OREANDA-NEWS.  March 15, 2011."We must facilitate regional innovation to the greatest possible extent and provide the regions with effective tools and incentives for its development."

Vladimir Putin's introductory remarks:

Good afternoon,

This January, Tomsk Region Governor Viktor Kress and I agreed to meet and discuss innovation development issues and the use of various incentives to facilitate this process. Now we are meeting here again, in the Tomsk Region, where many such promising plans and projects are already in advanced stages of development.

We have gathered here at the Tomsk special economic zone, which was established in 2005. Over 50 resident companies are currently registered here. The volume of stated investment in electronics, bio-engineering, IT systems, and nanotechnology projects exceeds 14 billion roubles. In essence, the region is moving to establish a powerful sector for innovation with broad potential for conducting R&D work, manufacturing, and marketing high-tech competitive products. This is precisely the kind of development infrastructure we frequently discuss.

Obviously, such regional projects generate successful economic modernisation and expanded business operations through the cost-effective use of knowledge-based resources. Moreover, it is my opinion that regions and municipal entities must become key players in the process of innovation development. A turn towards innovation is impossible at the sole expense of the federal government, separate projects and programmes. Minister of Economic Development Elvira Nabiullina and I have just assessed this process in general. It is developing rather successfully but the scale of this cost-effective process remains unimpressive. We must facilitate regional innovation to the greatest possible extent and provide the regions with effective tools and incentives for its development.

As I have already said, we have made some accomplishments over the past few years. By this, I mean special economic zones, the programme for establishing technology parks and business think tanks, as well as establishing a chain of federal and research universities catering to market demand. Why do we consider all these measures for supporting innovation development important?

First, these instruments of innovation development make it possible to restructure the regional economy and to facilitate economic growth, which is not dependent upon commodity production but rather upon the manufacture of value-added products in high demand on both domestic and foreign markets. This makes it possible to increase potential tax revenues in Russian regions and to expand their abilities to tackle social problems. The successful examples of the Kaluga and Lipetsk Regions, as well as the Republic of Tatarstan, can be mentioned in this regard.

Second, the operation of special economic zones, technology parks, and science cities must promote new and advanced production ethics, as well as cost-effective models for merging education, science, the economy, and business. Moreover, interesting experience in public-private partnership and attracting potential investors is being accumulated. These achievements must be used to improve the investment climate at both regional and national levels.

Third, we are creating additional incentives for promoting an active labour market policy. Such special zones for innovation make it possible to create cost-effective and well-paid jobs for people. They create demand for skilled human resources and personnel retraining centres. And, of course, it is particularly important to skillfully utilise them in those regions and cities with low economic diversification levels, where people's welfare often depends on one or two enterprises.

In all, 24 special economic zones and 13 science cities currently operate all over Russia. State-of-the-art technology parks have been developed in 12 regions. The state has already invested nearly 28.3 billion roubles in the infrastructure of such innovation zones – namely, in roads, production facilities, and laboratories. This year, the federal budget will allocate over 17.5 billion roubles towards all special zones, technology parks, and science cities. I would like to add that, considering the importance of the federal programme to establish state-of-the-art technology parks, we have decided to extend its duration to 2014.

Apart from budget investment in infrastructure, we have offered an entire range of tax and customs benefits to companies. For instance, the residents of special innovation development zones will pay no property or land tax. Profit tax rates have also been reduced. Moreover, we have stipulated a long-term transitional period as regards the payment of insurance premiums to social funds. They will pay just 14% until 2017.

I want to remind you that corporate profit tax rates now at 15.5% must be reduced to 13.5% in regions. Overall economic rates are 18%.

No customs duties and value-added tax (VAT) are charged on imported foreign goods being delivered to and used in such zones. The residents of technology parks are entitled to property tax and profit tax benefits.

About 530 resident companies, including foreign companies, are currently registered and operate in special innovation development zones and technology parks. The total volume of stated investment in special innovation development zones stands at about 170 billion roubles, while overall investment in special zones is 300 billion roubles. For instance, Swiss Corporation Novartis plans to establish a pharmaceutical cluster in the St Petersburg innovation development zone and to set aside over 15 billion roubles for this project. All R&D and testing projects will be conducted at specialised colleges, universities, and research institutes there. Innovation development zones are also operating successfully in Zelenograd and Dubna near Moscow.

The Technology Park of the Novosibirsk Academic Town, the Kazan IT Park, the Kuzbass Technology Park in Kemerovo, and the Western Siberian Innovation Centre in Tyumen are intended to support high-tech small and medium-sized businesses. At the same time, a number of problems are hindering the more cost-effective development of such zones, technology parks and science cities.

We must pay special attention to this. We have put in place all the basic infrastructure and incentives, but they are not operating smoothly enough. To be honest, they have not yet reached their intended capacity. True, they are still sufficiently young, and international and foreign experience implies that it takes far more time to reach design capacity than the deadlines we set. But we should move forward and expand these capacities.

On the whole, I believe that our meeting should conduct an inventory in this sphere, assess current investment barriers, propose the modification of legislation, and create additional incentives for businesses and regions actively striving to expand their innovation infrastructure. We need to search for effective models and solutions, study accumulated experience, and tackle problems that were not originally foreseen during the creation of such support programmes. This primarily implies an expanded social infrastructure and the solution of housing problems.