SPIEF Review November '2015
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THE RESULTS SPIEF REVieW · NOVEMBER 2015 SPIEF Foundation adviser Publisher: Dmitry Mikhailov LCC Alliance Media Strategy Editor-in-chief Address of editorial board Ekaterina Pronina and publisher: 36, Kutuzovsky prospekt, Art editor Moscow, 121170, Russia Anastasia Lesnikova Feedback: Correspondents Tel. +7 (495) 280 0150 Galina Fyodorova Fax +7 (495) 280 0160 Daria Kichigina www.amska.ru Editorial and graphic design SPIEF Review Alexey Kharkov 16+ Vladimir Tolkachev Passed for printing on October 29, 2015 Print date: October 30, 2015 Translation Publication date: November 5, 2015 The Linguistic Department of the SPIEF Foundation Printed by: Tekhnologiya TCD Photos Address: Design and Printing Department, 84, Prospekt Vernadskogo SPIEF Foundation Moscow, 119606 TASS Circulation: 3,100 copies Not for sale Cover: SHUTTERSTOCK.COM WWW.FORUMSPB.COM 1 Contents The Forum: Key Events Straight talk 4 Russian President Vladimir Putin speaks at SPIEF 2015 Driving investment 10 Interview with Governor of St. Petersburg Georgy Poltavchenko Photo Report The faces of SPIEF 16 Macroeconomics In the eye of the storm 28 A closer look at the session ‘Economics: frank answers to pressing questions’ China: a stranger at the party 32 Examining the Chinese economy at the peak of its process of transformation Three hundred years of growth 38 A summary of the roundtable ‘A five-year prognosis — the end of growth?’ The prospect of market fragmentation 40 The current global trading system and steps towards its modernization Appropriate bargaining 46 A look at the changing nature of trade relations Unpredictable oil 50 A summary of the session ‘A new dalance in the oil market and its implications’ Role of civil service resurfaces 56 Reforms in state management The Business Landscape Great challenges 60 The future development of BRICS and the impact of its activities Reducing tensions 64 Interview with President of the Foundation for Worldwide Cooperation Romano Prodi 2 SPIEF REVieW · NOVEMBER 2015 When a challenge is an opportunity 68 New challenges for SCO countries Energy integration 70 Integration processes in national energy systems The art of neighbourliness 76 A summary of the session ‘EU–EAEU as a formula for cooperation’ What is the best price? 78 Interview with Alexander Novak, Minister of Energy of the Russian Federation New directions 82 The development of new infrastructure projects Paradoxes of the Russian Economy Formal logic 84 A summary of the debate ‘Paradoxes of the Russian economy’ Why growth is needed 88 The consequences of Russia’s economic crisis Nothing personal 90 A summary of the CNBC TV debates Crisis or adaptation? 94 Interview with Oleg Viyugin, Chairman of the Board of Directors of MDM Bank Not by raw materials alone 98 Minister of Trade and Industry of the Russian Federation Denis Manturov on an innovative industrial policy Where is capital heading? 102 The development of Russia’s regions Comfort for money 106 Interview with EY’s Country Managing Partner for Russia Alexander Ivlev Investment: direct and effective 110 What attracts foreign investors to Russia? WWW.FORUMSPB.COM 3 The Forum: Key Events Straight talk Speaking at the St. Petersburg International Economic Forum, Russian President Vladimir Putin covered a variety of topics, touching on virtually every major issue of recent months. SPIEF Review has published the head of state’s key comments, as well as responses from the international audience. SPIEF REVieW · NOVEMBER 2015 On industry Even over the course of this Forum there are several businesses being launched, We have taken decisive steps in a num- including in St. Petersburg itself: a phar- ber of areas and the results have been maceutical enterprise, a gas turbine fac- marked. There is huge potential in our tory with foreign partnership – the list engineering sector, in petrochemicals, goes on. in the light and processing industries, in pharmaceuticals, and several other I would like to thank those of our part- I support the statement of President Pu- sectors. ners who, despite the well-publicized tin: it is high time to stop these sanc- political problems we are experiencing, tions, and I hope now that everybody A demonstrative example is the achieve- continue to work with Russia, to invest in Europe has understood that these ments of our agro-industrial sector. their capital and their technology, and sanctions have hurt Europe substan- to help create new businesses and em- tially. If you look at the figures, for in- Of course, our work in this area is far ployment opportunities. stance, within two years – 2014 and from done, but the fact remains that 2015 – Germany has lost 50% of its ex- milk production in January–April 2015, On the business ports to Russia. Italy is losing only 10% relative to the same period the previous environment of their exports in comparison with last year, grew by 3.6%; butter production year, so it looks quite good for them. by 8.7%; cheese by more than 29%; A comfortable business environ- So, the consequences in the different fish and fish products by 6%; and meat ment is the most important condi- countries in Europe are totally different. by 12–13%. tion for establishing a grassroots layer We have no common interests in this of non-commodity small and me- respect. We have common decisions Import substitution is not about clos- dium enterprises. This is the real way on the political level, but whatever the ing your market and fencing yourself to achieve a diversified economy and reasons and the backgrounds are, these off from the global economy. job creation. are totally wrong. We also need to un- derstand that Russia, in turning to the We must learn to produce high-quality Our goal is the growth of small and East, is doing something quite normal, products that can compete – not just medium businesses to the point where because the East has a lot of opportu- on the domestic market, but globally. they are able to take on the domestic nities to offer Russia. Do not forget, Essentially, our task now is to use our market and develop their export poten- we Europeans, and specifically Ger- internal resources more fully and more tial. To this end, we intend to closely link mans, have strong connections with the effectively to drive development. the work of industry support institutions Chinese, and extremely good business, with export stimulus. and we are very pleased to work togeth- I say again: we are responding to ex- er with the Chinese, so why should Rus- ternal constraints not by closing, but I am referring to the recently-estab- sia not do the same? by liberating our economy, and further lished Industry Development Fund, the But the tragedy is in the fact that opening up Russia for business. These Far East Development Fund, the Russian we have boosted that trend by apply- are not just empty words; this idea is at Direct Investment Fund, project financ- ing the sanctions. We must move away the heart of current policy. ing mechanisms, and also the Russian from that. Export Centre, which provides domestic This includes ongoing efforts to create companies with a whole range of ser- the right conditions for business, to look vices to support their products on over- Heinz Hermann Thiele, for new partners and open up new seas markets. Owner, Chairman of the Supervisory markets, and to be involved in bringing Board, Knorr-Bremse AG about large-scale plans for integration. In addition to this, and in response to the I would like to point out that in the last wishes of the business community it- year alone, more than 60 businesses self, we are setting up a corporation for with overseas involvement began ope the development of small and medium rating on the Russian market. enterprise. WWW.FORUMSPB.COM 5 The Forum: Key Events This will offer businesses essential finan- When the Soviet Union vanished, it left cial, legal, and methodological support, behind a vacuum, and there was a sense including assistance in gaining access that this needed to be quickly filled. to procurement projects announced by the state and publicly-owned compa- This was not, in my view, the right ap- nies. In effect, we are consolidating our proach to solving the problem. Iraq support mechanisms for small and me- happened for largely the same reasons, Mumtalakat is a sovereign wealth fund dium enterprise, and expect it to make and even in the United States there are of Bahrain. What do we want to ask an important and tangible difference many who think that mistakes were about the Russian economy? I think to the business environment. made there. There were indeed mistakes the Russian economy is very promising, made in Iraq, as many acknowledge, and the Russian economy has very solid On events in Ukraine and yet despite this, the same mistakes fundamentals. I think when we look at were repeated in Libya. Now we come the Russian economy from the outside, We have discussed events in Ukraine sev- to Ukraine. It is not we who are at the the Russian economy has a skilled work- eral times over, and I realize that there root of the crisis taking place in Ukraine. force, and a very educated workforce is no getting away from the issue. The It was a mistake – and I have said this in the country itself. In addition to that, thing is, it makes no difference whether many times before – to support the they have the resources that everybody we are talking about Ukraine or about anti- government, anti-constitutional up- has talked about, coupled with the man- another crisis in another country. A few heaval and armed coup which, amongst power that they have.