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Russian PM calls crisis best auditor for ineffective companies

October 02, 2015, 13:12 UTC+3
Russian Prime Minister Dmitry Medvedev made a speech at the International Investment Forum Sochi-2015
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Russian Prime Minister Dmitry Medvedev

Russian Prime Minister Dmitry Medvedev

© TASS/Alexandr Ryumin

SOCHI, October 2. /TASS/. Crisis is the best auditor for ineffective companies, Russian Prime Minister Dmitry Medvedev said at the International Investment Forum Sochi-2015 on Friday.

"Crisis I would say is the best auditor for ineffective enterprises while companies, which invested in new technologies, modernization of production and staff training will pass this period without serious losses," he said.

On the other hand, bankruptcy and change of control lie in store for those enterprises, which are not ready to adjust to new conditions, Medvedev said. "It’s necessary to have a clear idea of it and to targetedly work at reduction of running costs," PM said.

On oil prices

Dmitry Medvedev did not rule out that crude oil prices will remain low for a long period of time.

"Due to low oil prices, which are likely to remain at this level for a long time, we should refocus our economy from commodity positions to other growth areas as soon as possible," he said at the International Investment Forum Sochi-2015 on Friday.

"Today all current work of the government is focused exactly on removing imbalances of economy and of course on tackling crisis developments," Medvedev said. "For the first time in several years, oil and gas revenues of budget accounted for less than half of all revenues. Of course, low commodity prices and flexible exchange rate policy played a certain role in it, but nevertheless this discernible trend should be developed," PM said.

On import substitution

The official dwelled upon Russia's import substitution program. He said Russia’s policy of import substitution is not isolation but a policy aimed at raising competitiveness of Russian goods on global markets

"The return of Russian goods to our market is only the first step. The maximum goal is to make our domestic products competitive abroad. Import substitution policy is not about isolation and artificial barriers but the policy of competitiveness of Russian non-oil and gas goods on global markets. I urge all of our entrepreneurs not to be afraid to break the boundaries. Economic boundaries, of course," Medvedev said.

"Perhaps, a complete withdrawal of imported goods from our market could give Russian manufacturers an additional chance. But it also spoils them and ultimately affects the quality of products and guarantees price growth. First of all we will be guided by common sense and interests of our people," Medvedev said.

On counter-sanctions

Medvedev said that Russian companies will be able to enjoy lower costs thanks to counter-sanctions and changes in ruble exchange rate only for 2-3 years.

According to him, these were counter sanctions and the weakening of the ruble that gave advantage to national companies which is now seen in reduction of costs in rubles and optimization of the room for competition.

"The other thing is that this gain in costs, which literally "fell from the sky" on many of our businesses won’t last forever. Maximum it will last two or three years," Medvedev said.

On investments

According to the prime minister, the level of trust to Russian assets is gradually rising.

"As a result [of introduction of a number of tools to attract private investors to the economy - TASS] the level of trust to Russian assets is gradually rising," he said, adding though that this level of trust is assessed in different ways.

Medvedev said that in July Russian market was acknowledged at one of the best for investment among BRICS economies. Also, this week the International Economic Forum published its annual rating of global competitiveness index where Russia was upgraded by 8 notches to take 45th place.

On advanced development territories

Russia expects more than 240 bln rubles ($3.6 bln) to be invested in its advanced development territories, said Medvedev, adding that first results will be evident within 1.5-2 years.

"Nine advanced development territories have been set up in Russia’s Far East, with almost 21 bln rubles being allocated from the budget. We expect more than 240 bln rubles worth of private funds to be invested, and the first results, hopefully positive, are expected within 1.5-2 years," he said.

Within advanced development territories’ mechanism "those companies, which are not afraid of local risks, are offered very strong preferential advantages: simplified order of new production launch, administrative support, subsidized tax regime," Medvedev said.

The prime minister added that a number of other tools "opening up regions for investment" have been introduced already. "Those are special economic zones, industrial and technological parks. Not all of them are effective and successful yet, but in general such tools have shown their worth. Big international and local investors, famous international brands work there both in traditional sectors and in innovations," he said.

On state control

The government control should be "clever" not "frequent", the prime minister said.

"Annually more than 2 million checks are conducted. This is too many without any reason. The state control should be clever and not frequent," he said.

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