Wednesday, September 6, 2017

State Council Presidium meeting on the comprehensive development of the Russian Far East

Vladimir Putin held a State Council Presidium meeting in Vladivostok on the comprehensive socioeconomic development of the Russian Far East.

State Council Presidium meeting on the comprehensive development of the Russian Far East.
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State Council Presidium meeting on the comprehensive development of the Russian Far East. Photo: TASS
President of Russia Vladimir Putin: Good afternoon, colleagues,
The State Council Presidium is holding today’s meeting within the framework of the Eastern Economic Forum. We will discuss the comprehensive development of the Russian Far East and creating conditions for attaining quality improvements that will be obvious to everyone in all Far Eastern regions by the middle of the next decade. We have adopted a decision on a large-scale progressive modernisation and development of the Far East.
It is clear that we could not make up for the decades of unresolved problems within a matter of the past few years. Frankly speaking, when I look at what is being done now I sometimes feel that we are not doing enough, because we want to see the results of more effective work sooner, we want all of us to work more effectively. But I understand that everything we are doing will take a long time to complete, that these projects cannot be implemented as simply and quickly as we would like to.
Of course, there are also positive changes, and quite a lot has been accomplished already. We have created special development institutions and the legal framework for the operation of priority development areas and the Free Port of Vladivostok. We have launched the One Hectare programme in the Far East and large infrastructure and industrial projects, which have produced the first results.
For example, industrial growth rates are higher in this macro-region than the country’s average. The past three years were far from simple for the Russian economy, yet the average growth rate [here] is 8.6 percent. This is much higher than elsewhere in the country.
We have already learned how to attract investments to the Far East, and this work will certainly continue. Now the main task is to raise the people’s standard of living. It should not only reach the nationwide average, but even exceed it in the future. It is vitally important to achieve positive changes that people living in the Far Eastern regions will really feel.
In the past 25 years, almost 2 million people have left the macroregion. Today, the migration situation is slightly better, but the population continues to decline yearly, not at the same pace as before, but it is still declining by some 0.3 percent. Our main task is to increase the attractiveness of the Far East. This means decent housing, quality healthcare, transport accessibility, modern schools, kindergartens and day nurseries. In short, it is necessary to create conditions so that more hardworking, talented and educated people will come here.
The solution of both economic and social tasks can be successful only with the comprehensive development of all nine Far Eastern regions. The Government is developing jointly with the regions draft projects through 2025 for each of these regions. This is a very important stage, when everything needs to be carefully thought through and calculated.
Meanwhile, problems are now arising both at the level of the federal budget and at the level of individual agencies. We know that due to various objective reasons we have not been able to fulfil everything that we were going to do to finance the Far Eastern projects – I mean the federal budget. Although the work is going quite well there on the whole.
I would like to draw the attention of the Government, the economic bloc, the Economic Development Ministry and the Finance Ministry, to the fact that the Far East continues to remain our priority. Let's remember that. I would ask you to promptly make the necessary adjustments and to ensure funding for integrated regional development programmes in the future.
Let me also remind you about the decision to include designated Far Eastern chapters within the key state programmes. I saw a report on the implementation of this decision. It provided a ranking of state programmes in terms of their contribution to the development of the Far East. I have to say that in a number of areas the situation is modest, to put it mildly, if not outright dismaying.
What is this all about? Who drafted these programmes? They were developed by ministries and agencies in charge of specific sectors. Instead of creating special sections on the Far East within the programmes, they either failed to mention it or lack substance. Listen, here is what I want to say to my colleagues in the Government: I will look very closely into this issue, mark my word, and I want everyone to understand that appropriate measures will be taken against those who fail to deliver. We will have to appoint people to those ministries and agencies who understand our country’s development priorities. Please keep this in mind and make sure you address this situation.
Moving on, we have here with us heads of companies that invest in the development of Russia’s Far East. I would like to hear from you, colleagues, whether the current federal and regional support mechanisms are effective and to what extent.
I think that we need to set a specific objective: in the next three years, all Far Eastern regions should be in the top half of the national ranking of regions in terms of their business climate. What this means is that the Far East should outperform other regions in terms of promoting positive change. Other regions will also seek to improve their standing. Of course, we must keep this in mind.
I would like to highlight a sensitive issue for many entrepreneurs in the Far East and across Russia. I am referring to excessive oversight and control. We discuss all the time the issue of inspections being held without any reason or justification.
In August, in Blagoveshchensk I instructed the Government, the Prosecutor General’s Office and law enforcement agencies to look into this situation one more time in order to put things straight in terms of oversight. I expect a separate report on these efforts.
The One Hectare programme has proved worthwhile for supporting local businesses and promoting territorial development. Those who have received land under this programme have not only launched their own businesses but have united into new populated areas in the Far East for the first times in decades. The federal and regional governments must provide them with financial assistance and help them create communal infrastructure. I also suggest that those who are successfully working and have privatised their plots of land be offered larger plots of land to develop.
We should also give our compatriots who settle in the Far East an opportunity to join this programme. In general, we must analyse the progress this programme is making. As you know, people asked me about this during the Direct Line programme and complained about problems and red tape. We must analyse all these questions and come to proper conclusions. Those who come to live here, including those who come from foreign countries, come with the intention to work here and to build strong families with many children. We must certainly support these people.
Colleagues, during our meeting in Kaliningrad, where we discussed transport problems in northwest Russia, we agreed to do the same for the Far East. As I have already said, the macro-region’s logistics infrastructure is a key area in the development of Russia’s transport system and international transport corridors.
Aviation is crucially important in the Far East. We launched a programme of subsidised flights here in 2010. Over the past eight years, the number of subsidised flights has nearly tripled. But this year problems with buying subsidised tickets were reported. Actually, I believe that this happened not only this year. If we look carefully, we will most likely see the same problem last year.
I want the Transport Ministry to report on what they plan to do about this problem. We must create conditions in which people living in any part of Russia would feel that they all live in one country. I am not going to formulate solutions right now. I am asking everyone to analyse the situation and submit their proposals.
There is also an obvious need for creating more internal routes, which is a separate and very important task. We must think about what we need to do to towards this end.
Another question concerns passenger services between the Far Eastern islands and the mainland. This directly concerns the Kamchatka Territory, where aviation is the only means of passenger service available, although there are vast opportunities for using sea routes.
Also, I want you to tell me about the implementation of the key infrastructure projects, including the Trans-Siberian and Baikal-Amur mainlines and the development of large sea ports and airports. Proper organisation of the checkpoints on the Russian border is of crucial significance. Let us talk about this issue; let us talk about what we are doing in this area.
We have made big but so far only the first steps towards the priority development of the Far East. There is hard and responsible work ahead, but we will definitely accomplish it if we act together and implement all our plans without fail.
The working group of the State Council has presented a detailed report with many new proposals and has prepared a number of measures related to the comprehensive development of the Far East. Let us discuss it.
Mr Shport, you have the floor.
Governor of the Khabarovsk Territory Vyacheslav Shport: Mr President, colleagues.
First of all, I would like to thank you, Mr President, for your trust and the opportunity to prepare the working group’s report on the comprehensive development of the Far East.
In 2013, you described the development of the Far East as a national project of the 21st century. As per your instructions, we have quickly started creating a model of priority economic development of a macroregion that is completely new to Russia. This model is based on the creation of an investment climate and investment systems in the Far East that will be competitive in the whole of Asia Pacific. The new development mechanisms, which we created for a macroregion, are truly working.
The first resolutions on priority socioeconomic development areas were adopted about two years ago. In terms of technology, this is not a long time, but 18 such zones have already been created in the Far East and 158 companies with 500 billion rubles of reported investment have received resident status. Overall, there are plans to implement 340 projects worth 1.4 trillion rubles. The Vladivostok Free Port’s regime applies to five regions; 284 projects with a total investment of over 320 billion rubles have received Free Port resident status.
Infrastructure support is being provided for large investment projects. Federal support, estimated at 34 billion rubles, has been approved for 14 projects in five regions of the Far Eastern Federal District. Mr President, the decisions to level energy rates for companies in the Far East became effective in July, as per your instructions.
Arrival of investors is the best indicator of our system-wide work. According to statistics, the real investment rate index in the first half of this year was almost 120 percent and is one of the highest rates in the country. At the working group’s meetings, we carried out a detailed analysis of the situation in existing and future development areas in the Far East. Working group members and the organisations involved submitted over 300 proposals. We have analysed all of them, and the majority of these proposals have been incorporated in the consolidated report.
I would like to say a few words about the working group’s main conclusions and proposals. As you said, much has been done to attract investment to the Far East, but investors have already pointed out new challenges: how to attract skilled workers, and how to keep them in the Far East. The current residents in the priority socioeconomic development areas and at the Free Port have created 60,000 new jobs. All the proposed investment projects, of which there are over 800, will need more than 100,000 people. This is a large workforce, which we cannot provide even if we forget about the demand for skilled workers in the Far East.
This problem is also reflected in the results of the national ranking of the investment appeal of our regions. All Far Eastern regions received an E in the category Quality and Availability of Labour, which is the worst mark. The Republic of Sakha (Yakutia) has a D, which is also a bad mark.
In this regard, the working group believes that in order to meet economic development needs, it is necessary to implement a set of measures to stimulate labour migration to the Far East. We propose to update the current federal programme, Labour Mobility, for this purpose. The programme is still active, but it has been adjusted (there are new proposals) and today it requires simple modernisation. We propose to focus this programme only on the Far Eastern regions. Today this includes 16 regions in total.
It also makes sense, using the experience of this programme and the programme to resettle compatriots living abroad, to work out measures to support various categories of immigrants. We have worked on such proposals. With your approval, Mr President, together with the Ministry of Labour we will develop concrete proposals on the Labour Mobility programme.
Of course, it is impossible to solve the issue of attracting labour without providing people with certain living conditions. The question arises: how and in what conditions will people live there? So, modern kindergartens, housing, schools, hospitals and sports centres are needed. It is not enough just to stimulate private investment. As you already said, an integrated approach is needed.
Thanks to the investment support system, priority development centres are rapidly taking shape in the Far East today. The working group proposes to apply an integrated development approach to them. The first experience with such an approach is underway in the Khabarovsk Territory. In accordance with your instruction, in April 2016, the Russian Government approved a long-term plan for the comprehensive development of Komsomolsk-on-Amur. I can say that the experience of Komsomolsk-on-Amur will be implemented in Svobodny in the Amur Region soon. In August, the Government approved the integrated plan for Svobodny.
(The speaker went on to talk about the implementation of the integrated development plan for Komsomolsk-on-Amur and the problems that had come to light, and also made suggestions on how to solve these problems.)
The working group proposes to change the mechanism for supporting the integrated development of the Far East. What new approaches are recommended, if you will support them (and we hope you will)? First, in conditions of limited state resources, it is necessary to maintain compact centres of economic growth. Today, there are such centres in almost every region. Together with the Ministry for the Development of the Russian Far East, all the Far Eastern regions have designated such development centres.
I can list the main centres: the Eastern Petrochemical Complex in the Primorye Territory, the gas processing centre in the Amur Region, the Amuro-Khinganskaya priority development area in the Jewish Autonomous Area, the coal and metallurgical complex in South Yakutia, the Komsomolsk-Amursk-Solnechny agglomeration, the Yuzhny priority development area in the Sakhalin Region, the Avachinskaya agglomeration in the Kamchatka Territory, the gold mining centre in the Magadan Region, and Beringovsky priority development area in Chukotka. This approach – through development centres – is distinguished by its cost effectiveness.
Here is what I can say about the Khabarovsk Territory. If we act according to sectoral provision standards and open up, figuratively speaking, a broad development front, then the cost of infrastructure will amount to a trillion rubles. But this amount is unbearable, unrealistic. On the other hand, the approach with development centre, which we chose, requires 50 billion, and it solves major problems and they are being resolved today, as we can see. We propose approving this approach in all regions.
Second, the working group recommends reforming the current rules for granting subsidies to the Far Eastern regions: to move from a multi-channel system of subsidising regional activities according to sectors to a single grant for integrated development. This will help avoid numerous regulatory procedures for approval.
Third, it is proposed to select one main manager of the granted subsidy for integrated development. For Russia, this manager is the Ministry for the Development of the Russian Far East. This will allow us to quickly resolve these issues.
(Vyacheslav Shport proceeded to list specific proposals of the working group, in particular, on financing as part of the subsidies for the comprehensive development and under the One Hectare programme.)
According to members of the working group, the subsidy for comprehensive development should not be a substitution for the work with special sections of the Russian Far East in the state programmes of the Russian Federation. You have mentioned this as well. This concerns major transport and energy projects, as well as specific ones that are essential for the Russian Far East, such as Seismic Reinforcement of Residential Buildings, a project which is important for most regions. This programme is operational in every region and has shown very good results.
There are other programmes as well, such as Light Aviation Development. This is a separate programme, and it should not be discontinued after a single subsidy is introduced. The programmes should continue functioning as they are specific and must be included into these special sections.
These are our proposals and main areas of focus, which you can find in the report.
I would like to thank all members of the working group and colleagues – governors of the Far Eastern regions, investors and public organisations for the energetic work and engaging discussion, and for the proposals that have been submitted to the working group.
Mr President, I ask you to support the proposals for the comprehensive development of the Russian Far East voiced here today.
That concludes my report. Thank you.
Vladimir Putin: Thank you very much, Mr Shport.
Mr Trutnev, go ahead.
Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev: Mr President, colleagues,
During the forum, we reported that in the past three years, 837 investment projects have been launched in the Far East with support from the Government.
The total amount of investments stands at 3.2 trillion rubles. We can now say that we have learnt to attract investment to the Far East. We are perfectly aware that the world never stops changing, and development models that were created have to be improved. To draw investors there, we have to take some responsibility, primarily responsibility for supporting every project.
An essential part of our responsibility is meeting the government’s commitments to build infrastructure for new projects for priority development areas. Currently, work is in progress on 130 such facilities. We are overseeing the construction process online and making sure that every ruble from the budget is spent as designated.
There are some problems though. The existing rules on granting subsidies are highly overregulated and do not allow for flexible and efficient management of finances, depending on the schedule of building enterprises.
Mr President,
Yesterday, as you were touring the exhibition of priority development areas, you supported the proposal to create multi-functional service centres for investors as well as a change in the rules of subsidising infrastructure development. We will promptly draft relevant proposals.
And yet, we believe that the first stage in the development of the Russian Far East has been a success. Now we are facing even more complicated and larger-scale tasks. First, we should bring living standards in the Russian Far East to a level not lower – and, if possible, higher – than the average living standards in Russia.
Second, we should build the required housing, infrastructure, schools, hospitals and kindergartens for all major investment projects. This task is being addressed, Mr President, as part of your instruction to develop the Zvezda shipbuilding complex: Housing for 7,000 employees is being built; the overall amount of funding is 14.5 billion rubles as provided by the Fund for the Development of the Russian Far East, the Housing Mortgage Finance Agency of the Primorye Territory, and the state programme for the development of the Russian Far East.
The same comprehensive development task was assigned to the city of Komsomolsk-on-Amur. In that city, we should create 27 municipal infrastructure facilities worth a total of 62.9 billion rubles. But the funding situation is considerably worse, as you noted. In the meantime, we must build highly important facilities, such as a hospital for children, an oncology centre, and a theatre. We must also rebuild an engineering school and a sports complex. The city has none of these.
We are facing the same problems as we implement the gas refinery project in the town of Svobodny in the Amur Region. This will be a major facility, one of the most advanced in the world, with 4,000 employees. We must provide them with housing, infrastructure and all the necessary services.
In effect, we are talking about the need for the Government of the Russian Federation to transition to a project-based way of working, where the state accompanies an investor-implemented project by creating [decent] living conditions for people.
To be continued.

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