Minister Elvira Nabiullina spoke at the meeting of the International Council for Cooperation and Investment of the RUIE (Russian Union of Industrialists and Entrepreneurs)
16.04.10On April,16, 2010 Minister Elvira Nabiullina spoke at the meeting of the International Council for Cooperation and Investment at the Russian Union of Industrialists and Entrepreneurs, dedicated to the discussion on "Russia in the international global strategies of foreign companies."
The meeting of the International Council held in the framework of a Week of Russian business organized by RUIE was attended by A. Shokhin, the President of RUIE A. Denisov, First Deputy Minister of Foreign Affairs of the Russian Federation, V. Vekselberg, the Chairman of the Supervisory Committee of the Renova Group of Companies and Chairman of the RUIE International Cooperation, A. Mordashov, the OAO Severstal CEO and the chairman of RUIE Committee for Trade Policy and WTO and representatives of foreign companies.
A Speech by Minister Elvira Nabiullina at a meeting of the International Council for Cooperation and Investment at the Russian Union of Industrialists and Entrepreneurs on “Russia in the international global strategies of foreign companies ", Moscow, April 16, 2010.
Our economy might definitely be regarded as recovering which is certainly an important factor for modernization. According to recent reports, in March 2010, the industry saw an increase by 5.7% compared to the corresponding period of the last year. Growth with purified seasonal and calendar factors was 0.1%. This is a not much, still it's better than in February when it declined. A positive sign is the fact that in March an increase occurred primarily due to the manufacturing sectors of the economy. it is 0.3% with purified seasonality.
We expect investment growth in order to support the revitalization of the economy. It has been repeatedly stated earlier that the tasks of modernization require that the growth of investment should reach 30% of GDP. Both national and foreign capital is required for obtaining such growth. As regards the foreign capital we are talking primarily about long-term direct investment.
We learn about problems with the investment climate from the data in various rankings and we get information on the implementation of various investment projects. Therefore, the Government has now organized a systematic work on the consistent improvement of investment climate, which will soon bring measurable results. To begin let me remind you of what has already been done for several years.
Firstly, there is systematic work going on in order to reduce administrative barriers. In that way for 10 years the number of types of licensed activities reduced from 500 to 74. Last year the mandatory certification was lifted on a wide range of goods.
Proposals are being prepared In the Government in the framework of the activities of the commission on administrative reform for the removal of various restrictions in specific sectors. Such plans have already been approved in agriculture, construction, health and education. What is meant here is the procedures for obtaining permits and approvals and about control and supervision activities.
Last year we did a lot of job reducing the number of inspections, which were primarily related to small business. Measures which required approval from the Prosecutor General's Office of Russia were put into effect. I must say that this has given some effect and led to a reduction in the number of inspections. According to the Prosecutor General's Office in 2009 they received over 37,000 applications to conduct unscheduled inspections and only half of which were agreed upon. And that means that for half of the instances the inspection was denied. And the statistics for various regions are different. For example, in Moscow, the number of declined inspections was more than 70% and in the Voronezh region it was 29%.
There also a tendency has been displayed to reduce the field tax audits. While in 2005 there were 220,000 of them, then in 2009 there were already 86 000 of them.
And, finally, about the taxes themselves, which are considered by investors as a major component of the investment climate. We continued our policy to reduce tax burden and to increase their incentive effect. From 1 January 2009 depreciation premium on income tax increased by 3 times and also a special multiplying factor for depreciable assets that are used only for scientific and technical activities was introduced. Corporate income tax rate has also been reduced. Expenditures on education, medical care and so on were exempt from taxes. It is very important for us that the tax actions were carried along with the stimulating effect.
The next topic, which is very important for both national and foreign investors is a problem of connecting to the infrastructure. We also began the work on this issue with small businesses. The order to connect small businesses to the power grids was liberalized. It also gave some effect. But now we want to extend this practice to other companies. This means the introduction of standard contracts with strict obligations and rights of the parties and the liability for contract terms from the power supply utility companies in case of failure to comply.
The next task we have set is to reduce the time of the beginning of investment projects. Work in this area is being conducted not only in order to change the regulatory framework including, for example, the introduction of the possibility of the independent expertise in investment construction projects. We select best practices in the Federal regions in implementation of investment projects and will replicate it across the country. Investors know that different regions have different practices. Despite the common legal framework both the number of procedures and terms of agreement are very different. Therefore, not only the work on legislation is very important, but also the organizational work with different regions. We will conduct a regular monitoring of the situation in the regions based on international standards in order to monitor the situation and to consistently improve it.
Next topic is related to the customs administration. Basic provisions of the Customs Code of the Customs Union have already been prepared. Proposals which were announced by the businesses and, primarily, by the Russian Union of Industrialists and Entrepreneurs on facilitation of customs administration were included into this project. It concerns first of all the simplification of customs procedures for import-export of high technology products. But there is the next stage of work ahead of us, so that procedures transparent and easy for business at the level of national legislation are to be fixed . And, of course, the key thing is the law-enforcement practice of customs administrative work.
The next topic is simplification of the migration regime in order to attract skilled foreign workforce. A corresponding draft of the Federal law is already being prepared for a second reading by Parliament. In our view, it would allow the removal of restrictions in attracting highly skilled workforce to the country. This law needs to be supported by bilateral agreements also.
The next most important area is the reducing of the state's share in the economy, including the sale of the share of government shareholdings. We are also working with the businesses in these directions. Recently there was a substantial discussion about how to organize the privatization process in a best way and prevent the proliferation of the public sector. Plan of action in this direction is being prepared.
A new mechanism to solve specific problems in implementing investment projects started working for foreign investors. What is meant here is a new format of the Consultative Council for Foreign Investments of the Government of the Russian Federation. The first applications of investors have already been submitted to the Executive Committee of the Board. They have either been resolved or are in the process of resolution. I think that ICCI can work closely with FIAC on issues about how to run business in Russia.
And in conclusion I would like to say that by pursuing a consistent policy of improvement of the investment climate in Russia, we must do it on a bilateral mutual basis. We support the investment of Russian companies abroad. But our investors abroad are not always welcomed "with open arms." More and more signals of the violation of rights of Russian investors come from abroad. I think that we also have to discuss this issue including in the framework of the International Council.
Minister Elvira Nabiullina attended a meeting of the Working Group on the development of business ties and trade and economic relations of the Russian-American Presidential Commission.