OPINION: Why only $650 Million?
"IT and Communications Minister Leonid Reiman said Russia would invest some $650 Million in the IT sector over the next five years."
Feb 04, 2005
"IT and Communications Minister Leonid Reiman said Russia would invest some $650 Million in the IT sector over the next five years."
This may seem a nice figure and I suppose that lots of people find it more than a welcoming message from the government towards the IT sector. During the recent visit to Novosibirsk, both Putin and Reiman highlighted the need to improve and develop the Russian talented scientific centers. Now, when this figure may seem a good jump start, it might be appropriate to make some small comparisons, in other words, some bench marking.
We know Finland and we also know that this small country is having the one of the most competitive IT sectors in the world. But, the market itself in Finland is small, graduates from the universities are nothing if compared to Russia and most of all, we do not have extensive and successful R&D history with lots of Nobel prizes behind us. We only have one as far as I know and that is not in IT. Therefore it is so important to realize and compare what Finland is doing for supporting the high-tech sector. One example, if you please.
Tekes (The National Technology Agency of Finland, www.tekes.fi) invested last year alone 409 Million euros, app. 533 Million Dollars to fund 2242 projects in private field and within the network of Universities. 237 Million Euros went to the companies and 172 millions to the Universities and other research institutes. This created a pool of new or replacing products 770, 190 production processes, 730 patent applications, 1000 Master's Thesis and app. 2500 publications. Pretty impressive, I would say!
The question now is that, is the allocated sum of $650 Million for the next five years sufficient in Russia, if even the small country of Finland can invest almost the same amount in a one single year? Moreover, Tekes is not the only agency in Finland that is funding the R&D, there are several others and the overall figure is even greater! Surely, in my opinion, Russia has the money! Oil prices are rocketing and oil sector is pumping money to the coffins in Kreml. How we then only see this small spillover for the IT sector? Why not invest more? If Russia and, more importantly the government wants to be serious for supporting the IT sector and the R&D centers it should look around and do their homework properly before announcing the support.
I am curious person and therefore I read all the articles and news about the new Tech Park networks, tax breaks for the companies and so on, that were published during the last weeks very carefully. I have to admit that I am confused. Why these tech parks should be state driven in a first place? If you look around, almost in all countries they are private businesses. Who determines the companies than can have a premises in the parks, who says are you allowed for the tax breaks or not etc.? If it will be state driven organization it is doomed to die from the very beginning. Like Mr. Silverang is saying in St. Petersburg Times article (Jan 25, 2005), we just do not want to see some beautiful, new glass covered office facilities, but instead, we would like to see the services offered for the companies. To put it shortly: The Business. Who will offer these services? I am afraid, if somebody will say that the same state-driven organization. Where they could find such talented people for this challenging task? Once again, I am more than afraid, if somebody will say: Well, we have some technically orientated bureaucrats who can do this. More surprisingly, it was even mentioned that companies in these huge state-driven remote tech parks should be investigated by tax police at least after every three years. I am asking once again why? Shouldn't we start the investigations in tax issues if something is wrong with company balance sheet, not doing it by as a de-facto procedure?
As far as I can tell, Putin and Reiman are only seeing the buildings, not the needed business based structures behind the tinted glass windows. This also leads us to the important factor of location. In Finland, most of the parks are closely located to the major highways and more importantly to the airports. Similar, location based structures you can find in India, where the duo visited some time ago. Why this is so? Because business is international and traveling is still essential part of doing the business altogether. Fast in fast out. Time is money and this expression is also well known in Russia. People just do not want to spend days for traveling. As an example, Novosibirsk is middle of nowhere and Akadem Gorodok is far away from the airport. Business wise this is not a very feasible location. The problem here is that, during the Soviet Union times, most of the R&D facilities were located in remote and closed cities, far away from the civilized world. This concept doesn't apply in the modern business driven world. But, if Russia is building up the same old Soviet style of R&D centers, maybe all talented people will be relocated to the hidden cities in Siberia. I surely do hope that this not the case.
This may seem a nice figure and I suppose that lots of people find it more than a welcoming message from the government towards the IT sector. During the recent visit to Novosibirsk, both Putin and Reiman highlighted the need to improve and develop the Russian talented scientific centers. Now, when this figure may seem a good jump start, it might be appropriate to make some small comparisons, in other words, some bench marking.
We know Finland and we also know that this small country is having the one of the most competitive IT sectors in the world. But, the market itself in Finland is small, graduates from the universities are nothing if compared to Russia and most of all, we do not have extensive and successful R&D history with lots of Nobel prizes behind us. We only have one as far as I know and that is not in IT. Therefore it is so important to realize and compare what Finland is doing for supporting the high-tech sector. One example, if you please.
Tekes (The National Technology Agency of Finland, www.tekes.fi) invested last year alone 409 Million euros, app. 533 Million Dollars to fund 2242 projects in private field and within the network of Universities. 237 Million Euros went to the companies and 172 millions to the Universities and other research institutes. This created a pool of new or replacing products 770, 190 production processes, 730 patent applications, 1000 Master's Thesis and app. 2500 publications. Pretty impressive, I would say!
The question now is that, is the allocated sum of $650 Million for the next five years sufficient in Russia, if even the small country of Finland can invest almost the same amount in a one single year? Moreover, Tekes is not the only agency in Finland that is funding the R&D, there are several others and the overall figure is even greater! Surely, in my opinion, Russia has the money! Oil prices are rocketing and oil sector is pumping money to the coffins in Kreml. How we then only see this small spillover for the IT sector? Why not invest more? If Russia and, more importantly the government wants to be serious for supporting the IT sector and the R&D centers it should look around and do their homework properly before announcing the support.
I am curious person and therefore I read all the articles and news about the new Tech Park networks, tax breaks for the companies and so on, that were published during the last weeks very carefully. I have to admit that I am confused. Why these tech parks should be state driven in a first place? If you look around, almost in all countries they are private businesses. Who determines the companies than can have a premises in the parks, who says are you allowed for the tax breaks or not etc.? If it will be state driven organization it is doomed to die from the very beginning. Like Mr. Silverang is saying in St. Petersburg Times article (Jan 25, 2005), we just do not want to see some beautiful, new glass covered office facilities, but instead, we would like to see the services offered for the companies. To put it shortly: The Business. Who will offer these services? I am afraid, if somebody will say that the same state-driven organization. Where they could find such talented people for this challenging task? Once again, I am more than afraid, if somebody will say: Well, we have some technically orientated bureaucrats who can do this. More surprisingly, it was even mentioned that companies in these huge state-driven remote tech parks should be investigated by tax police at least after every three years. I am asking once again why? Shouldn't we start the investigations in tax issues if something is wrong with company balance sheet, not doing it by as a de-facto procedure?
As far as I can tell, Putin and Reiman are only seeing the buildings, not the needed business based structures behind the tinted glass windows. This also leads us to the important factor of location. In Finland, most of the parks are closely located to the major highways and more importantly to the airports. Similar, location based structures you can find in India, where the duo visited some time ago. Why this is so? Because business is international and traveling is still essential part of doing the business altogether. Fast in fast out. Time is money and this expression is also well known in Russia. People just do not want to spend days for traveling. As an example, Novosibirsk is middle of nowhere and Akadem Gorodok is far away from the airport. Business wise this is not a very feasible location. The problem here is that, during the Soviet Union times, most of the R&D facilities were located in remote and closed cities, far away from the civilized world. This concept doesn't apply in the modern business driven world. But, if Russia is building up the same old Soviet style of R&D centers, maybe all talented people will be relocated to the hidden cities in Siberia. I surely do hope that this not the case.