What to do …?
It’s always nice to be asked for an opinion.
It’s a good idea to ask people for their opinion – it says that you value them and their advice, you don’t have to agree them but it is always reassuring if they happen agree with what you already thought, and it is always possible that they will say something new that you haven’t thought about or give you food for thought and set your mind off at a tangent.
I often ask my staff for theirs, but I do warn them not to be offended if, for some reason, I choose not to take it.
On the other hand, I find it a difficult and onerous task when I asked for my opinion.
Difficult? Yes, because, it requires having thought through the issues and coming to a conclusion, whilst recognizing that there may well be things that one doesn’t know, or where one is mistaken.
Despite the fact that I am someone who “knows his own mind and isn’t afraid to voice it”, I am not a great fan of vox pop. It seems to me that there are too many people, (myself included!), who are far too eager to give vent to opinions even when they don’t know what they are talking about. It’s not that I think their opinions are worthless … after all, “everyone is entitled to their own opinion, no matter how bigoted or misguided they might happen to be” … and for, all I know, they could be correct.
Part of the trouble is that I constantly meet people who vociferously pontificate about things of which they don’t really to have any knowledge, but they still think that and act as if they should not only be heard and listened to but also consider that everyone should agree with them and do what they say – as if they were “the fount of all knowledge”.
I often say that the difference between them and me is that “I know that there are things that I don’t know”. I may also vociferously pontificate, but I try to acknowledge that what I am saying is only my opinion, based on background and experience, and on my understanding of the situation. It is quite possible that I am wrong, mistaken or may come to change my opinion over the course of time as either the situation changes or I learn things and my understanding becomes clearer.
I don’t expect everyone to agree with me … of course it is nice when they do, but I appreciate that they may see the situation differently from the way that I do … the important thing is that we listen to each other and consider what the other person has to say.
So, if I think that everyone is entitled to their own opinion, but do they have the right to give voice to it. This is a question of “Freedom of Speech” and I think the answer is “Yes, but within limits”. In a way, this is true whenever we exercise our rights. Rights and Freedoms carry with them responsibilities and duties.
A message which is “sent” is not always the same message that is “received”. The old parlour game of “Chinese whispers” used to demonstrate this much to the amusement, delight and enjoyment of the participants.
That’s one reason that I said I found the situation onerous.
Anyway, this week I was asked to give an interview for a news programme on the subject of the development of the economy.
As usual in this sort of situation, my first thought was: “Why me? … what do I know about the subject? … what can I say? … and why do they think that what I have to say is important?”
Of course, I am pleased to have been asked, and that the journalist thinks that my opinion is valuable. I don’t feel, however, that I can claim to be an expert – after all, my formal education in economics is limited to a short “A.B.C.” course at night school, many years ago. Having said that, especially after I had read the questions, I felt that the important thing was to contribute to the debate and so I responded like this:
The first question asked about the present state of the economy – if the situation for doing business was one of development, stagnation or even regress – and what risks it involved.
To be honest, that struck me as a bit simplistic in that the situation is complex … there are signs of all three: development, (construction and infrastructure projects are continuing and the reconstruction of the South has many opportunities and much potential for the budding entrepreneur to step in and create further development), stagnation (many foreign investors have put their plans on hold waiting to see how things will develop and it is unlikely that we will see any serious Foreign Direct Investment until into next year – after the results of the election are clear) and regression (in tourism we are facing a difficult year with cancellations, and the problems with cross border traffic means that trade with Kyrgyzstan’s foreign partners is hampered if not actually disabled). The second part seemed open-ended and negative – trust a journalist to ask about “risks” and not opportunities. Anyway, this was the answer that I wrote:
The current situation is mainly one of uncertainty … uncertainty about the legitimacy of authority (government), the borders, investors seeking to protect their investment (or potential investment) by adopting a “wait and see” approach, a downturn in trading activity (and hence tax revenues) at a time of increasing government expenditure, ( some of which is “one-off” but possibly massive – for example spending on the reconstruction of the South – whereas other aspects are ongoing – such as pay increases for police and the military.
In our industry, tourism, for example, it is difficult to say what will happen this year but many tour firms, hotels and service providers, (guides, drivers, homestays, transport companies and so on) have received cancellations and are finding it difficult to survive. As happened in 2005, the first cancellations which came after the initial revolution were from those who were due to travel within a month or two … but this year, more followed after Maevka, and then again after the events in the South in June. As a result, we will be lucky if we have half the business this year than we had last year.
The referendum played an important role in helping to ease the situation … now we await the elections, both the campaign and the voting itself, and also how the politicians deal with results. The rest of the world will be watching very carefully to see how things develop and if Kyrgyzstan can move from this state of uncertainty into one where it safe to travel, invest and do business.
The second question centered on the apparent rising trend for interference by government bodies in the conduct of business, especially the burning issues of the day: corporate raids and nationalization. Why was this occurring and and what dangers did it present to businesses.
Although it is a good question, once again, I was unhappy to see the negative emphasis on “high profile” cases which, although important in themselves and for the implications that they contain for businesses in general, seem to me to be far from the norm and on the potential on “dangers”. This is what I wrote in reply:
I know what I read and see in the media about such pressures but, fortunately, our company has not been subject to them … and I hope and trust this will continue to be so.
The reasons as to why there are such pressures on Private enterprises are probably features of history … and psychology. History, because people see what has happened and want to correct the “mistakes” of the past, and in itself that is good. Unfortunately, I also sense a tendency to seek revenge and a sense of jealousy.
The next question asked why there always seemed to be problems the effectiveness of the government’s management of the economy, what were the underlying causes for this and who were their opponents.
It seemed to me that this assumed that there was, indeed, a problem … and to be frank, there probably is. Once again, I think that there are lots of reasons for this … and I had trouble trying to decide where to begin and what to include. Part of the problem is that it is easy to criticize – easier than to be be constructive, or to take responsibility, make decision and then carry them through to implementation. In the end, this is what I settled on:
I see a couple of major issues here. First of all, Kyrgyzstan is a small country – and there is a limited pool of available “talent”, people with suitable qualifications, knowledge, skills and experience, to fulfill the essential posts at all levels of government and administration, and limited infrastructure for them to obtain and develop these qualities. By that I do not mean that there aren’t talented people available, there are!
The second factor is psychological … there is an Impatience after twenty years of independence when there has been little progress, indeed some would say that there has been a deterioration, in achieving a better standard for the ordinary citizen of Kyrgyzstan … the people have aspirations which are not being fulfilled and this leads to frustration which needs to be directed somewhere … and the government are an easy and obvious target.
Indeed, the government is, almost, in a “no-win” situation. Unless they are successful in being able to make advances in the economic situation in the country, then they will be subject of criticism – and it is much easier to be critical than it is to be constructive.
The subject of the next question was about support for Small and Medium sized Enterprises, (SMEs), and whether it was necessary to support them, and more generally whether SMEs could lead to improvements in the economy of the country.
This question surprised me … it almost seemed to be a “no brainer”. I know that there are a number of controversies about the nature of the Kyrgyz economy: the lack of, and need for, a strong manufacturing industry as opposed to being simply a trading nation, the transit economy that Kyrgyzstan has become facilitating trade between it’s larger neighbours, especially China and Kazakhstan, Uzbekistan and, more distantly, Russia. I know that during the Soviet period there was a thriving manufacturing and engineering industry in the country but, in my role as an “armchair economist”, I am not convinced that the absence of financial and logical support received from the center, (Moscow), the current quality and level of infrastructure and available level of technology, the distance from the markets for the goods and services produced, does anything but hinder the development of large scale industry. Hence I replied:
Yes! SMEs play an important role in the Kyrgyz economy … and I think this will continue to be so for the foreseeable future. Large investment projects are good but a large proportion of people in the country live and work in rural regions and are unlikely to be directly employed in such projects. So, it is necessary to find possibilities for them to help themselves prosper and develop … and the best way for them to be able to do so is to foster the development of small and medium sized enterprises which can flourish and grow. One way to do this is to find ways to support and develop microfinance systems … the availability of even a small amount of credit can make a big difference to the success, or otherwise, of an enterprise and another is to try and maintain tax measures that will not hinder their growth, such as the Simplified system of taxation and the Patent system.
I was then asked if I agreed with the measures that have proposed for the development of the country’s economy and what else was needed …
To me, this “begged the question”: “What measures, in particular?”. I know that this wasn’t very helpful, but my response was simply:
I am reminded of the Hawthorne effect – almost any measures will be helpful, provided that they do not actually hinder and hamper development.
Attention then returned to the issue of cooperation and partnership between the government and business.
I have lost count how many times I have been asked for an opinion on the different roles of government and the private sector, and the relationship between the two. As a former Trade Union official, it might not be surprising that I was reminded of the fact that in Britain we used to talk about the “Tripartite” system – Government, Business and Organized labour, (the Unions). Personally, however,I think this misses at least one other important party: the non-governmental, voluntary sector – charities and the like. In the UK, a large section of the educational sector is provided by the churches; a large amount of medical research and care is performed by charities such as “Cancer Research”; the RSPCA, (Royal Society for the Protection of Animals), play an important role in certain aspects of society … and so on. In Kyrgyzstan, the Donor community, (the World Bank, the United Nations, European Bank, Asian Development Bank … and so on), also play a vital role. Despite that, I took my lead from the question and limited myself to a simple “two party” system:
Yes! As the English poet said: “No man is an island” … in these days of globalization it should be evident that we are all interdependent upon one another. The most important word in the question, it seems to me, is “partnership”. Let each, the government and the Private Sector fulfill its own role … but at the same time work together in a spirit of cooperation and understanding for the mutual benefit of all. This, however, requires a major psychological shift. At the moment the two sides seem to see each other as rivals rather than partners. When they do meet, both sides come to the table with aims and objectives that they want the other side to fulfill, but seem less willing to consider what they can contribute to the process.
The final question asked for priorities: what three measures should the government undertake in order to facilitate the development of business in the short term.
This was by far the most difficult of the questions to address and, in contrast to my answer to question five … that almost any measure which didn’t actually hinder development was welcome … I chose not to propose specific measures. I wasn’t exactly “dodging the question”, but it seems to me that it is the wrong question in that any measure will only be really effective if it is properly implemented. It seems to me, for example, that there are already many very good laws and regulations on the statute books, but the main problem seems to be that they are not properly implemented. The problem is much more deeply seated than this … and goes back to the very approach adopted towards business and other aspects of society … by all parties. My original draft referred to making corruption unacceptable; the need for an element of altruism; the recognition that perception is sometimes as important as, (or, sometimes, even more important than), reality … and similar concerns. In the end, this is what I settled on.
Where to start? You ask for three measures … but I would rather raise three issues which I think the government needs to address. Before a decision can be made on individual measures, it is necessary to determine in which direction we want to travel … what is our goal … what sort of society we hope to achieve … because this will help to determine what measures are appropriate and which are likely to be most effective.
The first issue is, obviously, to provide for safety and security. This is, perhaps, the main duty of any government. In order for the economy and business to flourish and develop, it is essential that everyone feels confident that their physical, financial, social, psychological and spiritual wellbeing is not under threat.
The second issue, it seems to me, is to provide for a fair and equitable society where people feel valued and are sure that they will be treated, and that laws and regulations, will be applied in an open, just, transparent and predictable manner, with mutual respect, whether in relation to their dealings with each other or with the authorities, (for example in inspections, court cases and so on).
The third area I would address is more nebulous, social and psychological, a question of philosophy, attitudes and ethics. This is both a long term and a more difficult issue to tackle but, in my opinion, it is a vital issue. After all, these factors affect and govern all that we do, our dealings and relationships with one another. They need to be addressed at all levels of society: in schools and Institutes of Higher Education; in the courts and apparatus of government, (local and national); in the media; in our dealings with each other.
In fact, I note that these issues are already being addressed by both governmental authorities and by members of society as a whole.
As I tried to say above, “I don’t claim to have all the answers” or “a monopoly on wisdom”. My aim in answering these questions was to make a contribution to the debate and |I hope that someone, somewhere, found what I had to say interesting, useful and helpful. My aim in writing this is to give some idea about how I came to those answers.
As I said, it’s nice to be asked for an opinion.
For anyone who is interested, and can read Russian … the published interview is here: http://www.open.kg/ru/theme/interview/?theme_id=160&id=300. Basically it is just a translation of what I wrote, but the page also has links to some of the other interviews that they conducted on the same theme.
Bishkek