As Russia integrates into global economy and, in particular, as the process of joining by Russia the World Trade Organization is being finalized, the external economic ties become increasingly important factor, that influences the region’s economy.
Samara Region is one of the largest participants in external trade of Russian Federation. Over many years, the exporting companies continuously put Samara Region to the top ten regions of Russia for export of goods.
According to Privolzhsky Customs Board, the foreign trade turnover in 2007 decreased by 4.9% compared to the same period of the past year and made up 8537.9 MM USD. Meanwhile, the trade turnover with far abroad countries for the reported period made 6549.6 MM USD, which is by 12.8% less compared to the same period of the last year. The external trade turnover with CIS countries in 2007 increased by 35.6% (1988.5 MM USD)
In 2007, the number of foreign economic activity participants increased by 9.7% compared to 2006.
Export
Export of goods in Samara Region in 2007 decreased by 12.3% compared to the same period of the last year and amounted to 6909 MM USD. Meanwhile, export of goods to fat abroad countries decreased by 20.9% compared to 2006 and amounted 5231.8 MM USD, increased by 33% to CIS countries (1677.2 MM USD).
It’s necessary to outline an interesting fact, that import from near-abroad and far-abroad countries grows at almost the same rates, but the situation with export is different: export to CIS countries has grown by 33%, and export to far-abroad countries dropped by 20.9%. Thus, we can see an obvious trend for increase of external trade with CIS countries and decrease of activities in delivery to far-abroad countries. As early as in 2006, with the aim to balance foreign trade we suggested to separate a new target group of partner regions for export development: CIS countries, Africa, Latin America. All in all we can say that this forecast justified itself and this tendency will be the same in 2008.
The decrease of export to far abroad countries was the result of decrease in supply of “crude oil and crude petroleum” (2709 ÒÍ ÂÝÄ document) by 30% compared to 2006. These fuel-energetic goods took the biggest part of export commodity pattern in Samara Region in 2007 – 49.1% (60% in 2006). One should outline that main importer country of Samara fuel-energetic products is China – 53.9% of overall volume of all mineral products, exported by Samara Region. In 2007, the total export of fuel-energetic products by Samara Region to China decreased almost twice – from 3426.1 MM USD in 2006 to 1830.9 MM USD in 2007. The wide-margin leading articles in the structure of Russian export to China are hydrocarbons, oil and petroleum – in the first half of 2007 the share of this product group made up 49.6%, but compared to the same period of 2006, it dropped by 5%.
In export commodities pattern 2007, the following shares still tend to grow: “machinery, equipment and vehicles” (10.9 to 15.5%), “metals and metal products” (7.7 to 11.2%) as well as the total amount of export.
The decrease in export of chemical and related industries products in 2007 by 2.6% compared to 2006 is the result of decrease in supply of “organic chemical compounds” (74.8% compared to 2006), “gum and rubber products” (42.3%), “miscellaneous chemical products” (78.9 K tones in 2006 to 2.5 K tones in 2007). However, the growth of export in this commodities group was seen in “plastics and plastic products” (in 2.3 times), soap, surface active organic agents, detergents” (143.8%).
The export of machinery, equipment and vehicles exceeded the similar figure of 2006 by 24.5%, including the 20.1% increase in export of light vehicles. The main consumers of light vehicles were the CIS members, where Ukraine, Kazakhstan and Azerbaidzhan took the lead.
Export of metals and metal products takes a relatively stable niche on the foreign market. In 2007 overall export volume of this commodities group increased both to near- and far-abroad countries. About 65.6% of the volume was aluminum and aluminum products and 20.6% - ferrous metals and ferrous metal products.
The sales of food products and agricultural raw materials on foreign market in 2007 amounted to 195.3 MM USD and, compared to the same period of the previous year increased by 88.9%. The share of this export category is low and made up just 2.8% (1.3% in 2006).
Gigantic growth of export in this commodities group (74x times) was seen in supplies of “wheat and meslin” (0.6 MM USD in 2006 to 44.5 MM USD in 2007). This was due to increase of the number of countries, that import this type of products (in 2006 – India only and 7 more countries in 2007). Approximately 38% of the food products and agricultural raw materials volume tool alcoholic and non-alcoholic beverages. Also, milk products, oilseed, medical herbs, cacao and cacao products were exported.
In 2007, the main exporter countries of Samara Region were the following: China (29.9% of overall export volume), Ukraine (11.7%), USA (7.8%), Kazkhstan (7.5%), Mongolia (5.6%) and Turkey (3.3%).
The largest exporter countries of Samara Region in 2007 were the following: Yukos-Transservis CJSC, AvtoVAZ OJSC, Togliattiazot OJSC, Kuibyshevazot OJSC, Novafininvest OJSC, Samarsky Metallurgichesky Zavod OJSC, Samara-Nafta OJSC.
Import
As the agreements on entry to WTO develop, the import to the country gradually increases. Over Russia, the import increment rate outruns the export increment rate for the first time during the last years. This trend proves itself over the whole of Samara Region. On one hand – it’s negative, because the Russian export is the one of clearly pronounced raw nature, while import is composed of manufactured and consumer goods. On the other hand, this is positive for small and average enterprises, because overall amount of sales generally increase. In addition, the competition forces them to increase quality and decrease expenses of local manufacturers.
Import of goods and services to Samara Region in 2007 increased compared to similar period of the last year by 47.2% and amounted to 1628.9 MM USD. This was both due to increase of delivery from far abroad – 146.3% (1317.6 MM USD) and increase of delivery from CIS countries – 151.1% (311.3 MM USD).
In 2007, import amount of the “machinery, equipment and vehicles” group increased 2x times compared to 2006, the share of this products made up 56.9% of overall import volume, this is an evidence that the demand for this type of goods stays on the same level. Speaking about the similar period of the last year, the import of following wares increased: equipment and mechanical devices – 2x times, electrical machinery and equipment – 157%, railroad locomotives and rolling equipment – more then 5x times; ships, boats and floating structures – over 13x times. The import of land transport increased more than 2x times, including: tractors – 5x times, car spare parts and equipment – 2.3x times, trucks – 2.9x times. However, import of light vehicles made up 65% of the 2006 level, this is due to both centralization of customs clearance for light vehicles, that does not involve the Samara Region, and due to start-up of new complete cycle assembling manufactures on Russian territory.
The import of chemical products increased by 11.9% compared to 2006. The import volume of this group decreased by 7.6 points and amounted to 17.2%.The import of following goods exceeded the level of 2006: gums, rubber and products (2x compared to 2006), non-organic chemicals (137%), plastics and plastic products (121.9%).
The import of food commodities and farming products increased by 59.9% compared to 2006, due to increase in import of fruit and berries from 1971 tonnes in 2006 to 20819.5 tonnes in 2007, milk and milk products, alcoholic and non-alcoholic beverages (6.6x times and 4.2x times, respectively). The import of frozen fish increased 8.2x times, sugar – 118.5%; oilseeds, medical herbs, forage – 2x times; fats, animal oils – 185%, cacao beans – 133.9%.
Metals and metal products are also a part of import pattern, with increased import volume of 20.5%. The main share of import within this group of products are ferrous metals and ferrous metal products (61.7%) and aluminum and aluminum products (24.2%). The import of copper and copper products decreased and made up 75.5%.
Main importer countries in 2007 were the following: Germany (25%), Ukraine (13.7%), Italy (6.6%), France (4.8%), China (3.6%).
The main importer countries of Samara Region in 2007 were AvtoVAZ OJSC, Tarkett OJSC, Konditserskoye Obyedinenye Rossiya OJSC, Samarsky Metallurgichesky Zavod OJSC, FGUP GNPRKTSE TSESKB-Progress, Kuibyshevazot OJSC, GM-Avtovaz OJSC.
Foreign trade countries structure
In 2007, Samara Region maintained trade relations with 123 countries, among them the major partners were China (24.8% of overall foreign trade turnover), Ukraine (12.1%), USA (6.9%), Germany (6.9%), Kazakhstan (6.4%), Mongolia (4.5%), Italy (3.7%), Turkey (3.3%).
The distinctive feature of foreign turnover countries structure is the fact that for the first time the European Union Countries had given up place to the Asian-Pacific Economic Cooperation countries.
The share of Samara Region foreign turnover compared to turnover in Russia and Privolzhsky Federal Region
The share of Samara Region foreign turnover in Russian Federation and Privolzhsky Federal Region stayed on the level of 2.1 and 20%, respectively.
The trends in external economic ties
One should outline that the amount of goods, manufactured in Samara Region and showing sufficient competitive capability on foreign market, is far from the total. The customs data show that there is a lack of demand for food and footwear, textiles and sewing goods, for a number of construction materials.
Low competitive capability of the manufacturing sector – is the key problem for both Samara and Russian export. The financial support is emphasized among the urgent means of state support, which includes export crediting, warranties for export operations, partial compensation of interest rates for export credits. Specialized organizations were created abroad to realize financial means of export support – export credit agencies, export-import banks. In most cases, the resource base of such organizations is created for the expense of state budgets, as well as for the expense of internal and attracted means.
Thereby, the strategy of Samara Region Government should be aimed towards encouragement of external ties and promotion of Samara Region as an export-oriented and investment-attractive territory. In this regard, the Government of Samara Region plays the role of “goal determinant” of a kind, and at the same time, the guarantor of “game rules” in the complicated and sometimes unpredictable field of foreign economic ties.
It is of interest that the data on export-import flows structure in Russian Federation for 2007 shows that Russia imports progressively more expensive products at progressively larger volumes. The increase of value for goods, imported to Russia, stays one of the main trends in foreign trade. The consumer boom is obvious, it supports the growth of import and stabilizes the Rouble.
For instance
The data for the first half of 2007 over RF: increase of clothes import volume – 214%, footwear – 245%, perfume – 177.9%, cars in monetary volume – 179.7%.
The data for the first half of 2007 over Samara Region: increase of clothes import volume – 220.6%, footwear – 122.9%, perfume – 120.7%.
An indicative example is car import. The volume of car import in monetary volume for Samara Region made up just 25.7% of the first 6 months of 2006. This example proves that local companies tend to operate via large federal car importers – while there is an immense increment of import over the whole country, the Samara Region import drops.
The situation is the same for the food commodities and related raw materials: there is a pronounced dependence on the indirect federal import, at this different positions show different dynamics. One should take into account here that we are speaking about the food products in Samara Region that are identified as international import of Samara region, although according to expertise estimates, the interregional import of food products for Samara Region (not including distributive network data) is about 20% of the overall products import or 4.5% of overall volume of interregional trade turnover. In 2005 the interregional import of food products made up 10.8 Bln RUB with overall trade turnover of 239.3 Bln RUB, and the international import of food commodities made up 2.3 Bln RUB (78.7 MM USD). The international import of food commodities in 2007 made up 139.4 MM USD.
At the same time, one should take into account that main WTO transition period for Russia equals 7 years, within this period current value of custom duty of 11-12% will be decreased by 3-4%. Main risk groups are food, clothes and footwear, household appliances, computers, medicine and medical equipment. With regard to this situation we should outline again that the organizations of Samara Region should spend the nearest time on technical re-equipment of manufacturing capacities with new equipment and technologies.
Samara Region, for the reason of its geographic location, social-economic features is a kind of a test market for new products and services. This could attract both modern mobile foreign partners and advanced technologies and projects.
In addition, we consider it necessary to turn your attention to climate change factor in Europe. Due to increase of risks, there exists a possibility of complete transfer of production outside the European borders, meanwhile, the European part of Russia has a high competitive capability from the standpoint of business climate and amenities.
At the end of the day, the main goal of Samara Region Government in the area of foreign economic ties and foreign investments is to determine the concept of direction and terms of development and to give the corresponding identification signals to the business.
Head of Department S. Subbotin
