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TO PARTICIPANTS, GUESTS AND ORGANIZERS OF THE ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM
DEAR FRIENDS,
It is a great pleasure to welcome you to the St. Petersburg International Economic Forum, which this year is taking place under the theme Achieving a New Balance in the Global Economic Arena. For the first time in the last several years, the global economy is showing signs of recovery. The Forum will discuss how to consolidate the emerging trends and assess the risks and challenges related to the introduction of new technologies. The sweeping changes taking place today require effective measures by the international community to enhance the international governance architecture in order to take coordinated steps to ensure that all population groups benefit from the fruits of globalization and thereby guarantee sustainable and balanced development. Over these years, the Forum has gained substantial authority as a recognized global discussion platform open for direct and engaged dialogue on the relevant issues we face today. This June, heads of state and government, prominent public and political figures, and business and expert community representatives from Russia and many other countries will once again gather in St. Petersburg. I am confident that the initiatives and recommendations the Forum produces will contribute to developing common, consolidated approaches, and the contracts and agreements executed on the Forum’s sidelines will give impetus to international cooperation and help to launch and implement new, mutually advantageous projects. I wish you productive and successful work.
Vladimir Putin TO PARTICIPANTS AND GUESTS OF THE ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM
DEAR FRIENDS,
It is my pleasure to welcome all of our guests to the St. Petersburg International Economic Forum. As always, participants can look forward to a rich and varied business programme. Discussion will focus on the current status of the international economic system and prospects for its sustainable development, the search for the best paths to solving pressing problems, and how to make use of emerging opportunities. This year, special attention will be devoted to the Forum’s key topics, which include analysing fundamental trends in the global economy, issues on Russia’s economic agenda, and problems associated with human capital as a key vector of development. Time will also be taken to consider those advances in science and technology that are having an increasingly noticeable impact on our lives. We are pleased offer our guests a variety of event formats at the Forum, which we hope will assist them in establishing new business contacts and developing existing ones. The Forum’s exciting cultural programme includes theatrical productions, concerts, receptions, charity events, exhibitions, and a wide variety of sightseeing tours, which we trust will be entertaining for all. On behalf of the Organizing Committee, I would like to express my hope that participants and guests of the St. Petersburg International Economic Forum are able to engage in constructive and interesting work, accomplish new goals, and have an enjoyable time!
Sergei Prikhodko Deputy Prime Minister of the Russian Federation, Government Chief of Staff, and Chairman of the Organizing Committee of the St. Petersburg International Economic Forum 3
4
IN THIS ISSUE
Page 8 WHAT TO EXPECT AT THE FORUM: people, events, discussions
Page 28 ELVIRA NABIULLINA, Governor of the Central Bank of the Russian Federation The economy is learning how to get by amidst stable low inflation
Page 32 DENIS MANTUROV, Minister of Industry and Trade of the Russian Federation Import substitution: not a fad, but a conscious policy
Page 36 ALEXANDER TKACHEV, Minister of Agriculture of the Russian Federation What’s the secret to the success of domestic agribusiness
Page 40 SVETLANA CHUPSHEVA, Director General of the Agency for Strategic Initiatives Who makes the “investment weather” in the Russian regions
Page 44 ANTONIO FALLICO, Chairman of the Board of Directors of Banca Intesa The global economy is struggling to find a new development model
Page 48 ALEXANDER BUGAYEV, Author and Director of the Federal Agency for Youth Affairs Who will shape the country’s economy in 20 years
Page 52 VLADIMIR SUNGORKIN, Director General of Komsomolskaya Pravda Publishing House Why is it becoming increasingly difficult for the powers that be and entrepreneurs to navigate the information flow
Page 61 VIKTOR VEKSELBERG, Chairman of the Board of Directors of Renova Group, President of Skolkovo Innovation Centre Is it possible to survive in the 21st century without getting off the “commodity boat”?
Page 66 ALEXANDER SHOKHIN, President of the Russian Union of Industrialists and Entrepreneurs How can we reform oversight activities
Page 70 KIRILL DMITRIEV, CEO of the Russian Direct Investment Fund What can sovereign investment funds do for economic growth?
Page 74 ANATOLY CHUBAIS, CEO of RUSNANO The most profitable ideas are originating in high-tech industries
Page 82 GARY BLUMENTHAL, President of World Perspectives, Inc., USA Why growth in productivity is by no means the most important thing in agribusiness
Page 88 BORIS TITOV, Presidential Commissioner for Entrepreneurs’ Rights How much reserves is the shadow economy hiding?
Page 90 ANDY BALDWIN, EY Managing Partner for Europe, Middle East, India and Africa Europe: the decline of the Old World or the new technological future?
Page 98 HEMANT KANORIA, Chairman of the Board and Managing Director of Srei Infrastructure Finance Limited, India How Russia and India should cooperate in a new economic situation
Page 104 MARKO ČADEŽ, President of the Chamber of Commerce and Industry of Serbia How a small country in the Balkans managed to conduct effective economic reforms
Page 118 SERGEY GORKOV, Chairman of Vnesheconombank What is blockchain and how can it help to reform the financial sector ST. PETERSBURG 5 INTERNATIONAL ECONOMIC FORUM 2017 6 П 7 2017 8
FORUM: WHAT TO EXPECT 9
THE ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM: FORUM: WHAT YOU NEED TO KNOW ABOUT ITS WHAT DISCUSSIONS, MEETINGS, AND WAYS TO SPEND YOUR TO EXPECT TIME IN THE MOST BEAUTIFUL CITY OF THE WORLD 10
FORUM: BUSINESS PROGRAMME The Forum’s business programme was The SPIEF programme includes sessions, roundtables, business developed with the involvement of the traditional BRICS session and B20 breakfasts, and televised debates. more than 200 leading experts from International Trade and Investment On the Zero Day of SPIEF, Russia, Europe, Asia, the United States, Forum, the Energy Summit, and a the Russian Small and Medium- and North and Latin America. number of business dialogues between Sized Enterprises Forum (SME), In 2017, the Forum events will be countries. Several business breakfasts the International Conference on united under the theme ‘Achieving a are to be held: ‘EAEU–India’, IT Developing Cooperation ‘from Lisbon New Balance in the Global Economic Breakfast, and more. Sessions of the to Vladivostok’, the Interregional Forum Arena’. Shanghai Cooperation Organization and ‘Women’s Entrepreneurship: Problems Discussions will focus on five main the Valdai Club are also planned, as well and Solutions in Europe and Arab pillars: as the Russia–India Forum of CEOs. Countries’, the second Interregional ƴ Dynamics of the Global Economy A session of the World Festival of Forum ‘Strengthening International ƴ Russian Economic Agenda Youth and Students will be held on the SME Alliances between the Russian ƴ Embracing Tech Disruptors Forum’s sidelines for the first time. Federation and Latin American and ƴ Focus on the Human Factor Discussions will be held in the Caribbean Countries (LAC)’ and the ƴ Foresight Series Forum’s traditional formats of panel World Sport Forum will be held. ST. PETERSBURG INTERNATIONAL 11 ECONOMIC FORUM 2017
SPIEF INVESTMENT & BUSINESS EXPO
A special communications ƴNovgorod Region WELIKE platform for companies to RUSSIA showcase their promising Russian and international ƴNP “North-West Cluster investment projects, B2B of Medical, Pharmaceutical REFERENCE INFORMATION solutions and technologies. Industry and Radiation Technologies” SPIEF 2017 information services Exhibition participants: Tel.: +7 (812) 680 0000 ƴOrenburg Region (24 hours) ƴAssociation of Innovative Fax: +7 (812) 680 0034 Regions of Russia ƴRussian Ministry of North Email: info@forumspb.сom Caucasus Affairs (North FORUMSPB.COM ƴBelarus Caucasus Development Corporation and Resorts of Forum financial services ƴCOALCO “IQ REGION” the North Caucasus) Participants can pay the ƴForesight ƴSevastopol participation cost in cash or with a bank card at the Forum’s ƴHeliports of Russia ƴSiberian Generating payment offices at Accreditation Company Centre 1 (Outlet Village Pulkovo, ƴHubei Xishui Kemei 60/1, Pulkovskoye Shosse). Machinery Co. Ltd. ƴSmolensk Region The financial services provide ƴKhabarovsk Territory ƴState Corporation – participants and representatives Housing Assistance Fund of payer organizations with ƴKrylov State Research original copies of contracts, Centre ƴTatarstan Investment Development Agency work completion statements, and invoices signed by the ƴMIR National Payment Roscongress Foundation. System ƴRepublic of Crimea Documents can be picked up at the same time you pay for ƴMoscow city government ƴTver Region participation at Accreditation ƴMoscow Region ƴTula Region Centre 1 or at financial services stands at the Forum venue ƴNational Research ƴVladimir Region (Passage, stands 95–97). Payment University Higher School for additional services may of Economics (HSE) ƴYaroslavl Region also be made at Accreditation Centre 1.
A 5.5% commission fee is charged when paying for SPIEF PRESENTATION AREA WITH participation and services at THE SUPPORT OF EY financial services stands. Financial services The St. Petersburg International government representatives. The operation hours Economic Forum will host a SPIEF Presentation Area is operated special communications platform: by Russian news agency TASS. Accreditation Centre 1. the SPIEF Presentation Area. Participants will be able to receive Outlet Village Pulkovo Located in the centre of the Forum expert evaluations of their projects May 29–30 10:00–19:00 exhibition hall, this platform will and discuss prospects for bringing May 31–June 2 08:00–22:00 provide space for companies to them to fruition, and will have the June 3 08:00–17:00 present their projects, products, chance to talk to investors and and services, and hold their own partners. A current version of the Forum venue business sessions. The SPIEF SPIEF Presentation Area business (Passage, stands 95–97) Presentation Area, organized with programme is available in the May 31–June 2 08:00–20:00 the support of EY, will host Russian Programme section of the Forum June 3 08:00–16:00 and foreign investors, executives website, under ‘SPIEF Presentation from major companies, and Area’. 12
FORUM: CULTURAL PROGRAMME Gala Concert Access: Premium Package 20:00–21:30 May 31, 2017 participants (by invitation) Mariinsky Theatre Concert Hall 19:30–22:00 (20, Pisareva Ulitsa) Mikhailovsky Theatre India Reception given by the Access: to attend the event (1, Ploshchad Iskusstv) Confederation of Indian Industry participants must present a ticket, Access: Premium Package June 1, 2017 which can be purchased via the participants (by invitation) 19:30–21:30 personal web office. The price of Belmond Grand Hotel Europe these tickets is not included in the Welcome cocktail hosted by (1/7, Mikhailovskaya Ulitsa) package. the Chairman of the SPIEF 2017 Access: Premium Package Organizing Committee participants (by invitation) Gala Reception given by the May 31, 2017 Governor of St. Petersburg 20:00–00:00 Performance by Yuri Bashmet and June 2, 2017 Blok Restaurant the All-Russian Youth Symphony 19:00–22:00 (Leningrad Centre, 4, Orchestra Manege Central Exhibition Hall Potyomkinskaya Ulitsa) June 1, 2017 (1, Isaakievskaya Ploshchad) ST. PETERSBURG INTERNATIONAL 13 ECONOMIC FORUM 2017
EXHIBITIONS FOR SPIEF 2017 PARTICIPANTS ON JUNE 13 For all questions related to SPIEF ‘So Easy to be Nearby’ Photo 2017 cultural programme events Exhibition and to obtain invitations to the events, please visit the cultural June 1–3, 2017 programme stands located in the 1–3, Malaya Konyushennaya Passage (stands 34, 78, and 91). Ulitsa Free access A full list and detailed description of the cultural Russian Industry 2.0 photo programme events is available in exhibition ‘Investment: the Cultural Programme section Aiming for Results’ of the SPIEF website. June 1–3, 2017 ExpoForum Convention Visiting St. Petersburg theatres and Exhibition Centre, and ordering individual guided Governors’ Club tours Access: visitors to the Governors’ Club You can book tickets to leading St. Petersburg theatres and order ‘Silk Labyrinth’ exhibition personal guided tour services June 3, 2017 through the Cultural Programme KGallery (24, Nab. Reki section of your personal web Fontanki) office. This service is also Access: by SPIEF 2017 badge available at any theatre ticket and guided tour booking stand at the ‘Handwritten Treasures of the SPIEF venue (Passage, stands 33 East on the Banks of the Neva’ and 79) and by emailing ticket@ Exhibition forumspb.com (for theatre June 2–3, 2017 tickets) or excursion@forumspb. Institute of Oriental com (for guided tours). Manuscripts (Novo- Mikhailovsky Palace, 18, Contact person: Dvortsovaya Nab.) Varvara Malevskaya Access: by invitation or Tel.: +7 (905) 231 6358 SPIEF 2017 participant badge
Access: Premium Package 19:00–20:30 participants (by invitation) Alexandrinsky Theatre (6, Ploshchad Ostrovskovo) Opening of the exhibition of Access: Premium Package and works by sculptor and artist Dashi Standard Namdakov as part of the gala reception given by the Governor of Package participants St. Petersburg (by invitation) June 2, 2017 Petersburg.Live Festival 19:00–22:00 June 3, 2017 Manege Central Exhibition Hall 18:00–22:00 (1, Isaakievskaya Ploshchad) Dvortsovaya Ploshchad Access: Premium Orchestra Sinfonica di Milano Package and Standard Giuseppe Verdi (laVerdi) Package participants June 3, 2017 (by invitation) 14
FORUM: SPORTING PROGRAMME ST. PETERSBURG INTERNATIONAL 15 ECONOMIC FORUM 2017
M-1 Challenge 79 international mixed martial arts (MMA) tournament June 1, 2017 Time: 19:00 For any information Yubileyny Sports Palace concerning sporting (18, Prospekt Dobrolyubova) programme events and for Access: Premium Package invitation request you can participants (by invitation) refer to sporting programme stands (Passage, stands 35 FIGHT NIGHTS GLOBAL 68 and 77). International MMA Tournament June 2, 2017 A complete list and detailed Time: 19:00 information about sporting Yubileyny Sports Palace programme events can be (18, Prospekt Dobrolyubova) found on the official Forum Access: Premium Package website in the Sporting participants (by invitation) Programme section.
Roscongress Cup Chess Tournament June 3, 2017 11:00–16:00 Dubki Park Yelagin Island Tennis Club (44, Dubkovskoye Shosse, (6, 3-y Yelagin Most) Sestroretsk) Access: by invitation Access: by White Nights. Roscongress Cup SPIEF 2017 participant badge Tennis Tournament June 3, 2017 St. Petersburg 09:00–21:00 Corporate Yelagin Island Tennis Club Games (6, 3-y Yelagin Most) June 3, 2017 Access: by invitation 09:00–17:00 Alexeyev Sports Roscongress Cup Billiards Centre, 16, Prospekt Tournament Rayevskogo June 3, 2017 Access: by 09:00–21:00 SPIEF 2017 Yelagin Island Tennis Club participant badge (6, 3-y Yelagin Most) Opening ceremony VI International Mini-Football for the Ladoga Tournament for St. Petersburg Trophy Raid consular missions and people’s June 4, 2017 diplomacy representatives 12:00–14:00 June 3, 2017 Isaakievskaya Ploshchad 10:00–18:00 Free access
Basketball match. ‘VTB Arena Open: Showdown between the Two Capitals’ for the Roscongress Cup June 1, 2017 16:00–19:00 Nova Arena Sports Complex Access: by invitation 16
FORUM: NAVIGATOR
ACCREDITATION PICKING UP A PARTICIPANT OF FORUM PARTICIPANTS BADGE BY PROXY To collect your participant badge by proxy, your proxy must present Participants must present an expedite collection of your participant the following: accreditation badge in order to access badge you can present your electronic ƴ their passport; the SPIEF venue and a number of ticket at an accreditation stand. ƴ an original standard power of events on the cultural programme. attorney form;* Badges may be picked up at one of ƴ a list of the participants whose The accreditation badge is the accreditation points in Moscow or badges the proxy is collecting; personalized and may not be given St. Petersburg. ƴ copies of the participants’ to third parties. You should keep your passports.** badge and ID with you at all times Accreditation points start * The power of attorney form for picking up participant badges may during the Forum. working in advance, before be downloaded in the Accreditation the start of the Forum events. section of the Forum website. Badges may only be picked up at ** Copies of participants’ passports The accreditation badge must be will be returned after the badges are one of the accreditation points by collected before the start of the picked up. presenting your ID. To simplify and Forum events. ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM 2017 17
PICKING UP YOUR PARTICIPANT BAG
Participant bags can be picked up in the Passage of the ExpoForum Convention and Exhibition Centre PICKING UP from May 31 until June 3, 2017. A PARTICIPANT BAG BY PROXY Participant bag distribution point operation hours To collect your participant bag by proxy, your proxy Date Time must present the following: May 31 09:00–20:00 ƴ their passport; June 1–2 08:00–20:00 ƴ an original standard power of June 3 08:00–18:00 attorney form;* ƴ the participant’s badge / You must present your accreditation e-ticket. badge to pick up the participant bag. * The power of attorney form for picking up participant bags PLEASE NOTE: BAGS CAN ONLY may be downloaded in the BE COLLECTED UNDER POWER OF Accreditation section of the ATTORNEY UPON PRESENTATION Forum website. OF A BADGE PROVIDING ACCESS TO THE BLUE ZONE.
HOURS OF OPERATION OF ACCREDITATION POINTS
Site Address Dates Time
MOSCOW 11:00–19:30 May 18 09:00–19:30 World Trade Center Moscow Moscow, 12, Krasnopresnenskaya Nab. (on weekdays) May 19–31 9:00–13:00 ST. PETERSBURG May 22–29 10:00–20:00 Accreditation Centre 1. Outlet 60/1, Pulkovskoye Shosse May 30–June 2 07:30–22:30 Village Pulkovo June 3 07:30–18:00 May 29 11:00–24:00 Pulkovo Airport 41A, Pulkovskoye Shosse May 30–June 2 24 hours June 3 until 12:00 May 29 11:00–23:00 Pulkovo VIP Lounge 41A, Pulkovskoye Shosse May 30–June 2 08:00–23:00 June 3 08:00–12:00 May 29 11:00–24:00 Moskovsky Railway Station 85, Nevsky Prospekt May 30–June 2 06:30–24:00 June 3 06:30–12:00 Belmond Grand Hotel Europe 1/7, Mikhailovskaya Ulitsa
Kempinski Hotel Moika 22 22, Nab. Reki Moika
Corinthia Hotel St. Petersburg 57, Nevsky Prospekt May 29 11:00–23:00 May 30–31 08:00–23:00 Angleterre Hotel 24, Malaya Morskaya Ulitsa June 1–2 07:30–23:00 Park Inn by Radisson Pulkovskaya 1, Ploshchad Pobedy Four Seasons Hotel Lion Palace 1A, Voznesensky Prospekt St. Petersburg 18 F:
on Pulkovskoye Shosse, near the Roscongress Foundation is not TRANSPORT Moskovsky Rail Terminal, Pulkovo liable for the quality of transport Airport, next to the city’s hotels, and services provided by third party SERVICE at locations where Forum cultural and (unaccredited) transport companies. sporting programme events are held. TAXIS When ordering a taxi, please FORUM SHUTTLES To order a taxi, please contact a city enquire about the price and when the During the Forum, regular free shuttle taxi service of your choice. You can taxi will arrive. buses will run on the following routes: order an accredited taxi at SPIEF ƴ between Pulkovo Airport and the transport services stands at the city’s Accredited Forum SPIEF venue; airports and rail terminals. At the taxi services: ƴ between the official hotels and the Forum venue, you can order a taxi at TaxovichkoF SPIEF venue; the taxi booking stands in the Passage Tel.: +7 (812) 333 0000 ƴ between Accreditation Centres 1 and (stand 59 and at access control Email: [email protected] 2 and the SPIEF venue; point D). Komandir ƴ between the parking lots on Accredited taxis drop off and pick +7 (812) 326 0000 Pulkovskoye Shosse and the SPIEF up passengers on Peterburgskoye [email protected] venue. Shosse in the immediate vicinity of The timetable for the shuttle buses the Forum venue checkpoint. For the Information about accredited taxi is available in the Transport section convenience of Forum participants, services and their rates is posted on of the Forum website and at transport parking lots for accredited taxis the Forum website in the Transport services stands at the Forum venue are located at special parking lots section. (Passage, stands 31, 58, and 90). There will also be transport coordinators on duty at the shuttle departure locations to provide participants with information and logistical support.
SPIEF 2017 OFFICIAL HOTELS Domina Prestige Park Inn by Radisson St. Petersburg 5* (99, Nab. Pulkovskaya 4* (1, Ploshchad ROSCONGRESS Reki Moika) Pobedy) LOUNGE Four Seasons Hotel Lion Original Sokos Hotel The Roscongress Lounge is a Palace St. Petersburg 5* Olympia Garden 4* (3A, special business networking (1A, Voznesensky Prospekt) Bataisky Pereulok) area hosted by the operator W St. Petersburg 5* Ambassador 4* (5–7, Prospekt of St. Petersburg International (6A, Voznesensky Prospekt) Rimskovo-Korsakovа) Economic Forum 2017. The Roscongress Foundation Belmond Grand Hotel Europe Crowne Plaza (formerly the SPIEF Foundation) 5* (1/7, Mikhailovskaya Ulitsa) St. Petersburg – Ligovsky 4* has been holding business (61, Ligovsky Prospekt) events in Russia and abroad on a Angleterre Hotel 5* (24, Malaya Morskaya Ulitsa) Сrowne Plaza St. Petersburg regular basis since 1997, creating Airport 4* (6A, Startovaya favourable conditions for economic Astoria Hotel 5* Ulitsa) cooperation between the business (39, Bolshaya Morskaya and political elites of Russia and Ulitsa) Petro Palace Hotel 4* other countries. (14, Malaya Morskaya Ulitsa) Visitors to the Lounge can Corinthia Hotel St. Petersburg 5* (57, Nevsky Hampton by Hilton learn about all the opportunities Prospekt) St. Petersburg ExpoForum available to participants in the Hotel 3* events and projects organized by Radisson Royal Hotel 5* (64/2, Peterburgskoye the Foundation: the St. Petersburg (49/2, Nevsky Prospekt) Shosse) International Economic Forum, International Financial Congress, Park Inn by Radisson Pulkovo Hilton St. Petersburg Eastern Economic Forum, World Airport St. Petersburg 4* ExpoForum Hotel (41ZD, Pulkovskoye Shosse) (64/1, Peterburgskoye Festival of Youth and Students, Shosse) Russian Investment Forum, and Park Inn by Radisson Nevsky International Arctic Forum, among 4* (4A, Goncharnaya Ulitsa / Ibis St. Petersburg Centre 3* others. The Lounge administrators 89, Nevsky Prospekt) (54, Ligovsky Prospekt) accept applications to attend events and also to organize and Park Inn by Radisson Kempinski Hotel Moika hold convention events of any Pribaltiyskaya 4* (14, Ulitsa 22 St. Petersburg 5* Korablestroiteley) (22, Nab. Reki Moika) level. ST. PETERSBURG INTERNATIONAL 19 ECONOMIC FORUM 2017
SOCIAL MEDIA
@SPIEF
@forumspbru
TheSpbForum
@SPIEF
MOBILE APP The mobile app for the St. Petersburg International Economic Forum is the best way to get the latest information about SPIEF and learn about services offered at the Forum. It can be downloaded in the App Store and Google Play (search using the keyword ‘spief’).
The app is a tool that participants can use to plan their work and communication at the Forum.
Key app functions: ߩުތ۹ުŃݟܫݟߩߗުߗۍѓߗܲݟݔުѓތƬݔݟުۖ programme ݟުުޓߗޓݟѓ۬ۗѓތۍΖܲ۹ࠀު߿ܲ۬۹ݟުުۖ ޓ۹߿۹ݔߗުޓޓݔ۹ܲޓߩۍ ުތ۹ܫݟߗުܫࠀܲߗުޓ۹ܜѓޓޓ۹ު۹ܜѓݔܫࠁۗ÷ުۖ RESERVATION participants ޓܜ۹۬ߩ݀۹ު۹۹ߗܲݔܫ̹ۗުۖ ۹۬ߩ݀۹ުߗݟުܫۗޓݟݔѓ݀ުޓތ۹ѓߗ۹ުѓުݳ۹ތ«ުۖ OF MEETING ROOMS IN THE ѓݔ۬ުުۥѓ݀ތߩ݀ߗߩۗުۥޓޓݔ۹ܲޓߩۍROSCONGRESS LOUNGE ѓߗߗ۹ݔ۬ު ޓ۹߿۹ݔߗުܜߗܲݔތݳݟޓ ߗުތݳݟޓѓݔތѓߗܲݟݔުݟݔުߗތƬݔݟުۖ ޓ߿ܲۗ۹ތ۹ޓ For the convenience of its guests, the Lounge offers meeting spaces ߩު߿۹ݔߩ۹ތ۹ުŃݟܫѓߗ۹ުߗܜthat can be booked in advance, a coffee break area as well as broadcasts ۖުʃѓ߿ܲ of key events at SPIEF 2017. All the app’s functions and ުތ۹ުѓߗ۹݀ۍ۹ުߩ݀݀ࠂުѓ߿ѓܲ݀ѓތѓުޓ۹ތThe meeting spaces in the Roscongress Lounge can be booked for ۹ѓߗߩ 20–30 minutes. To submit a request to reserve a meeting room, please you enter your personal login go to the Roscongress Lounge administrator’s stand. and password from the personal ݟܲۗ۹ݹޫۍࠀ۹ This service is provided free of charge, subject to availability when booking. 20 FORUM: THE MAIN THEMES
DYNAMICS OF THE GLOBAL ECONOMY
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RUSSIAN ECONOMIC AGENDA
ƴ 3PTDPOHSFTT'PVOEBUJPO ƴ *OKFDUJOH%ZOBNJTNJOUIF 4FTTJPO.BEFJO3VTTJB 3VTTJBO'BS&BTU&DPOPNZ $SFBUJOHB/BUJPOBM ƴ 5IF3PMFPGUIF5IJSE #SBOE 4FDUPSJO3VTTJBƭT ƴ 4UJNVMBUJOH%FNBOEJO 4PDJPFDPOPNJD UIF3VTTJBO$POTVNFS %FWFMPQNFOU .BSLFU ƴ 1SPTQFDUTGPSUIF'PSFTUSZ ƴ &DPNNFSDFBOEUIF *OEVTUSZJOB.PEFSO 'VUVSFPG3VTTJBO3FUBJM &DPOPNZ ƴ *TUIFSFBO&NQMPZNFOU ƴ 5SVTUPS7FSJGZ4IJGUJOH $PTUUP"HSP*OEVTUSJBM &NQIBTJTJO$POUSPMBOE *OOPWBUJPO 0WFSTJHIU ƴ 4CFSCBOL4FTTJPO ƴ 5IF"JNTBOE4DPQFPG ƴ %FTUJOBUJPO3VTTJBƩ 3FWBNQJOHB5BY4ZTUFN 4IJGUJOH5SFOET5PX B S E T ƴ -PDBMJ[BUJPOBT %PNFTUJDBOE*ODPNJOH B.FBOTUP$SFBUFB$MVTUFS 5P V S J T N &DPOPNZ
ƴ BRICS: Boosting Economic Cooperation ƴ Financial Markets: The End of Globalization? ƴ New Frontiers in Scientific Advancement ƴ Europe in the Crossroads: Risks and Prospects ƴ European and Eurasian Integration: Possibilities for a New Interface ƴ The Changing Economics of Transportation and Logistics ƴ Hydrocarbon Energy: A Vestige of the Past or the Basis for Development? ƴ The Wealth of Nations: SWFs and their Impact on Economic Growth ƴ Fake News and the Blurring Lines Between Truth and Falsehoods ƴ Capitalizing on the Modern Era of Urbanization ƴ Antimonopoly Regulation in a Digital Economy ƴ The Cooperative Movement as a Driver of Socioeconomic Development ƴ Sport – a Space for Trust 22
EMBRACING TECH DISRUPTORS
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BRIEFING ƴ4QBDF5FDIOPMPHZJO (FPMPHJDBM&YQMPSBUJPO 24 WHICH MARKET IS GROWING THE FASTEST? RUSSIA next year, we fully believe in that. We it. And, in that, we will stay as we are. think that interest rates will probably In that we somehow see our mission, be about 8% at the end of next year, as well, to be a diversified financial but then they will further decrease. services provider and within that, what I also don’t exclude the chance that will grow and what will not grow; it’s they will not be able to keep inflation very tactical. Therefore, we will see, at 4%, after it reaches 4%, and I think once we see it, we will change the it will further decrease because the chips little bit, then when we see the factors that push inflation down now situation changes, we also change the will keep playing a role and inflation chips once again. That’s basically how could further decrease and interest we do business here and how we plan rates could be much lower than that. to do business further. For example, So, preparing ourselves to live in that we can currently see that there is high environment is a challenge and that’s growth in rouble mortgages. We also what we are thinking about. see ourselves being very competitive From the global picture, in this market because long rates development is obviously rather slow are lower than short rates and in this SERGEY and we think that it will continue situation many banks cannot find an to be slow. So, we don’t see any operational model but we can. We MONIN particular changes there, but also we know how to deal with it, because we don’t expect any big shocks because have access to long-term statefunding Chairman of the Managing Board we don’t see really big bubbles to be funds. So, we think that structurally we Raiffeisenbank particularly scared of. could to be very competitive for a long time. Mortgages is an area we like and In what areas do you see potential we’re prepared to be one of the market Where do you see the global economy growth for your core competencies? leaders there. So, that’s what we like in going over the next year and how With our market share of 1%, we are terms of current development, that’s can this impact your own growth still very diversified. We are diversified what we’re putting the emphasis on. prospects? between retail and corporate, we But, this can change and once these Well, as regards the global economy, are diversified within retail among changes occur, we will also change our we’re not interested in it that much. different segments within retail and bets. I mean it’s only if there are really big private banking, we are diversified shocks in the global economy that in corporate, among industries, Which markets are you looking to for would affect us, then we are impacted. among companies of different sizes. driving growth? If there are no real shocks, then I mean And, so basically, the business is Russia. I think, seriously, that Russia we don’t care whether world growth deconstructed to the level of several has become phenomenally cheap was 1% or 2%, strictly speaking. We customer segments. And, these in terms of assets, labour, in terms don’t even care that much about the customer segments are relatively of many things. I think that you can development of the Russian economy, autonomous in the way they have to achieve extremely high ROIs in Russia because we have 1% market share or perform their normal business goals and that’s what we’ve demonstrated a little bit more. However, I mean we and entrepreneurial goals, and from over the past few years. It’s not a can find customers that we like and that stance what we can do is change one-off, it is consistently high ROI in any industry, in any phase of the our emphasis and transfer a little bit performance. This combination of business cycle, it may be more difficult to one segment or another. But we being cheap and producing high ROI is sometimes and less difficult in others don’t want to change this paradigm the best combination you can find. You but anyway we can. Although there of being diversified among several cannot find anything better so what are economic factors that influence segments; we want to keep it that you should do is buy it up immediately. us directly. One of them is interest way because we see the benefits of Don’t delay, buy it up. But, seriously, rates, which we think, that since the it. Physically we see that one year we I think that the best investment is economy is not going to grow, interest make money in one segment, while currently Russia and, particularly, rates are going to go down. We believe in another year we can make money given our development, it needs more in the Central Bank’s forecast that just in another segment, and so on. investments and we would be happy to inflation will reach 4% by the end of So, we can really see the benefits of develop in a more expansive way. ST. PETERSBURG 25 INTERNATIONAL ECONOMIC FORUM 2017 STRATEGY
ELVIRA 28 NABIULLINA Governor of the Central Bank of the Russian Federation
THE ECONOMY IS SETTLING IN TO CONDITIONS OF STABLE LOW INFLATION
DENIS 32 MANTUROV Minister of Industry and Trade of the Russian Federation
SMART IMPORT SUBSTITUTION: A MAT TER OF FASHION OR NECESSITY?
ALEXANDER 36 TKACHEV Minister of Agriculture of the Russian Federation
RUSSIA HAS BECOME A SERIOUS PLAYER ON THE GLOBAL FOOD MARKET
SVETLANA 40 CHUPSHEVA General Director of the Agency for Stra- tegic Initiatives
RATING HISTORY STRATEGY
ANTONIO 44 FALLICO Chairman of the Board of Directors of Banca Intesa
I BELIEVE IN THE CREATION OF GREATER EURASIA FROM LISBON TO VLADIVOSTOK
VLADIMIR 52 SUNGORKIN General Director of Komsomolskaya Pravda Publishing House, Russia’s larg- est private media holding
TOMORROW, THE EARTH MAY EASILY TURN OUT TO THE FLAT
ALEXANDER 48 BUGAYEV Author and Director of the Federal Agency for Youth Affairs
WHO WILL “MAKE” THE ECONOMY IN 20 YEARS 28 S
THE ECONOMY IS SETTLING IN TO CONDITIONS OF STABLE LOW INFLATION ST. PETERSBURG INTERNATIONAL 29 ECONOMIC FORUM 2017
HE KEY TASK OF RUSSIAN ECONOMIC POLICY FOR THE MOMENT IS TO TRANSFER FROM ECONOMIC STABILIZATION TO SUSTAINABLE ECONOMIC GROWTH. THE GOVERNMENT AND EXPERTS ARE DRAFTING STRATEGIES TO ENABLE SUCH A TRANSITION.
growth has now slowed down and is changing in nature: it is now underpinned by consumption, not by Leaders ELVIRA export or investments, so this growth is most likely to be energy-efficient. of the future NABIULLINA Meanwhile, the supply of energy commodities has increased: shale oil Some leaders of the future growth Governor of the Central Bank and gas production has gone up, there have already emerged: these are of the Russian Federation is a global surplus of metallurgical agriculture, some chemical industries, capacity, etc. Consequently, it is time certain sectors of the consumer and to recognize the end not only of the engineering industries, as well as here is no single ‘oil era’ but generally of the ‘primary the service sector, including internal factor or single reform commodity super-cycle’. tourism and associated businesses. capable of starting The third factor consists of risks of Even so, a complete set of industries the growth engine by increasing volatility on global financial and value chains that would be itself; comprehensive markets owing to the quantitative competitive in the new environment structural reforms are mitigation policy being abandoned is yet to be established. This would needed. To accomplish such reforms by the USA first and then by the require not so much state support as Tand make them work, there should be Eurozone. Another source of volatility business initiative to seek profitable anchors that are clear to all economic consists in the problems of sovereign new projects and implement stakeholders: a consistent and logical debt and the weak banking sector performance improvement policy implemented by the state and, in some European countries, the big programmes. In order for such an obviously, macroeconomic stability. external debt of the corporate sector initiative to emerge and become The role of the Bank of Russia in the in developing economies, China’s high sustainable, structural reforms are transition to a new growth model is cumulative debt, etc. required, including in the financial to ensure low inflation and develop This global economic situation sector. These need to persuade a healthy and sustainable financial creates considerable challenges for the business that there is a high degree of market. Russian economy and financial markets. macroeconomic stability, the financial In the next 5–10 years, the drivers Declining growth rates and the global sector is reliable and capable of of Russian economic growth will be demand for traditional Russian export providing the services business and different from those in the 2000s and goods is limiting both growth through private individuals need. The Bank early 2010s. exports of such goods and growth of Russia is implementing a strategic What key factors determine the of demand for output of non-traded transformation programme in all the external conditions under which sectors, including the construction said areas. we will have to develop? The first is industry, which is underpinned the overall deceleration of global by revenue from exporting said economic growth. Although global growth rates have improved somewhat and appear more stable in 2017 than they have for the last nine years following the global economic crisis, this growth still looks flimsy against CONSEQUENTLY, IT IS TIME TO the rates in the first decade of the century. RECOGNIZE THE END NOT ONLY OF The second factor is the absence of clear growth champions in the THE ‘OIL ERA’ BUT GENERALLY OF world that would increase the demand for primary commodities and other THE ‘PRIMARY COMMODITY traditional Russian exports. China used to fulfil this role but its own economic SUPERCYCLE’ 30 S
commodities. New export niches must be sought on global markets and in global value chains. In addition, there are substantial FOR THE MOMENT, THE INFLATION domestic economic challenges. The potential for growth based on the RATE IS QUITE CLOSE TO TARGET available resources and capacities is limited. Unemployment is close to its historical minimum, while company has, for the first time, approached target will result in a further reduction surveys show that capacity utilization a new and very significant stage of in interest rates. Lower and more is close to historic highs. Hence, the development: operation under stable stable long-term interest rates will key growth potential currently lies in and low inflation. enhance the capability of business improving the performance of both For the moment, the inflation to finance investment projects. state and private entities, in cutting rate is quite close to target, so the Private individuals will become more costs, improving governance, raising focus of monetary policy is shifting confident of the safety of their long- labour productivity, investing, setting from mitigating inflation to stabilizing term savings, which used to depreciate up new small and medium-sized it at the target level. The financial owing to inflation. businesses and creating the conditions system has already responded to the It will take some time for the for their development. reduced inflation: interest rates are economy and the population to see As for monetary policy, we can going down. Securing inflation rates the positive effect of transferring now acknowledge that our economy and expectations at a level close to to inflation targeting. Inflation ST. PETERSBURG INTERNATIONAL 31 ECONOMIC FORUM 2017
Budgetary policy
Budgetary policy also plays a significant positive role in macroeconomic stabilization. Thanks to the reduced budget deficit and introduction of budget rule, the budget will stop diverting resources from the real economy to finance its deficit, so funds will become available for investment, and budgetary pressure on the economy and the exchange rate will soften.
projects properly, invest private savings accordingly and gain the trust of the population and business. To that end, we will continue our efforts in the following three directions: 1) clearing the financial system of weak and inefficient players, 2) improving regulation and supervision, 3) removing barriers and creating conditions for development of new financial instruments to promote financial resource availability and open new opportunities for business. An issue requiring special attention in the current circumstances is development of financial technology. Revolution 4.0 affected mostly the financial sector. Despite the relatively small scale of the financial technology industry, its influence is going to grow. It is new technology that will drive the growth of the financial sector. Progress in financial sector transformation will promote economic growth through a reduction in the expectations are going down but, so costs of financial institutions and far, both business and the population service costs for customers and are not sure if inflation is going to through increasing availability of remain low, so it is still too early to financial resources. Yet the digital speak of any fundamental changes revolution in finance should be in behaviour. Nevertheless, the navigated carefully to ensure persistence of the Bank of Russia unexpected threats to the economy in stabilizing inflation at a low level and financial stability are successfully and its caution in gradually cutting avoided. short-term rates directly influenced Stable low inflation and a by the Central bank should allow a sustainable budget, alongside a higher degree of trust to be secured in healthy financial system, form the the results of our policy and relevant foundations for new economic growth; changes in business practices and yet bringing this growth to levels people’s behaviour. above the current moderate forecasts Economic growth will call for of 1.5–2% in the mid-term will depend efficient financial institutions, which upon reforms and the quality of is exactly why the Bank of Russia’s the investment climate. I hope the policy is focused on building up a St. Petersburg Forum discussions healthy, reliable and efficient financial will enable us to make another step system able to assess investment towards delivering these goals. 32 S
SMART IMPORT SUBSTITUTION: A MATTER OF FASHION OR NECESSITY?
THE GOVERNMENT SET ITS SIGHTS ON IMPORT SUBSTITUTION IN 2014. AT THAT TIME, THE COOLED POLITICAL RELATIONS WITH A NUMBER OF COUNTRIES PUT US FACE TO FACE WITH THE PROBLEM OF ENSURING ECONOMIC STABILITY. HOWEVER, THE EFFECT OF SUCH HARSH MEASURES EXCEEDED EXPECTATIONS OF MANY ANALYSTS AND EXPERTS. SANCTIONS, LIMITED ACCESS TO FINANCING AND ARTIFICIALLY ERECTED BARRIERS TO OUR PRODUCTS EVENTUALLY CREATED ADDITIONAL INCENTIVES DENIS FOR THE DEVELOPMENT OF OUR OWN MANTUROV PRODUCTIONS. Minister of Industry and Trade of the Russian Federation ST. PETERSBURG INTERNATIONAL 33 ECONOMIC FORUM 2017
Preserving balance
By the way, a number of states – our new partners – have also gone through import substitution. The same BRICS countries – Brazil, India, China. As a rule, states try to refuse from importing in strategically important lines: food, machine-tool building, pharmaceuticals, etc. True, it is important here to avoid demonstrative bans on imported goods, complete rejection of foreign products, termination of cooperation with foreign investors. This mistake was made by some countries of Latin America, which failed to saturate the domestic market with their own products and simultaneously worsened relations with Western partners. We all know the outcome. The countries of East Asia followed a different path, placing a stake on moderate protection of national goods, expanding the geography of exports, improving the business and investment climate and localizing foreign producers. And here we follow in tracks of international trends. A number of industrial products have different localization criteria, foreign companies can obtain a loan from the FRP and conclude a special investment contract (SPIC). This is a unique mechanism that has already shown its effectiveness; and we intend to use it in the future.
nd now this trend To date, in the framework of import The import substitution strategy continues to develop substitution efforts, of 1,628 project has long ceased to be a “political actively. Moreover, initiatives provided for by 22 sectoral demonstration”, as some experts if initially the policy plans, 678 are being implemented. For initially called it. They talked about for development was their implementation, the resources the low quality of the future domestic dictated by external of state programs and the Industrial products, the populist nature of the factors rather than internal ones, now Development Fund (FRP) were involved program, and the fact that a number Aimport substitution has become a among others. The total amount of state support measures will remain natural and dynamic process for our invested is 105 billion roubles, where only on paper. But our best answer country. the state program accounts for 71 billion, to critics and skeptics is the results. and the share of the FRP is 34. 130 production projects have already Today, three years later, we can already At the same time, businesses started production of serial products. sum up the first results. According to invested 270 billion roubles of their Over 32,000 new jobs have been statistical data, the greatest success own and borrowed funds, that is, each created, of which 16,000 are high- was achieved in machine building. budget rouble accounts for more than productivity jobs. By 2020 the total Here, in some areas, the percentage two and a half private roubles. revenue is projected to be 500 billion of domestic products is only slightly below the maximum. For example, in the machine-building industry, the share of Russian production is 97%, in the energy sector – 77%, in oil and gas industry – 54.5%, in heavy industry – THE BARRIERS CREATED HAD 52.4%. Such figures can no longer be ignored. A POSITIVE EFFECT FOR RUSSIA 34 S
Localization of Lastochka electric train production in Samara, Russia
SHARE OF RUSSIAN roubles. This is several times greater PRODUCTION than the amount invested. Such impressive results were achieved not only in industry, but I N TRANSPORT also in agriculture, the financial % ENGINEERING sector, and the high-tech sphere. 97 And we do not intend to stop there. Import substitution is still a priority of Russia’s political and economic IN POWER agendas. Even western analysts cannot % ENGINEERING predict today, when the sanctions 77 and trade wars run out. Nevertheless, the barriers created had a positive effect for Russia. In industry, not I N OIL AND GAS only machine building started to % ENGINEERING grow. 80% of the country’s civil 54.5 helicopter industry, over 75% of its energy engineering, electrical and cable industry, 69.5% of its chemical I N HEAVY industry and 97% of its transport 52.4% ENGINEERING sector are ensured by own production. ST. PETERSBURG INTERNATIONAL 35 ECONOMIC FORUM 2017
IMPORT SUBSTITUTION BY THE NUMBERS OUR BEST ANSWER TO CRITICS PROJECTS AND SKEPTICS IS THE RESULTS 678 IMPLEMENTED WITH INVESTMENT OF
Today, import substitution not In aggregate, the taken measures only solves the problem of national have resulted in exceeding targets for security, but also leads to an increase the increase in the share of Russian in the competitiveness and quality of production in most industries. Only RUB 375 bln, domestic production. The volume of in the last year, transport engineering, including non-primary exports is growing. Russia timber and oil and gas industry is looking for and finding new markets – increased this share by more than S
Asia, Latin America. 10 percent. Heavy engineering, radio S E E In addition to direct financial electronics, automotive industry and I
UND N F support, we are working to form pharmaceuticals saw the growth from A P
the demand of Russian companies RAMM 5 to 8 percent. A similar dynamics is RIAL M ENT ENT T
for import-substituting products maintained in the first quarter. S M OG at the site of the government Of course, everything cannot be R OP TE CO TE commission on import substitution replaced completely, and why should L E TE P TE V and within the framework of special we produce something that is cheaper A E RIVA T interdepartmental councils. So, since to buy? Still, import substitution should S INDU THE D P 2015, together with the Ministry of be reasonable. Isolation will not last RUB RUB RUB Energy, we have been interacting with forever, globalization will still prevail, regard to oil and gas equipment in this and it will simply not be possible to format. This month, a similar practice ignore such a weighty player as Russia’s 71BLN 34BLN 270BLN has been introduced in our energy world markets. Surely, our country will engineering, electrical and cable return to the international arena, but not industry. only as the buyer, but also as the seller.
AvtoVAZ Сhief Вesigner Steve Mattin by the Lada XRAY concept car 36 S ALEXANDER TKACHEV: RUSSIA HAS BECOME A SERIOUS PLAYER ON THE GLOBAL FOOD MARKET
MORE THAN 120 Mt WE HAD A RECORD GRAIN HARVEST ST. PETERSBURG INTERNATIONAL 37 ECONOMIC FORUM 2017
RUSSIAN AGRIBUSINESS HAS BEEN PUTTING UP RECORD NUMBERS. PRODUCTION VOLUMES ARE INCREASING IN SUCH KEY AREAS AS GRAIN, MEAT, VEGETABLE OIL, AND SUGAR. THE GROWTH IN NUMBERS NOT ONLY GUARANTEES THE COUNTRY’S OWN FOOD SECURITY, BUT ALSO EXPANDS ITS EXPORT POTENTIAL AND THE INDUSTRY’S INVESTMENT APPEAL. IN THE RUN UP TO THE ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM 2017, RUSSIAN MINISTER OF AGRICULTURE ALEXANDER TKACHEV ALEXANDER SPOKE ABOUT WHAT AREAS OF AGRIBUSINESS TKACHEV DEVELOPMENT ARE KEY IN THE COMING Minister of Agriculture YEARS AND WHETHER THERE IS A PLACE FOR of the Russian Federation TRADITIONAL FARMING IN THE NEW REALITY.
When summarizing this year’s results, A wide range of entrepreneurs also actively supplying our products you spoke about the record numbers are interested in the agro-industrial to foreign markets. A number of that have been achieved in agriculture market, including foreign companies. industries, including the fat and and Russia’s greater role on the Investment activity continued to oil, sugar, confectionery, and meat global agribusiness market. What has grow based on last year’s results. The processing sectors, are demonstrating strengthened our country’s position total volume of financial investments serious export potential. The share so much? in the industry exceeded 10%. of agribusiness in Russian exports Russia truly has a lot to be proud Investors are showing increasing increased from 2.4% to 6% over of and these aren’t empty words, interest in dairy and meat cattle the period from 2011–2016 and but rather concrete indicators and breeding as well as vegetable farming agricultural exports were valued at numbers. They show that from year and horticulture despite the long USD 17.1 billion as of the end of 2016. to year agriculture in our country is payback period. The number trading partner countries demonstrating growth in the main In 2016, up to 7 roubles of investment has also increased and now exceeds production indicators. As a result, we were attracted for each rouble of state 100. Today we can say that Russia managed to achieve record results in support. What does this mean? It is seriously influencing the global numerous positions last year. Growth means that the economic levers used food balance. We are becoming in crop production totalled almost to stimulate the development of the an important player on the global 8%. We had a record grain harvest of industry are working effectively. agribusiness market. more than 120 million tonnes. Russia It’s important to understand that Exports are one of the most reclaimed its status as a leading the growth rates would be much promising areas in the development of grain power and became the world lower if not for support from the Russian agriculture. The country has leader in terms of wheat exports. The government. We are confident that the resources for this. I’m not only talking harvest of greenhouse vegetables position of the country’s leadership about government assistance, but also increased by 15% and surpassed will not change in this regard and that the integration of additional territories 814,000 tonnes. Growth continued in the volume of support will increase, into farming. The area of land used livestock production, largely due to which means that the production by farmers has increased by more success in hog breeding and poultry volume growth rates will continue at than 30% over the last ten years and farming. the very least. reached 42 million hectares in 2016. Agriculture has become profitable And this is only the start. The potential for the first time in many years and this How is the growth in numbers here is inexhaustible. We can return means it is attractive for investment. impacting Russia’s export policy? up to 10 million hectares of farmland In 2016, agricultural production had Today, we are not only fully meeting to the rotation, and this means we can a profit margin of 17% taking into the domestic market’s needs in have an even bigger harvest, including account state support. The number of most areas in accordance with the forage crops and vegetables, which will profitable farms increased to 87%. Food Security Doctrine, but are also be exported. 38 S
Growth in production volume is an farming, dependence on imported THE SHARE OF important indicator, but what about breeding materials is as high as 80- AGRIBUSINESS IN the innovative development of the 90%. Breeders face the challenge of RUSSIAN EXPORTS industry and agrarian science? creating domestic breeds of highly 2011 2.4% In order to supply the country’s productive poultry. 6.0% domestic market with Russian-made The government is reimbursing 2016 products, the Russian Ministry of expenses on the construction of Agriculture is also working to reduce breeding centres to stimulate work in AGRICULTURAL dependence on foreign breeding this area. The first ten seed breeding EXPORTS and genetics. We not only need to centres and four genetic breeding increase volume, but also stimulate centres have already received support. innovative activities. Today, our agriculture industry At present, the share of imported is in an extremely important stage 2016 USD BILLION sugar beet seeds makes up 80% of of development – reform and 17.1 the total volume of sown seeds, corn modernization. And for this stage, seeds – 44%, sunflower seeds – 53%, agribusinesses primarily need TRADING PARTNER and vegetable and potato seeds – breakthrough solutions and new COUNTRIES 50%. The situation is somewhat scientific focuses in addition to new better in livestock breeding. We have technologies and machinery. pedigree breeding stock of hogs and With each passing year, it is meat cattle. In dairy cattle breeding, becoming increasingly evident that roughly a third of the total volume of we need to modernize scientific young breeders is purchased abroad. research and introduce innovative But there are positive trends. Imports approaches adapted to the new of dairy cattle have decreased by 40% economic realities. In addition, the over the last three years. In poultry latest innovative achievements in the 100 ST. PETERSBURG INTERNATIONAL 39 ECONOMIC FORUM 2017
who are willing to work in rural areas and contribute to the development of the country’s agro-industrial complex. That’s why we titled the main theme of the agricultural session at the St. Petersburg International Economic Forum ‘Innovations in Agriculture and Employment in the Agricultural Sector: Searching for a Balance’. It is important for us to listen to the opinions of industry experts, specialists, and scientists on how to harmonize these two areas – innovations, technological progress, and the employment of people who were previously involved in agriculture. The government’s agrarian policy in recent years has aimed to provide systematic and consistent support to small farms. At present, farmers are the most rapidly developing sector of the agrarian economy. Last year small farms increased production by 14%, while growth at agricultural enterprises totalled 8%. With each passing year, the contribution of farmers to the overall loaf is increasing, and today they account for more than 12% of total agricultural production in Russia. Large complexes are the locomotive for the development of rural areas since roads, electricity, gas, and other infrastructure are built in the areas where they are set up. But farmers can also become the middle class in the countryside and the foundation agro-industrial complex are changing of the industry along with these major the structure of agricultural production. enterprises. We have all the prerequisites Business is becoming robotic and for this; we have a foundation and high-tech. Unfortunately, technological resources to solve this problem. development has resulted in a decrease Today, due to the support tools in the number of employees at modern provided by the government, we agricultural enterprises. This problem have launched hundreds of the most isn’t unique to Russia; it’s a problem important agribusiness investment that the whole world is facing right projects. If we truly want to become a now. When intensifying production, leading agrarian power, we must stop it is essential not to forget about the at what we have achieved. We must social component or about the people move forward.
AGRICULTURE HAS BECOME PROFITABLE FOR THE FIRST TIME IN MANY YEARS AND THIS MEANS IT IS ATTRACTIVE FOR INVESTMENT 40
SVETLANA CHUPSHEVA General Director of the Agency for Strategic Initiatives
START The idea of a rating emerged, both at the federal and at the regional level, when a lot of work was being done to improve the business environment. The implementation of the National Business Initiative roadmaps was in full swing as the regulatory and legal framework was actively being updated in such areas as construction permits and the registration of legal entities, registration of property rights, connection to power supply networks, tax administration, and so on. An investment standard was being introduced in the Russian regions – a set of 15 minimum institutions and tools that investors needed. It was introduced in different manners. For example, in some places investment portals were established solely for reporting, while other places had resources that were actually useful. In some regions, specialised organizations in charge of supporting investors met clients with rickety stools and sour expressions as if to say: we aren’t going to help with any projects without a call from above, while in other places each newcomer was treated like family with turnkey RATING support. Be that as it may, changes were taking place. And then the question arose – how can we make it so that, first of HISTORY all, the entire federal regulatory and legal framework works equally well THE AGENCY FOR STRATEGIC INITIATIVES for the entire country and, second WILL PRESENT A FULLSCALE NATIONAL of all, support infrastructure for investors is truly functional in each RATING OF THE INVESTMENT CLIMATE IN region and meets the demands of investors. This is what led to the THE REGIONS AT SPIEF FOR THE THIRD YEAR emergence of the idea of a national rating, which would become a source IN A ROW. WHAT HAS CHANGED AT THE of information about the efforts by LOCAL LEVEL? all levels of government to create a favourable investment climate in all of Russia’s regions. On the basis ST. PETERSBURG INTERNATIONAL 41 ECONOMIC FORUM 2017
of this data, which was obtained – and this is important – from actual businessmen, it was possible to get a picture in which the missing pieces of the puzzle (i.e. problem areas) were immediately apparent. And as we know, awareness of a problem is the first step to solving it. In 2014, the ASI and business associations (the Russian Union of Industrialists and Entrepreneurs, Delovaya Rossiya, OPORA Rossii, and the Chamber of Commerce and Industry) presented a pilot rating at SPIEF for which 21 regions were selected. The pilot project broke in the methodology so that full-scale measurements could be made the next year. This is how the history of the rating began.
INITIAL NUMBERS The results of the first full-scale rating (in 2015) clearly confirmed that the regions vary widely from each other in places where they shouldn’t differ in theory. It would seem that since the company registration procedure in the regions is the responsibility of the regional indicators for power grid connection bodies of the federal authorities and and property right registration also Up points federal law is the same, the process improved slightly, although not quite 0.8 should take the same amount of so drastically. NATIONAL RATING’S AVERAGE time everywhere. But that’s not the INTEGRAL INDEX FOR THE case. As the rating revealed, in some But despite all this, the overall COUNTRY AS A WHOLE places you can register in eight days, investment climate in the country INCREASED BY ONLY 0.8 POINTS, while in others it takes all 16 days. remained virtually unchanged: the WHILE THE TOP THREE LEADERS Obtaining a construction permit National Rating’s average integral (THE REPUBLIC OF TATARSTAN, was much worse with a more than index for the country as a whole BELGOROD REGION, AND KALUGA seven-fold difference between the increased by only 0.8 points, while REGION) REMAINED THE SAME best and worst indicators. The rating the top three leaders (the Republic also recorded significant gaps when of Tatarstan, Belgorod Region, and connecting to power grids and when Kaluga Region) remained the same. registering property rights. Why is that? The federal executive were negative. At the same time, These gaps narrowed authorities improved their work, the regional indicators accounted considerably in the 2016 rating, and but the regions lost ground. The for more than 50% of the growth the indicators improved overall. In indicators associated with the demonstrated by the top ten regions. particular, whereas in 2015 cadastral activities of the regional authorities So why were they negative? registration took more than 90 days make up a significant part of the Business representatives have in the worst-case scenario, in 2016 rating methodology (34 of 45), become more critical in assessing it was already around 60 days. The and the business surveys for them the correctness of inspections and the number of requested documents (deterioration in this indicator was seen in 76% of the regions). There is a greater no-nonsense attitude among THE REGIONAL INDICATORS entrepreneurs to manifestations of corruption (worsening in 76% of the ACCOUNTED FOR MORE THAN 50% regions). The decline in economic growth and budget support impacted OF THE GROWTH DEMONSTRATED the deterioration of the assessment of financial support measures for BY THE TOP TEN REGIONS small business (worse in 60 regions). 42 S
First of all, back in 2014, immediately after the pilot rating, a collection of best practices was NATURALLY, THE QUESTION compiled – effective solutions for work with investors from the ARISES: WHAT CONCLUSIONS regions that demonstrated the best results. The collection became the WERE MADE BASED ON THE RATING basis for the development of an educational programme for regional RESULTS AND WHAT MECHANISMS management teams. The training resulted in ‘roadmaps’ being formed HAVE BEEN INITIATED TO IMPROVE in each region on priority areas to improve the investment climate. THE SITUATION? Secondly, at SPIEF 2015 the Russian president ordered the creation of specialised And here is one more reason by 2 points (for example, when the organizational headquarters in each why the efforts of the regions are timeframe for power grid connection region (project offices) that would so important. One of the main decreases from 160 to 128 days) be responsible for introducing the conclusions that can be made from corresponds to a 1% increase in per ‘roadmaps’. Simply put, to correct the rating results is that the regions’ capita private investments in the the problems revealed by the rating. work to achieve high positions in the region. Third, a centre was established rating affects the volume of private at the Russian Academy of National investment and the growth rate in SO WHAT’S NEXT? Economy to exchange best practices per capita GDP. It was determined Naturally, the question arises: what in public administration and that per capita private investment conclusions were made based on the create an investment climate. This depends significantly on the National rating results and what mechanisms centre is now implementing an Rating index, specifically: an have been initiated to improve the ambitious programme to improve increase in a region’s integral index situation? the effectiveness of regional
Poultry meat plant in the Belgorod Region ST. PETERSBURG INTERNATIONAL 43 ECONOMIC FORUM 2017
Priority areas institutions and tools for developing ުۖ a favourable investment climate at the regional level; state cadastral registration of real ުۖ estate and state registration of rights to real estate and transactions; regulation of urban planning ުۖ activities and improvements in the business climate of the construction sector; utility connection of electric energy ުۖ consumers’ power receivers to power grids; utility connection of capital ުۖ construction projects to heat, gas, water supply, and wastewater networks; optimization of control and ުۖ supervision activities; stimulation of small business ުۖ development.
Samsung electronics plant in the Kaluga Region
THE IDEA HAS BEEN SUPPORTED BY THE PRESIDENT AND THE PRIME MINISTER
management teams – deputy model answers two questions – governors, city mayors, and heads what we want to achieve and how of regional ministries and agencies, to act. The models are developed development corporations, and by working groups comprised of natural monopolies. Representatives representatives from line ministries of 36 regions underwent training in and departments as well as 2016, and the rest will complete the entrepreneurs themselves. programme in 2017. The idea has been supported Finally, when it became clear by the president and the prime based on the results of the 2016 minister. And now the regional rating that the main potential for project-oriented authorities are improving the investment climate is working on introducing target concentrated at the regional level, models and should complete the a new solution was developed – bulk of work by the end of 2017. target models. The rating will show how successful The target model is a set of they are. And to be more precise – factors designed to ensure a the assessment will be made by favourable investment climate for businesses working at the local selected priority areas. The target levels. 44 S I BELIEVE IN THE CREATION OF GREATER EURASIA FROM LISBON TO VLADIVOSTOK THE GLOBAL ECONOMY IS IN THE DELICATE STAGE OF CREATING A NEW MODEL. THE FORMER MODEL HAS EXHAUSTED ITSELF AS WE SAW IN AUTUMN 2008. THIS DOESN’T MEAN THAT PROPONENTS OF THE PREVIOUS MODEL HAVE GIVEN UP AND AREN’T SEEKING REVENUE OR THAT ALL OF ITS COMPONENTS HAVE COLLAPSED. THE CREATION OF SOMETHING NEW AND THE DEPARTURE OF SOMETHING OLD IS ALWAYS PAINFUL. CONFRONTATION, CERTAIN FORMS OF COEXISTENCE AND MUTUAL INFLUENCE, RETREATS, AND CONFLICTS WILL CONTINUE FOR A LONG TIME. THE PERIOD WE HAVE ENTERED WILL NOT BE AN EASY ONE. ST. PETERSBURG INTERNATIONAL 45 ECONOMIC FORUM 2017
I’M AFRAID THAT IT’S PRECISELY THE STATE OF THE U.S. ECONOMY THAT IS THE MAIN PROBLEM, ALTHOUGH IT’S NOT ACCEPTABLE TO TALK ABOUT THIS. NOBODY BENEFITS FROM THE COLLAPSE OF THE DOLLAR AND THE U.S. ECONOMY; EVERYONE WOULD ANTONIO SUFFER FROM THIS FALLICO and so on as if it’s not the world’s top solving methods that have been Chairman of the Board of Directors economy! effective over the last few decades. of Banca Intesa I’m afraid that it’s precisely the state Thus, they recognize that the disease of the U.S. economy that is the main has changed and that they need new problem, although it’s not acceptable remedies. END OF GLOBAL to talk about this. Nobody benefits The situation is complicated by LIBERALISM from the collapse of the dollar and the the fact it hasn’t been determined In 2008, a financial and economic U.S. economy; everyone would suffer at a theoretical or practical level crisis broke out in the United States from this. which exact stage of global economic before spreading to the rest of the In other words, the Americans development we are currently in and planet. Technically, the crisis has been understand the problem and they where we are headed. Perhaps the world overcome, but that’s about all. This was intend to deviate from the problem- is moving towards something more followed not just by another cyclical failure, of which there were plenty, but by the end of a model, which for the sake of simplicity we will call the “liberal-global” model. The U.S. and other countries undertook the standard measures that had always been able to successfully overcome a rough patch and get back on the path to steady development in the past. This is not the case now. They managed to patch up the holes and resume growth at the cost of issuing an enormous amount of money shrouded under the vague term “quantitative easing”. However, the scale of such growth is simply microscopic when compared with the volume of additional money supply. Money does not go to the real economy, but remains in the financial, and in many respects virtual, realm. In the U.S. itself, we are seeing a reduction in the population’s incomes and the creation of jobs that require low skills instead of high-quality jobs. There is talk about restructuring the country, developing infrastructure, 46 S
For now, it seems the world is far from this point. Threats, including social ones, have a different nature. A TECHNOLOGICAL REVOLUTION For example, uncontrolled migration is more dangerous, even more so in a ALWAYS FRIGHTENS ITS cultural and even religious dimension than as part of the decline in the CONTEMPORARIES, BUT THEN quality of the labour market. The scope of labour is also ENDS WITH CHANGES TO THE changing in many respects today as more intellectual elements SCOPE AND QUALITY OF WORK appear. Take the profession of a programmer. Today, a person comes up with a computer programme in the multipolar and thus something that is for giving preference to stimulating backwoods, and tomorrow he will be more difficult to control and manage in development. Bill Gates. At the same time, there has order to ensure a balance of interests? Russia is a part of the global been an increase in the share of the But what will the economic model be in economy and thus affected by all the unskilled labour in which these very this case? For now the course is being processes that are occurring now. We same migrants are employed. Could built by feeling things out and by trial are also part of the prolonged discussion this by why the middle class, which and error since decisions have to be about the choice of the Russian largely consists of hired workers, is made here and now. economic strategy – controlling budget declining in size? This fully applies to the EU, Russia, expenditures and financial indicators This isn’t the first time that the and other regions of the world. or stimulating growth. These disputes, problem of changes in the labour The euro area was caught up in a with all their national peculiarities, are market under the influence of paradoxical situation for several years. comparable with the ones that are taking technological progress has arisen in They were afraid of deflation and place in the EU. human history and it probably won’t be offered cheap loans, although nobody the last. took them – neither companies, nor ROBOTS CANNOT REPLACE Each technological revolution households. Many countries have PEOPLE has replaced humans in terms of negative bank interest rates. Now The relationship between labour and performing certain operations. We can the situation is improving a little, capital today is contradictory, just as recall the methods tillers previously but the difficulties have not been it has been in the past. If an overall used to cultivate land for one. Our overcome. In the EU, we are seeing balance of interests is observed and distant ancestors used to dig up the a growing battle between Germany, the situation suits the participants ground to plant with a digging stick, as which demands fiscal austerity and in the process, the social situation is it’s called in Russian. And now? the preservation of classical financial stable. If not, then various cataclysms A technological revolution always indicators, and its partners, who call occur. frightens its contemporaries, but then ST. PETERSBURG INTERNATIONAL 47 ECONOMIC FORUM 2017
ends with changes to the scope and seems realistic. It does not run quality of work, the reallocation of counter to the alliance with America, labour resources, the disappearance but allows for building a common of certain professions, and the economic space that would function appearance of new ones. This has been according to comparable rules. It’s a painful process before. Remember not only capable of providing a the Luddite movement in England powerful impetus to the economic some 200 years ago? That even development of this super continent, resulted in people who broke new but would also contribute to the machines being executed and sent consolidation of peace and stability. for hard labour. Ultimately, though, And where does Russia fit into this following the innovative changes in system? We must proceed from what technology, new points of equilibrium we have. Does Russia have resources? were found and changes occurred in That means their extraction and the social structure of the population. processing will always be crucial for That is what will happen now. the Russian economy. Italy doesn’t But let’s not forget another have any, thus its economy has had, important factor. There are certain has, and will have a fundamentally things that only a person can do, different structure. There is no need no matter how perfect a machine to try to adjust your economy to a is created. The banking sector is particular scheme. Does this mean undergoing rapid automation and a that Russia should not try to diversify transition to digital technology. But its economy? Of course not. It’s this certainly can’t solve everything. important to create conditions for So much of everything in our lives will the optimal use of the conditions and remain within the power of humans opportunities that exist. – with their knowledge, intellect, The political factor must also experience, character, intuition, and be taken into account. Russia has numerous other qualities. Believe me: realized that in participating in the Intesa Sanpaolo’s banking group has international division of labour, it will 400 years of history behind it. I know still have to ensure a high level of what I’m talking about. technological independence: imports to strive for this. The risks have not may prove to be an unreliable source. changed throughout history: external THINGS WILL NEVER BE IDEAL, Efforts to restore and strengthen factors, the inability of the ruling BUT WE HAVE TO STRIVE FOR science and education create class to see a little beyond their own SOMETHING conditions for meeting this objective. momentary interests, an unfavourable What place does Europe hold in the But it’s crucial to understand that confluence of circumstances, even “beautiful new world”? If we proceed the creation of competitive products natural disasters and accidents, when from the assumption that the new does not ensure automatic access all’s said and done. What if the young world is still in its infancy, this place to markets: this requires political French general Bonaparte had died cannot be determined yet. support. Examples of Russian civil in 1796 with a banner in his hands Obviously, transatlantic ties will aircraft construction, nuclear power during the assault on Arcola Bridge? remain the pivot for Europe and it engineering, and certain other Europe would then never have known will structure itself around this axis. industries have already vividly about Emperor Napoleon with all Italy is part of this Europe. It can have demonstrated this. the ensuing consequences, including more or less influence within Europe As regards building an ideal world, the Napoleonic Code, which is the and satisfy its national needs more which I’m often asked about, I don’t basis of modern law on the European or less. This can happen in different think that things can get close to continent. In short, the basket of organizational structures. They can be being ideal, although it is essential factors is well-known... reconstructed. But this situation will not change on the whole. To what extent will Europe be able and want to regain a greater share of autonomy, especially if the U.S. truly focuses on its own problems, in order THE IDEA WHICH I SUPPORT OF to maintain leadership in the long term? I do not have a ready answer to CREATING A GREATER EURASIA this question. However, the idea which I support FROM LISBON TO VLADIVOSTOK of creating a Greater Eurasia from Lisbon to Vladivostok and Singapore AND SINGAPORE SEEMS REALISTIC 48 S
WHO WILL “MAKE” THE ECONOMY IN 20 YEARS? EVEN SCHOOLCHILDREN NEED TO KNOW THE BASICS OF FINANCIAL LITERACY
THE GLOBAL ECONOMY HAS ENTERED THE ‘FOURTH INDUSTRIAL REVOLUTION’. IT IS CHARACTERIZED BY SHARP GROWTH IN THE IMPORTANCE OF HUMAN CAPITAL. PEOPLE, THEIR KNOWLEDGE, AND ABILITIES ARE WHAT PROVIDE THE ALEXANDER MAIN COMPETITIVE BUGAYEV ADVANTAGE FOR BOTH GOVERNMENT STRUCTURES Author and Director of the Federal Agency for Youth Affairs AS WELL AS BUSINESS. ST. PETERSBURG INTERNATIONAL 49 ECONOMIC FORUM 2017
n order for the country’s economy projects of Rosmolodezh over the implement projects and, of course, to be in reliable, professional course of the year and the best ones will be relevant as they build their hands within 20 years, it is are invited for internships at partner careers, form working relationships, essential right now to work companies. Young people who have and establish communication. with the generation which will linked their lives with the economic The 19th World Festival of Youth be at the helm of economic and financial spheres are introduced and Students will be an important processes within two decades. This is to one another and establish a kind of event that will bring together young Ia difficult, complex task that must be social network of essential and useful people from around the world. The implemented by both the government contacts in real life. Such a network people coming to Russia from 150 and the commercial sector. The is already beneficial to them as they countries will include scientists, situation is greatly impacted by the rapid development of the IT, multimedia, electronics, and modern technologies markets, which 30 years ago seemed like science fiction. At the Federal Agency for Youth IT IS ESSENTIAL RIGHT NOW TO Affairs (Rosmolodezh), we are forming professional communities of 18 to WORK WITH THE GENERATION 30 year-olds. Young people undergo training as part of a forum-based WHICH WILL BE AT THE HELM OF campaign, and leading speakers from the industry work with the participants. ECONOMIC PROCESSES WITHIN The work does not end at the forums as their participants join other TWO DECADES 50 S
We are also working right now with the younger generation of citizens as WE ARE ALSO WORKING RIGHT part of the Russian Schoolchildren Movement. It is still too early here to NOW WITH THE YOUNGER talk about financial literacy and the basics of entrepreneurial activities, GENERATION OF CITIZENS but master classes and lectures from economists and businessmen AS PART OF THE RUSSIAN are being held at ‘pilot’ schools in a number of regions as part of career SCHOOLCHILDREN MOVEMENT guidance work. Training is an important issue. In addition to classical education and additional training programmes, we need to expand the commercial sector’s work experience in training the ‘work shift’. Many corporations have already taken students under the ‘tutelage’ from introductory courses at universities, investing resources in their education, inviting them for internships, and providing them with jobs. Thus, the personnel that are required for a given type of manufacturing or business at a particular time are being indoctrinated. The labour market will change considerably in the coming years. Many specialists will lose their relevance, and many professions that do not currently exist will become part of our lives. Given the growing informatization and robotization of the economy, many jobs may be taken by smart machines, and this is largely the current reality, which we must including in economic sciences, includes both methodological work take into account when thinking about entrepreneurs, and IT specialists on as well as an educational component, where to employ the personnel that whom the future development of the of course, and the programme are released in this process. industry and related sciences will also participants are all on the same When choosing their professions, depend. It is a real opportunity to create agenda, with similar aspirations and senior students should not rely on a professional community not just desires, with a similar outlook on life, the current stereotypes and criteria within the confines of Russia, but on an although they all have their own work of ‘prestige’. The priorities will likely international and worldwide level. experience, with each one focused on be different in 5–6 years when the The ‘You Are an Entrepreneur’ the specifics of business development current high school graduates enter federal programme is used to help in their own field, and the regional their profession. They need to look those who have decided to forge peculiarities of the market are taken for new, emerging, breakthrough their own path in the entrepreneurial into account. Our programmes industries in which taking a lead would sector. As part of this programme, we and forums feature meetings of allow for achieving new heights in work with young people who want to representatives of generations that are the economy. Once we solve the try their hand at developing their own different and conventionally divided numerous problems and challenges business and take the first steps or who by society. We search for approaches facing our country, we will have already have their own business. This to convey information to each person. every opportunity to become one of the best and most comfortable countries in the world for living. Such issues include forming a ‘smart’ urban environment and developing THE LABOUR MARKET WILL infrastructure, education, and medicine. Only by working together on CHANGE CONSIDERABLY such strategic issues will we be able to successfully achieve the goals we IN THE COMING YEARS have set.
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TOMORROW, THE EARTH MAY EASILY TURN OUT TO THE FLAT A FAMOUS MEDIA MANAGER DWELLS ON THE RELATIVITY OF TRUTH, ON INFORMATION PROTECTION, AND ON MONETIZING ANTICIPATIONS. ST. PETERSBURG INTERNATIONAL 53 ECONOMIC FORUM 2017
broke all the windows. Who is to is not a fake, but it is not possible. say that is not true, if indeed it was On the other hand, our journalistic a ton, 20 hectares, and if all the art of distinguishing nuances and windows are broken? shades will save our profession. Yet when the Internet appeared Is chocolate good for you? Does and gave access to the information global warming really exist? Is space all and sundry, it created a Russia’s economy growing or is it demand for value judgments. Why in recession? There are no simple only a ton? What kind of tomatoes answers to all these questions, and were those? Who is to blame that those who are able to live in the the windows are broken? And it uncertain world where there is no turns out that the former simplicity absolute truth are those who will is going away, disappearing. clearly land on all four. Decision- Phenomena are no longer self- makers, managers, can no longer sufficient. They cannot “live” be self-reliant, they can no longer without a value judgment. And that survive without an “interpreter,” means that a fact cannot be taken a person who reads the nuances as separate from its interpretation. of meaning in the shape of the VLADIMIR That is, a naked fact, a fact as such, clouds. A journalist can be such an no longer exists. interpreter. Today, if the media want SUNGORKIN Without going into lengthy to survive, it is their duty to become arguments to support it, I would such “interpreters of dreams.” Today, General Director of formulate the following thesis for the media have a new destiny, and it Komsomolskaya Pravda Publishing people involved in governance of is within this paradigm that they can House, Russia’s largest private any kind and in decision-making. be of interest and significance for media holding There is no objective truth except the audience. for the Lord’s commandments. I will say more. Since the It is best not to arm oneself with mathematical apparatus gains statements that there is some kind crucial significance for the Internet omething big and global of truth. Any truth is vulnerable, processes (what people in the has happened in the because any phenomenon is humanities call a “discussion” world. I do not mean 3-dimensional, it may be viewed can be translated into the precise the appearance of new from different perspectives, and language of the big data and treated gadgets and the related then you can bore a little hole in like a calculation assignment), infrastructure, I do not it to see what is inside. There is no the battle is brewing for the mean that now, you can call your mom simple and concise description of interpretation of the mathematical Sfrom anywhere in the world, you can any phenomenon that is significant laws themselves. Thus far, they always learn your location and watch for decision-making, a description are taken as a given. But won’t a soccer game with your pal through that would satisfy everyone. As the same fate that befell “naked his eyes. These are all derivatives of Dostoevsky once said, humble facts” befall mathematics as well? the major underlying factor: the role thyself, proud man. Realize that Won’t we be completely plunged of information in society has radically every phenomenon has a great into global uncertainty, having changed. number of interpretations, and they lost the last certainty represented will all be true, although they will all by arithmetic? Imaginary values, THERE IS NO MORE TRUTH contradict each other. probabilities and fuzzy sets will Today, as never before, information is As the editor-in-chief of a become very important for media of crucial importance for civilization. publishing house, I partly live in the managers, they will have to immerse It appears that people have future already and it is awe-inspiring themselves into all that and to always known that information is to see the growing importance take part in discussions that might important. Yes, it is so, and yet it of nuancing and shading. I would appear academic and artificial to us is not. About thirty years ago, we be happy to easily make the today, but will not appear that way were taught what information was determination: this is a fake, and this tomorrow. and how it should be processed. Yet the science of yesteryear was simple and straightforward, and that simplicity was quite enough. This simplicity lay in the following tenet: you are journalists, and you must TODAY, AS NEVER BEFORE, tell people the truth. A sensible tenet. Hard to argue with it. A ton INFORMATION IS OF CRUCIAL of milk was produced. 20 hectares of tomatoes were harvested. Wind IMPORTANCE FOR CIVILIZATION THE QUANTUM CONSPIRACY official makes a decision, they most The conspiracy certainly exists Any decision-maker whose decisions frequently do not know how this because all the oligarchs have their cost the least bit of money is under decision is perceived, whether it own information centres, and those attack from all sides. Such decision- will work, because they lack a set centres emanate… I don’t even makers are being manipulated. of quality “starting facts” (even if want to call it “information,” but To see the manipulation and we understand “facts” in a relativist some vibes. They receive vibes from to see though it, the decision- manner, as I have already said). others, process and re-emanate maker will have to expend There has never been such an them, having previously emphasized certain resources for information amount of misinformation out there, what would benefit them. It you protection, information attack, and this needs to be taken into make soft drinks, you will say that misinformation actions, for sifting account. soft drinks help fight viruses. If and purifying information. We There are two theories that you are a public official and you know all these things exist. Yet explain the dominance of the need to give account of the monies thus far, it brings about only greater informational horror. A global expended, you will say that all the manipulation of people. conspiracy and the big data theory. viruses are long gone, exterminated A simple example. A whole I lean toward the second theory. a long time ago, glory be to the party bunch of experienced editors checks In our work, we do not really take and the government. And each time, every article in the Kosmomolskaya into account the work of the human you will quote some “research,” and Pravda for being compliant with the brain. The human is an utterly these researchers will, in turn, quote “truth.” I regularly hear from the fantastic invention of the Lord or other “research,” and all that creates people in power, “We know how of some aliens. The human brain is information noise where one can newspapers are made. You are all not the kind of organ that produces sometimes catch the loudest note for sale.” I would be happy to put some sterile information. Either it (and this is part of the “conspiracy” everything up for sale, but that’s not wants to have fun, or it is the way because someone produces this the case. Yet, despite the editors and it sees things, or it pays attention note), but more often not even that. reporters’ best intentions, despite to all kinds of trifling nonsense and A “conspiracy” understood in the the multi-tiered fact-checking does not pay attention to important quantum way makes the question system, the information picture things. Yet today, millions of people of who the bad guys and who good presented by any news outlet is are sources of information and guys are meaningless. Millions of infected with misinformation. misinformation both. Facebook Internet users create reputations As a result, the people in power, friends, social networks, all that and destroy them. There were times lacking the understanding of the flows into the media. when Goebbels fought Stalin and internal workings of media, of the Having said that, I will now Erenburg conducted an anti-Hitler source of uncertainty, do not trust contradict myself, since I would not PR campaign. That was then, and this the media at all. They trust their reject the conspiracy theory straight now. Today, it’s everybody against advisors, experts, information away. Remember, I said before that everybody else. centres, which frequently deceive no interpretation of reality should be their clients shamelessly. rejected, because like the electron LENIN AS A SALESMAN When Yuri Andropov came is simultaneously here and billions Can the media remain a business to power, he said that we do not of kilometres away, and this is its if they engage in “interpretation know the society we live in. We fundamental quantum uncertainty of dreams”? Absolutely, since it have arrived at a situation when property, so any opinion, judgment, is the audience that forms the we can rightfully say it again. and event has a little bit of “truth” to foundation of the media business. When a businessperson or a public it, even if we are talking utter fiction. It is the audience that they sell 55
Now more of the same, but let’s leave the government aside this time. I assembled an audience, and that means I can tell it that Frederique Constant watches are cheap, easy to use, and beautiful, and they also look like the real deal. And somebody else will pay me money to shout “Drink Von Houten’s Hot Chocolate!” I am perfectly fine with this system. The memory of the revolutions means that in Russia, any more or less mass story is politicised. It has its drawbacks. We ask: where the media could make money? There is no market in sunny Croatia, but we can get a few crumbs out of to advertisers or subscribers. The meager pie that their audience is. meaning of the media as a business Germany has holdings that move is described with a simple formula. huge amounts of money. In Russia, There are certain persons, let’s call we can make money on politics. A them journalists, although quite often, while back, the deputy Mitrofanov they are no longer journalists. They ecstatically told journalists, “How create an audience that is tied to them. much money do you make off your It does not matter it if takes place on media? Politics is the way to make a website, in a newspaper, or on a TV money.” channel. If there is a person who can Then we should recall that assemble their own audience, that in Russia, economy is rigidly tied person will always find a way to sell to the state. This is why we have their audience. This is business for you. situations when a vice governor It has ever been the case, and assembles major advertisers and maybe that person’s last name is says, “Remember, you can advertise Lenin. Lenin went and assembled with this news outlet, and you do his audience at Finlandsky Train not advertise with this one, because Station in 1917. He said, “Land to it is not ours.” I do not consider it a the peasants, water to the sailors, favourable situation. and we shall burn the landowners.” Here an objection may be raised Everybody loved it. And the that there are people in Russia who audience of the blogger Lenin have successfully cheated the system. followed him. Then Lenin says, I They are all by themselves, they are have an audience, now we can sell independent, they have an audience, it. Let’s sell it in such a way that and they sell it successfully. Take we will seize the Winter Palace Oleg Kashin, for instance. So let’s see and set up our own government. It what’s what. worked out. He sold his audience. A I read Kashin every morning on political party means getting to the the Republic and I pay money for it, top of “create an audience” game. but I pay the Republic, I do not pay We got all those likes. Now we can Kashin directly. Kashin alone is not lay claims to seats in the Duma, enough for me, I need both Kashin to taking part in dividing up the and something else, and this is why I cabinet seats. read the Republic. Ksenia Sobchak is
IT HAS EVER BEEN THE CASE, AND MAYBE THAT PERSON’S LAST NAME IS LENIN 56 С
using me, I am using you.” And he will gain an even bigger audience. Monopolization is everywhere.
AN ALTOGETHER-TOO-EFFICIENT PROPAGANDA Monopolisation is everywhere, the role of the state is gigantic, and I do not think that the state fails at shaping the kind of picture of the world that it needs. Are there problems in the country? Yes, there are, and they are grave. And do people follow Navalny and Yavlinsky in droves? No. Some dubious opposition members made it into the Duma – the Communist Party of the Russian Federation, the Liberal Democratic Party of Russia. Yavlinsky is a not a Duma deputy. All those parties of people’s freedom are not represented in the Duma. Does it mean that the state’s propaganda machine has done a good job? Too good a job, I would say. The authorities are losing access to independent information. An opposition is necessary. A pike should live in the lake to keep all fish awake and to be kept awake itself. I think it would benefit the President another example. She has hundreds alone, without a system of assistants, primarily. Otherwise, the authorities of thousands of fans, yet she works junior reporters, and partners will be have to purify themselves all on with Dozhd TV channel. Why does able to replace the media. And that their own, and do it blindfolded, Kashin need the Republic, why does means that either Kashin builds up to boot. This is both unpleasant Sobchak need Dozhd? At the very that structure thereby creating a news and ambiguous. Governors are least, they need them to optimize outlet, even if a small one, or he joins being arrested at such a rate that the audience-selling technique. So an existing news outlet. it becomes indecent. Holding a you have a million readers, you will I think were Kashin better adapted governor’s office means a high not chase each one asking to give to the state in his language, mindset, mathematical probability of ending you money. This is looking at things and reflections, the state would have up in jail. Some office that is: a 15% from the blogger’s perspective. long ago called upon him and said, chance of getting a prison term. And now looking at things from the “Here, Kashin, have the 10 to 12 pm Why is the opposition important reader’s perspective. Here, reader. time slot on Channel One, here is as an institution? It is its job to shout Here’s Kashin, and here are five more the kind of money you will never out who stole what. A governor Kashins, and here’s a report from a make on your own.” And he would will get a fright and will not steal to journalist on the ground about the US have accepted. By the way, this is excess. Before setting up a company attacking North Korea. Kashin does the future I see. I see Kashin being that comprises his son and daughter- not have a reporter in North Korea. just as smug as Solovyov, on a major in-law, he will think, “Aw, hell, I’d He will be the last to learn about the TV channel. And Kashin will giggle better not.” He will be better off, he attack. And that means that no Kashin merrily as he says, “No, you are not will not go to jail. The authorities will be better off: when people see those endless arrests, they become convinced that every person in power is a thief. AN OPPOSITION IS NECESSARY. And what if Yavlinsky had been allowed into the Duma? Help him A PIKE SHOULD LIVE IN THE LAKE gain 7% of votes. We all understand that this is all regulated. Does TO KEEP ALL FISH AWAKE AND Yavlinsky look like someone who will destroy the state? Will he turn into a TO BE KEPT AWAKE ITSELF bomber? No. So where is the risk? П 57 2017 58 S
WE’RE NOT ONLY HELPING CHILDREN STUDY, BUT TEACHERS AND PARENTS AS WELL HOW THE PUBLISHING HOUSE BECAME A “FACTORY” FOR PRODUCING KNOWLEDGE ST. PETERSBURG INTERNATIONAL 59 ECONOMIC FORUM 2017
PROSVESHCHENIYE, AN ACKNOWLEDGED LEADER ON THE MARKET FOR EDUCATIONAL AND METHODOLOGICAL LITERATURE, HAS BEEN AROUND FOR ALMOST 90 YEARS. BUT AS LIFE HAS SHOWN, THE COMPANY IS NOT AFFECTED BY THE WEIGHT OF AGE. ON THE CONTRARY, TODAY PROSVESHCHENIYE IS CLOSELY ASSOCIATED WITH BOLD INITIATIVES AND INNOVATIONS BASED ON MANY YEARS OF EXPERIENCE.
We believe that 67% of today’s colleagues from the Higher School of VLADIMIR schoolchildren will work in Economics, we have calculated how professions that simply do not exist much our average households spend UZUN today. So we try to anticipate these on education for the year, and it ended trends and teach the basics of such up being around 800 billion. We also Prosveshcheniye Management professions from an early age and, estimated that one-third of parents in Company President most importantly, we teach them our country regularly invest 5% of their how to study, quickly change their incomes in their children’s education, competences, develop the necessary while 10% of parents invest twice as he company has moved skills, and quickly navigate the labour much. During the years when there beyond the publishing market, particularly since technology was thought to be a crisis in school house and is developing allows for this, and from the age of and preschool education, spending by as an educational 3–7 a child can already begin to learn households and the government only holding and a national robotics, for example. Another feature increased. The market for educational educational integrator. of modern education is that it has services also expanded. Prosveshcheniye Management Company become continuous. You must be The market for supplementary TPresident Vladimir Uzun spoke about ready to refresh your knowledge every education is also rapidly growing. For innovations in education, interaction with 2–3 years. Based on this assumption, example, the scope of services to the Russian regions, and how the holding we have created something new – the prepare for taking state exams is worth contributes to GDP growth by training Prosveshcheniye Academy, which about 40 billion roubles. This is twice as personnel for the new Russian economy. offers new knowledge and skills not much as the textbook market. But this only to teachers, pupils, and students, is understandable because when a child THE PRIMARY GOAL OF but also to parents. We also equip is given a diploma and enters the adult EDUCATION IS TO GROW HIGHLY specialized classrooms in schools: world, no one asks him what textbooks SKILLED PERSONNEL FOR OUR medical and engineering classrooms, he studied. The important thing is that COUNTRY which provide the opportunity to he is prepared for this independent What is Prosveshcheniye’s mission receive pre-professional training. adult life. today? After realizing two years ago that Prosveshcheniye was privatized in the number of students would Nevertheless, publishing textbooks December 2011. Then in 2014 our increase significantly and new schools and teaching aids remains one of the country came under sanctions. By would be built in the near future top priorities of your company. What that time, we had been accustomed to (3.5 million school places need to do you intend to do to develop new the fact that any technology could be be built by 2025), Prosveshcheniye areas? bought abroad. But access to foreign appealed to President Vladimir Producing textbooks is undoubtedly developments was taken away and Putin with a proposal to not build one of the key areas. But this accounts limited. So there has been a dramatic “walls and stairs”, but to solve the for less than half our income. Our increase in the need for training problem comprehensively and create growth points are the market for personnel who are capable of creating educational institutions that aim to supplementary benefits and services. and using their own technologies and achieve a specific result. Today we are This isn’t government money. This is products. This predetermined the helping to put these proposals into money from households and parents development of our company and the practice. that they are willing to part with for need to develop new products and modern high-quality products and programmes for the education system In your view, is demand for education services. and invest in new projects. stable or even growing? Or take teachers, for example, There is certainly a great need for new who are an important category of What is the essence of innovations in knowledge, skills, and educational consumers for our services. We offer modern education? What steps are technologies, and not only from them advanced training courses at the you taking in this area? the government. Along with our Prosveshcheniye Academy. Sure, they 60 S
are not cheap courses, but our classes Don’t you also work for children with any region. In particular, the region and experienced teachers produce disabilities? handles the parking system in Moscow good results. In addition to actual A: Yes, we have been publishing and is home to the Data Processing studies, the environment in which textbooks for such children for many Centre. The salaries of specialists teachers are taught is important. Thanks years. And this work has continued there are lower, but the level of to the Prosveshcheniye Academy, the following privatization despite the professionalism is the same. Ultimately, best specialists go to other regions fact that it is basically unprofitable. the higher the class of specialists, the and abroad, for example to Finland, Shareholders made this decision. higher their income. There may be Singapore, and Hong Kong. This allows But recently it has ceased to be solutions in other areas. The heads of them to adopt the best pedagogical unprofitable. Based on orders from the regions, education authorities, regional practices, including foreign practices. government, we have developed special business, and parents are interested in Supplementary education is a big textbooks under relevant programmes us in this regard. issue. Cities are growing. Schools are for more than half a million children overcrowded. A new school in Krasnodar with disabilities. Our textbooks for What is business interested in has twenty first grades. At the same time, visually impaired children, for example, specifically? in some areas there is not a single facility are of great interest to many people Human potential should be the main where kids can do something after and are in high demand. And now we focuses of business investment. The school. You can drive a kid somewhere have orders for them both from the earlier a business starts investing in far away, but not everyone has this regions and from parents. a person, even the smallest person, option. That is why we are opening the greater the guarantees that it will educational courses and additional Prosveshcheniye has close relations receive the necessary return. Two supplementary education courses near with the regions. What makes you so years ago, Rosatom and Novolipetsk people’s homes – in microdistricts, attractive? Steel, which have strong personnel where there are a lot of people and few There are 43,000 schools in the development services, did not believe opportunities. And there is already great country and we serve 25,000 of them that children should learn about demand for these projects. directly, supplying our products at robotics from the age of five. Starting at Soon our portfolio will feature below-market prices. In addition, this age, a child obtains the necessary products that will be associated with based on orders from above, we knowledge and learns how to work in a specific professions. We are actively conduct diagnostics of a region, take team. If such kids are made the centre interacting with employers and major into account key economic indicators, of attention, then when they finish corporations to determine the most staffing needs, and their specialization, school employers will have a clear idea popular professions and specializations and suggest ways to improve regional of who has which competencies and of the near future. This is why we are education systems to solve the region’s what kind and how they can be useful participating in the St. Petersburg urgent problems. The Novgorod Region in their companies. International Economic Forum, where is one of the latest examples. Located we will be able to discuss various between St. Petersburg and Moscow, Vladimir, the last question which options for cooperation to develop the region plans to develop tourism. I simply have to ask: recently you human capital for the country and for Accordingly, they not only need to announced that Prosveshcheniye is its economy with all stakeholders – better learn the history of their country preparing to hold an IPO. What are regional leaders and representatives of and their own region, read classical your plans? business and the education system. literature, and form communication A: Yes, we are preparing for an IPO skills, but also train staff at banks, and negotiating with banks. From their THE MOST IMPORTANT THING IS hotels, and public eateries. It turns standpoint, the company has excellent MOTIVATION out to be a huge cluster. But a child is prospects for a successful IPO. They Prosveshcheniye takes a case-by- motivated to study well because he like our strategy and the company’s case approach to developments and sees how he can apply his knowledge rate of the company, they are certain the publishing of its products. Your in the future. It is very important that that education is a good market, and partners include, for instance, the young people do not leave the regions. they understand our role on this Sirius educational centre. What was This is an important factor in regional market. I think the company is almost the reason for your cooperation? development. ready for the IPO. Perhaps, we won’t Sirius is a wonderful place to work place shares on the London market, with gifted children. As they say at the But what if there is no way to apply but on the Moscow stock exchange school, “botanists” start playing hockey, your skills in the regions? since the requirements of the Moscow while hockey players start teaching A: Yes, for now there is a problem of exchange are fully consistent with math. The most important thing is employment and salaries in the regions. international requirements. We are motivation in education. If there is People go where they can better fulfil closely following the latest examples motivation and children understand their needs and where wages are higher. of share placements by domestic where they will go after school, This is normal. To prevent this, regions companies. Foreign investors have also they will learn differently and work need to create their own clusters. been involved in these processes. This differently. In this sense, Sirius is a very One example is Yaroslavl, where the makes up optimistic. good example of a continuous system IT sector is well developed. Yaroslavl of education. specialists can serve the systems of Interview by Alena Sivkova ST. PETERSBURG INTERNATIONAL 61 ECONOMIC FORUM 2017
DIGITAL ECONOMY IS IT POSSIBLE TO SURVIVE IN THE 21ST CENTURY BY REMAINING DEPENDENT ON RAW MATERIALS?
IT HAS BEEN PROVED THAT USE OF DIGITAL TECHNOLOGY TODAY CONSTITUTES THE MAIN GROWTH POTENTIAL OF THE LEADING GLOBAL ECONOMIES. ACCORDING TO ACCENTURE STRATEGY, THIS TECHNOLOGY MAY CONTRIBUTE AN ADDITIONAL USD 1,360 BN TO THEIR AGGREGATE GDP BY 2020. IN CHINA, THIS ADDITION MAY MAKE USD 418 BN, IN THE US USD 365 BN, IN JAPAN USD 114 BN. IN RUSSIA, GDP GROWTH POTENTIAL BASED ON DIGITAL TECHNOLOGY DEVELOPMENT MAY ACHIEVE USD 60 BN CONTRIBUTED BY HITECH COMPANIES IMPLEMENTING DIGITAL SOLUTIONS IN THE ENERGY SECTOR, TRANSPORT, HEALTHCARE, AGRICULTURE, ETC.
he economic benefits (“catch up and outdo”), or in terms of of implementation of “substituting” foreign technologies with such technology in Russia domestic ones. It should be developed could be even higher, in the context of innovative technologies considering Russia’s with a good competitive position on the obvious competitive global market. Implementation of such advantage. We have strong educational technologies will provide the basis for the Ttraditions in maths and programming. digital economy ecosystem, for fulfilling We are global leaders in certain digital relevant economic and social tasks, for technologies; we have a well-developed new quality jobs. and globally competitive IT industry. The Industrial Internet of Things (IIT) Technologies capable of bringing is one of the high-potential areas. This is major economic benefits have been the language used for writing the history developed in Russia and are ready for of the Fourth Industrial Revolution. implementation. Suffice it to say that, Projects in this sphere constitute a in Skolkovo alone, we have over 250 strategic business line for Renova Group. companies working with big data, digital Key competencies are concentrated models and specialised methods for in some of our business units that are processing them. Equipment allowing big currently working to improve solutions VIKTOR data to be formed has been purchased allowing different devices to be and installed in various sectors of the integrated into the network and for a VEKSELBERG Russian economy. Now only some minor common language to be provided for additions to the infrastructure for data them. This will allow us to resolve the Chairman of the Board of Directors of collection and storage are needed, which key issue for the industry: integration Renova Group, President of Skolko- won’t require significant CAPEX. of the already available IIT systems of vo Innovation Centre (the “Skolkovo Implementation of Russia’s potential various industry sectors, healthcare, Fund”) in the sphere of digital economy insurance business, etc. into a unified requires, among other things, a special system. Industry 4.0 is no longer just a approach to be elaborated for catch-up theory, it is one of the most advanced development. Such an approach should technological and management practices not be viewed in competitive terms applied in Russia. For example, “Prana”, 62 S
GROWTH POTENTIAL
USD trn CAN ADD DI1360GITAL TECHNOLOGY TO THE COMBINED GDP OF THE LEADING ECONOMIES IN THE WORLD
365 418 114 60
RUSSIA JAPAN CHINA USA
the technology platform developed by rates and the level of the consequences the Russian company Rotech, is operating may be reduced by applying predictive with the future. This is the prognostic analysis methods for collecting and system allowing not only for the current processing data about power equipment status of turbines and mechanisms at operating modes, including changes Transport sector power stations to be determined but for in scheduled maintenance if abnormal their future status to be described on the loads and other non-standard operating Creation of a digital economy basis of mathematical algorithms and modes are identified. stipulates active IT implementation relevant adjustments made if the process Separate cloud-based storage of in the transport sector. Traffic safety deviates from the optimal parameters. data about operating modes should be improvement may be possible owing It is well known that the annual loss in established to identify the root causes of to development of accident prevention energy grids amounts to 9.4% and, in heat losses and failures. Common standards mechanisms, including automatic transfer networks, up to 18%. In 2015– for data collection and processing assessment of driving style and 2016, power stations with a generating should be developed and implemented, quality. And there is such a system capacity of over 25 MW and 110 KV as well as emergency alarm systems. available in Russia: currently, its pilot electricity grids suffered 4.5 thousand Predictive analysis algorithms will allow implementation is taking place at accidents, 20 of which had system-wide an early warning to be given about the Skolkovo Innovation Centre. It consequences. Accident incidence possible breakdowns and man-made controls violation of traffic rules and dangerous driving by public transport drivers and it also identifies hazardous sectors for planning urban infrastructure improvements. This automated assessment of drivers’ features will allow drivers with systemic traffic violations to be disqualified and thus road accidents with their participation to be prevented. Use of the ERA GLONASS system will permit 100% of the telematics data about passenger traffic in major cities and then across Russia to be collected and processed. Applications of this system for insurers will allow discounts to be obtained on third party liability insurance, thus providing an incentive for private drivers to install telematics equipment. ST. PETERSBURG INTERNATIONAL 63 ECONOMIC FORUM 2017
developing economies, meaning that, in certain sectors, we may turn from “Precision average performers into not ones that are trying to catch up, but into real farming” leaders. And there is no paradox in this. The world is changing so rapidly Digital technology has a great that the boundary between catch-up potential in agriculture and it is development and breakthroughs on already becoming visible in Russia. certain markets and areas might be “Precision farming” technology is disappearing. And there has already based on automated generation of been a period in our history when we recommendations for farmers permitting turned from catching up to leading – in intensified cultivation of land and space exploration, for example. ensuring up to 30% crop yield growth Even so, rapid growth of the with a simultaneous 20% cost reduction. digital economy in Russia may be Developing a cadaster-based, possible only if companies with regularly updated digital map of farm Russian capital focused on domestic lands is the basis for digitalization market start forming demand for of agriculture and a mandatory the technology and competencies precondition for precision farming. of the Internet age. Adaptability of Use of photo survey data supplied government institutions and their by Russian satellites and organization potential to become drivers of change of access to the requisite spectral band and supporters (not barriers) are data supplied by foreign satellites allows also especially relevant during the an agro-chemical database with specific digitalization age. Countries unwilling land plots to be developed. This will to lose the global competition result in real-time assessment of land are, therefore, striving to create a use efficiency, including forecasts for comfortable environment for hi- fertilizer application, crop yield and risk assessment for loans issued using government subsidies, etc.
RUSSIA TRADITIONALLY HAS VERY country is not yet among the leaders. If it continues this way, we will be STRONG SCHOOLS OF MATHS, losing competitiveness by the year and our chances of maintaining (let alone PHYSICS, CHEMISTRY improving) our current position on the industrial market will be very low. AND INFORMATION TECHNOLOGY Russia traditionally has very strong schools of maths, physics, chemistry and information technology. We know disasters. This will help prevent major tech companies and businesses. that there are professional investors in accidents, like the one at the Sayano- Countries with higher incomes (the advanced technology, including global Shushenskaya Dam in 2009. USA, UK, Netherlands, Singapore players, in Russia. The key task is to The story of the solar energy and Canada) are also creating the help them find one another. sector in Russia is an interesting R&D infrastructure required for new Our Skolkovo team has been doing example. Hevel Solaris, a subsidiary of knowledge generation and technology a lot to support the owners of new Renova and Rosnano, created a cluster development. knowledge (both in technology and in to manufacture high-performance Such a policy may be implemented business) striving to set up their own solar modules in Russia. This project not only in entire jurisdictions but businesses based on such knowledge. would be impossible without also in separate clusters created Such support includes a range of systemic support from government in a specific region of a country (or professional services, from assistance development institutes. In line in cross-border clusters made up in understanding the specifics of the with the localization requirements of territories of several countries). market situation in various sectors introduced in Russia, specialists at the Such clusters offer additional (“soft”) to providing direct contacts with Ioffe R&D Centre in St. Petersburg infrastructure: services cutting the potential customers and transaction developed a domestic solar costs and risks of hi-tech businesses, services. This is an important technology with one of the highest regional programmes for sourcing and element of the digital economy soft efficiency ratios in the world – up to hiring the best professionals. infrastructure in our country and I am 24%. The acquired experience may be Of course, all of this is relevant for sure it will bring noticeable results scaled up both in Russia and in other Russia, but let us be frank: today our very soon. ECONOMY
ALEXANDER 66 SHOKHIN President of the Russian Union of Industrialists and Entrepreneurs WE STILL NEED TO SUBSTANTIALLY REFORM OVERSIGHT ACTIVITIES The quality of the business environment and degree of the protection of entrepreneurs’ rights continue to define the state of the business climate in Russia
KIRILL 70 DMITRIEV CEO of the Russian Direct Investment Fund SOVEREIGN INVESTMENT FUNDS AS A DRIVER OF ECONOMIC GROWTH AROUND THE WORLD Interest in Russia among global investors is constantly increase and it has nothing to do with energy prices ECONOMY
GARY 82 BLUMENTHAL President of World Perspectives, Inc., USA IMPROVING AGRIBUSINESS EFFICIENCY IS QUITE SIMPLE The objective of “growing more food” is being solved using modern technologies, however the result may prove to be discouraging
ANATOLY 74 CHUBAIS СEO of RUSNANO INNOVATIVE SECTORS ARE WHERE THE MOST IMPORTANT CHANGES ARE TAKING PLACE The development of high-tech industry is important not only for “winning the global race”. Often such industries change the face of the economy as a whole 66 E
THE QUALITY OF THE REGULATORY ENVIRONMENT AND THE REGULATORY AND SUPERVISORY ACTIVITY: BUSINESS COMMUNITY ASSESSMENT THE QUALITY OF THE REGULATORY ENVIRONMENT AND THE LEVEL OF PROTECTION OF THE RIGHTS ENTREPRENEURS ENJOY LARGELY DETERMINE THE OVERALL STATE OF THE BUSINESS CLIMATE IN RUSSIA.
he annual survey of to 35.7%. In 2016, organizations the business climate encountered illegal actions by the the Russian Union authorities with greater frequency of Industrialists and than a decade ago. Entrepreneurs (RUIE) In case of a conflict, companies has conducted since believe that filing a court complaint 2007 demonstrated that in 2016, is the most effective way of Tthe rights of 42.9% of companies protecting their rights: 82.5% of had their rights violated by the respondents marked that option. In authorities; for 7.2% of them, it was 2007, their number was a little lower, a regular occurrence; and for 35.7%, 78.2%. those were isolated incidences. The next most popular answer in Compared to 2007, the number 2016 was “turning to federal executive of companies whose experience authorities”; it was marked by 36.3% of violation of their rights by of respondents. The popularity of this the authorities was confined to answer doubled compared to 2007. isolated incidents grew from 25.9% At the same time, the effectiveness ALEXANDR SHOHIN
President of the Russian Union THE NEXT MOST POPULAR of Industrialists and Entrepreneurs ANSWER IN 2016 WAS “TURNING TO FEDERAL EXECUTIVE AUTHORITIES”; IT WAS MARKED BY 36.3% OF RESPONDENTS ST. PETERSBURG INTERNATIONAL 67 ECONOMIC FORUM 2017
TODAY, A COMPANY CAN MOST EFFECTIVELY PROTECT ITS RIGHTS AND litigations. In 2009, when the question RESOLVE CONFLICTS BY TURNING TO… % about court practices was asked for the first time, their share was 35.9%.
2016 2011 2007 74.5% were involved a litigation with a contraparty; compared to the data of five years ago, their number Courts 82.5 grew by 23.5%, and it grew by 32.8% 81.0 compared to 2009. In 2016, 33.1% 78.2 of organizations were involved in a litigation with governmental Federal executive authorities 36.3 32.0 authorities. 18.0 The procedure for an out-of- court consideration of disputes with Regional executive authorities/ 28.8 the tax authorities helped 47.1% of municipalities 27.0 respondents who had recourse to 34.9 it to save both time and money. For 42.9%, the situation did not greatly Acting independently 28.1 39.0 change. One-fifth of the companies 21.0 experienced a spike in time consumption. The number of disputes Business associations 20.6 won grew for 7.1% of organizations. 23.0 2.9%, on the contrary, responded 7.7 that the number of disputes won decreased. Russian arbitration courts, 18.8 mediation agencies 8.0 33.3% of respondents believe that their chances to win a litigation against other regulatory and Mass media 14.4 supervisory authorities (RSA) are 20.0 high rather than low. In 2016, 8.2% 20.5 of companies assessed their chances as high. 14.5% are convinced that There are no effective ways 8.8 15.0 winning a litigation against other RSA 4.4 is impossible. On the whole, it is precisely the This is a three-answer question, the sum total of figures does not yield 100%. work of regulatory and supervisory
of turning to regional administrations or municipalities for the protection of one’s rights was in lesser demand: it Chances to win lost 6.1% over the last decade. 28.1% marked the option “the most effective If the opposing party is another entrepreneur, a company’s chances to win way to protect one’s rights is to act the case are high, the respondents believe. 31% of respondents chose the independently.” “chances are high” option, and 62.4% believe their chances to be high rather One fifth of the respondents than low. Compared to 2007, the number of responses “chances are high believe that the most effective rather than low” grew from 54.1% to 62.4% due to the drop in those choosing way is turning to public business “chances are rather low than high” option. associations and similar bodies. Over The chances of winning in court against regional or municipal authorities are the last decade, this answer grew in lower than the chances of winning a case against another company: 40.9% of popularity over 2.5 times. A decade companies assessed their chances as low rather than high, and 12% believe ago, this option was marked by 7.7% of they virtually do not stand a chance. Compared to 2007, the companies are respondents. less pessimistic: the number of the “virtually no chance” responses is twice as 18.8% of companies trust Russian low, and the “chances are rather low than high” answer lost 8.9%. arbitration courts and mediation 15.5% of respondents believe that a tax inspectorate will be the agencies. Their number grew by 10% unquestionable winner in a litigation. 33.8% assessed their chances as low since 2011. rather than high, and the greatest number, 42% opted for “chances are rather Businesses are becoming more high than low” answer. Over the last five years, the situation has improved: and more actively involved in the number of respondents saying “chances are high rather than low” grew litigation; in 2016, only 14.5% of by 12.8%. As regards a mandatory out-of-court consideration of tax disputes, companies were not involved in 49.3% of organizations had recourse to the procedure in 2016. 68 E
REASONS FOR SURPRISE INSPECTIONS OVER THE LAST TWO YEARS, % public. Compared to 2011, the number of respondents choosing this answer almost doubled, but even back then, the “complaints from employees or 2016 2011 the public” option held the first place among the possible reasons for a surprise inspection. Complaints from employees 44.6 Over a third of respondents and the public 20.0 indicated that surprise inspections
Information from another RSA 36.1 by regulatory and supervisory 15.0 authorities were conducted due to information about violations Information about an accident 30.1 received from other regulatory and 14.0 supervisory authorities. Only 15% chose that answer in 2011. Mistakes and contradictions in 18.1 paperwork 10.0 14.5% of businesspersons answered that surprise inspections A “hit job” ordered by 14.5 were a “hit job” ordered by competitors 3.0 competitors. Only 3% chose that answer five years ago. Complaints A “hit job” ordered by the local 10.8 from other companies were reasons authorities 8.0 for surprise inspections in 9.6% of
Complaints from other 9.6 companies; this number has tripled companies 3.0 over five years. The median duration of an A company’s history of 7.2 inspection in 2016 (from the start violations 3.0 to the completion of the inspection certificate) is 20 days. Inspecting complaince with 3.6 a complaince order In 2016, the company named requesting documents in excess A “hit job” ordered by federal 3.6 of legal regulations as the main authorities 6.0 drawback in the work of regulatory and supervisory authorities. This option was chosen by 43.6% of This is a multiple-answer question, the sum total of figures does not yield 100%. respondents. In 2011, it was chosen by 53.2%, and by 30% in 2007. A third of the respondents noted inspectors’ insufficient competency. In 2011, this answer was also the THE DURATION OF A COMPANY INSPECTION FROM THE START OF THE second most popular in the list of INSPECTION TO THE COMPLETION OF THE INSPECTION CERTIFICATE, % drawbacks in the work of regulatory and supervisory authorities with 45.2%. In 2007, its popularity was 2011 2016 lower with 17.4%. 30.9% of companies experienced 25.4 24.6 24.0 no problems during inspections. Ten 21.0 21.2 years ago, 25.6% of organizations 17.0 17.0 gave that answer, and 27% chose it 14.0 12.7 five years ago. 9.3 7.0 6.8 Following these first three variants after a significant gap is “direct and indirect hints that the up to 9 days 10–19 days 20–29 days 30–39 days 40–90 days over 90 days services must be paid for” answer. 12.1% encountered such incidents. The significance of this answer is authorities which perform regular conducted on a large scale: in 2016, gradually dropping. inspections of companies to verify 93.6% of the companies surveyed In 2016, another question compliance with regulations, underwent scheduled inspections, and was added to the questionnaire standards, certificates, licenses, and 54.2% underwent surprise inspections. concerning the problems with patents, that largely determines the In 2016, 44.6% of companies said mandatory requirements regulatory administrative burden businesses that surprise inspections were due to and supervisory authorities set for experience. The inspections are complaints from employees or the companies. ST. PETERSBURG INTERNATIONAL 69 ECONOMIC FORUM 2017
Drawback in the work of regulatory and supervisory authorities when conducting 51.7% of respondents stated that inspections in 2007–2016, % the main problem was setting new, unexpected mandatory requirements in the process of inspection. 2016 2011 2007 A little over a third of companies chose the option “contradictions Requesting documents in between mandatory requirements excess of legal requirements 43.6 set by various executive authorities.” 53.2 30.2% of organizations named 30 outdated mandatory requirements that are at odds with today’s Inspectors’ insufficient 32.2 level of scientific and technical competency 45.2 development as a problem for 17.4 businesses. When interacting with regulatory
No difficulties during 30.9 and supervisory authorities, inspections 26.9 29.3% of enterprises are impeded 25.6 by duplication of mandatory requirements.
Direct or indirect hints that the 22.4% of respondents 12.1 services must be paid for encountered mandatory 16.7 requirements with no connections 18.1 to safety and security; requirements are set for the quality of products, Inspections ordered 11.4 manufacturing processes, etc. as a “hit job” 12.7 Much has been done to change 17.4 the situation. Intensive work is being conducted as part of “Reforming Inspections conducted with 10.7 regulatory and supervisory activity” procedural violations 15.1 principal area of the strategic 8.7 development of the Russian Federation. Much has been done to introduce The object of the inspection 9.4 differs from the one indicated in a risk-oriented approach into the 17.5 the mandate regulatory and supervisory activity. 4.2 In April, draft regulatory instruments should be ready Inspections conducted by 4.7 unauthorized persons introducing the rule that establishes 8.7 the “one in – two out” principle 2.6 when a new mandatory requirement can be introduced on condition This was a multiple-answer question, the sum total of figures does not yield 100%. two mandatory requirements are removed. In summer, suggestions will be submitted on the procedure and methodology for codifying The business waits for the federal law regulatory instruments that form the legal basis of the regulatory and A separate area of activity is constituted by work done on introducing mechanisms supervisory activity, the procedure for limiting the inspection of regulated entities’ compliance with requirements for establishing codifying authorities, that are not included in the lists compiled by federal authorities in accordance and for financing the appropriate with paragraph 1 of part 2 of article 82 of Federal Law “On the protection of work. legal entities’ and individual entrepreneurs’ rights in the course of state control On the whole, there is still much (supervision) and municipal control”; work is also being done on revising said of work to be done to reform the lists with the aim of making them more convenient for use, including in the part regulatory, supervisory and licensing pertaining to the identification of a mandatory requirement and the circle of activity, and the Russian Union of persons it covers. Industrialists and Entrepreneurs is The business waits for the federal law “On the governmental regulation actively involved in this work. This (supervision) and municipal regulation in the Russian Federation” to be adopted. will allow for the excessive burden on It is necessary to amend the current legislation so that it would enhance the businesses to be reduced and for the accountability of officials from regulatory and supervisory authorities for violations Russian jurisdiction to be made more these authorities commit. attractive. 70 E
SOVEREIGN WEALTH FUNDS AS A DRIVER OF GLOBAL ECONOMIC GROWTH
THE ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM (SPIEF), WHICH IS OPENING ITS DOORS ONCE AGAIN TO THOUSANDS OF PARTICIPANTS FROM DOZENS OF COUNTRIES AROUND THE WORLD, IS A LANDMARK PLATFORM FOR GLOBAL BUSINESS. EVERY YEAR, SPIEF IS THE VENUE FOR THE LARGEST MEETING OF HEADS OF SOVEREIGN WEALTH AND INVESTMENT FUNDS WHICH CUMULATIVELY CONTROL MORE THAN $10 TRILLION IN ASSETS. AS ALWAYS, THIS YEAR’S MEETING WILL BE ORGANIZED BY RDIF AND WILL OFFER THE MOST RESPECTED INVESTORS IN THE WORLD A CHANCE TO DISCUSS TOPICAL ISSUES AND ASSESS THE CASE FOR INVESTING IN RUSSIA, BOTH AMONG THEMSELVES AND WITH THE PRESIDENT OF THE RUSSIAN FEDERATION VLADIMIR PUTIN. ST. PETERSBURG INTERNATIONAL 71 ECONOMIC FORUM 2017
his year’s SPIEF seemingly unrelated trends. In such a discussion promises to be situation, the key theme of SPIEF 2017 – particularly interesting, “Achieving a New Balance in the Global as several factors have Economic Arena” – is more relevant converged. These are: than ever before. Russia can play a role the growing role of in ensuring this balance, and it can do Russia on the global stage; China’s so largely thanks to its transparency and Tambitious plans; the political course cooperation with the world’s leading of the new U.S. administration; Brexit investors. and the political developments that have taken place in Europe in its wake; RUSSIA AS AN INVESTMENT IDEA and the unprecedented actions of Interest in Russia grew significantly last oil-producing countries to achieve year. There are a number of reasons for balance on the oil markets. All of this is this: the economy withstood sanctions, taking place against the background of as well as falling oil prices and the KIRILL global economic instability, the threat devaluation of the rouble. Eventually, of international terrorism, and the need both the rouble and oil prices stabilized, DMITRIEV to address environmental issues and which was also an important factor for climate change. We are witnessing a investors. The country’s leadership, CEO of the Russian Direct new reality, characterized by turbulence, along with the financial and economic Investment Fund (RDIF) multi-polarity and a combination of ministries of the Government and the Central Bank, played a decisive role. The economy is gradually gaining momentum, and the low level of public debt continues to help Russia stand out from many other countries. The country’s growing investment potential has not gone unnoticed either. A record number of leaders of the largest sovereign wealth and investment funds in the world have confirmed their participation in the annual meeting with the President of the Russian Federation, co-organized by RDIF. This year’s meeting will be attended by the heads of funds and companies from North America, Europe, the Middle East, India, China and Japan, among many others, with a combined capital under management of more than $10 trillion. ƴ Judging by experience, as well as the deals that have been concluded over the past few years at SPIEF, we can say that investors are becoming increasingly interested in agriculture, healthcare and infrastructure. Several key areas can therefore be identified as investment ideas within Russia: ƴ Non-core assets of state monopolies and major companies that can be sold or leased; ƴ Regional development projects; ƴ Agriculture, which has received significant boost due to state support and import substitution programmes, as well as the devaluation of the rouble; Meeting between Russian President Vladimir Putin and representatives of the ƴ Infrastructure, including air and international investment community in 2016 sea ports and telecommunications. At the same time, great prospects 72 E
have opened up for placements on the stock market in early 2017. The IPO of “Detsky Mir,” a chain of department stores selling products THE ROLE OF GLOBAL for children, opened the door for several other Russian companies SOVEREIGN WEALTH FUNDS to release shares into the market, causing much excitement among HAS GROWN SIGNIFICANTLY investors from the United States, Europe and Asia. Thanks to its SINCE THE FINANCIAL CRISIS participation in the IPO, the Russia-China Investment Fund OF 20082009 (jointly established by the Russian Direct Investment Fund and China ST. PETERSBURG INTERNATIONAL !"#$%& 2017 73 ECONOMIC FORUM 2017
Investment Corporation), which invested into the company before the public offering took place, was able to record an annual profit of over 90% in the dollar equivalent. The “Detsky Mir” IPO was soon followed by those of PhosAgro (a fertiliser producer) and other flagship Russian companies. Investors are actively interested in purchasing shares in these companies. Such investors include the world’s leading sovereign wealth funds (RDIF partners), which has not been the case in the past.
SOVEREIGN WEALTH FUNDS AS A which are looking for, and investing in, DRIVER OF GROWTH the most promising projects around The role of global sovereign wealth the world. The third trend is the funds has grown significantly since amalgamation or reorganization of the financial crisis of 2008–2009. funds in individual countries, such as Against the background of weak the merger between Mubadala and budgetary systems in many countries, IPIC in the United Arab Emirates, it is sovereign wealth funds—which which now have $125 billion under have accumulated trillions of dollars management. under management—that are capable We will see these funds becoming of becoming the drivers of growth more and more active over the next for both the national and the global few years, both globally and, jointly economies. A number of trends can with RDIF, in Russia. This cooperation be observed here. The first is the with RDIF will include activity in creation of country partnerships other countries. Sovereign wealth between sovereign wealth funds and funds are increasing the amounts that the investment funds of individual they are investing, allocating money to countries, as well as the use of the developing markets. Their investment co-investment model, according strategies are becoming more to which money is invested by the dynamic and focused on developing a funds on a joint basis. With the global presence. In time, investments establishment of RDIF and the first will start to play a decisive role in investment platforms based on it, resolving interstate cooperation Russia has been at the forefront issues, and their approach will be of this process, which has become more pragmatic in nature, taking the especially popular in recent years. national and business interests of all The second trend is the continued parties into account. diversification of the geography of SPIEF participants and guests will investments as fund managers seek to be able to hear about these and other optimise their portfolios in a situation trends in the work of leading sovereign where assets around the world are wealth funds at the panel discussion: depreciating in value and there are “The Wealth of Nations: SWFs and Their simply not enough quality projects to Impact on Economic Growth,” which will invest in. Examples include the UAE’s be held under the auspices of RDIF and Mubadala Investment Company and its international partners as part of the Saudi Arabia’s Public Investment Fund, SPIEF programme. 74 ECONOMY IT IS INNOVATIVE INDUSTRIES THAT ARE EXPERIENCING THE MOST IMPORTANT CHANGES HEAD OF RUSNANO GROUP ON THE INNOVATIVE ECONOMY, ALTERNATIVE ENERGY AND ROBOTS THAT REPLACE PEOPLE. ST. PETERSBURG INTERNATIONAL 75 ECONOMIC FORUM 2017
countries that have succeeded in In fact, in cooperation with setting up this sector demonstrates Viktor Vekselberg’s RENOVA Group, that two elements are required for RUSNANO had embarked on this success. The first is a system of state somewhat earlier, well before all support measures and incentives. the state support mechanisms The second is a sophisticated were set up. We took a long run industrial complex where private and jumped straight over the line. investment plays a decisive role. This Curiously enough, the landing was is obviously a simplified picture, as successful. Now we not only make there are also other components, yet world-class solar panels at the these two are the key ones. Hevel plant in Chuvashia but also In Russia today, renewable energy build solar power stations. Private accounts for less than one percent business is joining us in this sector, of the overall energy balance. Even building plants to manufacture so, this is where the main changes solar panels. Consequently, it may ANATOLY are taking place. A key condition be acknowledged that the Russian has been created in the country national solar power startup is a CHUBAIS for development of this sector: a success. This might be not all that system of state support measures visible so far: solar generation has just CEO of RUSNANO for renewable energy, for its basic exceeded the 100 mW threshold, while types, including solar, wind and the entire installed capacity is just landfill energy. The foundations over 240,000 mW. Yet this is already ALTERNATIVE ENERGY FOR THE were laid back in 2007, when we a conveyor that cannot be stopped. ECONOMY drafted the second edition of the Wind stations with an overall capacity It is vital for Russia to create an electric power law. We had lots of of 3,600 mW are expected to be built innovative economy. Major efforts discussions and disputes, including in the country by 2024. are required to accomplish this, at with many colleagues who now work As for wind energy, a support the government, public company for RUSNANO. Two paths were system is already in place for this and private business levels. Take, considered. The first was to use the as well. Now we have to set up for example, the alternative energy state budget to stimulate development manufacture of equipment and sector. The experience of all of the renewables industry. The other components and start building wind was to use the wholesale energy farms. market, which we were setting up Even so, this is not easy path. at that time. We chose the second In developing a new sector, option and it is now clear that if we RUSNANO often encounters a had taken these costs from the budget, lack of understanding. We are often Russia would have remained without asked why we are making everything renewable energy forever. ourselves instead of simply importing Yet that was only the beginning. it. But let’s imagine what it is like to Over the last four to five years, import, for instance, wind turbines. tremendous work has been done by Each blade is 65 metres long and ministries and the government: a set cannot be disassembled. A wind of most complex decrees has been turbine is a most high-end product developed that do not just make of huge size made of state-of-the-art construction of such power stations nanocomposites. Essentially, there is economically viable but also create a simple alternative: 1) make Russia an the conditions for construction of importer of this sort of product or 2) plants to manufacture equipment for develop a new industry in the country such stations in Russia. Only after with overall estimated investments all those documents were finalized of RUB 440 bn through 2024, and and signed did it become possible to the second is a much more promising move to building power stations and option. That is why the RUSNANO localizing production. Board of Directors recently endorsed a major project to build dozens of wind power stations in Russia with investments totalling approximately RUB 100 bn, of which RUB 30 bn will be furnished by us together with 400 Fortum Concern. The Ulyanovsk RUB bln Russia needs in investment Region will be our pilot area, with the to create a new industry first Russian 35 mW wind station to be commissioned there in late 2017. 76 ECONOMY
PARADOXES OF RUSSIAN CAPITALISM In the last few years, if not decades, there have been continuous RUSSIA IS NOT IN A VACUUM disputes in Russia as to what is more efficient – private business or public THERE IS THE REST OF THE WORLD, private partnership. Private business is time and again blamed for not AND IT IS GROWING being willing to invest in R&D. Yet the conditions in the country are often ignored in these disputes. The an idea that comes down to the the right thing. But when it comes to Russian private sector behaves just following: “I have nothing that an aluminum plant of the same Mr. as it is supposed to under the given is mine; all this has been given Deripaska, how is it that he uses our circumstances. The fundamental to us for a while to manage”. He subsoil for his own benefit? This is a reason is the historical weakness came under furious attack for this historical specificity of our mentality, of two basic institutions of the statement but, unfortunately, it which is also reflected in the state market economy. One of them is is true. The very institution of policy. If we look at the statistics, private ownership and the other is private ownership in this country the share of private ownership in the competition. is faulty. It can be argued that it is Russian GDP has dropped by almost Private ownership in Russia is still young, recently set up, but 25 50% over the last fifteen years. not really private and not exactly years is actually enough time. Yet it This fundamentally undermines ownership. As Mikhail Zhvanetsky is perceived, if not with hostility, at the appetite for innovation. said, ‘what we call sour cream is not, least with scepticism. Speaking of my Innovations are necessary for cutting in fact, sour cream’. Businessman apartment that I personally bought, costs and reaping more profit. Yet Oleg Deripaska also once expressed then private ownership is obviously all this property I own is not really mine and the profit is not entirely mine either, so why would I spend money? The situation surrounding competition is somewhat similar. In the meantime, such factors can have a critical effect on the state of our economy. Russia is not in a vacuum – there is the rest of the world, and it is growing. The average annual GPD increment is 3–3.5% globally. The forecast for Russia is 1–1.5% for the next 3–4 years, or 2% with some luck. What does this mean? In the first place, it means that Russia’s power in the world is going to diminish. Second, Russia will be falling increasingly behind the developed countries in terms of per capita GDP (that is, living standards!). And the third consequence is the most painful. It affects the economic sectors that are centrally financed out of the state budget, from defence and to education. Poor growth rates of the Russian GDP mean inevitable strategic weakening of the Russian army and deteriorating education compared to other countries. These three consequences together suffice for concluding that there is nothing more important for the country than bringing Russian growth rates up to average global levels. In fact, politicians, experts and our President are all agreed on this. But it is impossible to make ST. PETERSBURG INTERNATIONAL 77 ECONOMIC FORUM 2017
such a leap – from 1.5 to 4% growth – Social politics without fundamental structural reforms. RUSNANO tools tools tools tools tool BREAKTHROUGH TOPOLOGY Yet RUSNANO performs social functions as well. For example, the Group is RUSNANO is celebrating its tenth participating in building nuclear medical centres all across the country for anniversary in 2017, so there is diagnosing early stage cancer. Oncological survivability is 80% in Great Britain, 75% additional interest in the Group’s in Germany and 40% in Russia. And some more figures: survivability is 82% if the activities. We are often asked if cancer is detected at the first stage and 12% if it is detected at the fourth stage. any new breakthrough technology There are multiple thousands of human lives behind these figures. Our project has emerged in our portfolio over creates conditions for radical reducing of cancer-attributed mortality. This is really this period. The answer is yes. For life-saving. instance, in 2013, we took part in setting up OCSiAl, a company that manufactures a product called a single-shell carbon nanotube in Novosibirsk. This is an absolutely diameter of a human hair). They from the World Top 100 and tests unique project, not just for the are characterized by high strength, of our products are now in progress. country but for the entire world. I elasticity and electric conductivity. The process may end in a week or, am absolutely positive that there is Nanotubes are used as additives alternatively, we may find out in nothing like it in the world so far. to other materials to improve their three months’ time that additional Carbon nanotubes are rolled properties. tests are necessary. Nevertheless, graphene sheets 1 nanometre Active negotiations with 75 we have already made some sales, in diameter (1/50,000th of the major technological companies although I can’t mention any names 78 ECONOMY
in my opinion, is larger in scope and unfortunately growing more dramatically (for so far scientifically ROBOTS ARE AN EXTREMELY unaccountable reasons). Let me touch upon just one element of this: POPULAR TOPIC. ARE THEY GOING autism. Figures from trustworthy sources show that one of every of TO KILL THE LABOUR MARKET? 68 newborns suffers from autism. And these figures are more or less the same for California and Ryazan and Africa. What can modern healthcare and the social security system offer such people? As a general rule, it offers late diagnosis, at around 7–8 years of age, when the child is already formed, and then they usually diagnose schizophrenia and put the person in a psychoneurological dispensary. It is hard to imagine anything more terrible. Meanwhile, it is well known that, although autism is incurable, still, given appropriate support, a child can become capable of inclusive education – not only in secondary school but also in higher education, with subsequent employment. Yet such people usually need special housing, where there is a tutor to as we have signed confidentiality other industries disappearing. But explain everything to them and look agreements with virtually all the usually this is accompanied by new after them, for instance, to make sure customers. Sometimes, we are not sectors appearing that are related they don’t turn on the gas. The system even sure ourselves what product or unrelated to these novelties. for supporting such people, given that the customer is going to add our Robotics also brings an entire one in every 68 children is, in fact, nanotubes to as they might not share innovative cycle that is yet to be born with autism, has to be huge. Just their developments with us. built. So far, robotics are exotic. Yes, imagine the number of workplaces BostonDynamics impresses us with this can create. And I am not talking DON’T BE AFRAID OF ROBOTS! its miraculous four-legged horses: here about highly-professional The way technological progress is that’s nice, but there is, so far, no psychologists doing Aba therapy. I’m going to change human life in the large-scale industry behind this and talking about ordinary, not highly coming decades is being actively BostonDynamics remains a money- qualified social workers who are discussed lately. Robots are an loser, which means there is no real simply able to communicate with extremely popular topic. Are they demand for its product as yet. Even people and help them. Nobody has going to kill the labour market? Many so, the development of this industry counted how many workplaces will economists and futurologists today will inevitably lead create a large be required in this sphere; nobody argue that robotisation will get rid of number of workplaces – and this is has the slightest idea. Now, those 40% workplaces and people will be argument A. who are crying about catastrophic left without jobs. I can’t say I have Argument B is that, in my unemployment threatening us analysed this in great detail but I opinion, we fail to see main because of robotization most likely don’t think this is logical. occupations that will unfailingly just fail to see this. For in no way can There is a classic example emerge in the very near future. For these workers be replaced by robots. from a Soviet film called Moscow instance, there is the vast topic This job can’t be done without a Doesn’t Believe in Tears when of physical disability, which we human soul. That is why I don’t really someone says that, in a few decades, have finally started to understand believe all these forecasts predicting there would be nothing left – no and discuss only recently: from a mass unemployment. theatre, no cinema, no books – barrier-free environment to letting only television. The robotization a Russian disabled singer perform at Drafted with the consent of forecasts are more or less the Eurovision. RUSNANO based on an interview same. Emergence of any large-scale Putting this topic aside, there is with Anatoly Chubais by The new sector always leads to some the subject of metal disability, which, Republic П 2017 80 E
MAXIM KASHIRIN’S WINE STRATEGY
IN RECENT YEARS, THE NAME OF THE COMPANY SIMPLE HAS BECOME A SYNONYM OF QUALITY FOR WINE LOVERS IN RUSSIA. BELOW, THE COMPANY’S FOUNDER AND GENERAL DIRECTOR, VICEPRESIDENT OF ‘OPORA RUSSIA’, MAXIM KASHIRIN SPEAKS ABOUT THE COMPANY’S STRATEGY, NEW VISTAS AND ABOUT WHY WINE BUSINESSPEOPLE NEED VODKA.
he authorities and If people switch from hard liquor to business have long wine, it would improve the people’s argued about granting health and raise the cultural level. MAXIM wine a distinct status And health, of course, is not only a on the alcohol market. social but also an economic category. KASHIRIN Government support Yet we have to start our rise to a bright for Russian vine growing and wine future from a low base. General Director, Simple Group Tmaking increased fivefold after wine Russia today has 85,000 hectares making was at long last brought of working vineyards (compared with under the jurisdiction of the Ministry 115,000 in the French Bordeaux region Maxim Kashirin holds of Agriculture in August 2015. alone). By 2025, the Agriculture the Order of Merit of Although imported wines, which Ministry expects to double the area the Italian Republic, the is the main business of the Simple under vineyards but that is a drop in Na-tional Order of Merit Group, received no new preferences, the ocean considering the growing of France in the field the company was pleased that the demand. Especially because Russian of agriculture and has problems of the wine industry had consumers have realized that what won many international come to the government’s attention. It makes wine interesting is its national awards. is not only about import-substitution. diversity. Many are used to the high ST. PETERSBURG INTERNATIONAL 81 ECONOMIC FORUM 2017
YOU HAVE TO REMEMBER THAT CULT WINE MAKERS OFTEN PRODUCE ON A VERY SMALL SCALE AND THEY ARE VERY CHOOSY IN PICKING IMPORTERS AND COUNTRIES TO WHICH TO SELL A quality wines from classical wine- making regions in Europe and on FEW CRATES OF THEIR PRECIOUS other continents. We started our business in 1994 CUVÉE. SO ONE MIGHT SAY THAT by supplying wines from several wineries in Italy. Now Simple’s RUSSIAN CONNOISSEURS ARE portfolio features several thousand wines from all over the world, a wide LUCKY: THERE ARE FEW PLACES IN range of hard liquors, mineral water and natural juices, accessories and THE WORLD WHERE YOU CAN FIND glasses. The Group today includes the Simple Wine News publishing ALL THE BEST STUFF AT ONCE house, Enotria Wine School, SimpleWine room and Grand Cru and SimpleWine Bars. We employ The range of our services includes We recently launched our own more than a thousand people. everything connected with wine: wine production in Georgia and Traditionally, we invest generously from renting out glasses for big we have other interesting projects in promoting wine-drinking culture events to building wine cellars, about which it is too early to speak in Russia. from buying Bordeaux en primeur to because we are thinking in terms of In many countries, companies maintaining wine collections abroad. decades. Yet the first thing we put with a portfolio of high-end wines Wine consumption in Russia is on the market was not wine. Simple’s for connoisseurs are unable to still fairly low (7–8 litres per person portfolio never had its own strong compete with big alcohol holdings per annum compared to 22 litres alcohol brand but, if we think of selling cheap popular brands. The in the UK and about 40 litres in selling hard liquor, it has to be vodka, Russian market is different. Simple France), but the tastes and interests our national heritage. We unveiled is the biggest importer of wine in of the people who can afford Onegin vodka in October 2016. It value terms and, at the same time, quality beverages are in line with took us some time to prepare for has Russia’s best collection of top world trends. For example, more launching this product; we thought wines and rare wines. You have to and more companies use wine as an out the concept very thoroughly. remember that cult wine makers element in corporate culture. If you We considered every minute detail often produce on a very small scale assemble your staff at a symphony and did out best to stress the quality and they are very choosy in picking music concert, this sounds great but and promote a new aesthetic of importers and countries to which to not everyone would be genuinely consuming vodka. I was very anxious sell a few crates of their precious happy. A wine-tasting session with to see how the brand and the very cuvée. So one might say that Russian an effective choice of specimens idea of vodka from Simple would go connoisseurs are lucky: there are conducted by a top-class sommelier down with consumers. The reaction few places in the world where you is a safe bet. Wine is the best gift, was very favourable, sometimes can find all the best stuff at once. like a book was in former days. ecstatic, which made me very happy. We are also gradually enlarging our portfolio of top-range strong liquor in the most popular categories. Selling wine via the Internet is World famous a growing industry and we hope it will soon be legalized in Russia. But The portfolio of the Simple Group includes more than 450 we should not forget the individual suppliers from 42 countries, such as Louis Roederer, Lanson, consulting service. Simple pays Sassicaia, Frescobaldi, Joseph Drouhin, Bouchard Père & particular attention to working Fils, Armand Rousseau, Vega Sicilia, Penfolds, Hine, Frapin, with private and corporate clients. Symington, Nikka and Dalmore.
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THE FUTURE OF AGRICULTURE AGRICULTURE IS MORE THAN 10,000 YEARS OLD BUT IT HAS BEEN CHANGING MOST RAPIDLY SINCE THE GREEN REVOLUTION IN THE LAST CENTURY. THE CHALLENGE CITED AT THE END OF THE LAST DECADE WAS FINDING A WAY TO PRODUCE 70 PERCENT MORE FOOD IN ORDER TO FEED THE PROJECTED 9 BILLION PEOPLE IN 2050.
GARY R. BLUMENTHAL President of World Perspectives, Inc., USA ST. PETERSBURG INTERNATIONAL 83 ECONOMIC FORUM 2017
s we approach the latter part of this decade the agricultural sector is burdened with large stocks-to-use ratios and low prices. Russia alone Ahas become a serious supplier of food to the world, having increased wheat production over the past decade by nearly 50 percent and more than doubling her exports. Also notable is the way that technology and consumer demand are rapidly changing the sector.
Science and nutrition Scientific knowledge about food, nutrition, health and the environment advances persistently, but still has far to go. Humans consume over 2,000 different plants but only a small fraction of their 25,000 bioactive constituents (phytochemicals, zoochemicals, bacterochemicals, etc.) have been studied. Only a quarter of the 4,000 flavonoids (secondary metabolites) have been classed. There are four categories of essential nutrients plus some conditionally essential nutrients but much of what is categorized as non-essential nutrients are simply lacking in sufficient study. When improved knowledge about food eventually gets paired with the 20,000 protein coded genes in the human body, diets will become highly individualized based on genomics. 84 E
In addition to the positive influence of broader economic growth, countries like Brazil and Ukraine that previously taxed their agricultural sectors are now instead subsidizing them. Indeed, subsidies to agriculture have increased in many places whether they are large countries like China and India, or historically poor like Indonesia. Multilateral institutions and donor organizations have similarly boosted their support to agriculture. Much of the growth in future food demand will be in Africa, which already imports 40 million tons of wheat each year. Current investments are expected to greatly boost Sub- Saharan food production, which CIMMYT estimates produces wheat at just 10 percent of its potential. is increasing for value added Concurrent with the trend toward It is more difficult to fix the food products. The result of this clean label foods (less processed, poor governance and corruption dynamic is that the number of more natural) are advances in that contributes to food insecurity people actually farming is declining food science that will deliver in many parts of the world, but over time while the number of essential nutrients like protein in boosting agricultural production workers in the downstream agrifood sustainable ways. is relatively easy. Farmers with economy continues to grow. Protein is particularly important capital increase their application Value is also being added at for physical development in young of technology while employing the production level with corn that people and some studies show that economies of scale to ensure per resists aflatoxin, apples that do not dietary consumption of meat results unit efficiency. Producing basic turn brown, and potatoes that resist in better cognitive outcome in commodities is becoming more bruising while producing fewer children. Still, it is protein that is the efficient at the same time demand carcinogenic acrylamides when fried. building block and it may be obtained ST. PETERSBURG INTERNATIONAL 85 ECONOMIC FORUM 2017
agriculture as the industry most ripe for economic disruption because it was the least digitized out of the 22 sectors studied. However, that is changing. New genetic approaches such as CRISPR-Cas9 and RNAi are changing the seeds that are planted. Synthetic biology and nanotech are also beginning to make contributions. Farmers are increasingly using precision agriculture involving GPS guidance and autosteer, field mapping to 10 square metre increments, variable rate input applications and accurate yield monitoring. Agribusinesses compete on thin margins and so are constantly seeking marketplace advantages via new products and processes. Traceability has become more important and is aided by RFD product tracking; near-field transactions will eventually be recorded via blockchain, and retail from non-animal sources. The consumption of meat alternatives remains very small, equivalent to less than one percent of animal BILL GATES, THE WORLD’S protein sales according to the London-based market research firm WEALTHIEST PERSON AND NOT Mintel. But product development efforts are robust. Bill Gates, the A VEGETARIAN HIMSELF HAS world’s wealthiest person and not a vegetarian himself has nonetheless NONETHELESS INVESTED IN THE FAKE invested in the fake meat startup company called Beyond Meat. MEAT STARTUP COMPANY CALLED The global management firm McKinsey & Company identified BEYOND MEAT
food preparation will become increasingly automated including the use of 3D printing. The largest food related problem confronting society is the fact that 65 percent of deaths are associated with inappropriate dietary intake. Shifting consumer preferences and their expectations about the health and nutrition of specific foods would help address this crisis of non- communicable disease. However, it may also be true that changing the composition of the food we eat will be easier than changing human behavior. The future of agriculture will involve more than just basic nutrition. BUSINESS
BORIS TITOV Presidential Commissioner for Entrepreneurs’ 88 Rights
HOW TO EXTRACT THE TREASURE OF THE SHADOW SECTOR Everyone is worried about how to accelerate the Russian economy. There’s a solution and it’s not very obvious
ANDY BALDWIN EY Managing Partner for Europe, the Middle East, 90 India and Africa THE TECHNOLOGICAL FUTURE OF EUROPE The Old World’s economy is recovering after a full-blown crisis. But why aren’t economists happy about this?
HEMANT KANORIA Chairman of the Board of Directors and Managing 98 Director of Srei Infrastructure Finance Limited, India HOW INDIA MANAGED TO MOBILIZE PRIVATE INVESTORS Countries with a transitional economy are having a difficult time, but there are certain solutions that help to achieve outstanding results amidst limited resources BUSINESS
MARKO ČADEŽ President of the Chamber of Commerce 104 and Industry of Serbia WE LIVE IN A SMALL HOUSE WITH WIDE OPEN WINDOWS There are numerous reasons why little Serbia, located at the crossroads of East and West, has managed to brilliantly carry out economic reforms and became attractive to world investors. What are they exactly?
IGOR 108 SHEKHTERMAN Chief Executive Officer of X5 Retail Group TWO LAYERS OF TECHNOLOGICAL INNOVATIONS IN RUSSIAN RETAIL Where should efforts be focused to meet the requirements of a modern, rapidly changing market under the influence of new technologies
ALEXANDER 112 IVLEV EY Managing Partner for Russia NONENERGY EXPORTS FROM RUSSIA: TO BE OR NOT TO BE? The weakening of the rouble in recent years has provided new opportunities to exporters, but how can we find even more breakthrough solutions that are not related to currency fluctuations? 88 B
HOW TO EXTRACT THE TREASURES OF THE SHADOW SECTOR THE QUESTION OF HOW TO ACCELERATE THE DEVELOPMENT OF THE RUSSIAN ECONOMY IS ONE THAT CONCERNS EVERYONE TODAY. SOME IN WORDS, SOME IN DEEDS, BUT AT THE VERY LEAST EVERYONE IS DEFINITELY TALKING ABOUT IT. AND WHEN WE THINK ABOUT THIS, WE MUST NOT FORGET ABOUT THE ENORMOUS RESERVES THAT THE SOCALLED SHADOW ECONOMY CONCEALS.
registration) accounts for 20%–50% COMING OUT OF THE of the entire Russian economy. SHADOWS COULD Interestingly, the Federal State INCREASE THE Statistics Service, the Russian SHARE OF SMALL Presidential Academy of National AND MEDIUMSIZED Economy and Public Administration, BUSINESS IN GDP and the World Bank all have different figures, but they are unanimous in their view of the trend: the share of FROM 20 TO the shadow sector has continued to 30 increase in recent years. If this trend were to be reversed, the economic growth indicators would be among the most optimistic forecasts. IN MONETARY TERMS The whole question is how to do it. The policy of the ‘carrot’ alone is clearly not going to end well. Neither the tax FROM on parasitism (similar to the Belarusian 12.1 tax) nor depriving the unemployed of BORIS TITOV the right to free healthcare will bring about the desired result. In Belarus, TO RUB trn Presidential Commissioner the introduction of mandatory fees for 18.2 for Entrepreneurs’ Rights non-working citizens resulted in mass protests, and arguments about denying “PROPER” DEOFFSHORIZATION, healthcare to the unemployed are IN TURN, WOULD RETURN honestly akin to genocide. Moreover, ASSETS WORTH AT LEAST he shadow sector if we exclude people who are on the continues to flourish labour exchange from this standard, we in Russia. According will get tens of millions of fictitiously to different estimates, registered people on the exchanges and the share of unofficial only have more expenditures instead of USD bln employment (whether savings. 150 it is receiving salary in an envelope The shadow sector is expanding TO THE BALANCE SHEETS OF Tor working independently without not from the good life, but from the RUSSIAN COMPANIES ST. PETERSBURG INTERNATIONAL 89 ECONOMIC FORUM 2017
fact that it is increasingly difficult to work in compliance with all the government regulations. The risk/ return ratio is becoming increasingly unprofitable for businessmen. Whereas in 2000 investment projects paid off within an average of 5–7 years, now this period has grown to 10–15 years. Natural monopoly tariffs continue to increase despite all the talk about their containment. Small and medium-sized business continues to suffer from ever increasing restrictions, while the moratorium on scheduled inspections has devolved into uncontrolled growth in unscheduled raids. Taxes and fees – in deeds, not in words – continue to increase (trading fees, Platon, online payments, etc.). The Federal Service for Veterinary and Phytosanitary Surveillance alone, for example, has a whole system of shrewd companies Solutions for small business that must be contacted for the paid certification of products. There are also specific solutions for small business and microbusiness. The institution of There are no miracles, and business ‘self-employed individuals’ needs to finally be introduced – not in words, but in deeds. cannot “play by the rules” if this The Ministry of Finance has watered down the existing law to absolutely nothing. Instead game is devoid of any meaning. In our of 45 types of activities for self-employed individuals, only three are left, and their ‘Growth Strategy’ we are specifically regulation is in almost no way different from the regulation of individual entrepreneurs. trying to establish rules of the Not surprisingly, the reform failed: the number of registered self-employed individuals is game that will suit everyone – both estimated in the tens and at most hundreds throughout the whole country. Our version entrepreneurs and the government. of this reform needs to be implemented. Simple and convenient regulations needs to The strategy has solutions to contain be provided for self-employed individuals: one-stop shop registration, an exhaustive the tariffs of natural and infrastructure payment for a work permit (without registration and reporting to social funds), automatic monopolies. It offers changes to the de-registration upon expiration of the permit and a ban on inspections. And, of course, the tax system. It proposes eliminating the list of the types of activities needs to be increased to 45 professions. unnecessary administrative burden, The second thing that needs to be done is to stop the administrative war against small which always results in additional costs business. Real “supervisory breaks” need to be introduced rejecting both scheduled and for business. unscheduled inspections for a period of three years.Special attention should be paid to Real capital amnesty could make a the development of organized street and mobile commerce. The rights of owners of non- major contribution to the ‘whitewashing’ stationary retail facilities should be protected.
of the economy. As we can see, in its current form it has failed to work once again due to shortcomings. In addition, people have also learned how to bypass the law on controlled foreign companies. Thus, one option here would be to introduce an ‘offshore’ ratio on the tax of property, land, real estate, and dividends and cancel VAT refunds on exports for companies with offshore owners. A ‘white’ economy is good for everyone. It means a stable budget and social guarantees for working citizens. But once again we stress that only defending one goal post will not work. The young company Crimean Seafood wants to turn the Crimean peninsula The real interests of all participants into the main supplier of oysters on the Russian market in the process need to be taken into account. 90 B ENABLING EUROPE’S TECH FUTURE THE CONTINUED ECONOMIC RECOVERY BEING WITNESSED IN EUROPE IS ACCOMPANIED BY A WIDESPREAD AND POWERFUL UNDERCURRENT OF DISSATISFACTION. ST. PETERSBURG INTERNATIONAL 91 ECONOMIC FORUM 2017
SO HOW CAN EUROPE RIDE THIS WAVE OF ECONOMIC CONFIDENCE AND ENSURE ITS FUTURE GROWTH?
times, that thinking now needs to funding for second- and third-stage go one step further. Investment funding, not to mention wealthy decisions must be based on longer- private investors and families. term fundamentals, such as access In sharp contrast, the to deep pools of expertise and European technology scene lacks talent, access to the European the presence of a truly global ANDY single market overall as well technology player. While recent as large domestic markets, and data suggests that Europe is creating BALDWIN the effects of technology and more “unicorns” — start-ups with knowledge. valuations of over US$1b — we have EY Managing Partner for Europe, So how can Europe ride this wave not seen enough of these companies Middle East, India and Africa of economic confidence and ensure breakthrough to the US$50b plus its future growth? valuations. It would be futile for Europe opulist parties have TECHNOLOGY MUST BE to try to imitate Silicon Valley. garnered support in many A PRIORITY Across Europe, historically European countries and Much has been written on how individual countries have pursued a Europe-wide divide has Silicon Valley emerged. The early their own digital and technology opened between those combination of world-class research strategies with absence of an favouring an open trading institutions, military establishments, overaching technology framework. system and those championing a funding and talent were all Encouragingly, this could soon Preturn to national borders seen as contributors. It has benefited from change thanks to the European less permeable to people, goods a deep, sophisticated capital market Union’s Digital Single Market and jobs.However, among business that provides diverse and flexible strategy, which aims to remove leaders, economic confidence in Europe is on the up. In March 2017, the European Commission’s Economic Sentiment Indicator for the Eurozone — a measure of sentiment across industry, services, consumers, builders and retailers — rose to 109, well above its 26-year average of 100. And, against the global backdrop of geopolitical and economic instability, the first of many striking messages from the EYs European Attractiveness Survey 2017 is that investors are continuing to focus on better economic trends and opportunities in the European Union (EU), as well as its European neighbouring countries, including Russia and Turkey. While politics and politicians come and go and policies change, investors understand the need to take a long-term or multiyear view of investments. In these changing Р
HARNESSING INDUSTRIAL STRENGTHS Today, mainland Europe’s economy is services-based, and increasingly knowledge-based. There is a multiplying effect when we have a concentration of businesses in the same industry around certain countries or geographic areas, like engineering and automotive in Germany, technology around Berlin, FinTech in London, luxury goods in Italy, biopharmaceuticals around Brussels, and the Internet of Things for advanced manufacturing in Switzerland and France. Networking these and other centres more closely would help unlock their potential and potentially provide the scale that would enable their success in the global arena. Technology and knowledge increasingly do not recognize national boundaries, but seek out the benefits of global markets. Europe, including the UK, need to think beyond the immediate challenges presented by the Brexit negotiations and other political distractions to develop a more comprehensive approach to technology and to retain and sustain the vital links between Europe’s companies, clusters and knowledge centres, whether in the European Italy produces luxury class goods Union or not. The opportunity for Europe as the fourth industrial revolution takes hold is for online barriers and create a single While Europe has not produced governments to digitize their market to allow European firms to a global tech giant, it has made historic industrial strengths by scale more rapidly. If successful, significant inroads into what is often transforming today’s existing this could add €415b to the called “deep tech” — that is artificial centres into tomorrow’s future European Union’s economy and intelligence, robotics and industrial technology hubs. help to develop the pan-European Internet of Things. It continues As centres develop, with a ecosystem necessary to compete to have a strong industrial base view to creating the broader with the world’s largest technology and Europe can create something ecosystem necessary to incubate innovation centres. unique. innovation, it would be logical for governments in individual countries to associate their upcoming tech industries with their traditional industries. The political and economic challenge TODAY, MAINLAND EUROPE’S is to then leverage and connect these new and emerging hubs to ECONOMY IS SERVICESBASED, create the “virtual” scale necessary to compete with the type of AND INCREASINGLY businesses and industries we see developing out of the US West KNOWLEDGEBASED Coast. ST. PETERSBURG INTERNATIONAL 93 ECONOMIC FORUM 2017
FUNDING TODAY TO FUTURE-PROOF TOMORROW Financing, from seed money to late-stage funding, is usually the biggest issue for start-ups. In Europe, while VCs and private investors are growing, start-ups and small companies still remain reliant on the traditional banking system. According to the Association for Financial Markets in Europe, around 70% of Europe’s debt funding is still provided by banks, compared with 30% in the US. Also, Europe’s pool of capital remains fragmented at the country level and there are fewer private investors prepared to support businesses in reaching the next stage of development. The EU already has a plan to create a Capital Markets Union — a single market for capital, which would provide businesses with a greater choice of funding at lower costs. This would potentially reduce dependence on bank funding, which is less flexible than other forms of investment. But policymakers also need to think about how they can incentivise private equity firms and private individuals to invest in technology businesses. The good news is that investors generally are attracted to the idea of investing in Europe. According to the EY 2017 European attractiveness survey — transport and housing. So investors abroad, particularly students from Plan B for Brexit, over half (56%) of seek talent and opportunities in India and China. Ensuring that we global investors plan to grow their these concentrations of people, continue to welcome and support presence in Europe over the next brainpower and markets. free movement of the right expertise three years. On a continent where the across not just the European Union A key issue here will be the population is aging, the ongoing but all of Europe is key. A positive future role of London post-Brexit availability of the brightest and attitude to high skilled immigration with UK-based firms being involved best talent has become a strategic could become a real differentiator in in over half of debt and equity criterion for foreign direct the future. issuance by EU27 borrowers. Over investment. Yet many European Europe must do its best to the past decade, the city’s average cities acknowledge scarcities in remove both the soft and hard annual debt capital markets issuance some sectors or skills. Maintaining barriers that prevent businesses alone has stood at roughly US$328b. a good supply of talent is likely to from operating and growing within An acrimonious Brexit risks limiting be a key issue for Europe’s future the wider European market. Only the supply and access to much attractiveness. that will provide a constructive needed capital. The global market for talent pathway to greater investment, will become ever more competitive technological innovation, and more ATTRACTING THE RIGHT TALENT as more companies look to attract jobs and growth in Europe. In Europe as elsewhere, clever, the best engineers, technologists well-educated people flock to and data scientists. Europe has cities, seeking the symbiotic many of the best universities and The views reflected in this article are the access to highly paid skilled jobs, colleges in the world, but studying views of the author and do not necessarily educational and research facilities, in Europe needs to be welcoming reflect the views of the global EY cultural and leisure facilities, and attractive to the best talent from organization or its member firms. 94 B
MONEY AND THE CLEAR SKY HOW BUSINESS SHOULD COMBINE PRAGMATISM AND CONCERN FOR THE FUTURE
THE UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL (ECOSOC) PREDICTS THAT THE RUSSIAN ECONOMY WILL EXPAND BY 1.1% THIS YEAR AND 1.4% NEXT YEAR. ECONOMIC INDICATORS ARE RECOVERING AS SANCTIONS AGAINST RUSSIA CONTINUE. THERE HAS NOT BEEN ANY SERIOUS TURNAROUND ON THE GLOBAL ENERGY MARKET EITHER AS OIL PRICES HAVE DIPPED BELOW USD 50 PER BARREL IN EARLY MAY. EXPERTS VIEW THE SOURCES OF GROWTH AS THE INVESTMENT ACTIVITIES OF PRIVATE COMPANIES, WHICH ARE RESPONDING TO UNFAVOURABLE EXTERNAL FACTORS WITH A MORE SOPHISTICATED INVESTMENT STRATEGY. ENTREPRENEURS SAY IT’S NO LONGER ENOUGH TO SIMPLY INVEST IN PRODUCTION; IT’S JUST AS IMPORTANT TO INVEST IN HUMAN CAPITAL, BREAKTHROUGH TECHNOLOGIES, AND THE ENVIRONMENT. THE CASE OF NORILSK NICKEL IS A GOOD EXAMPLE OF THIS. ST. PETERSBURG INTERNATIONAL 95 ECONOMIC FORUM 2017
the Bystrinsky plant in the fourth Norilsk Nickel’s key business, thus quarter of 2017. it’s essential that it also remains MIKHAIL “This project was built from separate in terms of management”. scratch”, Norilsk Nickel President In order to implement the POTAPOV Vladimir Potanin said. “We call it largest construction project in the a window to the Chinese market. country’s modern history taking journalist This project has distinct growth into account the most efficient opportunities. First, it has nearby production, environmental, social, areas for further exploration and and HR technologies, and build USD 2 BLN AND growth. Second, an idea exists to an industrial facility with well- A WINDOW TO CHINA unite it with the Baimskoye field developed transport and logistics Norilsk Nickel’s total capex of our partners. An IPO could then infrastructure, Norilsk Nickel is budget for 2017 will amount to be held on Asian markets. This is using different investment sources. approximately USD 2 billion, an entirely different story from This is a unique transaction for the including USD 450 million worth of investment in the Bystrinskoye project. Contribution to reputation The company’s flagship project to develop the Bystrinskoye gold, Norilsk Nickel plans to drastically change the current situation in the Arctic iron, and copper ore field in the zone where its main production facilities are located. In particular, the Year Zabaykalsky Territory with a total of Ecology in Russia kicked off with the opening of the Norilsk Nickel- estimated cost of USD 1.7 billion supported Pasvik visitor’s centre, which is located on the Kola Peninsula involves building a mining and in the Murmansk Region. It is telling that investments in the regions processing plant with production where the company’s production facilities are located, in the habitat of capacity of more than 67,000 employees and their quality of life, in human capital, and in the future are tonnes of copper in concentrate all a significant part of the company’s social policy and contribute to its form. Norilsk Nickel plans to open reputation and actual market capitalization. 96 Ф
rub1 trn THE COMPANY’S TOTAL INVESTMENT IN ITS ENVIRONMENTAL PROGRAMME UNTIL 2022 roughly rub
250 bln WILL BE SPENT ON THE ENVIRONMENT AND THE PRODUCTION AND INTRODUCTION OF MODERN TECHNOLOGIES THAT EASE THE BURDEN ON THE ENVIRONMENT
Russian market – project financing involving Sberbank (USD 800 million for a period of 8 years) and attracting partners. Specifically, Norilsk Nickel in January 2017 approved the sale of up to a 39.32% stake in the Bystrinskoye project to CIS Natural Resources Fund – an investment fund that specializes in Russian natural resource assets. Chinese investment fund Highland Fund, which currently owns a 10.67% stake in the project, had previously been involved in developing the project. In the future, the fund may increase its stake to 13.33% and earmark total investment of USD 100 million.
THE IMPLEMENTATION OF A GLOBAL PROJECT THE CLOSURE OF THE OLDEST NICKEL PLANT IN NORILSK HAS ALREADY REDUCED EMISSIONS BY A THIRD ST. PETERSBURG INTERNATIONAL 97 ECONOMIC FORUM 2017
Based on the example of the project’s implementation in the Zabaykalsky Territory, it’s obvious that, in addition to financial interventions, Norilsk Nickel’s investments also have a clearly pronounced social nature. The plan is for the Bystrinsky plant to become a ‘talent foundry’ for the region and create roughly 3,500 new jobs.
HOW A WHOLE PLANT WAS TAKEN AND SHUT DOWN Experts joke that Norilsk Nickel is a ‘manual’ for advanced environmental technologies. The company focuses on innovative solutions and has record investments in the environment in terms of volume. “Today, we clearly understand what the modern Norilsk Nickel is exactly, what problems it has, and what we need to do going forward”, Potanin said. “The main problem is environmental. We must solve it because it has come to a head for both the company itself and the regions. Norilsk Nickel must transform itself from a polluter into an exemplary eco- friendly enterprise. Comprehensive modernization of production is essential for achieving this”. The company’s total investment in this programme prior to 2022 will amount to some RUB 3 trillion with roughly RUB 250 billion of this amount being spent on the environment, production, and the introduction of modern technologies that reduce the burden on the environment, in particular the implementation of a unique sulphur project. The implementation of a global project – the closure of the oldest nickel plant in Norilsk – has already reduced emissions by a third. “Modernization work needs to be synchronized with work to solve the environmental problem; otherwise, it will be exorbitant. The crowning achievement of the comprehensive programme will be the so-called sulphur project, which will make it possible to cut sulphur emissions by several times not only in Norilsk, but at other enterprises of the Taymyr Peninsula”, Potanin said. 98 B
INDIARUSSIA: A PARTNERSHIP OF TRUST INDIA AND RUSSIA HAVE HAD THE LONGEST AND CLOSEST FRIENDSHIP, AS COUNTRIES, SPANNING MORE THAN 70 YEARS. THIS RELATIONSHIP HAS BEEN DEVELOPED WITH A DEEP SENSE OF TRUST, UNDERSTANDING, EMPATHY, PARTNERSHIP AND BROTHERHOOD OVER THE YEARS AND HAS STOOD THE TEST OF TIME. DURING THE COLD WAR, INDIA AND THE SOVIET UNION (USSR) ENJOYED A STRONG STRATEGIC, MILITARY, ECONOMIC AND DIPLOMATIC RELATIONSHIP. WHILE INDIA IMPROVED ITS RELATIONS WITH THE WEST AND OTHER NATIONS, THERE WAS NO PAUSE IN OUR PARTNERSHIP WITH RUSSIA. AND WITH PASSING YEARS, THE LEVEL OF ENGAGEMENT BETWEEN THE TWO NATIONS HAS BECOME MULTIFACETED AND MULTIDIMENSIONAL. ST. PETERSBURG INTERNATIONAL 99 ECONOMIC FORUM 2017
HEMANT KANORIA
Chairman of the Board and Managing Director of Srei Infrastructure Finance Limited, India
INDIA-RUSSIA PARTNERSHIP Russia has continued to remain HOWEVER, RUSSIA HAS TOPPED the largest supplier of military equipment for India’s armed THE LIST OF INDIA’S TOP forces. However, as the global geo-political scenario changed STRATEGIC PARTNERS over the decades, the nature of co-operation between Russia and India has also evolved accordingly. five major components: politics, PRESENT SCENARIO In 2000, India signed strategic defence, civil nuclear energy, Bilateral trade during 2014 amounted partnership agreements with anti-terrorism co-operation and to USD 9.51 billion, with Indian exports Russia. Presently, India has entered space. The level of engagement amounting to USD 3.17 billion and into strategic partnership with has expanded into other fields imports from Russia amounting to more than two dozen countries/ like trade, economy, finance, USD 6.34 billion. Major items of export supranational entities. However, investment, skilling & education, from India include pharmaceuticals, Russia has topped the list of India’s healthcare, intellectual capital, miscellaneous manufactures, iron & top strategic partners (followed sports, youth, tourism, people- steel, apparels, tea, coffee and tobacco. by USA, France, UK, Germany and to-people contact, culture & Apart from defence and nuclear power Japan) as ranked by The Foundation entertainment. This co-operation equipment, major items of import from for National Security Research in is deep and multi-layered, pretty Russia include fertilizers, electrical New Delhi. Indo-Russian strategic much like the wooden Matryoshka machinery, steels and diamonds. Indian partnership has been built on dolls of Russia. investments in Russia were estimated to be about USD 8 billion, while Russian investments in India at about USD 3 billion. The two nations have also agreed With the help of Russia to liberalize business travel. These and other measures should help boost The two nations have sought to follow what both describe as a more bilateral trade. The two nations intend to pragmatic and less ideological relationship. Both countries are achieve a bilateral trade figure of USD 30 members of many international bodies where they jointly collaborate billion by 2025. on matters of shared national interest. With the help of Russia, India Russian firms are keen to invest in India has been pushing for reforms in the United Nations (UN) and World in construction, major infrastructure Trade Organization (WTO), with mixed results. Russia is also strongly projects such as dedicated freight backing India’s candidature for a permanent seat at the UN Security corridors and industrial clusters, Council. smart cities, sharing technologies 100 B
Co-operation between Russian enterprises and continuous technological development has kept the two nations the Russian manufacturing sector at the vanguard of modernisation. To enhance co-operation between the two nations in different fields, Russian companies can utilize this the Inter-Governmental Commission on Trade, Economic, Scientific, expertise in setting up manufacturing Technological and Cultural Co-operation (IRIGC-TEC) has been made plants in India under the “Make the apex G2G forum. It reviews sectoral co-operation under working in India” programme for catering groups on trade and economic co-operation, priority investments, both to the Indian market as well modernization and industrial co-operation (sub-groups on civil aviation, as for exporting to Asian countries. mining, fertilizer, and modernization), outstanding issues, energy & Similarly, Indian companies can energy efficiency, science and technology, communications & IT, complement Russian enterprises tourism and culture, and sub-groups on banking & financial matters and by setting up joint venture units in also on wildlife conservation. In addition, India and Russia have decided Russia. Both nations should ideally to institutionalize the CEOs’ Forum, which will meet twice a year – once contemplate setting up an Indian in India and the other in Russia. Centre of Excellence in Russia and a Russian Centre of Excellence in India, where players from the and skill upgradation. India would Thus, Russia can greatly benefit from manufacturing sector from either welcome Russian companies from the experience and expertise that countries can set up their units the public and private sectors. At India has gathered in the process. smoothly. This will also aid easy the same time, Indian companies With infrastructure developed being transfer and sharing of technological are exploring major investment a priority area for Indian government, know-how. options in Russia, especially in this sector will open up many new The partnership of India and natural resources such as coal, opportunities and Russian companies Russia truly demonstrates multiple fertilizers, hydrocarbons, minerals can participate in this process. facets of relationship. As we and rare earth metals. In fact, Similarly, Indian companies too can celebrate this friendship of seven Russia is the first country to have explore opportunities in Russia. decades, we wish that our group can agreed to participate in the “Make The manufacturing sector has participate intensely to foster this in India” umbrella in two key traditionally been the strength of relationship further. strategic sectors — nuclear and defence. Russia will build nuclear reactor components and military helicopters in India. Russian firms, in collaboration with Indian firms, are expected to help in constructing 12 nuclear power plants.
WAY FORWARD Two areas where I can foresee major scope for co-operation in the years to come are Infrastructure and Manufacturing. Infrastructure needs to be built, re-built and revamped in every country. But it may not be possible for the government alone to fund such projects. India has developed a unique public-private partnership (PPP) model for infrastructure Indo-Russian strategic partnership has been built on five major components: politics, defence, civil nuclear energy, anti-terrorism co-operation and space creation. With this model, India has managed to mobilize private investments to the tune of nearly USD 300 billion over the last two decades, which is non-pareil. There have been many learnings out of THE PARTNERSHIP OF INDIA AND mistakes that that have been made while implementing the projects; RUSSIA TRULY DEMONSTRATES some have already been corrected and few are still in work-in-progress MULTIPLE FACETS OF stage. However, as a whole, the PPP model has been hugely successful. RELATIONSHIP П 101 2017 102 B MOSCOW AND ST. PETERSBURG: NO COMPETITORS RIA RATING RANKS THE REGIONS ACCORDING TO THEIR ECONOMIC ‘WELLBEING’.
s per tradition, RIA Rating agency RATING OF THE SOCIOECONOMIC CONDITION IN THE has presented the results of CONSTITUENT ENTITIES OF THE RUSSIAN FEDERATION IN 2016 its work with an assessment of the economic situation in the 2016 ranking Constituent entity of the 2016 integral 2015 Russian regions. The method Russian Federation rating ranking used to compile the rating is 1 City of Moscow 80,891 1 based on an aggregation of different indicators in 2 City of St. Petersburg 74,541 2 A4 groups: ƴJOEJDBUPSTPOUIFTDBMFPGUIFFDPOPNZ Khanty-Mansi Autonomous 3 District-Yugra 69,933 3 ƴJOEJDBUPSTPOUIFFG˷DJFODZPGUIFFDPOPNZ ƴJOEJDBUPSTPOUIFCVEHFUTFDUPS 4 Moscow Region 68,597 4 ƴJOEJDBUPSTPOUIFTPDJBMTFDUPS 5 Republic of Tatarstan 67,681 5 The rating was put together by ranking the Yamalo-Nenets constituent entities of the Russian Federation 6 Autonomous District 66,805 6 in descending according to the value of an 7 Leningrad Region 61,890 11 integral rating score. The integral rating of each 8 Republic of Bashkortostan 60,759 10 constituent entity of the Russian Federation was determined as the geometric mean of the rating 9 Sakhalin Region 60,294 7 scores of the indicator groups. The rating score 10 Tyumen Region 60,082 8 of a constituent entity of the Russian Federation 11 Sverdlovsk Region 58,484 9 for each group of indicators was determined 12 Samara Region 57,388 13 using the arithmetic average of the rating scores of all the indicators included in the group. 13 Krasnodar Territory 57,217 16 Comments from Valery Tretyakov, the 14 Krasnoyarsk Territory 56,527 14 general director RIA Rating agency (which is 15 Perm Territory 56,236 12 part of Russia Today international information 16 Nizhny Novgorod Region 55,277 15 agency): “The top and bottom lines of the rating 17 Voronezh Region 54,946 19 remained virtually unchanged compared with 18 Rostov Region 54,383 24 2015. The main changes occurred in the middle 19 Belgorod Region 52,353 18 of the rating. Positive dynamics were seen in 20 Chelyabinsk Region 52,233 17 33 regions, 12 regions remained in their former positions, and 40 regions lost ground. 21 Republic of Sakha (Yakutia) 51,881 21 Positive dynamics were mainly seen in 22 Lipetsk Region 51,812 20 regions of the Russian Federation that have 23 Irkutsk Region 51,776 25 well-developed military-industrial and agro- 24 Orenburg Region 50,710 22 industrial complexes as well as the regions of the North Caucasus. Five of the seven regions in the 25 Tula Region 50,652 23 North Caucasus Federal District demonstrated 26 Primorye Territory 50,605 27 positive dynamics in the rating, which is probably 27 Novosibirsk Region 48,865 30 associated with the positive effects from 28 Murmansk Region 48,772 32 the implementation of the state programme ‘Development of the North Caucasus Federal 29 Vologda Region 48,467 37 District for the period until 2025’”. 30 Tomsk Region 48,057 29
Details: www.riarating.ru Source: RIA Rating П 103 2017
LTD LIDER 104 B
SERBIA THE COUNTRY WORTH INVESTING IN
THERE ARE MANY REASONS WHY A SMALL COUNTRY SERBIA, SITUATED ON THE CROSSROADS OF THE WEST AND EAST, WHICH WAS INVISIBLE ON THE GLOBAL INVESTMENT AND BUSINESS MAPUNTIL A FEW YEARS AGO, IS TODAY ONE OF THE MOST ATTRACTIVE EUROPEAN DESTINATIONS FOR INVESTMENTS, MARKO TRADE AND BUSINESS ČADEŽ PARTNERSHIPS.
President of the Chamber of Com- merce and Industry of Serbia ST. PETERSBURG INTERNATIONAL 105 ECONOMIC FORUM 2017
The best conditions in the region
Owing to the reform progress achieved in recent years, confirmed by the serious and independent research and analyses, and recognized by the international business community, Serbia today offers investors and buyers of its products the best enabling environment ever for doing business and investments: macroeconomic strength, political stability, commitment to the European integration process, more functional infrastructure, improved regulatory framework, higher business predictability, lower risks, higher ranking on international lists measuring competitiveness and business conditions
oday, we offer investors other corporations, which have not findings of the last year sur-vey important state come to this region, yet. There are conducted by the Foreign Investors financial and other no better ambassadors of Serbia Association in Serbia. From year to incentives, customs in the world than the foreign year, they confirm that almost 90% facili-ties for import of companies operating profitably in of the respondents would invest in equipment, and lower our market, and expanding their Serbia again, and that the majority tax rates and operational costs than capaci-ties. And there is no better is expecting further increase in Tour com-petitors. As our special indicator about Serbia than the turnover and volume of business, and advantage, we underscore the free trade agreements, such as the one with the Russian Federation, which ensure the producers across Serbia duty free export to the market exceeding a billion consumers worldwide. Being aware of the limitations of the small, national markets in the Western Balkans, we strengthen the ini-tiatives leading to the creation of a single regional market, and in the nest stage, a single customs area. This is because it is clear that none of the companies or investors comes to the Balkans because of the individual markets, but because of the regional market with 18 – 20 million consumers. Owing to its enabling environment and logistic advantages, Serbia is becoming a region-al hub for business operations of a growing number of big international Prime Minister of the Republic of Serbia Aleksandar Vučić and Prime Minister of the companies.At the same time, that Russian Federation Dmitry Medvedev is the best recommendation to 106 B
A flexible approach expected effects of further reforms of both public and private sectors in Our advantage lies in the flexibility of the SME sector, which accounts the next year, it is realistic to expect for more than 95% of the Serbian economy: they keep increasing their fur-ther growthin both foreign and capacities, they are ready to learn, to follow contemporary trends in domestic investments. Because business operations, and to invest in their business development, so as to there is no month in which we do not respond to changes in demand of the developed mar-ket economies and record either completion or start of foreign partners. an important investment project. Along with attracting foreign investments, it is equally important to strengthen the capacities of the planning an increase in employees the manufacturing, export-oriented domestic economy, which has been and new investments. sectors – automotive, textile, food recording higher production and Only last year, due to the processing, machine building, ex-ports, becoming more profitable, foreign investments, more than chemical and pharmaceutical and strengthening its investment fifty factories and plats were industries. This has contributed commissioned or their construction to the growth and higher began. The negotiations on new competitiveness of the domestic projects are under way with the same export supply, with a wide range of number of international companies. products, higher level of processing It is of special importance for and higher value added. the economy like Serbian, which In parallel with private 90% builds its accelerated sustainable investments, a new wave of public FOREIGN development on a healthy basis – investments into infrastructure has INVESTORS READY investments and import growth, been initiated, as a precondition for AGAIN INVESTING that the new investments in recent more private investments and as a IN SERBIA years have been highly project source of sustainable growth. Due diversified, and focuses mainly on to all this, butalso because of the ST. PETERSBURG INTERNATIONAL 107 ECONOMIC FORUM 2017
potential. Foreign investments are crucial for increased exports, but the domestic economy has to keep pace. Foreign investors look for a network of local suppliers, which are liquid, have ex-perience and implement standards in their business operations. Today, Serbian compa- nies are reliable suppliers, and future investors in Serbia and buyers of our products in the world can rely on them. We have a long industrial tradition and our companies have the required knowledge for business cooperation with foreign partners. They are capable of meeting the requirements of developed countries’ markets, ensuring the re-quired quality and processes, and meeting deadlines, delivering high quality goods and services on time, at competitive prices. The Chamber of Commerce and Industry of Serbia is especially focused on linking our companies with potential partners – investors and buyers abroad – and their integration in production and supplier chains of big companies, both domestic and foreign ones. One of the key tasks of the Chamber of Commerce and Industry in the future will be to supportinternationalization of the Serbian economy – through the promotion of the in-vestment and export supply of our economy, and networking of our companies with foreign partners.Our support and efficient chamber services are also available to companies from the world implementing their investment and business plans in Serbia and the region. One of the most prestigious business events – the International Economic Forum in Sankt Petersburg - is a great opportunity for us to present ourselves in the best possible way to the business circles of the Russian Federation, and to more than a hundred oth- er participating countries, and to be perceived as a country of the growing and open economy, serious companies, big investment potential and high quality products. And, finally, I will paraphrase THEY ARE CAPABLE OF MEETING a wise saying: We live in a small house, but its windows overlook the THE REQUIREMENTS OF big world. Welcome to Serbia, the economy worth investing in! DEVELOPED COUNTRIES’ MARKETS 108 B TWO TECHNOLOGY INNOVATION LAYERS IN THE RUSSIAN RETAIL SECTOR: KEY FOCUS POINTS IT IS NOW ABUNDANTLY CLEAR TO ALL MARKET PLAYERS IN THE RUSSIAN RETAIL SECTOR THAT LONGTERM LEADERSHIP, BOTH IN THE SECTOR IN GENERAL AND IN ANY OF ITS PARTICULAR SEGMENTS, CANNOT BE BROUGHT ABOUT BY STRONG TURNOVER AND FINANCIAL PERFORMANCE ALONE.
he pace at which in conjunction with the Internet new generations of Initiatives Development Fund, with technology replace a view to incorporating the best of one another (bringing them later in our business practices. new business processes What technologies does the along) compels all Russian retail business need today? retail market participants to change Any successful startup and any Tand seek leadership in innovation. business idea in general has to be The ability of any retailer to based, as we know, on an actual adjust to the changing consumer problem they are tailored to resolve. environment, to digitise and In its dealings with Russian startups simultaneously become more (and any technology companies), transparent to both consumers and a retailer should aim, above all, to the government is now becoming the convey the true-to-life issues of fundamental capital and, in effect, the Russian retail business that the mainstay and driver of growth for largely determine whether or not a any big retail business. particular technological idea will be Major national retailers, X5 successful. This range of issues is, IGOR Retail Group included, are not only however, quite unique. theoretically developing these ideas Frequently, the media-created SHEKHTERMAN but are also diligently working to put image of innovation in retail is a far them into practice. Today, X5’s IT cry from reality. This is particularly CEO, X5 Retail Group investment has already reached 10% true of the Russian retail business. of its capital spending but we are not More often than not, media-induced limiting ourselves to the technology stereotypes stemming from a already available on the market. lack of critical thinking about the Knowing that the digital environment feasibility of specific technological is changing daily, we are preparing concepts dominate the overall idea to test out innovative startups of which technologies Russian retail ST. PETERSBURG INTERNATIONAL 109 ECONOMIC FORUM 2017
Retail is the biggest non- resource industry Retail is the biggest non-resource industry of Russia’s economy, generating 14.3% of its GDP and 11.5% of all tax revenues into the country’s treasury. That said, according to the latest statistics from the Retail Companies Association, nationwide and regional retail chains account for 53.6% of the total retail market, with their share growing and slated to continue to grow in the foreseeable future. Given its scale, retail chains are not only the appropriate application environment for but also a natural driver of technological innovation, primarily owing to their ability to shape new customer experience, availability of a vast body of various consumer data and an extensive client base. business needs today. Yet idyllic without adequate technology to scenes featuring pizza and grocery process big data accumulated by drone delivery to cozy single-storey a particular retailer. These and cottages owned by self-employed other technologies allow for higher consumers creating digital content precision in tracking customer 24/7 are far removed from our reality. preferences and working out the 10% One can talk all one wants about most sought-after offers in terms of INVESTMENT IN IT this being our future but we would product range and services. ALREADY MAKE UP rather work on the actual problems Yet there is also “the second 10% OF CAPEX of the industry and several millions layer” of technological innovations of customers visiting our stores every in the Russian retail sector, which year than talk the talk. may not be so obvious for the media “The first layer” of technological and customers, but is infinitely improvement of operating efficiency innovation that is truly crucial for more important for the business at all commodity life cycle stages, the contemporary Russian consumer in a Russian environment. It opens from production to sales. (and, hence, the retailer) is generally up vast strategical and operational Proceeding from the need for aimed at resolving issues of customer opportunities for innovative and efficient communication channels satisfaction with their experience as technology companies, since between producers and retailers, customers. This covers technologies the problems that second-layer as well as third parties, including built to simplify and speed up the innovations are designed to solve are banks, government agencies, fiscal checkout process and self-checkout far more complex and global than data operators, etc., “the second services, eliminate queues, as well those described above. layer” of vital innovations for the as introduce intelligent customer The main task that second- Russian retail sector includes unique loyalty programmes aimed at the layer innovations are meant to solutions adjusted and customised best possible customisation of solve is to develop the distribution to the specific environment, and the consumer basket. This level infrastructure, which is far less sometimes tailored exclusively to also encompasses development of evolved in Russia than in Europe, fulfil specific tasks. e-commerce solutions for target both in terms of floor space and the This includes contemporary customer segments, mobile retail number of distribution hubs. legally valid workflow management applications, etc. As they work to provide enough (EDI) and EDI-based IT solutions This kind of innovation will floor space for Russian consumers allowing joint management of “drag” other innovations along and distribution channels with promotion events, joint control of with it. Efficient development increased capacity for Russian continuous on-shelf availability and implementation of this suppliers, retailers have to keep yet and sales planning for suppliers and type of innovation is impossible another task in focus: maximum retailers. The E-factoring platforms 110
Follow the customer Nationwide Russian retail networks possess sufficient solutions in all these spheres and qualified technical staff capable of implementing them; they also boast an extensive track record in applying first-layer technological innovations. Furthermore, it may be said that Russian retailers often do not “follow the customer” in as far as such innovations are concerned, but are proactively shaping customer habits in Russia by bringing them to the next level. For instance, self-service now being rolled out by Russian spheres is the primary challenge checkouts at a number of retailers, which have already become of the Russian retail sector. Only Perekrestok chain stores account a very popular tool for financing state-of-the-art digital technologies for more than 25% of daily sales. operations with many local suppliers, can ensure efficient coordination Mobile payment technologies also depend on EDI systems. of the efforts of retail chains, Apple Pay and Samsung Pay have Electronic data exchange (EDI) the government, producers and been implemented in all X5 Retail systems include software solutions suppliers over the vast territory of Group stores, as well as in other facilitating efficient logistics our country. federal retail chains. E-commerce in the interests of producers In turn, such coordination is also developing in the food retail and retailers, from intelligent efforts as already mentioned above sector. Once launched, as planned, warehouse management systems must be aimed at a breakthrough in in April 2017, this will make it and technological solutions for RFID the development of the commodity available to the customers of labelling systems making online distribution infrastructure in Moscow’s biggest retail chain, the control over commodity movements our country. The retail sector Perekrestok online supermarket, possible, to online freight therefore needs, above all, those will turn online grocery shopping “uberisation” services. To this end, technological innovations that into a more mass-market the GoCargo solution implemented facilitate fulfilment of this range experience. by X5 Retail Group in 2016 serves an of tasks, and this is a factor to Retailers are now introducing excellent example. be considered by all technology high-performance platforms to EDI systems include biometric companies contemplating entering store and process big data, such employee identification systems the Russian retail market. as the SAP HANA used by X5. at distribution centres and stores, Intelligent customer demand which provide for more efficient forecasting systems for various human resource management and categories of goods, as well as allocation. Strategic promotion event effectiveness Finally, EDI also includes partnerships measurement and improvement government infrastructural IT The format of strategic partnerships tools are being tested out, etc. solutions, which are the cornerstone between retail chains and producers of consumer market management, has a great potential here. Strategic such as the unified state automated partnerships are joint production information system regulating planning projects, or even joint alcohol products, the electronic projects to set up production record keeping system for foods of capacity to match specific sales animal origin Mercury, and online volumes, bring out new brands and checkout data transfer modules, implement smart sales management which signify a new stage in the in the interests of consumers. development of big data processing New technologies open up vast in the Russian retail sector. opportunities here and no retailer Development of technological can do without them if it wants to solutions in these and other run efficiently and develop such contemporary retail back office partnerships. S. P I 111 E F 2017 112 B
NONRESOURCE EXPORTS FROM RUSSIA: TO BE OR NOT TO BE? THE YEAR 2016 WAS BETTER FOR THE RUSSIAN ECONOMY THAN ANALYSTS AND STATE AGENCIES PREDICTED: GDP WAS DOWN ONLY 0.2% A THIRD OF THE EXPECTED DECLINE.
MACROECONOMIC the domestic market, and the ENVIRONMENT development of exports is thus Russia’s macroeconomic inconceivable without state support, stabilization and the lowering of including in terms of planning and regulatory barriers were seen as management. Positive changes are positive signs by business, and this was already in evidence: non-energy, reflected in the World Bank’s Doing non-resource exports continue to Business Rating: in 2017 Russia gained grow as a share of exports and at 11 points to take 40th place among 190 present account for more than a third countries. PMI – a composite index of of the total. This is a major advance. business activity – is also on the rise. Russia has boosted its exports Russia’s index hasn’t fallen below 50 in of foodstuffs to China and other the last 12 months. Asian countries as well as Europe. The outlook for the next few In terms of wheat exports, we years is positive as well: the updated overtook Canada and the US this forecast of economic development for spring, moving into first place 2017 has growth in GDP rising to 2% internationally. Russia is exporting ALEXANDER and subsequently to the average world increasing quantities of meat, level of 3%. butter, cheese and curd as well as IVLEV machinery, wood and many other HOW IS STATE SUPPORT goods. EY Managing Partner for Russia CHANGING THE STRUCTURE OF It goes without saying that state RUSSIAN EXPORTS? support aimed at expanding the Russian non-resource companies output of major companies and have traditionally focused on stimulating exports had much to do
RUSSIAN NONRESOURCE COMPANIES HAVE TRADITIONALLY FOCUSED ON THE DOMESTIC MARKET ST. PETERSBURG INTERNATIONAL 113 ECONOMIC FORUM 2017
with this progress. Additional state NONMINERAL AND support for non-resource and non- NONENERGY EXPORTS energy exports will thus be provided MAKE UP MORE THAN in the framework of four priority projects as part of the Russian Export Center’s “international cooperation and export” efforts. A 1/3 IN WHAT DIRECTION ARE OF TOTAL RUSSIAN EXPORTS RUSSIAN EXPORTS MOVING? Based on year-end results, Russia’s trade with non-CIS countries accounted for 85% of its total to China grew 58% in the same volume of trade. Rouble devaluation period (to USD 5.47 billion). This has prompted Russian exporters to demonstrates not only an increase in partly shift their focus to non-CIS volume, but a change in the structure countries, since the currencies of and format of economic cooperation CIS countries have also weakened, in line with the political course of making other markets more both countries. attractive. Also, the proportion of Why is China such a favoured exports to the European Union has destination for exports? Our research declined in favour of APEC countries shows that Russian exporters are – above all, China. not only drawn by the unparalleled According to the Federal size of the Chinese market, but by Customs Service, the volume of other factors as well. The “Made trade between China and Russia in Russia” brand has added value was up 41% year-on-year in the first in China because of its quality and two months of 2017. It should be environmental credentials: many noted that in January and February Russian goods have no counterparts 2017, imports from China to Russia in China. Rapid decision-making rose 29% year-on-year (to USD 6.19 by local entrepreneurs and the billion), while exports from Russia scale of projects play a positive role as well. Along with growing cooperation in e-trade, mining, agriculture, Russia in entertainment and construction, China and Russia continue to Doing Business strengthen their ties by expanding trade and cooperation in such strategic areas as oil and gas. China 40 holds stakes in strategic projects 190 DB 2017 1 (Yamal LNG) as well as directly purchasing oil and gas from Russia. In January 2017 Russia moved 73.19 ahead of Saudi Arabia to become the largest supplier of crude oil 1 DB 2017 % 100 to China. According to Chinese customs data, fuel supplies from Themes (ranking in global rating) Russia grew 25% as compared Establishment of enterprises 26 with 2015, reaching 1.05 million Receipt of construction barrels per day. Preliminary data permits 115 for 2017 suggest further growth Connection to the power in cooperation between the two supply system 30 countries. Property registration 9 Major infrastructure projects Receipt of loans 44 are also under way – construction Protection of minority investors 53 of a high-speed railway between Taxation 45 Moscow and Beijing, for example, International trade 140 and projects in defense, aviation and Ensuring the execution even nuclear energy – a sector with of contracts 12 important secrecy considerations Resolving insolvency 51 for any country. 114 B
Finally, the fluctuation of the rouble exchange rate makes long-term investment planning more difficult. MAJOR INFRASTRUCTURE What can be done to stimulate non- resource exports? The most important PROJECTS ARE ALSO UNDER WAY contributions would be infrastructure modernization as well as investments in new technologies and inventions and tax benefits for implementing OBSTACLES AND WAYS OF example, can account for up to them. Improvements in human capital OVERCOMING THEM 30% of the final price of grain, and a qualitative change in the level There are still obstacles in the way potentially making Russian-grown of education would provide added of Russia’s non-resource export wheat uncompetitive on the world incentives. A more mobile workforce potential – above all, the logistics market. would also be beneficial. Of course, infrastructure, further complicated For many categories of goods, efforts must be continued to enhance by Russian specifics. The result Russia still lacks local sources of the legal and regulatory framework is high transport, logistics and quality components at competitive for business, encourage exports and overhead costs. Railway transport prices and is thus unable to innovation and generally develop the costs and port charges, for manufacture competitive products. “Made in Russia” brand. П 115 2017 116 WE SATISFY THE NEEDS OF 99% OF THE COUNTRY’S POPULATION WITHIN A SHORT TIME, POST BANK HAS BECOME A NOTICEABLE PLAYER IN THE BANKING INDUSTRY AND ITS RETAIL NETWORK ALREADY RANKS SECOND IN SIZE ON THE MARKET. DMITRY RUDENKO, HEAD OF POST BANK, RECOUNTS HOW THE FINANCIAL INSTITUTION SEEKS TO BANK RUSSIA, ABOUT NEW TECHNOLOGIES, ABOUT WORKING WITH SENIOR CITIZENS, AND PLANS FOR THE FUTURE.
The post office and the bank seem 75% of which are cities with a popu- different owners and, because of this to be different structures. What can lation of less than 100 thousand and alone, they will not be able to act in possibly tie them together? rural areas. It is simply impossible to concert, pursue a single policy regard- The ties are much stronger than they bank the country otherwise. ing network development, product might seem at first glance. This is a The synergy of the post and the rates, etc. Meanwhile, all we need to banking model that has been proving bank, together with a low-cost oper- do is teach a postal employee to open its success for a long time in most ating model, enables us to open offic- an account with a free card to a client, parts of the world and its mission is es even in places where traditional set up a terminal in the post office for to supply the remotest parts of the banks find it unprofitable to operate. withdrawing cash and replenishing the country with basic financial services. Another important point is the avail- account – and there you go, you have We are the only bank in Russia that ability of post offices within walking access to banking services. has the opportunity to work within distance. We get closer to customers Unfortunately, small banks do the postal infrastructure. This gives and benefit from this. not always meet the requirements of us the opportunity to satisfy almost the Central Bank. Now imagine the the entire population of Russia with An opportunity to open an account need to provide all pensioners with our services. The combination of the in the nearest post office will reduce high-quality financial services. What infrastructure of the Russian Post the share of cash in circulation. should senior citizens do if such a and banking services is a service in I stand for the idea of limiting cash bank has its license revoked and their great demand, as is evidenced by the turnover to the average global level. funds get “suspended”? constantly growing client base and First, the logistics of cash, especially positive dynamics of portfolios. considering the size of our country, What services do you focus on? There are still areas in Russia are expensive and, second, non-cash The essence of banking products has where people cannot open an ac- payments increase the transparency not changed for centuries, only the count or make a bank transfer, even of the economy. form in which they are rendered and if they want to: there is literally no- pricing can change. We offer our cli- where they can do this. We are also There used to be proposals about ents the financial services that are in working to ensure that the number of banking the country using regional most public demand: cash loans and such areas becomes smaller. And we banks but this task now appears to be credit cards, deposits and current are enjoying some success: the bank’s assigned to you? accounts with interest accrual on the retail network has already exceed- Regional banks are an important part balance, payments, transfers. This ed 8 thousand outlets and, within a of the banking system but, in my is enough to satisfy not just 90% year’s work, we have covered about opinion, they have limited resources but 99% of the needs of an ordinary 2.5 thousand settlements, more than to fulfil this task. Besides, they have person. ST. PETERSBURG INTERNATIONAL 117 ECONOMIC FORUM 2017
What credit policy do you follow? We work with the Pension Fund of for our business. The key rate is Post Bank competes with the leading Russia in the same way as other pen- gradually decreasing, there are per- market players: our pricing is quite sion-delivering banks: we conclude sistent positive trends that stabilised liberal, so have we decided not to agreements on delivery of pensions the situation on the retail banking credit the sub-prime segment. The with regional offices of the Pension market last year. These trends are, bank is now at the stage of intensive Fund (today there are 60 of them and, above all, shifting of the popula- development and it cannot afford in the next few months, there will be tion’s behaviuor toward savings and high risks. Re-credited customers over 70 such offices). At the Pension reducing the delay in granting new have little chance of getting a loan Fund offices, we place consultants generations of loans, which suggests from Post Bank – they simply will who tell visitors about the bank and a more balanced attitude by borrow- not pass the scoring. Our customers’ its opportunities to deliver pensions ers in assessing their own financial needs for borrowed funds do not, and about additional bonuses availa- capabilities and a certain increase in as a rule, exceed RUB 400 to 500 ble for senior clients. payment discipline. thousand, so we do not operate in It should be noted that banks the segment of bigger loans. Russian Post provides the most par- do not attempt to grow at any cost cel deliveries from online stores. Do today; they have ceased to pur- Are you driving out microfinance you work with their clients? sue portfolio volume – quality has companies by offering small loans on Of course we do. We have developed become their priority. Re-inflation of attractive terms? an interesting solution for them. First, the bubble of default loans is easier Even if we do compete with micro- you can download a mobile appli- to prevent than to face its conse- finance organizations, it is only in cation and access a virtual card for quences again. terms of proximity to the client. As a making purchases online; so, even rule, individuals borrow from MFOs without visiting an office, the client What are your plans for business if banks have refused them a loan gets a convenient and secure e-wal- development in 2017? What is your because of high risks. Often, cred- let. Second, all online purchases strategy? it-dependent people are not easy using Post Bank cards are protected We have a lot of plans for 2017 – all to identify, because they serve their from a number of common risks by that remains is to implement them. obligations. They may have twenty the “Online Buyer Package”; such The key areas of our work are expan- loans and, seemingly, why not issue risks include cases when the product sion of our regional presence, growth them the twenty-first? The answer is delivered is defective, when it can be of the loan and deposit portfolios simple: because they serve each pre- found in another Internet store at a and of the client base. We plan to vious loan with a new one. As soon as lower price, when you have to pay for cover 82 regions by the end of the the next loan is denied, the pyramid return shipment if the goods did not year; the bank has already begun collapses. suit you. operating in the Far East and North Caucasus and, as of today, it is pres- Why do you focus so much on work- What is your attitude towards inno- ent in more than 70 regions of the ing with senior citizens? How is this vations in the banking sector? Russian Federation. work arranged? My attitude is pragmatic. If the We plan to increase the loan Senior citizens are an important innovations make our services more portfolio by one third and practically target audience for the Post Bank for convenient for customers, increase equate it with the deposit portfolio at several reasons. First, the percentage business efficiency– it’s great; if the level of RUB 150 bn. We will at- of the older population is growing in they do not – then we will not have tract customers with our good rates, Russia. This means that senior citi- innovations just for the sake of it. For close proximity of client centres, zens play an increasingly important example, blockchain – is it an inter- ease of service use and high quality role in the banks’ client base. And esting technology? It is. But as long service. There are no other recipes it is necessary to start working with as we do not understand clearly how for a bank’s success for now. them, telling them about the terms of it will make our services better, what As for the strategy, we are de- service, today. Second, senior citizens new opportunities it will open in our veloping consistently. By the end are responsible borrowers and up work with customers, we will not of 2018, we plan to form a retail to 60% of them are inclined to save introduce it only to tell our industry network – nearly every second and form stable balances on their colleagues that Post Bank has applied post office in the country will have accounts. blockchain. Post Bank points. We will begin to Senior citizens need to receive develop transactional servicing of their pension on time, multiply their What risks do you see for your small businesses; once again, we will income without excessive risk and business, considering the current revise the sufficiency of the current pay their bills. By transferring their economic conditions? product range. There is always room pension to their savings accounts Throughout my professional career, for improvement and where to grow, with monthly accrual of interest on I’ve heard people talk about the increasing the efficiency of the busi- the balance, we satisfy these needs. “difficult times we are facing”, “the ness. Isn’t that something to be happy In addition, preferential loan condi- severe economic situation”, and so about? For, as the song goes, to make tions and increased rates on deposits on. But look at us – we live, we work. a step forward, we have not only are available to senior clients. So I do not see any significant risks room, but potential as well. 118 Б
BLOCKCHAIN. INCEPTION OF NEW ECONOMY
HOW WILL BLOCKCHAIN TECHNOLOGY IMPACT ON THE QUALITY OF LIFE OF THE AVERAGE PERSON? IS THIS TECHNOLOGY INDUSTRY BASED, STATEOWNED OR A CROSSBORDER ONE? WHAT FORMS OF REGULATION FIT BEST INTO THE NEW REALITY? THE PARTICIPANTS IN VEB’S SPECIALIZED SESSION ON BLOCKCHAIN AS PART OF THE ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM WILL SEEK ANSWERS TO ALL THESE QUESTIONS. THE DAY BEFORE THE EVENT, WE SPOKE WITH SERGEY GORKOV, CHAIRMAN OF VNESHECONOMBANK, ABOUT THE BACKGROUND SERGEY AND MAIN TOPICS OF THE DISCUSSION, AS WELL AS WHY THE BANK IS SO INTERESTED IN BLOCKCHAIN GORKOV TECHNOLOGY.
Chairman of Vnesheconombank П 119 2017
Blockchain at a glimpse
A blockchain means, literally, a sequence of data units where every unit, or block, presents as a data package containing unique code, a set of transactions and information about previous transactions. A transaction can only be deemed verified once the respective record becomes part of a block and the block, in turn, becomes part of the chain. The process of generating blocks is called mining (by association with the mining of natural resources) and is based on cryptographic algorithms. A blockchain is essentially a database of all previous transactions. The database is not centralized. Every user within the system has a copy of the entire public ledger of transactions, which creates a distributed trusted collaborative environment. Decentralization is a crucial element of the blockchain technology. All data is stored locally and is identical which makes it impossible to hack or “cut off” the blockchain. Furthermore, the system is designed in such a way that every user continuously checks the data it receives. As a result, every transaction validates the integrity and reliability of the data within the chain. New data is added at the end of the chain completing the already verified data and partially based thereon. If some data within the blockchain is modified, for example, due to a breach, it will trigger changes in the chain down the line, otherwise the error will be visible to all users. However, changing data stored on, for instance, ten thousand computers is a complicated and expensive process, which ensures data integrity and accuracy. All participants of the blockchain fall into two categories: standard users who create records (operations, actions, transactions) and miners who build the records into data blocks (packages, envelopes). The process is very complex and resource- intensive, and not every user possesses the technical capacity to carry it out.
Mr. Gorkov, why blockchain? The interest shown in this technology by a state-owned corporation is quite surprising… We are at the verge of the fourth industrial revolution. We are still trying to comprehend where exactly this path is taking us. Yet the outlines of the new age are already visible. No doubt, just like preceding ages, Industry 4.0 will redesign most sectors and create new ones. Cyber physics, neuroelectronic interfaces, biomedicine… All will affect our life style. We will move to an economy of completely new interfaces between people, business, government and institutions. These interfaces will be decentralized, transparent and dynamic. The weaving loom was the driver of the first industrial revolution, the conveyor belt of the second, and the Internet of the third. Blockchain can drive the fourth industrial 120 B
Does this mean you believe Russia can be a leader in blockchain implementation? Correct. Currently, all the developed countries are approximately at the same level in developing and implementing blockchain. None are so far ahead that the others won’t be able to catch up. And we should grasp this opportunity.
Aren’t you afraid that blockchain will turn out to be just a fashion statement? On the contrary, we want it to become fashionable, to provoke interest and to attract more and more participants into development of the new technology. It is important to shape the practice of implementation, application and development of this technology, to seek its applied significance and identify all the related risks. Blockchain is already used in other countries and we will proceed from their experience. For example, ING and Societe Generale banks are currently exploring the possibility of applying this technology in trading liquefied natural gas. Only very few in Russia were talking about blockchain technology just a few years ago. Today we revolution. Today, this technology in developing the government are discussing the possibilities of is aligned to the maximum with the programme “Digital Economy” implementing it at the federal level. decentralization principle. We are described by Russia’s President in The RF Ministry of Communications already using the term “e-body” his Annual Address to the Federal recently announced that, by 2019, (“electronic body”) meaning a person Assembly. On the other hand, we there would be acomprehensive linked to the Internet 24/7. The are working to make processes more legal framework for full-featured human being has become an element efficient and to introduce advanced application of blockchain of the global network. We prefer technology in our Bank. Our new technology. electronic services. To put it simply: strategy stipulates the priority of At SPIEF, among other topics we no one flags down a taxi in the street; the Bank’s participation in catch- will be discussing a global one: the we prefer to order a taxi via our up development, and even more possibility of a standard platform mobile apps. relevantly – in rapid development. based on blockchain to provide As for our interest in this topic, Blockchain will allow us to take a step for interaction between different on one hand, we are participating forward in technology development. countries, such as for cross-border trade purposes. Blockchain is for good reason often called the “new Internet” because of its global character. Discussions are going on in various countries and even WE WILL MOVE TO AN international consortia are being set up, like R3. ECONOMY OF COMPLETELY NEW Where do you see the highest INTERFACES BETWEEN PEOPLE, potential for blockchain in Russia? This technology can be the basis for BUSINESS, GOVERNMENT AND creating any sort of public register of various transactions and the rolled- INSTITUTIONS out system per se will provide for ST. PETERSBURG INTERNATIONAL 121 ECONOMIC FORUM 2017
verification of payments/transactions. financing and investment project executed directly between equal We are envisioning big potential management. participants in the network. for blockchain applications in the Overall, blockchain may change As a result, the entire system Federal Agency for State Registration, the order of transactions: the relevant becomes more flexible, as many Cadastre and Cartography. This transaction model will switch from workflow tasks previously performed technology may significantly reduce using a centralized structure (banks, manually will be done automatically the time required for providing exchanges, trading platforms, using so-called “smart” contracts. public services, increase operational energy generating companies) to It is extremely important efficiency and make relations between a decentralized one (end users, to develop relevant conditions the public and institutions more consumers). Third-party intermediaries for blockchain creation: from transparent. (currently servicing most industries) infrastructure to specific tools Of course, it is important to take will no longer be required because supporting specific projects. This is our all the potential risks into account. transactions may be initiated and outlook for the nearest future. Certain limitations are required for such transactions as transfer of title to an apartment and the like. No deal may be put into practice in some cloud system without certain guarantees, a regulatory framework and a regulatory agency. BLOCKCHAIN WILL Speaking about the development bank, we could execute digital SIGNIFICANTLY REDUCE THE deals with our borrowers based on blockchain. This will significantly PAPERWORK AND COSTS, reduce the paperwork and costs, as well as facilitate interaction. Currently, AS WELL AS FACILITATE we are exploring the possibilities of blockchain applications for trade INTERACTION 122
THE SITUATION IS LESS PREDICTABLE THAN IT WAS FOUR OR FIVE YEARS Where do you see the global will at some point, but it’s going be economy going over the next year very low-single digit growth for the AGO and how can this impact your own next year or two. Relative to other growth prospects? emerging markets we still see Russia Tinkoff is a Russian company; we as in not bad shape; it’s proved to only do business in Russia. we are be very resilient. The government thinking about business beyond has made a lot of good decisions, Russia’s borders, and this is on the in the right order and in a timely public record, but for the moment way, they’ve managed the economic we only have business here and situation, and we’ve come out really we’re not planning anything in the looking quite good. Beyond stuff near future in terms of international that you get out the ground, Russia expansion. So, what happens in has a lot of good things going for terms of external forces that come it. There has been a bit of a clean- to bear on the Russian economy, out in the economy and especially the Russian financial sector, are in the banking sector. Some bad obviously very important to us. players have left, the good players Russia’s obviously been through the remain are feeling stronger in a bit of a difficult period over the an emptier market. If you look at last two-and-a-half to three years. the finance sector that’s especially We know what sequence of events true, where there’s been quite a big that led up to this. But recently, the clean-out, which we obviously like. OLIVER economy seems to have bottomed What could derail us from outside, out; it’s going back into weak growth it’s difficult to say but obviously HUGHES mode. Will it go back into high if there’s some kind of global growth? Highly unlikely in the near financial dislocation, as we’ve seen CEO Tinkoff Bank future. Obviously, we all hope it in previous years, for example a big bank collapse in the US or Europe, then obviously that would have a knock-on effect on the financial sector here. But, we very much hope that we won’t have any imported problems.
Do you think there are more threats and uncertainties facing your business today than three years ago? There’re always threats and uncertainties; I don’t remember a time when there weren’t any. Maybe globally, I would say that, economically and politically, the situation is less predictable than it was four or five years ago. But, there’s always going to be something that fortune has to throw our way and that’s just part of the nature of doing business in a fairly volatile emerging economy. ST. PETERSBURG 123 INTERNATIONAL ECONOMIC FORUM 2017 124 B
SALVATION LIES IN HUMANS: WITHOUT THEM, NO DIGITALIZATION
UNTIL RECENTLY, SOME PEOPLE USED TO FANTASIZE ABOUT AN ABSOLUTE UTOPIA: SUCH AS ALL PHYSICAL WORK BEING DONE IN THE FUTURE BY ROBOTS, WITH PEOPLE LEFT WITH ONLY INTELLECTUAL AND CREATIVE WORK. REALITY OUTSTRIPS THE DREAMS OF THE PAST BUT GIVES NO REASON FOR JOY. THE PROPHETS OF PROGRESS COULD NOT EVEN IMAGINE THAT DEVELOPMENT OF TECHNOLOGY WOULD CHALLENGE EMPLOYMENT OF A MAJOR KIRILL PART OF MANKIND. VARLAMOV
Director, Internet Initiatives Development Fund ST. PETERSBURG INTERNATIONAL 125 ECONOMIC FORUM 2017
undreds of thousands and algorithmization of operating Even the universal computerization of former street- processes. Robots will keep taking and network cabling common to cleaners left without physical labour upon themselves, the ‘dotcom’ era are losing their their brooms is, in while algorithmization, meaning relevance. The basic infrastructure in fact, not the worst digitalization of processes into the new digital economy is code, that case scenario but codes and software, will enable is to say, software that is laid upon unfortunately an unrealistic one. Too automation of many, in fact rather the networks, gadgets and gauges Hoptimistic! Robots at plants, automatic routine intellectual operations. we already have. And it is not some assembly lines and driverless cars are For instance, our portfolio startup ‘rough’ code written by a multitude merely the visible part of digitalization Stafory is already absolutely able, of Indian offshore programmers; it’s of the economy, the very tip of the that is to say 100%, to replace the code that has already been shaped huge iceberg. In reality, learning recruiter: the artificial brain ‘scans’ into process platforms, protocols neuron networks and artificial brains CVs on job-seeking websites, makes and standards, as well as into mass are soon to replace most routine initial calls to candidates, conducts information services and IT products intellectual workers. Their work will interviews using a human voice and for individuals and business. Such be done by software and that software making a video recording if necessary, infrastructure can have only one is going to replace 10 times more jobs complements the CVs, produces genuine producer: a human being. In than mechanical robots. Bankers, hiring recommendations and provides other words, people are our new work recruiters, notaries, accountants, them to the company HR. The huge benches, highly intellectual means of lawyers, newsmen and even recruitment services market is thus production for the new infrastructure scriptwriters: all these occupations being killed not by a giant such as of the new economy. will gradually become a thing of the Google but by a single startup that That is why, in a world where past. For instance, the Associated has created an AI-solution in just many jobs are to be robotized and Press’s bot is already producing two eighteen months with an initial algorithmized, the value of human thousand pieces of sensible news investment of RUB 1.5 m. If you have capital can hardly be exaggerated. per second. A year ago, film director children who are now studying to The leading global economies are Oscar Sharp and technologist Ross be recruiters, think of where they already prioritising human over Goodman even presented a full-length will end up in a few years’s time. financial or natural capital: it is its film according to a scenario written Digitalization liberates entire classes level and quality that determine the by a neuron network! Technology of ordinary occupations from human development of science and new is threatening the livelihoods of involvement and its impact on the production, their competitiveness Hollywood scriptwriters, not to economy is much greater in scale on international markets. This mention millions of future university than the industrial revolution. We are is about talented scientists and graduates who are unaware of the talking here about dozens of millions teachers, engineers and programmers, risk of being thrown overboard with of lives in Russia alone. entrepreneurs, other professionals their new diplomas. Do any of today’s Particularly in the context and high-class specialists realizing children remember what a telephonist of the onrushing digitalization, their potential in the country or for or a lamplighter does? it is important to revise Russia’s the benefit of its economy. Speaking to the Federal Assembly strategic priorities in social and Developers of sophisticated in 2012, our President voiced the economic policy. For decades, the technology and entrepreneurs task of creating and modernising dominant economic paradigm in our hold special positions in the human 25 million new jobs by 2020. This country has been investing in the capital structure. These are the is an important task but, even if it infrastructure in order to promote people who can become conveyers is fulfilled, who is going to be able economic growth rates, including by and catalysts of digitalization in the to fill these jobs? On the contrary, means of large-scale state projects. economy. It is indicative that the according to our forecasts and But what is the infrastructure in the Chinese development programme OECD data, around 6 million jobs economy of the future? Is it the Internet+ clearly reveals the will basically disappear in Russia in roads, bridges, buildings and cables Chinese Government’s aspiration to the medium-term as being useless that Russian capital construction engage as many people as possible and another 20 million will change loves so much? Alas, not any more. in entrepreneurial and innovative dramatically in nature. As a result, we will be witnessing a real drama: 26 million people will lose their jobs but 20 million new jobs may be vacant because they require other skills and competencies. As a country, we are DIGITALIZATION LIBERATES not ready for such changes, including because we don’t know what those ENTIRE CLASSES OF ORDINARY competencies should be and where can we get them. OCCUPATIONS FROM HUMAN All this will be conditioned by two trends: universal robotization INVOLVEMENT 126 Б
while the economy should learn to ‘utilize’ the potential of growing human capital. And this is what IIDF does, among other things, by providing assistance in launching new digital projects via systemic support for human capital development in the most promising IT sectors. Yet this is not enough. It is now high time to stop using the term ‘costs’ when talking about education and healthcare. Investments in these segments are not costs but investments with a postponed, long- term effect. Not without reason does the linguistic relativity hypothesis formulated by Sapir and Whorf state that language determines the way of thinking. The faster we manage to activity, thereby pursuing two goals Russia occupies a comparatively change our way of thinking, the more simultaneously: employment of high 28th place in terms of global effectively we will be able to handle employees left without jobs owing knowledge and operating skills, yet, new phenomena. to robotization and digitalization, in the overall rating, it ranks 56th, It is critical to reconsider and and stimulation of innovative behind Uruguay, Panama, Romania reconstruct our education system by development of big Chinese and Kazakhstan, owing to its poor updating standards in consideration business. And the point is not capacity to attract and utilize talent. of new technology, social shifts only that small and medium-sized The brain drain problem is acute in and the psychological specifics enterprises are the foundation of Russia: we are 86th in the relevant of the younger generation. While the developed countries’ welfare: rating, behind Tanzania, Madagascar the civilized world has realized their share in the economies of the and Pakistan. That is to say, we are the backwardness of the Prussian USA, Great Britain and France is still able to ‘create’ human capital educational model and started about 50%, and 60% in China. The but we fail to provide it with the implementing personalization, technological entrepreneur is not conditions for self-realization and continuous learning, project just a person with a booth selling comfortable development. The approach and soft skills focus – mobile phones or fur coats. The consequences of this gap are quite the Skills of the 21st Century – in IIDF experience of working with simple: the best and most talented education, Russia is still discussing thousands of startups has proven that Russian citizens, in other words, the rectangular form of classrooms the entrepreneur of the future is also the most productive part of the or marching drills. To say nothing the one who realizes revolutionary human capital, cannot find growth of the urgent need to build up job ideas, brings together financial and points inside the country, so they guidance mechanisms and close human resource flows, turning them “evaporate”. links between secondary school, into successful new projects able to Unless we take systemic higher education and business. conquer global markets and attract measures to develop and build up Finally, it is crucial to decide what financial capital. our human capital, we will face a our goals are and what tools are It is important to bear in mind that wide range of new threats. As already needed to make sure we don’t the programmer’s job is also rapidly mentioned above, this is primarily fall into a cargo-cult by raising changing in nature. The programmer an HR crisis. Second, we will face a fashionable technological tools to is often no longer the author of critical reduction in the number of the rank of an end in themselves thousands of new code lines. The Russian products in the economy, or even an idol. With a view to programmer of the 21st century the result being an increasing consolidating efforts, developing is a coder, engineer and architect technological dependence on a strategy and streamlining the rolled into one, a person thinking other countries. Third, Russia activities of all parties interested in in platform solutions and building might entrench itself as a donor of supporting national human capital, integrated systems. Such specialists talented and enterprising young we are setting up a Human Capital have already long been sought by people and specialists for the global Development Union. We are almost major global IT corporations that are labour market. Not very attractive out of time already: we should have developing their products into mega- prospects, are they? embarked on this a long time ago. platforms: Google, Facebook, Uber, In order to reverse this trend, But better late than never. If we Apple. the national policy in the area of change our attitude towards human Unfortunately, the Russian human human capital management needs capital today, Russia can become a capital situation is deplorable. In the to be revised. It should become the major exporter of not only natural Global Talent Competitiveness Index, key target of investment in Russia, but also human resources. П 127 2017 ROSCONGRESS
SERGEY 130 VYAZALOV General Director of the Ministry of Foreign Affairs of the Russian Federation, Chairman of the Board of the Roscongress Foundation SPIEF TO OPEN EXTENSIVE OPPORTUNITIES FOR INTERNATIONAL COMMUNICATION
INTERNATIONAL FINANCIAL 132 CONGRESS: FROM THE GLOBAL ECONOMY TO THE DEVELOPMENT OF THE FINANCIAL MARKET
EASTERN 134 ECONOMIC FORUM: RUSSIA’S WINDOW INTO THE ASIA PACIFIC REGION ROSCONGRESS
TOGETHER 136 WITH THE WHOLE PLANET: RUSSIA AGAIN WELCOMES YOUNG PEOPLE FROM ALL OVER THE WORLD
‘MADE IN RUSSIA’: 140 WHAT THIS UNIVERSAL BRAND WILL PROVIDE THE ECONOMY
YANG GE Actress, Ambassador of the World Festival of Youth and 144 Students MY COUNTRY CHINA IS A COMPLETE MYSTERY TO ME How Russians and Chinese can not only become friends, but actually understand each other according to a person who has truly lived in both cultures at once
SUBTLETY AND IMAGINATION: 148 RESTAURANTS FOR SPIEF PARTICIPANTS 130 R SPIEF TO OPEN EXTENSIVE OPPORTUNITIES FOR INTERNATIONAL COMMUNICATION FROM JUNE 1 TO JUNE 3, 2017, RUSSIA’S NORTHERN CAPITAL WILL HOST THE NEXT ST. PETERSBURG INTERNATIONAL ECONOMIC FORUM “ACHIEVING A NEW BALANCE IN THE GLOBAL ECONOMIC ARENA”. ITS ORGANIZER IS THE ROSCONGRESS FOUNDATION, THE BIGGEST CONVENTION AND EXHIBITION EVENTS OPERATOR IN RUSSIA.
he St. Petersburg The agenda for the St. Petersburg International Economic International Economic Forum always Forum (SPIEF) is a includes the most acute and topical unique event in the problems of our time, including world of economics and discussions on formation of a multi- business. The Forum was polar world, displacement of influence first held in 1997 and, since 2006, it has zones, the search for a balance Tbeen organized under the patronage in the global economic system, and with the participation of the development of human capital and President of the Russian Federation. other global economic and political Since its inception twenty years trends. ago, the St. Petersburg International By opening up new opportunities Economic Forum has grown from a for establishing contacts at the regional event to a reputable and political and business levels, the significant international discussion St. Petersburg International Economic platform. Today, SPIEF is a well- Forum plays an important role in SERGEY established and powerful brand developing international relations recognised in the global community. and business contacts between VYAZALOV Heads of international organizations, countries. The Forum is an effective leaders of states, heavyweight platform for business dialogues and General Director of the Ministry political figures, representatives presentations of the opportunities of Foreign Affairs of the Russian of business, the public and the offered by companies with the aim Federation, Chairman of the Board media endeavour to take part in the of finding new partners, as well as of the Roscongress Foundation St. Petersburg Forum. expanding and developing business The statistics for recent years relationships. show that the St. Petersburg Forum is Recommendations and attended by over 12,000 participants agreements developed during the from Russia, Europe, Asia, USA, North Forum have an important practical and Latin America. focus, serve to enhance the Russian Every year, attendees and visitors and the global economy, and participate in a topical programme promote development of equitable full of meaningful discussions and international cooperation in various interesting meetings that promote fields, as well as launching promising promising ideas and initiatives. new projects. П 131 2017 132
FROM THE GLOBAL ECONOMY TO THE DEVELOPMENT OF THE FINANCIAL MARKET WHITE NIGHTS AND SPIEF 2017 WILL GIVE WAY TO THE INTERNATIONAL FINANCIAL CONGRESS IN ST. PETERSBURG, AN EVENT JUST AS POPULAR AS THE FORMER WHICH WILL MAKE IT CLEAR TO ITS PARTICIPANTS WHAT NEEDS TO BE DONE TO DEVELOP THE ECONOMY AND WHAT ROLE THE FINANCIAL SECTOR WILL PLAY IN THIS REGARD. ST. PETERSBURG INTERNATIONAL 133 ECONOMIC FORUM 2017
ollowing one of the world’s prominent economic events, business representatives will be in no hurry to leave St. Petersburg as the city plans to host the 26th International Finance Congress from July 12–14. The Fevent, which is no less important than the St. Petersburg International Economic Forum, will bring together people who are well versed in the Central Bank’s policy in the whole spectrum of its manifestations – from monetary and credit policy to Address by Governor of the Bank of Russia prudential supervisory measures. Elvira Nabiullina at the International Financial Congress in 2016 This time the agenda of this international event will take on one of the most complex themes – ‘Finances for Development’ – which will depend on the of key market reforms, and drivers of WHAT’S NEW? teamwork of all stakeholders, including growth in certain sectors of the financial All the IFC sessions will take place financial market regulators, which in turn market. The IFC 2017 is expected in the genre of interactive discussions are often dependent on external factors. to be attended by more than 1,000 with discussions of the current problems The programme will kick off with participants from different countries facing the global financial system. a visit to a ballet performance of ‘Anna along with more than 200 members of This year the programme of business Karenina’ on the new Mariinsky Theatre different media outlets. meetings will expand to seven parallel stage. The congress itself will open with Attention will also be paid to themes roundtables and extend to topics that a welcome address from St. Petersburg that determine the trajectory of the cover almost all issues related to the Governor Georgy Poltavchenko and a global and financial markets in coming financial market. speech from the Governor of the Central years such as innovations in the financial The main innovation of the IFC Bank of Russia Elvira Nabiullina. sector, information security, corporate 2017 will be the fact that two adjacent More than 30 sessions are planned at data management, and the development congress venues in the centre of the IFC 2017 with a focus on economic of macro-prudential regulation. St. Petersburg will be hosting the development, the role of the financial Governor of the Bank of Russia Elvira Congress: the Presidential Library and sector in this process, and relevant topics Nabiullina will take part in the IFC, and the Central Exhibition Hall ‘Manege’. concerning financial market regulation high-ranking representatives of central An exhibition of IFC general partners and oversight. (national) banks from several countries will be held in the entrance hall of to This year the congress will once (Finland, Croatia, Singapore, Malaysia, the Manege Central Exhibition Hall again bring together representatives of Armenia) as well as representatives of the for the first time in the history of the credit and non-credit institutions and, IMF, the ECB, and the Financial Stability IFC. In addition, the Innotribe SWIFT of course, regulators for an open and Board will share their experience. The competition of start-ups will be held at confidential dialogue about the Central foreign business community will be the IFC 2017 along with the selection of Bank’s ability to promote long-term represented by leading financial experts, its winners. economic growth, about the contours researchers, and consultants. The IFC is expected to be fully rebranded this year. The presentation of the new style and logo of the International Financial Congress will take place in late May or early June 2017. In 2017, the IFC will retain the format that was tested last year. Previously, the range of discussion topics primarily focused on the functioning of the banking sector, but now the IFC topics will cover all aspects of financial activities. Prior to 2016, the event was called the International Banking Congress. But starting in 2016 the name was changed to the International Financial Congress. This was due to the fact that the Central Bank of the Russian Federation, which is the main organizer of the Congress, The ballet ‘Anna Karenina’ staged by became a mega regulator and expanded the Mariinsky theatre on the range of types of financial activities that it oversees. 134 Р
RUSSIA’S WINDOW TO THE ASIAPACIFIC REGION THE THIRD EASTERN ECONOMIC FORUM WILL TAKE PLACE IN VLADIVOSTOK ON 67 SEPTEMBER 2017 BASED ON A DECISION BY PRESIDENT VLADIMIR PUTIN.
or most Russians, the Far of China. South Korea and Japan are So it’s no surprise that the third East seems like some sort of nearby with populations of 51 million Eastern Economic Forum will once hard-to-reach far off land. and 127 million, respectively. There again take place in Vladivostok. The After all, the distance from are some 400 million people living Forum has rapidly gained popularity Moscow to Vladivostok within a radius of just over 1,000 km over the last two years. Specialists is almost 6,500 km, or a from Vladivostok. That’s roughly the note that the secret to its success is roughly eight-hour flight. By train you same distance between Moscow and quite simple – Russia’s Far East has Fwould have to travel some 9,300 km, Rostov-on-Don. Or from Vladivostok currently created a competitive model and by car the shortest route is more to Yuzhno-Sakhalinsk. According to for economic development. We can than 10,000 km. But looking past the numerous experts, this small part of safely state that the EEF 2017 will logistical difficulties, many people the world produces a gross product become the next stage in the dynamic forget that the Far East is an epicentre of some USD 7 trillion, or half of the development of this new economic of turbulent economic life. Judge for entire European Union. The density space. yourself: there are 65 million people of the economy and economic life is The Forum is attended by Russian residing in the two border provinces higher there than in Europe. President Vladimir Putin as well as ST. PETERSBURG INTERNATIONAL 135 ECONOMIC FORUM 2017
the leaders of Asia-Pacific region countries and serves as a platform for discussing issues not only related to the development of the Far East, but PRESENTATIONS WILL BE HELD AT the Asia-Pacific region as a whole. The large-scale event in THE FORUM ON NEW CONDITIONS Vladivostok essentially has a pragmatic and practical focus: it seeks to FOR INVESTMENT AND DOING strengthen ties within the international investment community and provides BUSINESS an opportunity for a comprehensive expert assessment of the economic potential of the Russian Far East. projects, receive information about Agency for the Development of As regards the Forum’s key the Far East’s existing investment Human Capital in the Far East (ADHC focuses, one of the highlights is opportunities and also hold FE) Deputy CEO Denis Kuzin told a demonstration of investment consultations on doing business the media that an entire plenary potential in different sectors of the in the region. An extensive pool session will be devoted to this issue. Far East economy: from agriculture of promising Russian and foreign It will be attended by the heads of and tourism to heavy industry and investment projects that are suitable Far East regions, representatives of high-tech manufacturing as well for practical implementation will be the Ministry for the Development of as strengthening the ties of the presented at the EEF. The project Russia’s Far East, and the ADHC FE. international investment community, creators will provide potential Actual recipients of the ‘Far Eastern Russian business, and the federal, investors with detailed presentations hectare’ are expected to talk about regional and local government containing the economic how they plan to develop the land authorities. justifications required for decision- they received and will be able to raise In addition, the Forum will address making. issues that concern them. issues related to the government’s One of the themes of the third The best ideas for using the provision of tax and other benefits EEF will be the implementation of ‘Far Eastern hectare’ will also be for investors, searching for new the ‘Far Eastern hectare’ programme. presented at the EEF 2017. opportunities for the economic growth of Russia’s Far East, and prospects for its integration into the economy of the Asia-Pacific region. Meanwhile, we should not forget about the advantages offered for attracting investment. Presentations will be held at the forum on new conditions for investment and doing business: priority development areas, the Free Port of Vladivostok, and state support for promising investment projects. All Forum participants will have an excellent opportunity to learn about specific business
Details
This time the third Eastern Economic Forum will take place immediately after the conclusion of the ninth BRICS, which will be held in China. Since its outset, the Forum has been firmly entrenched in the list of major global political events. The EEF 2017 will take place on the campus of Far Eastern Federal University (FEFU) on Russky Island in Vladivostok. A number of events will also be held on the Forum’s zero day – 5 September 2017. 136 R
TOGETHER WITH THE WHOLE PLANET: RUSSIA ONCE AGAIN WELCOMES YOUNG PEOPLE FROM AROUND THE WORLD
THE NINETEENTH WORLD FESTIVAL OF YOUTH AND STUDENTS WILL TAKE PLACE IN SOCHI IN OCTOBER. THE ORGANIZERS EXPECT MORE THAN 20,000 ACTIVE YOUNG PEOPLE FROM 150 COUNTRIES AS WELL AS 5,000 RUSSIAN AND FOREIGN VOLUNTEERS AT THE SITES OF THIS MONUMENTAL EVENT. THE FESTIVAL WAS LAST HELD IN 2013 IN QUITO, ECUADOR. BUT THE LAST TIME AN EVENT OF THIS MAGNITUDE TOOK PLACE WAS IN 1957, WHEN MOSCOW HOSTED THE SIXTH WORLD FESTIVAL OF YOUTH AND STUDENTS. ST. PETERSBURG INTERNATIONAL 137 ECONOMIC FORUM 2017
ver its 70 years of existence, the format of youth THE FIRST FESTIVAL WAS festivals has become firmly ATTENDED BY ROUGHLY entrenched in the minds of millions of people. Way 17,000 YOUNG PEOPLE FROM Oback in 1947, after World War II, representatives of progressive youth 71 COUNTRIES held the first festival of youth and students. At that time, there was a need to strengthen international ties, for interaction between nations and cultures, and to create a network of friendly foreign youth-based non- commercial organizations around the world. The first festival was attended by roughly 17,000 young
people from 71 countries under the slogan: “Youth Unite, Forward for Lasting Peace!”. Russia hosted such events on two occasions – in 1957 and 1985. Obviously, the original goals have undergone serious changes over time, but nevertheless more than 20,000 young people from 150 countries will travel to Sochi, Russia for the 70th anniversary of the WFYS. Huge staffs of Russian and foreign volunteers are expected to be involved in the work. The organizers will preserve the history of the festival movement and make the upcoming forum a global platform for an intercultural and international dialogue and a new stage in international cooperation, which will unite future generations around the idea of peace. 138 R
Economy 2030
Anyone who wishes can see the festival programme in all its glory on the sidelines of the St. Petersburg International Economic Forum. The document was approved at the third International Preparatory Meeting of the Nineteenth World Festival of Youth and Students (Colombo, Sri Lanka). In addition, a unified communications platform – a prototype of the mobile app – will be presented at SPIEF. This platform will be the main aid in Sochi for festival participants: using augmented reality technology, it will make it possible to get information online about the status of festival events, learn about the festival programme, and take part in surveys. HONOURING OUR PAST, WE BUILD for freedom and independence. WFYS representatives will THE FUTURE The year is quite conducive for the even hold a talk show called Seventy years is truly an impressive atmosphere of youth freedom and ‘Economy of the Future’ at number. The nineteenth festival creativity. one of the SPIEF venues. also has an impressive slogan: “For According to the organizers, one Student teams will present their Peace, Solidarity and Social Justice of the primary objectives of the programmes ‘Economy 2030’ and We Struggle against Imperialism WFYS 2017 will be for young people their vision of the economy of – Honouring Our Past, We Build from different countries to develop the future. the Future!” The upcoming festival an image of the future together and will be the third generation of the attempt to formulate answers to the main youth forum that took place most pressing challenges facing this in Russia and moreover will take generation. “Therefore, the goal of the place on the 70th anniversary of Some people are nevertheless state authorities is to help the first World Festival of Youth sceptical about modern forums. They organize and provide support. and Students, the 100th anniversary say the festivals are a platform for But the content of the WFYS of the Great October Socialist politicians and not for young people should not be conceived by Revolution, and the 60th anniversary with burning hearts. However, WFYS young people; it should emerge of the first Moscow festival. This 2017 Organizing Committee Chairman in a youth environment!” the year marks 50 years since the Sergei Kiriyenko has given assurances First Deputy Chief of Staff of the death in combat of Ernesto Che that this festival is above all a youth Presidential Executive Office said. Guevara, who fought his whole life event and not a state event. INVOLVING THE WHOLE COUNTRY IN THE YOUTH CELEBRATION The National Youth Council of Russia proposed holding the WFYS in Russia in 2017 (with support from President Vladimir Putin). This THE NATIONAL YOUTH COUNCIL idea was approved by the World Federation of Democratic Youth. OF RUSSIA PROPOSED HOLDING Sochi was not chosen as the host by chance – it was also approved, THE WFYS IN RUSSIA IN 2017 but at a meeting of the International Preparatory Committee of the (WITH SUPPORT FROM PRESIDENT Nineteenth World Festival of Youth and Students, which took place in VLADIMIR PUTIN) June 2016 in Caracas, Venezuela. ST. PETERSBURG INTERNATIONAL 139 ECONOMIC FORUM 2017
Young leaders from different spheres will gather in Sochi: representatives of youth NGOs, young journalists, engineers, scientists, creative and athletic THE PROTOTYPE FOR THE WFYS young people, leaders of youth organizations of political parties as 2017 LOGO WAS THE SYMBOL well as compatriots and foreigners who study the Russian language and OF THE 1957 FESTIVAL HELD are interested in Russian culture. This will mark the first time the IN MOSCOW festival is not hosted by a capital
city, but with the involvement of the entire country: the festival The main pillars of the scientific Future: Architecture and Design’, will begin with a massive parade in and educational programme of ‘Platform for Civil Development’, Moscow; key events will be held at the nineteenth World Festival ‘Economy and Entrepreneurship. Olympic Park in Sochi; a programme of Youth and Students will Drivers of the Future’, ‘The Future of has been established for foreign be ‘Projecting the Future: Science and Global Development’, participants in Russia’s regions – Architecture and Design’, ‘Global Policy and International from Kaliningrad to Vladivostok. It ‘Platform for Civil Development’, Security. Challenges of the Future’, will be a unique opportunity to learn ‘Economy and Entrepreneurship. ‘Technology of the Future’ and about the culture and traditions of Drivers of the Future’, ‘The ‘Industry 2035’. our enormous country. Future of Science and Global Ahmad Alhendawi, the UN As in the past, the symbol of the Development’, ‘Global Policy and Secretary-General’s Envoy on WFYS 2017 will be a multi-coloured International Security. Challenges Youth, expressed hope that the chamomile, which symbolizes of the Future’, ‘Technology of the themes that will be addressed at the continuity of traditions, the Future’ and ‘Industry 2035’. the WFYS will help to overcome connection of generations as the problems facing humanity: well as peace and unity of the “At a time when there are so many world’s entire population. Only complexities and difficulties in this time, its main component will world politics, I expect that people be coloured pixels as a sign of the held in Moscow – a white dove in a can come together and try to draw a youth’s community around the circle as a symbol of peace. new path forward based on mutual world in the era of information The main pillars of the scientific understanding, recognition of one and technological progress. The and educational programme of the another as well as people’s ability prototype for the WFYS 2017 logo nineteenth World Festival of Youth to act as peacekeepers and promote was the symbol of the 1957 festival and Students will be ‘Projecting the socioeconomic development”. 140 R ‘MADE IN RUSSIA’ WHAT WILL THIS UNIVERSAL BRAND GIVE THE ECONOMY
IN THE MODERN WORLD, THE DEVELOPMENT OF INFORMATION TECHNOLOGIES AND THE ACTIVE ROBOTIZATION OF PRODUCTION PROCESSES ARE RESULTING IN A DRAMATIC CHANGE IN THE CULTURE OF WORLD CONSUMPTION. CHEAPER MANUFACTURING PROCESSES AND THE MARGINALIZING OF QUALITY ISSUES DUE TO A DECREASE IN THE AMOUNT OF MANUAL LABOUR ARE LITERALLY FORMING A NEW TYPE OF ECONOMY THAT IS OFTEN REFERRED TO AS THE ‘ECONOMY OF BRANDS’. ST. PETERSBURG INTERNATIONAL 141 ECONOMIC FORUM 2017
cases that are important for the country. For the first time in many years, thanks to the economic situation as well as the sanctions placed on Russia, domestic manufacturers have been given the opportunity to show off their products to consumers. Over a short period, trends involving the emergence of new Russian brands, the return of Cyrillic names as well as significant investment in marketing, branding, and promotion have taken shape on the market. n the near future, brands will Successes certainly lay the proper become the key factor for foundation for generating demand choosing a product as they create among businesses for a national an emotional attachment among identity one of which could become the consumers to certain values, establishment of the ‘Made in Russia’ lifestyles, and meanings, while national brand. Even though Russia the quality of products will above all has no previous experience in creating Idepend on software and equipment such projects, a late start also provides settings as production becomes more significant advantages. Today, we have robotized. The active use of 3D printing the opportunity to look at the concept technologies will also contribute to this. and meaning of the brand from the Just recently, Airbus announced its desire standpoint of modern technologies to start printing aircraft components, and trends, making it not only an image while Boeing is already doing this with but rather a full-fledged tool that satellite production. Nor has this trend solves problems and provides domestic gone unnoticed by other industries, companies with a real result. such as light industry, construction, food One of the key objectives of production and many others. developing the ‘Made in Russia’ brand Today, the combination of these should be the creation of a single trends and the rapid development of information policy for the promotion information technologies are changing of the country’s manufacturing and consumption patterns and the ways in human resource capital. There are which products are promoted as they currently more than enough tools to create new challenges for which we meet such objectives, however they must start preparing right now. are not particularly effective due Beyond the emotional discussions to the absence of a unified centre of the current results of the import of competencies and collective substitution programme, many experts interaction between the government have not noticed a series of events and and business that could change the
TODAY, WE HAVE THE OPPORTUNITY TO LOOK AT THE CONCEPT AND MEANING OF THE BRAND FROM THE STANDPOINT OF MODERN TECHNOLOGIES AND TRENDS 142 R
perception of Russia on a global on their quality, level of production level. In the context of the current localization, or brand awareness. geopolitical situation, it is best to do All these opinions are based on the this with soft power in the form of experience of similar programmes and an apolitical agenda that is driven by institutions established at different actual businesses, people, and brands times in Germany, the United States, created in Russia. Australia, China, Japan, and other In this regard, an entirely logical countries, but they fail to take into question arises: is there something account that despite its value this we can offer? And there is only one experience was formed for a different answer – yes. Today, a whole layer of generations and conditions. small and medium-sized companies Amidst global access to has been formed, which for years had information and the development of remained out of the government’s field technologies, an entirely new group of vision. Despite all the difficulties, of consumers has emerged with which they not only managed to remain on it will be necessary to interact in the market, but successfully developed the coming years. They are used to and exported their goods and services a fundamentally different format of abroad. Above all else, all of these communication, are well informed, companies need to be advertised and and want to make decisions on their shown to potential consumers and own. This audience above all else partners both in Russia and abroad. needs to be given the opportunity They need to be provided with a to choose for itself and be shown breeding ground for development, an alternative while refraining from including in the information space while traditional propaganda. also avoiding any restrictive measures. Taking into account the realities There are numerous opinions of business in Russia and the about which specific companies globalization of the economy, the should be helped, how to choose and ‘Made in Russia’ national brand evaluate them, and whether to bet should exclude any restrictions
and assessment mechanisms for companies and serve only as a communications tool that does not duplicate functions or competencies, but harmoniously complements them both for business and the government. In this context, there can only be two objectives for the ‘Made in Russia’ national brand: the first is to increase the turnover of companies involved in collective promotion, and the second is to increase the brand value and enhance Russia’s positions in the international ratings of national brands. Both objectives are interrelated and their success hinges on large-scale involvement that can be achieved by integrating all sectors of the economy into the concept of the national brand. To achieve the objective of increasing Druzhba, Yantar, and Volna turnover, they will make it possible to One of the hallmark cases was the first rebranding in 80 years by the Karat plant, form a sufficient information space which manufactures the Druzhba, Yantar, and Volna cheeses that are so well- to attract traffic and subsequently known to every person born in the USSR. In just one year, the company was convert this traffic into new partners able to increase its market share from 9% to 10%, while increasing the share of and consumers while for ratings the cheese spreads in the sales structure from 7% to 11%. Another example that condition of each sector is a criterion deserves attention was the rebranding of the Sorvanets brand by the Kommunarka for assessing the value of the brand. confectionary plant, which tripled sales. These are just two examples among Despite the abundance of opinions hundreds of others, which demonstrate how important both correct positioning concerning the effectiveness of national and quality presentation are. brands, it must be remembered that ST. PETERSBURG INTERNATIONAL 143 ECONOMIC FORUM 2017
Foreign analogues
development of production and human resource potential, which includes CREATING THE ‘MADE IN RUSSIA’ tools that are capable of having a real impact on the country’s economic NATIONAL BRAND AS A DRIVER development, including improving efficiency and reducing government FOR THE DEVELOPMENT OF expenses on the promotion of economic sectors both within the PRODUCTION AND HUMAN country and on foreign markets, may not only become one of the new growth RESOURCE POTENTIAL points, but the start of the formation of a new image and perception of Russia as a manufacturing power that is capable of competing in the battle for both the modern information technologies costs. Such formats of interaction are modern as well as the future consumer. allow for imbuing traditional and tested vast and allow for assessing the potential Many experts have not noticed mechanisms with a new meaning. For of the ‘Made in Russia’ national brand a series of events and cases that are example, implementing the concept from a perspective where efficiency can important for the country. For the for predictable promotion takes on a be measured using completely different first time in many years, thanks to the whole new perspective with government figures. economic situation as well as the support. The formation of a primary Considering the difficult foreign sanctions placed on Russia, domestic agenda and subsequent promotion policy agenda as well as the economic manufacturers have been given the via key speakers online will make it challenges within the country, the opportunity to show off their products possible to generate larger volumes of importance of alternative approaches to consumers. Over a short period, traffic without significant cost. Creating and taking a fresh look at meeting the trends involving the emergence of a unified traffic network based on state objectives that are important for the new Russian brands, the return of media websites and institutions opens government will increase given the Cyrillic names as well as significant new horizons for attracting traffic and limited resources and time. investment in marketing, branding, and accelerating promotion in search engines Creating the ‘Made in Russia’ promotion have taken shape on the without the need for multi-million dollar national brand as a driver for the market. 144 R
YANG GE: FOR ME, MY COUNTRY IS A COMPLETE MYSTERY!
THE RUSSIAN ACTRESS AND AMBASSADOR OF THE WORLD FESTIVAL OF YOUTH AND STUDENTS SPEAKS ABOUT HOW SHE LEARNED RUSSIAN AND WHAT SHE WILL TEACH THE GUESTS OF THE FESTIVAL ST. PETERSBURG INTERNATIONAL 145 ECONOMIC FORUM 2017 2017
Students by WFYS 2017 Creative me. I had to gradually get used Director Ilya Bachurin. I am very to the culture, the rhythm of life, proud of this invitation and it’s very and the peculiarities of Russian important to me, above all because communication. I wouldn’t say that the festival is being held here in it was difficult, but it took time and, Russia. I’ve spent a big chunk of my of course, effort. life here. It so happened that at age You know what surprised me? 20 I came to Tula and later moved You Russians are very friendly to Moscow. The most important people. The Chinese, for example, periods of my life have taken place are very closed, on the contrary. on Russian soil. I spent my university We are unable to smile and interact days here and entered Gerasimov with strangers. In Russia, everything Institute of Cinematography (VGIK). is different. In Russia everyone is This experience and important period friends! in my life gave me an understanding When I was studying to become of how valuable communication is an interpreter in Tula, I didn’t know between different people, cultures, Russian at the time, and my teachers and countries. Thanks to this high- didn’t speak English or Chinese. It’s profile festival that will take place this some sort of miracle that I managed autumn in Sochi, young people from to understand something and learn different countries will have a chance in such conditions. I studied the to get acquainted, get to better know language for an entire year. I admit their peers from other countries, and that Russian is an unbelievably perhaps learn something. difficult language. But I can say All the more so since the festival that the language barrier is not a will bring together young people problem for communication by any from 150 countries. I recognize that means. After all, communication interaction and the people who is a special kind of magic between surround me have always played a people. Sure, it’s good when we big role for me. The WFYS 2017 will understand each other’s language. help to unite and rally talented kids But there is something more who are responsible for the future. important than language that It’s a wonderful thing when we can ensures communication between be together and become friends. The people. I’ll give you an example: important thing here is that everyone when my mother came from China, who comes to attend the WFYS 2017 she attended a play at the Gogol has different cultures and different Centre. The play was in Russian. upbringings. But culture is precisely Nevertheless, my mom understood what unites people; culture is a the gist of the performance. Not universal tool for communication. only that, she even understood who loved whom on the stage. Just like YOU RUSSIANS ARE VERY for me, when I was studying at VGIK FRIENDLY PEOPLE! and I wasn’t doing so well, was When I first came to Russia, sad, and needed help, my fellow things were very unfamiliar for students came to my aid without ormerly a student at Tula Pedagogical University, 28-year-old Chinese actress Future plans Yang Ge starred in the movie As far as my country, China, for me this country is a mystery. I have “Flight Crew” alongside spent my entire career in Russia and don’t even know how movies famous actor Danila Kozlovsky. are filmed in China. Chinese journalists have now taken an interest The diminutive Chinese woman with in me. They have started writing materials and learning things. Of Fa “Russian soul” recently spoke about course, I would like for my country to be proud of me. After all, the upcoming World Festival of Youth I really want to help out and share some of my knowledge about and Students, her life in Russia, and the cinema, or build relations between our cultures and create more special magic that blurs the boundaries joint projects in which I would certainly like to play a role. of communication between people from I don’t know where I will live in the future. For now, I really different countries. like it in Russia, but I don’t have any strict boundaries. Would you believe that my friends and the people I hang out with say THE WORLD IS ONE BIG FAMILY that I am already Russian! That I have a Russian soul. Perhaps I was invited to become an ambassador I was Russian in a past life and that’s why my entire life will be for the World Festival of Youth and connected with Russia. 146 R
saying a word. So you can always feel everything. It’s something akin to a non-verbal game. THE WFYS 2017 WILL HELP TO UNITE In general, when I look back on my university years, I can say that AND RALLY TALENTED KIDS WHO my fellow classmates really helped me out. They revealed a completely ARE RESPONSIBLE FOR THE FUTURE different world to me where each 147
I have a lot of friends who are 22–24 years old, but they have already tried their hands at many things. Sometimes they have done more than some adults. I would like for wise parents and independent- minded students to be able make decisions right away in an instant. Because when people start speculating and weighing things, difficulties appear.
person knew whom he wanted to be, what university to enter, and nobody owed anyone anything. Of course, you can simply love a country. You can love a country and the people that live there. If I didn’t like my job and the people I interacted with, I wouldn’t be able to live here. I like everything in Russia.
THE RECIPE FOR SUCCESS: THE EARLIER, THE BETTER I really fell in love with Sochi. I would really like to go to the World Festival of Youth Students myself. After all, it’s going to be held in my favourite place. I really like this city, and filmed there a few times. But I don’t want to go to the festival just because of my love for the Black Sea resort. Above all, I am interested in interacting with the festival participants and students. Just imagine – this is the new generation that is responsible for the future. Finally, I would like to give some advice to the young people, students, and everyone else who attends the World Festival of Youth and Students. I only came to understand it myself with time. Guys, the earlier you figure out who you want to be and what you want to do, the better. Understand that while we are young, we aren’t afraid of anything. When we love something to the utmost, we have a lot of power to do something right away. So in order to achieve success in a particular field, you need to start doing the things you love as early as possible.
Prepared by Alena Sivkova 148 R SPIEF
SUBTLETY AND IMAGINATION EATING AT A RESTAURANT FREQUENTED BY DOSTOEVSKY? ANYTHING IS POSSIBLE IN ST. PETERSBURG ST. PETERSBURG IS REFERRED TO AS THE GASTRONOMIC CENTRE OF RUSSIA. AND EVEN THOUGH MOSCOW OCCUPIES THE TOP SPOT IN OFFICIAL RATINGS, MANY GOURMETS STILL PREFER THE ESTABLISHMENTS OF THE NORTHERN CAPITAL. IRINA BYKOVA
HERE AND ONLY HERE considers it a must to put Simple-looking restaurants out an appropriate menu. on Rubinshteina Street, Tourists will inevitably the cafés Nord and ask the locals whether Zinger, Angleterre and it’s true that smelt smells Astoria, and the cult like cucumbers. Perhaps establishments of the smelt is the reason why Ginza Project and the the city is experiencing Berezutsky twins are a fish boom, although the spots where tourists St. Petersburg is close to head for fashionable the sea, so this is quite gastronomic tours and just understandable. for fun. Sure, Moscow is St. Petersburg is also the city of glamour and the capital of Russian the oil nouveaux rich; it’s vegans, i.e. people whose posh, expensive, and rich. relationships with food But only in St. Petersburg are too intricate according can you find a whole PACMAN to the “meat-eaters”. The set of gastronomic and very first and most famous price preferences literally Address: 2, Konyushennaya Ploshchad cafes without meat or any grouped together on Tel.: +7 (812) 997 7767 animal-based products one street: from an Website: www.pacmanspb.ru were opened in this city. unbelievably cheap Hours: Sun–Thurs: 12:00–01:00; Fri-Sat: 12:00–06:00 There are probably still eatery (with a set lunch Cuisine: European, Pan-Asian, Russian more of them per capita of homemade quality) to Menu: Dishes from all around the world – Europe, Japan, and in St. Petersburg than a mind-boggling (even by Asia as well as traditional Russian dishes with an interesting anywhere else in Russia (as Moscow prices) molecular presentation. The bar menu includes a variety of creative well as all kinds of stores cuisine restaurant. cocktails. and shops that sell these There are purely local Interior: Architect Andrey Tsygankov has designed the strange products for those specialties as well. For restaurant in bright and delicate pastel colours with the addition who are fundamentally example, each spring of ultra-modern details and elegant pieces of furniture. Each opposed to eating our food nuts go crazy about design element aims to ensure guests have a pleasant visit and little brothers). The same the local freshwater fish, awakens a whole extravaganza of sensations. goes for other unusual smelt, and each restaurant food practices: you won’t S. P INTERNATIONAL 149 ECONOMIC FORUM 2017
find hardly any restaurants a great respect for the nostalgic about the Soviet ‘patina’ and the shabbiness in other Russian cities that ‘Literary café’ at the underground and imagine that covers historic beauty. are entirely dedicated to corner of Nevsky and the yourself in the company Or savvy well-measured fashionable diets (like the Moika embankment – of Brodsky, Dovlatov, and neglect. Minimalism is Dukan Diet, which existed except during his time it Tsoi. always fashionable. Or a in St. Petersburg). was a confectionery. It is A constant highly avant-garde mix There are several simply impossible to list St. Petersburg trend is that is achieved not by explanations why all the famous visitors to bohemianism, and it’s not investing in expensive St. Petersburg in particular the ‘Stray Dog’ – it’s not only about theatres and designers, but by an innate has such a cult of food, just an art cafe, it’s a real museums. St. Petersburg sense of St. Petersburg cuisine, and restaurants. living history of Russian (including during the style. The city’s patriots have the literature during the days of Leningrad) has If you’re not scared simplest explanation: it is “silver age” that can still always been distinguished off by the local or your Russia’s de facto top city be seen on Italyanskaya by a special style. The own snobbery, if you are and remains the capital Street. And then there’s cultural capital and so on a diet or want to try in spite of everything, ‘Saigon’ – the name on and so forth. People something completely including the capital of remains unofficial, but love gilding and stucco in unusual, if you are looking cuisine. Furthermore, everyone knows that this the restaurants here, too, for beautiful interiors or St. Petersburg is definitely establishment is located however unlike Moscow panoramic views, or if you the main attraction for in the Radisson SAS Royal they experiment with them don’t even know what foreigners, and foreigners Hotel on Nevsky Prospect, more boldly. And they you want – this city has generate a finicky demand where you can get all have even more respect for everything for you. Or that must be met. That’s almost everything. why St. Petersburg has numerous hotels, a variety FROM PETER of excursions and, of We don’t know for certain course, restaurants and what and how people cafes. Another explanation ate when they built is the city’s well-preserved St. Petersburg, but we can historical development. easily imagine without An endless number of historical sources. The old-fashioned apartment famous Petrine assemblies buildings with first floors started back during the intended for commerce construction days and and elegant mansions with the people in attendance fancy entrances – they had to be fed, of course, simply can’t remain empty. but everything was very There are so many of them simple, almost tasteless, as and they are so different the foreigners grumbled. that a variety of tastes is BUDDHABAR ST. PETERSBURG The history of inevitable. Restaurateurs St. Petersburg’s “eateries” believe that such resources Address: 78, Sinopskaya Naberezhnaya dates back to roughly the are nowhere close to being Tel.: +7 (812) 318 0707 1720s when construction exhausted: in 1913, eateries Website: www.buddha-bar.ru had been completed and accounted for about a third Hours: Sun–Thurs: 12:00–00:00; Fri-Sat: 12:00–05:00 life had begun. Almost of all food purchases in Cuisine: Pan-Asian immediately, people St. Petersburg, while now Menu: Brings together the culinary traditions of Vietnam, started setting up types this figure is substantially Singapore, India, and Thailand. The menu features the of establishments in lower. legendary Buddha-Bar salad, baked cod with yuzu-miso sauce, St. Petersburg that had Only in the city on Angus beef fillet, lamb rib roast in South Korean style, and never existed in old the Neva (apart from old much more. Moscow. This is because European capitals such as Interior: Upholstered furniture in an oriental style, vintage they came from the West. Paris or London) will you vases, historical architectural details, a mosaic, French But they came to rest on find restaurants that have gold fabrics, and lacquered wood. One of the restaurant’s Russian soil. maintained their historical main decorations is a three-metre Buddha statue made in Let’s start with taverns, name and location Indonesia and a 25-metre bar – the longest in the chain of which in St. Petersburg since time immemorial. Buddha-Bar restaurants. were initially called Alexander Pushkin had ‘herbergs’ (from the 150 R SPIEF
German word ‘inn’) and from goose feathers were which were different from also offered. taverns in Moscow and any Another type of other city in the empire. establishment that claims They started opening to be a ‘grandfather’ in 1724 as Peter ordered of the St. Petersburg the establishment of 15 restaurant also came from taverns in the city. They the West and can only were unique in the sense be found in the northern that people ate on the capital – kuchmisterskiye first floor and slept on (from the German word the second floor, sort of Kuchenmeister, or cook). like a hotel. The courtyard They did not yet exist also contained barns with in the 18th century, but hay and ‘parking areas’ Pushkin could already for horses as well as huts envision them in the early where the ‘drivers’ slept. 19th century: they “satisfied In the 18th century, some the dinner needs among of the taverns were what lower class officials and we usually imagine as the TSE FUNG other inadequate persons”. ‘rough Middle Ages’ – a lot We already pointed out of drinking, a lot of noise, Address: 13, Rubenshteina Street that the historical buildings so-so food, but everything Tel.: +7 (921) 932 3333 of St. Petersburg – many in abundance. But other Website: www.tsefung.ru of them in any case – were taverns were already close Hours: daily from 12:00–00:00 already planned with to what we think of as a Cuisine: Chinese restaurants on the first ‘restaurant’. How taverns Menu: Classic Peking duck, more than 15 types of dim sums floor. They were located turned into restaurants will from the finest dough, woks, crispy spring rolls, and much on the first floors or in be described below, but more. basements and were quite for now let’s wrap up our Interior: Designed by the American design bureau Tihany, compact, occupying up to story about taverns. which has created a number of iconic luxury projects. The five rooms. Among other In the 19th century, interior of Tse Fung is designed in gold, purple, and black things, there were used the barbarity passed and tones. for family dinners and a tavern became the same weddings, while drinking as a restaurant, except was not welcomed. with a slightly lower status. kuchmisterskiye, theatre “clean” and “dark” (with It was the same with The Regulation on Tavern buffets, hotels, inns, and simple furniture) sides, another form of ‘public Establishments (1861) other establishments. and lower-class taverns eatery’ – confectioneries – classified taverns as “a At the end of the 19th (in basements and less which quickly spread place open to the public in century, 320 innkeepers frequently on first throughout the empire, which either special rooms in St. Petersburg floors). Waiters handled and came to Russia with a table were rented maintained 644 taverns housekeeping in the through St. Petersburg. or food and beverages that employed some taverns. The cuisine was Confectioneries, as we were sold”. Taverns 11,000 people. There were exclusively Russian, tea already pointed out, included restaurants, three types of taverns: was served in tea kettles, garnered special respect eateries, dukhans, French “clean” taverns and and sugar in chunks on a from Pushkin. They shops and wine cellars, second-class restaurants, plate. Smoking pipes with replaced ‘candy shops’ canteens as well as taverns consisting of removable mouthpieces where candy sweets were sold for takeaway. They served coffee, chocolate, ice cream, and fruit. Griboyedov, Zhukovsky, and Turgenev all loved the IF YOU DON’T EVEN KNOW WHAT confectionaries. The Wolff and Beranger confectionery YOU WANT THIS CITY HAS was known for a variety of sweets made in the form EVERYTHING FOR YOU of human figures, famous S. P INTERNATIONAL 151 ECONOMIC FORUM 2017
houses, and portraits of are based on annual famous persons. competitions, above all As for actual the ‘Golden Culina’ and restaurants? Of course, ‘Best in the Profession in they existed under St. Petersburg Trade and Elizabeth and Catherine, Services’. In particular, the but they differed ‘Gold Culina’ competition from their European is held among cooks, counterparts and were confectioners, waiters not called restaurants as well as students (they were mainly taverns). of institutions of Restaurants started higher and secondary popping up as a special vocational education. type of establishment at Over 200 participants a faster pace following compete for the title the decree of 1770, which ‘Best in the Profession divided taverns into in St. Petersburg Trade classes. Stratification and Services’, and all the took place right away competition tasks are as high-class taverns prepared based on the started striving to become STROGANOFF STEAK HOUSE theme ‘St. Petersburg “cleaner” and more style’. In addition, priority luxurious, while the ones Address: 4, Konnogvardeysky Boulevard is given to regional a class below threw in the Tel.: +7 (812) 314 5514, products among the foods towel and focused on the +7 (931) 314 5538 used for the competition common public. Website: www.stroganoffsteakhouse.ru among cooks. Restaurants in the full Hours: Mon–Fri: 08:00–00:00; Sat–Sun: 10:00–00:00 The most interesting sense of the word only Cuisine: American, Russian thing is to read what regular came to St. Petersburg Menu: Includes almost all ‘meat classics’ from tartars and citizens of the city write on in 1805. The Hotel du burgers to steaks from the best cuts of marbled beef. the committee’s website. Nord was a rather decent Interior: Both elegant and democratic with the use of natural They post their recipes and establishment that materials such as wood and leather to create an atmosphere of food-related stories. Here underwent rebranding in warmth and hospitality in the restaurant. are a few of them: 1805 and started being Kira Iosifovna: “My called a restaurant. family’s favourite dish is St. Petersburgers called restaurants, unlike at other however, new times require ‘pancakes with brains’. The restaurants “restaurasons” establishments, live music “specialties” so that when recipe was handed down to or “restauratsis”. Later a was played. Up to 1861, tourists come to the city, me by my grandmother. Fry so-called table d’hote women were not allowed they know that they will pancakes and stuff them appeared in restaurants – a in restaurants. Starting encounter something that with minced meat: diced general table that was laid in the 1850s, restaurants they can’t find anywhere brains together with onion, out at certain time known were opened on the else. So, in an effort to and fry it for 10 minutes. to regulars and created a premises of entertainment develop tourism, the Add salt and pepper for friendly dinner atmosphere. establishments. For the authorities have to think taste. Fill the pancakes The owners of the most first time in St. Petersburg, about developing the with sour cream and bake popular St. Petersburg in 1915, an all-you-can- restaurant business. them in the oven”. restaurants were mainly eat smorgasbord buffet For some time now, Alexander: “‘Pie with a French initially. Visitors was arranged at Tourist the St. Petersburg Prayer’ – this recipe dates were served by lackeys in Restaurant on Nevsky government has been back to the 18th century frock coats. Prospect. reviving St. Petersburg and my family has passed In 1839, restaurateur cuisine as a brand, calling it down from generation to R. Legrand was the first in CUISINE AS A TOURIST this the ‘St. Petersburg generation since this time. St. Petersburg to employ DESTINATION cuisine’ project. This is Filling consisting of butter Tatars; after this, Tatar Soviet times wiped out handled by the Committee beat with flour and sugar waiters served guests in regional features and also for the Development of is laid out in regular yeast the city’s most fashionable turned St. Petersburg Entrepreneurship and dough and baked in the restaurants (such as cuisine into a ‘pan-Soviet’ the Consumer Market. oven. Proportions are based Grand Hotel Europe). At version. On the contrary, Officials’ activities on taste. My mother cooked 152 R SPIEF
pie for each holiday using most of the regulars at this recipe, and there was the best restaurants of not a single bit left. There is St. Petersburg in the 19th a crispy crust on top, a soft century, according to sweet layer in the middle, local historian Alexander and fluffy dough at the Belokhvostikov. bottom”. The famous Russian And, finally, another zoologist, populariser, recipe from Alexandra and hunting and fishing Silkina: “‘Charlotte’ from my organizer Leonid grandmother. You need: 4-5 Sabaneyev wrote the apples (preferably green and following about Gatchina sour), 3–4 eggs, 1 glass of trout: “Light, almost sugar, 1 cup of flour, a little completely silver, with a ground cinnamon, and a light brown back and a tablespoon of lemon juice. white, slightly yellowish Separate the whites from belly. The meat from these the yolk, add some sugar to IL LAGO DEI CIGNI trout is almost completely the whites, and mix it until white, only the big ones you get a thick foam. Then Address: 21, Krestovsky Prospekt (Northern road) are slightly pink”. It was gently insert flour and yolk. Tel.: + 7 (812) 602 0707 extremely expensive even Pour the entire mixture Website: www.illago.ru under the tsars, when into a pre-cooked form. Hours: daily 12:00–00:00 food was cheap generally Shape with butter, sprinkle Cuisine: Italian speaking. People could with semolina, arrange the Menu: Dishes based on original recipes from fresh farm ask up to 1.2 roubles for apples randomly, sprinkle products: noodles with a truffle flavour dressed in a block of one fish (‘portioned’ at with cinnamon to taste, and cheese, fresh artichokes fried with mint and garlic, lamb chops 350 g.), which was highly sprinkle with lemon juice. with sage, and much more. popular. Then with this Bake for about 30 minutes Interior: Made from natural materials and various types of money they could buy 1.2 at a temperature of 170–180 wood. A panoramic view of Swan Pond and a chandelier made kg of sturgeon, 3 litres degrees”. from hundreds of snow-white crystals of selenite are able to of sour cream, 4 kg of More local, authentic amaze even the most sophisticated connoisseurs with their pork, or 40 kg of potato, recipes can be viewed beauty. An outdoor patio is open when the weather is warm. Belokhvostikov points out. on the website of Trout from Izhora the Committee for River is a fish that the Development of probably does not exist in distinctly local here. We originates from the sea, Entrepreneurship and the other cities. already wrote about the a species of the Baltic Consumer Market. I’m sure small fish that is best trout. Here is how Elena you would agree that it’s an LOOKING ON AS prepared in St. Petersburg. Molokhovets, a classic unusual place to replenish THEY’RE EATEN But there is also Gatchina of culinary literature and the supply of knowledge The fauna of St. Petersburg trout in the local the author of the culinary about cooking! And be sure and the Leningrad Region waters. At one time, its encyclopaedia “A Gift to to appreciate the depth does not seem like it connoisseurs included Young Housewives, or of historical memory with would differ much from fabulist Ivan Krylov, writer How to Reduce Household families keeping recipes the rest of Eastern Europe, and critic Ivan Panayev, Expenses” describes it: dating back to the 18th yet nevertheless there the famous literary hero “The Neva trout, called century. Such a resource is definitely something Ilya Oblomov, as well as truite samonée by the French, is more delicious than all other types of trout. It has a small head, a thick body, a pink and red colour, and is very tender. It should be RESTAURANTS IN THE FULL SENSE speared 10 minutes prior to use. Fishermen call it OF THE WORD ONLY CAME ‘tameshka’”. Members of the TO ST. PETERSBURG IN 1805 Romanov Dynasty were S. P INTERNATIONAL 153 ECONOMIC FORUM 2017
admirers of Gatchina a complicated dish, but it’s trout for centuries, also easy to spoil. Belokhvostikov says. They Stroganoff-style were served at official meat came in third in the receptions, including the conventional rating. Count last coronation of the Alexander Stroganoff, the emperor and his wife in the head of the Ministry of Russian Empire (attached Internal Affairs and in 1854 is the coronation menu the military governor of designed by artist Viktor St. Petersburg, is credited Vasnetsov), and on royal with concocting the dish. picnics and in everyday life. According to one version, as an old man the count had TOP 5 DISHES FROM THE teeth problems, and so his BANKS OF THE NEVA cook cut thinly sliced pieces Journalist Maria Sokolova of meat, fried them, and at one time asked the poured a hot sour cream question about which dishes sauce over them so that in St. Petersburg are the they would be easy to eat. absolute best according to SHATUSH In fourth place is the residents themselves. smelt, which we already She interviewed a number Address: 64, River Moika Embankment mentioned. Smelt has of people. And here’s what Tel.: +7 (921) 914 4343 become the unofficial she found out. Website: www.shatush-spb.ru culinary brand of St. Petersburg rassolnik Hours: daily from 12:00–05:00 St. Petersburg. In May, came in first. Rassolnik Cuisine: Asian, European, Japanese, Indian restaurant menus start is a sour salted soup Menu: A synthesis of Asian and European traditions based offering seasonal dishes made from cucumbers on the principles of ‘healthy cuisine’, the highest quality of with this fish, which that could be found in products, and a creative approach to cooking each dish. has an unusual smell of the 19th century on the Interior: Replete with unique ethnic details. The restaurant cucumbers. menu of any Russian takes special pride in the hookahs that it serves as a special The list concludes with tavern. It maintains an treat while filling flasks of Bohemian crystal with various the Leningrad crumpet, honourable place in the combinations of drinks, syrups, and fresh fruit. which foreigners call a list of first courses to donut if they see in the this day. Whereas the flesh. But there are nuances. ‘Moscow rassolnik’ usually Special offers for SPIEF 2017 participants What other cities call a features beef kidneys, in the St. Petersburg restaurants donut, St. Petersburgers pearl barley is added to the 1. Etazh 41 15% call a crumpet. Fluffy, St. Petersburg version. (except live music time) delicious, high-calorie, and In second place is 2. Kommunalka 10% inexpensive, crumpets can Petrograd salad. History is 3. CHARLIE 10% be described as a true type silent on whether the salad 4. CASA DEL MEAT 10% of St. Petersburg fast food. was prepared in Petrograd. 5. Tandoor 10% One of the city’s oldest After all, the city was called crumpet shops (on Bolshaya 6. Chaliapin 10% Petrograd during a difficult Konyushennaya) has existed 7. Chaliapin Country Restaurant 10% time, during World War since 1958. To buy a few I, and at the beginning of 8. Arka 15% filling rings sprinkled with revolutionary events. Not 9. RIBEYE Complimentary offering powdered sugar, you often many people could get 10. BEGEMOTH IS BACK Complimentary offering need to wait in a long poultry meat, mushrooms, 11. UNA Restaurant 10% queue, which is often filled or cheese during those 12. Tse Fung Complimentary offering with patient foreign tourists. difficult years. Nevertheless, 13. Buddha-bar 10% Materials from the chefs gave the name of 14. IL Lago dei Cigni Complimentary offering Encyclopaedia of Petrograd to the chicken St. Petersburg, the 15. Pacman 20% fillet salad. You can try it at websites aif.ru and 16. Hitch 10% any local restaurant, but it’s restoclub.ru, and the better to order it at a high- 17. Shatush 20% St. Petersburg Cuisine level establishment. It’s not 18. Stroganoff Steak House 10% project 154 R
ST. PETERSBURG: ANOTHER HISTORY
ON THE SITE OF ST. PETERSBURG, THERE EXISTED THE THIRD LARGEST CITY OF THE KINGDOM OF SWEDEN.
long ago, the pressure of water from along the Okhta River was annexed to the sea turns disastrous. Peter himself Novgorod the Great. was faced with the riot of nature in In subsequent two hundred years, KONSTANTIN November 1724, and he did not survive no factual evidence of economic it. The Emperor caught cold during a activity at the mouth of Okhta can be SMIRNOV rescue operation and soon died. traced in the sources. They did not Who would agree to stay here write much in those days. journalist of their own volition? Except for a Nevertheless, a Scribe Book few dozen of fishermen from Finnish of 1500 contains a record of three tribes. But this was how things Russian villages and one rural HOW IVAN THE TERRIBLE CUT A looked at first glance. In the Neva community in the Okhta area. The VENT INTO EUROPE delta, there were also quite safe inhabitants engaged in navigation and Many still believe that Peter the places where the great water never trade. 189 households were listed. Great built his capital on the desert reached. First and foremost, along It took off from this point banks of the Neva. No wonder, with the Okhta River. onwards. Ivan the Terrible decided all those rivers, lakes, and marshy It was no accident that, in 1300, to defeat the Livonian Order. He swamps all around. The climate was the Swedes, with the help of Italian succeeded. Though then everything humid and cold. Tens of thousands of master builders, built the fortress of became more complicated – Russia serfs who were forced to work on the Landskrona (Earth’s Crown) precisely was attacked by the Polish–Lithuanian construction did not live to see it over. at the confluence of the Okhta and Commonwealth and Sweden. The Then, there was also an annual flood, Neva Rivers. However, they did not fighting dragged on. when strong winds carried the water last long, a year later, one of Alexander However, the point is that the of the Gulf of Finland into the Neva. Nevsky’s sons, Andrew of Gorodets Moscow Tsar’s envoy Ivan Vyrodkov Every hundred years, as it was noted captured the fortress, and the land built a port and fortress called ST. PETERSBURG INTERNATIONAL 155 ECONOMIC FORUM 2017
Another Nevsky Prospekt This year St. Petersburg turns 314 years. As you know, the count starts from the May 1703 decree of Peter the Great ordering the construction of a new capital on the banks of the Neva River. The first stones were laid on the Hare Island, located closest to the Gulf of Finland. However, literally on the eve of the historic decision, the Tsar held a military council, at which the prospects of building a capital city at the place where the Okhta River flowed into the Neva were Another Nevsky discussed. There was already a city on the site – Swedish Nyen and the fortress of Nyenschantz, the garrison of which capitulated on May 1, 1703. Nyen’s advantage was that its location was inaccessible to floods. Peter judged it was far too removed from the seashore. This is how St. Petersburg emerged on the Neva banks proper. While, in the mouth of the Okhta, a settlement was established that was later incorporated into the city. Yet, everything could have turned out differently – and Nevsky Prospekt may have led to the Okhta River.
HOW CHARLES IX OF SWEDEN was more than 2,000, which was a fairly OPENED THE DOOR TO SWEDEN high number for Sweden at the time. To begin with, in 1611, Charles IX Naturally, as in other Swedish cities, self- ordered the construction of a fortress government was introduced in Nyen, on the place of the Landskrona, which which was enforced by the magistrate later became known as Nyenschantz and three burgomasters. or the Neva Fortress in the German Residents made a living mainly from transcription. On the site of the Russian trade between Russia, Sweden, as well as settlement of the Nevsky estuary, the with Northern German cities and even Swedish city of Nyen (Nevsky) was England. Then, there were also artisans, built. It was located on the right bank and, most importantly, navigators. In of the Okhta opposite Nyenschantz. general, the city’s economy at the In 1632, the city was granted the status time was considered quite effective of a free city. Then, within ten years, and successfully competed with other Nyen received from the Swedish crown Swedish cities. At some point, the all the privileges of a free trading city. government in Stockholm even decided Thus, the residents received personal to rebuild Nyen by laying out five radial freedom, where they might have been streets. The Swedes could build their serfs before. Tax exemptions followed. own St. Petersburg, but they had no Finally, non-townspeople were barred time, as the Northern War broke out. from engaging in crafts at a distance of four versts without the city. AND PETER THE GREAT After the war with Russia in 1656– CAME ALONG Gorodok (Town) of Neva Estuary at 1661, Russian residents were driven Swedish Nyen got the raw end of the the confluence of the Neva and Okhta home, and the Orthodox church was stick. The fortress of Nyenschantz, Rivers. destroyed. Apparently, the Swedes which was supposed to protect the Thirty years later, documents could not forgive the fact that, during city, did in fact bring misfortune on it. indicated the existence of a pier, the fighting, Nyenschantz was captured Expecting a siege by the Russian troops, an Orthodox church, and, most by boyar Peter Potemkin, the ancestor of the Swedish command evacuated the importantly, a guest house, which Catherine the Great’s famous favourite, local population and destroyed most would not have been built without His Most Serene Highness, Prince of the city, so that the besiegers had a good reason. Hence, trade people Grigory Potemkin. nowhere to hide. None of it helped, and, were regular in the Neva estuary. Nyen became depopulated. Swedes on May 1, 1703, the Swedish garrison And, clearly, they did not come alone. and Finns had to be brought in. Germans of 600 surrendered to Peter’s troops. At the end of the 16th century, up arrived on their own. However, some of Simultaneously, two enemy frigates sent to a hundred vessels from different the Russians remained as evidenced by to assist the besieged were captured. countries moored in city every year. the data of local censuses. The Russian Tsar carefully inspected This was not accidental. The Neva In any case, by the end of the the fortress and the city. He had to and its delta served as the starting 17th century, the city on the Okhta decide where to build the new capital point of the trade route known since River prospered. According to the of his empire. Moreover, the mouths of the 9th century as the Route from the descriptions of contemporaries, Nyen Okhta were not subject to flooding. So Varangians to the Greeks. was built up with rich manors. In the there was a chance that the construction Be that as it may, peace did not centre, there was a spacious town hall of St. Petersburg could have started last long. In 1611, Sweden seized these square, which was surrounded not only from the place where the Okhta lands, seizing the Time of Troubles, by private houses, but also had the flows into the Neva and the Northern which left Russia weak for a long time, Town Hall with clocks, two Lutheran Capital would have another centre. as an occasion. churches, and a school. The population It never materialised. Peter I did not 156 R
St. Petersburg. Okhta milkmaids quickly became a kind of visiting card of the new capital and even made their way into the “Encyclopaedia of Russian life”. In Eugene Onegin, Alexander Pushkin described a St. Petersburg winter morning in these words: The merchant and the beggar rise, To his stand the cabman drives, The milkmaids from Ochta go Crunching over morning snow. A model of successful female entrepreneurship captivated men too. Over time, workmen tended to discard their axes for abacuses and weights and, after accumulating enough money, could expect to make it into the ranks of bourgeoisie or even merchants. like that the Okhta was located a long like actual serfs. However, no complaints As a result, when the Maritime way from the Gulf of Finland, and the and petitions from Okhta residents seem Ministry decided to establish a construction of the new city kicked off to have been recorded. Unlike the capital shipyard in Okhta Quarter in 1801, on the Hare Island, which is the Peter itself, the Quarter did not grow very it turned out that the necessary and Paul Fortress now. In fact, Peter much with new labour arrivals. During craftsmen were no longer there. It underestimated the danger of flood. the entire 18th century, only some 2,500 was necessary to impose an annual The city on the Okhta could be people lived in Okhta. financial quitrent of 30 roubles on consigned to oblivion. However, There is an opinion that, by and large, all local residents to use revenues to Peter needed skilled carpenters, the Russians are not very enterprising. hire civilian carpenters. Nevertheless, woodworkers, and turners for the They tend to be more reliant on the the shipyard (Okhta Admiralty) was construction of his fleet. As many as government. This is why free market still successfully built. Up to the middle he could get. They were settled along does not function in this country. of the 19th century, almost a hundred the Okhta. In 1720–1723, the Emperor In Okhta Quarter in the 18th century warships were launched there. issued a number of decrees on the local artisans immediately brought their Other industries, for example, establishment of Quarter of Okhta. little cudsters with them. Russian man woollen business, started developing First of all, he ordered the speedy would not survive without fresh milk. in the Quarter as well. Therefore, construction of 500 huts “with porches” However, after they started getting when Okhta Quarter was officially and vegetable gardens. Using them to decent money from the treasury, they incorporated into St. Petersburg at the accommodate merchants or seafarers were clever enough not to spend the end of the year before last, it was already was not part of Peter’s plans, though. For money on drink, but instead invested it a developed factory district. It is not for several years, several hundred families in the purchase of Dutch and Holstein nothing that now it bears the name of of future shipbuilders from all over cows, which gave much more milk Krasnogvardeysky (Red Guard) District. Russia were settled there. than local cows. In addition, Okhta But this is a completely different Their legal status turned out quite had lush pastures. The milk poured in story. ambiguous. On the one hand, the authorities granted Okhta craftsmen quite a few benefits and privileges. They did not have to pay taxes and dues and received free housing and vegetable gardens. They were even paid 3 roubles 50 kopecks a month for work at the shipyards, which was a decent pay at Peter’s times – so much so that one could buy three cows and even a few poods of flour to boot. Moreover, after working off their duty at the shipyard, Okhta craftsmen were allowed to “moonlight” in the city. Capital city customers were generous, as they admired the skill of the cabinet-makers in particular. However, on the other hand, Okhta people were forbidden to leave the city and return to their home grounds. Just П 157 2017 158 R “HELP WITHOUT A TOUCH”: HOW SMART POSTERS CAN HELP CHILDREN
“HELP WITHOUT A TOUCH” IS A CHARITY PROJECT ON THE FRINGES OF THE ST. PETERSBURG INTERNATIONAL FORUM. IT IS RUN BY THE B.E.L.A. BUTTERFLY CHILDREN FOUNDATION WITH THE SUPPORT OF TECHNOLOGICAL PARTNER MASTERCARD AND CITYBANK. DURING SPIEF, THE PROJECT WILL ALSO GET HELP FROM ROSCONGRESS.
n conjunction with its partners, “We believe that such smart the B.E.L.A. Butterfly Children posters will soon appear in many Charity Foundation has Russian cities. Butterfly children developed unique posters with are born all over the country. a built-in reader for contactless Now you can help them easily payments. Those who wish to and quickly. The transfer takes 10 donate to treatment of children with seconds”, says Ksenia Rappoport, Irare genetic conditions can do so by People’s Artist of Russia and putting their contact-less bank card trustee of the B.E.L.A. Butterfly or any other payment device (such as Children Charity Foundation. a smartphone) to the poster for 100 “We are glad to take part in roubles to be instantly transferred this unique project and help the to the Foundation’s account. Such kids. We often have no time to posters will be placed on the grounds do something on which a human of the St. Petersburg International life might depend, and modern Economic Forum so that every SPIEF payment technologies and guest might make a donation in aid innovations make payments easy, of children. Taking part in creating simple and safe. When money is these posters was Photorapher Dmitry raised in this way, the very method Ageyev, winner of the international of payment – contactless – sends a Hasselblad Masters Award 2014 in the signal about the particular plight of Portrait category. those who need help”, says Alexei The B.E.L.A Butterfly Children Malinovsky, head of Mastercard Charity Foundation provides in Russia, Kazakhstan, Belarus and multifaceted systematic assistance Armenia. to children suffering from a rare skin All the money transferred disease called bullous epidermolysis via “Help without a Touch” (BE). The children’s skin becomes so smart posters goes to help the sensitive that touching it causes pain. charges of the B.E.L.A. Butterfly No complete cure for BE has yet Children Charity Fondation been found. www.deti-bela.ru. П 159 2017
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