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Vladimir Putin held a meeting of the Foreign Investment Advisory Council

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Vladimir Putin's opening remarks:

Good afternoon,

Before starting our meeting, I would like to remind you that we are meeting on a special day. This is a special day for the German people, for entire Europe, and for the rest of the world. Today, Germany is celebrating the 20th anniversary of the fall of the Berlin Wall.

This event has become one of the brightest manifestations of changes in the world. For the German people it has become a historic landmark, which has drawn a line under the sad past and become a major step towards Europe's unification.

New Russia had to start building the market economy and creating modern legal institutions practically from scratch, in very difficult conditions. Our partners - foreign companies which invested in Russia - did not find it easy, either. Nevertheless, I am confident that the majority of our foreign partners did not regret their choice. This is demonstrated by numerous successful projects in the Russian economy. Some of these projects have been carried out with direct participation of the Council's members, that is, your companies.

I would like to point out in this context that our colleagues at this meeting represent the companies that have together invested about $90 billion in the Russian economy. This is a huge sum and it is now actively working in our economy.

As far as I can judge, the overwhelming majority of our partners intend to continue investing in Russia and doing business here. It goes without saying that we are interested in the success of these plans and are ready to assist in their realisation as much as we can.

I would like to add that our Foreign Investment Advisory Council has proved to be an effective mechanism of uniting the efforts of the Russian Government and foreign partners to improve the investment climate, legislation and law-enforcement practice.

It is premature to speak about the completion of these processes, not to mention a full recovery from the crisis, which has affected all of us. However, I'm sure that we already have the grounds to express cautious optimism. This applies to the situation in Russia as well. In the second half of this year, our economy has started growing again; inflation is going down, and unemployment is gradually decreasing.

This does not mean that anti-crisis measures are no longer necessary. Needless to say, we will continue encouraging the domestic demand, increasing the stability and reliability of the financial system, and taking measures to reduce the budget deficit and ensure macro-economic stability.

Nevertheless, the tasks of strategic development are gradually moving to the fore. We are living in different economic conditions, and this reality is very important. It is very important for us to understand the features of this reality. It is obvious that it sets new requirements to our activities.

Therefore, at this meeting I would like to discuss your views on what the Government should do to overcome the institutional restrictions on the economic growth, guarantee investment breakthrough, and large-scale technological reform of the Russian economy. We could also discuss, if you consider it necessary, measures for improving the instruments of our cooperation.

That is all I wanted to say in the beginning. Now I am happy to give the floor to the Council's co-chairman, representing its foreign members, Mr James S. Turley.

* * *

I would like to emphasise that your opinion (addressing Mr Turley) is very important for us. You represent one of the leading companies in the world, Ernst & Young, and your view will help us take a critical look at our own activities.

I am grateful to you for your positive opinion on the Government's operation during the crisis. As for your critical remarks, they are absolutely justified, and we fully agree with you.

The first drawback you have noticed is excessive red tape in decision-making - either in starting a business or in deciding to invest. This is very true. I think this is a grave legacy of the planned economy when all decisions, including those pertaining to the market, were made at the administrative level, when it was believed that some administrator at some level knows better what to do or not to do than a businessperson or a market operator.

We have definite plans in this context. They are not being carried out as fast as we would like but we will continue pursuing them nonetheless.

What are they all about? First of all, they provide for the declarative principle on the start of business in many fields. We are working on this, and probably, the Regional Development Minister will speak about this in more detail.

The second aspect concerns the transfer of some functions, including licensing, to a self-regulating level. Here we must act very cautiously because self-regulation is not well developed here. It is either ineffective or weak, and still unable to assume such responsibility. But we will continue moving towards this goal.

And, finally, I'd like to say a few words about infrastructure. Despite the crisis, which dealt a two-fold blow at the Russian economy by reducing the market of our main export commodities, and lowering prices, we are using our reserves not to cut the scale of the infrastructure projects.

This concerns the development of roads. In this project we are cooperating with the Europeans - our Italian and French partners. This also applies to maintaining at the government level the investment programmes of our infrastructure monopolies, including Russian Railways.

In this project we are also cooperating with foreign partners, for instance, Siemens and German Rail. We are working with you on these projects, and will continue paying due attention to them in the future.