Opening remarks by Dmitry Medvedev:
Colleagues, earlier we agreed to hold a meeting on the development of the Far East and the Baikal region. I am not going to tell you what Far East means to our country. The Far East accounts for one third of our territory, it is not only a unique area that boasts great natural wealth, but it is also an enormous and, unfortunately, poorly developed region, which is very important from an economic point of view. People in this region have faced many problems over the last 20 years.
The infrastructure projects are of strategic importance. Let me remind you that APEC Leaders' Week concluded a month ago. As part of preparations for the summit several large-scale tasks were performed: Vladivostok has become a large centre of international cooperation in the region, and its infrastructure has been significantly improved. We hope that all this will give additional impetus to the development of the economy and social sphere not only in the Primorye Territory but in the Far East as a whole.
What instruments are in operation now? Let me remind you – this is the third stage of the federal targeted programme Socioeconomic Development of the Far East and the Baikal Region. Since 2008, the total funding from all sources, including the subprogramme for the development of Vladivostok, has reached 1 trillion roubles. We are now considering the possibility of extending the programme to 2018. A separate federal targeted programme entitled Socioeconomic Development of the Kuril Islands in 2007 – 2015, whose total funding stands at about 28 billion roubles, is also being implemented. These are the financial instruments we are using and will continue to use. There is a range of organisational decisions, including the establishment of the Ministry for the Development of the Russian Far East, that should define the priorities of this territory. But everybody understands that the efforts of the government alone are not enough to resolve the problems in this sphere. Given the problems in the global economy and the constraints on the federal budget, we just do not have enough money. Therefore, state investments are aimed at encouraging private investments. I believe that everybody understands this. It is also very important to attract institutional investors that are capable of providing large-scale investments with, if possible, low-interest and long-term loans. We should outline long-standing investment priorities and apply the methods of project financing. Financial projections should be based on international figures reflecting expenses in similar conditions. This is important for us especially given our strong tendency to inflate financial projections and address tasks using the most economically inefficient methods.
Coordinating state programmes with investment plans of infrastructure companies is another important task. Representatives of these companies are now present here. Federal resources should be used in the largest projects so that the credit ratings of the investors are not harmed. In this regard, very important are the opportunities offered by the Fund for the Development of the Far East and Baikal Region, which was established in 2011 by Vnesheconombank. This fund can act as a co-investor for the large-scale infrastructure projects which are not self-sustaining even for such giants as the Russian Railways, Gazprom, RusHydro, the Federal Grid Company, and other grid and energy companies. Joint work will also improve budget discipline. The resources of this fund – of course, when we decide how to further capitalise it and how it will work – will be used to build facilities relevant to long-distance infrastructure, such as railroads, stations, motorways, power transmission lines and substations. The cost of building these facilities, at least the full cost of construction, cannot be borne by local private investors alone. For the time being the fund's registered capital is quite modest – 500 million roubles; it needs additional capitalisation. The development of the fund should be complete with relevant liabilities. I would like to hear proposals to this effect from the ministry and Vnesheconombank. And, of course, we should use new legal instruments in the sphere of public-private partnership, in particular concession agreements. We should improve how the Investment Fund functions and accelerate the development of a mechanism that will help direct future revenues of the federal budget from the development of certain territories to investors who put their own money into developing public infrastructure. These proposals should be submitted to the Government in the near future.
There is another issue I want to discuss at this meeting. Our pre-revolutionary, revolutionary and modern experience in the development of the Far East shows that implementation of large-scale projects in this sphere and the development of distant territories where people do not want to go (and, to be perfectly frank, tent to leave) has always been bolstered by incentives. Regional authorities can offer only profit tax and property tax incentives. Let's analyse the possibility of giving tax breaks to enterprises being established in the Far East and the Baikal region. The issue is complicated, but without such benefits it will be impossible to resolve these tasks even by creating development institutions, further capitalisation of funds, supporting monopolies and others means. This should involve expanding of the list of tax privileges, extending their duration and making more active use of existing opportunities.
And finally, we should establish which projects can be implemented in the near term – in 2013 – and what should be done for their implementation. Before moving on to the topic of the meeting, I'd like to say that I signed a Government executive order concerning one more unique territory – the Arctic coast. An area measuring over 600,000 hectares of land in its western part will be given the status of a specially protected territory, where the Russian Arctic national reserve will be established. A draft plan on implementing the concept for the advancement of indigenous ethnic communities of Siberia, the Russian North and Far East has been introduced in the Government. That's all I wanted to say by way of an introduction. Let's start our discussion.
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