Originally published by EurasiaNet.org
February 24, 2011 - 10:41am, by Deirdre Tynan
Kyrgyzstan
At least 38 businesses seized by the Kyrgyz provisional government following the collapse of former president Kurmanbek Bakiyev’s administration last April are slated to be privatized by mid-2011.
The public auctions scheduled for May and June of this year are a prime opportunity to replenish the state’s coffers, Kyrgyz officials say. But some observers contend that restoring investor confidence is a more important aspect of the process than the final sales amount.
Kyrgyzstan’s reputation as place to do business took a battering after the rash of post-Bakiyev nationalizations. Almost a year later, there remains considerable skepticism about the ability of the Kyrgyz government to oversee a transparent privatization process.
Estimates on how much money can be made by selling off assets, many of which allegedly belonged to the ex-president’s son, Maxim Bakiyev, as well as his associates, range from $80 million to $110 million. Items up for sale include plots of land in the Issyk Kul resort area, hotels, a cinema, a stake in a mobile phone company, a Bishkek Distillery, and several imported cars.
According to the Deputy Minister of State Property and the Director of the Fund for the Management of Nationalized Property, Dair Kenekeev, $80 million is a conservative estimate based on the sale of items that are not subject to ongoing legal contests. For some items that the government wants to sell, ownership remains in doubt. As a result, authorities’ legal right to privatize them is open to interpretation.
Up to nine entities, including the electricity exporting Chakan HPP and the Manas Refueling Complex will remain government owned because of the revenue that they can generate for the state, Kenekeev said.
Some economic experts say that if the government was to divest itself, even partially, of its stakes in more lucrative holdings such as Manas International Airport or the Dastan weapons company, the windfall could be even bigger.
Potential buyers are already lining up. A bevy of Turkish investors who accompanied Turkish Prime Minister Recep Tayyip Erdogan on an official visit to Bishkek in early February are expressing interest in Manas International Airport, Dastan and KyrgyzTelecom.
The president of the Kyrgyz Stock Exchange, Aibek Tolubaev, also urged the government to put anywhere between 5 percent and 40 percent of its holdings in Dastan, Manas International Airport, KyrgyzTelecom, RSK Bank and Aiyl Bank, on the market. Such a sale could attract more than $40 million, he said.
Some transparency activists are wary that the latest privatization scheme will have tangible benefits for the state. Tolekan Ismailova, the director of the Citizens Against Corruption, a Kyrgyz rights and watchdog organization, said previous attempts to re-distribute property after forme president Askar Akayev was ousted in 2005 did not create the desired effect of replenishing state coffers. She stressed she considers entire process “illegal” because “Constitutional provisions safeguarding private property have been violated.”
“The new government, first and foremost, has to give the people justice. They must prove that they themselves were not engaged in theft or raiding, and through litigation decide what belongs to whom. But so far, this has not been a transparent process, it’s been closed to journalists and observers. This suggests there is a policy of grabbing at work,” she said.
Medet Tyulegenov, a professor of International and Comparative Politics at the American University of Central Asia in Bishkek, said while the public supports the sale of seized assets the government must be seen to act in a way that prioritizes both profit and transparency.
“Corruption is a very sensitive issue, especially because much of what is on sale used to belong to the previous regime. If it turns out that the current government repeats the mistakes of the previous one, it will cause severe frustration,” he said. [Tyulegenov previously served as executive director of the Soros Fund-Kyrgyzstan (SFK), part of the Open Society Foundations (OSF). EurasiaNet operates under the auspices of OSF, but has no direct ties to SFK.
Editor's note: Deirdre Tynan is a Bishkek-based reporter specializing in Central Asian affairs.
Originally published by Eurasianet.org (http://www.eurasianet.org/).
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