RUSSIAN REGIONAL PROFILE-AMURSKAYA REGION

 

10 SEP 98

FM AMCONSUL VLADIVOSTOK

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL

SERVICE AND U.S. DEPARTMENT OF STATE, 1998. ALL

RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

 

1. SUMMARY. ON SEPTEMBER 1-2, 1998, PCO AND CA

KONSTANTINOVA VISITED THE RUSSIAN FAR EAST CITY OF

BLAGOVESHCHENSK, THE REGIONAL CENTER OF THE AMUR

REGION. ASIDE FROM RAPIDLY CHANGING EXCHANGE

RATES, BLAGOVESHCHENSK THAT WEEK HAD FEW SIGNS OF

THE FINANCIAL CRISIS OCCURRING IN MOSCOW. SHUTTLE

TRADERS WERE CARRYING ON A BRISK CROSS-BORDER

TRADE WITH THE NEIGHBORING CHINESE CITY OF HEI-HEI,

AND REGIONAL OFFICIALS WERE GENERALLY UPBEAT

ABOUT LONG-TERM PROSPECTS. THIS REPORT UPDATES A

1996 FCS PROFILE. END SUMMARY.

 

THE AMURSKAYA REGION -- AN OVERVIEW

 

2. BLAGOVESHCHENSK IN THE AMURSKAYA REGION IS

ONE OF THE LEAST ACCESSIBLE AND LEAST VISITED

CITIES IN THE RUSSIAN FAR EAST, LYING 18 HOURS

EAST BY TRAIN (TWO HOURS BY PROP-DRIVEN PLANE)

FROM KHABAROVSK. THE REGION'S SOUTH IS RICH

FARMLAND SPRAWLED AGAINST A 1,243 KILOMETER BORDER

WITH NORTHERN CHINA; THE REGION'S NORTH IS

SPARSELY FORESTED TUNDRA BORDERED BY THE VAST

SAKHA REPUBLIC.

 

3. BLAGOVESHCHENSK (POPULATION 216,700) IS A

SINGULARLY ATTRACTIVE CITY, AND ONE OF THE OLDEST

IN THE RUSSIAN FAR EAST. THE CITY LIES ON A FLAT

RIVER BANK, SEPARATED BY A KILOMETER OF RIVER FROM

THE MODERN CHINESE CITY OF HEI-HEI. THE CITY IS

STRIKINGLY CLEAN; ITS MANY ORNATE NINETEENTH

CENTURY BUILDINGS WERE REPAIRED DURING ITS 140TH

ANNIVERSARY CELEBRATION THIS SUMMER.

 

MEETINGS WITH LOCAL OFFICIALS

 

4. ON SEPTEMBER 1 AND 2, PCO AND CA KONSTANTINOVA

MET AMUR FIRST DEPUTY GOVERNOR ALEXANDER I.

SHKURIN, VALERY G. KULIKOV, CHAIR OF THE AMUR

EXTERNAL ECONOMIC RELATIONS COMMITTEE, VLADIMIR I.

CHECULAEV, DEPUTY CHAIR, AND A NUMBER OF OTHER

LEADING REGIONAL OFFICIALS. REGIONAL OFFICIALS

MADE LITTLE MENTION OF THE ON-GOING FINANCIAL

CRISIS IN MOSCOW, AND WERE INTENT ON ATTRACTING

U.S. TRADE AND INVESTMENT. THE OFFICIALS OUTLINED

A REGIONAL INVESTMENT ATTRACTION PROGRAM BEGUN IN

1996 THAT INCLUDED TAX PRIVILEGES FOR INVESTORS

AND LEASING. IN GENERAL, THE REGIONAL PROFIT TAX

ON LEASING IS HALVED DURING THE TWO FIRST YEARS OF

THE LEASE. BANK PROFIT FROM INVESTMENT IS EXEMPT

FROM REGIONAL PROFIT TAX. COLLATERAL CREATED OR

PURCHASED FOR INVESTMENT PROJECTS IS TAXED AT HALF

THE REGIONAL PROFIT TAX RATE. IN 1997, THE

AMURSKAYA REGION ADMINISTRATION ESTABLISHED THE

"GOLDEN FUND OF AMURSKAYA REGION", IN WHICH GOLD

OWNED BY THE OBLAST SERVES AS A GUARANTEE FOR THE

INVESTMENTS IN THE OBLAST.

 

AMUR'S TRADE AND INVESTMENT

 

5. STATISTICS ON AMURSKAYA ARE OF UNEVEN

QUALITY. MOST TRANSACTIONS WERE ARRANGED THROUGH

BARTER, AND ABOUT TWO-THIRDS ARE WITH NEIGHBORING

CHINA.

 

IMPORTS AND EXPORTS

 

1995 1996 1997

TOTAL IMPORTS 76.3 52.2 66.1

-FROM NIS 14.4 10.4 16.2

-FROM NON-NIS 61.9 41.8 49.9

-FROM U.S. N/A 3.5 2.6

 

TOTAL EXPORTS 63.8 98.2 117.8

-TO NIS 1.4 0.6 0.4

-TO NON-NIS 62.4 45.4 51.3

-TO U.S. N/A 0.2 0.1

 

(MILLIONS USD, REGIONAL GOVERNMENT STATISTICS)

 

LEADING IMPORTS - 1997 (BARTER NOT INCLUDED)

FROZEN MEAT 7,500 TONS

NON-FERROUS METALS 800 TONS

CLOTHING 700 TONS

CHICKEN 500 TONS

 

LEADING IMPORTS FROM U.S. - 1997

(IN THOUSANDS OF USD)

SAUSAGE 716

CHICKEN 371

FOOD PROCESSING EQUIPMENT 356

HEATING OIL 263

 

LEADING IMPORTS FROM U.S. - FIRST HALF OF 1998

WOOD-WORKING EQUIPMENT 474

BULLDOZERS, EXCAVATORS 240

SPARE PARTS 232

SAUSAGE 214

 

LEADING EXPORTS

WOOD PRODUCTS 232,300 CUBIC METERS

NON-FERROUS METALS 102,200 TONS

GEM STONES 5,700 TONS

 

FOREIGN INVESTMENT IN AMURSKAYA IS MINIMAL, AND NO

RELIABLE STATISTICS ON IT ARE AVAILABLE. CHINA

APPEARS TO BE THE ONLY ACTIVE INVESTOR.

 

CONSUMER GOOD TRADE -- THE CHINA FACTOR

 

6. THE RIVER BETWEEN CHINESE HEI-HEI AND RUSSIAN

BLAGOVESHENSK IS GUARDED BY AN OLD RUSSIAN GUNBOAT

ANCHORED IN MID-STREAM, SEVERAL DESERTED WORLD WAR

II VINTAGE PILLBOXES, AND A DECAYING FORT WHOSE

BUILDINGS DATE FROM TSARIST TIMES. IN CONTRAST TO

THE RUSSIAN CITY'S NINETEENTH CENTURY BUILDINGS

AND SOVIET ERA APARTMENT BLOCKS, THE CHINESE CITY

ACROSS THE RIVER IS MADE UP OF NEW SKYSCRAPERS,

OFFICE BUILDINGS, AND HOTELS.

 

7. A NUMBER OF LOCAL BUSINESS AND GOVERNMENT

LEADERS POINTED TO NEARBY CHINA AS THE KEY TO

AMUR'S CONTINUING ECONOMIC VITALITY. A LIVELY

CROSS-BORDER SHUTTLE TRADE (VIA ICE ROAD IN WINTER

AND FERRY IN SUMMER) FILLS BLAGOVESCHENSK MARKETS

WITH LOW-COST CHINESE FOODSTUFFS AND CLOTHING.

VALERIY KULIKOV NOTED THAT EXCHANGE RATE

FLUCTUATIONS HAD SLOWED THE SHUTTLE TRADE IN

RECENT DAYS, AS RUSSIAN RUBLES HAD LOST THEIR

PURCHASING POWER. HOWEVER, THE CENTRAL RYNOK AND

A MULTI-STORY MALL (CONVERTED BY A LOCAL

ENTREPRENEUR FROM AN OLD SEWING FACTORY) WERE

FILLED WITH ACTIVE SHOPPERS AND CHINESE (WITH SOME

018

 

JAPANESE, U.S., AND KOREAN) GOODS.

 

8. IN 1992, THE CHINESE CITY HEI-HEI RECEIVED

THE STATUS OF A FREE ECONOMIC ZONE, SPURRING RAPID

ECONOMIC DEVELOPMENT. REGIONAL OFFICIALS HAVE

BEEN HOPING FOR A BRIDGE ACROSS THE RIVER, A FREE

TRADE ZONE FOR THE CITY, AND EVENTUALLY A RUSSIAN-

CHINESE FREE ECONOMIC ZONE, THOUGH NONE OF THESE

IDEAS HAVE YET MATERIALIZED.

 

BEST PROSPECTS IN AMURSKAYA

 

9. BEYOND BARTER AND SHUTTLE TRADE, THE BEST

LONG-TERM ECONOMIC PROSPECTS FOR AMURSKAYA APPEAR

TO BE FARMING, FOOD PROCESSING, TIMBER, AND

MINING. OVER THE LONG-TERM, U.S. FIRMS CAN LOOK

TO OPPORTUNITIES TO EXPORT:

 

-- FOOD-PROCESSING EQUIPMENT

-- MINING EQUIPMENT

-- WOOD-WORKING EQUIPMENT

 

IN THE SHORT-TERM, SALES OF THESE PRODUCTS WILL BE

REDUCED BY WEAKNESS IN THE BANKING SECTOR AND THE

WEAKNESS OF THE RUBLE.

 

MINING

 

10. AMUR TERRITORY RANKS THIRD AMONG THE GOLD-PRODUCING

REGIONS OF RUSSIA. THE LEADING COAL

PRODUCTION ENTERPRISE IS THE "DALVOSTOKUGOL"

JOINT-STOCK COMPANY; AMUR TERRITORY IS ESTIMATED

TO HAVE ABOUT 71 BILLION TONS OF BROWN AND

BITUMINOUS COAL RESERVES IN 90 DEPOSITS. AMUR IS

ALSO RICH WITH SUCH MINERAL RESOURCES AS IRON,

COPPER, TITANIUM, APATITE, ZEOLITE, TUFA, KAOLIN,

PHOSPHATIDE, CHALCEDONY, LIMESTONE, DOLOMITE AND

OTHER CONSTRUCTION MATERIALS. ONE OF THE RICHEST

DEPOSITS IS IN GARINSK, WITH ESTIMATED RESERVES OF

389 MILLION TONS OF IRON ORE (37.1 PERCENT IRON).

 

FOOD PROCESSING AND AGRICULTURE

 

11. THE SOILS OF SOUTHERN AMUR -- SOMETIMES

CALLED "AMUR CHERNOZEM" -- ARE AS FERTILE AS THE

FAMOUS BLACK EARTH OF WESTERN RUSSIA. AMUR, THE

AGRICULTURAL CENTER OF THE RUSSIAN FAR EAST, HAS

57 PERCENT OF THE REGION'S ARABLE LAND (1,371.17

THOUSAND HECTARES) AND PRODUCES NEARLY ONE-THIRD

OF ITS GROSS AGRICULTURAL PRODUCT. AMUR'S

PRODUCTS (SOY-BEANS, POTATOES, VEGETABLES, AND

HONEY) ARE EXPORTED TO OTHER TERRITORIES. WITHIN

AMUR TERRITORY, THERE ARE 25 STATE-OWNED

AGRICULTURAL ENTERPRISES, 54 JOINT-STOCK

AGRICULTURAL ENTERPRISES AND 3,419 FAMILY FARMS.

 

12. WITH THE DECLINE OF THE RUBLE, AMURSKAYA FOOD

PROCESSING FIRMS SHOULD HAVE A BETTER CHANCE IN

RFE MARKETS AGAINST HIGHER-PRICED FOREIGN

COMPETITORS. IN VISITS TO TWO LEADING LOCAL FOOD-

PROCESSING FIRMS -- BAKER'S FACTORY "ZEYA" AND

MILK PLANT "BLAGOVESCHENSK" -- THE MANAGERS

APPEARED TO LACK THE EXPERIENCE OR TRAINING NEEDED

TO ESTIMATE FUTURE MARKET EFFECTS OF THE EXCHANGE

RATE CHANGE. NADEZHDA I. ANISCHENKO, MANAGER OF

THE MILK PLANT, WAS PRIMARILY CONCERNED ABOUT

PAYING FOR HER LEASED SWEDISH FOOD-PROCESSING

EQUIPMENT. THE LEASE IS DOLLAR-DENOMINATED AND

WILL BE HARDER TO PAY WITH EXISTING RUBLE

EARNINGS. HER FIRM HAD TRIED BUT FAILED TO SELL

THEIR SOY-MILK, JUICE, AND ICE CREAM PRODUCTS IN

CHINA ("TOO SWEET") AND THE U.S. TO GAIN HARD

CURRENCY. SHE BELIEVED IT WOULD BE IMPOSSIBLE TO

SELL THEIR MILK PRODUCTS BEYOND KHABAROVSK,

AMURSKAYA, AND THE SAKHA REPUBLIC BECAUSE OF THE

LACK OF REFRIGERATED TRANSPORT.

 

TIMBER

 

13. AMUR HAS MORE THAN 20 MILLION HECTARES OF

FOREST. TIMBER COMPANIES EXPORT THEIR PRODUCTION

MAINLY TO THE FORMER SOVIET REPUBLICS, CHINA AND

JAPAN. TIMBER PROCESSING IS NOT WELL DEVELOPED,

AND MOST TIMBER IS SOLD IN RAW FORM.

 

TRANSPORT AND TELECOMMUNICATION

 

14. AMUR'S EAST-WEST COMMUNICATION IS MAINLY BY

RAILWAY: THE ZABAYKALSKAYA SECTION OF THE

TRANS-SIBERIAN RAILWAY, AND THE BAYKAL-AMUR

RAILWAY (BAM). ABOUT HALF OF AMUR'S 5,424 MILES

OF ROADS ARE PAVED. THE AMUR-YAKUTSK HIGHWAY IS

THE ONLY AUTOMOBILE ROUTE BETWEEN AMUR AND THE

SAKHA REPUBLIC (YAKUTIYA). THERE IS NO EAST-WEST

HIGHWAY LINK IN AND OUT OF AMURSKAYA, THOUGH THE

RUSSIAN GOVERNMENT HOPES TO RAISE FINANCING TO

COMPLETE A TRANSSIBERIAN HIGHWAY.

 

15. RIVER PORTS AT BLAGOVESHCHENSK, POYARKOVO

(AMUR RIVER), SVOBODNY AND ZEYA (ZEYA RIVER)

OPERATE FOR SIX MONTHS OF THE YEAR.

BLAGOVESHCHENSK, NEAR THE MOUTH OF THE ZEYA RIVER,

IS A FAVORABLE LOCATION FOR CARGO TO AND FROM THE

UPPER ZEYA AND LOWER AMUR, INCLUDING FOR SOME

CHINESE PORTS. TRANSIT CARGO FROM WESTERN RUSSIA

ARRIVING BY TRAIN IS SHIPPED THROUGH THE

BLAGOVESHCHENSK RIVER PORT TO SETTLEMENTS ALONG

THE LOWER AMUR, RUSSIA'S PACIFIC COAST AND

SAKHALIN ISLAND.

 

16. SMALL PLANES SERVE 22 TOWNS IN AMUR

TERRITORY. BLAGOVESHCHENSK HAS REGULAR FLIGHTS TO

MOSCOW, YAKUTSK, YUZHNO-SAKHALINSK, KHABAROVSK,

IRKUTSK, AND VLADIVOSTOK, AS WELL AS CHARTER

FLIGHTS TO TURKEY AND KOREA. SHORTAGES OF JET

FUEL MAKE FLIGHT CONNECTIONS UNPREDICTABLE.

 

17. INTERNATIONAL TELEPHONE SERVICE IS OFFERED BY

DALTELECOM INTERNATIONAL, A RUSSIAN-AMERICAN JOINT

VENTURE BASED IN KHABAROVSK. BLAGOVESHCHENSK IS

ALSO CONNECTED TO RELCOM AND SPRINT E-MAIL

NETWORKS.

 

KEY CONTACTS

 

LOCAL OFFICIALS:

 

ADMINISTRATION OF AMUR TERRITORY

135 LENIN STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 443-022, 443-652, 446-241, 446-201,

443-841

FAX: (7-4162) 446-201, 443-833

E-MAIL: MARK@FORCOM.AMUR.SU

GOVERNOR, ANATOLIY N. BELONOGOV

VICE GOVERNOR, ALEXANDER I.SHKURIN

CHAIRMAN OF THE INTERNATIONAL RELATIONS COMMITTEE,

VALERIY G. KULIKOV

HEAD OF THE NATURAL RESOURCES DEPARTMENT,

NIKOLAI A. STARKOV

HEAD OF THE INVESTMENT POLICY DEPARTMENT,

VLADIMIR I. STARKOV

HEAD OF THE FOREIGN TRADE DEPARTMENT,

NATALYA V. TSVILIY

 

AMUR TERRITORY CUSTOMS

IGOR STEPANOV, DIRECTOR

1 LAZO STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 423-224

 

TERRITORY COMMITTEE OF STANDARDS AND QUALITY

CONTROL

TATYANA SAVCHENKO, DIRECTOR

24/2 50-THE ANNIVERSARY OF OCTOBER STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 445-932

 

VISA DEPARTMENT OF THE INTERNAL AFFAIRS

ADMINISTRATION

VLADIMIR SMORODIN, DIRECTOR

18 50-TH ANNIVERSARY OF OCTOBER STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 497-259, 426-783

 

"AMURGELCOM", AMUR TERRITORY COMMITTEE

FOR GEOLOGY AND MINERAL RESOURCES

1 RYOLOCHNY LANE

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 443-691

FAX: (7-4162) 449-525

TELETYPE: 154222 NAUKA

 

AMUR CHAMBER OF COMMERCE AND TRADE

ANATOLY POKAZANYEV, PRESIDENT

60/6 SHEVCHENKO STREET

BLAGOVESHCHENSK, RUSSIA 675011

TEL: (7-4162) 426-634, 421-577

FAX: (7-4162) 421-577

 

REPRESENTATIVE OF THE RUSSIAN MINISTRY OF FOREIGN

ECONOMIC RELATIONS IN AMUR TERRITORY

23 TEATRALNAYA STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 446-773

 

RUSSIAN-AMERICAN SCHOOL OF BUSINESS ADMINISTRATION

(PORTLAND STATE UNIVERSITY BRANCH)

ANDREI KONYUSHOK, DIRECTOR

6 SHEVCHENKO, OFFICE #405

BLAGOVESHCHENSK, RUSSIA 675000

TEL/FAX: (7-4162) 423-082

E-MAIL: ANDREI@RASBA.AMUR.SU

 

TRAVEL INFORMATION

 

TRAVEL COMPANIES:

 

AMURTOURIST, LTD

1 KUZNECHNAYA STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 423-122, 490-377

FAX: (7-4162) 423-122, 490-388

GENNADY TRUSHIN, PRESIDENT

 

INTOURIST-BLAGOVESHCHENSK, INC.

27 SHIMANOVSKAYA STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 445-772, 421-446

FAX: (7-4162) 445-772

GALINA PRIKHODKO, GENERAL DIRECTOR

 

BLAGOVEST, LTD

38 OSTROVSKI STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 440-765, 441-997

FAX: (7-4162) 440-760

 

HOTELS:

 

OF THE MORE THAN 15 HOTELS IN BLAGOVESHCHENSK, THE

FOLLOWING TWO ARE RECOMMENDED:

 

"DRUZHBA" HOTEL

1 KUZNECHNAYA STREET

BLAGOVESHCHENSK, RUSSIA 675025

TEL: (7-4162) 490-540

 

"ZEYA" HOTEL

8 KALININ STREET

BLAGOVESHCHENSK, RUSSIA 675000

TEL: (7-4162) 421-100