“In a high-stakes environment, money is worth its weight in gold”

The interest of Russian companies in technology projects has grown sharply after many foreign suppliers left the market. But now companies are faced with both rising funding costs and staff shortages. Kommersant spoke with the Minister for Development of the Far East and Arctic about how these problems are being solved in the Far East Alexey Chekunkov.

This is one of the interviews of the project “Business Talk”.

Video interview Tatiana Edovina with the Minister for Development of the Far East and Arctic Alexey Chekunkov.

Transcript of the interview

About sources of financing

— We met before the forum and talked, in particular, about the fact that many technological chains have been broken, but new foreign partners are unlikely to compensate for all the missing supplies. What measures could close this gap?

— Allow me to move away from the phrase “support measures.” We had an interesting session on technological development, where it was noted that there are two paths: one is crooked paths, they all work, the second is import substitution.

You can’t do everything at once. We learned how to carry things, but we also realized that we need to create a lot ourselves. We are a large country with a diversified economy and, most importantly, a serious research and production school. I am glad that for the first time on the street of the Far East, as part of the EEF, a huge pavilion of the Ministry of Industry and Trade has risen. It looked very organic; unique technologies were presented there. Well, it’s clear that the country has concentrated. Here I will quote the moderator of the session: the country got together and began to quickly create something that had not existed for decades.

I was deeply touched by the president’s statement that we will create new generating capacities, we will create energy. It is very important. Any industry needs cheap energy going forward. This is a huge competitive advantage for the Far East. We have it. The most important thing is that we have energy sources. First of all, it is water. We use only 23% of the water resources needed for hydropower. We need to lower the cost of electricity.

Companies have found ways, and the industry has not stumbled; growth continues – that’s a fact. And we can only rejoice at this. Companies are replacing outdated technologies, there is capital.

The limited possibilities for applying capital plays into the hands – people look at new businesses, large businesses become larger, and this is good.

When large entrepreneurs diversify into some related or other industries altogether and apply their managerial talent and capital to, among other things, replace outgoing Western companies, I welcome this. New national champions are being born, and they will replace these technologies.

The emphasis on advanced development is also important, that is, first we create cities, and then people come there, first we build energy capacities, then industry uses them, because energy is cheap. I think all these trends should inspire optimism.

— The discussion about financing technology projects is now being resumed. How do you see the role of the ministry, what tools do you consider relevant now?

— For a number of years now, a considerable part of the state program has been directed towards additional capitalization of VEB.RF. The structure that used to be called the Far East Development Fund, which I also led for six years, is now VEB.DV, finances projects at 2% per annum. She mixes her money with commercial funds, and in total we get a fairly competitive financial product. Of course, now, especially in conditions of high stakes, this money is worth its weight in gold, and we need to think very seriously about priorities.

We have set a priority for ourselves: the implementation of city master plans. This is where everything we did comes together. In the next three years, I think, all new capital, all additional capitalization will be targeted towards financing master plans. Money is mixed with commercial money, and I think that in this way, through our line alone, we will push projects worth 250–300 billion rubles. through the concession mechanism. This money will now be included as extra-budgetary money, then we will take on obligations and will pay for the projects already created over the next 10-12-15 years. If we add to this the prioritization in other government programs, DOM.RF tools, special treasury loans, budgeted funds, then in total we already have somewhere around 0.5 trillion rubles to start this work. This is a serious financial resource.

If we talk about technology, then money is never the main thing for technology. Just as a rocket must gain a certain speed in order to overcome earth’s gravity, so any technology must go through the so-called valley of death, when the technology already works, it seems that there is an interesting product with some given qualities, but it does not yet have a market. Yesterday, in the same pavilion of the Ministry of Industry and Trade, I met quite a few companies I knew, which were born here in FEFU. Very impressive technological developments, some of them can even compete at the global level. But as an investor in the past – I have been investing for almost 20 years – I always ask developers: what is the volume of serial production, what is the price, where is the market, where are you selling? Not everyone can answer these questions yet. It can be seen that projects are often still at the stage of, let’s say, a prototype or an interesting product, but not a product. To jump over this “valley of death”, sometimes you need to invest a lot of money. It does not always work.

I will give two examples – they are very famous. More precisely, one is known throughout the world, the second was once famous, but no one will remember it now. The government, that is, US taxpayers, invested the same amount of funds in them – $0.5 billion each. The first project was Solyndra, they made solar panels. Complete zero, everything burned out. The second is Tesla, which we can only applaud. I really want us to follow the path of Tesla, of course. But what is fundamentally important here is the ability to invest risk capital.

Our session was led by the famous Russian automobile designer Vladimir Pirozhkov, who now heads the MISiS Prototyping Center.

And in dialogue with the expert community, we came to the conclusion that in Russia the role of the state in technological innovation should be bolder and higher.

At the same time, it needs to be concentrated in several priority areas – this is already happening. There is already work on drones – this will be a serious national project. In addition, we proposed choosing a limited number of such areas and concentrating serious resources in them in order to minimize the risk of losses, the risk of loss. There are ten directions, they should become a magnet for people, because such a project, when you can change the industry, it attracts people, it attracts engineers, it attracts marketers, scientists, technologists. We really need this too.

About personnel shortage

— You pay more attention to training and development of programs at Far Eastern universities. What’s going on here?

— We have three pillars of work with personnel, and so far this is a non-exhaustive list. We need to take primary and secondary education seriously. In terms of secondary technical education, our most important joint work with the Ministry of Education was the “Specialists for Growing Industries” initiative. It lies in the fact that we are rapidly creating laboratories in technical schools, supporting specific technical schools – a total of 208 colleges and technical schools in the Far East. When you arrive there, you realize that this is a level. For example, in Krasnokamensk – a small town, a single-industry town – we installed the most modern simulators for drivers of heavy equipment. Of course, it is faster and more efficient to learn on a simulator before getting into a car that costs many hundreds of thousands of dollars, and the technical school does not have cars that cost many hundreds of thousands of dollars. There is no point in learning on an old machine if you have to work on a new one. In Kamchatka, I was in a technical school that supports business, and, frankly, I was so impressed that I included an illustration in my report to the president – a poster describing the career ladder, the path of a young man. During his studies, he will receive a special scholarship – 15 thousand rubles, become a good worker, serve in the army, finish his studies, become a chief mechanic, then a mine manager with a salary of 450 thousand rubles. at 30 years old. Not everyone can follow this path, but not everyone who comes to the sports section will become a master of sports. This gives the guys a great reference point and imbues technical specialties with very well-deserved, fair dignity. We really need such specialists now; there is a big shortage of these professions.

Another program is “Priority 2030”. A separate track for the Far East is being implemented here. We allocated 6 billion rubles. for 12 winning universities, an average of 500 million rubles. per university, which for some doubled the development budget. This, of course, allows universities to attract more interesting teachers and allows them to develop their base. And the guys went.

The result is that during the 2022/23 academic year, three times more people came to the Far East for their first year than seven years ago.

That is, more freshmen arrived than applicants left. This is a very important milestone for us. People go to the Far East to study. It is clear that then they stay, start families, find work – this is our joy and pride.

The third niche program is the training of management personnel for the public service “Muravyov-Amursky-2030”. This is a program about overcoming, about expanding horizons. A program that first deeply immerses participants for a whole year in the reality of the Far East, in the situation in the regions. There are eight training modules, each taking place in a separate region, in which those who complete the program remain to work for two years. The first stream – more than 40 people, they are already employed: they became deputy ministers of regional governments, vice-rectors at universities, heads of public organizations, heads and deputy heads of municipalities and districts. One girl went to work in the Ust-Kamchatka region, this is generally the heart of Kamchatka – even by Kamchatka standards it is far away. In 2028 there will already be 300 such people, they will deeply understand the Far East, they will know everyone who manages the development of the region, they will know each other. According to any laws of the genre, this, of course, will be a different quality, a new management layer in all regions and municipalities. I hope that we will feel this and, most importantly, the Far Easterners will feel an improvement in the quality of management and the quality of communications with the authorities.