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EEU and crisis: every man for himself or staying afloat together?  

01/03/16 07:51, Bishkek – 24.kg news agency, by Tatyana KUDRYAVTSEVA

Kyrgyzstan is a member of the Eurasian Economic Union for six months already. The country has not had time to feel the advantages of integration for the period. And then economic crisis broke out in the region. Businessmen sounded the alarm. If the government does not listen to their opinion, not to take urgent actions, the situation could slip out of control. In the end, we will simply lose many areas of entrepreneurship and increase the ranks of the unemployed.

The government, in response to business concerns, is ready to work out an anti-crisis program. 24.kg news agency asked the respondents how to find a way out of the crisis and, ultimately, to benefit from participation in the EEU.

 Gulnara Uskenbaeva, chairwoman of the Association of Suppliers:

- State aid is necessary because a part of the problems, associated with EEU is caused, unfortunately, not by the entry into the union but by the actions of our officials. They create such procedures within the country that complicate life of the entrepreneurs. We have repeatedly said that it is necessary to simplify procedures so that our business can survive in a crisis and the EEU. The opposite occurs in reality. Moreover, our businessmen simply can not solve some of the problems by themselves in a down economy. For example, access to resources. If now the commercial banks provide loans at 30 percent per annum, our businesses will not survive with such loans. And there is no development without access to finances. The state should consider the possibility of issuing loans to entrepreneurs at the lower interest rate. For example, as it is annually done for farmers. Now we have to support the small and medium business.

-What business is ready to do to overcome the difficulties?

- Often there are additional expectations from business. What can we promise except that we are ready to live, work and pay taxes? When we are working, we pay salary. We provide jobs, people feed their families. And it is our social task we perform. And we continue to do it. We either should not be interfered, or to be helped. Here is a recent example. I was at the Social Fund. Its workers were talking about the need to invent a new method of control over taxpayers. After all, entrepreneurs buy licenses but not the policies. I by myself tried to buy this policy. I have visited Pervomai Department of Social Fund five times, but could not buy it. And who will go to them constantly? What has the Social Fund done for the people to ease payment of the insurance premiums? Nothing at all. The main task is to simplify managing of payments.

Eldar Abakirov, representative of the Association of Young Entrepreneurs:

- The problems were obvious before Kyrgyzstan's accession to EEU. Now, the authorities say, of course, that nobody has predicted the regional economic crisis. But initially it was known that our economy is not ready for the EEU due to weak manufacturing, the lack of standards and long-term financing. Many factors were known, but we all closed our eyes, joined the union and are convulsively trying to survive now. But again, it all depends on our responsiveness and will. And here we can not say that everyone will solve his problems on his own. If the business has problems, then the entire state will have the problems, because the business is jobs and taxes. If people do not have work, they will be hungry and quickly overthrow the power. We're all in the same boat and must act together.

- What should we do to ease life of people in the country?

 - Kazakhstan, for example, has made concessions that it can import products from WTO countries. And these rates are different from the norms of the EEU. We could do the same. Our Association of Young Entrepreneurs has proposed the government five steps to overcome the crisis. At the same time we need to achieve maximum business liberalism, eliminate bureaucratic schemes when issuing permissions on connection to the communications and in the field of business checks. We have too much pressure on the business by the inspection bodies. Checks are carried out constantly. These all distracts business from the main business activities, and it should all day long think about better production, how to provide better services, but not about inspections. If the business pays taxes honestly, it should not be touched.

 Zhyrgalbek Sagynbaev, chairman of the Association of Manufacturers of Kyrgyzstan:

 - The economic situation is difficult, the crisis has affected all the spheres. After joining the EEU, game rules for the industry have changed, there are appeared new technical regulations. People get acquainted with them, business is looking for new forms of cooperation according to supplier-buyer principle. About a year is needed to fully use the potential. Only after that the business will start developing actively. Unfortunately, we can not choose the neighbors. Any crisis that occurs there automatically comes to us. At present, cooperation is hard, look at Kara-Balta Ore Processing Plant which stands idle due to lack of raw materials.

 - And what problems does your sector have?

 - Business sorely lacks working assets. The assets are undervalued. Our lenders undervalue assets and issue short-term loans in the industry sphere. The opening of the Russian-Kyrgyz fund, which plans to lend at 12 percent per annum for long periods, should help the sector to deal with the crisis. To change this situation, in my opinion, we have to learn how to negotiate with investors, to teach our business to prepare competent and clear business plans. And the government should choose definite specialists who will be responsible for negotiations with major investors. Unfortunately, as of today, our state structures abroad can not attract investments due to certain circumstances.

- What should be done to change the situation?

- The state is obliged to attract investors and to learn how to protect them. The crisis is a bad companion for the state, but at the same time it is good because each head is tested for strength. First, it saves money and time. Life forces a state to look for new ways of development. Our country is small, and it is easier for us to get out of the crisis. The potential that exists in our country is not fully used. Now there are many ways to properly use the current situation to develop. Kyrgyz Manufacturers' Union has sufficient experience in these areas and is ready to assist the government and the heads of industrial enterprises. We have strong ties with the countries of the EEU and abroad.

Ainura Chekirova, executive director of an analytical center:

- Everything should be cooperated. Any initiative to change the business conditions of work should be consistent with it. The crisis should be overcome by joint efforts. And the practice is that the additional administrative burden on business policy continues, and it finds it out post factum. Now we must jointly build a unified communications front with EEU. There is an active legislative process that the business is not aware of. Reconciliation is carried out through the government of the Kyrgyz Republic. It is necessary to discuss together how to defend the interests of Kyrgyzstan,  discuss a version for presentation of the decision of the Eurasian Economic Commission, so that tomorrow our businessmen will not face with an unhealthy competition. But it is really difficult to make it. Such a large amount of material comes from EEU that it is difficult to analyze something and quickly offer solutions to the issue. Of course, we try to keep track of all the initiatives, sift "unhealthy" norms, but it is impossible to keep track of everything.

-Are there internal initiatives of the Cabinet that prevent business from focusing on dealing with the crisis?

- There is a situation now when the Ministry of Economy, as the relevant agency, is trying to announce initiatives to support the business, but the reconciliation process kills the original idea. It seems, the bill has been submitted for discussion- a good, rational document, but as soon as it comes to the agencies for agreement, each of them reflects its inner interests in it. The State Tax Service, for example, if the bill is aimed at reducing the tax burden, says that it is not in favor of the budget. Customs Service says that document may create a risk of smuggling. The Social Fund will contribute to it also ... And there are lots of other examples. The idea is so distorted that has trivial effect. The idea is changed by 70 percent. And sometimes it is even abandoned, because the key government body (Ministry of Finance, for example) is against it. Often the proposed projects do not coincide with the position of the Ministry of Economy in liberalization of the laws in the field of business. So, we agree on a good, but there can appear a document, which greatly complicates the life of business. This indicates poor coordination of government actions. 

 Sergey Ponomarev, the chairman of the Association of Markets, Trade and Services:

 - There is a crisis, and it is recognized by the government. Therefore, we together with the Council for Business and Investments Development and the government develop an anti-crisis program. When we offered it, we were told that the indicators are good, there is a growth, but we were convinced that there is a crisis. In the end, we were right. But I must say that the crisis began not because we have entered the EEU as some biased politicians say. We have repeatedly discussed the situation and came to the conclusion that it would be worse without EEU. The problem is that we have agreed on national interests too long. We have entered the Union on August 12 and on August 20 Kazakhstan let tenge to float freely. Our exports became more expensive. The same happened with Russia. But the capacity of our domestic market is insufficient for the economic sector, we need new markets. Business needs government support, of course. We have initiated the adoption of anti-crisis program for this purpose.

- What kind of help is business waiting for?

- We would like to have more than we are offered now. But even those measures, that are included into the current anti-crisis program, can have effect. For example, it is proposed once a quarter to inform the EEU countries about what we have produced and sold on the Union market. Advertising is a good thing, a good support. Process of de-dollarization of the economy, which is also important for Kyrgyzstan, is detailed in the program. In addition, we propose to adopt the experience of Belarus, where they exempt of VAT on imports for180 days. Entrepreneurs by saving on customs clearance will be able to gain a competitive advantage in the markets of the EEU. And this is important for those who work on foreign markets. But business would like also to have financial support. For example, the Russian-Kyrgyz Development Fund is working but it provides business loans in the amount of over $ 3 million. It is possibly acceptable under Moscow standards, but it does not work in our country. But the Russian Federation gave the money, so now the government of Kyrgyzstan and Russia are discussing the possibility of reducing the threshold. Businesses today need fast, low-cost and long-term money. That is an essential support.

URL: http://eng.24.kg/perekrestok/179505-news24.html
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«When we ran in the elections, we said that would even get the moon and the sun from the sky ».
MP Kamchybek Joldoshbayev at a meeting of Parliament, February 2, 2017.

«What have you done besides sale of donkeys to China?».
Deputy Ryskeldi Mombekov to the head of State Inspectorate for Veterinary and Phytosanitary Safety Kalysbek Zhumakanov at a meeting of Parliament, February 1, 2017.

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