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Sunday, September 4, 2016
Vladimir Putin at Eastern Economic Forum
Eastern Economic Forum
Vladimir Putin took part in the plenary session of the Eastern Economic Forum. This year, representatives of 35 countries applied to attend the forum. In total, delegations from 56 countries are taking part.
September 3, 2016
The Eastern Economic Forum (EEF) was established by a Presidential Executive Order in 2015 to promote the accelerated economic development of the Russian Far East and the expansion of international cooperation in the Asia-Pacific region.
The EEF focuses on enhancing the investment appeal of the Russian Far East and offers broad opportunities for cooperation between Russian and foreign business partners.
* * *
Moderator of discussion at the plenary session of the Eastern Economic Forum, former Australian Prime Minister Kevin Rudd: President Putin, Prime Minister Abe, President Park, and to our distinguished guests here at Vladivostok and to you, the delegates at the Eastern Economic Forum. My name is Kevin Rudd, and I am President of the Asia Society Policy Institute in New York. It is good for me to be back in Russia, it is good to be here in Vladivostok, Russia’s Pacific capital, but as well, it is good to be here, at this Eastern Economic Forum.
I am told, Presidents and Prime Minister, that we have one and a half thousand delegates here from many countries across the region, and we have most of those delegates from the business community. And so therefore, we are here to discuss the central theme of the future economic development of the Russian Far East.
We are also here at a time of great global challenges. We are here at a time when we have tensions in geopolitics, new tensions, we have changes in global geoeconomics, we have the continuing global challenge and rising challenge of global terrorism, we have of course a slow and sluggish global economy, which has not fully recovered from the crisis of nearly ten years ago. We have a global problem of unemployment, and in particular global youth unemployment, before we even encounter the impact of the new technologies on employment in the future.
So we are particularly privileged at this time when we see great global challenges requiring strong global leadership and strong global institutions to have these political leaders with us today. And we are doubly privileged to have them with us today because each of them is now in the next 24 hours heading to Hangzhou in China for the G20. And the eyes of the world will be on the G20 in China to see what contribution that gathering can make to rejuvenating the global economy, which affects each and every one of us here.
So, thank you, Prime Minister Abe, thank you, President Park, and thank you to our host, President Putin, for having us here in the great city of Vladivostok.
We are going to begin with addresses by the three political leaders and then we will move to an open forum. And if we could begin by inviting the President of the Russian Federation, His Excellency Vladimir Putin, to deliver his formal remarks to this, the second, Eastern Economic Forum. Mr President.
President of Russia Vladimir Putin: Ms Park Geun-hye, Mr Shinzo Abe, friends, ladies and gentlemen. Welcome to Vladivostok, to the second Eastern Economic Forum, which brings together over 3,000 participants from 35 countries this year.
For us this means a growing interest to Russia in the political and business circles of the Asia-Pacific and other regions; an interest in our Far Eastern agenda in general, our steps and initiatives that open up new possibilities for cooperation and the implementation of lucrative projects in the Far East.
We have set ourselves a big goal, ambitious in every sense, a huge-scale task: to make the Far East one of the centres of Russia’s social and economic development – a powerful, dynamic and advanced region. As I said, this is one of our most important national priorities.
We can already see real change here – only the first, but nevertheless significant and encouraging results. For example, industrial production in the Far East grows at a more than 5 percent rate; growth has been modest across Russia at 0.3 per cent, but in the Far East we had 5 percent.
Over the past year, the region has additionally attracted more than 1 trillion rubles of investments – about $15 billion, and more than 300 investment projects were launched here. This means that the business support policies we proposed enjoy demand.
Finally, there is the main consolidated and most valuable indicator of ongoing changes in the Far East – the emerging positive demographics. For the first time in a quarter century, Khabarovsk Territory, Sakhalin, Yakutia and Chukotka have seen an increase in population. For the third year in a row, the birth rate in the Far Eastern Federal District exceeds the death rate, and fewer people are leaving the Far East.
There is population outflow, regrettably. However, it went down 3.5-fold for the Far East Federal District as a whole over the first half of this year. It is true that the demographic results are still modest, but they do demonstrate an emerging trend and we must now build on this trend and make it irreversible.
Over the next three years, we must achieve a sustained growth of population in the Far East. I remind the Government and all ministries and agencies that our state programmes must also focus on this task, especially economic, social and demographic programmes, our housing policy, healthcare and education.
Ladies and gentlemen, the strategy for developing the Far East is based on openness to cooperation on a broad international level, all the more so as the Far East is literally at the epicentre of dynamic integration processes.
We are working consistently to develop the Eurasian Economic Union and expand its international ties. In October this year, Moscow will host the second round of talks on a trade and economic cooperation agreement between the EAEU and the People’s Republic of China. This will lay the foundations for a comprehensive Eurasian partnership in the 5 plus 1 format.
The trade and economic agenda within the Shanghai Cooperation Organisation is also becoming more substantial and promising all the time. The upcoming accession of India and Pakistan as full members of the organisation, and, I hope, Iran in the future as well, will add to these opportunities.
In short, several integration tracks are taking shape in the Eurasian region today. They flexibly complement each other and enable us to carry out projects on a mutually advantageous basis.
We believe that this integration network and the system of multilateral and bilateral agreements, including those on free trade zones, could become the foundation for developing a big Eurasian partnership. We discussed this very idea at the St Petersburg International Economic Forum this summer.
Now, together with our EAEU colleagues, we are drafting consolidated, practical proposals on developing broad Eurasian integration. These proposals concern such matters as regulation, unification of administrative procedures, removing trade barriers, supporting trade and investment, technological and production cooperation, intellectual property protection, and infrastructure construction.
We believe that effective integration is possible only on the basis of equal rights of all participants and respect and consideration for each other’s interests without any political or economic pressure or attempts to impose unilateral decisions. As we understand it, integration is about predictable, long-term rules and openness to cooperation with other countries both in the East and the West. We are ready to study counterproposals attentively and look for the best possible solutions with anyone who is interested in such cooperation.
We realise that these are big, ambitious, complex and long-term tasks. The project I refer to can be carried out only within the framework of a flexible multi-level model using innovative solutions and working in the interests of economic growth and greater prosperity for people throughout this vast region.
The driving force behind this integration will be business energy and initiative and its obvious and ever-growing demand to remove barriers and create big markets with a business-friendly environment.
This integration must also be based on serious joint projects, which will sew the seams of our economic space and create new development resources. I would like to mention a number of these projects and opportunities now.
First is a reliable energy infrastructure. We support the initiative of Russian, Japanese, South Korean and Chinese companies to create a super energy ring linking our countries as one. We propose setting up an intergovernmental working group in order to move ahead more rapidly and dynamically on this project. Let me note that Russia is ready to offer its Asia-Pacific region partners competitive energy rates and long-term fixed price contracts.
Second is transport infrastructure and the formation of new, competitive trans-Eurasian and regional transport routes. Examples here are the Primorye 1 and Primorye 2 transport corridors, which lay the shortest route for moving goods from China’s northeast provinces to the ports in southern Primorye Territory, and the construction of the Russian section of the Europe-Western China route. I will be discussing the development of this and other transport infrastructure routes with my colleagues at an upcoming State Council Presidium meeting very soon.
Third. We are living in an age of information and rapid development of digital, telecom and Internet technologies. We have to seize the opportunities they offer to promote cooperation, so that our countries’ governments and companies could do business and interact in a convenient electronic form.
Therefore, we suggest creating a common digital economic space. We are talking about the creation of legal and technological conditions for electronic interaction. I would also like to ask the Russian Government to submit a detailed plan of this work.
In fact, some good things have already been done here. The Eurasian Economic Commission is supervising the development of an integrated information system – a system of cooperation in transport, trade, customs, veterinary, tax and other procedures.
Fourth. We need human resources and technological groundwork for the future. In this regard, we invite partners to join the project to build an international science, education and technology cluster on Russky Island.
We plan to put together a support system for start-ups here, including venture capital financing, to organise a network of laboratories for collaborative research, and to create a modern business infrastructure, including business and exhibition centres.
We would like professors and students from other countries to come to Russia, as well as research, creative and project teams from other countries. As far as I know, 2,500 international students are already studying at the Far Eastern Federal University, and dozens of faculty members from other countries teach here.
A few hours ago, my colleagues and I attended the opening ceremony of the Far Eastern Oceanarium. This is not just a commercial centre, but a science, education and information centre, and we hope it will also serve as a good base for the study of marine biology at the level of leading scientists in the region and around the world. And I ask the Government to speed up the development of a comprehensive development programme for Russky Island.
Ladies and gentlemen, the projects I have just mentioned reflect the full diversity of opportunities for joint work in the Far East. We are creating the best possible conditions to make this region a centre of investment appeal and a platform for cooperation.
Starting October 1, a one-step system will start operating in the Vladivostok free port for all border-crossing procedures. The checkpoints and electronic declaration of goods systems will be working round the clock.
I met yesterday with business representatives. I know that not everything here is working exactly as we want it, but we took in your comments and will make the necessary improvements to our work.
The Government is already at work on plans to simplify visa procedures for foreign citizens arriving at the free port. The plan is for people to complete all the formalities via the Russian Foreign Ministry’s internet service and obtain an electronic visa.
In addition to Vladivostok, we recently decided to extend the free port regime to another four Far East ports – Vanino in Khabarovsk Territory, Korsakov on Sakhalin, Petropavlovsk-Kamchatsky in Kamchatka Territory, and Pevek in Chukotka. We will add more if necessary.
At the meeting with business representatives I just mentioned, we heard that this is not enough and that some business representatives have not received the breaks they were expecting. We will certainly examine further all of these issues.
Yesterday we also discussed work in the priority development areas and raised a number of issues concerning procedures for obtaining profit tax breaks.
I do agree that we should take into account each project’s specific nature, scale, and implementation timetable. I think that the tax holidays should be extended for big long-term projects. I discussed this matter yesterday with the Finance Minister, and the Finance Ministry agrees in general to this idea. I ask them to draft the relevant amendments to the law as soon as possible.
We are sure that there will be many big and significant projects. The Far East offers an excellent location and natural resources with direct access to the most promising global markets. This offers inexhaustible opportunities for business initiative.
At the same time, we should give companies the opportunity to attract affordable financial resources. This is the task that the Far East Development Fund is currently addressing. The Fund issues loans at five percent annual interest in rubles. The demand is high, with businesses literally queuing up. To avoid holding back the launch of new projects and provide them with sources of financing, we have to constantly focus on the Fund’s capitalisation support.
Of course, we are facing the overall task of developing an extensive financial and investment infrastructure in the Far East. Such projects are already underway. At this forum, you can see the presentation of a new investment system, Voskhod. It opens direct access to Far Eastern companies’ shares and bonds for Russian and foreign investors.
An agreement has been signed on the forum sidelines between Russia’s Far East Agency for Investment Promotion and Export Support and one of the world’s largest banks, the Japan Bank for International Cooperation. A joint platform will be created to attract Japanese investors to the priority development areas and the Vladivostok Free Port.
The Russian-Chinese Fund for Agro-Industrial Development, which has started its work this year, is a good example of mutually beneficial investment cooperation. The fund supports export-oriented projects in agriculture and the food industry.
I am confident that the Russian Far East, with its land and marine resources, can become one of the major suppliers of quality and eco-friendly foods in the Asia-Pacific Region, an area that is home to almost 60 percent of the world’s population.
To our partners from Japan, the Republic of Korea and other countries, I propose establishing similar joint investment platforms. They could focus on financing projects not only in agriculture but also in industry, high technologies and natural recourses development – in short, in the sectors that have a vast potential.
At the same time, we must combine access to our natural resources with investment in their processing. I ask the Government to develop and implement such a mechanism for the Russian Far East. The approach should be simple: if a company wants to receive a priority right to the use of raw materials, aquaculture or forest plots, or to develop mineral deposits, it has to put effort into building plants, contribute technology, and create new jobs and higher added value.
Friends, the future of the Russian Far East is inseparable from the future of Russia. This is what our ancestors believed, and they explored Far Eastern lands and brought glory to the Fatherland. We have begun a new historic period of developing the eastern territories, and it is planned for decades ahead.
The tasks to be resolved in the Far East are unprecedented in scale and importance. We are fully aware of our tremendous responsibility to our citizens and future generations. I am absolutely certain that we will carry out the plans I have outlined here. I believe in the Far East’s success.
Thank you for your attention. Thank you.
President of the Republic of Korea Park Geun-hye (retranslated): President of the Russian Federation Vladimir Putin, Prime Minister of Japan Shinzo Abe, members of government delegations and business communities, allow me to begin by congratulating you all on the opening of the second Eastern Economic Forum in Vladivostok, the centre of the Russian Far East.
The Far East is a treasure trove of diverse energy resources, including oil and natural gas. Asia and Europe meet here and the region is the starting point for transport routes and freight arteries across the Eurasian continent. It would be no exaggeration to call this region Russia’s new heart.
The great writer Dostoyevsky said that Asia would play a big part in Russia’s future and this showed his foresight with regard to the Far East. Currently, North Korea leaves us with a break in the chain that makes it hard to realise in full the Far East’s tremendous potential, but in the future, when these links are joined together once more, the Far East will become a bridge of peace and prosperity linking Eurasia and the Asia-Pacific region.
I hope that the Eastern Economic Forum will become a good platform for comprehensive dialogue and for concentrating knowledge on the task of making this idea reality. The leaders of three countries, the Republic of Korea, Russia, and Japan, are taking part in this forum, as are high-level officials from other countries, and this offers good opportunities for strengthening political will and cooperation in this region.
Ladies and gentlemen, we see today a slowdown in global economic growth and a trend towards protectionism and new isolation, and this creates added uncertainty. At the same time, two opposing forces, integration and separation, intersect, and this creates chaos.
The European Union achieved the highest level of political and economic integration, but it now faces challenges following Britain’s decision to withdraw. At the same time, in the Asia-Pacific region, integration gathers pace and countries are building stronger ties with each other. The international community has come to a crossroads: to take the road of separation and isolation, or to choose the path of openness, integration and ties. The shape of our future depends on the choice we make.
A policy of separation and isolation would be the wrong choice. History has taught us this. During the Great Depression, countries raised customs duties and the result was that trade fell by more than 40 percent in just four years. After protectionist measures were introduced in the 1980s, trade that had been growing at an average rate of 20 percent fell to just 5 percent.
We cannot achieve sustainable global economic growth if we raise barriers and choose separation and isolation. On the contrary, we must raise the level of integration, link our networks together and create a platform for global economic cooperation. On this basis, through ongoing innovation and opening our markets, we must create a new driving force for building the future.
Ladies and gentlemen,
The Far East offers opportunities for economic ties and human contacts as well as good industrial organisation. This potential makes the region a promising new place for carrying out integration and growth initiatives. President Vladimir Putin is carrying out a new eastern policy that is injecting new life into the region and developing its potential in a vision that can become reality.
The Republic of Korea is also paying great attention to the Far East. Above all, I note that trade between South Korea and the Far East accounts for 40 percent of our overall bilateral trade. Sixty-percent of Russian tourists visiting South Korea come via Vladivostok. The Far East is thus a bridge linking the Republic of Korea and Russia.
The ASEAN countries, including Japan and China are also making efforts to develop this region through various development and cooperation projects. There has been progress, but we still have work to do together to fully develop the Far East’s potential and ensure sustainable growth. In his speech at the first Eastern Economic Forum, President Vladimir Putin stressed the importance of social and economic development in the Far East and Russia’s effective integration into the Asia-Pacific region. Keeping this view in mind, we need to concentrate on three main cooperation areas.
First, to activate Far East development, we must put in place an environment that will ensure the region’s sustainable development, in particular by strengthening cooperation in foodstuffs, housing construction, healthcare and medical services. We need to get more players involved. In this context, we are ready to work with Russia to come up with specific measures for carrying out joint projects in agriculture based on modern technology in Primorye Territory, including projects to build agroindustrial facilities.
In the fisheries sector, the Republic of Korea could take part in a project to build refrigerated warehouses and fish processing facilities and make a contribution to developing the Far East’s fisheries industry. Korean companies also have great experience in housing construction and by getting involved in big housing construction projects, Korea could help to improve the region’s housing situation. Korean medical facilities use advanced technologies based on ICT (information and communications technologies) and could provide quality medical services, which would of course boost the level of healthcare and medical services in the region.
Secondly, to diversify the Far East’s industrial structure, we need to build an infrastructure and make sure that all projects develop naturally and independently in accordance with economic principles. The Far East’s economic structure is currently centred around energy resources development, but given the region’s geographical location favourable for logistics development, it has great potential for growth through industrial diversification, as the Far East is located so close to the Northeast Asia economy.
If we marry South Korean capital and processing technology to Russian fundamental science and resources, this would enable us to create a competitive industrial base. Furthermore, cooperation between Korean and Russian businesspeople on infrastructure development, including transport and port infrastructure, we can develop a new multimodal logistics route that will unite the Eurasian continent.
In particular, the Northern Sea Route opens up new opportunities for cooperation in sustainable resource development. The project to build rapid intercity transit routes in the Far East and projects to improve city infrastructure also offer good opportunities for cooperation because South Korea has the needed experience and technology for carrying out environmental projects, including technology for processing the waste generated in the process of developing city infrastructure.
At the Korean-Russian summit in November 2013, President Putin and I agreed to develop joint investment platforms with the aim of stimulating bilateral investment in the Far East. Korean and Russian companies can work together in promising areas and use the investment platform to carry out favourable projects.
Thirdly, we can accelerate the Far East’s development and maximise the results if we broaden the cooperation spectrum by linking the Far East to the neighbouring countries’ economies. We can use the Northeast Asia countries’ different Eurasian concepts and initiatives as a basis for spreading the energy of advantageous cooperation in the Far East across the entire Eurasian continent.
The Korean government wants to turn Eurasia into a continent of unity, creativity and peace. This is how we see promotion of cooperation with the Eurasian continent. At the St Petersburg Economic Forum in June, President Putin proposed establishing a big Eurasian partnership. This is a vision for integration across the entire continent and it fits with our own Eurasian initiative too.
The Republic of Korea is a country that has signed free trade agreements with the United States, China and the EU, so if we are able to enter into a similar agreement with the Eurasian Economic Union, in which Russia plays a key role, it will lead to increased economic integration in Eurasia, revive the development of the Far East, and will also promote the benefits of the region’s advancement across the continent of Eurasia.
At the same time, we need to get some practical results of cooperation on a mutually beneficial basis. We must make efforts to develop multilateral cooperation in the region through building trust. Right now, North Korea’s frequent provocations hamper trilateral projects, including the Rajin-Khasan logistics project.
However, if these barriers are eliminated it would be possible to resume these projects on an even more ambitious scale, between three parties: Korea, Russia and Japan, or Korea, Russia and China. This will create an environment where all networks are interconnected – electricity, railways and energy, and in the long run, this will contribute to the effective integration of the Far East and to the region’s prosperity.
Ladies and gentlemen, peace and stability in the region is an absolute prerequisite for the sustainable development of the Far East and the regions’ integration. In this context, I cannot ignore the issue of North Korea, which is a key node in Eurasia and the most serious threat in the region.
Despite the repeated warnings of the international community, North Korea has conducted four nuclear tests since the beginning of this year and launched ballistic missiles. Pyongyang does not recognise the UN resolution, calling itself a nuclear power in the East, threatening nuclear strikes and continuously improving its nuclear and missile capabilities. After the nuclear test, North Korea has already launched 19 ballistic missiles, which means it has launched a rocket every two weeks, which exceeds the number of rocket launches over 18 years under Kim Jong-il's government.
The ballistic missiles that fall in the eastern sea are a threat to ships navigating there, including Vladivostok. North Korea’s regime ignores human rights and its people’s right to quality life, focusing all resources on the development of nuclear weapons and ballistic missiles. If we fail to prevent the development of nuclear weapons in the near future, the North Korean nuclear threat will become a reality.
I am confident that this forum will become a significant platform for dialogue aimed at joining forces to open a new page for an integrated Eurasia, for prosperity and peace in the region. I hope that in the future, this forum and our dialogue will emanate the energy of openness, change and innovation throughout North-East Asia.
Kevin Rudd: Arigato gozaimasu, Abe-san. If I got the message right, I think you want to see a peace treaty between Japan and Russia. I think that was a subtle message at the end of your speech. Also, Abe-san, congratulations on your Mario performance at the closing of the Rio de Janeiro Olympics. This was worthy of an Oscar. And it’s good to see that Mario from Nintendo has made his way from Rio de Janeiro all the way here to Vladivostok.
The questions that you raised, both President Park and Prime Minister Abe, about Vladivostok and the future I think are interesting to all of us. This audience is made up of businesspeople – investors, traders, people who want to see future economic opportunities become a reality. So, let me turn my initial questions to our host, President Putin, and it begins about this city, Vladivostok. I share the enthusiasm of Prime Minister Abe from my first visit here. In Australia, we have a place called Sydney Harbour. It is quite spectacular. It is one of the most spectacular natural harbours in the world. But in my 36 hours here in Vladivostok – here in Vladivostok you have a genuinely spectacular natural harbour as well. And so the challenge lies with its future economic development.
Mr President, as a kid growing up in rural Australia I lived on a farm, and in Australia we are used to vast distances, vast expanses, and vastness. But when I look at the map of Russia, and as a kid I used to look at the map of the old Soviet Union, this vast expanse east of the Urals and here in the Russian Far East. If we think Australia is vast, this is mega vast. In fact, I looked at the numbers just before we came on stage: we can fit two entire continents of Australia into Russia east of the Urals. And in the Russian Far East we’ve almost got one continent of Australia in terms of size.
Yet here in the Russian Far East you still, as you have indicated, got a population about the size of Singapore. So therein lies the challenge that you have pointed to. In my country, we call this the tyranny of distance, which is small population, huge territory, vast distances between people and markets. You obviously share a common challenge here. So, Mr President, I’ve listened very carefully to your strategy for developing the Russian Far East. On the core question of population and getting people to come here, to stay here and to prosper, could you expand further on the challenge of population growth here. I listened very much to what Prime Minister Abe had to say about helping through cooperative projects to build, rebuild and expand the city of Vladivostok itself, but if I could ask you further to expand on that most basic of challenges. Over to you, sir.
Vladimir Putin: First of all I would like to thank the President of the Republic of Korea and the Japanese Prime Minister for their emphatic and informative presentations. I enjoyed listening to you, and was both pleased and interested to hear your proposals. It is good that you have not only heard us, but also proposed your own versions of cooperation. Without a doubt, we will respond to them, we will make every effort to bring to life everything you and we speak about.
Now, regarding the potential of the Russian Far East and the problems that exist here. Indeed, one cannot disagree with the pioneers who discovered these places – these are truly amazing, beautiful, unique places. I would like to note that we are certainly grateful to our ancestors for the discovery and development of these areas.
However, I must say that for many decades, if not centuries, these areas have not been given enough attention. Attempts have been made in the past century, even during the development of the Western, partly Eastern Siberia; yet, we never got around to developing the Far East. Strange as it may sound, we hardly even had a good motorway linking the European and Far Eastern parts of our country. We never had one. A project was started in the 1960s, but was abandoned later. Only recently did we complete this project. For the first time these territories were linked to the European part of the Russian Federation by a motorway. This is my first point.
Second. Actually, the city of Vladivostok was founded and developed… if I may even use the world “developed.” I would rather say it merely existed here as a military base and a closed city. Hence all the problems that have been accumulating here for decades: an undeveloped infrastructure, a lack of primary energy sources and a lack of transport infrastructure in general.
All this, of course, is in stark contrast with this region’s potential. Huge mineral reserves are concentrated here. Well, for instance, it accounts for 20 percent of our oil reserves, about the same amount of natural gas; 70 percent of Russian fish is caught in these waters, and 75 percent of Russia’s forest resources are concentrated here as well. Eastern Siberia produces 75 percent of Russian diamonds and 30 percent of gold. This volume is hard to imagine.
I know that this is not enough. The region does need a new infrastructure, which I mentioned, it needs energy, finance, technology and a highly skilled workforce.
What are we doing to let this region truly breathe free, gain new vigour and make the most of its development prospects? We have taken a whole package of measures over these last years to implement our plans. What are these measures and what do they involve? First, we have introduced a whole system of preferences and exemptions for business in the region. This is particularly the case of what we have dubbed the priority development areas.
First, we analysed the experience of countries such as China, South Korea and Singapore, and we offer those who looking to work in the Far East a whole range of preferences, starting with tax holidays. For example, businesses are exempted from federal profit tax during the first five years of work. There are also regional tax breaks (on payments to the social funds, for example, accelerated return of value-added tax, and simplified administrative and customs procedures).
Second, as you have already heard here, we established a free port regime, first in Vladivostok and then in five other Far East ports. The free ports also offer a big range of benefits similar to those in the priority development areas. They also offer more effective work with the customs service and border guards.
As I said, I met yesterday with my colleagues and with members of the business community. We heard their comments and concerns and will make the necessary adjustments. In any case, we are putting into place the conditions they need at the ports and improving the port facilities.
Finally, we established a fund specifically for Far East development. It provides quite long-term and relatively cheap financial resources at a 5-percent interest rate. Of course, we must add more and top up the fund’s capital, but we have taken the first steps and the work has begun.
Another of our substantial measures concerns infrastructure. We decided and have already begun to subsidise businesspeople who build infrastructure facilities independently. I think that this package of measures should make it possible to work effectively in the Far East for those wishing to do so.
I mentioned the free hectare of Far East land at the start of my speech. Under this programme, we make a hectare of land available for free (as you can see, the region is not at all lacking for land) for people wanting to start their own business or develop the site.
There are many areas for cooperation and there are projects to build on. It would be wrong to say that the region is starting from scratch. If you look, you see that back in the Soviet period, we already developed aircraft manufacturing in the city of Komsomolsk-on-Amur, for example. True, this is military aircraft manufacturing, but the general skills are there, and they produce the Su fighter planes known all around the world.
We are well aware that we should not and cannot limit ourselves to selling arms alone, and this is why we are working, chiefly with our Italian and French partners, on developing manufacturing of civil aviation aircraft. The promising medium-haul Superjet-100 is produced here, for example.
We had already started developing a shipbuilding cluster in the region. Two years ago, I was here for the start of operations and the inauguration of what is really an enormous shipbuilding enterprise that will produce civilian vessels in specialised areas in which we really do have the skills, skills that we must continue to develop, of course. These areas include civil vessels with icebreaking capability, and specialised vessels for serving offshore drilling platforms, and for working on the Northern Sea Route, which President Park spoke about. We will develop this most economic route for shipping goods between Asia and Europe.
We are also developing our space sector activity here. We recently inaugurated Russia’s new space launch centre, Vostochny, in Amur Region, one of the Far East regions. The first launch has taken place and we will expand it to handle light, medium and heavy rockets. This is also a platform for international joint activity to develop outer space and offers excellent prospects.
We are developing not just the space launch centre (the first part of which is already complete), but are building a whole cluster and a town with all the needed social infrastructure for those who wish to work here.
Of course, the region also offers the resources I already mentioned, hydrocarbons, oil and gas, and traditional resources such as timber and fish. These are all areas in which the region has longstanding experience and we just need to take them now to a higher level. We need to not just work on production and export, but also on adding value to our products – this is clear. It is for this reason that we are developing the priority development areas, the Vladivostok free port and other measures in order to attract Russian and foreign business.
But to make it all work efficiently, we definitely need highly-qualified personnel. Our event is taking place at Far Eastern Federal University, which was established only two years ago. We are working from this perspective – as I mentioned, 2,500 foreign students study at this university and dozens of foreign teachers work here. Last year, I was told that people from foreign countries are waiting to work here, and I’m very happy about this. Of course, constructing such beautiful university buildings was not enough; we have to provide highly-qualified personnel and talented young people to meet the demands of the growing labour market.
There is another side of this that we should remember. To do all of this and to make people want to live here, raise children and feel that their children have a future here, another goal has to be met – creating not only a modern living environment but also a cultural environment. There is a very good music theatre here. I’m grateful to the Mariinsky Theatre, which has opened a branch here. The first festival has recently debuted with great success, with a great number of people from Primorye and Vladivostok, as well as from foreign countries – primarily Japan, the Republic of Korea and the People’s Republic of China – that are interested in attending these concerts.
We intend to open branches here from St Petersburg’s Hermitage Museum, the State Russian Museum, and the State Tretyakov Gallery. I think that a local museum dedicated not only to Primorye but to the entire region, and the neighbouring countries, should also be considered.
Science and education should be developed. My colleagues and I have just visited the newly opened scientific centre for marine biology research. This has traditionally been developed since the Soviet era. I believe we have made a major step forward by creating a very good base and physical infrastructure. This will be a scientific and education centre. We will certainly succeed if we follow through on all these areas.
Kevin Rudd: Thank you, Mr President. In fact, I had the opportunity yesterday to walk around this campus. It is pretty impressive. I think a lot of university presidents around the world will be envious of the infrastructure that’s been put here very recently. And to confirm, the teachers here told me that you are getting faculty from around the world, you’ve got a couple of Australians arriving I think next year. They will be interested in the beer supply as well.
I am also interested, Mr President, in the other aspects of what you have talked about. You have mentioned the fact that you received expressions of concern from a number of businesspeople about the difficulty in getting visas, and visa access etc. And I certainly recall the experience of a friend of mine from Hong Kong. We were all APEC members here but the use of the APEC business card has not been as effectively recognised at Russian border posts as it could be. And I think that would be a huge thing to help for the future as well.
On the plan that you have outlined – it’s an impressive plan. The study that has gone into, for example, the Chinese special economic zone experience. It is solid study. Free ports? The Chinese experimented with those successfully. Special economic regions you were talking about, the areas, all thirteen of them. And having lived in China when they first did those things back in the 80s, it really was a twenty year period before you saw the product of the initial investment. And then — history speaks for itself.
Let me put you another observation, Mr President, for your further reflection, and something which comes from a number of the businessmen here. They’ve looked at the plans, they’ve looked at the tax concessions being offered in the free ports and in the special economic areas, but they also ask this question about long-term investor confidence, i.e. that the rules won’t change here in Russia for the future, they ask questions about the consistency of the implementation of regulations, and about bureaucracy. So, given these concerns raised by businesspeople from around the region, around the world, again if I could invite your comments specifically on this question, of if you’re speaking to a group of investors, and their baseline concern is confidence and long-term policy and regulatory consistency, here in the Russian Far East, what would your response be?
Vladimir Putin: This is precisely what we discussed yesterday. We discussed these plans, which have been thought through carefully and are long-term. I think you can all rest assured that we fully intend to make every effort to carry out these plans.
We realise there are some things that are quite fundamental for business development. Tax breaks, of course, which we have introduced. Of course we would like for the entire Russian Federation to offer equal conditions for all economic actors and become a most attractive place for business development, but we realise that this region has some particular circumstances that require special attention from the authorities, and this is why we have decided to offer such big preferences here.
We also see that this is far from enough. The authorities must make an effort to resolve fundamental issues such as infrastructure and energy supply, communications and human resources. We have long-term plans for each of these areas.
Our company heads are sitting just over there. There is the head of Gazprom, for example. If need be, he can tell our partners about Gazprom’s plans and our other oil and gas companies’ plans to develop the energy infrastructure.
Yesterday, the businesspeople talked about how tariff differences can be fatal for business and stifle their development here. It is not good for ordinary people and it is not good for business either, and this is why we have come up with these long-term plans for the years ahead, not just in gas production on Sakhalin, for example, but also in developing pipeline routes in the Far East regions and distributing energy resources among the economic actors and the region’s households. Gazprom’s subsidiary company has already sent a plan for connecting people to the gas network to the Primorye Territory authorities and will do the same in the other Far East regions. We will certainly carry out these plans.
We will carry out projects for developing communications infrastructure in several areas, given the region’s vast size. The first area is satellite communications. Khabarovsk, which is the Far East’s official administrative centre, already has the satellite communications centre offering access to broadband internet and so on.
The second area is fibre optic communications. We have already carried out a project to link Sakhalin, Magadan and Primorye Territory with fibre optic cables. I don’t recall exactly if the cable has been laid to Magadan yet or not, but I think it has. In any case, the work on the coastal facilities is already complete, the stations and coastal infrastructure are in place and a cable reaching 1,800 kilometres has been laid. This will all start operation and will give people the basic conditions they need not just for daily life but also for business development. These are long-term undertakings that have been calculated in our plans and our budget planning.
Kevin Rudd: Thank you very much, Mr President. Prime Minister Abe, I listened very carefully to your remarks just before, and you are a genuine enthusiast for the development of the Russia-Japan relationship. Those of us who follow these things internationally read very carefully your eight bullet-points at Sochi, and those of us who follow international relations would have observed carefully your cry from the heart today about developing a peace treaty, and agreeing one, between Japan and Russia after all these years, and despite what was almost achieved in 1956. But it’s time to get on with it.
So you, in the framework of what you want to see in the future of the Russia-Japan relationship overall, could you give me a sense therefore of the role of economic engagement within that framework of trade, and investment between Russia and Japan, and the particular role which can be played by, frankly, forums such as this, the Eastern Economic Forum. Prime minister…
Shinzo Abe: The Russian Far East is developing intensively and I think that this development will have a very positive effect on the region as a whole. As for the Eastern Economic Forum, this is a very important platform for bringing together all with an interest in developing the Russian Far East. President Park Geun-hye is here beside me today, and so are senior officials from many countries’ governments, economic organisations and academic institutions.
Over these last years, Russia has established a number of new organisations and institutions, such as the Ministry for Far East Development, the new special economic zones, and the free ports. The points that Mr Putin noted in particular in his outline of the work currently underway in Russia are, I think, fruitful results of the initiatives he is taking, and these new organisations and institutions are among these results.
For my part, I would propose making Vladivostok and the entire Russian Far East a reliable export base for the Asia-Pacific region. Japanese companies work actively in this area and I hope this forum will strengthen further the cooperation between Japan and Russia. This will enable us to improve the lives of the region’s people, and I am sure that this will become a new driving force for Japanese-Russian relations.
Kevin Rudd:Thank you very much, Prime Minister. I noticed in your government you have a minister with specific responsibility for Japan-Russia economic relations. And on this trade and investment relationship between the two countries – if you could again outline to me how you see this deepening in sectors in the years which lie ahead. This is obviously a huge priority for you: you’ve proposed meeting the President of Russia here on an annual basis. I understand that after Sochi you’ve invited President Putin to visit your own home prefecture of Yamaguchi towards the end of this year, which is a beautiful part of Japan, in my recollection. So again, looking to the future and the deepening of Japan-Russia trade and investment relations and integration – how do you see this evolving?
Shinzo Abe: As for our bilateral relations in the economic area, we have great potential that we could develop and we must now identify, realise and make use of this potential. This will benefit people in both countries and will let us open a new chapter together. I think that this is work to open new horizons.
I would propose eight areas as a start for joint work between our countries. They cover a broad range of areas in economic life in both countries, industry, human resources training, industrialisation and raising the level in all areas of our life.
This is why I appointed a new minister who will be responsible for Russian-Japanese economic cooperation on the Japanese side. He will work for Russia and for developing economic cooperation with Russia. I took this step in the aim of achieving bigger and clearer results. The cooperation and partnership between our countries must produce clear results that our peoples will see and welcome. I think this should be our goal.
The Asia-Pacific region is home to nearly 60 percent of the Earth’s population, around 4 billion people. We must promote the ideas of free trade and economic integration in this region. This could become the impetus for further growth in Russia and Japan.
Japan’s post-war growth was driven by the export of cars and electronic goods through free trade regimes. Three-and-a-half years ago, I decided to take part in the talks on the Trans-Pacific Partnership, and I think that this is very important.
In 2012, Russia hosted the APEC summit in Vladivostok, right here in this hall. This was the moment when Russia showed the entire world not just the Russian Far East’s attractiveness, but also its determination to integrate into the Asia-Pacific economy.
I hope very much for wide-ranging cooperation between Russia and South Korea too, so that we can all work together to become part of the Asia-Pacific region free trade zone. Thank you.
Kevin Rudd: Thank you very much, Prime Minister. President Putin, you’ve heard Prime Minister Abe speak about his passion for developing the Russia-Japan economic relationship. Seeing from Moscow, seeing from the Russian national perspective – give me a sense of its strategic importance. I saw your interview just in last 48 hours where you’ve said on geopolitical questions Russia does not trade territory for economic cooperation. I’ve seen you said it very plainly in terms of the ongoing discussions between the two countries on the southern Kurils and northern territories. If you had a crystal ball and you were looking ahead five years, what is the shape of the Japan-Russia relationship that you would like to see in reality, in practice?
Vladimir Putin: The magic crystal comes under our national interests. Shinzo [Abe], with whom I established excellent and trusting relations, said that we have our vision and Japan has its vision, and each of us looks at the issue from the perspective of our own national interests. But we do all agree on one thing, namely, that we need to resolve this issue.
The search for a solution is certainly not easy. It was not us who created this problem. In 1956, the Soviet Union and Japan signed an agreement that completely settled the problem. The agreement was signed and was ratified by the USSR Supreme Soviet and the Japanese parliament. But our Japanese partners later decided not to implement this agreement and then the Soviet Union froze its decision too.
Not so long ago, at our Japanese friends’ request, we returned to this issue and are ready to examine it. Of course, settling this issue requires a high level of trust. As I said in the interview I gave to Bloomberg, we need to find a formula that would enable both sides to feel they have not lost out in any way. This is not easy, but we can find such a solution.
The Japanese Prime Minister proposed eight areas for cooperation between Russia and Japan, and I think that this is the only right road to take. Russia and Japan are natural partners in developing trade and economic ties and resolving regional security issues, and we are both very much aware of this. But as I said, we need to find solutions that would not undermine our relations but would create a solid base for building up our ties over the long-term perspective. As I said, this requires finding a solution that would ensure neither side feels it has lost out.
History shows us plenty of successful examples of this kind of approach, and I hope very much that we too will provide just such an example. We want this, Japan wants this, and our foreign ministers are working hard on this. We will support them at the political level, and of course, as Mr Abe said, we are ready to take decisive steps. But all decisive steps must be thoroughly prepared.
It is already clear today that we cannot let slip the opportunities we have today. Two big projects are underway on Sakhalin, for example, Sakhalin-1 and Sakhalin-2. Seventy percent of the energy resources produced there go to Japan. We are studying the possibilities for building an energy bridge now. Of course the Japanese economy has an interest in this project, and so do we. The Japanese have already decided to produce car engines in Vladivostok. A Japanese company would not take this step to its own detriment. We have an interest in developing our automotive industry too. Our Japanese friends and colleagues are willing to accept a high degree of localisation. This has benefits for them and for us and fits completely with our plans.
We visited the new marine biology research centre today. Japanese scientists took part in the discussions there, and from South Korea, and more people will come, scientists, students, people from research centres and universities.
Of course this is in our interests. Our past should not stop us from moving forward. But we do need to reflect on how to settle the problems that are preventing us from moving forward as fast as we would like. I hope that we will settle these problems.
To be continued
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