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Interviews

24.02.2015

The moment of truth (Rustem Khamitov's interview to the magazine "Expert-Ural")

Rustem Khamitov, the Head of Bashkortostan, has aimed the national economy to find new opportunities under deficiency of credit resources.
The head of the Republic told the magazine "Expert-Ural" how the economy should work during the crisis and which key points of  management should be highlighted to use the entire potential of the republican manufacturing complex.

The lucky one is one who works

- Mr Khamitov,  a few days ago you have discussed economic circumstances and government support measures with representatives of national big business in private. What is the tone of the business community? What kind of help does  it need?

- We have a constant dialogue with heads of the largest enterprises of the Republic and their major shareholders. Many of them have my mobile phone and email address: we solve many operational issues together. It has a sense, because big business is the backbone of the republican economic base. We have about 50 companies, which annual turnover is more than 5 billion rubles. 70% of tax revenues are formed by them.
Both big business and the business community work well, but now they are biding their time. They need moral support from the authorities as well as clear rules of economic activities, reducing  the administrative pressure and the stability of social relations. And, of course, they need an attention. Business reacts quickly to fair deal.
We have, as in other subjects, formed a government commission for sustainability of economic development. That is sort of the anti-crisis staff. We agreed with the business community to cooperate through the staff.

- At a meeting with Vladimir Putin in the end of December 2014 you emphasized that following the results of 2014 Bashkortostan is in the so-called "green zone" upon 12 of the 13 indicators for which the Federal government assesses the subjects of the Russian Federation. What does it mean? Did the Republic manage to maintain the pace of development in a crisis? Or was it a result of "safety bag" in the form of stable industries like petroleum refining and chemistry? Are the GRP index in 103% and increase of income by 6 - 7% compared to 2013 possible for you?

- Bashkortostan is a strong region with developed industry and agriculture, with a diversified economy, and it would be weird for us to have low development indicators. Although many people think that only oil industry saves us. It is not true. The lucky one is one who works. The last four years, we have working actively, have been showing the Republic to our country and the world. We create the conditions for investors, both domestic and foreign. We hold large forums, conferences, symposia, and teach our professionals in Moscow and abroad. In short we try to be modern and to meet the needs of the age. And we have some results. For example, we moved from 20th to 12th place in the list of regions by volume of investment. We also moved from 36th to 13th place in the list of the Russian government by the quality of Executive power and received the award in nearly $ 200 million. The Ministry of Finance annually gives us a rating of "high quality financial management in the region". High credit ratings allow us to loan resources on attractive terms and we do it sometimes. The volume of Republican public debt is one of the lowest among the subjects; it amounts approximately 25% of the annual budget. We consciously conduct the reasonable policy for loans, especially when interest rates are high. It is also important that the authorities of the Republic face the people. And it gives the result too. "We work for people" is the main principle for me and my team.

To rethink the methods


- Many regions focus on the import substitution now. Is it a compulsory measure or a new opportunity?


- I don’t like the primitive interpretation of import substitution, according to which all import products are substituted for all Russian ones without thinking about quality or price. Of course, we cannot do that. But we need to support domestic manufacturers, which are ready to produce modern products after the modernization and technical re-equipment.

We know that our businesses products can be used on internal national market at least by 40 - 50 billion rubles as resources, raw materials, equipment, parts and so on. We don't use inner resources to the full. The goal of our line ministries is to form inter-republican cooperation in the next two or three years. In this sense, I support  state-market governance mechanisms.

- How the incident with Bashneft JSOC influenced the investment reputation of the region? Are you able to finance structures, including sport, which previously received money from the Fund "Ural"?

- Reputation of Bashkortostan was high and remains the same. Investors are interested in us. Last year, the increase of investment was about 104%. As for Bashneft, no incidents with privatization in the Republic had such a scandalous reputation. The seizure of state property, which took place in 2000's, affected the people of the Republic. Thus the recovery of Bashneft to the state became the act of justice for citizens. Especially because a part of oil company share holding was transferred to the control of the government of the Republic in accordance with the instructions of Vladimir Putin, the President of Russian Federation. Bashneft is not just a company, but a symbol of Bashkortostan. Of course, people are very grateful to the President for this decision.

We can do it

- What is the situation with the preparation for the SCO and BRICS summits? Are there any unforeseen circumstances or everything goes according to the plan?

- In two years of preparation for the summits in Ufa private structures have built seven new hotels of world famous brands such as Hilton, Region, Sheraton. Now last preparations before opening are in process. Renovation of Congress Hall, which will be venue for meetings, comes to the end. As for the comfort, space and technical equipment it will be among the best facilities in Moscow, St. Petersburg and Sochi. Ufa has a new international airport terminal with high acceptance rate; it was built by Republic. Aerodrome complex was significantly upgraded, using federal budget funds. The Nesterov’s Bashkir Art Museum, Bashkir State Opera and Ballet Theatre and "Bashkortostan" music hall were renovated and they already work; here, members of official delegations and guests of the summits will be able to see cultural events. To make it short, Ufa will have new look for summits. I control each phase of preparations in person. It is a strategic project for us, which will have influence in the course of decades. At this time Ufa will be the "calling card" of Russian Federation. From 8 to 10 July a few thousand visitors come in the Republic from countries, whose population together is a third of the Earth population. It is a great responsibility. The republican expenses for this event is quite modest, generally we have enough developed infrastructure to host the summits.

As for organizational part, we have introduced proposals to expand the discussions between the participating countries at the regional level, as well as to conduct the first forum of small and medium business of the SCO and BRICS regions on the sidelines of the summits. Each time, when I speak at the foreign forums to potential investors, I say that the most optimal form of cooperation between the SCO and BRICS regions and countries is the model "R2R" (RegiontoRegion). That is the format we want to develop on this forum. And businessmen will have the opportunity to establish business contacts that can result in potential common projects. The President of Russian Federation supported this idea, especially because it will not cost very much.

- What forecast can you make for 2015?

- It will be difficult. It is a fact. But the country and its subjects will cope with the difficult economic situation. Russia's development is unstoppable. Everyone should remember it: both the inhabitants of the country, and our allies, and opponents. I'm an optimistic and confident that our country will develop and prosper.

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