Yury Borisov: “Russian industry needs real preferences, not arguments”

What CEOs of defence enterprises dream of

Tatarstan's defence industry expected exclusively fateful decisions from the arrival of Yury Borisov, who rose to the rank of deputy chairperson in the new government. The defence industry, as one of the director generals noted, is ready to start life “with a clean slate” — without debts, delays, and with new contracts. Certainly, they themselves hardly fully believed in this possibility, but still they had been promised preferences for purchases under national projects, preferential loans from the reference bank, the doors were opened for them in the field of localization of power plants, and finally, it was announced that 750 billion rubles of debts were restructured.

But in return, President of Tatarstan Rustam Minnikhanov made promise to Yury Borisov to ensure economic growth of 5% a year — exactly as much as the head of the state, Vladimir Putin, ordered in his address to the Federal Assembly. Achieving growth rates of the Russian economy above the global average (i.e. 3%) should become a key benchmark for the work of our new government, the deputy prime minister reminded. Deputy Minister of Industry Oleg Bocharov, Deputy Minister of Energy Andrey Cherezov, and head of the Agency for Technological Development Oleg Zinchenko attended the annual board meeting of the ministry of industry and trade of the Republic of Tatarstan for the first time. The guest of honour was Chairperson of Promsvyazbank, Pyotr Fradkov. They were accompanied by President of Tatarstan Rustam Minnikhanov and Speaker of the Tatarstan State Council Farid Mukhametshin.

The intrigue with the detention of Director General of Ak Bars shipbuilding corporation, Renat Mistakhov, was successfully resolved just before the meeting. On the eve of signing the loan agreement with Promsvyazbank, he had been detained in Moscow and taken to the Khamovnichesky court, which found no reason to send him to jail. Despite this, the head of the corporation came to the meeting accompanied by the head of the Ak Bars holding company, Ivan Yegorov. Mistakhov joyfully welcomed by Minister of Industry Albert Karimov. It is noteworthy that they arrived almost simultaneously with the leadership of Promsvyazbank.

Yury Borisov: 101% is about nothing

“Why have we come to you?" the deputy prime minister asked aloud. “Tatarstan is in the top 10 economically developed regions, all industries are represented here. GRP — 2,8 trillion rubles. This is almost twice as much as 12 years ago. But at the end of 2019, Tatarstan showed an increase of 101%! It makes us think! If it is 101% in a successful region, what can we say about the rest," Yury Borisov explained the purpose of the visit.

In response, the president of Tatarstan assured that the GRP of the republic will reach 5 trillion rubles in 5 years and with its own revenues of 600 billion rubles. “This money should be enough for us," he assured.

It seems that the deputy prime minister starts a cycle of trips to the regions from Tatarstan to assess “the depth of the decline” in production. A little later, President of Tatarstan Rustam Minnikhanov noted that as soon as Yury Borisov was appointed to the post of deputy prime minister, he immediately called him and set the task to achieve economic growth.

Minister of Industry and Trade Albert Karimov reported on which industries contributed to the growth of the economy. He immediately made a reservation that the traditional leader — the fuel and energy sector — could not show a frantic pace of production increase, as it is associated with OPEC restrictions. According to him, oil companies shipped products worth 603 billion rubles, or with an increase of 100,6%. The maximum growth index was shown by oil refining — 112,7%, he said. In 2019, the republic processed 18,6 million tonnes of hydrocarbon raw materials, which is by 8,6% more than in the previous year. 637 billion rubles of revenue.

Energy showed a little less — 104,3%. The volume of shipments amounted to more than 110,1 billion rubles. The grid system's power plants, including distributed generation facilities, generated 28,88 billion kWh of electricity, which is by 6% more than in 2018. At the same time, electricity consumption in the republic in 2019 amounted to about 30,59 billion kWh, an increase of 1,3% compared to last year, Karimov said. The machine-building complex improved the economy compared to 2018, showing an index of 99% against 92,8%. According to Karimov, the state of the industry was negatively affected by the withdrawal of the American manufacturer Ford from Russia, as well as “the failure to supply ships of the Zelenodolsk Shipyard, to which the supply of components is disrupted”. Consolidated proceeds — 550 billion rubles. For the first time in the last 5 years, petrochemistry has shown the worst results: a growth of 97,8%, and total revenue — almost 300 billion rubles.

Is it better to glue or to nail?

The minister's traditional report was interrupted by a satirical video from the popular Comedy Club show. The screen broadcasted Garik Kharlamov from the scene “Important meeting”, who in a dazed state asks to solve a simple problem before a representative commission. “Is it better to glue or nail the plate?" Garik Harlamov asks.

“Our CEOs are like him. In reality, there are often cases when such issues are solved under the guise of important meetings — to stick or nail a sign," Albert Karimov commented on the plot of the video.

In fact, the video was a parody of the work of holdings, where many Tatarstan enterprises are integrated. “It is clear that once it was necessary to collect corporate structures and ensure manageability. But as it is stated in the Old Testament: a time to scatter stones and a time to gather stones," said Albert Karimov. In his opinion, now “excessive centralization is becoming a barrier that shackles initiatives and prevents movement forward”.

From scratch

Albert Karimov called the creditworthiness of Tatarstan defence enterprises another problem of the industry. He did not disclose the exact amount of the debt. But he noted that

every third manager in the survey called this topic sick. Responding to this, Yury Borisov said that the debts of Russian enterprises of the military-industrial complex in the amount of 750 billion rubles will be restructured:

"750 billion rubles will be restructured for defence companies. Half of them will almost be written off, the rest will be restructured for 15 years at 3% per annum. This is a very serious measure that will give the opportunity to get rid of huge payments to bankers, free up funds for own development," Borisov said.

In his final speech, the deputy prime minister criticized the liberal policy pursued by the previous authorities. “I often engage in polemics with liberals from the ministry of finance and the FAS. What did the WTO give us? Is the imposition of sanctions an element of fair competition?!” he wondered to the approving hum of the audience. “All countries in the world that care about their own national industry do not hesitate to carry out pronounced preferential measures to support domestic producers. Look at what Trump is doing in America. He doesn't care about anything. He works in the interests of their industry. By the way, a bill was adopted 30 years ago: buy domestic thing that focuses on the purchase of its national products. Why don't we do this?" he wondered.

According to him, in a highly competitive environment, it is unprincipled to wait for Western markets to open up to us. “It is only by relying on the domestic market that we can give our industry a foothold, to make it rise, create competitive products, and then, by dominating on the domestic market, we can count on a segment presence outside. There is no other way. Therefore, Russian industry needs real preferences, not arguments on this issue.”

“The defence industry players will understand what money it is.”

Thus, Yury Borisov started talking about changing economic policy, which has recently become a popular topic for discussion and can become something like a national idea.

“That's why we have chosen a very simple path," Borisov continued to explain. “Usually simple solutions are the most effective. We have learned to make products in a particular segment — so it is guaranteed to be assigned to the Russian manufacturer. Neither the second, nor the third, nor the tenth extra, nor price preferences, which are bypassed in practice, nor bans on mixed lots, which again — we are practitioners and know how in competitive procedures, and we have such talented people, they write so well, such requirements can be written that a Russian manufacturer will not come close. Thus, the money will not go to Western vendors and suppliers.

According to him, purchases under national projects are estimated at 6 trillion rubles. “The defence industry players will understand what money it is. 1,5 trillion is the annual state budget," he said.