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Meeting on construction industry development

April 16, 2020

The President held a meeting via videoconference on developing the construction industry.

Taking part in the meeting were First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister Marat Khusnullin, Minister of Transport Yevgeny Dietrich, Minister of Economic Development Maxim Reshetnikov, Minister of Finance Anton Siluanov, Minister of Construction, Housing and Utilities Vladimir Yakushev, Central Bank Governor Elvira Nabiullina, Head of the Federal Service for the Oversight of Consumer Protection and Welfare and Chief State Sanitary Physician Anna Popova, MOSTOTREST General Director Vladimir Vlasov, President of the Russian Union of Builders Anton Glushkov, President of PIK Group of Companies Sergei Gordeyev, and General Director of DOM.RF Vitaly Mutko.

* * *

President of Russia Vladimir Putin: Colleagues, good afternoon.

Let us get down to work.

We are continuing a series of meetings on key, base industries that determine the dynamics of national economic development and provide employment and income for millions of our citizens.

Today, we will focus on the construction industry. The situation in the housing market, the implementation of large-scale plans for the construction and maintenance of roads, seaports, transport hubs, and other national support infrastructure all depend on the efficient and systematic work of this sector.

And of course, as we know, construction is an industry that generally covers a large number of enterprises: large, medium and small companies from related sectors, such as the production of building materials and machinery, metallurgy, woodworking, chemical, and so forth. This may be obvious, but they must be taken into account when making decisions on the construction sector.

We have some construction company executives taking part in the meeting. Colleagues, I would like to ask you to tell us about some of the problems facing your companies, suppliers and contractors, and your work in this difficult situation caused by the spread of the coronavirus infection.

I am also addressing regional governors. When taking preventive measures in your regions, you need to consider the specifics of the construction industry and the need for work to continue, especially on key, vital projects. Please work to find flexible, well-balanced solutions. Specialists are saying that this is possible. All you have to do is strictly meet the labour safety requirements and protect the health of the workers. But it is not necessary to slow down or suspend the construction process.

This is all the more important because, like many other industries, the construction industry has faced objective difficulties. The main problem is a drop in demand. Thus, the growth of mortgage loans in the first quarter of this year has been replaced by a decline. We can see this. It has also become more difficult for developers to obtain loans.

I also understand the concern of the companies involved in major infrastructure projects. It is important for them to see the prospects, to be able to plan for a long time ahead. Therefore, I will say straight away that we will certainly support the construction industry. Moreover, during the economic recovery it should become one of the growth drivers that will pull other sectors up.

This is what I wanted to say at the beginning of the meeting, colleagues.

Now I would like to give the floor to representatives from the construction business and our other colleagues here. After this, we will review the results. Go ahead, please.


Vladimir Putin: Colleagues,

At my request, the Government is working to find measures to support various industries. This includes the construction sector as well.

However, I decided to listen to my colleagues who are here today before making any decisions. Representatives of the construction sector have voiced their initiatives.

What are the things that I believe are important to do in the short term in this context and considering your opinion?

First, I suggest launching, as was described just now, a special preferential-term mortgage programme to support both our citizens and the construction industry and give people additional opportunities to improve their housing conditions. Under this programme, it will be possible to take out a mortgage at an annual rate of 6.5 percent to purchase new comfort class housing at a price of up to 3 million rubles in the regions and up to 8 million in Moscow and St Petersburg.

Let me repeat that the interest rate for our citizens will be 6.5 percent. Everything above that will be subsidised by the state. Let me note that this reduced preferential rate will be valid for the entire term of the loan. People can apply for a mortgage with this rate until November 1, 2020. I am asking the Government to launch this programme as soon as possible. According to preliminary estimates, this programme will require about 6 billion rubles in 2020. I know that the number is still being discussed, but about 6 billion rubles will be necessary.

Secondly, I am instructing the Government to develop a package of measures to increase the accessibility of bank loans for companies in the construction sector. My colleagues have just spoken about this. In this case, I am also suggesting subsidising the interest rate. But let me stress that this assistance will only be provided to companies that maintain their employment levels. I am asking the Government to determine detailed criteria as soon as possible, by the end of the month.

Another condition, or rather a requirement, and I need this to be a legal stipulation: when receiving the loan support I have just mentioned, companies must assume the obligation to complete the housing construction scheduled for commissioning this and next year. We must avoid delays in this construction. It is important that people are confident that their flats will be built efficiently and on time.

I know that the Government has already determined the amount of funding that it plans to allocate to the loan programme for the construction industry. The total is 12 billion rubles. I would like to ask you to launch this mechanism as soon as possible, before the end of April.

Thirdly, the problem of those whom we call defrauded investors is still outstanding in many regions. I suggest adding 30 billion rubles to the fund for the protection of their rights and spending this money to resolve the problems that have accumulated in recent years, and complete the construction of unfinished buildings. This is how we can load the construction industry and, most importantly, it will help our people by letting thousands of families receive their long awaited housing.

Fourth is another measure of support for housing construction that I suggest is providing a 50 billion ruble Finance Ministry state guarantee to the DOM.RF corporation. With this guarantee, the corporation will be able to obtain loans from commercial banks and buy new comfort class flats directly from the developer. Later, people will buy these flats, in part through our mortgage programmes. I have just spoken about this.

Fifth. We will continue the implementation of large-scale infrastructure projects. My colleagues have mentioned this. I am referring to projects on expanding the capacity of the BAM and Transsib railways, building roads in the south of Russia, including approaches to the Crimean Bridge and the Black Sea coast, modernising airports in Chelyabinsk, Perm, Khabarovsk and Norilsk, and building modern ports in Murmansk, on the Baltic Sea, the Black Sea and in the Far East. This will create a firm foundation for the economy and future growth.

Needless to say, there are understandable objective restrictions in conditions of countering the coronavirus. Despite this, it is necessary to adhere to infrastructure project schedules as closely as possible. It is important to avoid the freezing of state funds and to use them for the economy, for developing the country and the regions and for upgrading the living standards of our people.

My consultations, which I regularly hold with experts, show that special and safe procedures of construction work can be developed. I would ask the Government, together with the regions and construction companies, to quickly approve and use such procedures.

Further, I propose considering the possibility of redistributing part of the costs under the Safe and High-Quality Roads national project, as well as under the substandard housing relocation programmes, in order to increase the pace of such housing relocation and the construction and repair of roads, and thereby additionally provide orders to the construction and related industries and support employment. I instruct the Government to calculate the possible parameters of such a manoeuvre and report to me on the proposals within a month.

I would also ask you to separately consider the issue of increasing advances under contracts in infrastructure construction. We also spoke about it. Now, 30 percent of the contract is advanced, and I propose to increase this share to 50 percent, thereby providing construction and other companies with additional working capital, which will allow them to work rhythmically, meet their obligations to suppliers in other industries, and most importantly, to save the jobs and salaries of their employees and to attract new specialists.

We will continue to analyse the situation in the industry and together develop new additional solutions. Not everything that we have just spoken about was mentioned in my closing remarks, I am aware. Therefore, I would ask the Government to stay informed, to be in touch with industry workers, analyse the situation and propose options for the development of the industry based on the current situation.

I would like to thank all of you for your fruitful work today.

April 16, 2020