The meeting was attended by Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, deputy prime ministers Viktoria Abramchenko, Yury Borisov, Alexander Novak and Marat Khusnullin, Presidential Aide Maxim Oreshkin, Minister of Industry and Trade Denis Manturov, Minister of Economic Development Maxim Reshetnikov, Central Bank Governor Elvira Nabiullina, Sakhalin Region Governor and Chair of the State Council Commission on Investment Valery Limarenko, Chelyabinsk Region Governor and Chair of the State Council Commission on Economy and Finance Alexei Teksler, and Head of the Federal Taxation Service Daniil Yegorov. Representatives of major businesses and the banking sector, heads of the Russian Direct Investment Fund, the Chamber of Commerce and Industry, Rostec, Rostelecom, Russian Railways, Aeroflot, Inter RAO, Sovcomflot, State Development Corporation VEB.RF and public organisations such as OPORA Russia, Delovaya Rossiya and the Russian Union of Industrialists and Entrepreneurs also took part in the meeting.
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President of Russia Vladimir Putin: Good afternoon, colleagues,
Today’s meeting brings together many participants in various offices and places. I hope that our equipment will not let us down, and that it will operate as smoothly as before.
Representatives of the Russian business community, Government members and heads of State Council commissions are attending the meeting. This is a large group.
In this expanded format, I suggest that we review the current economic situation in great detail and mostly focus on analysing business and investment activity in Russia and all over the world, with due consideration for the high global economic interdependence.
We will discuss additional investment incentives, a highly important matter. Such incentives would boost the pace and quality of national economic growth and would also expand employment and raise people’s incomes.
I have already mentioned this, but I would like to point out once again that last year was the most difficult one for the global economy since the end of WWII. You are well aware of this too. According to estimates, global GDP went down 3.5 percent in 2020.
There are objective reasons for this, first of all, the epidemiological situation and the introduction of forced restrictions, which had a negative effect on business and economic dynamics in general.
The unexpected and large-scale crisis forced countries to take extraordinary measures. In this situation, countries with independent macroeconomic policies introduced the largest ever stimulus packages in terms of the budget and monetary policies.
Thanks to the reforms of the past few years, our new opportunities and the strengthening of Russia’s financial stability and economic sovereignty, we did not take tough macroeconomic measures amid the crisis, for the first time in modern history, but, on the contrary, responded to the problems arising by mitigating our approach in this sphere.
As you know, the Bank of Russia lowered the interest rate by two points last year to a historic low of 4.25 percent, and the Government’s fiscal stimuli amounted to approximately 4.5 percent of GDP. This is a great deal for our country. We did this although oil prices remained very low throughout the past year and even fell below zero at the height of the crisis, which was impossible to imagine before.
There is a reason that I am speaking about this in such great detail. I would like to say again that this active policy is proof of our fundamentally better capabilities, our decreasing dependence on the global situation and also the appearance of new mechanisms and tools for supporting business activity.
During the crisis, we were guided by a clear principle that at a time of trouble the state will definitely support working people, enterprises and companies and will give a helping hand to those who work honestly and responsibly, maintaining employment and investing in development.
Thanks to the timely and carefully substantiated support measures for industries and businesses, we have overcome the economic decline and returned to the recovery trajectory. We can see this from the dynamics of domestic demand and the gradual reduction in the unemployment rate.
As I have already mentioned, Russia’s GDP went down 3.1 percent last year. The decline was less than in many other countries.
Moreover, our investments in fixed assets started growing in the fourth quarter of 2020. They increased by 1.2 percent compared to the same period the year before. Of course, you and I know that overall year-end investments decreased by 1.4 percent. However, I would like to emphasise that the decrease was considerably smaller than during the previous crises Russia and the global economy encountered. If my memory serves me correctly, it was more than 13 percent, closer to 14 percent in 2009.
Thanks to a purposeful economic policy, we have prevented a plunge in investment activity. The investment risks of the Russian economy have greatly decreased. It is our clear goal to make the investment environment more predictable and sustainable.
However, I would like to remind you about our objective. Investments in fixed assets in Russia must grow by at least 70 percent in real terms compared to 2020. To attain this goal, we must provide system-wide support to investment projects of our businesses.
In this connection, I would like to draw your attention to what is being done and what else we will have to do.
First of all, infrastructure development is one of the country’s main priorities. I would like to point out that the current crisis was the first time when we responded to challenges by investing additional funds in infrastructure. It was the first time we did this.
Federal budgetary investment in motorways and trunk infrastructure increased by 20 percent last year within the framework of the national project alone, reaching 538 billion rubles.
I would like to add that during the period of forced restrictions we did not suspend the construction of roads, networks and communications, which are extremely important for the connectivity of our territories and regions and for launching new investment projects.
All of us are aware of an obvious thing: priority investment in infrastructure is an earnest and the foundation of our economic growth and a crucial factor for improving the quality of life of our people. It is likewise obvious that we need to increase these expenditures at the federal level. In fact, this is what we are actually doing. We must also create more opportunities for increasing investments at the regional level.
The Government is finishing work on a programme of additional funding for the regions’ infrastructure. I propose discussing this topic at a separate meeting in April. Of course, I also expect our colleagues to deliver a final report on the mechanism and volume of this programme.
Second, the long-term predictability of project implementation terms is a fundamental issue for expanding investment volumes. Business representatives always talk about this.
We have already offered a new mechanism of agreements on investment protection and incentives to Russian and foreign investors, that is, when ambitious and crucial projects get the so-called “grandfather clause” or fixed taxation terms for a period of up to 20 years, and when the state can compensate investment in the transport, energy, social, utilities and digital infrastructure at the expense of future tax proceeds.
The Government has upgraded a mechanism of special investment contracts, or the so-called SPICs, in order to support industrial projects. We have been using this tool since 2015. There are plans to sign the first contracts under the new SPIC 2.0 model in the summer of 2021.
We have to adjust these regimes all the time and make them more and more business-friendly. Today, I suggest that our colleagues from business circles speak their minds on what else we can do here.
I would like to add that, this year, it is necessary to launch a mechanism of investment deduction compensations throughout the country, as regards new projects. Two-thirds of revenues lost by regional budgets as a result of providing such deductions to businesses, will be compensated from the federal budget.
This initiative was announced in the last year’s Address to the Federal Assembly. Colleagues, I would also like to draw your attention to the fact that its practical implementation is being delayed. I would like to tell colleagues from the Government that it is necessary to streamline and launch the mechanism of investment deduction compensations as soon as possible, without delay and in the near future.
Third, it is necessary to consistently reduce investors’ expenses during the implementation of investment projects.
As agreed at the meeting in Tobolsk, and many colleagues certainly recall the essence of these agreements, we will continue to streamline construction procedures, including those in the field of industrial construction. I know that Mr Khusnullin is actively working in this area together with the Russian Union of Industrialists and Entrepreneurs. He has reported to me today; 3,000 different restrictive administrative procedures were abolished last year, and the Government is set to abolish another 3,800 procedures in the next few months. I hope that the Government will continue to act in close contact with the business community, and specific tangible results will be achieved here throughout 2021.
Fourth, it is important to allow companies and enterprises to obtain financial resources for implementing investment projects. We recently discussed this matter at a meeting with representatives of the banking sector.
Let me recall that it is necessary to develop the entire range of financial instruments and make not just loans but also bonded loans more convenient and accessible. Incidentally, last year Russian companies placed a record amount of bonded loans. It is also necessary to create additional opportunities for attracting share capital at Russian stock exchanges.
As for the companies’ own funds that are used for investment, I would like to note the following.
The past few months revealed a clear trend towards an improving global environment for such vital commodities as metals, fertiliser and other exports (steel, copper and nickel). All these markets have made up for their crisis-related losses and are even showing multi-year highs in a number of positions.
Considering the recovery of global markets and positive trends in the Russian economy, it is possible to predict that domestic companies, primarily in the export-oriented sectors, will end the new fiscal year with good financial results. We sincerely hope you achieve this and will do everything to help you.
This amounts to the formation of a solid investment resource. It is important to use this resource for developing Russia and its economy, creating new production lines and modern jobs, and strengthening the positions of Russian producers both in the internal and external markets.
We must give priority to the projects that will help us reach the national development goals. These primarily concern the need to ensure the health and welfare of our people, the growth of their incomes, real incomes, the formation of a comfortable and safe living environment, and the development of sophisticated, convenient digital services. Let me emphasise that these priorities are consonant with the global agenda.
I would like to add some ideas in this respect. The trials of the crisis have shown how important it is for businesses, for companies to demonstrate by deeds, by their specific decisions, responsibility for the country, the region and the city they are working in, and their concern for specialists on their teams, and to carry out social and environmental protection projects.
And vice versa, in this country and in fact in the rest of the world, we are seeing what serious problems are faced by companies that forget about working long-term, for the future in a bid to gain immediate results. The costs of resolving these problems and overcoming their consequences are sometimes incomparable with imaginary savings.
Colleagues, I would like to hear from you today, primarily from representatives of business – we have known each other for a long time – what measures are needed to support long-term models of responsible business development. As you know, we have built an entire system for supporting domestic business: large, medium-sized and small companies. In general, these support measures have worked well in recent time, during the crisis months of the past year.
Let us discuss all this, let us get down to business.
Vladimir Putin: Here’s what I would like to say in conclusion. The reason why I asked you to gather today is that together with colleagues from the Executive Office and the Government we have begun drafting the annual Address to the Federal Assembly, and the opinions of top executives of our leading companies and business associations are very important in this regard. But this is not the only reason.
Here's what I wanted to say too. Our colleagues casually mentioned today that the developments of the past few years associated with certain politically motivated restrictions on economic activity on global markets and with regard to our country encourage us to act with positive outcomes in mind. So, import substitution was mentioned.
That is true. However, import substitution is not the most important part of our response to politically motivated economic restrictions (by the way, they have been imposed only for the reason that we exist and are able to defend our national interests, there is really nothing else behind them). The most important thing is the creation of a competitive business environment in our country that will help bring in investment, not only domestic, but international as well.
If we, I mean the authorities at all levels, including federal, regional and municipal, which our colleagues also mentioned today, do this, then any steps of any kind against us will only benefit us.
There is one more circumstance that I would like you to be aware of. One of the first speakers today said, and I wrote this down, that last year we worked amid absolute uncertainty. Colleagues, unfortunately, these factors of uncertainty are not going away.
We see what is happening, for example, overseas: of all those who walked into the US Congress building, 150 people were arrested and face anywhere from 15 to 25 years in prison. We have no way of knowing whether the internal contradictions will stop there. We really want them to stop, and I will tell you why. We are interested in steady relations with all our key partners, and internal squabbles, for internal political reasons, are in the way of achieving this kind of stability in the relations between our states.
In this regard, how will the world's leading economies maintain relations with their key partners and competitors in Asia and Europe? Can we be certain about this? No, we cannot. It is impossible.
So, in this regard – I said something along these lines a while ago – but will articulate it one more time. Of course, the heads of companies and shareholders must make decisions related to investment activity and investment plans. But since we are working amid great uncertainty and a large number of uncertain factors, I reiterate, make your own decisions. But it is better to take it home, since it is a safer and more peaceful place.
The Government’s job is to create conditions where it will be more effective to channel the available resources and resources that may appear in the global market environment not for the payment of dividends or for distributing them somewhere – legally, as I understand it – but still somewhere in safe havens (today they are safe, but we do not know about tomorrow, considering these factors of uncertainty). It makes more sense to use them for developing private businesses or creating new businesses in the Russian Federation. For our part, we will do all we can to create stable and reliable conditions for this and to see that all these instruments work efficiently. I am referring to the instruments we discussed today, as well as ways of improving them.
In this context, I would like to ask the Government to study the ideas that were expressed today.
The first point. Of course, we need to review the proposals in the framework of the tax law in cooperation with business associations. I am not saying that things need to be radically changed here, but there is no point in discarding the proposals made by businesses today.
We need to draft a system of measures aimed at encouraging companies to direct their profits to funding investment projects in Russia. I would also like to ask you to attentively analyse other proposals in this regard.
The second point. I am instructing the Federal Taxation Service to conduct detailed monitoring of the profits and investment activities of the largest national groups of companies during a fiscal year and report to me every quarter on what is happening with the increased income from the external business environment, and how these funds are converted into new investment, infrastructure, social or environmental projects.
I would like to repeat: we need to use the favourable opportunities that are emerging for Russian companies in the global markets for launching projects that are important for entire industries, regions and our country. I would like to ask the Government to do all it can to facilitate the implementation of such projects.
And, finally, the third point. As you know, the liquid assets of the National Welfare Fund (NWF), as we mentioned today, have exceeded 7 percent of GDP. If the current foreign economic environment remains the same, the fund is expected to be replenished with 180–200 billion rubles every month.
Under the law, these funds of the NWF that exceed 7 percent of GDP, as the Finance Minister said today, may be spent on implementing large investment projects that will produce comprehensive results for resolving the tasks facing the regions, economic industries and the country as a whole, for that matter.
I would like to ask the Government to present, within a month, specific proposals on investing these NWF funds, including in infrastructure projects. It is necessary to make an inventory of such projects, to look again at those that have been thoroughly prepared and are ready to go, and to make a final decision on them. Needless to say, these projects must be effective, have a proper return on investment and be required by business, the economy and the regions of the Russian Federation. Once this assessment is made, they must be launched without delay.
I would also like to ask you to focus on projects involving the mechanisms of the RDIF and the funds that it creates for Russian investors. Mr Dmitriev mentioned this today and many of my colleagues talked about these instruments in their remarks.
I would like to thank you for our joint work today and wish you all the best and further success.