President of Russia Dmitry Medvedev: Good afternoon colleagues.
Today is the Day of Russian entrepreneurship, the second annual one, as far as I know. I would like to congratulate you and at the same time say that we all know that the life of an entrepreneur in Russia is hard work and not always the most rewarding work at that. I know this firsthand, because I myself was involved in this field for a long time. Nevertheless, it is very interesting work and very useful for the nation. This is the message I want to leave you with today, because without successful entrepreneurship it is clear that our nation has no future.
Let's talk about how to implement strategic and operational measures encouraging entrepreneurship, in the context of the economic problems that are affecting the whole world, including our country. I would like you to tell me about the problems that you've come across. We know that there are a lot of them, and many of them are familiar to us (to me and my colleagues in the Government Cabinet). Some of them may be getting easier to handle, but others may be rendered more difficult by the situation that exists today. Nevertheless, of course our primary goal remains resolving the major problems.
As you know, according to its Constitution Russia is a social welfare state, and the role of private business is therefore extremely important; the more people are involved in business the stronger the social foundations of our nation are, and the more stable our economy is.
Of course this topic does not affect only you: I think that almost everyone is being forced to revise business plans, reduce costs and look out for new management solutions to problems. It's true that many think of a crisis as a period of purification, an opportunity to get rid of inefficient businesses and create a modern framework for exercising one's own entrepreneurial skills. Of course this sort of work is not made any easier by a crisis.
The greatest challenge for the nation today is diversifying the economy. I have to speak frankly: this crisis has hit the Russian Federation particularly hard because we have such a one-sided economy. If we had a more diversified economy, the impact of the crisis would not have been as great. And of course our domestic consumption is not as well developed as others’, which means that we do not have the sort of opportunities available to countries where domestic consumption is very substantial. For these reasons the challenge of diversifying our economy is an absolute priority.
Of course we must develop manufacturing and high-tech industries and provide high-tech services. I have talked about this a lot. I don't think that you will want to argue this point. The creation of an economy based on innovation in Russia must be our number one priority. I have also said on several occasions that without a strong culture of entrepreneurship, all the state's intentions to create an innovation-based economy will come to nothing. Such an economy cannot be government-owned. Creating a number of large corporations to deal with this, or one big business that focuses on high-tech projects is not the way to achieve the sort of innovation we need.
As you know, we have proposed various solutions to improve our economic life. Of course not all of them have fulfilled their objectives, we have to admit this openly. Of course we all know this. Nevertheless, some of the decisions we make in this regard are very important in my view and have been implemented with considerable effect. One of the most important is the question of supporting strategic enterprises, especially in single-industry cities. We will be doing more of this in the near future.
With respect to other kinds of support for business, not all of them have stood the test of time, nor have all of them been implemented as quickly as we would like. For example, let me remind you about state guarantees. Unfortunately, this process turned out to be a very protracted one. The initial form in which these were offered was not popular at all, not so much with business (they were happy with any sort of guarantee) but rather with the banks, which refused to accept these guarantees. This situation must be changed. So we will be talking about that subject.
Of course we must continue to lend to industries that are in a difficult situation and that have no way out. I am referring to our automotive industry and agriculture, and in general those areas where credit is absolutely crucial if the industries are to survive.
As of May 1, 2009, a law has come into force banning the unscheduled inspection of small and medium-sized businesses. Let's see what will come of this, because we know that once something in Russia is forbidden, people often find a way of getting around it. Nevertheless, the legal framework that should put an end to these inspections exists, and the Prosecutor's Office and of course business should pay close attention to this matter.
We have expanded the opportunities for receiving government contracts. We have drafted a separate law concerning the rights of businesses to buy the property they are currently renting. As of this year the rules governing special tax regimes will be changed. Of course we must continue to develop mechanisms for lending on preferential terms and for extending interest-free loans, and to address other issues that are becoming more important for business with each passing day.
There are measures that have worked relatively well. In 2009, the amount of federal support for entrepreneurship will be 80 billion rubles [over 2.5 billion dollars], including 15 billion rubles for the capitalisation of regional guarantee funds. This mechanism works and it can be called a success, but nevertheless there are many more complex instances.
So let's talk about everything that is on your minds.
You said that the business community comes under fire from the media for not behaving properly, and that all sort of generalisations are being made. Of course, there are all sorts of situations, and people make use of the crisis in various ways. You can make positive use of it, by cutting costs or increasing our energy efficiency, for example, or you can take the short-term road, simply raising prices or putting together deals amongst yourselves to keep control of the market situation. Of course, generalisations are not a good thing, but at the same time, we all realise that various people will try to use the crisis in various ways. This is simply human nature, simply economic laws. The main thing for us is to use the crisis to develop in the right direction, because we have very serious lessons to learn from this whole situation.
It was said that our development has slowed down and also that all the companies represented here today were founded 20 years ago. I think this is not entirely the case. I think that some of the companies represented here today are younger. But this is not the main point. I have perhaps an even better idea of what business was like at that time than now. I have been 10 years in civil service now, and probably have not as good a feel for some business processes as you, because this is your daily environment. But I spent the 1990s in business, in the legal business, in bigger business, and remember very clearly what things were like then. I think that the situation really has changed fundamentally today. The situation has become a lot easier even for those deciding today which road to take after finishing university. You can go into business, even with the current problems, the slowdown in development, the crisis we face. You can go into a big company and hope it will survive whatever crises come along. But as far as motivation goes, I do not think there is less motivation today. I think it is simply that perhaps young people finishing university today do not have such an acute sense of the opportunities the business world offers. When we first went into business there was a huge difference between the old state system, state-owned enterprises, and the new possibilities of earning some money on our own, making some investments. Now everything has developed to a point where these memories have faded away completely.
As for the views that certain officials have expressed, I think they need to keep their feet on the ground and not lose sight of reality. When some of my colleagues, including in the Government, say that Russia will not emerge from the crisis for fifty years, this is simply unacceptable. If this is the way you think, go and work in some other place. If you are in charge of this or that ministry or agency and believe that the country is in such a state, this shows that you see no future for yourself and no point in the work you are doing. In this sense, it is better not to let your tongue get carried away.
When analysts make this sort of forecast they are just doing their job – making forecasts about the real estate market, the ruble’s exchange rate, oil prices and so on. Analysts are analysts. But when you have people who are supposed to be running the country and taking charge of entire sectors making these kinds of forecasts this is unacceptable, because it can have a very negative impact, all the more so as, fortunately, most of these forecasts prove to be wrong. We have all heard the various predictions about the exchange rate and oil prices. We have all heard the scare stories that did not in the end prove true. Of course, no one can guarantee against a second or third wave of the crisis, but so far this is not happening, and I see no need to create more problems than we already have.
Colleagues, I think that you have celebrated Entrepreneurs’ Day well this year, better than last year, anyway. It is very important for all of us, for the President and for the business community, to meet from time to time and listen to what each other has to say. To be honest, I was already aware of 95 percent of what you had to say today. Probably 5–7 percent of what you had to say was new to me, and that is a reason enough to hold this kind of event, because there are always issues here and there that escape our attention. But 95 percent of what you said was things I already know about, and it is sad to see that we are not managing to make real progress in these areas, otherwise you would not have raised these issues here today.
But even so, I think that, although we are indeed going through a difficult period, we should not over-dramatise the situation. There were several possible scenarios of how the crisis would develop in Russia, and so far it is the moderately negative scenario that is unfolding. The job of the authorities and the business community is to at least keep things on this track, in order not to create even greater problems. I will not compare Russia to other countries. You know that there are countries that have not been hit as hard as ours, but there are also countries facing much bigger problems than us. We need to look around ourselves and realise in exactly what kind of circumstances we find ourselves today.
Whatever the case, this is an important time that calls for responsible work. I want to thank you for your work. Some of you here represent very big labour forces, and some have smaller teams, but all of you believe in the new economy and have chosen to devote yourselves to business, and I think that overall, you have not miscalculated.
Some of you said that there is a change in thinking going on today, but I think when it comes to the motivations for joining the civil service, even though it is my duty to encourage people to choose this road, it is not so much a conscious choice that people make but a choice motivated more by the impression that there are various advantages to be gained, not to mention advantages of the illegal sort, and, unfortunately, people associate these possibilities with civil service and not with business. This is a temporary situation, because otherwise we would end up building not the kind of society we want to build. And then we would have to go back to the past, declare the economic model of these last two decades the wrong road and recreate the old system. But this is not our choice. I think that young people will eventually become motivated to go into business, especially into private business, because whatever the situation, the state-owned business sector will shrink, and the private business sector will grow. This is one of the fundamental laws of economic development.
I offer you my congratulations, and till we meet again.