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The main theme of the meeting was providing support for small and medium-sized business. Among the main objectives of the Group of Twenty, Dmitry Medvedev named the need to ensure access to national and international capital markets for small and medium-sized businesses.

In addition, effective anti-crisis government policy should focus more on improving the business climate, optimising the conditions for doing business, reducing administrative barriers, granting preferences and promoting the use of advanced technologies by small and medium-sized companies.

Dmitry Medvedev noted that the Russian Government will continue its efforts on developing microcrediting as an effective tool to support small businesses. The President also named the creation of business incubators and raising financial literacy as efficient lines of government activity.

The meeting also focused on the use of government procurement mechanism for small businesses and encouraging banks to more actively work with small businesses.

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President of Russia Dmitry Medvedev: Ladies and gentlemen,

I am happy to be taking part in the Business Summit. It was an excellent idea to join the G20 meeting with the Business Summit.

”Strong small and medium-sized business is not only an indicator of national economic stability, but also a factor that directly affects the situation in the global economy.“

The focus of this meeting is small and medium-sized business. A great deal depends on its wellbeing: the welfare of millions of people, a stable competitive environment, as well as the promotion of new products and innovation. Strong small and medium-sized business is not only an indicator of national economic stability, but also a factor that directly affects the situation in the global economy.

As the economic crisis led to a shortage of loan capital and a drop in business activity, providing support for small and medium-sized businesses has become an increasingly pressing issue.

Clearly, small businesses and launch of private companies could mitigate the impact of the crisis, provide additional employment and production growth thus maintaining consumer demand in the market and playing a major role in stimulating economic recovery, which is precisely the factor lacking in the global economy and the economies of individual countries.

The crisis has intensified the problems that hamper the development of small and medium-sized enterprises: there has been a decrease in the volume of support from financial institutions and capital markets, as well as from the corporate sector. That is due to the consequences of the crisis, but ultimately, it was compounded by the fact that governments, including the Russian government, directed priority assistance to major industries and strategic sectors first and foremost in order to preserve the remnants of their competitiveness.

”Clearly, small businesses and launch of private companies could mitigate the impact of the crisis, provide additional employment and production growth.“

The absence of such financial instruments affected the poorest countries and lowest-income population groups. Economists estimate that as a result of the crisis the number of those living on a little over a dollar a day has increased by 55 million people. No doubt, the blow to small businesses has played a significant role in this.

However, this crisis has encouraged governments to carry out effective policies of rehabilitating the financial system, which has been our priority and will be focus of our efforts today and tomorrow here in Seoul. We must try not just to restore the past conditions for small and medium-sized enterprises, but also to ensure a more favourable environment for them.

Governments should pay more attention to improving the business climate, optimising the working environment for businesses, reducing administrative barriers and granting preferences that will give an impetus to small and medium-sized companies to create advanced technologies and information.

One of our key objectives is to guarantee unimpeded access for small and medium-sized businesses to national and international capital markets. We need new mechanisms to achieve this.

Of course, here the efforts of one state are not enough. The G20 has made great strides in addressing the problem of expanding access to financial services. Back in Pittsburgh we agreed to support the rational distribution of new types of financial services to low-income groups. Their range in the poorest countries has grown considerably through the expansion of savings accounts, loans, insurance, payment systems and investment mechanisms.

Along with easier access to financial services, it is vital that financial literacy of ordinary people also increases. Russia has some unfortunate experience in this regard. This issue was particularly relevant in the 1990s, when millions of our citizens fell prey to investment bubbles and other forms of financial fraud, mainly due to the lack of basic financial knowledge. Therefore, education remains a priority.

Another G20 initiative was to introduce tender principles for state financing for small businesses and the best practices have already been identified. Access to microcredits and special financial services for innovation projects has been increased in order to create new jobs.

Incidentally, this is the first time that we have introduced the so-called microcredits, microfinance, in the Russian Federation. Their volume has grown. In this regard, the crisis has partly been to our advantage. Moreover, we were able to launch new financial instruments that did not exist previously. In fact, this was part of the Russian Government’s anti-crisis programme. In addition, special legislation on microfinance and microfinance institutions was drafted and adopted. We will certainly continue these efforts in our country. 

I would like to thank you for the detailed analysis of issues related to small and medium-sized business and for the valuable recommendations on ways to address the imbalances that have arisen during the crisis. I have read the report the working group has prepared and would like to thank everyone who took part in writing it.

I would like to mention another area that is successfully advancing, including in our country: the creation of business incubators, which are targeted at small and medium-sized businesses and the introduction of new technologies. I think that at present this is one of our key priorities.

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I would like say that I completely agree with what Mr Stephen Green (Chairman of HSBC) has just said about continuing the discussion on small business in the future.

The main problem in this situation is that as a rule we hear about problems faced by small business from big business. I have been involved in such discussions on numerous occasions, and it is very rare to see a representative of small business at such events. They have a somewhat different perspective on the problem, and I can judge that firsthand because when I gather representatives of small business in Russia, they say very different things from what we hear from big business.

Nevertheless, all the points made here seem perfectly reasonable. I would like to say that the five issues Mr Green highlighted at the end truly deserve the attention of the whole G20. Obviously, the attention to small business is very valuable because small business is very sensitive to signals form the government.

With respect to trade financing and the dangers that are potentially posed by Basel III: I will try to convey the concerns expressed by a few speakers earlier to my G20 colleagues. It is clear that the possible negative impact of Basel III will not affect only small business but, to be honest, is a danger to business in general. I understand the points you have made and will discuss them with my colleagues.

Regarding the creation of modern [financial] centres, the simplification of intellectual property rights regulation and the creation of startups, I believe these are all vital issues and we have been addressing them for the past two years since the onset of the global financial crisis. In terms of the five points that have been highlighted I think we could all pay greater attention to what has been said today, as well as the recommendations that were drafted in advance.

Another subject that I believe is of particular relevance and which we should focus on has also been raised here: including small companies in the state procurement programme, especially since they treat such contracts with greater responsibility. Of course, it is not always easy for the government to negotiate with small companies because their supply volume is small, but nevertheless the state must consider them as well.

The second important point is encouraging banks to work with small businesses more actively. In Russia we have some similar experience: we have set up some special programmes on encouraging banks to take part in financing big business. It is absolutely clear that it is impossible to induce banks to cooperate more actively with small businesses without additional incentives.

Thank you for drafting these recommendations. I will try to convey the points raised during our discussion to my colleagues, with whom I will very soon meet to address the key issues on the Seoul G20 Summit agenda.

Thank you very much.