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Trade and Economic Development Minister German Gref: Good afternoon. First of all, I wanted to show you the results of a study carried out by the Consultative Council for Foreign Investment, which surveyed 158 of the biggest foreign companies that have been working in Russia over a long period of time.

President Vladimir Putin: When was the survey conducted?

German Gref: It was conducted at the beginning of this year and the results were presented just last week at a special committee sitting.

Vladimir Putin: So these are the latest statistics?

German Gref: Absolutely the latest. As for the answers to some of the questions asked, here are some of the results. Asked if their business in Russia is successful, 80 percent of investors said their business in Russia has been successful over the last two years, 17 percent said they’ve had medium success and three percent regard their business as having been unsuccessful. Regarding increases in profits and sales, 16 percent of the companies said they had a profit of more than 50 percent, 24 percent said they had profits of between 30–50 percent and 14 percent said their profits were between 20–30 percent.

Seventy-eight percent of the respondents said they plan to expand their operations in Russia and next year 46 percent plan to increase their investment in Russia. Those are some of the positive notes that came through in the survey.

Twenty-eight percent of the respondents said we are following the right economic policy with regard to foreign investment, 27 percent consider it to be wrong and 45 percent did not know. Fifty-four percent of the companies believe the investment climate would improve here over the next two years, 25 percent said it would not change, and 21 percent think it will get worse.

In the investors’ minds, Russia’s five main advantages are the following: 88 percent of respondents place the size of the Russian market at the top, for 77 percent it is the high and stable economic growth rate, 55 percent see as our main advantage a highly qualified and cheap labour force and 46 percent named macroeconomic and political stability.

Now for the five main obstacles that investors think are in the way of investing in Russia. Top of the list is corruption, named as the main obstacle by 71 percent of investors. Sixty-six percent said the biggest problem is administrative barriers, 56 percent said it is a selective interpretation and application of the law, 51 percent put inadequate and contradictory legislation in first place and 29 percent viewed conflicts between the state and business as the biggest obstacle.

Those are the main results and we think they reveal an interesting picture. The responses have changed considerably. We last carried out a survey of this kind four years ago and the situation has changed a lot since then. If we compare these new results to the responses we got four years ago, we see that practically none of the priorities listed then coincide with those listed today.

Vladimir Putin: In what way have they changed?

German Gref: Four years ago, it was security issues and the problem of laws being applied differently depending on the region of the country – essentially a regionalisation of legislation – that were at the top of the list, whereas today these problems no longer exist. The problem of high tax rates, too, is no longer among the top ten problems named. In other words, we’re looking at a very different picture today.

This picture also fits in with the responses we get from Russian companies in similar surveys. The priorities named coincide on many points. This accordingly sets the direction we should be working in.

Vladimir Putin: How are you going to take into account these results in your work?

German Gref: We are currently completing work on the final version of a medium-term development programme – one that takes into account the results of these surveys. What we are trying to do is focus the government’s work over the next three years and put in place concrete mechanisms that will enable us to resolve the problems that Russian and foreign companies see as the biggest obstacles for doing business in Russia. Our aim is to make progress in all these areas. They practically all fall within the government’s area of responsibility. The problem of corruption is also linked to administrative barriers and to contradictory laws and it is clear that we need to make the state decision-making process more transparent at every level and this also involves taking further steps to remove administrative barriers and to change the tax and customs legislation. Tax rates and customs duties themselves are no longer among the top ten problems, but tax and customs administration is in fifth or sixth place among the problems named.

Vladimir Putin: So, are we talking about simplifying the system?

German Gref: Yes, about simplifying the system, ensuring that laws are unambiguous and making it possible for companies to effectively protect their rights during checks and inspections.

We are trying to address all of these issues as concretely as possible in the medium-term programme. I think the programme will be complete by the end of March and will be ready for examination by the government so that the specific legislative steps can then be taken to deal with these problems.