OREANDA-NEWS.   Vladimir Putin met with heads of major Russian and foreign companies and business associations at the CEO Global Summit, which is part of the St Petersburg International Economic Forum.
The summit of global business leaders was organised by the Russian Union of Industrialists and Entrepreneurs.

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PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon,

To start, I believe Mr Shokhin will say a few words.

PRESIDENT OF THE RUSSIAN UNION OF INDUSTRIALISTS AND ENTREPRENEURS ALEXANDER SHOKHIN: First, thank you Mr President for finding the time in your busy schedule to meet with the heads of global companies.

We have called this event the Global CEO Summit at the St Petersburg International Economic Forum (SPIEF). This is already a continuation of a certain tradition. Last year we held the B20 Business Summit on the forum's sidelines, and you met with leading Russian and world entrepreneurs to discuss recommendations for you as the G20 President, and for your G20 colleagues.

Last September we had an opportunity to bring these recommendations to the G20 leaders. We've decided to continue this tradition and this year we convened this Global CEO Summit to continue discussing the world's economic agenda.

The global economy remains fragile and many measures, including those adopted in St Petersburg, are still being elaborated and their implementation is fairly complicated. This is why business should continuously renew this discussion to make adjustments and provide new recommendations.

The second area we've discussed is conducting business in Russia, primarily systemic issues of improving the investment and business climate.

Obviously, we couldn't discuss all questions at our panel sessions, but the St Petersburg Forum has many other options for panel discussions, so more specific issues will be reviewed (and some have already been reviewed) today and tomorrow.

In addition, on the forum's sidelines we held many bilateral business meetings with our partners, bilateral business councils and Russia-based foreign business associations.

We didn't just discuss problems, but tried to determine some priorities, conducted interactive voting and determined what key issues could help improve the economy (in the opinion of Russian and foreign business).

Traditional areas are represented by investment, infrastructure, financial regulation, trade, employment, social investment in human capital, transparency of government management, anti-corruption efforts and some other issues. I'd like to ask my colleagues to report on the discussion of these issues.

But before they do this, I'd like to make the point that the development of public-private partnership has been described as the main issue in infrastructure investment. As for energy security.

Incidentally, we brought this item back to the agenda in 2006. Energy security was the main issue during the G8 summit in St Petersburg. For some reason it left the agenda of these forums but we believe it's time to bring it back.

So, for energy security it is essential to regulate the power industry based on the real-life risk assessment and return on investment. In other words, economic policy should be built not on some hypothetical assumptions but on real risk assessment.

The main priority in financial regulations ЁC as it was a year ago when we discussed it ЁC is to prevent the adverse impact of financial reforms on long-term investment. We don't need more regulation but we must make it more efficient and conducive to economic growth. As for employment, first and foremost it is necessary to pursue macro-economic policy that stimulates the creation of productive jobs. In international trade, struggle against protectionism continues to be at the top of the list.

During the last six years of the G20's existence, this has been the number one priority, but the fact that it remains on the agenda means that far from all has been done in this area, even compared to our expectations. In particular, I'm referring to the implementation of the WTO agreement signed in Bali in the end of the past year.

Equal access to government and municipal purchases is the main goal of the efforts to achieve transparency and counter corruption. Indicatively, this is a topical issue not only for Russia but also our foreign colleagues.

As for Russia's priorities in creating a favourable climate at home, the most important priority is the development of small and medium-sized business. The main task here is to remove the barriers for small companies by simplifying registration and improving regulation. Incidentally, today we presented the national rating of investment climate in various regions, and this issue was also discussed in detail there.

The second priority in improving the investment and business climate in Russia is to reduce regulation. Above all, it is necessary to get rid of redundant procedures and check-ups by monitoring and supervisory bodies and ensure their transparency.

With this, I'll finish my account of our activities. As hospitable hosts we'd like to give the floor to our foreign guests. I'd like them to continue our discussion. First of all, I'd like to give the floor to our guest from India ЁC the elected President of the Confederation of Indian Industry (CII).

PRESIDENT DESIGNATE OF THE CONFEDERATION OF INDIAN INDUSTRY SUMIT MAZUMDER: Thank you, honourable presidents.

I am going to talk about infrastructure, as he told you. Among the G20 countries, the emerging markets are still struggling, and they haven't quite recovered. For the G20 countries as a group to prosper, it is important that even the emerging countries prosper so that as a group we prosper. And it needs inclusive prosperity.

So I have one suggestion, which is that if some sort of a robust multilateral investment framework can be built, and the governments extend special cooperation, and a proper mitigation process for losses be drawn up, then the required funding for these emerging markets would come, and it would really help the G20 countries to be prosperous in the long run. Yes, he talked about private-public partnership ЁC that is working quite well in India. But there are other issues that require looking into. This is one suggestion.

The second point I'd like to make is that by 2020, there will be more people retiring from the job market than entering the job market, whereas India will have an excess of working-age people. I believe 65 percent of the population in India at that time would be the working population. And it is estimated that by 2026 the shortage in the world market would be about 45 million people, whereas India will have an excess of 56 million people, so it is very important that these people are properly trained and made ready for this opening. And this will happen once the infrastructure is at the same level as the mature markets. And this is important for the entire group of the countries, for their own good, because India could also be the manufacturing base for a lot of the countries.

These are the two suggestions that I have, Mr President. Thank you.

PRESIDENT OF RUSSIA VLADIMIR PUTIN: I want to start by once again welcoming the global business leaders. I think, as Mr Shokhin [President of the Russian Union of Industrialists and Entrepreneurs] mentioned, this is the first time such a summit is taking place as part of the Forum.

We have many common problems. When I say we, I mean the global economy and its impact on the world, including on the Russian economy.

Our colleague from India spoke just now about some problems that are purely global in nature. Let me take advantage of the fact that the floor was given first to a representative of Indian business, and I also want to note the longstanding friendship between Russia and India.

I just had the pleasure of speaking with the leader of the party that won the election, with the man who will be Prime Minister very soon. We agreed to press on with our undertakings and plans already underway, already in progress, and create new opportunities for work together too. We will discuss all of this at a meeting very soon.

In this context, we should note that India has very large labour force and many people looking for work. This does create a big problem of course. Young people make up more than half of India's population. How many voters do you have? I think it is close to half-a-billion people. Such figures are impressive. Our country is not exactly small, but when you hear figures like this you cannot help but be impressed.

What you talked about is linked to open borders of course, visa-free travel and the right to employment. We have long since been discussing these issues with our Indian friends. I think that the existence of some restrictions is understandable. They are linked to the need to protect our own labour market.

But we are moving in this direction all the same. We are making it easier to enter our country and will continue to do so on a parity basis. We have an increasing number of joint projects, including in hi-tech sectors such as nuclear energy, as we all know, and in this situation exchanges of highly skilled people obviously make particular sense and become more important.

I think you would agree though, that this is a rather narrow sector. People working in nuclear energy know that in order to develop the sector and ensure reliable safety of the projects we carry out, we need to use top-class specialists, at the initial stage at least.

What the Russian Federation does when it undertakes these kinds of projects is to not just provide the power units or build production facilities, but establish the whole sector, and this includes training local personnel.

This is just the clearest example, but we work in similar fashion in other sectors too, in the military technical cooperation sector, for example. We are working with you to develop advanced military technology such as the well-known BrahMos missile that India's armed forces use.

In this case, we do not limit ourselves to simply delivering a good. The missile is a joint product and is our joint intellectual property. The project also involves personnel training. We have organised this kind of work with our Indian friends in this sector and will continue to do so.

As for hiring labour on a mass scale, this is possible too in certain areas and in the case of big projects, including joint projects such as the infrastructure projects that you mentioned.

We have a large number of infrastructure projects in the pipeline. For the projects in which we plan to invest money from the reserve funds ЁC these are above all infrastructure projects ЁC we do not rule out the possibility of using foreign labour.

ALEXANDER SHOKHIN: I'd like to give the floor to our Canadian colleague, CEO of Kinross Gold Corporation Paul Rollinson.

KINROSS GOLD CORPORATION CEO PAUL ROLLINSON: Hello. Thank you, Mr President. I've been asked to speak on the theme of investments. And we're a mining company, so I'll make my comments relative to the mining industry.

I would say we're proud. We have been active in Russia for almost 20 years now, and we are the largest foreign investor in mining thus far. We've recently invested over USD 3 billion in the mining sector.

Our two mines are located the Far East, Chukotka. And our experience has been a very positive one, and there's been a lot of cooperation with the government and improvement in the regulation. But we think there is more that can be done to attract more foreign investment in mining.

And the benefits of that, of course, are that it would provide addition jobs, train human talent, and of course provide additional revenue for governments.

We have three specific recommendations in that regard. Number one, please consider the strategic limit for minerals, the size or the elimination.

We also think there may be a possibility to simplify the claim-staking process. There's a pilot project currently underway, but it hasn't been rolled out in all regions. And lastly, there are ways to facilitate the process to move from exploration to mining.

I would further suggest that, we would think that a way to come at this would be on a pilot basis ЁC to pick one region or a couple of regions where there is good mining prospectivity, such as the Far East Federal District, and roll out these suggestions on a pilot project.

And if we were to do that, we see four potential benefits. First of all, it would reinforce the government's strategic focus on economic and social development in the Far East. It would attract, we think, more mining investment into the Far East. The government would still retain control over its subsurface resource. And lastly, we think this can be done with very little to no cost to the government. Thank you.

VLADIMIR PUTIN: We'd be very grateful to you if you could formulate these proposals concretely. In cooperation with our business community and various business entities, we've been working on this particular agenda and on ways to simplify various administrative procedures. Many decisions have been made in the area of customs regulation, incorporation of companies and regional administrative practices.

Of course, this is probably not enough, and we'll continue working on it. Your recommendations will be most useful to us. I say this without any exaggeration or irony. We're working on these proposals in conjunction with our business community. Some of them are being drafted, others have been adopted and still others are being formulated.

We can discuss simplifying access or application filing procedures as well. We believe we have a fairly liberal approach to these issues. We don't have any bans whatsoever, as I'm sure you know. We allow everything, if I may put it this way EC we don't have any subjects that are off-limits in cooperation with our foreign partners.

There are certain rules on so-called national resources or national mineral deposits. This doesn't mean that access to them is banned to foreign investors. It merely means that decisions on this issue should be approved by the government commission.

Working in Russia, you must be aware of these issues. So, if you believe there are any problems, we have government members here, top Russian leadership, so please tell us what exactly is making things difficult for you. There are deadlines for reviewing such applications and they are being observed, just like yours, but we're ready to give more thought to this question.

Regarding simplified procedures on prospecting and production after a permit is issued, these decisions are usually interlinked. If we issue a permit for prospecting, we proceed based on the premise that the company that invests resources and money into this phase of work should receive a production license as well, although current Russian legislation does not explicitly provide for this.

This concerns the need to ensure the public interests with regard to future investment. We want to prevent a situation whereby a company that has invested relatively small funds into prospecting will in effect start dealing in its licensing options.

Still, the licensing power should belong to the Russian Government. As you have said, the Government should monitor this process. But maybe we have overlooked something. Please formulate your ideas in more detail, and we will be happy to consider them.

ALEXANDER SHOKHIN: Thank you.

I'd like to give the floor to Mr Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, France.

CHAIRMAN AND CEO OF SCHNEIDER ELECTRIC JEAN-PASCAL TRICOIRE: Mr President, good afternoon. Thank you very much for meeting us this afternoon. My company Schneider Electric is specialised in systems, in equipment and software for energy management and energy efficiency.

Under the guidance and with the support of your teams, we have invested a lot in Russia. We employ now 12,000 people in your country, developing manufacturing technology here in the country.

So after so much investment, my question goes naturally to your energy plans. I would like to ask you if you could explain to us where you see your priorities in the field of energy ЁC which sector, which installation, in which geography.

I would like to know if you could give us some colour about this agreement that you signed this week between Russia and China. And as it is one of specialities of my company, if you could tell what is the specific place of energy efficiency in your energy vision for Russia. Thank you.

VLADIMIR PUTIN: Energy efficiency should be our primary concern, not only in Russia but also for any company in any other country. It is one of the key elements of success in any sphere, in any business or project.

Of course, we will try to ensure maximum efficiency in accordance with modern standards in all areas of work concerning energy. What should we focus on?

We are certainly considering such promising energy sources as renewable energy, hydrogen energy and solar energy. We are working on these projects. Our companies allocate funds for this and also receive government support for such projects.

At the same time ЁC as an energy expert, you should know this ЁC everyone understands that energy consumption will be growing in the next 30 years, while the structure of primary sources of energy will not change. Therefore, we will focus on the production of hydrocarbons and the development of nuclear generation.

Nuclear energy currently accounts for 16% of the Russian energy balance. If my memory serves me correctly, the figure is over 80% in France. So there is still room for improvement, and we have a comprehensive development plan.

We intend to increase the share of nuclear energy to at least 25% of the total energy balance. This will require us to work hard to build new capacities. We plan to build around 20-25 large power units, or as many as were built in the entire history of Soviet nuclear generation.

Of course, we ЁC I am referring to Russia and France ЁC are both partners and rivals, but in a positive sense. The issue concerns the production of generating equipment and the supply of nuclear fuel to the global market.

I believe that we have certain advantages, because we offer full-cycle services, including the removal and recycling of fuel waste. Our capabilities in this area are considerable, and we can offer its services both to our companies and to our foreign partners. Our nuclear companies have a big portfolio of contracts for decades ahead.

As I have said, we not only supply and sell nuclear generating equipment, but we are also building a whole new industry, which includes research and personnel training. We intend to continue improving our nuclear sector as a science. We take part in international projects. We intend to build the best and safest modern nuclear power stations.

As for hydrocarbons, their prices will not decrease. I think this is obvious, because what's left is difficult to access or is located in areas that lack the proper infrastructure. This is the situation in Russia and also elsewhere, as you are aware.