Rustam Minnikhanov: “There are projects worth 4-5 trillion in Tatarstan, we can use them”

About how the first day of Gaidar Forum closed “acting” of the ministers

The liberal Gaidar Forum, where Prime Minister Dmitry Medvedev usually spoke, opened on the day when President Vladimir Putin made his revolutionary address. Gaidar Forum has been considered to be actually a “liberal headquarters” where Western ideas are tested, which then turn into presidential decrees and economic strategies of the country. Many experts, politicians, and observers in recent years rightly, though ironically, have begun to consider it “the forum of the government of Dmitry Medvedev”.

It is noteworthy that at the end of the first day of the forum this same government resigned. At this time, Ranepa was hosting a business dinner with representatives of the government, business and regional authorities on the theme 'Through investment attractiveness to the economy of trust'. In light of the latest news, the situation during the discussion was somewhat constrained — two speakers at once had received the prefix “acting” a few minutes before it began — these are deputies Siluanov and Oreshkin — now former ministers of finance and economic development.

The event itself started 15 minutes later and ended 6 minutes earlier due to the lack of people willing to speak. The latter, as those who participate in the forums know, is extremely rare (usually the speakers do not have time to speak).

Discussing the ex-finance minister's bill

Piquancy of the situation added the fact that more than half the time guests at a business lunch “in Davos format” discussed the draft law 'On the protection and promotion of investments and development of investment activity in the Russian Federation' (SZPK), who has been led and overseen by the finance ministry, headed by Anton Siluanov, until now. The speakers spoke about the project in full confidence that it would be implemented very soon, although 30 minutes before they had learned about Siluanov's resignation (although we predicted his resignation, we found this option still unlikely).

Besides, his main representative at the panel discussion, Deputy Finance Minister Andrey Ivanov (as well as Deputy Minister of Economic Development of the Russian Federation Vadim Zhivulin) had received the prefix “acting” by this moment. The parties still expressed if not confidence then hope that the bill would be implemented in any case.

“We are participants in the almost unique event”

The guests were gathering for a long time and looked somewhat confused, with the exception, perhaps, of the smiling and joking Igor Shuvalov, who just a year and a half ago — very, as it turned out, in time — left the government for the state development corporation VEB.RF. The moderator of the discussion, Alexander Ivlev, EY's managing partner for CIS countries, on the contrary, was absent-minded, his voice even trembled when he tried to smile and remarked:

“We are participants of the almost unique event. This is the first major business event to take place after the government's resignation this year," and then he added pleadingly: “But this should not affect our discussion of the topic of investment attractiveness!”

The level of business confidence in the Russian authorities is very low, hence low GDP

Formally, the event was dedicated not only to the new ministry of finance's bill, which has been adopted in the first reading so far, which should help create predictable conditions for doing business and investing in infrastructure projects but also to give foreign investors a call about the stable situation in the executive and legislative spheres of the authorities (the discussion was supported by the Advisory Foreign Investment Council in Russia). In the summary of the discussion, it was noted as that the Russian economy “has proved its resilience to external challenges: sanctions rhetoric, turbulence in emerging markets, and volatility in oil prices”. An example was given that in the World Bank's Doing Business 2019 ranking, Russia improved its position, taking the 28th line: “Now Russia is ahead of all the BRICS countries, as well as many European countries.”

But in fact, the speakers' rhetoric was primarily concerned with the lack of trust, both businesses' — to the government and the government's — to businesses. “Where are the gaps in trust and understanding between the state, foreign investors and Russian business?" they asked questions at the last discussion of the first day of Gaidar Forum. And they gave quite unfortunate facts: it is known that trust leads to an increase in the welfare of the population. If the average confidence level increases by 10%, the GDP level immediately increases by 21%. The highest level of public and business confidence in their own authorities is in the Scandinavian countries, where GDP is five or six times higher than in Russia because the level of trust there is three times higher than in Russia.

One of the reasons for the low level of trust the moderator called the increase in the number of security forces in our country: today we have about 700,000 employees working in security agencies, and the same number — in the ministry of internal affairs. “Businesses do not trust the government and vice versa. Under pressure, businesses lose their prospects and start working “for a short term”, “they grab and run”, hence the slowdown in economic growth. We have twice as much confidence in the courts, the media, and politicians as in the Church and the armed forces. We should know that the conditions will not change in the future," Alexander Ivlev said, either referring to the bill on investment or the situation with the vacuum of the executive power that suddenly developed at that time.

“Any entrepreneur needs, first of all, predictability”

Igor Shuvalov, the chairman of the state development corporation VEB.RF, responsible for the implementation of national projects and for the investment attractiveness of the country and regions, tried to resolve these doubts. He began his comforting for the audience speech trying to defuse the tense situation “with a joke”. Not everyone seemed to understand the joke, and not many people could like it. According to him, he had recently visited “a Latin American country“and the fact that people in our country trust only the armed forces should not confuse anyone, said the former deputy prime minister:

“In that country, the best enterprises belong only to the armed forces! The ministry of defence! This is true! I will not name the country, you can guess for yourself. I remember how German Gref once sponsored the Russian-Singapore business council. They discussed democracy! 'If you ask me now what is more important, democracy or predictability, I will tell you that any entrepreneur needs predictability, first of all. And all the prosperity of Singapore is built thanks to this!' the head of this country declared to us then!”

Being sarcastic about democracy, Shuvalov, not agreeing with the point that only in Russia there is a crisis of confidence in the state, said that today in the world you can not trust anyone at all. Especially after the US “started to break up the WTO”. He believes that this applies to all world institutions, including the World Bank, which decided “not to lend to projects in Russia”. There is no trust, the system is falling apart, trust often does not exist regardless of the authorities and business, people do not trust each other at all — these are Shuvalov's countertheses. Nevertheless, the head of the state corporation tried to reassure current and potential investors. Referring to Vladimir Putin's address, he said that even after 2024 (the year of Putin's potential departure from the post of the leader of the state), stability will remain.

Igor Shuvalov: “Russia has its feet on the ground better than many EU countries”

“How to restore business confidence in the government? Putin's address was very clear today: after 2024, it is pointless to expect that all previous years of development would be crossed out. What has been done will be strengthened. In an interview, our president asked: 'Why do you think people will come after me and ruin my legacy? Maybe the opposite will happen?' I think the country has achieved great success since 1993. Russia has its feet on the ground better than many EU countries. We have gone far in the maturity of our institutions. We have created optimal conditions for businesses and for foreign investors — today is the best time for them. Nothing is perfect inside the EU. We stand alone, and the predictability for business is higher. I don't like many things either, but if you compare all the positions with China, the US — Russia looks good. And since 2014, when the West declared economic war on us, Russian society should respond with consolidation, using the example of Israel. Which, against the background of special external conditions, is demonstrating success!” Igor Shuvalov said.

Coca-Cola about Kazan: “In Russia, we signed an agreement with Kazan on 'the city without waste”

As for the growth of business confidence in the state, he believes that “everyone should create new services for the country's citizens through investment opportunities” (that is, “start with yourself”). VEB started taking part in this since last year, developing the city's economy, he said. And just as the civil service “should be a service”, businesses should view their business and mission “as a service”, changing cities and businesses for the better. Businessmen responded to Shuvalov's speech with an obvious Soviet tone in different ways. For example, Aleksey Malinovsky, the head of MasterCard-Russia, noted that Russia has a good potential for digitalization, and our country generally ranks first in the world for smartphone operations. But, he believes, the main thing for businesses is always predictability, understanding how and when your investments will return. Not short-term character but “survivability of investments in a long-term strategy”.

“Developing the strategy for 2021, we look at how the economy will change, what will happen in the country in 5-10 years. We look at how much our investments will be returned, and the situation will be predictable...," said Malinovsky, probably wishing that after the government's unpredictable resignation, the economy still remained predictable.

Alexander Ruzhevich, CEO of Coca-Cola HBC Russia, also promised that the company was not going to leave Russia, and it came here to build a business for many years. In particular, Coca-Cola is currently developing one of the eco-friendly projects in Tatarstan:

“The issue of processing one hundred percent of our production waste is on the agenda. This is our goal until 2030. In Russia, we signed an agreement with Kazan on 'the city without waste', and we signed that by 2030 one hundred per cent of our packaging will be completely recycled!”

It should be noted that this agreement was signed in the summer of 2019 as part of the WorldSkills business programme in Kazan.

Municipalities are “armless”, regional authorities are “suppressed” — businesses believe

In turn, Viktor Semenov, the chairman of the supervisory board and founder of Belaya Dacha group of companies, even expressed regret that by the time of his speech, Shuvalov had already left, since he agreed with him that “business is a service to society”. In his opinion, if the business does not deal with problems at the checkpoint, the problems at enterprises will come themselves due to the checkpoints. However, Semenov criticized the current situation with the crisis of lower authorities, in particular, the lack of rights and opportunities for municipalities:

“At the level of governors, we get huge support for import substitution! But as soon as we get to the level of the city and districts... They become some kind of armless there! They have nothing left, they only deal with garbage cans... Yes, 20 years ago we passed laws to preserve the country, and the reins and finances went up. But we have strengthened the state, and I think we should gradually send the finances and some of the reins down to the regions, and especially to the municipalities! The environment is made by municipalities, no matter how brilliant the governor is. Feedback mode should be restored. Many officials and businessmen feel that it is not there, and you can do everything on the sly — but the person is weak!”

The vice-president of Norilsk Nickel MMC agreed with the “suppression” of local authorities, citing the example of granting regions the right to introduce property tax benefits in 2018: only 12 regions eventually introduced a zero rate.

The ministry of finance forms an “investment navigator” with electronic PPP agreements

Finally, we moved on to the main topic, the new bill that should increase the level of business confidence in the authorities, and thus the volume of investment in the regions. Andrey Ivanov, the acting deputy minister of finance of the Russian Federation, told about how it will look like. According to him, according to the draft bill (the second reading is to be held in the state Duma in January), the investment regime will apply to the entire range of persons engaged in business activities. The state is also switching to an automated system, “the electronic form of PPP agreements”, when contracts will be concluded in the information system and their confirmation will not be required from the authorized body. Thus, according to the official, Russia will move “in the direction of trust, reducing the number of procedures” that must be passed in order for an investor to get stable conditions for 6-20 years. Besides, the authorities will be ready to establish specific obligations of the state for support, its volume and cost.

“We are creating a reference to the measures of support and the registry — “the investment navigator”, to translate subsidies, incentives and so on from state-funded to investment language. And any subject could understand that. And we have no desire to destroy the market: we are not going to interfere with the existing agreements, we will give them 1-2 years to adapt," he promised.

Rustam Minnikhanov: Tatarstan has projects worth 4-5 trillion rubles that can be implemented thanks to the new bill

“The bill provides for the creation of a mechanism for reimbursement of infrastructure costs. I know that Tatarstan already has very good experience in using this investment development tool, Rustam Nurgalievich, how does this work in Tatarstan and how will you continue to use the new law?" the moderator asked Minnikhanov.

The president of Tatarstan admitted that the bill has long been expected in the republic and has long been “discussed from different sides”. They very much hope that the document would eventually be adopted:

“We believe that Tatarstan has projects worth 4-5 trillion rubles that have not yet been implemented, but given these opportunities, this bill, we can use them. An example is Alabuga-2, a project that was supported by Andrey Yurevich [Ivanov, Deputy Minister of Finance of the Russian Federation], thank you very much! In principle, there are 242 billion investments in petrochemicals, and what we will do there in the near future is a serious investment. If we take Tatarstan, investments in fixed assets in the past 3-4 years have amounted to at least 600 billion rubles. We look at all the possibilities. Here there are opportunities for PSEDA, two SEZs — they all work. The example of KIP Master — 1,5 million sq. m. And if there were no state support measures, there would be nothing there! We have worked on [the new law] with our large companies, they are all are being at the track. Andrey Yuryevich, you saw it yourself. I just don't understand: the ministry of finance has always raised the biggest question for us. The ministry of finance was always a brake! But in this case, we have the opposite, the ministry of finance is ahead! But some forces are always slowing down! Something always appears...” with doubt in his voice Minnikhanov said, adding that we live in a “difficult time” and attracting investors from the US and Europe today is difficult, and it is necessary to find them somehow, and the bill of the ministry of finance today is “the right decision”.

Tatarstan has become the record holder for mentions in the panel discussion, starting with Coca-Cola. The last time Tatarstan was mentioned by Alexander Pirozhenko, the director for the development of priority programmes at the Agency for strategic initiatives, who promised that for the new ratings ASI now he will interview big business (to take into account his “serious voice”) and clients of regional organizations to attract investment. Over the existence of the ASI ratings, he believes, progress is evident.

In the presidential address to the Federal Assembly, Vladimir Putin said that starting in 2020 the annual increase in investment should be 5%. To spur them, the tax rules for business will not change until 2026, but the process of adopting bills that protect investment, including the law being discussed at the forum, will be accelerated. According to the Russian leader, support should be given not only to large projects but also to medium and small businesses. Besides, Putin offered to compensate the regions for two-thirds of the lost income from the investment tax deduction and asked them to speed up the adoption of draft bills on investment protection.