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State Council Presidium meeting on enhancing the investment appeal of Russian resorts

August 26, 2016, Belokurikha, Altai Territory

While on a working trip to the Altai Territory, Vladimir Putin chaired a meeting of the State Presidium Council on measures to enhance the investment appeal of the health resort sector in Russia.

The main report has been prepared by Head of the working group and Altai Territory Governor Alexander Karlin. Co-reporters are Healthcare Minister Veronika Skvortsova and Minister for North Caucasus Affairs Lev Kuznetsov.

Before the meeting, the President made a helicopter tour of the Belokurikha resort and inspected development plans for a new resort, Belokurikha-2. He was also updated on the pharmaceutical potential in Altai and new medical technologies.

* * *

President of Russia Vladimir Putin: Colleagues, good afternoon,

I can see here the heads of many regions that have assets in the health resort industry, and by assets I primarily mean the natural conditions.

We are here to discuss all problems, all issues that arise in this area. But I think everyone will benefit from looking at what Siberia has, and what Siberia does, to share experiences and work out steps to be taken at the federal level for the development of the health resort business. This is what we are going to talk about today.

You probably know that I was here for the first time in the early 2000s, in 2003. They had the mineral water and radon therapy too, although their debit is decreasing, so the plan is to develop a second cluster, Belokurikha-2. As for materials and equipment, it was a mess, to put it mildly. It was on the 1930s level, or the 1950s at best, the way it was maintained.

Much has changed for the better here over the recent years, of course, both in appearance and in content. But there are many lingering problems as well. Last summer we determined steps for the development of domestic and inbound tourism, and now, as I said, let's talk about the investment appeal of the domestic health resort industry. These industries certainly overlap, but they also complement each other. I believe that many decisions on tourism are fully applicable to the health resort industry.

Historically, it developed as an integral part of the Russian healthcare system. Today it still plays an important role in the treatment of a variety of diseases, their prevention, rehabilitation of patients and generally in maintaining people’s health and ability to work and lead an active life.

For reference: regular treatments at health resorts can increase a life span by three to 15 years. The majority of patients who undergo medical rehabilitation at a health resort are able to return to their jobs and reduce the duration of their temporary or permanent disability by two or three times.

The need to improve resorts is not limited to their medical and social value. Health resorts are located around the country and so can provide the basis for economic growth and the improvement of transport infrastructure and services in many cities and even regions. To date, there are 1,875 resort organisations in Russia.

Unique nature combined with effective treatment methods used at modern Russian resorts is a solid foundation for enhancing their competitiveness and increasing demand for them in Russia and internationally. We are developing inbound tourism, but we also can and must develop the sphere that we are discussing at our meeting today. In particular, I am referring to attracting foreign guests, considering that Russia has unique natural conditions, and this is not an exaggeration.

But development in this area is hindered by inadequate material resources at the majority of our resorts. This is why nearly 46 percent of facilities at state resorts are idling. Just imagine – we are not using almost half of our resort facilities. Unfortunately, the majority of these idling facilities are regionally owned.

It has been assessed that the renovation and modernisation of the existing resorts will cost about 37 billion rubles. This is a significant figure, but outlays will increase with every year if we sit on our hands. This problem cannot be settled with federal funds alone, and so one of the priority tasks is to consolidate funds and to search for investors actively.

Of course, there are also modern resorts with up to date equipment in Russia. They are being developed with private investment. One of them in Belokurikha, where we are meeting today. Recent investments in this resort include one billion provided from the federal budget and five billion that came from private investors.

A new promising investment project, the Belokurikha-2 subcluster, is being implemented here. It will comprise a winter resort and a health resort for 3,000 people, with a developed health and recreation infrastructure, including a ski resort right across from the hotels.

The Belukurikha-2 investment project is being implemented within the framework of the federal targeted programme Development of Domestic and Inbound Tourism in Russia. As Mr Karlin [Altai Territory Governor] has said, it received an award as the best health resort project at the 66th General Assembly and International Scientific Congress of the World Federation of Hydrotherapy and Climatotherapy in 2013. It is a good project, but we nevertheless need to further improve and implement it.

Judging by what is being done to develop its infrastructure (I hope Mr Karlin has shown you how they are building roads here), there are grounds to believe that this project will be implemented. In fact, the basic infrastructure elements are already in place.

It is obvious that we need a comprehensive and well substantiated strategy for the development of the country’s health resort complex, with state funding priorities and a procedure for attracting private investment.

We have not formulated this basic document yet. The Government should start working on it as soon as possible, so that a framework document is adopted by May. I believe that this can be definitely done within six months. I ask you to complete this work in March.

At the same time, we also need to complete the creation of a state register of our resorts and to update it regularly. We should also create open information resources on medical resort treatment in Russia for Russian and foreign citizens.

I believe that we should also define clear criteria for dividing health resorts into categories, similar to hotel stars. This will help people choose a health resort and will also provide an additional impetus for owners to improve the standards of their operation.

One of the priorities is to create a favourable investment environment in resort regions. For example, it is critically important for business to define the resorts’ protected boundaries and to register them with cadastral authorities. This is stipulated in our legislation, including for maintaining the recreational potential of our resorts, but this provision is not always complied with.

Now we need to discuss something with special attention and care (please excuse this tautology, I have to call your full attention to this). I am referring to the proposals submitted by a number of regional heads on the introduction of a regional resort fee. Indeed, many countries around the world charge a small resort fee. Nevertheless, I ask the speakers to give a detailed motivation to justify the proposal. People must understand clearly where exactly the money goes, how it is spent and who spends it, with a transparent procedure for control over the spending.

Another important issue is the priority state support for projects aimed at improving the development of resorts and tourism. We also need to give the Federal Tourism Agency authority to promote the services of Russia’s rehabilitation and resort industry on the domestic and international tourism markets.

Finally, we should discuss the signals we have been receiving from a number of regions: I mean the recent sharp increase in payments for land use.

Colleagues, it is certainly clear that all regions are trying to find ways to augment their budgets, and there is nothing wrong with that. Yet, hiking lease payments in pursuit of quick short-term profits may adversely affect long-term development of your regions.

First, their investment appeal may dwindle, including in resort areas. I do not think we need to comment on this. If your prospective investors are asked to pay too much, they will not pick a region where the fee for the land is too high. I ask the leaders of the regions where this is the case to reconsider, to weigh the pros and cons, looking at the long-term consequences of such decisions.

Colleagues, in conclusion I would like to emphasise that while creating the environment for businesses, for private investment, we must still keep in mind the main thing – the resort industry should work effectively for the preservation and strengthening of people’s health, and its services should be available to people with a wide range of incomes.

Let's discuss all the issues that are of interest for the development of that industry.


Vladimir Putin: Let's sum up. I will not repeat everything our colleagues have said. Firstly, I would like to thank you for your commitment to this topic. We could see everyone’s enthusiasm in discussing this issue, and it is clear why. What we are talking about here is not just an industry, not just business, but it obviously involves a social component: the health of the Russian people. And here, indeed, we need to think about how to make the industry attractive to businesses. This is what we certainly need to do.

But we also understand that its investment appeal will obviously be proportionate to profits, and profit usually comes from how much people pay. To ensure that all categories of citizens can afford therapeutic and rehabilitation treatment, these services either need to be cheaper for vulnerable groups, or a certain share of the cost should be shouldered by the government. We will not be able to make a huge leap. I mean, if we insist that these treatments should yield profits as a business, then we need to coordinate it with income growth, with people’s purchasing power.

So let's analyse all of today's proposals very carefully. They are all rational in one way or another, we just need to find the golden mean between diametrically opposed views, as we usually do in such cases. It can definitely be found here. It is certainly impossible to shift all costs onto the federal budget, it is simply infeasible, unrealistic, but if we want to ensure availability, we need to think about how to achieve it.

People who have been in this industry for many years say that we need to improve the relevant legislation, we need to look carefully at the existing rules, and if necessary, make adjustments to them.

Actually, I would like us to finalise the draft instruction that has been prepared, so that the future document gives a good impetus to the development of health resort business in Russia in the medium and long term.

Thank you very much.

August 26, 2016, Belokurikha, Altai Territory