Putin: I am glad to see so many familiar faces in this room today. I mean, of course, not only representatives of the Russian administration, but first of all my friends from Russian and foreign businesses.

Generally speaking, we are glad that the Davos forum keeps momentum with regard to Russia. We and its organizers were just remembering how all this began in the early 1990s and I was happy to recall my participation in the work of various forums. I have been in Davos four or five times at the invitation of its organizers, and we appreciate its efforts to bring about all the positive developments in the Russian economy.

Today's meeting involves representatives of both Russian and foreign businesses, and I think that this is the best possible combination because it is necessary to take into account the interests of the state and of representatives of various financial and industrial groups and different countries.

As I have already said, the World Economic Forum has traditional ties with Russia. To us, each session of the Forum is not only a responsible event. Conclusions and assessments made here are very important for people who make decisions in Russia. I am confident that such meetings in Russia are of big business interest to you, too, especially since this session gives you a real opportunity to reevaluate prospects for the Russian economy.

I think that the timing is also quite good. Many companies are finishing their fiscal year and considering budgets for the next year. I hope that your presence in Russia will influence future investment plans, and our country will have a worthy place in these plans.

I cannot but welcome the decision made yesterday by our partners and friends from Exxon to take part in a major investment project in Russia. Direct investments of $12-15 billion, direct investments are an important thing. Considering that overall project costs may approach $30 billion and if we compare it to foreign investments accumulated in Russia, this is a serious sum.

This event is pleasant as it is, and I have to say that if our partners work like this in the future, that is, if they take into account each other's interests and the interests of the Russian state and their business partners, and this project involves Russian, Japanese, US and Indian companies, I think we can achieve much if we move toward each other. For my part, I promise you all possible support for such projects.

At the same time, I would like to note another important aspect of this event.

The world economy must diversify its risks. We cannot but remember the September 11 events. On that day terrorists tried to deliver a blow to predictability and stability in the world, they definitely tried to lend a global nature to this event. Now a new principle of global rights and duties is emerging in the system of international relations. This is why our efforts to counter violence and hatred must be clear, thought-out and decisive.

All factors of cooperation are important here, and economic ones perhaps even more so.

I would like to stress that Russia calls for further integration and the liberalization of the world economy and intends to take the most active part in these processes.

I think you follow events in our country and know how seriously the economic situation has changed here in the last two years. I will not tire you with statistics. I will only give you the most important figures.

First of all, Russia is a country which is building a favorable tax regime. Many know the figures I am going to cite now, but I will do this all the same, at least for two reasons. First, I am happy to say this one more time, and second, I want everybody in this room to know this.

The income tax for individuals has been 13 percent since the beginning of this year. Needless to say, this is the lowest rate in Europe. We have adopted a law reducing the profit tax from 35 percent to 24 percent, and for banks from 43 percent to 24 percent. In other words, it has been almost halved. This is also one of the lowest taxes.

By taking such decisions we tried to spur investment by foreign companies. And we will continue to simplify our tax system. For example, three taxes have been replaced with one for the use of resources. We have other plans, too. I am confident that your Russian colleagues told you about this yesterday and they will talk about this today. We are also considering setting the ceiling for mandatory payments to the consolidated budget for taxpayers in the future.

Now I would like to address our Russian partners, Russian businessmen. These ideas have been mentioned during discussions with them. I am sure that you understand and know that it is hard to formulate an idea, but sometimes it is as hard to implement it. But I want to assure you that we do not ignore such ideas. We notice them, we remember them and we take them into account in our practical work.

I dwelt upon this at such length because the tax burden was the main brake on our economy for a long time.

Russia has a strategic goal -- to become a country that makes competitive goods and renders competitive services. All our efforts are committed to this goal. We understand that we have to solve questions pertaining to the protection of owners' rights and the improvement of corporate governance and financial transparency in business in order to be integrated into world capital markets. I know that your discussions will be devoted to these issues. The problems you have prepared for discussion are most vital for the Russian economy. These include the situation in the banking sphere, direct investments and corporate governance I have mentioned above. I'd like to say that we have already prepared a draft of a corporate governance code, and we want to know what you think about it. At the same time, we understand that the OECD adopted these documents a long time ago, and I do not think that we should invent things here. But I will take the liberty of making a small lyrical-political excursion for the Russian audience and for those of our colleagues who work with Russia for quite a long period. We have had scores of different codes. We all remember the Moral Code of the Builder of Communism as well. We also know how it all ended. This is why I think that it would be much more important to revive the best Russian business traditions. They have always been in Russia, and I am confident that this will be the most productive step toward establishing normal, transparent and reliable relations in business. However, there are already many stable and reliable sectors in Russia that have had the most positive influence on the entire world economy. First of all, it is our energy resources. Now that instability in the world directly impacts world markets, Russia remains a reliable and predictable partner and a supplier of oil and other energy resources.

Ladies and Gentlemen!

We no longer count on loans, we live according to our means and find ways of paying foreign debts without, as I have said so many times, foreign borrowing. By the way, in a meeting with Mr. Koehler I pointed this out to him and said also that we were not going to, figuratively speaking, get as bit above ourselves. We maintain contact with leading international financial organizations, we count on their consulting aid, we realize that the development of the world economy is difficult, and we see all problems in a medium and longer-term perspective. This is why we have agreements with international organizations that we will not only work together and monitor events in the world and Russian economy, but will also use the support of international financial institutes if we need it.

Despite the dramatic cut in taxes, and perhaps due to this cut, tax collection has increased by 14 percent this year in real value. The GDP has grown by more than 20 percent in three years. This is one of the best indicators in the world. Our stock market has grown by 39 percent this year in the dollar equivalent. And this is also one of the best indicators in the world. But we will continue to step up the tempo and improve the quality of reforms.

We still think that our major task is to create conditions for making business as open as possible and protecting it from unscrupulous bureaucracy and crime. This is not an easy task because, and we have to face the truth, these negative phenomena have already taken deep root here. But we are not going to give up. We consider improving our judiciary a priority. Active processes are under way now, including legislative ones. They aim at creating independent and effective courts in Russia. All this is necessary for building a modern and mobile economy in Russia.

There is another element that I cannot but mention, ladies and gentlemen. I think it is as important as everything I have said above. All our efforts in the purely economic field are being accompanied by an active social policy in Russia, because only by pursuing a rigorous social policy can we generate such public support that will create a favorable investment climate and conditions for developing the most modern economy in Russia.

In conclusion, I would like to say that we are well aware of the fact that Russia has many unsolved problems. We know this. But we also know that our country is a promising economy and a vast market of the future. There have always been great opportunities in Russia. We know that these opportunities were limited by serious risks. So, our task now is to minimize these risks. Much has already been done to achieve this. But we will continue to solve these problems most consistently, including with your help and your direct participation. We count on this very much. Thank you for your attention and let me wish you success in your work. Thank you very much.


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