We Are Expanding Freedom And Making
Russia More Open: Putin
By Vladimir Putin
Video and Transcript
Plenary session of the 19th St Petersburg International Economic
Let me repeat the point that we are responding to the restrictions
imposed from outside not by closing off our economy, but by
expanding freedom and making Russia more open. This is not a slogan;
this is the substance of our actual policies and of the work that we
are doing today to improve the business environment, find new
partners, open up new markets, and take part in big integration
Posted June19, 2015
President of Russia Vladimir Putin:
Good afternoon, ladies and gentlemen, friends,
It is a pleasure to welcome you all to this
International Economic Forum in St Petersburg, a city which
throughout its history has always been a symbol of Russia’s openness
and desire to draw on the best of world practice, cooperate,
and move forward together.
First of all, I would like to thank all
of the politicians and businesspeople attending this forum for their
interest and confidence in our country. Ladies and gentlemen,
friends, we see in you serious long-term partners, and it is
for this reason that, as is tradition, we always speak with
frankness and trust at the St Petersburg Forum about our
achievements and new possibilities, and also, of course, about
the problems and difficulties we encounter, and the tasks we are
still working on.
I saw many of you here a year ago. Over this last
year, the global and Russian economies have changed, and in some
areas, these changes have been very dramatic. Russia’s economy now
has faces restricted access to the global capital market, and then
there is the drop in prices for our main export goods, and the small
decrease in consumer demand, which had previously been an impetus
for economic growth. True – here, I agree with the participants
in the yesterday’s discussions at the forum – demand is starting
to recover again now.
Looking at energy prices, on which our economy is
still very dependent, unfortunately, I remind you that the average
price for Urals brand oil in 2013 was $107.9 a barrel. In 2014, it
dropped to $97.6 and over January-May this year, was at $56
a barrel. According to Rosstat [Russian Statistics Agency], Russia’s
GDP contracted by 2.2 percent in the first quarter of 2015 compared
to the same period in 2014, and industrial output was down by 1.5
percent over January-April 2015.
What I want to note, however, is that by the end
of last year, as you know very well, people were predicting that we
were in for a very deep crisis. This has not happened. We have
stabilised the situation, absorbed the negative short-term
fluctuations, and are now making our way forward confidently through
this difficult patch. We can do this above all because our economy
had already built up sufficient reserves to give it the inner
solidity it needs. We still have a positive trade balance and our
non-raw materials exports are increasing.
Let me give a few examples to illustrate these words.
Physical volumes of non-raw materials exports increased by 17
percent over the first quarter of 2015, and exports of high
value-added goods came to nearly $7 billion in the first quarter,
which is up by nearly 6 percent in value terms and by 15 percent
in terms of the physical volumes.
We have kept inflation under control. Yes, it did
spike following the ruble’s devaluation, but this trend then
slackened off. We saw prices go up quite sharply over the first
three months of the year (by 3.9 percent in January, 2.2 percent
in February, and 1.2 percent in March), but in April, inflation rose
by only 0.5 percent. That the trend is decreasing now is clear. We
can see this.
Our budget is stable. Our financial and banking
systems have adapted to the new conditions and we have succeeded
in stabilising the exchange rate and holding on to our reserves. Let
me stress too that we did not resort to any restrictions on the free
movement of capital, just as was the case in 2008 and 2009.
The federal budget deficit in January-May 2015 came
to 1.48 trillion rubles, which represents 3.6 percent of our GDP. We
expect that the deficit will reach 3.7 percent of GDP for the year
as a whole. This is in line with the budget law currently in force.
Our gold and currency reserves, which I just
mentioned, come to more than $300 billion. I was speaking with
Elvira Nabiullina [Governor of the Central Bank] just before, and,
according to my information, our reserves came to $361.6 billion
as at June 5. They are very slightly lower now, because some money
has been used.
At the same time, the Government Reserve Fund came
to $76.25 billion or 5.5 percent of our GDP as at June 1, 2015. Our
second reserve fund, the National Welfare Fund, had reserves
of $75.86 billion, again, 5.5 percent of GDP.
We have prevented a jump in unemployment, which
currently stands at 5.8 percent of the active population. I remind
you that during the 2008–2009 crisis, the unemployment rate rose
to 8.3 percent. The imposition of sanctions forced us
to considerably step up our import replacement efforts. We have made
significant progress in a number of areas and have achieved some
notable results. We have tremendous potential in our engineering
and petrochemicals sectors, in light industry, the processing
sector, pharmaceuticals, and a number of other sectors. Our
agriculture sector’s results are a clear example of what we can
Of course, we still have a lot of work to do in this
sector too, but our dairy production, for example, was up by 3.6
percent over January-April 2015, compared to the same period
in 2014. Production of butter increased by 8.7 percent, cheese
by slightly more than 29 percent, fish and fish products by 6
percent, and meat by 12–13 percent. The import replacement
programme’s aim is not to close our market and isolate ourselves
from the global economy. We need to learn how to produce quality,
competitive goods that will be in demand not just here in Russia,
but on the global markets too. Ultimately, our goal is to make
fuller and more effective use of our internal resources to resolve
our development tasks.
Let me repeat the point that we are responding
to the restrictions imposed from outside not by closing off our
economy, but by expanding freedom and making Russia more open. This
is not a slogan; this is the substance of our actual policies
and of the work that we are doing today to improve the business
environment, find new partners, open up new markets, and take part
in big integration projects. I note that more than 60 companies with
foreign participation have started up practical operations in Russia
over just this last year alone. Right now, while this forum is
taking place, several companies are opening their doors, including
here in St Petersburg. There is a pharmaceuticals company, a company
producing gas turbines as a joint venture with foreign partners,
and so on.
I want to thank all of our partners who, despite
the current political problems, continue to work in Russia, invest
their capital and technology, and establish new businesses
and create new jobs here. Friends, thank you very much.
Ladies and gentlemen,
The timely measures that we took to support our
economy and financial system have worked overall. Now, we are once
again concentrating our focus on resolving the systemic tasks on our
long-term development agenda. Our task is to ensure sustainable
growth, make our economy more effective, raise labour productivity,
and bring in new investment. Our priorities are to improve
the business climate, train the specialists we need for the economy
and public administration, and education and technology. I would
like to say a few more words about each of these issues.
Let me start with improving the business climate
and making Russia’s jurisdiction more competitive. Our aim is
to offer the freest and most predictable and favourable conditions
and opportunities for investors. We want to make it profitable
to invest in Russia. We set the firm goal for the coming four years
of settling tax rates that will remain stable and not increasing
the tax burden on business so that companies can plan their work
for the medium term.
We will stick to these decisions no matter what
the external situation or the burden on our budget. You can see from
the figures I cited just before that our reserves are sufficient
for us to be able to carry out these policies. At the same time, we
are creating new incentives for new developing companies. In this
respect, let me remind you that we decided to introduce tax holidays
for individual entrepreneurs, offer small and medium-sized business
special tax regimes that significantly reduce their tax burdens,
and give tax breaks to greenfield industrial companies.
Yesterday, I discussed with the heads of our
industrial companies a number of issues that we most certainly do
face. The proposal was made to offer tax breaks of this kind not
just to greenfield projects, but to all new investment. We will
certainly examine these proposals. Let me add, that capital
and assets returning to Russia from abroad are also exempted from
tax payments, and their owners are fully guaranteed from any kind
At the same time, we will take steps to make Russian
companies and their offices abroad more transparent. We have already
made the necessary amendments to our laws. Let me stress that these
provisions are fully in keeping with the decisions made by the G20,
FATF and other international organisations.
Furthermore, as part of our national entrepreneurial
initiative, we have thoroughly updated the federal laws regulating
conditions for doing business. The authorities and the regulatory
and supervisory agencies are changing their approach to working with
businesspeople. It is becoming more comprehensible, open
and transparent. Let me note that starting in 2016, small businesses
that have never had any serious violations of the rules in the past
will be freed from inspections for a three-year period.
We realise, of course, that for our national
jurisdiction to be competitive, we need to keep moving ahead
and make constant improvements. At the same time, we also need
to analyse the effectiveness of the measures we have already taken.
This makes it particularly important to have effective channels
for getting feedback from business. I therefore ask the Agency
for Strategic Initiatives and the main business associations
to analyse how the laws are enforced and study the best practice
around the world, and if need be, propose new decisions.
The national regional investment climate rating also
has a very big part to play. The rating is not a goal in itself
of course, but will provide a working instrument for identifying
and spreading best practice in the regions to the country
as a whole. Incidentally, the initiative to develop this rating came
from our main business associations. What distinguishes this project
is that the businesspeople themselves assess the state
of the business climate, the quality of public administration and so
More than 200,000 businesspeople throughout Russia
have taken part in the surveys this year. Some of the positive
examples have already been mentioned during the discussions here,
but I would like to take the opportunity to name them once again.
I think this is worth it. They include Kaluga Region, Tatarstan,
Belgorod Region, Tambov Region, Ulyanovsk Region, Krasnodar
Territory, Rostov Region, Kostroma Region, Republic of Chuvashia,
and Tula Region. As I said, this rating will be a tool for helping
to improve the quality of management at all levels of power. This is
one of the key areas for our development today.
In this regard, the first point I want to make is
that we need to develop a whole class of public administrators who
know how to work flexibly, take a modern approach, and understand
business’ needs when it comes to the business climate and the public
administration system overall. A mechanism for ongoing improvement
of public management personnel will be one of the most important
steps in work in this area. We also plan to establish a centre
for exchanging best practice in public administration and developing
the business climate in the regions at one of our top universities.
This centre will be a good platform not just for improving
qualifications, but also for exchanging experience, coming up with
new ideas, and developing horizontal ties between the members
of different regional management teams.
Second, I think it would be a good idea to set up
special headquarters – project offices, if you will – in each
region. They will become a kind of managing office for development,
helping to introduce the best mechanisms for creating a favourable
investment climate. A comfortable business environment is one
of the essential conditions for developing a mass of small
and medium-sized businesses working in the non-raw materials
sectors. This is a real road forward to economic diversification
and job creation.
Our goal is for small and medium-sized businesses
to conquer the domestic market and develop their export potential.
We will therefore develop close coordination between
the institutions for supporting industry and stimulating exports.
They include the recently set up Industrial Development Fund,
the Far East Development Fund, the Russian Direct Investment Fund,
project financing mechanisms, and also the Russian Export Centre,
where Russian companies can receive a whole range of services
to support their goods on markets abroad.
Also, following a proposal from the business
community, we are setting up a corporation to develop small
and medium-sized business. Businesses will be able to obtain all
of the necessary financial, legal and methodological support,
including help in getting access to public procurement tenders
and tenders by state-owned enterprises. Essentially, we are
consolidating the support mechanisms for small and medium-sized
business and we hope that this will bring us real results.
Friends, anyone who wants to take the lead
in the world today has to put their focus on leaders in business,
management, and, of course, developing technology and education. We
have done a lot to strengthen our country’s scientific
and technology resource base, bolster cooperation between
the scientific community, the education sector, and industry,
and get new developments into practical implementation in actual
Over the near future, we will undertake an extensive
technological upgrading of our companies in the raw materials
and non-raw materials sectors and in agriculture. From 2019, a new
technical regulation system and strict environmental standards will
encourage gradual transition to the best available technology.
Essentially, companies will be required by law to modernise
and carry out ongoing technological development. One of our most
important tasks today is to give our companies incentives to invest
in developing technology here in Russia. I ask the Government
to propose additional decisions in this area.
We also need to make an inventory of the current
mechanisms for supporting applied research and getting new
developments into practical use. We need to look at how
the incentives, including tax breaks, are working.
As for the development institutions, they need to focus clearly
on facilitating our technological modernisation efforts.
We are launching projects that will provide our
companies with a powerful technological resource base not just
for today but also for tomorrow. Our technological planning horizons
are broadening substantially. Russian companies must take key
positions in sectors and markets that will shape the economic future
and the way of life of people in 20–30 years’ time, like the way
the IT sector has dramatically changed our own lives over these last
To achieve these goals, we have launched the national
technology initiative, with the participation of prominent
scientists and the high-tech business sector. This is a long-term
project, of course, but within the next 2–3 years, we should already
have new scientific laboratories, new companies, and educational
programmes for training personnel able to handle the most modern
tasks and work with the latest technology.
There is another very important area I want
to mention. At the recent congress held by Delovaya Rossiya, one
of our biggest business associations, the idea came up of organising
an effective system for foreign technology transfers. We have
successful experience of foreign technology transfers
in the pharmaceuticals, automotive, and consumer goods manufacturing
industries. It is important to give this work a systemic basis
and get the development institutions’ resources involved. I ask
the Government and the business associations to draft specific
additional proposals on this matter, including on establishing
the optimum format for cooperation between the authorities
and business in the area of technology transfers.
We realise, of course, that the quality of our
education system will play a decisive part in developing our country
and making it more competitive. Our colleagues from foreign
investment companies, who I met with yesterday, said the same thing.
Training for specialists must prepare them not only for today’s
demands but also take into account the best global practice
and the development prospects for new technology and markets.
Our young people, students and schoolchildren, have
won the most prestigious competitions in technical and scientific
fields. To give just one very recent example, students from St
Petersburg National Research University of Information Technologies,
Mechanics and Optics have proven repeatedly that they are unrivalled
in the world today. This year, the university’s team once again
confirmed its absolute leadership and was a long way ahead
of the world’s top programming schools. The university’s team is
the only team in the world to have won the student programming
championships six times. I want to congratulate the team once again
on this success.
A lot depends, of course, on the heads
of the universities. We need new leaders here, people with deep
knowledge of production, people who know industry’s needs and follow
the technological development trends. Our companies propose that we
build up a reserve of management personnel for universities training
our engineering and technical specialists. I think this is a good
proposal and we should carry it out. At the same time, the business
community should be more active in universities’ supervisory boards
and boards of trustees and should work closely with teaching staff
and take part in their training and ongoing education programmes.
This is in business’ own interests.
Modernising and improving the quality of secondary
vocational education and giving it stronger links to actual
production are very important tasks. Many regions are already
actively implementing with success a programme of dual education
that combines time spent in actual companies with theoretical
training. It is no coincidence that the regions that have made
the greatest progress in developing their secondary vocational
education systems are also the leaders in the regional rating
and overall are demonstrating rapid socioeconomic growth.
The engineering professions and the trades require
very high levels of skills today. This requires us to develop
a modern system of professional standards. The employers
and business associations are also playing a big part in this work
through the Presidential National Council for Skills
I think we need to summarise our experience, combine
our efforts and build an integral system for training personnel,
taking the best world practice into consideration. This system
should cover every link, from additional education opportunities
for developing children’s skills in technical fields, to secondary
vocational education, higher education in engineering, and national
and international competitions for the various trades.
Another important areas of our work for the coming
years is developing mechanisms for accompanying and supporting
talented children so as to help them develop their potential in full
and achieve success here at home, in Russia. As you know, we are
launching one such project. It is underway now in Sochi. This is
the Sochi centre for children from throughout the country who show
exceptional talent in sport, the arts, and science. This will be
another important part of the Sochi Olympic legacy.
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