Agenda: development of the IT industry
Panel discussion with IT industry representatives
Before the discussion, the Prime Minister toured an exhibition of IT projects at the Popov Technopark in Innopolis.
Excerpts from the transcript:
Good afternoon, friends and colleagues.
I am delighted to welcome you at Innopolis. Before we begin our discussion, I would like to thank the authorities of Tatarstan for an opportunity to hold a meeting on the IT industry here. It is notable that we have gathered in a city that was only recently built from scratch in the region where special attention has always been given to the development of information technology. Tatarstan has done a great deal to make the establishment of many IT companies possible.
This meeting is a good opportunity to talk about the future of the IT industry and incentives for promoting its development, an issue that has been often discussed at great length, as well as about increasing Russia’s contribution to the global IT market. The changes that have accumulated in the past 20 years have resulted in a new leap for the global civilisation.
As you know, it all began with the material world, which was succeeded by the legal world, and now we are moving into a new phase, the digital world. Throughout its history, the humankind has formulated certain notions and created a range of systems for recording non-material components ‒ for example, writing, the writing systems, law and double-entry bookkeeping. Those who learned new technologies used them to gain an advantage over their rivals and to boost their development. Today, the digital transformation is an opportunity for our country to rise to a higher level of development and to ensure a new quality of life and new opportunities for our citizens.
As we approach the dawn of a new era, we can see that digital products and services are replacing things which used to be part of our everyday lives before. There are many examples when digitalisation has destroyed entire industries, replacing workers with machinery and artificial intelligence, which has been discussed at all kinds of conferences. This is why our decisions and actions must be geared to these new challenges.
Digital technologies and free exchange of open data improve the availability of goods, services and the quality of life in general, and make it possible to create new innovative products and services. Today digital transformation encompasses all aspects of life in all countries without exception. The future world leaders will be the countries where knowledge is the highest value, where people are not afraid of experimenting and where they have the opportunity to exchange open data freely. Only this kind of environment can prepare the ground for new ideas, solutions and technologies, including, which is very important, for platform solutions. Talent and knowledge are becoming the most valuable assets today. It means that non-tangible assets are moving to the forefront, above all intellectual property, of which all of you, especially software developers, are well aware. And the defence of intellectual property rights should be an unconditional priority for us today.
However, there is a danger that should be taken into account. It is already obvious that following digitisation leaders gives rise to a new digital dependence of countries.
Russia cannot afford to be a country that is led by someone, and this means that we have no choice: we must move forward and become leaders in this respect.
Current changes in the world are called differently: the Fourth Industrial Revolution, the Third Wave or Society 5.0. But the main thing we must bear in mind is the ubiquitous nature of digitalisation.
The Internet of Things technology, the low cost of data storage and computing capacities have created a new competitive landscape. Modern business models are based on the application of global data arrays. Working with them paves the way to discoveries, which produce new value chains, just what is happening everywhere in the world, irrespective where the process inventor created it.
This is the way the new economy is being developed and digital platforms play a key role there. In fact, they change the familiar relations between people established over time.
In the past 20 years, the world has changed a great deal and goes on developing at an accelerating pace. In the early 2000s, most major companies around the world were part of the real economy sector. Look at the list of the leading companies – we knew them too well. They included machine tools and equipment manufacturers, petrochemicals and consumer goods giants. Today, digital giants have become the heroes of the day, which nobody, even those, who engaged in information technology at the time of its inception, could have imagined 20 years ago.
Who knew about such companies as Amazon, Facebook or Alibaba two decades ago? Hardly anyone, probably. And new companies, of which we are completely unaware, will take the lead in five or 10 years or maybe as soon as in one year.
Our task is to make the appearance of successful startups in Russia as frequent as possible. To make such companies Russian in their essence and origin. Today’s Innopolis residents may well be among them. We saw some outstanding examples today: Visiology Technology and Inference Technology. Other companies may also be among them. We don’t know it now but should do everything possible to make Russian jurisdiction most attractive to the IT industry, the birthplace of ideas launching new technologies, goods, services and markets.
digital solutions are developed by trial and error. Innovations emerge only when
people are not afraid to abandon the obsolete. The core of innovation is
creating breakthrough business models and mastering new knowledge.
Of course, today the Russian Government is taking efforts to create such a favourable environment for Russia’s digital ecosystem.
Society’s digital development requires a new state policy that would meet all modern trends, a policy that many of you are eagerly awaiting. We are closely following all global trends and the best current recommendations, including those from the Organisation for Economic Cooperation and Development.
Today, transition to digital technology primarily requires the best conditions for access to communications, infrastructure, services and data; we have to fully unleash the potential of the efficient use of digital technologies, encourage businesspeople in this industry through providing accessible financial tools, reduce barriers for trade and investment, and improve taxation in the digital world.
Many governments are following the path of digital transformation in their countries. You can see it and read a great deal about it. Russia also has much to feel proud of in this area.
The core condition for such changes is an advanced IT industry. The more new technological solutions it offers, the faster the digitalisation of the economy and the social sector takes place.
In recent years, Russia’s IT industry has shown stable growth. To a large extent this is due to the government’s earlier support measures. Those included reduced insurance fees of 14 percent. To remind you, back then the unified social tax was in effect only in special economic zones; we discussed it when we were launching them, and introduced the 14 percent rate. This was done primarily for software developers.
In the past six years, the demand for domestically developed software solutions and IT services in our country have increased by 50 percent, and we have seen an even greater rise in demand for our products in the foreign markets, both for software and IT services, with a growth of 80 percent.
Importantly, this industry is becoming increasingly mature and independent. In the past six years, its gross value added has more than doubled. Currently, the industry employs over 500,000 qualified specialists; its share in the GDP has also almost doubled during this period.
The recent few months were extremely difficult for the IT-industry as well as for the entire country. And today first of all I want to thank all the companies, which provided free or privileged access to online services and helped our people amid the spread of the coronavirus infection. During that hard time the industry rendered assistance to Russian people and Russian businesses, which is very important. Almost all schoolchildren and university students, retired people and those who worked remotely for a long time during the lockdown, perhaps felt that support. Despite all the unfavourable consequences, which I am sure will be surmounted, the coronavirus situation has shown a new demand for digital services, especially in our country. I am sure that it will keep on growing. People say: “Every cloud has a silver lining.” New opportunities have opened up. The traffic of online services in medicine, education, culture and entertainment increased considerably. In the course of two months, the government services portal processed over 20 million electronic applications for various payments without any personal presence being necessary. Now people have been convinced that it is quick, easy and convenient. So, these services are steadily gaining popularity. It became clear, which platforms and services were lacking, and the leading players started filling the gaps.
Russian digital platforms and software products are leading in practically all segments of our market and in some areas they compete effectively at the global level.
Meanwhile, current growth rates make it impossible for us to narrow the historical gap between us and the technological leaders, and win the place consistent with our capabilities, or, if you like, our talents and objectives. Therefore, pursuant to the presidential instruction we have developed an entire set of government support measures. I do not just mean a tax manoeuvre, but a whole set of measures that would give us the possibility of priority development in the IT sector and should lift it to an absolutely new level of leadership.
The industry development programme drafted by the Government includes six main areas of government support. First – the new tax environment requested by so many. Second – stimulation of demand. Third – support for innovation. Fourth – assistance to startups. Fifth – development of private-public partnership. And at last, the sixth area – expansion of the industry’s personnel basis.
At the President’s instruction, we are implementing the so-called tax manoeuvre for Russian IT companies. Just a reminder: insurance fees will be reduced twofold, from the current 14 percent to 7.6 percent. This will help decrease costs and to increase the companies’ competitiveness on the global market. For such companies, income tax will be reduced from 20 percent to 3 percent. We have made a decision that these benefits will also be applied to microelectronics and radioelectronics design centres. I very much hope that this decision will make Russian laws more appealing to companies that are successfully operating on the global IT market.
Benefits will be provided to Russian companies that have 90 percent of their profit coming from selling software and services for its development and support, as well as cloud services – and many have mentioned this. The existing VAT exemption will apply to exercise the right to the use of software products that will be included in a special software registry, including through the cloud model in the SaaS mode.
Currently, restrictions are in place for purchasing foreign software for state needs. Many do not like this, but this condition will apply to IT purchases by companies with state participation as well as their subsidiaries. They will have to develop programmes for digital transformation that would imply the priority use of domestically-created software solutions; these programmes will be considered by the Governmentl Commission for Digital Development. These efforts will allow us to boost the demand for Russian software products.
A unified technological platform will be created to develop the government authorities’ information systems. The platform is open for Russian software products to be integrated; we will have to restrict the development of new platforms with the use of budget funds if related ready solutions already exist on the market. In this case, we will promote the use of such solutions through financing end consumers and encouraging competition between suppliers of such solutions. To this end, we will introduce procedures for obligatory evaluation and the coordination of created systems’ architecture.
In addition to this, support of the exports of domestically developed solutions is required through co-financing expenses for their promotion.
Top Russian IT companies will receive grants for new developments worth up to 250 million roubles per year, but not exceeding 50 percent of such companies’ expenditures. This year, grants can cover 80 percent of the expenses for the development and launching of new products, a measure taken due to COVID-19. The Government has already signed a corresponding resolution.
In August, the selection of entrants seeking grants will begin; this should boost the launching of new products or their new versions on the market. To this end, 20 billion roubles have already been envisaged under the Digital Economy programme until 2024.
Grants are also envisaged for startups to develop prototypes of new products and the launch of them on the market. Efforts will be taken to implement various programmes for the acceleration and support of IT companies that are developing solutions in AI, big data, IoT, and blockchain – that is, all the technologies relevant today.
We will provide grants with
consideration of the market’s prospects and demands under the state and industry
programmes for digital transformation.
Finally, Russian companies will get opportunities to join the e-government infrastructure and build its services into their own ecosystems. For example, marketplaces, recruiting websites and private announcements will be able to log in their users with the state online ID (the Unified System of Identification and Authentication, USIA), thus making it possible to increase confidence in the information placed there.
Users of the public services website will be able to certify various documents with an electronic digital signature. With the permission of an individual, the public services website can open access to their personal data to businesses. For example, which is important today, patients can give a doctor of a private clinic access to their CT scans online, if they are available in their personal account on the public services website.
The main thing is that businesses can become full-fledged participants in the development of the public services ecosystem. We are already examining a number of proposals to implement new projects within the public private partnership that do not require any investment from the budget, such as services in healthcare, education, construction, transport and utilities. We plan to actively develop and support the implementation of projects involving private investment.
In order to address the deficit of qualified IT experts, we suggest increasing by almost 2.5 times the admission numbers for IT majors at universities gradually, from 50,000 this year to 120,000 in 2024. Today, we heard the report of the Innopolis head, and this is exactly what Innopolis does today: it increases the number of degree programmes and students. At the same time, we plan to provide for the training of qualified IT architects. This is a very important field. These goals will receive financing within the Digital Economy national programme.
We are also examining ways to co-finance the expenses of individuals and companies if they undergo intensive training and digital competency programmes.
All these measures will allow us to increase the number of people working in IT by 50 percent by 2024 and double the demand for Russian software and IT services both on the domestic and international markets, as well as encourage more than 1,000 startups.
Today we will discuss ways to achieve a breakthrough in the development of the national IT industry.
I would like to once again thank everyone, especially those who came to Tatarstan from abroad today. I know that almost all leaders of the best Russian IT solutions are here today. Thank you for this. I would like to say once again that we will do everything possible not to just establish public private partnerships but to make Russia the best place to develop technologies, including those you are working on.
I would like to ask Deputy Prime Minister Dmitry Chernyshenko, who oversees the digital economy, to moderate today’s discussion. We will give the floor to everyone who wants to speak and, of course, there will be a Q&A session so that we can answer your questions.
Dmitry Chernyshenko: Colleagues, indeed, as Mr Mishustin said, Innopolis has brought together the owners and heads of companies, which largely determine the future of the Russian, and maybe even the global IT industry. Russia generally occupies a unique position in the global digital market. We have our own search engine, our social networks, our enormous capacity and our capabilities, and we feel that the industry is really on the verge of a new leap – a growth leap. You just heard how the state will take unprecedented measures to stimulate the industry. We will discuss these and other issues today.
So, colleagues, I would like to invite Arkady Volozh, Yandex CEO, to the stage. More than 10,000 employees, $16.5 billion in capitalisation, the company won the battle for search engine No. 1 and drives new consumer economies, from e-commerce and taxis to autonomous vehicles, and operating in several countries. Arkady, please, tell us about the role of digital companies in economic development.
Arkady Volozh (Yandex Chief Executive Officer): Thank you. First of all, I would like to express our deepest gratitude to the Government for inviting us to this large-scale event. It is the first such opportunity for me in four months. Thank you very much.
I can see very many people I know here; I have known some of them since the time when IT was called an industry. Today it’s like electricity, and nobody calls electricity an industry. Electricity is everywhere – in searchlights, video cameras and computers, but we don’t call this an industry. The same is happening to the digital technology. It is being applied everywhere, in all industries, and is creating added value everywhere, in all markets, both commercial and non-commercial, as well as in healthcare, education and everywhere else. Just take a look at how we have been living these past two or three months of the coronavirus restrictions. And try to imagine how we would have lived in such conditions 20 years ago or even in 2010 without the technology we have now. We have everything we need now, including food delivery, digital movie theatres, education and video linkup. Not so long ago we had none of this.
The digital industry and IT are developing so fast because it is an extremely competitive sector. Competition in the digital industry differs from competition in the classical markets in many ways; it is based on the network effect, because the digital industry is really a worldwide industry, the internet has opened up the world, and companies are now competing on the global scale. This is good for both businesses and users, providing access to all kinds of services. We are happy to be living on such a market and in a country where this industry is fully open and Russian companies are competing with international companies on equal terms. It is not like this everywhere. In a word, this competition and rivalry is taking place with a single click, as we say now. It really takes one click to choose between Russian company А and company B, or to choose foreign companies C or D. All of this is at our disposal.
Regulation in this sphere must be based on equal rules of the game for all companies, big and small or local and international ones. This is what must be the basis of regulation, as I see it. When people speak about competition, they mean above all technological competition, believing that they will surge ahead of others because they have a better technology. But the digital technology is everywhere, in all the traditional spheres of life, including in the strictly regulated spheres that have their own regulations. They have had them for a long time, and their regulations are important because they concern sensitive spheres such as healthcare and education. This is how it should be. Therefore, half of competition today is a competition of technologies and the other half is a competition of regulations. Companies are competing with each other mostly through technology, while the markets and countries are competing through their regulations. Countries are competing with each other for the companies that can work and develop their technologies in their markets. Market regulations can include tax, anti-monopoly and technological regulations. And competition between regulations is as strong as competition between technologies.
Also, I would like to say that we are operating in the sphere of regulation that combines all of these elements, that is, technology and the traditional regulation which we are used to. I am referring to autonomous vehicles. And we are in the capital now, one of the global capitals of autonomous vehicles. I would like to remind you that two years ago Innopolis launched the world’s first self-driving taxi service, the world’s first commercial service of this kind. No city in the world had it in 2018, when it was launched at Innopolis. Since then self-driving taxis have been used tens of thousands of times. I invite those who have not used self-driving cars before to make use of this opportunity. They are here, and we are ready to offer a ride to everyone. Welcome.
Dmitry Chernyshenko: Thank you very much. We can see that you have become a formidable rival in the field of regulation, and we would like to see a comparable response from the industry. I give the floor to Boris Nuraliyev, 1С.
He has been on this market for 30 years, automating 83 percent of workspaces in Russia. He knows better than anyone that personnel is one of the biggest challenges in the IT industry. When we worked on the Digital Economy National Project, the shortage of IT professionals was estimated at one million. We are now reducing this shortage at the Innopolis Supervisory Board. Boris, go ahead, please.
Boris Nuraliyev (founder of 1С): Thank you very much. I always remind people that computer software is made up of zeros and ones, which we have an unlimited supply of. This means that the quality of staff and how well their work is organised is what makes one IT company stand out from another. It’s that simple. Our human capital is our main asset.
Mr Mishustin, Mr Chernyshenko, you are absolutely right when you say that the industry has already received enormous support. Our staff is our major expense and our major resource. Therefore, reducing social security contributions to 14 percent and exempting software development from VAT is a huge stimulus. To a certain extent, this support allowed Russia to have its own search engine, its own email service and ERP systems that take up a substantial share of the market. I think further reduction of social security contributions to around 7 percent, VAT exemption for Russian developers will help the industry to progress even faster, despite the crisis caused by COVID-19. IT professionals are highly sought after, this is really true. They have great export potential and can relocate abroad easily.
Prime Minister Mishustin said that about half a million people in Russia are involved in the IT industry. As a matter of fact, in the digital economy, IT professionals are in demand beyond the digital industry as well. The IT industry itself is not particularly big but it has a serious impact on the development of other industries. Russia currently has 1.8 million IT professionals, if we count in telecommunications companies. It may seem like a considerable number but in reality they account for only 2–4 percent of the working population. In European countries, they make up around 4–5 percent. In England, five percent of the population works in IT. Unlike the United States or Israel, Great Britain is not even considered a recognised exporter of information technologies. But this is how many IT specialists they need just to make sure that their economy is efficient and British subjects can use the internet properly. Russia needs to increase its number, too. We believe that we need a total of 220,000 new IT professionals to enter the industry each year. This demand will increase to 300,000 per year by 2024.
It is true that the education system and our government are doing a great deal to achieve this. The President issued a resolution to increase the number of state-funded places in regional universities. The Ministry of Education will be making a request concerning IT education and I would like to ask the Government for support. A substantial part of these state-funded places should go to IT programmes this year. Under the digital economy programme, we need up to 60,000 state-funded places this year. The programme requires 80,000 state-funded places for the next year and it will be very difficult to obtain them. Clearly, this requires huge efforts on behalf of the education system. We need support. Because so far, the planned number is only 70,000, without any additions.
Mr Mishustin, you said that by 2024, Russia plans to train 120,000 new specialists. Russia does not have so many state-funded places. How can this be achieved? One of the ways that the industry proposes is launching digital training programmes as a voluntary supplementary specialisation, similar to the reserve military training that was provided alongside a degree during the Soviet times. Once a week, students will attend lectures given by industry professionals, with a compulsory final exam. It may be a national exam or a World Skills certification or a vendor certification exam, it does not really matter. As a result, we will get professionals in various subject areas who can efficiently automate their own industries. Of course, they must be able to develop algorithms, code and de-bug software.
There have been many proposals concerning accelerated bachelor’s degrees. Perhaps this would be the right approach. In reality, almost all second- and third-year IT students are already employed. And they often complain that the university programmes are not very useful in their jobs. Therefore, we believe it is important to review the study programmes in IT. There is no need to squeeze a four-year bachelor’s degree into three years. It will affect the quality. Let it be four. But the first two years must focus on specialised subjects and mathematics. Health and safety training, philosophy etc. can be moved to the third and fourth years. Senior students must also be provided with official work placement opportunities. They get jobs any way so why not be employed officially and submit reports on your experience? In my time, we had access to more resources for writing term papers than some undergraduate students have for writing a final thesis today. .Eventually, students will be more motivated to take responsibility for their professional development. Or, on the contrary, the first two years might show that they are not particularly interested in this field and they will be able to switch to another programme. The President mentioned this in his Address to the Federal Assembly.
Now, the last thing I would like to emphasise. The Ministry of Education is also working on this issue. Almost half of the universities offering IT training accept applicants based on their physics test marks. Why is it bad? It may appear that learning physics is great. The downside is that children who want to get accepted and study IT – especially those who consider themselves advanced students – give up on computer science in the middle of the 10th year and bury their heads in physics textbooks. Now look, this year 98,000 schoolchildren signed up to take the Unified State Exam in computer science (I don’t know how many actually passed it but it should be about the same number) and 460,000 signed up for the Basic State Exam after the 9th year (the exam was cancelled). The statistics was similar for 2019 and 2018. Our schoolchildren want to study computer science and they need to be given an opportunity to enroll based on their computer science test. This change was discussed last year and the respective bill was even put up for public discussion at regulation.gov.ru. But then Order No. 666 came out. It did contain some improvements. Computer science was put as a priority subject for the ninth category of qualifications. However, it is not the same.
I truly believe that workforce is the most essential asset for this industry. Thank you for your support. I hope we can resolve this issue.
Dmitry Chernyshenko: Thank you very much. I believe that Order No. 666 is doomed; we will definitely work on this. As you have mentioned, those who started with the Assembler programming system are more used to the binary numbering system, but we know now that quantum computing has upset the applecart. We have a question from the audience: When will you have a 1C version in the Tatar language?
The next speaker is Boris Dobrodeyev, Mail.ru, an extremely effective company I like very much. It has snatched up the lead in many highly competitive spheres, such as the social media, online games, email, cloud solutions, maps, car sharing, delivery services and many other spheres. As many as 93 percent of those in Russia who have internet connection are using Mail.ru products. Boris, can you tell us about your work with the state? What are the prospects? Is a mutually beneficial partnership with the state possible or will there always be an injured party in this relationship?
Boris Dobrodeyev (CEO (Russia) Mail.ru Group ): The short answer is yes, and I will provide the details in my remarks. I would like to begin it with expressing gratitude. Mr Mishustin, your attention to the industry and the incentives you have approved are very important for us today. About a month ago now I informed the President about the deduction of input VAT. We have been advocating this solution for several years. The games industry could not develop without it. The project has been implemented within a matter of one month. We did not expect this to happen so fast. In general, if you listen to what is being said on the sidelines of this event and create a tag cloud, the most frequently used word will be “stimulation.” I believe that this is very good and correct.
Today I would like to tell you about the activities at Mail.ru that are not generally associated with our company. For the past 20 years we have worked on mass consumer services such as mail, the social media and messengers, which over 93 percent of the RuNet audience are using. At this new stage in our development we are learning to apply the technologies and products designed for millions of users to businesses and companies because they have huge potential. We believe that they can be used to make our companies and our economy much more effective.
It is great that our solutions are being used by Russia’s largest companies such as LUKoil, Rosatom and VEB. During the coronavirus crisis we helped more than a thousand companies deal with peak loads by applying our cloud solutions. For example, we transferred the facilities of the Higher School of Economics to the cloud technology in an urgent manner. Our databases help to accelerate transactions at many banks and telecom operators, and our big data experts help many companies save hundreds of millions of dollars. I believe everyone will stand to gain if we applied these technologies and this experience to the requirements of the state. I believe it would be correct not to create new technology or products from scratch but to use available marketable products. This would benefit all sides. Companies working in China and the United States, such as Amazon, Alibaba, Microsoft and Tencent, are actively contributing to digitalisation.
Infrastructure is not the only sphere where we can work. The coronavirus crisis has shown that we do not have a Russian product or platform for connecting teachers and students for educational purposes. It is a high-profile issue. We understand that online education will never fully replace direct contacts between teachers and students.
We understand that students have not embraced self-isolation, contrary to the numerous vital videos posted online. At the same time, online learning is very important as an auxiliary instrument, and it will not be abandoned. According to our surveys, 95 percent of students are using our resources, and 48 percent are using VKontakte for distance learning. We offer access to many new technologies, for example, team calls for over 100 people. We are developing this service together with Rostelecom. In other words, we are using our solutions towards this end; we are investing in this sphere, and we believe that it has a huge potential. We are conducting a very constructive dialogue with the Education Ministry and the Communications Ministry, and we would like to ask you to support the application of our solutions at schools, because we believe that this would benefit both teachers and students.
It has been said today that the modern economy is the economy of talent and knowledge. I have read here that we will need very many professionals for the digital economy. We fully agree with these estimates, but we also see that the demand for such professionals significantly exceeds the supply. We believe that one of the possible solutions is additional professional education, the demand for which has soared during the coronavirus infection. Despite this, the number of those who would like to receive digital professions has increased, but they cannot do this now. To put it tentatively, tens of thousands are learning these professions now, while millions would like to do this as well.
Millions of people have registered on our sites that offer additional professional education, but the obstacle is the first payment, the price. Therefore, it would be great if the state and the industry co-financed the development of additional professional education. We would like to ask you to make use of the existing market players within this project, those who have accumulated considerable experience and can offer good products. I am sure that they can help us achieve the ambitious goals you have formulated. We will then have millions of new professionals and a very positive influence on the economy.
Lastly, I would like to tell you about our latest project, which is growing rapidly. It is a platform for the VKontakte mini apps. In fact, it is the most popular Russian platform for software developers, which 15,000 developers and 36 million people are using. Since we do not have a popular national app store, it would be reasonable to choose a Russian player as a standard for the creation of government service applications on a par with iOS and Android. This will benefit the country. We are ready to offer access to as much as the RuNet audience as can be covered with our support. Everyone will stand to gain from this.
To conclude, I would like to say that this is a period of tectonic shifts, as you said in your presentation. This implies big opportunities and big challenges. I am sure that we can stand up to the challenge if we join forces and act together. As you have said about industry 5.0, it is very important for us to act so that the score is 5:0 in our favour.
Dmitry Chernyshenko: Thank you very much. I am confident that when we gather at Innopolis again, instead of “stimulation,” the tag cloud will contain “implementation” and “success” – perhaps, among other things, thanks to the VK API platform.
Now I am delighted to invite Dmitry Yeremeyev from FIX.
This international incubator and start-up holding focuses on monetising internet traffic and financial technology. Last year, Dmitry opened a new bank, Bank 131, that offers services to both international and Russian internet companies. It is the only bank in Russia to have obtained a Central Bank license in the past five years. The bank is named after Dmitry’s magnet school in Kazan.
Dmitry, the floor is yours.
It is really nice to be here, at Innopolis, and particularly welcome to be here in Tatarstan where I was born.
The Government and the country in general are currently taking swift actions to introduce changes that would increase the competitiveness of Russian companies on the domestic and international markets. I am delighted to speak here on behalf of the industry. I would like to present several proposals for your consideration in support of these changes. Perhaps they will help to expedite the ongoing processes.
The world has changed and the economy has gone through uberisation. Today all of us here and a great number of entrepreneurs are making money through the international rather than the Russian market. There are computer game developers, colleagues selling software and using advertising models for monetisation among us today. One of my proposals is to extend the privileges that we have been talking about, such as reduced social security contributions and income tax, to the Russian companies promoting and selling goods and services on the international markets. It appears to me that it would be the right decision that will help boost Russia’s competitiveness against other jurisdictions. Many of us do our business via companies in the Netherlands, Ireland, Singapore and Hong Kong.
Next. The business model is slightly different now, with more P2P and B2C transactions – meaning that business is becoming a service. Jurisdiction of a company does not matter. A Russian citizen can start a company or open an account anywhere in the world. This is where jurisdictions compete. In this context, Russian companies’ competitive advantage on the domestic market when it comes to dealing with private individuals… I would be grateful if you considered the issue with individual income tax withholding agents. You see, when a Russian company carries out transactions, payments to private individuals – be it a service fee or, for example, monetisation of a person’s services on Yandex – the company becomes a withholding agent. Foreign companies in the same case are not considered individual income tax withholding agents and will actually pay slightly more. The individual will, respectively, pay 13 percent on this income, which, in my opinion, does not make the Russian jurisdiction balanced in terms of an equal tax burden and simplicity.
The next issue I would like to cover is related to the Russian financial system. Foreign companies can easily open accounts anywhere in the world, including on Russian territory. It would be my sincere wish that international companies – both Russia-based international companies and other international companies like Google – be able to open accounts on Russian territory in order to carry out transactions involving Russian persons. It would be right and very helpful.
Still, there are numerous nuances that are not always easy to resolve. For example, there may be problems with the account opening procedure itself. Companies have to obtain notarised translation of a hefty package of documents in order to be issued a tax identification number. At the same time, there is an excellent example of the Google tax and obtaining a tax identification number online. I would like to ask you to consider applying the same approach to the companies who wish to open accounts in Russia.
Game developers, advertising companies and similar companies operating from Russia need a different approach and changes to the foreign exchange control regulation. I think it is about time because sometimes it is very difficult to receive money under an offer or wire money. For example, because of the coronavirus, we recently paid a fee to participate in an international conference and now we may be subject to a fine. By changing these aspects, we can provide a new competitive edge to our financial system and Russian companies.
Another important issue is online identification. The Central Bank of Russia put in a lot of effort to make online authorisation and registration possible. Unfortunately, you still have to visit a bank to open an account, which is extremely complicated, especially during this pandemic. I would like to support the proposal of permitting companies to open Russian accounts online, like in many other countries. In my opinion, it would significantly boost our competitiveness against other international companies operating on the Russian market. It would allow international companies from anywhere in the world to operate on Russian territory, which includes carrying out transactions with private individuals.
Thank you very much for this opportunity to speak openly and sincerely and for this frank talk.
Dmitry Chernyshenko: Thank you, Dmitry. We are all waiting for Google to transfer its accounts from Ireland to Russia and open an account in Bank 131.
Participants, I would like now to pass the floor to Telegram Vice President Ilya Perekopsky.
Telegram is a global messaging service with Russian roots trusted by 400 million users in 90 countries. It is great news that this popular service is officially operating in Russia. This is a good sign for IT entrepreneurs and investors.
Ilya, I know that large companies value talented people; they pay them well and go out of their way to attract talent. Telegram organised a series of international competitions for developers.
When it comes to the winners of your competitions and other talented people all over the world, what obstacles do they face?
Yes, it is true that we try to make a practical contribution to IT training. We annually hold dozens of contests in different IT areas, involving thousands of people, most talented youngsters and often teenagers aged 14–16. They constantly take part in these contests and solve difficult practical tasks. Thus, we teach a new generation of IT developers to work in an utterly competitive environment and perform difficult practical tasks very quickly.
We have already paid millions of dollars in prize money to our winners. I must say that most of them are from Eastern Europe and perhaps half of them are from Russia. When we pay the prize money, half of it goes to Russia. We don’t know the Russian tax system very well. The only thing we know is that when winners receive the money (many of them are registered as individual entrepreneurs or are self-employed) they pay very little in taxes. At least in this area our winners pay one of the lowest tax rates in Europe and probably the lowest tax in Northern Europe.
When we organise these contests, we can see that there is an entire army of talented programmers in Eastern Europe, in particular in Russia. But there are certain things that stand in their way and don’t let them fully uncover their potential. We think that the main reason, especially when we speak about B2C mobile app developers, is that there is a different tax the entire world has to pay. This tax accounts for 30 percent and is paid to Apple and Google, which are American companies. We have been discussing tax breaks and lowering the income tax to 3 percent. Yes, in Russia, these companies will pay 3 percent, while they will also pay 30 percent to private American companies.
Today Europe is actively discussing this, and we are also taking part in this discussion. Antimonopoly investigations are underway. We would like to urge Russia to take part in this progressive movement, because we think it is a serious factor that holds back the IT industry in the entire world and in Eastern Europe and Russia in particular. Of course, this tax of 30 percent holds back the entire industry. At the same time, we can see that Apple and Google are worth trillions of dollars and have cash stacked away in their offshores. They use this money to cheaply buy companies in Eastern Europe; they buy programmers and take them to their offices. This is why the IT industry in Eastern Europe is not developing as quickly as we would like, although we believe that the entire global potential is concentrated here, and not there.
We would like Russia to join this movement and think about what we can do with this. Unfortunately, it is a sphere where it is difficult to compete technologically. But back in 2016, we launched a game platform with a catalogue of games in Telegram, but Apple didn’t let us keep it. They threatened to remove Telegram from Apple Store, and we had to take it off. We had to face this and understand how important it is. An analogy I can use here is this: the Golden Horde used to be based here in Tatarstan, and everyone paid tribute to Tatarstan; today there is a similar base somewhere in San Francisco, near the Golden Bridge, and everyone pays tribute to it. And we think this a fundamental thing that holds back the development of the IT industry all across the world, but especially here, because this is where this army of talented young people is concentrated: in this region.
Dmitry Chernyshenko: Thank you very much, Ilya. I don’t think San Francisco existed when the Golden Horde was settled here. The quasi tax of 30 percent is an interesting thing. We will discuss it. Of course, the industry will support this. I also think the fact that the global potential of the IT industry is here, in Eastern Europe – mostly here, in Russia, because half of the prize millions goes to Russian developers – is excellent news today, just as your presence here today.
Our next speaker is Eugene Kaspersky from Kaspersky Lab.
It is one of the most recognised Russian brands abroad, with 200 countries, 400 million users and 270,000 corporate clients. Over the past years, the Russian IT market has almost doubled and reached $11 billion, with 80 percent of Russian developers’ sales accounting for foreign markets. Most of them are antivirus software. This is not only prestigious for Russia but gives it a strategic advantage.
Yevgeny, please share your experience in promoting products globally.
First of all, I would like to thank the Government so much for paying such a lot of attention to our industry and for giving me this unique chance to meet with my colleagues, Boris and Arkady, personally. We tried to recall when we last met and just couldn’t. Unfortunately, it is a rare thing to see our digital giants abroad. In fact, if we compare the Russian and foreign markets, we will see quite a big difference. I was shown numbers from Rusoft, and they say that the Russian market accounts for only 1.5 percent compared to the foreign one. This is where we have to compete against other foreign software developers. In fact, it is clear that there are a lot of them there and few of them here, so many – according to the same data, more than a half of Russian IT companies – begin to work abroad one way or another.
I don’t want to say that everything is good and sweet abroad. In fact, it is quite difficult: you have to understand the language of the culture and business rules. Sometimes it can be painful, it can hurt, sometimes it hurts at the state level where geopolitics is at play. However, it is not like this all over the world. There are regions that welcome innovations and technologies from Russia. Moreover, I would say that there is a rule: the worse they speak English, the better your businesses will develop; with one exception: Japan. They don’t speak English whereas working there is a quagmire. It must also be taken into consideration that, to be honest, Russian developers are… Let me quote Condoleezza Rice, with whom I shared the podium once. She turned to me and said: “Russian programmers are the best in the world.” I said: “I agree 200 percent.” It is true, and we must thank our education system for this.
My children vary in age: the middle son is nine years old and he’s already learning Python. When I’m abroad and mention that programming is taught in Russian middle schools, people are surprised and do not believe me. We have enormous potential and we have to work with these human resources: I agree with this, and we can cooperate here.
We can offer products and services but we can also make technologies, the best products in the world. For example, take our company: we provide the best safety solutions. We are the only company US special services are afraid of. This means that if our product is installed, the National Security Agency and CIA wouldn’t tread there. It is a pleasant fact.
Let’s say: sometimes we suffer for this, but this is more pleasant than hurtful. There are other innovations, such as New Cloud Technologies with their own office. They have completely unique ideas and architecture; they can do things that Microsoft or Linux will never be able to do. They can be ported to any OS, which means they can work even on a large screen, even in an iron, and they will work.
I am not a specialist in autopilots, but I think that if we take Yandex, Kamaz and their autopilots and compare them with their foreign competitors, I will not be surprised if they turn out to be better. I don’t know but I believe, because in fact Russian software engineers are the best in the world, and being an exporting company is in fact a very interesting, pleasant and profitable job.
We depend on crises much less. For example, this means that if the rouble plummets then the euro grows; and if the Brazilian real tanks then something else grows. If this virus were not biological but digital, we would have immediately “bisected” it, issued an update, cured everyone and advertised our company by doing so. Let’s say, Europe is shut down and the rest of the world lives; Latin America begins the shutdown and Europe begins to revive: we have grown after six months.
Perhaps if all of Russia worked so effectively as my company, the Russian economy would be the best in the world.
And now to requests. We have almost everything needed for Russian companies to export more and see more Russian IT products abroad; everything is very good, we are glad and thankful for this; but there are two moments. First, the incoming VAT. This is unjust. Please excuse me, but, let's say, if I export bricks abroad, it is counted; and if I export software, it is not; if I import, it is the same: they are counted and we are not. What for? This is simply unfair.
The second thing, which does not concern us too much, but I think is quite painful for export companies starting out : currency control. I don’t say it must be cancelled, but it would be more effective to make it less costly, especially for companies that do not have experience or resources for it.
There are a lot of other wishes, too, but they are not so big, and we are ready to fulfil them ourselves: where to teach and work; how to take part in exhibitions and so on. We are ready to help, participate in working groups and share our experience in every way possible.
This is why I think that now is a good moment, when the potential of Russian IT companies can be multiplied by our state’s focus and care; which will result – of course, not tomorrow but during our lifetime – in Russia turning into a leading global IT player.
Thank you very much.
Dmitry Chernyshenko: The sooner, the better.
Thank you so much. Yevgeny Kaspersky – the man who scares American intelligence, who met Condoleezza Rice, our Russian Elon Musk, as the President recently called him. Yandex-drone on a KamAZ truck is cool. How do you like that, Elon Musk?
And now let’s invite Ilya Sachkov of Group-IB to the stage.
Group-IB is involved in the investigation of up to 80 percent of the high-profile cybercrimes in Russia. I think Russian cybersecurity is one of the most developed in the world, our system is secure, we can feel it.
Ilya, how well developed is domestic cybersecurity?
Ilya Sachkov (Group-IB CEO): First, I probably will not agree with Mr Kaspersky: in order for domestic cybersecurity to develop properly, we need to compete with the strongest players in their markets. This is exactly what the Germans and manufacturers of other cars that produce cool things do. That is, we need to go not to those countries where English is poorly spoken, we need to go to countries where English is native, then the product is competitive, and then, returning to Russia, this product makes the country safer.
Those companies that say we work in the Russian market and do not export anything abroad in cybersecurity (I am only talking about cybersecurity today), I would forbid such companies from working in Russia. Because this is absolutely a pure lie in terms of engineering. If you make a good product, why is it not sold in difficult, including politically difficult, markets?
Russia’s main competitor in cybersecurity, is America. The Americans use several strategies that Russia has not yet used, I in no way urge using the same strategies, I will talk about a smart export strategy.
The first thing is mad capitalisation and disproportionate state assistance, including from law enforcement agencies, that is, when decisions are implemented in basic infrastructure, critical infrastructure in different countries, including in Russia.
It is impossible to compete with the Americans using their methods – rampant capitalisation and similar, I would say, toxic methods. We use the “smart” export strategy, this has led to the fact that last year we got 40 percent, and this year 50 percent of recurrent revenue from non-third world countries, including Europe, the US, and the Asia-Pacific region. Last year we got all the largest companies in the Netherlands, and they pay directly to Russia, to Russian accounts.
The smart export strategy consists of several things, this applies to cybersecurity.
First. Cybersecurity is not business, it is primarily intolerance to crime. You should not think about how to make more money, but about fighting organised crime. However, for most American founders of cybersecurity companies it is just business.
The second strategy is to adapt a product to a local market. Americans make a boxed decision, selling it equally in every country. If you look at the reporting of public companies, everything is about the same everywhere: 60-70 percent of the budget is sales marketing. In each country that we enter we create a smart office, which consists of service units that study crime in the region; we investigate, and respond to incidents. Thus we come to know crime better. We adapt the product to solve local problems.
The next task is to ensure necessary integration with local education systems. Local offices must consist of local people who have experience with local education based on the methodology in the area of cybersecurity that you want to teach.
Naturally, there is sovereignty. Americans with their products (and the Chinese, too) are not always ready to ensure sovereignty. To be more precise, they do not provide it at all. If you want to be successful on the international market, you must guarantee sovereignty of your product. When you deal with regulatory bodies, you must employ all necessary methods to show that the product is truly sovereign, dissociated, verifiable and has nothing to do with any politics or government.
So, what are the obstacles? There are many of them. I have no intention to offend anybody. I am a patriot, and when I criticise my country, it is an expression of love. The first problem is Russia’s rhetoric in the field of cybercrime and cybersecurity in the world. Here is a simple example. The entire world is claiming that Mr Maxim Yakubets is a hacker who drives a Lamborghini around Moscow with a license plate saying “THIEF”; that he is a cybercriminal and creator of the Dridex malware. Every engineer in the world knows about it. Computer forensics is a very exact science. Not a single government body in Russia, neither police nor the Federal Security Service, nor the Foreign Ministry, has responded to this. Maxim remains in Moscow; he still drives his expensive car and, trust me, this affects the reputation of Russian companies that export information security solutions. What happens in the country when the entire world is telling you: “This is criminal”? More often than not, accusations do not have a political motivation; but they are scientifically verified accusations.
Now I would like to briefly touch upon the things that we would like to see happening. If we speak about VAT, it is preferable that the list of Russian software be verified down to end beneficiaries to reveal any foreign owners. This proposal concerns cybersecurity companies. Foreign companies doing cybersecurity business in Russia do not need any exemptions.
Second. There are many smart export services. Companies that help to gain an advantage over Americans offer services where a country or a client purchases your software as a service. We would like to ask you to extend the VAT concessions to this category of services.
Third. I fully agree with Mr Kaspersky about foreign currency controls. This system has not been updated since 1970. Trust me, it is not easy to convince a foreigner to buy Russian cybersecurity software. Once he or she is convinced and we have gone through all the initial procedures, we come to the purchase transaction. And the foreigner stumbles upon foreign currency control that demands a seal from a country where seals became obsolete ten years ago. By all means, foreign currency control is a system that must be reviewed.
Support institutes such as Skolkovo and Innopolis proved their efficiency. There are privileges that are only available to some companies within Skolkovo. These privileges must be extended to the others because all these companies are already subject to extremely thorough assessment and their focus on innovation is proven. Skolkovo demonstrates excellent export potential. If possible, all Skolkovo and Innopolis residents should be eligible for the social security contribution reduction to 7 percent. The Russian Export Centre needs a support similar to what China provides to Huawei.
If it is possible, clients should be able to receive loans at Russia’s expense for major infrastructure projects with the Russian Export Centre. The centre has its own bank. All Russian software developers and their clients abroad will be happy to have this support.
As far as education is concerned, the number of places in universities is not the only problem. The thing is there are a great number of new specialisations in this industry that are not covered by study programmes. Therefore, additional vocational training must begin as early as high school.
Since 2015, we have been asking the Ministry of Education to shorten the health and safety training. I went to School No. 444. I still visit my school and every year, 11th-year students spend six hours on learning how to throw grenades at wooden tanks. Please, replace these classes with vocational cybersecurity training.
Naturally, we need to build IT clusters based at major technical universities.
I have been to the University of Cincinnati. It is located in the middle of the United States. When I saw their School of Information Technology, I felt a little sorry for my own alma mater. I am an associated professor of information security at Bauman Moscow State Technical University. Universities like this should have campuses and huge departments that will help create companies that are interested in creating new specialisations. Where do you find trend hunters? There is no such job in Russia. A huge number of students finish information security programmes but my colleagues will confirm that fresh graduates have to be taught again from day one.
Next. The practice of non-compete with respect to intellectual property protection. This procedure in Russia is not only dysfunctional but, unfortunately, often results in ideas being stolen and leaked from companies.
And the last two issues. They concern foreign companies operating in Russia – specifically, Huawei. I would like to stress that these companies serve a dual purpose. Not only do they undermine Russia’s sovereignty in information security, they are also completely destroying the labour market. Professionals making 250,000 roubles get 1.2 million and 1.5 million offers from Huawei. This is a brain drain happening inside the country and a complete destruction of the labour market and wages.
I have a huge number of other ideas. They are very specific and based on 17 years of practical experience in export. I will describe them in a separate message and submit it to the Government.
Thank you very much for your support and for this extraordinary day.
Dmitry Chernyshenko: Thank you very much, Ilya Sachkov.
School No. 444 in Izmailovo rules.
The smart export strategy, Zero Tolerance. Ask if necessary; he had one of the most successful cases and returned 3.3 billion roubles to the injured party that suffered from cybercriminals.
Our next speaker is Alexander Laryanovsky, managing partner at Skyeng.
The pandemic has given a huge boost to online education, but also other spheres. Educational platforms came to help. So, we have this practice, and now it must somehow be recorded. Alexander, what do you think, what future awaits online education when everything goes back to the new normal? What have we learnt from the pandemic?
I represent the services all Russian parents have had most of all during this pandemic.
During the first hours after it broke out all IT companies, shouting “No worse than others!” opened access to their resources and spilled lots of content on teachers, children and parents.
About a week later it became clear that this is not the best thing we can do, because we had to face complete digital illiteracy. It is an illusion to think that only teachers have it. Skills children and parents have are no better.
In December 1919, the young Soviet Russia launched ‘likbez,’ a campaign to eradicate illiteracy, because 98 percent of people could only draw a cross instead of signing. We are now at the same point regarding digital literacy.
Nevertheless, the load on IT has increased. Just to make it clear: before the epidemic there were about 30,000 lessons daily, but in April and May we had 40,000, but hourly. And then we realised what the first and the biggest problem the formal school education system had to face. It took the hardest blow. Teachers are absolutely overloaded.
Imagine: each of us knows computer technologies very well: in fact, we don’t even notice when we use them. How would you solve the following task: you are a teacher, you have 10–15 classes, with 20 to 30 pupils in each, and they send photos of their homework in VKontakte nonstop.
You receive hundreds of photos every day. You have to open them, look at them, understand which class it is, which task it is, and mark it. This is an endless flow of such photos.
We all would shoot ourselves approximately on the second day, and they had to live like this for a month. Around 30 March we realised the scale of this problem. On 6 April, just a week later, we and the Prosveshcheniye Group launched a service that made it possible to fully automatise all home tasks for all disciplines, with our own marketing, without any help from any state agencies. In six weeks two million students and 80,000 teachers joined it, with 10 million of fulfilled home tasks, which means about a million man-hours of time saved to mark homework, for teachers to raise their heads from monitors and know what’s going on.
This is when we realised there was a second problem: about 70 million searches for ready homework, if we look at Yandex’s statistics. This means we spend billions of roubles for school pupils to copy homework, with 1.6 billion visits of websites with ready homework per year, or 130 visits per every school pupil on the average. And we throw all this money away, because they just go there and copy it down. Not because they cannot think but because there is ready homework that can be copied.
For this year, we have allocated about 500 million roubles to invest in a system that will prevent this. It will be an antifraud system that will use algorithms to generate a unique task for every school pupil based on the approved material of Prosveshcheniye Publishing House that can be found in work books. This means that we will be able to decrease this capacity for at least 30 percent in one year.
Why am I talking about this? Because all these years we have used the advantage of being a Skolkovo resident; we can afford a lot of things. We really become champions, we are young, less than 10 years old, but already try to help the industry. Thanks so much to the Ministry of Digital Development for always staying in touch with us and for listening to our proposals. However, now we are in the situation that we lose all the advantages of being a Skolkovo resident if we exceed one billion profit. But the sum of a billion roubles was set back in the past…
And we will have no champions. We will either have to split these companies and go away or lose the opportunities Skolkovo provides, which is also unjust. This is why I am asking that the limit be raised. In fact, this is the only thing we need to further develop IT companies that are at the same level (I agree with everyone saying so) with global companies… We know how to do this better than others, and then we will win the export of Russian education.
Dmitry Chernyshenko: Thank you very much, Alexander Laryanovsky. We will review everything and include it in the minutes. Of course, school students will curse you for the individual lessons, but they’ll eventually become smarter and join Innopolis or Skolkovo.
And our final speaker for today, before Mr Mishustin wraps everything up, is Dmitry Dyrmovsky, CEO of Speech Technology Centre. Its AI solutions are used in 75 countries, including speech synthesis and recognition, and analysis of audio, video, face, voice and multimodal biometry, among other things. By the way, our developers’ successes in AI are recognised at the global level.
So, Dmitry, give us your view of Russia’s trajectory in AI development.
I sincerely believe that Artificial Intelligence should be leverage for use in all sectors of the economy, so I’ll talk about its use in the real sector, about real problems and real issues.
But I would like to begin my report by thanking you personally, Mr Mishustin, and all of the new Government from myself and on behalf of two associations of software developers: the Domestic Software Developers Association and Russoft, which bring together over 200 companies.
Colleagues, what we have seen over the course of six months, your interest in IT and what you really do, is all very promising, this makes us very optimistic, because we can really see the steps you are taking as well as your focus. We sincerely believe that we will be able to change the situation and develop at an accelerating pace.
I would like to especially note the constructive and open position of the Ministry of Digital Development, and particularly the Minister for building up a direct dialogue with the industry. We really need this, and it is great that we have this dialogue now.
Many developments in AI are being implemented for the first time, and this often entails a lot of risk. Of course, in using this new technology it is very important to involve senior officials, companies’ top managers and heads of agencies and regions in these projects. I would like to use the Moscow Mayor as an example of such support and interest. He is really interested in AI technology, which allows us to work with a team from the Moscow government to quickly develop a number of solutions and integrate them. So now, for example, doctors at more than 280 medical institutions can fill in medical documents with voice recognition. This saves over 20 percent of their time on paperwork. This is an interesting and good example.
We also see a lot of other uses; we see large support in implementing AI in industries like medicine, security and transport from the Head of Tatarstan, the Governor of St Petersburg, the Governor of the Murmansk Region and many other leaders. This is valuable, because implementation goes faster, is more intense and far more professional when senior officials are involved in the process and understand the technology.
I would like to discuss Artificial Intelligence further. We have the AI Development National Strategy until 2030 signed by the President. I am confident that now it is very important for us to concentrate our efforts on our actions to create a truly competitive AI industry as well as public demand for products and solutions with AI. Like you said, we see a breakthrough in these opportunities and technologies, and we are at risk of missing this window, which would make the gap between us and our competitors too big to cross.
In March, a separate federal project, Artificial Intelligence, was developed. A lot of swords were crossed; there was a lot of discussion; and I think the product submitted to the Government is quite balanced. The fast adoption of this document initiates an important step in the development of AI. We hope it will be taken soon.
Artificial Intelligence is a very risky area, and it is important to create a field of opportunities as well as parameters and limits, and encourage demand for such solutions. Of course, a legislative base is important, too, and now we see significant changes in this area.
Since the strategy was adopted, the law on “sandbox” in Moscow was passed and two normative documents were developed: the concept for the legal regulation of AI and the federal project on special experimental legal plans for all of Russia. I think the adoption of these laws is a unique opportunity to create a truly advanced legal system to develop AI.
We can look at the biometry projects used at airports as a small example. With our biometrical technology, passengers can board a plane without showing any document, passport or boarding pass; the face recognition system does this smoothly.
But, unfortunately, under our laws, people must show their boarding pass and passport before boarding. This means we have the technology for airline efficiency and passenger convenience, but the advantages of biometry are reduced to nothing because passengers have to show their passports anyway. The puzzle won’t be solved. Of course, it is very important that the law follows this progress.
Many ideas in the industry are already envisaged in the concept and the AI federal project. But I think that our most important AI-related task is to have as many AI developers in Russia as possible, including both large and small companies, at various levels of development.
I would like to elaborate on just two things. First. Of course, sustainable demand is very important for companies to develop. According to the national project, AI is the new electricity. It is very important to make commitments to motivate industries to introduce AI, and not just commitments but incentives, both financial and non-financial. I think it would be helpful to create special transformation programmes for industries, and special KPI or marks could serve as key elements of these programmes. For example, this could be a quota of doctors’ jobs with AI-support systems for making medical decisions. For the Ministry of Transport, this could be, for example, a share of key transport hubs equipped with biometric access control and security systems.
These KPIs would make it possible to work closer and more specifically with such projects. Of course, special financial tools are required, that would be tailored for the federal executive authorities, state companies, private businesses and so on.
Third, AI is based on data and, of course, special industrial data are important to teach it. For example, it is essential for medicine to create data sets with depersonalised, anonymous data to avoid violating people’s rights. Today this situation is a grey area. Let's say that in Europe, they have GDPR, this information is already regulated. We also need to bring this question to a close.
Competitiveness is fourth. Where there is competitiveness, the market grows. I believe it’s very important to avoid artificial barriers or artificial monopolies when working on the AI market, be it medicine, transport or biometry.
And now, just some numbers in conclusion.
According to certain analytical agencies’ estimates, by 2030 the AI world market will grow to about $13 trillion. AI’s contribution to Russia’s GDP could reach 10-15 trillion roubles, or almost 5-7 percent of the GDP. In fact, we have something worth fighting for. I believe our starting position is quite serious, and we still have time.
Dmitry Chernyshenko: Thank you very much, Dmitry Dyrmovsky.
We’ll fight for 7 percent of the GDP and bring data sets out of their grey area; there will be a lot of developers and we will create demand… Voice input is very cool.
Mr Mishustin, the speakers have finished their presentations. I would like to ask you to review the session.
Mikhail Mishustin: Friends, first of all thank you. It was a very open conversation. I think it is not the end of it. We started it after the pandemic, but this conversation has always existed for me. And I would like to note that we share opinions on many of the issues you have spoken about today. I am glad about this.
The main thing is, we agree that the proposed complex of measures… it was proposed by the President, and I will be honest that without the President of Russia’s systematic support this tax manoeuvre or the state policy on ICT would not have been developed. We have this systematic support. And it is very important that, in this sense, we are true partners when discussing some things. I hope indeed that this support measure complex for IT companies will give a new powerful boost to the development of the sector. This is not just your industry but also ours. By the way, all this time it has been growing steadily, increasing its capacities, but today we need different speed, different trends. This is a unique, I would even say historical, chance for a breakthrough for all of you, for all of us, for the high-tech sector and the entire Russian economy.
It is clear that we will have to fine-tune accreditation mechanisms and additions to the special registry (we have discussed this today). But you understand there are catches everywhere. When you begin discussing them, these catches are not always as simple as respected industry leaders tend to present them. Our task together, yours and mine, is to make these procedures simple and user-friendly. However, we cannot allow the idea to be discredited, so we want the industry to regard these issues responsibly, too. This is important. If everything is transparent in this sense, I believe we will agree and help. It is also clear that the state will support the competitiveness of our companies.
It is necessary to establish the kind of sectoral institutions and regulation mechanisms in the IT sector that will have the full trust of its leaders. Perhaps it has been somehow lost in recent years: I don’t know, but many of you said so… Let’s bring it back.
I would like to mention another important point: the complex of measures presented today, which we have discussed, is not final. We will support many of the ideas and approaches put forward today, work on them (first of all, work with you) and include them in our implementation plans.
The government is represented by those present here; I will list them: the minister of science and higher education, the minister of healthcare and the minister of digital development. Our key deputy prime ministers are also here today: Dmitry Chernyshenko, who is also responsible for sports, culture and tourism in addition to digital development. Alexei Overchuk is our deputy prime minister responsible for our international contacts and ties. Marat Khusnullin, who also comes from Kazan, is responsible for the construction sector and an entire range of transport-related matters, property and other things. Our team has come here to speak with you. This is a serious step, in a good sense, which, I hope you will support. And, of course, your ideas and projects will be supported.
Of course, we will continue to discuss and look for answers to such questions as how we can increase demand today, how best to implement state projects in the new conditions and how we can encourage technological innovation. We are ready to adjust rules and approaches only jointly today. Let me say this once again: we are partners, you can rely on us.
In fact, today the sector has a free hand. I urge all companies to take advantage of the new opportunities and incentives, develop their businesses and establish new ones that will compete successfully on the global market, as all of you have said. And I would also like to say: let’s discuss how we can turn the generation that is currently at school or university into a valuable asset and a powerful resource. This is unique, and all of you (I think I know half the audience personally) graduated from our best universities and specialist schools, and I hope that our youth, school and university students will receive the education they need to become experts and contribute to promoting powerful, effective and steady economic growth in Russia.
Thank you very much and once again thanks to the organisers.