Plenary session of the Eastern Economic Forum

Vladimir Putin took part in a plenary session of the Eastern Economic Forum in Vladivostok.

In his speech, the President, in particular, outlined his vision of the prospects for cooperation in the Far East, and Russia's approaches to regional economic integration, and gave an assessment of the most acute challenges and threats in the Asia-Pacific region.

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Moderator Ronnie Chan: Good afternoon, ladies and gentlemen, 

On behalf of all the foreigners and the visitors here I want to thank President Putin and his government for giving us such a warm welcome. Without you many of us have never been to Vladivostok and the Russian Far East and it is you and your government which are bringing all of us here together. Thank you. 

I don’t know why the President’s team want me to be the moderator. I’m not a journalist, I’m not a politician, I’m just a businessman. I suppose from my last name you can tell I’m Chinese, Ronnie Chan. But I lived many, many years in America as the president questioned me before this. I lived 16 years in America and I’m an American citizen.

And yet I represent no one here. I do not represent China, I do not represent America, I cannot represent anyone except myself. Perhaps, I can represent all the business communities that is, that is here. After all, this is an economic forum. 

I will try to direct the discussion towards two points. Number one – the Russian Far East and number two – economics, business, opportunities, investments. 

I don’t know, President Putin you may not have heard of Asia Society of which I’m the global chair but you seem to like us. Two years ago, Charlie Rose was the moderator and he was a trustee of the Asia Society. Last year Kevin Rudd was here and he is a trustee of Asia Society and myself as well.

Of course, I’m delighted to see Shinzo Abe-san. Abe-san and I, actually, went to the same university, so we have something in common. We were on campus around the same time.

I want to also thank and congratulate President Battulga and President Moon for being newly elected to become the leader of your country. In the case of President Battulga he has no yet finished his 100th day. But I’m delighted to see that he is a judo expert just like President Putin and my job is simple – to make sure that they engage in a friendly match before this session is over. 

With that, allow me to invite each of the four heads of state and heads of government to each make a brief opening remark. May I now first now call upon the President of the Federation of Russia, our host today, President Vladimir Putin.

President of Russia Vladimir Putin: Mr Moon Jae-in, Mr Battulga, Mr Shinzo Abe, esteemed moderators, ladies and gentlemen,

I am pleased to welcome all the participants and guests of the third Eastern Economic Forum in Vladivostok. This year, we have guests from over 60 countries. I am grateful to all of you for your interest in the Russian Far East, its present and future.

As we were waiting for this session to open, we noted that the interest in this forum has been growing year in and year out. I am pleased to hear that, and I think that this is very important for us.

Dynamic growth and renewal of this region are among our unconditional priorities. It is an essential part of our strategy to improve Russia’s competitiveness, its economy, and human capital.

We have concentrated considerable financial and organisational resources in the Russian Far East over the past several years. Preparations for the APEC summit in Vladivostok in 2012 gave a major boost to this macroregion.

This forum helped re-open the Russian Far East to the entire world, including businesses from the Asia-Pacific region. The Eastern Economic Forum, where we have gathered now, serves to enrich this spirit of friendliness and openness.

We are developing special innovative approaches to administering Russia’s Far East. Over the past four years, 19 federal laws have been adopted that have laid a new foundation for our efforts to lift the region.

Our plans include the further development of the Far East, improving the legal framework, codifying and systematising it even better to make sure that the laws and, most importantly, law enforcement practice, are convenient and clear for our citizens, for investors, and businesses, as well as the federal and municipal authorities.

It is necessary to do so to improve the effectiveness of special mechanisms that were launched in the Russian Far East. I am referring to the priority development territories and the Free Port of Vladivostok.

They opened up new opportunities for Russian and foreign investors in this macroregion, which made it possible to launch projects faster and cut the costs involved in their implementation.

The results are there for everyone to see: over the past three years, the increase in industrial output in the Russian Far East has outpaced the average growth rates in the Russian Federation which stand at 8.6 percent. The gross regional product grew by 4.2 percent.

The dynamics remain positive this year as well. Moreover, they are improving with investment in fixed assets up almost 20 percent as of the end of the first six months of 2017.

Notably, such positive dynamics can be seen across Russia showing a 4.1 percent growth. This is an excellent indicator. Everyone here is a specialist and perfectly understands what this means. What I am saying is that when investments in fixed assets go up at an increasing pace, GDP growth is guaranteed to follow during the next several quarters. The funds have been invested, and the production facilities begin to operate, and then the growth is guaranteed.

Major projects, such as the Zvezda Shipbuilding Complex in the Primorye Territory, and a gas chemical cluster in the Amur Region, are also being implemented. A major package of cooperation agreements will be signed as part of this forum as well.

These plans and investment decisions should be embodied in successful enterprises, plants, factories, and infrastructure facilities, and, most importantly, modern workplaces and high living standards.

We will not stop there. We are working to make sure that more of our friends, partners, and investors come and join us in the future with their capital, technologies, and ideas now that our previous projects in the Far East have become operational.

We will provide all-round support to the companies that are ready to advance to global markets and to produce and export high-tech products, including both leading corporations and those that are still working to join the top league of the global business.

The Far East offers a unique combination of opportunities and competitive advantages for the implementation of ambitious projects, including preferential tax treatment and streamlined administrative procedures, which are comparable to or even more comfortable than in the best development areas in Asia Pacific and the world.

These advantages also include rich natural resources – coal, oil, gas and metals, as well as low energy prices, which are lower in Blagoveshchensk, Vladivostok and Khabarovsk than in Busan, Seoul, Osaka, Tokyo or Beijing.

New transportation corridors are being built and ports capacities are being increased to give companies an opportunity to deliver their goods from Asia Pacific to Europe and back, as well as to other regions, as quickly and as cheaply as possible. We are scrutinising the opportunity of building a railway bridge to Sakhalin.

Taken together with the development of the Northern Sea Route, modernisation of BAM and Trans-Siberian Railway and implementation of other projects, this will help us make the Russian Far East a major global logistics hub. 

And lastly, the Far East is a major seat of integration processes. We know that business is interested in the lifting of trade and protectionist barriers so as to get free access to markets. 

I would like to say that this was in the focus of our attention at the recent BRICS summit in China. Russia intends to continue to rely on the logic of openness, cooperation and trust and to lift obstacles that are hindering the development of business contacts, tourism and educational and youth exchanges. 

A month ago, on August 8, we started issuing electronic visas to foreigners coming to Vladivostok. Over the past four weeks, some 1,300 people have used this service, including those who came here for the Eastern Economic Forum. On January 1, 2018, we will start issuing electronic visas for travel to Kamchatka and Sakhalin.

We intend to deepen investment, trade and financial ties with all our partners, both on the eastern and western coasts of the Pacific Ocean, considering that the Russian Far East has limitless potential for investment.

The Far East Investment and Export Agency has already created joint investment companies in conjunction with their colleagues from China and Japan. A similar entity with our South Korean partners will be created before the year is out. We share interest in creating such a close investment partnership with our Indian friends as well.

To be competitive and attract investment, we plan to keep moving forward, analyse practices for attracting capital adopted by the leading countries, and offer better terms and conditions.

My colleagues and I have on many occasions discussed a number of innovative solutions to improve the investment appeal of the priority development areas and the Free Port of Vladivostok, including at recently held working meetings in Moscow.

For example, our agreements with residents of such areas should include the so-called ”grandfather's rule,“ where the terms and conditions for investment cannot be downgraded during the first 10 years of project implementation.

To reiterate, we intend to focus on improving the business environment. In this connection, I will go over a number of other decisions. This is new information, so those who are working in the Russian Far East should pay attention.

For example, any investor who has become a resident of a priority development area or the Free Port of Vladivostok until 2025 will enjoy a ten-year break in insurance premium payments, whereas previously such a break was available no later than three years following the creation of a priority development area.

I think those who engage in practical work understand what I am talking about. That is, if you registered with a priority development area in 2014, your exemption will remain effective for the next 10 years until 2024. If you did so in 2025, then it will be effective for 10 more years.

For major investment projects in excess of 100 billion rubles, the revenue tax exemption will be extended from 10 to 19 years. In this regard, we are proceeding from the premise that these are long-cycle projects, and those who invest certain amounts of funds should understand the economic aspects of these projects.

Finally, foreign investors who invest $10 million or more in the Russian Far East, should be able to use an expedited procedure for obtaining Russian citizenship.

We could make such an offer to our moderator [head of the privately-owned company Ronnie Chan in Hong Kong]. He is a businessman and says that it is unlikely he would ever have come to this region if it were not for this forum. No problem, he may go ahead and invest $10 million here, and then come here as if it were his home. Actually, his home, not as if it were his home.

Colleagues, we are entering a new stage in the large-scale and comprehensive development of the Russian Far East. This stage concerns primarily the creation of better working and living conditions for the people, as well as an economic and social environment that will be better than the average in Russia in many ways. This is what we want and will try to achieve. We intend to focus on several things.

First, we must provide effective incentives to encourage the growth of business activity in the Far East and create comfortable conditions for doing business not just in priority development areas but across the Far East as a whole.

We discussed these issues with Russian business people at one of the meetings that were held in Vladivostok yesterday. I want you to know that this is a key task for the federal and also for regional and municipal authorities, which is more important. 

We must create broad opportunities for enterprising, smart and diligent people, of whom we have always had a lot in the Russian Far East, to show initiative. 

I ask the management of the Corporation for the Development of Small and Medium Business to take additional measures to support business in the Far East. Regional authorities and the Ministry for the Development of the Russian Far East must take part in creating a portfolio of projects which need support in the form of preferential tax treatment and guarantees.

The second crucial area of our work is vitally important for the well-being of our people. I am talking about the creation of a modern social infrastructure.

To help the Far East develop sustainably and to let the people see that they have a future here, we must not only create economic growth centres and new jobs, but also build new hospitals, medical and cultural facilities, kindergartens and schools, improve the populated environment based on public requests and change the image of cities and towns. As I have said, social development indictors in this region must surge above the country’s average by 2025. 

The Far Eastern regions’ development plans and federal programmes must focus on these issues.

I ask the Government to coordinate the necessary managerial and institutional mechanisms and find additional sources for financing the comprehensive development of the Russian Far East.

Third, the future of any region depends on young people, those who are choosing an occupation, studying or shaping their lives and careers, which are inseparable from their home region.

We must make use of the initiative, open-mindedness and talents of the young people in the Russian Far East, which means that we need an effective youth policy that will take into account both current and future objectives of this region.

I spoke about this yesterday when I met with foreign investors. One of the problems they pointed out – our colleagues in this room will confirm this – is the shortage of personnel in the areas of concern to them.

We will take all of this into account.

I am asking the Government, the Ministry for the Development of the Russian Far East, the Ministry of Education and Science and the Agency for the Development of Human Capital in the Far East to prepare a programme that will focus on the development of education, career guidance and supporting young people in the labour market.

This includes the opening in the Far East of branches and specialised departments of the leading Russian universities. Their operation and the training of professionals must be closely integrated with the key industries and social sectors.

The example I mentioned is connected to the problem that was formulated by our Indian partner, who said that they had been working for a long time in Russia, including in the Russian Far East, yet had not yet found good gem cutting professionals. Lack of professionals in gem cutting is part of a bigger problem that concerns many industries.

We must make full use of the existing educational potential in the region. Far Eastern Federal University is growing into one of the best and most modern universities in Russia and a digital technology development centre.

I would like to say that the demand for skilled personnel in this region, including skilled workers, will continue to grow. So, we must create the educational base for training professionals for future companies here, in the Far East.

We will need to modernise the regional system of vocational training in the next three years and upgrade the education and onsite training equipment at vocational schools based on the best WorldSkills standards.

Finally, the fourth area is about an active demographic development policy.

The demographic situation in the Russian Far East is gradually improving, but additional, decisive measures are needed in this area in order to reverse negative trends that have been developing over decades.

This summer, the Government approved a demographic policy concept for the Russian Far East, which should start in 2018. To this end, the Government should adopt a corresponding action plan already in September.

Finally, I support the proposal made yesterday at the meeting of the State Council Presidium to improve the current labour mobility support programme.

I would like the Ministry of Labour and Social Protection to work through possible ways to resolve this issue, to further expand this programme, improve its effectiveness and make it instrumental in helping hard-working and talented people who would like to move to the Russian Far East, and to live and work here.

Friends, in closing I would like to once again emphasise that the development of the economic potential of the Russian Far East should go hand in hand with improving its social sphere, so that every resident of that region could feel actual improvements in education, healthcare, housing and utilities services, and the well-being of their family, relatives and friends.

The future of the Far East depends on the people who were born and live here, and those who came here to work and would like to settle down here.

This work extends far into the future, but we believe that we will be able to realise our plans if we join our efforts.

By all means, the Russian Far East will be successful the way the people who live here see it and want it to be.

Thank you, and I hope that many of those who show interest in the Russian Far East will realise all their plans here.

Thank you very much for your attention.

 

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