The State property
fund is an organization that you find in many
countries under different names and their
responsibilities may differ, could you perhaps
underline for us the main responsibilities
and competencies of the State property fund
here in Kyrgyzstan and the role it serves
within privatization process?
Our department was established in January
1991 and I think in all the countries such
agency is created during the transition
period. The mission of them is to cope with
temporary tasks, which are set for them
by their Governments. So you know that during
the Soviet time there was no private ownership
and this very agency was established in
order to privatize the state property. This
is one of the functions of this agency,
as well as to manage the property, which
belongs to the state nowadays. These are
only two directions of our agency, besides
this we are working on creating investment
climate in our republic, establishing investment
policy of our Government, and we are dealing
with bankruptcy issues in our country.
The state property fund is also in charge
of recovering bankrupt enterprises, do you
think that the large number of bankrupt
enterprises can be salvage with the necessary
influx of foreign capital. Do these enterprises
remain viable that they will have to be
completely eliminated?
Of course, investors can buy those enterprises,
which are under the bankruptcy procedure
as well. Bankruptcy is not just liquidation
of enterprise, in the positive meaning of
this word, it is a change of owner. In the
process of bankruptcy, special administrator
is seeking for the investors or those people
who are interested in buying this enterprise
and his main task is to find new owner or
to sell to them without interfering the
normal process of production cycle and stopping
their processes and pay out the debts they
had before. And administrator sells that
part of the company, which interests the
potential investors. And those assets of
this enterprise, which did not find interest
with the investor, can be sold separately.
It is only one kind of bankruptcy, but there
are several other types, like reorganization,
sanation, but these kinds of bankruptcy
should be obligatorily implemented with
the help of state, budget.
As our government does not have budget reserves
we unfortunately could not apply those types
of bankruptcy in the practice nowadays.
Therefore we mainly apply liquidation by
selling the object.
We met with minister of transportation
and during our conversation he highlighted
the sell of 51 % of shares or controlling
stake of Kyrgyz Telecom. This is, of course,
the most anticipated privatization in Kyrgyzstan,
could you give us an insight when it will
take place or when it will start?
In order for you to have a detailed information
I would like to say that we are selling
51 % of JSC "KyrgyzTelecom" and
one should clarify here that 51 % of the
whole joint stock company, not the state
share as the state has 87-90% in this company.
Therefore under further informing of potential
investors it would be clear that the control
stake of KyrgyzTelecom is under sale. We
have got a permission from Parliament. Hired
a financial-legal advisor on selling Kyrgyztelecom,
which is an American company "Deloi
Tush". At the moment, we are conducting
joint work, prepare tender documentation
and their preparation is under its finalizing
stage. Sometimes within a month I think
we will start promotion through mass media,
Internet and by embassies accredited in
Kyrgyzstan as well as through our embassies
abroad.
In attracting foreign investment Should
all joint stock companies provide obligatory
reports on their financial activities, this
is one of the conditions that has applied
to some enterprises but not to the whole
of state owned enterprises. Do you think,
perhaps, that it would be advisable or good
idea to make it mandatory, so that investors
could feel more comfortable and secure when
bringing in their capital in the Kyrgyzstan
and into those enterprises?
You know, you are asking the right question,
in general, and particularly concerning
Reemtsma it is not quite correct as this
company is not state but private. There
is no state share of stocks in this company.
And in general the companies where there
is a state share they are reporting, we
request them to provide reports as we are
conducting shareholders meeting and our
state is a main shareholder of those companies.
But at the moment there are 250 enterprises,
where we have state share of stocks from
10 to 100%.
Out of 276 enterprises with state share
the government has controlling stake of
51 % in 187 enterprises still or has that
number decreased?
Nowadays this figure is decreasing because
we have adopted a privatization program.
This is like a last stage of state property
privatization in Kyrgyzstan. On the base
of this privatization program we have already
started the privatization of those enterprises,
which are still with state hands. For clarifying
as of today the Government owns about 29-30
% of state property. 70 % of state property
is already privatized. We had 30 % and therefore
I am saying 29-30% as we already privatized
some enterprises.
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There is also
the privatization of the Energy sector. Could
you tell us what you think are the opportunities
for investing in this sector, which could
be so strategic for Kyrgyzstan in the years
to come, and the role that foreign investment
could play in developing it?
We really should start from this year the
privatization of one of the energy distribution
companies according to the privatization
program of energy sector. And I would like
to say that weather we like it or not we
earlier or later will come to stage of privatizing
energy sector. And without investing to
the energy system we are not able to independently
develop this sector. But looking to our
current problems, processes I could say
that perhaps, for the moment we have to
wait for a while with privatization process
here. As by transferring the ownership to
private hands we will of course transfer
enormous rights to investor or private company
concerning cutting off electricity, independent
rising of tariffs and it of course will
influence the social issues in our country.
Therefore we think that for a while we will
wait with privatization of energy system.
But privatization is not only transferring
the ownership, there are other forms of
privatization. For the moment we are considering
possible transfer to concession, for example.
At the moment we are in the process of considerations
as this is very serious issue. We should
approach to this issue very thoughtfully
and weigh everything.
How would you describe the investment
climate here in Kyrgyzstan to our readers
and what do you think it will be like in
couple of years?
You know in general I could say that we
have many problems in creating investment
climate. But I think that we have done a
lot of as our country is not reach in natural
resources, does not have favorable geopolitical
climate. We just have to create artificial
investment conditions but I think that in
future we will be a liberal country, which
will create maximum conditions so that investors
would work here. I even don't exclude that
politicians can raise up the issue on becoming
Kyrgyzstan as an off-shore zone. Therefore
we should maximally create conditions for
investors. This is our only way out.
Do you think that the more investors
come to Kyrgyzstan, the more favorable the
investment climate will become, just by
mere force of their presence here. What
is SPF doing to attract all those investors
in terms of attracting and informing and
encouraging them?
I am not sure that the more investors will
come to Kyrgyzstan the better will be because
the possibilities of Kyrgyzstan are limited.
For example comparing with Russia, so billions
of dollars are needed in order to raise
the economy of Russia. And if to invest
all those billions to Kyrgyzstan, it would
just not be able to digest them. Therefore
we need so much, what we need. But what
are we doing? Every year we are conducting
investment summit with participation of
foreign investors, which are considered
to be the biggest ones within the Kyrgyzstan
scale. This is what you told about Reemtsma,
Cumtor Company. In the beginning I didn't
pay attention to this but later start to
think about it and it turned to me to be
very important. So we are sitting together
- Government from one hand and investors
from the other hand and they are asking
us questions, raise to us their problems.
We are asking each other different questions.
But mainly they are asking us. Why we are
not doing this or that? If we are not able
to do this or that we explain them why we
are not able, and if there are certain subjective
reasons then we try to correct it during
the next year. This way we are creating
"barriers matrix", which interfere
foreign investors to work here in Kyrgyzstan.
Nowadays this matrix is very popular. And
during the next year we are coping with
those barriers we had created ourselves
with full courage. As Ruzvelt told.
One last question and this is more about
yourself. You are very young person to be
seating in this place and I am sure that
there is a lot of accomplishment behind
you that had brought you here. Perhaps,
you can tell about some of them, what you
feel more satisfied with and perhaps you
feel most challenged in this very task of
running the SPF?
I am 33 years old, yesterday I had a birthday,
I graduated Legal Faculty of KSNU, diplomatic
academy of Russian Federation, and passed
training in Institution named after George
Marshall for half a year on the security
issues. I worked with Government in the
President's Administration, was a Deputy
Minister of Investments, and the last time
President's Assistant, nowadays I am a chairman
of this Fund. What I have done - it is difficult
to enumerate own achievements, this should
be told by people. But the most important
I would like to do that 98 % of property
would be under private ownership and 2 %
under state ownership in our country. Of
course by legal and qualitative way because
I am sure that the basis of any government
is private property and the last thing will
stay on earth is the private property if
there will be no any state.
I am sure you can do this and wish you
luck.
Note: Winne cannot be held responsible
for the content of unedited transcriptions.
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V.I.P. INTERVIEWS
