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It’s necessary to change the mentality of Kazakh officials
Prominent businessman Serikbay Bisekeev, whom the press often refer to as "the millionaire from a village" or the "Kazakh Steve Jobs” (Arman Holding - manufacturer and global leader in technology and systems integration) was elected on July 31, 2014 to the Board of Directors of JSC "Entrepreneurship Development Fund "Damu" as independent director. In this role, Mr. Bisekeev has already addressed a number of initiatives, and he recently spoke at the webinar "Entrepreneurship in Kazakhstan: Myths and Reality."
Dozens of entrepreneurs - beginners as well as more experienced "business sharks" - gathered at each of the "Damu" Fund’s 16 regional offices to touch base with the successful businessman (in 2012 he was named Entrepreneur of the Year in Russia in the "B2B" category according to Ernst & Young). Prior to the beginning of the webinar, Serikbay Bisekeev talked to the press.
Serikbay, this year you became independent director of the "Damu" Fund. What are you planning to focus on first of all?
One of the first challenges I have encountered when dealing with entrepreneurs and second-tier banks is the amount of red tape when registering documents. There is a lot of talk that "Damu" provides loans at low interest rates, but that very few businessmen can actually obtain these loans. Banks sometimes pore over an application for months, while the entrepreneur loses time and business due to seasonal fluctuations. The entrepreneur’s issues must be resolved "right here, right now". If the government allocates money through the "Damu" fund, then it should "call the tune". In addition, banks need to listen to the demands of "Damu", whereas they currently live their own lives: each bank requires whichever application forms they deem necessary to be filled out. So each time the poor entrepreneurs approach a bank, they are forced to complete more documents. It's like running in circles. I proposed issuing the participants of "Damu" programmes a standardised application template, allowing the businessman to fill it in only once and send it to 5 or 6 banks. You don't have to keep running here and there all the time, and you're no longer made to feel like a beggar. The banks will also be required to give a clear answer within two or three days: whether they approve the loan or not. Or whether a follow-up interview is granted or refused.
And what is the reason for such long decision-making?
The banks say they are prepared to give an answer within 2-3 days, but that they do not have enough data on each borrower. We have now organized integration between the banks and tax authorities, so that banks have complete credit history details. Where possible, we would also like to obtain behavioural characteristics as well. For example, whether a person pays utility bills on time, whether they have committed any traffic offences... If a person behaves adequately, has always studied well and handed everything in on time and has never been in debt, their rating is immediately increased.
What "Damu" is now offering can be called unprecedented support - in essence, a business can obtain loans at a rate below the rate of inflation. In 2014, a moratorium was declared on inspections of SMEs. What else needs to be done for the development of business?
A global analysis needs to be conducted of how similar funds operate and, perhaps, to take on board some of their positive experience. Take for example Turkey. We started out at the same time. Not 100-200 years ago, like France and England, but 20-30 years ago... but they provide very good support for their businesses. The consumer market in Kazakhstan is very small. Just 17 million. This means we have to work on our exports. For this we need to provide all the conditions in order for small and medium businesses to begin producing their goods. At present we are in fact only selling resources. What does Turkey do? Entrepreneurs are told: "Do you want to build something in Kazakhstan? Here's the money for cranes, cars, machines, generators... Build!" The government gives money interest-free. "Want to sell fur coats or sheepskin jackets - we will pay you a year's rent in Saks Fifth Avenue. Work!" This is due to the fact that they do not have oil and gas resources. But we do - and we have earned 1000% per annum. Small and medium businesses need to be taken on and developed - but this has not been done, and the result is that 10 years have been lost.I think we need to learn from other countries - which protectionist policies really function.Let's take the situation in the field of tourism. Our president says that tourism is now a priority sector. But what happens? The monopoly of "Air Astana" makes it impossible to fly here from other countries. How can we get in the top 30 developed countries if we do not have direct flights from Japan, New York, Singapore, Shanghai or many other financial centres. There will not be any tourism. And entrepreneurship? Foreigners refuse to create any joint ventures largely due to the fact they do not want to fly here in a crate. And our people cannot fly there. Added to that is the constant inconvenience of visas and migration cards... We don't have this. We are all trying to protect. Enough already! If we want to create jobs and receive 10 times more tax than "Air Astana" pays, it is necessary to establish the kind of game rules that will generate business. Direct flights, an open sky. These are basic things, but for some reason we are closed to them. It is claimed that the shares of "Air Astana" belong to someone in high authority. But first of all we need to consider what is beneficial to the country, and only then to the individual.
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.
Next year, "Damu" intends to work closely with the National Chamber of Entrepreneurs. What do you think this cooperation will result in?
Any cooperation should be fruitful, and both the National Chamber of Entrepreneurs and "Damu" have regional offices. If they interact, dividing the area of responsibility so as not to repeat each other's work, they can duly complement each other. Businessmen will be able to feel protected and create jobs with ease.
Protected from what?
Many officials in Kazakhstan receive a state salary, yet do not realize that their salary is actually provided by entrepreneurs. That is, those who pay taxes. This way of thinking needs to be changed. For officials to understand that they actually live and get paid on time thanks to entrepreneurs, and therefore do not create unnecessary obstacles.
You say that our officials' way of thinking has to be changed. How can this be done? What specific steps need to be taken?
Here there are two sides at play. We need to change the mentalities, respectively, of both officials and entrepreneurs. To achieve this we need to give examples of how everything happens in other countries. Next year we have mapped out for study the experience of Turkey, Korea and Singapore, and to bring the best elements from those states into our system. For this it is necessary that entrepreneurs, in parallel, also adopt good international practice. They have their own traditions, which do not permit them, for example, to break their word regarding time. In general, there are a lot of ethical business standards we must accept. If a person in a bank has set up a meeting at a certain time, he should turn up. If he does not come, or is late - he will never be given a loan there, since his behavioural characteristics do not correspond to those of a businessman. People here still too often do not recognize such elementary things: "I'll call my relative and I will appoint another meeting." Things shouldn't be like this.
What do you think - in which area does business in Kazakhstan need to be developed?
If we take a global view, the state should change the laws so as to create a more favourable investment climate. At the moment, we give only good benefits to those who bring 20 million to Kazakhstan. Nevertheless, the whole world is supported by small and medium businesses. Maybe it makes sense to do something for those who bring in 10 million, or 5, in order to help medium-sized companies reach our market as well. We are currently only focused on the giants. Giants are good, but you need to provide some benefits for small and medium foreign businesses, too - so that they can create jobs locally. After all, you can set them the condition that if they open an enterprise here, the medium and lower level staff should be local, and the managers - if foreign experts - should not simply work in our country, but also teach and prepare their replacements. So that in 3-5 years the company will employ only local experts. I think there needs to be systematic work with legislation.
And regarding aspiring entrepreneurs?
Animal husbandry can be developed. The land in Kazakhstan, as in Australia and other such competitor countries, allows for both the movement of livestock over various pastures, as well as grazing. This significantly reduces the cost of meat. Right now, cattle are kept in cowsheds which constantly requires the purchase of animal feedstuffs to feed them with. That means the cost of meat immediately increases. Let's give herders the possibility to "migrate"; we will then have a competitive product. Why we do not want to deal with livestock is a mystery to me. Next, fish: almost all of it is imported. But what prevents us from providing the conditions and making it possible to farm fish here. We cannot feed ourselves. If we closed off access to imported products, we would have nothing to eat. Even with flowers it's the same! They are shipped to us from Holland. Is it warmer in Holland than in Almaty or Shymkent? Let's establish the conditions. When oil is extracted, associated gas is evolved, which we currently just burn off - thus poisoning our country. But it can be put to a different use. For example, by burning the gas, it is possible to obtain heat energy and CO2 - food for plants. Let's weigh up the fundamentals, and force oil companies that burn gas to build greenhouses and manufacture products.
That's to say, at present it's more logical for Kazakhstan to follow the traditional route rather than leaping into innovation?
Of course, that area of work is not completely closed to us. But innovation requires brains. And brains are a problematic area for us.
What advice can you give to those who are still planning to start on the path of entrepreneurship?
First of all, you need to read what people who achieved success have written. In the 90s, when I started to do business there was no Internet, there were not enough books or information. Now it's all there. It is therefore better to begin at the beginning. Read, analyze the pros and cons and understand whether it really is your thing. Not all of us can be entrepreneurs. 90% of people believe that they are ready, but in fact they only see the advantages - businessmen live well, are happy and successful... But are they really ready to lead people, and to sacrifice so much for them?
Source: Курсив
