Andrey Kovalev: “Those who did get the subsidies from the state must receive the Nobel prizes”
Andrey Kovalev is a businessman from Moscow, the owner of Ecoofis Group of Companies, creative food court “Sunflowers Art & Food”, etc. The annual turnover of all his projects is about 2 billion rubles, he has 800 employees.
Enterprises cultivated for decades are collapsing in a month now, and the aid declared by the authorities today is 00 rubles, he said in an interview for NI.
“Before the coronavirus, I had a strong medium-sized enterprise. In a month we went to -40% with previous profitability of +10%. A tenth of the employees have already been dismissed, some have been sent on the unpaid leave, the rest have reduced salaries and reduced rates. Next month, I am afraid there will be nothing to pay people, even large companies cannot provide salaries, and this is not to say about medium-sized businesses.
The main pain for owners of commercial real estate: a wild tax on the cadastre and land rent: the value of real estate is prescribed five times higher than its real price. This collection was introduced in 2014. Well, a state criminal, I evaluate it for myself, but what else can you call the one who invented it? The pandemic only exposed this problem. Revenues in the industry for the month have already fallen by 50%, and we are making concessions, lowering fees for our tenants, and no one even remembers lowering taxes on working with real estate.
The whole world saves business, saves jobs, spending trillions of dollars and euros, we have the amount to maintain is ridiculous 0.7% of GDP. Everywhere there is an understanding that without pouring money into the business now, then you will need to spend 2-3 times more. In Russia, there is no such understanding. Four months have passed since the start of the epidemic. Some declarations. These instructions of the president and the government have so far reached the earth, overgrown with incredible instructions, according to which it is impossible to get help from the state. I do not see any system of government in this part.
In the USA, Great Britain, and Germany, an entrepreneur automatically receives state aid. They are quietly quarantined, and we are shaking. 10 million workers, at least, we are already on the verge of unemployment. So far, the authorities have not done anything to save jobs. They talk about some handouts, but they are impossible to get. The system does not work.
People who have been building their business since the 90s have gone through gangster years, survived the crises of 2008-2009 and today 2014 are becoming poor. Non-state enterprise workers really have nothing to eat, nothing to feed their children. This is already a reality, what happened in North Ossetia will be with us everywhere.
Right now, you need to inject at least 15-20 trillion into the business, otherwise, after the epidemic, you will have to inject 50 trillion, and many enterprises will not come to life.
Return to entrepreneurs 30% of the taxes they paid over the past year, and this will really save the situation. Do it directly, you do not need sophisticated indirect schemes, according to which nothing reaches us. Give loans at 2-3% - both to the population and business, as is happening all over the world in order to save consumer demand.
A simple, widely announced interest-free payday loan. I would use it now, I would use everything I can. But where are these zero payday loans? A month has passed since the president announced his help, but it is still not there.
VTB Bank, for many years we have been working perfectly and well with it. I’m calling there, and they tell me that interest-free loans have not yet been issued. Funding from the center has not been received. The refusal does not depend on VTB; the Central Bank should develop and send instructions. Before banks can issue loans at zero interest, they must receive either 10% of subsidies, or be financed directly from the Central Bank at a rate of –2%. Obviously, the Central Bank does not comply with the presidential order. Remember how Minister Reshetnikov tried to get a loan a few days ago. And he didn’t succeed.
With other banks I will not even try to work on interest-free salary loans. Changing the bank now with a well-functioning system of work with the creditor is an action with zero result. My bank sees my momentum, he knows what real estate I own, we have a payroll project at VTB. All my employees get paid on our bank cards. I am transparent to him. No other bank will even consider my applications, because in order to open an account with any other bank, I need to get approval from VTB. This is a long procedure with an implicit outcome, which will take at least three months. In addition, other banks also do not yet have instructions from the Central Bank.
We are constantly monitoring the situation. At the meeting with entrepreneurs, the president instructed to resolve the issue of cadastral tax and land lease so that landlords could reduce their rent to tenants. Finally, now the instruction of the mayor of Moscow on receiving subsidies should come out, but for some reason only for owners of shopping centers. And what about the owners of other commercial real estate? There are 11 pages in the document, nothing is possible to understand from them. Anyone who can get a subsidy for this document needs to get a Nobel Prize.
Small and medium-sized entrepreneurs will come out of the crisis, of course, by completely different people. Businessmen are already openly telling the authorities that it does not suit them. And what kind of dialogue should there be if we, managers who built their business for decades, see that there is no competent management at all at the top.
My guess is that this summer there will be a new batch of representatives of SMEs. This will not be the well-known fake party that seems to represent our interests now, and not those pro-government organizations that pretend to help entrepreneurship. I already see how entrepreneurs unite in cities, how they unite everywhere on an industry basis and openly express their deep dissatisfaction with the actions of the authorities and discuss how to save the country. And these will be people with real managerial experience. They will demand large-scale economic reform, tax cuts, interest rates on loans, a total revision of relations between government and business”