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Russian currency regulation needs to be liberalized as much as possible so as to support remaining exporters and companies should not be penalized for things like not repatriating foreign currency earnings on time, the head of the Russian Union of Industrialists and Entrepreneurs (RSPP), Alexander Shokhin said.
"Right now, despite the essential elimination of mandatory sales of forex earnings, the repatriation requirement still exists and it needs to be urgently eliminated, of course," Shokhin told Interfax on the sidelines of the Innoprom-2022 exhibition.
Problems arise foremost for sectors that were oriented toward exports and are now forced to dramatically reduce them, including steelmakers, he said.
"These companies exported more than half of their products. And in the world, as we know, there is excess steel capacity, and as soon as we're removed from the market it could be forever, someone else will take this niche and it will be fairly difficult to return to these markets," Shokhin said.
One of the most vulnerable is the mineral fertilizer industry, he said. "It has won very many niches on world markets and, fortunately, the problem of hunger does not allow the United States and the Europeans to impose tough sanctions against our mineral fertilizer producers. But, nonetheless, if there are any restrictions, problems will also arise with returning to these markets," Shokhin said.
It is necessary to find new markets, including domestically, he said. "The very same steel products can also be used in Russian construction in large amounts. But, while the drop in exports, say, is 30 million tonnes, construction can absorb a maximum of 5 million tonnes. It's clear that these [steel] companies will still be pressed," Shokhin said.
"And this means that we need to think about infrastructure projects that can absorb labor and provide orders for the very same steel products, construction materials and so on. In other words, we need new drivers of economic growth," he said.
The situation could worsen somewhat in the fall, he said. "But with the right industrial policy and the right policy of support for businesses and other sectors one can expect that next year we will reach some kind of plateau from which it will be possible to push off and achieve a positive dynamic," Shokhin said.