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President of Russia Vladimir Putin: Please go ahead, Mr Repik. We had agreed to meet.

Head of Delovaya Rossiya Alexei Repik: Thank you very much. I sincerely appreciate your continued attention to the business agenda. I am pleased to report that Delovaya Rossiya is fully engaged in advancing the national development goals you have set.

In February, you instructed the Government to draft a plan for structural economic changes, and we have also prepared a substantial set of proposals.

We would like to present specific proposals at the upcoming 20^th anniversary forum of the organisation. I sincerely hope that, in keeping with the well-established tradition, you will once again be able to attend the event in person. This is an official invitation.

Vladimir Putin: Thank you very much.

Alexei Repik: Turning to the agenda of both the forum and our broader work, there are several areas I would like to highlight.

We have worked on a considerable set of issues and are continuously monitoring the need to address industry-specific imbalances. Our industry-specific proposals cover sectors such as mechanical engineering, unmanned aerial systems, metallurgy, sports, catering, retail trade, and e-commerce.

We pay close attention to regional dynamics and disparities. For me, one of the most critical issues is the economic integration of our new regions. These territories come with a range of inherited circumstances. I would appreciate the opportunity to discuss some of their issues with you in more detail at a later time.

Vladimir Putin (commenting on the presentation): What are these excessive restrictions you are referring to in relation to physical retail?

Alexei Repik: Which section is it?

Vladimir Putin: The first one – addressing the imbalance between traditional retail and e-commerce.

Alexei Repik: At the moment, we have a new, very powerful and competitive industry – e-commerce.

Vladimir Putin: It is growing by leaps and bounds.

Alexei Repik: It is advancing very successfully. We are seeing active progress, and not only in Russia, but our companies are becoming leaders in former Soviet republics and making forays into other friendly markets. On the other hand, our physical retail segment has been significantly streamlined, primarily when it comes to protecting consumer interests – the rules are quite strict now. However, with this new segment booming, online and offline retailers are trying to align with each other to level the playing field, as they say. We are trying to find the best formats for the state and the consumers, but also for businesses, to ensure that these two large segments coexist in harmony.

Vladimir Putin: Ok, but what excessive constraints on traditional retail were you talking about?

Alexei Repik: For traditional retail? In fact, the first issue worth mentioning is probably staff shortage, which is now one of the biggest challenges in the Russian economy overall. We have no other options to address this except by enhancing labour productivity. Incentives are needed to compensate labour with capital, that is, to automate, robotise processes, and use artificial intelligence.

On the other hand, there are counter-stimuli. I am referring to a situation where certain segments of the service economy, including retail, are taking advantage of special tax regimes that were not established for them – I am referring, for example, to the flat rate for self-employed workers. They use this to reduce their payroll costs, achieving cheaper labour. With cheaper labour, they have no motivation for staff reduction or automation and, most importantly, they pull an already scarce workforce from the manufacturing sector, which is very important for Delovaya Rossiya. Therefore, Mr President, it is very important to prevent the consumer economy from “consuming” our supply-side economy, because without it, we will not be able to curb inflation.

You have said that we need to navigate between the Scylla of high inflation and the Charybdis of declining investment activity. In fact, this is a fundamental issue that includes the subject of floating rates, when we are offered “key plus” loans, which often transfer duration risks from banks to enterprises. The role of enterprises is different – ​​they need to build factories, not engage in financial speculation, as they are not really equipped for this.

By the way, building factories now is a financially risky business, because those who did not time their construction correctly within the cycle sometimes do not have the opportunity to complete it. There is no revenue yet, and many are on the verge of bankruptcy. We need to help them as well. We will discuss this at the forum.

Vladimir Putin: Regarding the proposal to eliminate the excise tax on molten steel, have you discussed this with the Government?

Alexei Repik: We are working with the Government. We meet regularly with the relevant ministries and the Prime Minister, and we have discussed our proposal packages.

There are many important points, including those concerning land, which is of fundamental importance, because our Land Code remains outdated and overly rigid.

Vladimir Putin: Yes.

Alexei Repik: More provisional rules need to be introduced.

Vladimir Putin: This is indeed a very good and relevant point, which is becoming increasingly pressing: we need to analyse possible formats for the return of companies from unfriendly countries that have exited the Russian market, taking into account the interests of Russian investors.

Alexei Repik: We have not wasted time over the past three years. Of course, we should now carefully address the issue of the potential influx of new-old residents into our economy.

Vladimir Putin: And competitors.

Alexei Repik: Of course. On the one hand, competition is always beneficial because it makes us more productive and stronger, among other things. On the other hand, we believe it is fair to prioritise the interests of the Russian economy when making any management decisions regarding this.

Vladimir Putin: I completely agree. We will certainly discuss this, because there must be a balance between fostering competition and protecting domestic producers, especially if our domestic producers have invested in particular enterprises.

Alexei Repik: Mr President, we will work on this. When we receive your feedback, we promise to work even more intensively.

Vladimir Putin: Thank you very much.

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