Meeting with Government members 2020-10-14 16:20:00 The Kremlin, Moscow Vladimir Putin held a regular meeting with Government members, via videoconference. The meeting focused on the main instruments for achieving investment development targets. * * * President of Russia Vladimir Putin: Good afternoon, colleagues. Today we will hear a report by Economic Development Minister Maxim Reshetnikov on the main instruments for achieving investment development targets. However, I would like to begin with a different matter. I have a nice piece of news: the Novosibirsk-based Vektor Centre has registered a second coronavirus vaccine, EpiVacCorona. I would like Ms Golikova to tell us about this in detail. As far as I am aware, a third vaccine is almost ready at the Chumakov Centre of the Russian Academy of Sciences. Ms Golikova, please. Deputy Prime Minister Tatyana Golikova: Good afternoon, Mr President, colleagues. It is good news indeed. The Vektor Centre has received the registration certificate today. I would like to note that clinical trials involved 100 volunteers. Unlike with the first Russian vaccine, Sputnik V, which is an adenovirus vector-based vaccine, the new one is a promising synthetic vaccine based on peptides. It consists of short synthetic peptide fragments of virus proteins, which the immune system can use to identify and neutralise the virus. It should be pointed out that the peptide-based vaccine does not induce any reactogenic responses and is noted for its high level of safety. The first batch of 60,000 vaccine doses will be produced in the near future, and the Vektor Centre will launch post-registration clinical trials in a number of Russian regions involving 40,000 volunteers. I would like to add that simultaneously the centre also plans to start clinical trials on 150 people aged over 60. I would like to point out that the creation of a second Russian vaccine will greatly increase vaccination opportunities for people, which will help us to stabilise the situation and will bring us closer to the end of the COVID-19 epidemic. In addition, post-registration clinical trials of the Sputnik V vaccine are ongoing as well. They involve 13,000 volunteers, and the vaccine has been dispatched to the regions, albeit in small amounts, but it has. One more vaccine, which you have mentioned, has been created at the Chumakov Centre of the Russian Academy of Sciences. It is an inactivated vaccine. We have received permission to conduct the first and second stages of clinical trials at medical facilities in Novosibirsk, St Petersburg and Kirov. During the first stage, 15 volunteers were inoculated with this vaccine on October 6. They have not reported any serious complications or side effects. All of them feel well, and the second stage will begin on October 19 on 285 volunteers. The clinical trials of this vaccine are expected to conclude by December, which means that we will have three vaccines. We certainly hope that this will be the case. The more vaccination opportunities we offer to our citizens, the sooner we defeat the coronavirus. Mr President, may I say a few words about the epidemiological situation and the Russian regions’ preparedness to work under these conditions? Vladimir Putin: Please do. Tatyana Golikova: Actually, just as we expected, the number of coronavirus cases went up with the beginning of the autumn-winter epidemic season. As of October 14, we have 1,340,000 cases of COVID-19. The average increment rate over the past 24 hours across the country was 1.1 percent, and in 30 regions, it was even higher. I would like to note that the average daily incidence rate for the past working week was 7.5 per 100,000 people. I would like to note in this regard that Russia ranks 54th among the 189 countries that publish data on the spread of the virus. This suggests that the situation in Russia, although quite tense and complicated, is nevertheless under control. It does differ across the regions: as of the end of the last working week, an increase was observed in 38; 29 were unstable; 18 recorded a stabilisation of incidence; while eight regions showed relatively high levels. The regions that showed a significant increase have failed to fully implement sanitary and anti-epidemiological restrictions: there was no control over wearing facemasks in public spaces and public transport, and no restrictions on public events. On the other hand, the regions showing low morbidity rates were the ones enforcing the anti- epidemiological measures. I will cite a few examples. In the Chechen Republic and the Republic of Tatarstan, there is strict enforcement of facemask requirements and the COVID-19 incidence rate is less than one per 100,000. (Further in her remarks, the Deputy Prime Minister addressed the regional authorities, employers and citizens to underscore the need to comply with the requirements and sanitary doctors’ recommendations, adding that the level of testing has reached almost 52 million lab tests, and also cited statistics on the graveness and age structure of cases and on the number of hospital beds available. In addition, Tatyana Golikova spoke of the Russian regions’ preparedness for the autumn-winter epidemic season and the supply of medicines.) In closing, I would like to say that the spread of the novel coronavirus, and of course, the autumn-winter epidemic season are cause for concern. However, our preparations carried out in spring, I mean, the fact that two Russian vaccines are now available, makes us confident in the future. We believe that the situation is under control and no restrictive measures for the economy are required. However, I would like to take this opportunity to encourage the regions and the people to comply with all sanitary requirements. Vladimir Putin: Thank you. Ms Golikova, you said 40,000 volunteers are willing to take part in testing the new vaccine, EpiVacCorona. As far as I know, you and Chief Sanitary Doctor of Russia Anna Popova have been vaccinated, among these 40,000 volunteers. You have already been given the second dose of this vaccine, haven’t you? How are you doing? Tatyana Golikova: Yes, Mr President, Ms Popova and I were vaccinated, and not among 40,000 volunteers, but as part of clinical trials, that is, during the first and second phases in order to see if the vaccine was safe and effective. Indeed, we have two phases behind us. Neither Ms Popova, nor I had any side effects or complications during the first and the second phase, or afterwards. We strongly hope this will be the case with everyone who takes this vaccine in the future. Vladimir Putin: Did you run a fever? Tatyana Golikova: No, we did not. Importantly, none of the volunteers in the first or second phases had a fever, either. Vladimir Putin: I see. But the titres appeared, did they not? Tatyana Golikova: Yes, they did, and at a fairly high level. Vladimir Putin: I see. I would like to congratulate the researchers and staff at the Novosibirsk Center Vektor on this achievement. This is undoubtedly an important accomplishment of yours, my dear friends. Thank you very much for your work, talent and dedication. We need to step up the production of our first and second vaccines. Of course, it is critical to provide as much of the vaccine to the Russian market as possible. We continue to cooperate with our foreign partners, and we will promote our vaccine internationally. However, we should strive to produce the vaccines for our international customers, at least at this point, at production facilities in the recipient countries. I think everyone understands this. I just want to point it out again. Ms Golikova, you said that testing has not been properly organised in all regions. You also said that six regions clearly have a problem with that. I will call you shortly after this meeting to get a list of these regions. Tatyana Golikova: Fine, Mr President. Vladimir Putin: Let us proceed. Several days ago, Mr Patrushev reported to me that the grain harvest in 2020 might be at least the second largest harvest in Russia’s recent history. Mr Patrushev, are you here, can you hear us? Minister of Agriculture Dmitry Patrushev: Yes, Mr President, I hear you. Vladimir Putin: Please comment on this and elaborate on what you have already reported to me. Dmitry Patrushev: Thank you very much. Mr President, colleagues, Despite the recent developments, Russian agriculture shows positive trends. We continue to cooperate with the regions on a weekly basis to monitor the situation in the sector. In general, it remains stable. In spring, farmers had their sowing season as usual. The harvest campaign also began on time and is almost done now. The harvest rate and crop yield figures are significantly higher than last year. As of today, grains have been harvested on 93 percent of the areas and, as I reported, we hope that this year the grain harvest will exceed 125 million tonnes in net weight, including the expected 82 million tonnes of wheat, which is 7.5 million tonnes more than in 2019. The plans for other crops are as follows. The potato harvest should bring in about 22 million tonnes and the oilseed harvest should yield 21.5 million tonnes. In particular, a record harvest of rapeseed is expected: at least 2.5 million tonnes. The vegetable harvest is to exceed 14 million tonnes. In addition, fodder conservation for cattle breeding is on schedule. At the same time, winter crop sowing continues. The total sowing area covers over 19 million hectares, which is half a million hectares more than last year. In 38 regions, the work has already been completed, and in another 24 regions, it is still underway. Mr President, in general, everything is proceeding on schedule. Agricultural producers have been provided with the seed they need, and the same can be said about all the main production resources. In particular, the accumulated reserves of mineral fertilizer amount to 3.7 million tonnes, which is almost 10 percent more than last year. Prices on the mineral fertilizer market are stable now. As for fuels and lubricants, no interruptions in fuel supplies were recorded over the past period of this year. Demand is about 4.6 million tonnes of diesel fuel and 700,000 tonnes of gasoline. Agricultural producers have been provided with fuel and lubricants for the harvesting campaign. Next. The major farms have over 565,000 tractors and combine harvesters, and the equipment fleet is being systematically updated. According to plan, 56,000 units will be purchased this year, partly based on Resolution No. 1432 of the Ministry of Industry and Trade and preferential Rosagroleasing programmes. In 2020, Rosagroleasing will supply at least 9,000 units of machinery and equipment worth 36 billion rubles. This was possible because of the funds allocated for the additional capitalisation of Rosagroleasing. I would like to thank you separately for this. This is a very necessary solution that allows for updating the agricultural equipment fleet. I will brief you on the main parameters of state support. In 2020, 100.5 billion rubles were allocated to the regions as direct financial assistance to farmers. These funds were directed to the regions in December of last year. As of today, 72 percent have been received by the direct recipients. I would like to note that this pace is higher than last year, but we continue to keep it under special control. Also, during the period of seasonal field work, agricultural producers need to maintain a sufficient level of working capital. The most effective tool for this is loans, including concessional loans. To carry out seasonal work in 2020, Rosselkhozbank and Sberbank alone issued 479.8 billion rubles in loans, which is almost a quarter more than last year. (Further, the Minister spoke about measures to support agriculture, including subsidies and concessional loans.) Mr President, this is the current state of affairs regarding the sowing campaign. I also have information on the comprehensive development of rural areas, which I would like to present to you now, if I may. Vladimir Putin: Please do. Dmitry Patrushev: Thank you. We have repeatedly said that the agro-industrial complex is more than just agricultural output and food, it is also the rural people employed in this industry. To improve their quality of life, since 2020 the Ministry of Agriculture has been implementing the state programme Comprehensive Development of Rural Areas. It came as an important stage in the large-scale development of the territories that one-fourth of the Russian population calls home. The state programme is based on monitoring Russia’s rural areas in terms of key parameters that describe the quality of life, so each of its action points has been thought through from the perspective of actual needs. Moreover, regions, local government bodies and, importantly, rural residents took an active part in drafting this state programme. As a result, 81 regions took part in the 2020–2021 bidding campaign. Notably, according to the plan, the state programme will cover areas that are home to almost 5 million people, or 13 percent of Russia’s rural population, during the first year of its implementation, with 132 projects this year, including landscaping, construction and renovation of social buildings; 90 of these projects will be completed in 2020. As a result, 361 new buildings will become available, including schools, kindergartens and cultural centres, as well as medical and sports facilities. In addition, over 833 kilometres of gas distribution lines and over 733 kilometres of water supply lines will become operational in 2020. In addition, almost 690 kilometres of roads will be built or renovated. Mr President, the rural housing mortgage programme enjoys high popularity and has already been used by over 24,000 people in 80 regions with the amount of outstanding loans nearing 48 billion rubles, which were used to buy about 1.8 million square metres of housing in rural areas. In other words, we are seeing an enormous interest in this programme and are working on proposals to extend it until 2030. Colleagues, while providing the country’s population with sufficient amounts of produce, our agrarians have been taking on foreign markets as well. The demand for domestic agricultural produce is growing, partly because of its high quality. In 2020, we plan to export about $25 billion worth of produce. We have currently surpassed $20 billion. In addition, we are also continuing our import substitution plans. We have a package of measures for the development of foreign trade. Despite the pandemic, in 2020 we have opened new markets for 18 commodities of Russian origin. In all, we can deliver our products to 160 countries. As a matter of course, we are carrying out our plans to promote our agro-industrial products. In part, Mr President, we have created a network of representatives of the Ministry of Agriculture in 50 countries in line with your executive order. Once coronavirus-related restrictions are lifted, our first representatives will start performing their functions in Thailand, Tunisia, Indonesia, Jordan, Mexico and Malaysia. We expect this to increase the export potential of the agro-industrial complex. On the whole, we estimate that all of our planned figures for foreign trade will be reached. Mr President, concluding my report, I would like to convey to you, members of the Government of the Russian Federation, the Federal Assembly and regional governors our enormous gratitude for your permanent attention to the development of the agro-industrial complex and assistance in helping us reach the goals of our sector. This is my report. Thank you for your attention. Vladimir Putin: Thank you. Mr Patrushev, did I understand you correctly when you said agricultural exports have increased over the same period last year? Dmitry Patrushev: Yes, you are correct. On the same date last year, we had not reached $20 billion. I checked the current figures today. Our agricultural exports are already at $20.7 billion. I expect that we will fulfil our plans for this year. Vladimir Putin: The workers in this industry continue to make us happy. We are very grateful to them. That is great. Dmitry Patrushev: Thank you, Mr President. Vladimir Putin: I understand that we will review the final results of the harvest a bit later, is that right? Dmitry Patrushev: For now, 93 percent of all areas have been threshed. Only a little remains, but still it makes sense to review the results a bit later, you are quite right, Mr President. Vladimir Putin: All right, that is clear. Thank you very much. Dmitry Patrushev: Thank you. <…> Vladimir Putin: Easy-term mortgage loans at 6.5% APR are among the measures to support the construction industry and individuals. It ends on November 1. Mr Mishustin, since the situation is challenging overall and, even with the economy recovering, people and certain sectors of the economy, including construction, are struggling, so why not extend this programme into at least mid-2021? What do you think? Prime Minister Mikhail Mishustin: Mr President, colleagues, Indeed, you are correct. The easy-term 6.5% APR mortgage loan programme for newly built housing will expire on November 1. It was launched by the Government upon your instructions in April. A person can take out a loan to buy a flat costing up to 6 million rubles throughout Russia, and 12 million rubles in Moscow and Moscow Region, and St Petersburg and Leningrad Region. Vladimir Putin: Is that a flat in a new building? Are you talking about new construction? Mikhail Mishustin: Yes. It is safe to say that this programme is among the most effective anti-crisis measures with over 220,000 loans worth 630 billion rubles already issued. The programme covers over 90 percent of the mortgage loans for new housing. We can see that it is a popular programme that families can use. By the way, this has supported the construction industry, which found itself in a plight due to the pandemic. In this regard, Mr President, we support this and we consider it important to extend this easy-term mortgage loan programme at 6.5% APR until July 1, 2021. We can quickly come up with the corresponding directives. Vladimir Putin: Good, let us go ahead and do so, since this is a truly popular programme, which is really helpful. Let us extend it until at least mid-2021. Mikhail Mishustin: We will, Mr President. And one more thing. Under your instructions, last week I met with Viktor Medvedchyuk, the leader of the Political Council of the Ukrainian party Opposition Platform — For Life. We discussed a number of issues, including a request by Ukrainian industrialists to open access to some companies in our markets. They are subject to our response measures. These are the companies that used to export goods to Russia. Mr President, we think it is possible to allow the delivery of equipment and products for the following companies: Bratslav, the Barsky Machine-Building Plant and the Rubezhansky Cardboard Mill. Mr President, if you support the return of these imports to our country, the Government will process the necessary paperwork for this purpose. Of course, the interests of our manufacturers will be fully observed. The Ministry of Industry and Trade has meticulously studied the impact of this decision. We will wait and see how our Ukrainian colleagues react to this gesture of goodwill. We will proceed from a position of parity in the development of our economic relations. Vladimir Putin: All right. It is common knowledge that we did not introduce these restrictions. We merely responded to them. We are always ready to restore full-scale cooperation with Ukraine. The level of cooperation between our companies was very high and comprehensive. It was useful to both of us, bringing mutual benefit and keeping jobs, providing people with decent salaries. We are ready to restore full-scale cooperation with our Ukrainian partners. Let us consider this a first move and a goodwill gesture on our part. All right, I agree with this, go ahead, all the more so since the Government believes it is possible and will not harm our producers. Why not? All right, it is a deal. Mikhail Mishustin: Thank you, Mr President. We will process the paperwork. Vladimir Putin: Thank you. Let us address the main issue. Mr Reshetnikov, you have the floor, please. Minister of Economic Development Maxim Reshetnikov: Mr President, Colleagues, The July executive order has upgraded our national goals. There are two key economic goals – economic growth and increased investing, and for good reason, because the two goals are interconnected. In the long run, economic growth primarily stems from an increase in investment. In recent years, we have been systematically establishing the necessary tools, the investment climate, tax incentives, and have been expanding infrastructure and development institutions at both the federal and the regional levels. It is crucial to identify another priority at this point, which is support for specific projects in certain industries and regions. This will be the foundation for launching a new investment cycle. This work is to be streamlined in three areas. First, support for private investment, large private projects including those within our new investment instrument, that is, the legislation on the protection and promotion of capital investment. The second area is implementing projects in the regions. And the third area is facilitating investment programmes of companies with state ownership. The first area involves support for large private investment. The mechanism – as I mentioned, the Investment Protection and Promotion Agreement (IPPA) – provides investors with long-term stability of operating conditions. The mechanism primarily stabilises taxes imposed on the implementation of investment projects, and the major conditions for implementation relating to the use of land, urban development, mandatory requirements, and conditions for support from the state. It also offers a new opportunity that was missing before. Now developers can independently build the infrastructure needed for investment project implementation: roads, power lines, utility infrastructure, while the state will then reimburse the costs through future taxes, which will be paid from the operation of the investment project. Last week the Government approved the required legislative base for enforcing this law, and within only a few days, we have received applications for 15 projects worth 850 billion rubles, which will presumably create 35,000 new jobs. The goal is to conclude at least 20 projects worth 900 billion rubles in investment before the end of this year. Why do I say “at least”? Because the mechanism for signing the agreement is a simple declaration. In other words, if a project meets the requirements and an investor applies, we are obliged to sign the agreement and stabilise the terms of the investment for the investor. A special agency, the Investment Development Agency, has been set up to help investors. Now information platforms are being created to make the process as digitally compatible as possible. Alongside this, we are developing the available tools. One of these tools, with great potential, is the Project Finance Factory, which is being developed by Vnesheconombank. As of today, the decision to fund 10 projects worth 760 million rubles has already been made as regards the Factory. In other words, these are large projects. VEB is considering another 12 projects worth 1.4 trillion rubles. Of course, we hope these tools will supplement one another. At the same time, we are now creating an opportunity to fund pools of projects and projects with long payoff periods under the Factory’s auspices. We are also developing legislation on public-private partnerships and concessions. We have drafted a law that specifies the types of state financial participation in concessions and establishes a minimal threshold for private investment. This was not the case before. This bill simplifies the bidding procedure, it introduces an e-tender and will allow investors to be reimbursed for the expenses of pre-investment preparations. The draft law has received the necessary approvals and was submitted to the Government just a few days ago. On the whole, I would like to say that 100 new concession projects worth 300 million rubles in investment have appeared since the start of this year. In other words, this is an effective and sought for mechanism. The second area includes support for regional projects. Here, our goal is to combine the development of the investment climate, support tools and the implementation of specific projects, so this would eventually result in implementing specific projects in the regions. What is being offered? The mechanism for regional agreements on protecting and encouraging investment will be launched on April 1. The capabilities that investors have in relation to major projects will also become available to the regions in order to support medium-sized projects that are also important for the regions. We are developing a mechanism for special economic areas and territories of advanced socioeconomic development. We know from practice that special economic areas are a very popular tool. Three new special economic areas were created during the challenging first six months of this year. The requisite documentation and decisions for five more areas were finalised and submitted to the Government. The decisions will be made soon. Of course, we are following the application of the law and have drafted a package of amendments to legislation that concerns unification of such areas, reduction of administrative barriers for investors working on these projects, and expansion of the types of allowable activities in these areas. At the same time, we propose increasing the regions’ responsibility to make sure that the targeted number of jobs and the investment announced during the creation of special economic areas remain unchanged. Concurrently, we are developing new tools to support housing construction and promote urban development. I am referring to infrastructure bonds, which we are working on. I will take a moment to discuss the tax deduction tool for investment, which we have been using since 2018, and which needs to be upgraded given the current circumstances and goals. What is being offered? We propose tying in the provision of this deduction with the implementation of a specific project rather than the cost items, as is the case now, and providing an opportunity to write off not only the expenses associated with vehicles, equipment or transport, but also to consider the possibility – investors and governors asked for this – to include the costs associated with industrial buildings, such as factories and plants. We also suggest providing for the regions’ budget shortfalls in revenue beyond 2021. Some 27 billion rubles were found even in the complicated budget for 2021, but the governors are asking about the medium-term perspective because the possibility of reimbursement for one year alone makes it very difficult to make long-term decisions. We will discuss all these issues at the State Council meeting with our colleagues and the governors. Ultimately, every region, not just the top 20 investment leaders, needs to regularly update its list of projects with all the support tools, which includes all the opportunities in the regions to attract investment and create jobs. And, finally, the third area is support for investment programmes of companies with state ownership. This is primarily about investing in the fixed assets that create new jobs. Why is this so important? First, overall investment by companies with state participation exceeds 20 percent in the national economy. This is a sizeable percent of all investment. The main point is that these investment programmes pay for the purchase of machine-building products, metallurgical products, building materials and chemical goods. These items of expenditure have a huge multiplicative effect on the entire economy. For example, I can quote the investment programme of Russian Railways. This year the company faced a shortage of funds for implementing its investment programme. It created a new mechanism – a mechanism of perpetual bonds that has already attracted 150 billion rubles. It still has more plans until the end of the year in this regard. It is this instrument that allows Russian Railways to stabilise the implementation of its investment programme and continue carrying out the projects it has launched before. Now other companies are interested in this approach. Mr President, everything I listed is part of a single plan to achieve the national goals currently drafted by the Government and is being discussed. Both the regions and the involved industries, as well as federal agencies, will be advised as to the investment benchmarks. We will ultimately achieve our goals by pursuing real projects – large private projects, and state and regional projects. Thank you for your attention. Vladimir Putin: All right, thank you. (Other speakers at the meeting included Finance Minister Anton Siluanov, Central Bank Governor Elvira Nabiullina, Presidential Aide Maxim Oreshkin, Accounts Chamber Chairman Alexei Kudrin, and Governor of Chelyabinsk Region Alexei Teksler.) Vladimir Putin: As we have said, of course, you have just spoken about this, attracting investment and investment development measures are the key approaches to making progress in the economy and overall progress in the country. This includes many components, very many factors. This is definitely stability, in the broadest sense of the word, both political stability and macroeconomic stability, this is minimal bureaucracy, effective – but entirely within the law – performance of law enforcement bodies, and we often revisit this, a reasonable antimonopoly policy and general fiscal policy. There are many matters here we must look into. I strongly expect that we will work together to pursue these measures, efficiently use the tools mentioned here and generally give it the attention it requires. I ask the Prime Minister to keep this under his control. Thank you. Ms Golikova, I will call you shortly; we will get in touch and talk. Thank you very much. All the best to all of you.