Rostec's 12 Program
Ensuring the proactive technological modernization of the economy and comprehensive development of the country based on cutting-edge technologies is a priority task, with objectives formulated within a framework of 12 national projects implemented by the government at President Putin’s instruction. The state corporation Rostec is to become a key provider for each of these projects.
National objectives and strategic tasks of Russia’s development up to 2024 were articulated by President Putin during his inaugural speech in May 2018 and formulated in a respective order.
The document formulated nine national development objectives for the country. They included ensuring sustained natural population growth, raising life expectancy, Russia becoming one of the five major global economies, and ensuring transition to economic growth rates above the global average while also maintaining macroeconomic stability.
In order to implement this program, 12 national projects and an infrastructure development plan have been developed or revised, split into 72 federal programs. All in all, a total of 25.7 trillion rubles have been earmarked for their implementation from budgetary and extrabudgetary sources. That includes 6.3 trillion rubles for the costliest part – implementation of a transport infrastructure upgrade and expansion plan.
From the very start, a key role in the plan’s implementation was given to the state companies that are to be most actively involved in achieving these objectives. As President Putin stated at a meeting of the Council for Strategic Development and National Projects held last November, “it is mandatory for state-owned companies to take part in development projects; it is what they were set up for, after all.”
Resources and technologies required for the implementation of national projects are to be localized and produced in Russia, working within the country and for the benefit of its development, and shall provide an incentive for national economy, industry, science, and education, Putin believes.
For these purposes, it is possible (and necessary) to use capabilities of the defense industry enterprises, tasked with enhancing their output of civilian high-tech products. “Naturally, when working to resolve development tasks, we need to employ technology, specialists and build cooperation chains, using the most advanced resources the world has to offer. However, it is clear that we may only progress relying on our own technological, workforce and production capabilities,” the president insists.
These calls for action are clearly directly addressed to Rostec, which is meant to play a key role in the country’s long-term technological modernization program. The state corporation is already among the forces that are most actively driving the plan for technology transformation outlined in the May order. One of the reasons for this is that participation in the implementation of national programs is fully consistent with Rostec’s own development plans, as stipulated in its development strategy up to 2025. One of the key items in the aforementioned strategy includes the requirement to bring the share of civilian goods production in total output to 50% by the deadline specified above. A large-scale production diversification program has been launched for this purpose and is being currently implemented.
As Sergey Chemezov, the head of Rostec, commented on the subject, “Money is spent for technology and earned by products. Creating high-tech products is our key commercial task with a massive intellectual component.” Strategically, the objective of this effort is also fully in line with that of the national projects: to create world-class modern technology capability in Russia. It is no coincidence that Rostec is one of this program implementation’s most active participants, and its enterprises are already involved in 12 national projects.
A clear understanding of the fact that digitalization and digital transformation are in fact a new global megatrend set to have a bearing on all spheres of life and production techniques has been formed and articulated in Russia at the very top level. The national project in digitalization implies progressing in four main areas: development of new production technologies, big data, quantum communication technologies, and VR/AR. Two state corporations, Rosatom and Rostec, have been designated as competency centers in this area, each being responsible for their own professional area.
Key areas assigned to Rostec include neural technologies and artificial intelligence, distributed registry systems, the Industrial Internet of Things, robotic engineering and sensorics, and wireless communication technologies.
The Smart City Ecosystem Project, which Rostec has been implementing since the autumn of 2016, is one of the flagship projects in this area. Pilot projects for integration of smart city elements into the urban infrastructure have already been launched in Ulan-Ude, Nizhny Tagil, and Moscow. Their high efficiency has been proven in practice.
The digitalization of the energy industry is one of Rostec’s key tasks within the framework of the Digital Economy project. An automated monitoring system successfully tested in April 2019 minimizes power line cutoffs for scheduled maintenance and current repairs, and reduces the accident rate due to early detection of threats.
The global objective of the national project is to enhance the life expectancy of Russian citizens. Early diagnosis is key in solving this problem. For this purpose, it is planned to increase the share of the population undergoing annual preventive screenings from the current figure of around 40% to 70% by 2024. This, in turn, will require a proportionate increase in the throughput capacity of the regions’ medical facilities and laboratory services. For this purpose, a network of clinical diagnostic centers is being set up with Rostec’s participation. The first of them, in the Kurgan and Samara regions, are set to open their doors as soon as in 1H 2019. The state corporation is offering for deployment in such centers its in-house technological solution, laboratory information systems (LIS), thereby enabling the transfer of all key work processes to electronic format, from referring a patient for tests and preparing biomaterials to the presentation of results. Among other things, LIS will reduce by 20% budget expenses allocated for these purposes, and resolve the issue of test results loss and reliability.
Another Rostec initiative within this national project is setting up a national sanitary aviation service. At the moment, this service is only available in less than a half of the country’s regions. It is planned that following this national project implementation, respective services will be available in at least 85% of the Russian Federation’s constituent entities. As a result, the number of people taken to hospital for an emergency on the first day will rise to 90%. Rostec has been an active project participant since 2016. The Russian Helicopters (Vertolety Rossii) holding that is part of Rostec is an active supplier of helicopters and medical equipment under this program. Under this program, 60 helicopters fitted with a medical module have already been shipped to different regions. By 2021, it is planned to deliver 104 more brand-new Ansat and 46 Mi-8 helicopters.
The main objectives of the national project include efficient waste recycling and disposal, purification of urban air, improving the quality of potable water, taking care of water systems and maintaining biological diversity. The landfill elimination problem is among the most pressing. Rostec’s subsidiary RT-Invest is a key developer and provider of solutions in this area. In particular, by the end of 2022, the company will build in the Moscow Region four waste incineration plants, where waste will be used for power generation purposes. Construction of another similar plant is planned for Kazan. The new technology will help resolve in an environmentally friendly manner the issue of waste dumping sites and landfills that has been a particularly pressing matter recently. Rostec’s plants will incinerate 90-95% of waste with zero emissions. The launch of these plants will enable the recycling of over 60% of all waste produced in the Moscow Region, and the reduction by 30% of waste burial volumes. By 2022, there will be zero waste burial in Kazan.
Another part of Rostec’s work in this area is setting up and deploying environmentally-friendly urban transport. For instance, in 2018, the subsidiary of the state corporation, the Kalashnikov Concern, donated to the Moscow police 30 Izh Pulsar electric motorcycles and four Ovum cars. The vehicles were used during the World Football Cup. The Concern is planning to create new specimens of “more traditional environmentally-friendly transport.”
Kalashnikov will also commence the development of an integrated system for material and technical support of Russia’s designated conservation areas control. Forward plans include setting up a network of regional training centers across the country.
International Cooperation and Export
Enhancing international technological cooperation and growing exports of Russian high-tech products is the key task of the national project.
Under the national project, the Roseleсtroniсs holding that is part of Rostec is supplying to the European Space Agency matrices used in astronautic radar locators on the circumterrestrial orbit.
“We manufacture a broad range of high-tech products that are in demand both, in Russia and abroad. Interest on the part of the European Space Agency provides yet another confirmation of the fact that our inventions meet the requirements of the highest global standards,” comments Oleg Evtushenko, executive director of Rostec. “In particular, we are fostering cooperation with the countries of the Pacific Rim. For instance, early this year, Roselectronics supplied radiation-resistant television equipment for controlling reload of nuclear fuel at the Tianwan Nuclear Power Plant in China. And in 2017, the Center for Promotion of Russian Technology and Presentation of Russian Investment Projects Abroad was launched in Singapore with support from Rostec and the Russian Singapore Business Council.” In its turn, in 2018, the Shvabe holding included in the state corporation entered into a tripartite agreement on cooperation in the area of Russian high technologies promotion on the SEA markets.
Building scientific capacity is a key objective of the national project falling into three main tasks. By the aforementioned date, the country is to become one of the world’s five leading countries in scientific areas that are priority areas for Russia, and become an attractive workplace for Russian and foreign scientists, with the country’s expenses related to scientific research outpacing GDP growth rates. Total expenses under the national project are estimated at 635 billion rubles, most of which is to be spent in Russia for setting up 15 world-class scientific and educational centers. Each of them is to bring together not only the leading education facilities of the industry but also non-financial sector enterprises, which should considerably enhance the efficiency of new technology development. The new partnership between Rostec and the Russian Academy of Science is to serve these goals. A respective agreement signed in April 2019 implies pooling the efforts of the partners for the purpose of creating innovative products, including conducting joint scientific research and development, and expert review of innovative technology.
The parties will also join forces in such areas as development and implementation of the state scientific and technical, industrial and innovative policy.
Russia being ranked in the top 10 nations in terms of basic education is the objective of the national project embracing all stages of the educational process, from children’s early development to working with seasoned specialists. One of the primary tasks is talent sourcing and creating an environment promoting development and professional orientation. Creation of an up-to-date digital environment in schools is a mandatory condition for achieving the above. “The state has set the task of providing high-speed internet connections, up-to-date technologies and digital tools at each school,” comments Sergey Sakhnenko, industrial director of Rostec’s Radio-Electronic Cluster. “Rostec is a supplier of over 100 products for the Education National Project, including both individual equipment and software items and integrated solutions, enabling the creation of ‘digital classrooms’ and ‘digital schools’ on a turnkey basis.”
For that purpose, the Avtomatika Concern has developed and is currently implementing the Digital School software and hardware package. The integrated solution enables digitization of all key processes, from controlling access to schools to financial calculations and report generation. It has been implemented at 350 educational facilities located in 60 cities and towns in Siberia, the Urals and the Far East. Subsequently, this experience will be rolled out to other regions of the country, as well.
Small and Medium businesses and Supporting Individual Entrepreneurial Initiative
The implementation of the national project is to resolve the task of providing small and medium businesses broader access to financial resources, including soft financing. By 2024, the number of people employed in this area, including individual entrepreneurs is to grow to 25 million. Novikombank, which is part of the Rostec structure, has been implementing a program for supporting small and medium production companies for over five years now. Recently, Novikombank launched a designated line of credit products for small and medium businesses that are contractors under state contracts, allowing small and medium businesses to obtain loans on softer terms with fewer documents required. According to 2018 results, the loan and guarantee portfolio of Novikombank’s customers that are small and medium businesses has grown by 175%, exceeding six billion rubles. The easy fundraising process is supplemented with a convenient procurement process. At the Goszakaz (‘Government Contract’) 2019 forum, operator of Rostec’s Berezka Unified Trade Aggregator signed a cooperation agreement with the Center of Competencies in the Area of Digital Development and Transformation of Small and Medium Business of the Digital Economy Development Fund. Not only does the use of the Unified Trade Aggregator enable state budget savings for low-volume procurement, it also opens access to state procurement for small and medium entrepreneurs. “At the moment, over 8,000 entrepreneurs have been accredited by the aggregator, having placed on Berezka platform nearly 900 thousand products,” comments Sergey Yarosh, general director of JSC RT-Project Technologies.
Operating Efficiency and Employment Support
The main target indicator of another national project from the Economic Growth block is the annual increase in operating efficiency of medium-sized and major businesses of the non-resource-based sector of the economy. As provided for in the program, this figure is to grow from 1.4% to five percent in 2024.
The national project offers an integrated approach to the task, and the list of work areas includes the incentivization of up-to-date production methods implementation, best practices deployment, provision of training to employees, supporting export operations commencement, and engaging foreign experts to take part in the programs. Rostec includes more than 700 entities, located in 60 constituent entities of the Russian Federation, with a total headcount of 445,000 employees. Besides investing into its enterprises development, the company also maintains an active cooperation with the constituent entities of the Russian Federation, stimulating a comprehensive industry upswing in the regions.
Housing and Urban Environment
According to the national project, by 2024, 18 cities located in 15 regions of Russia are to become ‘smart’. This means that the Internet of Things and information technologies will be used for the management of the city space – power networks, the water supply, and public space.
Rostec is an active participant of the Smart City program. The corporation is implementing various initiatives with an overall cost exceeding 30 billion rubles. Projects for integration of ‘smart’ technologies into the urban infrastructure are already underway in Moscow, Ulan-Ude, and Nizhny Tagil. In particular, the implementation of the Well-Lit City program providing for revamp of the entire urban lighting system in Nizhny Tagil demonstrates an annual saving of dozens million rubles due to power consumption reduction by more than 20 million kW per annum.
In addition, the FindFace Security System engineered by NtechLab is being implemented. It allows real-time identification of faces in a video stream, and in case there is a match with databases, the system will instantly serve notices to security services employees’ mobile phones. The solution is also compatible with regular cameras. The whole process from the actual appearance of a person in front of a camera and until receiving a signal takes less than five seconds. FindFace Security has already been connected to more than 3,000 cameras in Moscow.
Safe and High-Quality Motorways
The national project will be implemented in 83 regions of Russia with 104 urban agglomerations, having a population of 200,000 persons each. The main objective is to bring up to 50% of regional highways up to standards and halve the number of road and traffic accidents. These objectives are also being partially resolved under the Smart City project. Among other things, the project provides for the development of smart traffic systems that enable automated traffic management, such as speed measurement units and photo/video driving recorders. The Shvabe holding is involved in these systems development and has created an innovative transport system – ‘smart’ traffic lights with a video monitoring system, equipped with a video camera providing a 360-degree viewing angle. The function of panoramic video shooting allows road services to remotely control safety at the crossroads using a PC or a mobile gadget.
Rostec has also launched for the Smart City project a Smart Bus system, promoting traffic safety on the roads. Passenger transport is fitted with a video control system with a function of automatic passenger count and monitoring surrounding transport. A pilot project has already been launched in Kemerovo.
Project objectives include increasing the average life expectancy in Russia to 67 years, and increasing the total fertility rate per woman from 1.62 to 1.7 by 2024. For that purpose, the plan is to build perinatal centers and have them fitted them with up-to-date medical equipment. The Shvabe holding is also involved in supplying comprehensive equipment to these centers. In particular, a perinatal center in Pskov alone received over 1,200 units of medical equipment, including intensive care, reanimation, and artificial ventilation equipment.
Overall, the project aims to provide comprehensive support for cultural activities, the efficiency of which is to be measured in specific figures. This includes an increase in cultural facilities attendance by 15% up to 1.93 billion persons, and a fivefold increase in the number of addresses to digital cultural resources – virtual concert halls, model libraries with access to digital resources, online translations, and AR guides. In addition to directly supporting a number of cultural events, such as the Spasskaya Bashnya Moscow festival of military orchestras or the Tolstoy Weekend Festival in Yasnaya Polyana, Rostec is operating as an integrated supplier of digital technologies that will be also used for resolving the tasks set under the Culture national project.