Stepping into the XXI century

MAIN EXPORT ITEM

Anatoly Aleksashin,
Deputy Chairman,
St. Petersburg Committee
for Economy and Industrial Policy

        For a long time the main scope of our home exports were raw materials - this is characteristic of weak and developing countries. Nevertheless in the last few years the Petersburg industry, notwithstanding a deep recession, has extended its activities on the world market, offering the products of advanced technologies. The current list of Petersburg export items is headed by machine construction products. It made up 60 percent of our city's output in 1998.
         Our city exports various vessels for the merchant marine as well as military craft and various electronic equipment: turbines, generators, electric motors of different types and capacity, tractors, cranes, machine-tools, and the like. Moreover, a significant share of exports is made up of ferrous and non-ferrous metals as well as of fuel, oil products, and timber.
        St. Petersburg's industrial products are purchased by the most technologically developed countries. We sell our equipment to German automobile plants, and the US and Japan purchase our freezer generators.
        Today the world market is being penetrated even by those branches of industry that were previously regarded as non-competitive. For example, the city's textile industry exports exceed its imports. The city furniture industry has also increased its exports. The same applies to the food-processing industry. The West purchases our world-class chocolate, sausages produced by the Samson and Parnas enterprises, as well as our beer.          St. Petersburg's trading links extend from Southeast Asia to Latin America. The city exports 11 thousand items and this figure is rising.
        Export items make up about 25 percent of the city and its region's gross product. This figure is impressive, given Russia's current economic situation. In the US and Germany this ratio makes up 32 and 40 percent, respectively.
        The importance of exports for Russia can not be overestimated. Apart from direct profits brought in by foreign trade to the manufacturers and the state, this creates other significant stimuli for native industry. These include increased participation in the international division of labor, adherence to the stringent requirements of the world market, which compels us to use high tech and modern materials, increase the quality of production, reduce waste and unnecessary expenses, as well as actively increase demand for the products of our enterprises.
        The other question is that the increase of our exports as well as foreign customers' interest in St. Petersburg goods have shown that our legal, financial, and tax conditions slow down the further development of export. In March 1998 the city took measures for the support of industrial exports, something which definitely helped the situation. The Association of Exporters of high tech products includes 11 enterprises as well as the Bureau of International Certification, and important steps were taken in the training of specialists, the city's participation in exhibitions, and widening of the information base.
         Nevertheless it was clear that all this was not enough and we needed the systematic work of the St. Petersburg administration in the field of exports development, wider use of scientific and technical resources, and growth of our enterprises' innovative activities. By the end of 1999 several drafts were developed which formed the basis of St. Petersburg's export policy up until 2003.
        So what problems will be solved with the help of this complex program of activities directed towards the creation of proper regional conditions for raising exports?
         Firstly, the plan is to improve legislation in this field. We need to establish standardized procedures when it comes to concluding international contracts; we also must exercise greater control over the external trade activities in St. Petersburg.
        Secondly, the state must support measures for stimulating exports, that is introduce export credit guarantees for working money, export credit insurance, and other traditional kinds of special purpose funding. Moreover, financial backing must make up at least 0,1 - 0,3 percent of our region's gross product.
        Thirdly, our system of taxation needs improving. This is constantly mentioned by exporters. In particular, we need to change the value-added tax for advance payments and lift the customs and value-added tax for imported equipment that is directly involved in producing export supplies. We must actively participate in the improvement of federal legislation in its different foreign trade aspects because there are many problems that cannot be solved at the regional level.
        The concept includes many other questions that reflect the need for wider information backing in world market conditions, highlighting the specific features of our region, the creation of Petersburg representative offices abroad, and, last but not least, the establishment of consultative and marketing organizations coordinating relations between the city's enterprises and their foreign partners.
        External trade activities are inseparable from the St. Petersburg administration's industrial policy. The documents adopted by the administration designate a large scope of activities for the next four years up to 2003. We expect that they will positively influence the regional economy.