On the main economic results of the development of the Vitebsk region in 2022. Interview with Alexander Subbotin
The year-long journey turned out to be truly challenging. We had to face complex systemic challenges amid increasing external sanctions pressure on the economy and the tense geopolitical situation around the country. Against this backdrop, however, social obligations are consistently fulfilled, progress is being made in solving the strategic task of the current five-year plan for the balanced development of regions, and optimistic plans for the future are being built. The head of the region, Alexander Subbotin, summarized the main economic results of the Vitebsk region's development in the outgoing year in an interview with "Vitebskiye Vesti."
— Alexander Mikhailovich, as you know, the effective functioning of the economy determines well-being in the social sphere and the prosperity of every person. The most important indicator here is exports. If in the post-pandemic 2021, external demand grew, which our exporters successfully took advantage of, then in 2022, due to the unfriendly actions of a number of countries, it was necessary to significantly reshape the geography of foreign trade. How successful was this?
— First, it should be noted that in response to external challenges, the state is taking comprehensive measures to support the export potential of producers. Despite external pressure, we are confident in our own capabilities and are open to constructive interaction with foreign partners. Today, almost a thousand entities of the Vitebsk region are involved in foreign economic activity, exporting over 1.5 thousand types of products. In 2022, the share of supplies to "far arc" countries was increased by a third. The effectiveness of work in the markets of Iran, UAE, Saudi Arabia, Israel, Georgia, and Mongolia has increased significantly. We are successfully establishing cooperation with partners from Tunisia, Ethiopia, Iraq, Myanmar, the Dominican Republic, North Macedonia, and the Philippines.
Responding to external challenges, the state is taking comprehensive measures to support the export potential of producers.
Entering new markets confirms, first and foremost, the demand and competitiveness of our goods. To expand the presence of producers abroad and increase the volume of external supplies, it is necessary to address issues related to increasing the depth of raw material processing and the volume of agricultural production, and expanding the scope of certification in accordance with the standards in force in the new markets.
For example, for supplying products to the Chinese market, Verkhnedvinsk Butter and Cheese Factory and UP "Verkhny Lug," Polotsk Dairy Plant, Postavy Dairy Plant, Glubokoye Condensed Milk Plant, Vitebsk Meat Processing Plant, Vitebsk Broiler Poultry Factory, etc., have already been certified. Documents for organizing meat product supplies to the PRC by Glubokoye Meat Processing Plant and Orsha Meat Canning Plant are being considered. By the way, solving the problem of reorienting export flows from European and Ukrainian directions, our enterprises have almost tripled the volume of products to China.
Today, the Vitebsk region trades with partners from 77 countries; compared to 2021, their number has decreased, but not critically – by 4 states.
— Russia traditionally remains the main partner. How do you manage to leverage the integration potential of Belarusian-Russian relations?
— Indeed, the Vitebsk region cooperates with all federal districts of Russia. For 9 months, the foreign trade turnover amounted to $3.5 billion, with the export growth rate exceeding 114%.
Over 65% of goods are supplied to the regions of the Central Federal District (mainly Moscow, Moscow Oblast, and Smolensk Oblast), and 12% to the Northwestern Federal District (Saint Petersburg, Leningrad Oblast, and Pskov Oblast). At the same time, issues of sales market diversification are being addressed. Among the new destinations are Ingushetia, Khakassia, and Sakhalin Oblast. We have managed to significantly expand the presence of our products in the Chechen Republic and the Republic of Sakha, as well as in Altai and Irkutsk Oblast.
The potential for trade with Russian partners is far from exhausted, but it is necessary to ensure a competitive price-quality ratio of products – this is the key requirement of consumers.
— In the context of external sanctions, particular importance is attached to the issue of import substitution, which requires everyone – both the state and business – to mobilize all resources and seek non-standard solutions. How has the Vitebsk region taken advantage of new growth opportunities?
— Today, 76 enterprises in the region participate in the import substitution program, of which more than 70% are representatives of small and medium-sized businesses. For 9 months, the volume of import-substituting products manufactured exceeded $737.5 million, and the conditional savings of foreign currency due to the supply of corresponding products to the domestic market amounted to $91.6 million. These figures serve as an objective indicator that the Vitebsk region is capable of solving import substitution tasks. Moreover, in conditions where many niches have become available, regional producers who are ready to take advantage of new development opportunities come to the forefront.
There are many examples of how, in import substitution, private businesses have found niches with high potential, ensured product quality, and successfully integrated into the production chains of major manufacturers. The enterprise "Novy Vek Spring" supplies its products to the assembly lines of the holdings "Bobruiskagromash", "Gomselmash", "Amkodor". SOOO "Manuli Hydraulics Manufacturing Bel" supplies to BelAZ, MAZ, MTZ, and others.
Together with the Russian side, an algorithm of actions has been defined and is being implemented for the substitution by domestic producers of Western companies that have left the markets of Belarus and the Union State. In terms of prompt substitution of critical imports, agreements have been reached on increasing mutual supplies.
In conditions where many niches have become available, regional producers who are ready to take advantage of new development opportunities come to the forefront.
— In your opinion, what are the sources of growth for the regional economy?
— Undoubtedly, this is the development of the agricultural and industrial complexes, including through increasing the depth of processing of local raw materials. Speaking of industry, traditional sectors for the Dvina region will play an important role — machine tool and instrument engineering, woodworking, and petrochemicals, the competitiveness of which needs constant attention. Great potential exists in electronics, bioindustry, pharmaceuticals, robotics, and the production of composite materials. Corresponding projects are being implemented in these areas.
To enhance the competitiveness of the regional economy, it is necessary to more actively use the cluster tool. The composite cluster already operating in Polotsk should receive further development. In addition, considering the educational and scientific potential, existing technologies and equipment, it is advisable to create a biotechnology cluster in Vitebsk and a science and technology park based on the "Izmeritel" plant in Novopolotsk.
The tourism industry also contributes to increasing investment attractiveness. In the Polotsk district, a set of measures is already being implemented to fully unlock the tourism potential. The regulatory framework for the comprehensive development of tourism in the Pozerie region, which includes Braslavsky, Verkhnedvinsky, Miorsky, Gluboksky, Rossonsky, Postavsky, and Sharkovshchinsky districts, is being prepared. It is planned to improve infrastructure, train personnel, and create new facilities. In the future, this can form the basis for the creation of a tourism cluster.
— Currently, the agrarians of the Vitebsk region have made a worthy contribution to ensuring the country's food security, overcoming the psychologically important milestone of harvesting one million tons of grain. At the same time, the region's agro-industrial complex is under special attention from the country's leadership, especially the agro-industrial associations created in the Vitebsk region. How did the agro-industrial associations perform in the past year?
— Currently, 6 agro-industrial associations operate under Decree No. 70. Their composition varies periodically, and accordingly, the composition of raw material zones is updated, for which relevant regulatory legal acts are being prepared. Agro-industrial associations account for half of the gross output of the industry and 20% of the industrial production volumes of the Vitebsk region. They employ 63% of the workers in the agricultural sector. The scale of the work done is also evidenced by the volume of investments: about 700 million rubles have already been invested in the development of agro-industrial association production, including 163 million in 2022: 26 million rubles for the modernization of processing enterprises, and 136 million rubles for strengthening the material and technical base of agricultural organizations. Since the decree came into effect, 670 units of modern high-performance equipment have been purchased, and a number of large agricultural facilities have been commissioned (e.g., the Churylovo dairy farm for 2,000 dairy cows in the Orsha district, a pig breeding complex in the Liozno district, etc.).
As a result, for the 9 months of the current year, the revenue from product sales in the agricultural production organizations (APO) exceeded 1.9 billion rubles, which is 20% higher than the 2021 level. The profit from sales amounted to 88 million rubles with a sales profitability of 4.6% (for comparison: in 2021, APO operated at a loss with a sales profitability of minus 0.5%).
APO exported products worth over 180 million dollars (a 10% increase compared to last year's result). The foreign trade balance was positive, amounting to 118 million dollars. The export geography includes 22 countries, and the key sales markets remain Russia (80% share) and China (about 10%).
Nevertheless, work still needs to be intensified in several areas: stocking cattle, increasing fodder procurement volumes, optimizing costs, and expanding the product range.