Moscow press review for June 1, 2015
MOSCOW. June 1 (Interfax) - The following is a digest of Moscow newspapers published on June 1. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Prime Minister Dmitry Medvedev on Friday ordered the finance, economics and labor ministries to look into the possibility of financing the deficit of the Pension Fund of Russia with money from the National Welfare Fund. Finance Minister Anton Siluanov has already said that Russia should only spend money from the Reserve Fund - the ministry believes the NWF can only be spent for this purpose in a year and only if the retirement age is raised immediately (Kommersant, p. 1).
Growth of investment, innovation and modernization of businesses does not necessarily lead to growth of labor productivity throughout the economy - productivity can rise or fall depending on which sector redundant workers migrate to. Unemployment has stayed low in Russia thanks to the informal sector, where productivity is low, so this slows overall productivity growth and thereby the economy, according to a new study (Vedomosti, p. 4).
OIL & GAS
With Russia's potential European allies on Turkish Stream having doubts about the prospects of the gas pipeline project, Gazprom is putting the powerful financial element on the negotiation table. The gas giant, which had refused to participate in construction of the onshore section of the pipeline, has changed its mind and offered its participation at least to Greece. This is the arrangement under which the project's predecessor, South Stream was supposed to be built (Kommersant, p. 7).
Gazprom Neft said that all of the ESPO oil it has shipped to China in 2015 has been sold for yuan. The Russian oil company began working on switching contracts to other currencies than the dollar last summer. But analysts believe there are virtually no economic benefits in this and that the company is just doing the bidding of the authorities (Vedomosti, p. 11).
BANKING, FINANCE & INSURANCE
Russia's Deposit Insurance Agency is prepared to ask the Central Bank to top up its almost depleted fund. The agency plans to ask for a five-year loan of up to 110 billion rubles. The high amount is due to the significant increase in deposits at banks on which the regulator has imposed restrictions, and therefore growth of potential DIA payouts this year. The agency's insurance liabilities totalled 202 billion rubles in 2014 and 20 billion rubles in the first quarter of 2015 (Kommersant, p. 1).
RETAIL & CONSUMER MARKET
Non-stop Production has returned 25 million rubles that the state Film Fund had provided for the film adaptation of the book The Durov Code about Pavel Durov, founder of leading Russian social network VKontakte. Director Fyodor Bondarchuk has pulled out of the project, but the producer says film has not been cancelled, just postponed and production could start this year (Kommersant, p. 1).
Russia's Federal Anti-Monopoly Service has submitted a list of goods for which parallel imports - without permission from the brand owner - would be allowed to First Deputy Prime Minister Igor Shuvalov for approval. In an unpleasant surprise for manufacturers, the list includes cosmetics and perfume, non-alcoholic beverages and hygiene products in addition to the previously discussed auto parts, medical products and pharmaceuticals (Vedomosti, p. 10).
Prices for consumer electronics and larger household appliances are falling in Russia as the stronger ruble has forced manufacturers to lower wholesale prices for retailers. Retail prices for smartphones and some appliances have dropped by 20% to 25% compared to their peak at the beginning of the year. The lower prices are expected to bolster sales (Vedomosti, p. 11).
SPORT & LEISURE
The president of the Russian Football Union, Nikolai Tolstykh was dismissed on Sunday in a major victory for his opponents. Tolstykh, who has been under fire for the union's financial problems, is likely to be replaced by Sport Minister Vitaly Mutko, who has already said he would think about returning to football institutions (Kommersant, p. 1).
The Finance Ministry has drafted a resolution to grant a zero value-added tax for suppliers and partners of FIFA involved in preparing for and holding the World Cup football championships in Russia in 2018. The tax break will also be extended to the Russia-2018 organizational committee and national football associations. Russia offered far more tax breaks for preparations for the 2014 Sochi Olympics (Vedomosti, p. 10).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
A 'right to be forgotten' bill has been submitted to Russia's State Duma that would obligate search engines to delete links to personal information at the request of individuals. The right to be forgotten could be interpreted far more broadly in Russia than in Europe. Critics say the bill could violate citizens' rights to search for, access and receive information, and could also lead to various abuses (Vedomosti, p. 1).
German software developer SAP plans to form a joint venture with Russian companies and transfer intellectual property rights to some of its software to it. State companies Rostec and Rostelecom are holding negotiations with SAP, which earned 5.6 billion rubles on government contracts in Russia in 2014 and does not intend to stop working with the state sector because of Russia's import substitution plans (Kommersant, p. 10).
Interview: Sergei Chemezov, CEO of Rostec (Vedomosti, p. 8).
TRANSPORTATION & LOGISTICS
Russia's leading airlines have entered the high season with 2.2 billion rubles in losses accumulated in the first four months of the year, mostly due to low fares on domestic routes, where they are fighting for market share. Carriers are increasing capacity while keeping fares below cost, leading to 4.6 billion rubles in losses on domestic flights. They hope to make up the losses on the back of high summer demand, but analysts are sceptical (Kommersant, p. 7).
