Innovative development of Russian economy construction sector Mikhail

Innovative development of Russian economy: construction sector Mikhail KAYKOV President Railway Constructors Union Vienna, 16/03/2012 1

Innovative economy and standardization Innovative economy (knowledge economy, intellectual economy) — type of economy, based on the flow of innovation, constant improvement of technology, manufacturing and export of high technology products. BUSINESS 1. Investments INFORMATION EXCHANGE 4. Getting quality improvement or new product 2. development 3. Implementation process STA NDA STA RD NDA RD STADARDIZATION: - The engine for implementation and innovation development - Provides the development of innovative - Element in ensuring global projects management - Tool to reduce costs etc. 2

Technological levels Russian and Europe: level of economic development First level New technologies in textile industry, the use of water power Second level Rapid development of transport (railways, steam shipping), the occurrence of mechanical production in all sectors on the basis of steam engine Russia legs behind developed regions in 2 technological levels Third level Use electricity in industrial production, the development of heavy engineering and electrical industry through the use of rolled steel, new discoveries in chemistry. Implemented radio, telegraph, cars FOURTH LEVEL Energy development with the use petroleum and petroleum products, gas, communications, new synthetic materials. The era of mass production of cars, tractors, airplanes, various types of weapons and goods. Computers and software, radar FIFTH LEVEL Achievements in microelectronics, computer science, biotechnology, genetic engineering, new types of energy, materials, space exploration, satellite communication etc. SIXTH LEVEL (2015 -2020) Biotechnology, nanotechnology, investing in people, new level of education system, new environmental management (high environmental technology), robotics, artificial intelligence, flexible systems of “unmanned” manufacturing, laser technology… smart electricity network … new types of transport (heavy, speed, range, low cost), the combined transport systems, production of construction materials with predetermined properties, manor urbanization “tissue” type, design and management of the future, the use of hydrogen as a clean energy source 3 The Framework Programmes for Research and Technological Development(FP 1… FP 8)

European technological platforms - Political objectives of ETP Development and implementation of key technologies to respond economic and social challenges - Elaboration of all. European approach and strategic plan for development and realization of these technologies Enlargement of private investments in research by bringing research to industry к and improvement of markets for innovative production 4 BASIC STAKEHOLDERS of ETP

European construction technology platform (ECTP) Within the 7 th. Framework Program PRINCIPAL MISSION: - To improve competitiveness of the construction sector - To satisfy social needs and ecological challenges over 230 organizations 5 Cultural heritage Processes, information& communication technologies Networks Materials 26 Domestic Technical Platforms Underground construction Quality of life Cities and buildings 7 principal directions Construction R&D Innovation Roadmap for a positive living environment for Society

ECTP ambition To develop Innovative Buildings and Infrastructures to construct Europe’s future To innovate by research and integration of inputs from other sectors through appropriate tools (such as PPPs) in FP 8 (2014 -2020, budget plan 80 billion euro) INITIATIVES OF ЕСТР 1. E 2 B «Energy Efficient Buildings» 6 2. re. FINE «Future Infrastructures in Europe»

Е 2 В «Energy Efficient Buildings» Ø A major world-wide challenge Ø Buildings = major potential for energy/carbon savings Ø today more than 40 % of energy consumption Ø and around 30 % of GHG emissions Ø Road Map Ø Retrofit the existing building stock Ø Develop future positive energy buildings/districts Ø Integrate new technologies (including RE technologies) Ø Innovation by research Ø Recovery Plan Ee. B PPP call 2010 : strong involvement of industry and SMEs (24%) from the whole value chain (ECTP/E 2 BA : >230 Members) Ø Construction sector ready to collaborate towards an “ideal house” for PPPs in FP 8 7

re. FINE «Future Infrastructures in Europe» 8 Challenges Existing infrastructures are getting old/obsolete Roads (see winter 2010) Water supply systems (leakage, water quality)… Mobility of people, goods distribution, flows (water, electricity, gas) To keep cost of infrastructures socially acceptable To adapt infrastructures to new requirements : sustainability, availability and cost of energy, ageing society, climate change Priorities and research needs Infrastructures for a sustainable urban mobility Infrastructures for a sustainable competitive economy Greening infrastructure networks Towards smart and resilient infrastructures Infrastructures of an inclusive society

Innovative development in Russia: main difficulties Financial problems Legislative base Infrastruc ture projects Technical barriers Corruption Successful realization others… Administrative barriers At the same time State course of modernization and innovation development of economy has not changed 9 The Government still plans to shift from rent-economic system to the economy, generating new knowledge and solutions

CONTRACTS absence of budget planning Innovative development in Russia: for long term main difficulties Financial problems INVESTMENT CREDITS legally isn´t formalized the possibility of project financing, absence of housing and saving deposits, riskness to use the equity contracts, difficulty in attracting of private investment (including foreign) difficulty of obtaining credits especially to small and medium enterprises at the regional level, in the field of housing, high rates on crediting in the absence of guarantees and insurance and long payback periods, the dominant position of financial and construction associations, not worked-out at the legislative level the system of collateral 10

Innovative development in Russia: example of imperfection of legislative base Ø Poor quality of technical regulations Ø The complexity of technical regulations implementation in practice Ø Inability of scientific and technical progress Ø The development period of 17 primary technical regulations is thwarted By some experts the costs of reform is over 5. 3 billion rubles. And this is without taking into account the EU funds (more than 5 million Euros) allocated under TACIS program «The convergence of technical regulation, certification and accreditation systems between Russia and EU» Ø Over the entire period of the FL-184 have been made 10 amendments Ø Russian model of inconsistency in practice the EU (no notified bodies, building regulations are mandatory for the application status) Ø Absence of statutory requirements on general product safety Ø Absence of state regulation of building materials’ safety Ø Imperfection of number of legal norms (non-state project exercising, not updated the list of high-risk, technically complicated and unique objects, the complexity of ownership registration of commissioned buildings, lack of automation of administrative procedures, etc) 11

Innovative development in Russia: some of technical barriers Ø Terminology Ø The failure to take the international and European norms of technical regulation Ø Absence of unified state program of production development of construction materials Ø Certification of imported equipment Ø Pricing and budget normalization 12

Innovative development in Russia : corruption Ø Lands conversation for the construction of one category to another, coupled with defects of urban planning and zoning Ø Obtaining a building permit Ø Project exercising Ø State control and supervision of construction Ø Laws on placing orders for supplies, works and services for state and municipal need (Federal law N 94, Federal Contract System) Ø Dependence of project on the particular bureaucrat 13

Russia’s competitive advantages High scientific and educative potency, generally accepted 14 large scientific & educational centers measurable technological supply Vast internal market Financing of public projects to support high technologies

Government activity to support innovations Russia is on the way to establish national innovative system through such tools as engineering platforms, science cities, technology parks, etc. SKOLKOVO – is a strategic development initiative, elaborated for: Ø Diversification & growth of Russian economy via innovations & business; Ø Full integration of Russian scientific & engineering capabilities to global economy; Ø Development of human resources via international research & educative projects; Ø Creation of internationally competitive hightech enterprises. 15

SKOLKOVO: WHAT DOIS IT SUGGEST? To fill the gaps in technological area The goal of SKOLKOVO is to fill the gaps by means of effective capitalization 16

Clusters of SKOLKOVO Cluster of energy-efficient technologies (Support of innovative & breakthrough technologies , aimed to reduce energy consumption by manufacturing business, housing services and utilities, city ground environment. Includes over 80 enterprises) Cluster of nuclear technologies (Elaboration of new products for energy markets, development of new materials and complicated engineering & technological systems. Includes over 20 enterprises) Cluster of biomedical technologies (Support & development of innovations in the field of biomedical technologies. Includes over 20 enterprises) Cluster of space technologies and telecommunications (Touch upon various areas of activity – from space tourism to systems of satellite navigation. Includes over 20 enterprises) Cluster of information technologies (Development of strategies in the field of information technologies — from search engines to cloud computing. Includes over 100 enterprises) 17

SKOLKOVO IN FIGURES Creation of innovative environment, financing of projects of members of innovative center “SKOLKOVO” and foundation of centers of applied research (44 innovative projects in 2011) 5 352 mil. RUR Approved subventions for the companies-members of innovative center “SKOLKOVO” for the year of 2012 5 352 mil. RUR Confirmation of obligations for co-financing of the activity of the members of “SKOLKOVO” by Russian and international venture capital funds Customs representative for the companies-participants in the activity of “SKOLKOVO” 18 5 352 mil. RUR

Research and development in SKOLKOVO Headquarters in Research & Development Ø 14 HQ in research & development Ø 17025 mil. RUR – overall budget Corporate venture funds 1900 mil. RUR– volume of corporate venture investments Co-investing in start-up projects Ø 1740 mil. RUR – total of grants Ø Fanatical support for 30 start-up companies Co-investing in research & educative environment Ø Technological cluster of Sberbank & Data processing center Ø International space center Ø High technology center of continuous medical education March 1, 2012 Federal Property Management Agency has altered some 50 companies, controlling or blocking stake of which is a State property, of need to allocate before September 1 “not less than 1%” of their innovation budget to finance the SKOLKOVO institute of Science and Technology (Skolkovotech). 19

CONCLUSION December 8, 2011 The Russian government has approved the INNOVATIVE STRATEGY OF THE RUSSIAN FEDERATION TO 2020 Framework program of European Commission OBJECTIVES 1. Development of human resources in science, education, technology and innovations; 2. Improving of business activity in innovations and acceleration of appearance of new innovative companies; 3. The widest possible implementation of modern innovative technologies to activities of the Government; 4. Assistance to well-balanced and stable growth of the sector of research and development; 5. Provision of transparency of national innovation system and economy, as well as the integration of Russia into global process of creation and implementation of innovations; 6. Enhancement of realization and implementation of innovation policy undertaken by public authorities of Russian Federation and municipal entities. OBJECTIVE – Is to create science & technological foundation for the accelerated economic development of the united Europe, the growth of its competitiveness in the world, to boost the employment, to bring EU to the level of the most scientifically and technologically advanced states and to build a common European Research Area (ERA). THE OBJECTIVES ARE FULLY CORRELATED 20

NEED FOR INTERACTION AND INTEGRATION OF EUROPEAN AND RUSSIAN INITIATIVES ON INNOVATION DEVELOPMENT Commercial exchange between EU & Russia’s accession to WTO: for Russia means the need to fulfill all obligations, in particular for the removal of technical barriers to trade 21

PROPOSAL Ø Participation of Russian organizations in the activity of AETR Ø Implementation of AETR initiatives on the platform of SKOLKOVO Federal law “on Innovation center “Skolkovo” Article 13. Features of technical regulation in the Center … 2. In regard to products and/or process related to requirements to these products … used within the Center, instead of separate safety requirements contained in technical regulations, conditions, standards, rules… may be applied technical regulations and requirements, contained in technical rules or relevant documents of member states of the Customs Union within Eur. Asian Economic Community or member states of Organization for Economic Cooperation and Development. 3. Decision to use within the Center (Skolkovo) regulations or requirements stated in part 2 is the domain of managing company… Economic effect ØThe use of experience of European technology platform, which shows the effectiveness of ØReduction in funding for research projects conducted by our European colleagues ØDevelopment of scientific and technical cooperation between Russia and EU ØOvercoming the significant technical barriers 22

THANK YOU FOR YOUR ATTENTION Mikhail KAYKOV President of Railway Constructors Union www. sszd. ru Тel. : +7(495)956 -29 -38 E-mail: info@sszd. ru Bld. 8 B, Mozhayskiy val street, Moscow, 121151, Russia 23