Agenda: Consolidated Strategy on the Development of the Manufacturing Industry until 2030 and for the period up to 2035, execution of the federal budget for the first half of 2023, support for the regions in the Far East.
Government meeting
Mikhail Mishustin’s opening remarks
Mikhail Mishustin: Good afternoon, colleagues.
There is a very important item on the Government’s agenda today: the updated consolidated strategy for the development of the manufacturing industry for a long-term period.
The President pays very serious attention to this topic. It is essential to strengthening our technological and industrial sovereignty. Just yesterday, the President held a meeting of the Council for Strategic Development and National Projects, where the creation of up-to-date manufacturing capabilities was discussed quite extensively.
Unfriendly states’ sanctions disrupted many cooperative ties, logistics routes, and resulted in the closure of traditional export markets. But, despite all the difficulties, Russian enterprises were able to quickly adapt to the new conditions, partly thanks to prompt decisions and support measures. Today, they are increasing the pace of production quite aggressively, which is evident from the numbers. Over the first six months of 2023, industrial output as a whole increased by more than 6 percent. We expect that, at the end of the year, the worst affected sectors will also enter the green zone. In terms of motor vehicle manufacturing, growth could be about 2 percent, about 3.5 percent in the machinery and equipment sector, and almost 8 percent in the medicines and preparations sector.
It is important to carefully monitor the trends and ensure the execution of the President’s instructions to increase the production of such companies this year, as well as their share in the gross domestic product.
The new consolidated strategic document addresses the range of tasks in priority areas that were set during the Government’s strategic session in May, including the introduction of mechanisms that will encourage research and development activities (this was discussed in detail yesterday at the meeting with the President), a radical renovation of the tool-building industry, and the implementation of breakthrough projects in digital transformation of industries and technological processes.
Our main goal is to increase the manufacturing index by 55 percent over the next 12 years compared to the base year of 2019, while labour productivity must almost double over the same period. Denis Manturov will elaborate. A little later, I will give him the floor.
The next issue concerns federal budget execution in the first half of 2023.
Earlier this year, experts suggested, quoting various figures, that the federal budget would be challenging to balance. Six months into its execution, we can see that the fears were unsubstantiated. As the President said, none of our adversaries’ predictions turned out to be true. Budget revenues were 135 billion roubles higher than the forecast. Revenues exceeded 12.3 trillion roubles.
The percentage of revenue coming from non-commodity sectors continue to grow, even faster compared to the first quarter. Non-commodity sectors already account for almost three out of every four roubles of revenue, which confirms higher stability in the budget.
The President specifically noted that these trends are helping us to achieve our development goals.
We continue to prioritise the funding of social and healthcare programmes – everything that adds value to public welfare, including utility services, housing and road construction, and relocation from dilapidated housing. Of course, we are also implementing support measures for businesses and for economic growth in general.
It is important to continue to adhere to the coordinated approach to budget execution, to ensure that the trends emerging today can be maintained for the long term.
Now, as concerns supporting the regions in the Far Eastern Federal District, the President set a primary goal of making this macroregion modern and attractive for students, workers and businesses. The district will soon host the Eastern Economic Forum.
The Government has developed an entire action plan, with mechanisms and instruments, to achieve this goal. The most effective measures include social development plans for the economic growth centres that were launched at the President’s initiative.
We plan to redistribute over 6 billion roubles in funding for these measures among the regions in the district. A major part of these funds will be spent on the construction of roads and communication networks for local companies, social facilities and residential buildings, including housing under the Far Eastern Neighbourhood Programme.
It is important to ensure that the funds are spent in the most efficient manner, which is a universal problem for all projects. These important infrastructure projects must be highly relevant and contribute to the economic development of the Russian Far East.
Now I would like to turn it over to Denis Manturov who will report on the general development strategy for the processing industries.
Denis Manturov’s report on the Consolidated Strategy on the Development of the Manufacturing Industry
Denis Manturov: Mr Mishustin, colleagues,
The consolidated strategy for the development of the manufacturing industry is focused on achieving Russia’s technological sovereignty, with long-term predictability and continuity in the implementation of industrial policy as its core guiding principles.
We have consistently adhered to this approach for almost 10 years; in many ways this strategy helped our enterprises to confidently go through the Covid period and quickly adapt to the challenges they faced over the past year. This is confirmed by current macro indicators. You mentioned this as well. But, despite the good dynamics of the manufacturing index, I should note that the potential for recovery growth is limited. At the same time, one of the basic targets of this strategy is an annual increase in production by an average of 4 percent until 2035.
To be able to achieve this growth rate for sure, we will need to overcome the structural constraints for growth, which is the main focus and priority of this strategy. I would also like to dwell on a number of key points in this document.
The first priority is to create the necessary conditions for a new investment cycle in every sector. The inflow of capital is essential both for the start of new projects, and in general, to reduce the accumulated depreciation of fixed assets.
We discussed in detail measures to stimulate investment at yesterday’s meeting of the Council for Strategic Development. We will monitor the effectiveness of these tools and adjust them if necessary.
Our objective is to double the annual volume of investment in the manufacturing industry by 2030, with 2019 taken as the benchmark for all the indicators included in the strategy.
Our next priority, which is also related to investment, is to increase the innovation potential of industrial enterprises. By 2030, the number of companies engaged in technological innovation should increase from the current 28 to 40 percent. This is the goal of the current support measures that stimulate research, reverse engineering projects and technology transfer under the SPIC 2.0 mechanism, and that attract venture capital to promising niches.
The innovation status of industries largely depends on the pace of digitisation of production processes – we also reported this in detail to the President yesterday. The strategy calls for the further expansion of automation and robotic automation in industry. We will also continue to implement lean manufacturing methods. All these measures taken together should increase labour productivity by at least 50 percent by 2030.
Increasing productivity at this pace should largely compensate for the shortage of human resources as, despite the current surge, employment in the real sector will decline in the next ten years. In this context, we are focusing on educating the most in-demand workers and engineers, including under Government-sponsored programmes – I am referring to Professionality, Advanced Engineering Schools and Priority 2030.
Also, the strategy includes diversifying the potential of single-industry towns and supporting labour mobility in the regions.
With regard to the sectors, we have identified detailed plans and prospects during several strategic Government sessions. The priority sectors are listed in the presentation. Their unfaltering development is the key to ensuring our country’s food, medicine, energy, information and environmental security, as well as improving Russia's economic connectivity.
Long-term output plans have been drafted for every basic industry. Based on the new targets, we will update our industry strategies during the year. Deepening the processing stages and levels, ensuring the production of critical components and parts, and shortening the product development and sales cycles will be the unifying goals of these strategies.
Implementation of the approaches outlined in the strategy will make it possible to increase the share of manufacturing industries in GDP to almost 15.5 percent by 2035 and will help fulfil a number of national goals.
Colleagues, the above strategy has been synchronised with national projects and state programmes, as well as with our country’s technological development concept. The document was developed with the participation of industry associations, the scientific community, industry curators in the regions and, of course, our colleagues from the Government.
Please, support the proposed approaches and approve the strategy.
Mikhail Mishustin: Yes. According to the document that has been presented, this is how it should be, but I have a question about the federal project to expand the production of the means of production. This concerns the machine tool industry and everything else that you and I discussed during the strategic session.
Mr Siluanov, have you identified all the sources to fund it?
Anton Siluanov: Yes, as we were drafting the budget for the next three years, Mr Manturov and I have identified the volume of priority resources that we need to resolve the issue. The issue of machine tools remains open, but we have agreed to find funding for them as well. Mr Mishustin, when drafting the budget we will report to you the amount of funds to finance this area which will be included in the draft budget as well.
Mikhail Mishustin: I want you to understand that this is one of the core areas of our work. Get together for a meeting. You have a whole range of sources that we have discussed. This is my amendment for you. And I will be expecting you to come up with a decision about funding.
Mr Grigorenko, please include that in the minutes.
Okay, good. Mr Manturov, in any case, it is important to implement the measures included in the strategy as quickly as possible. I read it, and it looks quite balanced. I count on concerted action by the ministries, agencies, and regions, because developing the manufacturing sector today is absolutely among the top priorities in achieving the country's technological sovereignty.
We will adopt this and amend the minutes accordingly, which I mentioned earlier, with regard to the specific strategy.
