very actively, observing the interests of all its residents, creating comfortable conditions for them all, regardless of their religion and nationality.
Tatarstan welcomes its guests with a smile and is always open to cooperation. People in Tatarstan are very hospitable. And of course we would like to hear your suggestions where we need to improve, to learn. A two-way road is always a useful way to cooperate.
We invite you to visit the Universiade in July 2013 and the FIFA World Cup in 2018, because such large events raise us to a global scale.