The Kremlin is counting on the biggest Russian companies to help modernize the economy, and business is ready to do so — in exchange for tax breaks and financial support.
President Dmitry Medvedev will hold the next meeting of his commission to modernize the economy Feb. 11 in Tomsk, this time with owners of some of the country's largest companies.
Invitees include LUKoil's Vagit Alekperov, NLMK's Vladimir Lisin, Severstal's Alexei Mordashov, Basic Element's Oleg Deripaska, Onexim's Mikhail Prokhorov, TMK's Dmitry Pumpyansky, Alfa Bank's Mikhail Fridman and Rusnano chief Anatoly Chubais. The discussion will focus on their participation in Medvedev's modernization plans, two sources from the presidential administration told Vedomosti.
This will be the commission's first meeting with representatives from private business. In November, Medvedev discussed modernization with the heads of investment funds, and in December he met with the leaders of state companies.
"Now we're going to compel big business to innovate," a Kremlin source said, describing the meeting's main intention.
A source close to one of the businessmen invited to Tomsk and another in the Kremlin administration said the company owners have already met with Vladislav Surkov, first deputy head of the presidential administration, and Arkady Dvorkovich, Medvedev's top economic aide.
The sources told Vedomosti that the businessmen explained what was preventing them from re-equipping their companies with new technology and participating in innovative projects. A source close to one of the businessmen confirmed that they had begun discussing the proposal in December.
State corporation Rusnano was chosen to help win over business. Chubais will present the proposal in Tomsk, a source close to him said, adding that his presentation was still being discussed at the very highest level.
At his December meeting with the heads of state companies, Medvedev suggested buying assets from high-tech foreign companies. Private business isn't opposed, but they don't have the funds and are readying a counter proposal: Russian companies will buy up foreign firms, while the state will give them loans backed by stakes in domestic companies.
A source in the Economic Development Ministry said there are currently no clear guidelines for appraising high-tech foreign assets. Neither are there clear guidelines for supporting companies that want to invest in foreign high-tech, said a different source in the ministry. "But if we formalize those procedures, it could arouse the ire of other countries, who would see the Russian government's actions as a desire to buy up everything they have."
That source said a declarative document was needed to spell out that the state is ready to help and that the assistance should be financial — through subsidized interest rates and state guarantees — and political, through the Foreign Ministry.
The businessmen will also propose introducing tax breaks for innovative activity and lowering import duties on high-tech goods. Industry is also unhappy that there are no specific individuals within the government who are responsible for modernization. The government should set a coordinating body at the federal level, said a spokesperson for NLMK.
Oil companies will ask for a legal framework clarifying what research and development expenses they can include in their production costs. In part, Alekperov had complained that LUKoil is spending $100 million per year on R&D, a meeting participant said.
A LUKoil spokesperson confirmed the figure and said the company would like the topic to be raised in Tomsk.
Alexander Razgildeyev, a lawyer at Taxadvisor, said the Tax Code left the definition of R&D fairly open, meaning that companies should disclose it themselves in the terms of their contracts for scientific work.
Russian businessmen are having these problems because the country does not have any special legislation for people and companies that are financing innovation on their own, said Anton Danilov-Danilyan, a member of Delovaya Rossia's expert council.
In other countries, they are exempted from income tax and value-added tax. For example, large and medium-size businesses have regularly suggested removing all limitations on the import of machinery, since once the equipment is put into use the state must return the VAT anyway.
Currently, only equipment for which there is no Russian counterpart can be imported without paying VAT, and that is not easy to prove.
Alexander Kogan, deputy chairman of the State Duma's Budget and Taxes Committee, said the government was ready to work quickly to settle any problems that business may have in this regard.
Dvorkovich confirmed that all of these topics and more would be discussed in Tomsk. Sergei Borisov, president of the Opora small business lobby, was also invited to the meeting and is planning to propose that big business share parts of the received state orders with smaller companies.
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