Irkutsk
Ulan-Ude

Blagoveshchensk
Chita
Yakutsk

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Vladivostok
Khabarovsk

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Yuzhno-Sakhalinsk

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Petropavlovsk-
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Moscow

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80 action documents

How Japan-Russia economic cooperation will develop, - the head of the Moscow representative office of ROTOBO - Japan Association for Trade with Russia and New Independent States

80 action documents
Photo by: kremlin.ru

Daisuke Saito

Head of the ROTOBO Association in Moscow
In December 2016, Japan and Russia signed the 80 agreements at the intergovernmental and corporate level in accordance with the 8 points of the Cooperation Plan, including the extraction of energy resources, medicine and health care, the development of the Far East, etc., on the eve of the summit. It was signed 12 intergovernmental and 68 corporate projects. Investments of the Japanese side amounted to 300 billion yen.

By belonging to 8 points, it is possible to single out 23 project in the field of energy production and production capacity increase, 15 projects in the field of industrial development in the Far East and its transformation into a base for export, 14 projects in the field of advanced technologies, 13 projects in the field of promoting diversification of industrial Structure of Russia and increase of efficiency of work at factories and enterprises, 6 projects in the field of medicine and public health.

In this connection, 23 memorandum was signed in the field of energy resources production, including cooperation between Mitsui Bussan and Mitsubishi Corp. and Russian state-owned gas company Gazprom with respect to the construction of a new plant for the production of liquefied natural gas (LNG) In the framework of the Sakhalin-2 project aimed at developing oil and gas fields on Sakhalin; On cooperation between the Marubeni corporation, etc. And the Russian state oil and gas company Rosneft in relation to the exploration and development of natural gas deposits on the Sakhalin shelf; On cooperation between the Japan National Petroleum, Gas and Metals Corporation (JOGMEC) and the Irkutsk Oil Company (Russia) regarding the exploration of natural gas deposits in Eastern Siberia. Projects in the field of extraction of energy resources were the most numerous within the framework of the 8 points of the Cooperation Plan.

In the field of industrial development in the Far East and its transformation into a base for export, 15 memorandums were signed, including an agreement with local enterprises on the participation of the Sodzits corporation in the management of the terminal building of the Khabarovsk airport, as well as the project of significant expansion of cultivation activities Vegetables in greenhouses in the Far Eastern Republic of Sakha, which is maintained by the company "Hokkaido Corporation", funded by the Bank of Hokkaido.

In the field of medicine and health, 6 memorandums have been signed (1 intergovernmental, 5 - between private corporations), including the cooperation of Mitsui Bussan Corporation in expanding the distribution channels for pharmaceutical products, etc. On the basis of investments in leading Russian pharmaceutical companies, as well as the creation of a Diagnostic Preventive Center at the Railway Hospital of the Russian Railways in Khabarovsk. 14 memorandums have been signed in the field of advanced technologies, including cooperation in the development of a document management system involving artificial intelligence between the Japanese electrical equipment manufacturer Fujitsu and the Russian software developer ABBYY.

In the field of encouraging the diversification of the industrial structure of Russia and increasing the efficiency of work in factories and enterprises, 13 documents were signed, including those aimed at creating a framework for the joint Japanese-Russian joint venture by the Japanese Bank for International Cooperation and Russian government funds in the amount of 100 billion yen.

In addition, 2 signed a memorandum in the field of urban development aimed at creating comfortable and clean cities that provide a comfortable and active life, 1 memorandum in the field of substantial expansion of exchanges and interaction between Japanese and Russian small and medium-sized enterprises, 3 memorandum on dynamic expansion of bilateral Humanitarian exchanges in various strata of society. A press release has been published on the establishment of the Moscow office of the Japanese National Tourist Organization (JNTO).

As for territorial affiliation, most of the 80 projects do not have regional restrictions or such restrictions are vague, but out of 23 cooperation projects in the field of energy production, 10 projects belong to the Far East region of Russia. If we add to this 15 projects for the development of industry in the Far East, 1 project in the field of urban planning and 1 project in the field of medicine and health care, then a total of 27 projects - one third of the total - belong to the Far East region. The interest of Japanese enterprises in the Far East region is still high.


Why is economic cooperation necessary?
In order to avoid misinterpretation, it should be noted that the Cooperation Plan of 8 points is not one-sided assistance from Russia from Japan. Speaking of economic cooperation, it is difficult to avoid the image of aid, but most of the projects are promoted by private entities. This is not economic assistance on the model 90-s, when Japan provided unilateral assistance to Russia, using tax funds. The subject of activity to the maximum extent are private enterprises on the basis of a business basis and mutually beneficial relations.

Of particular importance is the presentation to President Putin of Japanese-Russian projects for the extraction of energy resources, medicine and healthcare, urban development, the Far East, etc., which are under implementation and in preparation, in the format of an integrated Cooperation Plan. By drawing attention to what Japan can offer to Russia, acting in full force, one can expect Russia to realize the importance of this, which will lead to the improvement and expansion of bilateral ties.

Initially, there is no need for government-initiated economic cooperation. As a rule, in developed countries, the government is not involved in economic projects, with the exception of large infrastructure projects. In contrast, in developing countries, the government is actively involved through official development assistance. In the case of Russia, this is a difficult issue, since the country, as a member of the G8, at the same time suffers from numerous problems related to infrastructure and urban environment, and seeks to receive Japanese assistance. Economic cooperation becomes necessary if one tries to change the non-standard relations with Russia, in which the territorial issue persists. Assistance in this direction is the basic position of Japanese enterprises.

It is a mistake to think that in case of economic cooperation the islands will be returned. The Japanese government creates a scenario for solving the territorial problem, using economic cooperation as a lever and linking together the territorial issue and economic cooperation. This is a position based on the search for compromises, within which the specification of economic cooperation is made dependent on progress in resolving the territorial issue. The concept of linking economic cooperation to a territorial issue is a method that has so far been used by the Japanese government to achieve breakthroughs on the island issue. However, history proves that it is ineffective. Japan should act honestly and openly, without linking the territorial issue with other issues.


Can the Japanese-Russian economy change?
The expectations of the Russian side regarding the Plan for the development of cooperation from 8 points are high. 80 contracts and memorandums have been signed, and it is possible to evaluate the presentation of the achieved results in a tangible form. There is a sufficient probability of cooperation in the field of medicine and health in Russia with a low average life expectancy and low level of medical care, as well as in the field of industrial development, infrastructure development, etc. In the backward Far East. Consideration of the progress of the Cooperation Plan and the formation of a mechanism to address emerging systemic complexities, etc. At the intergovernmental level will create significant potential for implementation.

80 of the final documents formulated in the brief period from the submission of the plan by Prime Minister Abe to President Putin in May last year prior to the summit in December is the so-called first step. The next challenge is how Japan will act with regard to projects requiring long-term consideration for large-scale development of natural resources, diversification of industry, etc., to which the Russian side pins the expectations.

The economies of Japan and Russia are in mutually complementary relations, compensating for the missing elements. Russia has vast territories and rich natural resources, Japan - technology and capital. For both countries, there is an opportunity to become an ideal tandem. Russia wants more serious intentions from Japan, and this becomes important in the future.

However, the baseline conditions are complex. As President Putin noted, recently the volume of Japanese-Russian foreign trade has been declining. In 2015, the volume of foreign trade amounted to 20,9 billion US dollars, which is 40% lower than the maximum registered level of 2013 (34,8 billion US dollars). Russia is on 15 place among Japan's foreign trade partners (2015), its share is 1,6% (export: 0,8%, import: 2,4%). If we compare this with the largest foreign trade partner of Japan - China, then this scale does not exceed 0,1.

The number of enterprises-members of the Japanese club, which is the structure of Japanese enterprises in Moscow, amounted to 2016 companies in October 190. For 10 years their number increased by 3 times. Members of the St. Petersburg Chamber of Commerce and Industry include 50 companies. The number of companies in Russia exceeds 400. Areas of their activities vary from trade, automotive, electrical companies to logistics, retail, finance, agriculture, medicine.

Both the volume of foreign trade and the number of operating enterprises are minimal from the standpoint of bilateral Japanese-Russian economic potential, but the likelihood of their significant growth in establishing relations is high. Despite the gradual increase in attractiveness as a market, the difference becomes apparent when compared to China and the countries of Southeast Asia, where thousands of Japanese companies operate, and this is not a cause for pride. Japan-Russia economic ties are still a minority world.

Looking back, Japanese-Russian relations have always been repeated attempts at their development. As Prime Minister Abe stated in a speech at the Eastern Economic Forum in Vladivostok in September, it is important to maintain a politically stable relationship by establishing a mechanism for annual regular meetings between the heads of both countries. With the maintenance of stable ties, economic relations will necessarily become more powerful.

So, what is necessary to translate Japanese-Russian economic relations to the leading level? It is necessary to solve 3 the following tasks. This is the diversification of areas of cooperation, promoting the promotion of small and medium-sized enterprises and expanding the territory of promotion.

Within the framework of diversification of areas of cooperation, four areas are most promising: medicine, agriculture, forestry and fisheries, advanced technologies, urban development and infrastructure construction. In all 4 areas, promotion of Japanese enterprises is lagging. In particular, special expectations can be placed on cooperation in the field of agriculture, forestry and fisheries in the Far East. The interest of Japanese enterprises is also high.

Infrastructure. In addition to numerous large-scale projects to equip the infrastructure of seaports, in Russia there is an acute problem of deterioration of electricity and water supply networks, as well as other household infrastructure, efforts are being made to update and re-equip it. Western enterprises are actively advancing and penetrating this market. On the other hand, the level of popularity of Japanese communication equipment and technology is extremely low. The possibilities for developing this market are very high, which will require additional efforts from Japanese enterprises.

Agriculture. As a result of the import substitution policy, there is a growing interest in investment in agriculture in Russia, and there are expectations regarding Japanese and other foreign capital. 3 Japanese companies are currently operating in the Far East, including one project in the planning stage. JGC is one of the successful examples and produces cucumbers and tomatoes in a greenhouse farm in Khabarovsk. Hokkaido Corporation began cultivating in greenhouses in the Sakha Republic and made the first shipment of products in December of 2016. In addition, JFE Engineering in Primorsky Krai also plans to start producing vegetables.

Medicine and health. In the area directly related to the health of the population, there are high expectations regarding the Japanese level of medicine and advanced medical technologies. There are examples of the promotion of Japanese enterprises in the medical sphere, for example, the Rehabilitation Center for Vladivostok, planned by the JGC and the "Hokuto Hospital", etc.

Hi-tech. Advanced technology is one of the areas on which the Russian side has the greatest expectations. This does not mean that Japan only provides technology and cooperation to Russia. Russia is a country with a certain technological potential, and there are areas in which Japan can learn and ask for leadership. In this area, two-way cooperation is possible.

The key to translating economic ties to the leading level is to expand the promotion of small and medium-sized enterprises to Russia. Without such an advancement of an increasing number of small and medium-sized enterprises, it is impossible to expect the development of Japanese-Russian ties. Maintenance of today's level has reached its maximum. The Japanese government is making efforts to support the promotion of small and medium-sized enterprises to Russia, but the problem remains: to what extent should the state support and whether there is a need for comprehensive assistance.

If we consider the areas of promotion of Japanese enterprises, then they are based on the Moscow direction and the Far Eastern region. Japanese enterprises almost do not work in Siberia and the Baikal region. It is important to seek to expand areas of advancement.

The view of Japanese enterprises on Russia gives way to hope. To further expand these trends, it is important to accumulate as many positive examples as possible from both 80 projects and from among other plans. In this case, the number of enterprises considering the idea of ​​advancement in Russia and the possibility of development in Russia will grow. This is the last opportunity to translate Japanese-Russian economic ties to the level of leading ones.

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