The experts have discussed the legal mechanism to support the national shipbuilding industry

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Presentation “Service maintenance and repair works on vessels in the Black Sea ports” by General Director of LLC “ROSFLOTSERVICE” Roman Parshin.

On June 21, 2018, a joint meeting of the Expert Council under the State Duma Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship for the development of the shipbuilding industry and marine engineering and the Committee for the Shipbuilding Industry and Marine Engineering of the Russian Engineering Union was held at the site of JSC "Rosoboronexport".

The participants of the event focused on the issues of changing of Russian legislation affecting the working conditions of vessels in the Northern Sea Route (NSR).

It is referred to amendments to some articles of the Merchant Shipping Code, which establish the priority of using vessels built in Russia for a number of works in the Northern Water Area. Such works include cargo and passenger transportation within the country (cabotage), icebreaker assistance, search and rescue operations, exploration, development and sea transportation of mineral resources, as well as a number of other activities.

The proposed changes are due to the fact that at present the state subsidizes, first of all, shipowners, while the financial support of domestic shipbuilding enterprises is carried out indirectly and does not guarantee the placement of orders at Russian shipyards.

Opening the meeting, First Deputy Chairman of the State Duma Committee on Economic Policy, Industry, Innovative Development and Entrepreneurship, First Vice-President of the Russian Engineering Union Vladimir Gutenev expressed confidence that “without abolishing competition, we must protect the interests of Russian manufacturers and service providers on its territory and in the sea zones to which Russian jurisdiction applies, including in the Arctic water area”. At the same time, he noted that the Northern Sea Route is one of the determining factors for ensuring sustainable socio-economic development of the regions of the Arctic zone of Russia.

The NSR not only ensures national security and enhances Russia's geopolitical presence in the Arctic, but is also an important transport corridor, a key element of the entire transport infrastructure.

Meanwhile, at present, Russian shipowners prefer to buy tankers and dry cargo vessels from foreign shipyards, primarily in South Korea, China and Finland. As a result, domestic production facilities are underutilized. And this is despite the fact that shipbuilding is one of the engines of industrial development, involving dozens of related industries in the production process, creating about seven new jobs for one employed in shipbuilding. And this, in turn, contributes to the development of coastal areas, technical, cultural and scientific centers.

According to Vladimir Gutenev, “the draft federal law will provide a real opportunity for Russian shipyards to develop domestic production, increase capacity utilization of industry enterprises, diversify them, successfully compete with leading global manufacturers in terms of quality, price and terms of shipbuilding.” Moreover, the considered legislative initiative meets the objectives set at a meeting on the development of the Far Eastern shipbuilding complex by the President of Russia Vladimir Putin. Obviously, it will contribute not only to the achievement of target indicators for the development of domestic shipbuilding, defined by the “Strategy for the development of the maritime activities of the Russian Federation until 2030”, but also to a deep degree of localization on our territory of those industries that are not currently represented.

In turn, the Chairman of the Committee on the Shipbuilding Industry and Marine Engineering of the Russian Engineering Union, President of USC Alexei Rakhmanov, said that the adoption of amendments to KTM is an expected and absolutely correct decision from the point of view of the shipbuilding industry. At the same time, according to him, legislative innovations should take into account the interests of all domestic companies, including those owning ships, extracting and carrying cargo. In this regard, one of the key tasks of the regulatory agencies in the person of the Ministry of Economy and the Ministry of Industry and Trade should be the synchronization of the development of various industries, both shipbuilding and extractive industries. In order to harmonize all these interests, it is necessary now, on the basis of the draft law under consideration, to work out soft rules, which subsequently should not be subject to review.

Thus, according to Vladimir Gutenev, foreign companies interested in the Russian market will be given a clear signal so that they will now begin to think through strategies for interacting with domestic manufacturing industries (and not easy localization). At the same time, this will create the basis for genuine de-offshoring and changing the jurisdiction of Russian companies that own vessels operating under foreign flags.

Boris Kabakov, Director of the Department of Shipbuilding Industry and Marine Equipment of the Ministry of Industry and Trade, who presented the draft law at the meeting, noted that the proposed changes to the Merchant Shipping Code had already caused a resonance, right up to the point of view that from 2019 a full ban was imposed on the operation of foreign-made vessels, performing work not under the Russian flag.

According to him, the amendments under discussion are of a systemic nature in solving the issue of ensuring the rhythmic loading of domestic shipbuilding enterprises. However, taking into account the concerns of Russian customers, the draft law provides for the possibility of operating vessels flying the Russian flag as of January 1, 2019, regardless of the place of construction. Moreover, the bill does not apply to ships included in the Russian Register of Vessels under Construction until January 1, 2019, also regardless of the place of construction. In addition, based on the results of the work carried out with the business community, provisions have been made to the bill that allow the use of ships built outside Russia after January 1, 2019 to perform certain types of work by decision of the Government of the Russian Federation. To make such a decision, the interested party must objectively substantiate the impossibility of using the vessels built in Russia for the intended work. As a result, there is a balanced support for the shipbuilding industry, taking into account the interests of both shipping companies and charterers.

“We objectively evaluate the production possibilities of vessels in Russia, and therefore the Ministry of Industry and Trade is open to dialogue in order to work out a mechanism for solving the tasks of both import substitution and the interests of domestic mining companies,” Kabakov said.

Meanwhile, Vitaly Klyuev, Director of the State Policy Department for Maritime and River Transport at the Ministry of Transport, noted that a number of issues that are still to be discussed remain unresolved. In particular, already at this stage of the consideration of amendments, it is advisable to “consider the transportation cycle as a whole - from the shipper to the recipient (including processes for the production and disposal of the vessel). In the process of coordination, we proposed a whole range of compensatory mechanisms for the subsequent operation of vessels. There is no doubt - it is necessary to support national shipbuilding, however, right now we need to think about ship repair ”.

A separate issue is the value of the ship, produced at Russian shipyards. At the moment, it is higher with a longer period (in comparison with foreign shipbuilding enterprises) and falls on the shipowner. In this regard, “until we calculate the entire life cycle of a cargo, it is rather difficult to come to some conclusion. Otherwise, you can come to a situation where if we get the shipbuilding industry out of the soup, we will lose the shipowner, and if we bail the shipowner out of trouble - we lose the shipper ..., ”- Klyuev explained.

In addition, when implementing the bill, one of the key issues will be the content of the concept of a ship built at a Russian shipyard. Today, this issue is regulated by the Government of the Russian Federation No. 719 “On confirming the production of industrial products that have no analogues produced in the Russian Federation”, which allows the construction of ships at a Russian shipyard, taking into account the need to supply components of foreign production. However, its provisions require clarification taking into account the possibilities of the Russian industry, including in the quality and price segments.

According to Boris Kabakov, to date, the relevant section of the Ordinance, describing the products of shipbuilding, has only 4 positions, which are formulated in the most general form. In this regard, the Ministry of Industry and Trade together with USC JSC are working to agree on the types of vessels, types of operations and equipment that must be in order for the vessel to be considered Russian. At the same time, as stated by Vitaly Khanychev, General Director of the Central Research Institute, Kurshev, one of the problems in this direction is the use of the All-Russian Classification of Economic Activities (IED), which is largely impersonal and does not allow for the classification of existing equipment. This approach, according to the President of JSC "USC" Alexei Rakhmanov, is a dead end: “Let's stop and go the way we need. Since we are struggling with direct imports, it is necessary to return to the classification codes and develop a document detailing the entire range of shipbuilding in accordance with the HS codes”.

Summarizing the discussion, Alexey Rakhmanov said that nowadays “low interest rates, a long order and a large series, as well as a customer” are important for domestic shipbuilding. The draft law creates certainty regarding the customer. “Even as we speak, there is an increase in cargo turnover at the NSR, and the cargo base for Russian carriers is growing, with the result that they will have more funds for fleet renewal. At the same time, Russian shipyards will have a rhythmic loading of serial projects, which ultimately will contribute to the economic development of Russia and will help our country to occupy new promising niches not only in the shipbuilding business, but also in shipping,” - the President of "USC" JSC summarized.

REFERENCE:

In 2012-2017, 1116 foreign-produced vessels were imported into Russia. Of these, 239 are intended for inland waterways and 877 for seaports.

At the beginning of 2018, the Russian International Register of Ships registered 1,141 vessels with a total deadweight of more than 4.5 million tons. In 2017, the administration of the Northern Sea Route issued 662 permits for navigation of vessels in the water area of the Northern Sea Route, of which 107 were issued to foreign flag vessels.