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00:18 | Aug 12 | 2011

The Development of External Economic Relations of the Sakha Republic

According to the data provided by the regional office of the Federal State Statistics Service of the Sakha Republic, the region’s foreign trade turnover reached $3323.6 million in 2010 which is two times higher than the previous year. The economy of the Republic received a total of $1336.6 million of foreign investments which is 19.6% higher than in 2009. 

The volume of foreign trade in the Far East Federal District amounted to $1.6 billion in 2009 which is a 25.9% decrease in comparison with the previous year. The largest shares of foreign trade in the Far East Federal District belong to the Sakhalin Region (50.4%), Primorsk Territory (23.7%), Sakha Republic (Yakutia) (9.2%), Khabarovsk Territory (8.9%).

Foreign investments brought to the Far East Federal District by regions: Sakha Republic – 13.7%, Sakhalin Region – 70.6%, Chukotka Autonomous District – 11.4%.

Economic specialization of Yakutia

Focused resource-oriented specialization of the national exports still remains to be characteristic of Yakutia.

The main problems of exporting companies are:

– high tariffs for transportation, the distance from transport services;

– complicated procedure of customs clearance;

– lack of information about foreign markets and customers as well as channels to promote products.

The question of opening a specialized customs post in the Republic is pressing for further increase of sales volumes of the diamond complex products.

The main problem of export sales in the coal industry is low competitiveness due to high transport component of production costs. To resolve this problem railway tariffs for transportation of coal need to be reduced and the existing coal terminals of the Far Eastern ports should be modernized.

Sales of industrial wood and timber outside the Republic including exports is anticipated in small amounts as the absence of railway on most of the Republic’s territory excludes the practicability of development of the forestry and woodworking industry on a large scale. River and sea transport delivery is considered optimal. But due to the climatic conditions water transportation is exercised only once a year which also limits the volume of deliveries outside the Republic.

High tariffs on transportation of timber influence the profitability of forestry products sales outside the Sakha Republic (Yakutia). Exceptional tariffs for transportation of timber by rail as well as provision of a discount system for transport by water need to be implemented to increase exports of timber.

In the area of promotion of agricultural products, namely: reindeer products, leather goods and furs, fish products, it is necessary to solve the existing local problems and come forward with an initiative to resolve them at the federal level.

There has been a significant decline in production and insufficient sales volume of reindeer products. In this regard at the regional level there is a need to address the issue of uncontrolled export of reindeer antlers by individuals and organizations without a license and using financial schemes that allow tax evasion thereby reducing the purchase prices of importers.

Priority reindeer husbandry development areas are the creation and introduction of innovative technologies, the production of dietary supplements and drugs. It is therefore necessary to develop a comprehensive marketing strategy to promote the products of reindeer farming.

The main problem in the area of export sales of animal products (leather, skins, furs and fur and skins raw materials) is the complexity of handling the exportation of these products in the customs and regulatory authorities. To enter the world market in fishery products sales it is necessary to upgrade the existing facilities to meet the requirements for quality management systems.

In general, when selling local goods to foreign markets the main problems are the poor transportation infrastructure, high transportation tariffs, and complicated procedure of customs clearance.

Goals and priorities

The long-term perspective aim of foreign economic activity of the Sakha Republic is the formation of new export-oriented industries (export of new products and services) and achieving global competitiveness of manufacturing industries and service sectors such as:

– the formation of stable relations between Republic and foreign companies with access to foreign markets;

– strengthening the positions at the commodity markets with high level of processing, transforming the Sakha Republic into the largest exporter of goods and services associated with the production, transportation and processing of diamonds, natural gas, petroleum and iron ore;

– attraction of advanced foreign technology and investment to manufacturing industries for their technological upgrading and competitive growth;

– improving the structure of exports, diversification of export services list, including by means of high-technology products and services in tourism and information technology.

External economic activity being an important tool which regulates the inflow of foreign investment will occupy an increasingly important role in the implementation of industrial policy of Yakutia.

The priority directions of foreign economic activity are:

I. Improving the investment climate. Attracting investments to the priority projects for socio-economic development of the Sakha Republic;

II. Improving the foreign economic relations and mechanisms of international and interregional relations of the Republic;

III. Creating favourable conditions for the formation of the modern infrastructure of foreign economic activity, business development, expansion of export markets;

IV. Stimulation of foreign economic activity in the region, providing financial support to export-oriented enterprises;

V. Scientific and methodological support, personnel training and skills development of export-oriented industries’ employees.

In order to create a favourable investment and foreign trade climate and promote a positive image of the Sakha Republic in the world it is planned to strengthen the existing relationships with international organizations (UNESCO, the Northern Forum and the Association of Northeast Asia Regional Governments).

Recognition of cultural, spiritual and natural heritage of the Republic by the world community will help address the socio-economic development issues of the region. In this regard, close work with UNESCO on inclusion of the Lena Pillars Natural Park into the UNESCO World Heritage List will be continued as well as the formation of new nominations to the UNESCO List of Intangible Cultural Heritage and the UNESCO Cultural Heritage List.

To do so it is important to intensify scientific cooperation through programs of the International Union for Conservation of Nature and other inter-regional and international projects.

Cooperation in the field of innovation and energy and resources saving technologies are of interest and that is why the participation of enterprises and scientific organizations in international fairs, conferences and forums is planned.

Russia’s accession to the WTO will have a positive rather than negative effect on exporters of Yakutia. Facilitating access to foreign markets will increase the number of independent export supplies by enterprises; the reduction of importing tariffs will reduce the price of imported equipment thus improving the quality of local goods.

As a result of such activities it is expected to have an increase in economic efficiency of export of the Republic characterized by:

– profitability of production when marketing externally;

– extra profit for sales in foreign markets compared to sales in the domestic market;

– optimization of the territorial structure of exports, its correspondence to the geography of the external market outlets;

– increase in use of productive capacity of the Republic when exercising the export activity;

– improvement in branch-wise structure and industry-specific structure of exports, increasing the share of products with high added value.

Minister of Federative Affairs and External Relations of the Sakha Republic Valery Maximov


Reference

Minister of Federative Affairs and External Relations of the Sakha Republic Valery Maximov

Valery Maximov was born in the village of Berdigestyah in the Gorny District of Yakut Autonomous Soviet Socialist Republic on August 16, 1976.

In 1999 he graduated from the Financial and Economic Institute of the M.K. Ammosov Yakutsk State University with a degree in management.

Work experience

In 1999 he became a research scientist of the Academy of Sciences of the Sakha Republic (Yakutia).

1999-2000 – Leading Specialist, Department of Economics (energy and mineral reserve base) of the Ministry of Economy and Forecasting of the Sakha Republic.

2000-2002 – Chief specialist of the Department of state assets management under the Government of the Sakha Republic.

2002-2005 – Head of Oil and Gas Department of the Ministry of Industry.

2005-2007 – Deputy Minister of Industry of the Republic.

2007-2010 – First Deputy Minister of Industry.

Was appointed as Minister of External Affairs of the Sakha Republic by the decree of the President of Yakutia in October 2010.