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Prime Minister Vladimir Putin chaired a meeting of the Government Presidium

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Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, colleagues.

Let's begin by exchanging up-to-date information.

I have signed the Government Resolution On Measures of State Support for the Companies of the Defence Industrial Complex (DIC). Mr Ivanov, could you please comment on it?

Sergei Ivanov: Yes, Mr Putin. In line with the decision adopted earlier this measure is part of support for the DIC.

On a par with the increase of their charter capital, in the last few months we have allocated considerable resources to such companies of the DIC as MIG, which received 15 billion roubles, the Khrunichev Centre got eight billion roubles, the Gorbunov Aircraft Production Association in Kazan got four billion, etc.

At the same time the resolution you've signed gives an additional 15 billion roubles to the DIC companies. The resolution gives every company that is the chief contractor of a state defence order the right to ask the commission headed by Mr Siluanov for a subsidy to pay interest on a loan, equal to two thirds of the Central Bank's refinancing rate.

Vladimir Putin: Could you explain this in more detail, please?

Sergei Ivanov: In the current conditions, a DIC enterprise or any other company receives a loan at an interest rate of about 20%. The Government pays two-thirds of this rate. It has allocated 15 billion roubles for this purpose. The resolution defines in detail the procedure for applying to the commission.

I think this measure will help DIC companies in their financial and economic activities, as well as many related industries that are producing spare parts.

Vladimir Putin: How will the commission decide what company deserves this benefit - a subsidy for two thirds of the interest rate?

Sergei Ivanov: A company that has taken out a loan this year will apply to the commission headed by Mr Siluanov and submit documents showing what interest rate it has to pay. Then the commission will decide whether it will subsidise two thirds of this rate.

Vladimir Putin: The order of the commission's work has been determined. How long will it take it to review such applications?

Sergei Ivanov: The commission has been working since last autumn. It has already reviewed about a hundred applications for different types of support. I didn't mention this, but one of the measures provides for preventing the bankruptcy of the DIC companies. The current budget was increased by three billion roubles to this end. A company submits an application to the commission; the commission holds a weekly meeting to review the applications. Under the resolution, the commission should review an application in no longer than 10 days.

Vladimir Putin: Thank you. Are you going to hold the meeting of the Government Commission on High Technologies tomorrow?

Sergei Ivanov: Yes, tomorrow I'm going to hold a regular meeting of the Government Commission on High Technologies and Innovations. We will focus on measures of support for the technological modernisation of the companies working in the real economy. This is one of the main issues. It plays a major role in our anti-crisis programme as well.

In the last few years, we have adopted a number of federal targeted programmes to speed up the real economy's modernisation. They provide for re-equipment of enterprises, purchase of new technological equipment, higher labour productivity and higher energy efficiency. We have a dozen programmes for the DIC alone. We also have high-tech civilian federal targeted programmes, such as civil aviation, shipbuilding, and electronic components. We will use them to speed up modernisation and achieve a new technological level linked through higher labour productivity.

Recently, we have also made a number of decisions to expand these measures, for instance, subsidising interest rates on loans received for technical re-equipment. Such measures are already carried out, at least partially, in such economic branches as the light industry, car-making, transport machine-building, building of agricultural equipment, including tractors, the timber processing complex, and building of aircraft engines. This measure is applied practically to all companies that are part of the United Aircraft-Building Corporation. About 10 billion roubles have been earmarked for this purpose.

Also, we may subsidise interest rates on loans that have been received in national banks for innovation and investment projects. This is another impetus for technical re-equipment.

In addition to this, we are using the instruments of customs and tariffs. Duties have been cancelled on almost a thousand export-import items. Import of technological equipment that is not produced in Russia is duty-free. This is done to encourage Russian producers to buy modern equipment.

We'll discuss this package of issues at the commission meeting tomorrow. After the meeting ends, I am going to fly to Novosibirsk for a meeting with the Presidential Envoy, Governors, and industrial and economic operators. We'll talk about anti-crisis measures. I'll explain our proposals and listen to their opinions about them.

Vladimir Putin: Mr Sobyanin, have you been on a business trip as well, haven't you?

Sergei Sobyanin: Yes, I discussed our programme with the Governors of the Urals Federal District and listened to their proposals. On the whole, the situation there is under control. They have received the funds on employment support agreements. Practically all regions have already concluded these agreements. On three agreements, they have received federal budget funds and started working. The programme on the construction of new housing financed by the Fund for Reforming Housing and Public Utilities has been very successful. It provides for the demolition of dilapidated housing and capital repairs. This assistance came in very useful because the scale of construction has fallen. It supported not only those who lived in hazardous housing but also construction companies and business. There are some interesting proposals. We'll report to you about them.

Vladimir Putin: Good. Thank you.

Ms Nabiullina, you had a meeting of the Collegium. What were your conclusions?

Elvira Nabiullina: We discussed the country's economic development, the performance of the Ministry and its tasks, above all in connection with the anti-crisis programme. The Ministry has a large share of responsibility in directing the government investments, the federal targeted programme on technological modernisation, on the one hand, and on dealing with the crisis, on the other hand. We have proposals on the development of small businesses and on the state order.

I would like to single out the issue of the state order: On Monday we held the fifth annual conference on the state order in which the regions took part. The regions displayed their achievements at the exhibition, including new ideas regarding the procedure of the state order that simplify access to the state order, including for small enterprises, and make it more transparent and more effective. Above all, it has to do with online auctions, online placement of the state order. Many regions have made progress in that direction. I would like to single out Moscow, Tatarstan, Kaliningrad and Tomsk regions, which handle a large part of their government procurement in this way.

The conference also discussed the effect of the novel provisions introduced into the law last year in order to simplify the procedures and give small businesses access to state orders and introduce the system of online tenders. The regional representatives also urged the need to improve the legislation because the system of state orders is taking on a new role and it should be transparent and effective, and its cost should be reduced.

Today there was a large meeting involving the United Russia to discuss the anti-crisis programme. On the whole, it supported the goals and priorities of the anti-crisis programme, but specific proposals and remarks were made.

Among the proposals I would like to single out those aimed at stimulating internal demand, which is one of the programme's priorities. Some interesting proposals were made, for example, on the need to develop internal tourism and services in addition to the tasks already included in the programme. There was a proposal also on support of small enterprises, for example, by introducing a moratorium on the payment of the rent on federal-owned real estate by small enterprises. But that needs some calculations because it would reduce revenues. Some proposals dealt with concrete measures, for example, in forestry. We have decided to study all this. It was a very detailed and constructive discussion with additional anti-crisis measures proposed.

Vladimir Putin: All this needs to be summed up and we should respond to these proposals before my speech in the Parliament. I will probably meet with the leaders of the Duma parties tomorrow and we will discuss these issues too.

Mr Fursenko, an international conference has opened in Moscow and it is within your remit.

Andrei Fursenko: Just today we opened an international conference on "The Formation of the Innovative Class in Russia and the World in the 21st Century". It is a small conference but it has very interesting participants, big names in Russian and foreign business. Some of the ideas expressed elaborate on what was articulated at the meeting at the Ministry of Economic Development.

Two things are particularly important for us: The main obstacle to the transition to innovative development path - not only in Russia but in the whole world - is the limited human resources.

Some speakers suggested what could and should be done to develop and modernise professional training. During the course of the seminar we agreed with representatives of some Western companies on how to work together in this area not only at university level, but also at the primary and secondary vocational training level.

The conference is in progress now and there are many young participants. It is public and is broadcast online, and it is already receiving questions from young people, from students.

Vladimir Putin: I met with the trade union people yesterday and it was a very substantive, helpful and businesslike conversation. I would like to stress several things that concern the Education Ministry. One of the women taking part suggested introducing a new system of remuneration in the public sector, including in the education sphere. Some questions were raised concerning the link between a teacher's salary and the number of pupils in the class. I am not going to go into details now, but please think about it. I know your Ministry's position, and there can be no hard and fast rules here. I am just drawing your attention to this, and I would like you to think about it and report to me on what is actually happening.

Andrei Fursenko: We are working quite closely with the trade unions. We know their position, we discuss it and we take into account many of their proposals. It is not our position that what we propose is the only option and that there are no others.

Vladimir Putin: Yes. It is a complicated system and of course there should be some general rules, but we should pay attention to the feedback we receive from the people who work in the sphere very seriously. That's the first thing.

And another thing. Ms Golikova, there are some questions connected with pensions for people who have reached retirement age but do not have the full seniority, people who work in hazardous occupations. I am referring particularly to miners. Some groups of miners are not covered by the current law that concerns that group of people. I have prepared the paperwork and I would like you to consider it promptly.

Tatyana Golikova: The bill on that issue is awaiting approval.

Vladimir Putin: Yes. And, Ms Nabiullina, the question of raiders. It is a very real problem, one of the participants raised the issue. Has a draft law been prepared?

Elvira Nabiullina: It is ready but some details need to be finalised.

Vladimir Putin: You should finalise it as soon as possible.

Let us get down to our agenda for today.

We are going to discuss the optimisation of the structure of federal property. We have long been stressing that public property should be used exclusively for the benefit of the entire society and help to tackle national challenges rather than enrich certain individuals or, as we used to say, "a group of comrades". In this connection we have decided to reduce substantially the number of the so-called Federal Unitary Enterprises, or FGUPs. Last year their number was cut by 40%.

A large part of minority stakes has been privatised. They did not yield much in the way of dividends and the Government had no say in managing these commercial entities.

Several years ago the share of companies with government stakes where we did not have a controlling stake was as high as 77%. Now it is 39%, and, as decided, we are gradually shedding excessive assets that are not needed for performing public functions.

By the same token, the assets of the public sectors were consolidated in 26 integrated structures in the areas that are critical for addressing national tasks that cannot today be tackled without direct government participation. The shares of nearly 1,200 enterprises are to be transferred to these structures.

However, not all the problems in this sphere have been solved.

Of course, the financial crisis has made a difference: In the second half of last year there was a marked decline of investor interest in acquiring state property.

At the same time the result cannot be put down only to external circumstances; the lag was already there not only last year, but also in 2005-2007, when the market situation was very favourable. The conclusion is obvious: either we have not been planning well or we have not been working well.

The main cause of the setbacks is the flawed legal framework of privatisation and the neglect of the federal bodies with regard to the state of affairs in the enterprises within their jurisdiction. As for the enterprises, we know what is happening there: People work there and get their pay, and they don't want to change anything.

I think this situation is intolerable. I would like to ask the Ministry of Economic Development to prepare proposals that would turn the situation around.

And one more point. As I said, we are committed to privatising excess state property. At the same time, in present-day conditions it is vital to ensure that the privatised assets are properly valued. Even allowing for the crisis we should not sell government property below market price. There is no point in it. We do not want obviously understated prices. We should bear in mind the essence of this process today: As a result of the recent developments, the shares of enterprises are plainly undervalued and we should think about the future of each enterprise.

I would single out one more item on our agenda today, which is to do with the improvement of our financial institutions.

As you know, in December 2008 the Government approved the Strategy of the Development of the Financial Market until 2020. Today we will begin discussing the concrete measures to implement it.

The Federal Financial Market Service has prepared a draft law that simplifies the procedure of settling mutual contractual obligations in the event one participant in the financial market goes bankrupt. Its adoption would substantially reduce the risk of transactions in the Russian stock exchanges and make them more competitive in comparison to foreign exchanges.

Let us get down to our agenda.