Council for Strategic Development and Priority Projects.

Vladimir Putin chaired a meeting of the Presidential Council for Strategic Development and Priority Projects at the Novo-Ogaryovo residence.

The Digital Economy program was the main item on the agenda. Taking part in the meeting were Russian Government members, Presidential envoys to federal districts, and heads of business associations, major companies and corporations.

The meeting featured keynote presentations by:
  • Minister of Communications and Mass Media Nikolai Nikiforov
  • Industry and Trade Minister Denis Manturov
  • Moscow Mayor Sergei Sobyanin
  • Director of the Young Professionals direction at the Agency for Strategic Initiatives Dmitry Peskov

* * *

President of Russia Vladimir Putin:

Good afternoon, colleagues.

As you know, pursuant to the Address to the Federal Assembly, the Government was instructed to propose comprehensive approaches to developing Russia’s human resources, as well as intellectual and technological capabilities in the so-called digital economy.

Russian Government worked closely with the business and expert communities and drafted a program to this effect until the mid-2020s. Today, we will discuss its key points.

Let me reiterate that the digital economy should not be regarded as a standalone industry. It is a way of life, a new foundation for the administration of government, the economy, business, social services, and society in general. Of course, the creation of a digital economy is also a matter of national security and Russia’s independence, a way to make Russian companies competitive and enhance Russia’s standing on the international stage for decades to come.

I must say that in the past few years Russia has made tangible progress in many areas of digital development. We are among the world’s leaders in Broad Band WL and Wi-Fi coverage. According to Rosstat [Federal State Statistics Service], from 2010 to 2016, the share of households with access to the internet grew from 48.4 percent to 74.8 percent. The average Internet speed in Russia increased by 29 percent in 2016, which is the same as in France and Italy. By early 2017, the Russian market of commercial storage and processing centers grew to 14.5 billion rubles.

Owing to the high competence level of our IT experts, Russian companies offer unique software solutions. They are being used in the most diverse areas, for instance, in the development of smart cities.

I would like to note that our capital Moscow is among the world’s leaders in using digital technology in a modern city infrastructure and has left behind such metropolitan cities as Toronto, Tokyo, Hong Kong, Barcelona and Sydney.

Incidentally, in some categories Moscow ranks among the top three. Thus, in the use of digital services for communication between the state and its citizens, our capital occupies the first place – the first place in the world. I hope Mr. Sobyanin will tell us about it and share his experience with us.

Moscow ranks second in the world in creating infrastructure for implementing innovations.

It is third in developing business models based on large-scale introduction of advanced technologies and in its educational system that meets the requirements of the future labor market.

Mr. Sobyanin will tell us how he has achieved such results. This means we are competent enough to develop other territories in the same way. Naturally, Moscow occupies a special place and it has many more opportunities than others do. We have the leading companies here. All this is clear but we have competencies, so we can do it.

We must use our entire technological and intellectual potential to implement this complicated umbrella project. It is unprecedented in terms of scale and hence its influence on the life of the country and of every Russian citizen. It has been already compared to the breakthrough projects that helped Russia strengthen its positions in the world in different periods throughout its history, such as the construction of railways in the late 19th century or electrification in the first half of the 20th century. Our top priority now is to create a mechanism for implementing this project.

I will tell you briefly about some elements that I consider being of crucial significance.

Council for Strategic Development and Priority Projects meeting.
Council for Strategic Development and Priority Projects meeting.
Firstly, I outlined the main areas of developing the digital economy in Russia when I spoke at the St Petersburg International Economic Forum. These main areas are the lifting of legal obstacles that hinder the introduction of novel technologies; the creation of a core development infrastructure, such as communication lines and data storage and processing centers; a thorough improvement of the education system, including through total digital literacy; and the creation of a mechanism for supporting Russian companies that are regarded as competence centers in the sphere of digital and other breakthrough technologies.

I believe that we should appoint special people in charge of these areas and determine the target figures and timeframes for achieving them.

Secondly, the digital economy project is a comprehensive project that covers all spheres of life without exception, has a direct impact on the operation of our companies and concerns all Russian citizens. Therefore, we need to create an effective governance system that would correspond to the complexity of goals and would allow us to rally the efforts of all levels of power, businesses and research and academic institutions.

Thirdly, the federal and regional authorities will invest nearly 200 billion rubles in information technologies this year alone. I expect your proposals on enhancing the effectiveness of these investments. Overall, as I have said, we must determine the sources, mechanisms and volumes of allocations for the digital economy project.

Let us proceed to the subject of our discussion.

Our next speaker is Mr. Nikiforov, Minister of Communications and Mass Media.

Minister of Communications and Mass Media Nikolai Nikiforov:

Mr. President, colleagues,

In conjunction with the Presidential Executive Office, on your instructions, the Government has developed the Digital Economy program. What does this mean? A digital economy is an economy where data constitute an independent economic unit.

Rephrased, a digital economy is a data economy. The digital economy is about how we create, transmit, collect, store, protect, and, most importantly, analyze data and how, based on this data, we make decisions that make our economy and management more efficient, and, therefore, improve the quality of life.

What are the existing trends? Over the past five to ten years, we have been experiencing an actual revolution in technology and telecommunications. Tens of millions of Russians have got used to the daily and even hourly use of mobile internet, mobile devices, and online payment so quickly that they do not even realize that they are surrounded by dozens of various automatic sensors that collect and transmit information.

All this is happening so quickly that we even forget that 10 short years ago there was no such thing as smartphone, which people currently use to go online. Five years ago, there was no such thing as mobile high-speed internet access technology, which we refer to as 4G, or LTE. These processes are speeding up, and the technical digital race is gaining momentum.

What do we need to succeed? For such a large-scale undertaking with digital data, which will permeate all spheres of life and all business processes, we need modern cross-cutting technologies, when a digital technology is developed once and then can be re-used in a wide range of industries.

In addition to conventional technologies, such as wireless communication, mobile devices, and microelectronics, these are fundamentally new entities, including technology for handling big data, the distributed registries also known as block chain, machine learning, virtual and augmented reality, artificial intelligence, and quantum technologies, to name a few.

The digital economy is not about the share of people connected to the internet, but about how traditional areas of the economy have changed under the influence of digital transformation, how different they have become. These changes are taking place in all countries without exception and in all sectors, be it transport, finance, healthcare, trade or government administration.

All these sectors are experiencing enormous pressure under the impact of digital changes. If we want our economy to be strong and competitive, and there is no other way, we can only achieve this by leading the digital transformation, among other things.

The focus of the Digital Economy program is to create a critical set of conditions for launching these processes and ensuring their accelerated development.

We can single out a kind of basic foundation that consists of five components. The first one is infrastructure, as you mentioned Mr. Putin. Then there is the regulatory base, the technological groundwork, workforce capacity and information security.

Naturally, we will have to create fundamentally new regulatory documents to support the digital transformation. We need an environment where, far from impeding, we are facilitating and speeding up digital transformation processes to turn Russia into a jurisdiction that is appealing to engineers of promising digital technologies, who would dream of developing and testing it here in Russia and offering these solutions for export later on.

We are continuously talking about the most diverse examples, such as electronic sick leave certificates and electronic work record books. We need regulation so that, when carrying out major repairs, we would equip our buildings with sensors from the very start to collect information about the use of utility services.

State Duma Speaker Vyacheslav Volodin established a special council on developing the digital economy and we are convinced that in cooperation with deputies we can do what is required.

Obviously, digital infrastructure is crucial for interconnecting our country’s vast territory and for data collection and storage. It is what makes it possible for us to ship this new economic entity. We have been actively developing this infrastructure for several years, building fiber optic communication lines to small towns and achieving results in areas that, it seemed, would never have modern communication facilities, bringing fiber optic lines to Magadan, Kamchatka and Yakutia, and now we are about to reach Norilsk. I believe these projects are real communication breakthroughs because not a single country in the world has to build communication lines under such difficult conditions.

Vladimir Putin at the Council for Strategic Development and Priority Projects meeting.
Vladimir Putin at the Council for Strategic Development and Priority Projects meeting.
At the same time, we have the second lowest rates in the world for mobile internet and cellular communication services. This is according to the World Economic Forum. And we are tenth in the world in terms of prices for landline internet access. Considering the level of our spending, I believe this is a very good result, which also demonstrates the level of competition in this sector.

Infrastructure and technology groundwork are of paramount importance. What is technology groundwork? This is teams and companies that create and develop those cross cutting technologies. There are quite a few of them in Russia and we are proud of them. Our programmers really achieve leading positions in various international competitions.

IT exports are growing. They have already reached a threshold of $7 billion. You have set the goal of raising IT exports to the export level in such sectors as the defense industry or agriculture. This is what we aim for, and we are confident that the development of regulations and conditions for the development of the digital economy will help us achieve this goal.

The most important thing, of course, is human capital because the digital economy can develop successfully only when people have essential knowledge and experience. This is competence in the broad sense of the word. This is not only about software developers but involves a review of the entire approach toward highly skilled specialists in many fields.

As for programmers, today we have about 500,000. We believe that the required technology groundwork can be ensured if we increase their number and set the target at 1 million people employed in the IT sector.

The next layer includes the so-called digital platforms, the operators of such platforms, and cross-cutting digital technologies. We have quite a few such companies. They include completely privately owned companies and companies with state interest. We all know Yandex, and we are also aware of what the Russian Post, Rostelecom, and Sberbank are doing.

The key point is that we need Russian cross-cutting digital technologies and Russian digital platforms. We need our own companies, our national champions.

For many years, we have traditionally supported a wide range of traditional sectors, such as agriculture, various industries, the aviation industry, and the automotive industry. Now, the moment has come when we really need to support this area of activity.

At the top level, this is already a matter of specific markets, companies, products, and business models, which in different industries are beginning to work in a new way. Our goal is to create proper conditions for these industries to operate effectively based on the use of data.

The goal is to develop a kind of ecosystem in which, on the one hand, major companies, operators of these digital platforms, can work. On the other hand, there may be a small startup business, which will look for new ideas and test them, and niche companies that can operate in different sectors of the economy.

We can ensure the global competitiveness of the national economy, and achieve leadership positions in some areas. However, to do so, we need our partners to consolidate, including at the international level.

The high-tech ministers of the BRICS countries will meet for the third time in late July. Let me remind you that the first such meeting was held in Moscow, when Russia acted as chair.

Our goal is to create a competitive global information technology market. I stress the word “competitive,” because we can see attempts to monopolize it. Together with our international colleagues, we will defend the position of fair market competition.

International experience is very important. We studied and were guided by the experience of similar programs in many countries. We developed the program with a large team consisting of over 150 people. We had many meetings with officials from the Government, the Prime Minister, and Deputy Prime Ministers and had consultations with the Presidential Executive Office. We believe that we have also managed to maintain meaningful dialogue with the IT industry itself.

We extensively discussed the program with representatives of IT companies and adjusted it based on their proposals in many respects. What instruments do we suggest for continuing to implement it and achieving specific results? We believe it should be primarily applied in healthcare, government administration and the smart city concept.

Why have we chosen these areas? Because the state is playing the biggest role in them and their social significance is very high. However, the program is not at all limited to these areas. Naturally, changes will be taking place in all other industries as well, and gradually we will expand the range of specific industries where priority projects will be implemented.

The Digital Economy program is not an operational document. It states our goals for 2024, towards which we should start moving rapidly without delay. And we will start moving towards them following an operational document, the so-called adjustable three-year plan. We believe this plan should be endorsed by the Government and adjusted every year. The plan determines our goals, tasks and specific milestones, including sources of funding. We have a list of goals, tasks and deadlines for every area.

We will need an entirely new model for managing, implementing and providing financial support for the program. In our estimate, annual expenses within the operational plan that we are to draft and endorse will be around 100 billion rubles.

I would like to emphasize that a considerable part of these funds have already been allocated in the federal budget, but we will have to consolidate them and determine a uniform technical policy and uniform rules of the game.

Russian Government is drafting such proposals. Additional budgetary funds will be required to accomplish this.

Mr. President, colleagues, I would like you to approve the Digital Economy program in general, instruct the Government to approve it and to start developing a specific implementation plan for the next three years.

Vladimir Putin:

Good, thank you. We will do so at the end of our discussion.

Now, I would like to ask the Minister of Industry and Trade, Mr. Manturov, to say a few words on this subject matter.

Minister of Industry and Trade Denis Manturov:

Mr. President, colleagues,

According to our estimates, a system-wide transition to a digital development model can boost labor productivity in manufacturing industries by over 30 percent by 2024 and increase the contribution to the GDP of the sectors based on advanced manufacturing technologies to 15 percent.

The principles of digitalization are already being used in our country in high-tech projects. The MS-21 aircraft, the PD-14 engine, the head icebreaker Arktika, the vehicles based on a single modular platform, and a number of other projects are being implemented using digital design and digital modelling technologies.

To be able to scale such projects to a wide range of industries, Russia has come up with its own ideas in three key areas. The first and most important is the development of modern equipment, materials and supplies. Our enterprises are already making sophisticated machining centers with Russian-made CNC, as well as equipment and raw materials for additive processes. Today, domestic serial manufacturers of 3D printers, primarily for prototyping, are present on the market. However, we are still at the initial stage in terms of developing industrial-scale additive equipment and industrial robots.

The development of the optoelectronic industry is of paramount importance for making digitalization materials. Specialized clusters and engineering photonics centers have been created in Saransk, Perm, Zelenograd and Novosibirsk, in order to combine the capabilities of Russian enterprises.

The development of sophisticated software is the second area where we enjoy strong starting positions for digitalization. In this segment, I would like to note the multifunctional package Logos created by Rosatom in Sarov, which includes engineering analysis and supercomputer modelling.

The third area includes the development of intelligent management systems. In this area, our competence in the sphere of cybersecurity gives us a key competitive edge. The Kaspersky Lab and the Russian company InfoWatch are already implementing information protection projects in the transport and energy infrastructure facilities, and can promptly adapt these solutions to industry digitalization goals.

To stimulate the active application of these solutions in production processes, we believe it is essential to modify the existing incentives. We are working to readjust the mechanism of subsidizing the production of pilot batches of equipment by shifting the focus to digitization. There are also plans to review the list of software products, the procurement of which is subsidized today by the Ministry of Industry and Trade.

Today, this support measure is applied to engineering software. We believe it is advisable, firstly, to extend it to software products that are essential for implementing industrial internet technology, that is to say, production management systems, and second, to include large companies in the high-tech segment among those entitled to discounts.

Since this applies mostly to new technological solutions, it is extremely important to streamline the regulatory basis and standards for emerging markets. To this end, we are already implementing a separate program to develop inter-sectorial standards in areas such as cyber-physical systems, mathematical modelling, the “internet of things” industry, “smart production” and “smart cities.”

Putting in place a technological and regulatory basis will make it possible to move full steam ahead toward creating a network of factories of the future in the country. Rostec plans to put the first such factory into operation before the end of this year. As part this project, ODK Saturn is building a test site to fine-tune technology that can be used, in particular, in manufacturing complex aircraft components.

In all, by 2035, about 40 factories of the future, 25 test sites and 15 experimental digital certification centers should be created in Russia. To ensure the effective fulfillment of this task, in formulating a detailed plan for the implementation of the Digital Economy program, we will spell out all the activities in the industrial sector, synchronizing them with the areas that are overseen by our colleagues at other agencies.

Thank you.

Vladimir Putin:

Mr. Sobyanin.

Moscow Mayor Sergei Sobyanin:

Mr. President, colleagues,

For Moscow, smart city technology is no new phenomenon. It is required for running the city. The city economy directly employs about 600,000 people. It has thousands of offices, one of the world’s largest systems of water, heating and gas supplies, transportation, healthcare, education and social protection. Today it is impossible to take care of the needs and problems of 12 million people without introducing information technologies.

There are several key areas in which we are working together with the Government of the Russian Federation, industry-specific ministries and departments, in particular, the provision of e-services to the population. Today six million Muscovites, or practically every Moscow family, are registered on our government services website.

Every year we receive over 200 million inquiries, or about 50–60 inquiries per family. We have a reliable identification system that does not require a cumbersome and complicated procedure for getting e-signatures. As a result, people save two or three working days when receiving relevant services. For instance, Muscovites can receive allowances for children without an e-signature and without applying at an integrated government service center in person. In 2016 alone, we received 119,000 e-applications and paid out over three billion rubles for the birth of a child, additional allowances to young families and so on.

We have a similar system for granting e-services to businesses. The main services in transport, construction, land and property relations – in all 74 services for businesses – have been transferred to e-format and are being used by thousands of large, medium and small companies. Without leaving the office, one can get a taxi license, conclude, execute or reregister a contract for renting a plot of land, submit design documents for expert assessment, receive a construction permit or a permit for the entry of a lorry into the city center and so on.

Direct contact with city residents is perhaps one of the key areas in implementing the Smart City program to actively engage with millions of people in traditional formats. They are essential but not sufficient. It is impossible to resolve many issues without information technology.

The Our City portal accumulates all complaints from the public on 187 matters – from outpatient hospitals to transport to potholes to trash collection and so on and so forth. In other words, 90 percent of all the issues that people encounter can be resolved through this portal. It has 1 million registered users.

In recent years, we have resolved about 2 million issues. It takes on average four days to resolve a matter. Needless to say, this is a far more effective system than customary complaints on paper that go from one agency to another: They are not structured and people get pro forma replies.

Here, getting a reply does not involve getting the runaround. A person takes a picture of whatever he is reporting and sends the photo via the internet. Importantly, it is an open system. The city as a whole can watch a complaint being processed and evaluate the response. If the response is off the mark, a person can always say so online and state what the actual situation is, posting a photo to confirm that. Therefore, this is also about public oversight over the work of city services. We believe that the 1 million users are 1 million real assistants in the city who help us set things straight and deal with particular matters.

In addition, there is the Active Citizen system involving about 2 million Muscovites. It has helped make 1,500 decisions. Active Citizen and crowdsourcing help deal with everyday matters – from trash disposal to the illegal installation of a summer café. Muscovites participate in running the city, put forward proposals concerning the provision of amenities in courtyards, planting trees and school holiday terms, and are involved in large city projects, in particular deciding on participation or nonparticipation in the housing relocation program, formulate standards for city services, including outpatient clinics, schools, integrated government service centers and so on.

Regarding city management, this is of course an opportunity to get right to the bottom of citizens’ complaints and respond to them not formally but with regard to each block, residential building and district, conduct personalized online voting, make managerial decisions in the interests of the majority of Muscovites and avoid mistakes.

Education is one of a smart city’s key features, as our colleagues have mentioned. A number of solutions have already been implemented in Moscow. Many of these solutions have been implemented in other cities and regions. We provide all-round assistance to them, and learn from them as well.

We have created a registration system for kindergartens, schools and various activity groups to preclude any corruption schemes that existed previously. Getting into schools or kindergartens was a huge problem with long waiting lists. Today, there is nothing of the kind.

A single electronic report card has been created, which is used by almost all students and parents. Of course, this is not good news for the students, because they can no longer hide their bad marks or other issues, but it allows their parents to monitor their performance.

A unified system of access control and catering has been created, so parents know exactly when their child has entered the school building, what he or she had for lunch, etc. Of course, it represents a personalized accounting system for the city, which allows us to save about 5 billion rubles a year, since we have eliminated duplicating processes, misrepresentations, and other negative things.

Currently, we are planning the next stage of education computerization where we will introduce new information technology and a new resource base. However, most importantly, we are busy creating a uniform educational environment in conjunction with the Ministry of Education, so that each teacher can have access to an electronic lesson plan with teaching aids and the best options for conducting a class. A single information base and high quality content must be put in place as well.

This is the critical area. We are lagging behind our colleagues, I mean the best foreign practices, in a major way. We are monitoring this situation. I hope that we will remove these inefficiencies within a year or two, at most three, and that the education process at our schools will be more exciting and more effective.

Naturally, healthcare is a major area for municipal information systems. At one time, in cooperation with the Ministry of Healthcare we established a unique uniform medical information system. At any rate, we have not seen anything similar in other metropolitan areas.

A program of this scale allows people to register for an appointment with a doctor, and monitors patients’ visits to an outpatient clinic and even the time they spend there. This allowed us to drastically reduce the time for making appointments with doctors and waiting for them. Today only 10 percent of patients wait for an appointment for over 20 minutes. Before they had to wait much longer than that.

Of course, it is very important for directors of clinics and the city to manage labor resources and flows of patients, analyze the real situation and prevent false reporting that, regrettably, was very common in the past for various reasons.

Today in cooperation with the Ministry of Healthcare and the Ministry of Communications and Mass Media, we are carrying out our next project, the introduction of medical e-cards, and this is not some flight of fancy. We have already introduced three million such cards and I believe we will complete this work in the next year or two.

The introduction of centralized laboratory services will give a doctor special access to laboratory tests and there will be no need to collect any documents or results of tests. It should also be a centralized and closed system but accessible to specialists.

The same applies to sophisticated tests, such as x-ray, MRI, CT imaging and the like, and the creation of an information and methodological base that is being actively developed today. As a result, a significant amount of information will be collected on patients and methodological support provided for doctors to help them make a diagnosis and prescribe the necessary treatment.

There are also many issues linked with sick leave e-certificates, e-prescriptions and the like. In other words, there is an enormous amount of work that we should certainly conduct with our colleagues from federal ministries, which is what we are doing.

The next system is quite serious and, in our opinion, it is one of the best in the world. It is the intelligent transport system. It was put in place over the past three to four years, borrowing on the world’s best achievements. It includes traffic management, traffic oversight, photo and video recording of traffic violations and oversight over the operation of the public transit system.

As a result, the number of traffic accidents has almost halved and average traffic speed has increased by 13 percent with the number of vehicles growing exponentially. Of course, the situation on Moscow roads these days is rather difficult because of the street renovation program, but I believe it will get back to normal within the next four to six weeks.

At present, a metro security system is being actively introduced in collaboration with the Transport Ministry and federal agencies and I believe it will be finalized within the next several years. Another priority for us is the utilities management system, the Glonass system, data collection technology and so on.

What would I like to ask and propose for inclusion in the draft resolution? In our view, we need to finalize what the Minister said – IT education standards not only in the system of higher education but also in secondary schools. Unfortunately, they leave much to be desired and it is important to get IT companies, domestic developers involved in this process.

Education software and methodology as such should of course be different; it should keep pace with the requirements formulated today by the digital economy development program.
There is another thing that I believe is important. We digitize particular services, but at the same time, the law requires that a document may also be submitted in paper format. If an official has the opportunity to accept a paper document, then all the advantages of IT, of obligatory online services are eliminated.

Oversight and technology transparency deteriorate and so on. Therefore, it is essential to make online services mandatory, without the option of paperwork, at least at the regional level. If a person has no such opportunity, there are always integrated government service centers and other facilities, but without this it is very difficult to move forward, and it will simply impede the dissemination of online services.

Vladimir Putin:

Thank you very much.

Mr. Peskov, the Agency for Strategic Initiatives, please.

Director of the Young Professionals direction at the Agency for Strategic Initiatives Dmitry Peskov:

Mr. President, colleagues,

I would like to say a few words about the ideology of the program, some issues it raises and the gaps we encounter. Of course, the program as such is definitely not a digital state plan. It does not lay claim to being all-inclusive or comprehensive.

Perhaps it is not a very good idea to develop such a digital state plan and hope that we will create a modern digital economy in Russia with a series of projects. The pace of change is so high that it is possible to create the environment and essential prerequisites, but we should not think that we are the smartest and know precisely what the future will be like or what exactly we will create.

In this sense, the program is a foundation. To use an analogy, it is an industrial site on a designated land plot with key technologies, roads in the form of broadband internet services, power supply in the form of the computing capacities of data processing centers and a fence in the form of an information security system.

However, it is up to a person, an entrepreneur, not the state, to decide exactly what will be built on this site, because, to reiterate, everything changes too rapidly. Business does this better not because it is smarter but because it is quicker. Needless to say, we should do our best to keep pace with the competition.

We have a very ambitious program. It is much smaller than what we actually need to do but it is larger than what we can do today. This gap is precisely what the program is directed at. In other words, we will not become a world leader by implementing this program but it will give us our ticket to the first league over these years.

We are facing two critical factors – normative regulations and human resources. Our risk in the former is very simple. The current regulatory system naturally prohibits us from doing everything we are planning to do in the digital economy.

This is a natural function of this regulatory system, but we must establish a ban on the word “ban” with the exception of the Criminal Code, of course.

We must have options: “This is allowed but let’s try it in a sand box,” or “let’s try it out with some restrictions.” We must build such a system by all means or else people are going to be very skillfully avoiding regulation in the digital economy.

If we try to excessively regulate, we will create an advanced nation of crypto-anarchists. They will successfully compete with our bodies in bypassing relevant norms. We will, of course, meet our goal of universal digital literacy but probably this will not be exactly the literacy we need.

People are a key restriction on the program. We see that we need at least three levels of decisions in this context. Universal digital literacy should be at school level and the program sets very ambitious tasks.

To begin with, it is necessary to introduce digital norms. Those who master them will have advantages in entering universities.

It is necessary to separately regulate a modernized technology class. The world’s best practices should be incorporated right into this class.

There is also a proposal to count the results on informatics as part of the Uniform State Exam, but these are minimal measures.

We understand that we do not need a million computer experts for a breakthrough but, according to our estimates, we need 120,000 highly qualified engineers because if we retrain everyone and they are not very literate, we will fall into the same trap as our Indian colleagues.

For ten years, they invested huge funds into large-scale training of low-level engineers and programmers, and now during a new wave of the technological revolution they are easily replaced by artificial intelligence in data and voice processing centers and in many other services.

We must not miss this wave of artificial intelligence under any circumstances. Of course, it will also do some unpleasant things. It will throw a certain number of people onto the labor market and we should be prepared for that, so the program envisions the creation of a system of digital vouchers to obtain the required skills through online education systems, which are essential for the digital economy. It seems that these three steps can address some personnel training tasks.

Naturally, we will come up against an ethical barrier. This barrier is very serious because society will quite often not be prepared to use or accept the results of these technologies. In public perception today, a robot at the steering wheel, at the helm or with a scalpel is something very dangerous.

In 20 years, we will arrive at the opposite, with people saying that a human being at the wheel, at the helm or with a scalpel is dangerous and even criminal because this can lead to heavy loss of life due to the large number of mistakes.

Even with respect to healthcare, the program envisions that we will farm out some decisions, for example in diagnostics, to artificial intelligence and automated systems.

Naturally, it is important for us not only to digitize the old, not only to digitize government services and administration – we also need to make money from that. In this respect, we are synchronizing the Digital Economy program with the National Technological Initiative (NTI). In other words, NTI markets should use the infrastructure that is being created in the digital economy, fuelling its progress, as it were.

Therefore, to reiterate, there should be not only centers of loss but also centers of profit. Of course, for this entire system to move forward, we need an innovative administration system because there are no examples in the world of ministries creating advanced digital economy systems.

What is more, there are no examples of such systems being created by public companies alone. In all cases, this is the role of small companies, of startups. We know that our competitors are launching similar programs; we know about start-up nation and other things.

It is important to create a center of competence within the administration system where the voice of business will carry as much weight as the voice of the state. We did this several years ago within the framework of the National Entrepreneurial Initiative and as you know, we advanced more rapidly than all of our competitors. Even our colleagues were asking, “What is your magic?” It seems to me that this magic, this magic wand should not be broken and we should preserve the mechanism of getting the business community involved in this decision-making process. Then we have a chance. To reiterate, we will not become a world leader but will get our ticket to the first league.

Vladimir Putin:

Thank you.

Colleagues, who would like to say something? Mr. Shmakov please.

Federation of Independent Trade Unions Chairman Mikhail Shmakov:

Thank you, Mr. President.

Mr. Nikiforov has presented a very interesting and substantive report to this meeting and indeed, we should agree with its main conclusions. The ambitious goals that it sets are realistic and indeed have special importance for our country as all these things are moving forward very quickly in the world.

I would like to briefly draw your attention to certain goals that are highlighted in the materials in our possession. Personnel and education: introducing a set of regulations for labor relations with flexible remote employment.

Needless to say, this is a very important issue and goal, but I believe one word should be added here: a set of regulations for labor and social relations with flexible remote employment. Because today it is the most pressing and undeveloped issue, which is being approached but has not been resolved in any country yet, and it is looming large in our country as well.

Mr. Peskov just said that it is important to address ethical and philosophical issues related to the digital economy, and it is one of these ethical, philosophical issues.

In the economy in which we live today and in which we have lived for decades or perhaps even centuries, we define a job as something that generates, first, a product, and second, wages, personal income tax and contributions to social funds. With flexible remote employment, prerequisites for the smooth operation of this paradigm disappear. Indeed, other tasks should be addressed here and everything should be built differently. We recently had a discussion: Should a robot pay income tax? This is a joke of course, but as a matter of fact, it aptly sums up the issue: a workplace is occupied, a product is manufactured, but there are no taxes and no contributions to social funds.

This is not to say that robots should not be used but it is essential to change the entire system, including the social security system, because a remote employee does not have sick leave or a pension since he does not make corresponding deductions and so on.

This is why a number of countries are experimenting with introducing a basic unconditional income, when a person receives a monthly payment (not a minimum wage) from society, from the state. This kind of payment of course does not make him rich but he does not have permanent employment, but rather some odd jobs or remote employment. In other words, we are already facing this issue. Therefore, I would propose adding this to Item 2.9 because we need to address these matters now.

Vladimir Putin:

Thank you. Go ahead, please.

President of the All-Russia Public Organization Business Russia Alexei Repik:

Mr. President, I would like to comment on the statements made by the previous speakers.

The trouble is that our efforts to use modern digital technologies to enhance the quality of the existing services, including government services, is extremely important.

It is important primarily because it is attracting an increasing number of new users, our citizens, into the digital economy. Without attracting people, as Mr. Sobyanin has said, we will certainly lag behind as consumers, which will lower the demand for business.

At the same time, we understand that this is not creating a digital but a digitalized economy. A truly digital economy is an economy of platforms, which can answer the question that has been raised here by the head of our trade union movement.

A platform is a system of relations between the consumers (citizens) who must receive quality services at fixed prices, those who offer these services at a price, and the state and society, which receive tax and social payments.

This is of fundamental significance, because it would help businesses get out of the shadows and would create a normal transparent system without any imbalances in competition.

At the same time, the opinion and positions of businesses must be more than simply taken into account in the regulation of these platforms, as Mr. Peskov has said. By the way, the expert and business communities played a major role in preparing the current draft of this program. Take the principle of dual approval, which was stipulated in the National Business Initiative at the proposal of Business Russia. It not only helped test whether the proposed regulations suited the business community or not, but also supervised their application. This is why we achieved such good results.

Of course, we must not forget about the role of the state in maintaining confidentiality and training personnel, which is of primary importance for creating and maintaining the necessary infrastructure, because the demand for it is growing exponentially. For example, we need a billion of billions (quintillion) bytes to store the sequenced genomes of one million people. This equals tens of zettabytes, the term which we tried to recall before this meeting. To sequence all genomes, we need exabytes of data. In other words, we are living at a completely new stage marked by demand for infrastructure without the government. But business cannot satisfy this demand.

If we keep working together under the same formula of success, including work on developing regulations, and also considering the possibility of pilot implementation at our best facilities (for example, medical initiatives can be implemented at the Moscow medical cluster, and other projects at the facilities that have the equipment for pilot implementation), I am sure that if we do this we will avoid digital anarchy and a situation where consumers will prefer foreign products to Russian ones. We have grounds to believe that our products will be comparable, if not better than foreign ones.

Vladimir Putin:

Thank you. Go ahead, please.

Rostelecom President Mikhail Oseyevsky:

Mr. President, colleagues,

Rostelecom contributed very actively to drafting this program. The work involved dozens of experts. Our main task, as we see it, is to improve the basic infrastructure. Since we have entered the stage of debates today, I will say that I do not think this is a job for the Government. In our opinion, business and such companies as Rostelecom are able to meet the demand for such infrastructure in all economic sectors. We plan to invest up to 130 billion rubles in the next five years to improve data transmission systems and data processing and storage centers.

This will increase our throughput capacity across the country by 40 percent, will help us develop global corridors, such as the Europe-Asia transit corridor, and also improve traffic exchange with our European and Asian partners and create the country’s largest network of data processing centers.

Next year, we will join forces with Rosatom to open Europe’s largest data processing and storage center near the Kalinin Nuclear Power Plant. It will have the capacity to meet the requirements of the majority of federal executive agencies. We have the required potential.

Of course, we must create a new infrastructure – digital platforms – in addition to the existing basic infrastructure, as my colleagues have said here. We are working on a number of such platforms. I believe the industrial internet platform should be the top priority.

We are focused on four basic sectors where these technologies and software will be used: oil and gas production, energy, machine building and agriculture. It may sound surprising but agriculture is a major consumer of these technologies.

Our third priority is to ensure cyber stability of both the infrastructure and the digital economy institutions. Our cyber security center, which operates around the clock, has repelled over 2,000 cyberattacks over the past three months. Therefore, we are considering major investment in the development of technologies and capacities, as we see major interest in such services on the part of our clients, which include both companies and individuals.

Overall, the digital economy program is a strategic document for Rostelecom. We will use it as the basis for preparing a new mid-term corporate development strategy.

Vladimir Putin:

Thank you.

Mr. Gref, please.

Chairman of the Management Board and CEO of Sberbank German Gref:

Mr. President, colleagues,

I believe this is indeed a very important discussion and your speech at the St. Petersburg Forum set a very important trend in the economy as many companies immediately addressed their digital strategies.

Today’s meeting is, in my opinion, a very good indicator itself. I would like to thank the organizers for getting all of us involved. Of course, the document still requires some significant improvements. However, it is very important that the key points have been outlined.

I would like to say a few words and make seven points that are key today. Two of them are technology-related and do not require a high degree of involvement on the part of the state. These two main types of technology today are artificial intelligence and block chain. Artificial intelligence is the latest trend that will affect every industry, as you said in your opening remarks, the social sphere, public services and all kinds of businesses.

What is our current challenge? It is a massive shortage in human resources. This deficit is a big issue right now. We could set a task for major universities. They are currently expanding their capacities, but we monitor students and support them starting from the third year on in order to fully prepare them for a career with us.

Of course, both the country’s and companies’ positions require a significant improvement in artificial intelligence. It is a good thing there are companies like Yandex. Yandex invested a lot of money, including in computer science university programs. Actually, their experts assisted us with establishing our competencies. Today artificial intelligence is becoming a prevailing trend for everybody.

The second technology is block chain. I do not think we need any help here either, except for one aspect. It is necessary to include relevant training in the programs of major universities. This is perhaps the only request from us at this point. We can deal with technology development but what we do need is better workforce and perhaps careful regulation. Most importantly, we do not want any prohibitions.

We said that we would ban virtual currency. I would like to say that a huge amount of the flow generated by the data mining centers and technological startups immediately moved abroad. We should be very cautious when regulating this area, but some regulation will certainly be needed, because it is an explosive technology.

There are two things related to what is known as “hard”, rather than intellectual exercises. One is quantum computing. I do not see how private businesses can cope with this on their own. What we have in hand here is still inadequate and some serious help from the state will be needed, possibly in the form of private-public partnership.

The quantum center is likely to be addressing this. However, honestly speaking, it pursues just a few lines of research, focused primarily on quantum cyber protection. We need our own R&D on the quantum computer.

Once quantum computing is on the market, there will be a huge gap between those who own it and those who do not. We should certainly nationalize this technology. Let me repeat it once again: we do not see how private businesses will cope with this.

Robotics technology is the fourth powerful trend that is developing in all industries. There are many lines of research in robotics technology and the state will need to allocate resources. How is this developing elsewhere? This is being done by joint ventures created by leading R&D centers, universities and specialized companies.

We have actively studied the market during the past year or so and we have a robotics laboratory. However, I would like to say that we are, of course, far behind others in this regard. In this area, we would like to have a joint program with the state.

Item five is cybersecurity. I absolutely agree – and we in the business community are beginning to pool our efforts – that this is emerging as a very grave issue, a very grave threat. Not a single company can protect itself on its own.

There should be joint efforts by all state agencies and major companies, which can eventually establish effective information exchanges and provide an umbrella for the entire economy. We cannot do without that. There is a need for a very active state policy in this area.

Item six – I agree with Dmitry Peskov – is about schools. The world is rethinking the education concept. We must, of course, support this debate as much as we can. It is too late to catch up with the situation at universities; it is the schools that are creating it and changing the model radically.

I believe that this offers room for cooperation between companies and the state or municipalities. A number of such projects are underway in Moscow with active support from Mr. Sobyanin. Moscow can be used as the starting ground and a testing range, but we must do the same around the country as well.

And my last issue concerns government services and managing models. Mr. Nikiforov spoke about managing models, and Mr. Peskov did so as well. We cannot create a digital economy on the basis of the old system of management. Therefore, we must change it.

We know how to do this and how to apply the new model. I believe that the implementation of this program should start with the system of management. This would give a powerful boost to our country’s development.

If we do this, we will be able to surge very far ahead. I believe that we have a wonderful opportunity to achieve this goal. I am very optimistic on this score, though I do not like being overly optimistic.

Now for government services. We have long been working with the Government on this. Indeed, we have the experience of combining the opportunities of business and government agencies and the regions. The Tax Service, the Federal Treasury, the Federal Service for State Registration, Cadaster and Cartography and the Pension Fund are making great strides. The Government is involved as well – thank you for your support, yet I believe that we will not succeed in digitalizing government services if we only use traditional methods.

The online portals we have created are only the tip of the iceberg, because services are still provided manually. We need assistance from business to redesign these processes. I believe that this is also very important, as we can see.

And lastly, about the gaps my colleagues have mentioned. One of the biggest gaps is that digital companies will only survive as global corporations. Of course, we have fewer markets than China, and so this very serious gap concerns the organization of the Russian market to make it competitive. Regrettably, there are serious obstacles to our development on the global market. What can we do to take advantage of all the opportunities and remain competitive on the global market? I regard this as the biggest issue today. We must consider it and all the possible solutions very seriously before taking a decision.

I would like to thank my colleagues again for raising this critically important issue and you, Mr. President, for moving it to the forefront of state policy.

Vladimir Putin:

Thank you.

We have discussed this issue before. I do not think there are such people in this audience, but generally, some of our other colleagues and citizens could ask why we need to do this when we have oil, gas, coal and all kinds of metals – ferrous, non-ferrous, gold, platinum, diamonds and much more. Indeed, our technological development is moving ahead rather well, and we have a solid intellectual basis. But we need a breakthrough, and we must ensure it.

One of my Arab colleagues, a former petroleum minister, once said that the Stone Age ended not because humanity ran out of stones, but because it invented new technologies. Yes, new technologies are invented all the time. Those who lag behind in this competition will immediately or very quickly – I want to stress this – become dependent on the countries that are leading this process.

Russia must not let this happen. The main thing is that we have the chance and the opportunity to use the factors I mentioned above, and we must use these factors in full measure to ensure this breakthrough and this leap into the future.

I suggest that we amend the proposed Government plan, taking into account what our colleagues have said today, adopt it and start working hard to implement it.
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Vladimir Putin chaired a meeting of the Presidential Council for Strategic Development and Priority Projects at the Novo-Ogaryovo residence...

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