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President of Russia Vladimir Putin: Good evening, colleagues.

We have already begun to discuss several issues with Government members, and we have invited you here to talk about them today as well. I am referring to a certain part of the Address, and now I will say a few more words about this in detail.

First of all, I am talking about specific steps to increase the efficiency of state corporations and companies with state participation, where the state owns 50 percent or more of the shares.

We have 52 such companies. They hold leading positions in key sectors of the economy: in infrastructure, energy and the military industrial complex; they have close economic and cooperative ties with many companies across the country.

In this regard, I will stress again: state companies should prioritise placing orders with Russian organisations, first and foremost, with small and midsize businesses. It is of course necessary to buy abroad, but we must import only unique equipment and technologies without which we cannot develop, or will develop less effectively, worse than we would like. We are talking first and foremost about technologies and equipment that do not have analogues in Russia.

Naturally, domestic suppliers’ offers need to be competitive, both in quality and in price, since these expenditures are laid into the cost of production for state companies and, as we all understand, affect your profitability.

I will remind you that the Address set the objective to lower state companies’ operating costs by no less than 2–3 percent annually. Fulfilling this objective should become one of the key indicators of the company executives’ efficacy and should form the basis for their remuneration.

Overall, it is necessary to analyse state corporations’ business models, to clear their balance sheets and create a straightforward plan for disposing of their non-core assets; we must also update long-term development programmes and conduct audits. These instructions are in place. I expect to hear today about how they are being carried out.

At the same time, I would like to note that the development and implementation of a corporate strategy is systemic, but nevertheless internal work. However, taking into account the status of state-owned companies, I feel it is necessary for the Government to prepare a list of interrelated strategic documents that will be required for organisations with state participation.

Furthermore, as I said in the Address, it is imperative to bring order to state companies’ finances. This is fundamentally important for corporations with a wide network of subsidiaries and affiliates, where unfortunately, the holding company often does not see financial resolutions at the local level, which can lead to a diffusion of resources, low returns on investment, and losses.

It is necessary to monitor the flow of funds and financial risks in both the holding company and its subsidiaries, while all operations of a specific state-owned company should be conducted through a single financial settlements centre. This approach allows for optimising state companies’ money flows, making their management more efficient. As you recall, corresponding instructions were given to the Government. Starting next July, unified treasuries should start operating. And today, I would like to hear how this work is going, as well as work to transfer state companies’ funds to Russia’s core banks.

And the last issue I would like to touch on concerns discipline in paying dividends. It is clear that the state’s participation in state companies’ capital provides significant advantages, such as strong support in carrying out complex projects and the opportunity to strengthen positions in the foreign markets. At the same time, the government as the major shareholder certainly has the right to expect corresponding returns.

I want to remind you that we agreed on the general principle as regards payment of dividends to the state: no less than 25% of net profits. However, based on the results of the past two years, this requirement is met by just over half of state-owned companies, and some even managed to get individual Government resolutions allowing them not to pay dividends or significantly reduce their size.

It is clear that all of us here are grown-up, experienced people, and it is clear that the arguments are always solid and based on the need for capital investments. Let’s agree that if decisions are made, they need to be fulfilled. And if they are not fulfilled, then new decisions are needed, reasonable and systemic, not spotty ones, or ones in favour of individual enterprises that get close to the high offices.

With this in mind, let’s begin today’s meeting.

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