EXPORT OF THE TOMSK OBLAST IN 2021

 

By Dmitry Shiptenko @ Tomsk Internet Newspaper / Tomskaya Internet Gazeta (gt-tomsk.ru)

 

Export of The Tomsk Oblast in 2021 - where and how

 

According to the data of the Russian Federal Customs Service, in 2020 the volume of export of the Tomsk Oblast have reached $310,15 million rubles against $314,03 in the previous year. This means that the expected - and logical, given the circumstances - crash in the volume of exports didn't happen. Actinve support tools and possibilities of increasing the exports have become the topic of another round table organized by Tomsk Internet Newspaper.

 

Eduard Belyaev, advisor to the rector of the TSU “Eurasia. Expert policy of Tomsk residents before and after COVID-19. Perspectives for 2021”.

- Almost everyone I've discussed the topic of exports with forget about the geopolitical background and political situation that have situated themselves among the post-Soviet countries in 2020.

 

And that is a quite an important moment - as you know, in the previous year most of the Eurasian Economic Union (EAEU) members were ablaze and regularly. This includes the coup in Kyrgyzstan, and dissent in Belarus, and events in Armenia which, as we all observe, still drag on, to this day. The situation was calm exclusively in Kazakhstan, where the high-level elections went without any disturbance.

 

If we were to speak about the current year's situation, then Kazakhstan will remain as the most stable direction. This country is one of the few to survive through all lockdowns, even though they have been under a serious pressure not seen since the 90s. Nevertheless, the Kazakh markets seems to be the most attractive one.

 

 

In Belarus, we will observe minor transformations in the political field, at the same time, the ever-increasing pressure of Western sanctions will push it towards a more positive attitude towards Moscow. In particular, we assume that in 2021 almost all the roadmaps that Lukashenko had ignored over the previous five years will be approved.

 

Kyrgyzstan will face a very difficult economic situation associated, first of all, with a serious external debt, about 60% of which falls on China - the fact is that the peak of payments on this debt happens to be in 2021. This is reinforced by a declared political reform - in theory, it should end with parliamentary elections set on June.

 

A political crisis will continue in Armenia and its result isn’t clear yet.

Moving to the topic of export of Tomsk Oblast where, to our great surprise, the results for 2019 and 2020 are practically the same. That is, during the pandemic, the volume of export supplies remained almost unchanged, the same was the top list of markets with which Tomsk companies worked. The first eight positions remained unchanged, and the TOP-3 are still held by China, Uzbekistan and Kazakhstan. In fact, there is nothing wrong with the fact that this picture has been observed for seven or eight years - in fact, this is the very outer comfort zone where we and our products are welcome.

 

The TOP 15 of export goods in 2019 and 2020 differ by about 30% - which indicates attempts to flexibly respond to the situation associated with the pandemic. However, this is a general picture, not indicative for the SME segment. Majority is oil industry; minority is food industry and so on.

 

As for the markets that can be considered promising this year, first of all it is worth Kazakhstan again. The fact is that according to an available statistic, during the lockdown and COVID period, the local construction industry grew by 11.5%. This is confirmed by data on the situation on the labor market - during the pandemic, Kazakh enterprises posted about 100 thousand additional vacancies in the construction sector. Another promising area is food industry; for example, we are talking about the purchase of sugar. Kazakhstani companies very actively bought sugar from Russia, including from the Tomsk region - the reason was the price freeze set by the Russian government So, seeing how global sugar prices are growing, it has become profitable for Kazakh enterprises to buy it in Russia, rather than produce it on their own. Traditionally, good performance in terms of purchases is shown by the auto parts market, the local railway industry (the locomotion stock there is either Russian or Soviet), as well as everything related to the oil industry.

 

In 2020, Uzbekistan has received an observer status in the EAEU. This year, there will be a short respite (the country is awaiting presidential elections), therefore, with a high degree of probability, it will become a full member of the economic union in a year. For many years, the country has been actively purchasing everything related to woodworking in the Tomsk region. Construction’s market is developing dynamically in Uzbekistan as well, that is, prefabricated building structures are well-suited there. At the same time, it is necessary to understand that since 2017, when the country practically opened up to the world, the situation in it has changed quite dramatically. That is, now it is necessary there to compete not only with the Russian companies - local markets are trying to master business from EU countries, the US, etc. Uzbekistan is extremely interesting for everyone and they will step on our heels more and more actively.

 

Thus, the list of relatively favorable markets for 2021 includes Kazakhstan, Uzbekistan, China, India, Vietnam and Mongolia. You can also think about Italy - this is the most pro-Russian country of the EU, and it can be used as a base point from which we can enter markets of neighboring countries. In addition, you can consider the prospects for working with countries such as Egypt, Saudi Arabia, UAE, Indonesia, Azerbaijan and Turkey.

 

In the end I would like to say that the borders are already opening, the process as a whole has begun. At the same time, 2021 will be a transitional and rather “bleak” year, but a breakthrough is really possible in terms of exports in 2022.

 

Aleksandr Zvezdov, the Head of the Representative Office of Russian Export Center in Krasnoyarsk

“Business support measures taken by the state”

- At the end of 2020, the foreign trade information system "Odno Okno" (“One Window”) was launched in Russia - in fact, we are talking about an alternative of "Gosuslugi" but for exporting companies. And, perhaps, it can be argued that for the Russian Export Center, 2021 will be held under its auspices.

 

Within the framework of this platform, almost all services and services for supporting the issues faced by the exporter will be aggregated. But the system is initially focused both on novice exporters who can receive consulting assistance and start-up support, and on already established companies that need to reduce the cost of access to various resources.

 

If we talk about existing and most popular services, then it should be noted that the site is already integrated with systems of the tax service - that is, here you can confirm your zero VAT rate. It also provides a way to work with customs authorities, such as a possibility of filing a customs declaration. It’s also here an application for the issuance of certificates of free sale is carried out, as well as two available subsidies for the transportation of products.

 

The last point is important because now the submission of applications for subsidies can be performed online. Previously, companies were forced to send packages of documents to the head office of the Russian Export Center - it got to the point that some large exporters sent entire lorries of documents to the central office in Moscow. Now applications for a subsidy under government decree No. 496 (we are talking about the transportation of high-tech products, the subsidy is provided by the Ministry of Industry and Trade of the Russian Federation), as well as under Decree No. 1104 (agricultural products, the owner of the subsidy is the Ministry of Agriculture) can be submitted through the "Odno Okno" system, where all necessary documents can be sent in scanned form.

 

All exhibition-related activities have been transferred to the that system as well. Previously, it was posted on the Russian Export Center website, but now all exhibitions and business missions subsidized by REC are also available within the framework of the "Odno Okno". I would especially like to note that the first offline exhibition in 2021 is already being prepared - the "Big Industrial Week" is planned for April in Uzbekistan, which means the borders are really starting to open up a little.

 

As part of the service for finding a foreign client, a company can independently place an application and pass a scoring questionnaire. Next, the employees of REC foreign representative offices - and there are 14 of them in total - begin to process this application and select potential counterparties. I would especially like to note the fact that all these services are funded by the state and are completely free of charge for exporters.

 

Speaking about other innovations in the field of state support for exports, it is necessary to return to the topic of subsidiary support. First, the parameters of subsidizing the transportation of agricultural products have changed quite drastically - the state has expanded the list of products subject to the subsidy, and has also made changes to the delivery procedure. It means that before 2021, only the distance between a place of loading and the border of Russia was subject to subsidies, and now (as in the case of the program of the Ministry of Industry and Trade) the entire distance is subsidized in full.

 

In addition, a new subsidy program was launched in test mode within the framework of the Resolution No. 2316 - it concerns specifically exhibition and fair activities. Before, the REC subsidized participation in events included in the closed list, which was formed for a year and a half in advance - of course, changes were made to it, but they were insignificant. And if a company was interested in an exhibition that was not included in this list, then it had to either contact the Export Support Center or pay for participation in this event on its own. The new regulation allows companies to participate in any overseas exhibition or fair and then apply for reimbursement of the costs incurred. The criterion for compensation is the conclusion of a contract following such an event.

 

Also, in 2020, REC slightly changed the line of financial and insurance products, and we hope that this year it will work in full force. In particular, the center has formed “box” solutions aimed at the SME segment - for example, more affordable insurance services for small start-up companies in need of support, as well as an unsecured lending program for businesses just starting their export journey.

 

Marina Glagoleva, Member of the Board of Directors of the “Innovatsionnaya Bizness Gruppa” (Novosibirsk) “Consulting in the field of the foreign economic activity management”

- We have been working on the provision of services in the field of foreign economic activity since 2015. The geography of the project covers the markets of the EAEU countries and the free trade zone of the union, the CIS countries and China. We provide a range of services for the development of strategies for entering foreign markets, organize promotional activities and export-import logistics.

 

In general, we have implemented about 100 such projects, and usually we work with government agencies (although the portfolio also contains orders from private exporters). The company has joint export projects with the Tomsk Oblast - namely with the local Chamber of Commerce and Industry and the regional Business Development Fund.

In my speech, I would like to emphasize the support measures, and more specifically, on what happens to the companies that have received this support.

 

Despite the many years of “raising” exporters - and the same Exports Support Centers have been operating since 2013 - their level of business doesn’t always meet the international requirements. And the problems remain the same - marketing, communication and the culture of negotiation, which is even more obvious online. It was possible to look past some shortcomings “over a cup of tea”, but online everything became severely more apparent.

 

It means that there is a need for an additional extension of support measures scale - it is another matter that as a result, companies develop sort of an addiction.

The most effective types of support in 2020, in my opinion, were acceleration programs from the REC’s “Export School”, as well as some regional programs. For example, working with the Export Center of the Novosibirsk Oblast we have developed an acceleration format for novice exporters – and it concerned those enterprises that didn’t meet the requirements of the current REC programs. However, despite an extensive approach to "boosting" these companies and joint work with invited mentors, as a result, we faced the same problems of lack of motivation and responsibility by companies. And that can only be solved by working together with support infrastructure organizations and private companies - export support practitioners.

 

For example, we can talk about the development of common requirements for participation in support projects, taking into account the general experience. In the regional RECs, starting with 2021, the approach to cooperation with exporters is changing; from mono-products they are shifting to measures of systematic support for individual companies. Sberbank came up with quite an interesting solution - as far as I understand it, their experts constantly are in touch with the companies participating in the business accelerator. We are implementing a similar project as a way to provide support during export deals – if a company already has an export contract in mind, experts from different industries are being connected to it. As a result, efforts are joined: the company is consulted on a variety of issues, while the deal is being audited to determine what the company lacks and what tools it needs right now. That is, the exporter receives all this concurrently, and thus he has better chances of concluding a contract.

 

Alexey Zhuravlev, Product Manager for Global Markets of the Siberian Bank of Sberbank PJSC (Novosibirsk). “Online tools of Sberbank for effective exports control”

 

- Throughout today's discussion, the topic of a pandemic was a cross-cutting theme. In general, it formed two main trends, which we will discuss.

 

The first such trend have become, undoubtedly, market fluctuations, which provoke colossal currency risks for exporters. The second basic trend is the remote format of organizations' work. Building on these trends, we'll look at three tools to improve export efficiency.

 

First of all, we are talking about what you all are probably facing during regular operating activities – of course, it is the conversion of export revenues. At Sberbank, it is carried out by the means of electronic channels. The first such channel is Sberbank Business Online, familiar to many, and the second is presented as a separate terminal - this is a powerful software package called Sberbank Markets.

 

Conversion through Sberbank Business Online is recommended for enterprises with fairly episodic currency sale of purchase transaction – which is about, safe to say, about one transaction a month. A separate terminal is more suitable for businesses and professionals who want to have a better control over the process and manage the exchange rate at which they sell their proceeds. The estimated volume of transactions at Sberbank Markets starts at $1 million per year.

 

By our estimates, the conversion of currency makes up to 50% of the costs of the banking part of servicing foreign economic activity. This is quite a lot, so we are ready for a dialogue on a preferential rate, the provision of online quotes and access to online transactions in terms of currency conversion.

 

The second tool I would like to mention is related to currency risk management. In a nutshell, conversion has a number of limitations - that is, it doesn’t allow you to understand at what rate you can sell your revenues, for example, in a month. It turns out that you know that the money will come to you in 30 days, but you have no way of accurately predicting rate fluctuations - and so, such a limitation can be easily removed with the help of such instruments as a currency forward and a currency option.

 

The third tool allows you to effectively control the currency balances on your current accounts. While these funds are in a foreign currency account, all you can do is place them in a deposit. The rates there are almost zero, all the while you once again don’t understand what the rate will be, for example, in a week. And a tool such as a dual-currency deposit can provide an increased guaranteed income because you effectively sell your right to choose a currency of return of "body" of a deposit to your bank. It’s also implemented in the Sberbank Business Online service, and to conclude such a transaction, only three actions in an online application are needed.

 

In conclusion, I would like to note that these instruments have peculiarities in terms of tax accounting. Accordingly, we provide assistance in resolving this issue - Sberbank has sufficiently detailed recommendations that we provide to the financial services of exporting companies.