Friday 13 December 2013

Twice as fast to stay in place

Russia's Minister of Economic Development, Alexei Ulyukayev, was in London this week. Talking to a packed audience at the LSE, hosted by LSE SU Russian Business Society, Mr Ulyukaev spoke candidly about the challenges ahead for Russia in its efforts to create modern and efficient industries.

Beginning the lecture with an unexpected quote by Lewis Carroll, “We must run as fast as we can, just to stay in place”, Mr Ulyukaev went on to discuss a number of key issues:
  • Confidence for inward investment 
  • A focus on innovation and entrepreneurship 
  • Facilitating a culture of best international practice and support for SMEs 
  • Investment in infrastructure

Confidence for inward investment
1. GDP outlook: 3.3% for 2014, average of 3% 2014-16 (with a slower 2.5% GDP growth forecasted for 2015).
2. Sustainable growth. Continuing efforts being made to facilitate a culture of best-practice, increased R&D activity and steps towards moving to a knowledge based economy.
3. Mr Ulyukaev believes that trade relations are not being undermined by the political climate in Russia.
4. Mr Ulyukaev appeared bullish about the prospect of Russia soon to be joining the OECD (Organisation for Economic Co-operation and Development).
5. Russia is having to painfully adjust to new conditions in light of its accession to the WTO but over the long-term it promises to be a major positive catalyst for economic development. He said it was important to learn best economic policy and practice from an institution like the WTO.

Focus on innovation
Mr Ulyukaev appears to support the stance of Russia’s Deputy Prime Minister Vladislav Surkov, emphasising how innovation is a key to stimulating Russia’s economy. (Surkov will be delivering a lecture on innovation at London School of Economics and Political Science on May 1 2014.)

Support for SMEs
1. Increased support for SMEs in the way of tax exemption for individual entrepreneurs in the first two years of trading.
2. Access to land and energy will be simplified, and tax for small and medium-sized enterprises will be reduced from 30% to 20%.
3. Credit will also be made more available for SMEs.

Investment in Infrastructure
1. Privatisation of rail industry. Russia and its state-owned railway monopoly Russian Railways (RZD) are in the midst of a long series of dramatic reforms to create high-speed rail infrastructure using private investment to make up the rail funding shortfall
2. Privatisation of Rosneft. Did not speculate on the timing of the privatisation or its potential postponement.
3. Sochi 2014. According to The Economist (World in 2014), the Games will end up being the most expensive Olympics in history at a cost of $50 billion (and four times more than planned)

A podcast of the talk is available here.

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