Midkhat Shagiakhmetov: ‘Tatarstan’s economy is starting to recover’
The republic’s economy minister reports on a positive trend, however, the region hasn’t reached pre-crisis numbers yet
After the coronacrisis severely hit oil production, petrochemistry and mechanical engineering companies and energy of Tatarstan in the first half, Tatarstan’s economy began to recover in July, though there is a way to reach pre-crisis indicators. The republic’s Minister of Economy Midkhat Shagiakhmetov said about this during a live transmission of the programme Tatarstan Online on social media. The head of the economic sector of the Tatarstan government also commented on who needed a new package of supporting measures for businesses, what sectors benefited from the pandemic, why he saw e-commerce as the future and how the republic would gradually get rid of oil dependence.
Who was hit during the pandemic the most
During the live transmission of Tatarstan Online programme, the republic’s Minister of Economy Midkhat Shagiakhmetov said how the coronacrisis affected large and small businesses of the republic. According to him, the fall in oil rates in the case of Tatarstan overlapped with the effect of the pandemic that hit the economies almost around the world. As a result, there was registered a decline in production, first of all, in the oil industry in the last seven months.
At the same time, the pandemic led to the closure of borders, which broke a lot of production chains. As a consequence of the fact that entire countries closed for quarantine and the world demand for products decreased, production volumes in Tatarstan’s petrochemistry reduced as well.
Mechanical engineering enterprises and power engineers also felt the coronacrisis, the latter had a domino effect: as a lot of enterprises reduced their production volumes, electrical energy consumption fell as well.
To keep the economy afloat, Shagiakhmetov noted, there were introduced “unprecedented” supporting measures both by Russia’s government and Tatarstan’s government: from preferential to interest-free credit for core enterprises to save the staff.
The minister claimed that the government of the republic didn’t cease its operation even for a day during the quarantine, the agroindustrial complex worked daily as well. Some enterprises of the mechanical engineering sector suspended operation for just a couple of days, resumed the production and learnt how to work in the new conditions meeting all epidemic requirements of Russia’s consumer rights protection watchdog.
Tatarstan’s economy is starting to recover but has a way to reach pre-crisis numbers
“But I can say that we have numbers for the last seven months at our disposal, according to them we can conclude that Tatarstan’s economy is starting to recover,” Midkhat Shagiakhmetov. “We have registered a rise in the food industry, oil refining, in some mechanical engineering enterprises. Both retailing and fee-based services began to recover after the last restrictive measures were lifted. We haven’t reached pre-crisis numbers yet, but there is a trend for growth. In the last six months, despite the crisis investments in fixed capital in Tatarstan have totalled over 209 billion rubles.”
According to him, during the crisis 46,000 small and medium enterprises received tax deferral, over 40,000 entrepreneurs received preferential credit to pay salaries to their workers. Measures aimed at enterprises from affected sectors were taken first for SMEs (first of all, by the federal government). Shagiakhmetov claimed that understanding that even if the sector itself didn’t feel a significant influence of the pandemic, while some companies could have been hit, the republican government had to expand the range of support to enterprises that weren’t on the list of affected sectors.
In late summer, the republican authorities adopted a new set of measures to support businesses affected by the pandemic, the minister said.
Whom the new package of measures for Tatarstan small and medium businesses is designed for
“Today we’ve already stopped using the concepts an ‘affected’ or ‘non-affected’ business, and all Tatarstan entrepreneurs can be up for the new package of measures. The new package is designed to help a business as much as possible to get out of this situation, lend a hand, minimise costs so that our enterprises will reach the previous level of development,” Shagiakhmetov explained. “Both enterprises of the Agroindustrial Complex and processing sector, construction, companies of the real sector of the economy in general can use the new measures.”
The minister reminded the audience that the first supporting measures were aimed at, first of all, saving employment. And according to the register of SMEs as of 10 August provided to the Ministry of Economy by the tax service, these measures helped Tatarstan save the staff in commerce (enterprises of this sector can also count on some supporting measures from the “second package”). There is not a sudden fall in staff in SMEs, claimed the head of the economy ministry. One can see the new package of supporting measures and apply for it on its website: it includes microloans, subsidisation of interest rates, help with product certification and so on. Shagiakhmetov remembered the Tatarstan government subsidising costs on food delivery to clients of public catering enterprises, cafes and restaurants at the height of the pandemic.
“When restaurants and cafes closed, and a lot of people work there, there was a question about what to do. We began to think with our colleagues, the association of restaurateurs how to help. Delivery costs were significant and burdensome for a business. And then we agreed with big services like Yandex to subsidise these costs by supporting cafes and restaurants.”
However, Shagiakhmetov recognised that at the moment SMEs accounted for 26% of gross regional product, which is lower than in European countries “because of the structure of our economy”.
Who benefited from the pandemic: online platforms, delivery services and self-employed people
According to Shagiakhmetov, the pandemic didn’t limit to only a negative influence on the economy. For instance, today Tatarstan has 78,000 self-employed people, not to mention 8,000 who are registered in other regions but decided to work in the republic. And the number of self-employed people even increased during the self-isolation period, the minister noted.
Volumes of online commerce also significantly grew in Tatarstan during the pandemic, the Ministry of Economy registered almost a twofold growth of Tatarstan producers — up to 2,000 enterprises that began working on such online platforms as Ozon.ru. Logistic centres of big online platforms are also built to develop e-commerce. So he reminded the audience that a now just 50,000-square-metre distribution centre of Wildberries began operating on Zelenodolsk industrial site in August, while after the second phase, the centre will occupy 100,000 square metres (the amount of products of Tatarstan manufacturers via Wildberries is estimated at a billion rubles today). The term of delivery of Tatarstan companies’ products is expected to reduce to 24 hours with the opening of the hub.
An Ozon centre is also expected to open in Zelenodolsk again in September, near Kazan, in PSEDA. So, the economy minister noted, the logistic help is closer: “Shelves in federal chains are limited. One can place any amount of any good online”.
5,4 trillion rubles have been attracted to Tatarstan in 10 years
Before the coronacrisis and fall in oil rates hit Tatarstan’s economy, the region remained a leader and had been consecutively improving its indicators for 10 years.
“About 5,4 trillion rubles have been attracted to Tatarstan’s economy in the last 10 years, it is a huge number. Our republic regularly occupies leading places in the regions’ investment climate rating that’s annually made up by the Agency for Strategic Initiatives, which talks about its climate, attractiveness. A lot of big projects have been implemented in the same 10 years, as a result, gross regional product has increased by 28%, the amount of industrial production alone has grown by 38%, the share of processing sectors has risen to 70%,” the Tatarstan economy minister said.
Moreover, growth of economic indicators isn’t an end in itself for the government, Shagiakhmetov noted that a better quality of life of people was the priority, the whole Tatarstan economy is designed for it. Thanks to the growth of the economy, over 50 republican social programmes have been implemented in the last 10 years — from big repairs in schools and health care establishments to the construction of rural clubs, children’s camps and Our Courtyard programme.
Answering questions of social media users, Shagiakhmetov admitted that Tatarstan functionaries also regularly asked themselves when Tatarstan would run out of oil. The programme Life After Oil was created precisely to gradually get rid of oil dependence thanks to which the share of processing plants in Tatarstan’s GRP increased, even projects on innovative products were implemented. This influenced oil production and oil refining as well: the share of oil that is refined outside the republic, not sold crude, after production increased. The Tatarstan government is aimed to increase the regional economy’s diversity, which, according to Shagiakhmetov, shouldn’t depend only on one feedstock.