Kyrgyzstan: Business Ombudsman to protect the rights of entrepreneurs

BISHKEK (TCA) — 2019 began with good news for Kyrgyzstan’s business community. Kyrgyz Prime Minister Muhammedkaly Abylgaziyev has signed a Government Resolution on the establishment of a Business Ombudsman to protect the rights, freedoms and legitimate interests of entrepreneurs.

Business opinion

“The Government Resolution has been approved taking into account the views of all stakeholders including government agencies, business and international organizations,” said Daniyar Mederov, Deputy Executive Director of the International Business Council (IBC) based in Bishkek. “The document includes requirements such as maximum independence of the new body. Any citizen, including a foreign one, can take the post of the Business Ombudsman.”

Last October, the Economy Ministry submitted the draft Resolution “On the authorized person to protect the rights of business entities (Business Ombudsman)” for public discussion.

IBC participated in the interdepartmental working group (IWG) under the Economy Ministry to draft regulatory legal acts on the creation of this institution.

“We discussed all the comments and suggestions to the document up to the final wording, and the best international practices were also taken into account, including the successful experience of Ukraine,” Mederov said.

Earlier last year, the IBC submitted to the Government its proposals to improve the judicial system and ensure the rule of law in the country, including the creation of the Business Ombudsman.

Protecting existing investors is the best investment climate advertisement for Kyrgyzstan, the IBC believes. “If the current investor feels comfortable in our country, then the potential investor, having received a first-hand review, will consider that it is possible to work and invest here,” it said.

“A lot of entrepreneurs turn to us in connection with the violation of their rights and other problems. Of course, we are trying to solve them within our competence, but it would be easier for both business and government agencies if a centralized body with the appropriate powers and resource base would deal with such issues,” IBC Executive Director Askar Sydykov said.

“The activities of business associations should be aimed at solving system problems. There are other tools to solve the private problems of entrepreneurs, but they do not work efficiently,” said Deputy President of the Chamber of Commerce and Industry of Kyrgyzstan Nurlan Musuraliyev.

The Economy Ministry is overloaded with requests from individual entrepreneurs, and its experts collaborate with business associations, but they also cannot cope with the large flow of appeals. Small and medium businesses cannot afford highly qualified specialists to assert their rights. This situation can be successfully solved by an independent body such as the business ombudsman institution, Musuraliyev concluded.

Business associations proposed Sergey Ponomarev, President of the Association of Markets, Trade and Service Enterprises of Kyrgyzstan, for the Business Ombudsman position.

“In case of violations of the rights and freedoms of business entities, they actually have nowhere to turn. A private entrepreneur will not address the Ombudsman, because he has other functions. It is the Business Ombudsman who can fill the gap,” Ponomarev believes.

President keeps his word

Kyrgyz President Sooronbai Jeenbekov spoke about the creation of a new institution designed to assist businesspeople at his meeting with the business community last September.

The head of state then spoke about serious claims of businesses against the Government, the judiciary and law enforcement bodies.

“Indeed, their claims are very reasonable. Unfortunately, instead of creating conditions for businesses and rendering assistance to them, some state bodies continue to intervene in their affairs with inspections,” Jeenbekov stressed.

“Among the main claims of businesspeople is the unfairness of court proceedings. There are also no real guarantees to ensure the inviolability of the private property rights of investors. Entrepreneurs are concerned about the instability of legislation, the administration of social benefits and taxes, as well as fair competition in the Eurasian Economic Union (EEU) market,” the President said.

At the meeting with the business community, he also spoke about the creation of an Industrial Development Committee under the National Sustainable Development Council. Late in December, Jeenbekov signed a decree on the creation of this committee headed by the President himself. The committee includes members of the Parliament, Government, representatives of the leading business associations and international companies.

The new committee will be a good platform for economic development, stimulating the development of industry and entrepreneurship, and increasing the investment attractiveness of Kyrgyzstan. The business can now submit its proposals and promptly solve them at the high platform chaired by the President.

Independent institution

The principles of the rule of law, independence and transparency will be the basis of the Business Ombudsman’s activities.

“He will not have punitive functions, and his decisions will be transparent and accessible to the public,” Economy Minister Oleg Pankratov said.

The creation of this institution will help minimize corruption risks, primarily in relations between the business and inspection bodies. The Business Ombudsman Secretariat will consider appeals and complaints from entrepreneurs about the action or inaction of ministries and state departments, state enterprises or joint-stock companies with a state share, Pankratov explained.

The Business Ombudsman and his staff is not a state body and therefore not accountable to the government. Its activities will be funded by international development partners.

The Business Ombudsman will be elected for a five years term. He or she cannot hold this post for more than two terms in a row.

Ukrainian experience

The Council of Ukraine’s Ombudsman helped return over $450 million of illegally charged taxes, fines and other payments to businesses over the four years of its activity, Deputy Business Ombudsman of Ukraine, Tatyana Korotkaya, said at her meeting with the business community of Kyrgyzstan.

By setting up the Business Ombudsman Council, Ukraine has taken a major step towards the improvement of its investment climate. Korotkaya shared Ukraine’s experience, saying that the Business Ombudsman Council (BOC) is the first point of contact for companies seeking redress against unfair treatment. The BOC is funded through the Multi-donor Account for Ukraine set up at the European Bank for Reconstruction and Development (EBRD) in 2014, Korotkaya said.

Ukraine’s Business Ombudsman Algirdas Semeta, a former European Commissioner and Finance Minister of Lithuania, is independent of the government and all political parties. The Council’s team consists of distinguished experts with mostly western education and practical experience in law, strategic management, economics, auditing, and risk management.

According to the latest data, the Council considered 4,898 complaints and conducted 237 investigations over four years of its activity. The majority of complaints related to tax issues (65%) and law enforcement actions (14%).

A delegation of business associations and government agencies of Kyrgyzstan met with Algirdas Semeta during their study visit to Ukraine in April 2017. Following the meetings, Kyrgyz government agencies, together with development partners and business associations, decided to create a similar institution in Kyrgyzstan.

Neighboring countries

In Kazakhstan, the Commissioner for the Protection of the Rights of Entrepreneurs, Bolat Palymbetov, was appointed by Kazakhstan’s President in February 2016.

According to the Commissioner’s report, 12,420 requests were received in 2016-2017, and about 47% of them were resolved fully or partially. The amount of property rights of entrepreneurs protected by the business ombudsman staff was 74.1 billion tenge (canceled fines, penalties, arrests, and entrepreneurs’ property returned or saved).

Problematic cargo transit including cargo theft and the lack of communication between entrepreneurs are the main problems Kazakhstan businesspeople face.

In Uzbekistan, by the decree of the Uzbek President of July 28, 2017, Dilmurod Kasimov was appointed the Commissioner under the President for the protection of the rights and legitimate interests of business entities.

In June 2018, Kazakhstan and Uzbekistan signed an agreement on mutual assistance and cooperation at the forum of business ombudsmen of the two countries.