Chemical industry is ready to invest in the defense sector development

March 26, within the forum “Government order” in Moscow a round table was held on the subject of industrial companies support in diversification projects of the Military-Industrial Complex. One of the event speakers was Mikhail Sutyaginsky, Head of the Chemical Industry Committee of Delovaya Rossiya, Chairman of the Board of Directors of the AO GC Titan.

It bears reminding that in 2016 the defense complex was set a diversification task – restructure for output of civilian products: by 2025 its share in the Military-Industrial Complex production should achieve 30%, and by 2030 - 50%.

On the 26^th of March, representatives of the Ministry of Industry and Trade and the Ministry of Economic Development of Russia, top managers of defense enterprises, private companies, banks, key business associations of Delovaya Rossiya and the Russian Union of Industrialists and Entrepreneurs (RUIE) took part in the discussion. Igor Vdovin, Chairman of the Committee for Investment Policy, Development Institutions and Export Support of the RUIE performed as a moderator.

At the round table the speakers talked about the industrial companies’ role in the diversification projects of the Military-Industrial Complex enterprises, the conditions for successful interaction between the parties, sales markets and also, they brought up the subject of state investment promotion as well as import substitution. 

Alexander Zgruyev, Deputy Director of the Military Industrial Complex Department of the Ministry of Industry and Trade of Russia, said that the results had already been achieved in those areas where Russian Federation had traditionally strong competencies - shipbuilding, aircraft and helicopter manufacturing. In addition, the Ministry of Industry and Trade supports “peaceful” inventions of state corporations concerning import substitution, development of critical infrastructure and digitalization. The department is also ready to encourage the establishment of partnerships between private companies and the Military Industrial Complex enterprises.

Regarding state support of the Military Industrial Complex, the First Deputy Director of the Production Development Fund, Alexey Kuznetsov informed that the Production Development Fund was currently implementing 11 programs whereas “Conversion” was among others. He noted that many defense industry enterprises discovered their possibility to receive repayable borrowed budget funds, and the number of applications from the Military Industrial Complex on “Conversion” and other products, in particular, development programs equalized. “Working with us is not so difficult,” he summed up “We have financed 800 projects 182 billion rubles worth, and if eight hundred companies were able to get support, then other 1800 enterprises will also be able to do it.”   

The Military Industrial Complex representative Artem Shatrakov, Director of the Core-Business Concern Department of “Almaz-Antey” dwelt upon the activities in the field of civil technologies. “Back in 2012-2013, we determined for ourselves primary development areas: fuel and energy complex, housing and utilities sector, connection service, transport, medicine and industrial technologies, we created marketing service, started engaging for work people with civilian market experience,”  he explained “As a result, today we are working with large companies for which we are an industrial partner and with private business that have competencies, products and developments in the areas we need.”

In his speech, the founder of the GC “Titan” highly appreciated the Production Development Fund calling it “the most successful support instrument implemented in the Russian Federation”. He also touched upon the problems that private companies face by interaction with financial institutions in the investment projects implementation.

“Among key barriers for participation in diversification projects particularly bureaucratic barriers can be distinguished. More publicness is necessary as well: private business does not have complete information about the capabilities of the Military Industrial Complex enterprises,” Mikhail Sutyaginsky emphasized. “Moreover, due to strict regulation documents projects of private companies which in their turn could be of the defense complex interest, are in slow progress.”                                                                  

He cited as an example the comprehensive project for modernization of Omsk petrochemical site of the GC Titan, involving production of epoxy resins top requested in defense manufacturing.

As the regional industrialist noted, business was interested in cooperating with the Military Industrial Complex enterprises in diversification projects. But it is necessary to take a number of measures in this direction to stimulate private business participation. Mikhail Sutyaginsky expressly indicated among them the necessity to implement Military Industrial Complex projects on the principles of partnership with private business within the mechanism of shared investment financing of a project with a Military Industrial Complex share to a maximum of 25 + 1. 

Information:

Forum-Exhibition “STATE ORDER is FOR Fair Purchasing” is a discussion and exhibition platform of federal significance within state, municipal and corporate procurements. The platform is annually attended by specialists of regional control bodies, customers, specialized organizations working in the contract system, as well as representatives of “natural monopolies”, state corporations and state-owned companies.

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