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President Vladimir Putin:

Good afternoon, dear colleagues,

On our meeting’s agenda today is continued development of information and communication technology in Russia.

I know that not just I, but you too, have had the chance to take a look at what is being done in this area in Nizhny Novgorod. We have visited different sites and seen what is happening.

This subject has been getting constant attention of late. This is because the market for this technology is very promising indeed, has a direct impact on scientific and technological progress and is an important factor in Russia’s ability to achieve leading positions on world markets.

We discussed in detail the creation of technology parks last year in Novosibirsk. Today we will be looking at the whole spectrum of issues related to new technology development.

We all know that countries that began working at the right moment on developing this technology have not only resolved a number of their internal problems but have succeeded in making their economies world leaders.

This is one of the most tried and tested modern paths to development, and it is a promising option for our country with its high potential and excellent start-up capital. I am referring here, of course, to our country’s intellectual, innovation and scientific-technological potential.

But potential can only be developed in practise if the right conditions are in place. In this respect too, the situation is very positive for the information technology sector.

Growth in this sector should in turn spur development in fundamental science and give a boost to a whole range of applied research in related sectors. We already have the accumulated financial resources and the managerial experience we need to launch such an expansion of the Russian information technology sector.

Last year, this sector accounted for 5.3 percent of GDP. In 2000, it accounted for just 2 percent of GDP. The sector employs more than a million people in Russia today and has the highest labour productivity of any economic sector, which is very important for the economy as a whole.

But more progress needs to be made because the reality is that we still lag quite a long way behind the technologically developed countries where the information technology sector accounts for 30 percent or more of GDP.

I am sure that advanced technology can become a real driving force for economic growth, for modernisation of management and – very important – it will become the object of increased consumer demand.

There are some very promising niches in this sector. Advanced technology is currently little used in education and healthcare, for example. Only 5 percent of teachers use information technology in the teaching process at the moment. In Western Europe this percentage is a lot higher. In Britain, for example, this figure is close to 60 percent. In areas where information technology could make a real impact on the quality of services provided, they are being underused.

This new technology can also play a part in ensuring state control of the safety and quality of consumer goods, including medicines and goods in a number of other sectors.

There is no doubt that all of this should be taken into consideration in the implementation of the national projects. The working group has set out the relevant proposals in its report and I hope that we will also discuss these proposals today.

I would like to say a few words about our most important tasks.

First, we must ensure that all our citizens and organisations have equal access to modern technology. One of the difficulties is that there are big regional differences in this respect. The regions are in very different situations when it comes to developing communications infrastructure. To take mobile phone use, for example, it is 80 times higher in some regions than in others, and in some regions the number of personal home computers is 50 times higher than in others.

We clearly must take action to bridge this gap. This is a problem for the world in general, but our country is a particularly striking example of this technology gap. This is not the responsibility of just one ministry. The government in general, the business community and the regions themselves should all be involved in resolving this problem.

Although the sector is growing by more than 30 percent a year, which is a very good result, and I heard today that the sector in Nizhny Novgorod is growing by 40 percent a year, we still have more than 40,000 settlements that are not connected to the telephone networks. This is an absolutely unacceptable situation in the twenty-first century. The state must fully settle this problem over the next three years, and this includes looking at the possibilities for converting some of the radio frequency spectrum for civil use.

Our postal system is also in need of considerable modernisation work. Today we had the chance to learn about the positive work being done in this area. Seventy percent of post offices are in rural areas. These are places where people have practically no access to any other kinds of communications services and the post is their main channel of communication, so it is important to modernise this sector.

A second area we have to work on is computerising state and municipal management. As you know, some of the programmes designed for this purpose are already functioning. All of these programmes are united within an overall concept that has been given the name “Electronic Government”. This project should be implemented by 2010.

Our ministries and agencies generally have the computing technology they need today. Civil servants at practically all levels have computers. We have also created local computer networks.

I realise that these are only the first steps. Having all the technical equipment has not yet had much impact on the quality of management, however, as I am unfortunately forced to note. Ministries and agencies continue to duplicate each other’s work, are slow in cutting administrative costs and remain closed to citizens. Civil servants often establish monopoly use over data bases that should be open to all and were initially created for people’s needs. These data bases should help make the work of the state authorities, at federal, regional and local level, transparent. I was talking today with Valery Pavlinovich [Shantsev] and he said that he plans to place a number of procurement orders through the Internet. I think that this is the right approach and I recommend making more use of these possibilities as a solution to the problems we have.

The regional and local authorities should pay particular attention to preparing citizens for the use of new advanced technology and should focus on information work that will help form public demand for the development of such technology.

Another major area of discussion is the development of Russian production in the information and communication technology sector. Software design and production is the new area of global competition today. This offers Russia great opportunities because we have world-class specialists in applied mathematics and programming.

Russian companies working in this sector are already active not just within our borders but in the CIS too and the state should be familiar with the situation on these markets and provide the necessary support. One way of providing support is to help with the organisation of technology parks, as we discussed in Novosibirsk.

We also discussed at that time the need to search more actively for investors, both Russian and foreign. Investment raised could be used in particular to support the projects of Russian designers and developers and encourage promising small and medium-sized businesses in this sector.

Coming back to Novosibirsk, we decided then to create technology parks in four different regions. A year has now gone by and the various ministerial approvals are still all in the process of being obtained. This is very wasteful. If we keep going like this we won’t be able to keep up the pace of work. Now we have also made the decision to establish special economic zones, but this does not mean that we can forget about the previous decisions on technology parks.

Another three regions have since also joined in this project. This is a good thing overall, but the time it takes to get through all the paperwork regarding these decisions must be brought down to a strict minimum.

Developing information technology today is not just a big task on our agenda; it is a strategic objective in every sense of the word. Making this development reality will require the government to take a number of important steps, including developing a special system of measures. As far as I know, the proposal has been made to set up an ad-hoc commission to coordinate the government’s work in this area. Let us now discuss all these matters.

Thank you for your attention.