The Prime Minister gave an interview to Maria Kudryavtseva, a correspondent for the Rossia-24 TV news channel, on the eve of the 25th anniversary of the Russian Foreign Investment Advisory Council.
Dmitry Medvedev’s interview with Rossiya 24 network
Maria Kudryavtseva: Good afternoon, Mr Medvedev.
Dmitry Medvedev: Good afternoon.
Maria Kudryavtseva: The place where we are conducting this interview is symbolic. Why here?
Dmitry Medvedev: At the request of our colleagues from the Foreign Investment Advisory Council, we began to hold our meetings in this room. We used different places for holding these events before. At some point, I invited our colleagues, foreign investors, who are part of our large commission, to come to the Prime Minister’s suburban residence. And so they did. They found this place convenient for work. We have been getting together here since then.
Maria Kudryavtseva: It is a very beautiful place.
Dmitry Medvedev: It is a good place, indeed. Most importantly, it is convenient for discussing all kinds of issues on the agenda of our meetings. There is usually a great deal to discuss.
Maria Kudryavtseva: How long does a meeting usually last?
Dmitry Medvedev: We discuss various issues probably for three to four hours on average in this room. After that I meet with the heads of companies participating in the FIAC. That’s a lot of people, in fact. Currently, the council includes 53 top executives of major international companies. At some point, we tried to calculate the capitalisation of the companies that are part of the FIAC. This was not an easy job, because their capitalisation fluctuates, but it is about $2 trillion. This indicates the size of investors who participate in our country’s projects.
Interview:
Maria Kudryavtseva: We are talking about the Foreign Investment Advisory Council. The main purpose of the council is to help foreign businesses adapt to our country and to encourage the investment flow. The council has been in existence for 25 years now, but recent years were not easy. There are external restrictions and risks. Are you satisfied with the level of interaction with foreign companies as part of the FIAC now, in the current context?
Dmitry Medvedev: Speaking of simpler and better times, there are no simple times, as we all know. When the FIAC began to work in 1994, it was also a challenging time as the annual inflation in our country ran at about 350 percent. This created a difficult macroeconomic environment for work, even if you sincerely wanted to invest in a developing economy, such as Russia’s economy of that period.
Now is not the easiest period either. For obvious reasons, the economy is constrained by trade restrictions and sanctions. Our response measures are in place as well. I am not even talking about trade wars that constantly flare up and do not help establish orderly trade and economic relations. Nevertheless, I want to be clear: I am satisfied with our FIAC cooperation. It is a very good format that has been effective during the past 25 years. What is the point of having it? Indeed, much in our economy depends on the authorities’ position. Our economy is not as private business-oriented as the US economy, and investors always want to get a piece of advice or, in some cases, guarantees from the executive authorities, and sometimes from the legislative authorities, about the investment terms remaining unchanged. If there are any problems (they are always there), then they want to be able to directly tell the authorities: “You know, this rule does not work. This rule is misinterpreted. And here we feel we are limited.” And they can do so in an absolutely productive manner.
When we get together in this room, it is not just about reporting on the work done. Indeed, we exchange good and kind words, and then each investor can directly pose questions to any member of the Government. Most of the investors who come here, and these are the world’s largest companies, do not have such format in their respective countries, where the entire Government sits in one room and they can say: We would like things to be done differently in this particular case. This is a unique format in this sense. My colleagues in the Government, all specialised ministers and I directly answer these questions. As a rule, after this meeting, I issue recommendations to our agencies to adjust their policies or to specify a subordinate regulation, a Government regulation. Or come up with an initiative to amend a law, that is, an act of higher legal force, laws passed by the State Duma. Investors participating in the FIAC appreciate this. They tell me: “We talked to you last year. Things have changed since then.” This is probably the most important outcome of such meetings.
Maria Kudryavtseva: Mr Medvedev, since we are talking about the Foreign Investment Advisory Council, this is more of a story about developing local production during globalisation, so it is actually a big challenge. But at the same time, as you have already noted, there are trade wars and additional barriers. The risks are growing, and the investment environment is getting worse. In this situation, how do we convince foreign companies that are members of the FIAC to expand business in Russia, to invest in Russia and operate here?
Dmitry Medvedev: They can only be convinced by a predictable policy and a good business climate. We are trying to show just that. I am not saying that it all works out perfectly. There are probably some problems. Nevertheless, we are trying to create predictable conditions for a long period. It is for a reason that we say: If tax legislation is changing, then, firstly, this cannot be done retroactively. And we give companies time to prepare. Secondly, we say that if tax legislation has been changed — a particular tax or budget payment has changed — this tax cannot change again for quite a long time, a predictable period. I believe this is the best guarantee of investment, both domestic and foreign investment.
By the way, earlier, maybe in the 1990s, we proceeded from the assumption that priority should be given to foreign investors, believing they had more capabilities, more money, and could bring a different economic culture to our country. Now we have certainly changed that approach. Our position is that all investment must be equal, and all investors must enjoy equally attractive terms and equal respect, and that the same requirements for compliance with Russian laws – administrative and tax requirements, and employment laws – should apply to all investors. In this sense, I think we use a general framework that is convenient for everyone: The national regulations apply to any investment.
Maria Kudryavtseva: Since they come here and work so eagerly, it means this really does pay off – it is profitable for them to operate here.
Dmitry Medvedev: Absolutely. Not a single investor, not a single entrepreneur would ever invest at a loss. But to our colleagues’ credit, investors on the FIAC, they not only invest at a profit – these projects are indeed expanding, from energy to high technology and pharmaceuticals – but also establish research divisions, R&D units, in our country and do research together with Russian scientists, Russian specialists.
Maria Kudryavtseva: Mr Medvedev, as we see, on the one hand, Russia is improving its Doing Business ranking. But on the other hand, administrative restrictions and inspections by law-enforcement bodies, especially in the regions, seriously limit the development of business. Do you think this is a serious problem, or is it far-fetched to some extent?
Dmitry Medvedev: If a problem is discussed, it probably does exist. In this case, this is exactly so. But, in effect, it is a consequence of what I spoke about. We must consistently improve the business climate on a daily basis. This is manifested in different areas and concerns the administrative load, as well as the selfsame inspections. Not long ago, we launched an initiative that was metaphorically described as a regulatory guillotine. In effect, this reflects our desire to get rid of a lot of regulations that were adopted long ago and impeded our progress. They should not be applied. This looks simple, of course, but in reality this is very complicated. There are many regulations, and we need to figure out what we should do away with and what we should keep in place. Much is being done in this respect. When this work is completed (beginning with next year), we think conditions for business will be better, including businesses with foreign investment.
Improving the legislation must be aimed at creating a more favourable business climate for foreign investors. But there is more to it. Our common task is to improve legislation in a wide range of areas, thereby creating better conditions for doing business. Incidentally, I am referring to the administrative legislation. A decision has been adopted – I initiated it some time ago and it received support – to upgrade the administrative legislation, notably to draft a new Code of Administrative Offences. This may sound abstract to those who are not experts, but in reality our Code of Administrative Offences consists of a host of articles that have been amended dozens of times. It is absolutely inconvenient to use and contains a vast number of administrative offences with which businesses get charged, among others. Our task is to create a much clearer and more effective Code of Administrative Offences that would be more suitable for economic development goals.
This is yet another area of work about which we will be pleased to tell our colleagues from the FIAC.
Maria Kudryavtseva: We will look forward to that and to the discussion of other issues there. Thank you.
Dmitry Medvedev: You can be sure there will be plenty to discuss.
