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Meeting on transport sector development

May 7, 2020, Novo-Ogaryovo, Moscow Region

Vladimir Putin held a meeting, via videoconference, on transport sector development.

Taking part in the meeting were Chief of Staff of the Presidential Executive Office Anton Vaino, Acting Prime Minister Andrei Belousov, Deputy Prime Minister Marat Khusnullin, presidential aides Igor Levitin and Maxim Oreshkin, Transport Minister Yevgeny Ditrikh, Industry and Trade Minister Denis Manturov, Economic Development Minister Maxim Reshetnikov, Finance Minister Anton Siluanov, Central Bank Governor Elvira Nabiullina, Chairman of the State Duma Committee on Transport and Construction Yevgeny Moskvichev, Head of the Republic of Buryatia, who also heads the State Council’s Transport working group, Alexei Tsydenov, Head of the Federal Anti-Monopoly Service Igor Artemyev, as well as heads of major companies and organisations operating in the transport sector.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

Today, just as we agreed, we will discuss the overall situation in Russia’s transport sector.

However, I would like to ask you to begin by reporting on the measures taken in the transport sector to protect people from the coronavirus, and what is being done to protect passengers and staff considering the sector’s specific nature. These issues are at the centre of our attention at the moment.

Of course, we will discuss with senior executives from the leading companies and business associations urgent measures to support the sector, as well as its development prospects, taking into account strategic long-term objectives in terms of national economic development.

Russia’s transport sector employs about 4.5 million people, whose consistent and reliable work serves as a steady growth driver for businesses and regions, as well as the entire country as a single whole.

Just like other key industries, the transport sector is having a hard time due to the coronavirus pandemic and the enforced restrictions.

We are witnessing the shrinking of cargo and passenger traffic, falling revenues and growing financial problems; many companies are suffering losses.

I would like to note that even under such difficult conditions, our transport and logistics companies continue their uninterrupted operations, provide reliable transport services between the regions and territories, which is a strategic task for our vast country.

I would like to use this opportunity to thank the employees of transport companies for their hard and responsible work during these difficult times. It is important to support the people engaged in the transport industry and ensure the general sustainability of the Russian transport sector. Companies must be able to pay salaries, maintain their fleet and infrastructure and fulfil their financial obligations.

As with other industries, we decided to allocate over 23 billion rubles from the Reserve Fund as emergency assistance to airlines. These funds should be used to pay salaries to the crews and other employees, settle airport bills and leasing payments.

It is noteworthy that the situation with air transportation – both in Russia and around the world – is particularly difficult. We can see it, we understand it, and will devote a separate meeting to it to discuss the objectives of the aviation industry in general.

I would also like to remind you that we made a list of backbone enterprises in all types of transport and will provide them with special support, including preferential loans for working capital financing.

I want to emphasise that this is a federal list of enterprises. We must not forget that in each region, there are companies that fulfil important tasks for a certain territory. Most of them are companies engaged in bus and river transport, and commuter railways. In this regard, I ask the heads of Russian regions to develop mechanisms to support such enterprises.

We need to pay special attention to seasonal transport, primarily inland water transport. It only operates for just six months, from May to October, which means that if anything prevents the normal operation of the navigation season, and the fleet does not reach its usual capacity, companies and their staff will need additional support.

The drop in tourist flows is a common, crosscutting challenge for all passenger transport. International tourism has virtually come to a halt, and it will take time before it recovers to its pre-pandemic levels.

We need to use the reserves that become available within the transport sector for developing domestic tourism, region-to-region transport, as well as for offering quality and affordable services to our people, who will no doubt be eager to travel around the country once the restrictions are lifted. I suggest that we hear what other participants in this meeting think about this.

Moving on, as I have already mentioned, the domestic transport network saw a decline in its throughput. In this context, we need to come back to the question of prioritising cargo trans-shipment through Russian seaports.

Russian port facilities are quite competitive compared to foreign ports. Today, we have a real opportunity to make headway in attracting more cargo flows to Russian ports. Of course, this should be beneficial for transport businesses, as well as for Russian producers and exporters.

In this connection, I would like to remind you that I have already issued an instruction to set up a special economic zone in the Caspian Sea, which calls for creating a modern transport hub. I would like to hear a progress report on this matter today.

Overall, I would like to stress that the decline in global demand exacerbated competition on international markets, including fuel and raw materials, food and other products.

In order to win over these markets and make Russian products more competitive, our exporters must work together with transport companies. I hope that Russian transport companies offer effective logistics models to support and drive exports, including for high added-value products.

There is another important topic. Over the past years, the state was involved in the launch of a number of major projects to boost the capacity of railways and seaport approaches, as well as to develop the road network and waterways. This included the Eastern Polygon railway infrastructure development project, ports in the south and northwest, and efforts to develop the Central Transport Hub in the European part of the country. In addition, Russian companies have been showing positive momentum in upgrading their rolling stock, sea and inland fleets, as well as motor vehicles.

We need to preserve as much as possible investment programmes for the transport sector and infrastructure development in order to safeguard value chains, protect jobs in the sector and incomes earned by the people employed within the sector or in related spheres. I am referring to major long-term orders for the Russian industry, railway rolling stock manufacturing, automobile plants and shipyards, as well as construction companies, and producers of construction materials.

Let me emphasise that there will definitely be demand for transport capacity as the economy recovers and starts growing again. We believe this to be inevitable once demand for travel and cargo shipments begins to recover. The recovery pace for the economy and businesses will largely depend on whether transport and logistics companies are able to work together effectively.

In this context, I would like to note the obvious fact that once the epidemic subsides, we will need to take a serious look at the sanitary and preventive measures in all sectors, taking into consideration the experience we will have accumulated, including and maybe even primarily in the transport sector.

I would like to draw the attention of our colleagues from the federal agencies that they must avoid taking things too far, as they say, or submerging businesses with formalistic, excessive and sometimes nonsensical requirements. It is essential that the requirements are commensurate with the risks. What matters the most is that they help protect the people’s health and ensure their safety. This should be our continuing priority.

Let us now move on to discussing the agenda items.

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Vladimir Putin: Colleagues,

During today’s meeting, I wanted to discuss this topic from a comprehensive perspective in order to understand what is going on in the transport sector. I also wanted us to meet in this format, so that this dialogue does not take place solely within the Government between the Transport Ministry and the Finance Ministry or the Economic Development Ministry, but instead reaches outside the Cabinet so that both the Finance Ministry and the Economic Development Ministry can hear what people who actually work in this sector think, learn their perspective on the ongoing developments, as well as their opinion on challenges and ways of resolving them.

Today, we heard specific proposals on ways to support the transport sector. We will review all of them, as the Finance Minister has just said.

I would like to highlight a number of comprehensive solutions, and I ask you, or rather instruct you, to do the following in the near future.

First, I propose expanding the list of sectors most affected by the epidemic. We have just discussed this. The Finance Minister has just said that while many companies operating within the sector can use the existing support mechanisms, including small and medium-sized businesses, others are left out. There are gaps that need to be filled, so we need to look carefully into this issue and add inland water transport and commuter rail service to the list. We need to understand whether companies in these sectors can benefit from the measures that we have introduced so far. This is all there is to it. If not, in this case we need to think about how we can help these companies, so that practically all transport types and segments are covered by state support measures.

In this context, I would like to remind you that companies operating in the affected sectors of the economy can benefit from special support measures (Mr Siluanov has just mentioned this), specifically deferred taxes and duties, lower social insurance contributions, and a temporary moratorium on inspections.

In addition, companies of this kind are entitled to non-repayable financial aid and interest-free loans for paying out salaries if they keep a specific share of their workforce on the payroll.

I strongly believe that these support measures will do a lot to support shipping companies, especially now that inland navigation has resumed. They are also expected to have a positive effect on commuter railway service and ensure a reliable operation of commuter trains at a time when there are fewer passengers, which means lower revenues for railway operators.

Second, as I have already said at the beginning of the meeting, it is essential that investment continues to flow into the transport sector, and our colleagues mentioned this today. We need to carry out infrastructure upgrades and renew railway rolling stock. We need to look at the existing or potential requirements for new transport means. We all understand that not only does this provide a foundation for future economic growth, but also creates demand for the goods and services from suppliers and contractors down the value chain.

Russian Railways is implementing a large investment programme that will have a wide-ranging impact on the Russian economy. As we have heard today, the company plans to issue perpetual bonds to finance these investments. I support this proposal. I am asking the Government together with the Central Bank to quickly develop the necessary legislative and regulatory base. I think this will be a good tool for all participants in the process, so these bonds should be issued this year. We must do all we can to make it happen.

Third, I have already said that we have the capacity to work faster to redirect our cargo flows to Russian ports. We have the reserves to boost our competitiveness and effectiveness in all means of transport and logistics services.

For example, currently both Russia and foreign states are preparing or beginning to gradually lift restrictions. However, right now it is obviously difficult to say how it will go, including what foreign destinations will be open to Russians and when. This does not depend on us alone. It depends on developments and decisions made in other countries.

This means that we have to help bolster domestic tourism, or, to be more exact, to augment our capacities in this area involving, of course, transport companies (without which it is impossible to do anything), travel agencies and the hotel industry. All these resources must be tapped in order to create attractive routes and new offerings in Russia with easy access, where people would want to spend time.

The Government is currently developing a national action plan to reopen the economy, as well as a list of specific measures to restore employment, people’s incomes and growth in different sectors of the economy. I propose adding steps to develop domestic tourism to this plan and, let me stress this once again, to do so in close coordination with the business community.

Moreover, I propose adding to the national action plan measures to encourage transit container shipping (my colleagues were very convincing on this just now) and to explore profitable logistics routes, for our exporters to discover new prospective markets.

Let me repeat that as capacity is being freed up in the Russian transport system, it must be used to meet the needs of Russian companies and exploit Russia’s geographic advantages in the interest of the national economy and our people.

I would like to once again thank all the participants in today’s meeting for their work. Please give my best regards (I am talking to the representatives of businesses and our leading companies) to everyone who works at your enterprises and your companies. I wish them good health and the best of luck.

Thank you very much. All the best.

Yes. And of course, I am also asking the Presidential Executive Office together with their colleagues in the Government to prepare the list of corresponding instructions.

Thank you.

May 7, 2020, Novo-Ogaryovo, Moscow Region