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President of Russia Dmitry Medvedev: You and I have been working for a long time in various positions, including within the Government and the Presidential Executive Office, where we both addressed an issue of particular importance to our country, and we continue to address it today: improving regulation for small businesses.

This is a complicated matter. I cannot really say that we have made significant progress in the last few years. At the same time, as someone who understands how the business world functions, I can say that today’s small business regulations are nevertheless better than they were ten or fifteen years ago. But apart from regulation itself, there are also audits, pointless initiatives by local or regional authorities, exactions and corruption which all affect small businesses. Our efforts to curtail such practices are rather slow in bringing results, although, as I said, we are moving in the right direction.

I have instructed the Government to address this matter. A corresponding draft law has been submitted to the State Duma. Please brief me on the progress in taking care of this matter, which is very important for our country.

First Deputy Prime Minister Igor Shuvalov: We prepared some draft bills for federal laws. Those laws were passed and went into effect on July 1, 2009. Thus, we have fully carried out your instructions, and the legislation is beginning to take effect.

We had regional meetings on this issue, we held a session of the Government Commission on Supporting Small and Medium-Sized Businesses with participation of representatives of law enforcement agencies including the Prosecutor General’s office, in order to ensure proper enforcement of these laws since, as you know, the practical application of the laws is often far too different from their initial concepts.

We have an important responsibility. In line with your instructions, we drafted laws which were later approved by the legislators, and now, we must ensure that they are applied accordingly.

(Next, Mr Shuvalov briefed the President on specific changes to the regulation of small businesses and the draft legislation prepared by the Government and addressing such issues as acquisition of premises for business purposes, accounting and reporting standards, and ensuring participation of small businesses in government tenders.)

Lately, we have been progressing with a full overhaul of the government tenders practices. I am referring to e-tenders, which we have been testing and gradually introducing. Their results are quite successful in some regions. Since January 1, 2010, the e-tenders format will become compulsory nationwide.

Here, we must use two approaches. On the one hand, we should parcel out lots so that small businesses may bid and offer their services in the public sector. On the other hand, we should employ the most advanced types of e-trade. Three platforms for e-tenders involving major budget expenditures are currently available. From a technical standpoint, the Russian Federation’s Savings Bank, the Government of Moscow and the Government of Tatarstan, are best prepared at this time and can arrange major government tenders.

Dmitry Medvedev: You mentioned government e-tenders. The idea is good, and the approach is correct. Tender lots should be parcelled out such that small businesses may participate.

I recall an e-mail sent to me through the presidential web portal, which referred to our government e-tenders website [the Russian Federation’s official website for providing information on placing orders, www.zakupki.gov.ru]. The letter mentioned that the site is generally quite useful as one can get information about what is being auctioned, and for how much, so anyone can participate. But allegedly, when the tender information is published, letters are deliberately changed from the Cyrillic to the Roman alphabet, and as a result, the information becomes unavailable if the search is done in Russian. This may not be true, but please look into it.

I gave relevant instructions to the Minister of Economic Development, and I hereby instruct you as well. If there is any kind of gimmickry, especially coming from a special information resource that was created to promote auctions, encourage competition, and fight corruption, then this is a really bad sign. Please take care of this and report back to me.

Igor Shuvalov: I can tentatively say that this information has been corroborated by certain facts. We will brief you on the matter soon, after a more thorough investigation.

Dmitry Medvedev: When you say it has been corroborated, are you referring to the allegations that this was done intentionally?

Igor Shuvalov: Yes, that’s right.

Dmitry Medvedev: Then whoever was involved in this should be punished.

Igor Shuvalov: We will certainly report to you on the final outcomes of our investigation.

Dmitry Medvedev: Thank you.

Igor Shuvalov: The last draft bill that I would like to discuss with you today addresses credit cooperation and smaller formats for providing loans to small businesses, which is something that small businesses have been requesting of you and the Government over the course of years. Now this format has been put into law, and the draft bill has been approved by the Federation Council.

Dmitry Medvedev: Yes, this is also an important format that will provide access to credit cooperation, and thus, to more discretionary money. It may even grant many businesses access to money at a different interest rate. These are instruments that existed as far back as a century ago. Now, we must simply return to these methods, though clearly, we must take into consideration modern circumstances.

This is an extraordinarily important topic, so we will meet regularly to discuss it, and I would like you and other members of the Cabinet to remember that during times of crisis, small businesses represent one of the most important clusters and one of the most important matters that we must address. Because if small businesses are engulfed by the crisis, our recovery time will not be measured in years, but in decades. The kind of environment we create today for small businesses will determine how quickly we are able to recover from the pique of this crisis.

Igor Shuvalov: We act in line with these directions. We will be preparing a package of draft bills promoting the development of small businesses in our country, for the autumn session of the Federal Assembly [the Parliament of the Russian Federation]. This is one of the key goals for Cabinet members, and some constituent entities of the Russian federation are actively involved as well.

I would like to report that several constituent entities do in fact perceive the problem of supporting small business as their greatest priority. Some entities, such as Republic of Tatarstan, Perm Territory, and Moscow have been very successful. But there are also federal entities where this issue is given little attention. We will make further efforts to encourage their activity.