FACE TO FACE

Vladimir Platonov:

We give business an opportunity to develop quickly

President of the Moscow Chamber of Commerce and Industry answered our questions in an exclusive interview with Capital Ideas

Mr. Platonov, a year ago you headed up the Moscow Chamber of Commerce and Industry (MCCI). What was the most challenging and unexpected part of your new job?

I have to say that this place of work wasn’t all that new for me. Before being elected President, I spent a year and a half working as Senior Vice President of the Chamber. But even before that, I was relatively familiar with the MCCI’s work. I was a Deputy at the Moscow City Duma (MCD) for two decades, and considered it part of my responsibility to stay informed about what’s happening at the largest association of entrepreneurs in the capital. I followed the Chamber’s work closely and worked on the city law “On the Moscow Chamber of Commerce and Industry,” which was adopted by the Moscow City Duma in 2002 and updated in 2012 and 2017.

After the Moscow City Duma elections in 2014, deputies had the opportunity to work at the Duma full-time or part-time. I decided to try my hand at a new role, which was similar to what I did before. After all, entrepreneurs are also city residents, and I worked with them for a long time as a “liberated” deputy. Business has its own important and complicated problems. Of course, I started to see things differently after transferring to the Chamber. There were no big surprises, but there are challenges at any job. Most importantly, my experience gives me the tools I need to address them.

It doesn’t really matter which particular group of people you’re helping to resolve problems. We are creating an integrated city community that should be comfortable for living, working, relaxing, and running your own business.

In your opinion, what is the business climate in Moscow like these days? Cloudy with a chance of rain?

If we’re going to use weather analogies, I would say cloudy with a chance of sunshine. But there are government planes that work on dispersing the clouds regularly, like we do on City Day.

The clouds, in this case, are the consequences of Western sanctions, the drop in oil prices, and some holes in the legislation that we’re trying to fill in. After all, business was forbidden in our country for 70 years. We’ve been building a market economy for a quarter of a century. This might seem like a long time, but you have to overcome a lot of public inertia, learn from your mistakes, create things from scratch. It only seems like it would be enough to apply a specific economic model, and the “invisible hand” will take care of the rest. If you don’t create the right market conditions, nothing will work! If we try to let the market figure itself out, we’ll have savage capitalism, which is what we almost ended up with in the 90s. Over-regulating the market, on the other hand, can lead to a downturn and crisis. The government constantly has to look for a middle ground, and chambers of commerce and industry are there to moderate between the interests of business and government.

How much did the Western sanctions affect the city? Or maybe they actually helped in some way?

Of course we could not have avoided being impacted by the sanctions. Moscow is the country’s biggest industrial and financial center. So the western sanctions introduced in 2014, which were aimed at Russia’s military, energy, and financial sectors, affected the city’s economy.

However, in spite of forecasts by certain experts, the sanctions didn’t turn into a catastrophe. On the contrary, they set in motion a lot of positive processes that were waiting for the right time to fully unfold. The sanctions and counter-sanctions prompted us to develop our real sector and pushed us to implement import substitution and localization processes. It turned out that our agricultural sector was capable of rapid development, that our IT professionals are good enough to compete with the West, and that Moscow, which had never been home to heavy industry plants, can become a center of cutting-edge industry.

Of course this didn’t happen on its own. The city authorities launched a special program that enabled effective enterprises that pay decent salaries, actively invest in manufacturing, and use their territory efficiently receive sufficient tax benefits in order to invest the savings in modernization and the expansion of production volumes in the city. Overall, the so-called “tax revolution” that took place in the city over the past five years (thanks to advances in federal legislation) resulted in a significant expansion of small and medium-size business, as well as individual entrepreneurship. An entire network of business and advanced manufacturing plants is being created - industrial parks, technological parks, and coworking spaces. We are giving business the opportunity to develop quickly and achieve results. Over the past few years, Moscow’s production sector has demonstrated stable growth - a few percent per year.

I’m also pleased to point out that the MCCI has actively participated and continues to participate in developing laws on industrial and investment activities and cutting-edge taxation mechanisms. The city gives tax and rent benefits to companies operating in in-demand sectors that meet all modern requirements.

So aside from negative consequences, the sanctions have been good for us. They gave impetus to the development of a number of economic sectors, including agriculture and advanced technology. They also prompted us to look for new markets for import and sales.

Do you agree with the opinion that the worst sanctions are ones that we impose on ourselves by being disorganized or irresponsible? If so, what is the best way to overcome this?

There are well-known cures for this, it’s nothing new. Don’t give up, try to work in accordance with modern requirements, always strive to accomplish something new - new models, technology, algorithms. Borrow best practices from the West and the East, rely on positive experience from our own country.

What industries are the most appealing right now in terms of investment?

Moscow is the biggest city in Europe, an agglomeration of 20 million people, the largest consumer market in Russia and Eastern Europe, and the center of investment activity. In 2016, Moscow was in the Top-10 Russian regions in terms of the quality of our investment climate. We also came in first in the public-private partnership development rating. In 2016, investment volumes reached a record high for modern Russia - over 1.7 trillion rubles.

In terms of specific industries, it’s best to start with ones that are actively implementing public-private partnerships. This includes transportation and the construction of industrial and civil facilities. Transport infrastructure, as well as industrial and civil construction, have always been appealing spheres for foreign investors. Unlike other regions, the pace of construction for industrial and civil sites in Moscow has increased. The city’s expansion had a lot to do with this. It opened new opportunities for the most advances architecture and design solutions, residential construction projects, and job creation.

Now the city has launched an unprecedented social project - the renovation of old and dilapidated housing. There has never been anything like it in our history in terms of both scale and technology, even after World War II. Thousands of old residential buildings will be demolished and replaced with new ones. At the same time, whole residential quarters with social and business structures, as well as transportation systems, will be erected. There will be enough for everyone for many years to come, and it won’t be able to happen without public-private partnerships. I am sure investments in this sector will be very successful.

What kind of advice would you give to foreign businessmen and investors who are considering investing in Moscow? Is there anything they should keep in mind?

I’d like to give some general advice to entrepreneurs who are starting to work in Moscow.

Don’t come to Moscow expecting that everything related to business has to function exactly like it does in Germany or Japan, for example. Some things are just different here. Pay attention to the advantages and opportunities that exist in Moscow. Of course, we have our own nuances and one has to adapt to them. But it’s important to keep in mind that the government and the Chamber of Commerce and Industry are doing everything in their power to create a comfortable environment for foreign business in the city.

Can you tell us about the MCCI’c international relations? How are they relevant for the city?

The development of international relations is one of MCCI’s top priorities. The MCCI is an important part of the international system of chambers of commerce and industry.

Due to the Western sanctions, which we have already talked about, a lot of Moscow’s organizations that engage in foreign economic activities have shifted their focus to markets in the CIS, the Asia-Pacific region, Latin America, and Africa. Due to these changes, the MCCI has activated relations with CIS countries, Iran, India, China, and so on.

The MCCI is the foundation of an effective system that provides non-financial support for business entering foreign markets.

Important tools for developing foreign economic relations include:

  • MCCI Committee on Foreign Economic Activity (headed by Minister of the Government of Moscow, Head of the Department for Foreign Economic and International Relations of the City of Moscow Sergey Cheremin)
  • 40 commissions on foreign economic cooperation with partners in foreign countries
  • Center for Customs Counseling.

Commissions in countries such as South Korea, the United Arab Emirates, Italy, Iran, India and others work to help domestic enterprises enter foreign markets.

In 2014-2016, the MCCI held a total of more than 300 events in the field of foreign economic activity (trade and economic missions, forums, conferences, round tables, including in the framework of exhibitions, presentations, meetings in the Chamber with ambassadors, trade representatives, parliament members, mayors, delegations of businessmen from a number of foreign countries, etc.).

All these measures are substantive in nature. Russian and foreign entrepreneurs are assisted in finding partners, as well as informed about various aspects of foreign economic activity. At the Hanover exhibition alone, which was held in April 2016, Moscow enterprises held 64 meetings with German partners. 25 of them culminated in the signing of protocols of intentions, and many have signed cooperation agree.

 

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