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President of Russia Dmitry Medvedev: Good afternoon,

Today the commission is holding its seventh and last meeting this year. As we agreed last time, we are here today to listen to what the heads of the big companies in which the state owns a stake have to say. I would like to discuss the conditions for developing new high-tech products in Russia, the equally important aspect of their commercialisation, and how we will form our own innovation market.

State-owned enterprises plan to spend more than two trillion rubles on investment programmes next year. This is a similar level to what it was this year. For those who can’t do the calculations fast enough, this comes to around $70 billion. This is quite a lot of money.

This money comes to twice the corresponding investment from the federal budget, but how it is spent will determine the future not only of these corporations themselves, but of other economic sectors’ development too. The thing we should note here is that, of these two trillion rubles, investment specifically on research and development, that is, companies’ spending on R&D, comes to 40 billion rubles. It is not hard to work out that this represents around 2 percent. Work out for yourselves just how well these figures correlate.

Of course there is a need to considerably increase spending on scientific research and experimental and design work. This should be our common task. Present today are ministers, deputy ministers, people from the Presidential Executive Office, all involved in one way or another on the boards of directors of our country’s biggest state-owned or partially state-owned companies.

You can take it as my instruction to you all to vote for these decisions at meetings of these companies’ boards of directors. I address this to everyone present and I propose giving the corresponding instructions to the Economic Development Ministry and Russia’s Federal Property Management Agency (Rosimushchestvo), which it oversees.

Company managers’ performance should be measured by how much they increase production effectiveness and how fast they upgrade technology. We need to select specialists trained to achieve these goals. As I said, total investment is high, but investment in innovation is a lot lower in Russia than it is in other market economies. This problem affects not just state-owned companies (it would be unfair to say that they alone neglect scientific research and do not invest in R&D) but private companies too.

To quote some figures from the big oil companies, for example, if we take one US dollar per ton of fuel equivalent we get the following coefficients: Shell – 5.67; Exxon Mobil – 3.02; Gazprom – 0.29; Surgutneftegaz – 0.39; Tatneft – 0.72; Rosneft – 0.06. This is a big difference!

We cannot wait for the market to set everything in place. We often hope that things will work out of their own accord, but on this matter, believe me, things will not happen all on their own. Fifteen years so far have not brought these changes, and are not about to do so. The market is a powerful tool, of course, but most important is that we have to create conditions that will simply make it not profitable to keep using ineffective technology and outdated equipment. The law on energy conservation recently adopted with your help is just the first step in this direction, and it is an important step.

The laws on technical regulations should also pursue these same objectives. The law on technical regulation was passed the day before yesterday, and this is also an important decision. We spoke not long ago about the need to take firm action if necessary to push through new rules on approving technical regulations. Now this law has been passed and I expect the relevant ministry (I understand this will be the responsibility of the Industry and Trade Ministry) to prepare these new technical regulations as fast as possible.

No prohibitions or complicated procedures now, the Government and the State Duma need to act fast. Of course, we need to ensure that decisions already approved are actually enforced, for example, important measures such as application of the 1.5 coefficient for R&D spending included in production costs. I understand that our tax authorities are cautious in this area, but this law needs to be implemented and cannot just be left on paper alone.

As for the state-owned companies themselves, they should optimise investment management, draw up scientific and technological development plans and forecasts for modernising the technologies they use, formulate orders for research that will help to make their products more competitive. The people in charge of this work, the people who head these divisions in companies should see their responsibility increase substantially. I call here on the heads of state-owned companies.

Development strategies and investment programmes should include specific measures for innovative development and wide-scale introduction of modern technology. These measures should be set out as separate components of these strategies and programmes. I want the work on these investment programmes and strategies to be done fast. I instruct the state representatives to keep watch on this and ask the Presidential Control Directorate to prepare a report on the work accomplished in, say, three months time.

One other point I want to make is that when companies buy Russian-made innovative products the company and the Russian R&D sector both benefit, but when companies buy imported technology, only they benefit.

We need new technology and products developed here by our science and industry. But simply using Russian technology is not the aim in itself. We also welcome the establishment of joint ventures with our foreign partners to develop innovative products.

Furthermore, we need to attract foreign specialists. This is very important and in some cases is simply essential. We are creative, clever and well qualified people, but we should not feel shy about bringing in specialists from abroad too. We can do this today and we can pay them decent money. They will be happy to come here and work here.

In conclusion, I want to say that I have heard from company CEOs on enough occasions that the state does not provide enough economic incentives. This is partly true, but only partly. We need to change our thinking and our approach to doing business in the modern world. This is an area we need to work on. It is time to wake up! You need to invest money in the technology that will be your companies’ competitive advantage tomorrow and will ensure that Russia’s big state-owned companies are leaders on the global markets.