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President of Russia Vladimir Putin: Ladies and gentlemen, friends,

I am grateful to the Business Summit’s organisers for the invitation to address the Asia-Pacific region’s business community. Meetings such as these are key events at the summit.

It was not so long ago that we met in Vladivostok, only a year ago. A number of changes have taken place in the world since then. The crisis’ most acute phase, which we spoke about last year in Russia, is behind us now, but we cannot count on a swift recovery in the global economy. The current economic model’s problems are structural and protracted in nature. 

Growth rates are slowing down or stagnating, even in the Asia-Pacific region, which until recently was the driving force in global development. The region still is this driving force, but nonetheless, forecast growth rates for the region in 2013 and 2014 are lower than what they were.

We think that accumulated global imbalances are the main cause of this situation. Eliminating them requires us to establish a new, long-term economic development model focused on growth in the real sector of the economy, quality job creation, and structural reform.

We discussed this model’s parameters last year in Vladivostok, and again in Russia recently at another big event, the G20 summit. The G20 leaders all agreed on the need to combine measures for stimulating economic growth with fiscal consolidation. This is a difficult task that would seem to be taking us in two different directions, but the G20 leaders nonetheless think it is a realistic objective and it was this goal that we enshrined in the St Petersburg Action Plan.

Economic policy must be closely tied to resolving social problems. This was the issue addressed by the first ever meeting between the G20 countries’ labour and finance ministers. 

We need to find sources of investment financing and ensure a fairer distribution of risks. I think that in St Petersburg we succeeded in agreeing the basic principles for attracting institutional investors and strengthening bond markets.

Public-private partnerships will help us to attract more investment into the economy. Several big projects are already underway on this basis in Russia, including projects to develop the transport infrastructure in Siberia and the Far East. We invite business partners from the Asia-Pacific region to join in these projects and take part for example in the large-scale modernisation of the Trans-Siberian and Baikal-Amur railways, and developing the Northern Sea Route. I know that many Asian countries are very interested in developing this transport corridor.

We are giving foreign companies the conditions they need for working in Russia. The Russian Direct Investment Fund offers very reasonable if not preferential financing conditions and has already established good working ties with our partners in China and Japan. 

Having a suitable tax system plays a big part too. The G20 summit gave this matter a lot of attention and we all agreed to combat tax evasion, including through offshores.

The issue of fiscal discipline is relevant for the Asia-Pacific economies too today, and APEC will therefore be looking at how to improve exchange of tax information.

Developing trade is another promising source of global development. We need to expand the network of regional and sub-regional free trade agreements. This was something mentioned too by practically all of the leaders who spoke at the summit’s first meeting today. We need to simultaneously strengthen the global trade system and maintain the WTO’s central role, and we also need to break the deadlock in the Doha trade round.

Russia is actively involved in integration underway in Eurasia. As you know, we established the Customs Union and the Common Economic Space together with our partners. These two organisations work in strict accordance with the World Trade Organisation’s principles. We see this as our contribution to strengthening multilateral trade. 

Finally, we cannot improve the global economy’s health unless we invest in human capital. We must open up new opportunities for obtaining modern education that meets today’s demands, and bolster the social guarantees for young people, women, people with disabilities, and other vulnerable groups.

Last year, the APEC summit took place at the Far Eastern Federal University’s campus. This modern university is becoming one of the Asia-Pacific region’s biggest educational centres. I am sure that openness in education is one of the important factors for stable growth in the future.

Ladies and gentlemen,

Integration and our common efforts through APEC facilitate development of a fair and open system for growth in the Asia-Pacific region, strengthen the economic and humanitarian ties between our countries, and help to raise our peoples’ living standards.

I am sure that the business community will continue to play a very active part in developing the regional and global economies. Our governments, for their part, will create the necessary conditions for improving the business climate and will lower administrative and trade barriers. I think that this cooperation between the business communities and the governments is the key to our common success.

Thank you for your attention. Thank you very much.

Question (re-translated): Mr Putin, Russia is one of the world’s biggest oil producers. We just heard the US Secretary of State’s speech about climate change. It is essential and necessary to control greenhouse gas emissions. What is Russia doing in this area?

Vladimir Putin: Russia has always made clear its willingness to take steps to limit emissions in line with the commitments agreed upon by the entire international community. We have joined the multilateral international agreements in this area, including the Kyoto Protocol. Right from the start, we took on very strict commitments to limit emissions.

Of course, for this process to continue in such successful and well-coordinated fashion, we need to work together with all the international economic actors, and above all with the countries that have the biggest emissions. They include the United States, India, China and others. Of course each country has its own specific situation and we need to be respectful of these specific circumstances and seek consensus on each step we take together.

We are well aware of our partners’ positions and we believe that we can reach agreement on further joint steps. In any case, Russia is committed to all of the objectives of environmental protection and will respect strictly all of its commitments. 

Question (re-translated): Mr President, I represent HTC, Taiwan. I read your article in the New York Times newspaper and appreciate what you are doing for the entire world. In order to achieve stable economic growth, we need to improve the business environment. Thanks to this cooperation and to your efforts, many of our companies have been able to develop their business in Russia. What other measures do you plan to take in Russia to improve the business climate?

Vladimir Putin: Your colleague asked just now about atmospheric emissions. Environmental issues and pollution obviously have an impact on development. Clearly, we will need to use advanced technology that will help us to protect the environment and at the same time give us opportunities for growth. One of Russia’s natural competitive advantages of course is its abundance of mineral resources, oil and gas. But the biggest competitive advantage in the economy now and in the future is to have better state institutions and a higher level of training in education, healthcare, and government institutions.

As far as government institutions go, I must be honest that despite your positive comments – and I thank you for these kind words about Russia – we set high demands on ourselves and think that we still have a lot to do to improve the way our institutions work and improve the legislative framework so as to give business the best possible conditions. 

We have organised a direct dialogue with the Russian business community in this area. Working directly together with Russia’s biggest companies, we drew up ‘roadmaps’ for improving the business climate in Russia. I don’t think that ratings are the source of absolute truth in this area, but the ratings nonetheless show that we have made substantial progress. The business community itself says that things are changing for the better.

At the same time, we are analysing what is happening in the real economy at each specific moment, and I repeat that we are working together with your colleagues in Russia to come up with new methods that will improve the business climate.

This applies to doing away with red tape in the decision-making process too. More specifically, it concerns improving the situation in the construction sector for example, reducing the time it takes to get all the permits. We are also speeding up and simplifying connection to the infrastructure networks, including the energy infrastructure, and we are working on infrastructure development in general. In this respect I can tell you that we have decided to support infrastructure development in Russia, including through sources that we had until now just been building up and trying not to touch, namely, the Russian Government’s reserve funds.

We built up sizeable reserve funds and we think that we can now channel part of these resources into supporting infrastructure development projects such as railways, including in Russia’s east. In my opening remarks I mentioned the Trans-Siberian and Baikal-Amur railways. This also includes developing our airports and ports, roads, and building high-speed rail links. Of course, we will also work on improving the conditions for access to financing and loans. I hope that all of this together makes it possible to say that we will keep moving forward in improving the business climate.

Thank you very much for this question.

Question (re-translated): Mr President, energy security and energy independence are very important issues for the APEC region. Natural gas is one of the greenest energy sources and so it has a particularly important part to play here. What role can Russia play in supplying gas to the APEC economies?

Vladimir Putin: Russia is probably the world’s biggest natural gas exporter. We export large quantities of natural gas to European countries. At the same time, we see that energy resources are playing an ever more important part in speeding up economic growth in the Asia-Pacific region. We are aware of our responsibility in this sector and therefore plan to expand our energy sector cooperation with our partners in Asia. This concerns several different areas: fossil fuels, and advanced technology too. 

By advanced technology, I mean developing the nuclear energy sector. We are working actively with our partners in China, India and other countries, where we are building power plants and carrying out successful big projects in the nuclear energy sector. I note too that all of our projects are based on what we call the post-Fukushima standards, which set higher safety demands.

We are also carrying out a number of hydroelectricity projects in Russia, and this enables us to export a sizeable amount of electricity to the Asia-Pacific countries. We will expand this work. Together with our partners, we will also work on renewable energy sources too of course.

At the same time, you are absolutely right that abundant oil and gas resources are our natural competitive advantage. We have already built a big oil pipeline system running to the Pacific coast. This project set records in effectiveness and was built in record quick time. It runs several thousand kilometres from Siberia to the Pacific Ocean, with a branch line running to Daqing in China. This has helped to develop a new global energy market for our brand of oil. As for gas, we have big possibilities in this sector and are carrying out a number of projects. 

First of all, we have gas pipeline projects. We are already building an infrastructure link from Sakhalin Island to Vladivostok, from where the pipeline could go on to South Korea either via North Korea or via the sea route. We could carry out at least two projects for delivering gas to China. Finally, and no doubt an important piece of news for the business community, is that we are examining and will soon take steps to develop the liquefied natural gas trade. I am referring here to projects in northern Russia, on the Yamal Peninsula, where one of our big private companies, Novatek, is working. We not only support the projects that Novatek is already carrying out there, but will also support the projects of our main gas producing and exporting company, Gazprom. These are also big projects.

Russia, using its budget resources, is building one of the biggest ports in the north of the country, Sabetta. We are investing budget money in an underwater channel, from which the liquefied natural gas can be sent once the project to expand the Northern Sea Route’s capacity has been carried out, to Europe and to Asian countries. Of course, we will also continue work on the projects that you probably already know on Sakhalin and around Vladivostok.

Question (retranslated): Mr President, it is a great honour for me to ask you a question. Today, you spoke about energy. I think this is an important topic throughout the world. Currently, China is moving forward very quickly in technological development, in all areas, ranging from economic to cultural. You spoke about energy and the economy. What do you think are the directions where we could cooperate? In what areas should we cooperate? Thank you.

Vladimir Putin: We have many directions for cooperation with China. I already mentioned our cooperation in energy, including nuclear energy. We have already launched two blocs at the Tianwan nuclear power plant. Our Chinese partners are pleased with their operation. We have prospects for further work in this domain.

I have already mentioned that we have built an enormous pipeline system that currently works very efficiently. Incidentally, this is the result of our agreements with the Chinese government. The pipeline has reached the Pacific Ocean, but it branches off to Daqing, China. And as you know, we have plans there to build a joint company to process crude oil. But that’s not all. Most important, in my view, are our prospects for cooperating in the high-tech sectors.

We have very good projects in aviation. This is true of helicopter technology, as well as medium-haul and wide-body aircraft. We have very good prospects in space exploration. We have specific projects and I very much count on making progress.

But naturally, implementing infrastructure projects is very important for both China and Russia. Here, we are discussing many possibilities both in terms of developing rail and automotive transport. All this is also very important within the framework the Shanghai Treaty Organisation. We are developing a range of joint initiatives very actively with our partners in Central Asia.

I very much expect that this positive work will promote further broadening trade and economic relations with the People’s Republic of China, which in the last 18 to 24 months has turned into Russia’s largest trade and economic partner.

Our trade volume with China hit a record number last year: $87.5 billion. China is currently Russia’s number-one trade partner. Together with our Chinese friends and with President Xi Jinping, we have set the goal for the next two years to reach at least $100 billion in trade. I am confident that we will succeed.

Question (retranslated): Hello, Mr President. I would like to ask you about your reaction to Mr Obama’s absence at this summit. And also, the fact that you wanted to meet with him personally. What do you think about this?

Vladimir Putin: We see what is currently happening within the United States. It is a complicated situation. I believe the fact that the President of the United States has not come here is quite justified. I think that if I were in his position, I would not have come either, and I imagine that any head of state would have done the same. After all, when it is impossible to adopt a budget, when the government is essentially taking a forced leave – that’s not the time for foreign visits.

Moreover, I would like to say that all the leaders gathered at the APEC summit in Bali wish President Obama success, since we are all interested in seeing the crisis we are currently witnessing in the United States resolved as quickly as possible, because the United States is the world’s largest economy. Its wellbeing largely influences the state of the global economy.

And in addition to everything else, the US dollar is still a very important reserve currency. This is highly important for all of us. I am hopeful that all the political forces in the United States will be able to resolve this crisis as quickly as possible.

Question (retranslated): Mr President, I represent a company in China. I have a very important general question on maintaining a stable business environment. Everyone knows that if a company is not present on the international arena, it does not have a future. My question is as follows: if a company is investing in another nation, its main concerns are not regarding the risk to the business, but rather, the potential future relations with that nation.

What kind of agreements need to be made between nations in order to avoid these risks? Right now, of course, Russia and China have excellent relations, so my question does not concern Russia and China, but nevertheless, the situation with many other countries is different. If we invest in a particular nation and suddenly, relations with that nation deteriorate, we lose money. What should be done in such a situation?

Vladimir Putin: I think this question is very important, but I feel events like the one taking place here in Indonesia, in Bali (I must express my gratitude to our hosts, the organisers, and President Yudhoyono, who did a great deal to create such excellent working conditions for us) – the entire purpose of events such as this is to create stable operating conditions for businesses and economies, regardless of the current political environment. I think this should be entirely feasible in the modern world.

Let’s recall the past. Even before World War II, an American company acquired the Opel company in Germany. In spite of the tragic events during World War II, the company remained under American proprietorship, and indeed, they bombed fewer enterprises on German territory during the war, or perhaps did not bomb them at all, which is, incidentally, a very good example.

I think that if such relations are developed more and more broadly between nations, perhaps nobody will bomb anyone else at all. I hope that is exactly what will happen.

Thank you very much for this joint work.