Meeting with Head of Delovaya Rossiya Alexei Repik

President of Russia Vladimir Putin: The organisation will mark 25 years soon.

Head of Delovaya Rossiya Alexei Repik: Yes, Mr President. Thank you for the opportunity to meet with you ahead of the anniversary of Delovaya Rossiya. Twenty-five years ago, on October 16, 2001, you met with a group of entrepreneurs. They wanted to create a new type of association as a voice of the growing private non-resource business. You supported the idea, and the founding convention was held as soon as the next day. The organisation was established. Back then, we had 243 delegates and members from 54 regions.

This is how a small organisation called Delovaya Rossiya started out in 2001. Over a quarter of a century, the Russian economy has come a long way, with an enormous growth in the 2000s. Then, there was the crisis of 2008, two first sanctions in 2014, and the pandemic. In recent years, the businesses have been under unprecedented external pressure.

But every time, businesses respond to every challenge with growth rather than retreat. Companies that began with one workshop have grown into industry leaders. Even we traded imported goods in 2001; now, we have built our own production facilities to export goods. We have learned how to build plants where they never existed before. We have substituted the technology that was blocked for us; we have opened markets that we did not consider before, including in African countries and a whole number of Southeast Asian countries.

These accomplishments have turned Delovaya Rossiya into an organisation of just over 10,000 entrepreneurs – owners and top managers of private companies, with 4.5 million workers. The most important proof of our work over these 25 years is that one can build a serious and honest private business in Russia. Russian entrepreneurs are not temporary opportunists but patriots. Last year during the forum, I told you that the home front was secure. And I can reaffirm this statement today: the home front is secure, and everything is going according to plan.

This organisation grew from your meeting with entrepreneurs 25 years ago, and it is a great honour for me to invite you to its anniversary forum. We really hope you can attend.

Vladimir Putin: Last year, I attended the forum too. We’ll see. As long as nothing prevents me, I hope I can be there.

Alexei Repik: Now, with your permission, I would like to briefly outline the main issues we intend to discuss. Our key priority is the task you have set for us: launching a new investment cycle. This cycle cannot and must not simply replicate the previous one. Between 2019 and 2024, investment in fixed capital increased by almost 40 percent. During that period, we were engaged in import substitution, expanded export capacity, and developed industrial facilities, mining and processing enterprises, and major resource extraction projects.

However, that stage of our work has largely been completed. The economy has reached a point where simply continuing along the same lines is no longer effective. Labour resources are limited, and existing market niches have already been filled. The next investment cycle must therefore focus not on repeating past achievements, but on increasing productivity, introducing new technologies and developing new markets. Its success should be measured not by the volume [of investment], but by the qualitative change it brings about. What matters is not how many trillions are invested, but where those funds are directed, what objectives they serve.

As you can see from the slides, the economy does have financial resources available for investment. The first slide shows the amount of currently unused funds held by businesses and the people. There is considerable potential here, but the requirements for investment projects are changing. As I have already mentioned, they must deliver substantially higher productivity.

I believe it is essential that these projects should also be inclusive. Our country is facing a labour shortage, and we cannot afford to leave millions of people with disabilities on the sidelines. They are capable of working, and the technologies that would enable them to do so are already available.

Overall, our objective is to achieve technological leadership, with an emphasis on non-resource sectors and domestic demand, while redirecting our export efforts towards markets that are open to us and offer opportunities for growth. At the same time, of course, we must take the necessary precautions against potential risks. We understand that the current environment presents particular challenges. Today, managing risks is just as much a part of implementing a project as building substations or water treatment facilities. So, we must do everything possible to prevent others from creating difficulties for us.

Vladimir Putin: What about the investment tax certificate?

Alexei Repik: I will come to that now. This is an interesting challenge. Two key conditions must be met to channel available funds into new investment.

The first is macroeconomic stability. This is why balancing the budget was so important: it provides a margin of safety and room for manoeuvre. In this respect, we fully support the approach underlying the budget submitted by the Government. Delovaya Rossiya is prepared to accept the suspension of certain tax benefits for as long as the country needs it. This is entirely reasonable. It is better to accept a certain increase in the tax burden now than to face persistently high interest rates or an unbalanced budget.

The important thing is to ensure that the additional burden falls on those earning passive income rather than on working people; on passive income rather than productive activity; and on excessive consumption rather than the earnings and household budgets of millions of families. These proposals have been carefully considered and will not undermine investment activity.

There is another idea that I mentioned to you, at the meeting on economic issues that you chaired last summer. It would not require any budget funding at this stage. After all, 60 percent of investment in our country is financed from companies’ own profits. We are proposing a mechanism that would allow future profits to drive investment today: a company invests in new production capacity, automation or R&D and, once the costs have been verified, receives an investment tax certificate covering, for example, half of the investment amount. The certificate can be used only to offset tax on future profit growth. Consequently, if profits do not increase, there is no tax deduction.

The certificate would serve as collateral against which a bank could finance the project. The tax deduction would only take effect five years down the line, around 2031–2032. We would not factor it into the budget for the next five years. However, once the enterprise begins generating additional profits as a result of the investment, the bank could claim a portion of those profits, including to cover loan repayments. The budget would not spend a single ruble upfront, yet it would gain a new tax base and, in effect, a stronger enterprise.

I would like to hand you the relevant documents. We have formalised the proposal in a letter. If you have no objections, we will proceed to develop the concept further in cooperation with the Government and the Bank of Russia.

Vladimir Putin: Mr Repik, there is one more issue, one that has been with us for a long time, you might say: the investment climate. There are always matters requiring particular attention from both the business community and the state. These issues arise for various reasons and are by no means static; new ones constantly emerge. And, of course, there are specific challenges we face right now, that is obvious.

I would also like to discuss with you and hear what steps, in your opinion, the state needs to take to ensure that businesses feel comfortable and confident, feel secure in their own country, and understand that the state is safeguarding their interests, just as businesses today are responding to the challenges facing Russia.

Alexei Repik: Mr President, the business community has accumulated considerable expertise that is vital to the country. It would be wrong not to make full use of this potential for national development. How can we harness it to the fullest? We have a range of ideas, including some that address the very issues you have raised. I suggest we discuss them now.

Vladimir Putin: Very well.

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