7 august 2012

Prime Minister Dmitry Medvedev, on a working visit to Novosibirsk, meets with experts to discuss entrepreneurship at higher education institutions and research centres

“Perhaps the most important and the most difficult thing is for the state to continue creating a favourable environment, an environment that favours innovative activities.”


Dmitry Medvedev: Dear friends and colleagues. Today we are holding another in the series of meetings with experts, a meeting devoted to the development of innovative entrepreneurship in our country and to research centres. I need hardly explain to you why all this is necessary: you are all competent individuals and you are engaged in these matters. I suggest that we concentrate more on the problems, but anyway I would just like to remind you of what has been happening.

We began developing a legal framework some time ago. The law on innovative enterprises attached to higher education institutions went into effect three years ago  – I signed it in 2009. I can’t say it has brought about a total revolution, but I am sure that it has been useful. I hope you will confirm this at our meeting today. Following this, a number of other decisions were made, and we passed corresponding resolutions. Since then, more than 1,600 innovative enterprises have been created, and by the way, 300 of them are in the Siberian Federal District. They were granted significant preferences, by our standards, in the field of accounting, reporting, in the field of taxation and renting of premises.

In 2010 the government adopted a special resolution (no. 218) that ensures state support and incentivises relevant agencies to cooperate. The federal budget for 2010-2012 allocated about 20 billion roubles (the figure for this year is about seven billion) for R&D. The state is helping 92 companies and 66 educational centres to carry out about 100 comprehensive projects on high-tech production. Such are the results.

What are the priorities? Of course, the most important and the most difficult thing is to make sure the state continues upgrading the conditions for innovative activities. This is a complicated task because the state does not want to give away anything. Such is state life, but it is necessary to improve not only our legislation as a whole but also tax and customs regulations, and to enhance the protection of intellectual property with due account of our commitments and recently adopted laws.

Our regulation on protecting intellectual property generally conforms to modern international trends. Nonetheless, in this country, the rights to intellectual products of innovative companies belong to their founders, that is, universities and research institutes. Foreign universities transfer patents to the developers. At this point we could give Russian trailblazers an exclusive license to the products of their intellectual activities. Or maybe we should do something else. Let’s think this over because a lot depends on the legal structure.

Our next priority is a system of innovative management. Obviously, we must increase the beneficial influence of business people on the governing bodies of higher educational institutions. Let’s discuss this as well. In my opinion this is a good thing, but maybe some of you think that business people should not be allowed to approach these bodies. I think we need this symbiosis of entrepreneurs and the scientific community, and I’m referring not only to the commercialisation of developments but also to management. This may improve things in many cases. We could make entrepreneurs members of scientific councils, boards of trustees or boards of directors. Moreover, this is easy to do. It is enough to adopt relevant decisions; we don’t have to pass any regulatory acts.

Needless to say, lack of investment remains one of the main headaches. We must develop venture investment and attract state funds. We should also look into what an IPO can do for innovation-driven start-ups on dedicated international securities markets. I’m not sure if this can make a big difference, because not every company is capable of floating an IPO, but this may be one approach.

Finally, we are also talking about basic support for young researchers who engage in advanced research, including the housing problem. I've been involved in this for quite a while now: we just spoke about it with our colleagues. Indeed, things have started happening, but with great difficulty, overcoming a lot of inertia in the process. Frankly, I had to push it through personally, but as a result 238 flats were purchased last year...

Remark: 259.

Dmitry Medvedev: That’s even better. The more the better. Accordingly, housing certificates are being issued. The Siberian Branch of the Russian Academy of Sciences will certainly continue to do this work.

I think I’m done with the introductory remarks. Let's talk about our future work. Please go ahead.

Dmitry Peskov: Mr Medvedev and colleagues, my name is Dmitry Peskov. I am the director of the Young Professionals department at the Strategic Initiatives Agency. I have been working in this area for a long time as well. A year ago today in this very building, Mr Verkhovod (Dmitry Verkhovod, General Director of the Novosibirsk Akademgorodok Software Technology Park) and I conducted a prospects meeting for Akademgorodok. You can see who participated in that meeting by the smiles. Frankly, most of our forecasts were negative. Since our Open Government discussions are based on an honest and open approach, I can say that looking at the results of Federal Law No. 217 we can say that the companies’ total capitalisation tends to be very large. Therefore, we can honestly say that if we got something right at all, it’s that we encouraged innovation. We should capitalise on the experience of those who managed to create their own companies in this fairly acidic environment and even make them grow in fair global competition. We have here today the people who survived and came out on top. We would like to share the experiences of the survivors and winners today.

Given the time constraints, I would like to ask all of you to keep it under four minutes when you speak so we can have some time left for discussion. Please do not talk about the problems; focus instead on things that the government should change.

I would like to give the floor to the General Director of the Novosibirsk Akademgorodok Software Technology Park, Dimitry Verkhovod.

Dimitry Verkhovod: Mr Medvedev and colleagues, as we are all aware, Federal Law No. 217 provides the basis for the creation of small innovation-driven enterprises at institutions of higher learning and research institutes. First, I would like to thank you: we realise that pushing to adopt this law took a lot of administrative effort. I have some good and some bad news for you, as usual. The good news is that Law No. 217 does work, meaning that after all the revisions, amendments and explanations, it allows institutions of higher learning and research institutes to create small innovation-driven companies and transfer their intellectual property to these companies. Unfortunately, this law does not work in the sense that it fails to reach its primary goal: it does not allow research institutes to derive real income from their intellectual property. The main reason for this is that the funds received by research institutes and institutions of higher learning from innovation-driven small businesses go to the single budget account of such institutions at the Federal Treasury and are subject to all the limitations imposed by the Budget Code and Law No. 94.

In addition, small innovation-driven companies created under Law 217 cannot attract extra-budgetary investment as it leads to the dilution of the institution’s share which is explicitly prohibited by the law. In order to unlock the potential of Law No. 217, our innovative community believes that here, in this Akademgorodok, we must adopt several pivotal decisions. First, we need to repeal the sections concerning state universities and research institute labs that are related to revenue received from selling patents, licenses and trademarks and allow small innovation-driven companies to make a profit. We propose allowing state-run higher education institutions and research institutes to establish off-budget accounts and credit revenue from the use of the intellectual property related to these accounts. They should be able to dispose of these funds at their discretion without being constrained by the strict limits imposed on accounts by the Federal Treasury. We also believe that all the restrictions relating to the use of the intellectual property by higher education institutions and research institutes should be removed.

You will see that as higher education institutions start receiving real income from intellectual property, they will begin treating and evaluating it properly and use it as they see fit. We believe that this will encourage investment and allow us to access capital and intellectual property markets. Unfortunately, this is not how it works now.

Dmitry Medvedev: I think I’m missing the second point. The first proposal is clear. This does not mean that it’ll be easy to implement it, though. What do you mean when you say ‘remove the restrictions’?

Dimitry Verkhovod: The share owned by a higher education institution or a research institute cannot be diluted under Law No. 217. Therefore, if a company has attracted some off-budget investment, then it must come up with its share of the investment in such an enterprise. As a result, it is limited in its ability to attract extra-budgetary investment, including capital from the capitals market.

Dmitry Medvedev: I see. What does this have to do with the intellectual property?

Dimitry Verkhovod: Unfortunately, nothing. That is exactly the problem…

Dmitry Medvedev: But you are nevertheless talking about the intellectual property.

Dimitry Verkhovod: No, the point is that the intellectual property that is brought into such small innovation-driven businesses is subject to constraints: it must be properly assessed and after that the company can no longer dispose of it at it sees fit.

Dmitry Medvedev: How would you like to be able to dispose of it?

Dimitry Verkhovod: Remove all the barriers if we want to attract serious capital investment. The institution itself will decide whether it’s a profitable proposition or not. The institution will assess its property in comparison to such investments...

Dmitry Medvedev: The intellectual property cannot be diluted because it represents an absolute right.

Dimitry Verkhovod: The share is diluted.

Dmitry Medvedev: The share in what?

Dimitry Verkhovod: In the enterprise.

Dmitry Medvedev: That’s another matter. Please frame your thoughts properly, because this is not directly related to intellectual property. The issue is about diluting the share.

Dimitry Verkhovod: That’s diluting the share brought in as…

Dmitry Medvedev: Not intellectual property?

Dimitry Verkhovod: … intellectual property. Exactly.

Dmitry Medvedev: All right, continue.

Dimitry Verkhovod: In addition, we propose removing obsolete and discriminatory barriers that stifle small innovation-driven companies in the first place.

With regard to customs barriers, you once spoke about it in fairly descriptive terms. I will not touch on that. With regard to tax audits, they are particularly damaging for startup companies that are in the process of purchasing equipment and materials. Of course, businesses receive VAT refunds which triggers in-house tax audits and crosschecks followed by an avalanche of paperwork, requirements and restrictions that are a death knell for small businesses. This needs to be addressed as well, because the amounts of VAT refunds are insignificant. They are not worth the paperwork required to put together the documentation for the tax authorities.

In addition, we propose abolishing exchange controls on transactions effected by innovation-driven companies. Last year, Rosfinnadzor (Federal Service for Fiscal and Budgetary Supervision) conducted a targeted audit: a special order to audit the Novosibirsk Akademgorodok Technology Software Park residents was issued. Nine companies were audited. Eight of them were fined an average of 40,000 roubles each, mostly for transaction certificate-related violations. See what happens: if a company is just one day late in receiving its foreign currency proceeds compared with the date specified in the contract, Rosfinnadzor issues a fine of anywhere from 75% to 100% of the difference. It’s absurd. First, a partner or a buyer delays an enterprise from getting its money and then the government fines it the same amount. Therefore, we expect currency regulations and currency controls, including transaction certificates for the non-commodity export of goods and services, to go soon. The corresponding legislative changes are set forth in the national business initiative’s road map, and we know that just the other day, I believe it was July 29, you signed a directive to this end. We very much hope that this directive will be followed through on and that this work will be completed. We are prepared to participate in this process, including the monitoring.

We realise that the creation of small innovation-driven enterprises is not an end in itself. For institutions of higher learning and research institutes, these companies primarily serve as an interface in their dealings with the real sector of the economy. In addition, they act as brokers who sell the capabilities of institutions of higher learning and research institutes to the production industry and other sectors of the economy. However there are two “buts.” The first one is that in and of themselves, the institutions of higher learning and research institutes make poor partners for the real economy, if only because of the budget constraints that I mentioned earlier due the fact that they are public institutions. Small innovation-driven businesses established by such institutions of higher learning and research institutes aren’t seen by the real economy as full-fledged partners, either, first, because they are small, and, second, due to a lack of manufacturing or technological infrastructure and business experience. What’s the solution? The solution lies in these small businesses becoming part of the technology parks where small innovation-driven enterprises can get the necessary technical infrastructure (I hope we will have time to show it to you today), work together with successful innovation-driven companies with sales experience and consulting companies. They will get all the necessary services, acquire experience and can eventually become partners with big business.

In addition, we believe that technology parks are a place where academic research meets the real economy. The Akademgorodok technology park has actual experience in developing designs commissioned by multinational companies, state corporations and law enforcement agencies. Our technical infrastructure allows our residents to find innovative solutions, manufacture prototypes and small batches of products. In other words, we can work to orders placed by major companies.

Dmitry Verkhovod: As we know, in the United States the Department of Defenсe was the main consumer of innovations at the time. We have a better situation: the government took charge and counted the major consumers, with 46 state corporations and partially state-owned companies. Fortunately, these companies’ issues have remained unsolved for a long period, which has provided us with vast opportunities. We have dubbed this group of 46 companies “the 46 fatties”, and we are eager to cooperate with them and believe we have enough experience and opportunities. We would like the government and the 46 fatties to pay attention to technology parks as the sites for establishing efficient research branches of these companies, where academic science meets the real sector through the intermediary of small innovation companies. But at the same time, we also propose to oblige the 46 fatties to establish their own branches at the operating technology parks and national research universities. You may say that the word “oblige” has no place in market conditions and it should not be this way. But I think this is incorrect. The existing mechanisms of corporate management allow for this. For a start, we invite state representatives and independent directors of these companies to visit our technology park, see the opportunities it provides, learn about our resident companies’ developments and our cooperation with academic research and development institutes and universities, and make their own independent decisions. My only request is that they not all come at once. We wouldn’t be able to handle this.

Dmitry Medvedev: Thank you.

Dmitry Peskov: Thank you, Mr Verkhovod. I would like to ask the next speakers to be more specific and stick to the “one speaker – one solution” format, otherwise we will not have time to listen to everyone. Next up is Leonid Kossovich, rector of Saratov State University. 

Dmitry Medvedev: Colleagues, you don’t have to stand up, please speak in whatever way is most comfortable for you. The very core of this discussion is to make you feel comfortable. Do as you please.  

Leonid Kossovich (Rector of Saratov State University): Thank you. Mr Medvedev, colleagues, we represent a national research university. This status obliges us to engage in innovation activities. We are obliged to establish small innovative enterprises. Our innovation network is operational now and comprises 13 enterprises. Mr Medvedev, we have fulfilled the promise we made to you at the State Council session, and they are working well. Now, I will speak on the leading example of our work experience, the work of Rusmarko enterprise established by us. This work experience has shown successful results…  

Dmitry Medvedev: With whom? With an enterprise?

Leonid Kossovich: Rusmarko is our enterprise established together with a national pharmaceutical business. Our specialists have invented a nanofiber wound dressing with unique characteristics. This is a breakthrough in treating burns and various skin ulcers, pressure sores and surgical cuts. The dressing’s uniqueness lies in its high healing action, antiseptic properties and biodegradability. The dressing is painless and reabsorbs on the wound, with no keloid scars. We are completing the registration and have received the patent. (Hands a dressing to Mr Medvedev). I’d like to present this to you.

Dmitry Medvedev: Thank you.

Leonid Kossovich: Developing this bandage was the first step to establishing a whole new line-up of materials and a brand new industrial sector.

As for the polymer electroformation, we have worked with natural polymer chitosan, while the method of electroformation of various polymers helped us create different biomembranes, particularly those with antibacterial properties for handling wounds and making medical clothing, respirators and various masks. Here I have a few samples, they are already on sale: ultra-fine and extra-sensitive filters used for blood purification.   

Dmitry Medvedev: Not everything at once, or I will have too many presents here. Will you pass it over later? Thanks. 

Leonid Kossovich: Our blood purification membranes are ten times cheaper than those manufactured abroad, and they are better. The main thing is that this would not have happened without the efforts made to support national universities, such as the innovative universities competition. While following the path of commercialisation and expansion – and the market in Russia is developing and potentially estimated at 19 billion roubles for existing materials – we are facing huge issues. First, it is impossible to set up a base department at the enterprise we established, because under current law base departments can be established only at scientific organisations and under the territorial principle.

Regarding activities under Federal Law No. 217, much has been said about it. There are gaps and contradictions, and we are aware of what practical steps that have to be done, and we are ready to offer these proposals at any moment.  

And, finally, speaking of the market: the market of new and innovation materials will not work without government support in certain spheres, and it needs state standards and various regulations to promote effective work of this union of business and universities. Mr Medvedev, I can now read out two items from our proposals.     

Dmitry Medvedev: Sure, go ahead. I think you should have begun your speech with that. I have a suggestion for you and all those present. It is always very interesting and pleasant to hear what has been accomplished. But our meeting is short, so it would be better if you spell out your proposals on what has to be improved right away. Go ahead.

Leonid Kossovich: By the way, as for the gaps and contradictions, they result in numerous inspections by controlling bodies.

Dmitry Medvedev: Please elaborate.

Leonid Kossovich: This year, duplicative inspections were held for six months by various bodies, and, basically, we had to answer the same questions from different controlling agencies.

I think that universities should be allowed to set up base departments not only at scientific organisations but at industrial enterprises as well, including universities’ small businesses, regardless of the university’s location.  

Dmitry Medvedev: You have already mentioned this.

Leonid Kossovich: Small innovative enterprises which house university departments should be offered the possibility of using equipment located in the department free of charge for the first one or two years. This is necessary for conducting joint research projects, developing technologies and for producing initial test batches. Only after this will the enterprise be ready to conclude contracts, even contracts based on favourable terms, for the lease of equipment. 

Rental payments in the period between product development and market sales are detrimental to an enterprise. It is very difficult for us to work, Mr Medvedev.

Dmitry Medvedev: Thank you very much.

Dmitry Peskov: Thank you. The next speaker is Yevgeny Pavlov, director of…

Dmitry Medvedev: Just imagine a similar meeting held abroad somewhere and our colleagues concluding their speech with the words “It is very difficult for us to work.” I understand that it is difficult for you. Unfortunately, your words highlight a certain paradigm of our mindset. It's difficult for everybody. You just have to move forward and propose something.

Go ahead, please.

Yevgeny Pavlov (graduate of the Siberian Federal University, director and co-founder of Unimet): Mr Medvedev, I represent the Siberian Federal University and the Unimet company. We are doing all right in principle, but we want to ask some questions. 

Dmitry Medvedev: That’s fine.

Yevgeny Pavlov: We are currently working with major centres like the Skolkovo centre. Next week we should get a diploma. Our question is this: Russia is a large country… Every large city has a technology park. Novosibirsk has an excellent technology park. Would it be possible to create a Skolkovo Foundation subsidiary on the basis of this technology park so that projects worth up to 30 million roubles could be sent there for expert review. I come from Krasnoyarsk, where we have a KRITBI (Krasnoyarsk Regional Innovative Technology Business Incubator). Why is this needed? Because all this air travel and red tape is getting in the way of doing real work. I think that an expert review of projects with small funding, limited funding, could be carried out locally. For example, Ivan Bortnik’s Small Business Promotion Foundation successfully carries out such work and taking the bureaucratic obstacles out of it; it has representatives everywhere, everything is clear, everything works effectively. I think that all foundations with state participation should be accessible – this is very important for innovative startups, to speed up their work, to get advice. I think this is the way it should be done.  

Dmitry Peskov: I would only say not subsidiaries but a partnership network, Mr Pavlov.

Yevgeny Pavlov: Yes, we could specify here that there should be no increase in the number of officials. Nobody has any doubts that the experts in Novosibirsk’s Akademgorodok [Siberian branch of the Russian Academy of Sciences] are capable of carrying out expert reviews. It is probably possible to carry out such expert examinations locally, maybe not on 1 billion rouble projects but certainly on projects worth up to 30 million roubles.

Dmitry Medvedev: I see.

Yevgeny Pavlov: Thank you.

Dmitry Peskov: Thank you very much. The next speaker is Ivan Shelemba from Inversia-Sensor. Go ahead, please.

Dmitry Medvedev: Go ahead, please.

Ivan Shelemba: Good afternoon, Mr Medvedev, colleagues. Let me share our modest experience with you. Inversia-Sensor is a small startup, we operate in the area of professional equipment. Our products are already operating on various sites. You have probably seen the high-rises in the technology park. Our displacement monitoring systems are installed there. At a plant in St Petersburg…

Dmitry Medvedev: You mean this equipment?

Ivan Shelemba: Yes. We supply…

Dmitry Medvedev: They look really cool.

Ivan Shelemba: … We supply thermometric systems for generating units to the Elektrosila plant in St. Petersburg. Our systems are installed at the Sayano-Shushenskaya HPP and in the Kuznetsk Basin mines. Our company started operations with a grant from Ivan Bortnik’s Foundation, we worked hard and we have had two pieces of good luck. The first time we were lucky was when we worked in the incubator under the Automation and Electrometry Institute at the Siberian Branch of the Russian Academy of Sciences, it is not far from here: we created the first prototypes there. Our second bit of luck came when the project for the technology park included the Technology Support Centre infrastructure. We were able to make the first production samples and launch small-scale production.  

To be a really successful company we need to have a third slice of luck: we need to attract big orders. But it is hard for us, for a small company, to get orders from mammoths such as Rosneft and other large corporations which Mr Verkhovod listed – we just do not know how to approach a company like Rosneft. So on behalf of all small innovative companies, on behalf of the small businesses of Akademgorodok and the Novosibirsk Region, we also ask you to provide incentives for these big companies to locate their innovative subsidiaries here. I’m sure that if Rosneft takes a neighbouring office, our small company, as well as 20-30 similar companies, will be able to develop ready-made solutions for Rosneft, and for solutions that are not yet ready they can place an order for a solution and we will work on it for 6 to 12 months. That is my proposal. Thank you. 

Dmitry Medvedev: Thank you.

Dmitry Peskov: The next speaker is Alexander Kychakov, Chairman of the Board of NSU Endowment Foundation. 

Alexander Kychakov: Mr Medvedev and colleagues, I represent the owners of the capital of the Novosibirsk State University Endowment Foundation and the theme of my report is Entrepreneurship and Universities.

I’d like to cite two figures at the beginning of my speech. The 2012 budget has allocated 438 billion roubles for the entire system of higher and postgraduate education. Our expert-moderator recently said in an interview that (according to an expert evaluation) corporations spend some 500 billion roubles on additional training for their graduates. The question is: why don't corporations transfer their budgets to universities and colleges and create some kind of synergy? According to data from the Forum of Donors, under federal law No. 275 On the Targeted Capital Foundations of Non-profit Organisations, there are only 45 foundations at 1,300 universities within the system of the Ministry of Education. So we can see that the targeted capital foundations (the law on which was adopted in 2006) are failing to operate as an effective social technology. They have practically no influence on the development of education at the moment.  

Why is this happening? It seems that both business and educational institutions realise that they need each other, but it is often the practice nowadays for targeted capital foundations to be created either by business or by educational institutions, and there is a certain element of mutual distrust. Educational institutions have no mechanism for attracting money from business to their foundations. We propose creating such a model to make it possible for both business and educational institutions to jointly invest and develop these foundations. How can this be done? How can such a mechanism be launched as a technology? Our foundation was the third to be registered in Russia, and we have been working successfully for around five years.

Dmitry Medvedev: How much money do you have?

Alexander Kychakov: Not much – 21 million roubles, that is very little on a national scale. We haven't been able to accumulate more since the crisis. There are very few foundations with real money in them – five at most (the MGIMO, the Higher School of Economics), where corporations have transferred targeted funds. In our view, the effective minimum is at least 1 billion roubles, well, a foundation should have at least 500,000 roubles within the system – the interest would create the minimum required to operate such a foundation. The system-wide launch of foundations within the system of higher professional education… Following the reform we discussed a possible reduction in the number of universities (this is currently under discussion, I will not attempt to give an assessment of this); but if we take 1,000  universities and 500 million roubles for each of them, the total financial lever created amounts to around 500 billion roubles. This is not very much on a national scale. But it is not a small sum either.  

What needs to be done for these efforts – the efforts of business and the state – to come together so that these financial costs can be met jointly? We have analysed this issue and here is our proposal: a framework for the innovation system has to be created. Currently we see that the state has done a lot in this respect. Under the Strategy of Innovative Development until 2020, 46 state corporations, territorial clusters (the Ministry of Economic Development is working on them, tenders for 25 clusters have been held), and 30 national technology platforms have been created… And there is a green shoot in this new economy – the Skolkovo Innovation Centre. We think it’s high time for the Skolkovo experience… The Skolkovo mechanisms, or the Skolkovo pattern has to be multiplied within the new framework; replicate these mechanisms in 29 national universities and in 9 federal universities.

As we said (here’s a small slide), we think, and I, as a businessman and chairman of the board of the foundation, that from a business perspective, the universities are precisely the core of all this and we are interested. We can see now that the state has created all the prerequisites for an effective launch of this system that will change the entire landscape. To change this landscape, as we said, the relevant amendments have to be introduced, perhaps as the previous speaker proposed, to provide co-financing mechanisms, or allow educational institutions to invest those non-budgetary funds in long-term development programmes, thereby creating a common language between universities and business.

Apart from this, we believe it is necessary to create a critical mass of medium business. What is happening in universities today, these small companies… Universities still think in terms of… When we speak of (one of your ideas is to hold an IPO)… Regrettably, universities still think in terms of small companies. They do not switch to medium and big companies. Meanwhile, it is necessary to create the same eco-system as in Skolkovo, that is, the environment, housing and offices close to research centres. We must replicate this system in these 29 regions. Thank you for your attention.

I’d like to add that we have seen on the example of Novosibirsk that the Housing Construction Fund and the Academy of Sciences are doing this for young researchers. Moscow State University is also taking an active part in these efforts. There is a technology park as well. But medium companies have a problem, not the small ones we talked about… We must take the next step and decide where medium and large corporations will be based. We must create such development territories. Both the HCF and regional administrations should take an active part in this. Thank you for your attention.

Dmitry Medvedev: Thank you.

Dmitry Peskov: Thank you. The next speaker is Vera Mysina, Head of the Russian Academy of Sciences (RAS) Council of Young Scientists.

Vera Mysina: Good afternoon. I head the Council of Young Scientists of the Russian Academy of Sciences and have come here with the express purpose of telling you about one problem that you can help us resolve. I don’t know whether you remember or not but on December 15, 2009 there was a meeting with RAS members at which I spoke about the problems of young scientists.

Housing is of course the main problem. It is very important to resolve it if we want to retain the intellectual potential in this country. You said at this meeting “let’s give 5,000 flats for RAS young scientists.” This was in 2009 and now we are in 2012. You said yourself (and we counted) that they have received 300 out of 5,000 flats.

Young scientists shower our council with letters and we conduct endless meetings. They are saying that they will soon stop being young scientists and nobody will help them resolve their housing problem. We have joined the efforts to implement this instruction very actively because we understand that “If you are drowning, you are on your own.” What have we seen? I have to admit with regret that the RAS executives have not done enough to help young scientists in resolving this issue. We had to deal with problems that had nothing to do with us but we had to get involved or we would have probably not received anything at all.

The RAS Siberian Branch was the only ray of light in this darkness. It has energetic people with whom we tried to resolve this problem. In the process we studied the structure of the academy and realised that its directors do not understand how to resolve this problem on a systemic basis. It is unclear who is responsible for what and where we are mobbing. Since we’ve studied this and wanted to change in order to preserve RAS for Russia (because of its great history and excellent academic schools), we…    To sum up, I have come here with the express purpose of telling you: “Mr Medvedev, please listen to us and help us carry out our project of modernising the academy.” We have a clear idea on how to do this. We are young, we are young scientists but we are not pioneers or revolutionaries. We have a very pragmatic and sensible understanding of what to do.

Dmitry Medvedev: What do you want to do?

Vera Mysina: If I start telling you now, I’m afraid that…

Dmitry Medvedev: Go ahead.

Vera Mysina: All right.

Dmitry Medvedev: Do tell us because you said the academy is not ready for this although we must preserve it. Apparently, it is not doing a good job. In any event, all its executives must be dismissed because they fail to fulfil the instructions of the president and the government. If you are ready to do this, take it up. What should be done?

Vera Mysina: We have discussed at our council and between ourselves what should be done. In my report at a big meeting we had last November I mentioned by points what may be done.

Dmitry Medvedev: Tell us in brief what should be done.

Vera Mysina: The first point. We consider it necessary to reduce the executive personnel of the academy. This is very important because…

Dmitry Medvedev: I got it and I agree with you in principle.

Vera Mysina: I don’t want anyone to take offense but we have been through a lot of trouble. The academy is a great page in Russian history. It has done a lot for this country and has always served it with faith and fidelity. We don’t want it to disappear. We don’t want to wait till the time when there will be nothing left to modernise. This is why we studied this structure in detail and then drafted a concept. We’d like to invite you to listen to it.

Dmitry Medvedev: I remember – the top personnel of the academy must be cut. What else should be done for young scientists to receive flats?

Vera Mysina: There is also a bureaucratic machine – this time I’m referring to the central academy. We have departments on different sciences that serve as a buffer between the institutes and the RAS Presidium and this structure is a drag on almost everything. I’ll be straight – regrettably, the average age of academic secretaries is almost 80 years. This needs no comment.

We need research projects for technological breakthroughs if we want our country and its economy to be in the lead. If these departments are removed and the Presidium is in charge of the institutes directly, we will have quicker feedback and will carry out faster the projects that are now stalled.

I’d like to say that there is no transparency in all issues regarding housing certificates and flats. Nothing is clear. Our greater joint council is already three years old. No matter how hard we try we are getting nowhere – we seem to be heard but nothing is done.

I’d like to emphasise that everything I’ve said here is not a kind of challenge. I just think it’s time to change but Mr Medvedev, unfortunately, everything here depends on the state. If you make a decision, if you listen to our concept… Of course, I can continue talking about further measures but we would like this concept to be read and heard. There are many sensible people in the academy – both academicians and associate members. I think they will support our concept because it is bound to benefit the academy and Russia in general. Mr Medvedev, please listen to it.

Dmitry Peskov: Ms Mysina, hear me please.

Vera Mysina: Yes, see and hear our concept.

Dmitry Medvedev: I hear you. I even see you quite well so far.

Vera Mysina: Thank you.

Dmitry Medvedev: This is the first point. Second, you have developed your ideas from the flats for young scientists to reforms of RAS. We must do both. I have no doubt about this. I’d like to understand how you want to resolve the housing issue. This is a strictly practical task and we have discussed it with you. What should be done to provide many young scientists with flats? We have the money for this.

Vera Mysina: So, the money is there but the problem is that what the Ministry of Regional Development has allocated is not enough to buy flats. This is the first problem. We may even have the money but we can’t buy flats with it. The money goes into the budget and young scientists get nothing. The second problem is paid-for housing. The calculations were made on the premise as if  these flats are private ones.. Now it appears that we buy an empty box but a young scientist must move into it. He can’t find half a million roubles or more to get it into shape and, besides, it won’t be his or her anyway. This is the second problem that we must resolve.

Dmitry Medvedev: Do you think these flats should belong to them?

Vera Mysina: We know that initially young scientists were supposed to privatise these after working for a certain period of time. This decision was made at the relevant government meting and you spoke about this yourself.

Dmitry Medvedev: Yes.

Vera Mysina: But later on the executives decided that scientists will receive paid-for housing.

Dmitry Medvedev: But both forms are possible.

Vera Mysina: We think there should be different forms of receiving housing – privatisation, paid-for housing and hostels for post-graduates. Everything must be done consistently, stage by stage. If you are a post-graduate, live in a hostel – you can’t claim more than this accommodation, you must achieve something to improve your housing conditions. Once you do this, you’ll receive a paid-for flat; later on you may join a cooperative that the HCF is now building and eventually you will get an opportunity to privatise your flat.

Dmitry Medvedev: So these apartments are allocated to young researchers. What is the legal basis for this?

Vera Mysina: They are allocated as service housing.

Remark: They have rent contracts for the term of their service.

Dmitry Medvedev: I understand. They sign employment contracts and receive a service apartment.

Vera Mysina: Could I add something about housing certificates, since you have given me the floor?

Dmitry Medvedev: Certainly.

Vera Mysina: Mr Putin gave us an invaluable gift this year, 2.5 billion to the Academy of Sciences for housing certificates. So it's clear, we never got more than 300 million each year. Now we have enough money for these certificates, but the problem is that the demand is growing too quickly. For example, in remote scientific centres, the housing supply for which these certificates could be used is meager. We could “freeze” them though, and offer people a chance to invest them in construction projects. There are many of these programmes, and they are multifaceted. So it turns out that young scientists end up studying them instead of doing their own work. We believe it is the job of the RAN management to lobby for resolving the problems of young researchers at every level in government, to keep pushing. We young people account for 25% of the Academy of Sciences, which is quite a lot, and we hope that RAN will grow younger still, with the help of the government of our beloved country.

Dmitry Medvedev: This is a lot indeed. But isn’t the average age there 89?

Vera Mysina: Twenty five percent are young scientists.

Dmitry Medvedev: Younger than 89?

Vera Mysina: Younger than 35. We have young researchers, PhDs under 30.

Dmitry Medvedev: Thank you.

Ladies and gentlemen, I would like to comment on what we have heard. We have heard rather a lot actually, and all of that was proper and interesting in general.

At the same time, I also have my own opinion on these issues. We have taken certain steps to bring innovation to schools, to bring businesses to universities and create certain synergies between research centres, universities and businesses. But these are only the first steps.

I would like to make it clear from the start that we should not have expected to create a totally new environment in two or three years, but a change has indeed started, as you can see. At the same time, there are still many bureaucratic barriers – that’s probably just the way we Russians are, it's a special mindset. I would only like to warn you against pessimistic rhetoric and complaints about how difficult it is, and this goes not just for the audience in this room, and I mean no offence to anyone. Colleagues, we all know that Russia is a difficult country, but if we really want to achieve some change, we all need to work hard, and not just point at the management complaining about “old-timers” who fail to make the right decisions. We must get up and do something ourselves.

Now as for the issues covered by the bill I signed on small businesses and by the government resolutions passed later to complement it. I am by no means opposed to looking once again at how well this law and those resolutions comply with current realities, and to discussing the shares you have mentioned. I am ready to issue the necessary instructions, and I hope this will be recorded as part of the Open Government’s work.

As for tax inspections, I agree that they are frequent and that they also affect the businesses that you set up. We need to move in the right directions here.

Control over foreign exchange is a complicated issue. I forget how it is worded in the roadmap, probably it is as you say, although, for the sake of objectivity, it should be admitted that there have been cases of violations of currency regulations. So I think it would not be possible just to go and abolish any currency regulation. Let us return to this discussion later.

Now, about the “fat” businesses you mentioned, on which many of you seem to be counting. I fully agree with you that, unfortunately, most of Russia’s big businesses are partially-owned by the government – but not all of them. There are many large privately owned businesses as well, which evolved from former state-owned assets. They seem reluctant to join technology parks and attract young businesses and small businesses. I doubt that we should order them to do so. But they have to be stimulated somehow. How this should be done is a sensitive question. I don’t think we should just assign them to technology parks or specific small businesses: this could lead to the opposite effect from what we want. But I agree that this could be done as part of corporate policies and procedures. Moreover, I think I am going to resort to corporate directives while planning a series of financial commitments regarding Skolkovo and SkolTech. I think this would be the right thing to do, and I am now addressing both the senior government officials and the large businesses which pass such decisions at their board meetings. These recommendations can and must be issued.

As for the academic departments at companies, and the standards that you have mentioned, I have absolutely no objections to this initiative unless it conflicts with the general concept of higher education reform. I will issue an instruction in this respect.

I support the idea of expert appraisals at home, without having to come to Moscow. We were actually discussing Skolovo and certain ongoing procedures there, but on the whole I think that you are right. With such advanced research facilities as in Novosibirsk, for example, I see absolutely no use in going anywhere. This only encourages more bureaucracy and provides opportunities for pushing rivals aside. This is unacceptable. These rules need to be changed and I would like my colleagues here to record this.

I have already discussed large companies.

About endowments: I lobbied actively for this initiative even before serving as President or Prime Minister. I actually sponsored that bill, which was eventually adopted. I do not like the current situation either, although, just to be objective, one should admit that these contributions are voluntary. Your idea is good I think, but not very realistic. So I tried to estimate: the minimum endowment is 1 billion roubles. How much profit will this generate? I have to remind you that endowment capital is not going to be spent, but is used to generate profit.

How much profit will 1 billion generate? I’d say 100 million at the best, that is, $2-3 million. Is this enough to finance a university or something? I don’t think so.

I am not saying that it is useless to have 1 billion roubles. This is better than the 22 million you mentioned anyway, but it will not resolve all problems.

You said that 45 university endowments is too few. Well, it isn't. The problem is, we have too many universities – with just the right number of endowments to finance them.

If we adjust this proportion, for example, eliminating half of the existing 1,100 universities, and establishing 100 endowments at the biggest and most popular ones which have the best record, it would be great, and these endowments would grow.

At the same time, we all know that the endowments of the world’s largest universities did not grow in the course of two or three years. But when I visit one of them and discuss problems, it becomes obvious how much these endowments help.

I remember discussing this with the leadership of Stanford University, which has a $70 billion endowment, I believe. But Stanford is a very large university. I wish we could do the same.

As for the role and problems of young scientists, it was actually gratifying to hear you raise these issues, because it means that changes are ripe in the Academy.

This is not really about the ratio of young to old, because in scientific research, it is important that we have both the old and accomplished as well as the young and daring. It would be absurd to try to determine the right proportion here. If the government goes about telling the Academy of Sciences, look guys, you need to have this percentage of researchers under this age – it would sound odd I think. What needs to be done, though, is to change the system of the Academy’s management, and to give young people better access to decision-making. Can the government step in here? It can, but its influence should be limited, because the Academy of Sciences is an integral system, and if we begin giving it orders directly, telling it what to do, the Academy will eventually die as a civil-society institution, even though it is not an entirely independent institution (it’s a state institution as well). I am actually leading up to an important point – it is my most deeply-rooted conviction that reforming the Academy of Sciences is not entirely the government’s responsibility, but is also the responsibility of the Academy itself. If it fails to do so, frankly, I don’t know where it will end up 10-15 years from now, because everybody knows that there are problems and that they are accumulating.

I would really like us to follow through on the housing programme we discussed. This was not an easy job from the start: I had to squeeze out the money for it manually. This money was eventually provided, and it is important to use it now.

You say there are problems; I expect property valuation is one of them, because there could be a discrepancy between the price the Regional Development Ministry uses for the programme estimates and the market prices in different areas. Property prices would vary greatly between Novosibirsk, Moscow, and, say, Irkutsk. So I think we need to do some research to adjust the prices for regions. This would be the right thing to do. I will sign an instruction to the Regional Development Ministry and the Academy of Sciences, and about the housing certificates as well. I’ll do that.

Finally, the legal status of that housing. I should say that the arrangement you described is the best and the fairest one. Intending no disrespect to young people, I still think that, along with getting some credit as an academic, one should also do something valuable for his country before that country grants him an apartment. Therefore I believe that privatising service apartments after a specified period is a good solution. This proposal needs to be implemented, unless someone has a better one.

Finally, I would very much like you to preserve your eagerness to participate in the management of the Academy, because it is truly important for the future of the Academy. I think that its “grown-up” executives here are also aware of this.

I’ll have to go now because I have more things to do today. I will issue all the instructions we discussed today, will translate all the ideas into documents and will monitor their progress.

Goodbye colleagues, and good luck.

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