BISHKEK (TCA) — It seems that Kyrgyzstan’s State Agency for Architecture and Construction (Construction Agency) is interested in corruption continued, a Government anti-corruption experts group says.
The Construction Agency is among the state agencies that do not show positive results in dismantling corruption, the Working Group of the Defense Council of Kyrgyzstan concluded. If this situation continues, the punishment will not be limited to only disciplinary actions, Defense Council Secretary Temir Jumakadyrov said.
Business proposals
Problems related to obtaining construction permits require urgent solution, the Bishkek-based International Business Council (IBC) said.
Construction companies do not have access to information about available power capacities at the Severelectro electricity distribution company. The business community proposed to create an online access to information about available electrical power in Bishkek.
The introduction of the single window principle aims to attract investment into the sector and save the time and costs of entrepreneurs. In practice, the single window does not work. After receiving architectural and planning specifications, construction companies have to obtain approval of municipal services. As a result, developers are forced to “agree” with officials (in other words, to give them bribes) to get permissions. The procedure for obtaining these documents is not transparent, concluded the IBC Construction Committee.
To eliminate corruption, the IBC proposed to introduce electronic filing of documentation to obtain construction permits. In addition, the time of connection to heat or power grids should not exceed one month.
The business community has not supported the Government’s decision to introduce fees for connection to the power grids. The Public Council under the Economy Ministry also demanded to cancel the innovation, since it would negatively affect the development of the economy and attraction of investments into the country. The Government’s regulation adopted without Regulatory Impact Analysis (RIA) would significantly reduce new businesses and jobs, experts say.
Housing
Kyrgyzstan has the lowest housing supply among the CIS countries — 12 square meters of living space per one citizen compared to 18 square meters in the CIS. Among the Eurasian Economic Union countries, Belarus has the best result — 25.4 square meters per person, followed by Russia (23.4) and Kazakhstan (19.6).
Since the beginning of this year, 493 thousand square meters of housing have been built in Kyrgyzstan, while the country needs to build 30.25 million square meters of housing.
To make new housing affordable, construction companies in Bishkek are ready to reduce the cost of housing to $300 per square meter if the Government provides incentives including reduced costs for connection to utility networks (electricity, gas, and heating).
Mortgage loans
The State Mortgage Company (SMC) started its work in March 2016 and more than 350 people have used its service so far. The SMC will receive 3.3 billion soms from the state budget for preferential mortgage loans under the Affordable Housing Program until 2020, the Government reported recently. Earlier, it planned to allocate 3.7 billion soms. Medical doctors, teachers and social workers with work experience of at least three years have become the first beneficiaries of the program.
Of 4.6 thousand participants of the Affordable Housing program, about 600 refused to obtain mortgage loans due to their poor solvency. They have to earn 26-45 thousand soms a month to repay a mortgage loan, while the wages of many doctors and teachers are below 10 thousand soms per month.
The Russian-Kyrgyz Development Fund is funding the state preferential mortgage program, as the national budget has no available funds. The Finance Ministry has issued government treasury bonds and the Fund has bought them. The Finance Ministry will then allocate money received from the placement of the bonds to the State Mortgage Company.
According to the State Mortgage Company, the money received from the placement of government securities will be enough to issue mortgage loans to 2.5 thousand borrowers.
The Government has recently reduced the interest rates for mortgage loans from 12-14% to 10% per annum and simplified the procedure for obtaining mortgage loans. The practice showed that borrowers faced problems in finding co-signers for the conclusion of a guarantee contract for mortgage loans for 15 years. This requirement has now been excluded from the program terms. In addition, if borrowers provide additional collateral, they would be able to get a loan without paying an initial installment.
According to the new procedure, borrowers can now buy a turnkey housing worth up to 60,000 soms per square meter. Previously, it was required that housing acquired through a mortgage loan should cost not more than 3 million soms. In addition, the area of mortgage property has been increased up to 80 square meters instead of 70 before.
