HERALD – MARCH 2021 by HERALD

OFFICIAL PUBLICATION OF FBA EAC, IBC

EURASIAN FINANCIAL & ECONOMIC

# 1 (12) | 2021

PERSONALITY MACKY SALL:

Senegal – Russia: dynamics of close cooperation

page

4 S. Glaziev Become one of the most important centers of the modern world 10

I. Ohashi From the transport corridor to the economic one 56

V .Torrembini Now is a good time for investment in Russia 64

E DITORIA L BOARD: # 1 (12) | 2021

Bakhytbek Baiseitov, Chairman of Business Council of FBA EAC, President of the Association of Banks of the Republic of Kazakhstan

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Anvar Abdraev, President of Union of Banks of Kyrgyzstan

FOUNDERS:

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Alexander Murychev, Chairman of Editorial Board, Chairman of Executive Board of FBA EAC, Executive Vice-President of RSPP, Chairman of IBC

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Financial & Business Association of Euro-Asian Cooperation (FBA EAC)

International Banking Council (International Coordinating Council of Banking Associations)

Andrea Boldi, Owner of the company NEMESI S.R.L. (Italy) Yves Pozzo Di Borgo, Former President of Friendship Group with Central Asia in the Senate (France) Vladimir Vasic, Secretary General of Association of Serbian Banks Alexander Dzneladze, President of Association of Banks of Georgia Anatoliy Kazakov, Chairman of the Coordination Council of Financial and Banking Council of the CIS Elena Korobkova, Executive Director of Independent Association of Banks of Ukraine Alexander Kotlyarskiy, First Vice President of the FBA EAC, General Director of ”PROMTEX” LLC Manish Kumar, General Director of SOLTEX Group LTD., Head of Representative Office of FBA EAC in India, Sri Lanka, Bangladesh, Malaysia

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ISSUE DATE: March 2020

Krzysztof Pietraszkiewicz, Chairman of Polish Bank Association Anatoliy Tkachuk, Vice-President of FBA EAC, President of GC RUSTIAN Dumitru Ursu, Chairman of Moldovian Bankers’ League Tydor Afanasov, President of CCERR Bakhtiyar Khamidov, General Director of Uzbekistan Banking Association Samvel Chzmachian, Deputy General Director of FBA EAC, Head of Representative office of FBA EAC in Armenia

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Appeal to the readers

CONTENT Dear friends and colleagues!

Alexander Murychev, Chairman of Editorial Board of the magazine “Eurasian Financial and Economic Herald”

We continue to work actively and productively during these difficult times! One of the visible results of our activity is the next issue of ”Herald”. This time we made a special effort to make it interesting and rich on a variety of topics.

The face of the cover was Macky Sall, President of the Republic of Senegal. During his reign, the Republic achieved remarkable results. Macky Sall will discuss the country’s handling of economic challenges, reforms important to Senegal, plans for the future and projects implemented, as well as cooperation and relations with Russia in a small but substantive interview. In the section ”Founder’s Page. FBA ЕАС” readers will be able to familiarize themselves with the results of the Association’s activities for 2020, as well as to learn about the future directions of its work. Under the same heading, there is a new initiative of the FBA ЕАС, the ”Business Dialogues Program”, which is planned to hold round tables on topics related to different branches of industry. The topic of industry continues in the section ”Technologies” – you can learn about the features of digital transformation of mining enterprises. The President of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, will report on the current state of the Russian economy, as well as the challenges in the near future and ways to overcome them. Samvel Chzmachian, Head of the FBA ЕАС Representation in Armenia, will analyze the state of the economy and measures of economic support in the republic in the heading ”Financial system of Eurasian countries” – Armenia. ”To become one of the most important centers of the modern world”, is one of the central messages marked in an extensive interview with the member of the Board (Minister) on integration and macroeconomics of the EEC Sergey Glazyev. It is dedicated to the decision of the Higher Eurasian Economic Council ”On Strategic Directions for the Development of Eurasian Economic Integration until 2025”. This topic in the section ”News from EAEU” will continue the article of Deputy Head of Administration of the President of the Republic of Kazakhstan Timur Suleimenov. The presentation will highlight trends and prospects in Eurasian integration. The subject of finance and banking is presented with material from the Republic of Kazakhstan. Galim Husainov, Chairman of the Board of Central Bank, will address the most relevant issues for the banking sector.

PERSONALITY / PERSONNALITÉ Macky Sall. Senegal – Russia: dynamics of close cooperation Macky Sall. Sénégal – Russie: une dynamique de coopération consolidée

NEWS FROM RSPP A. Shokhin: ”The Russian economy has reasons for optimism in 2021”

EAEU TODAY AND TOMORROW S. Glaziev ”Become one of the most important centers of the modern world”

NEWS FROM EAEU T. Suleimenov ”Eurasian integration today: trends and prospects”

PAGE OF THE FOUNDER. FBA ЕАС General Meeting of the members FBA ЕАС: Outcome

FBA ЕАС Program ”Business Dialogues”: round table ”Improving Efficiency and Safety at Mining Enterprises”

PAGE OF THE FOUNDER. IBC B. Kutle. Banking sector of Bosnia and Herzegovina during the pandemic

EURASIAN FINANCIAL SYSTEM S. Chzmachian. World and Armenian economies: reflections during the pandemic

BUSINESSES IN COUNTRIES G. Sebulela. South Africa: economy and the role of the Industrial Development Corporation

BANK. BANK. BANK G. Husainov: CenterCredit Bank – world trends with an oriental accent

GLOBAL TRENDS T. Fic. The role of gold during the pandemic

George Littlejohn. The Great Global Recapitalization 2021

EXPERT’S VIEW I. Lendell. World HR Trends – Lessons for Central and Eastern Europe

TECHNOLOGIES O. Lettiev. Foundations of the digital transformation of mining enterprises in modern conditions

G. Fedotov. Digital mining production processes

A. Subhangulov. Creativity is for man, routine – for robots

TOPIC FOR DISCUSSION O. Grobovets. Digital Labor Relations: Company Vision ”Eastsib Holding”

FORUM I. Ohashi. From the transport corridor to the economic one – efficient way to increase investment attractiveness and integrated regional development

INDIVIDUAL OPINIONS U. Schneider: Convergence between EU and EAEU – more than economic benefit

V. Torrembini. Now is a good time for investment in Russia

RESULTS OF THE PHOTO CONTEST ”WORLD THROUGH THE EYES OF THE PHOTOARTIST” – 2020

PHOTO CONTEST

I am sure that this number of ”Herald”, as always, will please you with a lot of useful and interesting information. See you soon!

THE ROLE OF GOLD DURING THE PANDEMIC Tatiana Fic. The year of the pandemic was a “year of records” for gold. The price and the demand of gold reached its historical maximum, while the demand for jewelry and the scale of central bank gold purchases slowed down.

FROM THE TRANSPORT CORRIDOR TO THE ECONOMIC ONE Iwao Ohashi. The creation of an economic corridor will fundamentally increase the investment attractiveness of the regions along it by locating investment projects and infrastructure.

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TO BECOME ONE OF THE MOST IMPORTANT CENTERS OF THE MODERN WORLD Sergey Glazyev. If we are able to shape the profile of the Union industry on the basis of the digital agenda of the EAEU, it can serve as a powerful tool for realizing the competitive advantages of the Union’s States, particularly in the industrial and financial spheres.

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BANKING SECTOR OF BOSNIA AND HERZEGOVINA DURING THE PANDEMIC Berislav Kutle. The pandemic has helped people understand how to build a new model of business strategy with digitization and telecommuting.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

CONVERGENCE BETWEEN EU AND EAEU – MORE THAN ECONOMIC BENEFIT Ulf Schneider. Both imports and exports would increase substantially if a comprehensive trade agreement were concluded between EU and EAEU. The economic benefits for business of both unions are obvious, but the benefits of close cooperation between the EU and the EAEU go far beyond the economy.

Personality

SENEGAL – RUSSIA DYNAMIC OF CLOSE COOPERATION

Macky Sall, President of the Republic of Senegal 4

– Africa and Russia have a long history of close relations – in politics, culture, economics. How the whole, how would you describe the current interaction between the Republic of Senegal and the Russian Federation in general? – Diplomatic relations between our countries were established in 1962, and to date, cooperation between Senegal and Russia has covered various areas. In June, during my visit to Moscow, I had a meeting with Vladimir Putin and said: ”Senegal is now at a crossroads. We are open to new partnerships. In addition to our traditional partners, such as France and the USA, we are interested in cooperation with China, Turkey and, of course, Russia”. Although in 2018 Senegal was among the top 10 African partner countries of Russia, after our meeting Vladimir Putin announced his intention to take relations with African countries, including Senegal, to a higher level. – What exactly is cooperation between our States at this time? – First and foremost, trade and investment. Trade between our countries has increased fivefold over the past three years, to $460 million. Most of the turnover is accounted for by Russian exports of petroleum products, fertilizers, agricultural products and machinery. The first investment projects have also been implemented. For example, a poultry processing plant and the largest Atlantic fish processing plant, covering approximately 8,000 square meters in West Africa, were built with private investment. Also, PJSC ”KAMAZ” intends to start construction of assembly plant in Senegal. Thus, the relationship between Senegal and Russia has a dynamic of close cooperation. – Could you give a brief description of the economic and political situation in the republic? – Senegal is one of the fastest growing countries in Africa. For the fifth consecutive year, the country’s economy is growing at a rate of 6 to 7 % per year, one of the highest rates not only in Africa but also in the world. At the same time, Senegal is one of the most stable countries on the continent politically. Since gaining independence from France in 1960, there have been no military coups and no major internal conflicts in Senegal. – How is Senegal developing under your presidency? How are we coping with current economic challenges? – I became President of the Republic of Senegal following democratic elections in 2012. In February 2019, I was re-elected for a second term. First of all, when EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

I came to power, I launched a massive fight against corruption. Most importantly, as early as 2013, I presented Senegal’s Development Plan, which has contributed to the country’s economic growth and continues to stimulate it. The Plan is based on 27 infrastructure projects and 17 structural economic reforms designed to attract foreign Investments in key sectors of the economy, as well as to combat poverty and improve the educational level of the Senegalese population. Under the Plan, the Government intends to create at least 600,000 new jobs. – Have the economic reforms you mentioned been successful? – Absolutely. The reforms carried out in the country have already yielded tangible results, allowing Senegal to climb from 178th to 140th place in ”Doing Business” rating in 6 years. In terms of specific projects, for example, a modern airport has been built in the desert near the capital Dakar, also high-speed railways and highways are in process. There is also construction of the futuristic city of Diamniadio, 30 kilometers from the capital. – In conclusion, we would like to know about plans for cooperation with Russian entrepreneurs. Are there such plans? – We’re constantly looking for ways to cooperate. For example, Russian entrepreneurs are studying the possibility of development of salt and phosphate deposits in the republic. Senegal is very attentive to the activities of Russian oil and gas companies, as it plans to produce 100,000 barrels a day by 2022 in result of the recent discovery of large oil and gas deposits.

Macky Sall is a Senegalese politician and President of the Republic of Senegal since 2012. He previously served as Prime Minister (2004-2007) and was Head of the National Assembly of Senegal (2007–2008). In 1988 he graduated from the University of Dakar of Cheikh Anta Diop with a specialty of ”mining engineer”, in 1993 he graduated from the Higher National School of Oil Production with a specialty of ”hydrogeology and geophysics”. In 1990 he joined the opposition Senegalese Democratic Party (SDP) led by Abdoulaye Wade. In November 2008 as a result of the conflict with Wade he was removed from the post of President of the National Assembly. After that he founded the party ”Alliance for the Republic” and joined the opposition. In the 2012 presidential election, he finished second in the first round with the support of other opposition candidates and won the second round. After coming to power, he has conducted a management audit and strengthened against corrupt practices. In 2014, he announced Senegal’s economic development program, which would invest $21 billion until 2035. Investment in agriculture, tourism and infrastructure development were identified as priorities. The goal of doubling economic growth (to 7%) by 2017 was set and met.

PERSONNALITÉ

SÉNÉGAL – RUSSIE UNE DYNAMIQUE DE COOPÉRATION CONSOLIDÉE

Macky Sall, Président de la République du Sénégal

– L’Afrique et la Russie sont liées depuis longtemps par des relations étroites - en politique, en culture et en économie. Comment caractériseriez-vous généralement l’interaction actuelle entre la République du Sénégal et la Fédération de Russie? – Au-delà des relations diplomatiques qui remontent à 1962, la coopération entre le Sénégal et la Russie porte sur divers secteurs. En juin 2018, je me suis rendu à Moscou où j’ai rencontré le Président Vladimir Poutine. Le Sénégal est maintenant à la croisée des chemins. Nous sommes ouverts à de nouveaux partenariats. Outre nos partenaires traditionnels, tels que la France et les États-Unis, nous sommes intéressés par une coopération avec la Chine, la Turquie et bien sûr la Russie. Déjà en 2018, le Sénégal figurait en très bonne place dans le top 10 des pays africains partenaires de la Russie. Et suite à ma rencontre avec le Président Poutine, celui-ci a annoncé l’ambition de porter les relations avec les pays africains, Sénégal inclus, à un niveau supérieur. – Qu’en est-il de la coopération entre nos États en ce moment? – D’abord et avant tout, dans le commerce et dans l’investissement. Le volume des échanges commerciaux a été multiplié par cinq au cours des trois dernières années, pour atteindre 460 millions de dollars. La majeure partie du chiffre d’affaires provient des exportations russes de produits pétroliers, d’engrais, de divers produits agricoles et de machines. Les premiers projets d’investissement ont déjà été mis en œuvre. Par exemple, avec la participation de capitaux privés, une usine de transformation de volaille et la plus grande usine de transformation de poisson d’Atlantique en Afrique de l’Ouest, ont été construites avec une superficie globale d’environ 8 000 mètres carrés. Le groupe KAMAZ a également l’intention de construire une usine de montage au Sénégal. Ainsi, la relation entre le Sénégal et la Russie a une dynamique de coopération consolidée. – Pourriez-vous décrire brièvement la situation économique et la politique de la République du Sénégal? – Le Sénégal est un des pays d’Afrique avec la croissance la plus rapide. Pour la cinquième année consécutive, l’économie du pays affiche des taux de croissance de 6 à 7% par an, ce qui est l’un des taux les plus élevés, non seulement en Afrique, mais également dans le monde. Dans un même temps, le Sénégal est l’un des pays du continent africain le plus stable sur le plan politique. Il n’y a pas eu de coups EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

militaires ni de conflits internes majeurs depuis l’indépendance de la France en 1960. – Comment le Sénégal évolue-t-il sous votre présidence? Parvenez-vous à faire face aux défis économiques d’aujourd’hui? – Je suis devenu Président en 2012 à l’issue d’élections démocratiques. En février 2019, j’ai été réélu pour un second mandat. Une fois au pouvoir, j’ai entamé une lutte à grande échelle contre la corruption et ai présenté en 2013 le Plan pour le Sénégal émergent, qui aide à stimuler la croissance économique. Ce plan repose sur 27 projets d’infrastructure et 17 réformes structurelles de l’économie, qui visent à attirer les investissements étrangers dans les principaux secteurs de l’économie, à lutter contre la pauvreté et à relever le niveau d’éducation des sénégalais. Dans la mise en œuvre de ce plan, le gouvernement a l’intention de créer au moins 600 000 nouveaux emplois. – Les réformes économiques dont vous avez parlé ont-elles été couronnées de succès? – Oui, certainement, les réformes menées dans le pays ont déjà eu un effet tangible, permettant au Sénégal de passer de la 178 ième place à la 140ième place dans le classement « Doing Business » en 6 ans. Un aéroport moderne a été construit dans le désert près de la capitale de Dakar. Des chemins de fer à grande vitesse et des autoroutes sont en cours de construction. À 30 kilomètres de la capitale, la construction de la ville futuriste de l’avenir, Diamniadio, est en cours. – En conclusion, il serait intéressant de connaitre les plans d’interaction avec les entrepreneurs russes. Avez-vous de tels plans? – Nous recherchons constamment des moyens de coopération. Par exemple, des hommes d’affaires russes étudient actuellement la possibilité de développer des gisements de sel et de phosphate dans la République. Compte tenu de la découverte récente de grands gisements de pétrole et de gaz, le Sénégal examine également de très près les sociétés pétrolières et gazières russes, car il envisage de produire 100 000 barils de pétrole par jour d’ici 2022

Macky SALL est un homme politique sénégalais, président de la République du Sénégal depuis 2012. Auparavant, il avait servi comme Premier Ministre (2004-2007), et aussi comme chef de l’Assemblée Nationale du Sénégal (2007-2008). En 1988, il fût diplômé de l’Université Sheikh Anta Diop de Dakar, ingénieur des mines, puis en 1993, de l’École Nationale Supérieure de production pétrolière diplômé en hydrogéologie et en géophysique. En 1990, Monsieur SALL a rejoint le Parti Démocratique Sénégalais (SDP) dans l’opposition, dirigé par Abdoulay WADE. En novembre 2008, à la suite d’un conflit avec Monsieur WADE, il fût démis de ses fonctions de Président de l’Assemblée Nationale, après quoi il fonda le parti Alliance pour la République et décida de rejoindre l’opposition. Aux élections présidentielles de 2012, il termina deuxième du premier tour, et avec le soutien d’autres candidats de l’opposition, il remporta le deuxième tour. Après son arrivée au pouvoir, il révisa le système de gestion et intensifia la lutte contre la corruption. En 2014, il annonça un programme pour le développement économique du Sénégal, impliquant des investissements de 21 milliards de dollars jusqu’en 2035. Les domaines prioritaires d’investissements furent l’agriculture, le tourisme et le développement des infrastructures. L’objectif fixé et atteint, fût de doubler la croissance économique alors de 7% et ce d’ici 2017.

Source: TASS

News from the RSPP

THE RUSSIAN ECONOMY HAS REASONS FOR OPTIMISM IN 2021 Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs

THE RUSSIAN ECONOMY ENDED 2020 WITH A FALL IN ALL KEY INDICATORS, BUT THERE ARE REASONS FOR OPTIMISM. THIS OPINION WAS EXPRESSED IN AN INTERVIEW WITH TASS BY THE PRESIDENT OF THE RUSSIAN UNION OF INDUSTRIALISTS AND ENTREPRENEURS ALEXANDER SHOKHIN.

– Alexander Nikolaevich, how do you estimate 2020 for the economy of the Russian Federation? What are the main results, from your point of view? – The world will no longer be the same. The “new normality” that has been discussed for the last couple of years turned out to be completely different – with restrictions on the movement, a ban on the activities of particular sectors, or almost all business and a break in supply chains. If we talk about Russia, then it ended this year with a fall in all key macroeconomic indicators. Thus, investments in the third quarter decreased by 4.1% compared to the same period last year. In turn, GDP in the first ten months fell by 3.6%, and industry in 11 months reduced output by 3%. But still, this is not the worst result – the fall could be significantly deeper. We can say that the Russian economy and Russian business have shown high adaptability and, crucially, the ability to develop in any extreme conditions. In many ways, the stability of the Russian economy is explained by effective measures of anti-crisis and systemic support for business. In particular, support for backbone companies, as well as small and medium-sized businesses in the most affected industries, allowed companies to remain on the market, maintain employment levels, continue to implement investment projects begun and in some cases even launch new ones. Thanks to the new specialized program of the Industrial Development Fund, it was possible to implement projects related to the production of drugs, masks, protective equipment. The measures taken made it possible to increase rapidly the production of critical to the pandemic goods.

The course on effective import substitution was also correct: in the conditions of breaking traditional supply channels, the development of new segments of production within the country certainly increased the stability of business. At the same time, the crisis also helped to identify “bottlenecks” in the interaction of business and government, for example, the lack of readiness of a number of authorities to work in electronic format provoked an extension of the validity of permits, licenses and other similar documents. – How did coronavirus affect Russian business and economy? Was it only a negative impact or are there any positive points? – The COVID-19 negatively affected the activities of 41.2% of RSPP member companies, as a survey conducted by us showed. For small businesses, the consequences of the pandemic were more serious – 60% of respondents reported problems in this regard. Among the representatives of large businesses, only 34.6% of enterprises share this position. Almost a third of the companies that participated in the survey remain optimistic, hoping for a further serious improvement in their market position. It is worth noting that many of the largest private companies that took part in the survey did not reduce the volume of investment programs in 2020, which is extremely important for maintaining domestic demand in terms of multiplier effect. Among the positive aspects, it is also necessary to mention the ongoing export projects. So, in 2020, some companies were able to occupy new niches in foreign markets, including in the high-tech sector. Moreover, a number of sectors have reached an accelerated pace of development. It includes grow-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

ing demand for IT-services and digital solutions. The segment of remote trade and delivery is actively developing. We can say that companies, which in the pre-crisis period invested in new technologies, digitalization, increased productivity and staff, were able to use the developed background for a strong breakthrough. – Chairman of the RSPP Committee on Intellectual Property and Creative Industries, President of IPChain Association Andrei Krichevsky noted that Russia was losing about 5% of GDP due to intellectual property protection problems. RSPP also stated the need to create special credit products focused on work in this area. What are the prospects for the development of the intellectual property market in Russia in 2021? – Yes, the estimate of the number of losses is 4.8%. Although I note that, it would be more accurate to talk not about problems in the field of intellectual property protection, but about the effectiveness of intellectual rights management. The Higher School of Economics reflected it in the conclusions of a study commissioned by the Russian Union of Industrialists and Entrepreneurs. It should be noted that about 80% of losses are in the industrial intellectual property sector – the situation is most depressing there, but it is in this sector that the most powerful growth potential is located. We lose about 1% of GDP in the segment where copyright and related rights traditionally work – animation, music, software, multimedia products and advertising. This is an impressive amount, which cannot be ignored in the context of a sharp economic downturn due to the pandemic. Therefore, the Russian Union of Industrialists and Entrepreneurs proposed to the Rus-

News from the RSPP

sian Government a number of important steps that make it possible to increase the systemic effectiveness of the field of intellectual property. Now, according to this criteria, we are in 45th place in the global international index, and in the overall ranking of 53 developed economies – in 35th. One of the most important proposals initiated by the Russian Union of Industrialists and Entrepreneurs was the concept of restructuring tax legislation, adapting the tax model to the needs of the creative and innovative economy. There is a different production cycle and the principles of bringing products to market in companies operating in the segment of production of intellectual and creative product. This means that they need an alternative tax model that differs from the model applied to more traditional production segments. Our second important proposal is to ensure the availability of credit resources. We had sent it to the Ministry of Economic Development of Russia Maxim Reshetnikov and have already received support. Amendments to the regulatory documents of the Central Bank of the Russian Federation are currently being developed with the participation of our relevant committee, which will enable banks to lend against the security of liquid portfolios of intellectual property rights. We are not talking about all types of intellectual property, but about those

that can really generate cash flow – cinema, software, engineering and design documentation, portfolios of rights that are used to build franchise networks. We hope that in those segments where the intellectual property market is operating sustainably, banks will be able to give loans without forming 100% reserves to cover possible risks. We also made a proposal to change the approach to the provision of services to businesses in the field of patent protection – in particular, to consider the transformation of Rospatent into a more modern, flexible and client-oriented form of a public law company, which recently appeared in legislation. This can be a useful step towards protecting the investments of Russian companies in new creative products and technologies. It is also necessary to improve the mechanisms of judicial protection, countering violations of intellectual rights on the Internet, paying copyright rewards and even reducing business risks when using “ownerless” works. The last of these proposals of Russian Ministry of Culture is implemented in the near future. – RSPP proposed to postpone the formation and adoption of all tax initiatives for the spring. What tax innovations can be adopted in the spring session of the government? How will they affect the business?

– We hope that we are not waiting for innovations related to the growth of fiscal burden. At the end of 2020, several decisions were made that aimed to form additional budget sources and led to a significant increase in the burden on the business, for example, in terms of a new rental coefficient for MET. We understand such solutions, but their discussion allows us to minimize risks to the economy without any risks to the budget. Unfortunately, the Ministry of Finance of Russia has no obligations for a formalized discussion of proposals that provide for an increase in the burden on business. The RSPP also asked to return to the question of the temporary nature of decisions to increase the burden on business during the crisis period and the need to stabilize the level of fiscal burden starting in 2023 at the level of 2020, as well as to fix as a priority of tax policy the predictability of tax conditions, not ideologically, but legally. We believe that the proposal to introduce new taxes, fees, insurance premiums, increase the size of rates or the taxable base should be necessarily reflected in the main directions of the budget, tax and customs tariff policy for the corresponding three-year period. At the same time, we advocate that a public formalized discussion of the project should be initiated before it is submitted to the Government of the Russian Federation. I believe that the best option is to conduct a regulatory impact assessment on the Federal Portal of draft regulatory legal acts – regulation.gov.ru – What are the most effective measures to support business by the government during the pandemic? What measures were not enough? Will Russian business be able to cope with the crisis in 2021 with current support measures or will additional ones be required? If required, which ones? – During 2020, the RSPP conducted a number of surveys to assess the relevance and effectiveness of various support measures. Of the respondents, 40% took advantage of at least one financial support measure, which is already a lot. Among the most popular measures are a loan for salary and resumption of activity at a rate of 2%, subsidies for maintaining staffing levels of 1 minimum wage per employee, preferential loans to systemically important enterprises for replenishing working capital and a number of others. According to our surveys, the most demand fiscal measures were the exten-

sion of the reporting deadlines, the extension of the deadlines for responding to tax claims and accounting for the costs of disinfection, the purchase of workwear, masks, etc. These same measures proved to be the most effective in terms of the companies that took advantage of them. For small businesses the most popular tax measure was the use of reduced insurance premium rates, given that many entities of such companies account for a significant part of the costs. Nevertheless, many of the required support measures need to be “adjusted.” In particular, a third of the companies surveyed by RSPP faced difficulties in fulfilling the standards established by the terms of the support program. For example, the requirement to maintain 100 per cent staff for a long period (incidentally, there was a complex and instructive discussion on how to count the number of staff). The companies that received support and the companies that refused to receive it evidenced that reporting procedure was overly complex (and often only in paper form) and perceived it as a significant barrier. I would mention expanding support for online events as one of the tasks for the future. Due to current conditions of restrictions on mass events, online exhibitions and showrooms helped many companies to support sales and introduce new developments. EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

It is worth considering some expanding programs to subsidize interest rates on modernization loans. The business is interested in supporting leasing, including international leasing. Equally important is the ability to extend the most popular support tools and mechanisms. At this stage, they are limited – somewhere in 2024, somewhere in 2029, but for long large-scale projects, support is needed for the longer term. – What challenges, in your opinion, await the Russian economy in 2021? How can the economy overcome them? – The main challenge involves an unpredictable situation with the spread of a new coronavirus infection. Despite the introduction of vaccines to the market, risks remain as new strains emerge, and restrictions on people moving and doing business persist. All this can lead to the fact that the level of demand in global markets may be lower than would be desirable. The situation with carbon regulation remains uncertain, respectively, the potential risks for Russian exporters and ways to minimize them are not sufficiently predictable. It is already obvious that next year this will be one of the key topics at the global and Russian levels. Meanwhile, there is a demand for accelerated digitalization of public services

for business. There are already some examples of transferring individual support measures into electronic form. In some cases, the transition is more successful, in others – less, but in general, it is an important process. Moreover, it is necessary to digitalize quickly any document flow between business and the state, preserving for the first time the possibility of submitting documents in paper form. So, as practice shows, the first couple of months (or even more) the transition to the electronic form, unfortunately, is accompanied by regular failures. The demand is high for anti-crisis support measures for businesses. This is especially true for the most affected industries. System support measures are equally popular – thanks to which the implementation of investment projects of companies, their entry into new markets and the introduction of new technologies is ensured. Business is also waiting for a clear strategy in the field of mandatory labeling of goods and traceability systems – but so far, the level of decisions validity on their introduction to specific products and the synchronization of created systems leave much to be desired. It is not possible to fully predict how new and old problems will affect the labor market yet. So, it is difficult to predict exactly the development of events in 2021, but there are some reasons for optimism.

EAEU today and tomorrow

“

TO BECOME ONE OF THE MOST IMPORTANT CENTRES OF THE MODERN WORLD

”

READERS ARE INVITED TO AN INTERVIEW WITH S.Y. GLAZIEV, MEMBER OF THE BOARD (MINISTER) OF INTEGRATION AND MACROECONOMICS OF THE EURASIAN ECONOMIC COMMISSION. THE MATERIAL EXPLAINS THE ESSENCE OF THE DECISION OF THE EURASIAN HIGHER ECONOMIC COUNCIL # 12 OF 11 DECEMBER 2020 ”ON STRATEGIC DIRECTIONS FOR THE DEVELOPMENT OF EURASIAN ECONOMIC INTEGRATION UNTIL 2025”. IMPORTANT ASPECTS OF THE INTERACTION OF THE EURASIAN ECONOMIC UNION WITH ITS PARTNERS ARE ALSO ADDRESSED. – In addition to the EAEU Treaty of 29 May 2014 (hereinafter Treaty) and the Declaration on the Further Development of the Integration Processes in the EAEU of 6 December 2018 (hereinafter Declaration), the establishment of Eurasian integration is defined by a number of strategic acts in force. What is the rationale behind the adoption of the Strategic Areas (SA) in December 2020? What is new about it for the EEC authorities, where you have a great deal of responsibility for the integration process? – The strategic directions have been drawn up on the instructions of the Heads of State in order to implement the provisions of the Declaration mentioned above. There are 11: Complete removal of barriers and maximum reduction of exceptions and restrictions on the free movement of goods, services, capital and labour in the internal market of the Union; Improving the efficiency of product markets; Improving customs regulation within the Union; Ensuring quality assurance, product safety and adequate consumer protection; Building the digital space of the Union, digital infrastructures and ecosystems;

Development of flexible and targeted mechanisms to promote economic development; Building an effective system for the management and financing of joint cooperation projects and the creation and development of high-productivity, including export-oriented sectors of the economy; Joining forces to promote joint research; Ensuring the most efficient institutional system of the Union, guaranteeing the implementation of the agreements adopted; Expansion of economic cooperation in the fields of education, health, tourism and sports; The formation of the Union as one of the most important centres of development in the modern world. Lists of measures and mechanisms have been adopted for each area, with 332 activities in total. A plan for their implementation is being prepared. This is the first time that such a detailed systemic plan for the development of Eurasian economic integration has been drawn up. It includes both the previously adopted and implemented strategic documents that you mentioned, as well as entirely new ones. The latter include scientific and technological cooperation, strategic planning, the development and

implementation of targeted programmes and major investment projects that are important for the integration of education and health, and joint action in tourism and sports. The approach to the planning of EEC work, which has become integrated, systematic and cross functional, is also new. – Which provisions of the SA seem to be the most important, emblematic of the implementation of the provisions of the Treaty and the Declaration to you? – I would not rank the provisions of the Strategic Areas in order of importance. Each of them is aimed at solving current problems and eliminating bottlenecks in the development of integration. The document had been under development for about two years and each of the measures included had been the subject of detailed discussions by authorized officials and experts from States. Many of the proposals were not agreed upon – only those that were deemed necessary for the development of the EEC by all its member States were selected. – Among the key measures on which the ”SA” is implemented, ”The union’s transition to an innovative development path” has been put first. What is this transition and what are its mechanisms?

– We have not defined the level of significance of certain measures. In each direction there are measures of primary importance, without the implementation of which the entire relevant sphere of integration “hangs”. But you are right in the sense that all strategic directions are oriented towards an innovative development path in one way or another. In particular, the use of modern digital technologies is envisaged in all areas of integration, and the measures necessary for their widespread adoption are in the right direction. The special area is devoted to scientific and technological cooperation. It includes measures and mechanisms such as the implementation of joint programmes and high-tech projects agreed upon by the Member States with the involvement of international development institutions, the Eurasian Development Bank and the Eurasian Stabilization and Development Fund; Monitoring the technological development of innovative companies and the introduction of modern technology foresight techniques to inform the development of member States’ economies on a technologically advanced basis; Establishment of national databases of information on science, including technology, according to a single inter-State codifier. This is a crucial area, because STP is the main factor of modern economic EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

growth, and without a steady increase in the scientific and technological level, successful socio-economic development is impossible. – The five years, for which the SA is designed, are short and there is no time to wait. What is being done now, what has been done since the approval of the SA by the members of the Eurasian Economic Council, and what role do you see for the business community in the development of integration processes? – Indeed, time is running out and, once Heads of State have approved the SA as a whole, we have begun planning for its implementation. To that end, a special meeting of the EAEU Business Council was held. An in-depth and informative discussion was very helpful in guiding us. In fact, our work is intended to create conditions for the fullest possible realization of the available productive potential on the scale of a single economic space, business cooperation between the enterprises of the EAEU States with a view to enhancing the social welfare and competitiveness of the economy and promoting its development. Meeting these benchmarks successfully will depend entirely on business community. The development of a market economy is carried out by independent enterprises, and the conditions created

by States should be favourable for their activities to increase the volume and increase the efficiency of production of high-quality products required by society. We have therefore discussed all the SA measures and mechanisms with the business community in the expectation of the active participation of business in their implementation. Frankly, not all of them have received unanimous approval. At the same time, however, these discussions have revealed many reserves for better regulation of the EAEU common market, as well as bottlenecks in the development of the Union’s economy. We laid down measures to eliminate them in the SA. In particular, we have outlined two areas, which I mentioned in full, among all eleven previously, namely, the development of flexible and targeted mechanisms to promote economic development and the building of an effective management system for joint cooperation projects. These directions lay down key measures to complete a single economic space on the basis of the goals of building the Union as an entity with a coherent system of strategic and indicative planning and forecasting. It should also be noted that a number of measures and mechanisms of Strategy 2025 focuses on creating conditions for the development of high-productivity sectors of the economy. It is the develop-

EAEU today and tomorrow

Working moment of the interview in the Cabinet of the Minister. S. Glaziev and Deputy Editor-in-Chief of the Herald O. Preksin

ment of the main directions of industrial cooperation within the Union for the next period, realization of the project ”Eurasian Network of Industrial Cooperation, Subcontracting and Technology Transfer” as well as reducing cross-border barriers and creating conditions for production cooperation. Thus, flexible mechanisms for stimulating economic growth in a comprehensive manner, together with a well-designed system for the development of industrial cooperation and the production of production leaders, based primarily on domestic inputs and production technologies, can provide the necessary impetus for the dynamic development of the EAEU economy. – How is the work envisaged by the SA to remove barriers, exceptions and restrictions to the free movement of goods, services, capital and labour in the Union’s internal market progressing? Is it possible to eliminate all barriers to Eurasian integration at all, or is it impossible to safeguard and especially support national markets? – This aspiration, as you understand, stems from the private interests of individual enterprises seeking to protect their familiar market niches from foreign

competitors. This is a natural challenge at a time when a single economic space is being formed. As the competitiveness and coherence of the EAEU economies improve, their relevance will diminish. Indeed, the work of removing barriers now occupies a significant part of the agenda of all organs of the Union. It is considered a priority at this stage, and the SA provides the necessary measures and mechanisms to enhance its effectiveness. Just before – February 2, 2021 – the EEC Collegium adopted the decision ”On the approval of the Methodology of the Division of Obstacles in the Internal Market of the Eurasian Economic Union into Barriers, Exceptions and Restrictions and Recognition of Barriers Removed”. It will certainly help to bring order to the identification of obstacles and, together with earlier decisions, to remove obstacles in a single economic space. – The development of the digital space of the Union, digital infrastructures and ecosystems has been identified as a separate direction in a common list of measures and mechanisms for the implementation of the SA. The topic is up-to-date and very broad. What is the focus? What is the current status of digitization in the EAEU as a whole

and in individual member countries of the Union? – This is indeed a cross-cutting theme that cuts through all EEC functions, which should be consolidated and streamlined within the framework of the Integrated Information System being developed. Its creation is intended to substantially increase the efficiency of our work, both in the framework of inter-State interaction and in the regulation of the common market. The key digitization measures are indeed in a special direction, which includes the following measures and mechanisms: ensuring traceability of goods entering and moving between the Customs territory of the Union Members; development of a single digital catalogue of the Union’s goods based on the integration of national catalogues of member States; development of a cross-border area of trust, information exchange and electronic document circulation; elaboration and adoption of acts by Union bodies on the creation and development of a cross-border area of confidence in establishing requirements for mechanisms to ensure information interaction between economic entities and the authorities of member States. The cluster also includes the development of Eurasian digital ecosystems, including through the Alliance’s

integrated information system, as well as the establishment of cross-industry digital ecosystems as part of the Union’s digital transformation (particularly in the fields of industrial cooperation, transport and logistics, labour and employment, and others). In short, the theme is truly cross-cutting. And if we are able to shape the profile of the Union industry on the basis of the possibilities offered by the EAEU digital agenda, then, if used properly, it can serve as a powerful tool for realizing the competitive advantages of the Union’s States, especially in industry and finance. – Do the SA contain any new messages for the formation of the EAEU common financial market? – Yes, of course. Measures for the implementation of the EAEU Common Financial Market Concept, approved by EAEU on 1 October 2019, are envisaged in the respective directions. In accordance with this fundamental instrument by 2025, Member States will determine agreed approaches to mutual recognition of licences through the implementation of a standardized licence mechanism for the establishment of a legal entity in the banking and insurance sector, as well as cross-border supply of financial services in the securities market sector within the common financial market. After 2025, Member States will continue to work on harmonization as well as on the formation of a common financial market in accordance with the criteria of the Treaty, including identifying harmonized approaches for the implementation of financial services activities without additional establishment (licensing) as a legal entity, which will be implemented as financial integration is deepened and as the stages of formation of the common financial market and harmonization of the legislation of member States are advanced. The Strategy for the Development of Eurasian Economic Integration 2025 significantly clarifies and complements the concept by setting out new substantive measures that will allow a more decisive pace in formalizing the Union’s financial market. For example, the Strategy provides for the elaboration and conclusion of an international treaty on a supranational body for the regulation of the Union’s common financial market; monitoring and analysis of the use of national currencies in the mutual settlements of States Members and proposals to increase their use; development and conclusion of an international treaty on the admission of brokers and dealers of one Member State to participate in organized trading EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

Russian Federation, a member of the Health Protection Committee of the DG, and a member of the Budget and Taxes Committee of the DG. From 2008 to 2012 he served as Deputy Secretary General of EURASEC. From 2009 to 2012 he was the Secretary of the Commission of the Customs Union. From 2012 to 2019 he was an advisor to the President of the Russian Federation. Glazyev Sergey Yurievich He was born on 1 January 1961. In 1983 he graduated from M.V. Lomonosov Moscow State University in the specialty ”Economic Cybernetics”. He began working in 1983. From 1983 to 1991 he was a postgraduate student, working as a junior researcher, a research assistant, a senior researcher, a Head of the laboratory of the Central Economic and Mathematical Institute of the Academy of Sciences of the USSR. From 1991 to 1992 he was First Deputy Chairman of the Foreign Economic Relations Committee of the Russian Federation. In 1993, he was a leading researcher, acting Head of the laboratory of the Central Economic and Mathematical Institute of the Russian Academy of Sciences, and served as First Deputy Minister, Minister of External Economic Relations of the Russian Federation. From 1993 to 1996 he was a deputy of the State Duma of the Federal Assembly of the Russian Federation and Chairman of the State Duma Committee on Economic Policy. In 1996, he served as Head of the Economic Security Department of the Security Council of the Russian Federation. From 1996 to 1999 – Head of the Information and Analytical Department of the Office of the Federation Council of the Federal Assembly of the Russian Federation. From 1999 to 2003 he was a deputy of the State Duma of the Federal Assembly of the Russian Federation, chairman, member of the Committee of the DG on Economic Policy and Entrepreneurship, member of the Committee of the DG on Credit Organizations and Financial Markets. From 2003 to 2007 he was a deputy of the State Duma of the Federal Assembly of the

From 2015 to present – Head of the Department of Theory and Methodology of State and Municipal Administration, Faculty of Public Administration, MSU im. M.V. Lomonosova. From October 2019 he was appointed a member of the Board (Minister) for Integration and Macroeconomics of the Eurasian Economic Commission. Doctor of Economics, Professor, Academician of the RAS. He has a number of state awards: the medal ”In memory of the 850th anniversary of Moscow” (1997), the gratitude of the President of the Russian Federation (2010), the Order of Friendship (2011), the medal of the Security Council of the Russian Federation ”For services in ensuring national security” (2011), Security Council Anniversary Medal (2017). Among his other awards are the Certificate of Honor of the State Duma of the Federal Assembly of the Russian Federation (2001), the Gratitude of the Chairman of the State Duma of the Federal Assembly of the Russian Federation (2006), the Commemorative Medal of the Anniversary ”100 years since the day of the establishment of the State Duma of Russia” (2006), Medal 1 degree ”For the contribution to the creation of the Eurasian Economic Union” (2015), gratitude of the Chairman of the Federation Council of the Federal Assembly of the Russian Federation (2011). Author of more than 300 scientific works, among which are monographs ”Theory of Long-term Technical-Economic Development” (1993), ”Strategy of Leading Development of Russia in Conditions of Global Crisis” (2010), ”Lessons of the next Russian revolution: the collapse of liberal utopia and the chance at ”economic miracle” (2011), ”Ukrainian catastrophe” (2015), ”Economy of the future” (2016), ”The Last World War. The United States starts and loses” (2016), ”Battle for leadership in the 21st century” (2017), ”Jump to the future” (2018).

EAEU today and tomorrow

exchanges (trade organizers) of other Member States. In addition to a whole list of specific measures, reference is also made to general approaches to the circulation of securities in organized tenders in Member States, as well as to the clarification of the positions of the States of the Union with regard to the development of a common payment space. The strategy also envisages the elaboration of mutual recognition of national rating agencies with the possible subsequent establishment of a federal rating agency. We can no longer rely on the subjectivity of the foreign ”big three” which, according to spurious pretexts, systematically publicly influences the investment climate in Russia and in the allied states. – The development of transport and infrastructure, according to the SA, is aimed at ”sequential and step-by-step formation of a single transport space”. Provides for ”The establishment of transcontinental and inter-State transport corridors, the creation and development of transport infrastructure in the territories of the Member States in the directions of ”East-West” and ”North-South”, within the framework of the interface with the Chinese initiative ”One belt – one way”. How’s the fate of these mega-projects that have been around for years? Where and when can we expect a breakthrough? – Unfortunately, we are not talking about major breakthroughs, and the reason for that is the lack of funding mechanisms. Remember the long history of the Russian-Chinese bridge project over the Amur river? It took the president’s in-

tervention to see it through. A similar situation exists with the construction of a motorway from Western China to Europe, which is only partially constructed. Since then, the People’s Republic of China has carried out similar projects with Pakistan, the Indo-Chinese countries, creating special international development institutions – the AIIB, the SRF – which have complemented equally powerful national ones. We need to follow the same path: to form specialized development institutions, to participate more actively in those already established, to build up our own. For large-scale projects, the SA provides measures and mechanisms such as the establishment of transport corridors, including transcontinental and inter-State corridors, increased passenger and freight transport to realize the transit and logistical potential of the Union. Among other things, the document provides the implementation by member States of joint large-scale high-technology projects capable of becoming symbols of Eurasian integration and the building of an effective system for the management and financing of joint cooperation projects, including the use of the potential of the Eurasian Development Bank, the Eurasian Stabilization and Development Fund and other development institutions operating in the Union, as well as the International Financial Center ”Astana”. – The final section of SA is entitled as follows: ”Formation of the Union as one of the most important centers of development of the modern world”. It contains a very detailed presentation of

the external economic strategy of the EAEU, including the positioning of the Union as one of the centres of formation of the integration contours of the Partnership for Greater Eurasia (PGE). How do you see the way in which PGE is being built, and what steps is the EEC taking or preparing to take to achieve such an ambitious goal? – The dialogue with the States of Eurasia is being organized in various formats, including the basis of the conceptual proposals we have prepared for the formation of the Partnership for Greater Eurasia. They are aimed at making Eurasia a zone of peace, cooperation and prosperity. The establishment of such a zone involves not only the establishment of preferential trade and economic cooperation regimes, but also the development of a continental transport, information and energy infrastructure and the harmonization of international production and a transition to a fair system of monetary and financial relations. The establishment of PGE could serve as a basis for a new world economic order, different from the current system of liberal globalization, based on the principles of the Washington Consensus, restoring the importance of national sovereignty and the diversity of national development policies, polycentricity and mutual benefit of international economic cooperation based on the principles of voluntariness, equality, transparency and strict compliance with the norms of international law. With regard to the steps taken by EEC to establish PGE, in fact the international activities of the Union provide the necessary framework for the development of the concept. This involves partnerships with third countries and regional groupings, both in the form of trade agreements and in the form of framework memorandums of engagement. It is encouraging that significant progress has already been made. EEC has established direct relations with ASEAN, CIS; on the final stage of formalizing the dialogue with SCO we are working with the Governments of 10 Eurasian countries in the format of memorandums (Bangladesh, Cambodia, Greece, Indonesia, Jordan, Moldova, Mongolia, Singapore, Thailand, Faroe Islands), with 4 countries in the form of free trade agreements (Vietnam, Singapore, Serbia and Iran, with which an interim agreement has been concluded) and 1 State – China – in the form of an agreement on trade and economic cooperation. Uzbekistan and Moldova have the status of observer States to the EAEU.

– EAEU international treaties with third countries are mainly limited to foreign trade issues and are aimed at establishing free trade zones. Is it unnecessary to expand the subject to include production cooperation, cooperation in digitization, finance and mutual investment? The development of such links not only stimulates but also stabilizes mutual trade flows? – The Commission always encourages dialogue with partners on the broadest possible range of its agenda. We have much to offer for that purpose, apart from discussing topics in the FTA, which are not as simple as they appear at the first sight. In our arsenal, the universal format is the memorandum of cooperation concluded by the Commission with foreign Governments. We have such memorandums with 14 Governments, and we do not stop there. The list of areas of cooperation proposed by the Commission covers all our supranational competence and can in principle be limited only by the will and capacity of our partners. Such an agenda goes well beyond purely trade policy and includes a vast array of issues of mutual interest, from regional economic integration and customs regulation to the protection of social and labour rights of workers. – And the final question. SA is aimed at ”popularizing membership in the Union and obtaining the status of observer state to the Union”. What are the prospects for the enlargement of the EAEU countries? Will the admission of new members slow down Eurasian integration? EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

– Eurasian integration has gone through two stages in its development. The Customs Union of the Three States was established in 2009–2011, and by 2017 we were to complete the formation of the Single Economic Space. With the admission of two new members, the integration bodies have been reorganized, the supranational authority has been expanded and decision-making procedures have become more complicated. The deadline for completion of the Single Economic Space was extended to 2024. The institutional system of the EAEU is now fully established, and I do not anticipate the need to change it with the admission of new members. There may be some difficulties with the WTO, but since that organization has not yet recognized our customs union, the problem is of a technical nature. In general, EAEU is open to dialogue with the outside world. In its six years of existence, we have developed an extensive international profile and interacted with foreign countries in various formats. One such format is the process of accession to the Union of new States (Armenia and Kyrgyzstan used to follow this path), as well as the granting of observer status to a foreign State with the EAEU (which Moldova, Uzbekistan and Cuba now have). I wish to point out that we have no influence on the way in which our partners decide on the nature of their interaction with the Union. It is up to each State to decide how and in what depth to interact with the EAEU. In the SA, we only stress the importance of maintaining the openness of our Union and identify the mechanisms by which, on the one hand,

the Union can receive requests from partners for increased interaction, and, on the other hand, to convey a message to the partner that such cooperation is good and cost-effective. If the membership of the Union is clear enough from the examples of Armenia and Kyrgyzstan, which have not only travelled this path but also have been in the Union for more than five years, observer status is a relatively new format. The first country to receive such status was the Republic of Moldova, followed by Uzbekistan and Cuba in 2020. These countries are seriously committed to intensifying their cooperation with the Union, participating in invitations to Union bodies without decision-making power and receiving Union documents that are open to the public. With these partners, we are drawing up plans for joint activities and working with their Governments on the entire scope of the Commission’s mandate, and with Uzbekistan a memorandum of cooperation between the Eurasian Economic Commission is being drawn up, which will provide additional infrastructure for the full implementation of observer status. Such partnership can be described as strategic. In response to the second part of the question, I would like to stress that the entry of new members into the Union with their new requests for integration is certainly a certain driver for speeding up integration. Even a factor such as different levels of economic and social development contributes to the search for and identification of new dimensions of integration that, at a minimum, address issues of equalization of economic development.

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EURASIAN INTEGRATION TODAY: TRENDS AND PROSPECTS Suleimenov Timur Muratovich, Deputy Head of the Office of the President of the Republic of Kazakhstan

First of all, it is important to highlight the fact that the idea of creating the Eurasian Economic Union was announced by the First President of the Republic of Kazakhstan N.A. Nazarbayev back in 1994. Today the EurAsEC, the Customs Union, the Common Economic Space, the Eurasian Economic Union are all links in the single chain. They are different stages of the practical implementation of the idea of Eurasian economic integration. This year, Kazakhstan for the second time in history ascended to the chairmanship of the Supreme Eurasian Economic Council, the Eurasian Intergovernmental Council and the Council of the Eurasian Economic Commission. President of the Republic of Kazakhstan, K.K. Tokayev, addressed a distinctive speech to the heads of the EAEU member states, where he identified Kazakhstan’s chairmanship’s 5 priorities. Some of them are the necessities of the modern era, such as accelerated and widespread digitalization. Others, such as the removal of barriers and industrial cooperation, are the continuation of the priorities from the past years. The first chairmanship was obtained by Kazakhstan five years ago

– in 2016. This was in the second year of the EAEU’s existence. Over the past years, the Eurasian Economic Union has transformed significantly. After almost 7 years, today, it is a respected integration platform with an effective multi-level architecture of interstate interaction based on equality, respect and mutual assistance. In addition, the Union is becoming a more attractive economic space to third countries and integration associations. During our first chairmanship in the Union, the first free trade zone regime between the EAEU and Vietnam was successfully proposed and executed. The success of this project made it possible, after 2 years, to accomplish two more important trade agreements: (1) the Temporary Agreement leading to the formation of a free trade zone with Iran and the Agreement on Trade and (2) Economic Cooperation between the EAEU and China. In 2019, two more agreements on a free trade zone were signed – with Singapore and Serbia. Today, EAEU is working on creating free trade zones with Israel, India and Egypt. If we focus on the advantages, we should underline the fact that the exe-

cution of such agreements will help to simplify the access of goods of the EAEU member states to foreign markets. In addition, this will allow the members of the Union to join the global value chains and strengthen the export potential of our countries. In general, despite the consequences of the pandemic, the final indicators of 2020 showed that the economies of the Member States of the Union passed local minimums of business activity with minimal losses. There is a significant merit of the EAEU that once again proved the importance of regional integration cooperation in a global economy. In terms of mutual trade in goods, it is important to note that the structure of trade has begun to change. Trade of raw materials is decreasing and the share of processed products is consistently growing in the EAEU. As a result, we are witnessing a diversification of (1) production and (2) export. In addition to trade in goods, in order to create additional jobs, lower prices for consumers and increase the rate of economic growth, EAEU countries are actively working on developing a single market for services.

Today, the single market for services operates in 53 sectors. Out of them, 36 sectors are functioning as a single market for all of the EAEU member states. For the rest of the sectors, the free trade regime operates with transitional periods. It is essential to understand that the formation of a single market requires the preparation of the service sectors for increased competition and the harmonization of the laws of all participating countries. This requires thorough and tedious legislative work within each EAEU country. Active work in this direction will allow developing specializations, improving competitive advantages of service providers, reducing relative costs, and, in general, increasing the competitiveness of the business of the EAEU member states. In terms of creating conditions for free movement of capital within the Union, a lot of work is being completed to create the functioning of the common financial market of the EAEU. It should be launched in 2025. Even today the EEC, together with the EAEU member states, is working on harmonization of national legislation EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

in the field of the financial market, and also is developing proposals for the formation of key segments of the common financial market. The Consultative Committee for Financial Markets plays a significant role in the creation of a common financial market. The members of the Committee are representatives of central (national) banks, ministries of finance, ministries of economies, and other regulators. Created in 2012, the Committee became an effective dialogue platform for the financial institutions, the regulators, and the EEC. One of the most important results of economic integration within the Union was the beginning of the functioning of a single labor market in 2015. Citizens of the Union countries have received significant advantages over third-country nationals. When working in other EAEU member states, they are not subject to national quotas and restrictions on the protection of domestic labor markets. Social insurance for workers is provided on the same conditions and in the same manner as for citizens of the country of employment. In addition, the

Timur M. Suleimenov is a Deputy Chief of Staff of the President of the Republic of Kazakhstan since July 22, 2019. He graduated from S.Toraigyrov Pavlodar State University with a degree in economics and management in the social sphere and with a degree in law. Moreover, he graduated from the University of Maryland with a Master’s Degree in Business Administration, Management, Master of Business with a specialization in Finance. He holds the certification in the Association of Chartered Accountants and Auditors in the UK. Timur M. Suleimenov served as the member of the Board – Minister in charge of Economy and Financial Policy of the Eurasian Economic Commission, as Minister of National Economy of the Republic of Kazakhstan, as Deputy Chairman of the National Bank of the Republic of Kazakhstan, and as Aide to the President of the Republic of Kazakhstan on economic affairs.

NEWS FROM EAEU

direct recognition of educational documents is ensured without additional recognition procedures. There are also uniform conditions for taxation of personal income. The Agreement on Pension Provision of Workers of the EAEU Member States will allow the workers of the EAEU Member States to fully form, maintain and exercise their pension rights on the territory of all Union countries. This will provide positive dynamics of labor migration within the Union and increase social security of workers. Moreover, within the framework of the Strategic Directions for the Development of the Eurasian Economic Integration until 2025, measures and mechanisms have been developed for further cooperation between the EAEU Member States in the areas of professional qualifications, labor migration, and the development of economic cooperation in the field of healthcare. This is especially true in the context of a new coronavirus pandemic. Therefore, the EAEU unlocked and continues to open up new opportunities for citizens of the countries of the Union. As part of the Strategic Directions for the Development of the Eurasian Economic Integration until 2025, special attention will be fixated on the legal protection of intellectual property in the Internet. In the context of global digitalization, the volume of e-commerce at the end of 2020 increased by 50% compared to 2019. At the same time, many countries around the world, including EAEU countries, were not ready to oppose and persecute the sale of counterfeit goods via Internet commerce. In this regard, it is extremely important to create promptly effective tools for suppressing violations of intellectual property rights via the Internet, which would make it possible to reverse this negative trend. We are expecting decisive actions from the EEC and the competent authorities of the EAEU member states. An important role in the development of the EAEU member states, including the Republic of Kazakhstan, is played by investments from the EAEU member states that are allocated towards joint ventures. It should be noted that since the creation of the Union, the number of legal entities in Kazakhstan with investments from the EAEU member states has doubled and today has reached more than 13 thousand enterprises. It is important to expand these integration processes. The development of industrial cooperation is one of the five

priorities identified by the President of the Republic of Kazakhstan K.K. Tokayev in his address to the heads of the EAEU member states as the Chairman of the Supreme Eurasian Economic Union. The priority sectors for the creation of joint ventures and investments on the territory of Kazakhstan can be the agro-industrial complex, the food industry (meat processing (from the Kyrgyz Republic), fish (from the Russian Federation and the Republic of Belarus), fruits and vegetables (from the Kyrgyz Republic and the Russian Federation), the production of oils and fats (from Kyrgyz Republic, the Russian Federation, the Republic of Belarus) fermented milk products – from Kyrgyz Republic, the Russian Federation, the Republic of Belarus), drinks (including alcoholic – from the Russian Federation and cognac from Republic of Armenia), manufacturing industry, metallurgy (production of metal structures, tanks, tanks and steam generators, metal products and processing services metals (from the Russian Federation and the Republic of Belarus)), mechanical engineering, the construction industry, the chemical industry, the development of the food market infrastructure (construction of storage facilities, wholesale markets); light industry. In the context of the coronavirus pandemic, issues on the creation of joint ventures in the pharmaceutical industry are now also on the agenda. The effectiveness of the Union as an integration project largely depends on the successful integration of state information systems and the expansion of the practice of using digital technologies. As you know, the Supreme Eurasian Economic Council approved the main directions for the implementation of the digital agenda of the Union until 2025 back in 2017. It is crucially important for our countries to ensure high-quality and sustainable economic growth of the EAEU member states, including accelerating the transition of economies to a new technological order, and creating new industries and markets. Currently, work is ongoing in the field of formation and launch of an ecosystem of digital transport corridors in the countries of the Eurasian “five” that will integrate information about vehicles, crew, cargo, permits and accompanying documents at all stages of transportation, technological operations. The creation of a single digital ecosystem that consolidates the flows of logistics information of the five countries

will significantly reduce administrative pressure on business, improve the quality of operational supervision and deepen integration processes in customs regulation. The ecosystem is planned to be formed by 2025. It is important to note that the EAEU countries, together with the Eurasian Economic Commission, are executing consistent and purposeful work to eliminate barriers in the Union’s internal market. It should be understood that existing trade barriers and trade exemptions significantly reduce the potential for mutual trade and investment. Most importantly, they reduce the level of trust in the Union and its capabilities. Moreover, this applies to both domestic enterprises and potential investors. Therefore, the position of the President of the Republic of Kazakhstan has always remained consistent – Kazakhstan is for the systematic elimination of barriers and the development of competitive markets. One of the important tools to combat barriers is a unified system of technical regulation. It allows eliminating technical barriers in mutual trade, protecting the domestic market from hazardous products and improving the quality and competitiveness of manufactured goods. The EAEU adopted 48 technical regulations, 43 of them came into force. Lists of standards for 42 technical regulations of the EAEU were approved, including more than 12 thousand items. Modern standards are the basis for the development of mutual trade with third countries. The regulatory framework for the common markets for medicines and medical devices has been fully formed. It is important to ensure the full application of technical regulations and standards in real life. In general, as noted by the President of the Republic of Kazakhstan K.K. Tokayev in his address to the heads of the EAEU member states: “We, as a Union, must focus on long-term priorities: maintaining the stability of economic and social systems, improving the welfare of citizens and ensuring the progress of the EAEU and its member states. Effective and full-fledged implementation of the Strategic Directions for the Development of Eurasian Economic Integration until 2025 will undoubtedly contribute to the achievement of these goals. “ We are confident that this message, expressed by the President as Chairman of the Supreme Eurasian Economic Union, is fully shared and supported by all countries of the Union.

EURASIAN BUSINESS ELITE Nominations for the year 2021:

”Standard of stability” ”Social responsibility” ”Technological Breakthrough”

Prize: Exclusive Designer Figurine The official award ceremony will take place in November, 17 2021 Address: 2 Bld., 8 Novinskiy Blvd., Moscow

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THE ORGANIZING COMMITTEE: Tel.: +7 495 663 02 08, 663 02 13, e-mail: bev@fbacs.com, office@fbacs.com EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

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Founder’s Page. FBA ЕАС

GENERAL MEETING OF THE MEMBERS FBA ЕАС:

OUTCOME ON MARCH 4, 2021, THE ANNUAL GENERAL MEETING OF THE FBA ЕАС WAS HELD AT THE HEADQUARTERS ON THE KOTELNICHESKAYA EMBANKMENT, 17. THE MEETING TOOK PLACE IN A FACE-TO-FACE AND DISTANT FORMAT. DISCUSSIONS FOCUSED ON THE ASSOCIATION’S ACTIVITIES IN 2020.THE ASSEMBLY APPROVED NEW DIRECTIONS FOR 2021 AND THE ROTATION BY THE GOVERNING BODIES OF THE ASSOCIATION.

President FBA ЕАС Anatoly Tkachuk

The General Meeting was opened by Anatoly Tkachuk, President of the FBA ЕАС. He welcomed the participants and, in his opening statement, noted that, despite the economic and political complexities of the past year associated with the pandemic, the Association had not only successfully adapted to the new realities, but has also grown significantly in quantitative and qualitative terms. Then Anatoly Tkachuk and Chairman of the Board Alexander Murychev presented the Diploma of Admission to the new members of the Association. The meeting proceeded to consider the issues on the Agenda. Oleg Berezovoy, General Director FBA ЕАС spoke about the work of the FBA ЕАС in 2020 and the future directions of the Association for 2021. He noted that the past year had been a challenging one for the global business community. Restrictions on movement could not affect the Association’s usual forms of work between and within States. Electronic communication has come to the fore, which has taken some time to adapt and recalibrate all work, but it has not prevented the implementing all the plans of Association. During the past year, 12 new organizations have become members of the Association, and today the total number of members of the FBA ЕАС is 72, representing 23 countries of the world. The membership structure of the Association are 9 banking unions and associations, 6 banks, 3 business associations, 3 financial organizations, 43 commercial organizations and 8 public organizations. EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

Chairman of the Supervisory Board – Ruslan Beketaev

The Association has representative offices or representatives in 53 countries around the world.In 2020, FBA ЕАС opened new offices in Hungary, Italy, Cyprus, Taiwan, West Africa, Mauritania, Finland. One of the Association’s forms of interaction with international public bodies is the signing of memorandums of cooperation, O. Berezovoy noted it in his report. To date, 18 memorandums have been issued. In the past year, a partnership has been established within the framework of signed memorandums with the Council of Turkish Peoples and the Initiative from Lisbon to Vladivostok.

In 2020, the Association’s leaders participated in more than 30 international events, most of which took place remotely. During the reporting period, the Association’s Office prepared and conducted: 1 meeting of the Coordinating Council and the General Assembly of the members FBA ЕАС. These were face-toface events. In distant format – 5 Board meetings, 5 Bureau meetings, 1 expanded Business Council meeting and 1 joint Supervisory Board meeting with the International Banking Council. A ”round table” devoted to the peculiarities of the work of credit institutions in the condi-

Founder’s Page. FBA ЕАС

General Director FBA ЕАС Oleg Berezovoy

tions of pandemic and the first distant B2B was also held, where the subject of discussion was extraction, processing and realization of amber.

The main event of the year was VII Moscow International Financial and Economic Forum, within the framework of which awards were presented to winners of the International Public Competition ”Eurasia Business-Elite”. A great deal of work was done by the Bureau to implement the decisions taken at the 2020 General Assembly on its reorganization. That is changing the name of the Association, its structure, amending the Articles FBA ЕАС and the Association’s administrative documents, the emergence of specialized committees and new directions and forms of work. The site has been modernized and expanded to meet the new challenges and structure of the Association. In the structure of the Association the so-called ”presidential vertical” appeared: – President; – First Vice-President; – Vice-Presidents; – Committees. Today in the FBA ЕАС has 5 Committees: Committee on Economic and Strategic Development;

Committee on International Scientific and Technical Cooperation; Committee on Ecology and Environmental Management; Committee on Industrial Policy and Engineering; Committee on International Leasing. According to O. Berezovoy, this is an opportunity, which intended to solve specific business problems of the members of the Association. He also told that at the end of last year a series of regular meetings of the President on issues of support of business-projects of FBA ЕАС members began, and in February of this year the first relevant ”round table” took place. The event was well received by the participants. Representatives of 9 countries took part in the ”round table” held by the First Vice President of the Association Alexander Kotlyarski. The topic of the round table was ”Increasing efficiency and safety of work at enterprises of the mining industry”. O. Berezovoy further elaborated on the strategic directions of the Association, namely:

1) Activation of the work FBA ЕАС in the sphere of advisory and expert work. Creation of the ”International Advisory Centre of the FBA ЕАС”; 2) With a view to expanding international contacts, intensify the work on the delegation of heads and members of the Association to the commissions and committees of the EES, the SCO, the BRICS and other international associations; 3) Interaction with the Eurasian Economic Commission and the EES Business Council; 4) Within the framework of the adopted Concept for the Creation of the Digital Platform of the Eurasian Economic Union, the European Union and China ”Digital Belt”, the continuation of work on the creation of MARKET PLACE FBA ЕАС; 5) Organization and holding of the VIII Moscow International Financial and Economic Forum with the working title ”Building bridges, not barriers”. The Forum will take place on 18 November 2021; 6) Organization and holding of the International Public Competition ”Business Elite of Eurasia”. The ceremony will take place on 17 November 2021; 7) Promotion of the Journal of FBA ЕАС ”Eurasian Financial and Economic Herald”, on the pages of which passes International contest ”World through the eyes of a photo artist” announced by the Editorial Board ”Herald”. The competition is held among non-professionals and enjoys constant success. At the end of the speech, O. Berezovoy thanked the members of the Association for their work in the past year, stressing that only the active participation of everyone and personal interest in the result can lead the Association to leaders in the Eurasian business space. The Chairman of the Board of Directors FBA ЕАС Alexander Murychev then addressed to the Assembly. Referring to the political and economic complexities of the past year caused by the pandemic, he noted the steady growth of the Association’s ranks and the continued interest of the international community in its work. In reporting on the work of the Board and the Board of Directors of the Association, A. Murychev noted the good work and strong interest of all members of the Board. Due to the tense of world economic situation, many members of the Association found themselves in a difficult financial situation, which affected the implementation of the Association’s budget. But, more than ever, the cohesive work of the Board and the EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

Chairman of the Board FBA ЕАС Alexander Murychev

Bureau of Management has helped to meet this challenge. Then the General Assembly heard a report from the Commission on Audit, delivered by the President of the Republic of Kazakhstan, Konstantin Topornin. In his report, he noted that, as a result of the audit, the Audit Commission had confirmed the compliance of the Russian Federation’s legislation with all the by-laws and registration documents of the FBA ЕАС, all financial and business transactions, accounting procedures. In conclusion, the President of the Republic of Kazakhstan informed the General Assembly that all expenses incurred by the Association were in accordance with its statutory aims and objectives, and no violations had been detected in the distribution of funds, which

Chairman of the Audit Commission Konstantin Topornin

was also confirmed by the May 2020 audit of the FBA ЕАС. The following participated in the discussion of the reports of the General Director and the Chairman of the Association’s Board of Auditors: Vladimir Kotenev – Member of the Board FBA ЕАС, Managing Director of ”Eurasian Strategic Consulting”, Ambassador of the Russian Federation to Germany in reserve; Evgeny Bazhov – Head of the FBA ЕАС representative office in the People’s Republic of China; Oleg Preksin – Member of the Board FBA ЕАС, Vice-President of the Association of Russian Banks; Samval Chzmachian – Member of the Board FBA ЕАС, Head of the FBA ЕАС Representation office in the Republic of Armenia; Igor Lyubchenkov – Deputy Committee on Industrial Policy Engineering of FBA ЕАС; Grigory Dashutin – Chairman of the Committee on Industrial Policy and Engineering of the FBA ЕАС, Vice-President of the Confederation of Employers of Ukraine; Abdoulaye Sow – Member of the Board FBA ЕАС, President of WARIG Company (Senegal). After hearing the reports of the management of the Association, the Audit Commission and following the discussion, the participants of the Assembly considered the work of the Association to be satisfactory, noting the significant development of the Association, and approved the activities of the FBA ЕАС for 2021. The President of the FBA ЕАС, A. Tkachuk, invited the Assembly to turn to the issue of rotation in the governing bodies of the FBA ЕАС. Ruslan Beketayev, Minister and an Economics and Financial Policy Panel Member of the Eurasian Economic Commission, became the new Supervisory Board Chairman of the Financial and Business Association for Eurasian Cooperation. Askar Salymbekov, Honorary President of the Dordoi Association, was elected Member of the Supervisory Board. Abdoulay Sow and Alexander Kotlyarsky became new Members of the Executive Board of the Financial and Business Association for Eurasian Cooperation. In conclusion, the President of the FBA ЕАС, A. Tkachuk, warmly thanked the participants of the General Assembly, congratulated the women with upcoming 8 March Day and expressed confidence that the 2021 year would be even more successful for the Association.

Founder’s Page. FBA ЕАС

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FBA ÅÀÑ ”BUSINESSDIALOGUE” PROGRAM: round table IMPROVING EFFICIENCY AND SAFETY AT WORK MINING ENTERPRISES

2020 HAS IMPLIED MAJOR CHANGES IN BUSINESS COMMUNICATION AMONG ENTREPRENEURS AROUND THE WORLD. CLOSURES AND RESTRICTIONS ON MOVEMENT BETWEEN STATES AND, AT TIMES, WITHIN COUNTRIES AND CITIES HAVE FORCED THE BUSINESS COMMUNITY TO SEEK NEW FORMS OF COMMUNICATION AND NEGOTIATION, MEETINGS AND BUSINESS CONFERENCES. AN INCREASING NUMBER OF EVENTS HAVE MOVED FROM FACE-TO-FACE FORMATS TO VIDEO CONFERENCES. THE FBA ЕАС HAS NOT BEEN LEFT OUT OF THE NEW TRENDS. AT PRESENT, THE ASSOCIATION CAN PRESENT A PROGRAM ”BUSINESS-DIALOGUES”, WITHIN THE FRAMEWORK OF WHICH MONTHLY ROUND TABLES WILL BE HELD ON VARIOUS SPECIALIZED TOPICS RELEVANT AT THE CURRENT STAGE OF INDUSTRIAL DEVELOPMENT.

On February 26, 2021, within the framework of the new program, a round table was held on the topic ”Increasing Efficiency and Safety of Work in Mining Enterprises”. The event was attended by representatives of 56 different mining companies. Modern digital technologies have made it possible to bring together specialists from Armenia, Australia, Belarus, Germany, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. The subject of the conference generated genuine interest and lively response from the participants. So, in the plans – continuation of the issue’s discussion raised during the round table and a return to this issue in the autumn of this year. The round table was welcomed by Anatoly Tkachuk, President FBA ЕАС. In his address, he noted the relevance of the main theme, highlighted the prospects for possible cooperation and offered a rapid exchange of views on the issues under discussion. First Vice-President FBA ЕАС Alexander Kotlarsky moderated the round table. In his introductory remarks, he noted that in modern enterprises, issues of improving efficiency and safety were directly related to the level of automation of production and technological processes, and in the current stage of development, the most efficient way to solve the problems of automation was to use digital technologies. However, it should not be forgotten that the introduction of digital solutions also entails certain risks that cannot be ignored. And these risks can be various, both in the area of surface information security issues and in the area of the social aspects of the digital transition, for example, when automation aimed at improving the efficiency and safety of work minimizes human participation in production processes and therefore reduces the number of jobs. This risk needs to be taken into account during the digital deployment phase, and one of the solutions is to retraining personnel. Representatives of PROMTEХ (Russia) Andrey Turbal – ”Digital enrichment processes as a tool to increase production efficiency” and Oleg Lettiev – ”Modern approaches to increasing efficiency and safety of underground mining operations” made keynote presentations during the round table. The process of digitization involves many aspects of the enterprise’s life. In addition to the highly specialized tasks and specific solutions offered in the dig-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

First Vice-President FBA ЕАС Alexander Kotlyarski

ital marketplace, the keynote speakers addressed various issues that arised when deciding on the need to upgrade production and that accompany the digital transformation process in all phases of the project Among those issues were: Automation of production processes as a strategic direction for improving the efficiency and safety of workers in the mining sector; The role of digital technology in transforming an enterprise into a modern, highly efficient production; Information security of automated process control systems; Environmental aspects of modernization of production and the risk of technological catastrophes; Social aspects of the digital transformation of production. Both any complex mechanism consists of separate nodes and aggregates, and the process of digital transformation of production consists of specific solutions and the application of new technologies that are linked into a single information space, allowing the enterprise to reach a new technological level. Some of such ”knots and aggregates” were described in reports by the partners of the round table Dmitry Stavostin (SYMPATEX Company, Germany) – ”Minimization of the human factor in analysis thanks to the

flow granulometer OPUS”, Alexander Vinyavsky ( SIEMENS Company, Germany) – ”Personnel Monitoring System”, David Tadevosyan (Technical Director of the Mining and Metallurgical Institute of the Republic of Armenia) – ”Improving Labour Safety at Mining Enterprises” and Denis Harisov (Micromine Company, Australia) – ”Micromine Mining-Geological Information System as a tool for increasing the efficiency of the mining enterprise”. In conclusion, Alexander Kotlarski, First Vice-President FBA ЕАС, summed up the round table and noted that there were great horizons for cooperation in which the Association was ready to become a link.

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BANKING SECTOR OF BOSNIA AND HERZEGOVINA DURING THE PANDEMIC When we think about-analyze the banking sector of Bosnia and Herzegovina, we cannot but put it in the context of the specifics of BiH as a state, on one hand and the global environment, on the other hand. Banking (as part of the Economy) began to develop in the newly established state of Bosnia and Herzegovina (BiH) only 26–27 years ago. As such, it is a hostage of both – good and bad,

within the development of the state, as an institution. The organization of the state by the Dayton Agreement, on the one hand, creates political insecurity outside, and on the other hand, slows down the normal development of civil society-economy, including the banking sector as part of it. The banking sector, as such, has grown into the most developed-most organized part of the economy primarily thanks to

Berislav Kutle,

CEO of the Banking Association of Bosnia and Herzegovina

foreign capital investment and the quality of management of most banks. All these banks have had and still have the support of mother banks in the EU. This regulation, organization, staff training has enabled that BiH banking by its organization and the quality of the balance sheet is already in the EU. Banking had a clear direction – a development strategy within such a complex state (with 14 governments).

Until the end of the first quarter of 2020, everything was well known, banking risks were under control, except for potential-unknown, hitherto imaginary ones, which appeared (like thunder from the clear sky). This risk emerged as the greatest-most uncertain in the history of mankind. All the world’s experts were certain that the world had got rid of all global catastrophes-diseases and that it was time to turn to the research of extending human life expectancy to immortality. Unfortunately, we were all wrong. There was a small (invisible to the eye) virus that turned the whole world upside down. At the same time, it brought so much fear into all segments of society that it paralyzed everyone. We shall solve the health problem much earlier than the resulting fear as a side effect of the virus. In such a new situation, BiH banking (as part of the bloodstream of the state) had to adapt and respond adequately to the crisis. After the first clear signs of a pandemic, banks introduced a moratorium on loans (with the consent of the banking regulator) to all legal entities that had no income due to Covid-19 as well to individuals who for the same reason were left without monthly income. After a short time of adjustment – seeking a solution, the banking sector reacted in a timely manner in all segments and thus prevented the catastrophe. In the first days of the crisis, we tried to find an adequate way to work with clients. Today, we are already noticing at least three new changes that will remain after the crisis. First of all, the process and quality of digitalization as well as work from home were accelerated, which lead to greater efficiency and elasticity while reducing costs. The second segment, which came to the fore, is the need to redefine the relationship between digital and live work. The third finding is the fact that after this crisis – there is no going back. Most of the new alternatives will become longterm reality. From the past, we can only take adrenaline shock as a stimulus for the present. We need to build a new business development strategy and from today (not tomorrow) start looking to the future through new glasses. Analyzing the business results of BiH banks in the last turbulent year, we see that banks have managed to achieve their mission even in such conditions. Banks were and remain self-sustainable, sufficiently capitalized, liquid, and EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

as such capable of performing their fundamental role. Last year, the pandemic had the strongest impact on profitability, which was reduces by almost 50%. The total income of banks declined by only 2%, while operating expenses grew by almost 7%. When talking about costs, it implies standard banking costs, because today it is clear that the negative impact of the pandemic on clients (and thus on banks) is not over. Today, the NPL of the banking sector is at an acceptable 7% with a coverage ratio of over 80%, which reduces the actual NPL by half. We are all aware that one part of legal entities will be permanently left without income, clearly part of employees will remain without their income, which will then change the profitability of banks in the coming years. It is necessary to emphasize that the business in 2020 permanently changed the way banks work. Namely, remote work, accelerated digitalization, cost optimization have resulted in the increased efficiency and resilience of banks. It has become the new present through which the strategy of the future is created. All these changes, as well as the already present real competition of new strong (non-banking) players to create non-interest income, are forcing banks to adjust. Banks need to adapt-respond to these challenges in order to remain competitive in the market. These further forces them to look for new sources of non-interest income – through new

products and ways of working so that they can mitigate the reduced demand (as well as margin) on credit products. Interest income remained the only core product of banks and it will have to be additionally taken into account both from the position of product creativity and from the position of security and profitability. Last year investments in the EU have dropped by 45%, which means that it was even higher in other countries (including BiH). It directly affected the decline in demand for loans on the one hand as well as the decline in small business and consumption on the other. Unfortunately, this trend will continue throughout this year. Despite everything, and all the unplanned negative changes, the banking of BiH has shown-proved that it is still the largest support for the development of the economy and the perspective of the population. All known (banking) and new types of risks will continue to be an integral part of our lives. We must always be ready to respond to them promptly, and at the same time strategically respond clearly enough. The pandemic has helped us understand how we need to build a new business strategy model, in which digitization and remote – working will be increasingly dominant. We must not waste time on “correcting” what has been done in the past, in order to have enough time and activities to act actively in the present (it is the only real one) so that the future will not remain an unfulfilled dream.

EURASIAN FINANCIAL SYSTEM

WORLD AND ARMENIAN ECONOMIES: REFLECTIONS DURING THE PANDEMIC Samvel Chzmachian,

Member of the Bureau of Executive Board of FBA EAC, Deputy General Director of the FBA EAC – Head of Representative Office in the Republic of Armenia According to IMF Managing Director Kristalina Georgieva, the world economy has entered a period of recession, which will be even worse than the global financial and economic crisis of 2008–2009. Economists warn that the coronavirus has already cost the global economy tens of billions of dollars, and the damage that the pandemic will cause in the next two years could exceed $5 trillion, Bloomberg reports, citing economists from the largest financial holdings. “Where before the announcement of quarantine experts in the EU and the US predicted only a slowdown in the growth of world wealth, now most of them agree that the world will become impoverished”, the BBC reports. The World Trade Organization predicts a decline in world trade from 13% to 32%. Meanwhile, the renowned economist Mohammad el Erian made an interesting conclusion: “We live in a global economy that seeks to be connected. However, preserving our health unexpectedly required us to maintain social distance and isolate ourselves. This is contrary to everything that underlies economic growth, prosperity and financial stability”. However, I believe, that there is a significant difference between the global financial and economic crisis of 2008– 2009, and the current situation in favor of the latter. T. The matter of fact is that the

world turmoil, related to the global financial and economic crisis, began with the financial sphere, with blows to the global financial and banking system, including Armenia, while today the financial and banking system is by far more stable, and this gives hope that the current crisis can be overcome more easily, and the economy will recover faster. Nevertheless, the question arises: what awaits the small economy of Armenia in these conditions, the economy of a country that does not have a direct access to the sea and, moreover, that has been blocked for 30 years by two neighboring states, a country that today is experiencing the whole “bouquet” of negative consequences of the war in Nagorno-Karabakh? Recall that in 2009, the country’s GDP collapsed by 14.5%, and by the end of 2020, a decline in economic activity at the level of 7.5% was recorded. Almost all macroeconomic indicators of 2020, namely foreign trade turnover with exports and imports, industry, construction, trade and services, were expected to be negative. A modest increase relative to the previous year at the level of 1.2–1.4% is present only in the field of electricity generation and agricultural production, respectively. According to the results of Q II and III, the Armenian economy entered a period of technical

recession (GDP fell for two quarters in a row). The assessments of the international rating agency Fitch Ratings are not encouraging either; the Agency has revised the outlook on Armenia’s Long-term Issuer Default Rating (IDR) from “Stable” to “Negative” and confirmed the IDR at “BB–”. According to Fitch estimates, the coronavirus shock negatively affects the Armenian economy due to its dependence on commodities (most of the exports), the problems of the Russian economy (private transfers of individuals, trade and foreign direct investment) and tourism. “Despite a robust macroeconomic policy and continued commitment to reform, the economic shock has put government debt on a markedly higher trajectory, and our projections carry negative risks given the COVID-19 outbreak,” the report said. Armenia has recently issued another Eurobonds worth $ 750 million, for 10 years maturity, with a yield of 3.875%. It is noteworthy that the demand for Armenian bonds has never been so high. “At the moment, investors in global financial institutions have accumulated a large amount of money, and they are looking for where to invest”, – Martin Galstyan, the Chairman of the Central Bank said. That is, international investors have unequivocally positively perceived the mac-

roeconomic stability in the country, and this is the most important message. Nevertheless, it should be noted that if the previous issue of Armenia’s Eurobonds is not repaid ahead of schedule, this $ 750 million will also have to be attributed to the state debt. Thus, the level of the latter exceeded 60% of GDP, which is critical for the country. The deteriorating position of the country’s backbone enterprises, thanks to which both the existing export indicators and tax revenues to the state treasury were previously provided, will soon become the main headache for the government. At the same time, there an advantage: following a sharp decrease in copper prices on world markets in March 2020 below the critical level for mining enterprises in Armenia of $ 5 thousand per ton (and copper is one of the main items of Armenian export), in recent months, prices began to grow and are currently approaching $ 8 thousand per ton. Negative developments in the Russian economy, with which the Armenian economy is intertwined in a tight knot, will also worsen the social-economic situation in Armenia. In particular, remittances from individuals are expected to decline sharply due to the slowdown in the growth of the Russian economy and the devaluation of the Russian ruble. In addition, a decrease in private transfers EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

has already been caused by the fact that most of the about 200 thousand Armenian labor migrants until recently could not leave to work in Russia (their usual labor cycle is March-November), and in their own country they don’t have jobs due to the high level of unemployment. But in this regard, from February 1, 2021, a window of opportunity opened: thanks to the mobile application “Traveling without COVID-19” developed by the Eurasian Development Bank (EDB), it became possible for EAEU citizens from Armenia and Belarus to fly to Russia from February 1 to March 1, so labor migrants who are bored without work are already actively flying to Russia. Tourism one of the drivers of the entire Armenian economy in recent years continues to incur huge losses. There is all hope for taming the pandemic by mass vaccination of the population, which will allow the resumption of air traffic on an international level. Last year, the Armenian government adopted more than two dozen anti-crisis support packages for both the population and business with a total value of up to $ 300 million. A part of them is of a social nature, the other is economic. The latter mainly offered various types of businesses interest-free (subsidized by the government) loans for paying salaries, purchasing raw materials and equipment, paying

taxes, making utility bills, and financing their previous loan obligations. It is worth mentioning that such state support, having solved the immediate problems of the entrepreneur, in any case can lead to an increase in the debt burden on the business and, in addition, only business entities with an impeccable credit and tax history will be able to use these support packages. Besides, state support in the form of a small one-time allowance was also provided to small businesses. Nevertheless, all this is not enough to maintain economic activity in the country, so the adoption of additional measures of state support suggests itself. As for the social anti-crisis measures, they involve the provision of one-time and, again, not very large, free assistance to various categories of the population. In particular, dismissed pregnant hairdressers can take advantage of an allowance in the amount of $ 135– $ 270, that is, within the 1–2 minimum salary. At this point, we expect to bring a smile to the reader, because humor today also helps us to confront the pandemic. Of course, we deliberately left out the necessary commas in the list of beneficiaries, although in this case we are not talking about “pregnant hairdressers who have lost their jobs”. That is, seriously, dismissed workers could receive assistance in the amount of 68 thousand drams, pregnant women – 100 thousand drams, and

EURASIAN FINANCIAL SYSTEM

about 100 thousand beneficiaries from 5 areas most affected by the pandemic – hairdressing, tourism, hotel business, restaurant chains and cafes, retail trade (with the exception of food and pharmaceutical trade) – received a one-time allowance in the amount of their average monthly salary, but not more than 2 minimum salaries and at least 1 minimum salary. By the way, the government did not leave even the shadow workers from account, whom the state “does not see”, but provided them assistance in the amount of a grant of 100 thousand drams (about $ 200), so to speak, through their children under the age of 14. And finally, in order to maintain the struggling economy, the Armenian government instructed to intensify the implementation of programs of largescale capital investments of the state, which, however, has been once practically stopped because, as the government used to believe, there was a serious corruption component in them. As the result, the capital expenditures of the state, laid down in the state budgets of 2019 and 2020, were largely underfufilled. Recently, the Central Bank of Armenia expressed serious concern about the low capex rates in previous years, pointing out that “the most important action that the government should take this year” is structural reforms that will contribute to an increase in the potential level of the economy and growth, that is, the state should be able to carry out government spending. Moreover, according to the Central Bank of Armenia, “this year, most

banks may try to reduce their balance sheets, as a result of which it is assumed that banks can slow down the pace of lending”. The head of the Central Bank recalled that in 2020 Armenia survived the coronavirus epidemic and the war, there are industries in the economy that have suffered more than others. “And it is very optimistic to expect that lending to these sectors will be in the same volume as in previous years. Banks, being pragmatic, believe, there will be some revision of the balance sheets this year,” he said. In any case, according to the RA government, any package of state support measures “is not humanitarian aid to the economy,” and it intends to invest about $ 100 million of the total amount of state support in those business ideas that will contain an innovative component that allows Armenian companies to fit in the future into the “new post-crisis world”. According to the government’s plan, those business entities that have a vision of the future and will submit programs for such restructuring of their business that will improve the global position of the company and make it more competitive, can apply for this financing. By the way, briefly about prices and pricing. It is unambiguous that prices for bread, sunflower oil, sugar, lentils, pasta, etc. rose sharply in Armenia, but at the same time prices for meat and meat products decreased slightly. And this is easily explained, since significant volumes of meat and meat products were purchased by a network of restaurants and cafes, of which there are more than a thousand

in the country and where more than 30 thousand workers are involved. It is clear that this sector of the economy has shrunk like pebbled skin amid a pandemic. In a word, COVID-19 came to the Earth very inappropriately, leaving in the past the high macroeconomic indicators of some states, including Armenia, for 2019 and the first months of 2020. And one involuntarily wonders if a combat virus was artificially grown in some secret biological laboratory in order to provoke the collapse of the world order and the global economy. Who knows ... And on the background of what the virus is doing to us (I mean with humanity), together with the undeservedly raised excitement, I think, thoughts about using the opportunity after the coronavirus to change the approach to doing business in general, come to mind. One involuntarily recalls interesting and non-standard reflections of Karen Markaryan, a very well-known in Moscow, Yerevan (and not only) economic circles, economist, writer, thinker (by the way, Doctor of Economics, Candidate of Technical Sciences), author of the worldly popular concept of “Unconditional Basic Income”, his original and extraordinary proposals to change the relationship between citizens, business and the state in organizing the world economy. It is enough to read his article “TaxFree World: Utopia or Reality?” where he demonstrates with simple arithmetic, but quite convincingly, how Russia (and all countries) can live without levying taxes.

BUSINESSES IN COUNTRIES

SOUTH AFRICA: George Sebulela,

President of the South African United Business Confederation (SAUBC), President and Managing Director of the Financial Services Group SEBVEST

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

ECONOMY AND THE ROLE OF THE INDUSTRIAL DEVELOPMENT CORPORATION

BUSINESSES IN COUNTRIES

South African’s and the world at large were eagerly waiting in anticipation as the Minister of Finance, Mr Tito Mboweni prepared to present the budget on Wednesday, 24th February 2021. The economy of South Africa has been severely under pressure as we witnessed multiple of Rating Agencies downgraded it to Sub-Investment level. Challenges such as high unemployment rate of approximately 32% with Youth Unemployment at 54,7%, unstable energy supply to meet the required demand, increase in social grants spending, bloated salary payments for public sector etc. COVID-19 Pandemic sadly did not do justice to the South African economy and has compelled South African Government through National Treasury to reallocate and reprioritize budgets to respond to this challenge. Furthermore, Government Stimulus package had to be also announced, which has been successful in other areas but need to be reviewed and improved in other areas. According to the African Development Bank report “SA is likely to see economic growth of 2.9% y/y in 2021 as it rebounds from the –7.3% y/y collapse of last year. This muted recovery has been accompanied by an unsustainable expansion in government borrowings and a widening fiscal deficit. Planned government borrowings for 2021/22 sit at R4.6 trillion (86% of GDP), and are forecast to reach R5.5 trillion by 2023/24 (93% of GDP) and 95% of GDP by 2025/26. As these ratios deteriorate and SA sinks deeper into a debt trap, lower credit ratings are all but guaranteed. The slide towards C-grade categories reflects concerns about a rapidly increasing risk of default. SA’s credit ratings are likely to fall into the single B grades this year already.” The difficulty of South Africa to be classified as a high risk investment country, will not only find it difficult to attract investments but rather raise capital from capital markets at exorbitant interest rates. This will therefore make difficult for SA Government and State Own Entities to repay the debts. Weak global growth, global trade tensions, and commodity price volatility also pose risks to the South African economy. A high public sector wage bill, poor performance of state-owned enterprises, and social programs, including national health insurance, exert pressure on the budget. South Africa would benefit by manufacturing more for African markets. The only way out of this trap is inclusive economic growth. Failure to achieve (as opposed to simply plan) rapid economic growth and cut state expenditure, is now critical to avoid financial collapse. This requires policies that promote pri-

vate and public sector investment in productive infrastructure and a curtailment of unproductive expenditure on inflated public wages and inefficient SEOs. Reforms are tackling structural constraints to economic growth and job creation. One of them is restructuring the utility company Eskom to reduce the major risk its debt places on the treasury. Other reforms include allocating the telecommunications spectrum, removing barriers to mining investment, and reviewing visa requirements to boost tourism. The government is taking steps to improve investment, revitalizing townships and industrial parks. On a more basic level, a key factor in SA’s failure to achieve sustainable economic growth is the alarming fact that doing business in South Africa is becoming more difficult, not easier. With the pace of regulatory reform lagging other economies in the developed and developing world, SA is becoming less competitive as a destination to set up shop or commit fixed investment. The result is lower employment, lower tax revenues and a negative growth spiral. This will make it difficult for the Government to spend on Infrastructure spend and key priority sectors that has the potential to create more jobs and alleviate poverty as we see it today. Furthermore, the World Bank’s 2020 Doing Business report says “inefficient regulation tends to go hand in hand with rent-seeking. There are ample opportuni-

ties for corruption in economies where excessive red tape and extensive interactions between private sector actors and regulatory agencies are necessary to get things done.” This is particularly true of both South Africa’s onerous regulatory environment and its high levels of corruption. South Africa lacks true, unified outrage against corruption.” The 20 worst-scoring economies on Transparency International’s Corruption Perception Index “average eight procedures to start a business and fifteen to obtain a building permit. Conversely, the 20 best-performing economies complete the same formalities with four and eleven steps respectively. Moreover, economies that have adopted electronic means of compliance with regulatory requirements–such as obtaining licenses and paying taxes–experience a lower incidence of bribery”. It’s clear that South Africa needs to shorten the time taken to start a business. The ease of start a business will assist to activate economy with more SMME development and increase in Foreign Direct Investment (FDI). South Africa has establish SA Invest domiciled in the Department of Trade & Industry with the intention to overcome challenges and obstacles to start a business. Hopefully the president’s address will go some way towards reassuring South Africans that government is alive to the dramatic benefits that can accrue from creating an environment that is more at-

tractive to doing business, and to the dire consequences of maintaining our current slide towards the cliff edge. In many economically strong and socially equitable states, Development Finance Institutions (DFIs) have acted as catalysts for accelerated industrialization, economic growth and human resource development. South Africa urgently needs to accelerate its industrial development and economic growth rates and expand its human resources capabilities. This is necessary not only to address the crippling economic and human development inequalities left by apartheid, but also to match the country’s rapidly growing BRICS partners – Brazil, Russia, India and China. South Africa also has to compete with other emerging markets, while catching up with the established industrial powers of the West. Development finance thus seeks to address financial market failures, and so complements both government resources and market financing. According to the United Nations (UN, 2005:14), DFIs play at least five crucial roles in terms of addressing market failures. Their roles are as follows: Appraise the economic and social development impact of projects seeking financing; Accompany investors in the long run through long-term loans; Offer technical assistance to sectors essential to growth; EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

Attract investors by facilitating financing operations; Alleviate the negative impact of financial crises through countercyclical financing by offering loans, even during downturns, and pooling efforts with regional financing institutions. DFIs are now generally expected to address broader development policy objectives. These include addressing market failures, such as private sector development, employment creation, income redistribution, import substitution, the development of poor groups or regions, as well as developing new industrial sectors or boosting weak ones (UN, 2005). Development banks have played four roles throughout their histories: i) providing complementary capital to under-serviced sectors; ii); new venture support; iii) providing countercyclical funding during economic downturns; and iv) responding to specific challenges. The Industrial Development Corporation (IDC) therefore can play a key role in South Africa for structural transformation by nurturing knowledge development, investing in infrastructure, promoting strategic trade, prioritizing investments in existing key sectors, and providing coherence to economic policies. The collaboration of South African Development finance institutions led by IDC is rather very crucial to assist expand infrastructure development. Infrastructure reduces the production costs of the

private sector and hence increases productivity. This infrastructure investment has the ability to stimulate demand in the South African economic activities through the multiplier effect. Therefore, IDC is very important in the context of regional integration and industrialization. IDC played a significant role in the industrial development of the South African economy. Besides providing funding to the private sector for industrial ventures, particularly small and medium enterprises, the IDC also undertook a number of large-scale projects considered to be of national strategic importance. However, IDC has still not perfected the funding of Black Economic Empowerment transactions particularly where equity contribution is required. There is however commitment from the new Chief Executive, TP Nchocho to push his team to innovate instead of relying on old conventional funding instruments used by the commercial banks. The IDC board of directors are also expected to review all funding mandates to ensure they match market requirements. In the interest of economic development and advancement of South Africa, it is expected that Industrial Development (IDC), Development Bank of Southern Africa (DBSA) and Land Bank (Agricultural Bank) should review their mandates relevant to sector value chain and begin to fully collaborate on projects of industrial, infrastructure projects etc.

BANK. BANK. BANK

CenterCredit Bank – world trends with an oriental accent Galim Husainov – Chairman of the Board of the BCC 34

EURASIAN COMPANIES ARE INTERESTED IN THE BANKING SECTOR OF KAZAKHSTAN. SEVERAL SUBSIDIARIES OF THE LARGEST RUSSIAN BANKS HAVE BEEN SUCCESSFULLY OPERATING IN THE REPUBLIC FOR A LONG TIME. BUT TODAY WE WANT TO TELL YOU ABOUT THE WORK OF THE OLDEST KAZAKHSTANI FINANCIAL INSTITUTION – BANK CENTERCREDIT (BCC). GALIM KHUSSAINOV, CHAIRMAN OF THE BCC MANAGEMENT BOARD, TOLD US ABOUT THE TYPICAL TRENDS FOR THE BANKS OF KAZAKHSTAN, ABOUT THE PRIORITY AREAS FOR ACTIVITY. – Galim Abilzhanovich, how was 2020 for your bank? What events can you single out from those that especially influenced the activities of BCC and the financial sector of Kazakhstan in general? – The year began with a very significant event for the banking system of Kazakhstan – summing up the results of asset quality assessment – AQR. This was a major audit initiated by the National Bank of the Republic of Kazakhstan and it was carried out by an independent consulting company. Asset quality assessment is an approach based on international financial reporting standards and prudential regulation. The purpose of the audit, which was achieved successfully, was to ensure an objective and fair view on bank assets, as well as a reliable and fair assessment of the capital adequacy of the banks under examination. Bank CenterCredit successfully passed this procedure and accepted the recommendations of the National Bank. Today the bank’s loan portfolio is balanced and differentiated. Liquidity indicators are at a high level. After the AQR, confidence in the quality of assets on the part of institutional investors and depositors increased significantly, as it was carried out by an independent consulting company at an international level, and after it, any speculation and gossip about second-tier banks in Kazakhstan disappeared. – Well, then the pandemic broke out, didn’t it? How has the coronavirus epidemic affected the Bank’s activities? Has Covid-19 changed priorities in the BCC product line? – Yes, the next test of strength was the Covid-19 pandemic, which had a rather serious impact on all spheres of activity, and, in particular, on the banking system. As for the priorities, coronavirus did not change, but rather accelerated decision-making in some areas. It is clear that at the very beginning of the epidemic, online services intensified, and this applies not only to banking services. A

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

serious emphasis was placed on remote products. We developed digital services before the quarantine restrictions. We already had mobile applications for both individuals and legal entities in our arsenal. In the very first days of the emergency regime in Kazakhstan when almost 100% bank branches closed, we promptly issued social cards that transferred state benefits. Moreover, we provided loan deferrals for individuals and SMEs. It is worth noting here that our portfolio is dominated by manufacturing rather than trading companies. Therefore, in general, we did not observe a strong deterioration in the quality of the portfolio, and the 91% of those organizations that asked for deferred payments in April last year have now returned to stable operation. – Has the state provided assistance to the people affected by the pandemic? – Yes, of course. During a slowdown in business activity, entrepreneurs were in dire need of affordable loans to stay afloat. Both individual entrepreneurs, whose business is related to retail, and large manufacturing giants need loans to replenish working capital for the purchase of materials and components. In this regard, the bank launched a number of programs together with state funds for supporting entrepreneurship. Thanks to which, SMEs can obtain loans, including unsecured loans, at quite “lifting” rates. At first, they were 8%, and then, according to the directives of the President of the Republic of Kazakhstan, they were reduced to 6% for a period of one year. It is a good program and has been in high demand. – Do you cooperate with foreign financial institutions? – Yes, we are long-term partners with ADB (Asian Development Bank) and EBRD (European Bank for Reconstruction and Development) and international financial corporation IFC, which is a part of the World Bank. Coopera-

tion with the EBRD is carried out in two directions, the first is to support SMEs, and the second is to support the EBRD’s Women in Business program, which was created in 2015 and it is aimed at lending to women entrepreneurs. A very interesting and useful project. As it turned out, women are very responsible entrepreneurs who take business seriously and are careful with loan payments. We work with IFC to improve lending processes and expand the product line to SME clients. – Going back to the topic of digitalization, please tell us how your bank is able to meet the needs of its customers for remote services. – Speaking in the language of numbers, 90% of services in our bank can be obtained remotely. Opening cards and deposits, money transfers, including Western Union, payments for purchases and services, currency conversion and much more. For entrepreneurs, starting from opening an account through a mobile application or Internet banking, almost all services are available remotely. The decision on loans is also made without physical presence of the client and without a credit committee meeting, but on the basis of the client’s scoring card. In addition to speed and convenience, the scoring card completely eliminates the possibility of fraud. – Does this mean that Bank CenterCredit will reduce its branch network? – Definitely not, the mentality of our people is such that despite the general digitalization, many people, especially the older generation, need to come to the branch, talk to the manager and find out the latest news about products and services. We cannot deprive them of this service. We are also currently running a campaign to create self-service zones – 24/7 based on existing branches. In the span of the year, we equipped 13 rooms that meet all the required standards. Therefore, there is no talk about

BANK. BANK. BANK

reducing branches and divisions, quite the contrary. At the moment, banks are in the process of transformation and are slowly becoming fintech companies, which, accordingly, affects human resources within the bank. For example, last year we reduced about 150 positions in operating rooms, mainly cashiers. On the other hand, our headquarters of “IT specialists” has grown greatly – software engineers, IT-architects and so on. – What about your own ecosystem? – We are constantly working on it. Our bank was one of the first banks in Kazakhstan to launch the Open API platform, which allows potential partners to integrate with the bank without lengthy preparatory procedures and to create innovative services for common clients of the partner company and the Bank. The direction of open platforms is a very important component of the country’s financial sector development. On the basis of open platform banks will be able to move away from the traditional banking model and transfer their services to the BaaS / BaaP paradigm, thus creating an impetus for the development of online services focused on quality and convenience for a joint client. – Tell us about the platform for online currency conversion in real time, what is its advantage?

– This is a truly unique platform that works directly with exchange rates. We use a completely new format, in which applications are processed online, that is, the client does not need to call a manager, dealer, or coordinate exchange rates. Through this platform, you can receive information in real time, fix the rate and conclude deals on favourable terms for the client. Back in 2018, our bank was the first in the Republic of Kazakhstan to launch this product for VIP-clients of legal entities, and since May 2019, the service has become available to all legal entities and individual entrepreneurs. Since May of this year, we have been offering an extended conversion project in the BCC.KZ mobile application for individuals. Furthermore, we have provided a personal rate function when a client converts more than $ 20,000, or the equivalent in another currency, with an even lower spread at the time of the transaction. In the absence of an account in a particular currency, the client can open it within the same system in 2-3 minutes. Conversion amount is from 1$ to 4 $ million or the equivalent in another currency. – And what about social projects? – We are acquainted with social responsibility, we support various cultural, sport and educational events. Right now, we are undergoing a large-scale project ded-

icated to improving children`s financial literacy. This practice exists overseas, and the need for such an option among Kazakhstani parents has been a long time in a making. Our children were born and are growing up in the digital world, that is why they learn faster. Therefore, we decided to create practical training for children`s financial literacy – Junior Card for children and Junior Bank Internet banking, where children can independently manage their finances. Of course, we have created all the security conditions. Not all operations will be available to children – automatic bans are included on transactions related exclusively to adult needs: tobacco, alcohol, independent use of auto services, etc. and parents can customize spending limits and receive SMS notifications. Children will also receive push notifications, and they can pay with card, smartphone or smart watch. As part of this activity, we also invite children from all regions of the country to visit sightseeing tours conducted by the heads of branches. We teach children how to use ATMs, terminals and a mobile application. We show children the structure of checkout areas, how cards are printed, and much more. Not all of these children will become bankers or economists, but we have no doubt that they will not be confused when they need to make a financial transaction on their own.

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Russian Union of Industrialists and Entrepreneurs

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Financial & Business Association of Euro-Asian Cooperation

Eurasian Economic Commission

ЕВРАЗИЙСКАЯ ЭКОНОМИЧЕСКАЯ КОМИССИЯ

THE VIII MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM

BUILDING BRIDGES, NOT BARRIERS

2021 18 NOVEMBER MOSCOW

IN THE PROGRAM: – business breakfast – panel sessions FORMAT: – online/offline

+7 495 663-02-08/13

SGK@FBACS.COM

THE ORGANIZING COMMITTEE: OFFICE@FBACS.COM BEV@FBACS.COM

WWW.FBACS.COM

ADDRESS: 2 Bld., 8 Novinskiy Blvd., Moscow Lotte Hotel Moscow EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

GLOBAL TRENDS

THE ROLE OF GOLD DURING THE PANDEMIC Tatiana Fic,

директор по центральным банкам и государственной политике Всемирного совета по золоту

The price of gold hit a record The Corona virus pandemic has high not only in the USD but reached almost every country in the also in other currencies, such world. An unprecedented shock to the as the euro, Chinese yuan, global labour market led to severe disrupSwiss franc, and many other. In tions in the goods and services markets in November 2020, the price exa number of sectors, and a contraction of pressed in Rubel terms went up the global output by 3.5%. The pandemic to 462 RUB, a 60% increase over caused an economic shock three times the year before. worse than the global financial crisis of While the price recorded 2008 and an extraordinary response of its record high, the total defiscal and monetary policies. mand for gold dropped to 3760 During times of uncertainty and critonnes, an 11-year low. The reses investors regularly turn to gold as an sponse of consumers, public asset that provides them with security and private investors to the criand a hedge against financial risks, insis was quite different. Chart 2 flation and currency fluctuations. It has shows the structure of annual also been evident during the pandemic, gold demand by sector. when the conditions of high uncertainty, ultra-low interest rates and large fiscal The global jewellery destimuli prompted investors worldwide mand dropped by 34% as a reto turn to gold as a safe haven and a long sult of high prices and a decline term store of value. in disposable incomes, especialThe year of the pandemic was a “year ly in China and India which of records” for gold. The price of gold constitute half of the global jewhit its all-time highs, the global gold4 500 inellery market. Similarly, Russian vestment demand reached its historical 4 000 consumers reduced their jewelmaximum, while the demand for jewel3 500 lery purchases by 25%. lery and the scale of central bank gold 000 Although 2020 marked purchases slowed down to levels 3that 2 500 the 11th year of central bank have not been recorded for a decade. buying, the official sector deAt the beginning of August 2020, 2 000 mand sharply declined, which, the price of gold reached 2,067 USD 1 500 chiefly, was caused by the disper ounce, its historical high, and1 has 000 continuation of purchases by remained at this elevated level since then 500 the Bank of Russia. Over the (see chart 1). Despite the development last decade the Bank of Russia of new vaccines, the uncertainty has re-0 2019 2020 was the single largest buyer of mained high and the economic recovery Bars and coins Centralon banks gold, adding to itsETFs reserves, from the pandemic is likely to be unevenJewellery average every year, more than and longer than initially expected.

Chart 2. The structure of annual gold demand Global annual demand in tonnes by sector 250

4 500 4 000

200

3 500 3 000

150

2 500 2 000

100

1 500 1 000

500 0 2019 Jewellery

Bars and coins

2020 ETFs

Central banks

Russian annual demand in tonnes by sector 250 200 150 100 50 0 2019 Jewellery

Bars and coins

2020 ETFs

Central banks

Chart 1. The price of gold

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

Jewellery

GLOBAL TRENDS

United States

Germany

Russian Federation

China

India -50

100

150

200

250

Chart 3. Bar and coin demand growth in % 150 tonnes of gold. In April last year the Bank of Russia stopped its purchases, and currently, it holds about 3000 tonnes of gold, which accounts for about 24% of its reserves. The pandemic triggered an unprecedented growth of investment demand which increased to 1773 tonnes – volumes never recorded before. The high demand was a result of record-high gold-backed exchange traded funds (ETFs) inflows. The strength of the ETF demand was the primary driving factor for the rising price of gold, which fuelled expectations of higher returns – and led to further investment in these products. The ETF demand originated mainly in Western markets such as the US and Germany. The bar and coin demand increased by a modest 3% as compared to the year before. However, this concealed significant regional idiosyncrasies. The Western markets witnessed large increases in bar and coin purchases as investors turned to gold as a safe haven. Investors in the East, on the other hand, seized on the opportunity to sell gold at high prices

to add to their budgets tarnished by the pandemic. Russian investors also increased their purchases. The demand expanded by 40%, mirroring investors’ need to diversify portfolios, minimise risks and maximise returns. Due to limited access to gold-backed ETFs, the demand for investment gold was satisfied by bars and coins, with coins being the main product due to a high 20% VAT levied on bars. If not for the tax, the demand would have likely been higher as gold bars could have responded to the financial security needs of a larger group of investors. Chart 3 illustrates the growth of bar and coin demand in 2020 in the US, Germany, China, India and Russia, respectively. According to the World Gold Council’s research , globally, there are clear perceptions of gold as a safe, durable store of value that provides a hedge against risks during uncertain times. Two-thirds of retail investors surveyed in China, India, the US, Germany, Russia and Canada, consider gold a safeguard against inflation and currency fluctuations. They

believe that gold will never lose its value in the long run, and they trust gold more than the currencies of countries. Similarly, Russian retail investors recognise gold as an asset that can provide them with security during crises. More than half of the Russian investors would consider investing into gold despite never having done so in the past. Two-thirds of Russians perceive gold as a hedge against inflation and currency fluctuations, and more than half of them trust gold more than the currencies of other countries. Figure 1 shows the perception of gold as an investment asset by investors in Russia, China, India, the US and Germany. In conclusion, the pandemic has had a significant impact on the gold market. The global demand for investment gold reached its historical maximum, reflecting people’s trust in and perceptions of gold as an asset that provides security during uncertain economic times, times when the currencies of countries depreciate and rising deficits pose risks of high inflation.

The perception of gold by investors in China, India, Germany, the US, and Russia

THE GREAT GLOBAL RECAPITALIZATION 2021 George Littlejohn,

Senior Adviser, CISI London

The CISI is a professional body – the Chartered Institute for Securities & Investment – with almost 50,000 members worldwide, mainly across Eurasia. We were formerly part of London Stock Exchange, so though we are only 30 years old, we have a 200-year heritage – and a Royal Charter from Her Majesty Queen Elizabeth II. We help people, especially young entrants to our sector, understand what is going on, to develop a ‘lingua franca’ which enables them to communicate with fellow professionals around the world. The need for that common financial language has never been greater, as the world faces financial chaos driven by the pandemic, with balance sheets in ruins and a huge and urgent need for sustainable infrastructure development. We need to make sure that capital raisers and issuers round the world are all speaking the same ‘language’ when it comes to expressing their investment objectives, to make the whole process work more effectively. And we must all reinforce that spirit of cooperation which was the keynote of last November’s important Forum. Many businesses have taken on higher levels of debt than they would have planned for because of the virus crisis. The demands of this debt may compromise the growth and viability of many of them, and thus investment portfolios, if there are no supportive mechanisms in place. Significant government and financial services effort is going into understanding and identifying mechanisms to support the recapitalisation of businesses globally. In February 2021, the CISI published research conducted on behalf of our global membership on this important subject. A key development last year in Britain was a report by TheCityUK, the country’s main financial lobby group, which laid out the likely scale of over-indebtedness among businesses. They found that, while EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

there is plentiful private capital, it will be insufficient for the task. Instead, they proposed a UK Recovery Corporation, initially state-owned which, it is hoped, would progressively attract more and more private-sector funding. Without action, TheCityUK warned, one third of 2.3 million businesses could struggle to repay government loans and, by March 2021, there would be up to £100bn of unsustainable debt held by firms, of which £35bn would stem from official loan schemes. In his March 2021 Budget, the UK Chancellor (finance minister) Rishi Sunak painted a picture of Britain’s economy which was at once bleak but optimistic. The UK economy shrank by 10% in 2020 but was forecast to rebound in 2021, with predicted annual growth of 4% this year and a return to pre-Covid levels by middle of 2022, with growth of 7.3% next year. Some 700,000 British people have lost their jobs since the pandemic began, but unemployment is expected to peak at 6.5% next year, lower than 11.9% previously predicted. This year, Britain will borrow a peacetime record of £355bn. The pandemic around the world The pandemic has prompted an unprecedented government response worldwide to support health systems and provide lifelines to vulnerable households and firms. Total monetary measures are running at around US$15 trillion, or close to 15% of global GDP, according to the International Monetary Fund. At a country level, the Canadian Federation of Independent Business for instance estimates that small and medium-sized enterprises (SMEs) had taken on debt totals of US$117bn by July 2020, due to pandemic-induced market conditions. In the US, President Biden’s $1.9 trillion stimulus package is aimed at helping Americans and businesses survive the pandemic.

In India, where the CISI has a significant base, around 122 million people lost their jobs in April alone. And according to recent figures from the IMF, India’s public debt ratio is projected to jump by 17 percentage points to nearly 90% in 2020, as a result of the increase in public spending due to Covid-19. As with most countries around the world, businesses both big and small have struggled to survive. In the UK, nearly 1 in 20 firms are likely to be pushed into technical insolvency due to the levels of debt built up since March 2020. And this may prove to be conservative, given the second wave of Covid-19. Zombie firms If these UK companies can continue to meet their day-to-day commitments, they will be able to continue operating, but if dissolved they won’t have the assets to cover their liabilities. The number of ‘zombie’ UK firms – meaning that their profits only just cover their debt interest payments – rose by up to 4% in the six months from March to September 2020, meaning that the total share of zombie firms in the UK economy is now 21%, representing over one in five companies. The demands of this debt may compromise the growth and viability of many businesses, and thus investment portfolios, if there are no supportive mechanisms in place. This is not to say that supportive mechanisms haven’t been used. Significant government and financial services efforts have been devoted to understanding and identifying mechanisms to support the recapitalisation of businesses globally, and these efforts are continuing apace. So, much work to be done, and we at CISI aim to play our part by linking our members with those of other professions – bankers, accountants and all the rest – around the world.

Expert View

Istvan Langyel,

Secretary General of WACEE – Central and Eastern European Banking Association

WORLD HR TRENDS –

LESSONS FOR CENTRAL AND EASTERN EUROPE

The COVID-19 pandemic has changed people’s lives globally: for the first time, nearly 8 billion people around the world have faced simultaneous measures such as masking, social distancing, restriction of movement, closing of shops, restaurants, theatres, quarantine and curfew. One of the far-reaching consequences of the pandemic is the spread of a remote and hybrid system of staff work. This has implications for the theory and practice of corporate governance and for one of its elements – personnel management. To understand the scale and depth of changes, it is worth to briefly recall the main ”classical” HR problems: Admission and adaptation of new staff; Operational work with personnel (labour organization); Labour and business communications management; Staff promotion/motivation; Measuring the performance of individual departments, directorates, divisions, groups and individual workers through the KPI system; Health and safety of the community; Staff training/development. The pandemic did not fundamentally change the role of HR in organizations but had to change the focus of work.

factor in the success of organizations. In this century, a multi-factor theory of corporate governance (stakeholderism) that initially recognized that, in addition to being responsible to investors and maximizing profits, Corporations also have responsibilities to other stakeholders, such as clients, society as a whole or creditors. Employees of the corporation were also usually mentioned at a late location. With regard to customers, the key requirement was to provide the perfect customer experience; the client’s path from need to completion of the purchase and subsequent experience (customer journey) was widely studied. New positions were created – manager of customer experience management, director of customer satisfaction analysis of product/ service etc. The idea of a ”caring corporation” appeared, which shares with clients their problems and helps to solve them. The company has been created. Instead of products the company began to sell ”solutions”. The basis of this ”client boom” was the assumption that the client is the main source of profit of the company, the quality control and at satisfaction of the product/service – the agent of the reputation of the firm (for example, in social networks).

HR with a human face One important consequence of the pandemic in Western countries is a better understanding of the role of the human

What changes has the pandemic brought? This trend probably would have continued if not for COVID. In the early days of

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

the epidemic, it became clear that the key challenge was not to increase sales but to ensure corporate continuity. In this task, the care of staff has become a key factor. Understanding the role of employees in crisis situations and increasing attention to the human factor in corporate practices determine the fate of companies in the era of the pandemic and probably also in the post-disaster period. If one accepts the thesis that employees are as important to firms as customers, one can draw interesting parallels ”clients – employees” as discussed below. In the pandemics, the ”caring corporation” must care not only for the level of satisfaction of clients’ expectations, but also and above all for the health and well-being of employees. Employee Experience Manager examines how satisfied employees are with the organization and working conditions, including health care; how they assess management efforts in a pandemic; what a team needs to do to work more effectively. Chief Employee Experience Officer may become a board member. Like the study of the client’s path, the analysis of the ”employee journey” became fashionable – from the moment of employment, through professional development to the occupation of relevant positions (note that this is a classic HR under a new name that gives it more weight in corporate governance). While customer ”care” methods began to spread in the work of HR, there

Expert View

was a danger of transferring aggressive marketing approaches to the field of personnel management. Creating a profile of employees, defining a strategic and current KPI are important tools in the hands of HR, but only until they are applied mechanically, and take into account the personal qualities of individual employees and contribute to their professional development. The goal of HR 3.0 is to attract employees to participate in the realization of the common goals of the company, reducing the level of their exclusion from their work. The development of modern technologies makes it possible to thoroughly study the use of every minute of working time of employees, as well as personal activity in social networks. However, even if this is allowed by current legislation in individual countries, it is contrary to the main goal of HR 3.0 – to create a collective belief that ”we are one team”. We cannot allow personnel management to evolve into ”HR with the face of the robot”! What do the staff think? When discussing the theory of ”caring company” HR-managers often point out – yes, it is all right, but are immediately interested: how to make employees work much and efficiently? Do the ideas of the company management reach ordinary employees? The answer is not simple. On the one hand, if there are problems with

sanitary working conditions, with technical support of ”remote” or movement of employees – this immediately feels. On the other hand, solving problems takes time, and employees should participate to the fullest extent in the discussion of current problems, have an effective, interactive communication with management. It is also an element ”HR with a human face”. The management of the organization should consider the staff as partners in achieving the goals and avoid the administrative practices of HR 1.0. This is particularly the case for a group of young staff for whom working flexibly, working in project teams with a clear purpose and greater autonomy is more important than traditional financial incentives. Do top managers understand their employees? In October 2020 IBM Institute for Business Value, in collaboration with Josh Bersin Academy, published an analytical paper with the participation of 1,500 HR executives from 20 countries: ”Accelerating the journey to HR 3.0”. The authors analysed the gap between top managers and HR managers on the situation of staff in a pandemic. The results speak for themselves: in most cases, the top management involved in crisis management, minimizing the losses associated with the pandemic, simply does not understand

the real situation of the staff and the role of HR in the COVID-19 environment. The figures below show a wide gap between the evaluation of managers and staff. 1. High level of business-oriented thinking of employees (whether or not

they consider the goals of the company as their own) – agree: Managers: – 84%; HR – 19%. 2. Does the company adequately assist its employees in acquiring new digital and other skills: Managers – 74 %; Employees – 38 %. 3. Does the company adequately support the physical and psychological health of employees: Managers – 80 %; Number of employees: 46 %. In order to narrow this gap, it is necessary to apply new methods of personnel management, to strengthen mutual communication ”management – personnel”, to increase the role of the first persons of the companies in supporting and strengthening the common corporate culture. These measures are important elements of the HR 3.0 model. Development of HR models before, during and after a pandemic The pandemic has accelerated the transition from classical forms of human resource management to more modern approaches. In real life, these models are rarely seen in pure form, and while theoretically more advanced models provide better corporate performance, a great deal depends on the personal qualities of managers and on the HR staff themselves. EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

Typically, three models (degree of development) of HR functions are distinguished with their respective characteristics: 1.0 Administrative tasks received from management; 2.0 Play a more active role in supporting analytical business solutions; 3.0 Application of automated processes and artificial intelligence, HR – business partner, ”HR with human face”. The pandemic has accelerated the transition to HR 3.0, as most corporate top managers have recognized the need for change in relation to the role and methods of HR. Among these important changes are the following: Strengthening the role of the HR service in the organizational structure of firms; Introduction of Chief Human Resources Officer (HR Director) as a Board Member; Change the approach of the HR function to its tasks; Empathy enhancement by top management and the HR service; Development of communication with staff; A revitalized business-oriented approach by the HR function; Development of flexibility to respond quickly to changes in external conditions; Increased use of new technologies.

HR and communication, HR and modern technology If at the beginning of the article the client experience and the client path were compared with the experience and the way of the employee, such a comparison can be made in relation to external and internal communications of companies. Modern corporations spend huge amounts of money on advertising and marketing based on the brand and the anticipated mission of the firm. The same goes for communication with creditors – you have to make yourself look better. Companies resort to all possible communication channels to deliver their ”messenger” – these are social networks, mobile applications, platforms for teleconferences etc. To what extent are these approaches applied to staff? Do firms have a clear strategy for communicating with staff? Research in this area has shown that employees highly appreciate the regular appearance on their screens of the first faces of the company with a short message which gives an overview of the situation and tasks in the near future – earlier, as a rule, only the board members met with the first faces of the firm so often. For example, the Chairman of the Board of a major Hungarian bank sent a short New Year message to the bank’s customers and employees. When asked which word most describes the bank’s activity in 2020, he replied: ”Care”. Care of clients, care of the bank’s collective and of society in general”. This message, I think, best expresses the spirit of the time and gives the right and necessary guidance to staff in an age of uncertainty. During the pandemic, it became common to establish internal social networks or platforms to discuss company issues. Staff comments and suggestions can be assessed, processed and passed on to management by a dedicated board or HR service team. In a remote environment, platforms have also become the primary tool for conveying a collective assessment of the current situation of an organization, the main operational challenges and strategies in the face of a pandemic. Thus, the HR 3.0 migration tool was created, and the main challenge now is to properly apply it. The main danger is the formal approach, the application of administrative methods complemented by modern methods of supervision of employees and mechanical analysis of their activities. We cannot allow the unique process of accelerated digitization of personnel management, which became necessary in the era of pandemic, to end with the emergence of ”HR with the face of robot”.

TECHNOLOGIES

Oleg Lettiev,

Ph.D., Production Processes Automation Department Director

FOUNDATIONS OF THE DIGITAL TRANSFORMATION OF MINING ENTERPRISES IN MODERN CONDITIONS The need for digital transformation, determined by the decree of the President of the Russian Federation as part of the strategy for the development of the information society in Russia, is due to the requirements of natural competition. The indisputable advantages that an enterprise receives as a result of digital

transformation, expressed in the safety and efficiency of production activities, ensuring product quality and, as a result, reducing costs, are the decisive factors for business today. The essence of digital transformation is to revise the business model of an enterprise, which is endowed with

the property of timely adaptation to changes in external conditions and transforms production into a fully observable and manageable process, ensuring the quality of management decisions based on reliable data. The basis of such a transformation is the end-to-end integration of various enterprise processes,

AWS SERVICES MOBILE CLIENTS

DISPATCHING COMPLEX

MES/ERP SYSTEMS

MULTI-SERVICE DATA TRANSMISSION NETWORK

PRODUCTION SAFETY

PRODUCTION SUBSYSTEMS

TECHNICAL SUBSYSTEMS

FIRE DETECTION AND FIRE EXTINGUISHING AS

MANAGEMENT OF TRANSPORTATION SYSTEMS

NETWORK INFRASTRUCTURE MONITORING AND MANAGEMENT

MINING SITE MONITORING SYSTEM

POWER MONITORING AND MANAGEMENT

PERSONNEL AND TRANSPORT POSITIONING SYSTEM

EXCAVATING SITE MONITORING SYSTEM

MAIN VENTILATION FAN MANAGEMENT

AUTOMATED TIME SHEETS

TRANSPORT DISPATCHING SYSTEM

DRAINAGE SYSTEMS MANAGEMENT

GENERAL MINEWIDE ALARM SYSTEM

WIRELESS TELEPHONE COMMUNICATION

MINE WINDERS MANAGEMENT

ROCK BURSTING PREDICTION SYSTEM

TECHNOLOGICAL VIDEO BROADCASTING

DEPRESSION AND AIR FLOW MEASUREMENT SYSTEM

AUTOMATED VENTILATION SYSTEM

PRODUCTION VOLUME MONITORING

PNEUMATIC SUPPLY

AUTOMATED AIR GAS CONTROL SYSTEM

PRODUCT QUALITY CONTROL

HEAT AND WATER SUPPLY

Further stages are characterized by analytical processing of the obtained data, integration with financial management systems, the formation of a statistical model of the enterprise, the application of artificial intelligence methods to the data analysis in order to optimize management methods and prepare the most informative data for management personnel of all levels. The result of the digital transformation of a mining enterprise is a significant increase in the efficiency of production management systems, including MES systems, primarily due to the elimination of the human factor. In the context of digital production, MES is the main tool for generating analytical information based on data collected from digital systems. MES is an integral part of digital production, a tool for controlling production processes for management personnel, a system that forms a statistical model of an en-

terprise and searches for bottlenecks in production. Digital transformation allows companies to expand their capabilities, reach and maximize the value chains associated with assets and operations, which is extremely important in the face of changing market conditions and shifting technological landscapes. Consolidating previously unavailable data streams, improving visibility and analysis of operations, and providing actionable insights on a basis of a better information can dramatically improve enterprise productivity. All this gives an indication of the inevitable process of digital transformation in all enterprises of the domestic industrial sector, and the company “PROMTEX” is ready to provide expert assistance on this way. Having the necessary experience, the company’s specialists will be able to find a solution that meets any client’s requirements.

ACCIDENT RELIEF PLAN

the organization of their information interconnection, and the transformation of production into an observable and controlled eco-environment, which leads to a general synergistic effect and a significant increase in the efficiency of individual business processes. The main stage in the digital transformation of mining enterprises is to ensure the principle of observability of production. This is realized by the introduction of new automated control systems or the transformation of existing ones in order to obtain complex data that accurately characterize the processes at each moment in time. As a result, the enterprise receives a set of technologically separate automated subsystems, united by a single, multiservice data transmission network and having a single complex of central dispatch control. The purpose of this stage is to create a single information space between all business processes of the enterprise. EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

TECHNOLOGIES

DIGITAL MINING PRODUCTION PROCESSES

In recent years, large mining companies have been actively working in the field of digitizing their production processes, and this corresponds to the trend towards digitalization of the Russian economy and the realities of Industry 4.0. The goal of the digitalization of enterprises involved in solid minerals extraction is the introduction of unattended technologies at all stages of the production cycle: from exploration and production to the resulting product, and also the creation of a digital twin of the mine using which it is possible to monitor and manage the operation of the enterprise in real-time mode. To date, this task has not yet been achieved due to the lack of an information system that would make it possible to solve it comprehensively. However, there are many software solutions in the market that provide the means to automate and simplify the individual production processes of the enterprise, and their integration allows the

enterprise to approach the full digitalization of the mine. There are many groups of information systems used by mining enterprises, depending on the tasks they solve, including dispatch systems, mining and geological information systems (MGIS), and database management systems (DBMS). It is the implementation of the above systems that makes it possible to digitalize most of the production processes, and one of the leaders in the integrated implementation of such software solutions is the Australian company MICROMINE Pty Ltd, founded in 1986 in Perth, Western Australia. Dispatching systems allow real-time control of all technological processes of a mining enterprise’s daily operation in open-pit and underground mining. One such system is MICROMINE’s Pitram system. The dispatch system, using the data received from corresponding sensors, displays all information on the operation of

primary and auxiliary equipment, location of personnel and equipment, works performed, and materials movement. Database management systems are intended for centralized storage and work with databases of primary mining and geological information, advanced and operational exploration data, as well as any other data obtained at the stage of exploration and development of a deposit. Examples of such systems are Geobank and Geobank Mobile. Mining and geological information systems are the software that makes it possible to solve a wide range of tasks: from processing primary geological exploration data and creating a geological model of a deposit for reserves estimation to the design and planning of open-pit and underground mining operations, increasing the efficiency of a mining enterprise. This system is the Micromine flagship software product from MICROMINE.

Grigoriy Fedotov, Head of Educational Institutions and Methodological Support Department, Micromine RUS LLC

Ultimate pit contours, 3D models of dumps, and an orebody block model in Micromine MGIS

The geological model of the deposit is the basis for the planning and designing of mining operations. During its creation, exploration data obtained both at the stage of the deposit exploration and exploitation are used. The final stage in the creation of a deposit geological model is obtaining a block model of a deposit, which makes it possible to estimate the deposit reserves, as well as establish the basic patterns in the distribution of qualitative indicators of a mineral within the deposit boundaries. This approach to modeling the geological structure of a deposit increases the accuracy of the deposit reserves estimation using modern methods of mathematical modeling and statistical analysis of geological data. In turn, this allows a more accurate cash flows assessment at the stage of strategic planning of deposit development. Based on the block model, the position of mining operations is designed in EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

the form of 3D models of a pit or underground mine workings at the end of the deposit development. At the same time, the tools presented in the MGIS allow obtaining an “optimal” mining position. The optimality criterion is the maximization of such economic indicators as gross profit, net present value, etc. In addition to solving mining design problems, modern software packages also allow solving planning problems. Planning can be performed both for the entire lifetime of an enterprise – strategic, and for shorter periods, for example, for five years – long-term, or for a week and daily – operational. When determining the order of the deposit development, the global goals of the company are considered: target indicators of economic efficiency, volumes of final products required to satisfy consumers, etc., as well as technical and technological factors: the number of equipment

units, schedule of their repair, availability of equipment, technological features of mining operations. Taking into account a complex set of these factors, the software allows obtaining the optimal order of mining operations with several scenarios for their development to select the most appropriate. Thus, the following key results of such software solutions integrated implementation are distinguished: The creation of an integrated geoinformation space and a unified digital model of the deposit which is updated and replenished constantly during the process of the deposit development. The formulation of a strategy for reserves development based on the company’s strategic goals, technical, and technological constraints. Operational control over the mine operation to improve the quality and safety of the mining process.

TECHNOLOGIES

Anton Subkhangulov, founder of Trolley Tech

CREATIVITY IS FOR MAN, ROUTINE – FOR ROBOTS

https://www.facebook.com/trolley Techofficial https://trolley-tech.com

WE REALIZED THAT IN ANY CLINIC OR HOSPITAL THERE ARE TASKS FOR WHICH IT IS NOT NECESSARY TO GRADUATE FROM A MEDICAL UNIVERSITY. HOWEVER, DOCTORS AND NURSES IN ALL HOSPITALS AROUND THE WORLD ARE FORCED TO DEAL WITH THEM DAY IN AND DAY OUT. THEY ARE DISTRACTED BY SECONDARY THINGS INSTEAD OF DOING THE MAIN THING – TREATING PEOPLE.

Tokyo, Henn na Cafe. A robot barista named Sawyer prepares coffee for 5 customers at the same time. Moscow, the White square. A small robot courier delivers lunches to the ever-working employees of the business center. Dubai, а police robot is patrolling the embankment. In addition to law enforcement, it successfully helps tourists navigate the terrain. Voronezh, 2 Kuka robots synchronously cook the seams on the huge 16-meter parts of the future railway bridge. They work under the control of adaptive software that does not require human intervention and replace the hard work of 10 welders. Robots appear in hospitals, state institutions, banks, work in warehouses, assemble cars and even sew masks in factories. All these are pieces of a puzzle that form a single picture of the global trend towards automation in all spheres of life. As a confirmation of these words, you can consider the graph below: According to MarketsandMarkets Research Private Ltd data for March 2020, the expected growth of the service robot market is from $ 37 bn in 2020 to $ 201.5 bn by 2025. Hand in hand with this trend is another one – humanization. Robots are taking on more and more complex, dangerous and physically demanding jobs. They can perform their tasks in unsanitary conditions, in any weather and time of day. They save people from the need to risk their lives and health, and give them the opportunity to focus on more complex and creative issues. Ultimately, improving working conditions and improving the efficiency of business processes will have a positive impact on the development of companies and the country’s economy as a whole.

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As the sad experience of last year showed, clinics and medical institutions are now in particular need of robotization. During the coronavirus pandemic, doctors and health workers worked hard to save the lives of patients. Even now, when the incidence of COVID-19 is declining, medical staff is forced to spend a huge amount of time and effort on routine actions. This idea was the starting point for the creation of the company “Trolley Tech” and the development of a service robot designed to help the medical staff of hospitals and hospitals around the world.

In a very short time, within just 2 months, the first trial sample of the robot courier was developed, and in December 2020 it was presented at the international technology exhibition GITEX in Dubai. Despite the increasing robotization of all industries and services, the robot from “Trolley Tech” turned out to be the only one in its niche-multifunctional robots that can relieve not only the medical staff, but also couriers, cleaners, waiters, and remove the most difficult and routine tasks from them. The audience of the GITEX exhibition received the new robot with great

TECHNOLOGIES

interest. It was included in the list of semi-finalists of the Supernova Challenge, beating several dozen other technology startups also represented at GITEX 2020. At the moment, the company “TrolleyTech” has developed 3 modifications of robots. Each of them significantly simplifies a functional area of the medical staff and frees employees from performing heavy, unskilled and dangerous work. Robot courier Disinfection robot Robot concierge. Let’s talk about each of the three types of robots in more detail. The robot courier and its modification-with a built-in refrigerator The robot can independently move medicines, biomaterials, vaccines and documents within the building, build routes, avoid people and furniture on the way, open doors and use elevators to move between floors. The robot is equipped with a cargo container or refrigerator with a temperature of –17 °C for the transport of vaccines. Container/refrigerator load capacity: up to 30 kg Travel speed: 5–10 km/h Battery life: up to 12 hours

Robot sanitizer The robot can independently disinfect the air and all surfaces of the premises of clinics and hospitals in accordance with established medical standards and SanPiN standards. Equipped with UV lamps and an ultrasonic antiseptic sprayer for decontamination of the room. Robot concierge The robot is equipped with a voice and face recognition system, so it can meet and greet visitors, provide them with all the necessary information, measure their temperature and remind them to wear masks. In addition, the robot can take over the functions of primary reg-

istration of patients, accompanying them throughout the hospital to the desired department / ward. In addition, the robot can be connected to the device for quick payment acceptance, which will avoid queues of customers at the checkout and speed up the process of their service. All 3 modifications allow you to unload the medical staff and allow doctors and nurses to devote more time to their immediate work – care of patients. In addition, the “Trolley Tech” robots can be adapted to any other field: industrial production, warehouse cargo transportation, hotel and restaurant business. They can take on all the hard, monotonous, or dangerous work. Imagine workers who never get sick, do not go on vacation, and are able to work around the clock without rest. They do not need to pay salaries, bonuses, contributions to insurance and pension funds. They are not distracted during working hours by communication with colleagues, and they practically do not need to be controlled. They’re just doing their job. Automation of routine, template-based and non-skilled tasks will allow company employees to perform their direct duties more efficiently: solve complex creative and engineering tasks, and provide high-quality service to customers. To return a person to a person – this is one of the main tasks of the company “Trolley Tech”. Its implementation will help people to do what they love, take care of each other and be happy. As a result, motivated employees of companies and satisfied customers will contribute to the development of business, enterprises, services and the economy of all countries as a whole. You can get to know “Trolley Tech” company better and follow the news on Facebook https://www.facebook.com/ trolleytechofficial and on the website https://trolley-tech.com

At Trolex, we save lives. We’ve been delivering world-class occupational safety technology in hazardous environments for over 60 years. Having established market-leading technology in Gas Detection, Strata Monitoring, Ex Connectors and Mining & Industrial Sensors, we have brought to market “the next generation of particulate monitors” as we tackle the biggest occupational safety hazard in modern times - respirable dust. Globally, over 700,000 people die each year from respiratory illnesses. The first release in the Trolex Particulate Monitoring Range is the Air XD, the world’s first and only open-path, full spectrum, highly accurate real-time dust monitor that can operate successfully in a wide variety of harsh and hazardous industrial locations, including mining, construction, aggregates and mineral processing. Most dust monitors are complicated, expensive to maintain and lose accuracy when around high amounts of dust. The Air XD solves these problems. Its open-path brushed stainless steel duct assembly with anti-static coating minimizes dust settlement allows free flow of air through the unit and enables the Air XD to function even in heavy dust loads. The Air XD is 10-100 times more accurate than pre-existing dust monitoring technology, maintaining its laboratory accuracy in dust-loads of up to 1500mg/3 (at least 10 times more than other dust monitors).

Multi-parameter detection points and a wide scatter-zone chamber allow the Air XD to monitor every particle flowing through the unit, from 0.35 to 40 microns, in real-time. Our advanced, on-device algorithm processes 10,000 particulates per second, providing a detailed overview of dust loading in the operating environment. Device connectivity options allow Air XD to report live particulate readings and improve company processes. Like all our products, Air XD was built to save lives while future-proofing businesses, increasing productivity and delivering a clear ROI. Trolex is revolutionising particulate monitoring technology. In 2021, you’ll be seeing even more developments from us in this range. Visit our website to find out more about our products and distributors: EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021 www.trolex.com 53

TOPIC FOR DISCUSSION

DIGITAL LABOR RELATIONS: COMPANY VISION ”EASTSIB HOLDING” Oksana Grobovets,

HR Director of Eastsib Holding

OIL AND GAS IS ONE OF THE KEY INDUSTRIES IN THE RUSSIAN ECONOMY AND THE RAPIDLY GROWING DIGITAL REVOLUTION COULD NOT BUT AFFECT THE COMPANY AND ITS SUBDIVISIONS. THE MOST IMPORTANT FACTORS IN THIS PROCESS ARE STATE POLICY AND THE DESIRE OF THE OIL AND GAS COMPANIES THEMSELVES TO IMPROVE WORK EFFICIENCY.

Despite bureaucratization, innovation is increasingly being introduced into labor laws. Digital technology is becoming integral to the development of employment systems. The COVID-19 pandemic has accelerated the need for digital upgrades in companies and has become an incentive for legislative change. Since the law on electronic employment records took effect in 2020, specific provisions of the national program “Digital Economy” have begun to be implemented in the field of HR. The country’s leadership believes that accelerating the digitalization of labor legislation is a key factor in the recovery of Russia’s economy after the pandemic. The next step will be to bring HR administration to a higher digital level. This will reduce the number of documents processed, the costs of document processing and logistics, and the amount of repetitive work done by personnel departments. Digital technology is being actively used in important areas of HR such as personnel assessment, development and training. The types of digital technology used for such purposes include artificial intelligence, machine learning, virtual and augmented reality. Digital tools such as chat bots, robot recruiters, resume aggregators and built-in analytics have great potential for use in the hiring process. Despite its advantages, digitalization of HR raises several questions, primarily in the field of information security. Business enterprises must ensure data security. Furthermore, developing the digital econEURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

omy requires the creation of specialized services and databases. Another barrier is the financial component – innovations require significant costs, especially at the implementation stage. There is also a need for revising labor laws since modern documents quickly become outdated. Eastsib Holding has taken a wide range of measures to introduce digital tools in the field of human relations. The primary asset of the holding is RNG JSC, which develops the Eastern Blocks of the Srednebotuobinskoye oil and gas condensate field in the Republic of Sakha (Yakutia). The group of companies has over 2,800 employees, more than 80% of which are shift workers. Another feature of the holding is its territorial location. Subdivisions of Eastsib Holding operate in Yakutia, Tyumen, Samara, Irkutsk region, with its head office in Moscow. This creates specific requirements for the digital upgrading of HR management. Eastsib Holding has done much to digitalize personnel record maintenance, personnel training and the implementation of the new legislation. Several business processes have already been automated: recruitment applications, employee hiring, business travel. Personnel record keeping has also be automated and includes vacation requests, transfers, dismissals, resignation lists. At the testing stage, there is an electronic application for charter flights and automatic distribution of pay slips to employee’s e-mail addresses from the payroll department. The most important project for holding in 2020 was the transition to electronic personnel record keeping. The compa-

ny conducted an information campaign in order to collect data and submit reports to the corresponding accounts of the Pension Fund of Russia. In 2021, the company will become a member of the Direct Payments Project and will make payments for mandatory social security (sick leave) directly to the territorial agencies of the Social Security Fund of the Russian Federation by using an electronic certificate of work disability. The company has implemented the OLIMPOKS training and monitoring system – the best program for online training and certification in the field of industrial production. Together with the Center for Training and Retraining of Oil and Gas Specialists of the Tomsk Polytechnic University (TPU), the company launched a joint project to assess the technical competencies of employees. The project provides the advancement of individual development and training plans through the ready-made modules of electronic educational courses at TPU and the Scottish University of Heriot-Watt. It is also necessary to highlight the social aspect of digitalization. The introduction of digital technologies in all areas of business will increase labor productivity, reduce production costs and reduce product delivery time to the end consumer. However, it can lead to labor market upheavals, an increase in the level of unemployment and, as a result, to higher social tension. The digitalization of labor relations is undoubtedly necessary, but it should be controlled at all stages and at all levels of implementation.

FORUM

Iwao Ohashi,

Adviser for Japan and Asia Pasific countries Association of Industrial Parks of Russia, expert member of the Subcommittee on Transport and Logistics of the Committee on International Cooperation of the RSPP

International transport corridor The Financial-Business Association of Euro-Asian Cooperation (FBA ЕАС) annually organizes Moscow International Financial and Economic Forum. In November 2020, when the VII Forum was held, I was invited to its third panel – ”Eurasian transport-economic corridors: construction of highways and crossroads”. Experts from Russia, Kazakhstan, Germany, Italy, China and Japan shared their views at the session. The discussion highlighted a significant and interesting opportunity for the strategic development of Russia’s regions in the future. During the discussion, I focused on the following points. First, in the development of the Eurasian transport corri-

FROM THE TRANSPORT CORRIDOR TO THE ECONOMIC ONE – EFFICIENT WAY TO INCREASE INVESTMENT ATTRACTIVENESS AND INTEGRATED REGIONAL DEVELOPMENT

dor linking Western Europe and Western China, the importance of ensuring ”connectivity” was emphasized. The real development of the international transport corridor goes beyond the mere development of the ”rigid” infrastructure, such as railways and roads. It is equally important to ensure the operation of a soft infrastructure, such as a mechanism for the harmonization of technical standards concerning the organization and management of goods transport, between linked markets along the corridor, as well as Customs registration and digital systems based on a common concept. Russia occupies a large space connecting Europe with Central and East Asia and the Middle East. Russia’s develop-

ment potential is not limited to the use of domestic resources and the expansion of domestic markets, it also aims at the strategic use of one’s own space in the intercontinental development context – with the introduction of the factors of economic growth of neighbouring countries into one’s economy. The development of an international transport corri-

dor is one of the most useful elements in this direction. It is important to develop roads and container railways connecting China and Western Europe through the Russian space. As a prerequisite for this, it is necessary – despite the current turbulent international geopolitical situation – to have the prospect of a stable development of trade relations between the

countries of Europe (primarily Germany) and China. In this context, it is envisaged to strengthen economic partnership and deepen connectivity – through the maintenance of friendly relations between China and the EU, the mutually beneficial realization of cooperation projects within the framework of the China initiative ”One Belt and One Way” as well as through

SIX CORRIDORS AND ONE MARITIME ROUTE OF INTERNATIONAL ECONOMIC COOPERATION WITHIN THE FRAMEWORK OF THE CHINESE INTUITION ”ONE BELT, ONE WAY”

R US S IA Corridor “China – Mongolia – Russia”

KAZ AKH S TA N

M ONG OL IA

Corridor “New Eurasian Intercontinental Bridge”

Corridor “China – Central Asia – West Asia”

CHINA

И Р АН Corridor “China – Pakistan”

Corridor “China – Indo-China”

Corridor “China – Myanmar – India”

INDIA

Corridor “China – Indian Ocean – Europe”

ЕВРАЗИЙСКИЙ ФИНАНСОВО-ЭКОНОМИЧЕСКИЙ ВЕСТНИК | #4 (12) 2021

FORUM

the development of dialogue between the Eurasian Economic Union, China and the European Union in the context of the ”Lisbon-Vladivostok” initiative. Russian national interests In assessing how advantageous the establishment of an international transport corridor in Russia can be for its own socio-economic development, it should be noted that the creation of such a corridor is only a necessary condition, not a sufficient one. The creation of a corridor and the strengthening of economic connectivity through it will primarily benefit foreign initiators. In other words, the greatest benefit from the establishment of an international transport corridor between China and Europe is the consumers (in both markets) of the goods to be imported and exported, as well as the countries with the highest value added in the development chain, production and sale of these goods. This is the case, for example, of branded high-value-added products developed and manufactured in Europe being placed on the Chinese market, or of products containing advanced European components, gathered in China and go back to the European market. Here, it is China and Europe that stand to benefit most from the operation of the international transport corridor through the EAEU, including Russia. In such cases, the potential source of revenue for Russia and other EAEU countries will be limited to road freight charges and container services. From the European and Chinese point of view, the Eurasian International Trans-

port Corridor is an instrument for maximizing efficiency and facilitating trade between them. This is in line with the realization and promotion of their own national interests. Naturally, there is no particular prospect for safeguarding the national interests of the EAEU or Russia. If such interests are to be fully realized, Russia must take a strategic approach in order to ensure its own benefit. On the other hand, there is also no contradiction in the development of the Eurasian international transport corridor between maximizing the national interests of Russia and enhancing the national interests of Europe, China and other EAEU member States. Rather, the more active Russia is, the more likely it is that its economies and those of other interested countries will benefit more. It means the necessity to develop along a corridor, which is regarded as a line performing transport and logistics functions, a belt-shaped space where value added would be intensively created. In other words, the strategic development of the belt along the international transport corridor as a space creating added value through the active use of the effects of the transport corridor would lead to the maximum realization of Russia’s national interests. But the question arises. If railways and roads are built, will the development of the surrounding areas also take place through the free activities of entrepreneurs and investors on the basis of a market mechanism? Probably yes. However, this approach will not always have the greatest impact. In fact, the creation

of value-added spaces and territories is often promoted through a deliberate, strategic approach in line with a defined vision and concept of integrated development. This is the concept of the development of the ”economic corridor”. An economic corridor is an approach to integrated strategic regional development, creating a sustainable and strong growth potential through the creation of an effective cycle of investment promotion and expansion of markets through the revival of economic activity based on a certain capacity for industrial development and the development of physical and institutional infrastructure regions, where the main trunk line (transport corridor) is the axis of strategic development. In fact, any corridor must be created in a favorable business and investment environment, based on a free and open market mechanism. But beyond that, the political will of the State and the vision, concept and strategy to promote development shared by the State, business, people and experts are essential to such an approach. The concept and strategy must be complex, integrated and systematic. Importantly, 3 dimensions – trunk infrastructure development, an industrial development strategy and an urban environment strategy – must be integrated into a common vision for strategic development. In the context of the strategic development of Russia we often encounter the aspiration to development by creating a ”growth point”. However, given the vast territory of Russia and the persistent lack of necessary financial resources, dy-

А CONCEPTUAL FRAMEWORK FOR THE INTEGRATED DEVELOPMENT OF THE REGIONS ACCORDING TO THE CORRIDOR APPROACH

Long-term development vision

Inter-regional balance

СORRIDOR INFRASTRUCTURE DEVELOPMENT PLAN

Open-ended planning process

Regional industry development strategy

Human resource developmen

Social and urban infrastructure development strategy

Environmental and social considerations Источник: Японское агентство международного сотрудничества

Investment promotion

Benefits to local communities

as well as achieving balanced development between regions through the development of other cities a belt-shaped industry centre. Along this line through the efficient use and optimal allocation of the country’s limited capital, labour and technology resources. In order to decentralize industrial capacities, the Government of Japan gave priority to the implementation of major infrastructure projects such as the ”Tokyo-Nagoya” and the ”Nagoya-Kobe” Expressways and the ”Shinkansen” Superhighway (at the time) connecting Tokyo, Nagoya and Osaka. This integrated strategic development approach has enabled the Japanese economy to develop high-value-added export-oriented products. Thus, since the 1960s, the country has successfully implemented structural reforms, resulting in high economic growth. A typical example of an economic corridor, the realization of which started in the first decade of this century, is the industrial corridor ”Delhi – Mumbai” (DMIC) in India. It is India’s first initiative for integrated regional strategic development. The concept is to advance the development of large production and logistics clusters by establishing a highspeed freight railway linking Delhi and the port city Mumbai, and to create an environment conducive to the revival of

”PACIFIC BELT,” WHICH FUNCTIONED AS THE AXIS OF STRATEGIC DEVELOPMENT OF JAPAN DURING THE RAPID GROWTH OF THE 1960s AND 1970s

namic growth with such an approach is often difficult, especially if each point of growth focuses exclusively on its own development and does not create synergies with other points. On the other hand, the Economic Corridor Initiative is an approach aimed at the intensive development of a country and regions through the deployment of growth points along the strategic development axis, with the aim of achieving precisely synergistic effects with each other. Economic Corridors – Foreign Experience Is it feasible to achieve strategic development with such an approach? As far as we know, there are no regions in modern Russia that have achieved development with a clear concept of an economic corridor. But the development of economic corridors can be observed in different countries and microregions of the world, especially in Asia. The most familiar for us Japanese, the development experience according to the concept of the economic corridor is ”Pacific belt”. The concept aims to disperse industrial capacity, which has been excessively concentrated in regions around major cities on the same line as Tokyo, Nagoya, Osaka and KitaKyushu, EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

DELHI – MUMBAI INDUSTRIAL CORRIDOR(DMIC)

DELHI

INDIA

MUMBAI

FORUM

economic activity, building on the work of industrial parks, technological parks, logistics centers, power plants, etc. In a belt-shaped area along a railway covering seven regions. The projected level of investment in this corridor will reach $90 billion, with three million new jobs. The key point of this concept is that not only is the development of a transport corridor envisaged, but also, taking into account the maximization of synergies, expansion and enhancement of local production capacity by actively attracting investment along the corridor between the metropolitan area, which is the largest consumer market, and the seaport on the Indian Ocean coast. In this regard, India has established a PPP partnership with Japan and has succeeded in involving many Japanese companies in localization projects in the respective 7 regions. In the last decade there has been significant progress in the creation and development of the ”Greater Mekong” economic corridors, the prototype of which was developed in 1992. As an extension

of the concept of an international economic cooperation program in the Greater Mekong Macro Region, comprising Thailand, Cambodia, Laos, Myanmar, Vietnam and China (Yunnan Province and Guangxi Zhuang Autonomous Region) since 2000, the territory has been developing economic corridors. Three main economic corridors were aimed at integrated development: ”East – West” connecting Vietnam and Myanmar; ”North – South” connecting Thailand and the city Kunming in China, as well as the northern part of Vietnam; ”South” corridor connecting Thailand and the southern part of Vietnam. The process of integrated development of economic corridors includes not only the development of transport infrastructure that facilitates the integration of economic centres in the macro-region, as well as a number of measures to facilitate import and export procedures and customs clearance at border crossings. It is also expected that the multimodal logistics centres established along these corridors will function as international

ECONOMIC CORRIDORS IN THE ”BIG MEKONG” MACROREGION

transhipment hubs, not only for trade within the macro-region, but also to interact with the markets of South, South-East and East Asia. In addition, the effective development of economic corridors is expected to lead to increased localization of goods production through the creation of industrial parks and special economic zones along the trunk infrastructure. Resulting in social drivers the macro-economic development of the region will expand from coasts to inland areas. Integrated corridor-based development is also being applied in underdeveloped regions of Africa. One example is the strategy for the creation of the economic corridor ”Nacala ”, the goal of which is the leading development of the northern regions of Mozambique. The strategy envisages the integrated development of the regions through active private investment in the mineral (especially coal) and agricultural sectors of the regional economy (using abundant local water resources). The development will be based on the modernization of trunk roads and railways, as well as the establishment of a modern seaport as an international trade hub. As part of the corridor development strategy, program will be developed for agricultural water supply and industrial water supply, electricity and communications, special economic zones, industrial parks, logistics parks and transhipment terminals, as well as program to promote tourism, agricultural production, human resources and regional branding. At the same time, it should be noted that some problems have been encountered in the implementation of this strategy. Many local farmers objected to large-scale acquisitions of cultivated land by large international investors, which could lead to the destruction of the traditional (though low productivity) farming system. Similarly, the introduction of a regional development corridor approach may raise concerns that large non-local investors may seize and monopolize local wealth. In developing the corridor, therefore, special emphasis should be placed on the sustainable management of national and regional interests through consensus-building among authorities, investors, policy makers and the population on the strategic development of the regions.

Танзания TANZANIA

NAKALA DEVELOPMENT CORRIDOR

CONGO Конго

Малави MALAWI

Замбия ZAMBIA

Зимбабве ZIMBABWE

CORRIDOR DEVELOPMENT STRATEGY TARGET REGIONS

Prospects for the development of an economic corridor in Russia In recent years, China has promoted the implementation of the ”One Belt and One Way” initiative, which proposes the development of six economic corridors in the Eurasian continent. For China, the aim of the corridors is to deepen the integration of European and Asian markets. It is assumed that two of these corridors will connect China and Europe through the territory of Russia: the economic corridor ”China – Mongolia – Russia” and the ”New Eurasian Intercontinental Bridge”. With regard to the first, a tripartite development program had already been formulated. Regarding the second, there are common elements with the two international transport corridors of Russia – ”Western Europe – Western China” and ”Meridian”, and as an example, it will be interesting to pay attention to the latter, which is currently moving towards realization. The ”Meridian” project, also known as the construction project of the highway ”Shanghai – Hamburg”, is aimed at connecting border points of Kazakhstan and Belarus through 8 regions of Russia. On this highway, in addition to the maximum speed permit, the weight and length of trucks with containers will be relaxed EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

to international standards. In this way, it will be possible to provide a large number and a short timeframe for transport between Europe and China, which will bring enormous benefits to importers and exporters. For Russia, however, this limits are the main benefit, which will only come from the revenues generated from the payment of truck fares on the highway and the provision of various transit services. Here, strategic evolution of ”Meridian” from the international transport corridor to the corridor of complex economic development may lead to maximization of national interests of Russia. The development of this corridor, which passes through the southern part of the CFD, as well as the regions of the Middle-Lower Volga River, has the potential of a unique opportunity of complex development of the involved regions. In the experience of other countries, the creation of an economic corridor can attract investment in economic activities along and around the backbone by increasing demand and, as a result, increasing the financial viability of projects. In this context, it will be possible to enhance radically the investment attractiveness of the regions along the corridor by locating investment projects and infrastructure in industries such as food processing, Agri-

cultural logistics, details and spare parts, creative goods processing and tourism, as well as improving the urban environment in a way that creates synergies between projects. With the integrated development of transport and economic corridors, the production functions of the regions along them will be integrated into the global value chain of international corporate activities. Also through the strategic transformation of the international transport corridor into an economic effect, the visualization of the development prospects of the respective regions is expected. This will raise expectations of a gradual increase in land prices in these regions and thus increase the possibility of financing investment projects using land and other assets as collateral. According to the Asian experience, funds for the construction of infrastructure facilities for the development of the corridor can be raised not only from revenues from tolls on the highway, but also by creating a mechanism for integrating the interests of different actors in the process of integrated development of adjacent territories. In the light of all this, how everything will turn out in the future depends largely on Russia.

INDIVIDUAL OPINIONS

Ulf Schneider,

Member of the Supervisory Board of FBA EAC, Chairman of the Board of Business Initiative Lisbon– Vladivostok, President & Founder, SCHNEIDER GROUP

CONVERGENCE BETWEEN EU AND EAEU – MORE THAN ECONOMIC BENEFIT According to solid academic studies, the EU could increase its exports to the countries of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia) by more than 50 per cent, if there were a comprehensive trade agreement between the two unions. The other way round the numbers look slightly lower, however, also significant. The economic benefits are obvious, but close economic co-operation between the EU and the Eurasian Economic Union (EAEU) would have advantages that go much beyond economics. An agreement would not only offer a strong statement in favour of multilateralism and against growing protectionism, but it would also provide an anchor of stability for an era of the next generation, and it would contribute to bringing the Chinese-led Belt & Road Initiative into better balance. Take opponents’ arguments seriously Frequent arguments against official cooperation between the EU and the EAEU are Russia’s dominance among the five EAEU countries, that Minsk II must first be implemented, and that Russia must stop its protectionism. It is also often said that the U.S. is against such an economic space, or at least that Poland and the Baltic States oppose it. There is no doubt that Russia is practicing some protectionism. However, it is similar to that of the U.S. (and this may

not change with the new U.S. administration) and China and, to a certain extent, of the EU. Talks with the EAEU would help to reduce protectionism. Politically, the U.S. would not welcome an economic space from Lisbon to Vladivostok. Europe did not interfere with new USMCA agreement (previously NAFTA), even though USMCA is a clear example of the law of the strongest, not the strength of the law. Political and economic stability in the EAEU-countries Since 2015 both European and Eurasian business in its Initiative Lisbon-Vladivostok promotes the creation of a common economic space within the borders of EU and EAEU. Such an agreement of the EU and the EAEU would also greatly increase the importance of the Eurasian Commission. In the event of the retirement of important politicians of the EAEU-countries, a strong Eurasian Commission could help to smooth an orderly transition to successors and have a positive impact on economic and societal development. Europe’s answer to the Chinese New Silk Road One of the questions commonly raised is how the Lisbon-Vladivostok project relates to the Belt and Road Initiative. The answer is simple: it is not in competition, but rather it is the logical European-Eur-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

asian complement. Common standards of the EU and the EAEU would be the benchmark applying to China and also to the newly created Asian trade agreement of 16 countries, called RCEP. The concerns of citizens of both unions regarding the Chinese and their New Silk Road could thus be addressed and better balanced.

ther developments. The author of this article was elected the Chairman of the board. To make more concreate proposals for next step forward the Task forces institution was launched. The customs and transport, technical regulation, visa facilitation, taxation are on the agenda of task forces’ active work. More task forces are on the way.

How the vision can become a reality While the idea of an economic space from Lisbon to Vladivostok is not new, it has so far remained a vision rather than a concrete plan, though that vision is for instance reflected in the coalition agreement of the current German government of Chancellor Merkel. Fortunately, however, there was a first small breakthrough in recent three years. Various constructive discussions took place between the Eurasian Economic Commission and the EU Commission at a working level. These included initiatives such as the Lisbon-Vladivostok working group, which is supported by more than 100 companies and associations from twelve EU and EAEU countries, associations like the German-Russian Chamber of Commerce (AHK), the German Eastern Business Association (Ostausschuss), Russian Union of Industrialists and Entrepreneurs (RSPP), Belarusian Chamber of Commerce and Industry (BelCCI), French-Russian Chamber of Commerce (CCIFR), Italian Confindustria-Russia, corporates such as Siemens, Schneider-Electric, Raiffeisen International (Austria), Severstal (Russia) and others. An international executive board was established with members from Austria, Belarus, Belgium, France, Germany, Italy, and Russia, which will coordinate fur-

Technical regulatory standards could make the difference for trade The support of the German Federal Ministry for Economic Affairs contributed to first results. Economic research studies show that the EU business would benefit more than business from the EAEU. In order to make it a real win-win situation, the EU should consider the interests of the EAEU countries, for instance significant visa liberalisation, just like these countries did for the EU citizens. This, in turn, would benefit the EU businesses, for example those working in tourism, aviation and fashion. Such a common economic space can be part of a European-Eurasian security architecture, from Lisbon to Vladivostok or even from Tokyo to Vancouver (via Europe), and should include countries such as Georgia, Serbia, Moldova, and Ukraine. Trade can be decisive in power politics. And as the tragic Ukraine conflict has shown, the nation with the power to set regulations on technical standards is the one that has the upper hand in foreign trade. The New Silk Road and the new Asian trade agreement RCEP might become another example for that. The EU and EAEU could balance this with harmonized standards and regulations within the vision of a common economic space from Lisbon to Vladivostok.

INDIVIDUAL OPINIONS

NOW IS A GOOD TIME FOR INVESTMENT IN RUSSIA

Vittorio Torremobini,

President of GIM-UNIMPRESA Association of Italian Entrepreneurs in Russia

Many Italian companies that work or wish to work with Russia often ask us the same question: ”Can Russia overcome the obstacles that the West has put in the way of its development?”. Of course, it is not easy to answer this question in a few words, but I will try to summarize briefly and concisely my personal point of view and that of our Association. At the geopolitical level, Russia must confront the West’s very poorly concealed attempt to divide the great Federation into many small states, as happened in 1991 with the Soviet Union. These actions have continued over the past 20 years, along with attempts to sever relations between Russia and the former Soviet republics – Georgia, Ukraine, Kyrgyzstan, Moldova and, more recently, through a renewed escalation of tension – Armenia and Azerbaijan. However, Russia’s strong leadership, represented by Vladimir Putin, largely prevented the catastrophic consequences of these numerous attempts. From a macroeconomic perspective, Russia is showing indicators of absolute respect. It is important that, in the military sphere as well, we believe that Russia has achieved a level of efficiency and equipment unprecedented in the past. From the point of view of relations with neighbouring countries, the establishment of the Eurasian Union has laid the foundations for the restoration of opportunities for economic and political development in an area that today finds itself at the centre of world geopolitical interests.

And if all of these are objective prerequisites to illustrate the true picture of the country’s current situation, we believe that it is very risky to think that continuing provocations against Russia (such as the most recent one, which Alexei Navalny has become a nationalist and xenophobic) may cause upheaval in the current political order of the Russian Federation. Likewise, further tightening of sanctions and hostile actions by the US and Europe seem unlikely, because of the very serious damage that this policy has caused to European economies, as well as its insignificant consequences for Russia. On the contrary, the policies pursued by the Russian Federation and the Eurasian Union countries have created new incentives for the development of the industrial system, especially the Russian and agro-industrial sectors. All this is easily confirmed by the import statistics of the new equipment and technologies that form the basis for the development of these sectors. This situation makes it more interesting to see a return to the investment race by Western companies interested in maintaining their market share, especially in sectors that were previously almost covered by imports. The Russian Government’s measures aimed at reconsidering and harmonizing public investment support instruments, which have increased sharply in recent years, even without a real possibility of market analysis, and at reforming the specific structure of the industrial system, are very interesting.

The resumption of experimentation with special economic zones and the concentration of different institutions in BEA is a good starting point for many companies, especially foreign ones, to look more confidently at new industrial investments. It is appropriate to say what investments Italian companies have made in Russia in recent years. Since 2000, when the Merloni group (INDESIT) opened its production in Lipetsk, Italian small and medium-sized companies have created more than 100 production units in a variety of sectors employing about 80,000 employees and turnover exceeds 7 billion euros. Despite the difficult political and economic situation, over the past 8 years many companies have been opened in various Russian regions, including Moscow, Kaluga, Lipetsk and others. New investments are already planned for 2021 in the above-mentioned regions as well as in the Ivanovo and Primorsky region. Of course, we could have provided a more detailed analysis, both by industry and by specific development perspectives, but both this data and what was said earlier, in our opinion, sufficient to answer the question put at the beginning of the article. So, Russia is slow, but can overcome all obstacles. It is for this reason that we are confident that the moment is propitious for a new series of industrial investments in the Russian Federation. ”Train” development – with the strong and safe engine – is slowly going on the way, and we do not think that we can allow it to pass.

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www.metrans.ru +7.495.642-59-99, +7-977-829-54-12. Whatsap, VIBER, TELEGRAM +79256425999 Facebook – https://www.facebook.com/met_logistic-113807833756128 INSTAGRAM: met_logistic 65

Photo Contest

PHOTO CONTEST “THE WORLD THROUGH THE EYES OF A PHOTOGRAPHER” – 2020. RESULTS Photographic art became a routine long ago. The photography does not just reflect reality – it reflects the reality in accordance with the outlook of a photoartist, his idea reflected in the picture. Here we find philosophy, beauty; and here is no place for falsity like in any other art. Everyone has a chance to take part in the art of photography – everyone who wants to share the beauty of the world around, who can feel this world, often even more delicate than professional photographers. And it is great because creativity is an inherent part of people’s life and makes it worth living… That is why the idea of the contest appeared – for those who wanted to share their view of the world, to awake emotions and the sense of belonging to the beauty – and thus to make our life more interesting and diverse. For the second year the Editorial Board of the Eurasian Financial & Economic Herald organizes the international contest “The world through the eyes of a photographer” for non-professional photographers. There are different topics: ”countries and cities”, ”home nature”, ”an artist in his own right”, ”world of emotions”,

”snatch a moment”, ”family album”, ”package of impressions”, ”incredible is close”, ”proactive attitude”. During the last year magazine readers saw the works of non-professional photographers from different parts of the world. 15 authors from 11 countries have progressed to the finals having sent 119 works to the Editorial Board of the Herald. The finalists of the contest were: 11 authors from 7 countries have progressed to the finals having sent 200 works to the Editorial Board of the Herald. SEAD SASIVAREVIC – Bosnia and Herzegovina FEODOR AFANASOV – Romania IRENA JAGER A. – Slovenia DMITRY SIGIDA – Russia LAMJAV BOLDBAATAR – Mongolia ALEXANDER SIDORENKO – Russia NIKOLAY SCHETNIKOV – Russia OSPAN ALI – Kazakhstan NADEZHDA MAROCHKINA – Russia JURIY KACHURIN – Russia TATYANA ORLOVSKAYA – Kazakhstan

WINNERS OF 2020:

FIRST PLACE DMITRY SIGIDA, Russia

SECOND PLACE NIKOLAY SCHETNIKOV,

THIRD PLACE OSPAN ALI,

According to the results of online voting conducted on the website of the Association, ALEXANDER SIDORENKO, Russia, became the winner in the nomination “Audience Award.” The Editorial Board of the HERALD seeks for diverse formats of defining the prizewinners, from absentee to interactive voting. You can decide what the final of the contest will be like in 2020. The photo contest goes on! We are waiting for your ideas, proposals and of course new beautiful works to participate in the contest “The world through the eyes of a photographer”. All works can be found on FBA EAC web site: http://www.fbacs.com/articles/ raboty-fotokhudozhnikov.html Contacts: sgk@fbacs.com, bev@fbacs.com, office@fbacs.com +7 495 663-02-08, 663-02-13, 663-02-19 66

EURASIAN FINANCIAL & ECONOMIC HERALD | #1 (12) 2021

ФОтоконкурс

«МИР “THE WORLD ГЛАЗАМИ THROUGH THE EYES ФОТОХУДОЖНИКА» OF A PHOTOGRAPHER”

2021

Редакционный сове т «Евразийского финансовоэкономического вестника» объявляет о продолжении конкурса «Мир глазами фотохудожника» — 2021. Мы ждем, что в этом конкурсе примут участие люди, влюбленные в свою родину, истинные ценители красоты, те, для кого фотография не профессия, а увлечение, способ самовыражения, желание делиться радостью от увиденного и пережитого.

The editorial board of the magazine “Eurasian Financial and Economic Herald” continues with the competition “The world through the eyes of a photographer” – 2021.

СРОКИ Прием работ — с февраля по октябрь 2021 года.

PHOTO STYLE «Countries and cities», «Native nature», «Self-artist», «World of emotions», «Snatch a moment», «Family album», «Package of impressions», «Incredible is close», «Proactive attitude»

КОЛИЧЕСТВО ФОТОРАБОТ От 6 до 10 ПОДВЕДЕНИЕ ИТОГОВ 15 ноября 2021 года Контактная информация

ТЕМЫ ДЛЯ ФОТОГРАФИЙ «Страны и города», «Родная природа», «Сам себе художник», «Мир эмоций», «Лови момент», «Семейный фотоальбом», «Багаж впечатлений», «Невероятное рядом», «Активная жизненная позиция»

sgk@fbacs.com, bev@fbacs.com, office@fbacs.com +7 495 663-02-08, 663-02-13, 663-02-19

Диана Раджиб Родилась в г. Москва, (Россия) Консультант по стратегии (Франция)

This is a competition for those who take photos not for profession but for hobby, self-expression, willingness to share joy from what they have seen and felt. TIME LIMIT Works are received from February to October 2021 NUMBER OF PICTURES 6–10 WRAP-UP November 15, 2021 CONTACTS

Diana Radjib Was born in Moscow, (Russia). Strategy Consultant (France)

Андреа Болди Родился в г. Ареццо (Италия) в 1967 году Предприниматель, владелец бизнеса

Andrea Baldy Was born in Arezzo (Italy) in 1967. Entrepreneur, Business owner

Ваник Габриелян

Родился в г.Арарат (Армения) в 1960 году. Электрик

Vanik Gabrielyan

Was born in Ararat (Armenia) in 1960. Electrician

ЕВРАЗИЙСКИЙ ФИНАНСОВО-ЭКОНОМИЧЕСКИЙ ВЕСТНИК | #1 (12) 2021

HERALD – MARCH 2021

Articles inside

THE ROLE OF GOLD DURING THE PANDEMIC Tatiana Fic

FROM THE TRANSPORT CORRIDOR TO THE ECONOMIC ONE Iwao Ohashi