Everyone has been heard: the most open dialogue about the timber industry took place at the forum “LPK 360°”

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In Moscow the main issues of the timber industry were discussed in the framework of the III Industry Forum “LPK 360°: from all points of view”. The event was opened by Denis Manturov, the Minister of Industry and Trade of the Russian Federation.

The main business event of the industry was held in the studio interactive format: not only speakers, but also all guests of the event were able to participate in the discussions of two sessions – “From all points of view” and “Index of the future: the development of the forest industry in digits”. Voting devices allowed participants to answer questions on the crucial issues of the timber industry in 2019: the possibility of imposition of private forest ownership, the specifics of investments in the forest industry, the “black loggers”, the illegal export of timber, the measures of the state support, the digitalization of the timber industry, the increase of custom duties on sawn wood and others.

As Denis Manturov noted in his welcoming speech, over the three years of its existence, the Forum has become an authoritative dialogue platform that allows us to consider such a complex, versatile and important segment of the Russian economy – the forest industry – from all points of view. “LPK 360°” associates representatives of state authorities, industry associations, business and experts, creating a truly three-dimensional picture of what is happening in the industry.

Wood processing and manufacturing of wood products demonstrate stable growth, export growth is underway. In fact, the Russian forest industry has moved from the category of “raw material extension” to the equal competitor of the world market players: export of unprocessed wood has reached the record lows – 8% of the total harvested volume.

“The conditions for the qualitative transformation of the Russian timber industry have generally been formed: we have successfully implemented both subsidiary and regulatory support measures. The total revenue of timber companies increased by 18%, amounting to 1.8 trillion rubles only for 2018, the export growth gave us the same dynamics. In total, the manufactures exported abroad products worth $14 billion, thus the forestry, along with metallurgy and chemistry, is a key export industry of the Russian manufacturing industry,” the Head of the Ministry of Industry and Trade of Russia said.

Separately, Denis Manturov expressed his view on the implemention of the private forest ownership. “This is one of the most important subjects for Russian Industrialists and entrepreneurs. Nowadays we have gained an understanding of why it is most needed to provide a collateral component for obtaining preferential loans for the construction of plants, and certain guarantees for the state that the owner will take care of the site he purchased. If there is a fire at the site, this is primarily damage to the owner, so he will definitely control his site and make sure that it is in proper order. This issue requires additional discussions not only in the industry segment, but also in a broader format with the public and at the interdepartmental level,” the Minister concluded.

The current situation on the global market suggests that sales of timber products will decrease by 9% or more by the end of 2019 due to a number of adverse factors. The major reason for the expected decline is trade wars. This has a negative impact both on prices, that in a number of categories have decreased by 20% since the beginning of 2019, and on production volumes. This state of affairs has been observed not only in the forest industry; the chemical complex and metal industry have also been influenced by international politics.

Despite the existing decrease, by the implementation of planned investment projects and measures of state support, non-raw exports of Russian Timber Industry can be returned to the level of 2018 next year, with the subsequent growth in the future.

“The Russian timber industry remains attractive to investors: it is planned to implement more than 80 projects for deep processing of wood throughout the country for a total of 1.1-1.3 billion rubles by 2024. The key goal of the development of the Russian timber industry at this stage is to establish and structure the mechanisms for collaboration between the manufacturer and the state, as well as targeted support for priority projects of the industry. The Ministry of Industry and Trade of Russia implements a number of measures of state support for manufacturing. It is needed to understand that all the measures that were developed do not duplicate, but complement each other or imply their use for projects of different scope and focus,” noted Viktor Evtukhov, State Secretary – Deputy Minister of Industry and Trade of the Russian Federation, in his speech.

As the panelists pointed out, the investments in the production of timber industry are, as a rule, long-term projects for modernization or construction of new facilities, their implementation sometimes takes more than a year or two. Certainly, stability is important under these circumstances, such as maintaining the original conditions throughout the project implementation period, both in terms of support from the state and in terms of resource prices.

Vladimir Sitnov, the Senior Vice President of Sberbank: “Sberbank is actively implementing an industry approach, allowing us to delve deeply into the industry specifics and understand the tendencies and trends of the industry’s products markets. Taking into account the projects announced in the Corporate Program of Increase of Competitiveness (CPIC), we can see a good potential for growth of export of timber industry products and are ready to provide intensively investment support. We support the existing measures of state support. They allow not only enhancing inflow of the investments into the industry, but also contributing to the growth of the presence of Russian timber industry products on the world markets”.

The discussion was also attended by: Gleb Nikitin, Governor of the Nizhny Novgorod Region, Dmitry Volkov, Deputy Minister of Construction of the Russian Federation, Sergey Anoprienko, Head of Federal Forestry Agency, Nikolay Tsekhomsky, First Deputy Chairman – Member of the Management Board of VEB.RF, Zakhar Smushkin, Chairman of the Board of Directors of Ilim Group JSC, Mikhail Shamolin, Chairman of the Management Board of Segezha Group, Mikhail Korolev, Managing Partner of Zodchy Group, Denis Kondratyev, First Deputy General Director of the League of Waste Paper Processors Association, Ruslan Davydov, Deputy Head of the Federal Customs Service, Maxim Kobin, Managing Director for Client Work of REC JSC, Managing Director of EXIAR, Board Member, and Yury Chaynikov, CEO of Redmadrobot Data Lab.