We sat down recently with one of Russia’s entrepreneurs—Anatoliy Pshegornitskiy. Pshegornitskiy is well-known for founding several electricity facilities construction companies, as well as for his stellar leadership of RusEngineering, a Russian conglomerate, taking it to $1 billion in assets.
Pshegornitskiy led the electricity facilities industry’s efforts to develop trustworthy guidelines for self-regulation thereby bringing this sector of the economy to a level of good relations with government leaders and other key stockholders.
When not active with his various entrepreneurial projects, Anatoliy Pshegornitskiy is busy with various charities, such as those that provide life-saving medical care to Russia’s poor children.
We asked Pshegornitskiy to speak with us about his journey to success and his thoughts on what many describe as an improving economic situation in Russia.
- You began your business career at what many would say was one of Russia’s most difficult times. How were you able to establish such a solid footing in spite of the circumstances?
- This is true. I came out of the Army after 10 years of service with virtually no money to my name. Everything was crashing down all around us—our nation, our economy, our healthcare, our leadership. It was definitely one of our dark times. But, I had a few advantages:
(1) I had degrees in electrical engineering;
(2) I also had a degree in economics; and
(3) I had been a boxer during my Army days. It taught me self-confidence and craftiness. In Russia at that time and even now, one has to be crafty to succeed. The cookie-cutter approach does not work in Russia.
- So you would say that having the right education is key?
- In my case, yes. In the early 1990s, at the time I left the Army and the time of the dissolution of the USSR, there was a severe shortage of construction engineers. As a general rule, an engineering degree is highly recommended. It gives you many options, especially an electrical engineering degree. I was able to obtain employment very quickly and then parlay that into establishing my own initiatives.
- What do you see as the primary challenge facing the Russian economy today?
- There are a few, but our primary challenges actually come from outside. Western sanctions and falling oil prices have hurt us. When the foreign investment pool diminishes, it has a ripple effect across all sectors of the Russian economy. Corporations are challenged to think long-term when leaders do not know what will be the future with these sanctions. On the other hand, the sanctions also had the effect of forcing Russia to focus more on developing domestic production, such as pharmaceuticals and foods.
- How has Russia overcome these issues with foreign investment?
- Actually, while not at the optimum level, foreign dollars are coming into the country. Foreign investments stood at a total of $177.5 billion, as of this past spring, with $10 billion coming just from the Asia-Pacific region. And there are bi-lateral economic relations that are working outside of the political framework, or in spite of it. For instance, the Russian-Austrian Business Council is committed to improving the business climate between the two nations, in spite of shaky political relations.
- What about those internal issues you mentioned earlier. What is being done to address them?
- Our economic ministries and agencies are taking measures to improve access to credit, protect intellectual property and create more hospitable tax structures, especially for entrepreneurs. This will help both our domestic businesses, as well as improve the situation for foreign investment. Russia has several plans on the books to be implemented in 2017, such as privatization of government-owned companies and modifications to existing commercial statutes and regulations, which is already being noted by the World Bank.
- Looking ahead to a Trump presidency, what do you see in store for Russia’s business climate?
- There is much hope for an improved relationship, especially on the heels of comments that President-Elect Trump made during the campaign. In fact, the Russia stock market bumped up by 7% following the election. The American and EU sanctions, applied in 2014, have definitely hurt the economic health of Russia and if the political relationship does indeed improve under a Trump administration, and we see the lifting of these sanctions, at least from the Americans, then I believe all sectors of the Russian economy will take off and come fully into their potential. It could be an opportune time for entrepreneurs and businesses seeking to expand their market share within Russia and abroad.
- What do you see as lingering challenges?
- The global attitude toward Russia may change and improve, but we still have some domestic issues to deal with if we want to successfully restart our economic engine. For instance, our labor force remains inadequate to meet our current and future industrial needs. We need better educated and skilled Russians entering into critical fields. Business productivity is stifled by onerous regulations and frequent inspections. And we need to modernize our technological base and increase domestic production of goods.