Working Day

14 july, 2008 19:30

Prime Minister Vladimir Putin chaired a meeting on economic issues

Prime Minister Vladimir Putin chaired a meeting on economic issues
"The problem of competitiveness of domestically produced goods is central to the discussion of the situation in all sectors of the industry and agriculture."
Vladimir Putin
Meeting on economic issues
Introductory remarks by Prime Minister Vladimir Putin:

Good afternoon,

On our agenda today are issues of making domestic products competitive. The Cabinet has already discussed it in passing, and we have agreed to have a separate meeting devoted entirely to this issue.

You may remember that I drew your attention to the growing imports. It means that we have been financing the development of production outside Russia. In fact what happens is that as soon as the incomes of our businesses and citizens increase imports increase as well. I will cite some data.

The problem of competitiveness of domestically produced goods is central to the discussion of the situation in all sectors of the industry and agriculture.

Over the past two months alone we have discussed the situation in the ship-building and the automobile industry, the fuel and energy sector, the medical industry and in agriculture.

Of course every sector has its own problems that call for a separate analysis and "spot" decisions.

But we should not overlook the common problems that hold back the modernisation of the national economy and its innovative development.

The problems are all known. We have discussed them repeatedly and I have mentioned today that they were discussed when the programme for the country's economic development until 2020 was set forth.

Today I would like to draw your attention to the following. Our economy has been expanding all these past years. The average rate has been about 7% a year.

As a result it has become more resistant to upheavals in the world markets, which was highlighted by developments in the last 18 months.

Sustained economic growth has continued in Russia in spite of the events that many experts describe as a world financial and food crisis. Last year growth was higher than we predicted: 8.1%. In the first quarter of this year it is 8.5%. In January-May 2008 industrial output grew by 6.9% and investments by 18.9%.

Nevertheless the events that are taking place in the world market have revealed certain vulnerabilities in this country. They have a negative impact on us.

The domestic industry and agriculture still do not have enough potential to meet the growing demand for quality goods and services quickly.

As a result, imports have shot up, as I have said. Unfortunately, we import not only goods but also negative processes.

Let me stress that we are not against imports as such. In the WTO negotiating process and in the dialogue with our partners we always come out for equal and fair access to each other's markets.

And in general the policy of import replacement is not always justified. It should not be our aim to replace imports in all sectors and in all groups of goods. Russia is part of the world economy. But we must take advantage of any competitive edge that we have.

We must create conditions to enable our producers to use their competitive advantages fully, to secure a worthy place in the world division of labour and protect our citizens against the negative phenomena that excessive dependence on foreign markets may engender.

We should above all maintain the macroeconomic parameters and macroeconomic stability. Market participants will be able to develop their investment strategies only if they trust the anti-inflation plans of the Government and the Central Bank.

Further. We should look at how the instruments of implementing our sectoral strategies work. I am referring to the modernisation of production, support of export, incentives for the production of science-intensive goods and energy saving.

The investment potential of Vneshekonombank and other newly-created development institutions must be used more fully.

We should also learn to be flexible in adjusting the plans and programmes that we have already adopted. Unfortunately, such a need arises when external conditions change. The Agriculture Programme is an example in point. When it was developed the prices of oil, fertiliser and other resources were at a certain level. Today the situation is entirely different. The programme needs to be adapted to the new realities. One way to do it is to use customs and tariff regulation and mechanisms of state support. We have passed amendments to the 2008 budget and such measures are envisaged. But we should look further ahead: what will happen in the economy, including the sector I have mentioned, in 2009 and in the following years.

The adoption of technical regulations is an important instrument in enhancing the competitiveness of the domestic industry. Early steps in that direction are being taken. Let us face it, they are still very timid, but we must go down that road.

Technical rules are called upon to set the bar of safety and quality for all those who intend to sell their goods in the Russian market. We see technical rules not only as a means of protecting our citizens from "junk" imports, but as a serious signal for the domestic industry. The time has come to grapple with the problem of changing the technological system and investing in quality.

As I already mentioned it addressing the meeting of the State Council in February, I urged the need to boost labour productivity by four times before 2020. I would like you to keep it under constant review.

In conclusion I would like to remind you of our main priority: macroeconomic stability and curbing inflation. This is a key condition if we are to put all our plans into practice.

Let us now get down to business.