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"SMEs need to focus on export"
On Monday, December 29th, renowned businessman Serikbay Bisekeev - head of Arman Holding Group, Independent Director and Member of the Board of Directors of the "Damu" Fund - gave a webinar address on the topic: "Entrepreneurship in Kazakhstan: myths and realities"
Businessmen from every region of Kazakhstan were given the opportunity to talk with the renowned entrepreneur in the first webinar organized by the Fund "Damu". Dozens of businessmen gathered in each of the regional offices of the Fund. This interest is due to the fact that Serikbay Bisekeev is not only a successful entrepreneur (in 2012 he was named Entrepreneur of the Year in Russia in the B2B category according to Ernst & Young), but also independent director and member of the Board of Directors of the Fund "Damu" (Bisekeev has held this position since July 2014).Before the beginning of the webinar, Serikbay Bisekeev had an audience with the press.
- Serikbay, this year you became independent director of "Damu" Fund. What do you think - how can the fund's work be improved?
- I have spoken with entrepreneurs and the representatives of banks, trying to figure out in which direction to go. There is much talk about "Damu" support. However, sometimes the application is kept under consideration for months, but entrepreneurs need money "right here, right now".
I believe that since it is state money, not the banks', the government should call the tune. The STBs must heed the demands of "Damu", but right now they just live their own lives. For example, each bank asks for their own version of a loan application form to be completed; the poor businessman fills in documents at each bank and has to jump through the same hoops each time. I proposed the creation of a standardised application template for "Damu" related projects. After filling in all the data only once, the businessman can then send a request to multiple banks, and the banks should answer within 2-3 days, whether the loan application has been approved or not. This means that the entrepreneur will not run around for the banks, but vice versa.
- Why do banks currently take so long to give an answer?
- They do not have enough information on borrowers. STBs ask us to assist them in obtaining information from the tax authorities, so we have integrated data from the Tax Committee with "Damu" borrowers' credit histories. If possible, we want to see how they pay their utility bills, whether they break traffic regulations: that is, if a person conducts himself adequately, has always studied well and has never been in debt, his rating is immediately increased. However, the First Credit Bureau doesn't yet provide enough information about a prospective borrower, and this affects the speed of decision-making.
- What other issues are currently relevant to "Damu" programmes?
- Sometimes it does not even matter to the entrepreneur what rate a loan is taken out at. The question is, when does he get the money - as well as solving the problem of collateral. Not every entrepreneur can even provide collateral to the amount of 50% of the loan (in order to obtain a "Damu" guarantee on the remaining 50%). There are now plans to guarantee up to 75% of the loan amount for some projects. Nevertheless, we need to find an optimal model, which would allow the acquisition of loans with a low collateral base - and in some cases without one altogether. This requires statistics on borrowers, which are currently being prepared.
- Apparently, it is particularly important for start-ups, because many are now pledging their own homes in order to get a loan.
- Yes. But when I started my business, I did not take out any loans - I put my own money into all the projects (saved, pledged, negotiated the postponement of payments). After all, the word "entrepreneur" derives from the word "enterprise" - he must always think of something.
- How transparently are loans issued by the "Damu" programme?
- I am convinced that everything is transparent, that banks do not have money credited to their accounts (National funds are kept in the National Bank) until the project is protected, then the money is transferred directly to the borrower. That is, the bank cannot invest the money illegally.
What "Damu" is now offering can be called unprecedented support - in essence, a business can obtain loans at a rate below the inflation rate. In 2014, a moratorium was declared on inspections of SMEs. What else needs to be done for the development of business?
An analysis needs to be conducted of how similar funds work, and to understand how businesses are supported in other countries. For example, Turkey started out at practically the same time as Kazakhstan, but has been supporting business all these years. Apart from which, it is important to take into account the fact that the domestic market of Kazakhstan is very small, which means we have to work on our exports. We need to provide all the conditions in order for SMEs to begin manufacturing goods that can be sold outside the country. Again, citing Turkey, if a businessman wants to build something, for example, in Kazakhstan, the state allocates him interest-free money for equipment so that he is able to work abroad. If an entrepreneur wants to sell fur coats or sheepskins, the state pays him the annual rent of top stores in other countries.
I cannot understand why our government does not do the same. We have oil and gas, we have earned 1000% per annum - we should have developed business, but in the end we have just lost time.
On a global level, the state must change the laws so that investors come to Kazakhstan. Currently, state benefits are given only to those who bring more than $20 million to the country. But worldwide, 80% of income is earned by small and medium businesses. Maybe attention should be paid to those who are willing to invest $10 million? Foreign small and medium enterprises can also create jobs in Kazakhstan. But it is necessary to set out the conditions. For instance, when creating a joint venture - the entire medium and lower level staff should be local, while the foreign managers should prepare their replacements, and after 5 years only Kazakh citizens should be working in the joint venture.
- Representatives of medium-sized businesses are now saying that the state should help them to participate in major projects such as Expo, because currently the main contractors - foreign companies - frequently ignore the local manufacturers.
- Yes, it is necessary to support local producers of goods and services. For example, in Singapore, where I now live, foreigners are not invited to work at average skill levels because, to put it bluntly, if they need someone to swing a shovel, they have enough of their own people. But if a company is willing to pay an expat $10 thousand per month, it means he really is needed and is thus granted permission to work in the country.
I think we need to highlight which protectionist laws really work in other countries.
Let's look at the situation in the field of tourism. The Authorities say it is a priority sector of the economy and it should be developed. But the monopoly of the national carrier "Air Astana" does not allow airlines from other countries to fly to Kazakhstan. How do we hope to get into the top 30 developed countries if we do not have direct flights with air companies from the world's financial centres - Tokyo, New York, Singapore, Shanghai? Foreign entrepreneurs cannot create joint ventures with us partly because they do not want to fly here in a crate. It is necessary to make the skies open - take for instance Amsterdam, which is open to flights from all airlines and competes with the airports of London, Frankfurt and Paris. Enough of protecting one company. If we want to create jobs and receive 10 times more tax than "Air Astana" pays, it is necessary to change the rules of the game.
- It is sometimes said that in order to develop business, we need to change the mentality of officials. Do you agree?
- Unfortunately, officials in Kazakhstan do not often realize that they are sustained by those who pay taxes, i.e. entrepreneurs. The same policeman who tries to "put the squeeze on" the entrepreneur for violating traffic regulations, does not realize that even the buttons on his uniform are paid for with taxpayers' money. We need to change the mentality of people so they understand: thanks to businessmen they get paid, and not vice versa.
On the other hand, it is also necessary to change the mentality of entrepreneurs. We have our own traditions that do not show business in the best light: for example, not complying with deadlines, promising one thing and doing another. If the bank sets up a meeting and a person promises to come at a certain time, he should do it. If he does not turn up, the bank will not give him a loan - but not everyone understands this.
- What advice can you give to budding entrepreneurs?
- First you need to read books written by people who have already made their way in business. In the 90s, when I started out, there was no internet, and it was not easy to find good books to learn the basics. Not everyone can become an entrepreneur.
But the state and big businesses should invest in renewable resources - in people, because sooner or later the oil will finish, but the people will remain.
Source: Forbes
