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20 April '17

Small Production Business in the Republic of Crimea. Limits and Opportunities

Small Production Business in the Republic of Crimea. Limits and Opportunities

Investments into Crimea and developing small and medium business is one of the priority subjects at the Yalta International Economic Forum, said Andrey Nazarov, co-chair of All-Russia Public Organization Delovaya Rossiya, as he opened the Small Production Business in the Republic of Crimea. Limits and Opportunities section.

“Having analyzed search engine queries, we saw that queries with key words ‘investment,’ ‘Crimea,’ ‘Free economic zone’ triple before and during the Forum. It bears out the attention focused on our section and the importance of our subject,” Mr. Nazarov said.

Andrey Vasyuta, the Minister of Industrial Policy of the Republic of Crimea, believes that Crimea’s manufacturing business is learning to work with high logistics expenses; in order to continue developing, business uses cooperation with the region’s large industrial enterprises that receive government contracts. “Given the sanctions, Crimea is essentially a logistical dead end, the terminal station. Under these circumstances, local manufacturing was launched on products whose costs involve significant logistical expenses. The second circumstance is governmental contracts; the discretionary decision to give the region such contracts became a salvation for the sector in Crimea. Today, the chain of cooperation is built around enterprises that receive governmental contracts,” the minister said.

Entrepreneurs taking part in the discussion drew the authorities’ attention to the pressing need to alter the current legislative framework that leads to conflicts with supervisory agencies.

“Today, the labor safety system is based on Soviet standards for large enterprises. Entrepreneurs are often afraid of launching manufacturing, since they do not wish to be the focus of close attention of supervisory agencies. We should move toward harmonizing the process, and that applies particularly to small and medium businesses, which cannot afford to have a labor safety department,” says Oleg Sveshnikov, a Crimean entrepreneur, Member of the Crimean Regional Branch of Opora Rossiy, PFK Svetozar.

Nikolay Dunayev, the section’s moderator, the Head of the Industry Committee of Opora Rossiy, Member of the Presidium of the All-Russian Non-Governmental Organization “Opora Rossiy,” drew attention to the need to compile the Register of small and medium manufacturing companies of Russia. He stressed that according to the data provided by some specialized companies, Crimea today has only 53 legal entities that can be classified as “small and medium businesses.” According to other data, the number of such companies in Crimea exceeds 2,000.

Alexander Poyarkov, the CEO of Podiy LLC that manufactures elevator cables used, among others, by OTIS, the well-known US elevator manufacturer, suggested inspecting state enterprises for efficiency in order to understand how to include a larger number of entrepreneurs into their manufacturing chains.

“The number of employees at OTIS’s main enterprise is 15 times less than the number of employees at supplier enterprises. That is, the greater part of the manufacturing process takes place at small enterprises. We could also increase the number of small enterprises by an order of magnitude to achieve the same ratio,” Mr. Poyarkov said.

Alexander Kalinin, the President of the All-Russian Non-Governmental Organization “Opora Rossiy,” said that he was confident that the difficulties of developing entrepreneurship in Crimea would gradually disappear or decrease significantly with the improvement of the region’s transportation accessibility.

“When the Kerch Strait Bridge becomes operational in December 2018, it will enliven the ports. We already see that entrepreneurs from Italy, from China have arrived at the Forum. They came here with their interest, with ideas, with projects,” Mr. Kalinin said.

The President of “Opora Rossiy” also noted those problems that are particularly pressing for businesses: small percentage of Crimean entrepreneurs participate in implementing the Federal Targeted Programme for developing Crimea; supervisory agencies exert undue pressure on businesses. He noted that involving the Public Prosecutor’s Office often helps curtail inspections, and called upon entrepreneurs to have recourse to this mechanism in cases of conflict.

The discussion concluded with the adoption of a resolution where the participants drew particular attention to the necessity to develop small and medium businesses and to involve small manufacturers into the cooperation chains of major enterprises.


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