Attending the meeting with the President of Russia were owners, board chairpersons and chief executive officers of Germany’s largest concerns.
President of Kazakhstan Nursultan Nazarbayev also took part in the meeting.
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The beginning of meeting with German business leaders
President of Russia Vladimir Putin: Good afternoon, ladies and gentlemen, I am pleased to welcome all of you here.
As you can see, I did not come alone. As you are probably aware, we held a CIS event in Sochi, and then our Eurasian Economic Union gathered for a meeting yesterday. Bearing in mind our meeting with you today, I asked the President of Kazakhstan to join us.
I am confident that he will not only not hinder this meeting, but on the contrary, you will have an additional opportunity to talk with the President of another country, with which the Eastern Committee of German economy works. I think that this will be beneficial for everyone.
I would like to begin by saying that despite all the current political difficulties, our relations with the Federal Republic of Germany in the field of the economy are not withering. Even though Germany is now second to China in terms of trade with Russia, it still occupies a significant place in our trade turnover.
I would like to note that representatives of the German economy were also actively involved in the St Petersburg Economic Forum just recently, in summer.
In 2016, trade amounted to $40.7 billion, and direct cumulative investment by German companies in the Russian economy reached $18 billion.
This year trade has rapidly grown by 25 percent; investment in its first quarter alone reached $312 million as compared to $225 in the whole of last year.
Over 5,000 companies with German capital are operating in Russia, employing 270,000 Russian citizens. The revenues of these companies exceed $50 billion.
We hope German companies will continue working successfully in this country. New business opportunities are opening up against the background of the resumption of economic growth. I am referring to business opportunities in general, including opportunities for our foreign friends, particularly those in Germany. We are ready to create all the conditions for them to feel comfortable in the Russian market.
We will continue improving the legislative base and law-enforcement practice in close contact with business circles. We will remove excessive administrative barriers, invest resources in infrastructure and, of course, the training of personnel.
I think you will agree that cooperation between our countries should not be limited to major projects. Small and medium-sized business is a major driver of the modern economy.
Small business accounts for more than half of the GDP in the German Federal Republic. Regrettably, the figure is much lower in this country.
However, we set ourselves the goal of bringing the share of small and medium-sized business in Russia to 40 percent by 2030. In this context, of course, it would be interesting to hear what you think about ways to involve small and medium-sized businesses in Russian-German trade.
Of course, we are interested in the opinion of our foreign partners about things that may get in their way when doing business in Russia and whether they need additional support from the government.
I am aware that the Eastern Committee of the German Economy has prepared a number of specific issues on bilateral cooperation for today's meeting. These areas include trade, energy, digital economy, the localisation of industrial production, and agriculture.
Our relations with the Federal Republic of Germany in the field of the economy are not withering. Germany still occupies a significant place in our trade turnover.
You can see many government ministers here, as well as members of our Government’s economic wing. We are ready to discuss any questions with you in detail. Our friends from Kazakhstan also represent the corresponding industries, so we are at your disposal.
Now, I would like to give the floor to my colleague, the President of Kazakhstan, and Mr Buchele will speak after him. Then, we will continue our discussion in a closed – but, I hope, still open and informal – format.
President of Kazakhstan Nursultan Nazarbayev: Mr President,
Firstly, I am grateful for this wonderful opportunity to be here in Sochi. It is a great gift for me to be able to meet with such major business leaders from the Federal Republic of Germany, many of whom I personally know from their work in Kazakhstan.
Secondly, thank you for not speaking German with your colleagues; otherwise, I would not understand anything of what you said. Clearly, you took note of my presence.
I am pleased to welcome your guests, German businessmen. Germany is also an important trade and economic partner of Kazakhstan, and we are bound by strong ties of friendship and mutual understanding.
As you may be aware, there are over 100 ethnic groups living in Kazakhstan. We used to be home to 1.1 million Germans who resided in Kazakhstan following the mass deportation of the Volga German Republic.
After gaining independence, we allowed 600,000 Germans to leave for their historical homeland, but the German community in our country is still large. They are a link, and we have a unique intergovernmental commission with Germany, which deals exclusively with ethnic Germans. I think this is another indicator of our special focus on cooperation between our countries.
Our German citizens, formerly from Kazakhstan, who are now residing in your country, are doing business with us, and they are a good connection, they have friends. I know they had no hard feelings toward us when they left Kazakhstan.
In the years since Kazakhstan’s independence, Germany has invested about $5 billion. Importantly, 90 percent of that amount was invested outside of the primary sector.
During the first eight months of this year, trade between our countries increased by $1.5 billion. In the past five years alone, 19 major investment projects worth $2.8 billion were implemented in Kazakhstan.
Among our partners are such concerns as Siemens, Knauf, Metro, Heidelberg, and Linde. I was in Berlin a couple of years ago and agreed with Chancellor Merkel that we will bring them in to work on rare earth metal deposits in exchange for technology and investment in Kazakhstan.
In all, over 900 companies with the participation of German capital are successfully operating in different areas in our country: construction, transport, communications, agriculture, the processing industry, and infrastructure in particular.
We have launched a multi-model Eurasian transport corridor: today five railways and six international auto routes pass through Kazakhstan from the Pacific via China, Kazakhstan and Russia to Europe; via Kazakhstan, Iran and the Persian Gulf; and via Kazakhstan and the Caucasus to Europe again. The main routes pass through Russia.
We will continue improving the legislative base and law-enforcement practice in close contact with business circles. We will remove excessive administrative barriers, invest resources in infrastructure and the training of personnel.
These routes link China and other Asian and European countries via Russia, the Caspian and the Black Seas, Iran, India and Turkey. Thus, we have formed strategic transport corridors that directly link Asia and Europe, the north and the south. You are welcome to use these transport opportunities. It takes 14–15 days to cover the route from the Pacific to Europe via China, whereas traditional shipping by sea takes almost three times as long.
As you may know, not so long ago I met with Mr Steinmeier at EXPO-2017 in Kazakhstan and we opened the National Day of Germany together. We discussed issues related to the development of our relations once again.
Today, Kazakhstan is opening up new opportunities. It has huge potential for profitable business. To begin with, it is continuously working to improve the investment climate and protect the rights of investors and liberalising business legislation.
Last year Kazakhstan moved up 16 spots to 35th place in the World Bank’s Doing Business rating. In the beginning of this year, Kazakhstan became an associated member of the OECD Investment Committee and joined the Declaration on International Investment.
We have a Foreign Investors Council overseen by the President of Kazakhstan, which annually addresses issues arising between our countries. A visa-free regime has been introduced for 61 countries, including Germany. There are corporate, land and property tax exemptions for investment projects in priority sectors that we have identified. Workforce for such projects is hired without quotas or approvals and there is a simplified procedure for acquiring licenses and executing contracts for the use of mineral resources.
Secondly, we are implementing the second comprehensive round of large-scale privatisation in Kazakhstan. The assets of mining, metallurgical, oil, gas, energy, transport and other enterprises are being put on the block. We are inviting German businesses to participate, including in public-private partnerships.
Thirdly, next year, the Astana International Financial Centre will begin operating on the basis of EXPO-2017. It will use British law, the English language, a preferential tax regime and an independent court of arbitration.
An international centre for green technology and investment will also open in Astana. We invite German companies to actively cooperate in these projects.
Business people need to use all available opportunities for business development and strengthening mutually beneficial cooperation. I hope that today’s meeting will bring us – both Russia and Kazakhstan – even closer together.
Russia is our main partner and ally in all matters, especially in the context of the Eurasian Economic Union, where we have open borders. We have no customs barriers and we have free movement of people, capital and finance.
Our trade is growing – at 30 percent a year. Consider what a tremendous pace this is and what opportunities there are. Hundreds of new enterprises are being created. I believe there is a good opportunity for us to work together.
Naturally, we need German technology, expertise, science and personnel. Therefore, we are ready to provide everything that is of interest to you.
Thank you. Thank you, Mr President.
Vladimir Putin: Wolfgang, please.
Chairman of German Committee on Eastern European Economic Relations Wolfgang Buchele (retranslated): Mr President, Ministers, ladies and gentlemen,
It is a great honour for us to be here in Sochi and to be meeting with you. On behalf of the German Committee on Eastern European Economic Relations and the representatives of companies who are present here, I would like to thank you for this opportunity to meet and talk with you.
The traditional meeting with you, Mr President, is the most prominent event of the year for the German Committee on Eastern European Economic Relations. I believe that in the past we have always had very constructive discussions. I would like to assure you that this year’s meeting will not be an exception.
Cooperation between our countries should not be limited to major projects. Small and medium-sized business is a major driver of the modern economy.
This time we are meeting at a very interesting time: There will be a presidential election in Russia next spring and in Germany, the Bundestag has just been elected and a new government is being formed. And of course, we are all asking ourselves what this means for our future relations.
If we look back over the years, we will see that when all is said and done, politics have played a major role in fostering economic ties between our countries. Apart from the Federal Chancellor, Social Democratic ministers of foreign affairs have contributed to political dialogue with Russia. In that regard, changes are emerging that could bring about political changes.
However, polls invariably show that the overwhelming majority of Germans have no doubt that we need friendly relations with the Russian Federation and that we should do all we can to overcome, or rather avoid stagnation in our relations.
This desire will of course be a guideline for the new Federal Government. We – the German Committee on Eastern European Economic Relations – are confident about that.
The second subject that has occupied our attention for several weeks is potential new US economic sanctions against Russia. The reasons for these sanctions are obvious. They are rooted in domestic policy and US economic interests.
We support the negative attitude to these sanctions on behalf of the EU and the Federal Government. In our position paper, we describe in detail the threat of potential extraterritorial application of US sanctions for German businesses.
Incidentally, we are in close contact with the Federal Government on this issue. Regrettably, these sanctions breed uncertainty among European companies. They might eventually influence investment decisions but we are doing all we can on the German side to help companies, to enable them to continue their investment activities amid this uncertainty.
At present, Germany is very positive as regards investment in Russia and I strongly hope this will remain the case in the future as well.
Let us now move to the good news.
Mr President, you spoke about statistics. The development of German-Russian trade inspires a certain amount of optimism in us. You have already said that German-Russian trade has gone up by 25 percent.
This applies to both our exports and our imports. So more goods can be shipped both ways after our trade's decline over the past few years.
In addition, it gives me great pleasure to see that German investment in Russia is growing. New companies open practically every week. Some representatives of these companies that are involved in this work are sitting at this table and will certainly tell us about their experience of working in Russia.
The activities of German companies in Russia and Russian businesses in Germany are on the upsurge. We consider this a brilliant example of very good and successful economic development. This is why I think it would be appropriate to talk about new joint projects today.
We believe Russia’s main trial, challenge and number one political task is to continue optimising its infrastructure, increasing labour productivity, for example, by introducing new technologies, and developing competitive export goods with a high share of localisation in Russia.
Thus, German manufacturing companies that have a presence in Russia and invest in Russia intend to sell their goods not only in Russia but also export them to other countries.
Therefore, it is important for us to have value chains in the country that would receive components and raw materials in Russia and would not have to import them, and this is the path we should follow together. However, I believe that there are good prospects for development here.
In addition, we would like to talk about digitisation and Industry 4.0. These topics are very much on our minds today. Another important topic is electromobility, artificial intelligence and energy efficiency.
And of course, support for small and medium-sized businesses is a major issue. I briefly addressed it. You, Mr President, have already set the goal of increasing the share of small and medium-sized businesses to 40 percent by 2030. If you want to achieve this target, we are ready to contribute to that.
German business is pleased to be working to put in place the necessary framework and discuss this matter with you, and we will continue to develop the partnership that we have established with [Russian] enterprises and institutes.
Recently, we have had quite a few good examples of good cooperation, for instance, between the German Committee on Eastern European Economic Relations and the Russian Agency for Support of Small and Medium-Sized Businesses, as well as with the Russian Union of Industrialists and Entrepreneurs.
Mr President, I do not want to end my remarks without belated birthday greetings on my own behalf, as well as on behalf of the German Committee on Eastern European Economic Relations. Both you and the German Committee on Eastern European Economic Relations were born in 1952 and this binds us together.
A little later, in 1954, Germany first became a world soccer champion. And of course, we all hope that next year we will be just as successful, and this brings me to our little birthday gift for you.
The World Cup will bring the Germans and Russians even closer together and we hope that we will support and root for each other. Therefore, as a little souvenir and talisman for this event, we have brought you a German national team jersey, No9 – centre forward.
As a mascot for the Russian national team, we have found a little sculpture of Lev Yashin who, without a doubt, is the greatest goalkeeper of the 20th century and who, by the way, is very popular in Germany.
Let these two souvenirs bring you and us good luck, and then we will surely meet in a great Russia-Germany final and we will be pleased to attend that final.
Vladimir Putin: Thank you very much.