Dmitry Valeryevich, what are the prospects for Russia’s economic cooperation with the countries of the Islamic world?
Dmitry Volvach: Against the background of the restructuring of the world economy, new opportunities have opened up for Russia and friendly countries to cooperate with the countries of the Islamic world – the United Arab Emirates, Iran, Egypt, Indonesia, Turkmenistan, Kazakhstan, Uzbekistan, Azerbaijan, Kyrgyzstan and Tajikistan.
In recent years, the role of Islamic countries as Russia’s trading partners has increased significantly. In 2022, mutual trade amounted to 153 billion dollars, which is 42% more than in 2021. The share of countries in the Islamic world for 2021-2022 increased from 12.6 to 18% of turnover Russia’s total trade. This strong growth is the result of our rapid action to redirect trade flows and logistics routes.
Work intensified with Iran, Turkmenistan, Kazakhstan, Uzbekistan and Azerbaijan to realize the fullest possible transit and logistics potential of ITC North-South. In the first quarter of 2023, its traffic volume doubled to 2.3 million tonnes. By the end of the year, we plan to sign a permanent free trade agreement between the UEE and Iran. Bilateral trade indicators between Iran and our country show steady growth. At the end of last year, mutual trade volume stood at around $5 billion, 20% more than in 2021.
We are actively working with Kyrgyzstan and Kazakhstan within the framework of the EAEU. During the period from 2016 to 2023, we removed 62 trade and economic barriers in the EEU market. Uzbekistan has observer status with the Union and benefits from all the advantages deriving therefrom.
Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan are active members of the Commonwealth of Independent States. In the total turnover of Russia, the share of trade with the CIS countries averages 12%. At the end of 2022, trade increased by 17% and reached $98 billion, of which Russian exports amounted to around $60 billion (an increase of 6%) and Russian imports amounted to $39 billion. (a 41% increase). We are negotiating with the United Arab Emirates, Egypt, Indonesia and Iran on the formation of free trade agreements with the EAEU.
It is known that Islamic affairs are based on Sharia laws and norms. Are any additions or changes needed in our country’s legislation and regulatory framework to attract Islamic investors?
Dmitry Volvach: This is a very important issue that should be taken into account in the work of increasing investment from the countries of the Islamic world. Of the 11 CIS countries, six countries are developing the branch of Islamic (partner) finance to one degree or another or have a developed legislative framework for the introduction of Islamic banking and finance. These are Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The government of Kazakhstan has adapted the legislation to the requirements of Islamic finance. In Kyrgyzstan, a similar law on banks was passed in 2016, which enabled the application of Islamic principles of banking and finance alongside traditional banking and lending. In Dagestan, Chechnya, Bashkiria and Tatarstan this year, a pilot project will start testing Islamic banking mechanisms based on best practices from partner countries in the Islamic world.
The share of the countries of the Islamic world for 2021-2022 increased from 12.6 to 18% of the total trade turnover of Russia
What joint projects can we offer companies from Islamic countries?
Dmitry Volvach: There are many examples of joint projects. In addition, the number of contacts is increasing not only between large companies, but also between small and medium-sized companies. The MSP Corporation and the Russian Export Center help small and medium-sized enterprises to enter foreign markets and find new partners abroad. About a hundred interregional projects are under development. In February this year, the governments of the Russian Federation and the Republic of Uzbekistan, on the initiative of companies, agreed to create a Jizzakh technopark in Uzbekistan. In April, a solemn opening ceremony of the technopark and an exhibition of the products of potential residents took place. In the near future, the technopark will host around forty resident companies and more than a thousand new jobs will be created.
In partnership with Azerbaijan, our country is developing cooperation in the fields of transport, logistics, pharmaceuticals, IT, education, tourism, oil and gas, automotive, food and chemical industry. The assembly production of trucks has already been launched, a helicopter service center has been established, the production of combine harvesters and the supply of railway wagons have been launched.
Tatarstan companies are actively working in the Turkmen market. For example, a shipbuilding company is building two ferries and a dry cargo ship for Turkmenistan. Last year, service centers for the repair and maintenance of trucks were opened there, this year it is planned to open another service center. Tatarstan’s oil, energy and medical enterprises are actively working on the Turkmen market.
Russian entrepreneurs want to increase the supply of agricultural and textile products from Turkmenistan. In return, we are ready to increase the volume of exports other than commodities, oil and gas equipment, chemicals, engineering and pipes. The Russian Export Center actively participates in the project of modernization of rolling stock of Turkmen Railways, freight cars and equipment.
In recent years, Russian companies have shown great mutual interest in cooperation with Iran. Thus, enterprises of Tatarstan are ready to increase the supply of chemicals and medical equipment, to develop cooperation in the field of engineering, education and science.
Russian manufacturers, including small and medium enterprises, are strengthening their positions in the Tajik market. Two branches of the Omsk region confectionery factory are successfully operating in Dushanbe and the city of Khujand. A company of the Sverdlovsk region for the wholesale trade of ores and metals is preparing to start production on the basis of a hydrometallurgical plant in Tajikistan. An innovative enterprise for the development and production of medical simulators from Tatarstan supplies its products to the Tajik State Medical University named after Abuali ibn Sino.
The largest amount of funds – about 80% – Russian companies invested in joint projects in the energy, mining, oil and gas and chemical sectors. Today, investments are multiplying in high-tech sectors: truck and bus assembly production, aircraft manufacturing, mechanical engineering and the pharmaceutical industry. All these areas are working to develop common transport and logistics projects.
Russian manufacturers, including small and medium-sized enterprises, are strengthening their positions in the markets of Islamic countries
To stimulate industrial cooperation, we have taken a number of concrete measures. Last year, we agreed with EAEU partners to subsidize interest rates on credits and loans issued by national and international financial organizations for the implementation of priority integration projects. These tools will start working next year.
In March 2023, the Eurasian Reinsurance Company was established, which will provide insurance support to participants of EAEU countries in mutual and foreign trade, stimulate the development of investment cooperation, provide export loans and interact with credit agencies and insurers.
Cooperation with the countries of the Islamic world is also developing in the field of culture, education and the human sciences. Our partners from Kyrgyzstan, Tajikistan and Uzbekistan understand how important it is to support the Russian language in these countries as a language of interethnic communication. Uzbekistan today has 955 Russian language schools and 16 branches of Russian universities. Our country is building 5 Russian schools in Tajikistan and plans to build 9 more in Kyrgyzstan. These are large educational complexes with modern equipment. They are taught by teachers from Russia and national republics. The basis of the educational process is the standard of Russian education, which will be supplemented taking into account national and cultural components, native language, literature and history.
Can Russian companies expand their participation in the economy of Islamic countries? What is needed for this?
Dmitry Volvach: In order to minimize the number of obstacles in the markets of these countries, we are actively working both on the EAEU and CIS platforms, and in a bilateral format. The EAEU’s free trade agreements with the United Arab Emirates, Egypt, Indonesia and Iran will provide preferential access to the markets of these countries for companies and products from EU member states. It is planned to expand the network of these trade agreements. For example, Malaysia has expressed interest in establishing free trade areas with the EAEU.
Last year and at the beginning of this year in Kyrgyzstan, Azerbaijan, Iran, Kazakhstan, Uzbekistan, Tajikistan and Turkmenistan, we organized a number of serious economic business forums with the participation of senior officials governmental. More than 6500 people took part. As a result, about 250 contracts and other cooperation documents in the commercial, economic, scientific, technical and humanitarian fields have been signed.
The International Economic Forum “Russia – Islamic World” in Kazan is also the largest platform for discussing topical issues of Russian cooperation with the countries of the Islamic world. I am convinced that the holding of such forums contributes to the multiplication of cooperation projects both at federal and interregional level. I wish all participants fruitful business meetings and negotiations that will bring interesting and mutually beneficial new agreements and contracts.
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