President of Russia Vladimir Putin: Mr Shokhin, we had a previous arrangement to meet and discuss current issues and, no less important, prospects for cooperation between business associations, the Government, the Executive Office, and authorities at all levels, so to say, in order to jointly outline future activities regarding critical business areas. I suggest that we focus on this today.
To begin with, I would like to hear what you think about the current business environment.
President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin: First, Mr President, thank you for this opportunity to discuss the current objectives of economic development and the country’s prospects in the context of the Presidential Address to the Federal Assembly. Without a doubt, it is important to consolidate and focus the business community on addressing these tasks in the context of the Address and the presidential election.
Mr President, I would be remiss not to use this meeting to congratulate you on the record level of support.
Vladimir Putin: Thank you.
Alexander Shokhin: It is also significant that there was a record-breaking turnout. Without a doubt, this is not only a victory for you personally but also for Russia, as it signifies the consolidation of Russian society around the national leader and the Supreme Commander-in-Chief.
This is vital for us, because we have long-term work plans that go beyond the next few years, or the three-year period that the Finance Ministry and the Government are focusing on, we have plans for five, seven, and even ten years ahead. So, continuing a number of national projects and creating new national projects, which you mentioned in your Address to the Federal Assembly, is very important for us. We are ready to join in this work.
We have a tradition of holding Russian Union of Industrialists and Entrepreneurs (RSPP) congresses annually. Thank you, Mr President, for making participation in them a tradition. This allows us, for one thing, to sum up the results of our joint work and to make plans for the future. I would like to take this opportunity to invite you to the upcoming RSPP congress, due to be held on April 18. We look forward to your participation.
Our plan is to use this congress to determine current priorities based on the country's development strategy. Moreover, we have been discussing these issues over the past weeks − we hold a Russian Business Weeks forum in the run-up to the congress. We have recently held 14 forums, and the recommendations from these forums have been included in our proposals for the congress as well.
We have put together a 100-point draft resolution. We have tentatively named it 100 Steps to Economic Leadership. I hope that if members of the Government, the Executive Office, and lawmakers carefully review our proposals before the congress − they have a month to do that − the discussions during the congress will be more productive and constructive. I would like to submit our proposals to you.
Vladimir Putin: Thank you.
Alexander Shokhin: With your permission, we will submit them to the Government and the Executive Office in order to obtain answers to our questions during the congress.
Mr President, you asked me about the business climate and environment. We conduct annual surveys. I would like to present to you the results of the latest business climate survey. We have come up with interesting figures.
Businesses consider that the state of the business environment in 2023 was about 2.5 times better than in the previous year. That is, in 2022, 14 percent of entrepreneurs rated the business climate as comfortable and favourable, but last year this figure went up to 38 percent. In my opinion, this is largely due to the fact that we are actively interacting with the Government and the Presidential Executive Office, as well as lawmakers. We manage to accomplish a lot, taking into account both the interests of the state and the interests of businesses.
I will provide several examples of what we have been able to accomplish.
A year ago, at our congress, we had an in-depth discussion of Russian businesses’ accelerated return to their native harbour, that is, Russian jurisdiction, and we proposed a series of bills and regulations that would expedite this process and remove administrative and financial barriers. A lot of work has been done this year, and you have encouraged it.
Finally, now we have all the systemic solutions that will make it possible to expedite (and are already making it possible) the return of international companies from various offshore locations to Russian jurisdiction. They are now becoming Russian international companies. This work has really been done; there are only a few last-minute touches left. I hope we will perfect everything in time for the congress. In particular, the issue of personal funds remains, but we hope a draft law will be introduced this week, since we have agreed on all issues between the Executive Office, the Government, and the State Duma. I think we will be able to report on the work done.
Another issue that you raised at the congress a year ago was the establishment of an award for socially responsible companies. We carried out the necessary work and reviewed the results of this work at the end of January. Our organising committee was very reputable: there were ministers, social partners, and representatives of companies and the expert community on it. The organising committee was headed by Tatyana Golikova, Maxim Oreshkin, and the President of the Russian Union of Industrialists and Entrepreneurs.
Forty-four large companies applied, and 14 won. We also hope that their awards ceremony – we divided them into three degrees – will take place at the congress, in your presence. Of course, this will demonstrate that Russian businesses continue to implement sustainable development programmes despite the sanctions and restrictions. Previously, we used a foreign term ESG; that term is gone now, but the work remains.
We used the most well-proven indicators, ratings and indices for sustainable development, which were developed over ten years, including by the Russian Union of Industrialists and Entrepreneurs. The companies’ programmes in the fields of human resources, territorial development, and technological sovereignty were also assessed. We can see that this will be a good example for all businesses, since, indeed, we not only can, but must scale many things.
Of course, we are facing new tasks and challenges, though many problems have been resolved or are being addressed. And we would like to reach a mutual understanding on all of them. In fact, Mr President, you are ahead of many things. For example, the Personnel national project is something we were considering; not that we were afraid to say it, but you had formulated these goals. I mean that, indeed, personnel shortages are a problem that concerns all industries, all enterprises, whether they’re large, small, or medium-sized, and individual entrepreneurs too; small companies face these challenges.
We believe that a lot depends on the professional education system here. Businesses are investing in professional education, in particular, projects and programmes like Professionalitet and Advanced Engineering Schools. Companies are participating in them not because this is a request from the Government or the President, but because they are a form of investment.
Vladimir Putin: It is necessary.
Alexander Shokhin: Necessary, yes. And we are ready: you have set the goal to double the number of programmes and colleges and universities taking part in them.
Vladimir Putin: And 30, 20 and then another 50 engineering schools.
Alexander Shokhin: Yes, yes. It is also very important to develop such tools and mechanisms as reflecting employers’ competency requirements in training programmes and federal state education standards. We are actively pursuing this issue.
Equally, we are thinking about a massive transition to combining final and intermediate state certification with an independent assessment of qualifications by employers. This experiment is currently underway at 29 universities. We believe it is time to transition to a full combined certification, where the education track, as they say, is assessed along with the professional track.
These issues are being addressed by the Presidential National Council on Professional Qualifications. It will mark its 10th anniversary in a month. Now we would like to expand this council’s powers somewhat, considering the tasks that you set in the Address as well as the real problems that the economy and employers face. We have prepared a draft executive order on expanding and deepening the competence of the council. Therefore, we would like to ask you to support this area as well.
The next problem I cannot help but talk about is fiscal policy. You stated clearly, both in the Address and recently, when meeting with the party leaders, that predictability and stability in terms of financial burden are needed, but at the same time, of course, social justice must also be taken into account. This applies not only to personal income taxes, but also to corporate taxes.
We specifically emphasised, partly at our meeting with you, Mr President, the importance of fairness in tax liability, suggesting that those who invest more should receive greater tax and investment deductions. We have a proposal on how to improve the transparency, popularity and effectiveness of these deductions, ensuring they consider not only investments in fixed capital but also in social projects, such as environmental initiatives, community development, and social facilities. We would like to start a dialogue on these matters with the Ministry of Finance, the Ministry of Economic Development, and the Taxation Service.
This principle extends to personal income tax as well. We recognise the need for differentiation in personal income tax, but we advocate that this differentiation be linked to investment deductions for citizens who invest in long-term securities, for example. The recent decision by the State Duma to allow deductions for individuals who use individual investment accounts and long-term savings programmes aligns with this objective. Therefore, our work here encompasses a wide range of significant considerations beyond simply adjusting rates for wealthier individuals. There are numerous aspects in which we aim to contribute.
There is one more issue that is directly related to your approach to stability and predictability in the fiscal system. We have many temporary solutions. For instance, export duties were applied for a six-month period last year, and discussions are ongoing regarding extending them for another six months. Similarly, restrictions on carrying losses forward to future periods were implemented as a temporary measure. We advocate for greater certainty in these matters and seek to engage in discussions with the Government before finalising these tax changes.
From my understanding of your approach, Mr President, it appears that following these decisions, there will be a sort of moratorium on…
Vladimir Putin: Changes.
Alexander Shokhin: This approach was largely used after 2018 – you announced this moratorium. However, we have observed that at times, the rates remain unchanged…
Vladimir Putin: …while the load is growing.
Alexander Shokhin: Therefore, we would like to work together closely on this matter. We acknowledge our responsibility in this regard and are prepared to do our share of the work. Yet, we would like to work alongside the Government and the State Duma. As we contribute to outlining the primary directions of tax, budget, and tariff policies, we hope to gain a clearer understanding, possibly even before the conclusion of the spring session of the Duma and prior to commencing work on the annual and three-year budget for the upcoming period.
Vladimir Putin: This is why we are meeting today. This meeting will mark the beginning of our joint efforts.
Alexander Shokhin: Good.
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