Businessman Andrei Podenok was appointed chairman of Moscow Entrepreneurs' Association's board of directors in 1992, after spending three years as its vice president.

In addition to his work for the association, he is a deputy chairman of Moscow City Hall's Entrepreneurs' Council and chairman of the Entrepreneurs' Council at Moscow's Central Administrative district.

Podenok is also a member of the Council of the Public Movement in Support of Domestic Manufacturers. Aside from advising other businesses, he is president of the RITM (Russian Investment, Trade and Management) company.

He talked to The Russia Journal about issues relating to supporting domestic manufacturers.

The Russia Journal: What does the Moscow Entrepreneurs' Association do to protect the interests of local entrepreneurs?

Andrei Podenok: We're one of the oldest entrepreneurs' associations – we've been around for 12 years. We've always tried to make money for the development of enterprise rather than ask the city authorities for it. We use both conventional and unconventional instruments to lobby for our interests. In the association, we possess a combination of Western education, local experience and good analytical skills, and the city authorities are beginning to appreciate that.

RJ: What's the overall situation with private enterprise in Moscow? Is the city far ahead of the rest of the country?

AP: Of 500,000 private companies in Russia, about 260,000 are located in Moscow. Demand is somewhat higher here than in the rest of Russia, and the business environment is somewhat better. And also, there is more support for small business from the city authorities. Moscow's budget for small-business development is several times bigger than the federal one.

RJ: You're a member of the council of the Public Movement in Support of Domestic Manufacturers. What are the most common problems domestic manufacturers are facing?

AP: Domestic manufacturers' biggest problem is the insufficient purchasing power of the population. There is a small section of the population – about 4 percent – that really consumes goods, while the rest of the population is barely surviving. The best way of supporting domestic manufacturers would be to stimulate consumption [by improving overall economic conditions]. In Russia, we have all the resources to achieve that, and it could be achieved quickly. We have colossal resources, such as land that cannot be sold or used as security for loans [under current law]. If it were considered an asset, many companies' market values would go up, and they would be able to take loans using land as security.

RJ: But under current law, what could be done to make the population choose domestically made goods over imported goods?

AP: The terms "imported" and "domestic" are no longer valid. There are no more national economies in the world. There are people who make money – and they don't care where they do it – in Europe, in the States or elsewhere. The [Russian] authorities should be more concerned about national taxpayers than about national manufacturers. Say, a foreign brewing company would like to enter the Russian market. Fine. But it should buy rubles first to buy a factory and it should buy malt from domestic growers. If the company wants to export profits, that's OK, too. There should be no restrictions on exports of capital. But it should first sell rubles and buy dollars in this country. There are no longer "domestic" and "foreign" manufacturers. Instead, there are those who produce the country's GDP, and they need to be supported.

RJ: But what would people say if most goods were sold under foreign brands?

AP: Why should they always remain foreign? If domestic consumption increases, it would bring tremendous growth to the economy, and there would be domestic [entrepreneurs] who would eventually buy back these plants [and replace foreign brands with domestic ones].

On one hand, Russia needs capital. But on the other hand, a vast portion of resources that is coming to Russia as foreign investment is actually Russian money. I'm sure that if consumption goes up in this country, we'll have more millionaires than the States and we will even be able to control international companies.

Because of poverty, [businessmen] are reluctant to invest in long-term projects and prefer to spend their money. It will take ages to change this psychology. It's easier to revive factories than to change the way people think. Many people here have been brought up with criminal attitudes. Tax evasion is a normal thing for them. By Western standards, people who don't pay taxes are criminals, but here it's a way of survival.

RJ: What can be done to change these attitudes?

AP: People need to realize that Russia has everything it needs for prosperity. There are enough assets and enough working capital. Also, there is an immense pent-up demand in this country – people hoard enormous amounts of cash at home. As soon as the economic situation improves, all of this money will be pumped into the economy, giving it a boost.

RJ: You said that there is no difference between domestic and foreign manufacturers, as long as they pay taxes and create jobs. So, what about the slogan "Buy Russian?" Is it a waste of time?

AP: First of all, what is Russian? Take the Rossiya [Russia] factory [owned by Nestle]. Is it Russian or not? There is no need for this slogan. There are products we can make and there are products we can't. Domestically produced Mayak [stereos] could never become better than Panasonics. And there is no tragedy in that. It's a tragedy when somebody comes to a shop and cannot afford anything or when an old woman picks up leftover food from a garbage can. The state should provide for decent living standards rather than put forward slogans like that. It can even be harmful to impose that kind of slogan on the population.

RJ: Harmful in what way?

AP: I'm against imposing cliched ideas on people who might not have the full picture [of how the economy works]. People are fed cliches instead of explanations that it doesn't matter who makes goods as long as he employs Russians, pays taxes to local governments and produces goods.

Why is the sale of land not allowed in this country? Because many would say "the Motherland is for sale." Why should land necessarily be sold to foreigners? It's enough to officially consider it as a liquid asset. As for agricultural land, it's hardly worth anything because prices for agricultural machinery and fuel are so high that any operation on it is loss-making. There is no point fighting for agricultural land, either.