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25.01.2016 13:24:00

Rustem Khamitov's interview for Russian Business Guide

Over the last year, Bashkortostan has been in the focus of the international and Russian media. The heads of the world's leading countries gathered last summer in the capital of the Republic to discuss the most important geopolitical issues during the summits of the Shanghai Cooperation Organization and BRICS, and they also truly appreciated the well–known hospitality of the Bashkirs. In the fall of the year, Ufa hosted the The First Small Business Forum of the SCO and BRICS Regions organized on the initiative of the Head of the Republic. In the following interview, the Head of Bashkortostan Rustem Khamitov speaks on joint projects with the BRICS countries as well as on economic benefits the region received from aforementioned events. 

Mr. Khamitov, how do you assess the results of major international events held in Ufa? What did they give to the Republic?

One can say that in terms of their international awareness and ability to undertake major international events, Bashkortostan and Ufa made not one but a few steps up. Fifteen heads of state came to Ufa during the summits and praised both the level of organization and investment opportunities in the Republic. Everyone, without exception, liked its nature, landscapes, scenery, liked Ufa – a beautiful, modern city with great potential.

I remembered the words of the President of Brazil Dilma Rousseff. As she came down the boarding ramp, she said, "Such a fresh air, it's so easy to breathe here." It is worth noting that it is easy to breathe here not only for the guests to the Republic and the tourists, but also for the business community and investors. We created optimal conditions and comfortable working environment for doing business in Bashkortostan, including big tax breaks, low administrative barriers, individual support for major investors. The participants in the SCO and BRICS regional forum, which we hosted in the autumn, unanimously noted this. The parties actually started to consolidate the agreements reached by the heads of state during the Summits, but now at the level of small and medium-sized businesses, at the regional and provincial level of the countries constituting these international organizations. Hundreds of new ideas, joint projects and R2R cooperation agreements can be regarded as the main outcome of the forum.

Let us talk about Republic's joint projects with the BRICS countries. As we know, some of them are already being actively implemented. For example, Indian corporation Hindustan Aeronautics Limited (HAL) started joint production of Su-30 jet engines together with the Ufa Engine Industrial Association (UMPO). How do you assess the results of this partnership?

India is a major partner of the Russian Federation in aircraft propulsion engineering and helicopter engineering. UMPO cooperation with Indian colleagues has been going on for several years. Ufa propulsion engineers launched licensed production of Su-30 jet engines based in Koraput, the city where HAL Corporation's branch is located. Supported by the UMPO, Indian experts already mastered four assembly phases, now the implementation of the fifth phase proceeds with the support of the Ufa colleagues as well. They have already shipped 280 sets of engines, and this work continues. Another production started in Lucknow, where Indian partners work on fuel automation systems assembly. In addition, the Indian partners propose to jointly develop fifth–generation jet fighter engines, and they are willing both to fund the project and to participate in the designing, assembly and testing. It is a good prospect. In turn, thanks to the cooperation with India, our company will have stable long-term orders.

We plan to explore other areas of cooperation. We have already received an offer from the Indian business on the construction of new plants, the production of fertilizers and pharmaceutical components in Bashkortostan. In the near future we will sign a Bashkortostan-Haryana cooperation protocol for strengthening our interregional relations .

How is the bus manufacturing project in cooperation with a major Brazilian passenger carrying vehicles manufacturer Marcopolo advancing?

In my opinion, this is one of the most successful and effective projects. Marcopolo and KAMAZ have established a joint venture in Neftekamsk to manufacture Bravis buses. Ninety percent of components were localized as part of the import substitution program. Today our partners already assembled 400 small buses, which have been shipped to every corner of the country – from Kaliningrad to Sakhalin. CIS and other neighboring countries also show interest in them – several buses are already rolling along Kazakhstan roads.

After the first production lot was delivered, I personally tested Bravis as a passenger. I really liked it – comfortable, stylish and modern. It can be used as a school bus, in suburban areas and for city routes. And so it happens in reality, actually. Now Ministries of Education in several regions have already applied for the new buses.

In 2016, the company plans to expand the geography of sales and reach full production capacity – about 3 thousand buses a year. Of course, given the difficult economic situation, it would be difficult to accomplish, but such a goal has been set.

As far as I know, Neftekamsk automotive factory is realizing another collaborative project, but now with the Republic of South Africa. Tell us about it in more detail.

Indeed, we have launched a project to localize the production of articulated dump trucks from the South African company Bell at the NEFAZ plant. This special equipment is used in the mining industry. In the first stage the engineers from Neftekamsk have been trained in South Africa, and then they assembled a prototype truck under the supervision of South African experts. This first truck was presented during the BRICS summit. Now the car is being tested in one of the local quarries. Russian potential customers show interest in such dumpers, and we estimate the market demand at 200–300 cars per year. I am sure that the first production lot will be put into production very soon.

We have also outlined good prospects for cooperation with the South African Limpopo province, where the mining and agricultural industry is very developed. We offer our partners to create a promising business model in Limpopo – that is, to establish the priority development area. Our Republic is ready to export industry, agriculture and management technologies. This mutually beneficial cooperation will deliver tangible results in a very short time.

Taking the example of mining industry, our oilfield services companies can operate effectively in South Africa because they have unique competence in the field exploration and development, water conditioning and purification. I am sure that they will be in demand by our South African colleagues.

The cooperation with Bashkortostan universities can become an important component of our partnership. In the first instance, this applies to our Petroleum and Aviation universities that are willing to not only to teach students from South Africa, but also to provide scientific support to industrial projects.

In the case with the Republic of South Africa, the main question is the logistics and transportation. We are currently working on this problem and looking for ways to solve it.

Today, Russia is increasingly looking to the East, especially to China, regarding it as a major strategic partner in the Asia-Pacific. How does Bashkiria deal with this “trend for China”? Do you have any projects implemented?

During the summit, I was lucky to meet with President Xi Jinping. He is a person of high culture, very profound, intelligent, and he is no stranger to lyricism too. I liked the words he said at the airport after the summit: "We discovered in Ufa a gold mine of friendship between China and the Republic of Bashkortostan." Such a beautiful metaphor aptly characterizes the business relationship between Bashkortostan and the People's Republic of China.

Contacts with China provinces have been intensified significantly, and mutual visits of business circles have become commonplace. There have been about fifteen meetings and mutual visits only over the last year. Apart from Chairman Xi Jinping, delegations from Jiangsu, Liaoning, Sichuan and Anhui provinces have been visiting Ufa. Our entrepreneurs are also working on various options to explore the Chinese market during their visits to this country.

Eleven inter-governmental and inter-municipal agreements between Bashkortostan and different provinces of China have between put into effect. And that's not to mention the agreements and contracts directly concluded between our enterprises, educational and scientific institutions and their Chinese partners. There are more than fifty such contracts.

A dozen Bashkir-Chinese joint investment projects are in various stages of implementation. Among them are construction of Ishstal steel rolling mill, production of heavy drilling rigs in Ishimbai, building of greenhouses and construction of wheat deep processing plant. It means that in three or four years several joint ventures should start running in the Republic.

Here is another example. Together with our Chinese partners, we are discussing the prospects of copper and zinc tailings reprocessing, because these tailings contain many useful metals, such as zinc, copper, silver and other components. However, we have no essential technologies. Well, China does have them.

Kuyurgazinsky District began construction of the plant for ultralight civil helicopters production. The first samples were assembled in Kumertau and have shown good results in various exhibitions. The interest in these machines is huge.

Recently, we began extensive work on exporting Bashkir honey to China. Our manufacturers shipped more than hundred tons of high-quality honey to China in the past year alone. We are ready to discuss supplying our Chinese customers with Bashkir honey bees for breeding. Well, this is another famous brand of ours. By the way, Mongolia has purchased several hundreds of our bee colonies in recent years.

We are participating in Silk Road Economic Belt projects – primarily, in transport infrastructure projects. The international transport route "Europe – Western China", which is under construction now, will be running through the territory of Bashkortostan. This will not only increase Bashkir-Chinese trade turnover but also significantly intensify contacts between China and Bashkortostan.

How significant will be the economic effect from such cooperation?

I would like to say that working in BRICS opens up great opportunities for the regions and solves many important problems. It means the attraction of major investors, the access to international markets. We understand that we need to adjust the legislation, standards, to work out the logistics and do much more. This is a huge work which is only beginning now. Businesses of our countries complement each other, and the cooperation in various fields already renders new quality. It opens up new ways of economic growth. 

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