TITLE:                   KAMCHATKA REGIONAL PROFILE

SUBJECT COUNTRY(IES):    RUSSIA

POST OF ORIGIN:          RUSSIA

SERIES:                  INTERNATIONAL MARKET INSIGHT (IMI)

ITA INDUSTRY CODE:       N/A

DATE OF REPORT (YYMMDD): 991203

DELETION DATE (YYMMDD):  201203

AUTHOR:                  INNA NAZAROVA, BISNIS REPRESENTATIVE IN VLADIVOSTOKCCCCC

APPROVING OFFICER:       RICHARD STEFFENS

OFFICER'S TITLE:

NUMBER OF PAGES:         9

SUMMARY

Kamchatka Oblast is a Russian Far East (RFE) territory with an
economy based on fishing and related industries.  Kamchatka's
vast natural resources are underdeveloped.  The region depends
on imports of fuel, food products and equipment.  Kamchatka's
natural resources and proximity to the Asia-Pacific region
create some opportunities for U.S. exporters despite the low
purchasing power of a sparse population. End summary.

GEOGRAPHY

Kamchatka Oblast is a 472,300 square kilometer territory in the
RFE washed by the Bering Sea and the Sea of Okhotsk.   The
regional economy depends on fishing and fish-processing.  Fish
and seafood are the primary exports and a source of cash to pay
for imported food products and fuel.  Kamchatka is rich in
natural resources, including gold, silver, copper, natural gas,
and coal; but lack of infrastructure, remoteness, high energy
prices and fuel supply disruptions hinder regional economic
development.  Kamchatka's substantial timber reserves and lack
of technology present an opportunity for U.S. wood processing
equipment exporters.

BEST SALES PROSPECTS

Fishing vessels;
Fish processing equipment;
Wood processing equipment, especially dry kilns;
Fuel;
Food products.

POPULATION

Kamchatka's population, gradually decreasing, totaled 387,100
people in July 1999.  While it has three towns and a number of
settlements, more than half live in PK.  Many work for seasonal
fishing and fish-processing industries.

The average salary in June 1999 was USD 156, a 150 percent
nominal growth and a 30 percent real decline compared with June
1998.  Kamchatka's State Statistics Department estimates that
wages constitute over 60 percent of the family income in
Kamchatka, versus about 40 percent for an average Russian
family. Ten percent of the population earns about one quarter of
total income.

Kamchatka has more passenger cars than Russia on average - 140
vs. 114 vehicles per 1,000 people.  The number of automobiles in
Kamchatka reached 82,600 vehicles: 66,000 passenger cars, 12,000
trucks and over 4,000 buses.

FOREIGN TRADE

Kamchatka exports fish (93 percent of the total exports in
1998), machinery (3 percent in 1998, a dramatic drop from 38
percent in 1997), and timber (4 percent).  Its major imports are
fuel (73 percent), including oil and oil products.  Import
volume decreased significantly after the financial crisis of
1998; Kamchatka companies had to switch to cheaper imports and
domestic products.  In addition to established partners in the
United States, Canada, Germany, Poland and China, Kamchatka
found new ones in Romania and the Czech Republic.

KAMCHATKA'S MAJOR TRADING PARTNERS


FOOD PRODUCTS

Over half the food products Kamchatka consumes are imported.
Kamchatka's food imports in 1998 exceeded USD 23 million, a 41
percent decrease in the dollar value of imports from 1997.
Imports of pasta, butter and potato declined by 11, 7.5 and 5.7
times respectively; imports of fresh fruits decreased by 28
percent.  Pork and soybean oil were the only imports to
increase.

As a result of the August 1998 financial crisis, there has been
growth in the food-processing sector.  Fishing canneries
increased output 12 times, bakeries and meat processing plants
by about 30 percent, and dairy plants by 23 percent.

KAMCHATKA FOOD IMPORTS


*1996
*1997
*1998
*
*Meat & Poultry
*11,188
*12,306
*10,028
*
*Processed & Canned Meat
*7,363
*6,087
*2,811
*
*Dairy products
*1,465
*1,215
*123
*
*Fruits
*5,142
*5,142
*3,690
*
*Vegetables
*1,014
*969
*361
*
*Wheat & flour
*9,072
*6,127
*1,746
*
*Oil
*700
*613
*341
*
*Other
*13,928
*7,357
*4,052
*
*Total Imports
*49,872
*39,816
*23,152
*
*

FISHING INDUSTRY

The fishing industry continues to be the basis for Kamchatka
economy. However, its production decreased due to unfavorable
fishing conditions and reduced quotas.  The fishing industry
income rose due to the price increases in international
markets.  Pollack, salmon and crab are the most important
species.  Sales of cod and flounder have gone down.

Many Kamchatka fishing companies have outdated fleet.  U.S.
companies that market refurbished fishing vessels and
fish-processing equipment may find opportunities in the region.
As Russian companies often lack cash to pay up-front, leasing or
other flexible financing techniques should be considered.

TIMBER INDUSTRY

136 wood and wood processing companies operate in Kamchatka.
Most lack equipment and sell raw timber to Japan and Korea.
Local government officials say that, in general, the industry is
not profitable; however, the 1998 ruble devaluation improved the
situation.  The industry represents an opportunity for U.S.
exporters of wood processing equipment.  Small-scale and
refurbished equipment is marketable in Kamchatka.  Furniture
manufacturing equipment may also attracts Russian buyers.

ECO-TOURISM

Eco-tourism could be a promising industry.  Hiking and
helicopter tours to picturesque volcanoes and geysers, salmon
fishing, bird watching tours and river rafting trips attract
over 4,000 tourists annually.  The number of tourists from the
United States has decreased slightly in recent years while the
numbers of Japanese and European tourists grew. Local companies
have started marketing eco-tours in other regions of Russia.

Most travel agencies in Kamchatka are intermediaries between
tourists and one tour operator, Krechet.  The latter has
exclusive licenses to operate a dozen certified tourist routes.
It invests in infrastructure, including the helicopter fleet and
tourist cabins with modern utilities and western fixtures.
Crechet is a dynamic company with excellent facilities but
insufficient marketing.  It seeks a partner to promote Kamchatka
eco-tours in the United States.

GOVERNMENT

Present government officials in Kamchatka are Soviet-era
political leaders.  PK is among a few places in Russia where the
main street and the local legislative council have kept their
Soviet-style names u oLenin Streeto and oSoviet of People's
Deputieso.

The good news is that lately they are no longer waiting for
Moscow to provide solutions to Kamchatka's problems, but are
willing to seek them. Local officials are likely to express
their frustration with the lack of U.S. and foreign investment
and are eager to consider any project/deal in their region.

BANKING

Kamchatka has neither Moscow-based nor large regional banks.
Kamchatagroprombank is the largest local bank; it offers
electronic wire transfers, letters of credit, and commercial
loans.  The bank administers a small business loans program
under a partnership agreement with the U.S.-Russia Investment
Fund (TUSRIF).

TRAVEL INFORMATION

Aeroflot and its spin-offs serve Petropavlovsk-Kamchatsky (PK)
from Moscow, St. Petersburg, Khabarovsk, and Magadan.  Reeve
Aleutian has two weekly flights to Anchorage, Alaska.  Charters
from Japan are available during the summer. FESCO freight
vessels stop in PK enroute from Seattle to Vladivostok.  Many
importers use airfreight services.

The major hotels in PK are Petropavlovsk and Oktyabrskaya.
Petropavlovsk is a former state-owned hotel. The facilities
greatly improved recently as most rooms were renovated and a
power generator installed. Electricity and hot water are
available around the clock. There is a restaurant and a
cafeteria that serve decent food.  The music can be too loud in
the restaurants after 8 pm.

Oktyabrskaya is located two blocks from the local government
building and was built to house visiting Communist party and
government officials.  The receptionists are very friendly and
even turn on the hot water if asked u the hotel supplied hot
water for two hours twice a day when BISNIS representative
stayed there.

CONTACTS

GOVERNMENT

KAMCHATKA OBLAST ADMINISTRATION
1 LENIN SQUARE
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683040
Fax: 7(415-22) 73-743

VLADIMIR BIRYUKOV, GOVERNOR
Tel: 7(415-22) 22-096

BORIS SINCHENKO, DEPUTY GOVERNOR
Tel: 7(4152) 112-068

ALEXANDER POTIEVSKY, HEAD
FOREIGN ECONOMIC RELATIONS & TOURISM DEPARTMENT
TEL: 7(415-22) 28-022
TEL/FAX: 7(4152) 112-355

NATALIA LOBKOVSKAYA, DEPUTY HEAD
FOREIGN ECONOMIC RELATIONS & TOURISM DEPARTMENT
TEL: 7(4152) 112-092
E-MAIL: KRA@SVYAZ.KAMCHATKA.SU

LIDIA GAIDUKOVA, DEPUTY CHAIR
AGRICULTURE, FOOD AND TRADE COMMITTEE
2/1 VLADIVOSTOKSKAYA STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683017
TEL: 7(4152) 11-80-03
FAX: 7(415-22) 68-419

PRIVATE SECTOR

KAMCHATAGROPROMBANK
VLADA ARKHIPOVA, LEADING SPECIALIST
SMALL BUSINESS LENDING PROGRAM
1A LUKASHEVSKOGO STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683024
TEL: 7(415-22) 60-275, 33-717
FAX: 7(415-22) 60-270, 62-465
E-MAIL: ZEBRA@SVYAZ.KAMCHATKA.SU
SPRINT: KAMBANK/KAMCHATKA

REEVE ALEUTIAN AIRWAYS
ANATOLY BELOUSOV, CUSTOMER SERVICE AGENT
PETROPAVLOVSK-KAMCHATSKY AIRPORT
ELIZOVO, RUSSIA 684010
TEL: 7(4152) 111-667
FAX: 7(415-31) 99-559

KRECHET
VYACHESLAV ZVYAGINTSEV, DIRECTOR OF TOURISM DEPARTMENT
4 PROEZD IZLUCHNY
YELIZOVO, RUSSIA 684010
TEL: 7(415-31) 64-348
TEL/FAX: 7(4152) 111-700
HELICOPTER TRANSPORTATION SERVICES AND ECO-TOURS

GENSTROI
INGO SKULASON, CHAIRMAN
18 SOVETSKAYA STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683001
TEL: 7(4152) 112-276
FAX: 7(4152) 112-198
E-MAIL: GENSTROI@SVYAZ.KAMCHATKA.SU
OFFICE AND RESIDENTIAL CONSTRUCTION

KAMALASKOM
56 LENINSKAYA STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683001
TEL: 7(4152) 112-036
FAX: 7(4152) 112-256
E-MAIL: SERVICE@POST.KAMCHATKA.SU
JOINT VENTURE BETWEEN AT&T ALASCOM AND KAMCHATSVYAZINFORM TO
PROVIDE TELECOMMUNICATIONS SERVICES & UPGRADE TELECOMMUNICATIONS
FACILITIES

INTERKAMSERVICE
28 KLUCHEVSKAYA STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683017
TEL/FAX: 7(4152)115-147
TELECOMMUNICATIONS SERVICES, INCLUDING PREPAID PHONE CARDS,
E-MAIL, AND INTERNET

CONSULTING-EXPERT
STANISLAV SOROKIN, DIRECTOR
18 LENINA STREET, BLDG. 1, #106
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683040
TEL/FAX: 7(4152) 112-150, 228-293
MARKET RESEARCH AND CONSULTING SERVICES

TORGOVY DOM SLAVYANSKY
22 PROSPECT POBEDY
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683017
TEL/FAX: (415-22) 91-759
IMPORT OF FOOD PRODUCTS

FESCO INTERMODAL
LEV PANCHENKO
26 RADIOSVYAZI STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683000
TEL/FAX: 7(4152) 112-436
FREIGHT-FORWARDER

PACIFIC NETWORK
SERGEI FROLOV, PRESIDENT
P.O. BOX 185
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683000
TEL: 7(4152) 112-254,112-781
FAX: 7(4152) 112-672
E-MAIL: PACNET@SVYAZ.KAMCHATKA.SU

HOTEL PETROPAVLOVSK
31 KARLA MARKSA STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683000
TEL: 7(4152) 250-374, 250-911
FAX: 7(4152) 110-314

OKTYABRSKAYA HOTEL
51 SOVETSKAYA STREET
PETROPAVLOVSK-KAMCHATSKY, RUSSIA 683000
TEL/FAX: 7(4152) 112-686