Vladimir Putin’s opening remarks:

Ladies and gentlemen, today we have the first meeting of the Strategic Initiatives Agency’s supervisory board this year. It is very good that you are working so actively, that you are reaching out to representatives of other business associations. Mr Nikitin (Andrei Nikitin, Director General of the Strategic Initiatives Agency) has told me that yesterday you signed cooperation agreements with the Russian Union of Industrialists and Entrepreneurs and the Delovaya Rossiya (Business Russia) association…

Remark: No, it was Opora Russia.

Vladimir Putin: Right, with Opora Russia. This is very good, because it will allow efforts to be coordinated in nearly all spheres. You probably know that while speaking at the forum organised by Sberbank yesterday, I proposed that we join forces to improve our business environment. I very much hope that the Strategic Initiatives Agency will actively contribute to this process, which in reality amounts to introducing a new approach to creating a favourable business environment. I know that you are doing this, that you have started to do so in six regions. If memory serves, another ten regions are ready to follow suit.

Although there is a lot that has to be done in the business community, the focus should still be on state regulations. I will not repeat what I said yesterday; I don’t want to repeat myself, but it is clear that in this sphere, a great deal will depend on how our agencies, their chief executives and other top and middle-level managers carry out our instructions and achieve their goals. In this regard I would like to say that we also intend to introduce special mechanisms for evaluating the work of government institutions. We need to do this. However, the tasks I spoke about yesterday and have brought up today call for a professional approach. We will not accept mere declarations – we must join forces to find the instruments and methods that will make achieving these goals possible. We must invent, find, analyse and apply the best international practices, provided they can be effectively applied in Russia. When I said that trucks must complete customs procedures seven times faster, I meant that we should analyse the process of our customs clearance [to expose any drawbacks]. And regarding registration, we must know exactly how the system works, what it lacks and what gets in the way of its proper operation.

I strongly hope that you will work jointly with us on these issues. Of course, the agency should continue doing what it has been established to do – search for and promote interesting initiatives, which are bound to not only change the sphere in which they are applied, such as business, but also promote the implementation of practical projects. I hope that you are doing and will continue to do it. I don't want to speak for too long, so I'll give the floor over to Mr Nikitin. Please.

Andrei Nikitin: Thank you. Mr Putin, ladies and gentlemen of the supervisory board, thank you for your assessment of our work last year. You mentioned a standard for ensuring a favourable investment climate. I am glad to inform you that the introduction of this standard is proceeding faster than expected. We have received considerable support from the regional authorities and the business community. It's true that ten regions have joined us and are working on this issue. I received a letter yesterday from the governor of the Khabarovsk Territory, and that means that today in all federal districts there are regions where this project is being implemented in pilot mode. Work is proceeding in all spheres: the first meeting of the regional council on the investment environment in the Republic of Bashkortostan, held on January 20, was broadcast online. It was chaired by the republic’s head and was available for everyone to see him speaking with business people, to see how he addresses regional problems. An investment memorandum has been adopted in the Lipetsk Region and roadmaps on the investment climate have been signed in the Republic of Tatarstan and the Kaluga Region.

You could say we are moving at a fast pace. Expert groups made up of business people, representatives of local business associations, have been established to assess our progress and monitor the implementation of this project in each region. We are working closely with regional branches of Delovaya Rossiya. Overall, work in this sphere is proceeding quite well. We have drafted measures jointly with business representatives within the framework of the national business initiative, in accordance with the instructions that you made public at the Delovaya Rossiya conference. We have formulated our goal very clearly – to simplify and accelerate the application of business procedures in Russia, which means encouraging domestic investment. Above all, this should benefit Russian enterprises. Of course, we should act in compliance with international standards, and global ratings and foreign investors are important to us, but this is our country and it is our businesses and our economy that should be the first to feel the positive effect.

What are our priorities? First, we should facilitate export opportunities, access to foreign markets, creating conditions for our homemade products to find their niche on the global market. Second, we should ensure access to the energy infrastructure, simplify the construction procedure and improve customs regulation. How will we accomplish this? We will create project groups consisting of officials, business representatives and experts, to be headed by business leaders. They will start by formulating clear objectives that are acceptable to the business community, and then draft road maps for achieving these objectives. These groups will also monitor the implementation of these road maps.

In addition, we will launch an Internet site for this project within the next few days, using crowdsourcing to allow absolutely all business people who wish to do so, including managers and chief executives, to contribute to this work. It is vital to ensure that representatives of all the agencies concerned join this project at the initial stage, so that officials will not wait for business people to make proposals, but will work on these road maps together. I am asking for your help in this.

We are implementing many other projects, but I will not get into them here. I will only say that these projects have pinpointed the problems of medium-sized businesses, such as access to long-term financing and to customers in state corporations. You have issued the relevant instructions and we are working to implement them. We are pleased that the Federal Grid Company, Russian Post and Russian Railways have expressed their willingness to work with us in pilot mode. We will report on the progress in this sphere separately.

Mr Putin, ladies and gentlemen of the supervisory board, I am asking you to support the measures that we are proposing for the implementation of the national business initiative.

Vladimir Putin: I am sure of that, I am sure that we will certainly support them. Still, could you once again enumerate the projects on which you are working? At least two or three… How many projects are you implementing?

Andrei Nikitin: The agency is currently implementing about 100 projects. Of them, 70 have been approved by the expert council’s working groups. They primarily concern the establishment of new businesses. Mr Avetisyan (Artyom Avetisyan, New Business project director at the Strategic Initiatives Agency) will speak about them in detail. There are also some very interesting projects in education that are supervised by Mr Peskov (Dmitry Peskov, Young Professionals project director at the Agency). We also have social projects, which may not be big but…

Vladimir Putin: Size does not matter in this case. What is important is that people are working to implement these projects, don’t you agree?

Andrei Nikitin: You know, they are like attaché cases, because each project that involves a small private kindergarten runs up against a huge number of regulations that interfere with this procedure...

Vladimir Putin: Yes, I know. Sorry for interrupting, but I have spoken about this intentionally. We have established the agency, first, to help with practical projects and second, to use the process to try to better understand what goes on in these spheres and why these projects are taking so long to implement, and to remove obstacles hindering their implementation. This is the main goal of the Strategic Initiative Agency.

Andrei Nikitin: There is a direct connection between projects and the initiatives I have mentioned.

Vladimir Putin: All right, I understand. Mr Avetisyan, please go ahead.

Artyom Avetisyan: Mr Putin, ladies and gentlemen, during our joint work we have considered more than once the establishment of a Leaders Club.

I’m definitely pleased to let you know that the online club has been effectively established, which is very important. Our conversations with entrepreneurs and heated discussions have moved from business offices and meetings to cyberspace – namely, social forums. Frankly, we didn’t expect to see so many interested businessmen – not just individuals who want to do something for themselves or promote their own project, but people who are concerned with making Russia a better place to live and who are ready to make the appropriate changes. These are people who aren’t asking anything for themselves. They are real doers who walked a thorny path on their way to establishing their own businesses, and who are ready to share their experiences and energy with society.

As a result of this exchange of opinions, Kommersant daily published an appeal by an action group of these entrepreneurs to establish the Leaders Club. The letter was signed by over 50 heads of respected Russian companies from different regions, members of established public organisations, and business communities. In this letter, the entrepreneurs suggest that the Leaders Club should be created and that it should establish relations with us – the Strategic Initiatives Agency.

I will quote an excerpt from this letter: “The club should become an informal and non-political forum where the heads of effective businesses will communicate with each other, share their experiences and maintain a dialogue with the state and society. We are confident that united businessmen will be able to overcome the hurdles and barriers standing in the way of Russian business, improve the work of public institutions and achieve high levels of effectiveness for their enterprises. This will make it possible to create new jobs and implement advanced technologies. The consolidated opinion of entrepreneurs and the business community will have much more weight than isolated attempts to improve the situation in the country. Together, we will be able to let the country's leaders know that the best decisions are the ones made with our participation.”

This is quite a substantive letter, but there are certain points that I’d like to highlight. The key principle is to not only convene during conventions, but to make decisions using this interactive approach that developed through our joint work over the past month. Being around young entrepreneurs, I received a very powerful charge of positive energy, dynamism and drive. I can confidently say that the business community is ready to tackle the investment climate issue, and the Leaders Club is prepared to make our country a leading economy. We see the Strategic Initiatives Agency's role as the organiser of such a forum and the implementer of appropriate decisions.

Importantly, we see well-established businesses as our partners. I’d like to share their request with you, Mr Putin. We’d like to invite you to participate in the Leaders Club's meetings where we will discuss business initiatives and ways to promote them.

Vladimir Putin: Thank you. I’ll take a look at your schedule and see what I can do. Please go ahead, Elvira (addressing Elvira Nabiullina, Minister of Economic Development).

Elvira Nabiullina: Thank you. As a follow-up to what Mr Nikitin has just said, we need to be able to evaluate entrepreneurial initiative and the way it is implemented in the regions, so businessmen can see for themselves what works and what doesn’t in certain regions. In conjunction with the Strategic Initiatives Agency and Sberbank, we have developed proposals regarding the evaluation criteria for activities to improve the investment climate in Russia's regions. As you may be aware, we already have a performance evaluation system for the Russian regions, but it’s fairly unwieldy with over 300 indicators. Work is under way to make it less complicated and more manageable.

Since improving the investment climate is a national priority, we believe that investment climate indicators should be included in the general performance assessment. However, they have an importance of their own. In other words, we should provide investors with information about situations in specific regions and, at the same time, use these criteria to issue grants to Russia's regions to encourage them to improve their investment climate.

I believe that there shouldn’t be many indicators, and they should be quantifiable and objective. We propose using four statistical indicators – I’ll tell you later what we want to add. The first has to do with the growth of private investment, i.e. investments other than those provided by the state. This will show us how Russia's regions are doing with regard to attracting private investment. The second indicator will focus on attracting foreign direct investment. The third will reflect labour productivity growth because it’s important that these investments are used for workplace modernisation and improvement. Therefore, such an integral effectiveness indicator as labour productivity growth is important. The fourth indicator concerns the increase in the small- and medium-sized businesses' turnover, as this is important as well. It’s easy to increase private investment in one or two major projects. But it’s important that each region improves its investment climate overall and has new enterprises beginning operation. These four indicators are objective, statistically reliable and quantifiable. Certainly, we need to add an indicator that shows if particular regional executive authorities have adopted the standard for providing a favourable investment climate.

As you may know, this standard was developed in partnership with businesses and Delovaya Rossiya. Therefore, the regional authorities should adopt these standards. We believe that we should make use of surveys among entrepreneurs and also see how they assess the investment climate. Statistical reports detailing the complaints that specific regions file with investment commissioners are important as well, as we should have a clear picture on instances of violations of entrepreneurs’ rights.

This wraps it up for the system of indicators. I’d like to say a few words about supporting this system with work methods. Someone has already mentioned crowdsourcing. Mr Gref (president and chairman of Sberbank's board) is a big fan of crowdsourcing as far as I know from our discussions and we worked on it together. In our view, this technology is very suitable for working on the investment climate. Crowdsourcing could help identify problems specific for every region. We could mobilise collective wisdom through the internet. Apart from identifying problems we could receive proposals on how to resolve them, and, most important, jointly monitor the way they are resolved. In this context I have a proposal for the Agency – to try this technology as regards investment climate in pilot regions 6+10 with a view to spreading it to other regions. The ASI is ready for this. I think we could do this.

Vladimir Putin: Thank you. Apart from evaluating the performance of regions, we have been talking about the need to draft a system for assessing the work of our ministries and departments. This system must evaluate the work of specific individuals. I mentioned today what I spoke about yesterday, notably, that we must drastically improve many procedures. Achieving this goal depends on specific people. If we say that customs must work better and a van must pass the border much quicker than today, this must be achieved by individuals. They must formulate proposals together with their colleagues and implement them. How will they do this? How to evaluate their performance? There is a system, KPI (Key Performance Indicators), which is being introduced in many countries. We must also adopt it. I’d like the guys to join our discussion and make their proposals on how to build this system. I’d like you to take them into account in preparing it. Who would like to take the floor now?

Alexander Galushka (president of the national public organisation Delovaya Rossiya): Mr Putin, I’d like to say a few words, if I may.

Vladimir Putin: Please, go ahead.

Alexander Galushka: First, thank you very much. I’d like to draw attention to what you said yesterday – that 100 steps in improving the investment climate is a quite realistic task and that we must introduce KPI for different ministries, departments and executives… We have already made the first step in this work and it is reflected in our materials. In fact, we have analysed every position. We have shown where we are now and where we could be if we want to reach 20^th place. It is abundantly clear even from this assessment that this is a realistic task. For instance, if we have eight papers required for export procedures, we must reduce this number to four if we want to move to 20^th place. If export procedures take 36 days now, we must reduce them to five, or 7.5 times faster, as you said yesterday. Export duties should be $1,000 rather than $1,850 per container. And we have to use this approach for everything. Even if you take the registration of property, companies or tax administration… It is becoming clear that every problem can be resolved.

We think what you have said about KPI – we think this first step could serve as a practical, initial tool for creating this system.

Vladimir Putin: Thank you. Please, take the floor.

Sergei Borisov (president of the national public organisation of small and medium-sized business Opora Rossii): Mr Putin, ladies and gentlemen. I think is it very important for us to be clear on the business terminology… Now, especially recently, in the context of intensified discussions on the improvement of the investment climate, many are asking about the difference between the investment climate and the business climate. Which one is primary and more important? An investor is not necessarily an entrepreneur but a person with money who can contribute to a project or not. An entrepreneur is a man who bears the brunt and is responsible for everything. Entrepreneurs may receive investments, take loans and act themselves.

This is why we should not diminish the importance of the business climate and give a signal to the business community. This is very important. We have learned to evaluate the condition of the business climate. I know that both the Russian Union of Industrialists and Entrepreneurs and the Chamber of Commerce and Industry make such evaluations. I have shown you Opora’s materials, our index. We are dealing with large numbers and have 6,000 respondents. Last time we analysed 40 regions, categorising all problems that business people encounter. This is the first point.

Second, we think it is very important to keep statistics. Alas, we don’t have reliable statistics. We seem to have more or less objective statistics from the Federal Taxation Service about companies that have registered or quit. But the Federal Statistics Service (Rosstat), which has recently inspected all small companies, has provided completely different data. The difference is two times. According to the FTS, we have four million self-employed entrepreneurs whereas Rosstat puts the figure at about two million. During its poll Rosstat also established how these companies are doing, whether they are alive or dead, and it turns out that about one third of them are barely making it. It is very important for us to establish the reasons. Maybe one of them is the Uniform Social Tax, which we’ve discussed so much this past year. Now that a year has passed we must analyse this tax effect – have we substantially increased the Pension Fund and other social funds or have we lost more because many small companies didn’t make it? This is extremely important.

Mr Putin, thank you for your proposal yesterday on the commissioner for the rights of entrepreneurs. Our Gudermes initiative was heard and this is great. In this context we would like to ensure that Article 169 of the Criminal Code on the obstruction of business activity should start working in realm earnest. There is no statistics and no tradition to start criminal proceedings based on this article but there are so many cases that require action. 

Vladimir Putin: There is no law-enforcement practice.

Sergei Borisov: No, and this is the main reason. There are plenty of cases that could be initiated. And one more point – just in passing because we are not building this structure from scratch. I would still proceed from what we are doing in evaluating the regulatory influence and we think this has got off to a flying start in the Ministry of Economic Development. Now we must also launch a tool for retrospective evaluation. It will allow us, our entire business community, to evaluate not only current decisions or projects of ministries and departments but also what was done before. And we are sustaining damage from what has been done not quite properly compared to today’s requirements.

Mr Putin, it would be also great if we apply this assessment of regulatory influence not only to the government but also to the State Duma because a great deal of initiatives are coming from the Duma. We don’t feel them or influence them but they can distort our entire business space. Thank you.

Vladimir Putin: Thank you very much. Please, take the floor.

Rustam Minnikhanov (head of the Republic of Tatarstan):Mr Putin, I represent a region and I must say we cooperate with the Agency in a big way. The main point is that there is a place that brings together good examples and experience. We have already submitted many projects and they are being reviewed. But there is always room for improvement and we must work to make things better all the time. We should encourage every municipality to contribute and not limit ourselves to the regional level. We are paying close attention to all these issues – determining officials who will supervise everything in each municipality in order to receive a very accurate evaluation. We support all initiatives.

Vladimir Putin: Thank you. Is that all?

Dmitry Kozak: I’d like to add a few words, may I?

Vladimir Putin: Please, go ahead.

Dmitry Kozak: I’d like to say a few words about the criteria for evaluating the performance of regional government bodies and what you have mentioned – federal executive bodies. Following your instructions we are elaborating criteria for assessing the performance of regional government bodies. The list of these criteria will be compact. It must integrate numerous indicators and directions of work in the regions. Most of our indicators coincide with what the agency has proposed. There are certain discrepancies between different departments. We are going to harmonise this list next week and I wanted to invite the Agency and Mr Minnikhanov, a member of its Supervisory Board, to take part in this coordinating meeting.

Second, in 2009 we set up a government commission on evaluating the performance of federal and regional executive bodies. It will hold its regular meeting in late February where it is expected to resume this work on assessing the performance of federal executive bodies because it has not been completed. I think it would make sense to include the agency’s representatives in this commission to enable the ministries, whose activities directly influence investment climate in the regions and the country as a whole, to take part in this evaluation. In accordance with its provisions, this commission is expected to give a final appraisal of the annual performance of each federal ministry and department.

Vladimir Putin: OK, I’d like to say in conclusion – let’s still proceed from specific projects in the ASI’s work. Business associations are working effectively. They are already generalising what is happening in our practical life and are very active in the legislative process. I think your apprehensions that Duma deputies may make some decision to wreck our process are unjustified because…

Sergei Borisov: Mr Putin, we have precedents on this score and we are prepared to cite such cases for you.

Vladimir Putin: Well, OK, but this means that the fault rests not only with the Duma but also with the relevant departments and the government because the government must test the proposed decisions and this is our common… And the government is working in close contact with you, so this is our common drawback. But speaking about the Strategic Initiatives Agency, I’d still like to say… When I proposed establishing it, I thought you would promote concrete projects and, based on their implementation, make your own proposals and generalisations. Let’s focus our attention on this aspect. Thank you very much.