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“Kazan is where Europe meets Asia”

Interview - March 5, 2013
Upper Reach meets with Midhat Shagiakhmetov, Economy Minister of the Republic of Tatarstan, who says: “Tatarstan is open and ready to work in any direction with any investor, with any country, if there is an interest.”

Tatarstan’s economy has been growing steadily year-on-year. All key sectors are showing impressive signs of growth. What are your views on Tatarstan’s impressive economic performance in recent years?

To understand how the economy works in the Republic of Tatarstan we should look at the structure of it. There are the leaders of our economy – there is the oil company Tatneft, the automobile building company Kamaz, the Kazan Helicopters Plant and the TAIF group of companies, where Nizhnekamskneftekhim and Kazanorgsintez are included.

Gazprom’s subsidiary is also working quite actively and seriously in the territory of Tatarstan. This basic structure has been formed over the years. Nowadays the management of these companies is doing the work, and the results have been reached thanks to many years of hard work.

This is a republic that invested in oil exploration and in the reconstruction of our oil companies. For a long time we have been upgrading our core businesses that were created in Soviet times. The company Kamaz, which is now the main supplier of trucks in the Russian and the CIS markets, seriously upgraded the control system in the enterprise, using a SAP system and other new technologies including “lean production”. This work has been done over many years, and it gives its result today, these companies are now globally competitive.

The quality and the depth of the processing process of our petrochemical products are quite competitive. Now there are also global companies that have placed their production in Tatarstan. That shows that investors believe in us and trust us. There are companies like Rockwool and Ford-Sollers, among many other world-known companies, which have been successfully implementing their projects in our republic for several years.

The best estimation of the investing climate in the republic is the satisfaction shown by the businessmen that are operating in the territory of our republic. They have had quite a long presence in the Tatarstan market, and that means that in Tatarstan all the conditions for any investor are met. Foreign and Russian investors can easily locate their production and realize their projects here. Moreover, we have an investment council headed by the President of the republic, and any project that is being implemented in the republic is taken under special control. All the problems that could arise to our partners during a project are taken under supervision, and of course the President personally monitors the progress of these projects in the territory of the republic.

We fully understand that it is mostly impossible to produce any product or provide a service if it is not close to European standards. To compete with our neighbours is one thing, but to compete globally is another. We are increasing and promoting our businesses, our products, to the world market. More than 50% of the products that are produced in Tatarstan are exported and of these, 90% is delivered to the countries member of WTO.

Now there is a lot of controversy about if joining the WTO is profitable or not, and what will happen with the Russian Federation. For one and a half years we have been working hard to implement measures that are set to adapt our economy to the WTO, to their conditions and rules. In connection to this, a month ago, a delegation of the Republic, led by our President, visited the headquarters of the WTO in Geneva. Representatives of the public enterprises, and our colleagues involved in them, met with many experts in the field of industry, agriculture, etc.

The goals set by the President not only adapt to the conditions, but maximize all opportunities that the WTO opens for the economies of the Russian Federation and the Republic of Tatarstan. Tatarstan is one of the regions of the Russian Federation that started actively to do projects of IT Parks and business incubators. Now there are almost all the infrastructures and institutions set for the implementation of major projects, and for the development of small and medium enterprises.

The Zakamsk area is the zone where the city of Naberezhnye Chelny, the second city of the Republic of Tatarstan, and the city of Elabuga, its Alabuga Special Economic Zone (SEZ), and the city of Nizhniekamsk are located.

The Alabuga SEZ has currently more than 30 residents, which already implemented an investment of 1 billion U.S. dollars. And there were just investments of more than $ 3 billion US dollars announced. The Alabuga SEZ is nowadays one of the best special economic zones of Russia in the general volume of production. Alabuga SEZ counts for the 73% of all the industrial zones of the Russian Federation. This project is very successful. In this area we already have infrastructure, there is a preferential customs regime, there is a system of tax incentives and we are actively working to attract potential partners and projects. Currently, there are world famous companies represented there, like Kastamonu Entegre, Ford-Sollers or Rockwool.

In addition, we are well aware that the world is growing and the republic has established major directions in fields such as engineering, biotechnology, IT or agriculture. At the end of last year we received the approval for another special economic zone in our territory form the Russian Federation. This will be the second economic zone in Tatarstan. It is the Innopolis project, which will be located near Kazan. We have an agreement with Carnegie Mellon University to establish a university in this area.

We are also paying attention to the development of agriculture and its processing. Tatarstan is self-sufficient regarding food. This is the result of many years taking into serious consideration the agricultural sector.

In Tatarstan we have a very powerful educational structure. There is the Kazan Federal University, where well known people have studied. In Kazan there are also two important research universities for chemistry and aviation. We have an environment for students, for creative people. We have to create this economic, intellectual, business and cultural environment that is attractive for people around the world to come here.

Forbes and other international renowned institutions named Tatarstan as the best place to do business in Russia. We are very actively working with the World Bank implementing projects that address infrastructure issues, to enable our partners to come to work and live in Tatarstan.

These are the core areas that we focus on every day. Our goal is to know that we always can do better for the investors, understand what they are concerned about and what they want and need. Those rates are now taken in the republic as the most important to maintain, to keep the path that was taken. It is important that our potential investors, whether foreign or Russian, are sure and have the knowledge that each rouble that they invest in the republic will return, and that there are all possibilities open for the implementation of their plans and projects.

What are the key economic sectors to be invested in over the coming years?

We have priorities for the development of our country regarding petrochemical, engineering, agriculture, IT and other sectors.

Our goal is to make our economy open to investment. Today the petrochemical industry is a very attractive one. We have a lot of interesting projects in this sector that are constantly promoted on various forums, exhibitions and meetings. Here is an opportunity for our potential investors.

We are also very active in the IT sector. The entire correspondence between the public authorities is done through IPad or IPhone, we have forgotten the paper. And the projects that we are now developing in the IT sphere, like Innopolis, are quite interesting for potential investors.

With the 2008/2009 world crisis we analysed what sectors were severely affected. It is clear that without a strong and competitive industry it is very difficult to have a strong growth. There is quite a serious scientific environment formed in the republic with major engineering companies, which are federal and international players. We started a project to create a machine-tool industry. We are already working with a number of foreign partners and with the federal government in order to produce competitive machines that meet the requirements of our engineering enterprises. This is one of the promising areas of our republic’s economy.

And as I said before, serious attention is paid to the development of agriculture. We implemented major projects in the field of agriculture according to world standards. And they will be further continued and developed.

The future is looking for completely new materials, new technologies. Areas like the production of composite materials, theproduction of innovative materials and the production and implementation of projects in biotechnology. The trends in the world’s economy are being seriously monitored and analysed.

But of course the best investment is an investment in human capital. Everything we say and everything we plan, all our projects are impossible without adequate trained personnel, completely different-minded people. And we are seriously working in this direction. The system of training begins in kindergarten. The republic works in the Algarysh programme, which allows sending the most creative and talented people abroad, to the leading scientific centres of the world in the US and other countries of Southeast Asia or Europe for training and retraining. These people then return to the republic bringing completely different and new approaches, and a different culture. Human capital is paramount.

Please discuss the preparations for the Universiade 2013 and what effect it will have on the economy.

Today our president launched the Universiade Torch in Vladivostok, and the 6th of July it will arrive in Kazan and here we will light up the Universiade torch. This project’s investments are focused on the construction of new sports facilities and construction of roads, apart from the preparations for the Universiade in general. During the time that we have been preparing for the Universiade, the effect for the national economy is obvious. First of all we are now the centre of attention of the world. This makes potential investors take into account that there is a city, that there is a republic, that is capable and able to hold a world level event. In addition it must be said that all these sport facilities are operational today, there are athletes already training. In the Universiade Village campus there are already students living. The Universiade objects will leave a heritage. The effect of the Universiade is obvious, not only for our republic but for the whole country.

What final message would you like to send to our British readers?

Kazan is the capital of the republic with over 1,000 years of history. The Republic of Tatarstan is home to many well-known Russian politicians, artists and athletes. Kazan is the place in our country where Europe meets Asia. Therefore, from the tourist point of view, there are all the opportunities to satisfy their expectations.

Today the Republic is one of the leading regions of the Russian Federation. Those institutions that have been created in the republic make investors feel comfortable. All conditions are met for the implementation of projects in Tatarstan. And investors should understand that their issues are our issues. The best example we have is the experience of our partners with whom we have been working for many years. The Republic of Tatarstan is open; Tatarstan is ready to work in any direction with any investor, with any country, if there is an interest. No company has been disappointed in our republic. Tatarstan is focused on the development of cooperation with the world's leading companies, in the implementation of our ambitious projects. Welcome to Tatarstan, Welcome to Universiade!