Tatarstan reprinted from Euromoney magazine, December 2007 Interview “We can!” Tatarstan’s President Mintimer Sharipovich Shaimiev talks to Euromoney about the republic’s economic development, its plans for the future and its determination to succeed Please tell us about the specifics of Tatarstan’s Mintimer Sharipovich Shaimiev, President of Tatarstan economic development and about the priorities for 2008? total of 1,153 people have been sent for training to the best univer- The main objective of Tatarstan’s development strategy is to sities and centres of science in the Russian Federation, the US, UK, achieve a European standard of living for the population. We France, Switzerland and Germany. aspire to build a democratic society on the basis of a competitive Another feature of our economy is cluster development. We set market economy, organically integrated into the world system. out the strategic task of developing four main clusters: oil/petro- Tatarstan is capable of achieving this aim. I say this because the chemical, car-building, aviation and power production. Here the results of social and economic development in 2007 bear witness most effective industrial complexes have been formed by various to the dynamic development of the republic. enterprises with a single sector orientation. Today our industrial production is growing at a rate of slightly less We pay great attention to developing small businesses. By 2010, than 9%. Across the Russian Federation the rate is 7 %. The value of we intend to raise the small business share of total regional product industrial output by the end of the year will be little bit more than to 30%. This may not be a high level compared to Western Europe Rbl 700 billion. Growth of 1% means €200 million, which is the value or the US. But as recently as the beginning of the 1990s small busi- of production at the Kazan helicopter plant. And 10% of growth is nesses barely existed in our country. €2 billion a year. The cost of our growth is very high. As to prospects for 2008, I would like to report some figures. Growth Our economic model involves strategic planning and a complex of total regional product is predicted at 7%. Industrial production approach to goal-setting and task-solving. We proceed from should grow a little bit faster - by 7.5%. It is a distinctive feature the fact that solving the major problems of economic and social of the structure of our economy. The highest rates of growth are development demands acceptance of complex measures and a expected in producing vehicles and equipment (over 18%), manu- sufficient period of time. A principal tool of government in Tatarstan facture of petrochemicals and finished metal constructions (11%), has become a targeted/planned approach. and chemical production and electric equipment manufacturing Here I would like to mention the second major element of the (10%). Tatarstan way of development - innovation. Serious organizational Now, we are working on the programme for the development and changes in forms and methods of economic management are be- placing of the productive forces of Tatarstan on the basis of the ing implemented in the republic, aimed at a qualitative increase in cluster approach until 2020 and for the period to 2030 within the efficiency. limits of which priorities will be offered, development scenarios of Formation of the republic’s innovation infrastructure is under way. the competitive advantages of the republic developed and eco- The integral investment system has been founded, of which the nomic regions inside the republic formed. central elements are four specialized investment funds (stabiliza- The primary goal of the programme is complex and effective tion mortgaging/insurance; investment/venture; regional fund for development of territories. One of the key, strong elements of the investment in small scientific and technical enterprises; IT sup- programme will be the development of the Kamskoye economic port fund). Their objective is the financing of effective innovative region. In the long term this region will become a basic locomo- projects. The network of 14 techno-parks is already functioning. I tive of economic growth in the republic. Every decade the total want to emphasize that all elements of the infrastructure created territorial product will be doubled here, and by 2020 the volume of by us are operating successfully. industrial output will have increased more than six times. Especially close attention is given to the formation of a holistic Big hopes are placed on development of the automobile cluster system of innovative education. In 2006, a programme of grant and its leader JSC Kamaz. The net profit of the company in 2007 is support for talented students and the best teachers started. expected to be 2.6 times that of 2006. The company will carry out Financing has been allocated from the budget of the republic. A a programme of re-engineering and develop cooperation with ii advertising feature Overview leading world producers of auto components. At the opening session, Jean Lemer, president of the EBRD coun- In 2006, jointly with US company Cummins, the enterprise for engine cil, noted that Tatarstan represents the future of Russia and the production was founded. Created together with German com- future of the EBRD, which is paying increasing attention to invest- pany Zahnradfabrik, the enterprise for assembly, and subsequently ment outside Russia’s two largest cities. I myself, as head of the production, of automatic transfer gearboxes is successfully operat- republic, in my welcome speech remarked that holding such an ing. It is planned to achieve production of up to 86,000 units a year event is an excellent opportunity to learn high technologies, gain with local content of up to 90%. In December 2007, an agreement experience of financial management and to present offers in the was signed with German company Knorr-Bremse on creating a sphere of economic and investment cooperation to the interna- joint venture to produce brake mechanisms. tional financial elite. With significant growth in the economy, demand for power re- A lot of contracts were signed during the meeting, among them sources is growing. Alongside energy-saving programmes, we pay the credit agreement between the EBRD and the municipal uni- great attention to accelerated modernization of the power indus- tary enterprise Vodokanal on financing for modernizing Kazan’s try. We plan by 2020 to commission new highly effective capaci- water supply systems. The contract was signed during the interna- ties in amount of 5,000MW. We understand that such a grandiose tional investment forum ‘Russian regions - strategy of growth’. The renovation of power supply capacity cannot be realized without cost of the project is estimated at Rbl 500 million, of which Rbl 350 attracting external investments and strategic investors. In develop- million is allocated by the EBRD. ing the wholesale market for electricity, the conditions for attract- Other example of cooperation between Tatarstan and the EBRD ing foreign investment have been created. We are ready for a include the purchase by the EBRD of 28.25% of the shares in joint- dialogue. stock commercial bank Spurt. The EBRD is planning to develop more actively a system of credits for small and medium enter- In 2007, the annual meeting of the European Bank for prises in the republic, simultaneously increasing terms of credit- Reconstruction and Development (EBRD) took place ing, and to participate in financing purchases of equipment by in Kazan. What is its significance for the republic? Tatarstan companies. It was a great honour for us to receive such a high-ranking interna- tional forum. The sessions of the EBRD council of managing direc- How much does the economy of the republic tors are held in the best-known, most prosperous cities in the world. depend on the petroleum industry and the price of The fact that this took place in Kazan, capital of Tatarstan, had oil? both economic and political value. Official delegations from the Tatarstan is one of the oldest oil-extracting regions in Russia. For 64 bank’s shareholders, 61 countries and two international organiza- years, 3 billion tons of oil have been extracted from the republic. tions, the European Investment Bank and European Commission, At current development rates, proven reserves of oil will allow this came here. All in all, participants in the EBRD events came to 2,364 to continue for at least three decades. In addition, pilot projects people from 69 countries. From the Russian Federation, representa- have begun to develop recovery of oil from bitumen deposits, tives of government and business also took part. which could provide up to 7 billion tons. Raw materials account for 31% of our gross re- gional product. It is clear that the present favour- able conjuncture in the market for raw materials will not exist for ever. Therefore, 10 years ago we began a programme to increase added value on extracted hydrocarbons. Our main efforts are di- rected to deepening oil refining. And, if in 2006 we increased the volume of oil recovery by approxi- mately 2%, production of petrochemicals grew by more than 20 %. More than Rbl 130 billion is being invested in construction of new oil process- ing and petrochemical production in the city of Nizhnekamsk, with capacity to refine 7 million tons a year of oil. Tire production is progressing, with JSC Nizhnekamskshina providing about 31% of the tires produced in the Russian Federation. An investment project on tire production using Pirelli technology has been completed successfully. So we are gradually abandoning our raw material export orientation and creating an innovative, Prime minister of Tatarstan Rustam Minnikhanov, EBRD president Jean science and technology-based economy. It is our Lemierre and president of Tatarstan Mintimer Shaimiev during the EBRD annual meeting in Kazan, May 2007 strategic choice.