"Special focus should go to the areas and sectors that affect the interests of the absolute majority of our citizens and directly affect the quality of life of people in our country, where an increase in the number of market participants and fair competition will reduce prices – which is always important – and improve services."
Remarks by Dmitry Medvedev:
Dmitry Medvedev participates in the plenary session of the 9th National Business Forum of the All-Russian Public Organisation Delovaya Rossiya
It’s much better in here than outside: it’s a pretty hot day in Moscow today, so I had two good reasons to accept the invitation to participate in the Delovaya Rossiya forum. I hope that you have already had, and will have, an honest and substantive discussion on the main subject of today’s session, which is the promotion of competition. We will discuss roadmaps and things that we will need to do together in the near future.
As you may recall, the national entrepreneurial initiative, or the system-wide work to improve the business environment in Russia, was launched at the Delovaya Rossiya convention 18 months ago. I would like to take this opportunity to thank everyone who participated in it, including entrepreneurs, business associations, and, of course, experts. Most importantly, key ideas were put forward then that have now been incorporated in the roadmaps. You are studying these maps carefully and, most importantly, you are looking into ways to implement them.
I won't repeat any truisms about the importance of competition. Obviously, the level of competition in our economy is very low. Moreover, competition in our country has certain specific characteristics and focuses on obtaining administrative resources. This is also unfortunate.
However, describing the state of affairs does not provide an answer. Actions speak louder than words. Therefore, I believe that the roadmaps to improve the investment climate help to promote competition. As you may recall, the Government has adopted a special roadmap which spells out consistent steps to promote the competition in general, including such an important component as promoting competition in infrastructure industries, reducing the share of the public sector in the economy (which, frankly, we’ve largely failed to do so far), developing competition standards in the regions, introducing best practices and, of course, increasing the level of consumer protection.
As you are aware, the work is planned to 2015. In addition to the Federal Antimonopoly Service and the Ministry of Economic Development, all line ministries and departments, as well as regional and municipal authorities, should be involved in this work. The relevant powers are enshrined in the regulations on the federal bodies of executive authority.
It is also clear that the subject of competition is very extensive. Judging by the programme of the forum, there are many issues that will be covered by separate speakers. I will briefly discuss a few issues.
My first point is that special focus should go to the areas and sectors that affect the interests of the absolute majority of our citizens and directly affect the quality of life of people in our country, where an increase in the number of market participants and fair competition will reduce prices – which is always important – and improve services. I’m referring to housing and utilities, transport – both rail and air – and communication services, as well as the affordability and safety of medical preparations and services.
What is the competitive market all about? I believe we all understand that it’s a market where consumers feel comfortable and confident. We need modern and effective consumer protection tools. The roadmap sets forth the task of developing a mechanism that, while new for Russia, has been tested in other countries. I believe this should be discussed as well, because, like any mechanism, it has its strengths and weaknesses. However, it should allow companies and individuals to file collective action lawsuits against violators of anti-monopoly regulations and to receive substantial damages. Of course, this should be done with the participation of a lawyer who will receive a portion of the recovered damages and will be interested in protecting consumer rights. Let's think about how viable this mechanism can be in Russia and whether we may run into problems with it. Also, if we decide to go ahead and introduce it, then we should decide on how to go about it.
My second point has to do with drafting regulations. It should be absolutely open, and the results of public discussions and anti-corruption expert analysis should be available to all interested parties. Market participants should also disclose the information on an as-needed basis, especially those that enjoy a dominant market position. For example, investment expenses and operating costs of our infrastructural monopolies should be absolutely transparent, and for this to be the case, there must be a shared and open information source.
My third point has to do with improving access to public procurement and procurement by state-owned companies for small- and medium-sized businesses. We talk about this quite often. Importantly, we should not only make efficient use of budgetary funds and buy quality goods at reasonable market prices, but should also form a stable and effective demand for innovative products, and research and development, which normally comes from relatively small companies. We will focus on supporting promising high-tech enterprises, which could compete not only on the domestic market, but internationally as well. I’ll give you a number which probably most of you are aware of. According to experts, annual government contracting amounts to about 8 trillion roubles. Currently, small- and medium-sized businesses account for only 2% of this amount. To put this in perspective, small- and medium-sized companies in the United States account, as subcontractors working for major companies, for about 30% of supplies to the army, and we are aware of the amounts of money that go into defence in the United States. You can feel the difference.
In accordance with the roadmap, about a quarter of purchases by companies with state participation should come from small and medium-sized companies. This is an absolutely specific target. If we get there, then I believe this problem will be resolved.
My fourth point concerns developing the institution of regulatory impact assessment. This institute is already working. I had some doubts, but, in fact, it has proved its beneficial nature. Its main goal is early identification of redundant and inefficient regulations. The regulatory impact assessment is required for all Government decisions. We must gradually expand the scope of using this assessment and spread it to the area of competition and implement these practices in the regions. By the way, this approach is fully consistent with the OECD recommendations.
My fifth point is that we should apply the best regional practices across Russia. A regional competition standard is being developed that is similar to the investment standard.
Indeed, the situation varies a lot across the country. It depends on the economic environment and the stance adopted by governors and their teams, their willingness to work and promote competition, or, conversely, to promote only the businesses that they have a vested interest in. Such a standard should be developed for the regions.
Colleagues, we have certain successes and ambitious plans, but there are also unresolved issues and disagreements. Most importantly, we should keep the business community interested in what we are doing. My colleagues and I are always aware of this interest, especially when we put together roadmaps and watch them being implemented.
I recently held a meeting of working groups on roadmaps, and I issued a directive to adjust several working maps, because initially we assumed that working maps are by definition something that can and should be adjusted. When we see that something isn’t working, or that the goals set in a working map have been achieved, then we need to move on. Therefore, we decided it’s time to update several roadmaps. This includes increased availability of energy infrastructure, improvements in the construction business and customs administration.
I would like to reiterate that working toward a common goal creates shared values, and, of course, creates trust, which is the most important factor underlying the relationship between the state and the business. The element of trust is very important, and, frankly, there is not enough trust yet. All that you and we are doing should be aimed at forming an atmosphere of trust. Everyone is involved in this: entrepreneurs, the state and all Russian people.
In closing, I would like to inform you that I have recently signed a directive to award a Government Certificate of Merit to Delovaya Rossiya for its large contribution to the socioeconomic development of our country. A special honourable mention will go to our colleagues who drafted working maps. They’ve done a great job. Once again, a big thank-you goes out to them, and allow me to present the certificate of merit right now.
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Dmitry Medvedev presented Government Certificate of Merit to the All-Russian Public Organisation Delovaya Rossiya.
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An agreement on cooperation between VTB Bank and the All-Russian Public Organisation Delovaya Rossiya was signed in the presence of Dmitry Medvedev.