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President’s keynote St. Petersburg address focuses on modernization
Published: 18 June, 2010, 17:07
Edited: 21 June, 2010, 15:38
TAGS: Investment, Manufacturing, Russia and the global economy, Economy
Russian President, Dmitry Medvedev, has announced that Russia will abolish capital gains taxes on long term direct investments, in order to boost economic modernization.
Speaking in St. Petersburg at the International Economic Forum, the Russian leader said that in order to encourage investment into economic modernization the government would be creating a strategic investment fund matching every 3 roubles from strategic investors with a rouble. He added that ending taxes on long term capital gains would be a key drawcard in luring global investors to participate in Russia’s economic transformation.
“As for improving the investment climate, Here I also hope that we're moving onwards. As of January 1st this year we’ve expanded the possibility to apply zero tax rate for profit tax in relation to dividends. And today I’m pleased to announce that in Russia as of 2011 we will fully eliminate the capital gain tax for direct long term investments. “
At the same time the President announced that from next year budget funds would be more clearly targeted to achieving specific outcomes, and promoting more efficient expenditures.
“From 2011 we will be seriously changing our fiscal policy reorienting the budget to deliver specific programs, creating greater emphasis on the main priorities of our development. We've made a very strong and important decision to move away from funding the government institutions unrelated to deliverables. Instead we will fund changes improvements new projects and specific deliverables.”
The President added that the number of strategic companies would be cut five fold and that the tax burden on domestic companies would be eased as soon as possible.
"We shall return to the issue of tax burden easing for businesses in the next few years if the global and Russian economies recover in favorable conditions. If everything goes to a favorable scheme,"
18.06.2010, 15:04
1 comment
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Bogdanov, Excellent analysis, you pretty well covered the drivers behind silicon valley and what needs to be done, and freedom is the key and I would amplify a bottom up approach enabled with a big top end initiator (cash and political will). I would have to be pretty well innovative to deliver on the weather, but never say never! If my hub was up in Rostov, well for part of the year, I could certainly match it! Anyway I hope not everyone wants palm trees, just for now! or we are doomed unless we get bought by HP.
Count Cash, I agree with you on the following: a) the suppose to be Russian “Silicon Valley” should be considered as a hub (politically and economically pumped), well-known and iconic around the country. b) success (read: money) attracts businesses and people (talented and, not very talented); so, it is important to create that original “hype” based on some, even initially not so big, but real achievements. But, I personally, see the key success of the Californian Silicon Valley as based on: a) proximity of the country's best technical universities -- most of innovations and ambitious engineers arrive from there; b) industry works together with universities and other research centers (as one organism); c) national diversity -- one of the most important elements for creating superior, competitive, and innovative environment; foreign workers/students are very welcome; b) freedom in its biggest sense -- economical, political, intellectual, freedom of braking traditions and conventional barriers; the economical life in the Valley is truly driven from the very low levels (individual initiative); d) cozy environment for startups -- where risk is respected and rewarded (by, potentially, very big money). e) the good whether (I am not joking -- I would never go to any Silicon Valley which would be located in Minnesota or, even, Massachusetts. I need coffee shops with palm trees next to them). In the very simple terms, I would describe Silicon Valley phenomena as being rather pragmatic -- this is another American “gold rush”. Only this time the money presented not in form of the yellow metal, but in form of high-tech products. And instead of the gun, the law regulates the relationships. Nothing romantic, really. People, primarily come here (and make great things) to become rich, and not to make this place being more famous.
The situation looks not so doomed for Russia when it comes to the location of its tech hub. I would give to the Russian government two options for consideration on this. 1) Taken in account how many Russian scientists and engineers already living and working in the American technical and scientific centers (especially, Silicon Valley), I would suggest Russia to buy out California from the US (similar, as Americans did with Alaska). Anyway, many right-wing politicians here consider California as a socialist state. So, it would be natural for Californians to be integrated into Russian political system. Plus, Russia has more freedom than America, so it perfectly fits for Californian lifestyle. 2) Now seriously. Luckily, Russia has a place, where I would gladly move to -- the Stavropol region. It has all necessary attributes to become the next Russian High-Tech center with the exception of one -- there is no any famous technical universities out there. The weather is one of the best in Russia. National diversity may be easily compared with the Silicon Valley. Very compact place with good transportation system, which may create much better conditions for communication between engineers than, say, in Moscow region. Proximity of resorts and scenic places (Caucasus mountains and Black sea) makes it very attractive place to live. The far distance from Moscow would create better conditions for private businesses and individual initiative due to lack of everyday's interference from the government. I may go on and on... So, everything what Russian government needs to do really -- just to pump enough money in that region and create conditions which would allow the best Russian and foreign scientist and engineers to move there. Another positive thing -- it would unload Moscow from concentration of everything, which is ridiculous thing as it is today.