OREANDA-NEWS. May 24, 2012. Vladimir Putin held a meeting with representatives of the Russian Union of Industrialists and Entrepreneurs, the Chamber of Commerce, Agency for Strategic Initiatives, national public associations Delovaya Rossiya and OPORA Russia.

The meeting participants discussed measures to support small and medium business, and current aspects of relations between the state and the business community.

The meeting took place in the run-up to the Day of Russian Entrepreneurship, which is celebrated on May 26.

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PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon, colleagues,

This meeting is being held in the run-up to the Day of Russian Entrepreneurship, which will be marked the day after tomorrow. I would like to congratulate you and the entire Russian business community and to express hope that we will continue actively working together, like we did in the past, and by “we” I mean government agencies and the business community.

In Russia, entrepreneurship has deep roots. Merchants have always enjoyed respect in our country, and the Russian merchant’s word of honour  – as we often point out – always had great weight and was more valued than an official contract.

I want to note that in recent years, as I've already said on numerous occasions and want to emphasise once again since this becomes particularly apparent in times of crisis, entrepreneurs have shown themselves to be responsible professionals, aware of the social significance of the work to which they devoted their lives, mindful of the people and working in partnership with the state.

I hope that this tradition will continue and that to a large extent you will be responsible for formulating Russia’s business policy jointly with the Government and the Presidential Executive Office, and will set the tone for creating the best business environment in Russia. I am referring to the business initiative and the roadmap we discussed earlier.

I suggest that today, as agreed, we will have an informal conversation on the issues that you are concerned about. I think this is the best way to discuss business matters.

Mr Shokhin, please.

PRESIDENT OF THE RUSSIAN UNION OF INDUSTRIALISTS AND ENTREPRENEURS ALEXANDER SHOKHIN: First, I think every one of the leaders of business associations present here would like to thank you for the opportunity to discuss the key issues of interaction between the business community and the state on the eve of the Day of Russian Entrepreneurship.

It is critical to reach an understanding now, at the start of the new Government’s work and in the context of the development of mechanisms and measures for the implementation of the executive orders issued by you on May 7, primarily, as I see it, regarding the technology of interaction between business and the state. Many of these technologies were developed in recent years and are quite effective. I will mention only the regulatory impact assessment, which involves all the leading business associations in a practical evaluation of draft laws.

In the last days of the previous Government a directive was issued on the extension of mechanisms similar to regulatory impact assessment to almost all legislation except the tax and customs laws. It is crucial that your executive order provides for a further development of such mechanisms, formal mechanisms for interaction with the business community. In particular, it stipulates the extension of regulatory impact assessment to customs and taxes and to the second reading of draft laws. This is what we have discussed at length recently, and I think it is very important for us that it has been formulated as a specific task with deadlines and specific instructions to the Government.

What issues do we think could be addressed in the near future, considering that we have been working at a good rate on the formation of interaction mechanisms between business and the state? First, we would like to be involved in the procedure of drafting, discussing and finalising the reports that are prepared by federal bodies of executive power on the President’s or the Prime Minister’s instructions.

The reason is that these reports set out not only the strategic development trends in a particular sector, but as a rule, they incorporate an action plan with a list of specific draft laws, draft Government resolutions, and so on. Naturally, it would be useful for the business community to take part in this work because if the ideology is being created without us, it becomes more difficult to adjust draft laws. It would certainly make sense to formalise the participation of business associations in the preparation of proposals that will be drafted on the execution of your executive orders of May 7.

In addition, it would be expedient to begin work on a number of agreements that have already been reached even before the deadlines set in your executive orders. In particular, if we talk about the inclusion of businesses in the discussion of draft laws prepared for the second reading, we would like to propose a mechanism that has already been tested by us with the Economic Development Ministry.

Each business association could name, say, five of the most sensitive drat laws for a particular association and business sectors; after that we would hold a vote and select several (for example, five again) draft laws that could go through the regulatory impact assessment procedure before the second reading.

Another issue that I think also needs to be agreed is the priority of institutional mechanisms of interaction between government and business. This doesn’t apply only to the business community; it probably concerns all civil society institutions. We have a number of venues and I must say that business is represented in different ways: in some cases as a combination of institutions of leading business associations, and in other cases prominent business figures are involved, who represent to a greater degree their own expert opinion.

It would, perhaps, be better to give priority to institutional mechanisms, especially since a number of venues will be established in the near future under the President, the Government and so on. It would be beneficial to preserve the current achievements in interaction that are linked with the involvement of the leading business associations.

In addition, I would like to raise another set of questions, some significant themes, in particular, on promoting modernisation and innovative development. Your executive orders outline a number of areas and set the deadlines; however, it would be preferable for the mechanisms recommended by the Finance Ministry and Economic Development Ministry to be launched from January 1, 2013. I am primarily referring to the tax holiday and exemption of new projects and newly introduced equipment from a number of taxes.

Also, it would be possible to reduce the administrative burden on business from next year if the multiple forms of accountability are eliminated. In particular, we believe – and it is mentioned in your executive orders, - that it would be sufficient to let companies choose the form of tax returns they wish to use, based either on Russian accounting standards or on international standards. If a company is public and operates in international capital markets, it will choose IFRS, whereas if it operates in the Russian economic space it will prefer the Russian accounting standards.

Unfortunately, there are certain inconsistencies at present. On the one hand, the right mechanisms are being introduced, such as the limitation of direct state control and the transition to such mechanisms as compulsory liability insurance. But at the same time, the old mechanisms of supervision and control not only remain but become more stringent. This is especially noticeable in the field of technical regulation and control of hazardous facilities, where all mechanisms are duplicated.

There is another issue that many members of the Russian Union of Industrialists and Entrepreneurs raise, as well as our colleagues in other business associations: the new Civil Code. It is a very important document, in fact, 25% of the Civil Code has been revised. It contains many provisions that are valid but relatively new and businesses need to assimilate them. We would like to conduct a public discussion of the new version of the Civil Code when it is prepared for a second reading, perhaps in the framework of the technology that I talked about earlier (the regulatory impact assessment before the second reading).

What are the most difficult aspects here? First, it introduces new concepts of property rights, which replace the existing ones: the right to rent and so on. In principle, this needs to be done, and we must move in that direction. But at the same time we believe that sufficiently long transition periods should be established for such complex issues that completely change the rules of the game and the legal environment for business. Thus, the new regulations shouldn’t be introduced from September 1 or January 1, but should be postponed for three to five years. That would be better than delaying the adoption of the Civil Code.

I would like to mention another topic, one that we have already discussed: the introduction of the Commissioner for Entrepreneurs’ Rights. We propose that a decision is prepared by December 1. We believe that it is already possible to start this work. In particular, if a Presidential Council was created to protect the rights of entrepreneurs and the Commissioner were made Chairman of that Council, then at least the content of the Commissioner’s work could be planned with the participation of the business community.

In addition, we believe that you were absolutely right to formulate this issue from the outset in terms of giving the Commissioner procedural powers. It should not be just an office to deal with complaints from businesses; it must have real procedural powers, standards for the Commissioner’s participation in assessing the current regulatory framework, which may fail occasionally. In principle, we could now begin to put these mechanisms in place, while the Commissioner and the Presidential Council would generate such ideas, especially if all the business associations take part in this work.