Agenda: Implementing measures to support small and medium-sized businesses in the current conditions
Mikhail Mishustin’s opening remarks:
Meeting of the Government Commission on the Development of Small and Medium-Sized Businesses
Good afternoon, friends,
I would like to welcome you all and to thank you for coming here, to the Tonar Plant, and I would like to thank our hospitable hosts, Mr Yury Weinstein, in the first place. Today, he showed us a very interesting production cycle that relies on Russian technologies. The plant’s staff is actively addressing import substitution issues that we discuss so often. Those goods and technologies that he showed us today are highly encouraging.
Today, we will hold a meeting of the Government Commission on the Development of Small and Medium-Sized Businesses. Amid the unprecedented spiral of external sanctions and restrictions, we have adopted a number of measures to assist this highly important economic segment.
As you know, the Bank of Russia reduced its benchmark interest rate to 11 percent today. This will also make it possible to support measures, including the Government’s measures, to provide more affordable loans for large enterprises, small and medium-sized businesses and, of course, for our citizens taking out mortgages.
Today, we will discuss what else we can do to implement all our decisions in the most effective manner.
Before we get down to work, I would like to congratulate all of you, primarily representatives of the business community, on your professional holiday. Today, we are marking Entrepreneur’s Day. Thirty years ago, the parliament passed the relevant law on enterprises and business activity, and such a concept as self-employed businesspersons was coined for the first time.
Your work is essential and useful for all people. Each of you, regardless of the scale of your business, company or its specialisation, addresses specific production, financial, HR and many other tasks. The well-being of your employees’ families directly depends on the success of your work. The economic situation in small towns and entire regions where you operate also depends on your success. In the long run, Russia’s growing prosperity depends on this.
The development of small and medium-sized businesses is a key task in achieving the national development goals set by the President, including efforts to boost employment and our people’s incomes.
The venue of our meeting is the Tonar Machine-Building Plant. This is the Moscow Region’s biggest plant in this sector. It also offers an example of how it is possible to develop from a small cooperative into a medium company and then into a big and successful business in a little over 30 years. This is not a unique case and, of course, we must do everything to multiply such examples and experience. We are doing all we can to build more plants like Tonar in Russia. Today, I would like us to discuss what we must do to support small and medium companies. The task of our Commission is to draft a package of measures to protect businesses from threats and challenges, as was the case with the coronavirus pandemic or what is happening now with the sanctions pressure on our country. Moreover, this package of measures must also create long-term opportunities for stable progress.
We must create a comfortable environment for businesses. Without nitpicking and excessive red tape. And these are not just nice words, but a principle that must guide the work of all government representatives at all levels.
Small and medium-sized companies are the first to absorb the blow. They are flexibly responding to the changing situation and are quickly adopting new formats. They are a source of many unconventional ideas and innovative solutions.
The Government is working on them in cooperation with the business community and public organisations. First, it is necessary to restructure production and logistics chains, start the search for new suppliers of raw materials and products, and enter the markets of countries that are willing to cooperate and develop equitable partnerships with Russia.
Our common efforts are already producing results. The main achievement is that small and medium-sized businesses continue developing even in the difficult situation that has taken shape today. Last April, the number of small and medium companies topped pre-pandemic figures and exceeded six million. These are not just pallid statistics. They represent real people. Small businesses provide them with jobs and wages and, moreover, deliver a wide range of consumer goods and services.
This is facilitated by the demand of large companies with state participation for the products of small and medium businesses. Last year, the scale of such purchases exceeded four trillion roubles for the first time. To encourage this demand, there is a mandatory purchasing quota.
This year, the Government has increased it from 20 to 25 percent and advised contractors to increase advance payments to 50 percent. Starting in July, we will increase the number of state companies with this mandatory quota several times over– from 1,800 to 20,000.
Responding to the sanctions pressure from unfriendly countries, the Government drafted several packages of measures to support small and medium businesses on the President’s instruction. They may be divided into several key categories – first, financial and tax initiatives, second, reducing the administrative burden on businesses and, third, making all support measures more accessible.
I will name just a few of the financial instruments that companies can use to replenish working capital or invest in business development. For example, purchase equipment or upgrade a conveyor line.
Small and medium-sized businesses can take advantage of a range of preferential loan programmes co-sponsored by the Bank of Russia with total available amount close to 1 trillion roubles.
Microfinance institutions continue to provide assistance, mainly targeting microbusinesses and self-employed individuals. Since the beginning of the year, they have provided loans to entrepreneurs worth almost 16 billion roubles.
Last year, SME Corporation launched the umbrella guarantees programme to expand this kind of support for businesses. Due to its guarantees, over 10,000 small and medium-sized companies were able to take out loans totaling more than 80 billion roubles.
More preferential lending programmes have been developed jointly with Russian regions. One such success story is the Tonar plant. The Moscow Region provided financing to the business through the Industrial Development Fund.
Due to such programmes, companies in priority sectors can take out financing at interest rates as low as 5–7 percent. The mechanism is already working in the first three regions, and another 16 regions are exploring this possibility.
Changes have also been made to the Payroll 3.0 programme. Now borrowers under the programme can apply to their bank for a six-month deferral of their loan. Almost 2,000 entrepreneurs have already applied.
Regarding tax-related initiatives, businesses now pay their monthly income tax based on their actual income rather than its calculations “on paper.” The deadline for paying simplified tax for the past year (for eligible companies already using the simplified tax system) and for the first quarter has been extended for six months in certain industries.
At the end of April, the Government, on behalf of the President, extended the deadlines for paying insurance premiums for companies supplying goods and services to the domestic market. We have been engaged in active consultations on this matter, including with public associations and business representatives. Such a large-scale support measure will significantly reduce the financial burden on companies in this difficult time. And businesses, including individual entrepreneurs, will be able to save more than 1.6 trillion roubles, and use it to pay salaries to employees, further develop and modernise production.
Russian regions will continue to independently establish tax holidays for individual entrepreneurs until the end of 2024.
I have mentioned just some of the decisions. I could offer a much longer list of decisions the Government has adopted in the last two months. Minister of Economic Development Maxim Reshetnikov will tell you more about the current measures and their implementation a little later.
Now I will talk about reducing the regulatory and supervisory burden on businesses. The comprehensive decision we made has had an impact on nearly every sector of the economy. As a result, entrepreneurs will have more resources to maintain and develop their business, including new projects.
In March, we announced a moratorium on audits until the end of the year, affecting scheduled and unscheduled audits alike – except, of course, investigating cases that pose a danger to people’s lives or health. This step became possible thanks to the risk-based approach introduced in the middle of last year. We can see that it is highly effective based on the results.
At the same time, the Government has deployed a digital system to make sure that the supervisory authorities are abiding by this moratorium, and launched an online feedback service entrepreneurs can use to file complaints about any violations of this ban.
Also recently a second package of amendments to the Code of Administrative Offences has been submitted to the State Duma. We are reducing penalties for violations of established requirements not only for SMEs and individual entrepreneurs, but for all businesses. We suggest issuing a warning instead of a fine if it is a first offence. And a ban will be introduced on bringing cases if an act of oversight has not been performed and the corresponding document has not been issued following it.
During our meetings, entrepreneurs said many times that work to prolong licenses and permits takes a lot of time and effort. We have decided to prolong the validity of such documents for one year automatically. This involves over 2.5 million documents.
Concessions have also been made regarding product labeling, including a moratorium on criminal and administrative liability for violation of relevant requirements. My deputy Dmitry Grigorenko will elaborate on this.
Another area is increasing the accessibility of all existing assistance measures, including digital and high-tech solutions. A SME platform has been launched, which makes it as easy as possible to start, run, and grow a business. It makes it possible to proactively obtain public services online. More than 85,000 users from almost all Russian regions have already registered there. Now 18 services are available on this platform for both company owners and start-up entrepreneurs. Their numbers will grow.
My Business specialised centres continue to operate in every region for individual interactions with the state. With their help, entrepreneurs received over 600,000 services last year.
Considering the sanctions pressure, the Government has also expanded the functions of the Russian Exports Centre. Now it helps to organise the delivery of goods not only to exporters, but also to importers, which will speed up the search for new suppliers and simplify the import of necessary products into Russia.
Now it is especially important to support young innovative enterprises and, of course, help them grow into advanced high-tech companies. In order to do this, we help regions to build fully prepared industrial platforms – industrial and technology parks – where they can be accommodated comfortably and on preferential terms.
Today there are 67 such facilities in Russia with about 2,000 residents representing small and medium-sized businesses, or about 30,000 employees – 30,000 jobs. In the next two years, at least 30 more sites will open in the regions, and thousands of new jobs will be created. They may as well be taken by employees of foreign companies that are now leaving the Russian market. These are often highly qualified experienced personnel who have a set of competencies and qualities that are in high demand in small and medium-sized businesses.
Colleagues,
Not only federal and regional officials, representatives of public organisations and the business community are taking part in our meeting but also entrepreneurs from the Moscow Region where we are gathering this time. Such an expanded format is already a tradition for us. This is the very feedback the President is talking about. It is extremely important in order to understand how the measures taken by the Government work on the ground, what is missing, and what needs to be corrected.
I hope for an open, business-like, and constructive conversation, following which we will develop new initiatives, solutions, and mechanisms.
