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Foreign economic activity of Yakutia in 2015-2018

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The foreign trade of the Sakha Republic (Yakutia) has a strongly pronounced export-oriented structure. The tendency to increase the export component remains. Foreign trade surplus is steadily positive.

          The Sakha Republic (Yakutia), following the results of 2018, has foreign trade contacts with more than 60 countries of the world, of which export was carried out to 32 countries. The key trading partners of the Sakha Republic (Yakutia) are non-CIS countries (98.9%).

          Foreign trade turnover in 2018 amounted to $4,914.6 million, which is $33.6 million less than in 2017 (by 0.7%), exports decreased by $157.2 million (by 3.3%), while imports increased by $123.6 million (by 1.2 times).

          In the export commodity structure of the Sakha Republic (Yakutia), the raw materials sector traditionally occupies the largest share (94.7%): cuttable rough diamonds (81.9% of total exports), hard coal (15.7%).

          Non-resource non-energy exports (5.3%) are mainly represented by diamonds (93.1%).

          In the commodity structure of imports, the main place is occupied by cars, equipment and machinery, meat and edible offal, aircraft and their parts, India rubber, rubber and products thereof. Foreign trade surplus of the Sakha Republic (Yakutia) is steadily positive. Export makes up 94.5% of the volume of foreign trade turnover.

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   The largest countries-business partners in foreign trade turnover:

Belgium - $ 2,149.9 million or 43.7%

India - $ 680.3 million or 13.8%

Israel - $ 479.3 million or 9.6%

China - $ 440.6 million, or 8.9%

UAE - $ 424.7 million or 8.6%

Hong Kong - $ 117.3 million or 2.4%

Republic of Korea - $ 115.7 million or 2.3%

Japan - $ 114.6 million or 2.3%

The export of the region in the reporting period amounted to $ 4,643.0 million, a decrease by 3.3% compared with 2017.

In the reporting period, the region's imports amounted to $ 271.6 million, which is 1.2 times more than in 2017.

The key trading partners for imports were:

United States - $ 128.9 million, or 47.5%. The main import items are: trucks; geodetic instruments and tools; pork.

Angola - $ 29.9 million or 11.0%.

Poland - $ 28.4 million or 10.4%.

China - $ 21.7 million or 8.0%.

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Features of foreign economic activity:

- the presence of a significant share of European countries in foreign trade turnover is explained by the old well-established distribution channels for the products of the diamond complex, which forms the basis of exports of the Sakha Republic (Yakutia);

- there is a tendency to increase the share of the countries of the Asia-Pacific region in the trade balance, which is explained by the geographical proximity and increasing imports from these countries;

- the predominance of the raw materials orientation of exports and a narrow circle of export goods, in particular, caused by competition from the Far Eastern regions of the country;

- a significant predominance of exports over imports in foreign trade is due to established export-oriented industries and a small population, which affects the volume of demand for imported goods.

The main principle of the export policy of Yakutia is to promote the development of export potential.

The following tasks are priority for developing the export potential of the Sakha Republic (Yakutia):

  • promoting the development of export-oriented and import-substituting industries;
  • production of competitive products and promotion of goods and services produced by enterprises and organizations of the Sakha Republic (Yakutia) to foreign markets;
  • increase in exports of the share of goods with a high degree of processing and services.

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Investment

The republic is creating a favorable investment climate to attract foreign

investment in priority sectors of the region’s economy: oil and gas complex, including the extraction and processing of oil and gas, the extraction of a number of metal ores and coal, the production of building materials, processing of agricultural products, timber industry complex.

          Attracting foreign capital to investment projects in the Sakha Republic (Yakutia) involves changing and expanding the range of export products.

          Today in the Sakha Republic (Yakutia) there are a number of enterprises with the participation of Chinese, Japanese, Korean and Canadian investors. The main activity of these enterprises is mining, processing of diamonds, there is also foreign capital in the banking sector, the auto service and restaurant business.

          The Sakha Republic (Yakutia) has unique hydrocarbon resources. And in the future, the role of hydrocarbons in the development of the fuel and energy complex and the economy will increasingly grow.

          The development of oil and gas production provides for a consistent, systematic increase in the scope of production and further export of oil and gas. This will be facilitated by the Eastern Siberia - Pacific Ocean pipeline system and the Power of Siberia gas transmission system.

          Currently, the industry points of growth and development of non-resource and non-energy exports are enterprises that produce jewelry, water, beverages, meat and offal, oils and fats, fish, mammoth bone products, IT, educational, medical and tourist services.

          Opportunities

          Based on the geographical location and transport infrastructure of the Sakha Republic (Yakutia), the most potentially promising foreign export markets remain the countries of East Asia (China, Republic of Korea, Japan), Southeast Asia (Vietnam, Indonesia, Malaysia, Singapore and Thailand) and South Asia (India), which are included in the number of priority countries and territories of the world for the development of Russian exports.

          Sectoral priorities for the development of exports of goods and services are currently associated with the exploitation of natural competitive advantages arising from the possession of rich natural resources, primarily mineral resources, as well as with the development of tourism, based on special climatic conditions, protected areas, cultural and historical events of the region.

          One of the most important areas of the economic policy of the Russian Federation at the present stage is the development of exports, an increase in its structure of the share of products with a high degree of processing and an increase in the competitiveness of Russian products on the foreign market. The need to strengthen the export potential is dictated by the importance of exports as a factor in the development of regional economies, so the elimination of internal and external barriers to the development of exports at the regional level is one of the tasks of government bodies at all levels.

          The main external factors (barriers) that hinder the development of exports include barriers of countries - potential sales markets; economic sanctions against Russia.

          Additional barriers for exporters of the Sakha Republic (Yakutia) are: difficult climatic conditions; the territorial remoteness of the region from the center of the country, high resource intensity and dependence of economic activity and life sustenance on the supply of fuel, food and goods from other regions of Russia; focal nature of industrial and economic development of the region and a low population density; limited transport accessibility; as a result, the high cost of transportation, the lack of modern information and telecommunications infrastructure.

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