In September 1997 the rate of the reduction in solvent demand for industrial products practically did not change comparing to August. The balance ( up- down) keep its negative values- the demand continues to decrease. The positive balance was received only in terms of the industry of construction materials: in this branch the demand was slightly growing. As to the other branches, the demand was reducing there.
The estimations of the volume of demand showed that the unsatisfied demand grew by 3 points. The share of the “below norm” answers grew in all the branches, but ferrous metallurgy and construction industry.
In September the production growth remained by industry as a whole: the share of answers concerning the increasing output once again exceeded the share of answers concerning its fall. For the first time since April 1993 the surveys registered the industrial growth in March 1997. Since March the decline renewed only twice- in May and July. In September the increase in output was registered in non- ferrous metallurgy, petrochemical industry, machine building and construction industry. The most intensive reduction was reported by the food ( -15%) and wood- working (-12%) branches.
The estimations of production ( by the balance) did not change for the last month. However it is worthwhile to note that the share of the answers “normal” (19%) was the best in 1997.
In September the lack of the stock of finished products in industry grew. Only 20% of enterprises consider their stock to be excessive. This is the best value from the moment of the beginning of registering the said indicator in March 1992. The insignificant (+4%) excess of the “above norm” answers over the “ below norm” answers was received only in food industry. In the other branches more “below norm” answers were registered.
By the industry as a whole the producer prices have not been changed for the fifth month running. The balance ( up- down) slightly differs from zero, while the share of the” remained unchanged” answers grew up to 87% in September. In September the negative balance ( the absolute decrease in prices) were registered only in metallurgy. In other branches the prices slightly grew.
The forecasts of change in production improved by 6 points. The positive values of the balances of forecasts ( up- down) remained the same since the beginning of this year- the share of enterprises expecting the rise in their output steadily exceed the share of enterprises envisaging its reduction. In September the negative balance of expectations
(-10%) was registered only in the industry of construction materials. In the other branches the balances are substantially positive ( +16...+32%).
In September the decrease in the forecasts of change in prices stopped. For the last five months the balance of expectations is within the interval of +6%...+8%. At the beginning of 1997 its value made up +24%. In September the answers concerning the envisaged decrease of producer prices were dominating only in construction industry. In the majority of other branches the moderate (+4%...+11%) price rise is possible.
The forecasts of the change in demand improved by 5 points for the last month. These forecasts remain positive by industry as a whole since January 1997. In September pessimism dominated only in construction industry. The other branches have more hope for the increase in solvent demand.
Individual business: some aspects of development
With the beginning of reforming the Russian economy in the early ‘90-s, the situation on the labor market cardinally changed. Practically everywhere in this country enterprises were getting rid of their employees, especially in the production branches of the Russian economy’s state- owned sector. Between July 1991- February 1992 the number of unemployed grew almost 4 times. As of today the number of unemployed makes up 6.7 mln.
The decline was especially sharp in the light industry’s branches, which resulted in complete depletion of the extremely poor Russian market of consumer goods.
Resulting form the effect of such factors, together with the introduction of the domestic convertibility of Ruble and freedom in traveling abroad, the most enterprising people, who were not happy with their position, started the individual import ( so called “shuttle” business).
According to the data of the State Customs Committee, in 1993 3% of passengers imported to this country the same amount of goods as the other 97% of travelers. These statistical data was received by the results of the customs procedures performed with regard to the baggage of passengers, who arrived from Turkey and UAE. There is certain circle of the countries, on which the Russia “shuttles” focus- Turkey, Poland, China, India, UAE, South-East Asia, Germany and Italy. According to some estimations, the volume of the “shuttle” trade with some countries was several times superior to the respective official goods turnover and reached 10- 15% of the Russian imports.
The share of the “shuttle” business reached up to 70% of the import of non- expensive shoes, clothes, approximately 50% of leather goods, up to 30% of audio and video equipment, and the overwhelming part of cheap bijouterie also falls on this type of trade Thus, in the national economy there is a new branch operating within the framework of non- trading turnover, therefore not bringing about any profit to the state budget.
The general fiscal orientation of the policy of regulating foreign trade has resulted in the rules of importation of goods performed by individuals. In order to regulate the “shuttle” business and carry on a real control over it, on 23 December, 1993, the RF government adopted the Resolution # 1322 “On the order of transfer across the customs border of the Russian Federation of the goods not designated for production or other commercial activity performed by physical persons”. From the viewpoint of customs fees, the new order equated “regular” import and the “shuttle” import: from that time, the individuals could import the goods worth USD 2 thousand exempted from customs duties. As to the goods exceeding the said quota, they were subject to imposing the unified rate - 60% of their customs value.
With the Resolution of the RF government # 533 of 3 June, 1995, the unified rate of customs duties was decreased twice- to 30%. However, within the framework of the struggle against decreasing customs value, the specific customs import duties were introduced with regard to a number of goods (in ECU for pc. or kg.). The list of such goods comprises shoes, audio and video equipment, TV- sets, video games and cartridges to them, toys, leather and fur clothes.
Due to the necessity to make up the budgetary losses resulted from the cancellation of export duties in 1996, the conditions of importation of goods to the Russian territory performed by individuals hardened. The Resolution of the RF government # 808 of 18 July, 1996 “ On the order of transfer across the customs border of the Russian Federation of the goods not designated for production or other commercial activity performed by physical persons”, the norms of the importation of goods performed by individuals, which are exempted from import customs duties, were lowered from USD 2,000 to USD 1,000, given that the total weight of the said goods may not exceed 50 kg. The articles of any assortment worth up to USD 10,000 ( but with their weight not over 200 kg.) are subject to imposition of customs duties, using the unified rate of 30% of the customs value, but not less that 4 ECU per 1 kg.
Although the life of “shuttles” became more complicated, the majority of them have not quitted their business. According to the recent survey, every “shuttle” imports the goods worth up to USD 5,000 on average. Obviously, the final decision concerning the cargo’s type, value and designation is made by a concrete customs officer, who may be open for “negotiations”. So far, it is only the customs office located at “Sheremetyevo- “, which shows its personnel’s relative vigilance (not more than 20% of the goods turnover pass through this office). “Shuttles” - importers from China (25%) mostly use the respective railroad. The Turkish route is the most popular itinerary ( by some estimations, 55% of the “shuttle” business fall on this country), and it is developed by the domestic businessmen either by sea, or by ground means of transportation. In the meantime some Turkish firms provide Russian “shuttles” with their transportation and customs registration services. The value of such services is between USD2/kg (for textile goods )- USD 5/kg for leather goods, while the Russian customs duty for these goods imported in amounts over the set quota is 4 ECU/kg. According to some unofficial data, the Turkish state subsidizes these firms, thus leaving the Russian budget without significant amount of revenues.
The pessimistic forecasts appearing after adoption of every government Resolution concerning “shuttles” have not yet justified. The significant price rise has not happened, the situation in the labor market has not deteriorated, and the “shuttle” business has not only “died”, but also practically has not reduced, though it has become more complicated.
The “shuttle” business, together with the “street” trade, is a specific «safety device», which allows the economy to employ huge mass of unemployed people without any social tension. Therefore, any persecutions upon the “spontaneous” import will result in the fact that many “shuttles” would become really unemployed and would be left without any means for existence. Taking into account that the “shuttles” are the most mobile and enterprising part of this country’s population, if they were cut from their usual business, the “shuttles” could create certain source of social tension. In addition to this, the reduction in volumes of the non- centralized import may also affect the formation of the Russia’s consumer market. That is why it is necessary to practice more sensible approach in the course of elaborating the respective legislative acts regulating the “shuttle” business in Russia.
Non- organized import (USD bln.)
Source: calculated on the basis of the Goskomstat data.
S. Prikhodko, N. Volovik
1 The GKO-OFZ yields are corrected on taxation.
2 The Decree “ On the plenipotentiary representative of the President of RF in the region of RF” provides the Center with effective tools to influence the policy implemented by the elected governors; the Decree “On se protecting investors’ and shareholders’ rights on securities in RF” reads that the Central Depository will be established. Such a depository as the government institution, will become the major custodian of securities in this country; the Decree “On some measures on perfecting the system of control over the military and technical cooperation with foreign states” turns “Rosvooruzhenye”, the revenues of which doubled for the last year, practically into a sub-division of the ministry, etc.