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The meeting was attended by federal ministers, regional leadership and CEOs of major enterprises.
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President of Russia Vladimir Putin: Good afternoon, colleagues,
Today we will talk about the development prospects of Rostov Region. Each Russian region has its own competitive position, its positive points, as well as its problems. We were just talking with [Rostov Region Governor] Mr Golubev; today the weather is fantastic, and yet for a couple of years in a row there was a drought. Certain agricultural problems that need our attention have arisen. Well, we will talk about them too.
Incidentally, many of my colleagues from the Government, and heads of ministries and departments are here today. I would nevertheless like to say something about a different region, one that is also currently experiencing great difficulties, namely the Far East. Many heads of ministries and departments have been working there, and the Prime Minister [Dmitry Medvedev] has the situation under control. Now we will create yet another group (he and I agreed on this today), and we will meet in one of the affected regions.
All the participants of this meeting will then disperse into affected areas, and then meet again to share our findings. Why? Until now our main objective was to minimise the effects of severe weather, minimise the damages that people incurred, and avoid casualties. But now, despite the fact that the situation in some regions remains difficult, large areas are seeing positive developments, and we need to move to the next phase of our work. We will need to assess the extent of the damage and plan specific actions by the federal government and the regions, in order to rebuild damaged infrastructure and help people restore their households. This is what we are going to work on next week, right in the region itself.
As for Rostov, I believe that it is extremely important for us to talk not only about the region itself, but also to continue having such meetings on the development of individual Russian regions. As I already said, Rostov Region has obvious competitive strengths, and it also has difficulties. Naturally, the strengths include its diversified economy, as well as strong industrial, agricultural and transport sectors.
Suffice to say that the region produces more than half of all Russian electric locomotives and combine harvesters, and that the food industry is developing rapidly here. I would also note that the entire region has access to gas supplies and sufficient energy. Electricity production is growing from year to year, and once the third and fourth units of Rostov’s nuclear power plant are put into operation, energy supplies in the region will become even larger. The region holds a steady position as one of [Russia’s] top three grain producers. Despite climatic difficulties – this year weather conditions are no better, and maybe even a little worse than last year – predictions suggest that even more grain will be harvested than last year. Naturally, this is the result of effective work by Rostov region’s leadership and, first and foremost, the people who work in agriculture.
At the same time, I would like to note that unfortunately, these positive, objective changes have not had an obvious effect on people’s wellbeing, prosperity and living standards. Why am I drawing this conclusion? Because during the first six months of this year, the region’s average monthly wages were lower than Russia’s overall average, while the unemployment level was higher, for some reason. Clearly, these figures speak for themselves, and we need to examine why this is happening.
The demographic situation is also far from ideal. The Governor has proudly reported that certain achievements have been made, and this is true. But when we gather for meetings like this, we should talk first and foremost about problems and understand where they stem from, what is causing them.
In this regard, I would like to note the following. The Governor showed me some information exhibits, and one of them indicates that the average lifespan in the region is longer than Russia’s average, but at the same time, the natural population decline is the highest in the Southern Federal District. Why is this happening? Incidentally, I want to point out that even the moderate inflow of migrants does not compensate for this natural decline.
The housing and utilities situation is also a current issue. A significant proportion of the public utility grids are worn out and there is a high non-payment level, including by management companies.
Clearly, the key to resolving these and many other problems lies in further boostingthe region’s economy, creating high-quality jobs and fostering conditions for the stable development of all key sectors. Together, these factors should help the region regain its status as a socioeconomic leader in southern Russia. Rostov Region has everything it needs to achieve this. I will mention a few key directions to work in.
The first is the challenge of properly developing the region’s agricultural potential. It is essential to implement new technologies and innovations in food production and create joint enterprises to process food products in accordance with global standards – the way it is done by certain producers, such as Mr Vaneyev. I recall his success in raising poultry. Now, they have switched from raising turkeys to producing duck meat, using the most modern technology. What is your overall investment?
Donstar CEO Vadim Vaneyev: We invested a total of nearly 6.5 billion rubles in turkey production, and 7 billion in duck production. We have created 5,000 jobs, and in two years, we will have 10,000 employees at our company.
Vladimir Putin: You see? Clearly, this is an example of commendable, efficient work. I congratulate you and wish you success. I hope that the region’s leadership will continue to support you, as they have done up until now…
Vadim Vaneyev: Yes, they have been helping us.
Vladimir Putin: …and provide administrative support for such projects in the future.
Today, the region has already become a leader in turkey meat production, as I already mentioned. I hope that your new company will also grow successfully.
It is extremely important that implementing modern technologies increases the region’s export potential. And to create high-tech enterprises, we must forge effective partnership models withfederal and regional financial institutions, and attract private investors more actively.
Mr Pumpyansky just showed me an essentially new production method in Taganrog, at the metallurgical works, and we were present at its launch. This is not just an example of modernisation; this is basically a new enterprise, and it serves as another good example of successful work in the region, this time in manufacturing.
Mr Pumpyansky, how much did you end up investing? Was it 32 billion?
Tmk Group chairman of the Board of Directors Dmitry Pumpyansky: Yes, 32 billion overall, with 8 billion going toward the arc furnace division.
Vladimir Putin: 32 billion rubles – that’s nearly one billion euro. This is a very large sum of money, and all of it was invested within a fairly short period. I already had the opportunity to congratulate those who implemented this project on their success. I hope these strong traditions in the south of Russia will be maintained and developed.
I know that an integrated business support system has been created in Rostov Region, allowing access to financial resources and property, providing the necessary information, consulting and education services for those who have decided to open or expand their businesses. Clearly, we need to be more active in applying the best practices used in other regions to develop entrepreneurship, first and foremost, in developing agricultural production and the food processing industry.
At the same time, the people working in this sector have also drawn attention to the remaining budgetary hurdles and high interest rates for loans. Problems remain with gaining access to utility services. We need to figure out why both Russian and foreign investors are investing large sums of money abroad, even though they have the opportunity to invest here.
Some colleagues present here are investing locally, but I don’t know if anyone here is investing major resources abroad. For example, I was surprised to discover that a substantial investment was recently made in Greece.
Greece is a good nation, and one with which we share a spiritual kinship, but we are all aware of the economic and financial problems there. Nevertheless, if an investor chooses such a destination, one that clearly has major problems, and prefers to invest there, rather than, say, Rostov Region, the question arises: what advantages does he see there over the local investment opportunities? Perhaps the root of the problem lies in what entrepreneurs refer to as frequent changes in the rules of the game? Let’s discuss this matter as well.
Modernising the transport system remains an absolute priority. Mr Golubev and I discussed this at length today. We are talking about rebuilding the region’s motorways, seaports and river harbours, as well as the possible construction of an international airport in Rostov Region, here, close to Rostov, maybe 22 kilometres away.
We need to increase the entire transport system’s capacity, modernise the infrastructure, create optimal traffic interchanges and transport grids. Rostov Region plays a key role in interregional cooperation in the south of Russia; moreover, this is our gate to the Black Sea nations and Caspian regions, and modernising the transport infrastructure is a fundamental condition for revitalising business activity, as well as stimulating tourism and our entire set of humanitarian ties.
Construction of the Rostov Universal Port combined transport and logistics hub has become a key regional project, at an overall cost of over 20 billion rubles. Naturally, we will provide various forms of support to the region in its plans to broaden the port’s operations. I know it aspires to reach a capacity of 20 million tonnes in the near future. I think this is entirely feasible; we need to look into what must be done to achieve this. But of course, first and foremost, we need to develop railway and motorway infrastructure.
Furthermore, we must improve the situation that I already spoke about regarding construction and housing and utilities. As you know, in this region and in others, we will be eliminating the emergency housing fund, as recognised on January 1, 2012.
The Housing and Utilities Reform Fund is currently helping to settle people within the 94,000 square metres of residential space from the region’semergency housing fund. The fund provided 3.1 billion rubles for these purposes, of which 1.3 billion rubles were acquired via co-financing from the regional budget – that’s 30%. I am asking everyone to respect the existing deadlines and fully complete this task by September 1, 2017 – the objective stipulated in the May 2012 Executive Order.
Another important point: at the State Council meeting of May 31, 2013, we agreed to take measures preventing the growth of debt in the housing and utilities sector, and to eliminate it entirely by December 1, 2013. I understand that this is a difficult challenge, but it is inexpedient to put its resolution off further; indeed, this would be harmful and dangerous.
Let’s look at what has been done and what needs to be achieved in the near future and in the medium-term.
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