In an interview with Made in Russia, Andrey Shubin, executive director of Opora Russia, spoke in the margins of the Eastern Economic Forum about the main problems faced by Far Eastern entrepreneurs and their interaction with controlling authorities, gave his assessment of the arrival of major corporations in the region and shared his plans for the forum. Interviewed by Ksenia Gustova.
- How would you describe the entrepreneurial environment in the Far East?
- If you look at the numbers, I have to say that the share of small business in the gross product structure is quite high and amounts to about 32-34%. There is quite a lot of small business here. This is largely due to territorial peculiarities: the region borders on China, with Japan and Korea nearby. That is why foreign trade is very developed here.
Because of the proximity of the sea, the fishing industry, and tourism, small businesses are also involved in these sectors.
The entrepreneurial climate in the Far East is the same as everywhere else in the country: somewhere better, somewhere worse, so it has to be evaluated on a sector-by-sector and region-by-region basis.
- How does it change from region to region?
- It all depends on the regions and how they build dialogues: some of them are open, while others are the opposite. The other day we were in Sakhalin, everyone there is open. The governor has held meetings and is generally open to communication. Here (in Primorye - note) it is the same: a constructive dialogue has been established with the business both at the regional and Vladivostok city level. The team is very active, they want to do something for the entrepreneurs.
- And where is worse?
- I wouldn't estimate and compare regions specifically. Very much, on what cannot or can affect, depends on supervising bodies. If we take the regulatory authorities, on the one hand, the climate here is more or less good, the dialogue is established. On the other hand, there are supervisory bodies like the Customs Service, which receive complaints. The same is, for example, with the tax service. Dialogue here is more often from the point of view of the local level. Entrepreneurs in principle are always dissatisfied with the tax service, but especially here. This also imposes its own characteristics in terms of development of entrepreneurship in the region.
- A 2017 study by Opora Rossii pointed out that insufficient financing and high taxation are constraints on business development in the Far East. Has anything changed over this time?
- The problem of human resources has been added. Firstly, the outflow of the population, and secondly, poaching to large corporations. Small businesses always have a problem, because all highly qualified personnel choose high salaries. This is a federal-wide trend that has been around for about 5 years.
Finance is also a pain. The situation is particularly acute here with small businesses. The problem, of course, is also a pan-federal one. Now the rate is going up. The implementation of concessional financing programs, interest rate subsidies, and the work of guarantee funds are of particular importance here.
If we talk about the Primorsky Territory, the key problem now is with customs crossings. Cars are standing in queues, there is no electronic queue. This causes great annoyance to drivers and entrepreneurs.
But there are nuances in every industry. For example, the new legislation in forestry. It is not clear how it will be affected by the new excessive requirements. The lack of roads is also a problem in terms of timber removal.
As I already mentioned, businesses have problems with regulatory bodies, because there is no dialogue with customs, but there are many problems.
I would include anything related to cross-border trade, exports and imports among the sensitive issues.
- You said about large corporations taking away human resources. But large companies are increasingly moving to the Far East. For example, PIK is going to build here. Are the arrival of such large companies good or bad for small and medium enterprises?
- If we are talking about the PIK, this is a good thing, because it is a construction company. In Russia, according to Rosstat, about two years ago, in the construction industry, 92% are small businesses. In fact, the arrival of the PIK is a good thing, because contractors can provide work for themselves, receive orders, and contract for construction, finishing, and supplying engineering equipment. This is more of a plus.
On the other hand, if some giant comes in, it immediately hires all the already trained professionals and poaches them. This is a problem. Such cases already exist in other regions. The question here is to what extent cooperation is implemented.
If there are orders, this is always good for small business.
- Has small business survived the pandemic in the Far East? And in general, are the pandemic problems of the Far East different from those faced by business in Central Russia?
- These are the same problems. The entire service sector has still not recovered due to the complete shutdown of entrepreneurial activity. There are still issues with post-social constraints, for example, with the children's industry. Everything related to children's clubs is still closed.
Fitness, catering, hospitality, all tourism, international excursions - of course, this is a huge failure. These spheres have not recovered so far. This is a general trend across the country. Yes, there were support measures, but they do not compensate for everything.
- One of the trends for today is sustainable development. Do you think small businesses in the region follow these trends?
- It depends on how much they're interested in it. They have more pressing tasks and it's an additional burden for them. If they are not informed, not connected, they won't follow it.
- Have you calculated how much money enterprises can lose in case a carbon tax is introduced?
- Not yet.
- Many ideas and problems are being discussed at the WEF. What are your expectations? Do you have an understanding of what you will definitely take on board?
- Our expectations are positive. The most important thing for us is that there is great networking. We can assess what is going on and decide what to do about it. We accumulate everything on the topic of small business into specific proposals and solutions. Plus, here we establish new contacts, which always catalyzes development.
The urgent question now is about border crossings, we will work on it. We became convinced that nothing had been resolved for several years. We will seek solutions and put questions to the federal agencies to eliminate everything we have seen here.
We will work on the problems in the children's industry, on interaction with the customs service, tax administration in terms of respect for the rights of entrepreneurs. Another important issue is informing business about all support measures, because they do not know about everything.