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Countries Competing for Economic Growth: What is Russia's Plan?
5 September 2019
13:45—15:15
KEY CONCLUSIONS
Facilitating sustainable economic growth is one of Russia's key objectives

Economic growth is of primary importance, it is vital to create a Russian non-commodity economy, create Russian jobs, and address all of the problems, social and otherwise, that are facing our country — Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.

Economic diversification is at the root of a country's competitiveness

A wealth of natural resources always creates dependence and addiction. As soon as you depend on natural resources, it becomes very difficult to walk away and try to develop other economic areas, such as industry, agriculture, and services. For this reason, on the one hand, you must preserve your wealth of natural resources, but on the other hand, you must think not only about the present, but also about the future. If you want to preserve your competitiveness in the future, you need to get involved in those services that offer a lot of added value — Bambang Brodjonegoro, Minister of National Development Planning of the Republic of Indonesia.

The state is ready to create conditions for the development of industry

Today, the Russian Federation is ready to provide a flexible set of legal regulations that are convenient for businesses, including for innovation in business, and that also preserve reason and justice and enforce federal law — Alexander Konovalov, Minister of Justice of the Russian Federation.

ISSUES
Underdeveloped justice system

We must return to reforming the justice system. I am concerned about judges’ professionalism and the general trend in the composition of the judiciary. If 60% of today's judiciary is composed of assistants and secretaries, this is a fairly closed elite group that, maybe does not have an inadequate picture of what is going on in the economy, but does issue inadequate decisions, as we have seen — Oleg Deripaska, Founder, RUSAL; Founder, Volnoye Delo Foundation .

Among my colleagues, managers and entrepreneurs, there is not a single person that believes that, if a prosecutor were to come into court and demand that they be locked up in a detention facility, there might be even a single judge that would disagree with the prosecutor and not sign the order. Mentality-wise, businesses do not expect to be granted the right to a defence. It is difficult to anticipate economic growth while this continues — Mikhail Shamolin, President, Chairman of the Board, Segezha Group .

Underdeveloped financial system

Russia does not have an independent banking system; we have a Central Bank and its affiliates. For some reason, the independent actors have been destroyed – I think this is another question that needs to be addressed. In its time, the creation of a mega-regulator, according to Shuvalov and Dmitry Medvedev, was supposed to accelerate economic growth. If six years have passed since the mega-regulator was formed and economic growth has not accelerated, then we need to take another step — Oleg Deripaska, Founder, RUSAL; Founder, Volnoye Delo Foundation .

Accelerating economic growth, even by 2 to 3%, is impossible with today's strict monetary policy. So, no matter how much we talk about it, the issue remains. Our money is too expensive — Andrei Klepach, Chief Economist, State Development Corporation VEB.RF .

Lack of qualified staff

Russia is currently lacking in educational genetics. For example, we created our own genetics company, tried to find specialists in the Academy of Sciences, and realized that there were no modern researchers capable of keeping up with the times. We are forced to use Western science — Vadim Moshkovich, Chairman of the Board of Directors, Rusagro.

Logistical limitations

What problems are we facing in Khabarovsk? Logistics primarily – it is outrageously expensive. <...> Prices in the Russian Far East are at least three times higher — Sergey Kolesnikov, President of TechnoNIKOL Corporation.

SOLUTIONS
Stable macroeconomic conditions

How can we achieve economic growth? We need to sustain a constant and significant rise in consumption. How? We must, most certainly, hold off inflation. <…> Maintaining a 3% inflation rate enables stable consumption — Bambang Brodjonegoro, Minister of National Development Planning of the Republic of Indonesia.

Developing prospective economic industries

Our commodities resources are very attractive and creating chains capable of processing and producing components for the automotive industry, machine industry, and all manner of things related to energy storage – there is no doubt that this can be and will done in Russia — Oleg Deripaska, Founder, RUSAL; Founder, Volnoye Delo Foundation .

Agriculture remains one of the drivers of the Russian economy, we are seeing annual growth and if we do see any limitations, they are purely structural — Vadim Moshkovich, Chairman of the Board of Directors, Rusagro.

Expanding international cooperation in attracting investment

Creating favourable business conditions will accelerate the development of bilateral economic relations. We currently have a fairly modest trade turnover – USD 4.5 billion. As our deputy prime minister noted, we hope that this figure will double to USD 10 billion in the near future — Hoang Ve Dung, Chairman of the Board of Directors, Duc Giang Corporation.

Increasing investment is an important issue. This is difficult, since an increase in investments depends in part on the foreign investment index, which, for us, is primarily tied to consumption of natural resources. When commodity prices increase, foreign direct investment increases as well — Bambang Brodjonegoro, Minister of National Development Planning of the Republic of Indonesia.

Creating convenient conditions for entrepreneurs

I have high hopes for the Far Eastern region, which has a lot of potential when it comes to the division of labour. I hope that the region will see the creation of serious arbitrage institutions that will be effective in helping businesses operate and answering businesses’ questions — Alexander Konovalov, Minister of Justice of the Russian Federation.

It is important that businesses are able to invest in Russia both safely and, most importantly, profitably. This is what the Russian economy is currently lacking — Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.

Reforming the justice system

Russia's justice system is moving in a positive direction – the right direction. I can testify to that. 27 years ago, I started going to court's as a public prosecutor, representative of the prosecutor's office, etc., and the justice system has changed dramatically over these years. <...> The issue of creating a judiciary is under discussion, our situation is not ideal — Alexander Konovalov, Minister of Justice of the Russian Federation.

Increasing state investment in the social sphere

If we were to take healthcare and education and calculate their funding shortfall, it would at least be in the range of 1.5 to 2 percentage points of the GDP, at least RUB 2 trillion. This is what we should not save but should invest in the development of our economy instead — Andrei Klepach, Chief Economist, State Development Corporation VEB.RF .

Special conditions for remote regions

There are territories that were on uneven footing from the start: in terms of logistics, energy costs, and labour resources. The state must identify such territories and help them develop by providing them with a simpler set of rules and attracting businessmen to that region — Vadim Khromov, Deputy Chairman of the Moscow Region Government.

The material was prepared by the Russian news agency TASS