Working Groups Materials (English Version)
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32nd PLENARY SESSION OF THE FOREIGN INVESTMENT ADVISORY COUNCIL IN RUSSIA 15 OCTOBER 2018 Foreign Investment Advisory Council in Russia Thirty second Session, October 15, 2018 CONTENTS 1. ISSUES AND RECOMMENDATIONS OF FIAC WORKING GROUPS ............................................................... 3 1. Digital Economy and Innovative Technologies ........................................................................................... 3 2. Localization and Regional Development .................................................................................................. 13 3. Improvement of Tax and Customs Law and Administration .................................................................... 25 4. The Development of Consumer Market and Technical Regulation ......................................................... 43 5. Health Care and Pharmaceutical Industry Development ......................................................................... 51 6. Financial Institutions and Capital Markets ............................................................................................... 63 7. Natural Resources and the Environment ................................................................................................. 84 1 1. ISSUES AND RECOMMENDATIONS OF FIAC WORKING GROUPS Foreign Investment Advisory Council 1. Digital Economy and Innovative Technologies TOPIC 1. Digital economy (in the light of participation of FIAC member companies in the Digital Economy of the Russian Federation program approved by Directive of the Prime Minister of the Russian Federation No. 1632- r of 28 July 2017). Issue 1.1. Implementation of Directive of the Prime Minister of the Russian Federation (cl. 12) on the List of Directives of the Prime Minister of the Russian Federation No. DM-P13-7063 of 23 October 2017 regarding the identification of mechanisms for cooperation between Autonomous Non- Governmental Organization – Analytical Center under the Government of the Russian Federation, Autonomous Non-Governmental Organization – Digital Economy, and foreign companies in the implementation of the Digital Economy of the Russian Federation program. Following FIAC’s Plenary Session, including the report of Jean-Pascal Tricoire, Chief Executive Officer of Schneider Electric, France, on the role of leading innovation companies in creating an ecosystem to promote the growth and development of digital economies across Europe and Asia, the Prime Minister directed the Ministry of Digital Development, Communications and Mass Media (the “Ministry of Communications”) to draw up proposals on mechanisms for cooperation with foreign companies in implementing the Digital Economy of the Russian Federation program, as agreed with Digital Economy Autonomous Non- Governmental Organization (ANO Digital Economy) and the Analytical Center under the Government of the Russian Federation. This issue was raised by the Schneider Electric SE CEO to identify the best way of cooperation and integration of the world’s top technology companies into the Management System for the Digital Economy of the Russian Federation Program, newly established by Directive of the Government of the Russian Federation No. 1030 of 28 August 2017. FIAC member companies that expressed their strong interest in participating in the program to confirm it repeatedly in 2017-18 include ABB AG, Samsung, Schneider Electric SE and Siemens AG. On 15 November 2017, the Ministry of Communications was requested in writing to make FIAC member companies part of the project management office (PMO) and task forces set up under the Digital Economy program. No reply has been received as of 20 August 2018. As of 23 November 2107, the deadline set in the instruction, the Ministry communicated its official position to the Government of the Russian Federation: “To ensure cooperation with foreign companies in implementing the Digital Economy of the Russian Federation Program (the “Program”), it is advisable to establish a single platform for sharing experiences between leading foreign and domestic companies with competencies in digital economy, and to engage professionals from the Foreign Investment Advisory Council (FIAC). The objective of the Council is to assist the Russian Federation in creating and developing an enabling environment for investment based on global best practice and the experience of multinational companies operating in the Russian Federation. Further, to acquire and retain relevant competencies and increase the number of jobs in the Russian Federation, it is recommended to localize foreign technology and production in the Russian Federation and to involve foreign companies in the Program in accordance with the Russian Federation Government’s Decree No. 719 of 17 July 2015, On the Criteria for Classifying Industrial Products as Having no Equivalents Produced in the Russian Federation. In addition to the above, it is necessary to explore ways to develop a systematic approach to promoting domestic products and brands into international markets using best business practice and state aid mechanisms, primarily, for small and medium-sized businesses. It is necessary to study the possibilities to localize the production of foreign high-tech products contributing to the development of digital economy in the territory of the Russian Federation. This can be achieved by 3 using various tools, including a framework of legal and economic mechanisms to reduce interest rates on loans for upgrading and/or developing new production capacities that create or use cross-cutting technologies in the real sectors of the Russian economy. It is necessary to consider inviting foreign companies that create or adopt internationally competitive cross- cutting technologies to locate their production facilities in Russia on preferential terms, including tax credits.” On 2 March 2018, a meeting was held with the Public Administration Department of the Ministry of Economic Development to get an update on their position and explore solutions for establishing acceptable mechanisms of cooperation with foreign companies in implementing the Program. No progress has been achieved as of 27 August 2018. On 6 March 2018, FIAC sent a letter to Oleg V. Fomichev asking him to support the inclusion of Alexander V. Ivlev, Coordinator of FIAC’s foreign members, in the Program’s Project Management Office and the ANO Digital Economy task forces. The response was received on 23 August 2018 (Letter No. 329 addressed to Mr. Shipov). Recommendations: To enable efficient cooperation with foreign companies in implementing the Program, the Project Management Office and the ANO Digital Economy task forces should consider accumulating time-tested knowledge, solutions and FIAC member global best practices under FIAC to further transfer them to the Russian Government in the form of consultations and recommendations for the purpose of finding the best solutions supporting the performance of public administration functions. As for day-to day communications, these should be organized at the level of the ANO Digital Economy task forces and joint centers of competence established in collaboration with the FIAC Working Group on Digital Economy and Emerging Technologies (as represented by ABB AG, Samsung, Schneider Electric SE and Siemens AG) and focused on priority areas of Russia’s Ministry of Communications, with the engagement of experts in all events and the possibility of official exchange of information. In the light of the above and taking into consideration the proposal sent by ANO Digital Economy to the Ministry of Economic Development on 23 August 2018, as well as acting on the instructions of the Prime Minister of the Russian Federation to establish cooperation between FIAC and the Russian Government under the Digital Economy of the Russian Federation program, we recommend that the Ministry of Economic Development: 1. Support the proposal to include Alexander V. Ivlev, a coordinator on behalf of FIAC’s foreign stakeholders, as a permanent member of the ANO Digital Economy’s Task Force (formed on 31 January 2018) and the Center of Competence dealing with regulatory matters. 2. In response to the cooperation offer of 23 August 2018, ANO Digital Technology should approve the engagement of the FIAC Working Group on Digital Economy and Emerging Technologies (notably, representatives of ABB AG, Samsung, Schneider Electric SE and Siemens AG) in the work of special task forces of ANO Digital Economy’s Center of Competence dealing with the regulation of integration processes, building digital trust, Big Data, cyber physical systems, intellectual property, special regulatory regimes, standardization and labor law. TOPIC 2. Implementation or support of cutting-edge solutions (primarily government information monitoring systems) including Big Data marking, collection, processing and deployment systems Issue 2.1. Building a regulatory framework governing data processing by information system operators (ISO), including those holding the status of the Fiscal Data Operator (FDO), which collect, process and transfer data, as well as data commercialization and the liabilities of ISOs and FDOs for non-compliance. 1. Currently, Russian operators of information systems (Platon, Mercury, State Industry Information System, online terminals, etc.), including those holding the status of Fiscal Data Operators, collect and process vast amounts of data, including commercially confidential information, about manufacturers and service providers, including retailers.