4 december 2012

Dmitry Medvedev meets with representatives of the Russian Union of Industrialists and Entrepreneurs

Dmitry Medvedev’s address:

Good afternoon! I see that the representatives of the Russian Union of Industrialists and Entrepreneurs are more disciplined than the ministers. You’ve been sitting here for quite a long time already and the ministers have only just arrived. Right? The weather is presenting problems: there aren’t enough flashing lights for everyone, so everybody is driving slowly.

I planned this meeting a long time ago. I had discussed it with Mr Shokhin (Alexander Shokhin – President of the Russian Union of Industrialists and Entrepreneurs). There are many urgent issues both for the authorities and for businesses that need to be discussed from time to time, and I regularly meet with many of those present at various events, on official trips and on the Open Government platform. Here is my general message: I’m guided by the idea that business has already evolved into a mature institution in our society, it has become a rather responsible partner of the authorities, and its direct interest is to have a modern economy that does not experience such powerful pressure from global economic forces and is protected so that it can achieve its goals.     

Recently, we reviewed the results of the Government’s work for the past six months. I spoke on cooperation with experts, on the importance of that dialogue, and I stressed that this is an important idea. This dialogue that the authorities are always trying to carry on – sometimes successfully, sometimes less so – as part of the Open Government has produced obvious results that have been recognised by business representatives attending our meeting. These results include the work on draft laws, including the important draft law on industrial safety, which has already been submitted to the State Duma. If you have not been following this issue, I will remind you that the Government has been preparing this draft law for five years and consistently failed to reach an agreement with entrepreneurs. [The Government and the business community] seemed to be on different paths or different planets. But when our forum for general discussion started its work, the parties came to an agreement, and the version they crafted has already been introduced in the State Duma. I think this is a good example, and we should replicate that success.  

There are many issues ahead, including work on so called roadmaps. Of course, the main objective is not to focus on paperwork, but to do concrete things, take decisions that would really help the business environment, make our multilayer investment climate more attractive, and make our economy modern and competitive.  

Before listening to what you have to say – and this is the main purpose of our meeting – I will outline some basic points. First, I want to hear your views of the macroeconomic situation in general and of global processes, and of the economic situation on global markets and in Russia, in particular, how you assess the availability of credit, current liquidity, whether it is insufficient; monetary and currency policy and the efficiency of state support for large projects. Recently, I held a meeting on this subject with the Government’s economic agencies and I planned the next meeting on taxes, to be held soon. I will tell you a little secret: I want to go back to discussing the option of a more useful tax – the VAT or the sales tax. This is a recurring topic of discussion in the Government. The Ministry of Finance has always been an influential opponent of the VAT. The Ministry of Finance has always had serious arguments against it. However, I think we should discuss this issue again. I want to hear your opinions. I only want to underscore one thing, which is that the Government’s general position is the same – we do not want to raise taxes.

Second, in years past, we repeatedly discussed – essentially the same people here today – the pros and cons of Russia’s accession to the WTO. Now it has become a reality. We have achieved the result. Frankly, we made a huge effort in talks with foreign partners, in preparing our legislation, in preparing conditions for more protected forms of business in this country. So, I want to hear your views, how efficient are the mechanisms to protect Russian businesses – those operating on domestic markets and those exporting products. What in your view should we do to improve this protection while simultaneously complying with WTO standards? Do we need to continue to improve antimonopoly law in this area and arbitration courts?  

And a third point I’d like to emphasise – you know about the current analysis of the regulatory influence of draft regulatory acts on business activities. The Ministry of Economic Development has made 1,300 relevant assessments, some of them with the participation of RSPP experts. I’d like to hear from you how effective this work is.

Now the fourth point. The Government is completing the drafting and endorsement of state programmes on key directions of economic development up to 2020. All in all, 42 programmes will be adopted. Many of them have undergone public discussion and you have taken a direct part in it as well. I’d like to draw your attention to one of these programmes, Environmental Protection. It should become the foundation for an integrated system of legal regulation and efforts to improve the environment in this country. We have federal laws on enhancing the effectiveness of state monitoring of the environment and full-scale use of the eco-potential of nature reserves and national parks. Several other environmental projects are about to be drafted. Such projects always influence business and the business climate, and it would be useful to exchange views on this issue as well. Environmental protection is our common responsibility. I have said enough – you know everything as well as me.

The fifth point also concerns a serious issue. One expression was coined, namely “innovation enforcement”,  which comes from the term “peace enforcement” emerged after the events in August 2008. Those days it was “enforcement to peace”, now it became “enforcement to innovations”. It is clear why it has emerged. Not everyone in this country wants to deal with innovations. State-run companies that carry out innovative programmes under relevant directives are a different story – we can influence their policy. Things become much more complicated when private investment is at stake. It would be interesting to discuss how steady the demand for new technology and research is in your business. In the final calculation, the success of this country’s innovative scenario depends on this.

And there is one more issue that I’d like to mention here. I have repeatedly discussed it with colleagues – support for science and universities. Entrepreneurs must not simply make demands on graduates (this is absolutely clear) but also directly influence their education. The simplest and most civilised way of exerting such influence is to invest in targeted capital or endowments of leading national universities. Many have already done this. All of us are trying to help our alma maters – the universities we graduated from. But let’s think once again what could be done to support the system of higher education in this country because the future of our country and our economy depends on it. That’s all I wanted to say at the outset.  

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Dmitry Medvedev: …I’d like to comment on three speeches if I may, and we will continue our meeting. Let’s have direct feedback rather than sit and wait for everyone to make a speech and for me to make some concluding remarks.

I won’t speak about the fraud mentioned by Mr Shokhin. Тhis idea emerged when we launched the Open Government. I remember we discussed this idea probably in February or March, and then it was supported by the Supreme Court. So you could say that it was born here. I’ll be straight with you – I don’t know how this new system of fraud-related crimes will work. It consists of a package of separate elements. But lawyers on such cases, all those who defend the rights of entrepreneurs on such cases (I trust them because speaking strictly they are the one that protect the interests of business) maintain that the new system will substantially reduce the opportunities for manipulation by agencies that conduct preliminary investigation. Regrettably, such things happen just as all sorts of designer cases-. So let’s see how the new system works. I hope it will be effective.

I suggest we discuss the pension system. You know my position, Mr Putin also expressed his view and there are opinions of other colleagues. We believe that the proposals that have been made will not make things worse either for business or for citizens. That said, I hope you also realise the system that has formed will not work no matter how much we invoke the usefulness of long-term funds. To be absolutely clear, the Ministry of Finance has not given a rouble to anyone from this savings box, and not because the ministry is bad, but simply because the system did not create the funds required for infrastructure projects, for one. This is the first point. But something can probably be done, and we will take the relevant decisions.

Speaking about the pension system as such, a calculating error has been made. It must be simply admitted by the Government and those who worked on this issue in the Government. We proceeded from the premise that people who retire by 2023 will receive the most money from the state-funded part rather than the unfunded part of their pensions. This is not going to happen because the rate at which we are saving money is too slow. We made mistakes on a whole number of incentives. As a result, the unfunded part will prevail. But what is this funded system all about then? Why do we need it? This is why what we want to do is not to renounce the funded part (it is a rational part of our pension system) but to streamline it in a way that will be the most effective for business. Obviously, if we divide these 6%, the proportions will be different and the insurance payment system will be adjusted accordingly.

We took a year-long break and determined that people should decide for themselves which system they want to stick with. I think that overall this is a reasonable way to go. However, I would like to reiterate that we are open to discussing this issue in general with the business community as well, all the more so since we will still be using the funded component arrangements with regard to the pension plan during this year. We need to make a decision regarding early retirement, namely as concerns List 1 and List 2. I think you will agree with that, otherwise we'll be dragging this thing around forever.

I agree that we need to focus on Law No 223. I have no objections against using the expertise of the Legislative Commission mentioned by Mr Mordashov (Alexei Mordashov, Director General of Severstal) or other entities, including the Open Government. This document should be passed before the end of 2012, if the State Duma’s schedule allows for it. I agree that it’s very important for the health of our economy.

I believe we should focus on what Mr Generalov (Sergei Generalov, President of the Industrial Investors Group) said with regard to the Federal Antimonopoly Service. It’s a shame that we did not invite the head of the service to this meeting. It would be nice to have him here now. I think you are right, we are ahead of all other countries in terms of the number of cases under investigation, but admittedly things aren’t as orderly in Russia in this regard, as, for example, in the United States, where antitrust legislation laws have been in place for almost 100 years now. We are still taking our first steps. In general, FAS works hard, and I never doubted their objectivity. Please note that the Federal Antimonopoly Service ranks very high in the Doing Business rankings, which we’ve used fairly often recently to show off our successes. Perhaps they are overdoing certain things, just like in any other line of work. We need to take a better look at the total number of cases and at the preventive measures. I have no objections in this regard, and I will discuss this issue with Mr Artemyev (Igor Artemyev, Head of the Federal Antimonopoly Service).

With regard to disputes between the Federal Antimonopoly Service and the Federal Taxation Service, on the one hand, I agree that such disputes can be resolved at the level of executive power. On the other hand, frankly, I don’t see anything wrong with the Presidium of the Supreme Arbitration Court passing down the final ruling on this matter, because it helps build up the credibility of our judicial system. Actually, this happens all over the world: if Government departments are in a bind, the judiciary can come to their rescue at some point in time.

I have already mentioned Law No 223. Russia ranks much lower in the Doing Business rankings in terms of customs administration than in terms of tax administration and antimonopoly legislation. I am glad that good work is being done in many areas, including roadmaps. I must admit I had to make certain efforts in order to reconcile the stances adopted by the departments, because they were very far apart at the beginning.

You mentioned the new revision of the Customs Code of the Customs Union and cited several examples, such as indefinite extension of the release (do I understand it correctly?), and the so-called open list of documents. We’ll come back to the former, but I absolutely disagree with the latter: any administrative regulation based on an open list of documents is a recipe for corruption. We must sort these issues out. I will ask Mr Shuvalov to look into it.

Should we adopt these 200 amendments, or postpone these 200? You know, it seems like the right thing to do, but I'm almost sure that our colleagues from the customs agency will say: “You know, the 200 amendments on which we failed to agree balance out the 200 on which we agreed, so they must be adopted as a package.” I will issue an instruction in order to have this sorted out. Perhaps we should indeed proceed case-by-case, but we also must move forward with regard to the 200 that we haven’t agreed upon yet. What is it?

Remark: Excuse me for interrupting you, Mr Medvedev. You touched upon a very important issue. We have studied it specifically. Strictly speaking, these 200 amendments are not related to each other. As a matter of fact, they can be adopted separately on a case-by-case basis.

Dmitry Medvedev: Let's proceed as follows: if the customs tell us that they don’t see any problem with that, then I’m ready to suggest to our colleagues in the Customs Union myself and via Mr Shuvalov that we should treat these 200 amendments separately and decide on them accordingly. We can do that. We do that for certain bills. That's it for the moment. Thank you.

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