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Information about positions of delegates and speakers of The Russia Forum 2012 are valid as of the date of the event.Sberbank of Russia. General license of August 30, 2010 for banking operations in the territory of the Russian Federation. Registration number 1481.Closed Joint-Stock Company “Investment company “Troika Dialog“ (hereinafter referred to as Troika Dialog Investment Company) may provide brokerage and depository services on thebasis of the following licenses granted by FSFM of Russia and provide other related services on the securities market:№177-06514-100000 for brokerage activities as of April 08, 2003;№177-06518-010000 for dealer activities as of April 08, 2003;№177-06522-001000 for securities management activities as of April 08, 2003;№177-06527-000100 for depository activities as of April 08, 2003;Troika Dialog Investment Company is a financial consultant on the securities market.Troika Dialog Investment Company is also entitled to render professional services in the capacity of stock market intermediary completing deals with futures and options on the basis ofLicense to act as stock market intermediary completing futures and options deals in stock market trading on the territory of the Russian Federation dated October 14, 2010, №1523, issuedby the FSFM of Russia. Informative and analytical services and data are provided by Troika Dialog Investment Company only within the framework of the abovementioned services and do not constitute a separate kind of activity.Troika Dialog Investment Company may refuse to provide services to persons who do not meet the requirements, imposed by Troika Dialog Investment Company for its clients, or whenlegislation applicable to such persons prohibits/restricts the provision of these services to them, as well as in other cases stipulated by applicable legislation and/or internal regulations ofCJSC Troika Dialog Investment Company.Closed joint stock company “Asset Management Company “Troika Dialog“ was registered by the Moscow Registration Chamber on April 1, 1996. FSFM of Russia license №21-000-1-00010 dated September 12, 1996 to perform management of investment funds, mutual investment funds and non-government pension funds. FSFM of Russia license №177-06044-001000 dated June 7, 2002, to perform management of securities. http://www.troika-am.ruThe value of investment units can increase and decrease, investment results in the past are not a guide to future returns, the government does not guarantee the profitability of unitinvestment fund investments. Prior to purchasing investment units, investors should attentively read the management rules of unit investment fund. To receive detailed information aboutmutual funds and to read through the management rules of unit investment fund and other documents, please inquire to: 125009 Moscow, Romanov pereulok, 4.Closed Joint-Stock Company “3D” – distributor of CJSC Troika Dialog AM and CJSC Troika Dialog Investment Company investment products FSFM of Russia professional security market participant’s license:– for rendering brokerage services №077-07641-100000 dated 28.04.2004– for rendering dealer services №077-07648-010000 dated 28.04.2004.
T H E R U S S I A F O R U M 2 0 1 2 Every year The Russia Forum presents us with new chances to meet and openly discuss what is going on in Russia and the wider world. The modern world is very dynamic and in this ever-changing situation it is important to rely on those whom you trust. Trust is a key element that is built up by years of communication, and I am proud that we have earned such trust. Obviously we cannot reduce the risks of investing in Russia to zero, but we can make the unpredictable predictable by giving investors as much information as possible during The Russia Forum so that they go on to make the right decisions. This year we were able to take our Forum to the next level in terms of scale and quality thanks to the joint efforts of Sberbank of Russia and Troika Dialog. We are pleased to announce that on the eve of the Forum the deal for Sberbank of Russia’s 100% acquisition of Troika’s share capital was closed. This was a significant event for both our company and the Russian financial market on the whole, and will allow us to merge the knowledge and expertise of teams that every day make the impossible possible. The Russia Forum is comparatively young, yet it has already become an important international conference that investors rightly consider to be one of the highest calibreDEAR FRIENDS, business events in Russia. This year the format of the Forum was greatly widened and the programme featured new events: for the first time ever we held specialised thematic workshops, which undoubtedly enabled us to make the Forum more informative. The Russia Forum 2012 also included a special day entitled “Cinema and Money” andYOU HAVE IN YOUR HANDS THE RUSSIA featured over 40 panel discussions and sessions dedicated to a wide range of the mostFORUM 2012 MAGAZINE, WHICH SUMS UP varied topics – from global economic challenges to making investments in art and theTHE FIFTH ANNIVERSARY EDITION OF future of modern Russian cinema.THE RUSSIA FORUM. I WOULD LIKE TO ONCEAGAIN THANK EVERYONE WHO SPENT THOSE Over 3,000 delegates attended the Forum, and the event was covered by 345FEW BUSY WINTER DAYS WITH US DESPITE journalists representing 133 media outlets from Russia and 12 foreign countries. InTHE RUSSIAN FROST AND THE MOSCOW connection with this, for the first time we held our event at a larger venue: the MoscowTRAFFIC JAMS . THOSE WHO WEREN ’T ABLE International House of Music. We sincerely thank Vladimir Spivakov for the modernTO VISIT OUR LANDMARK EVENT THIS YEAR infrastructure and high-quality service provided to the organisers and participants ofCAN FIND WHAT I HOPE WILL BE EXHAUSTIVE the Forum.INFORMATION ABOUT THE RUSSIA FORUM2012 ON THE PAGES OF OUR MAGAZINE. In conclusion I would like to thank the outstanding speakers whose addresses bring The Russia Forum unquestionable success. I would like to express especial gratitude to Vladimir Putin for his participation in the plenary session entitled “Russian Economic Policy in a Time of Global Change”. I hope that you found each and every part of The Russia Forum 2012 interesting, dear friends. I also hope that your faith that Russia can and should be invested in has grown, and that Russian investors were once again able to see that they have made the right choice. YOURS SINCERELY, RUBEN VARDANIAN PRESIDENT OF TROIKA DIALOG, CO-HEAD OF THE CORPORATE INVESTMENT UNIT, HEAD OF THE WEALTH MANAGEMENT UNIT OF SBERBANK OF RUSSIA I N T R O D U C T I O N 1
T H E R U S S I A F O R U M 2 0 1 2СОNTENTS 04 DOSSIER 72 HERMAN GREF Sberbank and Troika Dialog Today PANEL DISCUSSIONS, FEBRUARY 3 74 GORDON BROWN 08 STATISTICS 36 OPENING SPEECH: SERGEY SOBYANIN Forum in Numbers 76 KENNETH ROGOFF 38 The Future of the Global Economy and Financial System 10 WORKDAYS 78 QUOTATION 103 Is There a Future for Cinemas and Distribution? Program of The Russia Forum 2012 40 Risk Management: Myth or Reality? Straight from the Top 104 What do the Figures Mean? Cinema, Television and Advertising 12 SPEECH OF VLADIMIR PUTIN, PRIME MINISTER 42 A New Era in Mobile – Opportunity Knocks 80 SURVEY OF THE RUSSIAN FEDERATION Forum Survey Results 105 Breakthrough Hit Creation: A Gift of Foresight or Calculation? 44 Where Does the Big Money Go? PANEL DISCUSSIONS, FEBRUARY 2 82 RESEARCH CENTER 106 How to Finance Projects Through Special Funds 46 Interest Rates, Exchange Rate and Liquidity: are there Research Materials: An Investor’s Guide from Troika Dialog 14 Russia 2018: at Vital Crossroads and Challenges Resources for Investment? 107 How Will New Technology Change the Content Distribution Market? that Will Determine the Country’s Future 84 CHARITY 48 Which Emerging Technologies will Kill the Traditional Bank? Cinema Auction 108 Ukraine: This Applies to Everyone. State Policy for Supporting 16 The Present and Future of Russian Oil: CEO Challenges Cinema and Co-Production 50 Developed and Emerging Banks: A Case of Irreversible 86 TELETYPE 18 Global Economic Ills and their Impact on the Social Framework Decline vs. Irrepressible Rise? The Press on the Forum 109 Transmedia: A New Language for a New Audience 20 Agriculture & Food: What Will the Future Bring? 52 Retail: Stabilization Period SPECIAL DAY “INVESTMENTS IN CINEMA, TELEVISION 110 Will Russia be able to Transform from the World’s Largest TV Format AND NEW MEDIA” Importer into the Largest Exporter, and What Will it Take? 22 Privatization: Interim Results 54 Creating a Domestic Capital Base 92 Program of the Special Day 111 The Israeli Phenomenon: From Creative Desert 24 Russia’s Economic Policy in a Time of Global Change 56 Russia’s Gas Exports to Europe: New Challenges and Opportunities to Creative World Centre 94 List of Special Day Speakers 26 Metals and Mining in the CIS: Development Prospects 58 Transport and Infrastructure: Reform at a Crossroads? 112 Independent Cinema: How Not to Pass by a New Wave amid Great Volatility 98 Cinema, Television and New Media in 2012: Key Topics 60 Troika Dialog: Investments in Art. Art Banking and Art Finance SPECIAL DAY ROUND TABLES 28 Russia in Transition 99 Media Pirates: Is It Worth Dealing With Them? 62 The Role of Innovation Policy in Modernisation 113 Institute of Stars: Why isn’t the Hollywood Strategy Used in Russia? 30 What’s Moving the Real Estate Market? 100 State Support of the Production and Distribution 64 WORKSHOPS (JANUARY 31 – FEBRUARY 1) of National Cinema – What is Going to Change? 114 Film Studios: Who Will Win the Competition? 32 New Industrialization in Russia ON THE AGENDA: THE MAIN ECONOMIC ISSUES 101 How to Finance Cinema and TV Projects 115 Where and How to Look for Talent? 34 CLOSING SPEECH: GORDON BROWN 66 FORUM IN FORMAT 1:1 at the Expense of Advertisers List of company participants in meetings 116 BEST OF 102 Co-Production: How to Find a Common Language Forum Entertainment Program 68 PODIUM Complete List of Forum Speakers 126 ART Forum Guests Receive Inspiration from the Works of Wassily Kandinsky INTERVIEWS THAT MATTER 128 FORUM PARTNERS 132 CONCLUSIONS Alexander Bazarov Sums up the Forum C O N T E N T S C O N T E N T S 3
T H E R U S S I A F O R U M 2 0 1 2SBERBANK The bank has the most extensive branch network in Russia, consisting of 17 territorial banks, around 19,000 branchesTODAY and internal structural subdivisions as well as subsidiary banks in Kazakhstan, Ukraine and Belarus, a branch in India and representative offices in Germany and China. Sberbank continuously develops its Recently the bank has accomplished trade and export ﬁnancing, and by a large amount of work aimed at 2014 it plans to increase the share of net increasing its focus on clients: the numberFounded in 1841, Sberbank of Russia is the largest bank in Russia and profit generated abroad to 5%. The key of ATMs and payment terminals has been terms and conditions of a deal to acquire increased and internet bank functionalitythe CIS. Its assets and shares account for over a quarter of the capital Volksbank International – with branches has been enhanced. Clients can now use the in nine Central and Eastern European internet bank to independently manage theirof the country’s banking system. Sberbank is the biggest taker of countries – have been signed. At the end of accounts at home or via a smartphone. Since 2011, Sberbank signed an agreement on the October 2008 the share of remotely-executeddeposits on the market and the key lender to the national economy. creation of a joint loan market bank at points transactions has increased from 37% to 70%. of sale with Cetelem (BNP Paribas Group) New contact centres have been created and New products and servicesApproximately half of the population’s savings held in Russian banks and concluded a deal to acquire shares of SLB on average it takes 30 seconds for a caller to have been implemented, Commercial Bank AG. In January 2012 the be put in touch with a contact centre specialist. for example the “Youthare entrusted to Sberbank. Sberbank’s lending portfolio includes deal to merge leading investment company Offer”. For the purposes of Troika Dialog into Sberbank was finalised. Client service models are being reducing loan application reviewapproximately a third of all the loans issued in Russia. The founder successively changed, taking into account time, Sberbank has implemented the needs of similar client groups (VIP clients, the “Loan Factory” technologyand principle shareholder of Sberbank of Russia is the Central Bank large high-income segment). In 2011, 800 and now issues people all loans, offices were refurbished. Up to 2015 the except mortgages, practicallyof the Russian Federation, which holds over 60% of voting shares. reformatting programme envisages that the within one day. Sberbank also 7,700 points of sale will be reformatted.. launched a brand new product No less extensive work is being carried outOver 245,000 individuals and legal entities are the bank’s other for those opening businesses, inside the bank; above all this concerns New CRM-systems are being actively the “Business Start” loan and centralisation of operations and ITshareholders. implemented at Sberbank’s corporate has started up the “Serviceman modernisation. In 2011 Sberbank opened the largest and retail units (the corporate unit’s CRM- Mortgage”, a product aimed at data processing centre in Europe and the first automated system already covers over 250,000 clients). providing Russian servicemen archiving and logistics centre in Russia. Currently there These are information systems designed to with affordable and comfortable are 9 CTAs (Client Transaction Accompany Centre) in record the history of interaction between accommodation. operation and a programme for creating interregional client and bank, establish and improve service centres has been approved. This programme of business procedures and carry out subsequent transformations is closely related to the new corporate analysis of work results. ideology and technology, the SPS (Sberbank Production System). Using SPS methods, 27 billion roubles have already been saved. Of course, all this is grounded on changes to the work with bank personnel. In terms of personnel, a wide-reaching personnel evaluation and training system has been implemented. In addition a corporate training system is being developed with the assistance of the world’s leading business schools and unique social programmes have been launched. D O S S I E R 5
T H E R U S S I A F O R U M 2 0 1 2TROIKADIALOGTroika Dialog is part of the Sberbank Group and is one of the leading investmentcompanies operating in the CIS. The key business areas of Troika Dialog, founded in1991, are securities sales and trading, investment banking, private wealth and assetmanagement, private equity and venture investments, as well as personal investment andﬁnance. Troika Dialog’s operations are located in 21 cities across Russia plus ofﬁces inNew York, London, Nicosia, Kyiv and Almaty.SECURITIES TRADING COMPLETE MARKET INVESTMENT ANALYSIS BANKINGTroika Dialog is a participant on the mainexchanges trading in Russian assets. We The broad scope of Troika Dialog’s Troika Dialog provides its clients with aprovide a wide range of investors the research product offering reflects wide range of advisory services on dealsopportunity to carry out operations using a comprehensive and independent with shareholder and debt capital. Our aimfinancial instruments and we support view of the CIS markets. Our analysts is to find the most effective solutions forfirm quotes for the most liquid equities of closely keep track of operations at our clients in the framework of applicable ASSET MANAGEMENTRussian issuers beginning well before the 278 companies and conduct detailed legislation and to guarantee flawlessopening of trading in Moscow and ending analysis of the 129 most important execution no matter the market conditions. Since its founding in 1996, Troikaat midnight Moscow time when trading listed companies in Russia, Ukraine and In 2011, with the support of the Sberbank of Dialog AM has occupied thecloses in New York. Our company was Kazakhstan. In 2011 members of our Russia team, Troika Dialog took first place in leading positions in the mutualrecognised as the best brokerage house in research team took 12 key positions terms of M&A deals in Russia (Mergermarket investment fund industry and on OPERATIONS WITH2008-2010 and our traders were deemed in the Institutional Investor All Russia data) and first place in the ranking of the asset management services PRIVATE CLIENTSthe best in Russia from 2008-2011, Analyst rankings. Our analysts took first organisers of bond issues on the domestic market. We offer our clients 20according to Thomson Extel ratings. place in seven of the ten categories in market (Cbonds data). We also are among open-ended mutual investment Retail investors may obtain and make use of the prestigious Thomson Reuters Extel the top 10 global coordinators/bookrunners funds and 1 closed-ended products and services such as mutual funds, Pan-Europe 2011 Survey. operating in Russia (Dealogic data). commercial real estate investment internet trading, asset management, individual fund. Troika Dialog’s mutual funds brokerage service, and pension savings are some of the largest in Russia advisory via Troika Dialog’s own sales offices and our company is the leader or 1,200 agent sales points throughout Russia. ALTERNATIVE on the collective investments In addition, as part of its private banking INVESTMENTS market, holding a 19.8% share service, Troika Dialog provides a wide range of (according to Investfunds data as investment products to affluent individuals – Troika Dialog invests funds in the leading of December 30, 2012; among from conservative investment strategies to companies of fast growing sectors: retail, companies managing open-ended investments in structured products, real estate, financial sector, the media, healthcare, mutual investment funds). innovation, commodities markets, individual foodstuffs production and packaging. brokerage services, as well as advisory services. Besides this we manage four venture funds with investment totalling $100 mln. This money is invested in 9 companies of the IT, new media and life science spheres. D O S S I E R 7
6 345 T H E R U S S I A F O R U M 2 0 1 2 DAYS THE FORUM WEB SITE: 51372 VISITORS, 226156 HITS JOURNALISTS278 41 35SPEAKERS PEOPLE IN TOTAL COUNTRIES DURING TWO DAYS FROM JANUARY, 31 TO FEBRUARY,1, 2469 1:1 MEETINGS WERE ORGANIZED FOR REPRESENTATIVES OF 104 COMPANIES AUTOMOBILES* 42 AND 221 INVESTMENT FUNDS 3097 PANEL DISCUSSIONS DELEGATES MEDIA PARTNERS *35 MERCEDES-BENZ EXECUTIVE-CLASS AUTOMOBILES WERE USED TO ORGANIZE VIP-TRANSFERS S T A T I S T I C S S T A T I S T I C S 9
T H E R U S S I A F O R U M 2 0 1 2WORKDAYS PROGRAM PANEL THURSDAY, FEBRUARY 2ND DISCUSSIONSTUESDAY, JANUARY 31ST WEDNESDAY, FEBRUARY 1ST VENUE: MOSCOW INTERNATIONAL HOUSE OF MUSIC | KOSMODAMIANSKAYA EMB., 52-8VENUE: VENUE:THE RITZ-CARLTON HOTEL THE RITZ-CARLTON HOTEL 07:30–09:00 REGISTRATION. WELCOME COFFEE FRIDAY, FEBRUARY 3RDTVERSKAYA STR., 3 TVERSKAYA STR., 3 09:00–09:15 WHITE HALL. Opening speech: VENUE:FULL DAY OF 1:1 MEETINGS FULL DAY OF 1:1 MEETINGS Herman Gref and Ruben Vardanian MOSCOW INTERNATIONALPRIVATE THEMED CLIENT EVENTS PRIVATE THEMED CLIENT EVENTS 09:15–10:30 WHITE HALL. HOUSE OF MUSIC | Plenary Session: Russia 2018: KOSMODAMIANSKAYA EMB., 52-8 at Vital Crossroads and Challenges that Will Determine 08:00–09:50 WELCOME COFFEE the Country’s Future 09:50–10:00 WHITE HALL. Opening speech:08:00–14:00 WASHINGTON 1-2. 08:30–13:30 BALLROOM 1. 10:30–10:45 COFFEE BREAK Sergey Sobyanin The Agenda for CEOs in a Time of Global A Look at Forex and Interest Rates: 10:45–12:00 WHITE HALL. 10:00–11:30 WHITE HALL. The Future of the Global Risks and the Elections in Russia How to Reduce Financial Risks The Present and Future of Russian Oil: Economy and Financial System CEO Challenges GREEN HALL. Risk Management: GREEN HALL. Myth or Reality?08:45–12:30 MOSCOW 1-3. 09:00–15:00 MOSCOW 1-3. Global Economic Ills and their Impact Group meeting with management of Venture Capital: On the Crossroads BLUE HALL.A New Era in Mobile – on the Social Framework Sberbank: “Insights into Sberbanks Opportunity Knocks BLUE HALL. Business” 09:30–12:20 WASHINGTON 1-2. RED HALL. Where Does the Big Money Go? Agriculture & Food: What Will the Future Bring? The government’s objectives, regulatory 11:50–12:10 COFFEE BREAK RED HALL.10:00–13:30 BALLROOM 1. changes and tariff growth. Guarantees Privatization: Interim Results 12:10–13:30 WHITE HALL. Interest Rates, Exchange Rate and Operational Excellence to investors ahead of privatisation in Liquidity: are there Resources for Investment? 12:00–13:00 LUNCH the electricity sector GREEN HALL Which Emerging Technologies will 13:00–14:30 WHITE HALL. Kill the Traditional Bank? Crowdsourcing, Big14:30–17:00 ISTANBUL 1. Plenary Session: Russia’s Data, Social Commerce, Artificial Intelligence? Sberbank’s International Business: 09:30–12:30 ISTANBUL 1. Economic Policy in a Time of Global Change BLUE HALL. Developed and Emerging Banks: Opportunities on Markets of the Fundraising Possibilities on the Russian Market for A Case of Irreversible Decline vs. Irrepressible Rise? CIS and EAEC Foreign Issuers 14:30–15:00 COFFEE BREAK RED HALL. 15:00–16:30 WHITE HALL. Retail: Stabilization Period Metals and Mining in the CIS:15:00–17:45 WASHINGTON 1-2. 14:00–16:30 BALLROOM 1. 13:30–14:30 LUNCH Development Prospects Amid Modernization of the Cement Industry: The Russian Stock Market in 2012: Great Volatility 14:30–16:00 WHITE HALL. How to Maintain a Balance of Interests Reset. New Opportunities for Investors Creating a Domestic Capital Base GREEN HALL. Russia in Transition BLUE HALL. What’s Moving the Real GREEN HALL Russia’s Gas Exports to Europe: 18:30–20:30 MOSCOW 1-3. Estate Market? New Challenges and Opportunities Private Finance. Asset Allocation RED HALL. New Industrialization in Russia BLUE HALL. Transport and Infrastructure: Reform at a Crossroads? 16:30–17:00 COFFEE BREAK RED HALL. Troika Dialog: Investments in Art. 17:00–17:30 WHITE HALL. Art Banking and Art Finance Closing Speech: Gordon Brown 16:00–16:30 COFFEE BREAK 18:30–19:30 GREEN HALL. Round table: “The Global Economy. Political Risks 16:30–18:00 WHITE HALL. The Role of Innovation Policy and Choice of Capital” in Modernization W O R K D A Y S W O R K D A Y S 1 1
T H E R U S S I A F O R U M 2 0 1 2 THE MOST SIGNIFICANT CHALLENGE THAT RUSSIA WILL HAVE TO CONFRONT IS THE CHALLENGE OF LOW EFFECTIVENESS . civilisation, Russia will have to business environment. The deadlines for encounter the same problems hooking up to power supply grids must as other countries, noted be decreased by a factor of four. An Vladimir Putin. accountant must complete tax returns three times faster. The time required None of the reasons for the for trucks to go through customs will continued financial upheavals be reduced by six-sevenths. Obtaining have been addressed. Moreover, a construction permit will be five times the 2008 crisis has obviously faster than it is now, and there will be entered a new stage, revealing three times less paperwork involved in such large-scale in-depth problems the process. as the debt crisis of corporations and entire governments, and the The Prime Minister also touched on imbalances of the financial sector, issues concerning the improvement which has swelled out of proportion of the country’s investment climate. and has become largely speculative There will be a businessmen’s rights and far removed from economic commissioner in Russia and he/ realities. The upcoming decades will she will protect the rights of all be a time of great challenges, risks and businesspeople, not just foreign transformations. Russia, which is finally investors. The procedure for joining the WTO in 2012, has all it takes reviewing cases in arbitration courts to become a top five global economy in involving entrepreneurs must be the near future. as fast as possible and the time it takes to appeal court decisions by Last year the Russian economy grew businessmen should be extended. by over 4% (the best rate among G8 All rudimentary Soviet legal thinking members and the best result among large should be removed from criminal law. European economies). Russia’s inflation All the loopholes creating criminal rate (6%) is the lowest in the last 20 years liability in economic disputes should and is comparable to countries like Great be closed. Britain. According to government forecasts, in the next few years, inflation will lower The philosophy of oversight over to 4%. businesses must be changed, and a transition from various government Russia, unlike the world’s major developed permits to liability insurance must economies, has a budget surplus (approxi- take place. Public associations of mately 1% of GDP). Sovereign debt is extremely businessmen should be entitled low (only 10.4% of GDP) and external debt is to file legal claims to protect as low as 2.5%. the interests of entrepreneurs. Corporate legislation needs to Vladimir Putin’s speech was devoted to the In addition to the current balanced economy and be harmonised with that of ourSPEECH OF issues of Russia’s development as part of the global economy. The Prime Minister talked solid macroeconomic indicators, the country also enjoys basic, long-term and powerful advantages. key partners, primarily in Europe, across all positions.VLADIMIR PUTIN, about plans for shaping and implementing the country’s economic policy. At the same time as trying to resolve its own problems In the Prime Minister’s opinion, Russia’s core resource consists of a talented, creative, well trained and educated people. That is what the first set of measures proposed by VladimirPRIME MINISTER OF THE amid global transformation and against Putin, intended to increase the the backdrop of new trends in the Russia needs to move up 100 spots in order to Russian economys transparency,RUSSIAN FEDERATION global economy, technology and go from 120th place to 20th place in terms of the looks like. P A N E L D I S C U S S I O N S 1 3
T H E R U S S I A F O R U M 2 0 1 2 RUSSIA 2018 – AT VITAL businesses and prevents them from properly developing. There is not enough transparency in the work LARS THUNELL COMMENTED that WTO entry will help the evolutionary process continue, but added that the state needs to involve the The panel also reviewed the changes now taking place in the global economy and the serious CROSSROADS AND CHALLENGES THAT of the state and state officials. This needs to change so that the division between state and private enterprises private sector much more. He said the state is now trying to drive too much, which keeps the system overly bureaucratic and focused challenges it faces. Against that backdrop, the panelists reviewed the particular challenges facing WILL DETERMINE THE can be made and the work of the bureaucrats can be forced to be more efficient. too much on the older, mainly commodity- based, industries. the Russian economy, especially given the uncertainty over the trend in oil revenues. The panelists COUNTRY’S FUTURE FEBRUARY 2ND, THURSDAY EAST OR WEST? Panelists generally agreed that the clearest economic ALEKSEI KUDRIN REFERRED to the fact that the current political system is obsolete and needs to change as part of the process were asked if they consider it possible, under such conditions, to support economic growth in growth opportunities lie to the east of building a new economy. He referred the country and, specifically, to but that Russia should look much to current political changes as a very review what policy instruments OPPORTUNITIES AND CHALLENGES ARE EQUALLY CLEAR . THE more to Europe for examples when positive development that will force faster the government has, and needs, to PANEL CONCLUDED THAT RUSSIA HAS THE POTENTIAL TO building institutions and regulatory changes. He highlighted what he called achieve this goal. GROW THE ECONOMY MORE STRONGLY AND WITH GREATER frameworks. the positive response from the prime DIVERSIFICATION , AND THAT IT CONTINUES TO MOVE TOWARD minister. THAT GOAL , ALBEIT FOLLOWING A SLOW EVOLUTIONARY PATH . SERGEI GURIEV SAID that the state ONE OF THE MAIN CONCLUSIONS IS THAT THE STATE STILL ALEKSEI KUDRIN needs to speed up the privatization HAS A ROLE IN CREATING A BETTER BUSINESS AND ECONOMIC process to reduce its dominant role in ENVIRONMENT , BUT THEN SHOULD GET OUT OF THE WAY AND HELP RATHER THAN HINDER OR COMPETE AGAINST PRIVATE SERGEI GURIEV ENTERPRISES . THE PANELISTS IDENTIFIED A NUMBER OF KEY CHALLENGES THAT THEМОDERATOR: COUNTRY NEEDS TO ADDRESS IF THAT RUBEN VARDANIANRUBEN VARDANIAN UNFULFILLED POTENTIAL IS TO BE KENNETH ROGOFFPresident, Troika Dialog REALIZED. Regarding business startups, Russia needs to make it much easier for THE LOSS OF HUMAN CAPITAL the economy. He said that Russia also needsSERGEI GURIEV new businesses to start and grow. Right ALSO NEEDS TO BE REVERSED. to demonstrate very clearly that it is dealing LARS H. THUNELLRector, New Economic School now this is too difficult and has resulted Russia continues to lose too many with issues such as corruption by speeding in the economy remaining skewed of its most talented people every up the adoption of Article 20 of the UNALEKSEI KUDRIN toward large enterprises in extractive year, people who are starting up convention against corruption. He said thereRussian statesman industries. The SME segment is far too new businesses in other countries are some very public corruption scandals in small and yet this is exactly the area that but should be doing so in Russia. Russia today where the state could act moreKENNETH ROGOFF needs to receive state help to grow. The panelists did, however, highlight decisively. He called for the release of ex-Thomas D. Cabot Professor the fact that this is a normal trend in YUKOS chief Mikhail Khodorkovsky and theof Public Policy and Professor CORRUPTION AND OVERLY BUREAU- developing economies where people firing of everybody involved in the case ofof Economics, Harvard University CRATIC PROCEDURES REMAIN MAJOR leave for better lives elsewhere but Hermitage lawyer Sergei Magnitsky. OBSTACLES TO BUSINESS DEVELOPMENT. then, after 20–30 years, start to comeLARS H. THUNELL Panelists also identified the unpredictability back. The faster the state helps make it KENNETH ROGOFF HIGHLIGHTED the factExecutive Vice President & CEO, factor in Russia, stating that the lack of clear easier to do business in Russia, especially that while Russia’s annualized growth (4.0%International Finance Corporation rules and fair arbitration too often puts off to start a business, the sooner the trend expected in 2012) is very good compared foreign investors. Panelists identified the will reverse here also. with developed markets and most other lack of clearer guidance from the state and developing economies, Russia is capable of sometimes poor behavior, arguing that this THERE IS TOO OFTEN A LACK OF A CLEAR much more. He said that Russia should have, fosters equally bad behavior across the DIVISION BETWEEN STATE AND PRIVATE and needs to develop, new export-led growth economy. ENTERPRISE. This usually hurts private in such areas as hi-tech. P A N E L D I S C U S S I O N S 1 5
T H E R U S S I A F O R U M 2 0 1 2 THE PRESENT AND FEBRUARY 2ND, THURSDAY FUTURE OF ALEXANDER KORSIK RUSSIAN OIL: CEO CHALLENGES ARSEN IDRISOV SERGEY GORKOV LEONID FEDUN THE PANEL HIGHLIGHTED SEVERAL DISAGREEMENTS AMONG A VERY DISPARATE GROUP OF PEOPLE – FROM A CHIEF ECONOMIST AT A GLOBAL OIL MAJOR TO A GOVERNMENT OFFICIAL TO CEOS OF BOTH STATE - OWNED AND PRIVATE RUSSIAN MAJORS . DMITRY KONOV MIKHAIL GUTSERIEVMODERATOR: Gazprom Neft, added that the system shouldSERGEY GORKOV evolve toward profit-based (not revenue-Deputy Chairman of the Board, based) taxes.Sberbank SERGEY KUDRYASHOV FINALLY, THERE WAS NO SINGLE VIEW ONALEXANDER DYUKOV THE FUTURE FOR RUSSIAN OIL. KudryashovCEO, Gazprom Neft insisted that the era of easy oil is still withLEONID FEDUN us – the country has got the reserves, theVice President, LUKOIL technology, the people and the experience,MIKHAIL GUTSERIEV CHRISTOF RUEHL, CHIEF ECONOMIST demand in the emerging world would he said. Not so, countered RussNeftPresident, RussNeft AT BP, KICKED OFF THE SESSION by be balanced by slowing consumption in President Mikhail Gutseriev: the educationARSEN IDRISOV projecting that global oil consumption developed countries. of industry managers in the country is ALEXANDER DYUKOVManaging Director, Alliance Oil Company will grow at a compound rate of 0.6% at a “fetal stage,” he said. And Ruehl CHRISTOF RUEHLDMITRY KONOV per year to 2030, and that 90% of NOR DID THE PANELISTS SEE EYE TO EYE pointed out that all of the breakthroughGeneral Director, SIBUR LLC additional demand will come from ON RUSSIAN-SPECIFIC TAX POLICIES. technological solutions of recent years –ALEXANDER KORSIK India and China. However, Dmitry Sergey Kudryashov, the deputy energy from multistage fracking and horizontalPresident, Bashneft Konov, the CEO of SIBUR, pointed minister, claimed that the targeted tax drilling that allowed the unlocking of theSERGEY KUDRYASHOV out that consumption is likely to reductions on the Vankor, Verkhnechonsk shale deposits, to deepwater production –Deputy Energy Minister moderate as it runs into capacity and Talakan fields have worked their magic, were originally developed in the mostCHRISTOF RUEHL constraints. Some of the estimates boosting overall output after a decline in competitive upstream markets, such asGroup Chief Economist and for growth in Indian car demand 2008. But Bashneft CEO Alexander Korsik the US or Canada. The Russian tax systemVice President, BP that he has seen would imply said the targeted solutions do not ultimately should be tilted toward stimulating such that there are not enough roads work because the state cannot do a better competition, he said. in India today to even park – job of picking the winning fields than could much less convey – half the the oil companies themselves. He would expected number of vehicles. prefer a universal system of lower brownfield He also expects that higher taxation. His colleague, Alexander Dyukov of P A N E L D I S C U S S I O N S 1 7
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