VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Prime Minister Vladimir Putin's opening address:
Allow me to welcome you here in Moscow, at this meeting of the Foreign Investment Advisory Council (FIAC), which brings together 42 major global companies. Following the tradition we have set, I hope to have a meaningful and open conversation - many of us present here have known each other for a very long time. We intend to continue an active and open discussion of every subject that is of interest to our foreign partners developing business in Russia.
The council has been operating in a new format for almost a year. At your initiative, it has assumed the difficult role of supervising specific business projects, as well as seriously increasing its expert work, including analysis of the current business and investment climates, law enforcement practices and administrative procedures. The council's experts have given us particular assistance in attracting qualified foreign specialists to the Russian economy and I'd like to thank them for this.
Our immigration legislation was amended last July (this was done on your recommendations, among other things): Russia eliminated quotas for jobs for highly qualified specialists. The procedures for issuing work permits were simplified to the utmost. Now one can get a work permit in two weeks. The first thousand work permits have already been issued based on the new procedures.
I am pleased to note that the council is developing its contacts with the Russian regions. In particular, we welcome the formation of a special working group on the development of Siberia and the Far East.
I'd like to draw your attention to one more decision of the council. The position of investment ombudsman was established in Russia last August. My First Deputy Igor Shuvalov was appointed to it - he is sitting on my right. Foreign investors can address him directly, and tell him about their needs, proposals and ideas.
I'd like to repeat our position of principle - we do not divide business into domestic and foreign companies when it comes to defending the rights and interests of investors. This is important to create comfortable conditions for everyone who wants to do business in Russia, develop the Russian market and promote their goods and services.
Eventually, we will overcome our difficulties and be successful together. I can quote an example from our recent past, when we were reacting to the crisis. We provided substantial assistance to the financial sector. Both the federal budget and the Central Bank provided direct financial aid to financial institutions in a variety of ways. We helped both our banks with one hundred percent Russian capital and foreign subsidiaries, including those with one hundred percent foreign capital. We knew that the latter could cope with the difficulties themselves, but let me repeat that we proceeded from the premise that the interests of all those who work in Russia are indivisible. We gave equal assistance to all companies, regardless of the origin of their capital.
The same applies to the auto industry. During the crisis, the government helped both our traditional car makers and the companies established by foreign automobile concerns. Now this industry, as well as the financial sector, is quickly recovering. I'd like to add that not a single major project was discontinued either in the car industry or the financial sector.
The auto industry has adopted many new ideas. We also achieved success in energy, pharmaceuticals, construction, telecommunications and the processing industry. New projects were carried out in these industries during the crisis and practically not a single one was discontinued.
Lafarge started building a cement plant in the Kaluga Region when the crisis was at its peak. Its investment in the Russian economy is expected to reach from one to two billion euros in the next few years.
In 2009, PepsiCo announced its plans to invest another billion dollars in Russia in the following three years. Procter & Gamble did not cancel the implementation of its investment projects in Russia during the crisis, either. Not to mention the auto industry, in particular, with the production of auto parts. A number of new plants have been commissioned, and I personally took part in their opening.
This year Kinross Gold bought Russian companies that were involved in geological prospecting and the exploration of deposits in the Chukchi Peninsula. This was the first case of a foreign investor purchasing a strategic asset in the domestic mining industry, in particular, in gold mining. Ladies and gentlemen, as you see, these sensitive industries are not closed to foreign investment, either. The companies represented in the council have invested almost $100 billion in Russia. We appreciate this attitude from our partners, their confidence in the enormous prospects of the Russian market, and the fact that they did not retreat in the face of the crisis and are ready to continue working together. This makes us confident that our cooperation will be as successful as before, and maybe even better. Russia currently has the opportunity to implement a large-scale agenda of development, and to ensure long-term quality growth.
We both know very well that some industries are still beset with problems caused by the crisis. The factors of uncertainty are making themselves felt in Russia just as anywhere else and market demand is still not high enough. We experience this and understand this.. However, a general economic recovery is apparent. Thus, in the period from January to July, the profits of companies increased by more than 77% as compared with the same period of the previous year. Recent data from the Federal Service of State Statistics show that production in nine months of this year went up by 8.9%.
We expect the GDP to grow by 4% this year, maybe even a little more. In the next two years we expect to fully make up for the decline in the GDP during the crisis.
We think that we have a competitive advantage with our policy and the steady and sound macro-economic situation that has been in place over the last few years. Russia's national debt is at a minimal, safe level. In European countries, not to mention others, it stands at 60%-70% or even higher as compared to a mere 11% in this country. We hope that the real deficit of the federal budget will be much less than the predicted 5.3%. Next year we expect it to be a little over 3% of the GDP.
On the other hand, Russia's international reserves are growing and have already crossed the $500 billion mark. The country's foreign trade surplus is above $110 billion. The rouble is stable; its exchange rate is predictable and what's more, is determined by objective factors, since the Central Bank's interference with exchange trading has been minimised.
We avoided a nationalization of the economy during the economic downturn, although, to tell you the truth, many privately-owned companies were asking the government to take a controlling stake at that time. However, together, the government and business found the right path toward revival, and I believe private business leaders across Russia must be grateful for that now. The government avoided taking on excessive commitments, but provided valuable support to companies. Now we will prioritise private initiatives, support competition and effective market instruments.
The government will consider its privatisation programme at one of the next meetings. I will not disclose the details right now, but I can tell you that very attractive government assets will be auctioned.
We are making consistent efforts to reduce red tape in the economy by streamlining start-up procedures for investment projects and by eliminating unnecessary and perfunctory inspections. Russia will soon have a single national accreditation system which will simplify a new product's access to the market.
The government is currently completing a series of bills aimed at creating tax incentives for investment in high technology and in high-quality social services. At this point, most of these bills are being considered by the State Duma, the Russian parliament's lower house.
Next year, receipt from sale of unlisted assets with term of ownership over five years will be exempt from profit tax (capital gains tax); also both public and private schools and hospitals will be exempt from profit tax - the first such benefit for private services in Russia.
IT companies, companies engaged in technology innovation economic activities, and companies set up under universities will be entitled to a reduced insurance premium for social funds - 14% instead of 34% over ten years, according to a bill already passed by the State Duma and approved by the Federation Council.
A few days ago, I met with your counterparts, Russian business leaders, members of the Business Russia association. The problems we discussed also directly concern foreign investors. I am sure you would be interested to hear about the key decisions we passed in the wake of that meeting. Let me briefly fill you in.
First of all, we hear repeated complaints about innovative business projects being inhibited by regional bureaucrats. We must certainly assist our colleagues in regions and cities.
We agreed to consider ranking Russian regions by their attractiveness as investment destinations. The Economic Development Ministry is discussing the proposal now. Let me underline that the quality of their work with investors will be one of the basic criteria of a regional government's operation, as well as a major criterion to evaluate regional leaders' sustainability and their career prospects.
Second, regions and municipalities will publish lists of valuable land plots allocated for industrial and residential development, which will make it easier and faster to find sites for new investment projects. We will also encourage initiatives to establish private industrial parks. Your Russian counterparts raised this issue and I think it was the right thing to do. You can also implement projects as developers and tenants of such industrial estates.
Third, we will simplify the procedures for businesses' access to the natural monopolies' infrastructure. I know this is a very sensitive issue. I have heard a lot of complaints related to this process. We will continue to remove access barriers to power grids and other utilities.
Further on, we are starting several major projects and programmes essentially aimed at creating new markets and restructuring existing markets, for example our energy efficiency programme. It should stimulate demand for innovative, efficient and resource-saving equipment, from government-controlled and private companies.
Next year we will also begin modernizing all of the country's hospitals and outpatient medical services and reforming our health insurance system. This will be a good opportunity for businesses that invest in the Russian pharmaceuticals and medical equipment industries.
Our other plans include increasing annual residential construction volume from the current 55-60 million sq m to 100 million sq m by 2016. We also plan to build 14,000 km of roads over the next five years. These projects will certainly require investment and new building technologies for economy class housing and for modern highways.
You must have sensed the ongoing drastic changes in the general configuration of the Eurasian market. We have been living among the new realities - the Customs Union of Russia, Belarus and Kazakhstan - for three months now. The three countries will form a single economic space starting in 2012.
We recently held a meeting of the three countries' heads of government, and I can tell you I was very satisfied by our partners' attitude. You must know what I am talking about because Europe went through this process earlier - a very complex and sensitive process. Their eagerness to reach agreement and willingness to compromise have made me feel optimistic. We have every reason to believe that the three countries will establish a common space by 2012.
A common space will imply a 170-million-strong market where stable and transparent economic legislation will be drafted. In our integration drive, we are guided by the best international practices, including the experience and standards developed by the European Union.
The Customs Union and single economic space should help optimise customs procedures, primarily for exports and imports of high-tech products. Such standards have already been included in the Customs Code of the Customs Union.
Other important procedural issues are regulated by the new customs law which is currently going through parliamentary procedures. I especially appreciate the council members' substantiated effort in discussing this important issue.
Ladies and gentlemen,
We all understand that Russia needs direct private investment - I am referring to "smart" investment that includes technology in addition to capital and help in creating high-income jobs.
On the other hand, we also realise that competition for investment is growing worldwide. Therefore, the Russian government is seeking to create a truly open and investor friendly environment, with reasonable taxes and impeccable administrative services.
The record of your companies' achievements in the Russian market is proof that we are heading in the right direction. Russia is changing, although maybe not as fast as we would like it to. Yet, there are changes. I would like us to make a note of these changes, and publicise this information so it can reach other potential investors in your countries and other countries too. This will benefit us all here in Russia, one of the key international markets, and will help you succeed and become leaders of Russia's economy - an open, fast-growing and future-oriented economy.
Thank you very much.
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Prime Minister Vladimir Putin's comments:
- on the speech made by James Turley, Chairman and CEO of Ernst & Young and co-chairman of the Russian government's Foreign Investment Advisory Council:
Thank you for your speech Mr Turley. I have taken note of several things you mentioned, including further efforts to eliminate administrative barriers. You most likely noticed that we have done quite a lot towards this objective; at least I think we have. But I also agree with you that this is not enough. We have taken such decisions in healthcare, agriculture, construction and several other sectors. And we will continue to work towards this goal. We would appreciate recommendations for developing financial markets. We know that there is still a lot of hard work ahead, as I already said in my opening remarks.
Transport regulation is important, of course, but having sufficient facilities and building roads is probably even more important. I mentioned this in my opening remarks, too. We have the appropriate plans for this, and they are actually quite extensive.
You began your address with an issue that I also mentioned, immigration policy. We are interested in attracting highly qualified workers in a variety of spheres, both managers and narrowly focused professionals. We have somewhat simplified our immigration policy to ensure this. On the other hand, such questions are usually addressed in international practice on the basis of reciprocity. In this sense, there could also be some limitations facing us. Why am I saying this? I am saying this to encourage the business community in Europe and on other continents to influence their politicians, too. We want to develop relations with our partners, including in Europe, as equals. Ultimately, visa-free travel is the simplest and the most radical solution. In general, we see that our European partners understand our stance.
However, there are some challenges involved. What are they? We can already hear some people say that a visa-free regime with Russia would be possible, but granting it to Russia would also imply doing the same for several other post-Soviet countries; not all of them, of course, but at least the countries that are working to develop relations with NATO. But it is clear that these countries are not ready yet for a visa-free regime with Europe.
First of all, I think that politics should not hinder economic development, and second, that there is nothing unusual or discriminatory in introducing a visa-free regime gradually to those post-Soviet countries that are ready for it. I'd like you to take note of this problem and I'd ask you, if possible, to promote these ideas at major forums noting that political questions should not hinder economic and social development.
In conclusion, I'd like to thank you for your speech.
Prime Minister Vladimir Putin's comments on the speech made by Telenor Group President and CEO Jon Fredrik Baksaas:
Thank you very much, Mr Baksaas. Indeed, this is a very important aspect of our work. I have repeatedly noted this, and all Russian leaders are also giving this more attention. President Dmitry Medvedev also frequently speaks about this aspect. Modernisation and the introduction of high technology is a key feature of our activity. I repeat that this is key. Of course, telecommunications play an extremely important role in this.
We are grateful to all of our partners working in this area. As you know, we try to solve every problem that arises during the implementation of your plans at the government level. In my opinion, this is being accomplished rather successfully.
As far as licensing, regulations for the frequency of allocations and other aspects are concerned, I will not comment on what has already been said. I would simply like to stress that I agree with you. I would like to note that much remains to be done in order to facilitate stable, predictable and transparent regulations and procedures.
And now a few words about the use of telecommunications technologies for facilitating the most cost-effective support for state and public activities in various fields. This includes payment systems for housing and municipal utilities, as well as the provision of social services. We have made corresponding plans in all these areas. These technologies are currently being introduced rather quickly into the life of society and the state.
Social cards, as they are called, which allow people to pay for services or to receive state and municipal services, are being introduced in major cities, including in Moscow, and cities in Tatarstan and many other Russian regions.
We are now introducing a system of state and municipal purchases, and we plan to expand it. The next step entails purchases to be made during the investment activities of natural monopolies. Such purchases are to be made in online trading sessions. Several trading platforms have already been established, operating in one Russian republic and under the auspices of Sberbank. I have already mentioned this. I recently met with representatives of the Russian business community, who raised the issue of increasing the number of these trading platforms to at least six or seven. We will continue to work towards this goal.
The logistics infrastructure should be expanded on the basis of the technologies you mentioned. This applies to exit and entry procedures and equipping border checkpoints. Customs clearance, rather than immigration procedures, is the main problem here.
