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After floods, small businesses in Irkutsk Region are crying for help

The entrepreneurs are so far at a loss, some doubting as to the feasibility of restoring their businesses

TULUN /Irkutsk region/, July 25. /TASS/. The flood in the Irkutsk Region left many local residents not only homeless but also unemployed.

In the city of Tulun, the flood affected at least half of the small businesses. The local businessmen told TASS that they are at a loss. They have been deprived of the sources of income and the prospects for returning their businesses are vague. Meanwhile they still have to pay wages to their workers and taxes to the state.

When President Vladimir Putin visited the flood-affected areas in the Irkutsk Region on July 19, he noted that not only local farmers, but also small and medium businesses in those areas should receive assistance from the state.

Floods in the Irkutsk Region started in late June. According to the latest information, 25 people were killed and seven are missing. Roughly 10,900 residential houses with a population of 42,700 were inundated in 109 regional communities, along with 11,000 residential yards, 86 socially significant facilities, 49 road sections and 22 highway bridges.

Washed away incomes

According to Yury Karikh, the mayor of Tulun, one-third of the city has been affected by the flood and clean-up activities are still underway.

Roaming in the ruins, one can come across the crumbled walls of stores, car service centers and other service outlets, which used to be places of employment for hundreds of local residents.

Some buildings withstood the disaster, but their interiors need to be fully restored. The flood washed away the finishing, destroyed goods, equipment, documentation and computers with important data.

There was a strong smell of rotten food for several days around a large shopping center near the local bus station. That mall housed a big food store of one of the regional retailers. From the outside, the building looks as if the flood did not touch it, but inside everything is destroyed.

The clean-up work has been on for a third week running but the retailer is not going to refurbish the supermarket. The company is not going to stay in Tulun either, Natalia Yagodina from the local company Progress, which rents out retail space in the shopping mall, told TASS. At least 30 people will find themselves jobless, she says.

For small businesses, it is even worse now — these companies not only provided jobs for local citizens, but were the only source of income for the families of the entrepreneurs.

Igor Zapekin is now helping his relative to sort out the rubble in the local grocery store the woman owned. He told TASS that the outlet was up and running for 13 years but his relative does not know whether it is worth to revamp it now.

"It’s possible to restore the business, but this will require new loans. Let’s say, we start to restore it now, but within a month they [the authorities] may say that the whole district will be demolished. So, it does not make sense to restore it if there are no residents here," Igor explains.

The man said they had not estimated the whole damage yet, but the lost cooling facilities alone cost about 300,000 rubles ($4,755).

At the Narodny market, which was the largest one in Tulun, about 60 businessmen lost their jobs. Together with their employees this number exceeds 100 people. The flood ruined all shopping pavilions on the territory of 12,000 square meters. There are no stores, no cafes, no hairdressing salons, no sewing workshop anymore, Natalia Yagodina told TASS.

The man, who introduced himself as Vladimir, told TASS that he had been running a furniture store there for almost ten years. When the flood began, he managed to take out some of the small pieces of furniture but the rest was washed away. In the premises he rented in another district of Tulun after the flood, he put on sale the furniture he had saved. But it is unlikely that the sales will help him cover debts to suppliers and pay off loans, he pointed out.

Backbone of economy

After the flood, the city’s entrepreneurs formed an initiative group to "toll an alarm bell" telling the authorities about their desperate condition, the group’s leader Svetlana Vasilyeva told TASS.

On July 2, the group sent their appeals to the President, Prosecutor General, deputies of the State Duma (lower house of parliament) and the Legislative Assembly of the region.

Referring to official statistics and the information that now comes from entrepreneurs, Vasilyeva concluded that the flood had affected about half of small businesses in Tulun.

"Small businesses account for about 4,500-5,000 of 13,000-14,000 working people in the city. Moreover, these are mainly micro-businesses. About 50% of them have suffered," she added.

Vasilyeva noted that small businesses are the backbone of Tulun, which belongs to the first category single-industry cities. That means a city with a desperate economic situation and high unemployment. The flood has only added to its economic downturn. According to Vasilyeva, if the authorities do not help entrepreneurs recover their businesses, Tulun will have no future, because people will leave.

How to help

To bring the devastated local business back to life the authorities at least should grant them tax holidays and loans with preferential interest rates, Vasilyeva claimed.

Alexander Chalbyshev, chairman of the Irkutsk regional branch of the Opora Russia, all-Russian nongovernmental organization for small and medium business, stressed that nobody frees the entrepreneurs from their current liabilities to the tax department, suppliers, employees and banks.

"Therefore, businessmen are waiting not only for the prompt compensation of damage, but also for at least deferments of tax payments and payments to the pension and social insurance funds," he said.

"It is also important to agree on restructuring of debts to banks. Currently, the affected businesses physically cannot fulfill their credit obligations, so they risk becoming unscrupulous borrowers, which is disadvantageous both for business and for the banks themselves," Chalbyshev told TASS. He added that his organization had already informed the regional authorities on these issues.