Maxim Oreshkin dwells upon key growth drivers in the Russian economy
The implementation of breakthrough projects will accelerate the growth of the Russian economy, said the Russian Economic Development Minister to the Russian Investment Forum Magazine.
The state does not exist separately from business and from people. The state should strive to create the most comfortable conditions for the development of entrepreneurship, to offer those changes that will enhance business effectiveness. Business should understand how the economy will develop. Only by having an understanding of ongoing processes and having trust in economic authorities it is possible to plan investments with confidence. Otherwise, businesses will have to try predicting the exchange rate, inflation and the time of onset of the next crisis instead of conducting their core operations. This increases uncertainty.
The global economic crisis complicated the achievement of long-term development goals, led to a decrease in investment activity, slowed down the development of the Russian innovation system. We need breakthrough projects in order to follow the path of further acceleration of economic growth.
At this point we are faced with numerous problems, which hinder the acceleration of growth. Therefore, structural reforms are needed to ensure long-term sustainable development of the Russian economy. At the same time, breakthrough projects should focus on economic diversification while ensuring the achievement of sustainable high growth rates through an increase in the volume and quality of investments, more efficient use of labour resources, increase of professional qualification and incomes, productivity and accelerated growth of non-resource exports.
It is necessary to intensify private investment against the background of restraining growth in consumer spending and reduction of business costs in the sphere of tariffs for natural monopoly products and reduction of regulatory, administrative and law enforcement burden.
The increase in labour productivity and GDP growth should be based on the increase in the proportion and efficiency of investments in key areas, which are responsible for improving the quality of human capital (education, science and healthcare).
The former production model, which was focused primarily on the Russian market, is no longer appropriate, and it is necessary to ensure that even foreign investors, who come to Russia, run export-oriented businesses. It is obvious that the transition from the internal market to global business requires a distinctly different level of confidence – macroeconomic, tax and customs policies should be clear for years to come in order to enable the implementation of major investment projects.
Survey results bear evidence of a significant improvement in business expectations. The number of those who speak of uncertainty of economic situation as the main problem is decreasing – from 55 percent in December 2016 to 47 percent in January 2017. This, of course, is not yet the level of January 2014 with its 33 percent; therefore the financial and economic policy should be aimed at further improvement of stability and sustainability of economic environment.
Introduction of new technological solutions, for example, in the field of electronic commerce – large systems available to a significant number of Russian manufacturers and consumers – will reduce transaction costs and propel the economy to another level. This should also increase export sales of small and medium-sized businesses due to the fact that foreign buyers will be able to access relevant information through e-commerce systems.
Currently, we are developing a list of decisions and reforms, which should yield specific results, in order to achieve a higher Doing Business index of Russia. Basically, we are talking about solutions for the implementation of a one-stop shop environment and electronic document management systems for various procedures. It especially concerns the procedures in the sphere of construction and customs.
Measures to improve the business climate, increase the effectiveness of major investment projects, increase the volume of non-resource exports, facilitate the development of small and medium-sized enterprises, increase the efficiency of state support for the industries will be included in the draft comprehensive Government Action Plan for 2017-2025 aimed at increasing the growth rate of the Russian economy.
The dynamics of real household disposable income will have positive values already in 2017. They will be supported by a gradual acceleration of real wages and incomes from entrepreneurial activity against the background of economic recovery, as well as the dynamics of social transfers.
Short- and to a certain extent medium-term growth of economy can be stimulated by consumer demand. From the standpoint of long-term growth, a decisive role will be attributed to the increase in potential GDP, which is formed by the growth of investments in fixed assets, the expansion of contribution of labour resources and the increase in productivity (that is, the quality of basic and human capital assets). Without increasing the growth potential, stimulating consumer demand leads to economy overheating, growth of inflation and subsequent economic crisis.
The new system should provide for tax mechanisms that will be aimed at creating business activity and a favourable business environment. At present, the “high level of taxation” indicator, which still amounts to 39 percent, is of great concern. This is a high level, and it means that this problem is becoming one of the most topical issues for long-term economic development. Therefore, it is important to finish the discussion of changes in the tax system by the end of the first half of the year.
We also need workable tools to increase the volume of domestic products in the non-resource sector of the economy. It is advisable to provide mechanisms for stimulating the export of Russian products.
The tax system will virtually stimulate economic growth, including by creating conditions for increasing the volume of legal business, labour productivity, as well as economy diversification and avoiding resource dependence of the budget.
We expect a confident decline in inflation dynamics this year up to the 4 percent threshold. And most important is the stabilization of long-term inflation expectations near this threshold, as well as a predictable budget policy. An unstable deficit at the present time always poses a risk of volatility of tax system in the future.
An interconnected structure of budgetary, monetary and monetary policies will ensure a reduction in the dependence of the economy on fluctuations in oil prices. This structure should be based on a new tax system, stable in the long-term, that would contribute to economic whitewashing, increased investment and export volumes, and active implementation of new technologies.
Businesses are highly sensitive to risks. No entrepreneur will work in uncomfortable conditions. Comfortable conditions for running a business can only be ensured by implementing an appropriate regulatory policy. A procedure for the assessment of regulatory impact, which is performed at the federal, regional, and now even municipal level, has been introduced in order for the business not to “drown” due to adverse legislative initiatives. This is essentially a verification of initiatives for expediency, appropriateness, efficiency in problem solving and the absence of negative consequences in the form of unreasonable business costs. Such practice helps to prevent new and remove existing administrative barriers, move on to a smart regulation system and create the principle of sound decision-making in terms of possible impact on the private business sector. The assessment of regulatory impact involves the examination of draft acts, and the evaluation of actual impact involves the review of the existing acts. In general, this process consists in the search for the most effective solutions, which are further incorporated into the regulatory framework and become its binding instruments.
is necessary to optimize the rule-making system to avoid “slowing down”
businesses that cannot afford wasting time. A modern state should possess a
mechanism for prompt and effective decision-making on important issues, which
should be maximally well-thought-out and weighed and at the same time should
correlate the influence on all participants. The Ministry has developed a
package of short- and medium-term proposals for this matter. The utilization of
modern technologies will ensure a significant reduction in decision-making