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DMITRY MEDVEDEV: Dear colleagues and forum participants,
I think it is very logical that this forum is taking place in the Krasnodar Region. This is a region with high investment potential and is home to almost practically every economically attractive sector. This region has established harmonious conditions for investment projects and is implementing state support mechanisms.
The Russian business community is working hard to carry out long-term investment programmes and develop new production centres in the regions. These goals create new demands for effective state management and economic forecasting and planning.
It is important that entrepreneurs have a clear picture of the principles that will guide our economic policy, the planned locations for energy facilities, the natural resource production programmes to be implemented, the development of transport and information infrastructure and the way in which tariffs and prices for monopoly services will be set. This is a traditional set of issues that remains as relevant as ever.
Having a clear picture of what lies ahead in all of these areas will enable the regions and business corporations to be more effective in drawing up their own development plans. Probably the most important thing of all is to have a clear idea of what the future will bring.
I will mention just a few economic growth issues.
As you know, the federal authorities have already taken steps to encourage comprehensive regional development and expand cooperation between the different regions and sectors. The decisions have already been taken on establishing special economic zones and an investment fund designed to support major infrastructure and other projects has begun work. Favourable conditions have been established regarding taxation of research and development costs.
All of these steps should contribute to a better economic growth dynamic and help to increase labour productivity.
The favourable situation on markets abroad and good investment demand have not yet led to growth in Russian exports of high-technology goods. On the contrary, imports to Russia of finished goods are growing at a faster rate.
And yet countries the world over are active, even aggressive, in supporting their export sectors. Russian exporters too need not only financial backing but also carefully planned administrative support.
What does this mean in practice? First, it would involve simplifying the procedures for receiving loans from state development institutions, including loans for foreign consumers seeking to purchase Russian technological goods.
Second, would be information support, promotion of Russian brands on foreign markets and other measures to help bolster our export potential.
Business should be confident that it will always have the state’s backing on the world markets — this is the state’s duty. This is particularly true of sectors subject to global competition such as the energy sector and high-technology machine building.
Third, most technological modernisation in Russia is taking place through the purchase of imported machinery and equipment. At this stage this is probably an objective trend, but our objective in the future should be to reduce this kind of technological dependence. One solution, apart from developing our own production, is to buy foreign companies (either directly or through a stake in their shareholder capital).
This is a very important undertaking. As you know, most big countries follow this practice, some, such as China, very actively. We could also be more active in this area. This would enable us to modernise technology in our own enterprises and increase their productivity. It would also give us the opportunity to diversify investment and enter new markets.
Another important objective is to improve the quality of our economic growth. We know that research and development costs account for more than half the cost price of goods produced today by the leading world corporations. We also need to integrate science and production more effectively. As you know, we still have many problems to resolve in this area.
Yet another very important issue is that of making budget spending more effective, especially spending on supporting and developing critical technology, funding research centres and fundamental and applied research programmes carried out by the state academies of sciences and other state institutions.
We need to work together to ensure the transfer of technology to production — something that is still lagging behind - and the development of industrial design and engineering centres and the special economic zones.
We need to resolve the big issues of energy supplies, infrastructure development, modernising existing facilities and organising new production. The issue of training qualified and professional workers is also of immense importance for business and for the country as a whole.
Large-scale construction is now underway in industry and in the housing and utilities sector, and this places new demands on infrastructure.
In this respect, we must make a rapid transition to new tariff-setting principles and encourage the conclusion of long-term contracts in this area. This is the only way for making investment in these sectors long-term, profitable and attractive for private business.
The issues that we need to come back to constantly in our discussions include improving the tax system, developing the financial market, strengthening legal guarantees for property rights, and many other issues related to establishing a favourable business and investment climate in the country and supporting business in general.
Regional development and making the regions more competitive are very important factors for Russia’s long-term economic growth. All action in this area requires concerted cooperation between the federal and regional authorities, municipalities and the business community.
I want to call on Russian companies to work more actively in the country’s regions and put effort and resources into their development.
This is good for business, good for the regions and good for our citizens. Ultimately, it is good for Russia.
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DMITRY MEDVEDEV: Dear friends, this is not so much a concluding speech as a number of remarks that came to mind during the discussions with you and as I listened to the different presentations.
To start with some good news, during the breaks between the interesting events at the forum I saw on the Internet that Rosstat [Federal State Statistics Service] has tallied up the year’s results and, in contrast with the results obtained by the Economic Development and Trade Ministry, its data shows that Russia’s GDP increased by 8.1 percent in 2007. Let us hope that this year will also bring us good real economic development figures.
Now for a few comments.
Regarding state-owned corporations, this is a subject that has come in for a lot of discussion of late. I have already expressed my views on this issue. State corporations are needed only in sectors which would not be able to get along without them, and even then only for a limited time period. No change in economic direction is taking place and no form of state capitalism can be effective in the twenty-first century. As for individual state-owned corporations, they are not ‘holy cows’, but they can nonetheless be quite effective instruments for resolving a number of very complex problems. Take the housing and utilities sector, for example, where one state-owned corporation has been set up to address the sector’s problems. Another corporation has been set up to help us carry out our plans to develop high-technology sectors in Russia. These and a few other areas complete the list of sectors where there is a need for these corporations.
There were several presentations on regional issues. I think that issues concerning the delegation of powers need to be definitively resolved. We have already passed a number of laws. Now we need to make the necessary organisational effort to ensure a real and competent distribution of powers between the different levels of government. And I am sure that the regional authorities will work to support business and not stifle competition. It is very clear that our economic growth is linked to the harmonisation of legal and economic conditions in the country.
Yet another topic that came up at the forum was the independence of the judiciary. I think this is a fully justified question. We must improve the procedures for appointing judges and at the same time we must not forget that all bodies of power, including the courts, need to be transparent. Judges are not a closed caste of people cut off from the other branches of power. They form one of the branches of power in our country.
The housing and utilities sector also came up at the forum. We have only just begun putting together the package of laws needed in this sector. We have passed the law establishing a state corporation in this sector, but there is more to be done. We need to look at other laws in this complex area, which has been very much neglected until just recently. It would be good to have the RSPP [Russian Union of Industrialists and Entrepreneurs] involved in this work. The housing and utilities sector is complex and extremely wide-ranging, encompassing both the social sphere and a very important business component. This creates many possibilities for working together.
Some of the speakers at the forum expressed the view that other countries are not particularly keen to let us into their markets, while we are ready to invest (especially in the context of what I spoke about in my opening remarks) in production facilities that meet our production needs. I do not think there is any reason for hysteria, rather, we should work calmly and steadily to advance our interests and try to show others that Russian investment is effective and transparent and will benefit their economies.
Finally, on the question of Russia’s image, I think that a country’s image is not something given once and for ever but is the result of joint efforts. A country with strong business but a poor population cannot have a good image, and nor can a country with strong business, say, but a weak government. A country’s image depends on how well its population lives, on the conditions for business development, and on the government’s ability to take care of all of its responsibilities. If a country is successful in these three areas it will have a positive image in the world. I am certain that we are all able to give the Russian Federation a first-rate image.
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