February 1999

by Alexander Gordienko

The Republic of Bashkortostan is located in the southern Urals along the boundary of Europe and Asia. Its area is 143,600 sq. m. As of January 1, 1995, Bashkortostan had a population of 4 million people. The capital is Ufa, with 1.1 million residents. Other large cities include Sterlitamak (pop. 256,000) and Salavat (pop. 155,000). Representatives of 70 nations and ethnic groups live in the Republic of Bashkortostan. The urban population constitutes 65 percent of the total. Bashkortostan is a autonomous state under the jurisdiction of the Russian Federation.

Natural Resources
The most important natural resources in the region are oil and gas. Overall, approximately 250 oil and gas fields have been explored in Bashkortostan. In addition, the Republic has substantial reserves of ferrous and nonferrous ore, coal, lumber, phosphorites, dolomites, and gypsum. Other natural resources include gold, silver, cobalt, and other rare metals.

Industry
Bashkortostan ranks second by industrial potential among the Ural regions. It produces 2.6 percent of the Russian gross domestic product and ranks sixth (at 3.6 percent) in terms of industrial output in Russia. The major industry sectors are oil and coal production and processing, chemical/petrochemical manufacture, machine-building and metalworking, and ferrous and nonferrous metallurgy. The Republic's industry primarily specializes in the production of raw materials and semifinished products for further processing in other Russian regions. The available refinery capacity allows the processing of up to 50 million tons of crude oil and production of over 300 petrochemicals. The republic annually produces 1.1 million tons of coal, around 17 million tons of oil, and over 400 million cubic meters of natural gas.

The local oil and petrochemical sector is represented by such companies as Ishimbay Oil Refinery, Ufaneftekhim Chemical Company, Slavat Petrochemical Company, and Sterlitamak Rubber Plant. The chemical/petrochemical sector in the region is involved in organic synthesis production, production of synthetic resin, plastic, rubber, varnish, paint, and other chemical substances. Several machine-building companies specialize in manufacturing production equipment for the oil, gas, chemical, and petrochemical sectors.

Transportation
Bashkortostan is an important transit area for freight transport between western and northern Russian territories and the Urals and Siberia via rail, road, and waterways. The principal waterways are the Belaya and Ufa rivers. Bashkortostan is also connected to 70 Russian cities by air, including a direct flight to Moscow. The Republic has an extensive network of pipelines for the transportation of oil and gas to other Russian areas.

Foreign Trade
In 1997, foreign trade turnover totaled US$2.5 billion, 83 percent of which was exports. Key exportable products are oil and oil products, petrochemicals, machine-building products, and nonferrous metal products. In 1997, imports into the Republic totaled US$346.2 million. The major imports were machines, equipment, chemicals, food products, and metals.

Three hundred twenty-three joint ventures have been registered in Bashkortostan, 174 of which have actively been operating in the Republic. These include 22 U.S. companies that established joint ventures with local companies or their representative offices. The main sectors in which joint ventures are involved include petrochemicals, construction materials, home appliances, clothing, and food products.

Foreign Investments
According to the Bashkir Ministry of Foreign Relations and Commerce, direct foreign investments totaled US$20.6 million in 1997. The most attractive sectors for foreign investment included light industry, the food industry, transport, construction, and communications.

To stimulate investments, over the past two to three years, the Republic of Bashkortostan has adopted a number of laws which provide incentives and tax breaks to foreign investors. These include exemptions and reduction of taxes for companies with foreign investments exceeding 30 percent of the charter capital and revenues exceeding 70 percent of overall sales.

For additional information on Bashkortostan, visit BISNIS OnLine at www.mac.doc.gov/bisnis/country/bashkort.htm.

Alexander Gordienko represents BISNIS at the American Business Center in Nizhny Novgorod.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)