BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/39
The 15 % price advantage granted to domestic producers in public procurement will be extended at the start of next year to apply also for the purchases of SOEs carried out through competitive bidding. The actual impact of the law remains unclear, because according to the economy ministry only 5 % of SOE procurements this year have been subject to competitive bidding. The law on procurements of state-owned enterprises does not precisely specify those cases where procurements should be subject to competitive bidding. SOEs were already earlier subject to certain domestic content requirements in the case of large investment projects. The overall value of SOE procurements in recent years has corresponded to about 30 % of GDP.
The restrictions on procurements of the public sector and SOEs are part of Russia’s import substitution policy. Unsurprisingly for many observers, prime minister Dmitri Medvedev stated in his recent article that import substitution will remain a focal point of Russian economic policy in coming years, regardless of geopolitical conditions or sanctions.
Russia has also extended its food counter-sanctions to a ban on salt imports from November 1. The salt ban affects the same group of countries (e.g. the US, EU, Norway and Ukraine) and will remain in force with earlier import bans until the end of 2017. The ban mostly affects Ukraine, which last year provided half of Russia’s salt imports.