OREANDA-NEWS. Dmitry Medvedev: Good afternoon colleagues. We are here for a regular meeting of the Government Commission on the Socioeconomic Development of the Russian Far East. As planned, we are meeting in Khabarovsk, in a hall where all of you have been before. Weve discussed many issues here, but mostly those related to the Russian Far East.

The Far East is a clear strategic priority for the country. But its also a big challenge. To re-launch the regional economy, we need to overcome economic and bureaucratic inertia, stimulate the creation of technology to replace imports and start exporting high added value goods and services. The region must find its place in Russia and abroad, that is, in the international division of labour and international industrial cooperation.

Dmitry Medvedev: "We have approved the allocation of 346 billion roubles until 2020, but the funds allocation this year are much more modest and should be increased at the first possible opportunity."
The business climate is exceptionally important. Yesterday we discussed tax regimes, administrative pressure and other approaches that are important for business in the Jewish Autonomous Region. At best, they should be improved to match these conditions in other Asia-Pacific countries, which is not an easy task because our partners have reached great heights over the past 30-40 years, and second, because life is forging ahead.

Only by doing this will we create normal living and working conditions in the Russian Far East. These challenging plans cannot be implemented without major government investment and the contribution of both public and private investors, including foreign ones. In the current situation and considering the specifics of the Far East, we are especially interested in investors from China, Japan, Korea and other Asia-Pacific countries. There are many business opportunities here. I plan to hold a separate meeting on the Asian-Pacific development vector in the near future, in a few weeks.

Today well talk about the Far Eastern investment projects to which Russian business is contributing. Im referring to new companies in the petrochemical, gas chemistry, metal, mining and other sectors, and Im not going to list any exceptional examples. Its clear that all of these projects need special support, but we should remember that the goal is to create thousands of new jobs, balance the local budgets and improve the standard of living in the Russian Far East. Implementation is hampered by many problems, because these programmes are expensive and return on investment will be a long way off. In addition to this, investors will have to finance the construction of the transport and energy infrastructure in the Far East, which is why the rate of return is so far objectively lower here compared to similar projects in other regions. We must take this into account when deciding on projects that will be financed under the government socioeconomic development programme.

Dmitry Medvedev: "To re-launch the regional economy, we need to overcome economic and bureaucratic inertia, stimulate the creation of technology to replace imports and start exporting high added value goods and services. The region must find its place in Russia and abroad, that is, in the international division of labour and international industrial cooperation."
Id like to remind you that we have approved the allocation of 346 billion roubles until 2020, but the funds allocation this year are much more modest and should be increased at the first possible opportunity. The Minister for the Development of the Russian Far East will report on the projects and the methods of implementation. I hope that our business representatives will also express their opinion here. Also, I want to know about the proposed law on the priority development areas in the Russian Far East. How far has it progressed? And what about the idea of creating more companies in the Far East, including the possible transfer of the head offices of large companies with state capital to the Far East? Should we provide additional incentives? If there are companies that are willing to do this, we are ready to ease their relocation costs.

Our colleagues have spent a lot of time preparing a list of tasks and goals today. We have not managed to coordinate many of them in full. Well have to do this right here, at this meeting, because these are objectively very difficult tasks, and the departments cannot agree on ways to fulfil them.

Nevertheless, all these instructions should be finalised during todays meeting. Whats even more important, they should be implemented. This effort includes choosing investment methods (i.e. devising and approving methods regarding investment projects) and after that, introducing amendments to the federal targeted programme paving the way for implementing initiatives with state participation or as public-private partnerships, devising methods for evaluating investment projects, including the ratio of public to private investment and the ratio of tax proceeds to contributions to social welfare funds, and also detailing investment projects implemented as part of the federal targeted programme. Igor Sechin will present another major project, the Eastern Petrochemical Company. Since this is a major and complex project, as much as eight government support measures have been proposed in this respect. These proposals should also be reviewed and evaluated in terms of investment: Who invests what? In other words, how much should the state, Rosneft and other companies invest so as to make the project viable for all of them? All in all, this is a major, important project that should be implemented.

We have other projects on the agenda as well, including the Bystrinsky Mining and Processing Plant. Draft instructions also feature a number of proposals on its implementation. I would like to hear proposals from colleagues, what has already been agreed upon, and what has yet to be decided. There is also the Udokan investment project, projects regarding gold ore deposits, energy, construction of a mineral fertiliser plant and a number of other initiatives. I mentioned all these projects for a reason, which is to emphasise that todays meeting of the Government Commission should not be reduced to just expressing the commitment to develop Russias Far East or having Governors ask for more funding with respect to various aspects of the federal targeted programme. This is all important, but we have the opportunity to discuss such issues during face-to-face meetings or during my regional trips. It is not uncommon for me to visit the Far East and its regions, while you often visit the Government Todays meeting should result in the approval of concrete support measures for investment projects.

Well also discuss the work of the Far East and Baikal Region Development Fund today. The fund was to be used to attract investment and to expedite the development of these territories. We have repeatedly discussed this issue, and it should be admitted that the fund isnt working properly so far. We will not liquidate it because we need this tool. There are subjective reasons, and we need to analyse them. But basically, the decision-making mechanism regarding the relatively small allocations of the fund does not function properly. Therefore I expect the Government and Vnesheconombank (VEB) to submit proposals within a month. If no proposals are forthcoming, Ill make my own decision, but in that case, Ill have to dismiss anyone who has worked on this until now. The fund should start working. Again, Im giving VEB and anyone else responsible for the fund one month. Im ready to review any options that will invigorate the effectiveness of this fund, including the transfer of fund assets and allocations to the Russian Federation and options related to the transfer of management functions to a specialised agency. In the latter case, all property would be transferred to VEB, but at the same time the above agency should address all the current issues without any prior consultations.

Dmitry Medvedev: "Weve allocated 40 billion roubles to restore the damaged infrastructure. I assessed the situation yesterday, and must say that at least part of these assets was not spent in vain. Social facilities and schools have been restored, vital infrastructure is up and running again and most of the roads have also been renovated."
And I will, naturally, speak about clean-up operations after the 2013 flood, while concluding my introductory remarks. We see this critical issue as very complicated and important. Yesterday, I visited Birobidzhan and a construction site in the village of Leninskoye in the Jewish Autonomous Region, where the construction of housing for flood victims has begun. We have very little time, work is also underway in other areas, and construction has started in all the affected areas. But I want to remind you that all these projects should be completed by 30 September. This does not just imply official reports that everything has been completed, I mean giving the keys to all the recipients of this housing. Every effected region has received funding; you know your own contractors, and we need to require them do a high-quality job in a timely manner.

Weve allocated 40 billion roubles to restore the damaged infrastructure. I assessed the situation yesterday, and must say that at least part of these assets was not spent in vain. Social facilities and schools have been restored, vital infrastructure is up and running again and most of the roads have also been renovated. We need to complete the housing projects in the same manner, and Im pointing this out again.

Mr Yury Trutnev will make a brief report on the upcoming post-flood clean-up operations. After that, well hear the Ministers report with a presentation of major investment projects for the Russian Far East. And then well give the floor to everyone who is responsible for these projects.