The creation of new jobs and increase of real incomes are the key priority of our state. It's not just about economy, it's about politics, Vladimir Putin said today, speaking at the State Council. The meeting was devoted to attracting investments to the regions and facilitating business procedures. His speech was rather tough, despite it being almost New Year. "Whom do you allow to earn money?" Putin asked the governors. "Stop regulating everything you see." This message was addressed to federal officials.
Denis Davydov has the details.
Late December is the traditional time for the final State Council sessions. Today, all the 85 Russian governors have gathered in the Kremlin. The agenda concerns each of them — the investment attractiveness of the regions.
The President raises questions about how the regions themselves can earn rather than living on credit or the federal subsidies. The public debt of Russian subjects is more than two trillion rubles. Naturally, the financial instability of the regions is reflected in the interest of investors. Business is interested in those who make money and not just live high on the hog on credit.
Vladimir Putin: "The resources that you receive should lead to the revitalization of your financial status. No need to become further indebted wasting your resources on what you think is most appropriate and plunge into this debt hole again. There are examples of some regions that are holding back on getting refinanced even when there's such a possibility remaining in the system of credit relations with private banks. It's plain weird. I'll look into it once again. There is an opportunity to get refinanced, get a low interest and receive government funding but they still do business with private banks at a high interest rate. Who are you helping to get rich?"
The governors are silent. Instead, the question is answered by the LDPR leader Vladimir Zhirinovsky.
Vladimir Zhirinovsky, leader of LDPR: "Having large private bank loans they are offered to get cheaper loans but they refuse to get refinanced. It's the first sign of some corrupt scheming going on. We must quickly replace those fellows who refuse to get refinanced".
The Ministry of Finance points out the low financial discipline of debtors.
Anton Siluanov, Minister of Finance: "We signed agreements on loans and financial aid several times. Three or four of them weren't fulfilled — a systematic failure to fulfill the obligations. How can this be? In these circumstances, it's impossible to talk about the investment attractiveness".
There are some exemplary regions. 21 Russian region managed to increase investment growth by 40% during the crisis.
In the special economic zone Uzlovaya in the Tula Region the production of flexible steel pipes was established. Previously, they were produced only in the US.
Alexey Dyumin, governor of the Tula Region: "In 2018, seven residents of our Region are opening new enterprises".
Under the heavy pressure of sanctions Crimea manages to attract foreign investors.
Sergey Aksyonov, governor of Crimea: "Germany, Austria, Switzerland the Czech Republic, Bulgaria. We don't name them publicly due to the sanctions".
The bureaucracy does not allow business to unfold. Instead of doing business, investors have to spend a lot of time coordinating. It took the legal entities 43 days to connect to electricity networks. After the complaints of entrepreneurs, the time was reduced to 13.
The inspections of the supervisory authorities are yet another problem.
Andrey Nikitin, governor of the Novgorod Region: "All inspections must be recorded. The video must be kept for at least one year and submitted to the prosecuting authorities for them to execute their supervisory functions".
Pressure on entrepreneurs sometimes makes them go into the shadows where it's easier to do business.
Boris Titov, Presidential Commissioner for Entrepreneurs’ Rights: "We estimate the turnover of the shadow sector to be 33.6 trillion rubles. It's 39% of our GDP".
Vladimir Putin: "Nothing surprising about it. Some European leaders told me that they've got 40%. That means our situation is not unique. It's still bad though. We must be better than them. We must eliminate this Grey area. We must execute not only punitive measures forcing everyone to work fairly. We must create favorable conditions. Both the government and the regions are responsible for that".
The government entities are also complaining about the heavy administrative pressure. They are receiving fairly odd orders from the capital: "We are supposed to have a certain number of mirrors and clocks on the walls and chess boards on the tables".
Vladimir Putin: "We must stop this. The number of mirrors and clocks on the walls... At least they are not ordering particular officials to wear particularly colored underwear. It's ridiculous. The excessive regulation of every single aspect is pointless and harmful".
In order to facilitate the clearance procedures last year Putin issued a decree reducing the time for issuing construction permits. Now, the papers must be issued within seven days. Many cities have no general layouts. The regions have many hectares of unregistered land.
Sergey Mironov, leader of A Just Russia: "About 30 million hectares are not assigned at all. For example, you can imagine the territory of Spain where the land is virtually assigned to ghost owners. In this regard, I believe it's necessary to legislatively set a date after which those farmlands whose owners did not declare their ownership should be transferred to the municipal authorities".
An important factor that affects the investment climate is the tax environment. The regions use it differently. Some give a personal property tax concession, others don't. To determine the competitive advantages of each territory The president demands a long-term development strategy for the country to be submitted next year.
Dmitry Medvedev: "It's almost ready. Soon it will be considered at the government session and then released. And finally, you've mentioned the personal property tax. One could even consider the fate of this tax in the context of improving tax legislation which is scheduled in accordance with the instructions of the president".
Some propose to enlarge the Russian regions claiming that small territories face difficulty in carrying out big projects but they won't if they merge.
Vladimir Putin: "We have already enlarged some regions. In the Soviet era, you know Lenin had an idea of how the Soviet Union should be created. He basically created large powerful super-regions in the then Russia, whatever it was called back then. We all know it led to the collapse of the Soviet Union. Yes, there were other reasons as well but that mine exploded too".
Gennady Zyuganov took the floor. The leader of the CPRF spoke about the prospects for economic growth. He considered the issue from the geopolitical point of view.
Gennady Zyuganov, leader of CPRF: "Last year, you, Mr. Putin set an absolutely correct and realistic goal to reach the world development rates. It's 3.5% this year. The Chinese have 7.5 and the Americans will reach world rates. We need to do our best to fulfill this goal. Because it's all about competitiveness and, in this case, security".
The main topic — investment attractiveness — was addressed again by the leader of the United Russia faction in Duma Sergey Neverov.
Sergey Neverov, leader of United Russia faction: "We must form a safe environment for the investors that guarantees the security of their investments. We all understand that a congenial investment climate is the combination of various factors including a stable taxation system, regulations, and legislation. Business must feel secure".
Vladimir Putin: "To make the investment conditions reliable and attractive we certainly need stability in terms of the state taxation policy in terms of administrative and legal procedures, and we also need the political stability. There would be no investments without that. Who will invest into our regions or the country in general if it's unclear what will happen tomorrow? That's why we definitely need a renewal. We definitely need to move forward. But it all must be done in a stable evolutionary way when every new step is predictable".
In the end, Putin wished all members of the State Council a Happy New Year.
Denis Davydov, Pyotr Rovnov Stanislav Ponomarenko, and Valery Glushakov for Vesti
