"Now is not the best time for state-owned companies to launch an IPO"
Privatization of Russian state-owned companies would not be as beneficial to the state budget now as it would be if the key interest rate were lowered and the external economic situation stabilized. Sergey Katyrin, President of the Chamber of Commerce and Industry of the Russian Federation, told Izvestia about this at the SPIEF. He also noted that the trade wars unleashed by US President Donald Trump will lead to a restructuring of global markets. At the same time, foreign companies will be able to return to Russia if they did not support military operations against it and did not participate in sanctions. How the situation in foreign policy affects Russian business — in Sergey Katyrin's exclusive interview with Izvestia.
"It's true that there is a "probing of the ground""
— Negotiations between Russia, the United States, and Ukraine have been more or less active over the past few months. Against this background, there is news that some American companies want to return to our market. What can you say about this? Maybe there are already some agreements or specific solutions in this regard?
— Currently, there are no specific agreements on the mass return of foreign companies. It is known about the solutions for Indesit (we are talking about the Ariston company, which is part of the Indesit concern. — Izvestia), however, there is no large-scale return yet. Negotiations with other companies are continuing with some progress, although not as actively.
The basic principles of return are clearly formulated and understandable to the business. The first and key condition is that companies should not participate in financing military operations and should not use countermeasures against Russia. The second and perhaps most important condition is that returning companies should not harm Russian enterprises that have invested in import substitution and are in the process of implementing their projects. If these companies have not yet paid off their investments or have not reached their planned capacity, restrictions should be introduced. This approach should be unambiguous: it is impossible to endanger Russian enterprises that have responded to the call of the state, invested in production and started production of products previously supplied by foreign companies.
Only then can the issue of admitting foreign competitors be considered. The market should not be closed — competition is necessary, but it should be equal.
Localization of production should be a key condition for returning foreign companies. This implies the use of Russian components, raw materials, as well as the creation of production facilities in the country, and the use of their own technologies here. Another important aspect is the use of Russian human resources. Foreign companies should attract local specialists and develop production together with domestic enterprises. These principles have received broad support and understanding among all participants in the process.
In addition, the return of foreign companies to Russia will create difficulties for our business. Foreign companies have significant resources for large-scale advertising campaigns, which most domestic manufacturers cannot afford in conditions of high loan rates and lack of financing. This creates the risk of skewing the advertising market in favor of international players.
— Are there any specific companies that are already working on some steps to return to the Russian Federation?
— I would not like to name any companies. But the fact that there is a "probing of the ground— is true. After the prospect of ending the Ukrainian conflict in a shorter period appeared, many foreign companies began to show interest in returning. The Russian market remains attractive due to its capacity, skilled workforce and other competitive advantages.
Large corporations, especially those that did not leave the Russian market very nicely, are now exploring possible return conditions. They are considering various options: compensatory measures, technology transfer, and equipment supplies. However, it is premature to talk about specific plans — no company has officially confirmed its intentions.
We receive requests not only from individual companies, but also from business associations, including the American Chamber of Commerce in Russia. German, European and Korean colleagues are trying to understand the general sentiments of the Russian leadership and the business community towards their countries, without naming specific companies. As a rule, they represent the interests of foreign enterprises that continue to operate in the Russian Federation. Representatives of American, Korean, Japanese and European businesses continue to successfully operate in the Russian market. At the same time, the business activity of foreign companies has really increased. Our colleagues in various business associations note this trend.
— In your opinion, how should the return of foreign companies to Russia be regulated and is it required in principle?
— It is required, otherwise approaches to this issue will be interpreted very loosely. Everything must be regulated at the legislative level, otherwise each ministry involved in this process can develop its own criteria for the admission of companies and their working conditions. I think they will be involved in determining the list of companies and the conditions for their return.
"The whole system of international trade relations may change"
— In the spring of this year, global markets were shaken up by Trump's duties, most of which, however, have been postponed for the time being, but perhaps business is already feeling some changes, perhaps due to increasing protectionism?
— This creates serious problems for companies that have been active in the American market. The Americans and I trade for such an amount that it is an arithmetic error in the American foreign trade turnover. It has no meaning for them or for us.
But trade duties can lead to a reformatting of global markets. Companies are forced to look for alternative sales routes, which entails a chain of changes. If it is impossible to supply products to the USA or China, it is necessary to redirect the flow of goods to other countries. This, in turn, forces the host countries to think about protecting their own producers and building new partnerships. As a result, the entire system of international trade relations may change, both within and between individual associations.
Russia is actively working in several international formats, including the EAEU, SCO, BRICS and the CIS. We strive to create optimal conditions for all participants of these associations, building mutually beneficial relationships. If duties or other restrictive measures are imposed against any partner countries, a joint search for solutions to support each other will be required. Members of other economic associations have been thinking about the same issues.
That's why everyone started thinking about how to work. However, Trump is unlikely to be able to implement everything he has in mind, because it can do a lot of harm to America itself.
— The Ministry of Finance has announced plans for large-scale privatization in Russia. It is planned to bring seven state corporations to the IPO. Tell me, in your opinion, is now the right time to put shares of state-owned companies on the market?
— I will express my point of view. It seems to me that now is not the best time for state-owned companies to launch an IPO. At the moment, the access of Russian businesses to financial resources is limited — with a key interest rate of about 20%, many companies do not have sufficient margin of safety to participate in large transactions. The sanctions restrictions also narrow the range of potential foreign partners willing to participate in the IPO to friendly countries. Now may not be the right time to implement large—scale asset sales - more favorable conditions could have developed with lower interest rates and an improvement in the foreign policy situation.
The economic recovery would create a more favorable environment for state-owned companies to launch IPOs and would allow the state to maximize the benefits of privatization. Her task is not only to increase the efficiency of the company's management, but also to bring revenue to the state budget. At the same time, it is important to take into account the interests of Russian companies that could become buyers of these assets.
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