Moscow press review for September 11, 2014
MOSCOW. Sept 11 (Interfax) - The following is a digest of Moscow newspapers published on September 11. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
President Vladimir Putin has given his approval to the introduction of a sales tax in Russia, but the finance, economic development and industry ministries are opposed to the idea. A 3% sales tax could generate up to 200 billion rubles of revenue for Russia's regions annually, but not all are expected to introduce it, and there are fears that it will be hard to collect and will fan inflation (Vedomosti, p. 1).
Russians are still afraid to start their own business - only 2.6% want to be entrepreneurs given the low profits, high entry barriers and quality of government regulation, the Global Entrepreneurship Monitor shows. Nonetheless, a record 9.1% of Russians ran their own business in 2013 and at least another 14.5% of respondents do business in the shadow sector. In times of slow economic growth, people try to find sources of extra income and are prepared to take risks, analysts said (Kommersant, p. 1).
President Vladimir Putin held a meeting on Russia's new arms program for 2016-2025 on Wednesday and demanded that a balanced version of the program - taking into account defense needs, aimed at import substitution and based on the country's financial capabilities - be submitted within two months. The military-industrial commission, of which Putin has become chairman, will help seek a compromise (Kommersant, p. 2; Vedomosti, p. 2).
Russia's Federal Statistics Service is proposing legal amendments that would make participation in censuses mandatory. People who refuse to provide information about themselves would face a fine of 100 to 300 rubles. The bill also allows that a census can be conducted online, so people would be required to provide full names, data on their identification document and pension insurance number, whereas now censuses are virtually anonymous (Vedomosti, p. 4).
Russian First Deputy Prime Minister Igor Shuvalov said that new export contracts in Asia, including energy contracts, should be concluded in rubles, while the use of the yuan in settlements with Russian companies is subject to constraints. If China lifts restrictions on currency operations for Russian counterparties, half of the trade turnover between the countries could be switched to yuan and rubles, a senior Finance Ministry official believes (Vedomosti, p. 4).
Interview: Mikhail Mishustin, Head of the Federal Tax Service of Russia (Vedomosti, p. 8).
OIL & GAS
Gazprom has demonstrated how it can effectively influence reverse shipments of gas from Europe to Ukraine. Poland became the first country to halt reverse shipments to Ukraine on Wednesday after the Russian gas giant supplied about 20% less gas than requested by Polish gas monopoly PGNiG. Slovakia has also reported a 10% drop in gas supplies from Russia (Kommersant, p. 1; Vedomosti, p. 11).
UTILITIES
Russian Grids and the State Grid Corporation of China will by October 1 sign a road map for the formation of a joint venture to which the Russian company is proposing projects with annual investment of $1 billion. For now this refers only to distribution grids in border regions of Russia, including grid modernization in Trans-Baikal and connection of new mining projects. But Russian Grids wants to retain a controlling stake in the venture, which the Chinese company opposes (Kommersant, p. 9).
BANKING, FINANCE & INSURANCE
The International Finance Corporation, unlike the EBRD, has not officially suspended operations in Russia, but has not brought projects before its board of directors for more than two months and is not allocating money. Three companies are currently waiting for board approval, but a source at one of them does not expect this to happen until sanctions against Russia are lifted (Vedomosti, p. 10).
RETAIL & CONSUMER MARKET
The founder of bankrupt Russian fruit importer JFC, Vladimir Kekhman and the company's former CEO and chairman have become suspects in a criminal investigation into major theft of funds from Sberbank, the country's biggest lender. Banks are seeking more than 17 billion rubles from Kekhman and JFC group companies (Vedomosti, p. 10).
Russian footwear retailer Obuv Rossii, which has plans for an IPO, is expanding its business. After launching the new Emilia Estra chain in the summer, the retailer acquired the Rossita chain, which has 80 stores in the Ural region and Siberia. The deal, one of the biggest on the Russian footwear market, is estimated at $20 million (Kommersant, p. 9).
In preparation for the low season, Transaero is offering travel agents additional incentives. The Russian airline will pay agents an additional commission of up to 3% for advance sales of tickets. Advance bookings have been trending downward due to political and economic uncertainty (Vedomosti, p. 11).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Apple's new iPhone 6 and iPhone 6 Plus will go on sale in Russia on September 26 already, but their functionality will be restricted, as the smartphones do not support operation in the LTE networks of some Russian providers due to a software block by Apple. Communications Minister Nikolai Nikiforov demanded Apple remove the restriction and did not rule out strict inspections of imports (Kommersant, p. 1).
TRANSPORTATION
Russia's largest airports have seen a 60-80% surge in prices for runway de-icing products and St. Petersburg's Pulkovo has already complained to the competition regulator and Federal Air Transport Agency. The price growth is attributed to the weaker ruble and shutdown of the Azot plant in Ukraine (Kommersant, p. 7).
AUTOMOTIVE & ENGINEERING
While Moscow is eagerly inviting Chinese companies to invest in Russia, Russian manufacturers continue to complain that imports from China are pushing them out of the market. The Eurasian Economic Commission on Wednesday launched its sixth antidumping investigation against China this year, this time against producers of truck tires. China accounted for 64% of truck tire imports into the Russia-led Customs Union in 2013 (Kommersant, p. 7; Vedomosti, p. 12).
AGRICULTURE & FORESTRY
Russia's ban on food imports from certain countries has forced the authorities to think about additional funding for the agribusiness sector. The Agriculture Ministry is proposing to increase subsidies this year alone by 50% to 252.7 billion rubles, and raise them to nearly 1.8 trillion rubles for the period to 2020. The government has not yet approved the scope of the updated program, but businesses are already arguing over who should get more subsidies (Kommersant, p. 1).
