INTELLECT AND INNOVATIONS: RUSSIA'S NEW ECONOMY

Last June, the International Economic Forum was held in St Petersburg, Russia. Within its framework, representatives of many countries came to a rather simple conclusion: the global crisis requires a global response. Russia is doing its share in coordination with its partners. The Russian government continues being committed to the principles of the open market economy and free trade. No extraordinary protectionist measures have been imposed yet for the Russian national industries after the "G20" summit in November 2008.

Russia CPI inflation (% change year-on-year)

In the current global recession, Russia came to face problems with its exports, falling prices for major energy commodities and the outflow of speculative funds. To overcome these difficulties, Russia should develop its energy sector as the fundamental industry shaping the export capacity and generating the main cash flow, as well as reform and diversify the whole economic structure.

Last June, the International Economic Forum was held in St Petersburg, Russia. Within its framework, representatives of many countries came to a rather simple conclusion: the global crisis requires a global response. Russia is doing its share in coordination with its partners. The Russian government continues being committed to the principles of the open market economy and free trade. No extraordinary protectionist measures have been imposed yet for the Russian national industries after the "G20" summit in November 2008.

In the current global recession, Russia came to face problems with its exports, falling prices for major energy commodities and the outflow of speculative funds. To overcome these difficulties, Russia should develop its energy sector as the fundamental industry shaping the export capacity and generating the main cash flow, as well as reform and diversify the whole economic structure.

In this context, the main lesson learned from this crisis is the need to set up a more diverse economy. We have quite a number of relevant programmes. We believe that innovations, which constitute a very promising factor of economic development, are underused in our country.

Speaking at the St Petersburg Forum, Russian President Dmitry Medvedev referred to Russia's long-term development strategy as a "Five I's" strategy, with "I" for institutions, infrastructure, innovation, investments and intelligence. Today, the goal is to form an intelligent, "smart" economy and a corresponding intelligent and smart society. This assumes a significantly higher living standard and the predominance of a middle class, capable of adjusting quickly to the changing world.

Another important direction for Russia is to reinforce and improve the performance of the national financial system. The ultimate goal is making Moscow a major international financial centre. This project is still underway, regardless of the crisis. In a way, the crisis has even made it more relevant.

Another programme has been designed to support retrenched employees. This programme includes measures such as retraining, raising unemployment benefits, assistance in launching numerous small businesses, which would hire currently unemployed people. It is quite a serious effort that Russia is undertaking. But the situation should not be overdramatised. It, in general, is neither worse nor better than in the majority of developed economies.

Speaking about the foreign investments to the Russian economy, in Q1 2009 they shrank. But yet, despite the crisis, US$12 billion flowed into the Russian economy in January-March 2009. Although the amount is certainly smaller than last year, it still suggests that foreign partners have maintained confidence in the Russian market's favourable prospects, as well as its post-crisis restoration and growth.

Overall, about 60 clearance requests from foreign investors are being currently considered by the Federal Antimonopoly Service (FAS). Several requests involve a restructuring of Russian strategic assets in mining, transport engineering and other industries. I hope some Singaporeans will be soon among those investors, too.

In the terms of investments, I'd like to draw your attention not to the central or European part of the Russian Federation but to its other regions much closer to Singapore than Moscow and St Petersburg, like Vladivostok.

Russia GDP growth (year on year % change)

The APEC Summit 2012 will be held in Russian Far East on the Russky Island which lies south off the Pacific port of Vladivostok. This enormous infrastructure project includes building two bridges, a business centre, several hotels, a new airport terminal and reconstructing transport system. More than 4,500 workers have been employed. The estimated cost is about US$3 billion. After the summit, the government is planning to create a tourist zone and establish the Far East University based on the built infrastructure.

Russia looks at other global players, analyses other countries' experiences and studies their successful development. This is helping our country to withstand the impacts of the economic crisis.

I hope that this meeting will help develop a realistic view of the Russian business environment. On behalf of the Embassy of the Russian Federation in the Republic of Singapore, I wish to thank the organisers, IE Singapore, as well as everyone present today. by Konstantin Topilskiy