OFFICIAL PUBLICATION OF FBA EAC, IBC eurasian financial & …’естник ЕФЭ-3-2019... · 2019. 9. 20. · # 3 (8) | 2019 OFFICIAL PUBLICATION OF FBA EAC, IBC eurasian financial

# 3 (8) | 2019

O F F I C I A L P U B L I CAT I O N O F F B A E AC , I B C

e u r a s i a n f i n a n c i a l & e c o n o m i c

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ASKAR SALYMBEKOV

Union is a way to success and prosperity

PERSONALITY

Demchigjavyn ChimiddorjMongolia and Russia: features of cooperation in the energy sector

Timur ZhaksylykovEAEU single

service market: outlook

Alexander ShokhinBusiness cooperation Russia–France: provisional results and prospects

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IV INTERNATIONAL EXHIBITION FORUM

«EURASIAN WEEK – 2019»BISHKEK, KYRGYZ REPUBLIC, SEPTEMBER 25 27, 2019–

«THE EAUE: CONSOLIDATION. DEVELOPMENT. STRENGTH»

The Eurasian Week is the largest international business forum in the Eurasian Economic

Union (EAEU). In 2019, the Forum focuses on summarizing the results of the first five years

of the interaction between the Eurasian Economic Union and the global community.

REASONSTO VISITFORUM

More than 20 events on the siteand more than 2000 participants.

An intense business program,including strategic, partnership

and youth tracks

A broad youth agenda: Schoolof the young leader of the EAEU,

presentation of educational programson Eurasian subjects of the EAEU

universities, business gamefor young leaders of the EAEU

Extensive exhibition dedicatedto agriculture, industry

and other industrie

Possibility to find new partnersand expand the geography

of doing business: the programwill include industry exchanges

of subcontracts

All about the advantages of the EAEUfirst�hand. B2B sessions will allow todiscuss the features and bonuses of

doing business within the EAEUcountries with the real practitioners from

the various areas and forms ofownership: from small to large business

PARTICIPATION IS FREE.

REGISTRATION ON EURASIANWEEK.COM

Alexander Murychev, Chairman of Editorial Board, Chairmanof Coordinating Council of FBA EAC, Executive Vice-Presidentof RSPP, Chairman of IBC

Anvar Abdraev, President of Union of Banks of Kyrgyzstan

Bakhytbek Baiseitov, President of Association of Banks of the Republic of Kazakhstan

Oleg Berezovoy, General Director of FBA EAC

Andrea Boldi, owner of the company NEMESI S.R.L. (Italy)

Yves Pozzo di Borgo, Former President of friendship group with Central Asia in the Senate (France)

Samvel Chzmachian, Deputy General Director of FBA EAC,Head of Representative office of FBA EAC in Armenia

Alexandre Dzneladze, President of Association of Banks of Georgia

Tudor Afanasov, Deputy Chairman of the Coordinating Coun-cil, Presidnt of CCECRR

Bakhtiyar Khamidov, General Director of Uzbekistan BankingAssociation

Anatoly Kazakov, Chairman of the Coordination Council of Financial and Banking Council of the CIS

Elena Korobkova, Executive Director of Independent Association of Banks of Ukraine

Manish Kumar, General Director of Soltex Group Ltd., Head of Representative office of FBA EAC in India, Sri Lanka,Bangladesh, Malaysia

Alexander Kuchinsky, Deputy Chairman of FBA EAC Coordinating Council, Chairman of the Association of Belarusian Banks

Berislav Kutle, CEO of Banks Association of Bosnia and Herzegovina

Istvan Lengyel, Secretary General of Banking Association for Central and Eastern Europe

Amirsho Miraliev, Chairman of the Board of Association of Banks of Tajikistan

Valery Murin, Editor in Chief of the magazine "Eurasian Financial and Economic Herald"

Zakir Nuriyev, President of Azerbaijan Banks Association

Svetlana Orlova, General Director of Information and Publishing Center “Eurasia” Ltd.

Bratislav Pejaković, Secretary General of Association of Montenegrin Banks

Krzysztof Рietraszkiewicz, Chairman of Polish Bank Association

Anatoly Tkachuk, Vice-President of FBA EAC, President of “Russian mineral resources” JSC – managing company of GC Rustitan

Dumitru Ursu, Chairman of Moldovan Bankers’ League

Vladimir Vasić, Secretary General of Association of Serbian Banks

FOUNDERS:

Financial & Banking Association of Euro-Asian

Cooperation (FBA EAC)

International Banking Council

(International Coordinating Council of Banking

Associations)

PUBLISHER:

Financial & Banking Association of Euro-Asian

Cooperation (FBA EAC)

Editor in Chief: V. Murin

Executive editor: S. Orlova

Editor: A. Gusev

Corrector: A.Panyugina

Page-proofs: A. Bagaev

Editorial Board: E. Berezovaya, O. Ryazanov

Translators: S. Arkhipova, K. Tereshenko

PUBLISHER'S ADDRESS:

17 Kotelnicheskaya nab., Moscow,

109240, Russia

+7 495 663–02–08/13

[email protected]

www.fbacs.com

PRINTING HOUSE:

Released in the «Granitsa Publishing House» Ltd.

Format 210x297 mm. 124 pages.

ISSUE DATE:

Fall 2019

Opinions of authors do not necessarily coincide with those

of the editorial office.

The editorial office is not responsible for the content

of the advertisements. Advertised goods and services are

subject to mandatory certification. Reprint is allowed only with

the written permission of the editorial office.

Manuscripts are not reviewed and not sent back.

Reprint of texts and photos of the magazine “Eurasian Financial

& Economic Herald” is allowed only with the written permission

of the editorial office.

When quoting, reference to the magazine is required.

Registered in the Federal Service for Supervision of Communica-

tions, Information Technology, and Mass Media (Registration

number ПИ № ФС77-75043 dd. 19.02.2019).

EDITORIAL BOARD:# 3 (8) | 2019

eurasian financial & economicHERALD

Глобальная экономика

Dear colleagues and friends!

Welcome back. The members ofour Editorial Board have made a lotof efforts so that in spite of the holi-day time, high-quality and interest-ing materials in the issue appear. Ihope, we have succeeded, and youwill “plunge” into the diverse worldof finance and economics, historyand geography with us.

The opening article of one of themost respected businessmen of theRepublic of Kyrgyzstan, founder andhonorary President of the Associa-

tion “Dordoi”, Askar Salymbekov, tells not only how the countryis developing today, how comfortable businessmen and investorsare there, but also about the social responsibility of business tothe state, on the need to promote the spiritual and cultural de-velopment of the young generation in the name of preservingcivilization.

Furthermore, we turn to business cooperation of countriestrying to find a proper balance between politics and economy. Itwill be about economic interaction of such courtiers as Russia,France, Romania, China, Korea, Mongolia and others.

In the article by the FBA EAC President B.Baiseitov “Develop-ment institutions as an instrument of the national economy”, heraises issues of effective interaction between banks and develop-ment institutions using the example of the Republic of Kaza-khstan. The main conclusion to which the author has come – isthat, along with the obvious usefulness of the presence of devel-opment institutions in countries, they should not only reflect theinterests of global players who finance their activities, but alsonot forget about their main mission - to promote the develop-ment of national economies by saturating it with cheap resourcesin order to eliminate domestic economic imbalances.

As you know, the best friends of girls are diamonds. But goldcan be a good friend and helper as the international monetarysystem turns from unipolar to multipolar, as follows from an ar-ticle by a charming girl - Tatyana Fitz, Director of central banksand public policy of the World Gold Council.

Human recourses! At this stage of the development of civiliza-tion, this factor of effective economy takes precedence over therest. Therefore, we devote the impressive amount of pages of theHerald to the topic of formation of a single labor market on theterritory of the EAEU through the recognition of qualifications,the development of an independent qualification assessment sys-tem, and new approaches to the training system for specialists.

The materials on the digitalization, the breakthrough latesttechnologies in construction and refrigeration, the scientists’ dis-cussions about “who are we?” and “where are we going?”, fastfacts from the history of currency units of the world are also in-teresting. In the heading “The world through the eyes of a pho-tographer”, a series of photographs of new authors are present-ed.

And of course, pay attention to our block of ads. Perhaps par-ticipation in one of the events presented here will be a useful dis-covery for you, a new impetus to the development of your ownbusiness.

We are glad that you are with us.

chairman’s corner

Alexander Murychev, Chairman of Editorial Boardof the magazine "Eurasian Financial and Economic Herald"

CONTENTPERSONALITYA. Salymbekov. Union is a way to success andprosperity

EAEU: TODAY AND TOMORROWT. Zhaksylykov. EAEU single service market: outlook

RSPP NEWSA. Shokhin. Russia-France business cooperation:provisional results and prospects

WORLD TRENDST.Fic. Gold in the changing international monetarysystem

SUBJECT FOR DISCUSSIONA. Murychev. The development of the system of independent qualification assessment on financial market

FOUNDER’S PAGE. FBA EACForming a single labor market on the territory of EAEU via qualification recognition

FOUNDER’S PAGE. IBCB. Baiseitov. Development institutes as an instrument of the national economy (Kazakhstan)

E. Korobkova. Agrarian receipts and financial re-structuring: experience of cooperation with international institutes (Ukraine)

S. Chzmachian. Interaction of development institutes and commercial banks: best world practices (Armenia)

FINANCIAL SYSTEM OF THE COUNTRIESOF EURASIAImproved financial literacy of the population is the priority of the activity of the Union of Banks of Armenia

A.Kuchinsky. Belarusian banks – trending digital

EXPERT OPINIOND. Chimiddorj. Mongolia and Russia: features of cooperation in the energy sector

BUSINESS IN THE COUNTRIESThe Romanian economy: strategy, investment policyand cooperation with Russia

TECHNOLOGYA. Golik. «PIONEER»: Breakthrough technology inthe service of construction business

B. Babakin. Saving resources: Refrigerating appliancesand technology based on electrophysical methods

Forum «Rivers of Russia»: preservation and development of legacy of the past – a step into the future

DID YOU KNOWV. Kryachko. On the way of development of civilization: the eyes of geologist

PARTNER NEWSBIFF 2019: digitalization – new rules for a new game

HISTORY OF MONEYV. Krasnikov. The rand born in South Africa

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EURASIAN F INANCIAL & ECONOMIC HERALD | #3(8) 2019

EAEU SINGLE SERVICE MARKET:OUTLOOK Timur Zhaksylykov. It is the Eurasian integration that is an important factor of higher competi-tiveness of businessmen in the Unionmember-states and promotes econom-ic growth of the countries and betterliving standards of population.

GOLD IN THE CHANGING INTERNATIONAL MONETARY SYSTEMDr Tatiana Fic. As the international monetary systemtransitions from the unipolar, towardsa multicurrency system, gold, as a safehaven asset and a hedge against finan-cial shocks and currency crises, has re-mained and will continue to remain animportant element of central bankportfolios.

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THE DEVELOPMENT OF THE SYSTEM OF INDEPENDENT ASSESSMENT OF QUALIFICATIONSON FINANCIAL MARKET Alexander Murychev. Personnel gap considerably limits thedevelopment of business in Russian re-gions.

BUSINESS COOPERATION PROVISIONAL RESULTS AND PROSPECTS Alexander Shokhin. France has always been a focus area inthe international activities of RussianUnion of Industrialists and Entrepre-neurs.

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DEVELOPMENT INSTITUTES AS AN INSTRUMENT OF THE NATIONAL ECONOMYBakhytbek Baiseitov. Development institutes should not forget about their original mission– to promote national economy via itssatiation with cheap resources directlyand through banks.

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– Far in 2015 Kyrgyzstan joined theEurasian Economic Union and becameits fifth member-state. How would youevaluate the results of this integrationin general and for Kyrgyzstan’s econo-my in particular? Especially consider-ing the global economic challenges?– Kyrgyzstan’s membership in theEurasian Economic Union wasn’t a merecoincidence. There was a strong back-ground for economic union with suchcountries as Russia, Kazakhstan, Arme-nia and Belarus. Besides we have historic,economic and cultural ties with Russia.These four years showed that the EAEUmembership had positive effect on oureconomy. Of course there are some diffi-culties for example customs, regulationand technical issues. But it is a naturalevolutionary development were weak-nesses are removed gradually.

When the whole world unites intoassociations this alliance is very impor-tant for our small country. And only inalliance with its economic partners –EAEU member-states – Kyrgyzstan willbe able to survive and develop.– In late September, 2019 in Bishkekthe Eurasian Economic Commissiontogether with the EAEU member-states will host the fourth interna-tional forum “Eurasian Week” withthe Eurasian Financial & EconomicHerald as information sponsor. Thebusiness program of the Forum willcover sectoral practical issues crucialfor business development which is re-ally important for the Kyrgyz Repub-lic as well as for other EAEU partici-pants. Could you share your expecta-tions of this definitely key-noteevent?

– It is no coincidence that the Forum isheld in Kyrgyzstan since the goal of co-operation of the countries within EAEUis to form and improve the single marketof goods, services, capital and labor re-sources.

Today Kyrgyzstan’s GDP growth ispositive and officially amounts to 3-7%annually. Besides the turnover betweenRussia and Kyrgyzstan in 2018 grew by17%. That is why joint and national en-terprises will become an important ele-ment of the economic strategy of EAEUand will give a new impetus to the eco-nomic development. Seventy one re-gions of the Russian Federation alreadyhave direct connections with the regionsof Kyrgyzstan.

Against the Western sanctions to-wards Russia the regulatory require-ments of EAEU may gain flexibility and

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UNION IS A WAY TO SUCCESS AND PROSPERITYTHE FOURTH INTERNATIONAL FORUM “EURASIAN WEEK” WILL TAKE PLACE IN SEPTEMBERTHIS YEAR IN BISHKEK. THE BUSINESS PROGRAM OF THE FORUM WILL COVER SECTORAL PRAC-TICAL ISSUES CRUCIAL FOR BUSINESS DEVELOPMENT WHICH IS REALLY IMPORTANT FOR EAEUMEMBER-STATES. THE EURASIAN FINANCIAL & ECONOMIC HERALD, THE INFORMATION SPON-SOR OF THE EURASIAN WEEK ON THE EVE OF THIS EVENT ASKS A FEW QUESTIONS TO ONE OFTHE MOST POWERFUL BUSINESSMEN OF THE REPUBLIC OF KYRGYZSTAN ASKAR SALYMBEKOV.

Member of the Supervisory Board of Financial & Banking Association

of Euro-Asian Cooperation

Askar Salymbekov,

Personality

EURASIAN F INANCIAL & ECONOMIC HERALD | #3(8) 2019 5

resistance to the external pressure. Thiswill allow to intensify integration be-tween the EAEU countries if the issuesof unwarranted restrictions of trade aretackled responsibly.

“Trade war” of the USA and Chinawill open new opportunities for theUnion: new markets, de-dollarization,intense conjunction of EAEU and “OneBelt One Road”. Besides the conjunctionof EAEU and the “Economic belt SilkRoad” can get a more practical and bal-anced format.

Currently the mechanism of trackinggoods imported to the EAEU customsterritory is being approved. The devel-opment of digital transport technologieswill become one of focus areas. The re-cent meeting of prime-ministers in Kyr-gyzstan discussed and experiment ofmonitoring of automobile transit traffic

with the use of navigation seals. One ofits goals is to develop a proposal to ad-just the key differences in order to im-prove the project of international agree-ment on single transit system of EAEU.– This March the 8th Russian-Kyrgyzinterregional conference “New hori-zons of strategic partnership and inte-gration” was held. What crucial resultsof the event are worth mentioning?– At the conference during a round table“The development of agricultural com-plex of Russia and Kyrgyzstan with re-gards to transport and logistics potential”the participants discussed the dynamicsof supplies of Kyrgyz agricultural prod-ucts to the trade chains of Russia, theconstruction of trade and logistic distri-bution centers in Kyrgyzstan, the futureof joint projects in the area of produc-tion and processing of agricultural prod-

ucts in the area of organic farming.Transport and logistics system is one

of the key aspects of cooperation be-tween Russia and Kyrgyzstan so the ex-perts from both sides spoke about thedevelopment of interregional freight.The Association Dordoi which togetherwith the Union of Banks of Kyrgyzstanrepresents the Kyrgyz Republic in Finan-cial & Banking Association of Euro-Asian Cooperation, and Russian compa-ny “RosAgroMarket” signed a Memoran-dum of joint construction of a logisticscenter in Kyrgyzstan.

It should also be mentioned that theEurasian Economic Union has opportu-nity to increase export to the markets ofthe third countries which consider theEurasian market as a promising one.While we are ready to provide a fullrange of freight services, customs and

terminal services of the fruit-and-vegetables supply.– The Association Dordoiwas launched in 1991. Youare the founder, the ownerand the Honorary President.The development of Associa-tion wasn’t easy but today itis one of the prominent rep-resentatives of Kyrgyz busi-ness and greatly affects theeconomy of the country. I be-lieve that the readers of theHerald are eager to knowabout the Association direct-ly from its founder. Couldyou tell us about the historyof development and successof your brainchild, its prom-ising areas and charity work?– In early 90-s when followingthe Soviet collapse our youngRepublic started the transitionto market economy, peoplefaced the challenges of trademanagement and lack of business skills.Pop-up retail in the streets and unsuit-able markets created difficulties both foryoung businessmen and municipal au-thorities. The only thing I wanted was toassist in the trade management.

So, on December 7, 1991 we opened amarket Dordoi in the North of Bishkek,on a waterlogged open space. Like withany start-up there was a lot of critics andrevolt. Especially about the location.Many didn’t understand that it was a

cross of the upcoming routes which cre-ated transport and trade hubs. Moreoverin those times Kyrgyzstan gained a statusof a “dead-end” country without anytrade roads and access to sea ports. Butour zeal and relentless work brought re-sults: in a short period the trade and mar-ket complex Dordoi became a land hubconnecting trade roads from China toCIS, Europe and Middle East.

According to the World Bank’s re-search Dordoi is ranked as the most suc-

cessful social and economic project inour country’s history. Now it ranks intop ten largest markets in the world andhas created a vast labor market for Kyr-gyzstan and neighboring states withmore than 50 thousand workers, andabout 160 thousand people engaged inother activities related to the trade andmarket complex. And the most impor-tant thing is that 600 thousand peopledepend of these workers. Besides ex-perts recon that Dordoi’s activity trig-

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Personality


gered more than 18 sectors and areas ofeconomy of Kyrgyzstan including con-sumer industry, freight, air carriage,services and production.

All incomes are invested domesti-cally in new companies which are nowsuccessful in medicine, education, pro-duction, logistic etc. In fact we launchnew companies annually, this year aswell: in autumn we are opening a newschool, and early next year – thelargest meat factory with updatedequipment.

A lot of attention is paid to charityand support of socially vulnerable pop-ulation, sportsmen, workers of culture,art and science. Every year Dordoi al-locates millions to these areas and is go-ing to build up the amounts of finan-cial and technical assistance to thosewho need it. Creative incentives are al-so on the agenda for example masstransplantation, parks cleaning and themost important – youth enlightenmentthrough socially important campaignsand education.– In 2011 in one of the interviews yousaid: “Today in the context of globalsituation with different crisis, cata-clysm, revolutions, wars, more fre-quent cases of the force of nature Iworry that the mankind stepping inthe era of information technologiesand scientific and technical progressloses its spiritual and cultural growth.I believe that current troubles on theplanet are first of all caused by a spiri-tual crisis of the mankind”. Do youstill believe this?– Yes, I still believe this. Today when thewhole world fits in a smart phone most

people has got under the influence ofsubcultures and trends with their ownvalue system. As it is well known valuestransform the society and dissolve ethnocultural boundaries while against thebackground of economic crisis and oth-er turbulence this process speeds up.

In order to intensify the spiritual andcultural growth of the population in par-ticular the youth our community trust“Askar Salymbekov Fund” continuallysupports workers of culture and art.Tens of projects have been completedcreating plays, evenings, recitals. Thepublication of historical, scientific andfiction literature have also been support-ed. Special attention was paid to a doc-umentary about an outstanding states-man Zhusup Abdrakhmanov who wasone of the founders of Kyrgyz nation-hood in the first part of 20th century.The film was presented at a privatescreening in June, 2019. Now we areworking on a new documentary to com-memorate the 100th anniversary of anoutstanding statesman of KyrgyzstanTurdakun Usubaliev to show his largecontribution into the social and eco-nomic development of the country andits nationhood.

Besides the Fund is engaged intolarge educational projects to provide thepopulation with sound additional edu-cation in cities and regions of the KyrgyzRepublic. The education programs focuson personality development, informa-tion technologies, business school andlanguage. Following its successful expe-rience the Fund launches a new schoolfor students from Kyrgyzstan and for-eign countries.

One more priority of our work andsupport is sport in Kyrgyzstan. We havebeen involved in this activity since 90-swhen we started to revive the nationalsport Kok Boru. We developed rulesand competition procedures, and nowKok Boru has become a popular sportnot only in our country but also abroad.Moreover judging by the high results ofour football team at the Asia Cup 2018one can speak about our footballers’high level as well, part of who aretrainees and players of the football team“Dordoi”.

We extensively support all promisingsportsmen who apply for financial andprocurement assistance. And I feel joywhen new stars appear of the sport hori-zon. It is the best reward for me.

We should understand: cultural andspiritual development of a personalitybased on historical, cultural and ethicaltraditions of our people should benefi-cially cooperate with the modernworld, its technologies, but should notvanish in it.

About the author

Askar Salymbekov

Askar Salymbekov, a historian, an econo-

mist, a politician, a businessman and pa-

tron as well as a devoted football fan, one

of the most famous people in Kyrgyzstan

and far beyond.

He is a founder and Honorary President of

the Association “Dordoi” launched in 1991 as

a trade and market center in Bishkek which

is now a founding organization for many

companies, enterprises and working

places.

The achievements of A. Salymbekov are

marked by many rewards: order “Manas,

medals “Labor merit”, “Dank” and the Golden

medal of the Nobel Prize of the economist

V.Leontyev; the orders of the Russian Fed-

eration “Honorary Citizen of Russia” and the

International Assembly of capitals and

cities “For contribution into the sustainable

development of CIS cities”; order Rio-

Branko, a state reward of Brazil.

A. Salymbekov is a member of the Supervi-

sory Board of Financial & Banking Associa-

tion of Euro-Asian Cooperation.

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– Mr. Zhaksylykov, the Eurasian Weekwhich you chair includes a panel ses-sion “Business, money, people: ap-proaches to deepening integrationwithin the EAEU”. Could you pleasegive some details about the subject fordiscussion with colleagues? – This year is the fifth anniversary of theTreaty on the Eurasian Economic Union.Today the Eurasian Economic Unionsuccessfully works in many areas. TheUnion member-states demonstrategrowth of GDP, foreign and mutualtrade of goods and services.

The GDP of the Union member-statesin 2018 grew by 17.6% in comparison to2015, the industrial production grew by34.3% correspondingly, foreign trade –by 30%, mutual trade – by 30.9%.

No doubt that the driver of the eco-nomic growth of the Union member-states is business. That’s why it is neces-sary to create most favorable conditionsfor entrepreneurship by means of free-dom of service trade, incorporation, ac-tivities and investments. And it is theEurasian integration that is an importantfactor of higher competitiveness of busi-nessmen in the Union member-statesand promotes economic growth of the

EAEU: TODAY AND TOMORROW

INTERVIEW OF MEMBER OF THE BOARD – MINISTER IN CHARGE OFECONOMY AND FINANCIAL POLICY T. ZHAKSYLYKOV TO THEMAGAZINE “EURASIAN FINANCIAL & ECONOMIC HERALD”

EAEU SINGLESERVICE MARKET:OUTLOOK

EURASIANECONOMICCOMMISSION


countries and better living standards ofpopulation.

The current global trend of economicdevelopment is a larger share of servicesin GDP of all countries in the world. Inparticular in the mature economies serv-ices account for 70% of GDP, In the Eu-ropean Union – 73.3% (in 1970 – 53.3%),in USMCA (former NAFTA) – 79%(in 1970 – 64.8%).

Promotion of services becomes oneof the priorities of economic develop-ment of the Union member-states as welland a gradual growth of the amount ofexported services proves it. Total servic-es export of EAEU in 2018 reached $83525 million and in comparison to 2000 itincreased sevenfold.

Positive dynamics in the sector espe-cially in the last four years is related tointegration processes, creation of condi-tions for mutual trade between theUnion member-states including the im-plementation of a single market rules,improvement of internal regulation, lib-eralization of service trade.

And it is the liberalization carriedout by the Union member-states thatbrings the most considerable resultssince it implies the removal of limits, bar-

riers and other obstacles of investmentsand services. As a proof is bigger invest-ment flows in 2018 in the Union whichgrew by 36.7% compared to the previousyear.

This trend evidences more active in-vestment cooperation, execution ofjoint business projects of the Unionstates, gradual promotion of free serv-ice trade and incorporation, practicaluse of the advantages of the single serv-ice market.

Today the share of service sectors ofthe EAEU single market in the total serv-ice sector amounts to over 55%. The sin-gle market enables the service providersto work in any Union member-statewithout incorporation or readmission ofpermit. Moreover they don’t need thereadmission of qualification for serviceprovider personnel, qualifications arerecognized automatically. In this regardfurther extension of statement of servicesectors within the single market is antic-ipated which will allow the Union coun-tries use this potential to increase serviceshare in the economies.

However considering the future ofthis area we would also like to discussthe issues of economic development

with regards to compliance practiceswhich require clarification. For exam-ple within the single service marketthere are still such problems like non-recognition by some regulators of thepermits issued to a service provider inone state and valid on the territory ofany EAEU member-state. In some casesthere are limitations for automaticrecognition of qualifications of serviceprovider personnel received on the ter-ritory of any Union member-state. Free-dom of incorporation is not fully exer-cised. It is necessary to discuss the ad-ditional requirements when openingaccounts for service providers and theirtransaction of money from one Unioncountry to another. Potential advan-tages of service liberalization dependon internal regulation level. Once it isimproved the advantages of servicetrade liberalization are improved aswell as regulation practice.

To achieve this goal on December 26,2016 the Supreme Eurasian EconomicCouncil approved the Rules for the reg-ulation of trade in services, incorpora-tion, and activities which are a kind ofbasis for the freedom of services andbusiness within the Union.

Timur Zhaksylykov, Member of the board –

Minister in charge of Economy and Financial

Policy of Eurasian Economic Commission

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In its turn the Commission monitorsthe implementation of these Rules in thelegislation of the Union countries andinforms the Supreme Eurasian Econom-ic Council about the results.

These and other issues regardingservice receiver rights, confidence build-ing for regulators, providers and re-ceivers of services are on the agenda ofthe panel session of the Eurasian Week.This platform will provide us with afeedback from entrepreneurs of theUnion states, with more active interac-tion with business structures and willgive impetus to integration too.

– This year anniversary for the integra-tion. The main focus of the Forum ofEurasian Week in 2019 is to sum up theresults of the first five years of theEurasian Economic Union. What arethe main achievements of this integra-tion in your realm?– The Treaty on the EAEU launchednew equal right labor relations on the in-tegration area of the EAEU and ensuredthe formation of a single labor marketwith equal preferences for workers andtheir family members which makes forresources mobility and better employ-ment level.

For example the citizens of the Unionstates are exempt from the limitationsset by national legislation regarding theprotection of internal labor markets,they don’t need labor permits or apatent.

The workers and their families havethe right to stay on the territory of anyother Union states during the period ofthe labor contract or civil law contract.They can stay in any of the Union stateswithout registration up to 30 days sincethe day of entry. The workers of theUnion avail of national tax regime, med-ical treatment, statutory disability in-surance.

Education documents are recognizedautomatically in any Union county.

However there are still untapped op-portunities of integration and the Com-mission is working on the matter.

For example almost competed is thedraft Agreement on provision of pen-sions in the Union member-states. Onceit is approved the workers will be able toform, keep and implement their pensionrights on the territory of the Unionstates which will lead to positive dynam-ics in labor migration within the Unionand will provide the workers with bet-ter social protection.

In order to recognize academic de-grees and titles of the workers we areworking on an international agreementon mutual recognition of such docu-ments. Currently in progress is the cre-ation of digital services for informationand technical interaction between theplayers o single labor market regardingemployment of the EAEU citizens.

For financial sector we have workedout a draft Concept for single marketdefining targets, stages, criteria and mainareas including better availability andquality of financial services, growth ofthe financial sector and stronger com-petitiveness.

In 2016 the Agreement on informa-tion exchange in financial sector cameinto force, while 2018 was marked bythe Agreement on harmonization of leg-islation on the financial market and adraft of the Plan of harmonizationwhich defined the procedure and timelimits for the harmonization of regula-tions and requirements set by legisla-tions of the Union states. There is also adraft Road map to form a Single ex-change space in the Union including thelogically connected elements necessaryfor an effective work of a forex ex-change. For a start we have prepared a

Meeting of Advisory Committee for Intellectual Property Moscow, Russian Federation, EEC Headquarters, March 6, 2019



draft Agreement to allow brokers anddealers of one Union state to the tradesat the exchanges of other Union states.

This document will entrust nationalexchanges with the right to recognizethe licenses of brokers and dealer issuedin other Union states and will ensuretheir direct participation in the trades.

At the same time there is a draftAgreement of securities placement andtrading in the Union states aiming atfreedom of securities emission andtrading.

As for monetary policy we continueworking on harmonization and liberal-ization of legislation in the sector. Pend-ing is the draft Agreement of coordinat-ed approaches to monetary legal rela-tionships and liberalization measures.This will allow our citizens to open ac-counts without limitations in foreignand national currencies in the banks ofother Union states. We have defined alist of transactions which will not be lim-ited to ensure the freedom of moneyflow of residents.

At the final stage is the draft Agree-ment of information exchange regardingcredit records which will allow thebanks to assess borrowers’ status fromother Union countries.

An important factor for a single mar-ket is the coordination of tax policiesand administration. So we work on sim-plification of VAT, better tax administra-tion with the use of information tech-

nologies to facilitate export proceduresand VAT return to business.

Almost completed is the draft Agree-ment of audit within the Eurasian Eco-nomic Union which implies the right ofany citizen of a Union state to receiveaudit service without limitation and ex-emption with the recognition of qualifi-cations and audit reports.

Intellectual property is also in focus.Authorized bodies of EAEU member-states and EEC coordinate their work toharmonize compliance practices, to im-prove measures to combat infringementproducts.

The Union states follow a coordinat-ed management scheme for authors’rights and neighboring rights on a collec-tive basis to create trustful legal relationsbetween right holders and such organi-zations.

We have completed the legal frame-work for the mechanism of single cus-toms register of the intellectual propertyitems. In the nearest future it will be pos-sible to apply online in personal ac-counts on the Union’s website.

In process is the system of registrationof brand names of the Union and placesof origin of the products implying legalprotection in all Union member-states si-multaneously.

For entrepreneurship promotionthere is an effective mechanism of par-ticipation of business community in theformation of supra-national regulations

within the Union. The mechanism wasintroduced in 2015 and implies regula-tion effect assessment (REA) for the EECdraft decisions which are able to influ-ence business.

About the author

Zhaksylykov Timur Mekeshevich

Т. Zhaksylykov was born on September 17,

1968. In 1993 he graduated from M.V.

Lomonosov Moscow State University. In 1997

he graduated from the Institute of Political

Studies, Strasbourg (France) with Master’s

degree in the field of European studies. In

2003 he graduated from Kazakhstan Insti-

tute of Economics and Finance with a de-

gree in “Economics”.

He worked in the Administration of the

President of the Republic of Kazakhstan, in

the Ministry of Industry and Trade of the Re-

public of Kazakhstan, in Akimat of Astana.

From February 2012 to April 2017 he held the

position Vice-Minister of Economic Develop-

ment and Trade of the Republic of Kaza-

khstan, Vice-Minister of National Economy

of the Republic of Kazakhstan.

From April 2017 he was appointed to the po-

sition Member of the Board – Minister in

charge of Economy and Financial Policy of

the Eurasian Economic Commission.

Meeting of Advisory Committee for SocialProtection Moscow, Russian Federation, EECHeadquarters, May 23, 2019

12

REA is very popular judging by thereceived ideas, amendments during theEEC discussions from representatives ofbusiness and experts as well as by thehigh per cent of their introduction intothe final EEC documents. Since thelaunch of REA 296 EEC draft decisionswere discussed with 7.5 thousandamendments and observations and 5000 of them taken into account whenworking on a document, the share of ac-counted amendments from business is63%. In the Business Development De-partment of EEC the share of REA iseven higher and excesses 75%.

Besides the REA procedure is also im-plemented into the work on technicalregulations of the Union which is veryimportant for business.

REA is being improved these days.For example this year the Eurasian Inter-Governmental Council has assigned tolaunch a pilot project to assess the actualeffect of EEC decisions leading to overallassessment of the whole range of regula-tions within the Union.

– You have said several times that it isnecessary to raise the effectiveness ofinteraction between the EAEU mem-ber-states within the single servicemarket. What steps should be taken

here and how can the Forum assist inthis matter?– To raise the effectiveness of interactionbetween EAEU states within the singleservice market firstly there should be anon-barrier space for business of theUnion. Such space provides access toservice markets of the Union states with-out extra requirements, licenses and oth-er permits due to mutual recognition ofnational permits and professional quali-fications of service provider personnel.This as well as other conditions are pro-visioned by the rules of single servicemarket.

Besides the single service market fa-cilitates the development not only oflarge corporations but SME as well.Small and medium companies fall be-hind transnational corporations whichuse modern technologies, whose globalnetworks, financial resources are some-times equal to GDP of separate coun-tries. The rules of single market decreasebureaucracy and simplify the criteria ofthe Union market access.

We believe that such instrument asimplementation would be very useful.The EU experience is interesting in thisregard when national measures shouldbe taken in accordance with the Euro-pean instructions in the service sector.

The implementation of the Treaty onthe EAEU and the decisions of theSupreme Eurasian Economic Council inservice sector will lead to effective workof single market, guarantee legal stabilityand become one of the ways to harmo-nize legislation of the Union states.

Another way to create non-barrierspace is the activity of the Commissionto remove the existing obstacles and toprevent new ones. Taking into accountthat today services are in every aspect oflife the removal of barriers will allow tosolve problems of relevant sectors ofeconomy.

At the same time the exemption ofbusiness from cumbersome proceduresis an additional guarantee to ensure free-dom of services flow.

Secondly there should be more serv-ice sectors covered by the rules of singlemarket. Larger number of service sectorswill raise the effectiveness of the singleservice market and bring more advan-tages to the service providers and re-ceivers. Business requires lower costsand finds this opportunity on the singleservice market.

Today there are two ways to extendthe single market: removal of segmenta-tion of the sectors included into the listof services of the single market, and the

Meeting of Advisory Committee for entrepreneurship, Moscow, Russian Federation, EEC Headquarters, June 13, 2019



implementation of the approved liberal-ization plans. Both ways develop the sin-gle service market and gradually involvenew service sectors where the Unionstates are ready to provide more rightsand freedoms to economic entities.

Thirdly there should be more confi-dence in the single service marketamong all its players based on trans-parency and integration of the servicemarket, information exchange betweenregulators, service providers and re-ceivers, better regulatory.

Rules for the regulation of trade inservices, incorporation, and activities arealready in force. They define how theUnion states improve their business reg-ulation ensuring transparency of newand current regulation instruments.

According to the Article 68 of theTreaty on the EAEU we conclude agree-ments of administrative cooperation firstof all in the sectors of single market andthose which are liberalized with regula-tors and information for exchange. Suchinteraction of the Union authorizedbodies ensures tax and other obligationsof the service providers and receivers,ensures statistic data and prevent unfairbusiness.

These steps will allow to create a firmbasis for transparent and effective intro-duction and application of the rules ofsingle service market.

Fourthly there are challenges regard-ing consumer rights protection from un-fair market players.

We believe that this task can besolved by interaction of authorized bod-ies of the Union member-states whencarrying out the monitoring, administra-tive and procedural actions.

Such approach could provide guar-antees and comfortable conditions forthe fair market players as well as dismisssome fears of national regulators regard-ing consumer rights protection. Samemechanism of single market improve-ment works in the European Union.

All these measures will give a newimpetus to the work and expansion ofthe single service market.

The final target of the effective EAEUsingle service market is to provide highquality services, to stimulate invest-ments to the service sector and to devel-op integration.

And business society of our countriesplays the main role in the formation andwork of the single service market.

With this regard we hope for theproactive position expressed in theparticipation when revealing problemsof the single service market includingentrepreneurs inquiry and their ap-peals to the Eurasian Economic Com-mission.

Meeting of Advisory Committee for Intellectual Property Moscow, Russian Federation, EEC Headquarters, March 6, 2019

Meeting of Advisory Committee for SocialProtection Moscow, Russian Federation,EEC Headquarters, May 23, 2019

14

RSPP NEWS

BUSINESS COOPERATIONPROVISIONAL RESULTSAND PROSPECTS

Alexander Shokhin, President of Russian Union

of Industrialists and Entrepreneurs


France has always been a focus area inthe international activities of RussianUnion of Industrialists and Entrepreneurs.We have long and very active relationswith MEDEF and MEDEF International,with whom we created the Russia –France Business Cooperation Council. Ourpartner is also the FrancoRussian Chamber of Commerce and Industry. An additional incentive to our already closecooperation helps to give an active dialogue, carried out at the highest level. Under the patronage of the presidents ofRussia and France, the Trianon Dialoguewas created through civil societies, inwhich business associations of the twocountries also actively interact.

The Russia – France Business Cooperation Council was founded on November27, 2012 in Paris, under the protocol,signed between the Russian Union of Industrialists and Entrepreneurs (RSPP)and MEDEF International, in the presence of the Russian Prime Minister Dmitry Medvedev. CoChairs the Council areon the Russian side – Oleg Belozyorov,General Director of Russian Railways(since November 2015), on the Frenchside – Frederic Sanchez, President ofMEDEF International, Chairman of theExecutive Board of Fives Group (sinceMay 2018).

The main goals of the Council are:the promotion of effective cooperation

between enterprises of Russia andFrance; expansion of exchange betweenbusiness circles within the framework ofbilateral events or specially createdworking groups; assistance in strengthening direct contacts and relations withstate and private companies of eachcountry; to advance of common interests of private sectors of Russia andFrance in government bodies of the twocountries.

An important step was the signatureof a memorandum of cooperation between RSPP and MEDEF International inthe field of the industry of the future inthe context of RussiaFrance business dialogue at SPIEF2018 in the presence ofthe presidents of these countries.

In April out first specialized bilateralforum was held, at which issues of cooperation in the field of new technologieswere discussed. Groups of French andRussian experts discussed directions oftechnological and industrial cooperation,in particular in the area of digital technologies, additive manufacturing, automation, robotics, Big Data, IoT, as wellas standardization and certification,transformation problems, ways to ensureindustrial competitiveness and workglobally on the French and Russian industry. The meeting ended with the awardceremony "achievements of the industryof the future of France and Russia", inwhich Russian and French projects usingan innovative approach in productionwere noted.

On June 6, 2019, the second RussianFrench business dialogue took placewithin the St. Petersburg InternationalEconomic Forum, devoted to the practiceand prospects of cooperation on the digital agenda.

The digital economy today is not justa translation of analog forms into numbers but also a change in habitual business models and lives of people as awhole. Such technologies as the Internetof things, digital design and modeling, remote access and cloud storage, distributed ledger technologies, big data andartificial intelligence have already had animpact on business today.

During our discussions participants –heads of companies, represented variousareas of the economies of the two countries, focused on current projects andprospects for cooperation in the field ofinnovative technologies and digitalization. The composition of the French delegation was impressed not only by thenumber but also by the comprehensivecoverage. It presented a wide variety ofdirections, including banking, investment, transportation, engineering, energy, media, software, IT, consumer brands,real estate and much more. This composition, like a mirror, reflects a wide rangeof opportunities for fruitful interactionon a bilateral basis.

Among advantageous directions andareas, we noted the following: Industry 4.0.; climate and zerocarbon economy; innovative technologies in traditionalprimary industries; new mobility (trans

portation management, includingBlaBlaCar, multimodality, new modes oftransport such as electro scooter); newtypes of engines including hydrogenfueled; communication digitization introduction of 5G generation; technologicalsolutions based on artificial intellect for“smart cities”.

Among actual examples of promisingbilateral interaction in the area of creation new materials and technologies,the cooperation of companies SeverstalFIVES, SeverstalTotal can be identified.The French company Orange is lookingfor a partner in the field of 5G generation, transmission and processing oflarge amounts of data.

Such a form of cooperation as jointsupport for innovative startups is verypromising. As an example: on April 15,2019 in Paris (the Palace of Versailles),the Trianon Startups Business Forum washeld, in which more than 20 residentcompanies of Skolkovo took part, whopresented their projects to 15 Frenchcorporations, such as Air France, Total,Renault, Orange, Air Liquide, SNCF,Thales, Societe Generale, PernodRicard,Ipsen and others. The Forum was heldunder the aegis of the RussianFrenchTrianon Dialogue in partnership with theSkolkovo Foundation, the FrancoRussianChamber of Commerce and Industry, theAssociation of Advisers on foreign tradeof France, French initiative French TechMoscow and with the financial supportof the Russian company ADV AdvertisingGroup. It is planned to hold a similar

event with the participation of Frenchstartups in Russia for representatives ofRussian business.

On March 2019 the Head of the statewith French companies, the largest investors in the Russian economy met inthe Kremlin. The day continued with alandmark meeting as part of the InstitutChoiseul initiative and a visit to Russia bya largescale delegation of young Frenchbusiness leaders.

The ranking of young business leadersis a great project of the Institut Choiseulthat does the work for the long run. Thisfact that it has gone beyond France andreceived support at the interstate levelindicates his relevance, the commitmentof countries to develop normal, mutuallybeneficial relations. The Russian projectChoiseul 100 helps to sharp the future ofbilateral economic communications between Russia and France, gives an opportunity to get to know each other,establish contacts, and better know thepotential of each other. I count that thisfits into perfectly with the objectives ofthe Trianon Dialogue, which we supportto bring together our peoples.

We actively advance the interaction inall directions. One of the most importanttasks for us is to improve the businessenvironment, investment climate. Herethe representatives of French business,with whom we interact, including withinthe International Council for Cooperationand Investments, actively help us. Ourlast meeting was held with the participation of Sergey Lavrov in March.

16

RSPP NEWS

FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATION

Russian Union of Industrialists and Entrepreneurs

THE EURASIAN ECONOMICUNION & THE EU:

NOVEMBER 22MOSCOW

FORUM2019

+7 495 663-02-08/13/19 [email protected], [email protected], [email protected] www.fbacs.com

VI MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC

FORMAT

• Plenary sessions

• Breakout sessions

Session 1. France – EAEU: prospects

of investment cooperation

Session 2. Gold-mining and jewelry

industries– new opportunities

and technologies

Session 3. Innovation technologies

as promising investment

Session 4. Digital banking:

from classical banking to financial

ecosystems

SESSIONS OF THE FORUM

SEARCH FOR NEW FORMATS OF COOPERATION

EURASIANECONOMICCOMMISSION

GOLDIN THE CHANGING INTERNATIONAL MONETARY SYSTEM

18

WORLD TRENDS


The changing international monetary system

Economic power is shifting fromWest to East. China is now the world’slargest economy on a purchasing-powerparity basis. It is the largest trading na-tion in the world and has the thirdlargest sovereign debt market. Over thelast decades China has become a keydriver of global growth and it will con-tinue to propel the world economy overthe years to come.

The reconfiguration of the structureof the global economy and China’s risingglobal footprint is likely to have an im-pact on the international monetary sys-tem, with the greater use of the Chinesecurrency as one of the forces shaping theglobal financial system. The internationalmonetary system is likely to move awayfrom the unipolar, US dollar – based sys-tem towards a multipolar system, withnot only the US dollar, but also the euroand potentially the renminbi playing therole of the main reserve currencies.

Since 2009 the Chinese authoritieshave introduced a number of measuresaimed at promoting renminbi crossbor-der settlements, including building anoffshore renminbi market and facilitat-ing access of foreign investors to the Chi-nese bond market. Since the inclusion ofthe renminbi into the SDR basket, theshare of the renminbi in international re-serves has surpassed those of the Aus-tralian dollar and the Canadian dollarand currently it stands at 1.95% (as of Q12019). The inclusion of Chinese bondsinto the global bond indices earlier thisyear will provide a further impulse forinvestment into Chinese bonds and willfurther expose foreign investors to theChinese sovereign bond market.

The renminbi’s use in internationaltrade will most likely increase furtheronce certain conditions are fulfilled,most notably those regarding the cur-rency convertibility and the continuedopening of China’s capital account.The real question is not whether this

will happen, but when and what re-gions are likely to adopt the renminbias one of their main reserve currencies.While it will be difficult for the ren-minbi to rival the US dollar as the glob-al currency, Asia seems to be the natu-ral habitat for the renminbi (Eichen-green, Lombardi, 2017).

As the international monetary sys-tem transitions from the unipolar, to-wards a multicurrency system, gold, as asafe haven asset and a hedge against fi-nancial shocks and currency crises, hasremained and will continue to remainan important element of central bankportfolios.

Recent trends in central bankgold buying

Over the past decade, central bankshave purchased more than 4,300 tonnesof gold, bringing their total holdings tonearly 34,000 t. Following the USD andEUR, gold makes the third largest re-serve asset in the world, constituting

Dr Tatiana Fic,Director, Central Banks andPublic Policy, World GoldCouncil”

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As the site develops, more data and insight will be added to provide even greaterlevels of transparency and understanding around the value of gold as an assetclass. In March, we launched the Goldhub blog, which features market insightsfrom our teams across the world, as well as external commentators who provide aunique perspective on aspects of the market.

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about 11% of world’s international re-serves (chart 1).

Since the global financial crisis cen-tral banks have remained firmly on thegold purchasing pedal, with centralbank gold demand fluctuating at about500-600 tonnes per year (chart 2).

Last year central bank purchases ofgold totalled 651 tonnes – more than atany time since the end of Bretton Woodsand the suspension of US dollar convert-ibility into gold nearly 50 years ago.

The vast majority of buying has comefrom developing country central banks.Russia, China, Turkey and Kazakhstanhave been the largest purchasers. Theshare of gold in developing country cen-tral banks remains relatively low. Theoverall allocation is 5% as compared to16% for advanced economies which maysuggest there is scope for further growth.At the same time, over the past decadethe advanced economy central banksstopped selling gold under central bankgold agreements. Earlier this year, theydecided not to renew the agreement up-on its expiry in September 2019. In thepress release issued by the ECB in July,22 signatory central banks confirmedthat none of them currently has anyplans to sell gold. The signatories statedthat gold remains an important elementof global monetary reserves.

While the developing country cen-tral banks have been active purchasers,the pattern of demand has changed inrecent years. In 2016, demand was high-ly concentrated in Russia, China andKazakhstan (chart 3a).

By 2018, the demand had become farmore diverse, with nineteen individualcentral banks buying over one tonne ofgold last year, according to IMF data.Countries that had been absent from thegold market for many years became no-table buyers of gold. The EuropeanUnion re-emerged as a net buyer, aftersubstantial purchases from Poland andHungary (Chart 3b).

20

WORLD TRENDS

Chart 1Foreign currency reserves and gold

Chart 2Annual central bank demand

Source: IMF, World Gold Council

Chart 3аCentral bank purchases in 2016

Source: Metals Focus, Refinitiv GFMS, Worid Gold Council

■ Net purchases ■ Net Sales

Tonnes

1971 1976 1981 1986 1991 1996 2001 2006 2011 2016

800

600

400

200

о

–200

–400

–600

–800

0% 10% 20% 30% 40% 50% 60%

Tajikistan

Colombia

Mauritius

Belarus

Qatar

Kazakhstan

China

Russia

2,0

2,3

3,5

4,2

7,5

36,2

80,2200,7tonnes

2016

(Approx. 337 tonnes by 8 central banks)


Factors driving central bank gold demand

Central banks hold gold for variousreasons – as a strategic asset, to satisfytheir objectives of ensuring internation-al reserves liquidity and security, and todiversify their reserve portfolios. Gold isespecially well suited to central bank re-serve portfolios whose principal func-tion is to protect the country against ex-ternal shocks. The negative correlationof gold with other assets allows centralbanks to maximise the return on theirportfolios, at the same time minimisingthe risks.

The recent increase in central bankgold demand has been driven by a com-bination of macroeconomic and geopo-litical factors, as well as structuralchanges in the global economy.

Macroeconomic uncertainty result-ing from deteriorating budget positions,and rising debt of some of the reservecurrency countries, an increased threatof currency wars, and protectionist poli-cies have prompted central banks to di-versify their portfolios.

Some of the central banks buy gold atthe same time reducing their US Treas-ury holdings. The dedollarisation of re-serves is a response to sanctions and in-creased political tensions.

Some central bank purchases reflecta desire to hedge against future changesin the international monetary system. Itis noteworthy that most of the recentgold purchases have been coming fromcountries with strong trade and invest-

ment links with China in Southeast andCentral Asia (chart 4).

The rising exposure of the Belt andRoad countries to China will likely re-sult in higher holdings of the Chinesecurrency in their central bank reservesin the future. As the process of full re-gionalisation of the renminbi will take

time, these countries have been pur-chasing gold instead. As the shift to anew international monetary systemcould be both destabilising, due to hotmoney flows and changing expecta-tions, and possibly weigh on theUS dollar, gold can serve as a hedgeagainst both.

Chart 3bCentral bank purchases in 2018

Source: Metals Focus, World Gold Council

Chart 4Central bank gold purchases over recent years (2014–2018)

Source: IMF, World Gold Council

0% 10% 20% 30% 40% 50%

Serbia

Malaysia

Guinea

Qatar

Philippines

Egypt

Colombia

Kyrgyzstan

Iraq

Tajikistan

China

Mongolia

Uzbekistan

Poland

Hungary

India

Kazakhstan

Turkey

Russia274,3 tonnes

51,4

2018

(Approx. 544 tonnes by 19 central banks)

50,6

42,3

28,4

25,7

18,7

14,4

10,0

6,7

6,5

4,2

2,5

1,9

1,6

1,6

1,3

1,2

1,1

Meanwhile personnel gap consider-ably limits the development of businessin Russian regions: 68% of employerswith large-scale projects on competitivemarkets up to 2025 consider the lack ofqualified personnel as the main back-seton the way.

Besides 82% of Russian companies inthe high-tech sectors of economy haveto educate additionally the graduatesthey hire. The adaptation period of the“green hands” is about 1.5 – 3 years. Andthe gap between the education base andthe necessary skills at work is quite big.

About one third of the graduatesdon’t work in their degree field, more-over every fourth graduate works in theareas where higher education is not nec-essary at all. On the one hand the grad-uates meet different challenges whenlooking for a job, on the other hand 91%

of employers are not satisfied with theirskills.

The reason for this situation is thatthe education system doesn’t coincidewith the needs of the labor market – nei-ther in the number of graduates, nor intheir training quality. The expenses toovercome the skills deficit are chargedto enterprises.

Consequently national goals can’t bereached without modernization of thesystem of professional qualificationswhich is priority area of the state policy.

In order to create and develop thesystem of professional qualifications inRussia the President of the Russian Fed-eration signed a Decree #249 dd.16.04.2014 to establish the NationalCouncil under the President of the Russ-ian Federation for professional qualifica-tions (hereinafter – National Council).

In 2017 the Federal Law #238-ФЗ wasput into force “On independent qualifi-cation assessment” (hereinafter – FederalLaw #238), which includes the legal andorganizational basis and the procedureof independent qualification assessment.

According to the Law the independ-ent qualification assessment implies aprocedure to confirm that the qualifica-tion of a candidate goes along with theprovisions of a professional standard orthe qualification requirements set byfederal laws and other regulations of theRussian Federation.

The participants of the independentqualification assessment are:

National Council;National agency for qualifications de-velopment;Council for professional qualifica-tions;

22

SUBJECT FOR DISCUSSION

THE DEVELOPMENT OF THE SYSTEM OF INDEPENDENT QUALIFICATION ASSESSMENTON FINANCIAL MARKETAS IT IS WELL KNOWN, THE PRESIDENT OF THE RUSSIAN FEDERATION V. PUTIN HAS ENTRUST-ED THE RUSSIAN GOVERNMENT AND THE RUSSIAN SOCIETY WITH A TASK TO ENSURE A BREAK-THROUGH IN THE SCIENTIFIC AND TECHNOLOGICAL AS WELL AS IN THE SOCIAL AND ECO-NOMIC DEVELOPMENT OF THE COUNTRY, TO IMPROVE THE STANDARDS OF LIVING OF THEPOPULATION, TO CREATE COMFORTABLE CONDITIONS FOR THEIR LIVING AND OPPORTUNITIESFOR SELF-FULFILLMENT AND TALENTS IDENTIFICATION OF EVERY HUMAN.

Chairman of FBA EAC Coordinating Council,

Executive Vice-President of RSPP,

Chairman of International Banking Council,

Member of the National Council under the President of the Russian Federation

on professional qualifications,

Chairman of the Council for professional qualification development

Alexander Murychev,


Qualification assessment centers(QACs);employers;candidates.Ministry of Labor and Social Protec-

tion of the Russian Federation – as an au-thorized body.

In order to define the goals and themain tasks of the national qualificationsystem the National Council has ap-proved a Road Map for the develop-ment of the national qualification sys-tem in Russia for the period up to 2024.Also developed is

The Development strategy for na-tional qualifications system up to 2030(hereinafter – Strategy).

Since the launch of the national qual-ification system 1233 professional stan-dards have been worked out and ap-proved; 1767 professional qualificationshave been included into the registry,basing on them 840 packages of assess-ment means have been created; morethan 300 QACs have been opened on thebasis of leading Russian enterprises, and27.6 thousand people have passed the in-dependent qualification assessment pro-cedure in these centers.

The qualifications assessment is car-ried out in accordance with the Proce-

dures approved by the relevant Decreeof the Russian Government. Theprocess itself has a form of professionalexam, and after passing it successfullythe candidates are presented with astate-recognized Certificate of a quali-fication, which form has been approvedby the Ministry of Labor and SocialProtection.

For the assessment of qualifications ofthe financial market players under thedecision of the National Council theCouncil for professional qualification de-velopment has been established (here-inafter – Council).

The goals of the Council are the de-velopment of a system of professionalqualifications on the financial market,the work on professional standards, theindependent qualification assessment ofthe financial market players, profession-al and public accreditation of the mainprofessional educational programs, pro-grams of professional training and (or)additional professional programs.

The Council is established on the ba-sis of the Association of financial marketplayers “Council for professional qualifi-cation development“ with 74 members.

Today the members of the Councilare representatives of the Bank of Russia,

the Ministry of Finance of Russia, theFederal Treasury of Russia, the PensionsFund of Russia, RSPP, Association ofBanks of Russia, the National Associa-tion of the FOREX players,

The Financial University under theGovernment of Russia and other statebodies, educational organizations, pro-fessional unions and legal entities.

The Council is authorized:1) to monitor the labor market, to track

new professions, changes in thenames and the list of professions;

2) to develop, apply and update theprofessional standards;

3) to develop, apply and update the sec-toral frame of qualifications and qual-ification requirements;

4) to arrange the independent qualifica-tion assessment;

5) to take part in the development ofthe state standards of professional ed-ucation, in the update of the pro-grams of professional education andtraining as well as in the accreditationactivity for professional and publiceducational programs.The Council has branches in all fed-

eral districts of Russia, as well as commis-sions and working groups on every sec-tor of financial market.

Since its establishment the Council hasapproved 35 professional standards (19 areunder development now), 97 qualifica-tions and 68 packages of assessmentmeans (28 are under development now).

47 QACs and 134 examination cen-ters are entrusted with the rights to con-duct independent qualification assess-ment in the financial market sector. 1071people have passed the assessment. 854experts have been trained for qualifica-tion assessment.

An important point in the develop-ment of the qualification assessment sys-tem in the Russian Federation was thecoming into force of some provisions ofthe Federal Law #238 implying thechanges in the procedure of qualifica-tions assessment for financial marketplayers and the shift to the independentqualification assessment.

Today there are a number of require-ments to the financial market players:education level, work experience, qual-ification certificate of a financial marketplayer, and it must be valid.

Such requirements are stipulated byseveral facts. For example, the financialmarket has a very complicated systemand an advanced, dynamic regulation aswell as peculiarities in every type of pro-fessional activity on the securities mar-ket. The clients of the professional play-ers entrust them with their financial as-sets so the professional services forclients is an important condition forkeeping this confidence.

During the preparation of the shift toindependent qualification assessmentfor financial market players the Bank ofRussia and the Council signed a cooper-

ation agreement defining the joint ef-forts for the harmonization of the exist-ing appraisal system for financial marketplayers and the shaping national systemof the independent qualification assess-ment.

In April, 2019 the Road Map wassigned to ensure the shift to the systemof independent qualification assessmentfor the financial market players in theRussian Federation for the period 2019–2021. The Road Map includes strategictrends of the system development. Forexample, the development of the instru-ments for the professional and public ap-praisal of educational programs, the au-tomation of the assessment process, theinternational recognition of the certifi-cate of the assessment.

In order to improve the effectivenessof the professional qualifications systemin the area of financial monitoring(AML/CFT) a cooperation agreementwas also signed between the Council andthe Federal Financial Monitoring Service.

It is worth mentioning that accordingto the Decree of the Government of theRussian Federation # 584 dd. 27.06.2016the professional standards starting fromJanuary 1, 2020 will become obligatoryfor the public or municipal agencies,public or municipal unitary enterprises,state-owned corporations, state-ownedcompanies and business entities withmore than 50% of state-owned shares.

With this regard the Council hasstarted to work out the methods andprocedures of independent qualifica-

24

SUBJECT FOR DISCUSSION


tions assessment in the state-owned cor-porations: it appears that the marketshould have the alternative and the in-dependent qualification assessment canbe carried out not only in QACs but inthe corporations directly through creat-ing their own QACs.

Within the cooperation between theEAEU member-states the Council to-gether with partners promotes the con-tingency of qualification requirementsfor the financial market players in thesemember-states.

In accordance to the Treaty on theEurasian Economic union dd. 29.05.2014a single labor market implies a situationon a market within a specific sectorwhere the citizens of the states of theeconomic union have the right for

recognition of professional qualificationof personnel. EAEU ensures free move-ment of goods, services, capital and la-bor force as well as coordinated, agreedand common policy in economic sectors.

With this regard, considering thegrowing migration processes on the la-bor market of the Eurasian EconomicUnion and the arising need to mutuallyrecognize the levels of workers’ qualifi-cations an issue is thrown into relief re-garding the cooperation in unification ofrequirements to the training and assess-ment of labor resources of financial mar-kets in the EAEU member-states.

This leads to the need of analysis ofthe qualification market and the existingregulatory requirements to them, theneed to work out the methods unifica-

tion of qualification requirements to fi-nancial market players within theEurasian Economic Union, to create a sin-gle qualification frame and to implementthe program of mutual qualificationsrecognition based on the methodology ofnational qualifications unification.

Speaking about the Developmentstrategy of national qualification systemon the whole, its implementation impliescertain results for all parties of the process.

For the state: to ensure the humancapital growth of the country, to com-pensate the negative demographictrends related to aging of the most partof workers and decrease of the numberof working force; to maintain the supplyand demand balance of qualifications onthe labor market, to raise the effective-ness of education institutes at all levels;to raise the investment attractiveness ofthe subjects of Russian Federation, to im-prove the quality of labor force via at-traction of qualified labor migration.

For employers: to ensure the access toqualified labor force, to decrease costs onemployment and qualification confirma-tion, to ensure human resources potentialproviding for technological innovations.

For citizens: possibility to gain ad-vanced qualifications and high econom-ic returns on them; the possibility toconstantly improve qualification and getnew ones via lifelong learning, to buildcareer via NSK institutes and the possi-bility to extend professional mobility.

In conclusion it is worth mentioningthat the qualification assessment systemis still in its initial stage. However thereis hope that the main goals of the Strate-gy will be achieved.

FORMING A SINGLE LABORMARKET ON THE TERRITORYOF EAEU VIA QUALIFICATIONRECOGNITIONON MAY 24, 2019 FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATIONWELCOMED IN ITS HEAD-QUARTERS IN MOSCOW THE EXTENDED MEETING OF SUPER-VISORY BOARD AND COORDINATING COUNCIL.

THE MAIN ISSUE ON THE AGENDA WAS THE FORMATION OF A SINGLE LABOR MARKETOF THE TERRITORY OF EAEU VIA QUALIFICATION RECOGNITION.

AMONG OTHER ISSUES THE AGENDA COVERED INTERACTION WITH THE STATE MIGRA-TION SERVICES, CURRENT PROBLEMS WITH QUALIFICATION RECOGNITION WHEN SPE-CIALISTS OF DIFFERENT PROFESSIONS FROM EAEU COUNTRIES GET A JOB IN RUSSIA,AND ALSO THE METHODS TO HARMONIZE QUALIFICATIONS OF SPECIALISTS IN DIF-FERENT AREAS.

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FOUNDER’S PAGE. FBA EAC


Today the work of the Eurasian Eco-nomic Union (EAEU, Union) has en-sured the extension of four freedomsand a coordinated and single policy inthese areas. The freedoms are wellknown: freedom of movement of goods,services, capital and labor. The last oneis under special attention at this stage ofintegration, and the Treaty on theEurasian Economic Union (the Treaty)has set a number of considerable prefer-ences for citizens of the EAEU member-states in their work activity and theirstay on the territory on this or that stateduring their work.

In general, today the labor marketwithin the Union has already beenformed and is working which is one ofthe important results of the EurasianEconomic Commission (EEC) takingpart in the process.

Statistics confirms this result. For ex-ample the flows of labor migrants fromthe Republic of Armenia and Kyrgyzs-tan to the Russian Federation as themain host country, grew by 10% in thefirst year of their membership in theUnion. Later these flows settled downand are currently at a level higher thanthe one before their membership in theUnion. Unemployment level has also de-creased: according to the InternationalLabor Organization in 2018 the unem-ployment level in the Union on averagewas 4.9% among active population.Wages and welfare of the EAEU popula-tion gradually grow.

At the same time there are still someproblems in the area. For example Rus-lan Taran, President of Internationalsocial and labor fund of migrants fromMoldova said that legal base should bepriority. Besides he believes that allworkers of EAEU should have guaran-

teed rights for pension coverage re-gardless of the place of work and liv-ing. R.Taran also touched upon the is-sue of crossing the borders and the mi-gration legalization which can besolved if the migrants have the possibil-ity to define their status in a host coun-try before going there, while they areat home. He also reminded about theinformal channels of employmentwhich is a convenient and beneficialfor an employer “mechanism allowingto put the migrants beyond the lawand deprive them of rights”. In order tosolve the abovementioned problemsthe President of International socialand labor fund of migrants fromMoldova offers to open regional officesclosely connected with the center. Thecore task of the offices and the centerwill be “to protect the rights of mi-grants, to provide them with necessaryinformation and to combat the lackand unreliable information and meas-ures to sipmlify all stages of migration:entrance, movement, acceptance of mi-grants, medical care, permission totransfer money home legally, withininterstate agreements”.

Considering these facts the main taskis to ensure social and labor rights of theworkers. This task is priority for theEEC. Once it is completed the citizensof EAEU can practically see the advan-tages of migration processes. That iswhy currently the work of the Commis-sion aims to create conditions for fur-ther development of the single labormarket and to implement the existingpreferences and interaction of author-ized bodies.

The head of the labor section in theLabor Migration Department of EECChinghis Sarybaev told about some ar-

eas where the work is carried out to-gether with the Union member-states:

“First of all we hope to carry out, viaan electronic single integrated informa-tion system, the cooperation provi-sioned by the Treaty of pensions cover-age - regarding the employment periodconfirmation in the EAEU member-state, job appointments, payments andpensions export.

To improve the legal protection ofthe citizens the Commission offered toprovide the workers with long-termwork contracts (over one year) and totheir families with a special status assum-ing extended rights when crossing theborder of the EAEU member-states, one-time registration procedure, access toself-employment”.

Single labor market is a space not onlyfor workers but also for entrepreneurs.Thus the market is also improved by suchprovision of the Treaty as the prohibitionto deteriorate the terms of business. Ac-cordingly the states of the Union and theEEC are not authorized to introduce newand discriminating limiting measures tothe residents of member-states, moreoverthey are obliged to preserve and improvebusiness terms, to ensure stability of ac-cess to the market and non-application ofany new permissive qualification criteriaand procedures which cancel businessadvantages. Besides with regards to theservices, investments and any other activ-ity the Treaty provides for more than 30protective standards for entrepreneursfor example a full-fledged nationalregime and the most favored nationaltreatment, non-applicability of quantityand investment limits, guarantee of pro-tection and stimulation of investments,further liberalization and transparency ofinner regulations.

Valery Zakharov, the Head of theSection of Entrepreneurship, Servicesand Investment in the Business Devel-opment Department of EEC spoke aboutthe goals of the single market:

“One of important changes in theTreaty is the possibility to work withinthe single services market. It is a priorityand in many cases the basis for integra-tion. The goals of the single market is toreduce prices and tariffs, to improvecompetitiveness and investment poten-tial of the Union, to reduce costs of re-peated permits, immediate recognitionof licenses and allowances issued in oth-er countries of the Union without recog-nition, immediate recognition of allqualifications of the services supplierwithout confirmation.

Together with other instruments andprotective measures the single servicesmarket totally overcomes national pro-tectionism in the Union member-states.

The Treaty dictates the necessity tointroduce the best practices of nationalregulations as well as the change of reg-ulatory model for a less overloaded one.With this regard for the first time at thesupra-national level the rules of innerregulation were adopted aiming to abol-ish barriers and give guarantees to busi-ness and personnel of an easy notifica-tion qualification control procedure

It is a basis for freedom of servicesand business.

In its turn the Commission controlsthe rule implementation in the Union

member-states. On May 29, 2019 theSupreme Council was considering threedecisions to convert several economysectors into a single market format.

The movement of individuals is alsoworth mentioning. It relates to the guar-antees of movement of the personnel ofa service supplier. It means there can beno limits of recruitment at all, except forthe sectors with qualification criteria.But in this case anyway there can be nodiscrimination of the personnel of aservice supplier depending on his/hercitizenship”.

However one should realize that theformation of a single market can’t be suc-cessful without the most importantpoint of this process – qualificationrecognition of workers. The Union as-sumes the following here.

The workers have the right for pro-fessional activity in accordance withspecialty and qualification in their edu-cation certificate, decree in the state ofemployment. In accordance with theRight of the Union the education docu-ments issues in the Union member-statesare recognized without any procedures.

28



Excluding such areas of education asteaching, law, medicine and pharmaceu-ticals as well as decrees and academicstatus which need legalization andrecognition.

The harmonization of educationprograms for personnel training are be-ing discussed and have positive exam-ples. Following the round table withrepresentatives of the Union member-states on the training of pharmaceuticalspecialists professional standards in thisarea were approved which facilitatesmutual recognition of education docu-

ments in EAEU countries. Also activelydiscussed is mutual recognition of jew-elry countermarks together with theRussian State Assay Chamber under theMinistry of Finance of the Russian Fed-eration and the Association of jewelersof Armenia.

Ch. Sarybaev added: “Currently theCommission is also working on harmo-nization of qualification criteria regard-ing the main professions of drivers inEAEU member-states. It is suggested toset common criteria of the procedure ofthe drivers assessment, documentsrecognition and to entrust the Councilof EEC with the rights to set qualifica-tion requirements. In case of success itwill be possible to initiate the issue of im-posture on EEC the right to define qual-ification requirements for other profes-sions as well.

As for the system of independentqualification assessment which is beingintroduced in Russia and is optional fornow, there is one to be mentioned.

It seems that in the conditions of asingle labor market the system should beapplied to the workers of other coun-tries of the Union with the same proce-dure and terms as to its own citizens,and it shouldn’t be used as a protectioninstrument of the national labor market.

Considering that the system of quali-fication confirmation is also being devel-oped in other EAEU member-states aim-ing to improve productivity, workerssafety and quality one should rememberabout the harmonization of the imple-mented systems for the future directrecognition of qualification documentsof the workers”.

Thus, in general positive dynamiccan be seen in this process. However

there are still a number of questions tobe solved: the issue of cooperation ofmember-states with regards to gradualqualification conjunction for differentprofessions is being solved but is still onthe agenda. This was pointed out bySamvel Chzmachian, Deputy GeneralDirector of FBA EAC, Head of Represen-tative office in the Republic of Armenia:

“One should take into account thatwhile regulating different aspects of eco-nomic integration, enactments the levelof professional training of the workersare concerned to this or that extend. Forexample the creation of a single financialmarket demands mutual recognition oflicenses of its professional players andspecialists.

One of the licensing terms is the com-pliance of the financial market playerswith common requirements. Thus creat-ing a single economic space the legisla-tion indirectly influences the labor mar-ket of EAEU member-states”.

Another important issue was tackledby Evgeny Tarakanov, Director of Asso-ciation “National Migration Center” –the issue of professional training of mi-grants. He mentioned that for examplethe Russian Federation hasn’t got a sys-tem of professional training and retrain-ing for migrants, and quite а large mar-ket of educational services is not focusedon migrant education as a special targetsegment. In most cases additional educa-tion is not a very popular service amonglabor migrants, at the same time statisticsshows that more than half of them needsand wishes to study.

As we can see the harmonization oflegislation and integration within theEAEU is not an easy process. There is ac-tive work towards free labor force move-ment aimed at integration but in orderto reach the Unions goals it is necessarynot only to intensify the existing agree-ments but also to solve the tasks concep-tually.

EAEU Business Council has jumpedwith two feet into gradual harmoniza-tion of different qualifications in EAEUmember-states. For example togetherwith EEC it is working on a Commissionunder a relevant Advisory Committeeor a work (expert) group to promote thisproject.

The main thing is that there is alreadya Work group on harmonization of dif-ferent qualifications in EAEU member-states under the EAEU Business Council.

Andrey Bespalov, the Head of theWork group under the EAEU BusinessCouncil, Chairman of the CoordinationCouncil of the Eurasian Human Re-sources Center spoke about the tasks ofthe group:

“The Eurasian Human ResourcesCenter has expressed its support to thesingle labor market several times. First ofall we are grateful to FBA EAC and EECfor the relevant Work group under theEAEU Business Council.

On March 13, 2019 the Presidium ofthe Business Council authorized theWork group to carry out its functionssuch as to attract specialists, experts, cre-ate project groups, request necessary in-formation and provide it.

The Provisions of the Work Groupand its composition have been ap-proved. Now all five countries are repre-sented in the Group, three representa-tives from each country, and some ap-proaches have been developed.

The name of the Work group reflectsits goals and tasks which are to harmo-nize the mechanisms of access to singlequalification criteria, to promote themobility of labor resources and in gen-eral the task to create a single labormarket.

The mobility in the world graduallygrows. 230 million people annuallymove crossing the borders of their states.According to some estimation in Europethe number includes the population ofBelgium and Austria. On the territory ofthe Russian Federation 10-12 million mi-grants are present, which means that themigration processes involve about 7–15%of the economically active population.

When we speak about a single labormarket we realize that it is taken by anemployer because the labor market is amarket of supply and demand. And in-teraction with an employer, with migra-tion services, employment services is apriority in the activity of the WorkGroup since the users of the labor re-source are the employers. And every

employer has the right to employ thatpart of qualified labor resources whichin his opinion will be more useful for thecompany.

Another important moment is theneed to exchange only the qualified la-bor force since it created the basis for thenational wealth and improves the econ-omy. The trend is that in each of fivecountries a more qualified personnel en-ters than the one which exits. And theproblem is that migrants take positionsat least one step lower than the represen-tatives of the title states. So there is nomutual enrichment with qualified laborforce. And the exchange unfortunatelyusually involves non-qualified specialistsand doesn’t develop any economy of theUnion.

Speaking about the documents theWork group uses in its activity they arewell known. First of all it is the Treaty on

the Eurasian Economic Union which ap-proved free movement of labor force.

Article 96 of Part XXVI says that“member-states cooperate to harmonizethe policy of regulating labor migrationwithin the Union and also to assist in theorganized enrollment and attraction ofthe workers of member-states for theirwork activity”, and also that “the coop-eration of member-states’ in the area oflabor migration is carried out by rele-vant authorized state bodies”.

The Work group sees this coopera-tion in such forms as coordination ofcommon approaches and principles inlabor migration, information exchange,experience exchange, training, seminarsand learning courses, cooperation with-in the advisory bodies.

Another important Article of theTreaty is number 97. Is focuses on theright of employers to attract workers of

30



member-states without limitations onthe national labor market protection,and with this regard education docu-ments are recognized in the member-states without any recognition proce-dures in the host country-member to theUnion.

Also important for the Work groupare the Interstate Agreements andtreaties as well as Lisbon RecognitionConvention.

As for the output of the Work Groupwe suppose it must be: the Method ofqualification harmonization, theMethod of single labor market monitor-ing and the Method of development ofrequirements to the future professions/specialties.

It is necessary to mention that theEurasian Economic Commission partici-pates in the activity of the Work groupand in order to solve the tasks set by theWork group the role of the head organi-zation in the process creating a single la-bor market can be played by FBA EAC.

The areas of its support are:Cooperation with employers, businesssocieties and executive bodies of themember-states of the Treaty;Harmonization of cooperation withspecified committees of EEC whencreating the mechanisms of practicaltasks and projects management;management, logistics and organiza-tion of the work and projects of theWork group;participation in conducting of confer-ences, seminars about the EAEU laborresources.FBA EAC has an advantage as a head

organization since it already possesses anetwork of QACs, representative officesin 20 countries of Europe and Asia andthe administrative resource. A Eurasianlabor exchange is also being registered(International Human Resource Center).

As for the Method of qualificationharmonization as one of the products ofthe Work Group it is a large and crucialaspect for the single labor market. Todayit is obvious that such method is neces-sary, including for the financial and eco-nomic sector

So what is the concept of themethod?

This issue was tackled in details byOlga Firsanova, Head of the TrainingCenter for NSK development in financeand economy of Saint Petersburg StateEconomic University:

According to the basic guidelines ofscience the methodology of such prod-uct should include certain principles, aconceptual construct, certain procedureto carry out the process of recognition(depending on the conditions or the lev-

el of qualifications) of the documents,work experience and agreements be-tween countries.

Answering the question of the goalone should remember that it is the resultof the use of the method. And the mainresults are supposed to be the following:

Protection of the EAEU market fromthe inflow of non-qualified labor re-source and the development of migra-tion processes;Anticipated growth of the level ofqualification training of labor resourcesof intellectual capital in EAEU whichmust happen naturally for the reasonof qualification harmonization of laborresources from these countries;Closer interaction between an em-ployer which is the main player onthe market, and a candidate.There are examples already particu-

larly if the European Union. And some

documents were analyzed in order touse this experience.

First of all what is a qualification inthe European Union? Is it an educationdocument. Besides the professions areregulated and not regulated.

The regulated ones are those whichhave certain requirements of qualifica-tion while non regulated ones do not re-quire that. Every country of EuropeanUnion decides itself which profession isregulated and depending on this candi-dates from other countries follow differ-ent procedures. This practice can be ap-plied in EAEU as well.

So how does a candidate act? Hesearches in certain data bases for hisqualification and his profession andidentifies if it is regulated or not. Furtherin these data bases a candidate can findorganizations which consult and helpwith documents preparation and the

process of recognition itself, in case theprofession is regulated.

If not the candidate can decide him-self and get a job without qualificationrecognition or after this procedure thusgetting all the rights following theprocess and the positive decision. Allthis can also be applied in EAEU and infact become the main method.

Now a few words about the recogni-tion process. There is academic recogni-tion when it concerns education. Orthere is recognition of qualification andprofessional education mentioned inthe method which is being developed.Moreover there is recognition of differ-ent degrees. Completed recognition im-plies that a candidate come to a differ-ent country and gets a job without anyadditional procedures or obstacles. Partrecognition means that the qualifica-tion level is not high enough. In thiscase compensatory measures appear.And in this are an employer can influ-ence a lot.

There are different compensatorymeasures: adaptation tests, probationaryperiod or work experience (in Europe 3-6 years). After that a candidate gets anofficial document. And relevant bodiesare involved in this process to accompa-ny candidates from different professions.In the conditions of EAEU countriesthese bodies can be self-regulated HRcompanies. The main thing is the proce-dure of their cooperation with a candi-date.

Another important thing is standardprofessions. Standard professions meanminimum of labor actions, knowledgeand skills necessary for a candidate towork in the country of his interest.

When the standard professions arechosen, the systems of labor actions forthem are tasks it will be start of a very seri-ous harmonization process. Besides it goeswell with the goals for EAEU countries to-day including the task to create electronicbase for professions. It will considerablysimplify for an employer the search of la-bor resources and enrollment to a job.

It is important that the aspects ofqualification recognition and its chal-lenges are not limited by the abovemen-tioned ones. For example V.Zakharovspeaking about qualification recognitionstated that there will be lot of work tointroduce the provisions of the Treaty

on the Union into the national legisla-tions. Besides electronic work recordbooks should be introduced in the coun-tries of the Union. And one should al-ready think of centralization and digital-ization of this process.

In conclusion I would like to say thatthe work on the single labor market in-cluding through qualification harmo-nization is being done actively and suc-cessfully; the process is visible already.So there are grounds for a hope thatjoint efforts will reach the goals andsolve the problems in this area. Especial-ly taking into account that the process isvital for all EAEU member-states.

32


Companies of small and medium business inthe Eurasian Economic Union account for 18 to41% of total GDP and are a target segment formost financial organizations and institutes.

These organizations in their turn need awell-qualified team of experts who un-

derstand special features of this mar-ket segment and know how to com-

municate with its representatives.Our educational project allows

to receive new and organize theexisting knowledge and experi-ence of specialists involved into

the process of communicationwith SME. The educational process

draws experienced specialists withlong-term practical and methodological

experience of work with SME. The projecthas a pilot program for credit specialists of smalland medium enterprises better known on themarket as “EBRD technology”, “technology ofresponsible lending” or “cash-flow base technol-ogy”.

The program has four levels:Basic – for business development managers,

credit analysts who start their career in the sec-

tor, and also specialists of financial and eco-nomic services for small and medium enter-prises.

Extended – includes details of analyses ofbusiness models with complex structures, re-porting system and information processing aswell as practical methods of financial and eco-nomic analyses.

Individual – personal training in accordancewith the knowledge and experience of a client,pays attention to the previously discussed issuesand areas.

Corporate – training for the personnel of anorganization based on the programs valid in theorganization, rules and regulations, with re-gards to the existing product range and targetclient.

After the program a standard certificate isgiven. The students who have passed the test areallowed to take a qualification exam in theQualification Assessment Center for financialmarket specialists in accordance with the pro-fessional standard “Specialist of corporate lend-ing” with a standard certificate.

If you are interested to enroll or want to jointhe teaching staff please contact FBA EAC.

Contact person: Denis Burov

+7-926-322-44-96,

[email protected]

FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATION LAUNCHES AN EDUCATIONAL PROJECT

PROFESSIONAL DEVELOPMENT AND ASSESSMENT OF SPECIALISTS OF SME SECTOR

“PROFESSIONAL DEVELOPMENT AND ASSESSMENTOF SPECIALISTS OF SME SECTOR”.

34

ПрактикаFounder’s page. IBC

A REGULAR MEETING OF THE INTERNATIONAL COORDINATION COUNCIL OF BANKING ASSOCIATIONS (IBC) WASHELD ON MAY 17, 2019 WITHIN THE FIRST EURO-ASIAN FINANCIAL AND ECONOMIC FORUM ON THE PLATFORMOF KHORGOS INTERNATIONAL CENTRE OF BORDER COOPERATION (ICBC) “KHORGOS”.

THE AGENDA WAS AS FOLLOWS: “EFFECTIVE INTERACTION OF SUPRA-NATIONAL AND NATIONAL DEVELOP-MENT INSTITUTES AND COMMERCIAL BANKS: BEST WORLD PRACTICES”. THE MEETING ALSO COVERED THEREGULATION AND DEVELOPMENT OF FINANCIAL TECHNOLOGIES AND PROBLEMS IN THIS SPHERE AS WELL ASPOSSIBLE RISKS AND SECURITY ISSUES.

AFTER THE MEETING IBC MEMBERS AND PARTICIPANTS WERE RECOMMENDED TO USE THE MATERIALS INTHEIR PRACTICAL WORK AND INFORM CREDIT AND FINANCIAL ORGANIZATIONS OF THEIR STATES.

SOME ASPECTS OF THE MAIN TOPIC OF THE MEETING CAN BE FOUND IN THE ARTICLES FROM UKRAINE,KAZAKHSTAN AND ARMENIA.

EFFECTIVE INTERACTION OF SUPRA-NATIONALAND NATIONAL DEVELOPMENT INSTITUTESAND COMMERCIAL BANKS:BEST WORLD PRACTICES


In many countries practice hasshown that market relations based onthe principle “laissez faire, laissez passer”related to the free (non-regulated) mar-ket economy can lead to disproportionsin the economy. Considering higherrisks especially in the post-crises period,business may be not interested in invest-ing in long-term projects even necessary

for the society. 750 development banksworking all around the world are de-signed to eliminate these disproportions.These banks are not banks as we tradi-tionally understand them.

They are rather non-commercial fi-nancial institutes with a special status es-tablished under the decision of a gov-ernment. They can issues loans, bank

guarantees, targeted grants for large-scale socially important projects and car-ry out analytical and awareness-raisingwork.

Today in Kazakhstan there are all va-rieties of development banks due to thechallenges which the society faces andwhich demand solutions of the state andinternational community. For example

DEVELOPMENT INSTITUTESAS AN INSTRUMENT OF THE NATIONAL ECONOMY

KAZAKHSTAN:

Bakhytbek Baiseitov,President of the Association of Banks of the Republic of Kazakhstan

diversification and modernization ofeconomy extremely dependent fromhydrocarbon extraction and mineral re-sources, economic integration withneighboring countries, overcomingglobal crises, solution of social and eco-logical problems.

At first sight quite a big number ofdevelopment banks in Kazakhstanshould lead to their competitiveness fordifferent projects. However it doesn’thappen because each bank has deter-mined its role and uses its own ap-proach to the promotion of sustainabledevelopment of the country. The gov-ernment of the country can influencethe activity of the Development Bankof Kazakhstan (DBK) and the EurasianDevelopment Bank (EDB) because ithas considerable shares in their equitycapital (100% and 23.8% corresponding-ly). These banks are relatively young(in comparison to international devel-opment institutes) however they havealready gained reputation of the lead-ing financial institutes on the post-sovi-et space.

Another regional developmentbank on the territory of Kazakhstan isthe Asian Development Bank (ADB).Since the Republic became a share-holder of the bank in 1994 the totalamount of loans allocated to Kaza-khstan has accounted for $ 3.6 billion.41% of investments went to transport

and communications, 30% – to finan-cial sector, 13% – to nature resourcesand agriculture. The latest sector is im-portant for the banks as an instrumentto combat poverty and raise the livingstandards because most poor peoplelive in rural areas. Within the program“Drinking waters” (2002–2010) the gov-ernment of the Republic of Kazakhstanborrowed $34.6 million in order to im-prove the living standards and health-care in some selected villages.

Kazakhstan belongs to Asia geo-graphically but the country finds itselfin the European economic, political andcultural space. So there is no wonderthat the European Bank for Reconstruc-tion and Development (RBRD) is activehere.

It was created in London in 1989 foreconomic support of the former social-ist countries which had serious turbu-lence at that time. Regardless of itslofty mission its approach was prettypragmatic: the bank works as a fundbuying shares in companies with rele-vant level of corporate managementand high development potential in thestrategically important sectors of econ-omy. EBRD has worked in Kazakhstansince 1993 and has invested more than$ 8 billion into the economy of thecountry. Current Bank’s portfolio inKazakhstan amounts to $2.8 billionwith 80% as projects of infrastructure,

transport, energy and natural re-sources. The rest 20% are allocated tothe support for corporate, agriculturaland financial sectors as well as SME.The development of private sector isone of EBRD priorities in Kazakhstanthat is why its share in the Bank’s port-folio amounts to 50% and will remainlarge in the medium-term period. Ingeneral since 2014 for the support ofSME and businesswomen EBRD has al-located 19 loans in six derivatives(Bank CENTERCREDIT, Forte-Bank,Bank Intesa, Shinhan Bank, microfi-nance organization “KMF” and micro-finance organization “Arnur Credit”)for the total amount of 92.8 billionTenge.

Development banks can unite coun-tries not only geographically but also byreligion. The evidence is the Islamic De-velopment Bank (IDB) founded in 1973in Saudi Arabia and also working inKazakhstan. Although ethnic Kazakhsare officially Sunni, most population fol-lows secular traditions and doesn’t fol-low the rules of Islamic law. At the sametime if the money received from IDB areused to the benefit of the country anddo not lead to the obligatory islamiza-tion of the people one should welcomethe work of this financial institute. TheBank has financed about 50 projects oftransport infrastructure, healthcare andrural water supply. Just like with EBRD

36

Founder’s page. IBC


a considerable share in the investmentportfolio (31%) accounts for SME sup-port through lending to commercialbanks.

Another development bank work-ing in Kazakhstan is the InternationalBank for Reconstruction and Develop-ment – member of the World Bankgroup. Starting from 1992 the Bank hasalready allocated to Kazakhstan morethan $4.5 billion for 52 projects withthe largest share of investments (85%)accounting to transport infrastructure.In the last years the demand for foreigninvestments in the country has de-creased so the IBRD has switched to theanalytical, consulting and awareness-raising work. For example the Bank co-operated with the Kazakh governmentin the Program of joint economic re-searches. Previously the bank’s employ-ees organized a training for rural citi-zens to develop business skills in non-traditional areas.

In general the development banksin Kazakhstan reflect geopolitical situ-ation in the country. They express in-terests of global players (Russia, EU,USA, Japan, Islamic world) which fi-nance their activity. On the other handtheir work in Kazakhstan is useful forits economy because the final goal ofthe countries-donors is to reduce risksand find the advantages of cooperationwith Kazakhstan. For the country itmeans better infrastructure, betterstate and corporate management, de-velopment of alternative industries, in-tegration into the international eco-nomic space.

Among the development banks themain roles belong to DBK and EDB be-cause they allow the government ofKazakhstan to define the agenda them-selves and contribute into the sustain-able development not only of the coun-try but also the whole Euro-Asian re-gion.

The period when Kazakhstan wasreceiving considerable incomes fromthe high prices on energy productsand raw products has passed. Globaleconomic crises showed the weaksides of national economy and pro-voked thoughts about the future. Theeconomy of the country needs diver-sification, new infrastructure, newleaders educated and able to imple-ment innovations into life. This is whythe work of the development banksbecomes so crucial. They should notonly re-assign the money but also actas a real trigger of sustainable develop-ment and international cooperation.With this regard the national develop-ment institutes come to the fore, those

which were created by the govern-ment of Kazakhstan for further trans-formation of economy.

Today all national development insti-tutes are united under the NationalManagement Holding “Baiterek” whichacts as an operator of the key govern-ment programs of business develop-ment, industrialization and housing.

The Holding “Baiterek” has a num-ber of subsidiaries aimed at the mainmission – to support sustainable eco-nomic development of the Republic ofKazakhstan and to achieve the goals ofthe “Strategy – 2050”. The Develop-ment Bank of Kazakhstan, KazakhEx-port, the Investment Fund of Kaza-khstan, Kyzyna Capital Managementand Kazakhstan Project PreparationFund provide financing, insurance,leasing and advice to large enterprises.As for small and medium enterprisesthey can find support, advice and oth-er services from such companies asDAMU and Qaztech Ventures. Hous-ing Construction Saving Bank of Kaza-khstan, Kazakhstan Mortgage Compa-ny, Housing Construction GuaranteeFund and “Baiterek Development” arefocused on housing availabilitythrough the development of financing,mortgage loans, subsidy and housingrent.

Development Bank of Kazakhstanand KazakhExport support the ex-porters while JSC “Naitional Agency forTechnological Development” offers pro-motion to innovations.

The most effective instrument ofbusiness development within state pro-grams are the programs of DAMUwhich has a lot of different productsand programs of financing for smalland medium business most part ofwhich is carried out together with sec-ond-tier banks. Within the State pro-gram of industrial and innovation de-velopment in 2015–2019 the FundDAMU together with other institutesof “Baiterek” is involved as a financialagent and operator of the instrumentsof businesses support. The FundDAMU is also a financial agent to im-plement and monitor financial support(backing of fee rates of entrepreneurs’loans, business loans guarantee tobanks) within the Single program forbusiness support and development“Business Road Map 2020” and acts asan operator of education and advicewithin this program.

The support instruments of the Fundare the following:1) long-term financing of projects by

DAMU via second-tier banks condi-tional financing;

2) backing of fee rates of entrepreneurs’loans from second-tier banks viaDAMU (including up to 10% of in-vestment loans, up to 7% of currentassets loans);

3) guarantee of second-tier banks viaDAMU.

Branches of the Fund work in all regionsof Kazakhstan and have big experi-ence of interaction with local entre-preneurs, social organizations and lo-cal executive authorities.The mission of the Fund DAMU is to

take an active part in the sustainable de-velopment of micro, small and mediumbusiness in Kazakhstan via complex andefficient support instruments.

In order to achieve its aim DAMU fo-cuses its work on two key strategic areas:1. Support and development of start-

ups and working entrepreneurs – ex-panded financing of micro-business,development and implementation ofsupport instruments for microfinanceorganizations and credit coopera-tives, expanded range of financialprograms of the Funds for MSME,raising of economic effectiveness ofthe supported MSME;

2. Sustainable institutional develop-ment of the Fund – raising addition-al funds, achieving of the set level offinancial results, automation ofbusiness processes, better corporatelevel.In order to improve efficiency of in-

formation resources the Fund plans touse the Big Data technology. It will allowthe Fund to segment the products andpotential niches both to develop newdemanded products and to promotecurrent programs.

In general, speaking about the co-operation between banks and devel-opment institutes, it is worth men-tioning that the development insti-tutes should not forget about theiroriginal mission – to promote nationaleconomy via its satiation with cheapresources directly and through banks.The commercial banks in their turnbeing private market players shouldknow how to use these resources con-sidering the risks. At the same time itis inappropriate for the developmentinstitutes to be involved into profi-teering (for example ensuring liquidi-ty) or to include in their strategicgoals the participation in exchangemarket (like some of them do).

In conclusion is it worth saying thatwe need more programs and products ofsupport and financing from the develop-ment institutes in different sectors ofeconomy and of course better terms andconditions in them.

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AGRARIAN RECEIPTS AND FINANCIAL RESTRUCTURING:EXPERIENCE OF COOPERATIONWITH INTERNATIONAL INSTITUTES

UKRAINE:

Elena Korobkova,Executive Director of Independent Association of Banks of Ukraine

The most effective cooperation ofbanks of Ukraine was with internation-al financial organizations. Such a con-clusion can be made by analyzing var-ious projects in which Ukrainian banksinteract with external institutions. The

usual interaction patterns of such or-ganizations with domestic banks areused in all “target” countries and arewell known – the provision of re-sources for lending to projects or enter-prises of a certain type, industry, or

sharing credit risk with banks usingvarious kinds of guarantee mecha-nisms. However, in Ukraine there aretwo projects that stand out from the“standard” series. They will be dis-cussed.


ЕВРАЗИЙСКИЙ ФИНАНСОВО-ЭКОНОМИЧЕСКИЙ ВЕСТНИК | #3(8) 2019 39

The first project is agrarian receipts. In Ukraine as in many other coun-

tries, small and medium businesses areseverely limited in their access to loanswhich are necessary for financing cur-rent activities and development. This isparticularly bad for agricultural sector,the seasonal nature of which requiresthe accumulation of financial recoursesfor planting and harvesting campaigns.For two decades a temporary moratori-um on sale of agricultural land has beenoperating in the country that is the landcannot be a guarantee. And small farmsas a rule do not have other suitable prop-erty.

To facilitate access to credit for smalland medium-sized agricultural enter-prises, that don’t have property for col-lateral and the project of agrarian re-ceipts was launched.

An agrarian receipt is a title docu-ment fixing an absolute covenant of theobligator which is secured by a pledge,to deliver agricultural products (com-modity agrarian receipt) or to pay mon-ey (financial agrarian receipt) on theconditions specified in it. The key to thereceipt is the future harvest.

The prototype of the agrarian receiptwas Crop Receipts that is successfullyused in Brazil. The decision is based onforeign experience.

The Ukrainian project was launchedin 2011–2012, when Brazil’s experiencein introducing a financing tool for farm-ers secured by a future crop was stud-ied. On its basis, the concept of agricul-tural receipts was formed and a draftLaw on agricultural receipts was pre-pared. In November 2012, the Law wasadopted.

Features of the concept are as follows: a simplified collection procedure(without a judicial stage);the creditor's right to harvest is “con-nected” to the land and does not de-pend on the change of the land user(lessee); the issuance, transfer and repaymentof agrarian receipts is recorded in anelectronic registry, part of the data ofwhich is at free access (that is, the de-fault on the receipt is public). Pre-drafting preparation was carried

out in 2012-2014. A basic model of issueand circulation of agrarian receipts us-ing the electronic state registry and atest version of the registry were devel-oped.

In 2014-2015 a pilot project in one ofthe areas was launched, first receiptswere issued and redeemed. In 2016 thepilot project was expanded to four moreareas. In the same year, for the first time,a bank took an agro-receipt. In 2017 the

pilot phase of the project was complet-ed and since 2018 a full registry of agrar-ian receipts was launched, actingthroughout Ukraine. In this period theregulatory framework was developedand harmonized, the procedure for en-forced recovery and transfer of receiptfrom one creditor to another wasworked off. The circle of banks, financ-ing farmers using agrarian receipts wasexpanded.

At all stages of the project, Interna-tional Finance Corporation (IFC) inter-acts with banks and this interaction hastaken place at several levels.

A joint working group that workson draft regulatory documents, as wellas recommendations on how bankswork with agrarian receipts (the proce-dure for basis products, accounting rec-ommendations) was created by the In-dependent Association of Banks ofUkraine (IABU) and IFC. Advantage ofthis approach is that IFC experts (in-cluding foreign ones) participate in thework as well as bankers of various di-rections (lawyers, methodologists, “sell-ers”, accountants). It helps to keep ineye important nuances, to make “work-ing” legal mechanisms and identify themost crucial areas for improvements. Arepresentative of IABU is also a memberof Advisory Board of the project. AlsoIFC advises banks (individually) by theconstruction of a model of work andbusiness-processes, offers risk assess-ment, portfolio management and train-ing of staff.

It should be noted that agrarian re-ceipt is a new financial instrument andthe continued success of its use dependson the formation of well understoodand accepted practice. Therefore IFC ac-companies all the first of its kind events– the first to issue of a receipt, the first re-payment, the first transfer to a new cred-itor, the first default. By the way, IFC ex-perts take advice the notary officers andexecutors involved in the process, pre-pare recommendations for them and forcreditors.

Moreover, IFC regularly holds infor-mation and training events for no-taries, farmers and executors. Repre-sentatives of banks are involved insome of them.

If we talk about the results, accordingto IFC 851 agro-receipts (360 commodityand 491 financial) were issued amount-ing to 257 million US dollars (150 million– commodity, 100 million – financial) for2015-2018. At present 8 banks work withagrarian receipts (about 60 million USdollars have been financed).

The overall dynamics is as follows: 2015 – 11 receipts for $ 2 million;

2016 – 61 receipts for $ 15 million;2017 – 110 receipts for $ 30 million;2018 – 669 receipts for $ 210 million.In conclusion, there are constraints in

the implementation of the project. Anovelty of the instrument and thorough-ly the lack of large-scale practice (espe-cially negative) complicate the under-standing of legal and operational risksby banks.

The first real default of the debtor ac-cording to receipt in front of the bankappeared only in 2018. In addition,IAUB does not yet allow banks to eval-uate an agro-receipt as acceptable bailthat is banks are forced to overestimatetheir credit risk assessment or take anadditional bond security. Suppliers ofseed grain, fertilizers and others thingsare unfettered by strict banking regula-tion and can form more affordable ap-proaches to financing their partnersthrough agro-receipts. This has an im-pact on proportions of bank and com-modity financing to agrarians usingagrarian receipts. But in general, the pos-itive dynamism can be noted for all mar-ket participants.

The second project is Innovation.As a result of the crises of 2008–2009

and especially 2014–2015 a large part ofloans in portfolios of Ukrainian bankswas problematic (as a result – morethan 50%). Loans to the corporate sectorhave made the greatest “contribution” tothe total NPL portfolio. Generally, to re-store of capacity to pay the potentially“live” borrowing enterprises banksagreed with them about restructuring –deferring payments, selling or replacingcollateral, lowering the interest rate andeven forgiving part of the debt. Howev-er large companies usually buy credit toseveral banks but restructuring with onelender is impossible of others continueto “tear” the borrower into pieces andblock his activities in court. On Septem-ber 1, 2015, the volume of such loans wasestimated at 200 billion hryvnas (about9,2 billion US dollars).

The goal of the project is to createconditions for multicredit restructuringof financial debts when the borrowergives the opportunity to restore normalactivities and solvency and creditorsready for restructuring are protectedfrom aggressive actions of their competi-tors.

The instrument became Kyiv Ap-proach or Innovation is a procedure forvoluntary extrajudicial restructuring ofmulti-creditor financial debt (only cred-itors – financial institutions can partici-pate), which a debtor initiates and forwhich for a limited period (90 days withthe right to extend for another 90 days)

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debt collection activities are suspended(moratorium).

During the moratorium the debtorprepares a plan of restructuring, credi-tors involved consider it and make thefinal decision. If the restructuring plan isapproved by the majority of creditors,the further occurs according to it. To ini-tiate a restructuring, the viability of thedebtor should be reaffirmed by inde-pendent experts who are selected on acompetition basis.

The project of Innovation is inspiredby foreign experience. The point is thatsuch problems of Ukraine are notunique and similar programs of volun-tary (extrajudicial) financial restructur-ing were successfully implemented atdifferent times in the UK (London ap-proach), Austria, Turkey (Istanbul ap-proach) and other European countries.Their experience, taking into accountUkrainian specifics, formed the basis ofthe Kiev approach.

This specificity established the scopeand complexity of the project. If theLondon approach is an unspoken set ofrules pursuant of which is informallycontrolled the Bank of England then theKiev approach is formalized as much aspossible, not only principles but the pro-cedure of the Kiev approach are detailedin the Law on Financial Restructuring,the framework agreement is approvedby the IAUB and to manage system, fol-low the procedure restructuring and dis-pute resolution established special bod-ies.

At the end of 2014 the idea of finan-cial restructuring was presented in theIAUB by experts from the EuropeanBank for Reconstruction and Develop-ment (EBRD) and the World Bank. OnJanuary 2015, the heads of the IAUBmember banks decided to launch theFinancial Restructuring Program, initi-ated by the National Bank of Ukraine.A draft laws was developed and in2016 the law was adopted. Regulationshave developed in parallel, approachesto the organization of the system of Fi-nancial Restructuring were deter-mined.

Next the structure of the Kiev ap-proach was developed. The bodies of Fi-nancial Restructuring were formed: the

Supervisory Board (the work started atthe end of 2016), the Secretariat and theArbitration Committee. The Secretariatis a standing body that the implementa-tion of restructuring procedures at alllevels – from the adoption of the appli-cation to the approval of the restructur-ing plan. The Arbitration Committeesolves disputes between participants inthe restructuring.

The law was conceived as a tempo-rary (for three years) instrument to set-tle “pendant” debts of large companiesto banks. At the same time, for a numberof reasons the system of financial re-structuring did not achieve the plannedefficiency and the NPL level in portfo-lios of Ukrainian banks continues to re-main above 50 %. Upon review the situ-ation, proposals were prepared on thenecessary legislative changes and theprolongation of the Law on Financial Re-structuring for another three years.

The project is implemented with thedirect participation of the EuropeanBank for Reconstruction and Develop-ment and its interaction with banks thatis built through and on the basis of theIAUB. Moreover, the project is a uniqueexample in terms of co-financing.

The Independent of Association ofBanks of Ukraine and EBRD (with thesupport of the World Bank) createdjoint working groups (involving a num-ber of independent experts) whoworked on the bill as well as the detailsof the framework agreement on restruc-turing. In particular, the focus of theworking groups was the following issues:

organization of the work of the Secre-tariat and the Arbitration Committee(requirements, obligations, rights, fi-nancing);methods and project appraisal proce-dures (criteria and procedures for theselection of experts, approaches to da-ta analysis and determination of via-bility). Also banks within the framework of

committees and working groups of theIAUB continue to work to improve leg-islation related to Financial Restructur-ing.

The main working body is the Secre-tariat created on the basis of IAUB. Itswork is co-funded by IAUB and EBRD.

Thus, IAUB member banks that financethe Association (pay membership fees)indirectly participate in co-financing ofthe Secretariat and supporting the proj-ect as a whole.

Results of the project are as follows:the overall dynamics of the restructur-ing: 2017 – 8 billion hryvnia, 2018 – 19.5billion hryvnia, 2019 (as of April 18) – 9billion hryvnia. At the same time, 88% ofthe total volume of the procedures isdebts to state banks.

The restraining factor is the fact thatthe system of financial restructuring hasbeen created for all existing banks andtheir corporate borrowers, but it is main-ly used by state-owned banks. And mostof the financial restructuring procedurescarried out were initiated by borrowersof state-owned banks.

The reason is the Law on FinancialRestructuring opened up an opportuni-ty for state banks that the private sectorbanks had without it – to restructureloans with deteriorating primary condi-tions for the bank (including deferredrepayment, forgiveness of part of thedebt, interest rate reduction, etc.) with-out guaranteed accusations of harm tothe state. But numerous shortcomings inthe system of protecting the rights ofcreditors actually became a counter-in-centive for borrowers who did not wantto repay debts and had many opportu-nities to avoid fulfilling their obligations.Why restructure if you cannot pay? Inaddition, clarification is required by anumber of tax legislation norms and is-sues of coordination of certain issues inthe framework of restructuring with theAntimonopoly Committee. Work onsolving these problems continues.

In general, financial restructuring iseffective and the volume of settled debtsis growing. However, the unrealized po-tential remains significant.

The given examples clearly show thatone of the most effective methods ofproject implementation are the imple-mentation of global best practices, inwhich leading international institutionsactively help Ukrainian banks. We hopesuch cooperation will continue activelyand in the future which will make it pos-sible to implement a number of effectiveinnovations and reforms in Ukraine.



INTERACTION OF DEVELOPMENT INSTITUTES AND COMMERCIALBANKS: BEST WORLD PRACTICES

Samvel Chzmachian,Deputy General Director,FBA EAC, Head of Representative officein the Republic of Armenia

Today there are about 750 develop-ment banks in the world (without regardto the interstate ones), covering mostcountries with their activity. In large re-gions and countries a considerable shareof the cumulative banks assets accountsfor the development banks (for examplein South Asia the share is 12%, in the Lat-in America – 10%, in Germany – 8%).

The same can be said about the share ofloans issued by national banks (in theLatin American countries it amounts to30% on average). In many countries thedevelopment banks are often among thelargest national banks. For example theGerman KfW has a permanent positionamong 10 largest banks of the country:cumulative banks assets of KfW group

overpass €350 billion; besides this bank isthe fifth security issuer in Europe afterthe governments of Germany, GreatBritain, France and Italy.

At the same time, if we analyzeworld practices in establishing an affec-tive system of development institutes –specialized state (quasi-state) corpora-tions and companies aimed to eliminate

ARMENIA:

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barriers of country’s development (firstof all institutional and infrastructurebarriers) we will see that these develop-ment institutes do not always fit well in-to the national economic structure andin particular do not always cooperatewith commercial banking of the countryeffectively.

The Republic of Armenia also hassuch example with its negative experi-ence of creating a national developmentbank - Panarmenian bank. Serious hopeswere set on Panarmenian bank becauseit was created within the concept of “Ar-menian world” and was aimed to financecompetitive projects developed on thebasis of potential and knowledge of thelocal people and expatriates.

Being one of the most ambitious fi-nancial projects of Armenia it was ac-companied by the Law of the Republicof Armenia “On Panarmenian bank” andin 2011 the bank materialized as a JointStock Company with one shareholder –the Central Bank of the Republic of Ar-menia which allocated 7.5 billion drams(about 16 million US Dollars) to the eq-uity capital of Panarmenian bank.

However those expectations didn’tcome true: during the years of its workPanarmenian bank didn’t manage eitherto raise money from foreign financialstructures or investments from the Ar-menian community in the form ofshares. As a result it was announced un-advisable for the state to participate inthe structure, and in August, 2017 Pan-armenian bank was transformed into aninvestment fund still not very activesince then. Currently the governmentwants to abolish the relevant law.

Nevertheless negative experience isalso an experience to draw a number ofvaluable insights. Firstly the originalidea to establish an ethnic developmentbank even considering a vast and activecommunity seems a little bit restrictive.Secondly there was a breach of an essen-tial requirement limiting the work of de-velopment banks – to avoid direct com-petitiveness with private financial insti-tutes, commercial banks since such com-petitiveness suffocates their develop-ment and can become a source of finan-cial crisis.

After failing to raise money for thedeveloping of infrastructure and otherlarge-scale projects Panarmenian bankencroached upon the territory of com-mercial banks and started to financesmall projects, to conclude repos withcommercial banks and invest in govern-ment bonds.

It is well known that the short-termsegment of the credit market if one ofthe focus areas of commercial banks and

consequently the use of short-term cred-it instruments by a development bankleads to undesirable competitivenesswith commercial banks.

Thus Panarmenian bank sort of re-flected a number of problems in the Ar-menian economy related to the effec-tiveness of management and reasonableallocation of money. In other countrieswhich lack such problems due to a moreeffective government control the nation-al development banks become the lead-ers of the banking system and the driv-ers of national economies.

When speaking about the supra-na-tional development banks in Armeniaone can see that their field of activityis narrowing together with parallel de-velopment and diversification of na-tional commercial banks. In particularthere is a considerable growth of re-sources supply from the commercialbanks of Armenia (which do not haveany problem with liquidity) in the tra-ditional segments of the developmentinstitutes – first of all in financing of in-frastructure projects. This leads tostronger competitiveness. In 2018 thecapital adequacy ratio of Armenia’sbanking system amounted to 17.7%with the minimum set by the CentralBank being at the level of 12%.

It means that commercial banks inArmenia have high capitalization, stablebuffers and strong sustainability. Besideswe see the change of the traditional par-adigm of financing the investment proj-ects for large corporate clients – a shiftfrom bank financing of these projects tosimpler and cheaper bonded loans.

A couple of years ago the CentralBank of Armenia spiked the minimumregulatory capital requirement for com-mercial banks sixfold. Besides more ac-tive mergers and acquisitions and de-crease of the number of commercialbanks from 21 to 17 it provoked theproblem of selling the greatly increasedliquidity especially against numerousproblems in economy with the deficitof healthy portfolios and high-qualityborrowers. Consequently the commer-cial banks had to decrease the prices oftheir products and services and to holdback incomes. It relates both to mort-gage loans and business loans. For ex-ample today the interest of mortgageloans in the national currency is 9%, inUS dollars – 7%, in Euro– 6%.

Moreover recently the Armeniancommercial banks have proved theirability for complex deals and the consol-idation of local financial resources to fi-nance international deals whereas earli-er only development institutes could dothat. Thus three commercial banks in

Armenia jointly consolidated $40 mil-lion of credit resource. It allowed thecompany Charaat Gold Holding regis-tered at London forex exchange to buy$55 million from Russian PolymetallGroup also registered there, 100% sharesof Kapan mining complex.

Some Armenian banks closely coop-erate with such national developmentinstitute as the Armenian agency for ex-port insurance. The cooperation in-cludes factoring when clients assign aclaim to a bank for account receivableand in return they get factoring financ-ing which allows for example the ex-porters to build more effective and reli-able relations from financial point ofview with theirs foreign partners.

At the same time potential clients ofsupra-national interstate developmentbanks are not interested in the invest-ment financing in Dollars and Euro.They prefer national currency. Butsupra-national development banks incomparison to commercial ones have avery limited access to the instrumentsof getting and placing liquidity in na-tional currencies. For example theEurasian Development Bank with rep-resentative offices in six member-stateshas to conclude framework agreementswith the central/national banks, to openin these banks correspondent accountsin national currencies in order to maketransactions in the main currencies ofthe states. However as it has been al-ready said the commercial banks in Ar-menia have high liquidity and do notneed any additional debts to the devel-opment banks.

That is why in the last years we evi-denced several small similar projectswhen the EDB or the EBRD issue loansto micro business, small and mediumbusiness via commercial banks and fi-nance through them trade transactions.And hardly ever development bankssupport commercial ones in the securiti-zation of non-performing or low-liquid-ity loans and their refinancing on themarket or just buy these assets and copewith them further themselves – whichoriginally used to be their mission.

Nevertheless there is another, moresuccessful area of effective cooperationbetween supra-national development in-stitutes and commercial banks, whenEBRD buys a certain share fraction in Ar-menian commercial banks, buys into acapital and issues bonds thus supportingthe development of Armenia’s capitalmarket. As a rule those few banks whichnow have EBRD as their minority share-holders demonstrate more serious suc-cess and introduce more advanced banktechnologies and products.



These days financial literacy of thepopulation is considered a necessary re-quirement for the formation of a civi-lized society. Especially in circumstanceswhen directions and formats of the pro-vision of financial services undergo dras-tic changes.

Numerous programs and initiativehave been implemented in cooperationwith commercial banks of the country,with a view to introducing and deepen-ing of relevant knowledge among thepublic in the Republic of Armenia.

For a more effective and full imple-mentation of state policy in this area, aCommittee was formed to develop andimplement a national strategy for finan-cial education and even earlier – in2014 – the government of the countryapproved the National Strategy of Fi-nancial Education of the Republic ofArmenia.

The strategy aims at improving thelevel of financial literacy of the popula-tion of the republic that will contributeto the improvement of its well-being.The higher the awareness, the greaterthe likelihood that consumers will moreeffectively manage their budget, havemore manageable debts, will be able tosave and make competent investmentdecisions.

The Union of Banks of Armeniabased on the listed factors as well as be-ing included in the Committee, attachesgreat importance to increase financial lit-eracy of the population and carries outthe necessary activities within theframework of its Charter authority.

Thus, the Union of Banks of Armeniaapplies many initiatives in practice: or-ganization events within the frameworkof World Saving Day, holding of semi-nars and trainings, issuing of teachingaids, etc. Also new and modern pro-grams are being developed with the goalof creating a financially competent andmore knowledge-based society.

More recently on a joint initiative ofthe Union of Banks of Armenia andClub of Economic Journalists was organ-ized a series of 11 seminars for journal-ists, specialized in covering financial andeconomic topics. Lectures were held byhighest-level leaders of the banking sys-tem of Armenia, as well as the best ex-perts and heads of various financial in-stitutions. The journalists were present-ed various informational materials, ana-lytical data on the banking system andthe calculations on the legal regulationof banking in the Republic of Armenia.

At the Closing Ceremony of thislarge-scale event, the Executive Director

of the Union of Banks of Armenia S.Sargsyan, in his speech, noted: “One ofthe tasks of the Union of Banks of Arme-nia is to make the banking system moreaccessible and understandable for ourpublic and it could not be achievedwithout cooperation with the distin-guished representative of our media”.

Recently, the page of the Union ofBanks of Armenia was officially openedon the social network Facebook, andnow the Union can conduct even moreactive information activities to increasethe level of financial literacy of the pop-ulation. The official site of the Union ofBanks of Armenia is also involved in thisprocess.

Obviously, the work to improve of fi-nancial literacy of the population shouldbe lengthy. In addition, taking into ac-count this fact, the Union of Banks ofArmenia periodically organizes a seriesof public events called “Financial Litera-cy and Skills”.

It seems that such a multifaceted ap-proach in the near future will lead toachieve the goals that will contribute tothe development of the economy of theRepublic of Armenia.

The Union of Banks of Armenia

IMPROVED FINANCIAL LITERACYOF THE POPULATION

IS THE PRIORITY OF THE ACTIVITY OF THE UNION OF BANKS OF ARMENIA

BELARUSIANBANKS TRENDING DIGITAL Alexander Kuchinsky,

Chairman of the Associationof Belarusian Banks

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Financial system of the countries of EurasIa


Banking system of the Republic ofBelarus has been through a tough timein the digitalization process. It started in2013 when the Plan of joint efforts of theauthorities and financial market playerswas adopted to increase the share ofnon-cash payments for 2013–2015.

Simultaneously another plan was in-troduced – a Plan of joint efforts to im-prove financial awareness of populationfor 2013–2018. Recently a new Plan for2019–2024 has been signed. This workwas done with active participation of in-ternational payment systems. And it allgave results: in 2013 the share of non-cash payments was 16% while now itamounts to 45%.

The National Bank of the Republic ofBelarus is active about digitalization andin March, 2016 adopted a Strategy ofdigital banking development in the Re-public of Belarus for 2016–2020. It is a ba-sic document for the current work.

For example the Strategy implies thecreation and introduction of the Inter-bank system of identification which wasformed according to President’s Decree#478 dd. December 1, 2015. It is based onthe United Payment and InformationSpace. Moreover on April 18, 2019 thePresident of the Republic of Belarussigned a Decree #148 which provides forbiometric identification including voice

and video identification. Besides the datafrom the identification system can beused by the insurance and leasing compa-nies, FOREX-companies and state bodies.

Another aim of the Strategy is the de-velopment of settlement aggregators.Nowadays there is a draft Law “On pay-ment systems and payment services inthe Republic of Belarus” implying newmarket participants besides banks whichwill be able to make payments to thirdparties.

One more target was to develop theremote banking, and it was reached.Everyone is already used to the internetand mobile banking but now there aredifferent ways of remote interaction be-tween banks and clients: chat bots, socialnetworks.

The spread of payments with bank-ing cards in the Republic of Belarus to-day can be compared with the level ofEuropean developed countries. Paypass is also popular, as well as the use ofQR-code for payments.

Cyber security is under close atten-tion. In August, 2018 Belarus createdFinCERT – center for financial cyber se-curity.

Besides, Belarus gradually introducesISO 20022 for financial services. At thefirst stage in July, 2018 IBAN was intro-duced.

The Association of BelarusianBanks takes active part in all theseprocesses. Since last September it be-came a member of Digital BusinessConfederation which comprises theAssociation ”Infopark” and the Associ-ation of mobile operators. We want tocombine efforts and work out basicstandards and requirements for allcompanies. There are several direc-tions that we work on.

The first one is API – ApplicationProgramming Interface. This technologyallows an external application to accessdifferent program systems inside a bank.A lot of attention is paid to theblockchain technology of distributedledger. Very promising is the Decree ofthe President of the Republic of Belarus#8 “On digital economy development”,and the banks are preparing a possible is-sue of tokens via ICO (Initial Coin Offer-ing) under certain terms.

In addition it is worth mentioningthat during his visit to Minsk GermanGref, the President and Chairman of theBoard of Sberbank delivered a speech atour IT Park and highly appraised IT leg-islation in Belarus.

In general one can conclude that thebanks of Belarus are on digital trend andtry to keep up with the world financialsystem.

”

IN RECENT YEARS, THE MONGOLIAN-RUSSIAN ECONOMIC COOPERATION HASSTEADILY GROWN AND BECOME AN IMPORTANT PART OF THE DEVELOPMENTOF MONGOLIA’S ECONOMY. AT THE CURRENT STAGE TRADE AND ECONOMIC

COOPERATION BETWEEN OUR COUNTRIES IS BASED ON THE TREATY ON FRIENDLYRELATIONS AND COOPERATION OF JANUARY 14, 1993 AND ON THE ULAANBAATARDECLARATION OF NOVEMBER 14, 2000. THESE DOCUMENTS REFLECT SUCH PRINCIPLESAS MUTUAL RESPECT FOR SOVEREIGNTY, TRADITIONAL NEIGHBORHOOD, EQUALPARTNERSHIP AND MUTUALLY BENEFICIAL COOPERATION. INTERGOVERNMENTALAND INTERDEPARTMENTAL TREATIES, AGREEMENTS AND CONDITIONS REGULATEBILATERAL COOPERATION AND INTERACTION OF SEPARATE MINISTRIES AND DE-PARTMENTS. FOR THE LAST 20 YEARS, MORE THAN 100 AGREEMENTS WERE SIGNED.THESE DOCUMENTS ARE THE BASIS OF OUR RELATIONS.

“

MONGOLIAAND RUSSIA: FEATURES OF COOPERATION IN THE ENERGY SECTOR

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EXPERT OPINION

Demchigjavyn Chimiddorj,Director of business strategyand planning, Erdenes Mongol LLC

Despite the diversification of foreigneconomic relations and a policy of open-ness, Russia remains one of the maintrade and economic partner for us.

According to Mongolian statistics in2018 the total Mongolian-Russian tradeturnover increased by 37.6% comparedto 2017 and amounted to $ 1,796.2 mil-lion, of which export from Mongolia toRussia amounted to 85.9 million, and im-port from Russia to Mongolia – $ 1,710.3million. These figures indicate that atcurrent there is a trend towards an in-crease in trade. The main articles ofMongolian exports to Russia are ores,slag, ash, salt, sulfur, lime and cement,animal products and light industry. Inthe structure of Russian exports to Mon-golia, the main place is occupied by oilproducts, machinery and equipment,automobiles, food products, chemicalproducts, building materials, cigarettesand tobacco, household appliances andelectricity.

The energy area takes an importantplace in the development of Mongolian-Russian trade and economic relationsand is one of the traditional directions ofcooperation between our countries. Thiscooperation can be divided into twostages: the period of socialist develop-ment of the country and the transitionto a market development path.

Our energy cooperation began in theearly 20s of the last century, and it waswith the help of the USSR that the foun-dations of the modern fuel and energyindustry of Mongolia were created. To-day its fuel and energy complex is an es-sential part of the economy and func-tions in conjunction with other sectorsof the national economy with a view tosustainable economic growth.

The Soviet Union has been of greatassistance to Mongolia in creation of theenergy base. First of all, with its help, theproduction process at a coal mine nearUlaanbaatar in Nalaiha was mecha-nized – and thereby the foundations of

the modern energy system of Mongoliawere laid. As a result, coal production,as the main source of electricity produc-tion in Mongolia, increased.

In the 1940s, the Soviet site partici-pated in creating a central station in thecapital and in the creation of small pow-er stations in aimaks.

All seven currently operating coal HESlocated in the zone of the Central EnergySystem (CES) of Mongolia were built dur-ing the years of the socialist period of thecountry's development with the help ofthe Soviet Union and upon projects of it.These are stations with combined produc-tion of electricity and heat (combinedheat and power plants) operating to pro-vide basic electric load, production of hotwater for district heating and steam fortechnological needs of industry.

As a result of economic support fromthe Soviet Union in Mongolia, in the1980s a very high rate of growth in elec-tricity production was achieved: in 1985,electricity production reached 3,568.3million kWh. Thus, at the end of the 80s

of the last century, a large fuel and ener-gy base was created in Mongolia.

The second stage in the developmentof cooperation between Mongolia andRussia in the energy sector begins in theearly 90s. After the breakup of the USSR,economic cooperation between Mongo-lia and Russia, although it developed, re-mained low until the end of the 1990s,especially in the energy sector. Conse-quently, the deep systemic economic cri-sis in Mongolia connected with the tran-sition to a market economy and curtail-ing economic support from the USSR, in1996 there was a reduction in electricityproduction to 2614 million kWh. In sub-sequent years, a gradual restoration ofthe energy sector began, as a result ofwhich the pre-crisis (1989) level of elec-tricity production was exceeded only in2007.

Currently, seven coal power plantsoperate in the energy sector; more than

a dozen hydroelectric power stations oflow power (from 0.5 to 2 MW), as wellas solar and wind power plants. Dozensof diesel power plants with capacitiesfrom 10 kW to 3 MW provide electricityto the centers of aimaks; almost all localpower plants are connected to the pow-er systems of Mongolia.

Over the past almost 30 years, the en-ergy sector of Mongolia has become oneof the most important components ofthe country's economic development. Inthe late 90s, it basically completed thetransition from a centralized administra-tive command system to a market one,and currently electricity is sold in theCentral Energy System through themain market – the Single PurchaserModel (SPM) – and two other relatedmarkets: spot and competitive.

Today, Mongolia is one of Russia'spartners in export operations on elec-tricity, and cooperation between ourcountries in the energy sector is basedon the “route map” that has developedover the years of the socialist period inthe development of Mongolia.


REFERENCE

Demchigjavyn Chimiddorj

Graduated from Mongolian State Technical University

(specialty - electrical engineer); took a master's degree

in IT management from Strayer University in the USA.

He has been working in the energy sector of Mongolia

for more than 30 years: he was the head of the elec-

trical service of the Central Energy System (CES) of

Mongolia, the executive director of the National Dis-

patch Office of the Energy System of Mongolia, the

general director of the Ulaanbaatar HES-3 and the di-

rector of the energy policy department of the Ministry

of Energy of Mongolia. By decision of the Government

of Mongolia, in 2018 he was appointed director of the

department of business strategy and planning of the

state mining corporation Erdenes Mongol LLC, which

is an enterprise established for the purpose of plan-

ning, developing and operating strategically important

mineral deposits.

The geopolitical position of Mongolia –the lack of direct access to world oil andgas markets, as well as the presence of anextended border with Russia and Chi-na – determines the economic vector ofits development in the energy sector.

Meantime, work on the reconstruc-tion of Ulan-Bator HES-4 is underwayusing credit from Vnesheconombank ofRussia and the International InvestmentBank, and the Ural Turbine Plant (Yeka-terinburg) supplies turbines and otherequipment. Because of the reconstruc-tion, the capability of the HES will in-crease by 120MW. However, the short-age of electricity will continue. Accord-ing to the Ministry of Energy of Mongo-lia, in 2018, our country received 20% ofits electricity through imports from Rus-sia and China.

Today, Mongolia’s electricity system,created with the technical and econom-ic assistance of the Soviet Union, con-sists of four independent electricity sys-tems: the Central Energy System, theWestern Energy System (WES), theEastern Energy System (EES), and theAltai-Ulyasutai Energy System. Themain share (79%) of electricity is pro-duced at the HES with an installed ca-pacity of 823 MW, 4% at diesel powerplants with a capacity of 46 MW and at

a number of small-capacity hydro-solarand wind power plants.

The power shortage during the peakload in the Central Electric Power Plantsand almost the entire volume of electric-ity needs in the WES are met throughthe electricity imported from Russia.Due to the growth of the economy ofMongolia (in 2018, GDP growthamounted to 6.9%), the demand for elec-tricity, including its import from Russia,will increase. The latest forecast of de-mand until 2020, prepared by EconomicConsulting Associates for the WorldBank, assumes that the average annualgrowth in demand for electricity in theframework of the Central Electric Sta-tion will be 3.5%. In addition, resultingfrom the beginning of open mining atthe Oyu Tolgoi copper-gold deposit, de-mand is expected to increase in theSouth Gobi region to 600 MW by 2020.

According to the Ministry of Energyof Mongolia, electricity consumption isincreasing by an average of 6% per year,and this growth will continue. It shouldbe emphasized that Mongolia is a coun-try with a huge territory, a small popu-lation and a relatively underdevelopedindustry, as a result of which householdconsumption predominates in electrici-ty consumption. The equipment of ex-

isting power plants deteriorates physi-cally and morally, which leads to a short-age of electric power, especially peakduring winter highs. In addition, the en-ergy system has a small load, the lengthof the lines is huge, and the number ofgenerating sources is small and they areconcentrated in a limited area; theprocess of summer-winter or morning-evening regulation of the voltage and re-active power of the system is also verydifficult. To this must be added that in-vestments in the electricity infrastruc-ture have not kept pace with demand,and this significantly reduces the relia-bility of power supply and increasesoverloads in a worn distribution net-work.

Thus, low operational efficiency andpoorly maintained and outdated equip-ment are a serious problem in the Mon-golian energy system. Recall also that thepower system of Mongolia is dependenton the power system of Russia and doesnot have a regulatory power source forvarious cases – for example, in emer-gency situations or when peak loadschange to minimum night loads.

In one word, the energy system ofMongolia is in deep trouble today, espe-cially given the increasing domestic de-mand for electricity.

EXPERT OPINION

Vladivostok

Оsaka Tokyo

Beijing

CHINA

Shanghai

Nanking

Pyongyang

Seoul

Tianjin

QingdaoJinanJAPAN

RUSSIA

Shenyang

Dalian

Hangzhou

Ко еb

KOREA

5 05 km

1065 km

1500 km

Ulaanbaatar

MONGOLIA

GobiDesert

Dandong

745 km

610 km325 km

215 kmBusan

Fukuoka

880 km

Sakhalin

215 km

1130 km

48


To solve the above problems, it is nec-essary, in the first place, to take measuresto improve the structure of generatingcapacities in Mongolia. That would re-quire to solve the issue of creating a hy-droelectric power station that couldwork as a system regulator; to place inoperation renewable and other sourcesof electricity; to put in service genera-tors with a wide range of reactive powerregulation.

In this regard, Mongolian-Russian co-operation in the electric power industrycan be developed, in our opinion, in thedirection of joint construction of newgenerating capacities and electric grid fa-cilities providing parallel work with bor-der energy systems and the creation ofan interstate electric power system. Theproblems of the energy sector of theeconomy of Mongolia can also be suc-cessfully solved through cooperationwith other countries, in particular withChina.

It is energy cooperation in a trilater-al format (Russia, China and Mongolia)has great potential, and it was discussedduring a trilateral meeting on the SCOsummit on June 14, 2019, where Presi-dent of the Russian FederationVladimir Putin, Chairman of the Peo-ple’s Republic of China Xi Jinping andPresident of Mongolia Battulga Khalt-maa participated.

During a meeting with the leaders ofMongolia and China, Vladimir Putinsaid that Russia was ready to ensure un-interrupted supply of electricity to en-ergy-deficient regions of China andMongolia, as well as ready for closer co-operation with China and Mongolia inthe energy sector. “We are interested inreceiving specific proposals on possiblejoint projects from Chinese and Mongo-lian partners,” – the Russian presidentsaid.

The realization of concise energyprojects in a trilateral format will be animportant step in the implementation ofthe “One Belt – One Way” project. OnJune 24, 2016, in Tashkent at the SCOsummit between the Russian Federation,the People’s Republic of China and Mon-golia, an agreement was signed on thecreation of an economic corridor “Mon-golia – Russia – China”.

Currently, experts from the threecountries constantly consider the pos-sible joint energy projects relevant tothe creation of an economic corridorbetween the three states. In order tocreate a legal basis for the develop-ment of cooperation, a draft Agree-ment on cooperation in the field ofelectric power between the Govern-ment of the Russian Federation and

the Government of Mongolia has beenprepared. It is hoped that this docu-ment will be signed in the near future.Of course, the conclusion of such anagreement will contribute to the de-velopment of both bilateral and trilat-eral cooperation in the energy field.Moreover, resource and economic op-portunities for its expansion, in ouropinion, are available.

One of the strategic directions of tri-lateral cooperation is the gasification ofthe Baikal region of Russia, the centralregion of Mongolia and the northern re-gions of the PRC in case of the construc-tion of an export gas pipeline Russia –China through the territory of Mongo-lia. At the plenary session of the IV East-ern Economic Forum in September2018, the President of Mongolia Battul-ga Khaltmaa said: “The main foreign pol-icy directions of Mongolia are the stabledevelopment of friendly and good-neighborly relations of comprehensivecooperation with Russia and China, aswell as participation in political andeconomic integration processes in theregion. <...> We are ready to cooperateon the construction of a gas pipelinefrom Russia to China through the terri-tory of Mongolia".

It should also be noted that the lay-ing of this gas pipeline will contribute tosolving the issue of preserving the ecol-ogy of Lake Baikal, and may becomeone of the conditions for removing thethreat of building a hydroelectric sta-tion on the main artery of Lake Baikal –the Selenga River and its tributaries.Russia strongly opposes the construc-tion of a hydroelectric power station,and proposes to replace the energyshortage of Mongolia with an addition-al volume of electricity supplies at re-duced prices. Nevertheless, the con-struction of a hydroelectric station onthe Selenga remains an urgent issue forMongolia.

In analyzing the cooperation of Mon-golia and Russia already in the oil sector,it is noteworthy that Russia is our maintrade and economic partner. Since thevolumes of oil produced in Mongolia arenot enough to satisfy the ever-growingdemand for hydrocarbons, the country'sfuel market is almost completely de-pendent on imports of petroleum prod-ucts from Russia.

Important in the development of en-ergy cooperation between the two coun-tries is engagement in developing of theTavantolgoi coal deposit in a part of thesupply of mining equipment and theconstruction of the railway to ensure theexport of coal to the market of North-east Asia through the Far Eastern ports

of Russia. It is one of the largest reservesin the world: 6.5 billion tons of coal,about 40% of which is high-calorie cok-ing coal.

In summary, it should be noted thatthe aim of energy policy of the Govern-ment of Mongolia is the supporting en-ergy independence and energy securityof the country including by the forma-tion an energy resource market and thecreation a reliable energy base for sus-tainable economic growth. The resourcepotential of Mongolia in case used effec-tively should be one of the most impor-tant prerequisites for the steady growthof the country's economic developmentand its entry into the reserve of worldmineral resources. Scientists predict thatafter 2020 a dry technology of oil andgas extraction will appear, as a result ofwhich the fields of several countries, in-cluding Mongolia, will be involved inthe operation.

In the performance of a task of reli-able energy supply and energy securityof Mongolia, development of integra-tion and close interaction of integrationassociations in the energy sector are nec-essary. Energy cooperation should alsostrengthen in the use of alternative en-ergy sources and energy-saving tech-nologies. At the same time, the main partof energy resources is non-renewable,and therefore resource flows must be ra-tionally distributed.

In conclusion, I would like to expressan opinion on the implementation the“Asian Energy Super Ring” project, in-volving the consolidation of the energysystems of Russia, China, Mongolia, theKorean Peninsula and Japan, that is,those countries that are geographicallypart of the macro-region of NortheastAsia. It should be emphasized that therealization of this project is correspondsto the energy policy of Mongolia. ThePresident of Mongolia, speaking on Sep-tember 12, 2018 at the plenary session ofthe IV Eastern Economic Forum, laidemphasis that Mongolia was interestedin the project and called for speeding upits implementation. Russia, China, SouthKorea and Japan also express interest.However we understand that there arestill many unsolved problems, since thisproject is not only a matter of energy,but also to a large extent a question ofgeopolitics.

Nevertheless, we are confident thatin the new geopolitical conditions, mu-tually beneficial energy cooperation re-mains the mainstream for solving prob-lems and ensuring energy security in thecountries of Northeast Asia, as well asfor the sustainable economic develop-ment of Mongolia.

50 ”IN 2014, THE CHAMBER OF ECONOMIC AND CULTURAL COOPERATION BETWEENROMANIA AND RUSSIA WAS FOUNDED IN ROMANIA. HOWEVER DESPITE THEACTIVE WORK OF INFORMING RUSSIAN REPRESENTATIVES, IN RUSSIA THERE

IS STILL NOT ENOUGH INFORMATION ABOUT THE ROMANIAN ECONOMY AND, INPARTICULAR, INVESTMENT SUPPORT PROGRAMS. IT IS THE ROMANIAN ECONOMY,THE INVESTMENT POLICY OF ROMANIA AND ITS INTERACTION IN THIS AREAWITH THE RUSSIAN FEDERATION THAT ARE THE SUBJECT OF THIS REVIEW.“

BUSINESS IN THE COUNTRIES

STRATEGY, INVESTMENT POLICYAND COOPERATION WITH RUSSIA

THE ROMANIAN ECONOMY:

Tudor Afanasov,President of CECRR

Alexander Tyurin,Economic Advisor to the Russian Embassy in Romania

Andrey Naryshkin,Director for Development of theForeign Network of JSC Russian Export Center


In June 2014, the Ministry of Economy of Romania approved “Na-tional competitiveness strategy 2014-2020”. The strategical goals ofthis document are: 1. Creation of legal environment;2. Deepening partnerships between the public sector and the busi-

ness environment; 3. Competitive growth of manufacture goods and services in Roma-

nia;4. Shift in emphasis in development to 10 sectors with the greatest

export potential: tourism and eco-tourism; textile and leather articles; forest industry complex (including furniture industry); crafts; informative and communication technologies; food handling; pharmacy; energy production and environmental management; bioeconomy (agriculture, forestry, fishery and mariculture),biopharmaceutics and biotechnology.

5. Preparation of the program “Generation 2050” and solution ofpressing social problems.In September 2018, the “Industrial policy of Romania” was adopt-

ed. This document is aimed to create conditions, conducive to im-proving the competitiveness of the Romanian industry. It will be im-plemented by accelerating the adaptation of industries to structuralchanges taking place on a global scale, creating favorable conditionsfor the development of entrepreneurship and business (in particularsmall and medium enterprises), organizing favorable conditions forbusiness cooperation, as well as by increasing industrial potentialand developing a single innovative scientific and technological de-velopment policies.

The main goal of industrial policy must be higher value additionof Romanian goods, development of innovative clusters and foster-ing innovation as well as investment in high-tech sectors.

The industrial policy includes the following financing programs: improving the energy efficiency of manufacturing processes (in-cluding the use of renewable energy sources);development of bioeconomics;implementation of innovative concepts and technologies (indus-try 4.0, 3D printing, open innovation, etc.);industry research (marketing innovation);increasing the competitiveness of industrial goods.According to the program of the Government of Romania for

2018-2020, the economic model for this period consists of measuresthat have already been implemented in such countries as Poland,Denmark, France, Germany, the United Kingdom and the UnitedStates. The program assumes that Romania will be distinguished byone of the most liberal fiscal regimes that exist in the EuropeanUnion.

Since January 1, 2019, the number of taxes, fees and commissionscharged in Romania should be no more than fifty: for the population,the amount of total taxes will not exceed ten, and for enterprisesshould be about forty.

Over the past few years, the government has generally adopteda growth strategy based on an increase in wages, which is designedto stimulate consumption at the household level and, accordingly,GDP growth. But at the same time, this model has already led to anincrease in the budget deficit.

As to investments, according to the latest published data of theNational Bank of Romania, the amount of foreign direct investmentin Romania for 2018 increased by 8.56% compared to the same periodof the previous year and amounted to 5.342 billion euros, of whichcontributions to capital (including reinvested net profit) reached 3.771billion euros, and value of pure credit money – 1.071 billion euros.

As of November 30, 2018, Romaniaregistered 220.8 thousand enterpriseswith foreign capital. The largest num-ber of these enterprises are Italianowners.

It should be noted that when imple-menting projects in Romania, a foreigninvestor receives the following benefits:

exemption from income tax when in-vesting in new technological equip-ment used for commercial purposes;income tax exemption for employeesemployed as software developers; exemption from income tax for em-ployees employed in research and de-velopment companies; income tax exemption for researchcompanies for the first 10 years; specific deduction of R&D expenses; accelerated depreciation of equip-ment for R&D.In addition, investors creating pro-

duction facilities or offices in an indus-trial, scientific or technological park areexempt from paying land, constructionand urban development taxes, taxeslevied for changing the purpose of theland plot, and receive an additional de-duction from taxable income of 50% ofR&D expenses.

There are programs of support of in-vestment activity. One of them is theState Support Program for Investmentsthat have strategic value for the econo-my of the country. The budget of theprogram is 4,07 billion ley which isequivalent to about 925 million euros.Whereby in the year the upper limit offunds allocated for these purposes is lim-ited to the amount of 638 million lei (ap-proximately 145 million euros).

Private enterprises can rely on gov-ernment assistance depending from theregion of activity, as well as regional sup-port, which depends on the costs of in-vestment projects (tables 1 and 2).

In addition, there is a National RuralDevelopment Program 2014–2020.

In accordance with this direction, theshare of non-refundable state support canbe up to 50% of the total investment, butwill not exceed 1.0 million euros for theproject – in the event that large-scale in-tegrated production is not planned, and2.5 million euros for project – in case ofcreation of large-scale integrated produc-tion (regardless of the type of applicant).

Investment cooperation betweenRomania and Russia at this stage issmall. According to the Central Bank ofRussia, in the first half of 2018, direct in-vestments for 261.8 thousand US dollarscame from the Romania to the Russianeconomy and 188.2 thousand dollarsfrom Russia to Romania for the sameperiod.

Accumulated direct investments inthe Russian Federation from Romania asof July 1, 2018 amounted to 14 millionUS dollars, to Romania from the RussianFederation as of the same date – 30 mil-lion.

In the meantime, Russian companiescontinue to invest in the local economythrough their European representativeoffices. Today in Romania, subsidiariesof Russian energy companies conductbusiness.

Therefore, in the Romanian market,the Serbian subsidiary of GazpromneftNIS Petrol is represented, which current-ly owns a network of 18 gas stations.

Since 2005, Lukoil has been the own-er of the third largest refinery in termsof output in the country. From the startof the Russian refinery, about 600 mil-lion US dollars have been invested, ofwhich 120 million have been invested inenvironmental protection. Petroleumproducts are sold through the compa-ny's own refueling network; Lukoilowns 310 gas stations.

The plans of Petrotel-Lukoil includethe modernization of the coke-chemicalplant of the refinery. A project worth71.8 million US dollars is planned to becompleted in 2021. By the same time, anew sulfur recovery complex (29 millionUS dollars) should be built. One of thepromising activities is the developmentof the subsidiary Lukoil-Overseas of theTrident offshore field.

Thus, today there is a high-untappedpotential for cooperation between theRussian and Romanian businesses. Thechamber is ready to support Russian ex-porters, especially since on July 12, 2019,it became an export-trading adviser tothe Russian Export Center.

In conclusion, it should be noted thatexisting projects show the effectivenessof such interaction. Moreover, a growingnumber of Romanian businesspeople at-tend the Russian Federation, participatein Russian exhibitions, find partners. Itwas hope that our countries will contin-ue to develop mutually beneficial bilat-eral relations.

52

Table 1Maximum level of state aid depending on regions

Table 2Volume of regional state support as a percentage

of the costs of an investment project

Bucharest

West and Ilfov

Northwest, Center, Northeast,

Southeast, South Muntenia,

Southwest Oltenia

11,25 million euros 7,5 million euros

26,25 million euros

37,5 million euros

Region

Maximum level of state aid

2014–2017 2018–2020

Bucharest

West and Ilfov

Northwest, Center, Northeast,

Southeast, South Muntenia,

Southwest Oltenia

15% 10%

35%

50%

Region

Maximum level of state aid

2014–2017 2018–2020

BUSINESS IN THE COUNTRIES

Forum ROMANIA–RUSSIA

“ROMANIA-RUSSIA:

SEARCH FOR NEW FORMATS OF COOPERATION”

October 22–25, 2019

Program includes: o The second Romanian-Russian Forum “ROMANIA-RUSSIA:

SEARCH FOR NEW FORMATS OF COOPERATION”o Romanian-Russian cooperation in bank financing;o Business in crises times;o International economic activity in the modern trends;o FBA EAC as a flagman of Eurasian integration;o Russian Export Center. Suggestions and solutions.

o Jubilee meeting “Gala CCECRR 5 years”

Program of “Gala CCECRR 5 years” includes: gala dinner, musical program, drawing,surprises, charity auction and quiz.The program of the Forum also includes a gala reception on behalf of the Ambas-sador of the Russian Federation in Romania, excursions.The event invites representatives of diplomatic, political, economic and cultural so-cieties of Romania, Russia, Europe and CIS.

For details please contact us on e-mail: :[email protected]

54 ”

THE CONSTRUCTION BUSINESS IS ONE OF THE MAIN DRIVINGFORCES OF ANY COUNTRY’S ECONOMY. RELATED INDUSTRIESAND THE DEVELOPMENT OF SOCIETY AS A WHOLE LARGELY

DEPEND ON THE CONDITION OF THIS INDUSTRY. AT THE SAMETIME, THE CONSTRUCTION BUSINESS IS ONE OF THE FIRST TOTAKE THE FALL OF ECONOMIC CRISES AND CLEARLY REFLECTSITS ACTUAL STATE. THE LACK OF SIGNIFICANT FREE CAPITALAMONG THE POPULATION AND ENTREPRENEURS AUTOMATI-CALLY LEADS TO A DROP IN DEMAND AND AS A RESULT TO AFALL IN CONSTRUCTION VOLUMES. CREDIT SYSTEMS AND MORT-GAGE MITIGATE THE SLOWDOWN BUT THEY DO NOT FUNDA-MENTALLY SOLVE PROBLEMS BECAUSE THE FINAL COST OF HOUS-ING FOR CUSTOMERS INCREASES AND LOSES IN PERSONNEL ANDTECHNICAL EQUIPMENT ARE RESTORED OVER THE YEAR. THEONLY SOLUTION IS TO REDUCE THE COST OF CONSTRUCTIONWITHOUT LOSS OF QUALITY AND THE AVAILABILITY OF CONSTANTPRODUCTION VOLUMES.

“

TECHNOLOGY


In contrast to the banking and finan-cial sector, where processes of digitaliza-tion and improving interaction betweenparticipants are very dynamic, in con-struction business the inertia force and arather conservative approach to projectimplementation methods remain. This isdue both to objective reasons - in partic-ular, the need to conduct a lengthy pro-cedure for testing new materials beforetheir introduction, and to be subjective,including the disinterest of large playersin investing in new production facilities.As a result, this system does not allow toquickly change the established patternsof work and interconnections, to re-spond flexibly to changes in market de-mands but it perfectly maintains the bal-ance of interests of construction corpo-rations and material manufactures.

It is enough to analyze the list ofRussian companies and developers, whopresented new technologies in recentyears and were awarded at internationalexhibitions to understand that there arenot many domestic innovators, whohave achieved this level. And the mostinteresting for builders and investorswill be the technology “Pioneer” whichcan be safely attributed to break-throughs. The technology already has anumber of achievements, among them:

first place at the world exhibition“THE BIG 5 GALA AWARDS” inDubai; recognition at the prestigious con-struction exhibition MIPIM inCannes;

Award of the first international forumRusnanotech’08; 6 enterprises built abroad;successful introduction of new con-

struction technology and materialsin more than 10 countries of theworld.“Pioneer” is a fully domestic develop-

ment including the production of build-ing materials based on nanotechnolo-gies, the design and construction ofbuildings. Currently this technologyproduces more than 40 types of prod-ucts for construction industry. The con-cept, by which we stand, is very simple:one enterprise must fully meet the needfor basic building materials of the devel-oper and significant reduce the time andcost of construction and installationwork.

The technology was of special inter-est in the Gulf countries. Despite a satu-rated market of construction materialsand constant rivalry with leaders of thisindustry, “Pioneer” literally over a yearwent from an unknown newcomer tothe commissioning of the largest enter-prise for the production of non-auto-claved aerated concrete mixtures andblocks “ECOCON Industries”. The salesgeography of this enterprise constantlyexpanding and has long been beyondthe region.

One of the factors of such success isthe low cost of the company itself thatallows to return investments in 2–3 yearsas well as the profitability of the entireproduction cycle. How is this achieved?

Firstly, a wide range of inert materialscould be used as feedstock includingsands, stone crushing wastes, volcanicrocks, ashes, dolomites and concrete.Secondly, the enterprise does not needfuel and autoclaves. Thirdly is the sim-plicity of the equipment, it makes thecost of its operation lower than that ofmanufacturers of products made of gassilicate and reinforced concrete. Fourth-ly, the possibility of using process waterfor production without preliminarypreparation, including seawater, whichbecomes a determining factor for manypartners. Fifthly, thanks to the nanotech-nologies underlying the development,the amount of cement, chemical addi-tives and plasticizers is reduced by15–20% without loss of the quality of thefinished product. Finally, the most im-portant thing: all materials manufac-tured using the Pioneer technology haveunique quality characteristics. All this isdue to the nano-modification of materi-als, as a result of which additional chem-ical bonds and carbon nanotubes(CNTs) arise.

The main ware is dry pack for cast-in-place non-autoclaved aerated concrete.Its strength characteristics, heat insulat-ing, sound-insulation value and water-power, the absence of harmful compo-nents and casted manufacturing tech-nology make it possible to build from itsmaterials the loadbearing and fillerstructures, lift slabs, screeds, flat roofs,wall blocks, architectural details andforms.

Alexey Golik,General Director of “Center Restoration” LLC

«PIONEER»: BREAKTHROUGHTECHNOLOGY INTHE SERVICE OFCONSTRUCTIONBUSINESS

56

TECHNOLOGY

The structure of the cement stone: base cement (A) and finish grindin, modified carbon nanotubes (B). Concentration of CNT – 0.005%

А B

Table 1. Comparative characteristics of building materials

Clay brick 1550–1700 0,6–0,95 25–50 12 25–250

Silicate brick 1700–1950 0,85–1,15 25 16 50–300

Expanded-clay concrete 900–1200 0,5–0,7 25 18 35–75

Foamed concrete 500–1200 0,15–0,35 25 20 10–20

Autoclave foamed concrete 500 0,15–0,16 25 more 25 21

Autoclave foamed concrete 600 0,18–0,19 25 more 25 32

Nanogas concrete «Pioneer» 500 0,11 min 100 5 23

Nanogas concrete «Pioneer» 600 0,15 min 100 5 43

Material short textDensity, kg/m3

Conductance, W/m

Cold resistance, cycling

Water absorptionability, % by mass

Compressive resistance, kp/cm2


In tandem with the well-known tech-nology LGSF (light gauge steel framing),buildings and structures with uniquecharacteristics are build frim this mate-rial, with minimal costs and the com-plete absence of heavy lifting equipmentand concrete pumps. The high factoryreadiness of product and ease of instal-lation work allow to save time and mon-ey. All materials of this line are not hy-groscopic and have increased adhesion.It is not necessary to have primers, mem-branes, roll waterproofing. This is no“draft” stage of finishing process: premis-es are ready for finishing immediately af-ter installation.

A promising direction of the use ofnon-autoclaved aerated concrete soonwill be the construction of roads andfoundations. The inclusion of foamedconcrete “Pioneer” in the road cover al-lows to create a temperature barrier be-tween the roadway and heaving soilsthat don’t freeze through during the coldseason and are always in the zone of pos-itive temperatures. Under the conditionsof permafrost “Pioneer”, on the contrary,will keep the temperature of the frozensoil negative and eliminate subsidence ofthe subgrade. It is not afraid of the effectsof petroleum products and does not re-quire thorough preparation of the foun-dation. On the contrary, the aerated con-crete itself becomes a reliable anddurable foundation of the road and com-pensates for part of the loads on the can-vas. And the most important thing is thelow cost of the material itself and thework on its installation.

In the traditional cast-in-place con-crete frame building, the “Pioneer” tech-nology also has a wide use: enclosingstructures that do not require additionalinsulation and special plaster coatings;interroom and interroom partitions;flight of stairs, screeds, flat roofs, wherethe material is both insulation, screed,and waterproofing; panels for thermalinsulation of facades, foundations andpavilions, various adhesives, putties,floor leveling. As a result, constructioncosts are reduced by 15–20%.

However, the potential function em-bodied in nano-modified materials hasnot yet fully discovered. Technologistsof the company continue the scientificand practical search in cooperation withmajor Russian and foreign scientists.

One of results of international scien-tific cooperation is insulting plaster withunique properties developed in 2018.Lightweight, non-flammable, perfectlywhite and durable material is applied asa regular plaster and has a heat transferresistance equal to polystyrene foam. Itis easily paint and can combine the func-

tion of protecting structures and deco-rating facades or interiors.

Much attention is paid to the envi-ronmental performance of materials – inthe production and in the operation. Anordinary straight cement is used as abinding substance and only mineralsthat are safe for human health are fillers.

To return to the beginning, it shouldbe noted that the development of mod-

ern technologies is impossible withoutthe support of the banking sector: it isthe main initiator of the development ofindustry. Therefore, the possibility of co-operation with FBA EAC is of particularimportance for the company - joint ac-tivities open up broad prospects for theimplementation of progressive ideas anddevelopments throughout the Eurasianspace.

The structure of the adhesive material on the cement-sand basis:base (A) and finish grindin, modified carbon nanotubes (B).

Concentration of CNT - 0.005%

Table 2. Comparative characteristics of adhesive mixtures

Resistance no no no to shrinkage tears

Bending resistance, MPa 8 8 8

Compression strength, MPa 10 11 14

MeasuresStandart adhesivemixture

Adhesivemechano-activated mixture

Adhesive mechanoac-tivated and modified

mixture carbon nanotubes mixture

А B

58

”AMONG THE MAIN TRENDS OF THE FURTHER PROGRESS IN MODERN REFRIG-ERATING APPLIANCES AND TECHNOLOGY AN IMPORTANT ROLE BELONGSTO THE REDUCTION OF ENERGY COST WHEN GETTING THE ARTIFICIAL COLD

AND CONSUMING IT. AS FOR NOW WE CAN SAY THAT THE TRADITIONAL SOLU-TIONS OF THIS PROBLEM ARE ALMOST OUTSPENT.“

TechnologY

SAVING RESOURCES REFRIGERATING APPLIANCESAND TECHNOLOGY BASEDON ELECTROPHYSICALMETHODS


According to the forecast of the In-ternational Institute of Refrigeration inthe nearest future the refrigerating con-servation of perishable food has no alter-native. At the same time modern pro-duction of artificial cold is one of themain consumers of high energy. Refrig-erating industry accounts for 18% ofglobal energy consumption. Internation-al Institute of Refrigeration has set thegoal up to 2020: to reduce the energyconsumption by refrigerating systems by30–50% (as compared to 2000).

One of the most effective methods inthe development of energy-efficient re-frigerating appliances and technology inthe use of electrophysical methods(EPM) in agro-industrial complex. Theyare basing on gas-discharge processes –electro convection, corona, barrier andcapacitive discharges and low tempera-ture unbalanced plasma. With EPM theenergy consumption falls in the range of0.01 W/sm3 to 0.1 W/sm3.

The low temperature unbalancedplasma in the area of atmosphere pres-sures provides for a complex, synergeticeffect on the sterilized object throughdifferent inhibiting factors with the pos-sibility to regulate the intensity level ofeach of them. Plasma is an effective wayto inactivate different microorganism (E. coli, Bacillur sub. etc.).

On picture 1 you can see the main ar-eas of application of the EPM in refrig-erating appliances and technology.

For example the use of EPM in con-ditioning provides for an effective bac-terial treatment of air. Thus electro fil-ters are now being widely used allowingto clean the air from coarse dispersionand microorganisms. And the advan-tage of electro filters over the mechani-cal ones is that they catch not only fineparticle but also effectively kill microor-ganisms.

In refrigerated processing of food theEPM solves the problem of frost forma-tion on the surface of heat exchange ofthe cooling elements. The frost forma-tion considerably influences the work ofrefrigerating equipment: firstly, extraheat-transfer resistance reduces the in-tensity of heat exchange, and secondly,aeroperformance of the equipmentworsens. However the application ofelectro convective cooling leads to fili-form frost formations on the surface ofcooling elements (pic. 2 and pic. 3) andraises the effectiveness of heat-and-masstransfer.

As our research results show the useof electro convection for cooling of anair capacitor improves the heat ex-change and reduces the condensationtemperature by 3–7ºС.

Boris Babakin,Member of IAR (International Academyof Refrigeration), memberof RANS, Professor of Engineering of processes,machinery, refrigeratingappliances and technologyat Moscow State universi-ty of Food Production

Pic. 1. Application of EPM in refrigerating appliances and technology

Refrigerating technology

Defrosting of biological products

Pre-sale preparation of biological products

Aseptic refrigerators

Refrigerated biological processing

(cooling, freezing, storage) Drying

Con

dit

ion

ing

Coating of food products

Electro cryoseparation

Refrigerating systems

Capacitors

Auxiliary elements

Cooling elements

Refrigerating transport

Ice generators

Chillers

Desublimators

Cold accumulators

Dispersion of liquid antiseptic environments

Processing of thermolabile products,materials and production environment

with low temperature unbalanced plasma

Refrigerating appliances Refrigerating technology Technological processes

There are also prospects for EPM inauxiliary elements of cooling elements(oil separators, liquid separators etc.).The liquid drops separate from a coolingagent mush better providing for the dri-est motion of compressor and betterheat exchange of the main elements.

As for the refrigerating transport, thesanitary treatment here with the use ofelectro convection and ozone-hydroussolutions works more effectively thanwith the use of chlorine-containing hy-drous solutions which besides threatenecology and environment.

Pre-sale preparation of biologicalproducts with the use of ozone-air and

ozone-hydrous solutions extends the pe-riod of products storage due to lowerbacteria content (pic. 4).

The treatment of air environment,equipment and containers of aseptic re-frigerators with the use of electro con-vection, ozone-air environment and thelow temperature unbalanced plasmaprovides for highly effective bactericidaltreatment.

The low temperature unbalancedplasma is also promising in treatmentof thermolabile products and materi-als at the temperature not higher than40–50 ºС.

Electro convection for meat cooling

and freezing improves the heat ex-change, reduces shrinkage of goods andspeeds up the process. When a frozenproduct is stored unpacked its shrinkagealso reduces and electro antisepsisworks.

The electro cryoseparation of biolog-ical stuff allows to reduce the materialloses and keep the quality. Moreover theprocess is dry (without water waste),doesn’t need expensive wastewater cle-qning and is ecologically clean.

In conclusion it is worth mentioningthat these advantages are only part ofcurrent trends of usage of EPM in refrig-erating appliances and technology.

60

TechnologY

Pic. 2. Filiform frost formations on the surface of coolingelements and generating electrode

Pic. 3. Frost formations on the surface of cooling elements: а) without electro convection; b) with electro convection

а)

b)

Pic. 4. Pilot unit for pre-sale prepa-ration of biological productsusing the ozone-hydrous so-lution of 500 kg/h capacity

On July 2, 2019 the regular annual Na-tional Tourism Forum “Rivers of Russia”was held in the Tver region on the baseof the Zavidovo resort.

The forum was attended by the company“Torzhok Gold Sewing” led by Chairmanof the Board of Directors Oleg Ivanov.

Gold embroidery has been preserved inTorzhok since the 12th century and nowTorzhok is the only place where tradi-tions of this “precious” craft are re-mained. Gold embroidery has beenthreatened with annihilation more thanonce, now the company “Torzhok Gold

Sewing” is the heir to the craft and con-tinues its tradition. At the exhibitionstand of “Torzhok Gold Sewing”, partic-ipants and guests of the forum were ableto get acquainted with unique productsof Novotorzh gold embroidery.

Among honorary guests were OlgaGolodech, Deputy Prime Minister of theRussian Federation, Igor Shchegolev,Plenipotentiary of the President of theRussian Federation in the Central Feder-al District and Igor Rudenya, Governorof the Tver region.

A significant event of the forum wasthe ceremony of summing up the re-sults of the regional stage of the All-Russian competition “Tourism Sou-venir”, where in the nominations “Re-gion Souvenir” of the VIP category and“City Souvenir” the prize places werewon by products of the “Torzhok GoldSewing”.

Also within the framework of the forum“Rivers of Russia”, O.Ivanov presentedthe interregional project “SovereignRoad” which was previously submittedby O.Golodets, Governor of the Tver re-gion I.M.Rudeney.

The name of the project is associatedwith the highroad, built at the order ofPeter I and connecting Saint-Petersburgand Moscow. On the highroad was fol-lowed motorcade of the imperial dy-nasty Romanov – hence the name "Sov-ereign Road".

The essence of the interregional projectis to combine the efforts of researchers,tour operators, the hotel and restaurantbusiness, as well as museum complexesto create a single cultural and touristspace in the Moscow, Tver, Novgorodand Leningrad regions.

Diplomas of the District Stage of the All-Russian Competition «Tourism Souvenir» – 2019 for 2nd placein the nomination «Souvenir of the year» in the category of «VIP» and «Economy Class» issued byOJSC «Torzhok Gold Sewing»

FORUM «RIVERS OF RUSSIA»: PRESERVATION AND DEVELOPMENTOF LEGACY OF THE PAST – A STEP INTO THE FUTURE


62

”

WE ALL KNOW ABOUT A PRIM-ITIVE MAN, MEANING, AS ARULE, THE EXISTENCE OF NE-

ANDERTHALS AND CRO-MAGNONS.ALSO WE KNOW, FINALLY THE SAME,ABOUT THEIR HEAVY DESTINY, COM-PLETE DRAMATISM AND GREATHARDSHIPS. HOWEVER, OUR REPRE-SENTATIONS ABOUT WHAT THESECONDITIONS WERE IN REALITY AREFREQUENTLY CLOUDY. LET’S TRY TOGET OUTSIDE OF THE DISTANT AGESAND ATTEMPT TO ANSWER THEQUESTION: WHO ARE WE?”

“

ON THE WAY OF DEVELOPMENT OF CIVILIZATION:THE EYES OF GEOLOGIST

DID YOU KNOW

Based on existing archeological no-tions, Neanderthals lived on theEurasian continent, appeared there atleast a million years ago. Cro-Magnonswere on African continent and it is be-lieved that they appeared in Africa300 thousand years ago.

It is thought that their stay there wasrelatively comfortable at that time.However, the main “showplace” ofAfrica – the Sahara desert – had the fea-ture to become at times practicable forAfrican population: as a result of climatechange, becoming more humid, numer-ous oases in the Sahara were formed. Itallows individual tribes of Cro-Magnonsto cross the sands of the Sahara andmake a settlement the northern part ofAfrica. But these blessed circumstanceseventually changed: 85 thousand yearsago the climate became rainless, Saharawas impassible again and continued itsadvance to the north.

It can be assumed that resources onthe territory cut off from the rest of the

continent, have drastically fallen off andthe tribe living there was in a precarioussituation. He had no choice how to finda way to move to the Arabian Peninsula.The number of the tribe, who leftAfrica, was about 400 people.

And so, 85 thousand years ago Cro-Magnons began to make a settlementEurope and then Asia, Indochina andAustralia. This process continued forabout 11 thousand years. During thistime Cro-Magnons interested with theindigenous Neanderthals but how theycommunicated– is the subject of arche-ologists’ research. We will be fasted “a lit-tle” forward, passed these 11 thousandyears.

Seventy-four thousand years ago themore or less peaceful existence of theEarth’s population and the entire animalworld ended. Something happened thatradically changed the climate of theEarth – the eruption of the super-vol-cano Tobo in Indonesia, on the island ofSumatra. The consequences were colos-

sal. The amount of pyroclastic materialwas huge – 800 thousand cubic kilome-ters, which is many times more than thelargest modern volcanoes emit.

An incredible amount of ash in theatmosphere was the reason that it fell tothe ground together with ice – at the ra-tio of about 25% ash and 75% ice,formed icy sequences. They have beenpreserved in the north to the presenttime in the form of a thick layer of sed-iments that we now call permafrost andhave played a colossal role in the Earth’shistory.

Why? Let’s discuss. To begin with, these sediments in the

north have long attracted the attentionof scientists. Even the earliest-explorer ofKazaks Semyon Dezhnev, moving to theEast, were found at stops and later dur-ing the housing and small fortresses thatthe ground under soil layer begins tosubside and melt. This land they called“yedoma”. Divergent angles alternated:they were considered estuaries of large

Valery Kryachko,Geological and MineralogicalSciences Doctor, CorrespondingMember of Russian Academy of Geopolitical Problems


rivers, discharging into the Arctic Oceanthen as wind deposits because of highsettlements. By the way, this point ofview prevails now.

But then it was time to reconsiderthese views in connection with the ap-pearance of a large number of factsshowed a different genesis of these sedi-ments.

At first, I say that I happened tospend two expeditionary seasons in1989 and 1990 on the coast of the ArcticOcean on the territory of Yakutia – in agroup with permafrost scientists fromthe Institute of the SVKNII MagadanAcademy of Sciences.

There I can for the first time to per-sonally familiarize myself with thesesediments and to get information ofthese from the qualified scientists. And

although I am a specialist in the study ofplatinum fileds, this topic has capturedme and still does not let go of years. Andall because it has not yet largely studied,in my opinion, is of great interest for allof humanity.

Turn our mind to Yakutia. There,near the village of Kazachye, on theYana river and on the Arctic Sea coast,were found about six clusters of mam-moth bones and all these clusters arequite big, 15–20 meters high, precipitateswith already noticeable sloughing (de-struction). Based on my observations, itwas a result of melting “yedoma” and itsslipping to lower levels.

Locals, participated in the extractionof tusks, note that the productive stra-tum of the remains of mammoths in dif-ferent places is located at a depth of sev-

en to eight meters from the surface.Finding this stratum in the cliffs, the in-habitants, with the help of pumps, beginto erode this icy mass and thus formbranching galleries extending a hundredmeters into the coast. They have to bemade quite narrow for security reasons.

But the question is: how did mam-moths appear there?

I think it could be only one mecha-nism. I had photographs of such cliffs onthe one of the rivers in Alaska. Theirdepth is impressive – at least 50 meters.But the mostly is drawn to the fact thatat a depth of about 15–20 meters you cansee clearly the border in sedimentationand in this case, of icy ash fall. This meanthat there were two periods of ash falls.The lower level about 30 meters thickformed 75 thousand years ago.

When the ash fall ended, over time,the topsoil appeared and savannas witha grate feeding for the mammoth faunawere formed. Animals browsed, livedand then died, making natural cemeter-ies. It is difficult now to guess how longthis period lasted. But it is absolutelyclear that the time has come for the re-fall. Thus mammoths died earlier wereburied under a new layer of icy ash. Andit is this, form the point of view of localsof Yakutia, “productive” level is being ex-cavated.

But there is one more interesting fact.Romanian cavers in one of dene-holesfound a skull simultaneously with thefeatures of Neanderthal and Homo sapi-ens. This led them to look for the cause

64

DID YOU KNOW

Permafrost boundary

in Russia

Permafrost in Alaska near one of the tributaries of the Yukon.

1 – bottom layer of icy ash

2 – top layer of icy ash

1

2


of the death of this hybrid. In one of thelakes, a well was drilled with good corerecovery. And the layered core showeda very sharp climate change, with arough cooling. Moreover, this periodwas represented by ashes. The questionarose: where did the ashes come from30 thousand years ago? And an analysisof the territory of Europe showed thatin the area of the Etna volcano in Italy,in one of the bays, the super volcanoCampi Flegrei was located, which erupt-ed 39 thousand years ago. And the ashesfrom the well were to be completelyidentical to the ashes of Campi Flegrei.

But what does Yakutia? – you ask.And this when the second ash fall, de-scribed earlier by me, on the Yakutiacoast, can be the ash fall from the vol-cano Campi Flegrei. In the images youcan see clear that the upper part of theash section is different in compositionfrom the lower part formed by the ashesof the volcano Tobo that erupted74 thousand years ago.

Let’s return to Yakutia. There the staffof the St. Petersburg Institute of the His-tory of Material Culture of the Academyof Sciences of Russia study one of thesites of the ancient man. The age of thissite is 28 thousand years. This numbercan be a control for the time of the sec-ond stage of activation of the volcanoTobo. Probably this site is the last stageof stay of Neanderthals on this territorybecause on modern submissions theyceased their existence about 30 thou-sand years ago. And perhaps it was pre-cisely that catastrophe that finally de-stroyed them.

As you can see, there are many factsthat make it necessary to evaluate“yedoma” deposits as a result of a big ca-tastrophe and at the same time as an “in-strument” made a turn in the develop-ment civilization.

As for a mechanism of soil formationthen it looks as follow. After the erup-

tion and ashfall with ice according toAmerican scientists for about sevenyears until the ashes settle and the sunheating the surface of the earth, will givethe opportunity “yedoma” to partiallymelt and free from ice, that is to becomesediment. Well, the sediment is the ashwith enormous amount of metal-organiccompounds, which are great food forbacterial complexes, as a result of whichfertile soils arise, allowing the develop-ment of grass stands. And only thank tothese grass stands mammoth fauna ap-peared. And this is about 80 species ofanimals! Not only mammoths, but alsowoolen rhinos and bison, deer, saber-toothed tigers and cave lions and saigas.All this animal diversity lasted 40 thou-sand years. It is known that the first findsof mammoths dated from 50 thousandyears and the last – 10 thousand years.Therefore, it can be assumed that animalworld suffered during the send ash fallbut still survived. Apparently, Cro-Magnons survived. But Neanderthals,perhaps, were not able to outlast this ca-tastrophe. Although, we do not haveenough observations that to move fromguesswork to confidence.

It can also be involved that the ashwas unevenly deposited on the earth’ssurface, and its composition on such vastareas changed.

In any case, according to prelimi-nary data, the first ashfall in composi-tion was different from the second. Wehave already said - this is clearly seen inphotos from Alaska. It can also be as-sumed that bacterial complexes in dif-ferent climatic zones of the Earth dif-fered from each other and as a result ofthis, soils of different color and compo-sition from chernozems to red soils wereformed. But is it? Only one thing is ob-vious: the process of the formation ofvast fertile territories on Earth is associ-ated with the processing of organic-richashes by bacteria.

It can be observed: the catastrophethat occurred on Earth almost de-stroyed us but gave us the fertility of thesoil, which we use skillfully. For what,however, it needed more than one mil-lennium.

However a fair question appears: cana catastrophe be repeated and what willdo with us then? Moreover, taking intoaccount, there is a super volcano Yellow-stone on Earth. I recall, that the Tobo wasa super volcano too! Can we comparetheir in size and impact on the planet?

According to some data, the expect-ed Yellowstone explosion is comparableto the Tobo explosion that has alreadytaken place. This is to some extent en-couraging, because in this case, as can beexpected, there will not be all that isusually shown in disaster films – mon-strous tectonic shifts and giant tsunami.What are these assumptions based on?And on the fact that the explosion of su-per volcano occurs with the emission ofash upwards. The main forces acting onthe Earth are directed from the topdown. And there is no shear tectonics,and hence there will be no huge dips inthe crust, no horizontal displacements,therefore, there will be no mechanismsfor the formation of a tsunami. At leastin scale shown by directors and screen-writers. But, of course, these modelsneed to be worked out.

And the main question: what role didNeanderthals and Cro-Magnons play inthe formation of modern man? Do wehave their genes? There are numeroushypotheses on this account. And itcould be that we live not only thanks toashes of volcanoes but also to Cro-Magnon survivors of the catastrophe.

Preparation for the expedition: researchers Sergey

Poroshin (left) and Valery Kryachko. Northeast In-

tegrated Research Institute, Magadan. 1989

Mammoth tusk on the border between two ashy depths

66

PARTNER NEWS

2019

DIGITALIZATION – NEW RULES FOR A NEW GAME ON MAY 30-31, BISHKEK INTERNATIONAL FINANCIAL FORUM 2019 WAS HELD FOR THESEVENTH TIME.

BIFF IS AN EFFECTIVE PLATFORM FOR EXCHANGE OF INTERNATIONAL EXPERIENCE,CREATION OF PARTNERSHIPS, DEFINITION OF THE ROLE AND POSITION OF THE FINAN-CIAL SECTOR IN SUSTAINABLE FINANCING MECHANISMS, INTRODUCING NEW TECH-NOLOGIES AND DEVELOPMENT OF RELEVANT ECOSYSTEMS.

”””EURASIAN F INANCIAL & ECONOMIC HERALD | #3(8) 2019 67

Dastan Dogoev,Advisor to the President of the Kyrgyz Republic, Director of the PIU Digital CASA:

Today the Kyrgyz Republic isnot in words but in fact activelyinvolved in world trends and

passes to digitalization. At the state level,the project “Digital CASA-KP” managesthis project and financial sector is one ofour key partners. Presently we clearly un-derstand that it is in cooperation with thissector that it is possible to actively pro-mote the establishment of the digitaleconomy through the development of in-ternet-trading, updating and updatingand laying the foundations of the legalframework taking into account digitaltrends, as well as joining efforts to launchdigital solutions, improve digital financialskills and conduct an education cam-paign in support of change management.

Anton Borozdin,Director for Business Development Mastercard in Central Asia:

The payment world is changingand now we are in a new worldwhere old rules are no longer in

force. New technologies are developingexponentially, accelerating the coming-

in of the digital age. The move away todigital payments is the largest change inthe payment system after the appear-ance of bankcards. Digital commercegrows in double-quick time fast than tra-ditional, which contributes to increasethe market “internet thing”.

Today the consumers often have sev-eral devices to acsess the Internet andshop there. It allows to change the pay-ments’ structure which results in mod-ernization of infrastructure, in the activetransition from products to the provisionof services, in the emergence of alterna-tive types of payments and the appear-ance of new networks. However, such ac-tive expansion also contributes to an en-largement in cyber security risks, whichrequires increased attention to issues ofidentification and authentication.

The technology AR/VR is becomingmore and more popular, voice assistantsare an integral part of our lives, increas-ing the value of voice commerce; per-sonalizes slant is becoming the most es-sential for the modern consumer. Theuse of bots for online commerce is al-ready considered mandatory, and sub-scriptions and subscription campaignsreach a new level and become an inte-gral part of commerce on the Internet.Thus, flexible adaptation to the speed ofchange, security and convenience ofpayments become the key to successfultransactions in the future.

Semyon Popov,Director of SAP, Central Asia:

Technologies changed the prin-ciples of information retrievaland taking a decision on the

purchase of goods, and ways of pay-ment. The model of interaction betweencompanies and clients is changing alongwith behavior of a consumer: the task offinding and retaining a loyal buyer is be-coming increasingly difficult. In the ageof digitalization, banks must accept newrules of the game just like other areas.Moreover the competitors from non-fi-nancial sector appear: today not onlybanks can create a mobile applicationand a payment service. Online retailersand even social networks have such suc-cessful examples. Specialists and expertsof SAP already know how with the helpof machine learning technologies,blockchain, robotics and artificial intel-lect, banks can transform their businessand win in the competitive fighting. Weare also certain that in the era of experi-ence economy it is competent data man-agement, compliance with ethical stan-dards and transparency in communica-tion that will increase confidence andbuild a positive brand reputation.

Talant Omuraliev,Deputy Chairman of CJSC Interbank ProcessingCenter - operator of the National Payment System“Elcard”

The success of digitalization con-sists of three components: the ex-istence of technology, proper

regulation and merchandising by the fi-nancial sector in the regions. Taking intoaccount that “Elcard” has a status of a na-tional payment system, and we have alltechnical and technological opportuni-

THIS YEAR THE FORUM BROUGHT TOGETHER 262 REPRESENTATIVES OF BANKING AND MICRO-FINANCIAL INSTITU-TIONS, LOCAL AND FOREIGN FINANCIAL AND CREDIT OFFICES, INTERNATIONAL AND NON-GOVERNMENTAL OR-GANIZATIONS, SUPPLIERS OF VARIOUS SOLUTIONS, PAYMENT ORGANIZATIONS, INDEPENDENT EXPERTS AND ANA-LYSTS, REPRESENTATIVES OF REGULATING AUTHORITIES, BUSINESS OWNERS AND OTHER COMPANIES FROM MORETHAN TEN COUNTRIES. ACCORDING TO THE ESTABLISHED TRADITION, THE PARTICIPANTS PAID TIME AND ATTEN-TION TO CURRENT TRENDS IN FINANCIAL MARKET, NEAR CHALLENGES AND PROSPECTS AND OF COURSE NET-WORKING. ONE OF THE MAIN TOPICS WAS “DIGITALIZATION OF FINANCIAL SECTORS IN REGIONS”.

TAKING INTO ACCOUNT THAT 2019, THE PRESIDENT OF THE KYRGYZ REPUBLIC SOORONBAY JEENBEKOV AN-NOUNCED THE YEAR OF REGIONAL DEVELOPMENT AND DIGITALIZATION, THIS ISSUE IS ESPECIALLY URGENT FORKYRGYZSTAN.

A NUMBER OF FRAGMENTS OF SPEECHES OF THE EVENT’S PARTICIPANTS ARE PRESENTED TO ATTENTION OFREADERS.

“

“ ““

”

””

ties and developments. And we are readyto give them to the market if problems ofregulatory character will be resolved.Now, unfortunately, there is no this com-ponent therefore, we can see a serious im-balance: digital technologies develop wellin the capital but in regions there is a greathysteresis. The solution to a question ofremote identification and introducingthe concept of a digital contract - thesecomponents could greatly advance digi-tal technologies in the regions. However,it should be noted that many people hereconfuse the biometric database with thebanking one. It needs to be clear aboutstate identification and identificationthat required in the financial sector aregoverned by various laws. The second isbased on the Law of the Kyrgyz Republic“On countering the financing of terrorismand the legalization (laundering) of crim-inal proceeds”. This law requires the phys-ical presence of the client for each of hisappeals and, accordingly, limits the possi-bilities for the financial system to go on-line. Until the analogs of the requireddocuments appear in digital form, whichwill be recognized by law, banks will notbe able to move towards digitalization ofthe regions. We are all talking about digi-talization - but it is only possible with achange in the regulatory framework.

Denis Judin,Sales Director Colvir in Russia and the CIS

Over recent years digitalizationis a key topic in all forums.However this word means a

wide range of intentions from the cre-ation of qualitative internet – and mo-bile banking to adjustment of digitalchannels and processes, adjusting thelegislation including to make clientstruly feel part of the digital bankingcommunity. Indeed, it is one thingwhen a client has a mobile applicationin which he did something, but then hestill needs to come to the bank - sign thenecessary document. And another cupof tea when the client, being at home infront of the TV, can get absolutely allbanking services and forget about theexistence of bank branches. Moreover,in our opinion, this applies to both in-dividuals and legal entities.

Our company has already automat-ed banks across the CIS for 19 years.Now we specialize in the creation of adigital bank that is such not outside butalso inside. Today a digital bank cannotbe limited to creating, for example, abeautiful application with the opportu-nity of ordering a card issue, which willbe followed by a three-day process di-rectly at the bank, when staff will haveto carry paper documents between dif-ferent departments. Today, a digitalbank must have digital processes andcommunication methods - simple andfast - both outside and inside.

Certainly, in the success of digitali-zation, work is also important to im-prove the technological literacy of thepopulation. For example, today smart-phones are everywhere but at the sametime, we see that the mentality of peo-ple has remained the same: received asalary on the card and on the same dayremoved it in cash, put it under the pil-low - and live. No digital bank can bebuilt in such an ecosystem. Therefore,it is important to increase the financial

literacy of the population, the growthof trust in banks - so that money is inthe accounts. And this is one of the keytasks not only of banks, but also of thestate. Only then will it be possible to saythat the bank is truly digital and theeconomy is digital.

Anvar Abdraev,President of the ALE "Union of Banks of the Kyrgyz Republic"

The banking system within theframework of the initiative ofthe president of the country

plays an important role as a basis of thefinancial system. In presidential initia-tives, some of the proposals of our sectorin support of sustainable developmenthave already been reflected. But we un-derstand that areas and the breadth ofour cooperation and engagement intransformational processes have not yetbeen fully determined. Therefore,thanks to various events and, in particu-lar, this forum, we are actively consoli-dating the position of the financial sec-tor for effective partnerships and em-bedding our innovative proposals in thedevelopment processes of the sector andthe country as a whole.

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PARTNER NEWS

Following the results, the resolution of BIFF-2019 indigitalization sector included items related to the devel-opment of legal framework aimed at the creation of con-ditions ans incentives that contribute to:

development and implementation of digital financialservices in the Kyrgyz Republic;opening banking/payment API;recognition of 3DS identification as an analogue of aqualified electronic signature;

introducing in Laws and Statutory Instruments thedefinitions and meanings of a digital contract as a sub-stitute for paper versions of relevant documents;development of QR payments;preparing a decree of the Government of the KyrgyzRepublic on the implementation of non-cash paymentof public services through online services;creating conditions for the development of electroniccommerce;strengthening work on public awareness.

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For 15 years “BANKIT” is relevant and high-demand.

Because each participant is guaranteed:

three productive, inspiring and interesting days;

rich balanced program;

lighting the position of the regulator;

new products from developers and advanced solutions from practitioners;

professional atmosphere with discussions;

discussions on the hottest topics;

exhibition;

master classes;

business contacts.

Address of the event: President Hotel, Minsk, st. Kirova, 18

Working language: Russian

Organizers: National Bank of the Republic of Belarus, Scientific and Technological Association "Infopark",Association of Belarusian Banks.

Program and conditions of participation on the website: http://bankit.by/index.php

On October 22, 2019, within the framework of the forum, a meeting of the International Banking Council will be heldon the topic: "Priority areas of digital transformation of the banking sector".

October 22–24, 2019

INTERNATIONAL FORUM ON BANK INFORMATION TECHNOLOGIES

“BANKIT’ 2019” XVI

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”THE RAND REMAINS ONE OF THE MOSTSTABLE CURRENCY UNITS NOT ONLYIN THE SOUTH AFRICAN REGION BUT

ALSO ON THE WHOLE AFRICAN CONTINENTFOR A LONG TIME. ITS HISTORY BEGAN IN1961, AFTER INDEPENDENCE OF THE RE-PUBLIC OF SOUTH AFRICA.“

History of money

The rand takes its name from theWitwatersrand mountain range, whichfrom Afrikaans is translated as “whitewaters’ ridge”. In this place, in the latenineteenth century one of the largestgold deposits in the world was foundwhich for a long time used among otherthings to the manufacture of coins. Suchmechanism of origin of the name is verysimilar to the classical theory of origin ofthe word “thaler” – from the town ofJoachimsthal; in its vicinity silver wasmined, from which coins, popular in Eu-rope, were minted.

The first rands were introduced in1961 and in their appearance in manyways resembled the withdrawn from cir-culation of South African pounds. Thismade it easier for people to switch to anew currency. On the first notes had apicture of Jan van Riebeeck, the founderand first administrator of Cape Town inwhat then became the Dutch CapeColony of the Dutch East India Compa-ny. Interestingly, the first rands adopteda bilingual system from the SouthAfrican pound: in one variant banknoteswere issued with inscriptions presentedfirst in English and then in Afrikaans, inthe second variant – vice versa. In future,linguistic characteristics in different ver-sions were taken into account in the is-suance of South African banknotes.

Coins also duplicated British issuesbut were denominated in cents and inthe decimal system. In doing so, the sizeand material of coins at the first stage re-mained almost identical to the Britishsamples.

Later banknotes and coins repeated-ly changed. A series of bills with thename “Big Five”, released in the 1990s,received wide popularity.

On the bills were depicted the headsof animals - rhino, elephant, lion, buffa-lo, leopard. But the most radical changein circulation of money was the issue ofa new set of banknotes bearing Nelson

Mandela's image in 2012. Moreover, in2018 a special commemorative series ofbanknotes was released in commemora-tion of the 100th anniversary of his birth.In general, a particular relevance to Nel-son Mandela was repeatedly expressedin the imprinted of his portrait on vari-ous commemorative coins of SouthAfrica.

It should be noted the profound re-spect on the part of the Republic ofSouth Africa for the languages of largepeoples inhabiting the country. Thecoins in circulation today are issued ineach of the 11 official languages of theRepublic, that is, you can actually meetthe rands in Zulu, Xhosa, Afrikaans,Northern Sotho, Tswana, SouthernSotho, Tsonga, Swazi, Venda, SouthernNdebele and, of course, English. Mod-ern banknotes also take into accountthis linguistic diversity of the country.

Today the South African rand, de-spite various economic changes, can befound not only in the Republic of SouthAfrica itself but also in Swaziland,Lesotho, Namibia and even Zambia,Zimbabwe and Botswana. In fact, theSouth African rand is a kind of guaran-tor of the financial security of the region.

THE RAND BORN IN SOUTHAFRICA

Vitaly Krasnikov,analyst


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OFFICIAL PUBLICATION OF FBA EAC, IBC eurasian financial & …’естник ЕФЭ-3-2019... · 2019. 9. 20. · # 3 (8) | 2019 OFFICIAL PUBLICATION OF FBA EAC, IBC eurasian financial