OREANDA-NEWS. May 26, 2011. “The primary aim of the agency is to support those who have already achieved something, especially medium-sized businesses.”

Transcript of the conference: Vladimir Putin:
Good afternoon, friends and colleagues,

Today, we are officially starting a new project entitled “the Strategic Initiatives Agency under the Prime Minister of the Russian Federation”. Let me remind you that we proposed creating it in Volgograd, and I think the proposal was overall well received. I also want to remind you that the primary aim of the agency is to support those who have already achieved something, especially medium-sized businesses.

First of all, we are specifically talking about the field of innovation activity. However, we believe that innovation principles can be applied in all the fields that I will list in a moment. I’d like to reiterate that we are going to support those working in medium-sized companies, even though the boundaries and criteria are very vague there. In our country, there are special structures that work with small businesses and special structures that work with large businesses, but we pay too little attention to medium-sized business to a certain extent.

Which fields do we mean? There are three fields. The first one is called “new business”, and it involves the development of significant, interesting and promising projects. In this field, people will work proceeding from their own experience, and we will support them according to the expected results of their work.

I believe that, in this segment, we can support people who have achieved certain results. In order to move forward, they need support and administrative or, sometimes, financial assistance, and the agency might serve as a mediator between business representatives and financial organisations, our country’s leading banks and development institutions. It might support projects that are already underway and people who have proved that they are able to do something, as they have already implemented some projects, and propose new areas of activity. And I think it may well be so that people will appear who haven’t done anything special but have absolutely new, fresh, breakthrough ideas. The point is, if the expert council reviews these ideas favourably, it will be necessary to take a closer look at these proposals.

As part of work in this “new business” field, it will be important to have the opinions and experience of those who have already contributed to removing administrative barriers, to expanding relations with government and administrative bodies, and promoting new ideas to the municipal, regional or federal levels. Certainly, it will be very important to hear and devise approaches that will create more transparent relations between business (at least in the given segment) and the state in the broad sense of the word.

Then, there’s the second field, which we called “young professionals” for the purposes of discussion. Here, we are talking, first and foremost, about the development of a complex system of professional skills which would take into account the current realities and allow for the development of education standards, professional training and the selection of the best programmes in this field. We will get young experts involved in the work: lawyers, economists and engineers as well as public service and social workers.

Finally, the third field is “social projects”. These are the initiatives aimed at the development of social services. It is necessary to promote well-established projects that have social significance. I mean education, healthcare, culture, recreation, and care for the elderly and for all those who need it, for example disabled people.

I would like to say that it’s appropriate to talk about an innovative approach in connection with such projects because modern resources and technologies are being used. We must see to it that this practice becomes widespread, so that others can take advantage of the experiences of companies that already operate in the sphere. And newly launched projects must be expanded.

Now I want to point out the main principles of the agency’s work. First of all, it is openness; attracting a large number of independent experts; minimising bureaucratic procedures (it would be ridiculous to get stuck in red tape after setting the goal of eliminating it); the unbiased selection of personnel and projects.

It is important for us to make use of and share the experience accumulated in this field as well as to create the instruments for the selection and support of vital initiatives, to single out and promptly manage administrative resources and to facilitate access to financial resources.

I would like to stress that we must study and develop the best regional practices for supporting entrepreneurship and modernising the social sphere. As you see, we shall not work in Moscow only. On the contrary, our goal is to involve the regions in our work. The agency must closely cooperate with the regions. In the fall we must begin creating the regional network, which includes the establishment of the agency’s offices in the Russian regions. The agency must control the situation in the regions as well as select projects and people that deserve our support. We must provide equal conditions for self-realisation to talented people, especially young ones, and support interesting projects throughout the country.

And now a few words about the structure of the agency and the administration system. The main collective body will be the Supervisory Council. And if there are no objections, your humble servant will chair it. I think that such direct interaction must be efficient in order to provide help to those who need it. The council will include representatives from business circles and heads of the main business associations. Considering the regional aspect of work, we can involve heads of regions that were the most successful in the establishing good investment climates to join us. We have such regions. Their heads have the necessary experience. I would like to highlight that the agency begins operating today. The first step is the establishment of structures that will determine its work. What are these structures? Besides the Supervisory Council, it is the agency’s board of directors that must promptly coordinate the current activity, and the Expert Council. It is the Expert Council that will select prospective projects and initiatives that may gain the agency’s support.

Both the agency’s board of directors and the Expert Council will be selected in an open competition. The council will be composed of young entrepreneurs, representatives of medium-sized business, successful managers, those who have practical experience in managing business and social projects. A contest committee will be responsible for selecting candidates. The committee’s board will include business representatives, heads of business associations and leaders of Russian regions.

The competition will include two stages. The first stage, which will be conducted remotely, is being launched today and will last for 20 days, until June 13.  Finally, 25 candidates will be chosen for the agency’s general director. One of them will assume this position, and the others will join the Expert Council. Also ten candidates will be selected for the director positions in each of the three areas I mentioned.

During the second stage, the commission will choose candidates for administrative positions through interviews. I would like to stress that the first stage involves the use of internet technologies. The agency’s official website was launched today. The terms of the contest are posted on it.

In conclusion, friends. We would like the agency we are creating to be as open to society as possible and to become an effective instrument for supporting in-demand projects, projects directed at the confident and sustained development of this country. Certainly, this kind of development primarily hinges on the talent and tremendous creative potential of Russian citizens. This means young people, in the first place. I’m convinced that genuine economic modernisation and the complete renewal of the social sphere will eventually grow out of thousands and thousands of separate successful projects in Moscow, St Petersburg and all over Russia, projects backed by leaders full of initiative, competent and interesting individuals with promising new ideas and unorthodox approaches to tackling national objectives.

Let’s share our opinions on these issues. I suggest that we start with our colleagues in other cities. The videoconference should start with Tomsk. This is Alexander Kurganov, the director general of the Solagift Company, right? Mr Kurganov, you have the floor.

Alexander Kurganov: Yes, this is Alexander Kurganov, the director general of the Solagift Company.

Esteemed Mr Putin, colleagues,

The 14th Innovation Forum will open in Tomsk tomorrow. We, the residents of the Tomsk Technical Innovation Zone, will take an active part in it. The attention that the forum receives in general confirms the approval for modernisation programmes passed here in Russia. The forum will discuss issues regarding the creation of an innovative environment, cooperation between the business community and the government, the regions and the federal government, as well as the harmonisation of instruments and parties to the innovation process. What’s important is that companies do not merely accept some final standards but take an active part in establishing them. As a result, appropriate documents and instruments will be created and will be put into action.

Mr Putin, if you remember, you visited Tomsk in mid-March. I, for one, had the opportunity to acquaint you with the corporate project to create innovative products based on intricate, complex and multi-stage extractions from pine needles. At that time I asked you, and I wanted to thank you, for your personal support. I received a letter with your resolution. This letter is quite effective, and it helps us to market our products. And I would like to say that the creation of a separate route for the company tackling innovation projects is an extremely important task. In this sense, the Strategic Initiatives Agency … It is hard to overestimate its role because support for medium-sized businesses in the pursuit of substantial results on the market will objectively help the company to consolidate its position and to expand even further. We hope that this agency does away with the bureaucratic procedures you mentioned, so that the mechanism of corporate involvement in cooperating with the Strategic Initiatives Agency becomes clear. Thank you.

Vladimir Putin: In other words, Mr Kurganov, you support this idea?

Alexander Kurganov: This is a very good idea. The companies that are now launching their business and those that already have interesting products and projects and that are able to move along separate routes can score major successes.

Vladimir Putin: Mr Kurganov, it will be good even if it becomes easier to obtain my resolution or that of any of my colleagues, and if such resolutions help get things going. In that case, it will be possible to say that the agency has not been established in vain, but I think we will not limit ourselves to this.

As I have already said, this also includes support for access to financial resources, during the removal of some administrative barriers linked with the registration of property and intellectual property, and the promotion of products on the international, world market. This implies the customs-tariffs policy. You see, there are very frequent disagreements between decision-makers and those waiting for such decisions during the resolution of such issues. I hope this direct contact will always help accomplish such objectives to our benefit. Thank you very much.

Let’s switch to Yekaterinburg. This is Boris Zyryanov from the Multiklet company. Did I pronounce the company name right?

Boris Zyryanov: I think that, just like all other national innovation companies, we welcome the establishment of the Strategic Initiatives Agency. Our company specialises in the development and promotion of the new generation of microprocessors: processors with a patented multi-cellular design. The specific properties of our processors are often many times better than similar processors produced by foreign companies. The key indicators are speed, energy consumption, and cost. Some people are of the opinion that the creation of a national microprocessor is irrelevant to Russian business in the technologies sector. We disagree, and we continue to work. Obviously, it is very hard to overcome the inertia, and even defence enterprises run into great difficulties when transitioning to new hardware components and Russian processors.

We hope that the Strategic Initiatives Agency will render assistance in this field because such important issues can’t be solved without political will.

Mr Putin, let me ask you a question. As a basis for microelectronics and, subsequently, Russia’s entire field of modern production, do you believe that these processors could become an area of interest and activity under the Strategic Initiatives Agency? Thank you for listening.

Vladimir Putin: Surely, Mr Zyryanov, since you have drawn our attention to it yourself. My colleagues might have missed what you just said, but I don’t miss much. You’ve mentioned that your product is in demand both in the civil and defence spheres. And we have to be as independent as possible in this field. Unfortunately, we depend on foreign manufacturers in some key areas and industries that determine the country’s defence potential and security. Generally speaking, when I’m told about national security in the fields of dairy, meat, or light industry goods – anything of the sort – I can say that most goods consumed in the country should be produced domestically. But your branch of business can be regarded as among the most necessary in the field of defence and security. Obviously, we will support it. Perhaps you are aware that, in 2009, we implemented quite efficient measures of support for domestic production in overcoming the aftermath of the crisis. We created conditions in which national producers could enter the domestic market and sell their goods. We will continue to act in the same way. Certainly, any goods, especially hi-tech goods, should be competitive. Your product seems to belong to this category. In any case, we will review all of your proposals at the expert council and the supervisory board. If necessary, we will do everything to support you in making additional decisions connected with market access or access to certain financial resources. Formulate your proposals, and we will discuss them. Thank you.

Boris Zyryanov: Thank you for support.

Vladimir Putin: Volgograd, Vladimir Mikhalyov, Europa-Biopharm.

Vladimir Mikhalyov: Europa-Biopharm has been in operation since 1998. We specialise in the development and production of pharmaceutical drugs. Today, our most famous drug, Tycveolum, is Russia’s most effective drug for the treatment of liver diseases. It has passed all the necessary Russian clinical tests. Unfortunately, there are too many foreign drugs preventing both us and other pharmaceutical companies from moving forward.

In addition, we created a biopharmaceutical cluster that brought in over 7,000 people. It is poised to earn some 90 million euro a year, thereby replacing many other foreign drugs, food products, and agricultural technologies on the domestic market. At present, the cluster includes agricultural and pharmaceutical companies, research enterprises, and manufacturers of farming equipment. We have a question: will the Strategic Initiatives Agency be able to act as an umbrella for all of the government’s programmes so that all the projects can be monitored and advanced without lumping them together. To choose the best ones and to promote them? Will the Agency be able to do that?

Vladimir Putin: I don’t think it is the Agency’s task to integrate all the areas of the government’s activities, all the government programmes. But I am sure that the Agency will select the most promising projects in various areas. That means that your project may well get support. I’ll tell you why. Because, first, as you have said, our market is literally overcrowded with foreign pharmaceutical companies. I have high regard for them, but while total sales in our market run into billions of dollars, there are very, very few domestic products. They are mainly represented in the cheapest segment: the Brilliant Green antiseptic, bandages and the like. Yes, in that segment, there is a large volume of domestic products, but in high-tech goods, the share is very small. There is undoubtedly great demand for your products.

Incidentally, you will have heard that we have developed several federal targeted programmes for the next few years with considerable funding to be allocated for their implementation. We are talking about tens and hundreds of billions of roubles for the pharmaceutical industry and for the production of medical equipment. It is essential to identify the areas and projects that merit our support under these federal programmes. The money has already been allocated in the federal budget. In this context, projects such as yours will get priority consideration. There is no need to combine them with any other government programmes. There is a federal targeted programme to develop the pharmaceutical industry, and it is within that programme that suitable projects will need to be selected, of course. In that sense, the Agency can, must and will play its role, I hope a visibly positive role in your case.

Vladimir Mikhalyov: We are currently implementing nine federal programmes, I mean in research: the development of medicines, biologically active ingredients, agricultural technology and so on. Where does one go to register for the government pharmaceutical development programmes that are already underway? We have approached many agencies, but so far there has been no response, or, I’d better say, no positive response.

Vladimir Putin: To the Industry Ministry.

Vladimir Mikhalyov: We have already approached them.

Vladimir Putin: Let’s do it through the Agency. In fact, I am very grateful to you for this discussion. What you are saying now means that the body that’s being proposed – the Strategic Initiatives Agency – is going to fill a real need. I promise you: We will do it through the Agency and do it on a priority basis, because you are already involved and we have discussed this with you today.

Vladimir Mikhalyov: Thank you.

Vladimir Putin: It’s a deal. Thank you. Konstantin Zakharov, Chelyabinsk Teplopribor factory, please.

Konstantin Zakharov: Thank you, Mr Putin. My name is Konstantin Zakharov, I am the head of the tool-making factory Teplopribor in Chelyabinsk. We produce high-tech goods for practically all branches of the Russian economy: measuring and control equipment and instrumentation, necessary for the technological process.

Over the past ten years we have been vigorously studying domestic and international experience, and each time we won tenders to cooperate with foreign companies we encountered very powerful drivers. For example, in Japan it is a non-government association called ROTOBO, which is nevertheless operating under the government of Japan; the European Bank for Reconstruction and Development was supervising the TACIS programme. So, while we were pleased to win these tenders, we saw that tens and probably hundreds of our companies were sidelined because they could not borrow that foreign expertise. As a result, having spent a lot of time and our own money, we managed to introduce and improve on the best practices in our industry. We produce competitive goods and, just as importantly, the average wages of our workers have almost doubled. My view is that the creation of the Agency not just under the government, but under the prime minister provides equal opportunities across the whole Russian industry and gives many Russian enterprises access to global and domestic experience that is vital for the development of Russian industry.

So, this is what my question is: Can we expect that the Strategic Initiatives Agency will monitor and help spread advanced international management programmes so that this experience acts as one more development driver for more of our enterprises and fewer of them are left out of it all? Thank you.

Vladimir Putin: Mr Zakharov, that is what the Agency is being created for to a large extent: to select the best practices (as I said in my brief opening remarks), to study and disseminate them. We will certainly do it. But in your case, and in the case of other colleagues who have spoken today, it is also a matter of facilitating access to various support instruments. Do you sell your product abroad as well as in the domestic market?

Konstantin Zakharov: Very little, but we do sell abroad in principle. The whole scheme of Western support consists in helping their producers piggyback on our domestic companies to enter our domestic market. We are very well aware of that.

Vladimir Putin: Our aim is to help you break into foreign markets. This is why – for the first time – we are now creating these instruments to support high-tech exports. That would involve the use of the agency whose creation we are discussing to facilitate access to these resources for companies such as yours. We are talking about direct government support for the enterprises that have a chance to gain a foothold in the markets (above all the high-tech markets) of third countries. And that is only one form of support, not to speak of the domestic market. But this is what we will do, we will study the world’s best practices. Obviously, that involves direct budget outlays, but I repeat: We are creating the instruments to support high-tech exports, exports in general, and especially high-tech exports, and we will use the Agency to make sure that these instruments and the government money (budget resources) work effectively.

Konstantin Zakharov: Thank you very much, we will be happy to cooperate with you.

Vladimir Putin: Thank you and good luck to you. Vladimir Skityayev, Interskol, please, go ahead.

Vladimir Skityayev: Good afternoon. Thank you for the opportunity to speak here. Interskol belongs to the power tools sector, producing tools that are used in all sectors in Russia. But unlike our colleagues, we have had more luck: Interskol is the top Russian company, the market leader; practically one in every five electric power tools sold in Russia carries the Interskol brand. We design electric power tools, produce them at our own plants and outsource some of the production to specialised plants in various countries. Basically, we are already using a global corporation model.

Being aware of the importance of high-tech production in Russia, Interskol purchased a well-know Italian company, Felisatti, in 2009. It is a very high-tech wood-working firm which has a high standing in the sector. The entire production facility was brought to Russia: more than 50 cars and high-tech equipment that hardly has any equivalents; it was relocated to the Moscow Region and installed at our plant, and production was launched in 2010. In 2010, we scored a first in the history of Russia, even if we also take into account the Soviet times, by starting to export electric power tools to Western Europe, something that had never happened before.

As part of our effort to expand production, we also bought a Spanish plant in 2010, partly to broaden the range of products and gain access to technology, and partly as a step towards entering the European market, where competition is harsh and very tough. In general, our aim is to break into the top five global companies; that is our only chance to stay in this market because competition today is global. But those are high aims, something we are trying to work towards. On a day-to-day basis we compete in our market and in the CIS market, where we also have a strong presence. We compete with such global companies as Bosch, Hitachi, and Black & Decker.

In order to compete successfully in the future, we have to build a sectoral infrastructure, i.e. the entire chain from an idea to the final product – this is our strategy and our current objective. We know the consumer, we know what the consumer needs. This knowledge gives us the idea to develop pilot specimens, and that understandably involves the whole cycle starting with research and development, pilot production and serial production. But because we are a medium-sized company we cannot do everything on our own: we have to create an innovative production cluster – that is the cheapest and most flexible way. That includes universities, innovative companies, including RUSNANO – we cooperate with them in several areas. We set up a chair at the Moscow State University of Civil Engineering with government support (thank you for that), installed good equipment and a design system that has no equivalents – very few companies have such systems. So we are doing well in that respect.

But there are issues when it comes to serial production. Why? Because it is very difficult to organise production in Russia. It is much easier to do in China. So we went to China and set up two joint ventures there. Three years ago we tried…

Vladimir Putin: Is it easier or cheaper?

Vladimir Skityayev: Both cheaper and easier in terms of organisation, since the process began three years ago: we tried to build an enterprise, but it ground to a halt when it came to the allocation of land and getting planning permission. It turned out to be such a long-term and costly project that we simply could not afford it.

But interesting options of joint production with Russian enterprises exist. Take for example the Izhevsk Plant, which is a Federal State Unitary Enterprise, virtually the only enterprise that still has engineers and infrastructure, and is equipped for serial production. In fact, my first suggestion to the Agency is to look not only at one company, but at a whole sector, because, as it transpired during a conference of medium-sized companies yesterday, it is often necessary for businesses to create a cluster, as they need to cooperate with many similar medium-sized companies in the sector.

The other thing is that sometimes it’s just one or two companies that constitute the whole sector, while all the rest are imports, as is the case with pharmaceuticals, for example. I appreciate the fact that attention has been turned to such companies because if you take the FSUE I mentioned… It is an important element of infrastructure because it means R&D and the launch of production. Three or four years ago nobody was interested in the production of electric power tools. Any change, for example, a replacement of FSUE managers, would have put the whole segment in jeopardy. We would like the Agency to focus on preserving this enterprise so that it remains part of the sector and helps develop power tools production, especially as privatisation looms. We are just afraid that the production base will be lost.

Vladimir Putin: Buy it.

Vladimir Skityayev: We’ll try to.

Vladimir Putin: Is the enterprise slated for privatisation?

Vladimir Skityayev: Yes, it’s scheduled for this year, I think.

Vladimir Putin: Is it part of your cooperation?

Vladimir Skityayev: It is a very strong partner, we were developing very fast in the early 2000s. Together with Interskol we increased tools output tenfold.

Vladimir Putin: Very good. Give us your proposals because it is all too easy for an enterprise to get thrown onto the market. We have seen this happen at the start of the privatisation process. Somebody buys it up and then they offer it to someone who really needs it at a much higher price. If cooperation is already up and running, you are a private company that works with the FSUE, that can and must be taken into account in all the privatisation procedures. Submit your proposals and we will look at them. 

Vladimir Skityayev: Because in fact this sector is comprised of just one or two companies in Russia.

Vladimir Putin: I understand. Yes, I know. I would like to make two points. First, as you said, you are trying to promote your goods to the CIS markets. We are acting in several ways and it would be interesting to hear your opinion because we are actively working on a new free trade treaty within the CIS and the going is heavy, but on the whole the basic documents are ready. It would be interesting to hear your opinion, yours and those of your colleagues who work in the CIS markets – to analyse these documents in terms of their practical application in the near future. That is number one.

Second, you are aware of our initiatives as part of the Customs Union and the future Common Economic Space (starting January 1, 2012), which entails a deeper level of integration. I am referring to the coordination of macroeconomic and financial policies, etc.

Within the next year or so, we are going to embark on a deeper level of cooperation with these countries and create a structure similar to the European Union containing a stable system of supranational bodies. And in doing so, the opinions of people who are working in real life and the real economy is in great demand; therefore, we will discuss it within the framework of the agency. And, certainly, your remark that it is necessary to support cooperation and look into various projects when needed is very important. We will certainly pay attention to this. Thank you.

Please, Mr Bakulin, Volga Bus Group.

Alexei Bakulin: Good afternoon, Mr Putin. We talked to each other two weeks ago in Volgograd.

Vladimir Putin: Yes, I remember.

Alexei Bakulin: It was there that you proposed your initiative, and my colleagues and I enthusiastically embraced it as a significant and necessary platform for our small and medium-sized companies. We might put new ideas into practice on this platform because we are united by one thing: we all started from nothing, built our own companies, and created our own product range. In this case, Volzhanin produces the entire product range of modern buses. Actually, we have reached a certain state in which we are neither a small business nor a large company. And we naturally have certain needs for development.

However, we all understand perfectly well that the primary assets of such companies are people and innovations. Even in hard times, we support education, and now we invest in special training programmes for our experts. A year ago, we brought in the first ten experts from the Volzhsky Polytechnical Institute, and they are currently working at our plant. They didn’t need any period of transition or adaptation. We financed the entire programme.

Vladimir Putin: You financed…

Alexei Bakulin: We signed a target contract.

Vladimir Putin: When they entered the institute or later?

Alexei Bakulin: From the second year. These experts are now participating in our new project for the creation of a small bus. They are developing unique ideas and needed no time to adapt. Let me repeat that this is not enough for our company either: we need more resources and more people. Hence, my question is whether certain forms of support for such special education programmes in medium-sized businesses and industrial enterprises will be included in the agency’s initiatives. For today’s businesses, it is a very important issue.

The second question is connected with the first and is also of great importance: it has to do with innovation. In fact, we face a number of obstacles today, but we have some immunity to them and can overcome them. At the same time, these barriers should be eliminated because our time on the market is precious to us. When we presented our project in Volgograd, we underscored that this project was both a national priority and of value for export in light of the fact that a number of companies are interested in our product and even commission certain projects. By the way, our conference was very helpful because those international partners who took part in it signed contracts with us. Together, we are currently expanding to other areas – not only in the United Arab Emirates or the Czech Republic but in other countries as well. This is a very important and useful endeavor, and therefore I believe that these two issues should become an area of interest for the agency.

Vladimir Putin: The second one doesn’t need any explanation – obviously, we will review it. Have your partners settled on a new area of business with you or extended it after the Volgograd conference?

Alexei Bakulin: We prepared everything and awaited their decision. They made their final decision after the conference, and we signed the documents.

Vladimir Putin: This means they saw that you had support, and that played a certain role?

Alexei Bakulin: Yes, it played an important role, indeed.

Vladimir Putin: True, this is important in business, that much is clear. If they invest their money, spend their time, and provide technologies, it is important for them to see that our companies and projects are officially supported. This is true all over the world.

Incidentally, I proceed from the expectation that public support of entrepreneurs and their projects will be one of the agency’s key functions and will provide indirect assistance for the implementation of these ideas.

As for your first question, under the second area of the agency’s activity, “Young Professionals,” we will devise criteria for what a professional is, and these criteria will determine appropriate salaries, expectations, and managerial attitudes at all levels… However, this also entails the proposal of new professional education and training programmes. These programmes should be based on the experience you and your colleagues have – i.e., signing contracts with students for future work at the company. It is necessary to generalise, analyse, and evenly distribute such practices and opportunities all over the country. Naturally, I will try to encourage state structures to be guided by these best practices in their activity and plans. Thank you.

Please, Mr Dyomin, Splat-Kosmetika.

Yevgeny Dyomin: Mr Putin, colleagues, I represent the Splat Company. This is a national developer and manufacturer of innovative oral hygiene products. We are Russia’s No.1 domestic brand and are among the leaders overall on the Russian market with a 12% share.

Vladimir Putin: What products do you make?

Yevgeny Dyomin: Toothpaste.

Vladimir Putin: What is it called?

Yevgeny Dyomin: Splat.

Vladimir Putin: Splat. Is it really called that?

Yevgeny Dyomin: Yes, exactly.

Vladimir Putin: I was under the impression that there was nothing but Lacalut…

Yevgeny Dyomin: That just means we aren’t working efficiently enough. We will move forward.

Vladimir Putin: True. Nothing except Lacalut or something of the sort is advertised.

Yevgeny Dyomin:  Nevertheless, we have two laboratories, five international patents and over ten national patents. We count ourselves among fast-growing, innovative companies – these are the companies that are selected by the Expert Group agency for discussion platforms. The Gazel Congress, which is often discussed, was held yesterday. Such support is very important for us in this regard. The creation of the agency is a good initiative in terms of creating an integrative body that can perform important functions and enable rapidly growing innovation companies to address the issues that promote their growth. In particular, today’s basic issues are viewed in terms of innovation and R&D activity. For instance, this issue arises when we face international development activity with Japanese, Danish, and U.S. developers. The transfer of biological samples, bacteria, strains, tissues, etc. is a very sensitive issue for us. At present, such a procedure practically does not exist.

The second issue is the registration of intellectual property. We spend almost 1 million roubles per month on the protection of intellectual property, formulae, patents, and projects. And today the cost of trademark registration is still 20% higher than in China, for example.

Then there is the third issue. National exports account for over 16% of turnover, including exports to distant countries in such exotic places as Singapore or Taiwan. And we would welcome optimisation and assistance in the organisation of such export activity – in particular, in the field of financial monitoring. At present, if our customer withholds payment from us for one day, we have to sue him so that the financial monitoring service doesn’t impose sanctions against us. Singaporean companies do not understand that this is just a technicality and actually it doess’n contribute to the improvement of our busibess relations. Thus, if the agency facilitates such suprasectoral issues, it will help innovation companies a great deal.

Vladimir Putin: Could you get back to the first issue please?

Yevgeny Dyomin: The first issue is the organisation of international cooperation in research and development activity and, in particular, in the transfer of biological samples of bacteria.

Vladimir Putin: And what are the difficulties? Are these merely technical problems?

Yevgeny Dyomin: It is practically impossible. For example, it is forbidden to transfer tissues or living cells [across state lines].

Vladimir Putin: That’s what I mean: these are technical problems connected with customs regulations and so on.

Yevgeny Dyomin: For example, if Japan made a sample bacteria or strain for use, we are unable to receive it.

Vladimir Putin: You know, I have become convinced that the creation of this agency is a step in the right direction because of the number of issues and problems that exist without reaching centres of power. Just formulate them in concrete terms. I hope that we will cooperate in terms of specifics: you apply and receive a certain answer, the registration passes in a certain period, this is permissible and that is forbidden etc.

Yevgeny Dyomin: I see.

Vladimir Putin: In this way, we will find the right solutions and eliminate these problems that we term ‘administrative.’ This is the first point.

Second, it is necessary to provide assistance with registration. And we face a number of problems here. I’ve met the director of the International Bureau for the Protection of Intellectual Property just recently. Protection is good, but the entire process should be fast, transparent, and efficient to the utmost. As if we didn’t have enough problems in terms of non-resource related economic development! Besides, we have so many administrative barriers. Naturally, we will work in this direction. Finally, the same goes for monitoring. It is clear that your Singaporean partners are displeased. It is clear that such procedures are introduced in order to increase financial discipline and return earnings to the customs area of Russia. But we should stick to common sense and make these procedures correspond to international standards so that they aid our companies rather than impede them. We will review this issue by all means.

Yevgeny Dyomin: Thank you very much. I have a brief proposal: Why not stop calling companies ‘medium-sized’? ‘Medium-sized’ is a way of saying neither good, nor bad. Let’s invent a new word, like ‘emerging’ or ‘fast-growing.’

Vladimir Putin: Do you have a suggestion?

Yevgeny Dyomin: Our experts are doing a good job in this regard. Let them make the suggestions.

Vladimir Putin: All right.

Yevgeny Dyomin: Thank you so much.

Vladimir Putin: I agree. Let’s give up the word ‘medium-sized’ and replace it with something else. Thank you very much.

Please, Mr Gordiyenko, speaking on social issues.

Alexander Gordienko: Mr Putin, colleagues! I should emphasise that this is the first time I have addressed such an esteemed audience, and I apologise for any trepidation I may be feeling. Let me introduce myself again. My name is Alexander Gordienko, and I am the executive director of the Krylya Foundation, a charity organisation specialising in the social adaptation of children in government children's institutions. I am also a PhD student in law at the Russian State University for the Humanities.

I would like to say a few words about the Krylya Foundation. Our mission is to develop new models of social adaptation for orphans living in children’s homes, as well as to develop social technologies for the implementation of these models in the everyday practice of Russian orphanages. These models are based on the idea of self-management. In my speech, I would like to discuss three issues we are currently facing and ask Mr Putin if the agency could help us resolve them. Currently, we have developed technologies and recommendations in three major areas.

First, we have been discussing the idea of establishing a professional volunteer organisation among leading Russian universities beginning in Moscow. What is our idea? The idea is that volunteer organisations… What problems do they face? Above all, constant staff turnover. They lose their activists. Organisations dissolve. Beneficiaries of charitable services are left without effective aid. There are other problems as well. We suggest creating a professional organisation that would function as an entire institution that could remain in place and continue helping children. We are ready to arrange relevant qualification courses at each participating university to ensure satisfactory results. This brings us to another question. Will the agency be able to assist us in building ties with the universities and promoting this idea?

The second issue directly regards institutions for children’s self-management at children’s homes. This is the third year that we have organised an interactive educational camp at which children can model their own states with political, economic, social, and cultural institutions. They are encouraged to learn about and explore the society in which they are to live while still enrolled in children’s homes.

If there is such an opportunity, we suggest selecting a children’s home in Moscow or the Moscow Region – and we have several candidates – and turning it into a federal site for implementing experimental models of children’s self-management. Should these models be successful, they could be expanded to other children’s homes. This is in fact the model that Pavel Astakhov, the head of our department and a children’s rights ombudsman, was talking about. He believes this opportunity must be taken.

Third, there is the issue of social control in children’s homes and boarding schools. The fact is that many educational projects are difficult to implement because access to children’s homes must be authorised by their administrators. Good relationships mean open access, and there is no other way.

Vladislav Surkov’s work group is developing a law on the social control of children’s homes. We would like to ask you to adopt the law as soon as possible so that its results can be seen as soon as possible. We will try to report on whether any part of the law is not being observed.

Another question concerns abbreviations. SIA stands for the Strategic Initiatives Agency. You have probably heard about another strategic agency, the Social Information Agency. This organisation has been involved in development of civil society institutions for 17 years. It is one of the leading bodies in the strategic sector. It is possible that these two abbreviations will be confused. I would suggest renaming the Strategic Initiatives Agency of Russia as the Russian Strategic Initiatives Agency. That is my last point.

Vladimir Putin: I can easily answer the last question. We will make an effort to ensure these two organisations can be clearly identified and are not confused with each other. As for the other issues you raised, the law must certainly be adopted, and we are working on that. You are a professional, so it should be clear to you that it would not be right to allow open access to such organisations. This access must be granted exclusively to reliable and trustworthy people who are willing to help children. We cannot let just anyone in. Therefore, there must be some restrictions and social control so that children’s homes are not closed for external supervision. Unfortunately, more often than not, government bodies cannot provide proper supervision, if any at all.

The main issue is, of course, the first one you mentioned. I believe that your concept is plausible and that universities could assist in recruiting volunteers for successful charitable projects that would continue institutionally even when their staffs leave to become more involved in professional activity or family life. It is certainly important. We will make every effort to help you find proper grounding for this project.

Alexander Gordienko: Thank you. Thank you very much.

Vladimir Putin: Thank you. This work is very important. It looks very promising as part of the Social Projects initiative.

Alexander Gordienko: Can we possibly send you our proposal?

Vladimir Putin: Certainly. That is the reason this agency was created.

Alexander Gordienko: Thank you.

Vladimir Putin: Colleagues, are there any more questions? Please.

Alexander Tolstykh: Mr Putin, colleagues! My name is Alexander Tolstykh, KIT engineering holding. I have a few short recommendations in regard to the agency’s activity.

Vladimir Putin: Please.

Alexander Tolstykh: KIT produces industrial equipment. From the very beginning, our colleagues were puzzled, to put it mildly, because they believed we were simply a venture project. Nobody would risk investing in the development of new equipment or materials. But, in fact, new equipment is generally quite sought after. Mr Putin, I suggest that the agency play a role as mediator between potential manufacturers and state corporations, which are one of the major consumers of new Russian products. Our work is in great demand, but we need something to show for it.

Vladimir Putin: As I understand it, what is needed is a strong market.

Alexander Tolstykh: Absolutely. If there were a strong market, investors would be willing to fund domestic manufacturers, and this would solve a truly pressing problem. We are ready to expand production, but our capacity is not large enough to cover the whole market. This issue, I believe, is more relevant to the New Business initiative.

Second. Yesterday Russian President signed a decree creating the Federal Innovation Service. We believe it was a right and timely decision that will help improve investment climate in Russia. Mr Putin, perhaps it would be right to develop the agency’s international relations for this purpose, also as part of the New Business initiative. International relations regarding both export and import of our technologies to establish new enterprises in Russia that would, of course, involve Russian technologies as well.

Another issue concerns proposals on the agency’s cooperation with other specialised authorities and ministries in providing training in highly unique areas of engineering. We have our own design bureau. But, to be honest, Mr Putin, it is hard to find experts younger than 50 even if companies are willing to pay them decent salaries. Young people are often not aware of the fact that the industry is seeking designers and engineers and that they can make very good money – even more than lawyers or economists, whose numbers are already overflowing. In pursuing this initiative, the agency could enlist the help of potential employers and specialised ministries and perhaps even form a pool of the professionals in question.

Vladimir Putin: Yes, this issue may certainly be considered under the second initiative with regard to vocational training and new educational programmes.

Speaking of the protection of domestic markets, in your industry, for instance, domestic production is vital. I should say we are constantly addressing this issue. Recently, there was a meeting on power engineering, and we mentioned that our companies, large companies… Do you know how many orders they have received for the next few years? Energy companies have placed orders in the amount of three trillion roubles! That is what I call a market! Unfortunately, a significant amount of these funds are used to buy foreign equipment. And it is important to have what we call value for money. But the companies often rely on traditionally acclaimed suppliers and pay for a brand rather than for quality. One of the agency’s goals is to promote domestic production.

Alexander Tolstykh: Thank you very much, Mr Putin.

Vladimir Putin: Go ahead please. I am sorry there is little time left. But go ahead, by all means.

Vladimir Gyunter: I am Vladimir Gyunter, from the company NPO Arktur. It is a research and development company in science and technology.

Mr Putin, first of all I would like to agree with what you said about how important it is to support companies which are making forays into international markets or are already operating there. I am referring to the CIS markets primarily, because to be honest, it is much easier for a Russian company to operate where Russia has had longstanding economic interests. We believe successful export numbers to be the main tangible result of our performance.

However, we have faced some difficulties while trying to expand in this market. We applied to the Foreign Ministry, but received no response. So we are hoping that the Strategic Initiatives Agency will be the coordinator here. Strong support from the president and the prime minister could promote the necessary decisions, in cases where officials seem incapable of defending Russia’s interests.

We have a proposal: it could help if a 10%-20% quota is allocated to companies which have entered a foreign market and would like to establish a foothold there. If such a company runs into a problem, it would be in bad need of government support.

Vladimir Putin: We could do that. You have in fact mentioned three aspects of support. The first is administrative and diplomatic support for our companies’ projects and interests abroad, mainly in the CIS.

The second – I have already mentioned this but would like to repeat it now: we are working on a new agreement to establish a free trade zone in the CIS. There are other integration-related ideas too. Our colleagues could join us to tell us how various parts of our agreements work in practice.

The third is financial support for exports. All three measures are possible, and we will certainly work our hardest to have the agency focus on them.

I am sorry, I really have limited time… I must go on. Next please. Let’s make this the last question for today. We’ll meet again, more than once. This is what this agency is about: we will meet regularly to discuss current problems. Go ahead please.

Yelizaveta Oleskina (coordinator of the volunteer group “Old Age is a Blessing”): Thank you very much. I am sorry to delay you. But it is an honor for us to be here. I represent the volunteer movement “Old Age is a Blessing.” We have been active for four years – visiting nursing homes for older people, helping the elderly in rural hospitals and rural retirement homes. We believe that the agency could support one of our volunteer projects involving cooperation between universities, students and small rural nursing homes. We are thinking the agency could help us expand – we only operate in 17 regions now, while there are nursing homes everywhere across the country.

I believe we could achieve better results if more students and young people were better informed. Ideally, there would be no uninvolved young people or lonely old people anymore. On the other hand, we have encountered a problem we cannot tackle without help. We have noted a very strange new trend: rural nursing homes and hospitals are being shut down. Officials explain this by some obscure reorganization, or optimization, or integration. But in reality, this kills whole villages, because the small institutions no longer provide jobs to the local population and old people are being uprooted and moved away from a familiar environment. They fail to adapt in bigger institutions and we in fact witness their extinction. I think there is some misunderstanding. Take the Tula Region, for example. If you ask the regional and municipal governments why they are closing hospitals, they point to each other or say it is all for the good, for lack of better arguments.

Vladimir Putin: Oh, they do have arguments. It is as simple as with small rural schools. I will be honest with you and describe things the way they are. Small schools’ upkeep is costly while the quality of education they offer is low. What else could it be if a P.E. teacher also teaches math and physics and history? With all due respect for their selfless devotion and all the effort they put into professional growth, they cannot compare with modern education centres which are cheaper.

I am referring to the aggregate costs which include rent and maintenance, electricity and heating, administrative staff and so on. With the small nursing homes you were talking about – just like with schools – one needs to make a wise decision in each case. It is wrong to close them all. Roads need to be built first, and large education centres must be available. There is one proposal to reorganize small schools as branches of large centres instead of closing them. This could cut administrative costs. A similar solution could work in your area. We’ll think about it.

I would like to thank you all.

Yury Lipatov: Mr Putin, would you answer one last question from the media? It would be only fair.

Vladimir Putin: The journalists are here to cover our work, not to join or disrupt it.

Yury Lipatov: We won’t get in your way! We are trying to help.

Vladimir Putin: Just kidding. Fire away.

Yury Lipatov: I am Yury Lipatov, Channel One. I would like to ask you to clarify a few things. In lay terms, what kind of assistance will the agency give small business? The grants you discussed or the paper signed with your name? How will it work, technically? What would a person have to do to receive any of that? Send a letter? To some ministry?

Vladimir Putin: I thought we had discussed that already. Let me repeat: we are creating a structured body. At first, we will elect agency’s leaders who will be responsible for each of the three areas of the agency’s activity. The selection procedure will begin online, and then we will hold an open tender. We will meet regularly, and will hire some support staff to accumulate proposals and projects. The leaders in three areas of agency activities will meet in various formats; they will also meet with project managers and company executives. Some of them are here now, while others joined us earlier during the videoconference. They will collect and study proposals and forward them to the expert council. The council will select the best projects and suggest the best suitable format of support.

We will help companies raise loans or obtain state guarantees. We will engage in dialogues to amend the government’s regulatory acts and even federal laws. I am referring to proposals similar to the one we discussed today – about changing some technicalities concerning the control over foreign-currency flow, the time limit for bringing the money back into Russia, and the support of high-tech exports.

For instance, there are several different support options for high-tech export projects: they can be financed from the high-tech exports support fund, or unnecessary customs barriers can be removed. All such proposals will be considered to decide what kinds of support the company needs to implement its project.

Yury Lipatov: Many would say that this project is snapping at the heels of the new high-tech hub, Skolkovo. Some would find political motives behind this story. Could you comment on this?

Vladimir Putin: They shouldn’t be thinking that. There are no political motives. No one is going to snap at anything. If you look at the national development programme until 2020 – known as Strategy 2020 – it is mainly focused on restructuring the national economy and making it innovation-based. This is crucial for the country. That is why I can say that, while Skolkovo is a good and relevant project, which convenes interesting people and innovative projects at a new well-equipped site, this project we are talking about now is a networking project. It will be working across the country, and the two will perfectly complement each other. That’s all.

Yury Lipatov: Thank you.

Vladimir Putin: You are welcome. Thank you all, good bye.

Thanks for joining us. I am confident – as I am sure you have been convinced too – that this proposed format of cooperation between government bodies and individuals implementing important social or business projects is highly relevant. I have heard further proof of this during our discussion today. Thank you very much, good bye, see you soon.