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Business community concerned about pressure on economic entities in Kyrgyzstan

Business is particularly concerned about the work of the state commission to study efficiency of the development of Kumtor gold mine. The International Business Council (IBC) reports.

The company developing the mine applied to the IBC to protect its rights and ensure compliance with the country’s legislation. The letter of the commission to the management of Kumtor Gold Company CJSC says that it is planned to check practically all company’s documentation. The head of the state commission, deputy of the Parliament Akylbek Japarov, asks from March 3 until completion of the commission’s work, «from 9.00 to 22.00 to provide full and unhindered access for all commission members to all required financial and economic, legal, technical, environmental, administrative and other documents, as well as to provide temporary offices, office equipment for their work.»

At the same time, the list of members of the commission, experts and specialists is indicated. There are more than 20 people in total, and the list, as it is said, can be expanded.

 «As far as we know, despite the moratorium imposed by the Government on inspections of business entities conducted by law enforcement agencies, inspections by fiscal and law enforcement agencies are currently underway in relation to Kumtor Gold Company. In some cases, a huge amount of documents has been requested since 1993. Such an abundance of inspections in relation to one economic entity creates risks for further uninterrupted operation and performance of production tasks, which ultimately will negatively affect not only the company itself, its employees, but also the country as a whole,» IBC Executive Director Askar Sydykov said.

In addition, during the work of such deputy and other state commissions, the approach of requesting the necessary information is applied, providing access to all company’s documentation. There are risks of safety of documents necessary for further life of companies. Kumtor is not against providing information, but upon an appropriate request indicating the required information.

After publication of information on creation of the commission to check Kumtor Gold Company, the value of Kyrgyzstan’s shares in Centerra Gold Inc. fell by more than $ 150 million.

 One of the factors behind this is the fall in world gold prices over the specified period. But reports of the creation of the state commission also likely contributed to the fall in the value of Kyrgyzstan’s assets. In 2012, as a result of similar inspections, the value of shares fell almost three times.

«The current situation shows that even the largest taxpayer of the country cannot feel safe from inspections and requirements of government agencies. The situation is aggravated by the fact that we receive similar appeals and complaints from businesses from various industries,» the head of the IBC said.

A parliamentary commission has recently been created to check Vertex Gold Company, and other business entities are being checked by law enforcement and other government agencies.

The sixth convocation of the Parliament performs purely technical functions that are important for the life of the state after the end of the current session. According to experts, the Parliament does not now have the authority to create such commissions, because there are only four months left before the expiration of the term of the convocation.

There are supervisory bodies of executive power to check compliance with the law.

The Parliament, according to the law, exercises control over the executive branch. If it has doubts about the observance of the legislation, it could instruct the Government and its specialized bodies to carry out inspections in the prescribed manner, without duplicating simultaneous inspections by various bodies and commissions.

«We are very concerned about the ongoing inspections of business in the context of the deep economic crisis in which the country is now, and we stress the need to take measures to quickly stabilize the economic situation. We are surprised by the actions that contradict the declared policy of the state to protect investments and support business, carry out economic reforms provided for by the decree of the President of the Kyrgyz Republic on protection of property and support for entrepreneurs and investors dated January 29, 2021,» Askar Sydykov said.

One gets the impression that companies need to quit their main activities now and only respond to inquiries and inspections from government agencies. In such a situation, we can not talk about development.

Askar Sydykov

The IBC noted that they consider it important to respond to the appeal of Kumtor Gold Company and other companies, because today it concerns one company, tomorrow — another, and the day after tomorrow it can concern any of the economic entities operating in Kyrgyzstan in any sector of the economy. Today it is felt in many sectors of both large and small businesses — in trade, services, industry, and agriculture. IBC receives messages from various companies almost every day.

«The business community, civil society, and the general public must react to each such case and protect the legal rights of entrepreneurs and human rights. It is necessary to ensure the rigorous, uniform application of legislation and take into account the current difficult situation both in the economy of Kyrgyzstan due to the deepening crisis and recent political events, and in the global economy as a whole,» the International Business Council said.

According to preliminary data from the National Statistical Committee of Kyrgyzstan, the share of Kumtor in the country’s GDP was 12.5 percent and a quarter of all industrial production in 2020. Over the past year, taxes and mandatory payments were transferred in the amount of more than 13 billion soms. According to Kumtor Gold Company, the number of employees of the company, including contractors, exceeds 4,000 people.