After the shortage of products which the Krai suffered due to the halt of import in 1998, the Krai administration has recently approved the law "On the Establishment of the Primorsky Wholesale Product Market," making Primorsky Krai the first region in the country to approve such a law.

Previously, before the crisis, some 90% of food products consumed in the Krai were imported. After the crisis, the local market faced a shortage of goods and products. Good and food deliveries turned out to be a question of state security, which is why the local administration is in a harry to take control of wholesale trade in the Krai. According to the new law, the state shareholding in the authorized capital of any wholesale market located in Primorsky Krai, must be no less than 51%. However, the administration is going to act mainly as a supervisor for wholesale markets and bases, establishing regulations for trade, and the amount of taxes and duties. "Although it's not bad that the government has finally begun to actively participate in economics, it should do so deliberately," Vladimir Ponomarenko, Director of Eniseiskoye, one of the few local successful wholesale bases, says. Although the new law has already been approved by the Krai Duma, backers of the law are still unable explain how it will work in reality: what are the principles for the establishment of wholesale markets, and which financial sources will be used for this. In the meantime, the example of Fadeevskoye, the 100%-state-owned wholesale base, is not encouraging - the base is mainly concerned with providing its offices for rent, but not with food deliveries. Russian...

Private farms produce almost two thirds of the Krai' production of meat, although at the beginning of the 90's they provided only 10%-20% of meat and managed the same small portion of the total stock available in the Krai. In those times, there were two main obstacles blocking the development of private farms meat production - the shortage of feeding stuff, and the impossibility to obtain additional land. Currently, enough land is available for everyone who wants to rent it and work on it; but another problem - 'what should the stock be fed by' - still exists. Prices for special animal feed are unaffordable for ordinary farmers who can therefore rely only on their gardens. Most animals at private farms are fed with potato, which does not promote the best results. In such conditions, farmers prefer not to increase their herd. As a result, there are no more than 35 cows, 30 pigs and nine sheep (goats) per every 100 average houses in a village. In the current situation of the shortage of raw meat caused by the halt of import, farmers are unable to satisfy the unprecedented demand of local meat producers. These last ones, competing each other, have already purchased all animals available at local private farms, paying farmers in advance for young stock. However, the prospects are not really bright - although farmers currently can take advantage of the market's booming prices, they still haven't the necessary laws and financial support for increasing production itself. Russian...

The year of 1998 turned out to be the Year of Great Merges in business all around the world, ending with Exxon-Mobil's $80 billion deal. Russian... In Russia, business companies followed suit in order to weather the crisis. Managers of 22 local public service holding companies have recently established the Primorsky Craft Chamber, a non-commerce partner association with the intention to unite those 950 companies and 2,500 entrepreneurs dealing with public service in the Krai. The association will provide assistance with a variety of issues such as law, economy and techniques. Russian... Progress, a local military aircraft plant located in Arsenyev, is now benefiting from its own idea to establish a national-wide corporation of MI-24 helicopter producers. The national corporation has been recently established, with Progress in the role of basic factory. Russian... President of the Russian Insurers Union, Igor Yurgens, expects an increase in the number of merges and acquisitions in the insurance market in 1999, due to the slump in the national market. Russian...

Railroads: Unlike in most other countries, in Russia railroads are the main means of transportation. The railroads cargo turnover rate currently amounts to five times that of sea transport, and 50 times of the automobile. Russian railroads rank third in the world on the volume of cargo and passenger turnover. However, as the railroads are still state-owned, they suffer the same shortage of finance as other industries on the state pay-roll. The existing governmental practice of supporting unprofitable passenger railroad transportation at the expense of the relatively profitable cargo transportation has resulted in the artificial increase of cargo tariffs and a slump in railroad transportation. Before the "new era of reforms," more than 100 million tons of cargo used to pass through Primorsky railroads annually; now, this volume has decreased by three times. Even the TranSib, the world's largest railroad which could reduce the cost of international cargo by approximately $400 per each container, has been unable to increase the number of clients, despite all the programs specially introduced by the government to support this "Artery of Russia." As it is an artery of the Primorsky economy as well, the TranSib slump is also affecting the Krai. One of the most acute problems is the maintenance of the ineffective federal railroads located in the territory of the Krai. There are six of them in Primorsky. Been constructed for the needs of the former military complex, they have caused a loss of 99 million rubles in Primorsky in 1998 alone. According to the deputy chairman of the Krai transportation committee, the situation must be improved with the help of establishing counterpart companies which will separately deal with passenger and cargo transportation. Russian...

Far-Eastern fish is a tasty morsel which traditionally attracts many of our neighbors in the Pacific Rim. With the intention to obtain as much valuable crab, herring, pollack and other seafood, some of them undertake illegal steps such as poaching in the region of Kuril Islands or implantation into Russian commercial companies. The scale of this activity is so large that it causes severe damage to the national interests in fishery. For instance, a Hong Kong company, Pacific Andes Enterprises (BVI) Ltd., has caused 14.8 billion rubles in damage to the Russian budget in 1997 alone. The company is managed by a Hong Kong businessman, Djou Ten; it is supported by the Chinese government. In Russia, it has good relationships with oil magnates, LukOil and Sidanko, as well as with other companies such as Primorsky one, DalMoreProduct, where Djou Ten is a member of the board of directors. In 1997, the Hong Kong company falsified several agreements, which were allegedly signed between them and DalMoreProduct for the purchase of 14,400 tons of pollack. The falsified agreements allowed the company to export the pollack paying a 0.1% tax instead of the 10% tax which they should pay as non-residential producers. Ten has established several companies in Russia (one of them is Navigator located in Vladivostok) which allegedly leased Ten's six fishing ships in exchange for extracted fish. Actually, each company consisted of only a few employers working at the offices; they did not deal with either fish or profit. Unfairly competing with Russian counterparts in the herring fishing season, the Hong Kong businessman caused three DalMoreProduct ships to be arrested in the Taiwanese port Gaosyun. The ships were impounded for several months and made late for the fishing season. Ten received an opportunity to control prices in the herring market. Russian...

"Entrepreneur Of The Year," a traditional contest held annually by the Krai administration, was finished on the threshold of the new year. The winners of 1998 are: Vera Lopatnikova, the head of the Eureka company and a founder of the Arseniev Entrepreneurs Association ("Entrepreneur of The Year"); Vladimir Dorofeev, VladWad company, dealing with the import of metal-plastic pipes from South Korea which are used by communal services in Vladivostok and Bolshoi Kamen ("Young Entrepreneur Of The Year"); Vitaly Dubov, DT Center Company, who has become the author of the Primorsky law "On Taxation" (he won in the nomination "Good Head"); Lyudmila Pyatkina, an independent businesswoman from Spassk, who won in the nomination "Rocky Wall" because of her perseverance and success in widening her bakery business despite the economical crisis (by the end of the year, she had increased sales from 400,000 to 1.2 million rubles, provided 13 additional jobs); Vera Bazhenova, DalStar insurance company ("Steady Hand"); and Sharm Ltd. and Natasha companies which won in the nomination "Beauty Will Protect The World"). Russian...


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