“What’s key is that the authorities don’t shy away from business problems and don’t just high-handedly direct processes, but are in constant communication with companies, discussing various issues.”
Transcript:
Dmitry Medvedev: Good afternoon, colleagues. I would like to say: the forum has turned out well, it’s a great exhibition, enjoyable even. Well done! And a special thank you for the fact that it’s not 37 degrees outside, but only 32, so all in all more or less perfect conditions for working.
I’ve walked around the exhibition: it really is powerful, interesting and causing a great deal of excitement. The main thing is that lots of people who are interested in Innoprom have come to see how it all looks.
As far as I understand, this is already the third Innoprom forum. It has become our leading platform for showcasing modern technology and innovative approaches. As part of the exhibition, leading international analysts and experts are discussing issues and making forecasts about the development of the manufacturing industries in the global economy. So in essence you could say that these platforms are determining the future of the industry. You know we have a variety of forums and exhibitions in the country but the kind of industrial, innovative theme of your forum, our Innoprom forum is clear and in my opinion that is what makes this event stand out, which is why we have taken the decision to confer on the Innoprom forum the status of federal exhibition.
So, in my opinion, an equally important goal of Innoprom is to become a good starting point for realising our dream to host the 2020 Expo Universal Exhibition in Yekaterinburg, so we are beginning with Innoprom and hoping for Expo 2020.
I hope we will win, but we will all have to work hard, and that includes those who are here today, and the whole of the country for that matter. I want you to be in no doubt that the government will give its full support to Yekaterinburg and our Expo 2020 project.
World exhibitions have taken place since 1861, and our country has regularly demonstrated the best achievements of its architects, engineers and inventors, but it is only now that we’ve been given a real chance to host an exhibition of the technology of tomorrow. I think you will agree that international exhibitions are part of a global world and contests of breakthrough ideas and technologies lead to fundamental changes in industry and the economy. I think no one is in any doubt that we are now in the next stage of the transformation of the technological structure. But equally important, and this is what I want to say since I am at the Innoprom exhibition in Yekaterinburg, and which is probably the most important thing, is what will be left after the Innoprom exhibition is gone, in Yekaterinburg, and anything that is left should belong to us – to the people who live in the city and in the region. We simply must create a more comfortable environment. An exhibition or a forum is always a good way to find new investment, to obtain such investment from the national budget, which is probably natural, and to receive investment from other, extra-budgetary, sources. I hope that this will also happen this time.
And now I would like to say a few words about our current position. Analysts believe that the global economy is now standing on the threshold of a new industrial cycle, which will result in the restructuring of traditional industrial sectors. Global trends indicate that the following four main aspects will determine industry basics: first, a conversion to managing a product’s entire product lifecycle. Estimated product-servicing and eventual closing or disposal expenses should be stipulated already at the research stage. Second, comprehensive design and engineering automation must be pursued. Manufacturers have started using digital product design systems, which are not very popular here yet. But all of us must do this because we realise that, no matter what we do, no matter what products we create, they are highly unlikely to sell well abroad without digital models, and such products will have no future. And, of course, there are also super-computer simulations, a high-priority element in a modern industrial policy. The use of new-generation materials in production is the third thing. The idea of creating new materials for specific products is becoming more popular worldwide. For example, composite materials, which were initially developed for aerospace technology, are now being used everywhere. And, of course, we must start using composite materials more frequently. Technically, composite material fabrication can be used in many areas, including the construction industry and the fuel and energy sectors.
And, finally, the deployment of new industrial infrastructure, the so-called smart environments, such as smart roads, smart networks and smart production facilities, is the fourth aspect. The concept of smart plants presupposes the maximum possible automation of production processes through the introduction of robotic technology. Naturally, this ensures more cost-effective production processes.
Colleagues, as prime minister, I determine the high-priority aspects of the government’s work. As you know, at least 25 million cost-effective jobs must be created up to 2020, primarily in the non-commodity sectors. In addition, labour productivity must increase by 50-100%. We are still having trouble accomplishing this task.
These two objectives can only be accomplished through systematic work and by developing key Russian economic sectors, including the aircraft industry, the ship-building industry, the automotive industry, the pharmaceutical industry, the iron and steel industry and many others. Apart from just modernising current industries, we must create entirely new and competitive production facilities.
I would also like to make a few remarks in this context. First of all, greater energy efficiency is a top-priority. We have just discussed this issue with major companies, including those major investors who have been operating in the Russian market for a long time. We plan to reduce energy intensity by 40% from 2007 until 2020. A decree to this effect was signed in 2008.
To conserve energy and improve energy efficiency, Russia has adopted a state programme including subsidies for regions currently totalling over 5 billion roubles. State guarantees totalling 10 billion roubles for energy saving projects in industry and utilities have also been previewed.
Second, the government is developing a state programme to develop industries and improve their competitiveness, this is an additional mechanism supporting the idea of new industrialisation. The programme’s objective is to stimulate modernisation of manufacturing. This programme will be adopted accordingly.
Third, the defence order should become a serious resource for renewal, which is customary for our country and here, in my view, it is unadvisable to abandon traditions. To outfit the Armed Forces with modern equipment under the federal targeted programme the Development of the Military Industrial Complex of Russia to 2020, for example, the Sverdlovsk Region alone will modernise and create new capacity at 22 enterprises. These include such significant enterprises within the Russian defence sector as Uralvagonzavod, Kalinin Machine Plant, and Uraltransmash.
Fourth, we have launched mechanisms to support Russian high-tech production exports, mechanisms attracting investment to the real sector of economy. Currently the Agency for Export Loan Insurance has approved 10% of projects totalling $100 million. The exports are going to CIS countries, Asia and Latin America. The Russian Direct Investment Fund (RDIF) has begun work. Currently, total RDIF deals amount to about $1 billion, the ratio between their own funds and the raised funds is 1 to 4. I recall that we have set the goal of increasing the share of investment to 25% of GDP including through a significant increase in foreign investment
Next, Russia’s accession to the WTO offers opportunities to make use of our competitive advantages. Not only complications but also advantages – we should keep this in mind. Still, we naturally must protect our market against unfair competition and support the sectors which are sensitive to such changes, say agriculture, or the car industry, or agricultural machinery manufacturing using every existing and allowable mechanisms. Protecting our national economic interests under the terms of WTO membership will remain our priority, have no doubt about that.
Sixth, we need to formulate new requirements for engineering education and attract industrial enterprises to forming educational programmes, which is being done already. Even now, when walking around the exhibition, I saw several good examples of large enterprises creating industrial educational associations, their own colleges and vocational schools. I think this is extremely important especially given the shortage of workers. We ought to conduct targeted training of specialists, and already today I think we are quite capable of using public-private partnerships to resolve this task. It is necessary to develop this practice everywhere.
And finally, the seventh point I’d like to address: the so-called roadmaps have been developed as part of the national entrepreneurial initiative, and I approved all these roadmaps by government resolutions a week ago. We are talking about simplifying customs and tax regulations, lifting infrastructure restrictions, and some other important initiatives. All the formulated proposals will be discussed in the format of the Open Government during the meetings with experts.
And perhaps a general task which we often fail to accomplish but nevertheless ought to work on, constantly, insistently advance it at every level – the task of improving the business climate so that by 2018 Russia is ranked higher, close to the top, in all authoritative ratings of business climate. I mean the top 40 initially, and then the top 20. The task is very complicated, rather ambitious, but we should not set modest goals. Goals should always be ambitious. You can only achieve true success if you set ambitious goals.
A very important theme is the overall attitude of society and the state to the entrepreneurial class. In this respect, all of us should change, we should use every opportunity to convince people that entrepreneurial initiative is a boon, and that entrepreneurship is one of the key sources of a country’s development.
If we succeed in accomplishing these seven tasks we will see a completely different situation. And naturally, in 2020 we will see Expo 2020, which will be held very successfully in your beautiful city. Thank you!
Sergei Brilyov (presenter): Thank you, Mr Medvedev. We have a very interesting group of participants today, and though we have agreed that I wouldn’t, I still feel like asking Valery Rostokin, first of all, who produces polysilicon used for making solar batteries, in case someone doesn’t know. Before asking the question I have to apologise to one of the audience members. He told me a good joke: “The Stone Age ended not because people ran out of stones.” And what sort of stones are we going to make now? Polysilicon produced by Valery. According to experts, producing it is only viable when a barrel of oil costs 120 dollars. Valery, what do you do over there, could you explain?
Valery Rostokin (Director General, NITOL Group): Mr Medvedev, esteemed guests, NITOL Group is an industrial company, an integral part of the industrial assets of the Russian Federation. There is no doubt that the business community supports any initiatives of the government and long-term plans aimed at boosting industrial growth and the internal consumer market. NITOL Group has teamed up with Sberbank, Rusnano, and the Eurasian Bank of Development to realise a one-of-a-kind large-scale project of building a polycrystalline silicon production facility with a capacity of six thousand metric tons of polysilicon in the town of Usolye-Sibirskoye in the Irkutsk Region, thus laying the foundation for the development of solar power generation in Russia.
We are not just building, we are already producing world-class products that are in demand mostly among foreign manufacturers. This year we have commissioned basic industrial facilities and achieved the complete technological cycle. We plan to produce around 1.5 thousand tonnes of polysilicon by the end of the year and finish the construction of the plant in 2014.
Demand for solar energy in the world is increasing with each year and Russia is no exception. We pay ever more attention to the issues of environmental protection, power safety and innovation. The annual price increases for traditional fuels, like oil, natural gas and coal, drive the development of the industry.
The Far East, Siberia, the Trans-Baikal Territory, the south of Russia, the regions with high solar radiation, should become the major testing ground for the use of solar energy. Global practice shows that the rapid growth of alternative energy sources is only possible with government support at the initial stage, including the introduction of special stimulative tariffs and subsidies that will ensure the competitiveness of solar power compared to traditional fuels, and provide a push for the industry’s development in Russia. We exist, we work incessantly and we are dedicated to our business.
Mr Medvedev, we badly need such stimulative tariffs and the support of the state to fulfil the tasks outlined by you and the government. For my part, I am ready to play an active role in addressing these issues.
Sergei Brilyov: Mr Medvedev, businessmen are such sly people, they would naturally start with requests… All the more so since industries similar to yours in China are closing down. If it is closing in China with its cheap labour, where is the guarantee that it can work here? Should we develop fairy-tale industries? Can you hear me there on the other side?
Dmitry Medvedev: What’s the use of listening to you? Everything that needed to be said has been said that we should deal with tariffs. Let me listen to all the speakers and then I will draw the line so that it does not look like a monologue. I would like to hear from everyone in the audience who has something to say.
Sergei Brilyov: OK, we have here Dieter Siempelkamp, his family has owned the company for many decades if not a century, even his grandfather was in Russia. But now he arrived in Russia rather unexpectedly for himself. Ahead of today’s session we were discussing what we could discuss and we came up with a very original question: Dieter, what the hell are you doing in the Russian Federation (I’m quoting you)?
Dieter Siempelkamp (President, Siempelkamp Maschinen) (via interpreter): First of all, I would like to thank you for a chance to speak and I will briefly tell you what my company is doing. We have a very long tradition in this country. My grandfather started delivering different equipment for the timber processing industry some time in 1907, and my father continued producing plywood around 1927, and now we offer a wide range of products for Russian industry. We offer a wide variety of wood particle materials, various “Faber boards” and flakeboards. We have also supplied 13 plants to the region over the past five years. We have also rubber industry products, such as special presses for curing, for rubber conveyors, and we produce special forging presses for the steel processing industry. This city of Yekaterinburg is very important for us because we have a lot of business here in terms of steel and titan production, we also specialise in upgrading old plants. I think it is crucial to have methods for upgrading old plants which could work on for a long time. At the same we have another field in our activities – supplying equipment for plants involved with nuclear energy. That is, our big buyer in Russia is Rosatom, and Rosatom purchases our equipment for its plants in Russia, China and India.
That all sounds good, but we also have some problems. Importing equipment to Russia is sometimes very complicated. We face such problems with customs that sometimes we have to stop construction while we await spare parts that are struck at customs for several weeks. The customs procedures we have to follow are very complicated and are becoming even more complicated. It would be nice to have a way to reduce the amount of work involved and to speed up the process. That’s one issue. Another issue has to do with the timber processing industry. This industry does not have real opportunities for financing their investments. Russia has the world’s largest forests, and we still have to import wood panels. We have all the materials here, yet we still have to import panels for the timber processing industry.
It would be great to have a tool for financing the timber processing industry so that it could make such investments. Most of investments come from foreign companies but we would like Russian companies also to take part in investing.
Demand for furniture in Russia is growing, the quality is much higher than a few years ago, and furniture could become a very good export commodity. So what we need is financing for those companies.
And in conclusion I would like to say that we are happy to take part in the Innoprom Forum, we are represented here for the second time .
We had very interesting discussions with clients from the steel processing industry and I hope this fair will develop in the future to become the biggest industrial exhibition in Russia. Thank you.
CEO, Siemens LLC Russia & Central Asia: Thank you. Mr Medvedev, I must add that when we spoke with Mr Siempelkamp on the eve of this session he said that for all that he finds it much easier to work, for instance, with the Belarusian customs. They are exporting many things to Belarus. Maybe, it would be practical to tell them to export their produce via Belarus as part of the Customs Union? If all of a sudden…
Dmitry Medvedev: Or another option – suggest that we establish a political regime close to that in Belarus. Maybe, it will be easier to work. Shall we support this?
Sergei Brilyov: We have one more German here – Dietrich Meller, a frequent guest of such events, who has a piece of good news for us about common German and Russian technology. I guess GLONASS is about to strike a marriage of convenience, and maybe even of love with Russia.
Dietrich, I’d like to ask you to concentrate primarily on this issue because we have just heard some alarming news from your German colleague and we k now you as such a great optimist, judging by what you plan to do.
Dietrich Muller (CEO, Siemens LLC Russia & Central Asia and Vice President Siemens AG): Thank you. Mr Medvedev, ladies and gentlemen. Siemens has worked in Russia for almost 160 years and for 20 years in Yekaterinburg alone. This is a jubilee. By the way, we have a small reception by our stand and you are welcome to come!
In addition to innovation in the GLONASS-based movement monitoring (this is a subject of the future), I’d like to say a few words about three other subjects. The first one is support for technology localization. We attach much importance to the strategic partnership with Yekaterinburg, the Sverdlovsk Region and the Urals Federal District. Our main goal is to localize our technology. We are grateful to the regional administration for exemplary support. Urals locomotives are one of the bright examples – a joint venture was set up with Sinara group with record speed and has been a great success.
Electric locomotives and commuter trains are a big project. Yet, this is just a fraction of our billion investment initiative that the head of our concern, Peter Loescher, announced in Moscow last October. This initiative concerts the construction of ten new production lines in Russia. Apart from import replacement, our localisation programme provides for the development of Russia’s export potential. Deep localisation implies gradual formation of supply industries in Russia, as well as the development of a whole cluster of railway equipment producers.
I’d like to draw your attention to one problem. At the initial stage, there is still a requirement for the import of units, spare parts and components that attract higher duties than finished produce. It appears that it is cheaper to bring into Russia ready-made turbines, breakers or electric trains than to invest in their production in Russia and assembly them from imported components here. We think it is necessary to redress this and count on your government support – it would be very helpful to us.
The second subject is energy effectiveness. At the initiative of the Russian president and the German federal chancellor a study entitled “Yekaterinburg – an energy effective city” was launched in 2008. The study established that the introduction of modern technology will allow the city to save 44% of primary power by 2020. In case of the most advanced technology, the saving will be up to 79%. What has happened since then? We have reached tangible results in some spheres and not so much in others. Regrettably, the market has not yet received a strong impetus for introducing energy effective technology on a broad scale. If prices on electricity are low it is necessary to elaborate a clear system of government incentives on tariffs – up to technical and administrative regulations. It is important to make participants in the market interested in introducing energy effective solutions all along the line – from energy production to consumption.
And the third issue is about alternative energy sources, such as wind power. We have announced our joint project on localising the production of wind turbines in cooperation with Rostehnologii and RusHydro. Tariff regulations are on obstacle to the opening of the wind power market and we hope that the Russian Government will soon pass a decision that will make it possible to introduce this eco-friendly form of energy on a large scale. At any rate, we and our partners are ready for this. As for such new systems as control over the movement of lorries, which you mentioned, this is yet another project of joint localisation here, in Russia. Thank you!
Sergei Brilyov: Mr Medvedev, I’m listening to these speeches and wondering how many requests you hear during a day. Have you ever counted them? I heard five in 20 minutes. Let’s finish this part.
Dmitry Medvedev: This is my job!
Sergei Brilyov: So many requests… Let’s finish this mini part by giving the floor to Airat Bashirov from Kazan. He represents what is the fastest growing business today, right? Airat deals with plastic packing. What is it all about? Why is Rosnano interested in plastic packing in Russia?
Airat Bashirov (general director of Danaflex): Good afternoon, Mr Medvedev, colleagues. Actually, ours is a fast growing enterprise for Russia, not at the global level. We manufacture flexible packaging for food products, and our brand new product is nano-packing material which makes it possible to decrease the oxygen level and moisture permeability by 100-500 times. We have implemented this project together with Rusnano. Last year, we launched a new enterprise which is now actively developing.
I was very pleased to hear Mr Medvedev mention the government’s policy aimed at developing the industry and increasing competitiveness in his programme speech. However, the enterprise often faces a lack of long-term financial resources, as banks are not prepared to lend to large innovation projects and often complain of the expensive resources involved. One possible solution is to give state money to banks for financing and support of midsize innovation and industrial companies that have vast development potential both in Russia and abroad. Today, many programmes and subsidies are available for small businesses, at least in Tatarstan. Large businesses are able to solve these issues themselves, as there are western financial markets and IPOs available for them – while midsize businesses seem to be slightly neglected, and we indeed have problems with access to long-term and reasonable financing. In this regard, I have a question for you, Mr Medvedev. Is the government planning to provide support to prospective companies that are targeting foreign markets? In your speech, you mentioned certain programmes for the Russian Direct Investment Fund and export-oriented programmes. But what about midsize companies? Thank you.
Sergei Brilyov: Thank you very much. Mr Medvedev, it seems that we now have about five questions regarding tariffs, customs, custom duties, energy efficiency, and medium business support. By the way, Mr Bashirov and I spoke before the meeting, and I asked him whether it is easier for his company to get loans abroad – and he said the enterprise operates only in Russia, as a midsize business. As far as I remember, there are 1,300 employees. Mr Bashirov, am I correct?
Airat Bashirov: 800 people.
Sergei Brilyov: Mr Medvedev, we might address these questions now, and then hear from other guests. There are a lot of questions. Or should we listen to more of them?
Dmitry Medvedev: Let’s hear a few more questions. No need to hurry, everyone should have a chance to speak.
Sergei Brilyov: In your speech, you have mentioned public-private partnership, particularly with respect to providing new engineering personnel. It is clear that the Skolkovo Foundation has gained some experience, and there are still as many talented people in Russia as ever. But where will they come from, actually? In all professions, there is a lack of new specialists. Look at the participants here – there are young people present, but the average age is still higher than the age required in the young economy. Where will they come from?
Viktor Vekselberg (Board Director, Renova Group): You are absolutely right. People are the main foundation of our future. For two years, we have been implementing the Skolkovo project, which is rather successful. Today, there are some 500 resident companies at Skolkovo and over 20 shareholders, large corporations which have signed cooperation agreements with the foundation. Those include Siemens, whose representatives are here today. These companies undertook obligations to invest some 20 billion roubles to establish and develop research centres within the next five years. Also, there are venture companies ready to invest in our start-ups. But these are just figures, which we hope will prove efficient in the near time.
The question here is who is going to implement all these projects. As you know, the Skolkovo Institute of Science and Technology, or Skolkovo Tech, is one of the main facilities of the network being constructed. However, the institute requires at least a bachelor’s degree and further training of the most highly qualified specialists – that is, further training of specialists who already have a postgraduate or a doctor’s degree and who could further apply their skills. But where do we find young people who possess adequate skills and knowledge to study at this institute?
We have considered this and realised that we should establish a unified and common training system, starting from kindergarten and grade school. Last year, we implemented the national campaign to define a vision of the school of the future, which we dubbed Skolkovo school, with some 200 creative educational groups participating.
We were pleasantly surprised by the community’s readiness to switch paths and train the next generation.
I would like to say that the winners include a vocational school in Yekaterinburg, which has offered an interesting programme and made the top ten list.
The task is to ensure that the new process of educating our younger generation who will shape our future can form a new type of person – a free person that realises his creative potential, a person capable of transforming his knowledge into concrete results. That it why I would like to clarify a perception which has not been completely formed yet of what the Skolkovo Foundation is. A year and a half ago Mr Medvedev said that the Skolkovo Foundation is not just a separate territory, it is philosophy, a world outlook. It is that outlook that should permeate people of all ages involved in the process, and it is we, with a full understanding of the complexity of this task, that are beginning to solve it starting in the classroom.
Universities are the second level. We need a level of professional training at the Master’s level that will gives us the necessary personnel potential and people with the necessary skills and qualification. There is an international programme which is promoted by an organisation of 17 developed countries. They developed a selection system, a set of criteria for rating a student’s ability to use his engineering skills to create concrete, marketable products.
Russia is actively participating in that programme together with the Skolkovo Foundation, the Ministry of Education and Science and the Higher School of Economics, which will allow us (as I have already said, we have selected ten universities) to implement that programme and to create that chain of training for young people, training new personnel, a new outlook which will help accomplish the major tasks involved in the Russian economy’s transition to innovation-based development.
As I said, Skolkovo is not just a territory outside Moscow, it is a philosophy, and we want Skolkovo to be seen as a kind of a technological or innovation hub. And we follow that logic in our partnership with regions. We have, among other regions, established very good, stable relations with the Sverdlovsk Region. We signed a non-commercial partnership agreement on developing a biomedical cluster, and now the cluster has matured and is about to launch production of a number of preparations that have been engineered and made by our specialists with the participation of the foundation. And those forms of partnership between the foundation and regional institutions that allow for harmonious combination of various support mechanisms and for the promotion of innovative projects are vitally important.
In conclusion, Mr Medvedev, I would like to emphasise the very significant position that you stressed in your speech. Quite often the Skolkovo foundation or project is compared to Silicon Valley and is referred to as the Russian counterpart to Silicon Valley. I would like to remind the audience that Silicon Valley had been developing for decades with active support from the US government, which has placed orders for products that were badly needed by the military-industrial complex and by the economy in general. The emphasis on military procurement, with the clear priority being to favour innovative products, I think, gives confidence that the projects being implemented will be in-demand and will get real support through long-term government orders. This is a very important element of stability that gives our innovators, our businessmen confidence in tomorrow. Thank you.
Sergei Brilyov: Mr Vekselberg, I would like to take go back and talk about something you just said. As to that school that you thought up, there are a dozen such pilot projects. You take only one of them for the kids who will work or study in Skolkovo. Is this a concept for a school of potential geniuses or can such a school be basically built in any region? What will happen to the other eleven models that you have elaborated?
Viktor Vekselberg: No, I just said that 200 collectives from different cities and regions took part, which shows that the preconditions now exist for a radically new approach to the education process. We have selected ten regions as partners. In those regions our partners will work, so to speak. These schools will be operating in those regions where they are working today, and by using their experience we will set up our own school in Skolkovo that will also follow the principles and approaches I spoke about.
Sergei Brilyov: But is it scouting for geniuses or a new school for everyone?
Viktor Vekselberg: For everyone, of course, for everybody. It’s just that a new kind of person will emerge from it. Later on they will be selected by the kids’ natural abilities. And those who will have maths and physics skills and will use them later in their engineering studies, they will be our potential for implementing further projects.
Sergei Brilyov: Well, that’s in the future. Meanwhile, Mr Koksharov, I would like to address the president of the Urals Federal University. There are no Russian universities among the world’s top 100 universities, including yours. And everybody understands that something must change – and not tomorrow, but yesterday. So what is to be done? It’s a universal question but also a tough question.
Viktor Koksharov: The question is universal, it is fairly hard. Yes, the Urals Federal University is not among the top universities in the world, nor are other Russian schools. But we are sure to make it there. This is the goal we have set for ourselves – to crack the top hundred by 2020. And we have a vision of what must be done. First of all, we should focus on the quality of engineering education. Most of those sitting on the podium deal with production whereas we produce the people that work on this production. That’s why the key link in this chain are universities which should train quality specialists, personnel. What should be done? We must have a new quality of engineering education that integrates technological, managerial and educational foundations – precisely these three, nothing can be left out.
In addition, we should focus on staff. Who should teach? Our specialists, undoubtedly, whom we nurture, but if we want to be among internationally recognised leaders, we have to establish a competitive environment for attracting teachers from the world’s best universities. And Russian universities, at least the leading ones, should become centres for…If we take the Chinese example, it is the return of the Russian Huaqiao. Otherwise we will have the same experience as in the old song, “I pasted you from what I had, and then I fell in love with what I had.” In the academic environment it is called “academic incest” when we train staff for ourselves, they seem to be very… No, we have to dilute it and invite leading experts on a competitive basis. This is being done. There are a number of programmes launched by the government of the Russian Federation, Resolution No. 220 on setting up leading scientific schools at universities, a number of other support mechanisms. Of course, we want this to continue.
Besides attracting gurus and leading academic dignitaries and setting up laboratories – and this is what we are doing at our university – we have to invite postdocs, graduates of the leading western universities, those who just got their doctoral degrees, to come home to teach our students. And, by the way, we have very good students, they can be taught if we invest money, intelligence, knowledge, and the example of our universities, Russia’s leading universities, shows that a lot can be achieved.
For example, on our stand at Innoprom, when we had just started it two years ago, we only had posters. Today, two years later, we have real working samples that we created with the help of 56 small innovative enterprises that we established at our university with the support of the Russian government, which implemented Resolution No. 219. It means that all this can be done. We only have to give our people, our students, the necessary support, and we can achieve a great deal.
Next, we need modern infrastructure. We also need modern campuses which, in addition to educational buildings, social infrastructure and dormitories, will be outfitted with innovative technology areas and software technology parks. By the way, we are prepared to implement such a project at the Urals Federal University. We have a land plot allocated for these purposes and we have the capabilities to build it. We just need the government to launch this mechanism. We also have private investors who are ready to join in.
I am fully supportive of what Mr Vekselberg just said. We need to go to schools and perhaps even kindergartens. We need to instill a predisposition for technical education in children while they are young. Otherwise, we will experience what America has experiencing now where engineering positions are filled by graduates of Indian and Chinese technical universities. Of course, we want to avoid this. Let them come to us and work, but we want them to be graduates of Russian institutions of higher learning.
What do we need to accomplish this? We need to support schools for gifted and talented children the way it’s done in Skolkovo or the Urals Federal University where we have a boarding school for talented children. Top achievers from across the Urals Federal District live and study at this school and then continue their studies at Russian institutions of higher education. Our mission is help them get there.
We must go to schools. As a university, we are doing this and we also hold conventions of school teachers where we share information about the latest trends in teaching chemistry, physics and biology. We manage the work of school scientific societies and organise the work of the youth university in Yekaterinburg. We are ready to continue doing this work in the future. We know that if rising university students aren’t good enough, they won’t amount to much in the future. Finally, speaking about kindergartens, we are aware that there are internationally approved techniques that work just fine, such as establishing science and technology museums in major university centres and towns where preschoolers can go and see for themselves how technology works. Things that they see there make them enthusiastic about becoming engineers. As a university, we are prepared to carry out such a project in conjunction with the Sverdlovsk Region authorities.
I believe that we can achieve this. We can! Of course, we need the support of the federal government. I think the federal government fully realises this. At least, the initiatives announced at the very top tell us so. Together we can do it: by 2020, Russian universities must be in the top hundred, and the Urals Federal University is prepared to be among them. Today, we are already in the top 500 international universities. Our university was only established in 2010. This means that we can be successful.
Sergei Brilyov: Mr Koksharov, you deserve a round of applause for what you’ve said. I have a brief comment, since we don’t have much time here. Mr Medvedev mentioned public-private partnerships to training engineers. How can we make this work? As far as I know, roads are being paved in India that look like the ones in California, only they are designed to bring young Indian professionals home and have them work for the benefit of the country. Are you going to build such roads?
Viktor Koksharov: You know, it can work out perfectly well. We have tested many techniques at our university. For example, we are training students under M.A. programmes at our research and production association. We have set up classrooms right there, and students are getting M.A. degrees as they work. They become lead designers and engineers even before they get their M.A. diplomas. They get employed and they know what they are studying for. We are about to start a major project with the Urals Mining and Metallurgical Company, one of the largest in Russia. They are building a dedicated building and we are equipping it with the latest equipment together with them, also using the university funds. We are developing new modern academic programmes and we will train specialists for the metallurgical, power engineering and other industries, perhaps, even for the machine-building industry. There are appropriate mechanisms. Private businesses, too, are starting to pay attention, albeit slowly, because they badly need skilled labour and they realise that that new employees must be properly trained for the work they will be doing.
Sergei Brilyov: Don’t things that you just said contradict what you said about economic incest?
Viktor Koksharov: Of course not. The thing is that we enlist the services of practical workers and plan to bring in foreign faculty for training these students. We are already doing so and creating climate forecasting labs led by Nobel Prize winner Jean Jouzel. We are establishing special labs for the regional economy and inviting postdocs from abroad. We are also carrying out several other projects and moving forward step by step. Of course, this work will go at a faster pace if there are dedicated federal programmes for providing grants to universities on a competitive basis.
Sergei Brilyov: There you go. You are engaged in public-private partnership and still thinking about getting federal funding…
Viktor Koksharov: Public-private partnership is a must. It is the way of the future. By the way, as far as our campus construction work goes, we have worked out a customised consulting model that provides for the participation of privately held businesses in the creation of social infrastructure using concession or investment agreements, but there are other mechanisms that can be used to make these projects pay for themselves.
Sergei Brilyov: Well, in order to round out the package of issues, we need to hear what Mr Pumpyansky has to tell us. Mr Pumpyansky, look at how we started this conversation: Valery Rostokin told us that plants in China are being shut down, while they are working in Russia despite existing stereotypes. Germans keep telling us about transferring manufacturing enterprises to Russia or even establishing a Russian-German technical alliance. However, all these conversations are taking place – I’m just trying to use this discussion to get us back to the latest developments – amid a very complicated international situation. You represent big Russian business, but I would like to ask you a “foreign” question: is any kind of planning possible now at all?
Dmitry Pumpyansky (vice president of the Russian Union of Industrialists and Entrepreneurs and chairman of the board of the Pipe Metallurgical Company TMK): Mr Brilyov, planning is not only possible, it is there and we need it, all the more so since we are living in a globalised economy. Thank God, the Russian economy has long since become part of the global economy. Of course, the general economic recession has affected markets and Russian companies. However, those major Russian companies that didn’t sit on their hands during the fat years, actively modernised their manufacturing facilities and mastered the production of innovative products have safely hedged their businesses against potential market shocks.
To take the example of our company, the Pipe Metallurgical Company today is the biggest producer of steel piping in the world. We have production facilities in five countries, we supply our products to 80 countries and we account for up to 20% of the world output of certain products.
Of course we are not immune to market fluctuations in various regional markets, but thank God, today our factories in Europe and America operate in a more or less stable manner, although the degree of uncertainty is much higher there than here in Russia. But our core market is of course in Russia: 80% of our employees work here and our key customers are here. It has to be said that today the degree of certainty in Russia offers a much broader perspective and today we look ahead to the end of 2012, we are planning production for 2013, for 4 year and 5 year investment programmes, and our company strategies until 2020 have been drawn up and are being implemented.
I would like to say that we expect a major improvement of the situation for the business of big Russian companies, especially in the metallurgy, from the ratification and the coming into force of the treaty on accession to the World Trade Organisation, which, hopefully, will happen within a month or two. Then, given the active position of the Russian government and the Russian state, we will be able to take advantage of Russia’s accession to the WTO.
You see, discriminatory anti-dumping procedures against Russian producers is something that we see all the time in many markets, in many countries, but here, inside Russia, we, for example, have no apprehensions about WTO accession. We all welcome it because we believe we are ready to compete and to hold our own against any world producers.
I can’t help touching on another topic… Mr Moeller has already told you about our joint project – Siemens and Sinara group – to produce the most modern Russian locomotives, electrical-driven engines and powered rolling stock (we began a new project to localise the production of Lastochka trains). I think it is a remarkable example of competent government policy coming together, i.e. a pre-existing long-term strategy for the development of systemically crucial infrastructure of Russian Railways which was approved by the government.
This made it possible to conclude contracts which matched the 6-8-year life cycle. We have signed contracts of this kind with Russian Railways and have managed to raise our own money for these contracts and build up production. Today these electrical engines are operating on Russian Railways and show good economic performance.
As for localising the production of modern German electrical engines – the ones Siemens recently presented in Sochi (many of those present took part in that unforgettable trip) – when such trains appear on our railways they will revolutionise not only technology, they will change people’s mentality, if you like, because with the advent of new technology the era of our famous green commuter trains will recede into the past. And in order to create such science-intensive, high-technology products, a different kind of workforce is needed.
A lot has been said here about education. I have to say that in addition to interacting with the universities and of course working with schools and so on, we are training 500 workers in Germany on a full-time basis and for protracted periods in order to be able to launch the production of these hi-tech electrical engines. We hope to get a workforce of an entirely different standard.
So, life goes on. “Walk and ye shall reach.” The initiatives declared by the president and the prime minister aimed at changing the business climate in Russia are necessary and overdue and I hope they will be implemented very quickly. And then we will really be able to take some major steps forward and make the Russian economy much more competitive.
Regarding the topic of our conference today, career growth. We are aware that we are not doing enough in that field. Perhaps we should do more to explain to everyone via the media why all this is being done and what the services are for (what is being done, for what purpose and with what benefits in mind). There is indeed a certain vacuum of interaction, of feedback. Yes, the situation needs to be changed seriously. To a large extent this is the task of business itself, but of course, there has to be a certain amount of ideological assistance on the part of the government.
Just a couple more words. I must mention – as chairman of the Sverdlovsk Regional Union of Industrialists and Entrepreneurs, which brings together more than 70% enterprises, accounting for more than 70% of the gross regional product – the experience of interaction between business and the authorities here in the Sverdlovsk Region. We work in many regions but we have some unique experience in this region. The Union of Industrialists and Entrepreneurs is working with the government and the ministries via the internet, discussing legislative initiatives and complicated current issues via the relevant authorised agencies.
Mr Medvedev, you constantly set the task of raising Russia’s position in the Doing Business rating (and you have been stressing it recently with absolutely good reason). It seems to me that our work with the Sverdlovsk Region authorities suggests that we need a similar internal Russian rating of doing business in various regions. Let us introduce it, we will make it public and that will stimulate rivalry between regions for creating a competitive environment. Thank you.
Sergei Brilyov: Mr Medvedev, you have said very emphatically: let us hear everyone. Well, we have given a say to everyone. And I must say that the range of issues discussed was very interesting: financial support, ideological support, financial… And it all ended on ideology. Now you have the floor. We were afraid we wouldn’t be able to hear everyone, but we did.
Dmitry Medvedev: It’s tough, it’s very hot in here. We have listened to everyone and thank you very much. Goodbye. The government is a very special outfit. It listens and listens and draws certain conclusions and those conclusions will then be published.
On a serious note, first, I would like to say that I am very glad that more forums like Innoprom are springing up. You know, we have several big forums where major international companies meet and where multibillion deals are sometimes struck. I think it is important that normal regional and federal exhibitions such as the one we are attending, where practically any businessman who lives in the region or neighbouring regions, in the Urals and in the country generally can come and present himself and show what he can do without any unnecessary complications and, let us face it, without paying the huge sums that one sometimes has to pay to take part in major international events. I hope that the number of these exhibitions in our country will grow.
Now a few words about what has been said here. I am very well aware that the range of problems the members of our roundtable today raised here is fairly traditional. What are the concerns of our business and what are the concerns of our foreign partners? Mr Siempelkamp spoke about problems with the customs. Unfortunately that is true, our customs structure, although we have been trying to change it for perhaps ten years, is still extremely formal, very costly, very bureaucratic and, unfortunately, very corrupt. Personnel reshuffles have not yielded the desired effect. So the state should think about the role of customs in our economic system in general.
I don’t mind telling you that when, for example, I talk with the head of our customs service he asks me a tough question. He says: “You should make up your own mind as to what you want us to do. Do you want us to simply control the procedure of moving goods in and out of the customs territory of the Russian Federation in compliance with the law? That is one goal. We can do it. Or do you want us to earn big money for the state? That is another goal and we are doing it too and we are collecting large amounts in customs duties which go into the state budget”.
Of course there is no pat answer to that: the customs must do both. But the proportions, what is more important for the state, to pave the way for business, the creation of new jobs, new production facilities, the supply of components, or is it the fiscal task? And what should be the balance? This is, I think, what we should determine.
Our colleagues from Siemens, Mr Moeller, also said that railway technology… in general it is often cheaper to bring finished products into the country than to invest in production and import components that ultimately create new jobs. These are links of the same chain and it is high time we made a final decision. I said in my introductory remarks that I have signed road maps for several areas, including customs reform. This was preceded by some difficult consultations, but I am sure that if we introduce these customs procedures and the corresponding road map we will at long last have done something real.
Now some comments on what some other colleagues said. Airat Bashirov said that the state must support business: you have said that medium-sized businesses encounter problems that small businesses do not have because a system of support for small businesses exists, it is not perfect but it is in some ways useful. Big business has no problems because it is big. Medium-sized business has a problem with access to money, long money and cheap money. I think all the business people present here will tell me that they also have these problems. There is no company without problems. This is the current situation in the world which is naturally compounded by our internal problems.
Of course we must create modern institutions to support various sectors and forms of business, but these should be modern institutions. The most important kind of support, in my opinion, must consist in maintaining the right macroeconomic parameters, to be able to control inflation and not to allow the state and the economy to slide into the problems that we had in the 1990s and some other crisis periods.
If we have the right macroeconomic policy, if we can tackle major tasks, money will be cheap and money will be long. We all understand that these things are absolutely interconnected. Yes of course the situation, the world financial situation is important but it is critical for the government to concentrate on solving internal tasks and maintaining the parameters that we have identified for ourselves. Only then can we obtain credits and use a reasonable amount of collateral and reduce risks. Failing that, we may see a repeat of the events in the 1990s and during the crisis period.
Regarding human resources. Of course a shortage of personnel is felt everywhere, but especially at large industrial enterprises, industrial associations, and especially here in the Urals, and in other places where there are large production complexes. Unfortunately, at some point we lost our training potential. We did not pay due attention to training people with secondary vocational education and now we are only restoring what we had before. I hope we will succeed in doing it and we will do it with the support from the business community.
However, shaping a modern higher education system is an equally important task. Viktor Koksharov was speaking here about what we should do in order to make the top hundred. You know, I think the current situation in higher education is due to two reasons: first, the overall weakening of the education system in our country and second, our inability to position ourselves, to sell ourselves. By no means are all our universities weak academically and in terms of education.
Yes, we have fallen behind, and we have problems with providing the essential funding. But it is equally important to be able to position ourselves correctly and to demonstrate our achievements effectively. Everybody knows that for a university to be advanced and to be in the top hundred or the top two hundred it has to achieve a certain quotation rating so that other academic schools and other universities cite the work of our professors. But that is also achieved through communication when teachers are constantly engaged with the global academic community: they don’t hold back out of shyness, they travel, they are not afraid to invite foreign teachers for fear that they would take their jobs from them. Only educational and student mobility can solve these tasks.
Otherwise all our universities will be doomed to a fairly bleak existence serving only themselves, with our research papers being written only for ourselves, producing Candidates and Doctors of Sciences for ourselves and engaging in research that leads nowhere. The bottom line is that we are simply short of personnel. Here it is important to open ourselves up, and that calls for the correct environment, not just the academic environment, but the general environment.
You have referred to a new type of campus. That is right. For a university to be a real university it must offer not only a few good auditoriums, but also conditions for rest, for constant communication, conditions in which the students and teachers, if you like, mix with one another for almost 24 hours so that the students get an inkling of how valuable their knowledge is and so that teachers should not fall behind the students. As it is, this happens all the time. We know that teachers are often unprepared to meet the requirements set to students, and I am referring both to humanities, natural sciences and engineering. And I think this is the challenge for the near future.
We will support higher education and we will develop the system of grants: that system has acquitted itself well. And I am thankful to you for assessing its progress over recent years. We will continue to do it, to go on creating a system of incentives for university education.
As for the interaction between business and the authorities, Dmitry Pumpyansky has spoken on this. I am very glad that everything is fine in Yekaterinburg, in the Sverdlovsk Region and the relationship between the business community and government institutions is good. These kinds of relations are never without problems, but what’s key here is that the authorities don’t shy away from the problems facing business in Russia and don’t just high-handedly direct various processes, but are in constant communication with companies, discussing various issues.
Indeed, what exactly is a business climate? I am constantly thinking about it: what are we doing wrong that prevents us, for example, from being on a par with or close to China and other major developing markets? Why is it that many foreign investors and of course our own businessmen say that it is more difficult to do business here? Everybody seems to want a good business climate, decisions are being taken and we have laws that are by no means the worst. But ultimately I have to conclude that, in reality, the business climate is about all of us. This is not simply the position of the President, the Prime Minister, the ministers and the courts. It is the position of all those who are in this environment. It is just as much about the position of the businessmen themselves, the position of those who engage in entrepreneurial activities.
Of course it is hard for you to influence government decisions. But it is possible, especially in the context of global information exchange. Today you can hide nothing. Even bribe-taking and corruption, which unfortunately is very widespread in our country, even these things come to light. Therefore I believe that we will only have a normal business environment, a normal business climate, if we constantly and openly speak about all the problems without being afraid to speak about what we have not yet done and to offer our solutions to the authorities.
Perhaps the government will not accept all of these decisions, but in any case we will better understand what is needed in this or that situation regarding specific issues and regarding more general issues.
I would once again like to thank you for the invitation to take part in this event. I think it has been a success. The atmosphere was very warm in both senses. So I hope that we will enjoy this same atmosphere in the future. I wish you all the best.
