Meeting on the situation in the light industry 2020-06-03 15:30:00 Novo-Ogaryovo, Moscow Region The President held a meeting, via videoconference, on the situation in the light industry. Taking part in the meeting were First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister Yury Borisov, Presidential Aide Maxim Oreshkin, Minister of Industry and Trade Denis Manturov, Minister of Sport Oleg Matytsin, Minister of Healthcare Mikhail Murashko, Minister of Economic Development Maxim Reshetnikov, Minister of Finance Anton Siluanov, Governor of the Ivanovo Region Stanislav Voskresensky, Head of the Federal Taxation Service Daniil Yegorov, General Director of the Federal Corporation for Developing Small and Medium Business Alexander Braverman, representatives of the light industry and trade businesses. President of Russia Vladimir Putin: Good afternoon, colleagues, As you are aware, yesterday, the Prime Minister and I discussed the Government’s draft action plan to rebuild the economy and agreed to use it as a basic document. At the same time, we instructed the concerned officials to finalize this systemic document, taking into account a series of our meetings on the situation in the systemically important sectors. Today, as agreed, we will review what is going on with the light industry. Together with company CEOs, we will discuss ways of resolving the problems facing companies and employees during the coronavirus epidemic. This is what I would like to say to start off with, at the beginning of our current discussion. The light industry plays a special role in our country’s life. The saturation of our domestic market with vitally important high-quality products and goods that are used on a daily basis depends on the smooth work of textile, garments and footwear enterprises. The last few weeks and months showed that they also play an essential role in guaranteeing the safety of citizens. At the very beginning of the epidemic, acting amidst the well-known forced restrictions, Russian companies displayed a responsible and flexible approach and quickly launched the production of personal protective equipment. In some cases, they converted their production facilities and even launched production from scratch. In this connection, I would like to thank everyone involved in accomplishing this task, including the workers, engineers and managers. As I have already mentioned, Russia has expanded the production of face masks, gloves and protective garments dozens of times over a short period of time. Consequently, it became possible to avoid any critical setbacks in providing doctors, nurses and junior medical staff with this gear at hospitals and ambulance services. In some cases, there was a shortage of these goods during the initial stage, but the situation was rectified fairly quickly. I know very well that there were some other setbacks. But, as a rule, they were mostly caused by mismanagement. Here’s what I want to emphasise: the situation at the initial stage of the outbreak showed that we need to adjust our approaches to responding to such major public health challenges. This definitely includes the issue with personal protective equipment. Nobody can be safe from a force majeure, so Russian industrial facilities, logistics, and the healthcare system must be fully prepared for any scenario. This is where we need to act, as they say, proactively. In this regard, I propose, among other topics on the agenda, to also discuss what needs to be changed in the system of the state material reserve, what kind of safety resources we need to create to back production capacities. I would ask the meeting participants to share their thoughts on this subject. Next. This spring, demand for light industry products, as we are well aware, fell sharply, to our utmost regret. It was affected by the temporary closure of non-food stores, other restrictions we were forced to introduce, and the general difficult situation with the economy and people’s incomes. The drop in sales has negatively affected the financial and economic situation of enterprises, and the risk of lay-offs also increased. Allow me to remind you that about 300,000 people are employed in Russia’s light industry. As I already said, in this difficult situation, the most important thing is to protect the interests of workers and teams, as well as the incomes and well-being of Russian families. At the same time, it is important that companies confidently get through the current challenging stage, and it is even more important that they also launch and implement their long-term investment programmes. This is the rationale behind our strategy to promote competition and improve the transparency of the Russian market, to protect it from smuggling and counterfeit products, and, of course, to support those who work honestly, out of the shadow, that is, take care of their employees, invest in development and explore new market niches. Today I would like to hear the opinion of those people who directly work in this industry, and the opinion of businesses about support measures adopted for the industry at the federal and regional levels. I would like to hear, colleagues, how, in your opinion, we could make these policies more effective, including for the development of a modern, civilised market. And of course, what additional solutions are needed, taking into account the situation in the industry due to the coronavirus epidemic. Let us get started. <…> Vladimir Putin: I would like to thank everyone who has taken an active part in our discussion today, as well as those who prepared this meeting. The preparations are extremely important, because this is when possible and necessary support measures are tentatively discussed. Today we thoroughly analysed them, listened to what business representatives think about the existing and future support measures for the industry, which of them should be taken first of all and which measures will have the most effect on the further development of the light industry and related sectors. I would like to ask the Government to analyse and proceed with all the ideas and proposals that were voiced today, even if some of them have not been finalised as decisions at this meeting or during its preparation. I would like to dwell on some of them, to support and maybe even supplement them. First of all, I would like to say the following regarding our discussion. I ask the Government to subsidise the discounts on equipment to be leased to our light industry enterprises. I agree with the proposals made today that have been supported by the Government. This discount should be made available already this year. As the Minister proposed and industry representatives asked, it should amount to 50 percent of the cost of the leased equipment. Also, the Government is to increase subsidies for servicing the loans extended to the light industry companies up to 1 billion rubles annually. I have not forgotten what Mr Belousov said, but we will talk about this later. In general, by doing this we will support the smooth functioning of our companies, give them additional resources to replenish their working capital and to honour their obligations to their personnel and suppliers. In this context, I would like to say the following. Of course, I am aware that laws set out the criteria for assessing the effectiveness of such subsidies, such as an increase in revenues. I am asking the Industry and Trade Ministry and the Finance Ministry to work together with our businesses to adjust these criteria, taking into account the current and future market conditions, so that subsidies for servicing the loans become more affordable for businesses. Since early 2020, we have launched a five-year Comprehensive Programme to support the production of linen. Our colleagues from the industry were, in fact, among the first to raise this question today. This programme encompasses the entire production chain from flax-growing farms to end-product manufacturers. I would like to note that expanded linen manufacture is not about paying tribute to our traditions alone. First of all, this implies new opportunities for expanded import substitution (linen can surely be used as a cotton substitute). This can strengthen the positions of Russian manufacturers on our domestic market. And, of course, there is a good potential for expanding exports. I would like to ask the specialised agencies to help implement the Comprehensive Programme and to stipulate expanded funding in this area during its implementation. It is our job to create a competitive, environmentally-friendly and modern linen industry. Third, as I have already mentioned, sales of light industry goods have plummeted due to the forced restrictions. They have plunged greatly in some areas. Today, Russian regions and the entire country are gradually resuming normal business operations. Shopping centres and shops are reopening. However, it is necessary to prop up the additional demand during the industry’s restoration, to say the least. I would like to ask the Government to draft a decision on prioritising Russian light industry goods during state agencies’ purchases. This does not violate WTO regulations. The same concerns state corporations (we should think about more subtle methods here) and companies with state capital. Fourth, we have now discussed specific proposals on further “legalising” the market of light industry goods and corporate activity, especially that of small enterprises. Let me repeat once again: helping companies that work honestly, respect the workers’ rights and ensure their social guarantees is the top priority of the support provided by the state. Our future decisions should aim to support such businesses. I ask the Government to prepare a package of measures to create a most-favoured treatment regime for the light industry companies that work honestly and in good faith. I am talking about a wide range of issues, including combatting counterfeiting, creating special platforms for enterprises, fine-tuning the taxation system and increasing online sales. The Government has a number of programmes in this regard. Some of them were mentioned today. Please see if they need to be revised or amended. I mentioned that earlier today. Some companies will be part of these programmes, others will not. We must achieve noticeable results to improve the domestic light industry’s competitiveness. In closing, I would like to say that the current situation in the light industry and our economy in general is unusual. The fact is that our prompt and targeted measures can and must not only support enterprises and companies, but also – and this is important – identify a long-term direction for the industry and set structural changes in motion (yesterday, the Prime Minister and I discussed the programme prepared by the Government) to bolster the resilience of the real sector of the economy and to take it to a whole new level. In this regard, as I mentioned at the beginning of our meeting, I propose including (I want to emphasise this once again) today's decisions in the national action plan to restore the Russian economy. Again, thank you, colleagues, and I wish you every success. All the best. Have a good day.