OREANDA-NEWS. October 19, 2010. “The companies represented in the council have invested almost USD 100 billion in Russia. We appreciate this attitude from our partners, their confidence in the enormous prospects of the Russian market, and the fact that they did not retreat in the face of the crisis and are ready to continue working together. This makes us confident that our cooperation will be as successful as before, and maybe even better.”

Prime Minister Vladimir Putin's opening address:

Allow me to welcome you here in Moscow, at this meeting of the Foreign Investment Advisory Council (FIAC), which brings together 42 major global companies. Following the tradition we have set, I hope to have a meaningful and open conversation - many of us present here have known each other for a very long time. We intend to continue an active and open discussion of every subject that is of interest to our foreign partners developing business in Russia.

The council has been operating in a new format for almost a year. At your initiative, it has assumed the difficult role of supervising specific business projects, as well as seriously increasing its expert work, including analysis of the current business and investment climates, law enforcement practices and administrative procedures. The council's experts have given us particular assistance in attracting qualified foreign specialists to the Russian economy and I'd like to thank them for this.

Our immigration legislation was amended last July (this was done on your recommendations, among other things): Russia eliminated quotas for jobs for highly qualified specialists. The procedures for issuing work permits were simplified to the utmost. Now one can get a work permit in two weeks. The first thousand work permits have already been issued based on the new procedures.

I am pleased to note that the council is developing its contacts with the Russian regions. In particular, we welcome the formation of a special working group on the development of Siberia and the Far East.

I'd like to draw your attention to one more decision of the council. The position of investment ombudsman was established in Russia last August. My First Deputy Igor Shuvalov was appointed to it - he is sitting on my right. Foreign investors can address him directly, and tell him about their needs, proposals and ideas.

I'd like to repeat our position of principle - we do not divide business into domestic and foreign companies when it comes to defending the rights and interests of investors. This is important to create comfortable conditions for everyone who wants to do business in Russia, develop the Russian market and promote their goods and services.

Eventually, we will overcome our difficulties and be successful together. I can quote an example from our recent past, when we were reacting to the crisis. We provided substantial assistance to the financial sector. Both the federal budget and the Central Bank provided direct financial aid to financial institutions in a variety of ways. We helped both our banks with one hundred percent Russian capital and foreign subsidiaries, including those with one hundred percent foreign capital. We knew that the latter could cope with the difficulties themselves, but let me repeat that we proceeded from the premise that the interests of all those who work in Russia are indivisible. We gave equal assistance to all companies, regardless of the origin of their capital.

The same applies to the auto industry. During the crisis, the government helped both our traditional car makers and the companies established by foreign automobile concerns. Now this industry, as well as the financial sector, is quickly recovering. I'd like to add that not a single major project was discontinued either in the car industry or the financial sector.

The auto industry has adopted many new ideas. We also achieved success in energy, pharmaceuticals, construction, telecommunications and the processing industry. New projects were carried out in these industries during the crisis and practically not a single one was discontinued.

Lafarge started building a cement plant in the Kaluga Region when the crisis was at its peak. Its investment in the Russian economy is expected to reach from one to two billion euros in the next few years.

In 2009, PepsiCo announced its plans to invest another billion dollars in Russia in the following three years. Procter & Gamble did not cancel the implementation of its investment projects in Russia during the crisis, either. Not to mention the auto industry, in particular, with the production of auto parts. A number of new plants have been commissioned, and I personally took part in their opening.

This year Kinross Gold bought Russian companies that were involved in geological prospecting and the exploration of deposits in the Chukchi Peninsula. This was the first case of a foreign investor purchasing a strategic asset in the domestic mining industry, in particular, in gold mining. Ladies and gentlemen, as you see, these sensitive industries are not closed to foreign investment, either. The companies represented in the council have invested almost USD 100 billion in Russia. We appreciate this attitude from our partners, their confidence in the enormous prospects of the Russian market, and the fact that they did not retreat in the face of the crisis and are ready to continue working together. This makes us confident that our cooperation will be as successful as before, and maybe even better. Russia currently has the opportunity to implement a large-scale agenda of development, and to ensure long-term quality growth.

We both know very well that some industries are still beset with problems caused by the crisis. The factors of uncertainty are making themselves felt in Russia just as anywhere else and market demand is still not high enough. We experience this and understand this.. However, a general economic recovery is apparent. Thus, in the period from January to July, the profits of companies increased by more than 77% as compared with the same period of the previous year. Recent data from the Federal Service of State Statistics show that production in nine months of this year went up by 8.9%.

We expect the GDP to grow by 4% this year, maybe even a little more. In the next two years we expect to fully make up for the decline in the GDP during the crisis.

We think that we have a competitive advantage with our policy and the steady and sound macro-economic situation that has been in place over the last few years. Russia's national debt is at a minimal, safe level. In European countries, not to mention others, it stands at 60%-70% or even higher as compared to a mere 11% in this country. We hope that the real deficit of the federal budget will be much less than the predicted 5.3%. Next year we expect it to be a little over 3% of the GDP.

 

More to be posted soon...

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Prime Minister Vladimir Putin's comments:

- on the speech made by James Turley, Chairman and CEO of Ernst & Young and co-chairman of the Russian government's Foreign Investment Advisory Council:

Thank you for your speech Mr Turley. I have taken note of several things you mentioned, including further efforts to eliminate administrative barriers. You most likely noticed that we have done quite a lot towards this objective; at least I think we have. But I also agree with you that this is not enough. We have taken such decisions in healthcare, agriculture, construction and several other sectors. And we will continue to work towards this goal. We would appreciate recommendations for developing financial markets. We know that there is still a lot of hard work ahead, as I already said in my opening remarks.

Transport regulation is important, of course, but having sufficient facilities and building roads is probably even more important. I mentioned this in my opening remarks, too. We have the appropriate plans for this, and they are actually quite extensive. 

You began your address with an issue that I also mentioned, immigration policy. We are interested in attracting highly qualified workers in a variety of spheres, both managers and narrowly focused professionals. We have somewhat simplified our immigration policy to ensure this. On the other hand, such questions are usually addressed in international practice on the basis of reciprocity. In this sense, there could also be some limitations facing us. Why am I saying this? I am saying this to encourage the business community in Europe and on other continents to influence their politicians, too. We want to develop relations with our partners, including in Europe, as equals. Ultimately, visa-free travel is the simplest and the most radical solution. In general, we see that our European partners understand our stance.

However, there are some challenges involved. What are they? We can already hear some people say that a visa-free regime with Russia would be possible, but granting it to Russia would also imply doing the same for several other post-Soviet countries; not all of them, of course, but at least the countries that are working to develop relations with NATO. But it is clear that these countries are not ready yet for a visa-free regime with Europe.

First of all, I think that politics should not hinder economic development, and second, that there is nothing unusual or discriminatory in introducing a visa-free regime gradually to those post-Soviet countries that are ready for it. I'd like you to take note of this problem and I'd ask you, if possible, to promote these ideas at major forums noting that political questions should not hinder economic and social development.

In conclusion, I'd like to thank you for your speech.