10th World Economic Forum In Russia Closes With 5 Recommendations To The Russian Government - Economic Diversification Is Proceeding Slowly But Surely, Says German Gref, Russian Economy Minister

“The diversification of the economy is here already,” said German Gref, Russia’s Minister of Economic Development and Trade, in response to a set of recommendations from business leaders at the closing session of the World Economic Forum in Russia. Participants voted on a list of key issues defined by the World Economic Forum’s Russia Scenarios project.

Minister Gref said that “the Russian government is committed to reform and will do everything to make Russia’s economy as transparent as possible and one of the most liberal in the world”.

He said the “pace of transformation and the time pressure are very big and we start to do several things simultaneously. We don’t always manage to gauge things properly” and sometimes have to step back, which is perceived as a lack of efficiency and consistency by others. He stressed that the most important thing is not the speed of movement but the country’s stability. Movement forward is clearly outlined and the country is moving in that direction, he stated.

The five recommendations are:

1. Sustain a sector-diversified Russia through rule of law, predictability, administrative reform, stability, equality before the government and all commercial players. The government needs to find its own limits and balance point. “It’s important that business does business and government does government,” said Paul Ostling, Global Chief Operating Officer, Ernst & Young, United Kingdom.
2. Develop infrastructures – human infrastructure, physical infrastructure (e.g. information highway), commercial and intellectual infrastructure (e.g. management skills). Using the Stabilization Fund is one possibility.
3. Encourage “smart FDI” and develop Russian business, support equality for entities and transparency. FDI should bring more than money – it should bring management skills and intellectual property and stimulate co-investment between Russian and foreign investors.
4. Use the energy sector as the spark for diversification. “The first country to put man in space has more than oil as a competitive advantage,” said Ostling.
5. Attain a cultural balance between innovation and entrepreneurship versus statism. This is a process that could take 20 years.

Alberto Weisser, Chairman and Chief Executive of Bunge, emphasized that Russia has a clear competitive advantage in the food and agribusiness and exploiting it would also develop the rural areas. This would mean the financing of farmers, which in turn necessitates giving farmers land titles. Andrei Bougrov, Managing Director of Interros Holding Company, would like to see small and medium enterprises contribute 45% of GDP as well as “more women in government cabinet positions”.

The World Economic Forum closed the two-day Forum on Tuesday – its 10th meeting in Russia since 1991.