Import substitution runs into difficulties
RUSSIA / FSU POLITICS
- In Brief
21 Apr 2019
by Alex Teddy
Putin's economic aide Andrei Belousov said that national projects are to use Russian equipment insofar as possible. These projects were announced in May 2018. Belousov ordered the Ministry of Trade and Industry to draw up a list of Russian equipment for these projects and to propose legislative amendments. State procurement regulations already forbid buying certain medical products, furniture, machinery, electronics and software from abroad. As we reported three months ago this is more honored in the breach than in the observance with regard to software. State companies get a 15% discount on Russian goods.Belousov wants to write a list of Russian products and to analyze their quality. These will then be used for national projects. Bans on foreign equivalents will be implemented. When there is no Russian equivalent of an item then imports shall be allowed. Collaboration with foreign firms is permitted if they are introducing new tech and start to produce it in Russia.The government is spending about USD 400 billion on these projects. Most of this should go on Russian-built equipment and labor. Since 2014 and the start of sanctions the Kremlin has favored economic nationalism. Russia's counter-sanctions have not hit NATO countries hard. Moscow encourages people to buy Russian even when the foreign equivalent is not sanctioned by Russia. But not enough people are shopping 'patriotically'. Russian products are not renowned for quality and even when they are cheaper they are not the very cheapest.Note that bans on foreign manufactures are not retroactive. If a company already owns foreign equipment they are allowed to use it. They are just not permitted to purchase any more...
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