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Rishat Vakhitov: personnel issues are the key reason for the failure to substitute import in Russia

February 13, 2018/ 10:40

Moscow. During the last three years Russian companies have not managed to substitute foreign materials and equipment. The few successful examples are still the exceptions, while most Russian companies still import materials and equipment from abroad because of the lack of alternatives within the country. Economists come to the conclusion that the attempts of import substitution have failed having analyzed the degree of Russia’s economics’ dependence on the import.

Rishat Vakhitov, the Oil and Gas Information Agency expert and the consultant at Souzneftegazinvest consortium, comments on the situation:

- The issue of import substitution is quite acute, both for the industry and for the country’s economics in general. However, it’s difficult to agree with the conclusion made by the well respected publication as well as with the experts quoted by the author of the article. The experts are certainly specialists: a trader, a lawyer, a financier. Though the topic they are helping the author to cover is slightly different. There is no ground for grim conclusions with the portrait of the minister Manturov at the background. I confirm that. At the same time there are no reasons to clap our hand and assure the President that everything is fine with the import substitution.

I’m not going to bother the reader by further explaining how groundless the other conclusions are. I can’t understand how can the presidential elections influence import substitution or SUBSTITUTE IMPORT. By export, for example.

It seems to me that the main reason of the moderate success in import substitution is related to personnel. I’ll try to justify that. I looked through the list of the Government Committee chaired by the Prime Minister Medvedev. I didn’t see any ministers from the industries using the equipment being substituted: the Agriculture, Civil Construction and Housing and Utilities, Energy, Defense, Railroads, as well as Rosneft, Gazprom, Russian Academy of Science, etc. So, who orders and who controls? The deputies of top managers in the government, the very people who are supposed to be substituting! This is a paradox!

In the autumn of 2015 in Ufa I took part in a well-prepared meeting on import substitution in the energy sector chaired by Manturov. Important cross-industry decisions were taken… Though the people who had organized the event were soon made to leave the ministry. That is a pity. The current organizers of import substitution are week and can’t be compared to their predecessors. Let’s take the organization of import substitution in Tatarstan as an example. Here is what Tatinform say in their article In Tatarstan Import Will Be Replaced by Export : “As far as import is concerned, it amounted to 193 bln Rubles in Russia last year. At the same time it decreased to 2.7 bln in Tatarstan. It decreased especially significantly in equipment manufacturing ad vehicle production – by about 40%. In the chemical industry import dropped by over 25%!”

I could say more about this but I won’t. One thing is obvious: selecting competent and qualified managers both at the regional and federal governments always defines the final result. 

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