Chairman of the Avto-VAZ automotive company directors board Vladimir Kadannikov (left) talks to Avto-VAZ technology development director Georgy Mirzoyev (right) at the opening of the 4th Moscow Motor Show - ''Avtosalon 2003''
Photo: Dmitry Lebedev
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Government Opens Borders for Auto Parts
// By cancelling duties for their import
Motor industry
Yesterday it became known that Mikhail Fradkov signed a decree about lowering and canceling of custom duties for imported automobile components. Let us remind you that the most active opponent of duty canceling was AvtoVaz, and the main supporters of this initiative were companies which assemble foreign cars in Russia. However, the largest Russian motor works still has a chance to influence the cancellation of duties – the decree will not be assigned the formal number until the Finance Ministry, Trade and Economic Development Ministry and Energy and Industry Ministry work out an exact definition of industrial assembling of cars. Kommersant has information that they must have it prepared before April 15.
The draft on lowering the duties for automobile components, designated for industrial assembling was supposed to have been read by the interdepartamental commission last fall, however, the decision was postponed several times because of disagreements between Trade and Economic Development Ministry and Energy and Industry Ministry regarding the amount of duty for different kinds of components. On January 27, the commission approved the draft, where most components, including wheels, were not charged at all, five components (glass, starters, speedometers, mirrors, spark-plug wires) were charged by 3 percent, and seats and fastenings by 5 percent. The document was presented to the government in the middle of February.
It was actively supported by all companies, which assemble foreign cars in Russia, including Severstal-Auto (soon to manufacture SsangYong land rovers), Autotor, and joint-stock company of General Motors and AutoVaz. However, AutoVaz Chairman of the Board Vladimir Kadannikov spoke against it, calling the decision on duty cancellation “the most serious danger for motor industry.” “Those, who suggest they should be cancelled, say it will help increase workplaces, but that’s nonsense,” Kadannikov said. “The main workplaces are not in assembling but in manufacturing of the components. As result the total volume of investments into the Russian motor industry will be no more than $500 million at the potential figure of $1.5 billion. Over all the state may lose 15 billion rubles.”
However, the officials did not listen to the arguments of AutoVaz. Yesterday, RIA Novosti said that the decision about lowering import duties for motor components for industrial assembling of foreign cars in Russia had been made. A government source told Kommersant that Prime Minister Fradkov had signed the decree last week, however, the official issue of the document was delayed because the head of the government Apparatus was on vacation. Nevertheless, it is expected to be published any day now. According to Kommersant source, the original draft of the document has not been changed.
Fradkov’s press secretary Alexander Zharov specified that the official number will not be assigned to the decree until Trade and Economic Development Ministry and Energy and Industry Ministry develop the official detailed definition of industrial assembling of cars, which is a key to the fulfillment of the decree. Zharov said that Fradkov had given directions for the preparation of the document last week. According to Kommersant, it should be finished before April 15. The Ministry of Trade and Economic Development said it would meet the set deadlines, since it has been working on this project for a while, and is close to having it completed.
Kommersant will continue to follow the events.
Renata Yambaeva
All the Article in Russian as of Mar. 29, 2005
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