Vladimir Putin expects business to become a direct and essential participant of national projects. He shared this idea at the Congress of the Russian Union of Industrialists and Entrepreneurs. The construction industry situation and the decreasing mortgage rates were also discussed at the congress, along with the investment protection legislation that's being considered by the government and ways to improve the investment climate.
Anna Lazareva with the details on Putin's meeting with entrepreneurs.
Business is a direct and essential participant in national projects. Vladimir Putin began his speech at the RUIE congress with this phrase. The President stressed that he hopes that their partnership would be close and productive. However, the desire of Russian companies to invest in the country's development and be closely involved in the implementation of the national agenda is already obvious, says Vladimir Putin.
Vladimir Putin: "We can see that major Russian companies want to invest in national development programs and to be closely involved in the national agenda. I want to point out that the participants of a working meeting chaired by Mr. Shokhin and Mr. Siluanov discussed almost 1000 such initiatives. 250 investment requests worth a total of 12.1 trillion rubles ($185 billion) have been developed based on these initiatives".
The President dedicated a major part of his speech to the situation in the housing market. Vladimir Putin set the task to get mortgage interest rates down to less than 8% by 2024. He pointed out that mortgages have grown. It used to be 9.5% but now, the average is 10.5-10% The President says we need to go lower. The Ministry of Economic Development believes the negative effect of raising VAT is already over. The goal is to return to 8% mortgages. By 2024, the rate is supposed to be 7.8-7.9%.
Escrow accounts are supposed to become another incentive for the housing sector. It's a new transparent system. Instead of transferring the citizens' money to real estate developers, it channels them into a special bank account. Vladimir Putin expects both banks and real estate developers will work hand in hand in compliance with the new housing development mechanism to gather momentum instead of losing it.
Vladimir Putin: "A secure residential construction financing system using so-called escrow accounts should go into effect on July 1. That is, the property owners' contributions will not go to the developer directly, as before but will be channeled into a special bank account and transferred only in exchange for completed property. Construction companies will need to attract larger bank loans using project financing arrangements".
In his speech at the RUIE congress, First Deputy PM Anton Siluanov said that the main goal of the government in that field is to create a comfortable business environment to accomplish the task set by the president to reach economic development rates on par with the world average. The efforts are focused in three main fields: decreasing risks, reducing barriers, and creating investment incentives. The efforts are bearing fruit. The results of the Russian companies including the ones that aren't part of the oil and gas sector have been illustrative.
Anton Siluanov, Minister of Finance: "We've had a major increase in profits in 2018 not just the oil and gas sector, as previously, but other sectors as well. The profits of our, so to say, non-oil-and-gas companies that work in Russia have grown by 21.5% Their cost effectiveness is high, about 10%. These rates are pretty impressive even in the global context".
Entrepreneur right protection was also one of the key topics. In particular, the speakers proposed to create a digital platform where the information about all violations will be posted. This matter was also raised at the closed meeting with the president. According to President of VTB Bank Andrey Kostin, they also discussed the arrest of Michael Calvey, the founder of Baring Vostok, and Putin heard the opinion of business.
Andrey Kostin, President of VTB Bank: "He's got a good reputation, he's been in the Russian market for many years. Business has a lot of questions and I believe it's time to give us answers. The sooner we get our answers, the better it'll be for the investment climate. That would also make businessmen realize that violations do get punished but criminal practices aren't used to resolve economic or business disputes".
After the congress, Vladimir Putin gave certain instructions to the government and the Finance Ministry. The work on preparing and adopting legislation on investment promotion and protection must be expedited, but not at the expense of the document's quality. It's also necessary to make additional decisions on the special investment contract regime.
