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Participants in the meeting included First Deputy Prime Minister Igor Shuvalov, Deputy Prime Minister and Finance Minister Alexei Kudrin, Presidential Aide Arkady Dvorkovich, Economic Development Minister Elvira Nabiullina, Central Bank Chairman Sergei Ignatiev, Vnesheconombank Chairman Vladimir Dmitriev, and Sberbank Chairman Herman Gref.

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President of Russia Dmitry Medvedev: Colleagues,

We have reviewed the investment climate issues many times. This is one of the major priorities for the development of our state and activities of our country’s leadership, as the transition to innovative growth cannot be ensured without an up-to-date investment climate.

As we have discussed, the success of our modernisation efforts may only be guaranteed if the level of investments into the economy is no less than 30 to 40 percent of the gross domestic product which is convincingly evidenced by the experience of various nations, including such industrial giants and technological leaders as Japan, Korea, Singapore and China. In Russia, this figure is significantly smaller at somewhat 20 percent of the GDP, while the volume of direct investments attracted still remains at an unacceptably low level. I will try to return to this topic for a more extended analysis in the near future, while today I propose that we review ways to better use the potential of major international investment funds and long-term investment capital.

I know that Vnesheconombank management has had a series of meetings with the largest private and sovereign funds which manage enormous assets of about three trillion dollars. Many of them are ready to operate in our country. I met with executives of major funds and largest banks too.

”The investment climate is one of the major priorities for the development of our state and activities of our country’s leadership, as the transition to innovative growth cannot be ensured without an up-to-date investment climate.“

For this kind of partnership, a mechanism of a so-called special investment fund may be employed. I first mentioned this in my Presidential Address to the Federal Assembly. Subsequently, the idea was further considered by the Government and myself.

For setting the fund some resources of the National Welfare Fund could be used as in this way they may make greater contribution to the development of the industrial sectors of Russia’s economy. The money could also be invested in Russia on the terms of co-investments by other institutions, including leading international funds, which would ensure an adequate risk sharing in implementing such major projects. What’s most imperative is to generally improve the investment climate in the country, create new jobs, and attract additional money into development of the most advanced technologies, which in fact is exactly what we have been pursuing.

Today, we must make specific decisions on the pattern for shaping the fund, its functioning mechanism, its investment strategy, and the scope of possible and necessary state financing. These decisions should meet the investors’ expectations and be based on relevant global experience.

I expect that we may launch the fund in question by the middle of this year. By the way, we could demonstrate it to our partners during the St Petersburg International Economic Forum which is customarily attended by many of our partners, international investors, and numerous foreign leaders.

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