A regional approach to industrial restructuring in the Tomsk Region, Russian Federation.

513 Pages·1998·1.917 MB·English

by  OECD

OECD
Proceedings
D
C
A REGIONAL
APPROACH
TO INDUSTRIAL
E
RESTRUCTURING
IN THE
TOMSK REGION
O
RUSSIAN FEDERATION
OECD CENTRE FOR CO-OPERATION WITH NON-MEMBERS
OECD PROCEEDINGS
CENTRE FOR CO-OPERATION WITH NON-MEMBERS
A Regional Approach
to Industrial Restructuring
in the Tomsk Region,
Russian Federation
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
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OECD CENTRE FOR CO-OPERATION WITH NON-MEMBERS
The OECD Centre for Co-operation with Non-Members (CCNM) was established in January 1998 when the
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(cid:211) OECD 1998
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FOREWORD
The importance of the regional dimension to Russia’s economic development is being
increasingly emphasized by bilateral and international assistance. Active in several Russian regions
since 1992, the OECD’s Centre for Co-operation with the Economies in Transition organised a
conference on industrial restructuring in the Tomsk region, western Siberia on 3-5 June 1997. With
special support from the Institute of Advanced Studies (IAS) of Vienna, and in a horizontal effort
with OECD’s substantive directorates, the conference brought together over 300 experts, including
officials from OECD Member countries, international organisations, and federal, regional, and local
Russian administrations. Its objective was to discuss key economic policy issues and formulate
recommendations for the industrial restructuring and economic development in the Tomsk region.
Financial support from the Austrian and Japanese Governments was particularly valuable in
supporting this project.
This document contains the reports prepared for the Conference in June. A general regional
economic analysis carried out by the IAS provides the overall economic framework. Twelve sectoral
reports, prepared by OECD experts from the Secretariat and Member countries, were debated in nine
workshops, which examined the following policy areas: labour market and social policy, education,
financial sector, telecommunications, high tech, transportation, forestry, energy and the environment.
The workshop discussions focused on suggested policy recommendations. The final reports have been
revised to reflect the outcomes of the discussions.
One of the recurring themes of the conference was the role of the regional administration in
the economy. Decentralisation and closer co-operation with industry in most policy areas was
recommended by OECD experts. Participants from OECD countries generally expressed the view
that the state’s role is to provide an appropriate policy framework and let market forces guide
industrial development. The Deputy Governor and other officials from Tomsk generally expressed
views in support of an active regulatory role of the state. Regardless of this divergence in views,
agreement was reached on the main elements of Tomsk region’s economic reforms.
The Tomsk regional administration expressed its gratitude for the policy dialogue organised
by the OECD. The Tomsk officials and experts were instrumental to the success of the conference.
Tomsk officials expressed a desire to maintain close co-operation with the OECD in pursuing follow-
up activities.
In discussing key sectoral and economic policy issues, conference participants formulated
specific recommendations to assist the regional authorities to achieve greater economic growth.
Policy lessons drawn from the Tomsk conference will be evaluated together with those from previous
OECD conferences in Zhukovsky and Krasnoyarsk with a view to examining their applicability to
policy in other regions as well as at the federal and multi-regional levels.
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The views expressed in this publication are those of the individual authors and do not
necessarily reflect the views of the OECD, or its Member countries. Mrs. Alexandra Trzeciak-Duval,
OECD Directorate for Agriculture, and Mrs. Fianna Jesover, OECD Centre for Co-operation with the
Economies in Transition, directed and coordinated the preparation of the conference and the
elaboration of this publication.
This report is published on the responsibility of the Secretary-General of the OECD.
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TABLE OF CONTENTS
FOREWORD...............................................................................................................................3
ACKNOWLEDGEMENTS........................................................................................................7
CONCLUSIONS AND RECOMMENDATIONS....................................................................8
Chapter 1: ECONOMIC DEVELOPMENT IN THE TOMSK REGION.................................23
Chapter 2: IN THE TOMSK OBLAST: FEDERAL-REGIONAL ISSUES..........................125
Part I
SECTORS THAT CUT ACROSS POLICY AREAS IN ALL ECONOMIC SECTORS
Chapter 3: THE CHANGING LABOUR MARKET IN TOMSK OBLAST..........................157
Chapter 4: THE SOCIAL SITUATION AND SOCIAL POLICY IN TOMSK OBLAST.....189
Chapter 5: A REVIEW OF EDUCATIONAL OPPORTUNITIES IN THE TOMSK
OBLAST...................................................................................................................................221
Chapter 6: POST-PRIVATISATION CORPORATE GOVERNANCE.................................243
Chapter 7: PRACTICAL BARRIERS TO RESTRUCTURING THE BANKING
SYSTEM IN THE RUSSIAN FEDERATION.........................................................................253
Chapter 8: FORMATION OF THE POST-PRIVATISATION FINANCIAL
MARKET INFRASTRUCTURE IN THE TOMSK REGION.................................................261
Chapter 9: REGIONAL ENTREPRENEURSHIP: THE STATE OF
SMALL BUSINESS..................................................................................................................275
Part II
SECTORAL ISSUES
Chapter 10: FOREST SECTOR REVIEW AND INVESTMENT OPPORTUNITIES..........323
Chapter 11: FORESTRY AND MARKET PERSPECTIVES.................................................347
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Chapter 12: ENERGY AND ENVIRONMENTAL ISSUES..................................................359
Chapter 13: ENVIRONMENTAL ISSUES IN TOMSK OBLAST........................................387
Chapter 14: TRANSPORTATION..........................................................................................413
Chapter 15: AN OVERVIEW OF WORLD BANK TRANSPORT SECTOR
PROJECTS IN RUSSIA............................................................................................................435
Chapter 16: TELECOMMUNICATIONS SECTOR REVIEW: TOMSK.............................439
Chapter 17: RESEARCH AND INNOVATION IN THE TOMSK REGION........................469
RUSSIAN FEDERATION - TOMSK OBLAST DUMA: LAW OF TOMSK
OBLAST “ON INVESTMENT ACTIVITY IN TOMSK OBLAST”.................................483
LIST OF PARTICIPANTS....................................................................................................499
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ACKNOWLEDGEMENTS
In addition to the contributions made by the OECD and Russian experts whose work is
published in this proceedings document, valuable contributions were made by the following
individuals: Mr. Salvatore Zecchini, former OECD Deputy Secretary-General, who chaired the final
plenary session and presented a comprehensive analysis of the conference conclusions and
recommendations; Mr. Daniel Malkin, Head of Division at the OECD, Department of Science and
Technology; Mr. Martin Salamon, Ministry of Research and Information Technology, Denmark;
Mr. Matt Krott, Institute for Forest Policy and Nature Conservation Germany, Mr. Alan Straus,
Attorney at the law firm of Skadden, Arps, Slate Meacher and Flom; Dr. Heinrich, Professor, Political
Institute of Vienna; Mr. Mueller-Hanke, Senior Bank Adviser of the EBRD; and Mr. Peter Tysba,
Regional Policy Development Specialist, UNECE.
The conference was a success thanks to the initiative and hard work invested by the Tomsk
Oblast Administration (TOA), in particular by Governor V. Kress; Mr. Panomarenko, Deputy
Governor; Ms. Senkovskaya, Deputy Mayor; Mr. Lukyanets, Head of the Economics Department;
Mr. Budlov, Advisor to the Governor and Ms. Yavorskaya, Deputy Chair, Economic Committee. The
following co-chairs were instrumental in contributing to fruitful discussions at the conference
workshops: Mr. Tyulkov, Director of Tomsk Science Co-ordination Centre; Mr. Shamin, Deputy
Governor; Mr. Shitsov, Deputy Director “Tomsktelecom”; Mr. Vlasov, Committee for Support of
Small Business, TOA; Mr. Lukov, Head of Forestry Department, TOA; Mr. Afirkin, Transport
Division, TOA; Mr. Glok, Head of Education Department, TOA; and Mr. Adam, Head of Natural
Resources Department. Valuable research and assistance with logistics was provided by the firm
TOKKO, Mr. Chloptsov and Mr. Zhiganov.
Technical assistance with conference preparations and this publication was provided by the
following OECD assistants: Ms. Stefanie Milowski, Ms. Gillian Chalmers, Ms. Katushja Boffa, and
Ms. Deirdre O’Connor. Mr. Peter Gaskell, Principal Administrator and Ms. Alexandra de Miramon,
Principal Assistant, also provided valuable comments. OECD Moscow consultants, Mr. Taras
Kobushko and Ms. Svetlana Volkova provided valuable assistance with organisational matters,
including interpretation. Finally, this work has profited substantially from the comments of
Mrs. Alexandra Trzeciak-Duval and Mrs. Fianna Jesover.
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CONCLUSIONS AND RECOMMENDATIONS
by Mr. Salvatore Zecchini
Any approach to economic restructuring of the Tomsk Oblast must start from the consideration
that this region, like other Russian regions, has to bear the impact of the economic policies that are
implemented at the federal level and must operate within the constraints of federal laws. Both factors are
considered for the purpose of this presentation as exogenous factors, which cannot be easily changed by
the regional authorities. This is only a theoretical assumption which does not, in fact, hold true over time,
to the extent that federal policies and laws could, in the future, take into account the particular needs of
this region.
The conclusions and recommendations recall, first, the main sectors of the regional economy
that have been the subject of discussion. Second, they deal with policy areas that cut across all economic
sectors such as entrepreneurship, particularly among the small-sized firms, labour market, education,
training, and financing of real investment high-technology industries. Third, they focus on sectoral issues
concerning forestry, transportation, telecommunications and environment.
As far as the structure of the regional economy is concerned, a number of changes have likely
taken place in the composition of the aggregate regional product. While oil and gas extraction and
forestry still provide a large contribution to regional product formation, accounting for about 2/5 of the
total, it is the service industry that has been expanding most. By contrast, the manufacturing industry has
contracted, in part, as a result of enterprise restructuring. In addition, the Tomsk Oblast enjoys a high
science and technology potential, partly linked to defence related activities which are still important in the
region.
The statistical evidence on regional production is, however, blurred by the emergence of a large
and growing private sector, as well as of an informal economy, both of which are inadequately recorded in
the official statistics.
Some conference participants have provided anecdotal evidence on the extent of the informal
economy, linking this development to the degree of taxation of enterprise revenues. The expansion of the
private sector is due to both privatisation of public firms and the proliferation of small enterprises.
Privatisation has affected the ownership structure of the majority of large firms but has not yet permeated
deeply their management behaviour, since "insiders" in the firm have a controlling share of ownership and
deep restructuring has not generally been accomplished.
Problems of corporate governance are still acute in the Tomsk Oblast, mainly due to the fact that
managers and employees remain majority owners in those enterprises privatised in the Russian mass
privatisation scheme. Thus, the property rights of outside shareholders in local companies are still
uncertain. Inasmuch as many enterprises in Tomsk will eventually need to raise capital from outside
investors, or attract partners to help with restructuring and know-how transfer, it is important that a
corporate governance system is in place that will ensure that investor interests will be protected, and that
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they can gain representation on the boards of directors corresponding to their ownership interests. From
the Oblast Administration perspective, it will be important to put in place a legal framework within which
enterprises can flourish, including a functioning company law, securities law, banking and bankruptcy
law. Since this legislation is created at the federal level, the role of the regional administration should be
to see that the institutional capacity to implement and enforce the laws is in place in Tomsk. It is also
important that enterprises are subjected to a hard budget constraint, i.e. that bank loans are made on an
arm’s length basis, and that state subsidies cease.
In addition, providing comprehensive financial information in a coherent format on a regular
basis is an important first step in attracting outside financing and should be required under the securities
or company law. From the enterprise perspective, identifying goals and objectives, and the corporate
structure to attain those goals and objectives, will allow outside investors to evaluate how well the
enterprise fits into their own investment strategy. Enterprise managers must recognise that any time they
seek external financing, it will come with certain obligations and constraints, and they should be prepared
to accept those conditions as part of the price of capital. Lastly, in a region such as Tomsk, with its
reputation as a centre for academic excellence in western Siberia, at least one of the universities should
offer a programme in business administration. This could provide working managers with the skills in
marketing, finance and accounting that they lack, and would prepare a new generation of managers to
enter the labour market. Such a programme could be developed in collaboration with donor institutions.
There was criticism during the conference discussions of dislocations and economic hardship
that had arisen through the course of privatisation, although no clear evidence was presented that some
disappointing results that had been experienced -- for example, significantly reduced profitability after
privatisation -- were the consequence of the change of ownership, rather than of macroeconomic policy
and structural distortions (such as inefficient pricing resulting from lack of competition). Other managers,
however, expressed strong support for the approach of dividing large and inefficient public enterprises
into smaller units: their experience showed that such smaller units would either thrive or wither, in the
latter case strengthening the overall enterprise's health through a rationalisation of the business.
A general problem that constitutes a serious impediment to developing trade, investment and
financing is related to the inadequacy of information on market conditions, on the state of companies,
banks and other financial institutions, and on stock and securities markets. There is a widely felt need not
just for better statistical information on potential demand in the marketplace, but also for a tightening of
information disclosure requirements and accounting rules that apply to companies. In this respect, the
legal framework of the economy should be strengthened, possibly going even beyond federal law
requirements, i.e. by establishing higher standards through business or banking association rules.
In examining the current orientation of economic policy in this region, three general
considerations have to be made. First, the eagerness to penetrate into new foreign markets should not lead
to neglect the great demand potential which already exists in other adjacent regional markets of Russia or
in the Russian economy as a whole. These market areas deserve more attention by firms in the Tomsk
Oblast and extensive market research and marketing efforts should be deployed.
Second there is no better way to attract foreign investors as well as Russian ones than to improve
the general business environment. Any marketing effort to promote the image of Tomsk’s economy
among investors has to be based on the premises of these general business conditions. Better economic
infrastructures, such as telecommunications, roads, commercial services, lower taxation and less
administrative regulations are essential to enhance investment.
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