#6 - RW 261
Moscow Times
June 12, 2003
Kasyanov Wants More Machines
By Alla Startseva

Prime Minister Mikhail Kasyanov on Tuesday called on the nation to make more machines.

Kasyanov told Cabinet members that if something is not done to spur development in the machinery sector the government will not be able to achieve President Vladimir Putin's goal of doubling the size of the economy by 2010.

"The contribution of the machinery sector to gross domestic product must be increased," news agencies quoted Kasyanov as saying.

The production of more machines, including everything from turbines and trucks to tools and instruments, is considered key to reducing the nation's dependence on raw materials.

With the limited potential to significantly increase oil and gas exports, the government is increasingly turning to the manufacturing industries.

Kasyanov said that at 18 percent of GDP, the machinery sector's role in the Russian economy is only half of what it is in the European Union.

The Cabinet approved a plan put forward by the Industry, Science and Technology Ministry that calls for growing machinery production between 26 percent and 30 percent over the next three years.

The task is a tough one: Of the 7,000 companies working in the sector, some 41 percent were loss-making in 2002, up from 23.1 percent in 2000, according to the mininstry.

In a survival-of-the-fittest move likely to force consolidation, Deputy Industry, Science and Technology Minister Sergei Mitin said the government will soon end its policy of subsidizing the sector by guaranteeing cheap credits, except in "special cases." He did not elaborate.

He said the government will alter import and export tariffs to protect the domestic industry and support exports, which should help stimulate economic growth.

Deputy Economic Development and Trade Minister Arkady Dvorkovich said Tuesday that while his ministry is still forecasting 4.6 percent GDP growth for this year, it now expects average annual growth of at least 6 percent for the 2003-05 period.

Following Putin's call to double the size of the economy by 2010, which will require average annual growth of more than 7 percent, the Economic Development and Trade Ministry was forced to rework its short-term program for social and economic development.

Dvorkovich said the new version of the program was sent to all ministries last week and that all disagreements are expected to be worked out and finalized and sent to the government within the next few days. The ministry's program for growth calls for accelerating some reforms and explores the possibilities of creating Chinese-style special economic zones, he said.

"The decisions that were needed to reach 6 percent growth are not sufficient and logical for achieving 8 percent growth," he was quoted by Interfax as saying.

CDI Russia Weekly #261 ~ Contents  •  Next