The Moscow industry does not slow down the pace of production

— Vladislav Anatolyevich, according to open data, the capital's industry counts 700 enterprises employing about 787,000 workers. Will they face layoffs under sanctions? Which businesses are most affected by the disruption of logistics and supplier relationships?

— The figures you mentioned refer to the number of large and medium-sized enterprises. In total, there are more than 3.000 industrial sites in the city. The times when tens of hectares of land were required for the production of some products are in the past. We have a lot of small high-tech enterprises. 500-800 m² are enough for them to launch a serious production of vital products. We have a large number of such enterprises – about 2.500. We support them in every possible way. They are very flexible compared to large factories, which find it much more difficult to rearrange their production line. Flexibility allows small high-tech enterprises to bring products to market faster. Among the main tasks that all enterprises face today in the face of sanctions pressure is not only to retain personnel, but also not to slow down the pace of production. And Moscow enterprises succeed. For example, the production of manufacturing industries in March this year increased by 17 percent compared to March 2021. Considering that last year the growth of the manufacturing industry exceeded 40 percent.

We maintain constant contact with industrialists, and there are difficulties. They mainly concern cash gaps, logistics, raw materials and components. But all problems are solvable, and the city is doing everything to help businesses and solve them.

— Our industry has been engaged in import substitution since at least 2014. During this time, its products have been seriously updated, a large number of imported goods have been replaced with their own, in particular in mechanical engineering, aircraft building, radio electronics, construction, light and food industries. In the course of this work, only over the past five years, about 500 enterprises have appeared in the city, whose activities are somehow aimed at filling niches that domestic manufacturers did not occupy before. The conclusion of offset contracts in the pharmaceutical industry has proved to be a particularly effective tool in import substitution in Moscow.

— What is Moscow’s interest in them?

— Offset contracts are quite attractive for industries in various industries. According to the terms of the contract, an investor must either create a new production facility or modernize the existing one. In return, the city guarantees that it will purchase products. An offset contract guarantees the manufacturer the sale of products in the long term – for 8-10 years.

Since 2017, Moscow has become the first in the country to enter into offset contracts with enterprises. Today, the city has already concluded five offsets, the total volume of private investments in them is RUB 12.9 bn, and the volume of purchases is almost RUB 73 bn. Some investors have already completed the creation of production and have begun to supply medicines, medical devices and food products for dairy kitchens to city institutions.

For example, the Biocad company, which signed the very first offset contract in Moscow, in 2021 and early 2022 delivered a total of more than 390.000 packages of drugs that are used to treat a wide range of oncological diseases. This year, the manufacture plans to expand the list of drugs produced by organizing a full cycle of their production. According to the agreements, the company will be supplying 34 types of drugs to the city by the end of 2027. Another company, also working under an offset contract – Gematech – supplies the city with 44 types of medical products for stoma patients. As of the beginning of April 2022, 513.000 items worth RUB 181.1 m were delivered under the contract.

Two dozen much-needed medicines – antiglaucoma, antibacterial, analgesic drugs, as well as antidepressants and antipsychotics, undertook to localize the Moscow Endocrine Plant in two years.

— It was said that the capital intends to use the practice of concluding offset contracts in other industries. Any ideas where will it be exactly?

— We have a fairly large pool of offset contracts under development. This includes the housing and communal services sector, the construction sector, and the pharmaceutical industry sector mentioned earlier. First of all, the conclusion of long-term contracts in the areas in which the city needs the most is being worked out.

— An innovation has appeared in the legislation that allows them to be applied when concluding contracts for services. Any plans to take advantage of this opportunity?

— Indeed, from the 1th of July in the capital the amendments that were adopted last year will come into force – they relate to the conclusion of offset contracts for services. According to the terms, the investor will have to create or reconstruct the facility used to provide such a service, which, in turn, will give the city new jobs. We consider this area promising for the development, for example, of the 5G network, the creation of infrastructure to increase the number of charging stations for electric vehicles, as well as in the field of waste processing. There are also needs in the social block. Now, in the process of localization, we are trying to fill niches in all sectors of the urban economy with domestic manufacturers.

— The State Duma is in an active phase of consideration of a bill that will reduce the minimum investment threshold to RUB 100 m. Why did the capital want this so much?

— Our experience in this area has shown that the use of offset contracts is one of the best tools for creating and modernizing production facilities. In addition, they are effective in terms of budgetary savings: prices for products supplied for city needs under offset contracts are lower by an average of 20 percent compared to market counterparts. The adopted changes to the conditions for concluding offset contracts will make it possible to lower the threshold for investments in the creation or modernization of production from RUB 1 bn to RUB 100 m. This will help to involve more actively companies and launch projects that can meet the needs of the city. In addition, the capital will have the opportunity to sign offsets jointly with other regions, for example, with two or more constituent entities of the Russian Federation. Moscow, in turn, is always ready to help colleagues from other regions to scale up the offset practice.

— The package of regional measures to support the industry, which the Moscow Government has begun to form almost from the first days of sanctions pressure on our country, already has several instruments in demand. Will support measures be expanded and new ones introduced?

— Additional measures may be considered, but the implemented tools are providing significant assistance to factories. Our task is to support enterprises of all levels. To this end, in March 2022, Moscow Mayor Sergei Sobyanin decided to send RUB 20 bn to the Moscow Industry and Entrepreneurship Support Fund. Before that, the capitalization of the fund was RUB 4.3 bn. Of the additional funds, RUB 10 bn were allocated to industry, and the other RUB 10 bn to support investment projects for the construction of non-residential facilities in the capital. In April, it was decided to expand the list of enterprises, and now all metropolitan companies from various fields can receive a loan. This money is intended to reduce the cost of loans that enterprises need for working capital and the implementation of investment contracts. Thus, when the Central Bank rates jumped to 20 percent per annum, the capital's industrialists could get them at 15 percent per annum, since the Moscow budget took over the difference. Now that bank rates have dropped somewhat, we have also reduced the rate on preferential loans to 11 percent. And not only for new borrowers, but also for those who have already issued loans before making this decision. The preferential rate on loans for builders is 12%.

— Are preferential loans in demand?

— In less than a month, the Industry and Entrepreneurship Support Fund received 64 applications for a total of more than RUB 40 bn. Among those who applied for help from the city, for example, are two bakery enterprises, a pasta manufacturer: these three companies took RUB 747 m on credit. And what is very important: the money taken by the production workers is directed to working capital, the purchase of raw materials, and the payment of wages, which, of course, helps them survive in the new conditions.

— How long does it take from submitting an application to receiving money?

— It happens very quickly. The bank to which the company applies with an application conducts a preliminary check. Then the fund makes a decision within one or two days.

— What other help from the city, in addition to a soft loan, can industrialists count on?

— A complex of systemic support measures has been operating in the city for several years, it includes more than 20 tools. For example, large enterprises can receive the status of an industrial complex. There are 64 of them in Moscow, they occupy an area of over 320 hectares and provide the capital with over 75,000 jobs. This guarantees them a number of benefits – on income taxes, on the rate of land tax and property tax, on land lease. This year, as part of anti-crisis support, Moscow Mayor Sergei Sobyanin decided to automatically extend the status of an industrial complex for enterprises. Organizations holding these statuses will not need to confirm compliance with the established criteria (average salary, revenue, investments, and a number of others).

There are other anti-crisis measures. For example, enterprises that are ready to organize a new production or expand an existing one can receive land at a rental rate of 1 ruble per plot per year.

The portfolio of measures to support industrialists is very large – full information on this subject can be found on the Moscow Investment Portal or on the official website of the mayor and government of Moscow mos.ru. In addition, there is an anti-crisis hotline for industry support. With its help, you can learn about all the support measures in force in Moscow. To date, it has received over 200 applications.

These measures will be replenished, as a rule, based on the results of meetings with industrialists, which are regularly held by both the mayor of the city and our department. We try to immediately respond to all issues that are raised during these meetings. A particularly acute problem now concerns the search for new suppliers.

— And what can you do to solve it?

— Since mid-March, the city has been operating a service for selecting alternative suppliers of equipment, components and materials not only in Russia, but also in Asian countries, the EAEU. It is very popular – more than 130 companies have already applied for assistance. More than 50 of them asked for help finding the right products, and over 70 of them offered themselves as alternative suppliers for our enterprises.

— Do all enterprises pay wages to employees on time?

— There are no delays in the payment of salaries. This is monitored not only by us, but also by the Department of Labor and Social Protection of the Population, which regularly monitors the situation.

— Vladislav Anatolyevich, speaking about the capital's industry, what it is now producing that Moscow can be proud of? Please, name three products with the made in Moscow brand?

— I could name an infinite number of goods, since everything is made in Moscow – from sweets and ballet pointe shoes to space engines. But if we limit ourselves to three, then let the first one be, for example, IVA – an excellent tool for video conferencing. A very relevant solution that can be safely put on a par with the world leaders in this market. It was developed and produced in our Technopolis Moscow special economic zone, on the site, on Volgogradsky Prospekt. Not only the structures of the Moscow Government, but also many business representatives are already using it with pleasure.

There is no need to represent the food industry in Moscow, it's no secret that our chocolate, made according to classical traditions, until recently was supplied all over the world. Now we are redirecting it for export to Asian countries. I can't help but remember the Russian ice cream. Vladimir Putin once gave it to Chinese President Xi Jinping, later admitted that now, during every trip to our country, he always asks to buy him a box of ice cream. There are many people all over the world, who fancy Moscow ice cream.

In general, I would like to note that the mood for development is also felt by large enterprises that have long become brands, and, which is especially pleasant, by young industrialists. For example, the other day I met one of them. Polina Kazakova opened a small perfumery production in Moscow. It produces perfumes in small batches – 1.500 units each. Natural composition and essential oils. I personally liked the smell very much. Plus, the original packaging, you can feel the hand of a good designer. She wants to take a loan and increase production.

— Is she ready to challenge the French perfumers?

— Does it seem implausible? But after all, despite all the sanctions, there is no shortage of French perfumes in Moscow, and the products of the Moscow perfumer, moreover, in a high price segment, have already found their customers! Not to mention the cosmetic products of the Novaya Zarya and Svoboda factories, which are in demand not only among Muscovites and Russians, but also abroad.

Source: RG.RU