INFORMATIVE "DALBIRZHA"

One of Siberia and Far East's oldest noncommercial trading floors lost its long-time top manager Valery Budnik, who recently deceased. But Dalbirzha's life continues, and its new chairman Vladimir Tsebenko told "ZR" about nearest prospects.

- I have been working in Dalbirzha as a broker for seven years. Our exchange handled quite a number of deals in this period. In particular, we were engaged in selling decommissioned military hardware, mainly scrap from sunken ships and submarines, motor vehicles. We also closely collaborated with the State Food Agency in selling food products. This experience helps us today, when we take part in organizing procurement tenders for budget-paid organizations. Our special activity in the last year became market quotation commissions supporting this process.

- What is Dalbirzha today? What are its activities and organizational form?

- Our bourse, as all other exchanges, is a noncommercial partnership. First of all, it is a floor where people may contact each other, negotiate and make deals.

Rather many broker's offices are registered with our exchange, but only about ten actively operate. Each of them has a certain specific and is capable of quickly transacting a significant number of deals. During Dalbirzha's lifetime, we have accumulated much business and analytical information, including data on business reputation of individual companies. We are actively developing this informational resource.

In further prospect, we intend to organize exhibitions and various events on our premises. We closely collaborate with Primorye Chamber of Commerce and Industry in promoting local markets and producers.

- What informational services are you ready to provide?

- We're often contacted by chambers of commerce and industry from other Russian regions who search for business partners. Of course, they are interested in reliable companies. In this respect, we act both as a source of information and kind of a guarantor. We don't charge clients for "net" information, but, if a deal becomes successfully transacted through this dialogue, we receive a commission fee. We hope that information services will bring us direct revenues in the future.

We plan to organize a permanent exhibition of goods produced in Primorsky Krai. This will help buyers make their choice and promote local products to a higher level. After all, our goal is to make deals, handled through our bourse, mainly with locally produced goods.

"ZR" FILE: The Far Eastern Commodity Exchange (Dalbirzha) was established as an autonomous trading floor in 1990. It is a member of the Russian Exchanges Union and Food Exchanges' Union. In 2003, the administration of Primorsky Krai and Dalbirzha signed an agreement that the bourse will assume part of functions in organizing tenders on procurement of products, goods and services for budget-financed entities, with tender prices not exceeding 2,000 minimum monthly wages. During the first year, Dalbirzha held about 50 sessions of the market quotation commission, completed over 1,000 deals for a total of nearly 50 million rubles. More than 400 companies take part in bidding procedures, and more than 50 budget-financed institutions from all over Primorye placed their orders. - Roman CHURKIN.

PROTOCOL SIGNED ON INTERNATIONAL MONITORING OF AMUR AND USSURI RIVERS

The governments of Khabarovsky Krai, Jewish Autonomous Oblast and Heilongjiang Province signed a protocol on joint monitoring of the two rivers at a meeting in Khabarovsk.

The signing ceremony was attended by Lee Ping, Heilongjiang's deputy head of environment protection department, Anatoly Palachev, head of JAO's natural resources department, and Sergei Andriyenko, Khabarovsky Krai's deputy minister of natural resources.

The first protocol, signed in February 2002, expired and has been replaced by the new one. Experience showed that this document needed amendments and serious alterations. The data obtained through monitoring activities will become a basis for an intergovernmental agreement that will be binding on both sides.

One of major amendments was to apply international standards for laboratory testing and pollution criteria instead of mismatching Chinese and Russian national standards used before.

It is expected that an international memorandum on joint investigation of cross-border water pollution sources and factors, including Amur River, will be issued in December 2004. After that, protection of the Far East's largest river will become an intergovernmental issue and be solved on a bilateral basis. - Yulia PROKHOROVA.

FOREST INDUSTRY IN CRISIS

The forest industry is facing a number of urgent problems that need to be addressed immediately, because these problems tend to reach out beyond Russia's national borders.

Instead of liberalization of the forest industry, the abolition of a special exporter status more than 10 years ago, has eventually resulted in Primorye's forest industry integration in China's economy. This integration has no positive aspects: the region has de facto lost all leverage on price formation in external forest market and got stuck in the Chinese government's programme to rehabilitate national forests by 2010.

Evidence to this is that many large operators in Japan's forest market ceased buying raw timber in Russia and made contacts with Chinese producers, who offer goods produced from Russian wood in compliance with Japanese standards.

This history dates back to an "innocent" decree No. 75 issued by Primorye governor on 10 March 1992, which set forth procedures for foreign labour hire by local companies. That decree had been prompted by a shortage of work force in agriculture, construction, other sectors of Primorye's economy, and by the need to control stay of foreigners, mainly Chinese nationals, in the region.

Introduction of visa free procedures for tourism exchanges between Russia and China greatly changed the authors' vision. First "official" 6,000 Chinese workers dispersed in the mass of illegal immigrants, who partly became sellers in Chinese market-places and partly went in other sectors, less lucrative than commerce, but still offering means for better living standards that in poor Chinese provinces.

As a result, by 1995, when round log exports to China was Primorye was only 142,000 cubic meters, Chinese entrepreneurs have managed to establish a timber production infrastructure oriented at raw timber exportation to China. Starting in 1998, this structure began expanding its influence on so-called Russian shares in their businesses/

Former "market-oriented merchants," who had inspired this Chinese penetration into the region's forest industry thanks to well-established linkages with Russian administrative authorities and law enforcement agencies, gradually switched to organization and control of contraband export schemes. Then they were replaced by narrow specialists working directly with Chinese governmental companies - timber experts, quantity surveyors, record keepers. Through encompassing the region's entire forest industry with its accounting and recording procedures, the Chinese side step by step took over commercial aspects as well and started buying wood for cash.

And, abolition of a special exporter status became for the Chinese just a windfall, similar to the story, when one Russian minister divulged details of the eavesdropping system installed in the U.S. embassy.

A catalyst to this process became the Chinese government's ban on timber cutting in the upper and middle reaches of Yangtze and Huang He rivers, restrictions or stoppage of timber cutting in northeastern areas and Inner Mongolia, and cancellation of all timber imports restrictions, first of all, from Russia beginning 1 December 1998.

In that way, Russian timber contraband to China has acquired an almost governmental status and resulted in a situation, when the operator and processor of timber produced in the Far East is China, both in Asia Pacific region and in Europe.

The forest industry development programme, signed by Gov. Sergei Darkin in August, will bring no noticeable effect in this situation. Well-presented investment proposals, which should be supported by secured timber reserves as regional officials assert, are, in fact, aiming at capturing timber reserves still controlled by Russian entrepreneurs. But, timber is not the critical factor in this situation.

Chinese experts estimate that wood deficit in the domestic market may reach 200 million cubic meters in 2005. In this context, Primorye's timber reserves of 8.5 million cubic meters are just a modicum in strategic plans of China's forest industry. Next, timber exports from Primorye has been growing for a fourth straight year without any significant investments. But, interestingly, some Russian producers suddenly meet difficulties in exporting their produce, for instance, sawn products. More detailed analysis shows that they are Russian companies who employ no Chinese work force.

A logical conclusion is that pending Chinese investments are tied up not with requirements to improve the investment climate, but rather with China's far-reaching global goal to establish economically strong national Chinese communities in near-border Russia territories. China is ready to invest millions of dollars to accomplish this goal. Indeed, why should they make reservations on a better investment environment, when they are forming this environment themselves?

By official data, there are 452 companies, operating in Primorye's forest industry, with a total workforce of 13,800. Of this number, only 22 businesses have Chinese capital and only 250 Chinese workers are employed in the industry. However, foreign businesses export the bulk of timber and at least 30% of this export is bought from loggers in bypass of tax laws. In fact, the only missing component for monopolizing Primorye's forest industry by China is manning. Development programmes made on paper shortly before next elections leave no doubt that sooner or later China will accomplish this goal.

The forest industry is already working to the neighbouring state's benefit. Rapid impoverishment of near-border and inland forest areas is evidence to that. To make radical changes, the system of forest industry should be changed instead of adapting it to somebody else's benefit. A single region cannot do that alone.

It should be noted that the regional administration is aware of the abnormality of existing situation. Sergei Zakharov, chief specialist of the Forest Department, admits that the abolition of a special exporter status and stake on liberalization have yielded no good results.

Specialists most likely have their comments on scenarios for solving the obvious crisis in the forest industry, however, independent critical opinions will not be welcomed at all levels of the executive branch on the eve of the next electoral campaign. And when the forest industry in Russia's near-border territories will be fully captured by foreign parties, the costume of national interest defender will be gladly put on by Moscow. - Igor NIKITIN.

IN TRANSIT THROUGH VLADIVOSTOK

Though the flow of Chinese tourists in Primorye is seemingly growing from year to year, some tourism company managers say that, on the contrary, the number of "service-buying" tourists from China goes down.

By official data, says Sergei Pysin, chairman of the regional administration's tourism committee, about 100,000 tourists arrived in Primorye during 7 months of 2004. However, many tourists stay in Vladivostok only for a couple of days and then depart to Irkutsk, St. Petersburg, Moscow. By words of Intourist-Vladivostok deputy director Yevgeny Urbanovsky, when Vladivostok Air started charter flights between Harbin and Moscow, Chinese tourists became able to go to Russia's western regions in bypass of the Far East.

By latest official data, Primorsky Krai received 31,300 Chinese nationals during August, or 4,700 more than in August 2003. However, Chinese workers, who enter Russia with 30-day tourist visas and settle down on local market-places, construction sites and farms, should be deducted from this number.

Says Natalia Kalachinskaya, director of Gavan-Tourcentre tourism company: "Transit tourists, who proceed to other Russian regions without stopping in Vladivostok and leave no cash in the local budget, but are registered by statistics, should also be deducted from that figure. Many Chinese cross the border in Kraskino, spend the night in the local casino and go back to China in the morning."

At the same time, the number of tourists buying services and thus giving job to guides, caterers, interpreters, transport operators, has decreased on 2002 (the last year is not indicative due to SARS restrictions). Unless foreign tourists see adequate services in Vladivostok, worth while staying here longer than 2-3 days, prospects for tourism business may be jeopardized.

"It is known," Natalia Kalachinskaya continues, "that successful tourism includes the following components: what new I can see and learn, what things I will bring back in my suitcase. We shall build up-to-date comfortable hotels. Our entertainment potential traditionally consists of casino, strip-tease and excursions. Marketing tricks cannot substitute the heritage of natural history, and a provincial city is unable to build a Disneyland. We will be lucky if the aquarium project, soon to be launched in Vladivostok, will take not a very long time, but even it will not become a panacea for the tourism industry. Finally, shopping - even here Vladivostok has nothing to attract tourists." - Svetlana CHEREPANOVA.

DIFFICULTIES OF LEGALIZATION

As Alexander Torenko, Primorye's top passport and visa official, declared at the recent meeting of the inter-agency commission on foreign work force, 1,033 foreign citizens were banished from Primorye in the first half of 2004, of which 26 persons were driven out from Russia by force.

He further said that the region's passport and visa authority developed administrative expulsion procedures shortening stay of unwanted individuals in Russia. Deported foreign nationals will have special marks in their passport to prevent them from entering Primorye once again.

Alexander Torenko said: "We have checked more than 600 companies using foreign labour and identified 460 illegally employed foreign nationals. 23 permits were revoked, and 54 organizations lost foreign workforce hire rights."

By data of Primorye Interior Affairs Office's immigration department, about 2,000 persons were not allowed to enter Primorye in the first half of this year, because purposes of their visit did not comply with what had been declared in visa. At the same time, 50% more of foreign citizens and 12 times more of CIS citizens officially legalized their activities in the region. However, over 700 CIS citizens continue working illegally.

The inter-agency commission decided to recommend appropriate authorities to make alterations to existing rules such that to simplify legalization procedures for CIS citizens staying in Russia for a long time. - Sergei SHEPELKIN.

BREWERY FOR SALE

Juice and milk producer Wimm Bill Dann (WBD) is leaving beer business. Heineken (Holland) announced in August that it bought CEBCO brewing company belonging to WBD's shareholders.

By data of the Vedomosti newspaper, Heineken paid CEBCO at least $60 million for Volga brewery in Nizhny Novgorod and Shikhan brewery in Sterlitamak, while Moskvoretsky (Moscow) and PivoIndustria Primorya (Vladivostok) breweries are still in possession of previous owners.

WBD's shareholders, including chairman of board Sergei Plastinin and David Yakobashvili, went for beer business in mid-2000, when they bought Moskvoretsky, then PivoIndustria Primorya and Volga. In 2002, WBD bought Shikhan brewery through a privatization tender.

CEBCO announced its plans to join the leading trio of Russia's largest brewers but failed to take any significant action to create strong nationwide brands, which is necessary for serious play in the beer market. Now, part of its beer business was taken over by Heineken, which reportedly bought 100% in CEBCO, who owned 78% in Shikhan and 100% in Volga brewery.

Shortly before that, Moskvoretsky and PivoIndustria Primorya were withdrawn from CEBCO's jurisdiction. By "ZR" data, WBD's 67.12% in PivoIndustria Primorya was handed over to OOO Production and Trade Group Rusich.

As became known to "ZR," Primorye-based brewery will not remain in mid-air for a long time and most likely be sold in this year, though there are not many contenders in view. Representatives of Efes (Turkey) inspected the brewery and reportedly refused to but it. Other major players Baltica and PIT have their own breweries in Khabarovsky Krai.

The most probable buyer - Russia's second-largest brewing company SUN Interbrew, having 29.29% in PivoIndustria Primorya through Sacatinin Limited, announced its plans to build a brewery valued at 50 million euros in Irkutsk Oblast. It has already received a choice of six land plots for construction and will make a final decision in early October at a board meeting in Belgium.

Its senior vice president Irina Kibina said to the Vedomosti that "it is too early to tell whether we will construct a brewery or buy existing ones. We are in negotiations with many regions, and Irkutsk is only one of many possible locations." In Siberia, SUN Interbrew owns Rosar brewery in Omsk. - Olga DOBROLYUBOVA.

MEAT IMPORTS FROM CHINA UNDER BAN

Primorye's chief veterinary inspector Vladimir Semenov informed that a temporary ban was put on imports of livestock products starting 17 September, as required by Russia's chief veterinary inspector Alexander Ponomarev.

The ban applies to importation (transit) of live animals and all products of animal origin unless thermally treated. It was prompted by foot-and-mouth disease in several Chinese provinces. By data of FECA's statistics data, a total of 5,800 tons of meat and sub-products was imported from China through Primorye's customs points during the second quarter of this year. - Yury ROGOV.

SALMON SEASON: PESSIMISTIC RESULTS

With one of the largest TACs approved by the government, this year's salmon season was promising to be one of the most successful in last ten years - 256,000 tons was allocated to the Far East versus 188,000 tons in 2003.

However, fishermen have been able to produce only 127,000 tons of salmon. Still, official authorities assert that salmon fishery was rather good in this season.

Kamchatka's fishermen raised loudest noise again. The peninsula received the greater portion of salmon quotas with its western coast being the main fishing ground. There are many spawning rivers here, and Lake Kurilskoye is a natural habitat for sockeye, the most valuable of all Pacific salmon species.

It should be noted the situation in Kurilskoye Lake in 2002 provoked an investigation against Kamchatka governor Mikhail Mashkovtsev, who allowed fishermen to harvest salmon in excess of the approved TAC. Prosecutors decided he misused his authority and opened a criminal investigation, which is still in process.

Due to various reasons, Kamchatka fishermen did not set almost 40 ground nets in the west coast, each capable of catching at least 600-700 tons. When asked why, they replied briefly: "We were not sure there would be enough fish and did not like to take risks." However, more logically for them would have been to increase salmon producing capacity, given good forecasts for this year.

"ZR" FILE: By data of the regional administration, this year's quota was 138,200 tons of salmon, of which only 66,000 tons was produced (47.8% of the quota), with catch on the eastern and western coast being 5,100 tons (59.7%) and 60,800 tons (47%) respectively.

A "ZR" journalist, who visited Kamchatka during salmon run, saw the situation from a different viewpoint. Primorye-based companies offered better raw fish prices to teams operating set nets, and some major local companies did not have enough fish past summer. Kamchatka's angry fishing lobby started crying that governmental control is needed in the industry and was supported by V. Romanov, chief federal inspector for Kamchatka: "Economics should not be regulated by market forces only. There should be governmental control as well, and the government is represented by local administrations."

This all sounds rather curious - when fishing areas are distributed among fishing companies, they cry about administrative arbitrariness, but when they lose the local market to outside competitors, they call for administrative support.

Observers point out that another reason for poor results of salmon fishery is adverse weather conditions. Vitaly Dudarev, TINRO-Centre's head of fishery forecast and regulation department, believes bad weather to be the main reason for this year's failure. "90% of nets was damaged during August storms. By our information, after the August 6-7 storm in the western coast, 11 nets out of 104 ones were destroyed completely and it took a few days to repair the rest. But salmon does not wait, and it continued running to spawning grounds, with no capacity available to catch it."

Sergei Vakhrin, executive director of Kamchatka's association of coastal fishing companies, offers one more explanation - companies with no experience in salmon fishery had failed to make adequate preparations.

By his words, fishermen, who never worked on Kamchatka's western coast before, did not take necessary precautions upon receiving a storm warning. They forgot that waves are highest in this shallow-water area. Salmon traps and nets were not removed, and, as Sergei Vakhrin asserts, had 3-4 times less anchors than required.

Fishermen, regional officials and scientists agree that one more reason for this year's failure is that fishing permits were issued too late. Vitaly Dudarev says that, though control fishing showed that salmon run was adequate already on 15 July, FGU Sevvostrybvod issued permits only on 26 July.

He further says that Kamchatka was not alone to fail in salmon fishery in this season. Unused salmon quotas remain on Sakhalin and Kuriles. Khabarovsky Krai's fishermen harvested only 2,314 tons of their quota of nearly 7,500 tons. Even Japan, working under inter-governmental agreements produced only half the allocated quota.

Scientists give no forecast for chum, a Pacific salmon variety spawning latest of all other varieties. Vitaly Dudarev cautiously says: "It will depend on the warm current descending from the Sea of Okhotsk to Kuriles and Sakhalin. Chum migrates with this current, and, if it comes close to the coast, fishery will be good, if not - fishermen will have no chum." - Yury NURMUKHAMETOV.

NEW GOLD VEIN DISCOVERED ON CHUKOTKA

The vein was discovered by Bima Gold (Canada) in the northern and central zones of Kupol deposit.

Canadian specialists sank a total of 127 trial wells. Gold and silver reserves at Kupol are estimated at 120 and 210 tons respectively. The Canadians plan to produce first metal in early 2007, but findings of exploratory works show that the deposit can be put into operation earlier than that. By the time Kupol is commissioned, a camp, enriching mill and runway will be built there. Works at Kupol are being done Chukotka Mining and Geologic Company, the Canadian's company subsidiary. - Yevgeny ITAROV.

ANTI-TERROR OF THE SUBJECT

Khabarovsky Krai governor Viktor Ishayev returned from Moscow, where he attended the cabinet's meeting on strengthening the vertical of power and tightening terrorism enforcement.

The governor believes that it will take some time to work out a nationwide programme. In the meantime, a regional programme will be developed for subsequent incorporation in the national strategy. He positively appraised Vladimir Putin's proposals on strengthening the governmental authority and confessed that governors were expecting even tighter position from him, in particular, on personal replacements and administrative centralization. They were sure that Putin would declare about governors to be appointed directly by him.

A number of governors, including Viktor Ishayev were proposing that back in 2000 but were not supported by the majority. In his opinion, the point is not how a governor is elected, but what authority he will have and what he will be able to do for his region's benefit. True, he stressed that the oncoming gubernatorial elections will be held in Khabarovsky Krai in accordance with the existing law - "we have time for that," he said.

The region's legislative assembly will consider the issue of election on 29 September. Viktor Ishayev's term of office expires on 10 December and, as became known to "ZR," gubernatorial elections will be appointed on 19 December.

The governor replied evasively whether he will run for another term but added that he is in "fighting" moods. Ishayev's high spirits can possibly be explained by his lengthy meetings in Moscow with vice chairmen of presidential administration Surkov and Abramov.

Viktor Ishayev has a traditionally strong standing in Khabarovsky Krai. During his last trip to Moscow, he was dealing not only with political problems. By his words, he met with Rosneft top manager Bogdanchikov, who confirmed Rosneft's plans to complete a gas pipeline to Khabarovsk, to build terminals in De-Kastri and on Sakhalin.

Ishayev also had talks with the Construction Ministry about the second phase of the bridge across Amur River. OAO Russian Railways is ready to provide resources for its railway section, and now confirmation is needed from road transport officials. In conclusion, the governor said that road construction in the region will be carried on and there are resources reserved for that in the 2005 budget. - Oleg KULGIN.