Putin Meets with Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs

Putin’s wasting no time in getting people lined up to get his action-plan underway. We read how he’s already engaged the political-side and the Ministers, now it’s the business-side. This meeting usually happens annually and then there’re interactions on the sidelines at the several yearly economic and other forums. What we have today is merely the preamble between the two at the beginning of a much longer meeting. Someone else will be on the calendar tomorrow. Here’s their talk:

Vladimir Putin: Alexander Nikolaevich, we agreed to meet and discuss our current issues and, just as importantly, the prospects for cooperation between business associations, the Government, the Administration, and all the authorities, so to speak, in order to jointly determine future work in areas that are most important for business. I suggest you do it today.

First of all, I would like to ask your opinion on how the overall environment in which our business community operates is developing at the moment.

Alexander Shokhin: First of all, Mr President, thank you for this opportunity to meet and discuss both current and future economic development issues in the context of the President's Address to the Federal Assembly. Of course, it is very important now to consolidate the business community to solve all these problems following the results of not only the meeting, but also the presidential elections.

I cannot but take advantage of this personal meeting, Mr President, to congratulate you on the record result of your support.

Vladimir Putin: Thank you.

Alexander Shokhin: It is very important that the turnout was a record one. Of course, this is not only your personal victory, but also a victory for Russia, as it reflects the consolidation of Russian society around the national leader, the Supreme Commander-in-Chief.

This is very important for us, because we plan to work for a long time, not only for several years, three years, which the Ministry of Finance and the Government have at the forefront, but also for five, seven and ten years ahead. Therefore, the continuation of a number of national projects, the formation of new national projects, which you mentioned in your Address to the Federal Assembly, is very important for us. We are ready to join in this work.

We traditionally hold annual congresses of the Russian Union of Industrialists and Entrepreneurs. Thank you, Mr President, for establishing the tradition of participating in these congresses. This allows us, first of all, to sum up the results of our joint work and build plans for the future. I would like to take this opportunity to invite you to the next congress of the Russian Union of Industrialists and Entrepreneurs, which we have scheduled for April 18. We are very much looking forward to your participation.

At this congress, we just wanted to determine the current priorities based on the country's development strategy. Moreover, we have been discussing all these issues in recent weeks – we are holding the forum "Russian Business Weeks" before the congress. 14 forums were recently held, and the recommendations of these forums were also included in our proposals for the congress.

We have prepared a draft resolution, and we have obtained 100 points of our resolution. They called it "100 steps to economic leadership". I hope that if members of the Government, Administration, and legislators carefully consider our proposals before the congress – we have a month ahead of us – then the discussion at the congress would be more fruitful and constructive. I would like to pass on our suggestions to you.

Vladimir Putin: Thank you.

Alexander Shokhin: With your permission, we will submit them to the Government and the Administration, so that we can actually get answers to our questions raised at the congress.

Vladimir Vladimirovich, you asked a question about the state of the business climate and the environment in which the business operates. We conduct annual surveys. I would like to present you the results of the latest survey on the state of the business climate. You know, we have recorded some interesting figures.

Business estimates the state of the business environment in 2023 are about 2.5 times better than in the previous year. That is, if in 2022 14 percent of entrepreneurs assessed the state of the business climate as comfortable and favorable, then last year it was already 38 percent. This, in my opinion, is largely due to the fact that we are really actively cooperating with the Government, the Presidential Administration, and lawmakers. We manage to do a lot of things both taking into account the interests of the state and taking into account the interests of business.

Here are some examples of what we managed to do.

A year ago, at our congress, we discussed in detail the issues of expediting the return of Russian businesses to their native harbor, to Russian jurisdiction, and proposed a number of draft laws and regulations that would speed up this process and remove administrative and financial barriers on this path. A lot of work has been done this year, and you have given an impetus to this work. As a result, we now [have] all the system solutions that will allow us to speed up and already allow us to speed up the return of international companies to the Russian jurisdiction from various offshore companies that become Russian international companies. This work has really been done, there are still some touches left. I hope that by the time we get to the congress, we'll have finished reading everything. In particular, there is still the issue of personal funds, but we hope that a bill will be introduced just this week, since we have agreed on all issues between the Administration, the Government, and the State Duma. I think that we will be able to report on the work done.

Another issue that you raised at the congress a year ago is the establishment of an award for socially responsible companies. We carried out the necessary work, and at the end of January we summed up the results of this work. Our Organizing committee was very solid: it included ministers, social partners, representatives of companies and the expert community. The Organizing Committee was headed by Tatyana Golikova, Maxim Oreshkin and the President of the Russian Union of Industrialists and Entrepreneurs.

We have 44 major companies registered, and 14 are winners. We also hope that the awarding of these winners – we have divided them into three degrees - will take place at the congress and in your presence. This will certainly allow us to show that Russian businesses, despite sanctions and restrictions, continue to implement sustainable development programs. Previously, we used a foreign term – ESG, but the term is gone, and the work remains.

We used the most proven indicators, ratings and indices of sustainable development, which were developed for ten years, including in the Russian Union of Industrialists and Entrepreneurs. They also evaluated the companies ' programs in the field of human potential, territorial development, and the presence of technological sovereignty. We see that this will be a good example for the entire business, because, indeed, we are not only able to scale many things, but also obliged to.

Of course, despite the fact that many problems are being solved, we are facing new challenges. And we would like to have mutual understanding on all these issues. In fact, Mr Putin, you are ahead of many things. For example, the national project "Cadres" is what we thought about, not what we were afraid to say, but you formulated these tasks. I mean that, indeed, the personnel shortage is a problem that concerns all industries, all enterprises, both large, small, medium-sized, and individual entrepreneurs too, and small companies face these challenges.

We believe that much depends on the professional education system. Business invests and invests in professional education, in particular in such programs and projects as "Professionalitet" and "Advanced Engineering Schools". Companies participate in them not because it is, say, a request from the Government or the President, but because it is an investment.

Vladimir Putin: It is necessary, it is necessary.

Alexander Shokhin: It is necessary, yes. And we are ready – you have set a goal-to double the number of programs, the number of colleges and universities that participate in these programs.

Vladimir Putin: And engineering schools – 30, 20, then 50 more.

Alexander Shokhin: Yes, yes. And it is very important for us to develop such tools and mechanisms as the reflection of employers ' competence requirements in training programs and in federal state educational standards. We are actively working on this issue.

Equally, we are thinking about a massive transition to combining final and intermediate state certification with an independent assessment of qualifications by employers. The experiment is currently underway in 29 universities. We believe that the transition to a mass combination of attestation is overdue, where the educational track is evaluated, as they say, with a professional track.

These issues are very actively addressed by the National Council for Professional Qualifications under the President. He turns exactly ten years old in a month. We would now like to extend the powers of this council somewhat, taking into account the tasks that you set out in your Address, and taking into account the real problems that the economy and employers face. We have prepared a draft presidential decree on expanding and deepening the competence of the Council. Therefore, we would like to ask you to support this direction as well.

The next problem that I can't help but mention is fiscal policy. You clearly stated-both in your Address and recently, when meeting with the leaders of the factions – that predictability and stability of the financial burden are necessary, but at the same time, of course, social justice must also be taken into account. This applies not only to personal income taxes, but also to corporate taxes.

In particular, we raised the issue, including when we met with you, Mr Putin, that this fairness in the payment of taxes should be expressed in the fact that those who invest more should have more tax and investment deductions. We have a proposal on how to make these deductions more transparent, in demand, and really take into account not only investments in fixed assets, but also in social projects: in the environment, in the territories where we operate, and in social facilities. We would like to hold a dialogue with the Ministry of Finance, the Ministry of Economic Development, and the Tax Service on these issues.

This applies equally to personal income tax. We understand that the differentiation of personal income tax is overdue here, but we would like it to be really connected with the same investment deductions for citizens who invest, for example, in long-term securities. Recently, the Duma decided to grant these deductions to people who use individual investment accounts, long-term savings programs, and so on. Therefore, this work is really quite extensive and serious. It's not enough just to raise rates for the relatively wealthy. There are many aspects that we would like to participate in.

And another topic that is directly related to your approach to the stability and predictability of the fiscal system. We have a lot of temporary solutions. In particular, the same export duties were imposed last year for six months. The issue of extending it for another six months is currently being discussed. For example, the restriction on the transfer of losses to future periods was also taken as a temporary measure. Here we would like more certainty. This is also a topic that we would like to discuss with the Government before all tax decisions are made.

As far as I understand your approach, Mr President, the point is that after these decisions are taken, there will be a certain kind of moratorium on the implementation of these measures.…

Vladimir Putin: Changes.

Alexander Shokhin: This approach has largely been in effect since 2018, when you announced this moratorium. But we can see that sometimes the rates don't change…

Vladimir Putin: ... and the workload is growing.

Alexander Shokhin: That's why we would like to work together here. We understand our responsibility here, and we are ready to do our part. But we would like to work together with the Government and the Duma. As part of the preparation of the main directions of tax, budget and tariff policy, we would like to have a clearer picture, perhaps even before the end of the spring session of the Duma, before we start working on the annual and three-year budget for the next period.

Vladimir Putin: That's why we're meeting today. We will consider that this is the beginning of joint work.

Alexander Shokhin: All right.

Yes, the workload is growing. And much comes down to rubles and kopecks. The Forum coming in April will be an event to watch. As was clear IMO, the relation between Russian government and business is rather different as investing into and growing Russia are the goals of both, and both want to establish stable long-term policies that work. And Russians are avid planners and futurists because of that. Russian business is ready and is already performing very well.

*
*
*
Like what you’ve been reading at Karlof1’s Substack? Then please consider subscribing and choosing to make a monthly/yearly pledge to enable my efforts in this challenging realm. Thank You!