In his speech, the President, in particular, outlined his vision of the prospects for cooperation in the Far East, and Russia's approaches to regional economic integration, and gave an assessment of the most acute challenges and threats in the Asia-Pacific region.
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Plenary session of the Eastern Economic Forum
Moderator Ronnie Chan: Good afternoon, ladies and gentlemen,
On behalf of all the foreigners and the visitors here I want to thank President Putin and his government for giving us such a warm welcome. Without you many of us have never been to Vladivostok and the Russian Far East and it is you and your government which are bringing all of us here together. Thank you.
I don’t know why the President’s team want me to be the moderator. I’m not a journalist, I’m not a politician, I’m just a businessman. I suppose from my last name you can tell I’m Chinese, Ronnie Chan. But I lived many, many years in America as the president questioned me before this. I lived 16 years in America and I’m an American citizen.
And yet I represent no one here. I do not represent China, I do not represent America, I cannot represent anyone except myself. Perhaps, I can represent all the business communities that is, that is here. After all, this is an economic forum.
I will try to direct the discussion towards two points. Number one – the Russian Far East and number two – economics, business, opportunities, investments.
I don’t know, President Putin you may not have heard of Asia Society of which I’m the global chair but you seem to like us. Two years ago, Charlie Rose was the moderator and he was a trustee of the Asia Society. Last year Kevin Rudd was here and he is a trustee of Asia Society and myself as well.
Of course, I’m delighted to see Shinzo Abe-san. Abe-san and I, actually, went to the same university, so we have something in common. We were on campus around the same time.
I want to also thank and congratulate President Battulga and President Moon for being newly elected to become the leader of your country. In the case of President Battulga he has no yet finished his 100th day. But I’m delighted to see that he is a judo expert just like President Putin and my job is simple – to make sure that they engage in a friendly match before this session is over.
With that, allow me to invite each of the four heads of state and heads of government to each make a brief opening remark. May I now first now call upon the President of the Federation of Russia, our host today, President Vladimir Putin.
President of Russia Vladimir Putin: Mr Moon Jae-in, Mr Battulga, Mr Shinzo Abe, esteemed moderators, ladies and gentlemen,
I am pleased to welcome all the participants and guests of the third Eastern Economic Forum in Vladivostok. This year, we have guests from over 60 countries. I am grateful to all of you for your interest in the Russian Far East, its present and future.
As we were waiting for this session to open, we noted that the interest in this forum has been growing year in and year out. I am pleased to hear that, and I think that this is very important for us.
Dynamic growth and renewal of this region are among our unconditional priorities. It is an essential part of our strategy to improve Russia’s competitiveness, its economy, and human capital.
We have concentrated considerable financial and organisational resources in the Russian Far East over the past several years. Preparations for the APEC summit in Vladivostok in 2012 gave a major boost to this macroregion.
This forum helped re-open the Russian Far East to the entire world, including businesses from the Asia-Pacific region. The Eastern Economic Forum, where we have gathered now, serves to enrich this spirit of friendliness and openness.
We are developing special innovative approaches to administering Russia’s Far East. Over the past four years, 19 federal laws have been adopted that have laid a new foundation for our efforts to lift the region.
Our plans include the further development of the Far East, improving the legal framework, codifying and systematising it even better to make sure that the laws and, most importantly, law enforcement practice, are convenient and clear for our citizens, for investors, and businesses, as well as the federal and municipal authorities.
It is necessary to do so to improve the effectiveness of special mechanisms that were launched in the Russian Far East. I am referring to the priority development territories and the Free Port of Vladivostok.
They opened up new opportunities for Russian and foreign investors in this macroregion, which made it possible to launch projects faster and cut the costs involved in their implementation.
The results are there for everyone to see: over the past three years, the increase in industrial output in the Russian Far East has outpaced the average growth rates in the Russian Federation which stand at 8.6 percent. The gross regional product grew by 4.2 percent.
The dynamics remain positive this year as well. Moreover, they are improving with investment in fixed assets up almost 20 percent as of the end of the first six months of 2017.
Notably, such positive dynamics can be seen across Russia showing a 4.1 percent growth. This is an excellent indicator. Everyone here is a specialist and perfectly understands what this means. What I am saying is that when investments in fixed assets go up at an increasing pace, GDP growth is guaranteed to follow during the next several quarters. The funds have been invested, and the production facilities begin to operate, and then the growth is guaranteed.
Major projects, such as the Zvezda Shipbuilding Complex in the Primorye Territory, and a gas chemical cluster in the Amur Region, are also being implemented. A major package of cooperation agreements will be signed as part of this forum as well.
These plans and investment decisions should be embodied in successful enterprises, plants, factories, and infrastructure facilities, and, most importantly, modern workplaces and high living standards.
We will not stop there. We are working to make sure that more of our friends, partners, and investors come and join us in the future with their capital, technologies, and ideas now that our previous projects in the Far East have become operational.
We will provide all-round support to the companies that are ready to advance to global markets and to produce and export high-tech products, including both leading corporations and those that are still working to join the top league of the global business.
The Far East offers a unique combination of opportunities and competitive advantages for the implementation of ambitious projects, including preferential tax treatment and streamlined administrative procedures, which are comparable to or even more comfortable than in the best development areas in Asia Pacific and the world.
These advantages also include rich natural resources – coal, oil, gas and metals, as well as low energy prices, which are lower in Blagoveshchensk, Vladivostok and Khabarovsk than in Busan, Seoul, Osaka, Tokyo or Beijing.
New transportation corridors are being built and ports capacities are being increased to give companies an opportunity to deliver their goods from Asia Pacific to Europe and back, as well as to other regions, as quickly and as cheaply as possible. We are scrutinising the opportunity of building a railway bridge to Sakhalin.
Taken together with the development of the Northern Sea Route, modernisation of BAM and Trans-Siberian Railway and implementation of other projects, this will help us make the Russian Far East a major global logistics hub.
And lastly, the Far East is a major seat of integration processes. We know that business is interested in the lifting of trade and protectionist barriers so as to get free access to markets.
I would like to say that this was in the focus of our attention at the recent BRICS summit in China. Russia intends to continue to rely on the logic of openness, cooperation and trust and to lift obstacles that are hindering the development of business contacts, tourism and educational and youth exchanges.
A month ago, on August 8, we started issuing electronic visas to foreigners coming to Vladivostok. Over the past four weeks, some 1,300 people have used this service, including those who came here for the Eastern Economic Forum. On January 1, 2018, we will start issuing electronic visas for travel to Kamchatka and Sakhalin.
We intend to deepen investment, trade and financial ties with all our partners, both on the eastern and western coasts of the Pacific Ocean, considering that the Russian Far East has limitless potential for investment.
The Far East Investment and Export Agency has already created joint investment companies in conjunction with their colleagues from China and Japan. A similar entity with our South Korean partners will be created before the year is out. We share interest in creating such a close investment partnership with our Indian friends as well.
To be competitive and attract investment, we plan to keep moving forward, analyse practices for attracting capital adopted by the leading countries, and offer better terms and conditions.
My colleagues and I have on many occasions discussed a number of innovative solutions to improve the investment appeal of the priority development areas and the Free Port of Vladivostok, including at recently held working meetings in Moscow.
For example, our agreements with residents of such areas should include the so-called ”grandfather's rule,“ where the terms and conditions for investment cannot be downgraded during the first 10 years of project implementation.
To reiterate, we intend to focus on improving the business environment. In this connection, I will go over a number of other decisions. This is new information, so those who are working in the Russian Far East should pay attention.
For example, any investor who has become a resident of a priority development area or the Free Port of Vladivostok until 2025 will enjoy a ten-year break in insurance premium payments, whereas previously such a break was available no later than three years following the creation of a priority development area.
I think those who engage in practical work understand what I am talking about. That is, if you registered with a priority development area in 2014, your exemption will remain effective for the next 10 years until 2024. If you did so in 2025, then it will be effective for 10 more years.
For major investment projects in excess of 100 billion rubles, the revenue tax exemption will be extended from 10 to 19 years. In this regard, we are proceeding from the premise that these are long-cycle projects, and those who invest certain amounts of funds should understand the economic aspects of these projects.
Finally, foreign investors who invest $10 million or more in the Russian Far East, should be able to use an expedited procedure for obtaining Russian citizenship.
We could make such an offer to our moderator [head of the privately-owned company Ronnie Chan in Hong Kong]. He is a businessman and says that it is unlikely he would ever have come to this region if it were not for this forum. No problem, he may go ahead and invest $10 million here, and then come here as if it were his home. Actually, his home, not as if it were his home.
Colleagues, we are entering a new stage in the large-scale and comprehensive development of the Russian Far East. This stage concerns primarily the creation of better working and living conditions for the people, as well as an economic and social environment that will be better than the average in Russia in many ways. This is what we want and will try to achieve. We intend to focus on several things.
First, we must provide effective incentives to encourage the growth of business activity in the Far East and create comfortable conditions for doing business not just in priority development areas but across the Far East as a whole.
We discussed these issues with Russian business people at one of the meetings that were held in Vladivostok yesterday. I want you to know that this is a key task for the federal and also for regional and municipal authorities, which is more important.
We must create broad opportunities for enterprising, smart and diligent people, of whom we have always had a lot in the Russian Far East, to show initiative.
I ask the management of the Corporation for the Development of Small and Medium Business to take additional measures to support business in the Far East. Regional authorities and the Ministry for the Development of the Russian Far East must take part in creating a portfolio of projects which need support in the form of preferential tax treatment and guarantees.
The second crucial area of our work is vitally important for the well-being of our people. I am talking about the creation of a modern social infrastructure.
To help the Far East develop sustainably and to let the people see that they have a future here, we must not only create economic growth centres and new jobs, but also build new hospitals, medical and cultural facilities, kindergartens and schools, improve the populated environment based on public requests and change the image of cities and towns. As I have said, social development indictors in this region must surge above the country’s average by 2025.
The Far Eastern regions’ development plans and federal programmes must focus on these issues.
I ask the Government to coordinate the necessary managerial and institutional mechanisms and find additional sources for financing the comprehensive development of the Russian Far East.
Third, the future of any region depends on young people, those who are choosing an occupation, studying or shaping their lives and careers, which are inseparable from their home region.
We must make use of the initiative, open-mindedness and talents of the young people in the Russian Far East, which means that we need an effective youth policy that will take into account both current and future objectives of this region.
I spoke about this yesterday when I met with foreign investors. One of the problems they pointed out – our colleagues in this room will confirm this – is the shortage of personnel in the areas of concern to them.
We will take all of this into account.
I am asking the Government, the Ministry for the Development of the Russian Far East, the Ministry of Education and Science and the Agency for the Development of Human Capital in the Far East to prepare a programme that will focus on the development of education, career guidance and supporting young people in the labour market.
This includes the opening in the Far East of branches and specialised departments of the leading Russian universities. Their operation and the training of professionals must be closely integrated with the key industries and social sectors.
The example I mentioned is connected to the problem that was formulated by our Indian partner, who said that they had been working for a long time in Russia, including in the Russian Far East, yet had not yet found good gem cutting professionals. Lack of professionals in gem cutting is part of a bigger problem that concerns many industries.
We must make full use of the existing educational potential in the region. Far Eastern Federal University is growing into one of the best and most modern universities in Russia and a digital technology development centre.
I would like to say that the demand for skilled personnel in this region, including skilled workers, will continue to grow. So, we must create the educational base for training professionals for future companies here, in the Far East.
We will need to modernise the regional system of vocational training in the next three years and upgrade the education and onsite training equipment at vocational schools based on the best WorldSkills standards.
Finally, the fourth area is about an active demographic development policy.
The demographic situation in the Russian Far East is gradually improving, but additional, decisive measures are needed in this area in order to reverse negative trends that have been developing over decades.
This summer, the Government approved a demographic policy concept for the Russian Far East, which should start in 2018. To this end, the Government should adopt a corresponding action plan already in September.
Finally, I support the proposal made yesterday at the meeting of the State Council Presidium to improve the current labour mobility support programme.
I would like the Ministry of Labour and Social Protection to work through possible ways to resolve this issue, to further expand this programme, improve its effectiveness and make it instrumental in helping hard-working and talented people who would like to move to the Russian Far East, and to live and work here.
Friends, in closing I would like to once again emphasise that the development of the economic potential of the Russian Far East should go hand in hand with improving its social sphere, so that every resident of that region could feel actual improvements in education, healthcare, housing and utilities services, and the well-being of their family, relatives and friends.
The future of the Far East depends on the people who were born and live here, and those who came here to work and would like to settle down here.
This work extends far into the future, but we believe that we will be able to realise our plans if we join our efforts.
By all means, the Russian Far East will be successful the way the people who live here see it and want it to be.
Thank you, and I hope that many of those who show interest in the Russian Far East will realise all their plans here.
Thank you very much for your attention.
Ronnie Chan: May I now call upon the President of South Korea, Republic of Korea, President Moon, please.
Moon Jae-in (retranslated): Mr President of the Russian Federation Vladimir Putin,
First, I would like to thank you for the invitation to the Eastern Economic Forum. This is the third forum since its inception. I am happy to attend such an important event.
Mr Prime Minister Shinzo Abe, I am happy to see you again after we met at the G20 summit in September.
Mr President of Mongolia Khaltmaagiin Battulga, I am especially happy to see you too. You have recently taken office, just as I have.
Ladies and gentlemen, I am glad to meet you all.
Vladivostok is the largest seaport city of Russia. It is the first time I am visiting it. I am very fond of its atmosphere. Houses on the hills, if you look at them from the port, remind me of Busan, where I spend my youth.
The Port of Busan continues receiving Russian ships with fishery products. You can see Russian-language signs in front of the Busan Railway Station, and even buy Russian bread and kefir.
Russian Empress Catherine the Great knew about the potential of Siberia and the Far East: she spoke of a star that would rise in the East, bringing light.
In the new era, the Far East is still very attractive as a land of cooperation. The Far East carries the hope of prosperity and cooperation not only for Russia, but also the countries of Northeast Asia, including Korea. These hopes are becoming reality due to President Putin’s leadership qualities.
In accordance with the title of this forum, Creating a New Reality, the Republic of Korea is ready to boost cooperation with Russia and other countries of Northeast Asia.
Mr President, ladies and gentlemen,
Russians and Koreans have collaborated in the Far East for a long time. This land was developed by the ancestors of present-day Russians. Korean ancestors also lived there. The efforts of our ancestors revived this land.
On my flight here, I saw overgrown forests. It reminded me of a tiger that runs from Siberia to the Paektu mountain range in Korea. Since ancient times Koreans have considered the tiger a sacred animal and love it very much.
Mr President, many people think that your spirit is similar to the Amur tiger. “In” in my name – Moon Jae-in – also means “tiger”.
We are much alike in the courage and bravery of a tiger. And if we work together and develop the Far East, we will succeed, won’t we?
In addition to a symbolic link, our countries are connected by various factors: the great writers Dostoyevsky, Tolstoi and Chekhov, who described the Far East and Sakhalin in their books and who are Koreans’ favourite writers.
This region is also an important space for Korean literature. Contemporary Korean writer Yi Kwang-su wrote the novel Youjong, which is set in Siberia and near Lake Baikal. Writer Cho Myung-hee lived in Primorye Territory and reflected life in Primorye in his work. The monument to Cho Myung-hee was opened in front of the education and science museum of the Far Eastern Federal University.
Just this is enough to make me to feel the old and deep ties between Korea and Russia. We have memories and experience of living together once, helping each other in the Far East. Such memories will become a great force for further coexistence and a basis for achieving even greater progress in our relations.
Mr President, I saw a Bolshoi Theatre ballet performance in Korea. I would like to enjoy Russian ballet, which is the best in the world, at the Mariinsky Theatre in Vladivostok. The Mariinsky Theatre branch here gives us an understanding of your firm commitment to Russia’s new eastern policy.
I also have a strong commitment to economic cooperation with northern regions, including the Far East. During my presidential term, I want to make Korean-Russian relations closer and friendlier. This is my vision of Korea’s new northern policy.
This new northern cooperation policy coincides with your idea of the new eastern policy. The Far East is the place where our policies converge.
I believe that the Republic of Korea is the optimal partner for the development of the Russian Far East. Cooperation with Russia is the prerequisite of Korea’s new northern policy. I will actively take part in the development of the Far East to achieve this goal.
There are projects that are not progressing due to unfavourable intra-Korean relations, but in order to implement such projects I am going to focus on cooperation with Russia. For instance, cooperation in shipbuilding and marine logistics might become a new model for Korean-Russian economic ties and might change the map of international sea navigation.
What an inspiring thing, the development of the Northern Sea Route! The development of the Zarubino port and the use of Korean shipbuilding technology will turn the Northern Sea Route into a new Silk Road for the new energy era.
The Republic of Korea ranks first in the world when it comes to shipbuilding. Korea’s shipbuilding companies account for 64 percent of the total volume of large-capacity tankers. Thus, it would not be an overstatement to say that Korea has the world’s best technology in this area. A Korean company has received a contract to build 15 ice-breaking LNG carriers for Russia.
During the festive ceremony to name the icebreaker, President Putin said that Russia has now opened up all opportunities for the Northern Sea Route and that it would bring a significant contribution to the development of the energy industry of Europe as well as the entire world. This means a lot, because it opens up new possibilities for the development of global sea navigation. The ship arrived in Korea from Norway along the Northern Sea Route without needing any assistance from an icebreaker.
Due to the use of the Northern Sea Route, the distance, time plus transportation costs have dropped by a third as compared to the Southern Sea Route across the Suez Canal and the Indian Ocean. Korea and Russia have demonstrated to the world a new model of cooperation.
The Republic of Korea received a contract to build a large LNG-powered oil tanker for Russia. This historical event makes international sea navigation environmentally friendly.
The ice-breaking LNG tanker and the LNG-powered tanker will serve to boost the expansion of imports of Russian gas to other countries.
The Republic of Korea and Russia have established a joint company and are implementing the joint Zvezda shipyard project. Thus, bilateral cooperation in shipbuilding and energy has begun and is changing the world of business.
Looking into the future, in the long run the improvement of intra-Korean relations will lead to the connection of gas pipelines between our countries through North Korea.
Mr Putin, ladies and gentlemen, as promised, the Presidential Northern Economic Cooperation Committee has begun its work. This is the first such development. Similar to your Ministry for the Development of the Russian Far East, a state system for cooperation in developing the Far East has been established in South Korea.
In the long run, the Presidential Northern Economic Cooperation Committee, in close cooperation with Russia and the Northeast Asian counties, will develop practical measures on cooperation, with an emphasis on the development of the Far East.
With President Putin, we have agreed to set up a forum on interregional cooperation. This forum will serve as a good platform for practical interaction and stepping up personal contacts between local government bodies and representatives of small and medium businesses.
South Korea is primarily interested in accelerating the progress of talks, concluding an agreement on South Korea-EAEU free trade to create an institutional base for lasting northern cooperation.
Also, South Korea is interested in strengthening cooperation in multilateral formats, including under the Extended Tumangan Initiative.
Ladies and gentlemen, the Far East is geographically the starting point and the end point of the Trans-Siberian Railway. This is a corridor that links Eurasia with Northeast Asia and the Asia-Pacific region. There is high demand for the development of infrastructure – airports, railways and seaports.
Due to the measures on improving the investment climate that President Putin is taking, the business environment is dynamically improving.
I propose building “nine bridges’ between South Korea and Russia for simultaneous and multifaceted cooperation. These “nine bridges” would include natural gas, railway, the Northern Sea Route, shipbuilding, creating working groups, agriculture, cooperation, and others. We have much work we can do for further cooperation.
South Korea is the second largest importer of natural gas. Our country is interested not only in importing gas from Russia but also in taking part in energy projects.
The Trans-Siberian Railway is related to the history of Korean people. In 1907, the special envoy of Emperor of Korea Sunjong, Yeonsangun, used the Trans-Siberian Railway to attend the Hague Conference. In 1936, long-distance runner Sohn Kee-chung traveled the Trans-Siberian Railway to Berlin, where he won a gold medal at the Olympics. Connecting the Trans-Siberian Railway with Trans-Korean Railway will result in a corridor linking the continental and sea routes in Eurasia.
Cooperation in the electric power industry is about building a new energy paradigm. I wish for Russia to play a leading role in this area.
If Russia’s energy ring concept links the wind energy of the Gobi desert, solar energy, hydropower in Russia into a giant grid, Northeast Asia will have the world's largest energy grid.
This could become the basis for the formation of an economic community in Northeast Asia, similar to that of the European Union, and for the launch of a multilateral security mechanism.
I am confident that cooperation in power generation will help achieve both industrial development as well as peace in Northeast Asia.
I have an ambitious vision. With the new economic union and the multilateral security mechanism formed in the region, I suggest starting negotiations on building a power transmission network in Northeast Asia. I suggest that the leaders of all states start working in this direction.
The construction of a new production facility creates new jobs. Korean agro-industrial technologies are not lagging behind other countries. many agricultural companies are already working in Primorye Territory, providing technical and technological support to Russia in building a fish processing facility, and fisheries. This will help resolve the problem of food shortages in the future. All these “nine bridges” of cooperation will serve as a reliable path towards the future.
Mr President Putin! Despite the difficult conditions, Korean companies have continued their investment activities in Russia. Korean cars and household appliances have become popular brands in Russia. The Rio car model now tops the local sales as a result of Hyundai Motor's investment in a plant in St Petersburg seven years ago.
This is the result of cooperation between Hyundai Motors and Russian component manufacturers. Korean technology can contribute to building a large-scale industrial infrastructure in the Far East. We will render all kinds of financial support to such investment projects.
There is a Russian proverb about riding slowly but surely. Promotion of major projects is certainly important, however the accumulation of success stories of cooperation on projects implemented in the short term will help establish trust between Korean and Russian businesses.
Korean companies are interested in cooperation in agriculture, logistics, transportation projects, information and communications technology, the environment, waste processing, construction of hotels and resort areas.
Today we also see human contacts and technical cooperation in healthcare as well as in education. As the slogan of this forum goes, the Far East is the place where we will be able to create a new Eastern reality.
I would like to call the Far East a platform for dynamic cooperation, opening the era of the Pacific Ring.
Mr President, ladies and gentlemen,
A few days ago, there was a provocation by North Korea – it carried out its sixth nuclear test. This is a threat not just for the Korean Peninsula, but for all of Northeast Asia.
This is a problem for Russia as well from the point of view of the development of the Far East. I am grateful to Russia for its active participation in bringing sanctions against North Korea and would like Russia to continue its support on this matter.
I believe, however, that the successful exploration of the Far East through cooperation between Northeast Asian states is a kind of solution to the North Korean problem. If North Korea sees cooperation between Northeast Asian countries and a successful example of economic cooperation in the Far East, it will realise that participation in such cooperation is very fruitful.
In this context, despite the difficulties in the way of trilateral projects that involve both Koreas and Russia, projects that we cannot get down to for the time being, we should start working on projects that we can push forward through cooperation between two countries.
Of course, it would have been better if North Korea had set to work right from the beginning and taken part in cooperation, I hope that soon North Korea will abandon nuclear weapons and become a full-fledged member of the international community and that it will engage in cooperation projects.
Next February, the city of Pyeongchang will be hosting the Winter Olympic Games. Russia has always been a sports power and it was the host of the Winter Olympics in Sochi. We would like more Russian tourists to visit Korea.
As far as I know, you, Mr President, practice and enjoy such sports as skiing and ice hockey. Your visit to Pyeongchang will contribute to the natural resumption of top-level meetings on a regular basis.
This will be an opportunity for us, as hosts of two Winter Olympic Games, to send a signal of hope and peace to the whole world.
Ronnie Chan: May I now call upon the President of Mongolia. President Battulga.
President of Mongolia Khaltmaagiin Battulga: Mr Putin, Mr Shinzo Abe and Mr Moon Jae-in, I congratulate you on taking part in this forum and I welcome all other participants.
This is the first time that I am attending this forum as President of Mongolia, and I am very pleased about that. It took the Mongolian delegation 2 hours and 55 minutes to fly from Ulan Bator to Vladivostok. I have come here from Europe via Seoul, and it took me only 1 hour and 45 minutes. Why am I saying this? I want to say that the Far East is not a remote but a close region for the people of Mongolia.
I began my visit to the Russian Far East with a tour of its ports. I came here two days before the event so as to tour the Vladivostok ports together with Russian Transport Minister Maxim Sokolov and Russian Railways CEO Oleg Belozerov. I have seen how these ports are developing. Mongolia is a landlocked country, and so access to the sea is extremely important for exporting our products.
I have come to the conclusion that our northern neighbour, Russia, can offer competitive preferential transit terms for our products. I would like to thank Mr Putin and other Russian officials for preparing an agreement on transit deliveries. This matter was under discussion for years, and now we have reached a positive result.
Yesterday I met with Prime Minister of Japan Shinzo Abe. We discussed our cooperation in the Far East and also regional security issues. I was glad to have this opportunity.
I would like to express gratitude also to President of South Korea Moon Jae-in, who was elected only recently, just as I was. Both of us firmly believe in the importance of cooperation between our nations and promoting stability on the Korean Peninsula.
I wish the forum participants all the best.
Ronnie Chan: And last but not least we come to the leader of a very, very significant and successful country. That country was the first Asian country to economically rise to world prominence in the 19th century and it is also the country that was the first in the 20th century after the Second World War to again rise to economic prominence.
So, ladies and gentlemen, please, welcome Prime Minister Shinzo Abe.
Prime Minister of Japan Shinzo Abe: Mr Ronnie Chan, thank you for this introduction.
Mr Putin, I have come here again, just as I promised a year ago. This forum is being held for the third time. I see that it is becoming more interesting, and I congratulate you on this.
Mr Moon Jae-in and Mr Khaltmaagiin Battulga, I am honoured to meet with you.
Ladies and gentlemen, you know that President Putin has a black belt in judo. President Battulga has a black belt as well.
I view this as a good occasion to make a proposal to one more holder of the black belt, who is with us now. Mr Yasuhiro Yamashita, an Olympic gold medallist with the 8th dan.
Mr Yamashita, I have a special proposal for you. What if we convince the All-Japan Judo Federation to invite the two judokas with black belts who we talked about here, the two presidents, to Japan so that you will hold demonstration bouts with them?
Gentlemen, do you agree that this would be interesting? Actually, I do not have a black belt – I am wary of injuries – and so I will step back to watch these wonderful bouts.
In December last year, President Putin visited my native town, Nagano, on the coast of the Sea of Japan. The town’s residents lined the road and stood under rain and snow to welcome the President of Russia.
The night went by, the dawn came and Mr Putin and I saw that the garden was completely white: after midnight, the rain gave way to snow. And President Putin said: “How beautiful! Like a fairy-tale.” We will never forget that sight and that experience.
Ladies and gentlemen, that time Mr Putin and I spent over five hours talking, and we firmly decided that we must look into the future, not the past, at the vast and fruitful field of opportunities we will have when we open up the potential of Japanese-Russian relations.
We decided that while doing this we must above all determine what we need to do already now. I believe that this opened a new page in the history of Japanese-Russian relations, and this movement is gathering momentum. We see new development stages replacing one another.
One more happy event happened as I was preparing this report. The Japanese team, Samurai Blue, has won the right to take part in the 2018 FIFA World Cup.
This means that very many young Japanese who love football will come to Russia. I have a clear vision of how young Japanese and Russians will be cheering for their teams.
Mr President, our goal is becoming increasingly clear. We must now do our utmost so that our young people live in a better world.
Last year, the Japanese Government chose eight areas in which Japanese companies hold strong positions and proposed that they work jointly with our Russian partners towards common results.
The best way to build up mutual trust is by working together and then by sharing each other’s success. We have selected the areas that would benefit both sides and the projects that would be mutually advantageous.
Moreover, we have chosen the areas that concern each and every person in Russia and their everyday life. By doing this, we wanted to raise the confidence of ordinary people that we can do a great deal if we work together. This is the goal President Putin and I formulated at that meeting.
First of all, we set ourselves a goal to improve medical care and extend a healthy life expectancy. We used the technology developed by Oita University in Japan.
This university was the first one worldwide to successfully perform endoscopic stomach cancer surgery. Cooperation between Japan led by Oita University and Russia led by the Pirogov Russian National Research Medical University has already brought results.
Next, tuberculosis. As far as I know, over 15,000 people in Russia die of severe forms of tuberculosis. However, an innovative drug developed by a Japanese company effectively fights tuberculosis bacteria, which have developed resistance to existing medicines.
For your information, our company, Otsuka Pharmaceutical, signed a contract with the Russian firm R-Pharm in June. From now on, we will fight tuberculosis in a collaborative effort.
There is the Kulakov Research Centre in Moscow specialising in obstetrics. There is also the Russian Gerontology Clinical Research Centre. In addition, there is the Rogachev Centre of Pediatric Hematology, which I asked my spouse Akie to visit in April.
Our countries will use these clinics, which treat children and elderly, to combine their respective knowledge and experience. Japanese-Russian cooperation to save children's lives and extend healthy life will undoubtedly make progress.
The second path we designated back then is cooperation in the sphere of creating a comfortable urban environment. A year ago, I addressed this request to the President. Vladivostok is a city with endless opportunities for development as a tourist capital and a transport and trade centre. We sincerely hope that Japan will have the chance to participate in the activities which will unlock the potential of this wonderful great city with its specific nostalgic atmosphere.
A year has passed. Preliminary outlines of what will be done here have already taken shape. A shopping and resort cluster will be created on the coast. This will be a recreation area. Regarding the historical landscape of the city, I think we will make it even more beautiful.
Now you are looking at the plan for improving mail hubs by upgrading bilateral cooperation. Parcels will be delivered precisely on the appointed day, and so this pretty girl will receive her gift on her birthday and will smile for us.
This concept also envisions turning Vladivostok into the Far East’s best city for waste management.
I would like to mention one more plan that we are carrying out in Voronezh. This is a major transport hub. There is a minister in my Government who is in charge of cooperation between Japan and Russia. His name is Hiroshige Seko.
He visited Voronezh recently and said it could become a model of Russian-Japanese cooperation. The city has many beautiful churches and numerous parks. It is very beautiful.
However, this one million-strong city has one serious problem – traffic jams. So, we need to use a new system there that will change the duration of green traffic lights by exchanging information on the intensity of traffic between those traffic lights that are behind or ahead of traffic.
In other words, the green traffic light should be on as long as is necessary for a group of cars to pass without a hindrance. In this way, we will reduce traffic congestion. Moreover, we will reduce the amount of exhaust fumes that come from cars stopping and starting.
The city also has an obsolete water supply system. This is an ancient city and it is hard to conduct engineering work in it. But we want to offer a replacement technology.
We have also drafted a plan for upgrading railways and railway stations so that we have a convenient and beautiful city around a modern railway.
We will try to create a new city design. This is exactly how our two governments will unite Japan’s technology and Russia’s wisdom and promote urban development, making every Russian citizen proud of these achievements both before the world and generations to come.
Many representatives of Japanese companies visited Yekaterinburg in July. Japan was a partner country for the first time at the INNOPROM industrial trade fair that was also visited by President Putin.
Japan had 168 companies and organisations presenting displays at the exhibition. Out of this number 108 were medium-sized and small businesses. So, Japan is demonstrating increasing interest in Russia.
If Japanese and Russian entrepreneurs want to do something together, I think they will find very useful the one-billion-dollar fund established by the two countries. Both President Putin and I are focused intently on the development of the digital economy now.
Ladies and gentlemen, I would like to inform you that the governments of our two countries have just signed a memorandum on cooperation in this area. So, a great deal of work is being carried out on each of the eight points of our cooperation.
If I cite all the examples, I will simply run out of time. We have achieved so much in just one year. I think both the President and I were pleasantly surprised by these achievements.
However, at a time when we are focused on the future and trying to lay the foundations for prosperity, North Korea is posing a serious challenge to the global community. It is emanating a threat that is unprecedented in its seriousness and requires an urgent response.
On August 29, Pyongyang launched a medium-range ballistic missile that flew over Japan’s air space. On September 3, North Korea conducted a sixth nuclear test some 300 km away from here. The explosion was the most powerful in its history.
Thus, North Korea is escalating its overt challenges to the world and opposing law and order both in the region and in the world.
We must get North Korea to immediately and fully implement all the relevant UN Security Council resolutions and renounce all nuclear weapons and ballistic missile programmes in a definitive, verifiable and irreversible manner.
For this to happen, the global community should unite and bring maximum pressure to bear on North Korea. We should under no circumstances allow North Korea to threaten peace and prosperity in Northeast Asia.
Japan and Russia must strengthen their economic and security relations, while increasingly promoting mutual trust, and in this way lay the cornerstone of durable stability in Northeast Asia.
We also intend to promote rule of law in the area of maritime law enforcement with the help of Japanese-Russian cooperation. We will steadily continue this work as part of the security dialogue between the two countries.
Ladies and gentlemen, within just one year, Japan and Russia have made the kind of headway that was not possible in the preceding 70 years. If these steps continue for another year and then another, I am confident that we will see ahead nothing other than a brilliant future for Japanese-Russian relations, in which we will be able to unlock their full potential. This is why we must turn the page on the abnormal situation where we still have no peace treaty.
Vladimir, this duty must be performed by both of us. Let us overcome all difficulties and leave to the young people in the next generation a world where these two countries – Japan and Russia – will be able to unlock their full potential.
I would like to appeal to all those present in this room: Let us all – Japanese and Russians – work hand in hand to usher in a new epoch, a new era in Russian-Japanese relations. I want to call on all of you to do this.
Thank you very much.
Ronnie Chan: Thank you to the all four heads of state and head of government.
Now we enter into the next phase of discussion, which is questions to the four heads of state. In this sense, I am representing many of you here who are businessmen.
In as much as I’d like to concentrate on economic side of things, after all this is an economic forum, economics and business cannot be devoid of the political environment in which we live. At least two of the four have mentioned already the issue of North Korea. As I look back into the last one year it seems that there are perhaps three bombs in the world. One is Brexit, a little over a year ago. The second one is Donald Trump elected president of the United States. And number three is North Korea. I wonder if we can take it in reverse order.
First, concerning this matter of North Korea. Obviously, as Prime Minister Abe mentioned, it reminds everyone that a nuclear threat is something that may still be with us. President Moon, you are closest to North Korea. You are only 35 miles from the border, the 38th parallel. Let me ask you for some advice. Recently I met a friend in Southern China who is a big real estate developer. He told that he invests all over China except in Northeast China because of the potential danger of nuclear issues in North Korea. On the other hand, for me I have invested maybe 14 billion US dollars in China. All of them, basically, equity, no debt. And 4 billion of which is in Northeast Asia. So, please advise me, President Moon, is my friend correct to not invest there or am I correct to invest there. Should I worry for my 4 billion dollar US investment in Northeast China, which is very close to North Korea and indeed, Vladivostok. Please.
President of the Republic of Korea Moon Jae-in (retranslated): I think such investments in China are a very positive thing. This is the time to invest in Korea. Of course, the tensions over North Korea in the region create particular tensions for us. We apply sanctions and are exerting pressure to solve the North Korean problem together with the global community, but the aim of using such measures is to resolve the issue in a peaceful, diplomatic way. I would like to stress that there will be no war on the Korean Peninsula and in the region as a whole – I can say this with confidence. That is why this is the time for investing in Russia, the Far East, China and Korea.
Ronnie Chan: President Moon, you made me feel very good that perhaps my 4 billion US dollar investment in that part of the world is safe. I wonder if any of the other leaders care to comment on this point. President Putin?
Vladimir Putin: The way you asked the question is, should we worry about this situation and can we continue to invest? My answer to both questions is “Yes.” We should be worried, and how can we help being worried if we see such tensions in the region? But we should continue investing. Because if you stop working in the region economically as well, the situation will not improve, but will only grow worse.
Like my colleague from the Republic of Korea, I am sure that things will not come to a large-scale conflict, especially with the use of weapons of mass destruction. All the opposing sides will show enough common sense and awareness of their responsibility to the people who live in this region, and we will be able to solve the problem by diplomatic means, as the President of Korea said.
I have also discussed it with the Prime Minister of Japan repeatedly and most recently, two days ago, we spoke about it again over the phone. And he (I know) also holds the view that it is necessary to look for diplomatic means.
Incidentally, I should remind you that we practically agreed on everything in 2005. Agreements were reached whereby North Korea assumed certain obligations to curtail its nuclear missile programme and all the other parties to the process promised to contribute to this end, they spoke of the need to restore normal good relations between North and South and about possible trilateral Russia, North and South Korea projects.
Then, unfortunately, someone demanded from North Korea something I think it had not promised and the situation gradually deteriorated to its present level. We should be worried, but at the same time we should work to resolve the problem. And we can (I would like to stress it) and must achieve positive results.
Ronnie Chan: If any of the other heads of state and heads of government would like to jump in, please, feel free to do so.
I do agree very much with the two presidents who have mentioned that there cannot be a war there and I do not know how it can happen. With11 thousand cannons of the Second World War pointing at Seoul so close, I don’t see how anything could happen. Diplomatically, I think, that the international community has to lost a lot of opportunities, in particular, the United States and then they blame it on somebody else, which is unfortunate and that’s what gets us to our position today.
Now, I understand that Prime Minister Abe, you’d like to say something.
Shinzo Abe: At one time, North Korea also acted in a very intimidating way. In 1994, we came to terms on the nuclear issue but North Korea failed to fulfil its commitments and began to develop its nuclear programme. In 2004, we started the six-party talks but, regrettably, the accord which we almost reached did not become reality.
As for today, the international community should compel North Korea to drastically change its policy.
As for the UN resolution, the international community should make North Korea abide by it and thus resolve this predicament. This is how I see the future.
Ronnie Chan: Thank you.
Anyone else wanted to jump in to say anything at this point, no? If not, we will go forward.
Ok, then let’s now go to the second issue that is Donald Trump.
That’s a reality. He is the president of the United States. And the title of this forum is called Creating a New Reality. I wonder if President Donald Trump may not have inadvertently helped this part of the world create a new reality.
How do you see, in particular, I would address this to President Putin, how would you see the on-coming of the new administration in Washington, DC? How has it changed the dynamics and the relationships in Northeast Asia?
Vladimir Putin: You are a citizen of the United States. Here is the head of government and the President of the countries that are the closest US allies in the region and the world but you are addressing this question to me.
Ronnie Chan: I’ll ask them later.
Vladimir Putin: I will try to answer. We see the desire of the current administration to reduce tensions. We understand that nobody wants escalation. Strange as it may sound, I think, while that the administration is more than a few months old, it still has not been much time. We have to see how the situation develops.
This is what I would like to say here and what I have said more than once. I believe both leaders who are present here confirmed that there is no other solution of the issue but a diplomatic one. This is not an easy, simple or fast way of settling the problem but it is the only correct one. It is necessary to start talks and convince every party, including North Korea, that this is the best way of settling the issue for it as well. It is important to gradually involve North Korea in cooperation in the region. Russia has specific proposals (everyone knows about them) – a joint railway linking the Trans-Siberian Railway and Korean railways though North Korea, pipelines, developing its ports and so on. We have things to offer and to work on.
Building up a military atmosphere, a hysteria, is, in my opinion, counter-productive. It will not get us anywhere. Everything that is taking place is of course a provocation on the part of North Korea. This is quite obvious. They are provoking the situation.
But if they are doing it, believe me, they are not that stupid, so they count on a corresponding reaction from the partners and are trying to elicit such a reaction. But why are you playing up to them? Did you ever think about it? That is number one.
Number two, they will not stop. I have already said at a recent press conference in China after the BRICS summit and I can repeat it, they know full well how the situation developed, for example, in Iraq when, under the pretext – which is now obvious to everyone – under the specious pretext of searching for weapons of mass destruction a country and its leadership were destroyed, and even the family members and children were shot dead. They are aware of all this and they see possession of nuclear weapons and missiles as the only way to defend themselves. Do you believe they will give it all up?
We should say that we follow the path of cooperation, are ready to ensure their security, to formulate the conditions of work that they would understand and consider acceptable. I assure you, if this path is followed, the situation in the region as a whole, the relations between North and South will be transformed into cooperation and we can expect further steps. But it is impossible to scare them.
What do we propose to them? Look, we say: “We shall not impose sanctions.” Which means you will live better. You will have more good, tasty food on your table and so on. You will have better clothes. But the next step, as they see it, is an invitation to a cemetery. They will never agree to that.
We should approach it seriously and thoroughly. This takes time and a professional approach. I know, now that you are asking me about it, that there are many reasonable people in the current US administration who understand that it is necessary to proceed carefully. Even at the middle level (at the State Department, at the Pentagon and the Central Intelligence Agency) there are professional people who have faced this problem more than once and who deal with it year in and year out.
I very much hope that common sense will prevail and that, working together in a cooperative manner, we will move towards resolving this issue. I am sure this will happen sooner or later. The sooner the better.
Ronnie Chan: An American diplomat said to me recently that we should slowly turn off the supply of energy to North Korea, and I commented to him that you are not a neighbour of North Korea but we who live in this part of the world are neighbours and have been neighbours for the last thousands of years, and people will remember if you freeze them to death. That’s not something that any of the countries in this part of the world would like. So, I don’t want to dwell too much on this subject but on the instruction of President Putin I have to address to the other presidents in case they want to say something or the prime minister. If not, we will go on.
President Moon, can I go to the business relationship to North Korea? That is, you have I believe suggested at one time to have a Northeastern Super Grid to have electricity or a network in the whole of Northeast Asia. In order for South Korea to be involved in that don’t we need to go through North Korea and do you think we can convince them to play with the rest of the players in this part of the world and be part of the super grid?
Moon Jae-In: Regarding the previous dialogue on resolving the North Korean problem, we are discussing the issue with President Putin, President Trump and Prime Minister Abe and exchanging opinions. The basic position on the North Korean problem is its resolution by peaceful means. I do not think that the position of other countries, the United States (the present administration), is different. Even if there were some harsh statements, that was done to bring such actions by North Korea to an end. And expanding sanctions is also a measure to get North Korea involved in dialogue.
As for terminating fuel supplies to North Korea, North Korea’s provocations have continued since the UN resolution, so the issue of tightening the sanctions further is under consideration. Perhaps the time has come to discuss the need for tougher sanctions. I believe that both Russia and China adhere to this position. What specific measures? I believe we should get together and discuss the issue.
Regarding the power transmission grid in Northeast Asia. If North Korea is involved I believe it will be far easier to implement this project. However, even without North Korea’s participation, the project can be implemented with the participation of Russia, Mongolia, China and Japan. It would be good if North Korea was also involved. If North Korea participates, then electricity could be transmitted via its territory to [South] Korea and further on to Japan. However, if North Korea does not participate, then Russian and Mongolian electricity can be transmitted via eastern China to [South] Korea and Japan. The power transmission project in Northeast Asia was last discussed without taking North Korea into account.
As you know, European countries have an integrated power transmission grid. Northeast Asian countries are isolated from each other in this respect. This is why eco-friendly affordable electricity that is generated in Russia and Mongolia can be transmitted to other countries, promoting the joint prosperity of our countries, and as for Russia, this is means an increase in the export of its energy resources.
We can establish a single channel to facilitate power transmission and multilateral security through joint efforts modelled, patterned on the EU experience. This will be key to solving the North Korean problem.
Ronnie Chan: Now, let me turn to economics. But before I go to the Russian Far East, can I first ask President Putin a question about Russia in general. Where do you see the economic role of Russia in the global economic system? Politically, obviously, Russia is one of the most important countries. Member of the United Nations, permanent member of the Security Council, you’ve technology, you’ve weapons, you are the only Eurasia nation in the world. So, politically you are one of the most important country in the world but economically, what is the role of Russia in the total global system?
Vladimir Putin: We must make the most of our competitive advantages. What are they? Highly educated citizens and good traditions of development in high-tech spheres.
We are thinking about developing digital technology. We have adopted a relevant plan and development strategy. The Government adopted this document this year and we will consistently follow it. The future of any economy – and the Russian economy is no exception – lies in new digital technology, artificial intellect and so on – everything that belongs to the new technological mode. We will move in this direction.
Needless to say, it would be strange and absurd not to use what we have and what is also our competitive advantage – huge natural resources and logistics potential. As you rightly noted, we are a Eurasian power (part of our territory is in Europe and a considerable part is in Asia). This is a unique opportunity to develop all our territories.
My colleagues have spoken here, including the President of Mongolia who said directly: “It is easy for us to reach the eastern ports of the Russian Federation and we will do this if we are granted the right conditions.” We have just held a bilateral meeting and he said: “8,000 tonnes of coal are being shipped from Khakassia to Far Eastern ports. Why can’t we cover 3,000 km to take our cargo to Far Eastern ports?” Of course, he is absolutely right.
You noted similar words from the President of Korea who said he also wants to develop infrastructure in the Far East. We want to actively develop all this and many other things and I am hoping we will occupy a befitting place in the future global economy.
Ronnie Chan: Now, let’s turn to the Russian Far East.
I don’t know why do we still call it the Russian Far East. The implication is that the world is still a Euro-centric world. I’ll just remind everyone that transpacific trade has exceeded transatlantic trade by a long shot, and economic growth of the world of the last 30–40 years, over 50 percent of that actually cover this part of the world. China of course accounted for a big part of it, 30 some percent. So, I wonder, there’s a Russian saying which goes if you have boat make sure that you name it by the right name. So, should we not have a new name perhaps for the Russian Far East? I leave it to my friends from Russia to decide on that. But it seems to me that the Russian Far East is really the last frontier of human economic activities. Africa is very much in the global economic system. Latin America is very much in it. The only part that is space and the deep sea but that’s not on land. As far as land is concerned it seems to me that Siberia and the Russian Far East is, perhaps, the last frontier for mankind, for economic development.
So, Russia has always talked about developing. Somebody mentioned Catherine the Great – talk about it, visit it and expand the territories to the East. But it seems there has never been the determination to really develop this part of the world. And President Putin, five or six years ago you appointed Mr Trutnev to be the deputy prime minister of a big, major country just in charge of this part of the world. So, it seems to me that there’s some determination finally happening. And then you organised this forum which is very, very successful so far. So, tell us, what was the rationale behind your wanting to develop the Russian Far East?
Vladimir Putin: You have already named them. This is the region’s geographic location and its enormous riches, including logistics opportunities.
Our colleagues here said earlier that shipping, for example, along our railways is two to three times more cost-effective than by sea, and as a business person, you know that this is via the Suez Canal. It is far away. There is also high reliability, no piracy, etc.
Russia has long been present here but unfortunately, it has paid little attention to developing these territories. These are enormous territories. We developed Eastern Siberia. Now the time has come and there is an opportunity to do this.
By the way, I would like to draw your attention to this. We have gone through serious economic difficulties in recent years and there was the general crisis of 2008. We have begun to emerge from it step by step and we encountered crisis phenomena related to falling prices for our basic export commodities, including oil, and we had our share of difficulties, which even led to GDP drop below zero.
To go back to your previous question, this year we planned to achieve growth of 0.5 to 0.8 percent. Our GDP previously grew by 2.1 percent. Industrial production was up 2.6 percent. Agriculture grew by 3.4 percent (this year it will be 3 percent; we will need to see what the harvest is going to be). Inflation is at an all-time low, 3.5 percent. The Russian economy has never seen such inflation before. The Central Bank’s foreign exchange reserves are growing. We have very low unemployment, less than 5 percent. In other words, this is an array of macroeconomic conditions for the development of our entire economy, including such an important part of it as the Russian Far East.
As I said earlier, trade turnover is growing. Discounting oil and gas, it is up 25 percent. These are impressive, very good indicators. However, during this time, even in a crisis, the Russian Far East has demonstrated higher-than-average growth rates. I said that industrial production as a whole was up 2.6 percent but here it increased by about 6 percent, over 5 percent.
This means that with an efficient approach, by concentrating financial, administrative and regulatory resources and responding to the needs of business in general and investors in particular (by the way, investment in the Russian economy is also growing at a high rate – over 4 percent), this region can demonstrate and is actually demonstrating higher growth rates. This is the wave of the future for Russia as a whole. As I said earlier in my remarks, we will continue to give priority to this region.
Ronnie Chan: Mr President, am I correct in understanding that the population here accounts for 4 percent of the country’s entire population, while their contribution is 17 percent or something like that; in other words, the people who live here work more efficiently than in other parts of the country? This should grow both in terms of population and in terms of contribution to the GDP.
Vladimir Putin: Yes, you are absolutely right. It is to the credit of the people who live here, the result of the Government’s efforts in recent years. We discussed this here. Accordingly, the investments in this region should be commensurate with the contribution the region is making to the development of the entire Russian economy. We have in mind specific steps to raise attention on the part of the Government of the Russian Federation.
Besides, you have said yourself that the Far East is part of a fast-growing region of the world. Take for example Japan, which you have mentioned, it is a high-tech country, South Korea and China are developing rapidly, and India.
Just recently – I have mentioned the logistics opportunities – we tested the movement of container cargo from India in the South-North direction: India, Iran, Azerbaijan, the port of St Petersburg. And this is only the beginning. There is also the East-West route and other opportunities. Therefore, I keep in mind the fact that the Far East is part of a rapidly growing and highly promising region of the world. Of course, we should integrate it and make it attractive for our partners in this particular region. And not only them, but to the whole world, and this region as well.
Ronnie Chan: Obviously, infrastructure is something that is somewhat lacking in this part of the world. And infrastructure takes a lot of money. So, the fact that, Mr Putin, you organized this forum tells me that you welcome international participation. So, let us now turn to our friend from Japan and our friend from Korea and then later I will go to Mongolia with this very specific question.
First, Abe-san, what are you doing to encourage your companies to come to this part of the world? Are they coming? Are the Japanese companies coming big time to this part of the world?
Shinzo Abe: We have already spoken about the Far East. On the map of Russia, the Far East is indeed the Far East of Russia. Your Vladivostok, for example, is a city on the seafront and the sea connects it to the whole world. Vladivostok looks to the APR, it is a city open to the APR, and a city that can become a driver of overall development, a kind of gateway.
As for the plan of cooperation in eight areas, one of the areas – we are focusing on contributing to the industrial development of the Far East so that the Russian Far East becomes a base or a centre of export from Russia to the whole world.
Yes, indeed, it was my idea, and Japanese companies agree with my vision. I met with representatives and heads of Japanese companies yesterday. In fact many Japanese companies, leading companies, are to all intents and purposes already here in this region, both large enterprises and small and medium-sized ones.
So, how is investment developing? How are these companies operating in the Far East? Their heads told me about it yesterday. For example, Russky Island where we are now. Indeed, electricity on this island is generated using Japanese technology. Last year President Putin and I visited the Primorye Aquarium. All the facilities and the aquarium itself are made by Japanese companies. So, Japanese companies see a very real business opportunity in the Far East.
Energy is a traditional sphere of cooperation between Japan and Russia. For example, Japanese companies are already quite active in Russia in the sphere of renewable energy, such as wind power generation. It is fairly cold in winter in this region and Japanese companies are involved in growing vegetables in greenhouses. The people in the Far East can enjoy fresh, high quality, natural vegetables even in winter. This work is already underway in Yakutsk. So, advanced Japanese technology is already being used in this sphere in Yakutia.
I have already mentioned the plan of cooperation in eight areas, which I put before President Putin last year. One such area is medicine. Cooperation is already active in this sphere to expand the healthy life expectancy of Russians. In other words, Japan is actively promoting its technology to the outside world, including Russia. This is a very promising area.
There are also other areas. For example, this forum is a very good opportunity to tell the broader public in Japan and in Russia how business is developing and what chances there are. I think that would be a big stimulus for further investment by Japanese companies in Russia and in this region. To enable all these chances to blossom, we must maintain and show will in the future.
Ronnie Chan: Are there specific policies that you would like to see in Russia that will encourage further investment from Japan or from Korea? Would you care to address any of that or are you very happy now with the existing situation and the Korean companies, the Japanese companies are coming big time?
Moon Jae-in: As you well know, Korea is a peninsular state, and the combination of mainland and ocean is a geopolitical plus. Unfortunately, recently, due to the unresolved intra-Korean issue, we have had no opportunity to access the continent – this way is closed to us. Active participation in developing the Far East is an opportunity to connect these two parts of the continent; this is a prospect we are looking toward.
Russia’s Far East is a region where various Korean agricultural, logistics, fishing and shipbuilding companies operate. This underscores the region’s huge potential. However, so far, their operations have not been as robust as we would like them to be. Maybe the investors are still not very familiar with the investment environment and they think there are risks here.
The way to improve the investment climate, to create a favourable climate for successful business activity is the opportunity for pooling financial resources. For our part, we have created the Northern Economic Cooperation Committee.
Regarding Russia, jointly with Russia, we have created a new $2-billion financial platform for joint investment projects here in the Far East. A centre to stimulate investment in Far Eastern projects will also be established.
In addition, we would like a free trade agreement to be executed. This will help expand trade contacts between our country and this region. Yesterday, Mr President and I decided to set up a working group to look into this matter. I hope the group will speed up its work, and that it will actually lead to signing a free trade agreement.
Just recently, on Deputy Prime Minister Trutnev’s initiative, Korean Investor Day was instituted, when all difficulties encountered by Korean entrepreneurs are addressed. I believe this is a very good opportunity. Such opportunities help expand access to and investment in Russia’s Far East.
Ronnie Chan: President Moon, you must be happy to know that I am staying in Hotel Hyundai and the car that drives me around is a Hyundai as well. So, I can see that the Koreans are very active here. And there are so many friends from South Korea. That is wonderful.
President Battulga, can I ask you regarding your country’s relationship to this part of the world?
President Battulga, your country is very rich in natural resources. But so is the Russian Far East. Basically, what you have is what the Russian Far East has here. They have what you have, you have what they have. Perhaps, minus oil. But minerals, iron ore, carbon, many things.
Unlike Japan and Korea where they have what the Russian Far East doesn’t have and they also need what the Russian Far East can give them, the relationship between Mongolia and the Russian Far East is different. Should you not develop as soon as you can, as fast as you can, such that you do not want to let the big guy finish developing and then you may be left in a difficult position. What are you doing to quickly develop the Mongolian economy?
Khaltmaagiin Battulga: Mongolia is rich in mineral resources, but unfortunately, because it is landlocked we cannot sell our produce. As President of Mongolia, I am taking part in this forum in order to ensure the sale of our products through shipping. Thus, during my meeting with the Prime Minister of Japan I suggested that we could allow our private companies – from Russia, Mongolia and Japan – to start using a common port where we would purify and prepare coal for export.
I agree that we are in a world that has its centre in Europe. But in the modern world Europe is no longer what it used to be and the Asia-Pacific Region is occupying a new place. For example, New Zealand, though it is far away, has a thriving agriculture, which enables it to export its produce all over the world.
Being in this region, we cannot afford to be passive. This is my main message. We must find access to the sea using our northern neighbour, Russia, and be on a par with all the partners in the region.
I see here many people taking part in the forum, so you all have an interest.
I am attending this forum for the first time. I have seen with my own eyes that this is an ice-free port. I am sure that in the future we will be able to develop together and cooperate.
We have just discussed the issues of North Korea. I am sure that there will be no war on the Korean Peninsula. I visited North Korea several times, six or seven times in the capacity of agriculture minister. I am certain that no sanctions can stop diplomatic contacts.
Ronnie Chan: Thank you, Mr President.
Indeed, you are landlocked but that is since time immemorial. Just like I am born a short ugly guy there’s nothing I can do about it. I can just turn it into something that will work. With Mongolia you have two friends. One in the North with Russia and one in the South with China. You have a good relationship with Russia. You are sitting next to the President. I assume you have a fairly good relationship with China as well. So, you can have two – northern route, southern route – to the ocean. Not to mention that the biggest consumer of your products in the world in the last 25 years is right next to you. And that is China. And they don’t have it. They do not have what you have. It seems to me that you are in a very, very good position to thrive in the coming years and with the President not just being a judo black belt and a world cup champion but also a business person I’m sure that your country will do very, very well under your leadership and I wish you all the best.
Now, let me turn to the matter of capital. We need capital to develop these huge infrastructure projects. It seems to me that everything I have heard here in the last two days is financial capital. It is not corporate capital. Maybe 80 percent, 90 percent I hear are financial capital. This is money that does not come with management experience, technology. It is just money. I always tell people that this dollar is not the same as that dollar. Sorry, I do not have rubles here. I only have US dollars. This US dollar is different from this US dollar because this US dollar is nothing but one dollar. This one dollar comes with a management, comes with a technology, comes with experience, and it seems to me that in order to develop this part of the world of course, we need the financial capital but so much the more if we are able to attract the corporate capital, companies with experience, with technology. Moreover, they are the ones that create jobs. The financial capital still needs to hire someone to buy that aspect but the corporate capital can set up operation here and create a lot of jobs. So, what is Russia doing in order to attract not just the financial capital. And you have your own. You have the RDIF, you have the Far East Development Fund and so forth, and of course, you have other sources of money. How do you attract businesses to set up operations here that can create jobs?
Vladimir Putin: I spoke about this in my earlier remarks but of course, I will reiterate some of the key points.
We are creating and will continue to create favourable conditions for business in terms of administrative procedures, simplified customs procedures and opportunities to visit here. By the way, to reiterate, we have introduced a visa-free entry to the Free Port of Vladivostok for people who would like to work here.
Priority development territories (PDT) that I mentioned. Seventeen PDTs have been created, with an array of tax breaks at various levels of the tax system. I have just announced additional tax exemptions here.
We will not only create such conditions but will also consider ways of ensuring that living here is also interesting. In this respect, I believe that our plans to establish a cultural cluster here are important for both local residents and those who come here. We have mentioned the Mariinsky Theatre and I am grateful to Maestro Gergiyev for being so actively involved in this effort. There will be a branch of the Mariinsky Theatre here; in fact, it is already up and running. There will also be affiliates of the Hermitage, the Russian Museum and the Tretyakov Gallery. It is essential that people who want to live and work here live in a favorable, interesting environment. We will work to bring all of this about.
And then, it is also very important that the proposed cooperation projects are interesting. A few years ago, we laid the groundwork for a new Russian space centre here and it is already in operation now; the first rocket launches have been performed here. Within the next few years, it will become Russia’s first full-scale civil cosmodrome that will be used to study outer space, make manned flights, and so forth.
By the way, we are also planning to do this with the United States – that is, if wise guys from various US agencies do not stand in the way. There is interest here, including interest in studying Mars together with our American partners by 2030.
We will continue to work in the energy sphere. I see nothing wrong with that; it is a very important area. All those present here are extremely interested in this.
Finally, we have the very important sector of shipbuilding. We are developing, and my colleague on the right – the President of Korea – has said that we are not only placing orders (this is a good business – 15 ice-class vessels) but together with our Korean friends, we are in effect building a new enterprise – the Zvezda shipyard in the Far East, which, by the way, I intend to visit tomorrow.
It is a specialised sector and line of cooperation. These are support vessels and drilling platforms. This is what we need and what our partners need, and this does not involve tough competition, but on the contrary, a synergy of efforts will produce a good result because everyone is interested in receiving these energy resources. Shipbuilding is a high-tech sector.
The aircraft industry is developing here, and, actually, not only combat aircraft. The Su [Sukhoi] jets that are known all over the world and have proven themselves in combat, including the Su-35, which are effectively working against terrorists in Syria, are manufactured here in the Far East. This is also where we are making our most advanced Superjet-100 passenger aircraft that is selling well on international markets, primarily in Asia. We will continue to develop this sector.
Education. We are at Far Eastern Federal University. It has its specific competitive edge. What is it? It is region’s unique location that makes it possible to work in space research, power engineering, shipbuilding and aircraft making. The groundwork is in place.
Finally, marine biology. We will continue to develop this area, which is traditionally well developed at the Russian Academy of Sciences.
All of this taken together should, in my opinion (I am absolutely sure that this will in fact be the case), create favourable conditions for cooperation.
The Prime Minister of Japan said that a special ministry was created in the Japanese Government that is responsible for cooperation with Russia.
Yesterday, at a meeting with our Chinese friends, I told the Chinese Deputy Prime Minister that I have signed an executive order awarding him the Order of Friendship. This is no accident. Over the past two years, the region received 450 billion roubles in foreign investment. This is about $9 billion (a little over eight). Our Chinese friends account for 80 percent of this investment.
I am therefore addressing Prime Minister Abe: Maybe the minister who is responsible for cooperation with Russia should be promoted to Deputy Prime Minister so that he has more administrative resources to get Japanese companies involved in working with Russia? (Laughter.)
I would also like to ask the Presidents of Korea and Mongolia to find an opportunity to appoint special officials to facilitate the development of our cooperation.
I have not mentioned another interesting area of activity in the Far East – agriculture. Prime Minister Abe spoke about this but I missed it. We have an enormous amount of farmland in the [Russian] Far East; these lands can and should be used in the interest of the entire region. Incidentally, some of our foreign partners, our Vietnamese friends, are already setting up their agricultural production facilities here – that is, in addition to what our Japanese colleagues are doing, as the Prime Minister said.
Regarding the awards. For your information, this is not our last medal, so take notice [addressing Ronnie Chan]. (Laughter.) Granted, we once gave the Order of Friendship to your fellow countryman, Mr Tillerson, but by all indications, he has fallen into bad company and is going astray somewhat. I hope that the winds of cooperation, friendship and engagement will eventually put him back on track.
Actually, this is also a factor in the business climate. Despite all of the present difficulties on the diplomatic front (or flank), we maintain contact with US companies, including such an energy major as Exxon Mobil, which Mr Tillerson used to head.
Despite the fact that he organises searches at our diplomatic missions, we are addressing current crisis-related issues with his former company, Exxon Mobil. There are specific issues that Exxon Mobil is interested in resolving in the Far East, on Sakhalin-1, our major project. Against the backdrop of even these diplomatic rows, we have now agreed with them on ways of overcoming this situation, taking their interests into account. The Russian Government will announce this in the near future.
It seems to me that step by step, all of this is carefully creating a generally favourable situation for developing business activity in the Russian Far East.
Ronnie Chan: It seems to me that so much capital is necessary in this part of the world, that eventually this part of the world has to tap the international capital markets such as those in London, in New York and Hong Kong. But until there are enough successful projects…
Vladimir Putin: You are quite right. I am sorry for interrupting you but about 300 (270, I think) Japanese companies are already operating in Russia, not to mention our Chinese friends. I have also mentioned the scale of operations, 600 companies from the Republic of Korea.
We have a special relationship with Mongolia in the economic sphere. There are large joint ventures that we inherited from the Soviet days – some of the largest in the world – and there is a joint railway line.
So on the whole, we are satisfied with the way our contacts are progressing. Nevertheless, we believe that this is not enough, of course, and does not measure up to our potential.
Ronnie Chan: Mr President, allow me to speak to you as a business person. There are some parts of the world at different times that catch the attention of the world and it sparks the imagination. I wish that this part of the world will one day spark the imagination of the international business community. You mentioned that a lot is already here. Congratulations. But you also mentioned that you want more in order to arrive at the potential. In order to do that, is it a possibility along the line of what President Moon has just mentioned, that a major infrastructure project participated by many countries, of course lead by Russia, but Japan, Mongolia, ROK, China and perhaps some others that can be a project-based company, a consortium that can do some really amazing projects in this part of the world such that it will spark the imagination of the world in order to really attract attention to here.
Vladimir Putin: This is precisely what we should all look toward.
The President of Korea mentioned one such possible project – a regional energy ring. It is a large-scale, interesting, powerful project that can affect all countries in the region: Russia, China, the Republic of Korea, North Korea and Japan. Considering the region’s energy need, this can become the engine. That is my first point.
Secondly, together with our Chinese friends, we constantly discuss ways of aligning the Chinese project, President Xi Jinping’s initiative regarding the Silk Road, with our growing association in the post-Soviet space – the Eurasian Economic Union.
They can definitely be aligned. There is no conflict here, and this is the groundwork for creating a vast space for Eurasian cooperation. This includes infrastructure development, joint high-tech projects, taking into account Japanese and South Korean technological achievements and Mongolia’s potential. These can be very interesting wide-ranging projects not only in the energy sphere, which is what we are doing now. Suffice it to recall, say, the Yamal SPG [Liquefied Natural Gas] in which several companies participate (from Europe, Asia and India), Sakhalin-1, Sakhalin-2. We will continue further developing this.
We are inviting [everyone] to join space cooperation projects. Despite all of the problems and the outcry from our US partners, they still fly with our rocket engines; they are not giving them up, they cannot give them up. Nothing is more competitive than a Russian-made rocket engine.
We are ready to develop relations with all countries in the Pacific region. I hope that this is exactly what will happen.
Ronnie Chan: Gentlemen, everything I heard today is bilateral. It is between Russia and Korea, Russia and Mongolia, Russia and Japan, Russia and China. Is there room, do you think, if I may be allowed to ask Abe-san first, is there room for multilateral cooperation in this part of the world on some big infrastructure project that hopefully will spark the imagination of the world. Is there room for multilateral cooperation instead of just bilateral?
Vladimir Putin: We have mentioned one of these, the Asian Energy Ring, which covers many countries and will involve them in joint work. This could be trilateral cooperation, if we are talking about Korea. If we could reach an agreement with North Korea and the Republic of Korea to connect the Korean Railway and the Trans-Siberian Railway, and we are also considering a bridge between Sakhalin and Hokkaido, this would combine to produce a project on a planetary scale, which can lead to significant changes in infrastructure, power generation and the high-tech sphere.
Are you not impressed by what the Prime Minister of Japan said about our joint projects in medicine? I believe that they are extremely interesting, and we would be happy to invite our partners from any regional country to join these projects.
Ronnie Chan: Speaking as a person from Hong Kong, I do welcome your project to be listed in Hong Kong. I think that will be the closest international capital market that you can tap. This would be a wonderful, wonderful thing.
With the remaining time, allow me to turn to something else. I operate in 18 countries around the world. I collaborate with many, many friends from Europe, South Africa, America and so forth and the rest of Asia on projects. A lot of people tell me that it is very difficult to get things done in Russia. Why do you think this is the case and what can be done to improve that situation?
Vladimir Putin: This is why we have regular meetings with those who are already working in Russia. I think that you should also talk to those who succeed on the Russian market, and there are many of them. Yesterday I met with representatives of companies that are operating in Russia, including in the Russian Far East. They represent companies from 60 countries. They spoke about the problems they encounter here.
I was glad to see that nothing contradicted our efforts to improve the business climate, but there are some objective issues, such as inadequate infrastructure, which is understandable. Our partners – they are sitting here left and right of me – are ready to work together with us to develop infrastructure.
The lack of a developed infrastructure is the result of a policy that was pursued here for decades, if not centuries. Historically, Vladivostok was a fortress, a military city, and hence it was not developed. It did not even have a normal airport. We will gradually improve this situation.
We also need to improve the legal framework. I spoke about this today, including in my opening remarks.
We need to ensure funding, as we have said. We are working jointly with the Russian Direct Investment Fund and our Japanese and Korean partners to create financial institutions and funds for this purpose. We have set up two such funds with our Korean partners. They must start operating.
Of course, politically motivated economic restrictions must be abandoned. They are detrimental to the interests of all sides.
Those who want to cooperate must have direct access to each other. We should remove visa restrictions, lift them. As I have said, we have introduced visa-free entry to the Vladivostok port.
In short, we need to take effort, and I mean that both sides should do this. Our companies also face certain restrictions in our neighbours’ markets. Russian business people, who attended a meeting with the leadership of the Russian Far Eastern regions yesterday, told me this. This must be a two-way street.
In this context, we will support regional preferential agreements and unions, but only those that do not run counter to the principles and regulations of the World Trade Organisation and that create additional conditions for joint operation within this framework.
Ronnie Chan: Am I correct, Mr President, that you wrote a thesis one time on trade? Am I correct? A thesis on free trade.
Vladimir Putin: No, my thesis concerned Leningrad Region’s resource base. I worked in St Petersburg then, and my research focused on the logistics of the resource base. In principle, this work has much in common with any region. I believe that the groundwork done in this sphere can be useful if we adjust it to real life. At any rate, it has helped me in my work so far.
That thesis concerned strategic planning for replenishing a region’s resource base.
Ronnie Chan: Time is almost up, so let me just wrap up.
Can I ask whoever of you would like to answer this question, in particular, again our host, since you are our host. So, I have to direct the question to you perhaps more than anyone else. What economic legacy would you like to leave behind? President Putin, when you are 85, I will ask them later. When you are 85, still a long way off, when your grandchildren or great grandchildren come to you and say, “Grandpa, what did you do for my country in economics?” what would you say? The same thing I would like to ask of the others. President Battulga from Mongolia, President Moon, and Prime Minister Shinzo Abe.
President Moon, what kind of legacy would you leave in economic field? What would you tell your grandchildren one day, that you have done this for your country?
Moon Jae-in: I would like to see the Korean railway connect to the Trans-Siberian Railway via North Korea, so that trains from Busan would go all the way to Europe. I also want Russian gas to be delivered to my country via North Korea. This is the future I would like to see.
There is an economic community in Europe and various formats of economic cooperation in other regions. I would like to see a similar system of multilateral cooperation in Northeast Asia. As I said in my opening remarks, cooperation can spread from energy cooperation in the form of a power transmission grid to other areas as well. Economic cooperation will spread across Northeast Asia as a whole for our common prosperity.
I would like to launch these projects during my presidential term.
Vladimir Putin: For my part, I would like Russia’s economy as a whole and the economy of the Russian Far East to be modern, flexible and automatically adjustable to rapid changes in the world, to fit in, in the easiest possible way, with the next technological system, to be managed by modern methods and means, and managed effectively. All this should facilitate the development of our cooperation with other countries and countries in the Asia Pacific region. As a whole, this would create conditions for a durable, stable peace and cooperation.
Ronnie Chan: President Battulga, what is your vision for your country? What legacy would you like to leave?
Khaltmaagiin Battulga: During my election campaign, I announced my state development programme. Mongolia will become an agricultural country having a major objective, that of exporting its mining industry products. This is the main aim behind my participation in this Forum.
Ronnie Chan: Prime Minster Shinzo Abe, besides that question, I have another one for you. I heard you took a train here?
Shinzo Abe: I would like any person, no matter what family he or she was born into, to be able to get a higher education.
In Japan, many people live as long as 100 years. I would like to turn society into one where life could be started anew many times over so that all citizens can achieve their aims, develop themselves and be happy.
I would like to create this kind of society and economy in my country.
Ronnie Chan: Do you think, Mr Abe, that one day you will be able to take a train from Tokyo to Vladivostok? Is that a possibility? What do you think about that idea?
Shinzo Abe: It would be fine to travel to Vladivostok by train, but for this, our countries need to strengthen mutual trust to make all projects achievable. Let us put our heads together to implement such a project.
Ronnie Chan: Can I end by just one sentence, Mr President Putin. Would it be right to say that among other legacy that you will leave for your grandchildren or great grandchildren you will be able to tell them that, whereas generations of Russian leaders have always wanted to develop the Russian Far East, it was your grandfather or great grandfather, as the case may be, who has turned not just Vladivostok but the entire Russian Far East and made it bloom? Population would have increased not one time, but three times, five times. It will be integrated fully into not just the rest of Russia but also integrated into the entire Northeast Asia, such that your influence will no longer just be in Europe but also as much in Asia not just politically but also economically. Would that be something that is part of your dream?
Vladimir Putin: This is exactly the goal that I, along with all those in Russia who work to develop the Russian Far East have set ourselves. I am confident that much, at any rate, quite a lot of what we are dreaming of, will become reality.
Ronnie Chan: Ladies and gentlemen, this is the Russian Far East so Russia must take the lead and I am sure that all the countries around here from Mongolia to Japan, Korea, China and even others would be very, very happy to take part in developing good economic relationship for the benefit of all. Thank you very much, ladies and gentlemen! Shall we put our hands together to thank the four leaders?
Vladimir Putin: And we would like to thank our moderator. Thank you very much.