WEDNESDAY, DECEMBER 14, 2011

BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

50th Anniversaryof Manned

Space Flight

Bollywood actress Neha Dhupia pos-es with Vsedvolod Rozanov during the launch of MTS mobile services in Bangalore.

Mass rallies swept Rus-sia (right) after the Du-ma vote. Will Putin make it in the 2012 presidential elections?

MTS blazes a new trail in mobile broadband: CEO

Vsevolod Rozanov, CEO and president of Sistema Shyam TeleServices Ltd (SSTL), shares his company’s strat-egy and bets big on the magic of mobile broadband.

When MTS India started its operations, not only was it a late entrant, but also a late CDMA entrant. How does it feel to have turned the under-dog into the innovator?With its entry in 2008, MTS created a buzz with “One Million Free Minutes” for its customers. Since then, the company has built on its promise of innovation by in-troducing a series of firsts. With 12-14 telecom opera-tors fighting for market share, there was very little room for a newcomer like us. We had to act quickly, and hence, took the strategic de-cision to focus on data, a vastly untapped market. In November 2009, we launched our high speed mobile broad-band services brand, MBlaze. In just two years, we have be-come one of the country’s top-three data players. Along the way, we have introduced

Prepared byAanchal Anand

numerous innovations such as prepaid broadband and free national roaming for all MBlaze customers. Recently, MTS took the mobile broad-band experience to a whole new level by becoming the � rst telecom operator in the country to launch high-speed data (HSD) services on two national highways: Del-hi-Jaipur and Chennai-Ben-galuru. Our efforts have been honoured by awards like ‘Most Innovative Mobile Broadband Product’ and ‘Fastest Growing CDMA Operator’.

You talk about innovation as the heart of MTS’s strategy. How does the company bal-ance creating value for its cus-tomers with creating value for its shareholders?True to its long-term com-mitment in India, SSTL has invested over $2.5 billion in expanding its telecom net-work. Our focus is not only on numbers, but also the quality of the customer base. India is probably the most competitive telecom market in the world with compara-

tively lower average revenue per user (ARPU), and, there-fore, it becomes important that we rationalise our in-vestments. We understand that the Indian consumer is not looking for a choice be-tween value and quality. Here, the customer wants quality with choice, and as service providers, we need to be on our feet at all times to think out of the box. Our focus remains to create value for customers through qual-ity, price and innovation propositions that create long-term value for all stake-holders.

How do you see the data seg-ment of the market evolving over the next five years?We had pre-empted intense competition in the voice business and hence, steered our strategy to focus on data. Even if you look at Telecom Regulatory Authority of In-dia’s October 2011 report, the broadband penetration in India stands at just 1% as against the wireless teleden-sity of 72%. The National Broadband Plan envisages

NEWS IN BRIEF

India's Petronet LNG Ltd will finalise a pact soon for sourcing lique� ed natural gas (LNG) from Russia under a pact with en-ergy giant Gazprom. India's Oil Minister S. Jaipal Reddy held bilateral talks with Rus-sian Energy Minister Sergey Shmatko in Doha on the sidelines of the World Petro-leum Congress. OVL, Reddy said, showed keen interest in participating in the Sakh-alin-3 and other � elds.In June, Gazprom had signed a preliminary deal with Petro-net for the supply of 2.5 million tonnes of LNG annually. India is the world's eighth-largest importer of LNG. RIBR

Pratibha Patil became the � rst Indian pres-ident to ride in a battle tank when she boarded a T-90 in the desert terrain of Raj-asthan to witness an army war game under-way. Dressed in a black uniform worn by the personnel of the tank regiments, the 76-year-old president entered the exercise 'Sudarshan Shakti' here riding in the main battle tank with Army Chief General V. K. Singh. Patil's ride of nearly 500 metres last-ed for about 15 minutes. She was then taken in a Mi-17 transport helicopter near the venue before riding in the tank. In 2009, Patil had become the � rst Indian woman head of a state to fly in a frontline Suk-hoi-30 MKI � ghter jet aircraft from an IAF base in Pune. Patil was the second Indian president to fly in a fighter aircraft after A.P.J Abdul Kalam in 2006. RIA Novosti

Petronet to fi rm up LNG deal with Gazprom soon

Matrix Comsec (India), a VoIP equipment manufacturer that accounts for 30% of the market share in certain product categories, is coming to Russia. The exclusive distrib-utor of its products within Russia will be Digital Angel, with whom the company has a � ve-year contract. Gateways for IP tele-phony and user terminals will be main products the company will be selling in Russia, says Dave Parth, Matrix’s interna-tional sales manager. The company will focus on the SMB segment as competition in Russia’s big business and public sectors is very high and is already divided between big players. RIBR

Matrix to enter Russia, foucs on IP telephony

Patil rides T-90 tank in Rajasthan desert

160 million broadband con-nections including 60 mil-lion wireless broadband connections by the year 2014. Hence, there is a huge oppor-tunity for the growth and proliferation of HSD servic-es in India. With wireline penetration at just 3% of population, and on decline, mobile broadband is best positioned to satisfy the growing internet demand. We offer HSD services in over 200 Indian cities in-cluding the top � ve metros. The company is rapidly ex-panding its HSD network, and currently addresses over 92% of data potential across India. In MBlaze, we have one of the strongest data brands in the country.

Where do smartphones fit in this strategy?

India’s low wireline and PC penetration means that smartphones and tablets will drive data growth. MTS is creating a strong portfolio of these devices to offer the cus-tomers a complete package with access and high-speed. We recently launched MTS Pulse, an Android powered smartphone that users can get for free with no upfront payment. We are looking to take the Android platform to the masses. We recently launched two Android smartphones – MTS Livewire and MTS MTag 3.1, both priced below rupees 5000. We will add some of the best available smartphones and tablets to our portfolio.

What's your reaction to India's New Telecom Policy? The policy puts strong focus

to make broadband accessi-ble to and affordable for all by 2015. This is a great step for us as we are already data-centric. We look forward to the formulation of support-ing policies so that more spectrum can be released. We believe policy guidelines on issues like delinking of spec-trum and telecom license, al-lowing for spectrum trading, pooling and sharing along with new M&A guidelines, would be equally signi� cant. One needs to understand how NTP 2011 looks after the interest of the CDMA op-erators and their customers. So if I could have one wish, MTS would ask for further clarity on M&A guidelines and spectrum updates.

Yuri Milner, a top Russian entrepreneur and venture capitalist known for his con-quests in the US’ Silicon Valley, is in talks over acquiring a slew of Indian Internet companies. According to some Indian media reports, Milner is looking to invest $100-200 million. Milner’s investment com-pany Digital Sky Technologies (DST) Glob-al has approached the Flipkart online re-tailer and Just Dial, which processes around 100 million phone enquiries and 80 million online enquiries annually. DST opened its Asia office in Hong Kong earlier this year. It also invested in Chinese e-commerce leader 360buy.com and b2b giant Alibaba Group.RIBR

Russian state arms trader Rosoboronexport will increase arms exports by 11% year-on-year to $9.7 billion in 2011, Viktor Komar-din, a deputy head of the company said. “The figure will rise by about $1 billion compared to 2010,” said Komardin, who headed Russian delegation to the LIMA-2011 arms show in Malaysia. At the show, a preliminary agreement on the delivery of six Su-30MK2 � ghters worth at least $500 million to Indonesia was struck. The com-pany had struck $9.5-billion worth of con-tracts last year. “This year, we have signed more,” Komardin said. RIA Novosti

Yuri Milner eyes Indian online companies

Russian arms major to raise exports by 11%

Elections The ruling United Russia manages a convincing majority, but the new flux opens a new chapter in Russian politics

The United Russia may have won enough seats to push the government-sponsored bills through the State Duma (parliament), but its days of complacency seem to be over. Days after the election results were announced, tens of thousands of Russians turned out in cities across the country on Dec 10 in mass peaceful protest over recent polls they claim were rigged in favor of the ruling party. The biggest rally in Moscow since 1993 gathered, according to police esti-mates, around 25,000 peo-ple. Organisers said it was closer to 40,000. Another protest has been called for Dec 24. Russian President Dmitry Medvedev has ordered a probe into alleged vote rig-ging. Both he and Russian Prime Minister Valdimir Putin put up a brave face and stressed that citizens have the right to assemble publicly to express their po-litical views as long as they abide by the law. The Dec 4 vote will clearly have consequences that reach beyond law making. The Duma vote seems to have polarised the Russian society, with Putin and sup-porters describing the out-come as a “real” re� ection of the mood in the country while many Russians say they feel the vote was essen-tially unfair.The real test of the United

Is Duma vote a sign of change?Mass protests contesting the Duma poll results are a wake-up call. What does it mean for Vladimir Putin's presidential prospects?

IGOR ROMANOVRIBR

Russia's strength, analysts say, would be the March presidential election. The Duma elections have been widely touted as a referen-dum on Putin's future, given his decision to return to the Kremlin next year. Earlier, the Federation Council, Rus-sia's upper house of Parlia-ment, approved March 4 as the date for the 2012 presi-dential elections, signaling the beginning of the new election campaign.Experts say that the calls for the Duma re-elections hard-ly have a chance to be rea-lised. The three parliamenta-ry “opposition” parties (the Communists, the left-wing Just Russia, and nationalist Liberal Democratic Party)

only showed token support for the Dec 10 rally and did not support calls to give up their Duma mandates.Some analysts feel that the loosening of the tight grip that United Russia had on the previous Duma, where it counted 315 deputies (now 238 in 450-seat parliament), could trigger liberal reforms and a few showcase exam-ples in the tepid � ght against corruption. "It's good news because it will hopefully give the message to the leader-ship that it will have to change to continue to be suc-cessful," said Jochen Wer-muth, chief investment offi-cer at Wermuth Asset Management. Some changes would have to appeal to the

47 million-strong Internet-using middle class who hard-ly have any representation in the new Duma, he said.“To not lose these people who want to modernise the country, the Russian author-ities will have to start imple-menting reforms that will make them happy — inde-pendent judges, rule of law, fighting corruption,” said Wermuth. "Government economic pol-icies will change to reflect the alignment of new forces in the State Duma,” said Yevgeny Gontmakher, an eminent sociologist. “The growing in� uence of the op-position parties, while not decisive, will force the au-thorities to change their be-

haviour." The swollen ranks of the leftist forces in the Duma could “induce extra populist steps on the part of the country's leadership to move the needle of public opinion,” said VTB Capital in a note to investors. "The natural instinct for Putin will be to pump more money into the economy," adds Tim Ash, head of emerging mar-kets research at Royal Bank of Scotland in London. The most plausible interpre-tation of the success of the Communist Party and A Just Russia is growing frustra-tion with United Russia, ac-cording to both Alfa Bank and Wermuth. "We do not see this as nostalgia for the So-viet times, but rather as an

indication of protest voting," Alfa Bank chief economist Natalia Orlova and analyst Dmitry Dolgin wrote in a note to investors. But in terms of Duma opera-tions, United Russia's ma-jority will provide enough support for Putin as the like-ly next president and Med-vedev as the likely next prime minister. "It will allow us to work calmly and rhyth-mically," Putin said soon after the election results be-came known. United Russia's faction will still be able on its own to con� rm prime ministers, ex-press votes of no con� dence in the Cabinet, appoint and remove Central Bank heads and pass any legislation.

INTERVIEW VSEVOLOD ROZANOV

"WE FOCUS ON CREATING VALUE FOR CUSTOMERS

THROUGH QUALITY, PRICE AND INNOVATION"

Slide Show atwww.indrus.in

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BUSINESS REPORT in association with rossiyskaya gazeta, russia

Politicswednesday, deceMBer 14, 2011

in The economic Times every second Wednesday since February 2012 www.indrus.in

WEBSITE of the embassy of the Russian Federation in India

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diplomacy Economic integration, boosting connectivity, food security and promoting innovations will top agenda of Vladivostok summit

in hot seat: russia firms up plans for 2012 aPec summit

siderable funds have been invested in preparing facili-ties to host events.We believe that Russia’s chairmanship of APEC should be the starting point for developing multilateral cooperation in the Asia-Pa-cific region on a whole range of issues that are key to our country’s future. First of all, there is the liber-alisation of trade and invest-ment and regional economic integration. Certain steps in this direction have been taken this year under the US chairmanship, and we are ready to move forward on this path towards free trade and investment in the region. Whereas the recent summit in Honolulu mainly dis-cussed the current issues of trade liberalisation; next year, it would make sense to focus on the long-term out-look for integration of APEC economies, including taking into account CIS integration initiatives carried out by Russia, and on preventing fi-nancial and economic crises in the region and globally. It is APEC countries, which today account for the bulk of the global economy, that have a special responsibility for optimizing global mech-anisms for regulating eco-nomic development.Strengthening food supply security is another priority for 2012. This issue will like-ly become central to the global policy of the 21st cen-tury, and the APEC’s role in this can’t be overestimated. However, multilateral coop-eration among the region’s countries is only just the be-ginning in this area. We lack a coordinated regional ap-proach to food supply secu-rity risk management. The time has clearly come to deal with matters like reducing food price volatility, cutting losses resulting from trans-portation of agricultural products within the region, and coordinating national

Some might find the ques-tion of whether or not Russia is an Asian country some-what rhetorical and con-trived. One look at the map, however, is enough to find out that Russia has the con-tinent’s largest landmass with an eastern seaboard oc-cupying a sizeable chunk of Asia’s Pacific coast. Asia is home to Russia’s largest trade and economic part-ners, most importantly China, which has recently advanced to the top spot in terms of total trade turnover with Russia. Russia is a member of major Asian multilateral organisa-tions, including the 21-na-tion Asia-Pacific Economic Cooperation (APEC) forum. Nonetheless, many in Asia still consider Russia to be a “not quite Asian” country. Perhaps, this is because eth-nically, religiously, culturally, and politically, Russia has traditionally gravitated more towards Europe than Asia. Or it’s because the bulk of the Russian population lives in the western part of the country. But most impor-tantly, Russia has largely re-mained on the sidelines of the emerging Asia-Pacific community, despite its re-lentless efforts to take a rightful place in it. Russia’s potential as an

eying its integration into the asia-Pacific community, russia is firming up big plans to host aPec summit in Vladivostok next year.

cesses. In international af-fairs involving the region, we don’t always manage to grasp the logic of our Asian neighbours, which occasion-ally results in unfortunate miscalculations.That said, our Asian neigh-bours are not quite beyond reproach either. It looks like for some of them, the Cold War never ended, as they continue building their Rus-sia policy on principles dat-ing back half a century. Oth-ers view Russia as nothing

but a source of commodities from which to pump the re-sources they need––prefera-bly on the most preferential terms. Still others believe that developing relations with Russia can be post-poned until better times be-cause the priorities of Asian policy lie elsewhere at the moment.Against this backdrop, Rus-sia’s forthcoming chairman-ship of APEC in 2012 pres-ents a unique opportunity to take a new look at Russia’s

prospects for integration into the Asian-Pacific com-munity as a part of integra-tion processes emerging within this region. The Rus-sian leadership attaches the utmost importance to its chairmanship. Recent months have seen meticu-lous preparatory work to flesh out the chairmanship’s agenda with real content. Not only ministries, but also many regions and the expert community are taking an ac-tive part in this work. Con-

shifting geographies of power: Leaders of aPec countries at the 2011 summit in honolulu.

igor iVanoV SpEcially for riBr

efforts to improve yields of basic crops. Obviously, the food issues are closely linked with environmental issues and preserving APEC’s bio-diversity.Another priority of Russia is developing the region’s transportation and logistical capacity. By virtue of its geo-graphic location, Russia is a country of transit between Asia and Europe, but our in-tercontinental transport cor-ridor capabilities are still far from fully utilised. We need to accomplish a great deal domestically in this area, but the interna-tional dimension is no less important. Cutting costs and wait times at border cross-ings and implementing major infrastructure proj-ects such as upgrades of ports, airports, and transport corridors through private-public partnerships should be discussed both during the year and at the Vladivostok summit.Finally, the APEC summit in Vladivostok also represents an opportunity to promote an innovation agenda for Russia and the entire APEC region. How do we ensure the most effective forms of interaction between science, business, and government to promote new technologies? How can we bring coopera-tion among innovation cen-ters, universities, research institutions, science towns, and territories active in in-novations to a new level? How can we increase geo-graphic mobility for scien-tists, educators, and innova-tors? How do we ensure protection of intellectual property rights in the region and reduce the turnover of counterfeit goods? What needs to be done to harmon-ise education systems? These questions are becoming in-creasingly important not only for Russia, but also our neighbors in the Asian con-tinent.

The summit will help explore russia's prospects for integration in asia-pacific community.

it will be a unique opportunity to promote innovation agenda for russia in the aTr region.

Asian power remains largely unrealised. This can be at-tributed primarily to the fact that Russia is too slow and at times inconsistent in re-building the economy of its eastern regions, and doesn’t create the required incen-tives for foreign investment, or Russian investment for that matter. The Asian part of Russia faces acute unresolved issues in infrastructure, stimulat-ing small businesses, and managing migration pro-

igor ivanov

nationaLity: russianage: 66ciViL status: married, has a daughter

Igor S. Ivanov is President of the Russian Council on Inter-national Affairs. Previously, he served as Minister of Foreign Affairs from 1998 to 2004 and Secretary of the Security Council of Russia from 2004 to 2007. Ivanov holds the rank of Ambassador Extraor-dinary and Plenipotentiary. He took part in several UN Gen-eral Assembly sessions. He al-so served as Russia's ambas-sador to Spain.

BiograPhy

diplomacy it's time to conduct a post-mortem to make special and privileged partnership immune to vagaries in political weather and market fluctuations

It's a year since the last Rus-sian-India summit, when New Delhi played host to Russian President Dmitry Medvedev. The sun of bilat-eral cooperation is still shin-ing generously on the two nations and, during the meeting in Moscow, the par-ties will again reap a big crop of trade and economic agree-ments and make loud politi-cal statements about their common positions on the 21st century threats and challenges. Even so, there are

as india and russia hold the 12th summit, it's time to reflect and iron out irritants to propel bilateral ties into a higher trajectory.

spots even on the sun and politicians and experts in the two capitals who want the good weather to prevail in Russian-Indian relations in the future would do well to consider them today. This was mentioned in a half-whisper on the fringes of the Russian-Indian Forum on Trade and Investments, which was held with much fanfare in Moscow in No-vember this year.“The launch of the first unit at the Kudankulam nuclear plant in India, which is being built by Russia’s Atom-stroyexport, is scheduled for the end of this year and that of the second – just six months later,” Russian vice premier Sergei Ivanov told at the Forum. “Work on the

terms of the contract for building the third and fourth Kudankulam units is near-ing completion,” he went on, noting that Moscow today sees India as “the main cus-tomer for our peaceful nu-clear equipment and tech-nologies.”Meanwhile, the timeframe for the Russian-assisted con-struction of Kudankulam nuclear plant in Tamil Nadu was in danger of being dis-rupted due to protests led by activists who fear that in the wake of the Fukushima acci-dent in Japan, a similar trag-edy might happen in India.The Kudankulam crisis has put the Indian leadership in a tricky position on the eve of Prime Minister Manmohan Singh's visit to Moscow. Until recently, the Kudanku-lam nuclear plant was a sym-bol of the “privileged strate-gic partnership” between Russia and India. The third-generation reactor project being implemented by At-omstroyexport meets all the modern requirements on the safety of nuclear power plants and has several levels of protection, as Russia has repeatedly stressed. Howev-er, the Indian media outlets, citing anonymous sources, have alleged that Russia sup-plied “inferior equipment to India”. It is not unlikely that this was done at the instiga-tion of the US and France, Russia’s key competitors in the Indian nuclear market. Above all, it seems the US is

in the front as it is staking out a claim in the vast Indian market, which is larger than the combined EU market.Yet the most startling state-ment came from the chief opposition Bharatiya Janata party, which demanded that the government “resolve the Kudankulam issue prompt-ly”. Thus, while previously there was a total consensus within the Indian political elite on cooperation with

Let the sun shine brighter on all-weather friendship

Prime Minister Manmohan singh, President of russia dmit-ry Medvedev at 2010 summit in new delhi.

alexander kadakin, ambas-sador of russia to india.

sergei strokanriBr

As Prime Minister Manmo-han Singh heads to Moscow for annual summit with Russian President Dmitry Medvedev on Dec 15 , Kadakin said that Russia will be with India "rain or shine". The envoy, a veteran India hand, underlined that after 10 years of "strategic" ties, the two time-tested partners had redefined their

relations as a “special and privileged” diplomatic part-nership. "This time it is business... of-ficial visit...it will be energy sector, military field, and

economic sector," Kadakin said when asked about the areas in which the agree-ments would be signed. Alluding to Medvedev’s visit to India in December last year, which saw the signing of "an unprecedented" 33 agreements, the envoy said though the number of agree-ments will be less this time round, the quality of the pacts would be of greater long-term significance. “2010 was unprecedented. India was the only country that both the Russian presi-dent and prime minister vis-ited in one year. It is Hima-layan relations," he said.Despite recent protests by

Nuclear energy, defence will be highlights of talks: Envoyindia and russia are inching closer to signing a pact for two more reactors at kudankulam, says russia’s ambassador alexander kadakin.

oLga PetroVariBr

Russia, today we see at-tempts to make it hostage to internal politics. The row over the Kudanku-lam plant coincided with a major setback for Moscow in military-technical coopera-tion with India, the bedrock of bilateral ties. In Novem-ber this year, Moscow lost a major tender to deliver MI-28N “Night Hunter” helicop-ter gunships to India to the American Apache H-24 he-

licopters. In April, Russia's MIG-35 lost out to the French manufacturers of Rafale and Eurofighter Typhoon fighter planes in the biggest arms tender of this century. This time round, India sent to the Russian embassy in Delhi a letter listing 20 points by which the Russian MI-28N “Night Hunter” he-licopter did not measure up to the Indian requirements. One other reason for the

Russian defeat was India’s wish to not to depend on Russia alone for 80% of its arms, as has been the case over past decades.In general, there seems to be a new turbulence in the bi-lateral relations. Needless to say, the officials of the two countries are reluctant to talk about the problems. This is not surprising as no-body wants to mar the pretty picture for the upcoming

meeting between Manmo-han Singh and Medvedev in Moscow. Yet now is the time to assess the long-term con-sequences of mutual disap-pointments. If they accumu-late, they may strip the decades-old special partner-ship of its former halo. There is still time to conduct a post-mortem and make these re-lations immune to vagaries in political weather and market fluctuations.

locals over the Russia-as-sisted Kudankulam nuclear power plant in Tamil Nadu, the envoy struck an upbeat note, saying “nuclear ener-gy and cooperation in ener-gy sector will be the major highlight of the forthcom-ing visit.” “Talks are in progress and at a very ac-tive stage about Units III and IV. Let us expect they complete it,” Kadakin said in reply to a question at a press conference in New Delhi on Dec 7. “We expect that our nuclear coopera-tion, in spite of all odds and all your internal problems, will continue and we are ready to assist India in this,”

he said. “We have the road-map that Russian Prime Minister Vladimir Putin signed last March, under which 14 to 16 power units wi th 1 g igabytes are planned. We are implement-ing this roadmap,” he said. T h e e nv oy, h o w e v e r, stressed that Russia ex-pected that the Indian nu-clear liability law will not apply to Kudankulam's units III and IV as they were not applicable to Kudanku-lam I and II.In an important step, the envoy disclosed that Russia was awaiting India's reply to its proposal for finding a way out of tough Nuclear Suppli-ers Group rules on transfer of enrichment and repro-cessing (ENR) equipment and technology. The two sides are expected to sign further agreements on joint development of the fifth gen-eration fighter aircraft and multirole transport aircraft.

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BUSINESS REPORT in association with rossiyskaya gazeta, russia technology

wednesday, deceMBer 14 2011

steven geigerCOO Of SkOlkOvO

fOundatiOn

But for Russia to compete in the global knowledge econ-omy, it needs to shift gears, and Skolkovo is the new transmission. We do this by educating about intellectu-al property - by assisting entrepreneurs and startups to create, defend and com-mercialise their IP; by (hopefully) providing early and highly-visible success-es in monetising Russian IP on the world stage; and fi-nally by creating entirely-new IP legal frameworks, which can be applied across Russia. In short, our task is to create efficient mechanisms to transmit Russia’s scientific and intellectual horsepower into competitive knowledge-based products and services in global demand. Is changing culture and mindset easy? The upside, however, is if you are success-ful, your impact will be sig-nificant. Large countries are like battleships. Get them turning even a few degrees in the right direction, and you’ve changed their course. Skolkovo enjoys many ad-vantages . The first is Russia’s rich scientific and technical resources. My previous as-signment involved building a similar innovation city for the small emirate of Abu Dhabi, with only 400,000 cit-izens and virtually no scien-tific resources. In the global race towards a knowledge economy, Russia is already well-positioned.Second, we’ve learned from others. Starting later, Russia has the second mover advan-tage. We have studied innova-tion successes and failures alike, and have woven those into our model. Third, and in a break with the Russian tra-dition, Skolkovo is an entire-ly open platform for global cooperation in R&D. Closed science cities of the past served their purpose, but the sheer speed and scale of glob-al interconnectivity dictate openness and collaboration. The world may not be flat, but it’s definitely becoming more elongated. So why do we do it? I could give you lots of reasons, but perhaps Steve Jobs said it best: “Here’s to the crazy ones. Because the people who are crazy enough to think they can change the world are usually the ones who do.”

i’m often asked to sum-marise the core mission of Skolkovo. This re-quires only two words:

changing culture. Skolko-vo is changing the academ-ic culture in Russia by building an entirely new grad-level science institute, together with MIT. We be-lieve it will be the first such institute in the world, which comprehensively in-tegrates education, re-search, innovation and en-trepreneurship. You may not choose to start your own company upon grad-uation, but you certainly will know how to.Skolkovo is changing cor-porate culture. We’re edu-cating large Russian cor-porations about the value of conducting contract re-search, how to interface and partner with the VC community, and in general how to embrace innovation as central to their success, if not survival.Skolkovo is also changing entrepreneurial culture. It’s easy to forget that not long ago, private enterprise in Russia was either illegal or strongly discouraged. It will take time to overcome this legacy and to let the in-nately-creative Russian spirit flourish. Skolkovo is an accelerator in this trans-formation. By providing support, financing and preferences to startups, we hope to level the playing field somewhat against stronger players. Our role is also to provide “moral support” to nervous young entrepreneurs wanting to chase their dreams.Finally, we are clearly aim-ing to change the cultural understanding of wealth creation. Russia has been long dominated by physi-cal production: oil, gas, metals, timber, and so on. An exclusive focus on ma-terial output dominated the Soviet era with its fa-mous 5-year plans. Even today, virtually, all the top Russian business people made their fortunes through natural resources. Unsurprisingly, most Rus-sians view wealth creation in physical terms.

opinion

it's all about changing culture and mindset

innovation top global companies keen to set up base

Skolkovo promises to be-come the locomotive of the Russian economy. It will cer-tainly take some time before the Skolkovo “Innovation City” (Innograd) becomes a forge of new technologies, as its architects promise. And that’s understandable, con-sidering that their stated goals to become the founda-tion of the Russian economy are herculean in scope and the amount of effort required to realise them. However, collaboration with high-tech companies has already begun.Skolkovo’s ambitious man-agers have set out to create a series of centers that would allow foreign companies to conduct cutting-edge re-search. Says Roman Ro-manovsky, Skolkovo’s Oper-ating Director for Key Partners, “Our main task now is to create the most comfortable conditions and environment. Innovation centers are usually thought to be exclusively aimed at start-ups, but that’s not the case. Nor are we committed only to corporate research. We seek to make the circula-tion of ideas at Skolkovo constant, so that everyone can find what they come here for. Major companies would get young talent; start-ups would meet investors and in-vestors would get promising new ideas, and so on.”This approach has caught on: many foreign companies have already expressed a de-

sire to open research centers at the Innograd. So far, they have primarily come out with statements of intent, but some concrete agree-ments have already been signed.

the germans are upbeatFor example, Siemens has signed a document provid-ing for the phased develop-ment of its center. By 2015, it

will have a staff of 150. Some of the projects may be fi-nanced entirely by the Ger-man company. The total sum of joint investments will be about 60 million euros, with 40 million to be put up by Siemens and 20 million by Skolkovo Foundation grants. “For us, the Innograd is in-teresting as a pilot project that will transform Russia’s future. It’s no coincidence that Siemens AG CEO Peter Löscher is a member of the Skolkovo Foundation Board. The scientific cooperation covers a wide range of areas, including nuclear medicine,” said Alexander Averyanov, head of the Siemens project at Skolkovo. So far, the com-pany has not disclosed de-tails of the project, but it’s

safe to assume that it’s relat-ed to radioisotope diagnosis, since Siemens is the world’s leading producer of related equipment. Incidentally, the first grant of more than 3 million euros has already been given for the research project.

the Finnish experienceNokia has a somewhat dif-ferent vision of its partner-ship with the Foundation, with a focus on inventing and introducing inline pro-duction of everyday devices. “Mr. Vekselberg and we signed an agreement con-firming the specific stages of the center’s development,” says Nokia representative Tatiana Oberemova. “The center will develop powerful mobile computing systems and offer solutions in the field of nanotechnology. Nokia’s investments in the center amount to a double-digit number in the millions of euros, which is the stan-dard budget for Nokia’s re-search and development cen-ters.”The project was planned to develop at a dizzying pace: the construction contract was signed in June this year, and was due to be completed in December. It is unlikely that the schedule will be met, but some details of the part-nership between the In-nograd and the Finnish cor-porat ion are a l ready emerging. First of all, the main areas of research will be identified, most likely broadband sensor systems for the main Nokia platforms and mass production of mod-ern electronic devices using nanotechnologies. At the second stage, the center will open its laboratories and the

third stage will entail large-scale research and commer-cialisation projects involving Russian and foreign compa-nies.

swedish neighboursEricsson sees Skolkovo as an excellent platform for re-search in the sphere of tele-communications, cloud and telematics technologies. But the first research effort will be smart power supply net-works whose main goal is to save energy. Smart meters installed with end users will

constantly provide informa-tion to distribution compa-nies (for example, via Ether-net lines or through networks of cell-phone operators with the help of built-in SIM cards), allowing them (and consumers) to monitor con-sumption patterns more closely. “There used to be a lot of talk about the need to develop our economy, non-commodity exports, and now we have a place, an ecosys-tem where this can be ac-complished,” says Mikhail Podoprygalov, Ericsson vice-

president for work with gov-ernment agencies. “Skolkovo provides an ecosystem, and that’s an important corner-stone. I’m not the only one who could say that some things could have been done better and differently. But you have to understand that given the ambitious task Skolkovo is tackling and its vast range of goals, it is hard to say what’s justified and what isn’t.”“This is really Skolkovo’s main problem,” echoes Timo-fei Shatskikh, a financial an-alyst with RBK. “Until the first project is implemented, in the minds of most Rus-sians, not to mention domes-tic investors, the Innograd will remain just another am-bitious government idea. People don’t see Skolkovo as a scientific institution, but rather as a political one aimed at projecting a posi-tive image. Even the Foun-dation’s established partner-s h i p s w i t h We s t e r n companies cannot dissuade them from this. Until the first scientific idea that germinat-ed within the walls of Skolk-ovo is presented, that opin-ion won’t change. But the creation of several research and development centers may rectify the situation. Then you can at least argue that the generation of new ideas will happen serially.”

skolkovo: an ecosystem of new ideas, technologies

Billionaire Viktor Vekselberg, president of the skolkovo Foundation.

skolkovo, the innovation city, aims to transform russia's future by becoming a hub of cutting-edge technologies and ideas.

alexandre VostroVribr

Ericsson to invest in smart meters that would save energy. nokia to focus on mobile computing.

a series of centres would allow foreign companies to do cutting-edge research.

Fact sheet

40 billion dollars have been in-vested by the

state in innovation projects in 2011, says The National Asso-ciation of Innovations.

23 % of innova-tion projects are made by young

people. 9% Russian graduates want to be researchers.

22 % of the proj-ects relate to IT, 5% - telecom

and space, 4% - nuclear, 13% - the rest.

Russia is interested in coop-eration with Indian companies and investors in the "Skolko-vo" project, said Deputy PM Sergei Ivanov at a meeting of the bileteral Intergovernmen-tal Commission in Moscow in November. "We are very in-terested in cooperation with the Indian high-tech compa-nies and investors in this proj-ect," he said. Ivanov stressed that the Skolkovo innovation hub provides a zero rate of tax on income, property, in-stitutions, land, and a simpli-fied procedure for entry into Russia.

an open invite to indian firms

In an interview with RIBR, Dr Kandeh Yumkella, the head of the United Nations Industrial Development Or-ganisation (UNIDO) gives some tips on sustainability.

what is unido's main focus in developing countries?We focus on a niche area of industrial development – pollution management and green industries. In today’s context of climate change and resource efficiency in an overpopulated world, these areas are important to in-crease production and con-sumption. While market forces are important, indus-trialisation does not occur by accident. From Singapore to the EU, it’s been determined by the leaders. We want gov-ernments to mobilise their private sectors to engage in a green transformation.

how do you envisage this green transformation? Experts call it a third indus-trialisation based on green growth. Strong public-pri-vate partnerships in green

industries are needed, where the state hedges some invest-ment risk while allowing market forces to operate. Governments must plan carefully for 10 to 20 years ahead because the scale of investments is huge. The pri-vate sector will not risk cap-ital in green businesses if the government isn’t clear about what path it will be taking.

how are unido’s plans being realised in russia?We’re pushing many projects in Russia focused on green energy and cleanup produc-tion. These include a centre for the disposal of hazardous consumer products and in-dustrial waste in Tatarstan and a $1.5 million project to improve water quality and reduce the impact of indus-trial activities in the middle

ago. Now the Japanese are leaders in many green tech-nologies.

how do you promote energy efficiency while stimulating economic growth?Japan and Denmark have shown you can grow GDP continuously while cutting energy use – the new govern-ment in Denmark is pitching green technologies as a way to stimulate economic growth. But I don’t think this mentality has gained a foot-hold in Russia yet. The gov-ernment has set up an ener-gy-efficiency programme, and I have heard people ask: “What for? We have lots of energy!” The answer is that there is a high demand for that energy – what you don’t waste, you can sell to other countries.

Get ready for green transformation

kandeh yumkella, director-general, unido.

skolkovo center and Bauman Moscow state technical uni-versity will create a business incubator.

Prepared by arten zagorodnov

and lower Volga basin. We’re also promoting the produc-tion of energy-efficient re-frigeration and air-condi-t i o n i n g s y s t e m s v i a technology transfer.

what specific green technol-ogies would you recommend for russia?If Russian authorities were to adopt new municipal

building codes and use pub-lic money to build new insu-lation, they could create mil-lions of jobs. Mayors – like Michael Bloomberg of New York City – will tell you one of their biggest challenges was figuring out ways to keep skyscrapers hot and cool. They have been think-ing about incentives for own-ers and tenants to be energy efficient. We’re pitching these

ideas to wealthy Russians as new business opportunities. The message I brought to the Nevsky Ecological Congress in St Petersburg this year was that Russia has always been a leader in science, but there has not been enough mobilisation for it to lead the green revolution. Russian scientists who can lead this research are out there.

what are russia's challenges in the area of green growth?When Russia went through rapid industrialisation, sus-tainability was not an issue. There are now places where accumulated pollution has killed ecosystems, and con-taminated heavy-metal pro-duction sites where pollu-t i o n i s s e e p i n g i n t o waterways. The good news is that the technologies to deal with these problems exist. The Japanese faced the same situation 30 years

Brokerage services (to sell research) and scientists themselves remain underde-veloped in Russia. In the West, technology brokers form an entire market, which news agencies last year esti-mated at $500,000 in the US alone. In Russia, tech trans-fer – a service of searching for developers of in-demand technologies or creators of inventions and discoveries – happens in two ways.First, leading American tech transfer agencies – the Uni-versity of Chester Tech Transfer, European Techni-cal Science Association, East Bay Tech Transfer and Grif-fin, as well as the European Union Tech Transfer – oper-ate in Moscow, St. Peters-burg and Novosibirsk. These companies have no branch-es, meaning their work is conducted either directly via head offices, or via brokers, who work for a minimum in-terest-based fee. Tech trans-fer looks a lot like staff re-cruitment: a customer (a university, corporation or government agency) places

tech Mit, uS institutes top clients for russian scientists

with the surging demand for young russian scientists in the west, russia has evolved its own strategies to market them.

an order for a specialist with a certain reputation and skills, or even a specific per-son, and the tech transfer broker receives a fee equal to one or two monthly salaries of the hired specialist. “The most frequent customers are American technology insti-tutes fulfilling complex or-ders for industrial corpora-tions. Demand is especially high for graduates of Bau-man Moscow State Techni-cal University and Moscow State University’s science faculties,” says John Neiper, Eastern European Manager for Griffin. “The leading tech transfer customer is the Mas-sachusetts Institute of Tech-nology. We fulfill six to ten orders of this kind annually, with an annual contract av-

eraging $100,000-200,000," he said. Incidentally, 15 years ago, Russia filled upto 150-200 tech transfer orders an-nually in the natural scienc-es alone.The second way involves Russian corporations work-ing in partnership with the West and hunting for young Russian graduate scientists to work abroad. The con-struction sector leads the way. “Now graduates of the Moscow Architectural and Construction Institute capa-ble of designing miles-long bridges can compete for an-nual contracts of upto $200,000 and work for a Western partner company rather than our company,” said Ilya Ruzhansky, deputy director of Mostovik.

Marketing research and selling scientists

Mikhail Borishpolskyribr

Public-private partnerships in green industries, along with market forces, are needed.

unidO is pushing a $1.5 mn project for improving water quality in the volga basin in russia.

interView kandEh YuMkElla

unidO: ruSSia COuld CrEatE MilliOnS Of jObS

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BUSINESS REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA Feature

WEDNESDAY, DECEMBER 14, 2011

Region A European city in the Asian landmass, it's a paradise for adventure-seekers with its hilly terrains, islands and stunning views of the Pacific Ocean

A spectacular setting of hills and peninsulas, bays and outlying islands, a thriving student life, combined with buzzing oriental markets and a distinctly European feel in an Asian landmass make Vladivostok one of the greatest cities in Russia.With its trams, hilly terrain and stunning views of the Paci� c Ocean, the ‘Lord of the East’, founded in 1860, is redolent of San Francisco. The city, however, has a quintessential Russian feel

ral Fokin Street. The city’s Arbat is full of shops, cafes and fountains and goes one up on its Moscow cousin as it leads straight to the sea. For those of you looking for a quintessential Far Eastern Russian meal, the Izbushka (log cabin) cafe is an ideal place to enjoy some Ukha (� sh soup), while listening to folk songs from the region. Patrons can choose a ‘dacha’ room or ‘forest’ room for more privacy. The Admiral Fokin Street is also the best place to enjoy public celebration, be it the New Year, when reindeer and Ded Moroz (Grandfa-ther Frost) roam the area or the May Day festivities, when rock bands celebrate the near arrival of the Pri-morye summer.Vladivostok exudes youth-

ful energy, largely in part due to many institutions of higher learning in the city. The university students are used to exotic visitors but are friendly enough to invite them for evening parties. The best way to get to the Far Eastern Technical State University is to take the fu-nicular (one of only two in Russia). The ride to the top of the 100-metre high hill lasts just over a minute, but there are absolutely stun-ning views on top.Besides providing a visitor a chance to inspect some ships belonging to the Russian Pacific Fleet, the hill-top provides a lovely view of the railway station, a heritage building construction built in 1912, the regional admin-istration building and a gi-gantic monument dedicated

Vladivostok: Lording over the EastVladivostok reminds one of San Francisco with its stunning rollercoaster hills and the dreamy blue Pacific Ocean, but remains a quintessential Russian city.

AJAY KAMALAKARANRIBR

An aerial view of Vladivostok's historic center and the picturesque Golden Horn Bay (left). The builders of the bridge to the Russky Island have recently completed a milestone with the total length of the opposed cantilever sections of the main steel stiffening girder being now 564 meters.

with central Vladivostok boasting of a collection of colourful, elegant and gran-diose pre-civil war build-ings. Architecture-lovers can spend hours in the Svet-lanskyaya and Aleutskaya streets, home to many build-ings designed in Czarist Russia and symbol of an era when aesthetics mattered. Yul Brynner lived in house number 15 on Aleutskaya Street. The grand four-� oor mansion has been restored to its original glory, al-though there is no museum in honour of the legendary actor. Residents of the city grudgingly admit that the star of the ‘King & I’ and other Hollywood classics was actually not born in the city, but across the Tatar Straits on Sakhalin Island.Right in the heart of Svet-

lanskaya Street is the Arse-nev Regional Museum, named after the great eth-nographer, explorer and writer Vladimir Arsenev, who wrote ‘Along the Us-sury Land’. The museum has a rare collection of photo-graphs dating back to the founding of the city. There is an interesting col-lection of civil war photo-graphs and some with the insignia of the ‘Far Eastern Republic’, a country which existed for two years before being annexed into the So-viet Union. The Arsenev Museum also has a small but nice natural history sec-tion, with an exhibit of an Amur Tiger and Brown Bear in mortal combat.Also in the city centre is Vladivostok’s answer to Moscow’s Arbat: The Admi-

to ‘the Fighters for Soviet Power in the Far East’. All three sites are worth visiting on their own at sea level. Most visitors enter the city via the great Trans Siberian Railways, which terminates in the city. The square hous-ing the monument to the � ghters holds a weekly mar-ket on Fridays, where indig-enous and local handicrafts can be purchased.Vladivostok is surrounded by 16 imposing forts, most of which were built to protect against potential Japanese invasions. The best night views of the city can be seen from fort number 7, which is about 15 kilometres to the north of the city. While the fort is officially closed at night, that doesn’t stop Rus-sian students and youth from getting up there for ab-solutely dazzling views of the city, the Golden Horn Harbour and the Amur Gulf.For those that want a room with a sea view, the city has plenty of options including the Amursky Zaliv Hotel, which is perched atop a cliff and the Primorye Hotel, tucked away in a peaceful street. This writer prefers the Vlad-ivostok Hotel, an institution in the city, which was once the most prestigious hotel in the Soviet Far East. The rooms have a great view of the Amur Gulf and the gov-ernment-run hotel is within walking distance of both the railway station and the Ad-miral Folkin Street.No visit to Vladivostok is complete without a visit to nearby scenic places. The Shamora Bay, which has played host to some of the biggest parties in the region, has some gigantic cliffs with breathtaking views of the sea. While Shamora is a good place to have a pre-sunset picnic, the evenings are also well-spent in the sanatori-um, which is adjacent to the Russian Academy of Sci-ence. The main building in the sanatorium resembles one of the great palaces of St Petersburg. Both sites are on the same line of an electrichka (electric train), in which ticketless travel

seems to be the norm.The best beaches near Vlad-ivostok are on the Popov and Russky islands. There are regular ferries to both is-lands from the city’s ferry station. While Popov Island has a few guesthouses and is a more popular tourist des-tination, Russky Island, once closed to foreigners, is a hub of activity as it pre-pares to host the 2012 APEC Summit. The city was closed to foreigners for over five decades, but the Russian government is now trying to pitch the city as a gateway to the Asia-Paci� c Region. The city is closer to Seoul, Tokyo, Beijing, Shanghai and Pyongyang, than it is to Moscow, making it an ideal entry point for Asian busi-nesses to enter Russia. Sev-eral countries, including Australia and India, have consulates in the city, which is poised to be an economic hub linking Europe with the Asia-Paci� c.Trade and commerce aside, given the city’s historic landmarks, natural beauty and cultural activity, it is no surprise that Vladivostok is one of the most sought after cities for adventure-seeking travelers.

Ajay Kamalakaran was the editor of The Sakhalin Times from 2003-2007.

Raj Kapoor, Gandhi, veggie....

Getting ready for the Big Day: APEC summit 2012

Raj Kapoor, Mahatam Gandhi and vegetarian food – Indi-ans are sure to feel at home in Vladivostok. The Indian Consulate in Verkneportavaya Street takes care of Indian cit-izens in the vast Russian Far East and issues an increasing number of visas to Russians. The city also has a Russia-India Friendship Association, which organises cultural pro-grammes. This year, the Arse-nev Museum marked Mahat-ma Gandhi’s birthday with a roundtable meeting on the philosophy of non-violence. India’s connections to the city go back to the Soviet Union, when Indian ships were occa-sionally allowed into the city’s harbour. Many 50-something

Vladivostok is now facing a new wave of construc-tion ahead of the Asia-Pa-cific Economic Cooperation Forum it will host in 2012. The city today looks like an enormous construction site, with cranes rising above dug-up streets, as workers upgrade transportation in-frastructure and build a new campus for Far East Federal University on Russky Island, which will host the sum-mit. The role of host city for the summit will result in a huge breakthrough in the development of Vladivostok and the surrounding Primo-rye region. Among the ma-jor benefits are two huge bridges that Vladivostok will get by 2012 and that will ease movement around the city. One of the bridges will stretch across the Eastern Bosporus Strait to connect the continental part of the city to Russky Island, about 800 meters to the south. It will be the longest cable-stayed bridge in the world, with a main span length of 1,900 meters. The other bridge will connect the city center to Cape Churkin lying across Zolotoi Rog, or Gold-en Horn, one of the city's biggest bays.

residents of the city proudly talk about how the Soviet Pa-cific Fleet was on call to de-fend India during the 1971 In-dia-Pakistan war, when the US sent its 7th Fleet to the Bay of Bengal. The Hare Krish-na Cafe remains a favourite among vegetarians and for those with a taste for North Indian curries and kebabs. There is an Indian restaurant called Bombay-1 that caters to the Indian palate’s crav-ing for spicy food. And like in other parts of Russia, legend-ary romantic actor Raj Kapoor is popular among the older generation, while the late-20 somethings are fans of Mithun Chakraborty, famous here for his film Disco Dancer.

3 FACTS ABOUT THE CITY

1 Russia's biggest port on the Pacific Ocean, popu-lation - 616,884. The ter-

minus of the Trans-Siberian RR and the Northern Sea Route, the chief base of the Russian navy in the Pacific, and a base for fishing and whaling fleets. Distance from Moscow - 9250 km. The annual temperature is +5°C (average temperature in January is -14°C, in August is +24°C).

2 The city's location makes Vladivostok a strategic transporta-

tion hub in the Far East for in-ternational cargo shipments. The port handles cargoes pri-marily from South Korea, Chi-na, Japan, Taiwan, Thailand and Vietnam.

3 The city is the chief cultural center in the Russian Far East.

Among its many educational institutions are the Far Eastern branch of the Russian Academy of Sciences and the Far Eastern University. Main industries: car and equipment construction, shipbuilding, fishing, food pro-duction and timber processing.

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An ode to the great Russian Far Eastern winters

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Ajay Kamalakaran believes that minus 50 degrees Celsius and ice on the sidewalks are not a cause for concern. Indian can easily fall in love with snow. To advertise

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