OUTCOMES OF SPIEF 2018 CONTENTS

Trust Is the Foundation of 6 ’s Future Development

Trust Is the Foundation of International 16 Cooperation and a Stable World

Trust Is the Foundation 22 of Social Development

Digitalization as an Instrument 28 in the Trust Economy

3 OUTCOMES OF SPIEF 2018

The theme of this year’s St. Petersburg Interna- tional Economic Forum was ‘Building a Trust Economy’

Trust is the foundation of sustaina- ble development, and this idea was the main focus of SPIEF 2018. Dis- cussions at the Forum covered all aspects of this topic: building trust between countries, people, society, business, and authority. Russia in- tends to build its own future on the basis of these principles: an open economy, transparency of state reg- ulation, and fair social policy should underpin an improvement in people’s prosperity and an increase in the country’s competitiveness. One of the most important tools of such a policy should be the digitalization of all aspects of business, state admin- istration, and social interaction.

4 Доверие – основа будущего развития России 5 Is the Foundation of Russia’s TRUST Future Development

“We want to improve the lives of our One of Russian policymakers’ short-term goals is people, reduce the number of those living below the poverty line, and achieve an improving national prosperity through accelerated increase in the main indicator of wellbe- economic growth. ing – life expectancy”, These goals are attainable announced President of the Russian Fed- eration Vladimir Putin at the St. Peters- Russia has survived hits from sanctions and the falling prices of typical export burg International Economic Forum. goods. “We were able to make it through, and, not just that, we were able, to a certain extent, to strengthen our economy” (Vladimir Putin, President of the “To do this, we need to diversify the econ- Russian Federation). omy, create the conditions for attracting investment, improve workforce productivity Russia has “put in place an admirable macroeconomic framework” (Christine and people’s incomes, modernize healthcare Lagarde, Managing Director of the International Monetary Fund (IMF)). SPIEF and education, build a comfortable living participants highlighted that Russia has a special rainy-day fund, a floating environment, and resolve the problem of exchange rate, little national debt (around 13% of GDP), a low unemployment affordable housing resulting in a twofold rate (less than 5%), a rate of inflation which stands at 2.4%, and a fiscal deficit reduction in poverty and improved housing of near 1.5%. This has decreased the dependence of the economy and the for at least five million families annually.” budget on oil prices.

6 Trust Is the Foundation of Russia’s Future Development 7 OBJECTIVES SOLUTIONS

In order for Russia to remain one of Supplying a Workforce Switching to a Project tively affect businesses” (Anton Silu- the world’s six leading countries, its anov, First Deputy Prime Minister and GDP needs to grow by 3.3% a year, “Russia’s workforce decreases by Approach Minister of Finance of the Russian and to reach fifth place (this objective 0.5–1 million people annually. Base- Federation). was set by President of the Russian line demographic forecasts suggest According to First Deputy Prime Min- Infrastructure fund that Federation Vladimir Putin in his an- that Russia’s workforce will con- ister and Minister of Finance of the “The administrative burden on busi- amounts to approximately nual address to the Federal Assem- tract by 3.5 million people in the next Russian Federation Anton Siluanov, nesses due to inspections and reg- bly in March 2018), the growth rate six years” (Alexei Kudrin, Chairman of a project approach will be applied in ulation must be reduced by half in must reach 6% (data provided by the the Accounts Chamber of the Rus- order to achieve the strategic nation- order to bring Russia closer to the Russian Presidential Academy of Na- sian Federation). al development objectives set by the level of Organisation for Econom- % tional Economy and Public Adminis- President of the Russian Federation. ic Co-operation and Development tration). Reducing the Project management requires clear (OECD) countries” (Alexei Kudrin, goals, strict controls, and personal Chairman of the Accounts Chamber OF GDP The IMF expects the growth rate for Administrative Burden responsibility for implementation. of the Russian Federation). 3 the Russian economy to be around SPIEF 2018 participants also pro- 1.5–1.7% over the next six years. Ac- “The land, urban development, fi- posed introducing a flexible financial “The Ministry of Economic Devel- cording to Herman Gref, Chairman of nancial, budgetary, and legislative management scheme and creating opment is implementing a new the Executive Board at Sberbank, the sectors are so regulated it is prac- an effective system for monitoring risk-oriented approach when it most optimistic expert forecasts are tically impossible to do anything” project execution. comes to oversight and monitoring. around 2.5%. (Sergei Sobyanin, Mayor of ). Inspections will occur depending on SPIC 2.0 should Investing in companies’ position on a five-point result in Investment is required to accelerate “The speed at which decisions are scale assessing the risk of legal vio- economic growth. The current level made and the quality thereof are Infrastructure lations. This approach is already in of investment in Russia is just over horrendous; regulatory practices use in more than 15 oversight divi- The growth rate 21% of GDP. According to First Dep- are excessive” (Alexei Kudrin, Chair- Infrastructure investment stimulates sions” (Savva Shipov, Deputy Minis- 3.8% uty Prime Minister and Minister of man of the Accounts Chamber of the private investment, leading to a mul- ter of Economic Development of the Finance of the Russian Federation Russian Federation). tiplier effect. Russian Federation). RUB TRILLION Anton Siluanov, a 3% annual increase 1.2 1.5% in growth would require a minimum According to open-access data from One of the ways this issue is being ad- Russia has several hundred mech- of direct investment in investment level of 25%. the Supreme Court of the Russian dressed is through the creation of a anisms for supporting entrepre- sector projects annually Russian world Federation, the number of federal special budgetary infrastructure fund neurship, but they need to be sys- economy economy “If no measures are taken, there is a claims filed against businesses, ex- in 2019 that amounts to approximate- tematized and made more efficient. risk that the rate of economic growth cluding bankruptcy cases, grew by ly 3% of GDP over a six-year period. Application and accountability proce- will fall to 1%” (Maxim Oreshkin, Min- 20%. dures also need to be simplified. ister of Economic Development of the Debt financing mechanisms will at- The current level of Russian Federation). tract investment from the market. • Regional and business represent- investment in Russia atives called for the completion is just over Mitigating the Effects of Creating Stable and of work on improving the special investment contract mechanism, International Sanctions Attractive Business SPIC 2.0. By order of the Presi- Conditions dent of the Russian Federation, % “The effect of international sanctions this instrument should result in on Russia’s economy has increased One of the prerequisites of a trust RUB 1.2 trillion of direct invest- to 0.5% of GDP” (Alexei Kudrin, Chair- economy is a stable tax system. ment in sector projects annu- OF GDP man of the Accounts Chamber of the ally. The project office created 21 Russian Federation). “Taxes will remain stable for the to manage this instrument has next six years. However, “some ad- already gathered projects worth justments will occur... with respect RUB 8 trillion. to lowering those taxes that nega-

8 Trust Is the Foundation of Russia’s Future Development Trust Is the Foundation of Russia’s Future Development 9 • Members of the Russian Union of • In Tula Region, thanks to the work Industrialists and Entrepreneurs of the export support centre, the (RSPP) suggested organizing a number of export-oriented enter- comprehensive evaluation of devel- prises has doubled: from 92 to 195. opment mechanisms and institu- tions, in order to determine and im- • Kaliningrad Region has created a plement best practices, as well as special ‘concierge service’ which to give priority to those enterprises helps businesspeople arriving from affected by sanctions. other regions to find not just office space, but housing and jobs for • The Ministry of Industry and Trade their family members as well. of the Russian Federation consid- ers it necessary to prioritize sup- • St. Petersburg has reduced the port for enterprises engaged in ex- number of regional oversight and ports and innovation. monitoring functions and inspec- tion plans. Representatives of small businesses called for solving the problems relat- • Novgorod Region has reduced en- ed to the procurement procedures try barriers tenfold in the interest of employed by government and large supporting investment. enterprises: Increasing Non- • Strict requirements for participa- tion in tenders and a high cost of commodity Exports entry, which on certain platforms reaches RUB 120,000 a year, ac- Forum participants also acknowl- cording to Artem Avetisyan, Direc- edged that non-commodity export tor for New Business at the Agency volume is a comprehensive indica- for Strategic Initiatives and Chair of tor of an economy’s efficiency. The the Leaders Club for Business Initi- government plans to practically ative Promotion. • Expert analysis of supplier quality if An important part of protecting busi- eral’s Office of the Russian Feder- by regional teams made this growth double these exports by 2024, to the tender price falls by more than ness interests is the fight against ation, prosecutors’ response times possible. USD 250 billion. This necessitates • The presence of shell companies 25%. counterfeiting. to entrepreneurs’ complaints via the launch of a large portfolio of ex- that either block off suppliers’ ac- the agency’s online channels have • According to the ASI, out of 85 re- port-oriented investment projects cess or force them to get a subcon- • The termination of small business • SPIEF participants noted that prod- been reduced by two thirds. gions, only seven registered dete- across all sectors. tractor’s tender, forfeiting up to 30% provision requirements in small uct certification and labelling is a riorating business conditions. of the contract price. tenders and, in cases where three successful instrument thereof. Ac- In response to the challenges of a • The Ministry of Industry and Trade of government or municipal contracts cording to the Eurasian Economic digital economy, the Federal Anti- Regions are proposing (and imple- the Russian Federation and the Rus- • The growing share of contracts have been fulfilled in the last three Commission (EEC), after the pilot monopoly Service is preparing its menting) a variety of measures: sian Export Center (REC) propose of- with singular suppliers (up to 50%). years, including a rule requiring a project for labelling fur coats was fifth antimonopoly package. Forum fering government support for those second participant. implemented, the legal product turn- participants noted that foreign busi- • The reorganization of industrial ar- entering foreign markets. Some of the solutions suggested by over grew sevenfold. nesses operating within the Russian eas and the development of com- Forum participants included: Forum participants also noted the Federation as a result of digital tech- mercial property with the aim of • The Russian Agency for Export Cred- importance of creating clear ground • It is important to create instruments nologies should be held to the same creating jobs (offices, technoparks, it and Investment Insurance does • Standardizing invitations and guar- rules for the energy sector. of social control, establish pref- standards as Russian businesses. multifunctional centres, etc.) are not exclude the possibility of devel- antees, forbidding demands for ad- erences for good faith importers, underway in Moscow. opment institutions contributing to ditional documents during bid ac- In this respect, the Ministry of Energy and solve the issue of personal-use The regions play a key role in im- the equity of new enterprises if they ceptance. of the Russian Federation, in cooper- goods traffic through foreign com- proving business conditions. This • A website featuring recommenda- receive project financing. ation with businesses, has prepared merce platforms. was evidenced by the results of the tions on how to avoid typical vio- • Switching to procurement from and is following through on a set of Regional Investment Climate Index, lations (over 300 for 27 types of • The EEC has organized a platform small and medium-sized enterprises measures that include: long-term Accelerating the digitalization of ad- collected by the Agency for Strategic activity) and information on each for coordinating development bank (SME) on unified platforms. rates, normalizing preferential con- ministrative agencies is key. This ap- Initiatives (ASI). The ASI notes that, in monitoring and supervisory func- efforts. Work is being done to create nections, benchmarking energy con- proach has already been fruitful: 2018, the data showed “arguably co- tion and the responsible depart- joint insurance and reinsurance in- • Quotas for government procure- sumption standards, and payment by lossal growth”. The creation of new ment has been launched in the struments. ment from SMEs. declared output. • According to the Prosecutor Gen- targeted models and a surge in work Republic of Tatarstan.

10 Trust Is the Foundation of Russia’s Future Development Trust Is the Foundation of Russia’s Future Development 11 • Regional representatives spoke in fa- ic mechanisms for attracting them. vour of ramping up trade representa- tion work. • Russian clients’ bank deposits hold more than RUB 25 trillion. Market ex- Checked for compliance An effective mechanism for increas- perts estimate that in the next three with Roskachestvo brand ing exports is the creation and sup- to five years, 15–20% of these funds port of Russian brands. will go towards investment products.

• The Roscongress Foundation and • Foreign investors believe that Rus- the REC are developing the ‘Made sia’s market would see a sudden 3,500 in Russia’ brand. influx of funds if more companies outside the oil and natural gas and GOODS • The Russian Quality System (Rosk- metals extraction sectors were to achestvo) brand has been creat- enter it. ed and has tested the quality of 3,500 goods. The role of exchange instruments in attracting investment and citizens’ in- • Russian companies and regions are terest in them is already growing. developing their own brands. One of the most successful examples • According to Moscow Exchange, thereof is the car brand Cortege. the issue and trade of bonds grew by 60% in 2017. This growth has Russian clients’ bank Improving the quality of Russian continued: the turnover of individ- deposits hold more than goods is crucial to remaining com- uals in the corporate bond market petitive. Proposals include: during the first four months of this RUB year was 3.5 times higher than in • Creating effective laboratory facili- the same period last year, with a ties for product testing and testing 33% increase observed in the stock centres. market.

TRILLION • Refining the standardization sys- A home base for institutional inves- 25 tem, conformity assessment, and tors needs to be created. One way to certification procedures; involving achieve this is through the formation businesses in developing stand- of a long-term savings mechanism. 15-20% ards; forming a corporate system of voluntary accreditation; reducing • The Bank of Russia, Ministry of Eco- of these funds will go towards SME expenditure on voluntary cer- nomic Development, and Ministry of investment products tification during government pro- Finance are certain that creating a curement. powerful cumulative pension system with voluntary individual pension • Preparing international trade spe- contributions is key. Developing a life cialists for medium-sized compa- insurance system could also bolster The issue and trade nies and including businesses in the savings rate. of bonds grew by the development of export acceler- ation programmes. A separate issue is asset recovery of failed banks. According to the Depos- Developing the Financial it Insurance Agency (DIA), this is a RUB 4 trillion issue. System 60% • The most effective solution is finan- in 2017 A key factor in growing investment, cial recovery without the revocation especially in light of economic sanc- of licences, especially in the case of tions, is the search for sources of fi- systemically important banks. By nancing and the creation of econom- utilizing such an approach, by the

12 Trust Is the Foundation of Russia’s Future Development Trust Is the Foundation of Russia’s Future Development 13 beginning of 2018, the Bank of Rus- industry) and developing produc- issue of developing the Arctic Re- ternational cooperation to achieve support, service and infrastructure According to Forum participants, sia was able to build up a large and tion in areas that are lagging be- gion and the . these objectives. quality, specialization and customi- some of the measures required to de- healthy financial group on the foun- hind” (Sergei Glazyev, Advisor to zation of tour products. velop the industry are: dation of Otkritie Bank. the President of the Russian Feder- Successful development of the north- Tourism has a notable impact on re- ation). ern regions requires a systematic gional economies. A potential direction for regional de- • creating a wholesale rung in the fish- • A fund of non-core and toxic assets approach. According to Minister of velopment is the event and activities ing industry is being created and will be managed Developing Regions Natural Resources and Environment • According to the Federal Agency for industry, which is growing in global by the Banking Sector Consolidation of the Russian Federation Dmitry Ko- Tourism of the Russian Federation, popularity. To this end, Russia must • improving resource quality guide- Fund. The proposed asset volume Russia has created effective regional bylkin, a regulatory framework needs in 2017, 56 million people engaged establish industry policies, devel- lines will amount to approximately RUB development interests. Many of them to be created: an Arctic law should in domestic tourism in the Russian opment plans, standardization sys- 2 trillion. In three to five years, all of are being successfully fine-tuned in be adopted, on the basis of which a Federation, and 24.4 million interna- tems, and training programme meth- • modernizing fishing techniques the Fund’s assets will be sold to in- the Russian Far East. In the next few long-term regional development pro- tional tourists visited the country. odologies. vestors at market value. years, this region will see investment gramme and a comprehensive plan Their total impact on the country’s • subsidizing the fishing industry by worth RUB 3.4 trillion. to develop the Northern Sea Route economy amounted to 3.47% of Particular attention should be paid to way of fuel subsidies or VAT incen- • The DIA proposes shortening the will be established. GDP, or RUB 3 trillion. those sectors that are strategically tives. timeframe of liquidation procedures, • One of these instruments is the vital to various regions: fishing in the handing over temporary adminis- law on advanced special economic Infrastructure is needed to facilitate • The Federal Targeted Programme Russian Far East, for example. trative functions from the Bank of zones. In late 2017, amendments year-round use of the Northern Sea (2011–2018) led to more than RUB Their total impact Russia to the Agency and expanding were made to the Tax Code of the Route, especially by the icebreaker 115 billion of investment and the • Out of the 950 residents that are on the country’s economy amounted the liquidation mechanism to include Russian Federation which extend- fleet. United Shipbuilding Corporation creation of more than 250,000 jobs. working in areas with special tax nongovernmental pension funds and ed tax exemptions for investors is already building three icebreakers A new programme is being prepared regimes today, 45 are involved in insurance companies. from three to nine years. in St. Petersburg. On the topic of envi- for 2019–2025. the fishing industry. The volume of ronmental solutions, SPIEF 2018 saw declared investment amounts to al- % Focus on Innovation • According to Deputy Prime Minis- talk of shifting the shipping industry Recommendations for developing the most RUB 40 billion. OF GDP ter of the Russian Federation and to liquefied natural gas. sector include: improving information 3.47 In order to accelerate economic Presidential Plenipotentiary Envoy growth, Russia must modernize man- to the Far Eastern Federal District Forum participants were in favour of ufacturing and grow the processing Yury Trutnev, work on industrial leg- creating a unified coordinator for such sector. A number of comprehensive islation reform will begin in 2018, a massive government project and of steps have been taken in this respect. with the goal of removing current establishing a dialogue between all barriers to investment. involved in the process: businesses, • By 2018, 300 of Russia’s largest en- regions, and environmental experts. terprises had already converted to Regional representatives have also the best available techniques (BAT). proposed passing on 1–2% of the val- • A platform for such discussions ue-added tax income to the regions has been created: the ‘Arctic: Terri- “On the issue of modernization, as additional motivation to support tory of Dialogue’ International Arctic experts suggest focusing on those regional manufacturing. Forum. The Roscongress Founda- sectors where Russia is close to the tion is currently preparing for the cutting edge (such as in the aircraft Another focus of SPIEF 2018 was the fifth such event, which will be held in Arkhangelsk on 9–10 April 2019. According to Anton Kobyakov, Pres- idential Advisor and Executive Sec- By 2018 retary of the ‘Arctic: Territory of Di- alogue’ International Arctic Forum Organizing Committee, the Interna- tional Arctic Forum has established itself as a significant platform for 300 RUB 3.4 TRILLION open dialogue on the current Arctic agenda. Participants focused on of Russia’s largest will see investment worth improving quality of life for people enterprises had already living in the Arctic region, preserv- converted to the best ing its unique ecological potential, available techniques (BAT) ensuring sustainable social and economic development of the po- lar territories, and strengthening in-

14 Trust Is the Foundation of Russia’s Future Development Trust Is the Foundation of Russia’s Future Development 15 TRUST Is the Foundation of International Cooperation and a Stable World

To build an economy of trust, it is vital that international cooperation is strengthened through mutually beneficial open economies while unilateral protectionism, sanctions policies, and domination of the information space are opposed, said SPIEF 2018 participants.

16 Trust Is the Foundation of International Cooperation and a Stable World Trust Is the Foundation of International Cooperation and a Stable World 17 OBJECTIVES SOLUTIONS

Reducing Protectionism • According to Centre for Strate- Developing Cooperation noted that the number of joint Strengthening gic Research data, there were projects between Japan and Rus- Currently, the system of international 3,200 non-tariff restrictions, com- Non-tariff and Supporting a Just sia is growing rapidly; there are Integration Processes cooperation is “being destroyed, and pared to 12,000 in 2017. restrictions World Order currently more than 130. rather crudely” and “open markets and During the Forum, much attention fair competition are gradually being • Trade restrictions make addressing >12 тыс During the SPIEF 2018 plenary ses- During SPIEF 2018, the futures of was paid to the development of inte- replaced by all kinds of exemptions, the debt problem more difficult and sion, President of the Russian Fed- international organizations in which gration with respect to the Eurasian restrictions, and sanctions”, noted increase instability on the currency eration Vladimir Putin called on all Russia actively participates were Economic Union (EAEU), especially to President of the Russian Federation market. 3,200 countries to reject unilateral action, also discussed. the trans-sector digital agenda. Digi- Vladimir Putin. This causes chaos in and to comply with common rules. tal technologies create new oppor- economic relations and leads to an • In 2020, Chelyabinsk will host the tunities for improving the business 2000 2017 acceleration of the arms race. Foreign leaders attending the Fo- Shanghai Cooperation Organisa- climate in member states, make it rum confirmed their commitment to tion (SCO) and BRICS summits. possible to use the economy’s scale cooperation with Russia and a just to its fullest extent, and create a sin- world order. • More specifically, the creation of gle sphere of trust, according to Fo- a unified investment project bank rum participants. • President of the French Republic and unified standards for financing Emmanuel Macron stated that he has been proposed. “The competitiveness of an inte- wants to put an end to insufficient grated union is defined not by the sovereignty. He also said that, in the • SPIEF 2018 also hosted the an- flow of goods, capital, and labour, past 10 years, not a single French nouncement that the 2019 Global but primarily by the flow and in- enterprise had left the Russian Manufacturing & Industrialisation tegration of data” (Maxim Akimov, market. When it comes to foreign Summit (GMIS 2019) will be held Deputy Prime Minister of the Rus- direct investment in Russia, France in Russia. During the plenary ses- sian Federation). is in second place and is aiming to sion, President of the Russian Fed- move up to first. The trade turnover eration Vladimir Putin commented “It was also noted that EAEU mem- between the two countries grew by on Russia’s strategic objective of ber states share an objective to sus- 16.5% last year, and by 25% in Q1 of creating a high-efficiency sector in tainably develop agricultural pro- this year. manufacturing in order to increase duction. The EEC has consolidated the competitiveness of Russian ex- approaches to managing supply • Vice President of the People’s Re- ports and noted that, in this respect, and demand. The EAEU has adopt- public of China Wang Qishan called Ekaterinburg’s hosting of GMIS in ed a plan that will allow the Un- on all countries to reject egoism in 2019 will be a landmark event. ion to produce its own seeds at the foreign policy and to work on solv- levels achieved in the 1990s, when ing key issues together. Relations SPIEF participants also discussed Russia had large agricultural re- between Russia and China have the importance of the media in devel- search centres” (Sergey Sidorskiy, been developing positively: trade oping relations. Information inequal- Member of the Board – Minister in turnover is getting close to USD ity currently allows the global media Charge of Industry and Agroindus- 100 billion. to manipulate people’s conscious- trial Complex of the Eurasian Eco- ness, undermining the reputations of nomic Commission). • Prime Minister of Japan Shinzō competing countries and companies, Abe spoke in favour of strength- in part with the help of modern social Developing Business ening ties with Russia and ex- media platforms. It was proposed pressed the hope that the two that countries threatened by these in- Dialogue countries would become pillars struments of influence oppose these for peace in the Northern and efforts through joint information During the bilateral business dia- Eastern hemispheres. He also work. logues, SPIEF participants discussed

18 Trust Is the Foundation of International Cooperation and a Stable World Trust Is the Foundation of International Cooperation and a Stable World 19 what measures should be taken to in the fact that approximately one • Despite the strained relationship develop Russia’s relations with other third of shipments made via the between Russia and the USA, the countries. Trans-Siberian Railway are freight American delegation at SPIEF shipments to Japan. The land 2018 was once again sizable. Busi- • Russian and French business lead- route to Europe is half the length nesses recommend sticking to ers discussed their significant mu- of the sea route. pragmatism, as the trade turnover tual interests. The Forum saw the from January to March between signing of a deal between Novatek • Developing cooperation between the two countries has increased by and Total on the latter’s participa- Russia and India necessitates 9.4% to USD 5.2 billion compared tion in the Arctic LNG 2 project. Par- the removal of barriers to trade, with the same period in 2017. ticipants spoke in favour of expand- solving logistical issues, and im- ing areas of cooperation, noting the proving the information available Reducing Trade importance of high-level dialogues. to businesses about each other’s Potential directions include finance, markets. According to Alexey Gru- Barriers and Developing transport, food production, energy, zdev, Deputy Minister of Economic Infrastructure Forum participants also spoke in pacities will have to “replenish up to necessary, Russia could double its and the innovation sector. Development of the Russian Fed- favour of balancing both domestic 40 million barrels of falling volumes volume of agricultural production eration, the Russian authorities According to Forum participants, in and international tariff policies with of resources per day by 2040.” in a short period of time. • Representatives of Russian and are already working on removing order to develop international trade, respect to various modes of trans- Japanese business circles noted unnecessary administrative barri- transport corridors must be devel- port. CEO of Russian Railways Oleg • According to Alexey Miller, Manag- Increasing the industry’s potential, that the Eight-Point Cooperation ers and creating a one-stop shop oped, customs procedures must be Belozerov proposed creating a single ing Director and Deputy Chairman both in Russia and globally, is pos- Plan proposed by the countries’ for Indian investors. simplified, financial burdens must be transport document for all modes of of the Board of Directors of Gaz- sible because of new technologies: leaders has jumpstarted rela- lightened, and waiting times at junc- transport. Much attention was paid prom, by 2035, European domestic more advanced crops and optimized tions in the past two years. The • Germany is actively contributing tions during transport transfers must to digitalization and its ability to facil- production of LNG will fall by half mineral nutrition. Russia–Japan Investment Fund to the modernization of Russia’s be reduced. itate the optimization of every inter- and will be accompanied by op- has proven itself to be an impor- economy. In the past year, German action and enable information to re- portunities for supplying an extra • The Ministry of Agriculture of the tant financing instrument for joint investments grew to USD 18 billion. • The Government of the Russian main consistent throughout a good’s 200 billion cubic metres of LNG, Russian Federation sees its goal as projects. According to Kirill Dmi- Federation submitted a draft law journey. a significant portion of which will the creation of a unified, universal- triev, CEO of the Russian Direct German capital helps fund 5,000 en- to the State Duma of the Federal come from Russia. ly accessible digital agrobusiness Investment Fund (RDIF), the Fund terprises operating in Russia. The Assembly of the Russian Feder- Developing Cooperation platform that will unite every meas- has made a number of significant main problem for relations is sanc- ation regarding digital navigation • China is planning to increase its ure and database in the industry. investments since September: tions, but German colleagues also seals for freight travelling across in the Energy Sector, consumption of LNG to 360 billion in Transneft, one of the largest mentioned the issue of Russia’s the country. This would allow risk Food Security, and the cubic metres and to increase its The development of agriculture ne- infrastructure market players, complex system of business reg- profiles to be established ahead of share in the energy mix from 7 to cessitates a shift towards environ- and in the medical e-platform ulations. Dialogue participants time for various goods or shippers, Environment 10%; 80–110 billion cubic metres mentally responsible production. Doktis. At SPIEF 2018, the RDIF see a solution to these problems and will let a significant portion of of this LNG will come from Russian Forum participants noted the impor- announced the construction of in a rejection of protectionism and the freight being shipped across An important area for international co- pipelines. tance of financially encouraging this a gas chemical plant with assis- the development of cooperation in the border pass through a ‘green operation is the energy sector. Oil and change. tance from Marubeni. An opportu- technology and manufacturing lo- corridor’. gas are expected to remain the back- International cooperation is essential nity for transport cooperation lies calization. bone of the world’s global energy mix to solving global food security issues. The role of the environment in the and economy in the near future, and for international cooperation agenda is Russia, they will remain a strategic de- • According to the International Fer- growing. Humankind must shift the velopment resource. tilizer Association, by 2050 global paradigm of its co-existence with na- food consumption could double. ture, SPIEF 2018 participants noted. • According to International Ener- One proposal was to create a nation- gy Agency data, global demand • Today, approximately half of the al mechanism to monitor technolo- for liquid hydrocarbons grew by Earth’s soil is depleted and many gies before they are launched on a 1.6 million barrels/day to 8 million in areas are experiencing drought mass scale. 2017. Approximately 35% of the in- conditions. crease in global demand came from International cooperation plays a countries in the Asia-Pacific region. Russia can make a significant contri- particularly important role in ecology Europe was responsible for an in- bution to solving food security, as it is due to the rising importance of the crease of 360,000 barrels/day. This a global agricultural leader. ocean as a source of energy and food increase is expected to continue in resources. the future. According to Rosneft • According to the Ministry of Agri- CEO Igor Sechin, oil production ca- culture of the Russian Federation, if

20 Trust Is the Foundation of International Cooperation and a Stable World Trust Is the Foundation of International Cooperation and a Stable World 21 Is the Foundation TRUST of Social Development

The key factors for Increasing Russia’s global competitiveness is improving the quality of directly related to the quality of its human capital human capital in Russia According to the World Bank, human capital makes up 80% of the wealth include the following of economically developed countries; 30–40% of workforce in these countries is involved in the knowledge economy. In Russia, this figure is 17%.

Increasing life The key factors for improving the quality of human capital in Russia include expectancy to the following: YEARS • Increasing life expectancy to 80 years by 2030. This requires developing innovative healthcare technologies.

• Adapting the labour market and education system to the digital economy: according to the World Economic Forum, 20% of jobs will have changed by 80 2020. • Creating infrastructure for ‘smart cities’. According to experts, in the next 10–15 years, smart cities will be responsible for two thirds of the world’s By 2020 GDP. They will become drivers of global economic development and create the most jobs.

• The development of philanthropy and volunteerism as methods of increas- 20% ing social solidarity; creating a trust economy. of jobs will have changed

In the next 10-15 YEARS smart cities will be responsible for two thirds of the world’s GDP

22 Trust Is the Foundation of Social Development Trust Is the Foundation of Social Development 23 OBJECTIVES SOLUTIONS

Updating Education Improving Quality of Life Increasing Investment in Communications, and Mass Media • Creation of a continuous educa- of the Russian Federation Konstan- tion system, including through the Standards and According to the Civic Chamber of Human Capital tin Noskov, the digital economy is development of corporate universi- Increasing Funding for the Russian Federation, at the start of already exerting an impact on our ties for preparing targeted staff and Russia spends Science the millennium, 47% of the housing in “Either “redistribution or a budgetary life, on society, and on the tradi- skills development. small cities lacked hot water and 62% manoeuvre is needed in favour of pro- tional economy, including changing According to the Russian Academy of lacked indoor plumbing. ductive industries such as education, the employment market radically. • Development and use of region- Sciences, Russia spends 1.2% of its healthcare, and infrastructure” (Alex- A large number of traditional spe- al research universities, with the % GDP on scientific research, placing According to Alexey Firsov, General ei Kudrin, Chairman of the Accounts cialties are becoming increasingly support of business, as knowl- the country in thirtieth place globally. Director of the Platforma Social De- Chamber of the Russian Federation). obsolete and the education sector edge-based centres focused on OF GDP sign Centre, municipalities do not faces a challenge: how to retrain developing technologies, featuring 1.2 According to UNESCO, in the last have sufficient funds to modernize “People need to be at the heart of people for new professions. The innovation parks, business incuba- on scientific research 15 years, the number of scientific pub- infrastructure since only 15% of tax- every change. And the social sec- digital economy is not about tomor- tors, etc. lications in China has increased by a es remain in the city budget, while tor, which works towards this end, row, the digital economy is with us factor of 9.6. In India, it has increased businesses are not rushing to invest has to be out there, making these today, and it is already influencing • Globalization of higher education fourfold, and in Russia by 15%. in the urban economy because of the changes possible” (Tatyana Golikova, how we need to educate people. and science: close cooperation slow return on investment. Deputy Prime Minister of the Russian with foreign centres, creation of Of the housing stock Developing Healthcare Federation). • Goal-oriented education, developing joint research centres. in small towns: At the same time, the lack of trust in creativity and unique competencies. SPIEF participants noted the lack of the ‘government—business—society’ Education Reform Developing the effective tools for early diagnosis of chain leads to a deficit of private in- • Restoration of engineering educa- % diseases, the low level of digitalization vestment in the modernization of city Forum participants acknowledged the tion, preparing specialists capa- Healthcare System 47 lack hot water in healthcare and poor qualifications of infrastructure and public opposition necessity of reorganizing the Russian ble of incorporating technological medical staff, as well as the inadequate to new initiatives for implementing education system. Proposals included: achievements and innovations into • According to the Minister of Health- level of investment in clinical trials. technological solutions. real industry environments. care of the Russian Federation Ve- % • Cultivation of digitalization and ronika Skvortsova, over the next lack plumbing 62 Quality medical services are not suf- programming skills from primary • Inclusion of businesses in the de- 30 years, a single digital space will ficiently accessible. According to the school onwards. According to the velopment of modern educational need to be created to ensure con- Minister of Healthcare of the Russian Minister of Digital Development, programmes. stant monitoring of each person’s Federation Veronika Skvortsova, this issue is extremely important for Russia Only as the country has a vast territory, une- ven population density, and huge inter- % regional differences. The insurance system for occupational 15 OF TAXES illnesses works poorly. remain in city budgets According to Maxim Topilin, the Minis- ter of Labour and Social Protection of the Russian Federation, occupational diseases are either not detected in our country, or, if they are detected, insur- ance companies are not involved and the relevant procedures for establish- ing cause-effect relationships are not carried out.

The death rate remains high.

24 Trust Is the Foundation of Social Development Trust Is the Foundation of Social Development 25 health and obtain all the informa- Creating Conditions tion necessary for treatment. for Creative Self- The Ministry of Industry • Simulating investment in diagno- Expression, Developing a and Trade of the Russian sis and prevention, identifying and Volunteerism Movement Federation has supported preventing diseases in their early stages. President of the Russian Federation Vladimir Putin discussed the creation PROJECTS • Developing financial and regulatory of the autonomous non-profit organ- >50WORTH instruments for supporting clinical ization Russia – Land of Opportuni- trials, research, and the produc- ty, which should create a systematic tion of medicines. The Ministry of foundation for developing national cre- BILLION Industry and Trade of the Russian ative initiatives. ROUBLES >3 Federation has supported more Creating a Comfortable • In accordance with the ‘Green Shield’ cussed at the events of the Youth Eco- than 50 projects worth a total of SPIEF 2018 saw the presentation of Living Environment law, 85 regions proposed an initia- nomic Forum, which was held as part over RUB 3 billion as part of the the Roscongress Foundation’s social tive to create forest and park protec- of SPIEF 2018. Proposals included: Pharma 2020 strategy. With the platform, NPO LAB. According to Dep- During the Forum, much attention was tion areas. Twenty-five regions have help of members of the HealthNet uty Prime Minister of the Russian Fed- paid to the topic of developing ‘smart already followed through on the nec- • Popularizing entrepreneurship and National Technological Initiative, eration Tatyana Golikova, this will cre- cities’ and forming a space for trust essary procedures to form them. innovation among young people, in- Contribution of volunteers the Ministry is currently working to ate a dialogue between government, and cooperation between the govern- tegrating young entrepreneurs into to global GDP optimize regulation of innovative business, and non-profit structures, ment, business, and society. • Forum participants noted the ne- the international community. medical preparations and medical and lead to the “creation of new part- cessity of improving standards for devices. nerships, attracting resources to so- According to the Deputy Minister of environmental impact assessment • Involving young people in the mod- % cially-meaningful projects”. Construction, Housing, and Utilities of and transparency with regard to the ernization of the education system, 2.4 • Creating a system for interactions the Russian Federation Andrey Chibis, decisions reached in this area. establishing creative spaces for the between the healthcare system Investment in human capital could lead the number of municipalities partici- implementation of youth initiatives and industry in order to develop the to the creation of conditions which will pating in the Urban Environment pro- Overcoming Gender in the field of education, including most in-demand pharmaceuticals foster a volunteerism movement.. ject reached 7,000 in 2018, and over within the framework of the Future- % and technologies. the past year, 20,000 premises were Inequality and Team movement. >50OF THE • Volunteerism currently makes up equipped with the necessary facilities Empowering Young POPULATION • Modernizing medical education: 2.4% of global GDP. and a regional and municipal legisla- • Implementing entrepreneurship developing doctors’ competencies tive framework was created. A total of People fundamentals into the school cur- is keen to participate and skills, orienting them towards • According to the Director of the 18 million people helped to select the riculum in order to make small busi- in volunteering activities research, implementing new tech- Russian Centre for Civil and Patriot- premises. Overcoming gender inequality in busi- nesses more attractive to young nological solutions. ic Education of Children and Young ness and government is important. people. People Ksenia Razuvayeva, over Proposals included: Russia is part of international pro- • Government support for private 50% of Russia’s population is keen jects aimed at solving these issues. • Empowering young people to im- medicine, stimulating business to participate in volunteering activ- • Increasing subsidies for regions prove the quality of life in small investment in healthcare and re- ities. that implement digital solutions, • Russia is organizing the ‘Women cities: supporting successful My search studies, and implementing adding ‘smart cities’ to the criteria in STEM’ project aimed at helping Country – My Russia projects and philanthropic initiatives aimed at The Forum saw discussions on the for judging the work of regional and girls and women to master infor- creating project teams in 100 mu- improving people’s health. possibility of attracting members of local authorities. mation technology. nicipalities under the auspices of 85 the older generations to the volunteer the Russian Union of Youth. • Developing a palliative care system, movement and attracting volunteers • Utilizing a public–private partner- • SPIEF participants were in favour Russian regions proposed an creating unified standards of care to palliative and long-term care. ship instrument to modernize com- of the creation of the BRICS Wom- initiative to create protected and record-keeping, and establish- munal, social, and transport infra- en Business Alliance, meant to help forest and park areas ing financing. structure. engage women entrepreneurs in in- regions have ternational trade. undertaken Environmental issues have become a the procedures necessary element of economic and The empowerment of young people to establish them 25 social development. in social and economic life was dis-

26 Trust Is the Foundation of Social Development Trust Is the Foundation of Social Development 27 DIGITALIZATION as an Instrument in the Trust Economy

Russian policymakers see the development of the digital economy as a key instrument in achieving technological breakthroughs and increasing the coun- try’s competitiveness. The comprehensive digital development programme will “become one of our priorities for the next few years” (Vladimir Putin, President of the Russian Federation).

According to the World Bank, in 2016, 15.5% of GDP came from the digital sector, which should account for 25% of GDP in the next few years.

In Russia, according to the Russian Association for Electronic Communications, the digital economy makes up 5% (approximately RUB 5 billion) of GDP, and growth at the 5% level will remain for the next five years.

OBJECTIVES SOLUTIONS

Russia Needs to Catch their appeal as investors prefer digital increase in mistrust and the creation Creating a National Data Creating Ecosystems In 2011–2016, sectors. Traditional companies are by leading countries of their own ‘cy- Up with the Leading Exchange Platform the Skolkovo unable to change their own models as berarmies and firewalls’. This became a recurring theme at Foundation contributed Countries with respect to rapidly as digital companies. certain SPIEF 2018 thematic events. the Level of Innovation Simplifying the Exchanging data between various Companies are forced to restructure ecosystems and platforms allows Thanks to digital technologies, com- in the Economy their business models to fit the digital Interaction between for the prevention of cyber threats panies can operate outside their reality ‘on the fly’, and not all of them Large Corporations and and the creation of an atmosphere of own sectors: banks are going into RUB 147BILLION According to the World Economic Fo- do this quickly and effectively. trust between participants. the mobile communications busi- to the Russian economy rum’s most recent Global Competitive- Startups ness and the travel industry, while ness Report, Russia is not yet in the A legislative lag has been observed. Notably, such a platform is being de- non-financial companies are entering top ten countries for developing inno- Developers of digital platforms have According to the Minister of Digital veloped in the banking community the payments market. These inter- vation. Just 7.3% of domestic compa- noted that the federal law on govern- Development, Communications, and on the initiative of the Association of sections lead to the creation of new, nies use new technologies and inno- ment procurement keeps them from Mass Media of the Russian Federa- Russian Banks. The majority of credit cutting-edge technologies or popular vative approaches. According to the establishing long-term relations with tion Konstantin Noskov, most start- institutions are ready to exchange in- goods and services. In five years, IIDF educational World Economic Forum's Networked regions. ups find it extremely difficult to break formation. programmes have reached Readiness Index (which takes into ac- through bureaucratic procedures, count a number of factors, from gov- According to InfoWatch Group Pres- primarily corporate ones. The start- DOM.RF’s project could be one of the ernment procurement to the effect of ident , SPIEF par- ups themselves lack management first to apply blockchain technology >150,000 digitalization on society), Russia is in ticipants stated that dependence on experience: according to the Internet to real estate registries. PEOPLE 41st place out of 139 countries. foreign technologies is becoming Initiatives Development Fund (IIDF), especially dangerous given the digi- 80% are not ready to provide an ade- According to Sberbank’s CEO and talization of critical infrastructure and quate level of service and do not un- Chairman of the Executive Board Her- the lack of international law regulating derstand corporate procedures at all. man Gref, traditional sectors are losing the digital field. This is leading to an

28 Digitalization as an Instrument in the Trust Economy Digitalization as an Instrument in the Trust Economy 29 Refining the Regulation In five years, the IIDF’s training pro- of both large companies and private grammes have reached more than investors. of the Digital Economy 150,000 people. They have acceler- ated 15,000 projects and financed Searching for Export According to Viktor Vekselberg, Pres- 400 projects. ident of the Skolkovo Foundation, Innovation Niches and 53 new laws are set to be reviewed There are opportunities for partner- Developing International and approved over the next two years; ship between the government and 27 of them should be adopted as ear- businesses in developing digital infra- Cooperation in this Area ly as this year. Furthermore, there is structure. Large companies in need an urgent requirement to create the of digital transformation can become The export of value-added informa- conditions which will allow digital a source of capital. tion technology could become an platforms to emerge – ‘sandboxes’ important competitive advantage for for specific purposes. • Russian Railways, in cooperation Russia on the global market. Experts with the Skolkovo Foundation, is noted that some of the more promis- The Digital Economy programme has planning to develop a digital plat- ing export prospects were large soft- created mechanisms for business form to improve the quality of infra- ware files, information technology engagement in the creation of gov- structure management. systems, and integrated hardware– ernment policy in this area. software solutions. • The Russian Federal Communica- Developing Mechanisms tions Agency and Rostelecom are implementing a contract to supply to Support and Finance 15,000 communities with Internet Innovation access and have already fulfilled NEW approximately 70% of the contract. LAWS From 2011 to 2016, the Skolkovo 53 Foundation brought RUB 147 billion Venture funds are another effective are set to be reviewed and into the Russian economy in the form financing instrument. Forum partici- approved over the next two of support for startups and compa- pants noted significant growth in in- years nies-in-residence. terest in venture funds on the parts

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