THREE AIRLINES ON KAMCHATKA MAY MERGE

As officials from Kamchatka Civil Aviation Department say, Petropavlovsk-Kamchatsky Air, Koryak Avia and Khalaktyrskiye Airlines will be a single enterprise in about a year.

Thanks to this merger, Koryak Avia will avoid bankruptcy and Khalaktyrskiye Airlines will be able to resume flights after the Ministry of Transport revoked its license in last autumn. A technical and economic substantiation for the upcoming restructuring is to be completed by 15 March. - Yevgeny ITAROV.

KOLYMA GOLD REFINING FACTORY WILL PRODUCE TINSEL GOLD

The factory processed 27 tons of gold and 91 tons of silver in 2003.

Gold output is less than a year ago, while silver production grew by more than 30 tons.

The refining factory works with mining companies of Magadan, Chukotka, Yakutia and Khabarovsky Krai.

The production of bullions is growing. Kolyma refining factory director Vladislav Feoktistov believes this is a lucrative activity. Bullion sales totaled 160 kg in 2002 and 370 kg in 2003.

The factory plans to buy equipment for tinsel gold production. - Yury ROGOV.

SOUTH KOREAN GARMENT FACTORIES WRAP UP IN PRIMORYE

A meeting of the consultative council on foreign investments to Primorsky Krai was held on 12 February. Diplomats and representatives of foreign companies requested comments on some provisions of the new Customs Code that has taken effect.

Next, regional officials initiated discussion of problems and prospects for cooperation with South Korea and, in particular, problems faced by South Korean-invested garment factories after the new code went into force.

Far Eastern Customs Authority first deputy chief Alexander Terekhin and Customs Control Service deputy chief Mikhail Guryashin told about new customs and tariff regulations applicable to foreign economic activities and about January experiences of using the new code.

It is questionable whether hour-long reading of legal documents is an effective method to explain intricate procedures to foreigners, let alone that it was very hard for interpreters to perceive and adequately translate all details.

They did their best to interpret at least general provisions such as that the new Customs Code is a direct action law and does not require any additional laws, that customs taxes account for 40% of budget revenues, that customs declarations must be cleared within 3 days and, by FECA data, 97% of declarations in January was indeed cleared within 3 days.

Comments on Article 340 of the new code pertaining to methods to secure customs payments were of special interest for representatives of South Korean-invested garment factories Koross, Aross and PLP Consum Mijin.

This article stipulates the following types of security: deposit in the form of money, goods or other property, bank guarantee, bail, or insurance contract with procedure yet to be elaborated. By words of factory manager, all this results in considerably higher costs.

Under previous customs control procedures (use of client's materials), materials were exempt from import duties. The new procedure treats this as "goods being processed in Russia's customs territory," which requires a deposit for imported materials amounting to substantial sums if a factory has a high turnover of goods and materials. These sums to be repaid eventually but, in fact, will be withdrawn from circulation for a long time.

A bank guarantee may be received instead of paying to the customs, but, as ROK consul Om Kee Yon informed, commission fee for this service in Russia is 6-10% of the amount due to the customs, while in his country banks request only 1%.

By words of PLP Consum Mijin factory director general Nikolai Dolzhikov and Koross executive director Vera Karas, the new procedure takes much more time and money. Yes, declarations are cleared within 3 days but it takes another 3 days to stand in a queue to submit a declaration. If there is some mistake, the procedure starts again.

A collateral is required to get a bank loan but, before, property must be appraised which also takes money. Appraisal costs for Koross amounted to 210,000 rubles. This factory employs about 1,500 seamstresses and has a turnover of about 100 million rubles, which means a collateral of 25-30 million rubles.

Previously, containers with goods were inspected in a special area on the factory's premises in Partizansk and now they have to be brought to the Timber Terminal in Nakhodka. This means loss of two days and additional costs at 1,200 rubles per container.

According to the new code, customs brokers must deposit 50 million rubles on the State Customs Committee's accounts. An alternative to this deposit, which is beyond capacity for many brokers, is a guarantee by the Council of Customs Veterans or by the National Association of Customs Brokers. The first results as follows. The number of customs brokers reduced, competition slackened and prices grew. Services offered by "customs veterans" mean extra 4,000 rubles per vehicle and, as garment factory managers say, customs clearance paperwork has grown thrice.

In general, it is no wonder that South Korean business did not like the new "customs ceremony." By the way, the South Korean consul noted that some factories in Primorye haven't got back substantial amounts of VAT so far. Thus, "Michigan Russia" from Ussuriisk awaits repayment of more than 14 million rubles for 2002 and part of 2003. Other factories also have similar outstanding receivables.

It should be noted that the customs code is not the only reason for problems faced by garment factories. Other factors are shortage of labour resources, drop of dollar-to-ruble exchange rate resulting in a significant decrease in profitability of this business oriented first of all at USA with its current economic difficulties.

At the close of the meeting, regional administration officials, garment factory representatives and customs officials agreed to have another meeting and solve as many problems as appropriate. However, two factories - SH International (Vladivostok) and Comex (Artem) - gave official notice of shutdown and, by data of Yury Chernozub, head of the Legal Department of Primorsky Krai Labour Inspection, six more factories are idling. It looks that prospects for garment making business dwindle away in Primorsky Krai. South Korean businessmen should leave the market in a civilized manner. Not all of workers from closed factories have received separation fees so far. - Irina DROBYSHEVA.

MODEL FOR INNOVATION TECHNOLOGIES UNIVERSITY TO BE SET UP IN KHABAROVSK

The idea of an innovation university will be realized on the base of one of local higher learning institutions.

Governor Viktor Ishayev assigned the region's Ministry of Education, Council of University Rectors and Khabarovsk Scientific Centre, Far Eastern Branch of Russian Academy of Sciences to prepare by 1 July all documents and conceptual vision necessary for opening such a university.

A region-level innovation development programme will be worked out and actions to establish a regional innovation system in Khabarovsky Krai will be taken in this year. - Yevgeny ITAROV.