# REGIONAL CORNER: PERM OBLAST, RUSSIA

 

ByYelena Zheberlyaeva

 

Permoblast (region) is located in the Ural mountains, the traditional borderbetween Europe and Asia. It is situated on the Kama river, one of the largestnavigable rivers in Russia. The Kama provides access from Perm to five seas—theAzov, the White, the Baltic, the Caspian, and the Black—through a network ofchannels. The oblast has a population of over 3 million—its largest cities arePerm (1.08 million people), Bereznyaky (201,800), and Solikamsk (109,000).Located 1,100 kms from Moscow, it takes an hour and a half to travel betweenthe city of Perm and the capital.

 

LeadingIndustry Sectors 

Theoblast’s Soviet-era industrial development has only recently been diversified.Perm manufactures 30 percent of Russia’s mineral fertilizers, 20 percent ofpulp and paper, and most of its telephones. Perm oblast is considered to be theleader in Russia in chemicals, particularly oil industry- related chemicals;machine building; mining; and oil and gas extraction. **Bereznyaky Titan-Manganese Plant** is one of the largest of its typein the world and the only plant in Russia that manufactures magnesium alloys. 

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Formerdefense enterprises have been privatized and are restructuring their facilitiesto manufacture competitive consumer products. For example, **Motovilikhinskiye Zavody** manufactures consumer goods, agriculturalequipment, and machines and machine-building equipment for local enterprisesand oil and gas sector. 

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Foodprocessing enterprises are developing rapidly after the 1998 financial crisis,which proved an impetus for local manufacturing of food and light industry. Themajority of the population consider imported food products prohibitivelyexpensive due to the ruble devaluation. Currently, many enterprises are seekinginvestors to upgrade their technologyandequipment to be competitive in the local market*. *

ForeignInvestment andTrade

Over300 foreign enterprises are registered in Perm oblast and foreign investment is$276.9 million. Over 50 percent of foreign companies are manufacturers, 30percent are trading companies, and 10 percent are involved in the tourism,automobile, and transportation sectors. 

 

In1998, the foreign trade turnover for Perm oblast totaled $1.5 million with $1.2million in exports and $302 million in imports. The major imports to Perm inthe first quarter 1999 were machine-building equipment, chemicals, andfoodstuffs—70 percent of all imports come from Europe. Perm’s major exportsinclude methanol, cement, petroleum products, mineral fertilizers, andpotassium salts. 

 

Anumber of joint ventures are operating successfully in Perm oblast. **Sun Group** (u.k.) formed a joint venture with a local brewing company,which is now one of the top brewing companies in Russia. **Nestle**(Switzerland) has invested equipment and technology inKamskaya confectionery, making the factory competitive not only in Perm, butall over Russia.

 

Anotherexample of successful development is the **PermMotor Plant**, a former military enterprise, which has a joint venture with **Pratt & Whitney** (U.S.) to upgradeengines for ps-90a modelaircraft. **Pratt & Whitney**invested $3 million in the venture in 1998–99 to upgrade manufacturingfacilities and make the plant competitive on the world market. It was scheduledto invest $5 million by the end of 1999. 

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*For more information on theUrals, including Perm oblast, and a contact list for the oblast, visit **BISNIS Online**atwww.bisnis.doc.gov/bisnis/country/regions.html#Urals.*

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*Yelena Zheberlyaeva is the***BISNIS***representative inYekaterinburg.*