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Russian Industrial Production – Moving Up the Value Chain

Russian Industrial Production – Moving Up the Value Chain

At SPIEF 2016, the participants in the panel session ‘Russian Industrial Production – Moving Up the Value Chain’, discussed strategic aspects of developing Russian industry. Representatives of major companies took part in the session: Philip Morris International, SIBUR, Uralkali, the Kaskol Group, United Aircraft Corporation, RUSAL.

Moderator: Charles Robertson, Global Chief Economist, Renaissance Capital

The session participants noted, among the key factors of industrial growth, the need to improve technological regulation and the business credit system. In their opinion, one driver of industry could be investment in infrastructure construction, giving an impetus to many types of production.

Viktor Evtukhov, Deputy Minister of Industry and Trade of Russia, said that, in Russia, non-commodity exports had gone up by 6% and those of goods with deeper processing by 7.5%. Mr. Evtukhov stressed that the problems of industry, export and value added are the ones in which a transition needs to be made from macro-economics to corporate policy. For an increase in GDP, value-added needs to be grown, Mr. Evtukhov stressed. Technological competences need to be raised, a differentiated approach elaborated to supporting industries, relying on separating out individual sectors. A financial incentive instrument is already in operation in Russia – this is the Industry Development Fund. In the long-term, we will see development of the food industry, mineral fertilizers, agro-industrial and venture spheres. As for traditional industry, the demand is stable but might drop in the future. For this reason, new types of product need to be developed in this sphere and restructure the sector. Mr. Evtukhov named Severstal and SIBUR Holding as examples of companies going in this direction.

State Duma Deputy and President of the National Research Institute of Economic Strategy Elena Panina spoke about the need to learn to seek ways towards innovations, beginning with education. She noted that, in this area, certain achievements have already been made: the competition for places in technical higher educational institutions has reached that for places in humanitarian ones. In order to help industry, Ms. Panina believes, project finance should be developed and collective use technological centres set up to help put inventions into serial production.

Vladislav Soloviev, RUSAL CEO, believes that price competition is a thing of the past and that quality competition has come to the fore. To support industrialists, the state should improve the normative regulation and financing, allow the regions more flexibility and lighten the tax burden.

Dmitriy Konov, Chairman of the Management Board, SIBUR, expressed his opinion that development of production depends primarily on industrialists themselves and not regulators or the macro-environment. He stressed that SIBUR was creating materials only if there was a demand for them, that is, it follows the basic market principles.

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