Udmurt Republic Overview
POST OF ORIGIN: Yekaterinburg
DATE OF REPORT: 000314
AUTHOR: Yelena Zheberlyaeva
CLEARED BY: Kelly Raftery
Summary: This message provides a summary
of the geographic position, industrial structure, business
climate and investment opportunities for foreign companies in the
Udmurt Republic.
General survey
The Udmurt Republic is located west of the
Ural Mountains, between the Kama and Vyatka rivers. The
Udmurt Republic covers a total of 42,100 square kilometers (approximately
half the size of Maine) with a population of over 1.6 million
people. Izhevsk is the capital of the Republic with a
population of over 650,000 people. The largest cities of
the Udmurt Republic are: Votkinsk with a population over 102,000
people, Glazov–106,000 thousand people, Sarapul with a
population of over 107,500 people. Over 70 percent of the
population in the Republic are city dwellers. The population
generally consists of a highly educated workforce. There
are five public institutes for higher education, 15 technical
colleges and 25 private institutions of higher learning and
subsidiaries of institutions from other regions of Russia.
Izhevsk, the capital of the Udmurt
Republic is located 1300 kilometers from Moscow and 800
kilometers from Yekaterinburg, the capital of Sverdlovsk Oblast.
It takes 1.5 hours to get from Moscow to Izhevsk by plane and 12
hours from Yekaterinburg to Izhevsk by train (there are
transitional flights to Izhevsk from Yekaterinburg three times a
week, though these flights are often delayed due to poor weather
conditions).
LEGISLATIVE POWER
The Udmurt Republic is an independent
republic of the Russian Federation. The Supreme legislative
and monitoring body of the Udmurt Republic is the State Council.
The Government of the Udmurt Republic has a supreme executive
body that is determined by the State Council of the Udmurt
Republic. The citizens of the Republic elect the State
Council for a term of four years. The Council meets for
sessions not less than once every two months to determine both
internal and international policy, to provide legal oversight of
the budget and constitution and other issues. The State
Council also elects the executive body and appoints the Chairman
of the Government. Currently, the possibility of electing a
President of the Udmurt Republic is being debated.
NATURAL RESOURCES
The Udmurt Republic possesses abundant
natural resources: ferrous and non-ferrous ores, oil, coal, peat
and coniferous woods. Izhevsk is known internationally for
its oil deposits with estimated reserves of over 380 million tons.
Deposits of pit coal, hydrogenous coal and peat are all found on
the territory of Udmurt Republic.
TRANSPORTATION NETWORK
Izhevsk is an important transportation hub
with over 870 kilometers of railroads and 4900 kilometers of
automobile roads. The airport is 40 miles from the river
port Sarapul. The airport connects the Udmurt Republic with
other regions of Russia and a number of foreign countries. There
are daily flights from Izhevsk to Moscow and there are flights to
Yekaterinburg three times a week.
Telecommunications
Modern telecommunication technologies have
started their development in the Udmurt republic. There are a
number of paging companies as well as “Beeline”, a
cellular provider operating in Izhevsk. The NMT 450, as well GSM-900
standards have a well-developed network.
Leading industry sectors and social
infrastructure
The primary industries for profitable
development in Izhevk’s economy are: machine-building, metal
processing, metallurgy, chemicals and wood processing. These
are the most promising industrial sectors for joint cooperation
with foreign partners. Izhevsk produces 56 percent of
Udmurtia's total industrial output.
There are over 300 industrial enterprises
in Udmurt Republic. Izhevsk produces two thirds of Russia's
gearboxes, one third of its paper making machinery, and more than
half of its hunting rifles and carbines. Izhevsk’s
enterprises manufacture medical equipment, household appliances,
satellite communication systems, electronics, automobiles and
motorcycles.
INDUSTRIAL OUTPUT IN THE UDMURT
REPUBLIC IN 1999
COMPARED TO 1998
Machine building 140%
Chemical industry 137%
Ferrous metals 103.8%
Nonferrous metals 113.5%
Food processing 101%
Medical industry 134%
Wood processing
109%
Food processing enterprises started their
rapid development after the 1998 financial crisis. The
majority of the population cannot afford imported food products
any longer due to the severe depreciation of the ruble. Therefore,
an inadvertent benefit of the 1998 financial crisis was the boost
that it gave to the food processing industry. Currently,
the majority of these enterprises are seeking investors to
upgrade their technology and manufacturing facilities to become
competitive in the local market.
Izhevsk Moloko is a milk factory that uses
an imported packaging line to manufacture long shelf life
products. Currently, the milk factory manufactures long shelf
life yogurts, sour cream and curds and distributes its products
to Sverdlovsk oblast, Bashkortostan and other oblasts in the
Urals. These milk products manufactured in Izhevsk sell
well throughout the Urals.
Meat and fish products are processed by
either small private factories or delivered in quantity from
Moscow or Bashkortostan. Izhevsk does not have its own
confectionery production, all candies and chocolates are
delivered from Moscow, Yekaterinburg and Perm.
There are a number of internationally famous research centers in Izhevsk, which previously supplied the Soviet military’s needs. Izhevsk Mechanical Plant, which manufactures rifles and world-famous Kalashnikov submachine guns, is internationally known and exports its products all over the world.
BANKING
There are 20 banks operating in the Udmurt
Republic and 33 branches of banks from other regions. Sberbank
of Russia (the National Savings Bank) still owns the most
developed network of banks in the Repblic with 18 subsidiaries
all over the Udmurt Republic. Some of the local banks,
mostly branch offices of Moscow banks, accept Visa, MasterCard
and EUROCARD transactions. The local bankers state that
wire transfers to other European banks take 1-2 days.
RETAIL TRADE AND FAST FOOD
There are over 3500 shops and supermarkets
in the Udmurt Republic. The shops are not well
equipped and modern western type supermarkets are practically non-existant.
The range of goods sold is not as diverse as in Moscow or even in
Yekaterinburg. Another good opportunity for joint ventures
would be to build a network of modern western type shops and
supermarkets to cater to the middle class with reasonably priced,
long shelf life products. Another good bet for development is to
open specialty boutiques for the middle class, which can pay, but
has no opportunity to spend their money.
There is no regular, direct supply of consumer goods to the Udmurt Republic. The majority of goods are delivered from Moscow and St. Petersburg. The shelves of the Central Supermarket are half-empty. This presents another opportunity for reasonably prices imported or jointly manufactured consumer goods. Delivery of consumer goods represents another good opportunity for development.
FOREIGN INVESTMENT AND TRADE
The Udmurt Republic was closed to
foreigners for decades due to a high concentration of defense
related enterprises. Opened to foreign visitors and
economic investment in the mid-90s it has since obtained $144.7
million in cumulative investments.
The city has 156 joint ventures with
companies from 40 countries. Joint ventures employ more
than 1,600 people. The biggest foreign investors in Izhevsk's
economy are Siemens and Motorola.
TENDENCY OF FOREIGN INVESTMENTS IN
UDMURT REPUBLIC
1991-1994 $6.5 mln
1995 $11 mln
1996 $2.6 mln
1997 $10 mln
1998 $8.1 mln
1999
$116.7 mln
LARGEST INVESTORS FOR THE PERIOD 1990-1999
Germany $114.4 mln
Japan $9.7 mln
Czech $7.5 mln
USA $2.4 mln
Cyprus $1.3 mln
FOREIGN TRADE ACTIVITY RESULTS FOR 1999
Germany was the largest investor in Udmurt’s
economy in 1999.
The Ministry of Foreign Relations for the
Udmurt Republic registered 12 newly formed joint ventures (compared
to 14 joint ventures in 1998) and 3 branch offices of foreign
companies in 1999.
Major investments for the reporting period
were made in machine building, metalworking and the food
processing sectors. The Ministry of Foreign Affairs reported that
in 1999 87% of investments were made in metalworking and machine
building industries and 6% of investments were made in the
heating industry.
Foreign trade turnover in 1999 was $609
million, including $480.2 million in exports and $128.8 in
imports.
MAJOR IMPORTED GOODS IN UDMURT REPUBLIC
IN 1999
Machinery and Equipment 77.4%
Petrochemical Products 12%
Consumer Goods 3.7%
Ferrous and Non-Ferrous Metals
2.2%
MAJOR EXPORTED GOODS
Crude Oil and Oil Products 43.7%
Machinery and Equipment 42.2%
Ferrous and Non-Ferrous Metals 6.6%
Petrochemical Products 3.5%
Wood and Wooden Products
1%
LARGEST INVESTORS IN UDMURT REPUBLIC
Izhtel, a Russian-German joint venture,
with DM16 million in investments manufactures commutation network
systems.
Uralneft (Urals Oil) is a Russian-Czech
joint venture which extracts crude oil. The Czech company has
invested $7.5 million.
There are several U.S.-Russian joint
ventures, which work successfully in Udmurt Republic. Udmurt
Cellular Network is a U.S.-Russian joint venture with $1.5
million in investments. It has been providing
telecommunication services for several years in Udmurt Republic.
Harvy Yar is a U.S. company with $2
million in investment is a major wood processing venture in the
Urals.
LODGING FACILITIES AND SOCIAL
INFRASTRUCTURE
There are few hotels that can be recommended for lodging in Izhevsk.
Foreign businessmen are usually advised to
use one of these hotels as they have some decent facilities.
While these facilites are still far from western standard, they
are clean and secure.
Okolitsa hotel
23A, Ul. Mashinostroiteley
Izhevsk
Udmurt Republic
Tel: 7 (3412) 71-01-83
Fax: 7 (3412) 71-33-95
It is a private, small, but very clean and
comfortable hotel located in the vicinity of the city. It has a
good choice of eight single and double rooms with telephone
facilities and a restaurant. A car is available for
transportation 24 hours a day. The sauna is available upon
request.
Udmurt Republic Government Hotel
247A, Ul. Pushkinskaya
426008, Izhevsk
Udmurt Republic
Russia
Tel: 7 (3412) 23-49-36, 23-90-12
A private hotel of Udmurtneft
Votkinskoye Shausse
426039, Izhevsk
Udmurt Republic
Russia
Tel: 7 (3412)24-72-60
A CONTACT LIST
Aleksandr Volkov
Chairman of the Sate Council
The Udmurt Republic
15, Ploshchad 50 Let Oktyabrya
Izhevsk,
426074, Udmurt Republic
Tel: 7 (3412) 25-45-67
Fax: 7 (3432) 75-43-64
e-mail: mir@interlink.udm.ru
Viktor Vikulov
Minister
Ministry of Foreign Affairs
The Udmurt Republic
15, Ploshchad 50 Let Oktyabrya
Izhevsk,
426074, Udmurt Republic
Tel: 7 (3412) 25-91-20
Fax: 7 (3432) 78-49-97
e-mail: mir@interlink.udm.ru
Yevgeniy Vylegzhanin
President
The Udmurt Republic Chamber for Trade and Industry
54 A, Ul. Gol’yanskiy Posyelok
Izhevsk,
426074, Udmurt Republic
Tel: 7 (3412) 76-14-17
Fax: 7 (3412) 75-03-08
E-mail:postmaster@izhtpp.udm.ru
Olga Terentyeva
Deputy General Director
The Republican Center for Foreign Relations assistance of the Ministry of Foreign Affairs of the Udmurt Republic
15, Ploshchad 50 Let Octyabrya, room 305
Izhevsk,
426074, Udmurt Republic
Tel: 7 (3412) 25-91-18
Fax: 7 (3432) 78-49-97
e-mail: mir@interlink.udm.ru
The Center acts as a business center and
collaborates with the Oblast and city Government and with a
number of business structures. They set meetings, book
hotels, and prepare statistics and other services.
TRANSPORTATION
AIRPORT
Tel: 7 (3412) 31-16-75, 31-16-09
Fax: 7 (3412) 78-05-43
BUS STATION
134, Ul. Krasnoarmeyskaya
426057, Izhevsk
Russia
Tel: 7 (3412) 78-05-12, 78-60-07
RAILWAY STATION
2, Ul. Druzhby
426028, Izhevsk
Udmurt Republic
Russia
Tel: 7 (3412) 56-23-00, 56-22-53
LUGGAGE DEPARTMENT
Tel: 7 (3412) 56-22-34, 56-37-86
Izhevsk’s officials point out that
the following factors that add to the attractiveness for
investments to the city:
- Well-developed industrial potential, skilled labor, research & development institutes;
- Favorable geographic location, well-developed transport infrastructure;
- Sophisticated communications infrastructure;
- Easy access to gas pipelines and electric supply;
- Political stability in the region;
- Mineral resources (oil, timber, and peat);
- Moderate climatic conditions favorable for agribusiness;
- Pro-business environment and tax regime that stimulates investment;
- Friendly attitude of Izhevsk officials towards foreign and domestic investors;
- And favorable investment
legislation
For additional information on Izhevsk legal investment opportunities and privileges for foreign investors see additional report at:
http://www.bisnis.doc.gov/bisnis/country/991130izev.htm
This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)