HERALD - MARCH 2019 by HERALD

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ОФИЦИАЛЬНОЕ ИЗДАНИЕ ФБА ЕАС, МБС # 1 (6) | 2019

74 B. Khamidov Monetary liberalization of economy as the most important development factor for the Republic of Uzbekistan

Евразийский финансово-экономический

EURAS IAN F INAN C IAL & E C O N O MIC

HER ALD В Е С ТНИК Е В РАЗИЙСКИЙ Ф И Н А Н С ОВ О - Э КОН ОМИ ЧЕ С К И Й

Kim Kyungjun Gyeonggi-do – the driver of the Republic of Korea

22 A. Shokhin Russian Union of Industrialists and Entrepreneurs: Chair in the EAEU Business Council

4 Priority – digital transformation of banks VEROLJUB DUGALIĆ: PER SONALITY

№ 1 (6) | 2019

ЛИЧНОСТЬ

ВЕРОЛЮБ ДУГАЛИЧ:

Приоритетная задача – цифровое преобразование банков

А. Шохин Российский союз промышленников и предпринимателей: председательство в Деловом совете ЕАЭС

22 Ким Кёнгджун Кёнгидо – локомотив Республики Корея

# 1 (6) | 2019

Б. Хамидов Валютная либерализация экономики как важнейший фактор развития Республики Узбекистан

№ 1 (6) | 2019

eurasian financial & economic

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

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Премия «Финансово‐банковская элита Евразии» Ноябрь 2019 года Номинации 2019 года: 1

БАНКИР ГОДА (за личный вклад в развитие банковского бизнеса) ЭТАЛОН СТАБИЛЬНОСТИ (банк — лидер по устойчивому развитию, стабильности, обладатель международных и национальных рейтингов) ТОРЖЕСТВО ТЕХНОЛОГИЙ (банк — лидер по внедрению современных ІТ‐технологий)

Приз: Эксклюзивная авторская статуэтка Официальная церемония награждения пройдет в ноябре 2019 года при участии представителей деловых, политических и культурных кругов, национальных правительств и банков, руководителей отраслевых союзов и ассоциаций, представителей ведущих деловых средств массовой информации стран Евразии Форма регистрации и условия участия в конкурсе: www.fbacs.com

BANKER OF THE YEAR (for personal contribution to the development of banking business) STANDARD OF STABILITY (bank leader on sustainable development, stability, holder of international and country ratings) TRIUMPH OF TECHNOLOGY (bank leader in the implementation of modern IT technologies)

Оргкомитет конкурса: тел.: +7 495 663‐02‐08, 663‐02‐13, e‐mail: bev@fbacs.com office@fbacs.com

Organizing committee: tel.: +7 495 663‐02‐08, 663‐02‐13, e‐mail: bev@fbacs.com office@fbacs.com Registration Form and Terms of participation in the competition: www.fbacs.com

The official award ceremony will be held on November 2019 with the participation of representatives of business, political and cultural circles, national governments and banks, heads of trade unions and associations, representatives of leading mass media of the countries of Eurasia

Prize: Exclusive author's statuette 3 2 1

Nominations 2019: November 2018

«Financial and Banking Elite of Eurasia»

Award

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C ONTENT PERSONALITY Priority – digital transformation of banks Interview with the Secretary General of the Association of Serbian Banks, V. Dugalić

FOUNDER’S PAGE. FBA EAC V Moscow International Financial and Economic Forum “The Eurasian “Economic Union and the EU: search for new formats of cooperation” «Gold-mining – new opportunities and technologies» Production, storage and processing of agricultural products “Customs and logistics – "alpha" and "omega" of foreign trade”

# 1 (6) | 2019

8 11 13 15

AWARD Award “Financial and Banking Elite of Eurasia”

ANALYTICS N. Kholodkov. Latin America in the context

of financialisation of the world economy

GLOBAL ECONOMY I. Moiseev. Space market: structure and trends

FOUNDERS: Financial & Banking Association of Euro-Asian Cooperation (FBA EAC)

RSPP NEWS Russian Union of Industrialists and Entrepreneurs: Chair in the EAEU Business Council

HERALD eurasian financial & economic

International Banking Council (International Coordinating Council of Banking Associations of the member states of the Commonwealth of Independent States, Central and Eastern Europe)

PUBLISHER: Financial & Banking Association of Euro-Asian Cooperation (FBA EAC)

FOUNDER’S PAGE. IBC The main task of a bank is to assist clients S. Chzmachian. Regulation and development of financial technologies: problems, risks, security

PRACTICE S. Lyasota. Gold-mining in Buryatia: problems and outlook

HISTORY WITH GEOGRAPHY N. Schetnikov. Issyk-Kul Lake – an oasis on the Great Silk Road

DISCOVERIES V. Kriachko. Quasi-crystalline technological progress

BANK.BANK.BANK А. Kuchinsky. Under the stability sign

TECHNOLOGIES Z. Syamiullin. Hidden reserves: biotechnology in the service of AIC

BUSINESS IN THE COUNTRIES К. Kyungjun. Gyeonggi-do – the driver of the Republic of Korea

EXPERT OPINION О. Alekseeva. Control over customs payments in the development of digital technology

HISTORY OF MONEY V. Krasnikov. Notgeld – emergency money of Germany

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 office@fbacs.com www.fbacs.com

PRINTING HOUSE: Released in the «Granitsa Publishing House» Ltd. Format 210x297 mm. 164 pages.

66 ISSUE DATE: March 2019

68 PRICE: Free

FINANCIAL SYSTEM OF THE COUNTRIES OF EURASIA B.Kutle. The banking sector in Bosnia and Herzegovina: burn to reborn B. Khamidov. Monetary liberalization of economy

as the most important development factor for the Republic of Uzbekistan

70 74

PHOTO CONTEST Results of the contest “The world through the eyes of a photographer” – 2018

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.

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EDITORIAL BOARD

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

Anvar Abdraev, Berislav Kutle, Bakhytbek Bayseitov, President of the Union General Director of Banks President of the Associaof the Banks of Kyrgystan Association of Bosnia and tion of Banks of the Herzegovina Republic of Kazakhstan

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

Veroljub Dugalić, General Director of the Association of Serbian Banks

Oleg Berezovoy, General Director of FBA EAC

Andrea Boldi, President of the company AREZZO FIEREE CONGRESSI SRL (Italy)

Anatoly Kazakov, Elena Korobkova, Manish Kumar, Alexander Kuchinsky, Chairman of the Executive Director of the General Director of the Chairman Coordination Council of Independent Association Soltex Group Ltd., of the Association the Financial and Banking of Banks of Ukraine Head of the Representative of Belarusian Banks Council of the CIS office of FBA EAC in India, Sri Lanka, Bangladesh, Malaysia

Istvan Lengyel, Amirsho Miraliev, Valery Murin, Zakir Nuriyev, Svetlana Orlova, Secretary General Chairman of the Board Editor in Chief of the President of Azerbaijan General Director of Banking Association for of the Association magazine «Eurasian FinanBanks Association «Information and PublishCentral and Eastern Europe of Banks of Tajikistan cial and Economic Herald» ing Center «Eurasia» Ltd.

Krzysztof Рietraszkiewicz, Chairman of the Polish Bank Association

Anatoly Tkachuk, Vice-President of FBA EAC

Dumitru Ursu, Chairman of the Moldovan Bankers’ League

Bratislav Pejaković, Secretary General of the Association of Montenegrian Banks

Bakhtiyar Khamidov, Samvel Chzmachian, General Director Deputy general Director of the Banking Association of FBA EAC, Head of the of Uzbekistan Representative office of FBA EAC in Armenia

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Word to the readers

Dear colleagues and friends! “One shouldn’t start any kind of affairs with unnecessary solemnity: only the end of affairs should be solemnly celebrated” - said Johann Wolfgang von Goethe. I decided to start the appeal with a well-known aphorism of a very difficult person for whatever reason. The past year in the life of Financial and Banking Association of Euro-Asian Cooperation was the anniversary and the final of the year was two main events – the V Moscow International Financial and Economic Forum “The EAEU and the EU: search for new formats of cooperation” and the international public award ceremony “Financial and Banking Elite of Eurasia”. Preparation of these events is not an easy one but the result was a real and fully deserved celebration for all members and partners of the Association. Material about these events is presented on the pages of the issue. Continuing the theme of celebrations, I want, on the eve of International Women’s Day, to congratulate our women readers, members of the Association, our mothers, wives and daughters on this first and main spring holiday. Dear ours! You are the best, most beautiful, most intelligent and kind. And forgive us our often awkward greetings, confused toasts and possibly banal gifts. We love you and therefore we will try hard to work on ourselves to be worthy of you. You support us in everything, everyday you make us and the whole world better and more beautiful. Thank you for this and for being always there for us! Well now let’s return to the contents of the issue. As always we tried to include in it the most interesting materials connected with topical issues of the global economy and the financial and banking industry as well as to please curious readers with the new cognitive and educational headings of the Herald. One of them is “History with geography”. What do we know about Issyk-Kul Lake, about this amazing oasis on the path of the resurgent Great Silk Road? The director of the Kyrgyz-British travel company “Dostuk-Trekking”, Nikolay Schetnikov, will acquaint us with its history and the near future. This time the cover face was the General Secretary of the Association of Serbian Banks Veroljub Dugalic – a largely legendary personality. His contribution to the establishment and development of financial and banking deal in Serbia can’t be overemphasized. He will tell us about what is happening with the banking sector in the Republic and what tasks are facing the Association in our regular heading “Personality”. In additional to traditional headings such as “Founder’s page” and “RSPP news”, readers should pay attention to the “Discoveries” and “Technologies” headings – the issues of our inevitable existence in the conditions of the forthcoming fourth industrial revolution are especially relevant (“Industry 4.0”). But in the heading “Global economy” readers will get acquainted with such a topic, closed until recently, like the space market.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

Over the 60 years of its existence, cosmonautics has been shaped into a specific field of activity that satisfies many of the needs of modern society and presents unique opportunities ...", – the head of the Institute of Space Policy, the scientific supervisor of the Moscow Space Club, a Member of the Expert Council under the Government of the Russian Federation, Ivan Moiseev, will share his thoughts on the situation in the global space market. In my mind, the very Alexander Murychev, deep and interesting ma- Chairman of Editorial Board, terial is presented in the Chairman of FBA EAC Coordiheading “Analytics”. nating Council, Executive Nikolay Kholodkov, Doc- Vice-President of RSPP, tor of Economics, Chief Chairman of IBC research scientist of the Centre of Economic Research at the ILA RAS, will introduce to us the trend of financialisation and consider this process in the context of the economies of Latin American countries. I am sure that the attention of interested readers will be attracted by the new heading of the magazine “History of money”, the author of which will be Vitaly Krasnikov throughout the year – a young talented analyst whose profession coincides well with his hobby. The financial system of the countries of Eurasia is represented by the Republics of Serbia, Bosnia and Herzegovina, and Uzbekistan. The topic of bank credit to major investment projects is disclosed in the material of the Chairman of the Association of Belarusian Banks, Alexander Kuchinsky, in the heading “Bank. Bank. Bank”. Modern conditions dictate the need to find new ways of cooperation, new markets and new partners. Today in the heading “Business in countries” the Republic of Korea is represented by its leading province of Gyeonggi-do. Kim Kyungjun, General Director of PBKO Holdings Corp., will talk about why Gyeonggi-do is well known, what types of cooperation the provincial administration can offer and will introduce to us examples of economic contacts between our countries. However, going deeper into difficult issues of the modern economic world order, do not forget about the beautiful. This year we continue the international contest “The world through the eyes of a photographer”. We look forward to new works and will be happy to discover new names of talented photographers for ourselves and our readers. See you again on the pages of the Herald!

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PERSONALITY

VEROLJUB DUGALIĆ:

“

THE ASSOCIATION OF SERBIAN BANKS, TOGETHER WITH ITS MEMBER BANKS, HAS ALWAYS BEEN A LEADER AND OFTEN A PIONEER OF GOOD AND PROGRESSIVE IDEAS IN THE BANKING SYSTEM.

”

PRIORITY –

DIGITAL TRANSFORMATION OF BANKS

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– Firstly, I would like to ask you a question about the banking sector of Serbia as a whole: what is the current state of affairs, what has changed in recent years, what are its perspectives and what tendencies can be observed? – The banking sector of Serbia today represents the most vital part of our economy, which is fully capable of performing the function of financial mediation, imposed by modern business conditions. There are currently 27 banks operating on the Serbian market. There is a noticeable trend of sector consolidation and very intensive activities of the banks in the field of digitalising operations, as well as other activities that contribute to the economy and society of Serbia as a whole. It is also important to point out that the banking sector of Serbia is now operating in a stable macroeconomic environment, with our country’s credit rating growing, low inflation and a projected rate of economic growth of 4%. This will simultaneously affect the creation of better working conditions for banks. – In recent years, the banking sector of Serbia has followed the global trend of consolidation. How was this reflected on the indicators of banking activity and the shareholders' income? – The banking sector of Serbia keeps improving its performance every year. At the end of last year, the capital adequacy ratio was 22.8%, the rate of return on assets was 2.1%, and the capital return rate amounted to 10.7%. These most important indicators were achieved with a significant reduction in the share of NPLs in total bank loans, which has already reached its pre-crisis level. In this sense, the stable developmental perspectives of the banking sector will enable higher profitability of the banks and, subsequently, higher satisfaction and income of shareholders who believed in the potential of the banking market of Serbia. – The Association of Serbian Banks is one of the oldest bank associations, and in 2005 it was even decided that the date of its establishment (4 December 1921) will be declared the Day of the Association of Serbian Banks. Have the goals, mission and vision of the Association changed since then? What are they now? – The ASB owes its present-day success to its famous, imposing and long history which has always announced and spearheaded the processes of improving ban-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

king operations. It is worth pointing out that this Association, established on 4 December 1921, is one of the oldest, if not the oldest bank association in Europe. It was founded by the banks that existed in the Republic of Serbia at that time – 52 banks with headquarters in Belgrade and 56 banks located outside of Belgrade. The basic task of the then established association of banks was to represent the common interests of all monetary institutions, to raise issues of general importance and common interest, to consider all the most important issues from the economic and financial field, as well as to create conditions for the improved operations of the banks. The Association of Serbian Banks has had the same task to this day – to protect the interests of the banks and help them in their operations. – How many members does the Association have at the moment? Are all banks in Serbia members of the Association?

BIOGRAPHY

Veroljub Dugalić Dr Veroljub Dugalić, who has been at the head of the Association of Serbian Banks since 2003, has made an immense contribution to the development of the Association of Banks and its organizational units, the banking sector of Serbia as a whole, as well as the international cooperation in the field of banking and finance, during the past sixteen years. This is evidenced by the highest estimates and reports by the World Bank, OECD, as well as the numerous awards and recognitions, including: European Banking Technologies Award 2005 in London, the title of “Leading European in Serbia” in the field of economy for 2010, the BACEE Charter - Banking Association for Central and Eastern Europe (Budapest) for developing and strengthening international cooperation in the field of banking in 2012, a plaque for contributing to international activities in the field of banking and finance of the Coordination Council of the Financial & Banking Association of EuroAsian Cooperation in 2018, the plaque for outstanding contribution to the international financial and banking activities of the International Banking Council (Moscow) in 2018, etc. Due to his expertise, professionalism and dedication with which he performs the function entrusted to him, Dr Dugalić has built a reputation as a respected member of the banking community, who wholeheartedly represents the interests of banks in accordance with the principles of good practice and compliance with legal regulations governing banking operations. Dr Dugalić is highly regarded in academic circles. He is a full-time professor at the Faculty of Economics, at the University of Kragujevac, where he teaches International Finance and Fundamentals of Stock Exchange Operations, while holding a course on International Economics at the postgraduate studies of the Faculty of Economics, at the University of Belgrade. In the period from 2000–2001, he was Assistant Minister of Finance in the Federal Government, and then until 2002 he was Acting Federal Minister of Finance. His successful career was marked by the positions of the President of the Board of Directors of the Belgrade Stock Exchange and DDOR Novi Sad, as well as the President of the Assembly of JUBMES Bank and the Council of the University of Kragujevac. As a professor and economist, he has also given his professional contribution to many other functions, such as: Member of the National Payments Council (2001-2002), Member of the National Council for Reform of the Banking Sector (2001-2003), Member of the National Competitiveness Council, the authorised negotiator for Serbia and Montenegro in the negotiations on succession, etc. He has published more than 200 scientific works, textbooks, monographs, articles, papers and projects. The most important among these are the books: The Market - Theoretical Concepts and Functioning, National Bank 1884-1941, Share Prices - Technical and Fundamental Analysis, History of National Currency and Fundamentals of Exchange Operations. Dr Dugalić, a passionate collector of stocks, bonds, old banknotes and coins, published a collection entitled Shares – a Mirror of Time, Traces of the Past, which contains as many as 1500 shares and bonds that were emitted in the region or were traded on the Belgrade Stock Exchange.

– Since the foundation of the Association of Serbian Banks, all the banks that operated in our country have been our members. The situation is the same today, where there are a total of 27 banks operating in Serbia and all of them are members of our Association.

– Could you tell us something about the work of the most important organisational units of the Association, such as the Bank Training Center, the ASB Credit Bureau, the ASB Bank Clearing Institution and its structural unit - the ASB Direct Debit System? Which other directions of the Association's activities would you highlight as the most important? For example – related to the work of the Association’s committees? – The Association of Serbian Banks, together with its member banks, has al-

ways been a leader and often a pioneer of good and progressive ideas in the banking system. In 1976, the Association of Serbian Banks launched the operations of the foreign exchange market, which was run by the ASB until 2002. In the Association of Serbian Banks, the money market was also launched in 1989, from which the operations of the Belgrade Stock Exchange were restored. Furthermore, the Financial Markets Association (ACI) was established in the Association of Serbian Banks, which still exists as a separate organisation. Moreover, some more recent experiences show the importance of a guild-like association for the development of banking. Thus,

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PERSONALITY

the Association of Serbian Banks established the Processing Center, which was singled out in 2005 as a separate legal entity (Chip Card) in order to be able to process foreign payment cards. In addition, the Association of Serbian Banks has a special organisational unit, the Bank Training Center, which deals with the organisation of symposia, seminars and other forms of education for bank employees. Also, the ASB traditionally developed publishing activities, and has been publishing the Bankarstvo Journal for 48 years now, which has been on the list of scientific journals of the Ministry of Education, Science and Technological Development in the category M52 (prominent national journal) since 2012. The ASB also publishes professional publications, monographs and translations of the most important books on banking and finances in English. During the many decades of its activities, the Association expanded the core of its operations and tasks to meet the needs of member banks. As part of this, the Association of Serbian Banks aims to build up the position and strengthen the reputation of the banking sector in the country and abroad. Such a commitment means an active and creative approach to all the activities of the Association in order to make better use of the quality professional resources available to this institution. The dynamic upward trend in changes in the Serbian banking sector has also set the priorities in the business orientation of the Association of Serbian Banks as the only way for it to remain a worthy business partner to the banks. Fields significant for the operation of the domestic banking industry were covered by the Association with a set of quality services that have significantly facilitated the work of banks in the last few years and accelerated their development. These include, inter alia, activities to assist the banks in risk management and harmonisation with international standards defined by the Basel Committee on Banking Supervision, the introduction of international accounting standards, the realisation of the compliance function, etc. In 2004, the Association of Serbian Banks established a special organisational unit called the ASB Credit Bureau based on the agreement signed by all banks in the Association of Serbian Banks. The ASB Credit Bureau, as an institution with national coverage for the monitoring and supervision of the credit exposure of citizens and legal entities – clients of the banks and other institutions, is ranked among the most success-

ful and most efficient in the world, with a tendency of continuous improvement and expansion of the scope of services. Its members are all of the banks, leasing companies, all mobile operators, all state funds and agencies, insurance companies and other institutions. For its Credit Bureau project, the Association of Serbian Banks was awarded the “Triumph of Technology – Financial and Banking Elite of Eurasia” award in 2017, in Moscow, by the Financial and Banking Association for Euro-Asian Cooperation and the International Banking Council. The work of the Bank Clearing Institutions is based on state-of-the-art equipment and software that guarantee the settlement of transactions in the shortest period of time, reliably and professionally. For this project the Association received a prestigious European Banking Technology Award in London, in November 2005. This project enabled the time needed for the settlement of checks of all banks in the country to be reduced from 12 days to under an hour. By engaging representatives of the banks and the Association, 14 expert committees are active within the framework of the ASB for: risk and capital management of banks; foreign operations; retail operations; financial markets development; legal operations; accounting; tax systems; compliance; digital banking; information technology; payments; education and human resources; marketing and information; security. All these activities, both past and current, are being promoted by the ASB and channelled through its governing bodies, primarily through the work of expert committees with very pronounced dynamics and agenda, especially with accelerating the implementation of technological innovations in the banking sector. The necessary prerequisite for these activities is the good and continuous cooperation with all state institutions that would benefit not only the banking sector, but above all, the economy and the citizens of our country. – How does the Association of Serbian Banks participate in the development of innovative and progressive banking services and instruments in order to modernise the banking sector of Serbia? – The moment in which the celebration of the hundredth anniversary of the founding of ASB is slowly being prepared, also marks the accelerated process of the digital transformation of banks in which this Association has several important tasks significant for the proces-

ses of digital transformation. Namely, the Association of Serbian Banks actively participates in the creation of the general conditions and an incentive regulatory framework, as well as in providing assistance and support to the banks in this process. When it comes to the general framework for creating and using the advantages of financial technologies, a special incentive is given by the state, which has declared digitalisation as one of the most important priorities. In this regard, several acts have been adopted (Information Society Development Strategy, Law on Information Security, Action Plan for Implementation of the Strategy for the Development of Information Security, Development Strategy for e-Communications, etc.) that more closely define the need of the Republic of Serbia to use the comparative advantages that the implementation of modern technology has on the economy and the population. All these activities are part of the Digital Agenda as one of the priorities of the Government of the Republic of Serbia. The Association of Serbian Banks, together with the member banks, is part of the working groups and professional bodies that define the implementation of the provisions of these strategic documents in the banking and financial sector. – The Association of Serbian Banks actively cooperates with its foreign partners: with other countries' bank associations on a bilateral and regional basis, with banking institutions at the European and international level, as well as with international financial institutions. How is this cooperation being realised, what are the most important programmes and projects within which it is being realised, and how does this reflect on the economic development of Serbia? – The Association of Serbian Banks has a highly developed international cooperation and a large number of partners with whom they cooperate on a daily basis. These relations mostly derive from the ASB’s membership in international organisations, but are often based on bilateral cooperation agreements. The key condition is always that this cooperation must benefit the member banks and indirectly the economy of our country, and the number of such projects is truly high. The ASB is a member of the European Banking Federation (EBF), the European Banking Training Network (EBTN), the Association of Banks of Central and Eastern Europe (BACEE),

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the International Co-ordination Council of Banking Association in the Eastern and Central Europe (IBC), the Interbalkan Forum of Banking Associations (IFBA), the Banking Technology and Practice Commission of the International Chamber of Commerce (ICC). The ASB works intensively with numerous foreign institutions, banking associations, banks and the International Chamber of Commerce. It should be noted that the Association of Serbian Banks was one of the initiators and active promoters of the development of financial education, in cooperation with the European Banking Federation (EBF) in Brussels. We are the coordinator of these activities for our country, which are concentrated within the framework of the European Money Week project in March each year, but are also part of our ongoing commitment to proactively work towards improving financial literacy with all our partners. One of the projects being organised for the second time this year, at the initiative of the EBF, is the European Money Quiz which is intended for students of elementary and secondary schools aged 13 to 15 years old, and which the Association of Serbian Banks organises in cooperation with the Ministry of Education, Science and Technological Development. I believe that investing in financial education should start from the earliest age and that these activities will only bring good results in the future. – Back in 2006, the Association became a member of the International Banking Council; you, as the Secretary General of the Association, are one of the Vice-Presidents of the IBC. Would you tell the readers of the “Herald” more about the results and, of course, the potentials of this cooperation? – Since this cooperation was first formalised, both the Association of Serbian Banks and myself personally, are highly dedicated to actively contributing to the IBC’s goals, as well as to creating conditions for the further improvement of its operations. So far, this cooperation has resulted in a number of concrete activities, from the establishment of good personal contacts to the closer familiarisation our banking sectors. Frequent and regular exchange of experience within the IBC helps us to see the most important trends in the banks’ operations, but also to see the possible risks that can negatively affect the operations of our members. In this regard, a number of

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

useful initiatives have been launched which will focus on creating the preconditions for stronger not only financial cooperation between the IBC member countries, but also for encouraging and improving overall economic relations. – In 2017, a meeting of the International Banking Council was held in Belgrade, since the Association is a member. Many issues have been considered, including the problems of training and retraining bank employees in the conditions of technological innovations within the activities of credit organisations, as well as the role of financial organisations and bank associations in adapting their clients to modern forms of providing banking services. Could you to express your opinion on the results of the meeting, and did you reach some decisions that are significant for the banking sector in Serbia? – The organisation of such a renowned gathering was an exceptional honour and privilege for us. Apart from discussing the issues of interest to the IBC itself, the most important part was surely attempting to answer the question of how the bank associations can respond to the challenges faced by banking sectors in the new challenging conditions. On this occasion, a collection of works was prepared that sublimated the various experiences of the members, especially regarding the role of the bank associations in the promotion of financial literacy. This collection of works was made available to all our members, which also encouraged further interest in the development of this role of the Association. The IBC members exchanged experiences in this domain, and they also had the opportunity to visit the National Bank of Serbia where they learned more about the activities undertaken by the NBS in the field of financial education and protection of financial service users. I think that it is extremely important that this topic has been launched, since this is a segment of the Association’s operations that is rapidly developing, and which complements the traditional activities of the Association of Serbian Banks, such as the Credit Bureau and the Bank Clearing Institution or assisting the banks when it comes to harmonising with regulatory requirements. – On 4 December 2006, the Association of Serbian Banks signed a Memorandum of Cooperation with the Association of Regional Banks of Russia

(Association “Russia”) in order to strengthen business relations between the Serbian banking sector and the member banks of the Association “Russia”. Every September you participate in the international banking forum in Sochi, which is organised by the Association “Russia”. What does this cooperation mean for you and what kind of activities do you perform in this regard? – That is a very important Agreement which followed as a result of extremely well developed relations between our two associations. When looking at the good political and economic relations between our countries, the need for the representatives of the banking sector to join together and support the development of economic, cultural and all other connections between our countries is logically evident. Of course, by formalising this relationship, which stemmed from long-standing friendship and close professional relations between our associations, we will additionally work on the exchange of experiences, projects of common interest, as well as the exchange of personnel – our specialists in the areas most important for the development of our member banks’ operations. There will be more frequent meetings and, of course, other institutional arrangements for which such a Memorandum of Cooperation is certainly a prerequisite. – Could you please indicate some of the events that have lately been of major importance for the Association? If we are talking about projects, what is the Association of Serbian Banks facing in the future, what are your tasks and what are your views on the development perspectives of the Association? – The Association of Serbian Banks has highly developed business activities, some of which have already been mentioned. I believe that the proven expertise of the Association will be an integral part of the process of our country’s economic development, and we will strive to respond to all future challenges in a professional and expert manner, as we did in the past. The key matter is the role of the Association in the processes of digital transformation of banks in our country, the further improvement of the payment system, the harmonisation with the EU regulations and many other tasks that ultimately aim towards longterm and sustainable growth of the banking sector in Serbia.

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FOUNDER’S PAGE. FBA EAC

V MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM

“THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” ON NOVEMBER 30, 2018 THE FIFTH MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” WAS HELD IN LOTTE HOTEL MOSCOW. 8

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The participants of the Forum traditionally discussed current economic aspects of the Eurasian integration; considered the opportunities of European suppliers and manufactories to enter the EAEU market; learned about typical challenges and features of doing business in Russia and the EAEU for European companies; talked about the legal conditions and legal protection of business entrepreneurship in Russia, taking into account the influence of the EAEU. The Forum was attended by representatives of international development institutes, financial associations and organizations, businessmen, experts in the field of finance, economic, customs, logistics and insurance markets that are members of the associations of the Eurasian Economic Union (EAEU) and the European Union. The Forum program began with a plenary session “Eurasian Economic Space — Today and Tomorrow” where Alexander Murychev – Chairman of FBA EAC Coordinating Council, Executive Vice-President of RSPP, moderated. Addressing the participants, he noted that this Forum is an anniversary one (the annual event celebrates its fifth anniversary). “We have a small but significant date. The first four forums brought together more than 800 delegates from different countries of Europe, Asia and Africa. Over these years we discussed a wide range of practical and theoretical issues but we always focus on looking for a mutually beneficial partnership in the field of financial and banking cooperation in the interests of developing the economies and businesses of our countries”. Speaking about the Forum organizers, A.Murychev added: “Today FBA EAC is a powerful, authoritative, business platform that unites over 80 members from 20 countries of the world which allows expanding the geography of participants annually and in the multi-years partnership with the Eurasian Economic Commission and the RSPP to increase the level of intellectual and professional content of the Forum”. In this regard, Alexander Shokhin, President of RSPP, noted that under the conditions of the international antiRussian sanctions regime which “will only increase for a long time”, it is possible to find common ground between mutual interests of Russia and European countries at the level of cooperation and business of the EU and the EAEU. According to him, on the part of the Russian authorities, this requires the creation of the most favorable conditions for the inflow of investments, including foreign ones.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

The head of RSPP recalled that the presidential “May Decrees – 2018” identified more than a dozen national projects that set priorities for the integrated development of the Russian economy. The head of RSPP noted that none of these national projects is dedicated specifically to the financial sector, but each area implies its participation, creates a request for the banking system to search for effective mechanisms, to develop market technologies, to concentrate resources in key areas of development. A. Shokhin told that the RSPP together with the Ministry of Finance of the Russian Federation have developed and proposed to the Government a concept for consideration which describes incentives to attract private investments, implement the national projects and create a favorable investment environment. “In particular, we are talking about creating guarantees for investors, in accordance to which regulations and fiscal conditions for the period of the investment project, its cost recovery, will not change radically, even if the regulatory pressure on the business will be reinforced. That is, a stabilization clause will be envisaged, in international practice it is called “grandfathering clause”. If we have fixed the certain conditions in the investment contract then they will be valid, even if additional legislative decisions are taken in the country, which these conditions don’t fully meet. In particular, the case is about the adoption of a federal law on the protection and promotion of capital investments”, – said Alexander Shokhin. He expected that the relevant set of measures will allow to increase the share of investments in fixed assets in Russia from the current 18-19% to 25%. In this case it will be possible to talk about the

creation of a basis for solving every possible task in the field of developing the backbone infrastructure, the social sphere, health care, education, development of export potential, ecology and etc. Then Alexander Murychev read out to participants the greeting speech of Tigran Sargsyan, the Chairman of the Board of the Eurasian Economic Commission, after which he gave the floor to Bakhytbek Baiseitov, President of FBA EAC, President of the Association of Banks of the Republic of Kazakhstan, Chairman of the Board of Directors of JSC Bank CenterCredit. According to Bakhytbek Baiseitov, FBA EAC is able to consistently achieve its objectives in the interest of its members. He recalled that the idea of creating the Association initially was to integrate the interests of entire businesscommunity (and not only financial) in the context of the “changing architecture” of the world order, searching for points of growth where it is necessary to include joint recourses, financial technologies, etc. He told about the formation of the international financial center “Astana”, and also noted that today the economy of the Republic of Kazakhstan is focused on the global inter-state project of the new “Silk Road”. Anatoly Aksakov, Chairman of the Committee on financial market of the State Duma of Russian Federation, Chairman of the Board of the Association “Russia”, noted the very close interaction of the ABR and FBA EAC. According to him, this cooperation at the level of nongovernmental contracts under the conditions of political and economic instability acquires particular value. “In the context of today’s sanctions we have to act according to the principle – barking at a knot”, – said the deputy.

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FOUNDER’S PAGE. FBA EAC

Waldemar Herdt and Ives Pozzo di Borgo

He informed about an active phase of preparation of the Project Finance Factory of VEB. “At the end of this year we will amend the law on Vnesheconombank allowing to accelerate the process”, – Anatoly Aksakov said. He also provided assessment of the prospects of the program “Digital economy”, and referring to the

researches of McKinsey Institute he pointed out that the implementation of the “road map” within this project will bring additional 10 trillion Rubles to the Russian economy. “A whole range of laws is being prepared in this sphere. Our committee alone is working on three draft laws, while there are 50 of them. The whole document flow will become digital, a lot of services will become available in digital form. But all this demands conjunction in the framework of the EAEU and the EU, – the head of financial committee continued. The next speaker Ives Pozzo di Borgo, Former President of the Parliamentary Friendship Group with Central Asia in the Senate of France, in his speech assured the participants that European business in general doesn’t have any hostile sentiments for Russia. He said that in

2016 when he was a senator he initiated the relief of the sanctions. And this resolution was supported by 301 voices “for” and only 16 voices were “against”. However, later this document wasn’t approved by the European Council. Frank Schauff, CEO of the Association of European Businesses stressed that economic integration is advantageous for all parties, both for Europe and Asia. He said that business in Europe is likely to focus on the models of integration and better relations with Russia. He also agreed that now there are additional opportunities for interaction with Russia within the EAEU. At the same time Frank Schauff underlined the importance of such step as a new Customs Code in Eurasian area with single tariffs for all countries, harmonized customs procedures and new technologies in the sphere. Waldemar Herdt, Bundestag Deputy, party Alternative for Germany was quite positive about the future of economic integration with Russia. He quoted a German proverb saying that “A pessimist is the only black earth where nothing grows”. “A policy which hinders business is a bad policy” – he stated. According to Waldemar Herdt, food, economic and ecologic security is a strategic issue for every state in our changing world. “We need new patterns of interstate cooperation. American influence on Europe and Asia is gradually decreasing. And a kind of vacuum appears which could be filled by European businessmen. In fact Germany still depends on its overseas partner, and this doesn’t al-

low us to reach the full range of cooperation with Eastern countries. But today in our country a young movement is growing with pragmatic views, primed to Eastern cooperation. These people understand that the future of the EU depends on how we build this Eastern bridge. It’s a unique chance, and European businessmen are not going to miss it. And all this sanction hysteria has only one aim – to stave off economic European and Eastern block with its huge potential”, – said Waldemar Herdt. He also appealed to be more active in building interstate ties at the level of small and medium business. “It is always easier to screw up a big project than thousands of links between small enterprises, which make 60% of German economy”, – concluded the German Deputy. After the plenary session there was a short formal ceremony where Bakhytbek Baiseitov together with Alexander Murychev presented diplomas to FBA EAC new members – head of Mongolian Bankers Association, head of CCECRR and to the company “Antares Trading”. FBA EAC also signed the agreement on cooperation with the National Committee of the development of economic cooperation with Latin American countries (CN CEPLA). After that the participants of the Forum continued discussions in breakout sessions: “Gold-mining – new opportunities and technologies” ”Production, storage and processing of agricultural products” “Customs and logistics — "alpha" and "omega" of foreign trade”

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«GOLD-MINING – NEW OPPORTUNITIES AND TECHNOLOGIES » BREAKOUT SESSION V MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” 2018

Industrial engineering in gold-mining is rather conservative to a certain extent, and usually uses practices proven through years. However the latest achievements in the analysis of the mineral composition of deposits, ultrafine and cluster forms, as well as the development of the theory of ore formation allow to start new technologies of mining of gold, platina and other precious metals in industrial-scale volumes. The main aim is to ensure high profitability of the new factories abiding by high ecological standards. The participants of the session “Goldmining – new opportunities and technologies” were aiming to ensure interaction of science and new technologies with producers and finance. The moderators of the session were Igor Sinchyrin Head of Department of industrial and innovative technologies of RASPP, and Andrea Boldi – President of AREZZO FIERE E CONGRESSI SRL(Italy). Andrea Boldi – President of AREZZO FIERE E CONGRESSI SRL in his speech provided analysis of the goldmining sector in general and spoke about the main focuses of its development. In particular he pointed out the importance of interconnected production chains on the whole Eurasian territory. He said that it is necessary to build the process gradually, from gold-mining in the Far East of Russia to the jewelry production at the factories in Uzbekistan and in Italy with further sales in all Eurasian countries. Andrea Boldi expressed confidence in wide opportuni-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

ties for the cooperation between European and Eurasian businesses and stressed the huge potential of FBA EAC in the matter. The session started with the speech of Igor Finogenov, President of the com-

pany “Polymetall”. He said that the company demonstrated sustainable production and financial results at all enterprises. The company increases production and free capital to buy new assets and introduce new technologies.

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FOUNDER’S PAGE. FBA EAC

It is interesting that in all other presentations the speakers proved that the value of assets can rise considerably due to new approaches both in the theory of ore formation and the technologies of recovery of finely-dispersed and cluster gold. Valeriy Kryachko, Head scientist researcher of IGEM RAS (Russia) provided theoretical underpinning for ore formation and for the formation of platina and gold deposits. The subterranean processes with their high temperatures and pressure, provide for high-volatile forms of gold, platina, palladium and other elements in compound with halogens – chlorine and fluorine. Later it was evidenced that the Krasnogorsk solid mass has a unique chromatographic column, which shows the structure of precious metals with regards to their high-volatility. This explains that the most part of noble metals is contained in finely-dispersed and cluster gold. The problem of recovery of finelydispersed and cluster gold was also discussed in the speach of Viktor Nenakhov, the Dean of Geological Faculty in the Voronezh State University. He informed about the existing cluster forms and the history of their recovery as well as about the methods of research and extraction. Basing on the new disintegrational processes of ore material (piping

effect, eddying streams, electromagnetic effect) two major methods can be defined. The first one is self-assembly, the so called “Matvienko effect” which allowed to get a concentrate with highgrade vein of gold (more than 400 grams per ton) after the disintegration in a special concentrator. The second method implies using the piping effect (or cavitation) to recover cluster gold with two processes – disintegration and cyanidation –carried out simultaneously. Practical work in the analysis of selfassembly of Nano-dispersed forms of platina were covered in the report of Ekaterina Nenakhova, Principal geologist in GEO Citrin Ltd. (Russia). As a result of work it was revealed that the technology of self-assembly allows to transfer Nano-dispersed platina into the analytically trackable form with the possibility to observe it on standard optical instruments. The issues of control system for the turnover of precious metals and the problems of trust in the quality of precious metals and jewelry produced in Russia were presented in the speech of Alexander Tikhomirov, Head of Bullion Market Association (Russia). The basis of the control of precious metal is an individual electronic mark-up code with relevant crypto defense. The system allows any customer to trace the history

of the metal or a jewelry item as well as its quality. The representative of “Yaruna” Ltd. (Russia) Sergey Krayushkin informed the participants of the session about the specialties of gold-mining in Buryatia and behind the Baikal Region, about placer mines and ecological problems of the production. It was noted that “Yaruna” Ltd. has relevant specialists and technical personnel for expert assessment of a gold deposit and gold extraction. The session ended up with the presentation of Yuriy Tarasov, General Director “ECO TransMissia” Ltd. who spoke about an innovative method of exploration with micro-lepton diagnostics. The method is based on the fundamental fact that all physical objects, just like an electric and magnetic field, have their own micro-lepton fields, arising from the interaction of fine elementary particles – micro-leptons. At the end the participants confirmed the importance and timeliness of the issues discussed at the session, as well as the level of the discussion with speakers and their opponents being real experts in gold-mining and gold-processing, financial experts, sectoral specialists. The participants exchanged contacts and expressed their intentions to continue the work of the session next year.

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PRODUCTION, STORAGE AND PROCESSING OF AGRICULTURAL PRODUCTS BREAKOUT SESSION V MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” 2018 Providing the population with food is one of the important challenges facing the state and agricultural producers. The magnitude and importance of this task in the opening statement was highlighted by General Director of “Mashinoexpert”, Vladimir Makarov – moderator of the session. He underlined that those achievements in the domestic agribusiness industry which we have been observing in recent time, pale in comparison with those tasks that we have to solve in the near future. The work of the section was opened by Boris Babakin, Professor of the Moscow State University of Food Production. The main topic of the report was the development, production and introduction of refrigeration technology using electrophysical methods. Modern technology of Refrigeration is one of the main consumers of high-potential energy. The share of the refrigeration industry accounts for about 18% of global electricity consumption. The International Institute of Refrigeration has set the task of reducing the energy consumption of refrigeration systems by 30–50% by 2020. One of the most effective methods in developing of energy-saving refrigeration equipment and technology is the use of electrophysical methods, based on using gas discharge processes – electro convection, corona, barrier and capacitive discharges and low temperature unbalanced plasma.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

The technology of freeze-drying (vacuum drying under refrigeration) consuming a significant amount of refrigeration in food production was outlined by Alexey Antipov, Academician of the International Academy of Refrigeration. Food products of high quality with an extended storage period could be produced on basis of freeze-drying. Astronauts, military men, sportsmen, climbers and people of other professions are consumer of freeze-dried products. New types of products such as sublimated tea, honey, meat snacks,

are emerging. For demonstration and tasting, the speaker presented meat snacks from various meats which raised a lively interest amongst participants of the Forum. The development of the domestic agribusiness industry on the basis of support of farm business was proposed by Oleg Zhurba, Deputy Director of a nonprofit organization Fund Proindustry. Currently the main volume of food products in Russia is produced by large agriculture holdings. World practice shows that the share of farms in food

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FOUNDER’S PAGE. FBA EAC

production has to be about 60%. Farms are more resilient, could quickly rebuild to produce another type of products, with less cost and provide employment to the population. Also in his speech was described the structure of the farm and its technological equipment. Valentin Karamzin, Professor, General Director of Agromash LLC, devoted his speech to the development of baby food production and introduced the concept of the program “Development of innovative technologies and equipment for the production of baby food”. He noted that on the domestic market foreign producers dominate. Products of foreign production cause complaints and doesn’t comply with the national security policy. The purpose of the concept is the achievement of a number of state policy objectives in the field of

healthy nutrition of children. The implementation and replication of the created standard technical and technological solutions, taking into account the objectives of import substitution, will expand the assortment and production volume of baby food for all age groups as well as for pregnant and lactating mothers. It was also noted that the production of baby food is beneficial and the approximate pay-bank period of a standard factory for the production of baby food is four years. The development of the biotechnology industry was noted in the speech of Tatyana Vasilyeva, General Director of "Digital Technologies of Eurasia" LLC. The development of a new highperformance, environmentally friendly and commercially profitable resource-producing technology for the

processing of waste, including agricultural waste, wood waste and waste from the petrochemical, metallurgical and mining industries. The creation of a new industry opens a way to a stable future of cheap renewable fuels, animal feed, building materials, fertilizer and other products. Patrick Hoffmann, CEO,”Otrada Farms” Ltd, in his report, uncovered the modern opportunities of genetics and the problems of controlling sustainable food supply. This issue is directly related to the program of national security and the development of the concept of the health food industry. At the conclusion of the session, the participants thanked the speakers and exchanged contacts for more information with a view to further mutually beneficial cooperation.

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“CUSTOMS AND LOGISTICS – "ALPHA" AND "OMEGA" OF FOREIGN TRADE” BREAKOUT SESSION V MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM “THE EURASIAN ECONOMIC UNION AND THE EU: SEARCH FOR NEW FORMATS OF COOPERATION” 2018 The cornerstone of the success in any sector is the correct assessment of the imperatives of the time, and the main thing is a prompt response to the challenges of the time. Customs is no exception. This session focused on the problems of customs and custom logistics. The main topics were: customs logistics – improvement of management mechanism for export-import commodity flows; information technologies – the key element of effectiveness of logistic systems in customs; institute of customs audit – key element of better quality, facilitation and harmonization of customs administration; “Green sector” – backbone of risk management. The session was attended by representatives from six countries: Russia, Bulgaria, Turkey, Romania, Latvia and Madagascar. Besides the representatives of business, audit companies and legal & logistics companies the session was attended by independent press and officials: Anastasia Vyatkina, Head of preventive control in the Federal Customs Service of Russia and Irina Kirillova, Deputy Head of interaction with lawenforcement and control bodies of FCS of Russia. Vladimir Obydenov – President of group holding “ANTARES” opened the session. Being a moderator he welcomed the participants and in his brief speech he stressed the hot topic of the session and the priority of the issues on the agenda.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

After that Sergey Fedorov, the Chairman of the Riga Chamber of Commerce and Industry presented his speech ”International trade and settlement system in the context of the development of the “Big Eurasian Partnership" initiative and "The Belt and Road Initiative" (One Belt One Road). Philippe Delmotte, founder and CEO of POD CONSULTING FFF reported on “Financing and management of the devaluation risks of importers in Russia”. Aleksey Neronov, Project Manager of Biforium Ltd. (Russia) from SaintPetersburg spoke about the “Role of

logistics in the current business processes”. Olga Alexeeva, Head of Clients Department of “Multiservices payment system” Ltd. was one of the first who raised the question of customs audit. She presented the payment system “ROUND” – an operator of customs payments and a nationally important payment system, a system integrator which offers the foreign trade operators different services, for example the possibility for legal entities and individuals to pay customs fees at the moment of applying the customs documents to the customs bodies,

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FOUNDER’S PAGE. FBA EAC

thus avoiding advanced payments, excess payments, remaining balance. This system is also applicable for reporting and document exchange with state bodies. Additionally the service can be used to verify the potential contractors and for online cargo insurance. The next speaker was Inna Yelisanova, Senior lawyer of St. Petersburg branch of “DLA Piper Rus Limited”. She presented the report “Customs audit as a multifunctional mechanism of control of goods after their release” and demonstrated the presentation on the mythology of the automation processes of customs audit. The presentation was distinctive because the author’s technology of customs audit is widely used today in practice, while the idea of “customs audit” is simply missing in the Customs Code of the EAEU. At the same time the World Trade Organization (WTO) started to practice customs audit 20 years ago. Four of the five EAEU member-states – Russia, Belarus, Armenia and Kazakhstan are parties to the International Convention on the Simplification and Harmonization of Customs procedures (Kyoto Convention) and according to the Article 12 of the Convention“… agree to the obligation of the General Application”. Its text as amended by the Protocol of June 26, 1999 says that “The systems of customs control include the control with audit methods” (Standard 6.6.). Customs audit implies either direct involvement of customs administration in the check of foreign trade operators with regards to the requirements of customs legislation, or the access to the final audit report for an accredited audit organization. In case of successful audit the control body receives the confirmation of financial stability of a foreign trade operator. The level of trust at the categorizing stage becomes the reason to remove risks profiles for such subjects at the declaration stage. A faithful foreign trade operator gets to the “green corridor” and receives a number of simplifications from the customs service. The most important simplification is the Fast Track. Thus the customs audit allows to remove risks from the after-release verification, while the lack of the basic instrument of a reliable state control in the EAEU legislation reduces the speed of the development of the “green corridor” and hinders its work. According to A.Vyatkina, such work is already going on, and the FCS has decided to include the “customs audit” into the Strategy of the development of Customs Service of Russia up to 2030 – Yelisanova confirmed.

I. Kirillova added that a work group is going to meet by the end of 2018 to discuss the effectiveness of customs control after the goods release using the methods of customs audit. (FCS Order dd. 21.11.2014 № 2275 with regards to FCS Order dd. 11.05.2017 № 769). The procedure of customs audit automatization, worked out by I. Yelisanova will be studied in a work group. In case of a successful experience of using these audit reports by customs control (FCS Order dd. 14.10.2015 № 2053), the program will become a standardized product providing transparent criteria of verification for all interested parties. Vyacheslav Nevskiy, deputy General Director of “Assistant” CJSC informed

about his experience as a representative of audit organization at the first stage of FCS experiment. He said that audit verification proved to be effective. For example a foreign trade operator with a status of authorized economic operator, was denied an audit report due to the breaches of customs legislation. Earlier these breaches were not noticed by the Customs Service when giving him the low-risk status. Nevskiy also underlined the necessity of the soonest introduction into the customs legislation of the definition “customs audit” and a list of all simplifications for the foreign trade operators who have passed the verification at the second stage of the experiment.

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The representatives of FCS additionally confirmed the importance of the “green corridor” as a backbone for most areas of customs regulation. It’s worth mentioning that today the notion of “Customs audit” is often replaces by “Customs compliance” – a selfverification of a foreign trade operator to reveal possible breaches of the customs legislation to be cleared on their own as well as to optimize internal accounting in a company. Arina Makarova, lawyer of “SALUS” (Russia) in her report “Customs audit as part of business defense” stated that the results of self-verification are important in case of contestation of the adjustment of customs value in court. The report of

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

independent qualified experts provides for the opportunity of pre-trial settlements, therefore a foreign trade participant can secure his reputation and avoid excess loses. The advantage of the customs audit over the customs compliance is that the reports allow a customs body not to waste resources and not to itemize cases about audit. And the main difference between customs audit and customs control in Russia is in the categorizing of the foreign trade operators with the use of RMS and prior notification aimed to point to the mistakes of foreign trade operators. The customs audit allows to create a system where it is worthy to comply with the law. Alexander Bogatyrev, Expert of

"Metallservice" JSC (Russia) shared the problems of authorized economic operators. He believes that the criteria for the “green corridor” need to be improved. Since the unfair foreign trade operators, creeping in the filter discredit all authorized economic operators. А. Bogatyrev underlined the necessity to relive of responsibility of the final control inspector. He doesn’t have the capacity to inspect all cargos, to check documents for false data, let alone to reveal “sketchy schemes”, since a customs servant can’t be an expert in all supply chains. The participants of the session displayed a keen interest in the issues discussed, exchanged contacts and were satisfied with effective discussion.

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Russian Union of Industrialists and Entrepreneurs

FINANCIAL & BANKING ASSOCIATION OF EURO-ASIAN COOPERATION

EURASIAN ECONOMIC COMMISSION

VI MO SC OW INTER NAT I ONAL FI NANCIA L A ND ECO NO M I C

FORUM THE EURASIAN ECONOMIC UNION&THE EU:

2019

NOVEMBER SEARCH FOR NEW FORMATS OF COOPERATION +7 495 663-02-08/13/19 sgk@fbacs.com, s.arkhipova.fbacs@mail.ru, tkd@fbacs.com www.fbacs.com

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Award

AWARD

“FINANCIAL AND BANKING ELITE OF EURASIA” THE ANNUAL OFFICIAL CEREMONY OF THE INTERNATIONAL PUBLIC AWARD “FINANCIAL AND BANKING ELITE OF EURASIA” WAS HELD ON NOVEMBER 30, 2018 IN THE “CRYSTAL” HALL OF LOTTE HOTEL MOSCOW. THE CEREMONY WAS ATTENDED BY REPRESENTATIVES OF BUSINESS, POLITICAL AND CULTURAL CIRCLES, NATIONAL GOVERNMENTS AND BANKS, HEADS OF TRADE UNIONS AND ASSOCIATIONS, LEADING MASS MEDIA OF THE COUNTRIES OF EURASIA.

The “Financial and Banking Elite of Eurasia” is a relatively new award in the sector of economy and finance (awarded for the second time). It was established by Financial and Banking Association of Euro-Asian Cooperation (FBA EAC) together with International Banking Council (IBC). The winners of the competition receive exclusive designer statuettes with a bee on it – a symbol of hard work, thrift, zeal, unity, prudence, inspiration and wealth. The statuettes were designed by a professional Moscow artist, a winner of international competitions Mila Zakatova and made of bronze, silver and gold. The evening was opened by the Moscow chamber orchestra “Vremena goda” headed by the Honored Artist of Russia Vladislav Bulakhov. In the concert starred: leading opera singer of the State Academic Bolshoi Theater Ruslana Koval, “Opera Project”: Denis Boldov – leading opera singer of Stanislavsky and Nemirovich-Danchenko Moscow Music Theatre, Petr Melentyev– leading opera singer of the State Academic Bolshoi Theater, Kirill Zolochevskiy – leading opera singer of The Kolobov Novaya Opera Theater of Moscow, ballet dancers of Stanislavsky and Nemirovich-Danchenko Moscow Music Theatre – Natalia Somova and Georgi Smilevski, show ballet “Ideal”, Moscow Cossack Choir and others. The ceremony was accompanied by the orchestra of People's artist of Russia Levon Oganezov “Wonderful Life”. Master of the ceremony was a film and theater actor, a movie

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

director, a script writer and a film producer Andrey Ankudinov. Speakers of the official part of the ceremony were Bakhytbek Baiseitov, President of FBA EAC, President of the Association of Banks of the Republic of Kazakhstan; Anatoliy Tkachuk, FBA EAC Vice-President, Chairman of the Board of Directors of “Russian Mineral Resources”, RSPP Board member ; Alexander Murychev, Chairman of IBC, Chairman of FBA EAC Coordinating Council, Executive Vice-President of RSPP; Oleg Berezovoy, FBA EAC General Director, RSPP Board member; Ives Pozzo di Borgo, Former President of Parliamentary Friendship Group with Central Asia in the Senate; Frank Schauff, General Director of the Association of European Businesses; István Lengyel, Secretary General of Banking Association for Central and Eastern Europe (BACEE) and others. In the nomination “Banker of the year” The Bronze bee was given to Ashot Osipyan, Chairman of the Board of Araratbank (Armenia) The Silver bee went to Viktor Budarin, Chairman of the Supervisory Board of the bank Kuban Credit (Russia) The Golden bee was rewarded to Bakhytbek Baiseitov, Chairman of the Board of Directors of the bank CentrCredit (Kazakhstan)

In the nomination “Standard of stability” The Bronze bee was awarded to Hkamkorbank (Uzbekistan) The Silver prize went to the Mongolian Trade and Development Bank (Mongolia) The Golden bee was passed to the Bank Intesa (Italy) In the nomination “Triumph of technology” The Bronze bee was awarded to Paritetbank (Belarus) The Silver bee was given to Inecobank (Armenia) The Golden bee was awarded to “Cyberplat” Ltd. (Russia)

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Award

The fifth anniversary of Financial and Banking Association of Euro-Asian Cooperation The award ceremony for leaders and members of the Association FBA EAC awards dedicated to the fifth anniversary of the Association were presented to its management and members. Diplomas “For the great contribution to the international cooperation” were received by:

Oleg Preksin – Vice-President and Member of the Board of ARB, Andrea Boldi –President of Arezzo Fiere e Congressi SRL (Italy), Evgeniy Bazhov – Head of FBA EAC Representative office in China. Badge of honor of FBA EAC “For high professionalism and personal contribution to the organization of financial and banking business on the territory of Eurasia” was presented to: Oleg Chernyshev – Head of FBA EAC Representative office in the Central Fed-

eral District of Russia, Marat Sagalevych – FBA EAC Deputy General Director, Ives Pozzo di Borgo – Former President of Parliamentary Friendship Group with Central Asia in the Senate of France, Vladimir Kotenev – Partner of Ecovis (Germany), Anatoliy Tkachuk – Vice-President of FBA EAC, Chairman of the Board of Directors of “Russian mineral resources”.

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The highest degree of honor – FBA EAC order “For the long-term activity and special contribution to the organization of effective business, increase of economic potential of financial and banking sector of the economies of Eurasia” was conferred to: Alexander Murychev – Vice-President of RSPP, Timur Zhaksylykov –Member of the Board – Minister in charge of Economy

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and Financial Policy of EEC. Besides the awards the FBA EAC management received paintings of the famous Chinese artist Wang Jiu Bin, which were presented by Evgeniy Bazhov, the Head of FBA EAC Representative office in China. “The world through the eyes of a photographer” Results of the photo contest

The event also included digital voting of a “people’s jury” which selected the winners of international amateur competition “The world through the eyes of a photographer” announced by the editorial board of the “Eurasian financial and economic Herald” in 2018. For more, you could read in the heading “Photo contest”. The event ended up late with a bright dancing program.

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RSPP news

RUSSIAN UNION OF INDUSTRIALISTS AND ENTREPRENEURS: CHAIR IN THE EAEU BUSINESS COUNCIL IN 2018 THE RUSSIAN FEDERATION TOOK THE CHAIR IN THE MANAGEMENT BODIES OF THE EURASIAN ECONOMIC UNION. IN THE SAME PERIOD THE RUSSIAN UNION OF INDUSTRIALISTS AND ENTREPRENEURS WAS IN THE CHAIR OF THE PRESIDIUM OF THE EAEU BUSINESS COUNCIL.

Today the global economy is transforming, the world order is changing and it has considerable influence on the integration in EAEU and encourages to meet the challenges which not only adjust goals and shift priorities of integration, but also lead to the slowdown of integration process. The number of unsolved questions grow including the separation and coordination of the national and supra-national authorities. There is dissatisfaction from unjustified expectations, lack of integration which is largely connected with economic situation in the countries of the Union. Analytics estimate that the Eurasian integration falls behind by 1.5–2 years from the terms set in the Treaty of the Eurasian Economic Union. However some integration results are worth mentioning: The Customs Code of the EAEU has come into force; Common market of services and labor functions; Common market of medical drugs and medical products has been launched;

The work on barriers removal on the internal markets of the Union has been organized; Trade and economic cooperation between the Union and third countries has been enhanced; The presidents of the countries of the Union support the development trend towards digital economy and digital agenda of the EAEU; The remaining tariff and non-tariff barriers have been reduced, the migration of the citizens within the Union and working opportunities have been simplified. The Presidium of the EAEU Business Council got involved into the work on the hottest issues of the Eurasian integration right from the first meeting in Minsk on 26 November, 2015. The Business Council has gone through important structural changes in the last three years: introduction of a position of the President of the Business Council, the establishment of a Committee on trade and economic relations with China and other priority trade partners, the establishment of a Com-

mittee on digital agenda of the EAEU. The National Congress of Industrialists and Entrepreneurs of Moldova has gained the observer status in the Business Council. No doubt that the results of the Business Council can be achieved only through active interaction with the Eurasian Economic Commission. The representatives of business regularly participate in the work of almost all Consultative committees of the EEC Board according to the responsibilities of certain ministers of the Commission. The platform of the Consultative Council on cooperation with the EEC and the EAEU Business Council has been resumed. There are consultative bodies of the Commission with business structures as members: a Working group on the main focus areas of integration under the Consultative Council and a Business Dialogue with entrepreneurial society of the EAEU memberstates. There are also joint events, polls and analytical researches. Members of the Board of EEC always participate in the meetings of the Presidium of Business Council.

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One example of the influence and effective cooperation between the business communities from five states and the Eurasian Economic Commission is the work on the EAEU Customs Code, when more than 70% of the proposals and ideas coming from business were incorporated into the document. It is important to guide business to the development and support of confidence in the relations of the EAEU market players, for example through broader economic relations and cooperation between enterprises and companies of the EAEU member-states. Offices of RSPP in boundary regions have gained large experience of networking with neighboring districts of the Union states. It is likely to have positive impact on the future profound inter-regional and cross-border cooperation, closer interaction of member-states at the regional level. And there is no doubt that EAEU success is impossible without mutually advantageous work with other countries and other regional integration unions and business circles of foreign countries. The ninth meeting of the Presidium of the EAEU Business Council was held on 8 February, 2018 within the Russian Business Week. The meeting involved: the Chairman of the Presidium of the EAEU Business Council, the President of RSPP A. Shokhin, members of the Presidium А. Kharlap (Belarus), J. Sagynbaev (Kyrgyzstan), V. Khristenko – President of Business Council, authorized representatives of the Coordinators of parties to the Business Council E. Kirakosyan (Armenia), А. Panasyuk (Belarus), D. Zhunusova (Kazakhstan), Sh. Boronchiev (Kyrgyzstan), А. Murychev (Russia), the delegations of all parties to the Business Council, and also V. Tarlev – Head of the union-supervisor under the Business Council from Moldova. The Eurasian Economic Commission was represented by the members of the Board (Ministers) of EEC T. Valovaya, T. Zhaksylykov, V.Koreshkov, V.Nikishina and a large group of directors and experts from different departments. The meeting also saw representatives of large business associations: Chamber of Commerce and Industry of the Russian Federation, «Business Russia», «Opora Russia». A large delegation of foreign business associations represented the International Congress of Industrialists and Entrepreneurs. The meeting also involved the heads and members of the committees of the

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EAEU Business Council, Integration Council of RSPP of cooperation with EEC, committees and commissions of RSPP. The President of RSPP reported on the future development of Eurasian integration with regards to the goals and tasks of the Russian chairmanship in the EAEU bodies and in the Presidium of the Business Council in 2018. The meeting focused on the turnover of goods non-conforming with technical requirements of the EAEU on the territory of Union, as well as on revealing such technical regulations which hinder business activity. This part of agenda was prepared by RSPP Committee on Technical Regulation, Standardization and Conformity Assessment. Considering the priority of the problem the Committee discussed these questions before the meeting of the Presidium – at the Forum “Technical regulation as an instrument of Eurasian integration» within the Russian Business Week. The final position of the Forum was discussed by the meeting of the Presidium. The Forum underlined the importance and necessity to the soonest adoption of the revised version of the Typical schemes of conformity assessment in the EAEU to common order and rules of conformity assessment. This will make the process transparent and open and in its turn will limit the activity of unfair

economic entities which issue conformity certificates and declarations without tests and with violation of procedures. It was suggested to root out the practice when certification bodies only register conformity declarations and do not carry out the certification activity itself. It was also decided to revise the criteria and terms under which the conformity assessment bodies are listed to the Single Register of the Union. Obviously less falsification will ensure fair competitiveness, increase the load of production facilities and labor production, create new workplaces, increase tax incomes to the budgets and reduce harm to the health and property due to fake products. Recently the Consultative Committee of EEC for Sanitary, Phytosanitary and Veterinary Measures established a SubCommittee to coordinate state control (supervision) of the requirements of technical regulations of EAEU. As a result of the aforementioned discussions the Presidium of the EAEU Business Council initiated broader functions and staff of this Sub-Committee, which would work out and implement the measures to protect the EAEU market from dangerous and defective products; the work on amendments to the relevant parts of the Treaty on the EAEU; asked the EEC to work on the procedure of notification of the conformity assessment bodies accredited in national systems.

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RSPP news

The Presidium addressed the members of the Council of EEC to introduce mechanisms which would provide for valid assessment procedures; create common approaches to responsibility for violations of technical requirements of the EAEU and conformity assessment; amendments to relevant parts of the Treaty of the EAEU. The tenth meeting of the Presidium of the EAEU Business Council was held in Sochi on 27th September, 2018. The event was organized together with the meeting of Coordination Council of RSPP branches in the Sothern Federal District (SFD). A. Shokhin, the Chairman of the Presidium of EAEU Business Council and the President of RSPP moderated the meeting. The meeting saw the members of the Presidium, their authorized representatives and delegations from all parties to

the Business Council, directors and experts of the Eurasian Economic Commission including Members of the Board (Ministers) А. Subbotin (industry and agriculture), V. Nazarenko (technical regulation) and E. Kaikiev (energy and infrastructure). The meeting also involved executive vice-presidents of RSPP А. Murychev and V. Cherepov, managers of RSPP regional offices in the SFD, representatives of the Presidential Envoy to SFD, representatives of ASI, business and scientific and educational society of the District. The meeting covered important issues of the Eurasian integration, the work of the Eurasian Economic Union, the business conditions on the territory of the EAEU. In particular the following topics were discussed: Sectoral cooperation within the Agreement on trade and economic

cooperation between the EAEU and China; Harmonized position of the EAEU business regarding labeling of goods and their identification, traceability of goods and digital transport corridors to ensure legal turnover of goods on the inner market of the EAEU. Among other issues were: Support to the producers of the EAEU member-states to extend export (with regards to the existing supporting programs in the EAEU); Harmonization of the approaches of the executive bodies in the EAEU member-states to the barriers removal on the common food market; Transit problems in the EAEU and their solutions; Methods of unification of national qualification in the EAEU memberstates.

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Opening the discussion on this issue А.Murychev pointed out that with faster migration on the labor market it becomes necessary to arrange the recognition of qualifications of the workers so RSPP offers to start joint work on the unification of requirements to the trainings and assessment of labor forces in the EAEU member-states. Within this cooperation it is suggested to conduct the analysis of the qualification market and the existing regulatory requirements, to work out the method of gradual unification of the requirements to workers in the EAEU, to equal the frames of qualification and carry out the programs of mutual recognition of qualifications. RSPP is ready to undertake organization and methodology to consolidate all suggestions and to interact with the EEC on the topic. The meeting approved the candidates (nominated by the members of Presidium) to be rewarded with the Badge of Honor of the EAEU Business Council. The winners of the award were members of the Bureau of RSPP Board: А. Mordashov, Chairman of the Board of Directors of PAO “Severstal” and D.Pumpyanskiy, Chairman of the Board of Directors of PAO “TMK”, as well as P. Isaev, Deputy General Director of PAO “Severstal” on the relations with business associations and unions, executive secretary of the RSPP Committee on integration, trade and customs policy and WTO. The meeting organizers were the Committee of the EAEU Business Council on trade and economic relations with China and other priority trade partners, Committee of the EAEU Business Council on digital agenda, as well as members of Integration Council of RSPP on the interaction with EEC. V. Budarin, the Vice-President of RSPP, Co-Chairman of the Coordination Council of RSPP branches in SFD, President of Association of employers in the Krasnodar Region opened the meeting of the Coordination Council of RSPP branches in SFD. After that the RSPP Vice-President, Co-Chairman of Coordination Council of RSPP branches in SFD P. Lebedev, head of construction of Krasnodar regional branch of RSPP I. Golovkin and Chairman of Sevastopol Union of industrialists and entrepreneurs V. Gorbatov spoke about the construction sector of SFD with regards to the Law on participation in the shared construction. The participants agreed to propose the key

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problems here for consideration of the Bureau of RSPP Board. A. Leibovich, General Director of ANO “National agency on qualifications development” reported about regional and international aspects of development of the National qualification system (NQS) in Russia. He particularly focused on the governmental support to those employers who introduce NQS at their enterprises. Participants from Krasnodar and Rostov shared their experience of NQS implementation. The Rostov Region was on the list of pilot projects of NQS implementation in 2016, the Krasnodar Region – in 2017. Another key issue for discussion was the work of Arbitration center under RSPP on the territory of SFD. On 24th September the President of RSPP signed a regulation to establish the Southern branch of Arbitration center which was supposed to cooperate closely with regional branches of RSPP. Vice-President of RSPP А.Varvarin informed the meeting about the results and plans of the Center for the future. The meeting of Consultative Council of cooperation with the EEC and the EAEU Business Council was held on 14 December, 2018 in Moscow, and became a kind of consummation of the Russian Chair in the EAEU Business Council. The Consultative Council pointed out that during the Russia’s Chair important issues and problems of integration were in the focus. The Eurasian Economic Commission takes into account the most reasonable and constructive proposals of business. For example the proposals to amend the EAEU antitrust legislation were included into the proposals of the antitrust block of Commission, and later at the end of 2017 these idea were included into the meeting of Integration Council of RSPP on cooperation with EEC attended by the Director of antitrust regulation of the EEC A. Sushkevich and Deputy Chairman of FAS of Russia A. Tsyganov. The discussion covered additional procedures of the so called “soft” law: a mechanism of prevention and clarification, a mechanism of consultation as a form of outof-court settlements, a mechanism of relief of liability in case of voluntary confession and termination. After the meeting the proposals were refined and passed on to EEC. The second issue on the agenda of the Consultative Council was the Main lines and stages of harmonized transport policy of the EAEU member-states in 2018–2020. Great attention is paid to the

transit potential, and one of the important parts of this work is the creation of legal base, launch of programs to develop transit and multi-modal transportation of passengers and freight. In RSPP the same issues were discussed at the extended meeting of the Integration Council on cooperation with EEC. After the meeting a relevant workgroup was created. As a result of its work the EEC received proposals to improve the EAEU customs legislation for multimodal transportation and to simplify customs transportation. The proposals also included the amendments to the Russian transport legislation. It appears right if the approaches worked out in Russia would be implemented in other EAEU memberstates and EEC to form a common ideology of regulation of multi-modal transportation. The agenda of the meeting also included common food market and the mechanism of competence recognition of the conformity assessment bodies. These issues were initiated earlier at the meeting of the Presidium of EAEU Business Council on 27th September, 2018. The Consultative Council decided to study, refine and discuss the Code of fair practices in the interrelations of retail chains on the territory of the EAEU. The ideas to establish a cross-sectoral association for the food sector proposed by the Committee of the EAEU Business Council on the food market, technological platform for food industry and agriculture were included into the records of the meeting. Regarding the conformity assessment it was decided to focus on the following issues: Amendments to the Treaty of EAEU of 29 May, 2014 with regards to stronger responsibility of the applicants for accreditation and conformity assessment, work out of an effective mechanism of conformity assessment for foreign producers, introduction of mechanisms of economic responsibility for all parties of the assessment process; Implementation of the provisions of the new Order of the listing of accredited bodies of conformity assessment to the Single Register of EAEU, as well as its formation and management. It was also considered necessary to entrust EEC with the functions of the management of Single Register of accredited bodies and testing laboratory. Integration Council of RSPP on cooperation with the EEC

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Analytics

“

THE LATIN AMERICAN FINANCIAL MARKET IS NOWADAYS GOING THROUGH TRANSFORMATION, DEVELOPMENT AND STRUCTURE COMPLICATING, WHILE AT THE SAME TIME LAGGING BEHIND THE LEADING FOREIGN MARKETS. IT MAINLY REPLICATES BOTH SUCCESSFUL AND NEGATIVE ELEMENTS OF INDUSTRIAL ECONOMIES, AND IN THE BEST CASE IT ADJUSTS THEIR MECHANISMS WITH REGARDS TO THE LOCAL CONDITIONS. FINANCIAL MARKET IN LATIN AMERICA IN GENERAL AND ITS INNOVATIONS ARE USUALLY ON THE SECOND PLACE AND LOOK LIKE AN ADJUSTED VARIANT OF THE INDUSTRIAL COUNTRIES’ EXPERIENCE.

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LATIN AMERICA

IN THE CONTEXT OF FINANCIALISATION OF THE WORLD ECONOMY Nikolay Kholodkov, Doctor of Economics, Chief research scientist Center of economic research ILA RAS

The global economy has changed dramatically in the last few years. Open markets, liberalization of trade and capital flows, speed up of financial transactions and growth of private and public debt, revolution in information and communication technologies have shifted the world towards finance-based globalization. Financialisation – the principle of the development of financial depth of the world economy has revealed. The increase of financial assets and their turnover were faster than the real economy dynamics in many countries. The economy has been captivated with institutes, money, financial instruments. The development of today’s economy implies the use of the whole complex of innovative potential in any country. At the same time the financial segment of innovations has become more important, both for the growing financial sector and for its influence on the development of economy in general. The process of financialisation including stronger role of financial motivation, financial markets and financial institutes in econ-

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omy at the national and international levels has not only grown during the last third of ХХ century and especially in the early ХХI century, but has even become crucial, including the area of production of goods and ser-vices, trade. The most dynamic segment of financial market before crisis in 2008–2009 was the derivatives market. The use of financial instruments has become the key is-sue for companies shifting their attention from the production and trade of real goods to the financialisation of investment strategies with the aim to improve their profitability and balance. In terms of quantity the scale of it can be seen in the share of financial sector in the GDP, in the amount of financial assets, in the level of employment, average wages and incomes of financial sector. Another key aspect of financialisation is stronger involvement of producers into securities business. This trend is noticed in many industrial and developing countries including Latin America. In Argentina, for example, 500 largest companies have the share of financial assets up to 40% (43% in 2016) in their balances. In

Brazil the level of financialisation has increased from 4% in 1990 to 24% in 2008. Higher financial capital also means that the incomes in the real sector get more and more used for the open-market operations (including speculation). Financialisation is just one of the trends of today’s economy. As the Mexican researcher Roberto Soto mentioned, financialisation is “a way of saving with profit coming more from financial operations rather than from production and sales of goods”. In most cases financialisation implies: The development of financial sector and stronger influence of financial relations on social and economic success; Larger share of financial assets in the balances of enterprises in the real sector; Bigger amounts of the financial market operations in comparison to commodity markets; Advanced innovations which allow the financial institutes to convert non-liquid assets without a certain price into the approved securities (at

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Analytics

the same time some of these innovations start putting the brakes on the economy instead of stimulating it, and even provoke different crisis – debt, credit, exchange and even economic in general); Quality and quantity shift to the financial sector to the disadvantage of the real economy. The growing financial market gains contradictory assessments from scientists and experts. It is worth mentioning that while globalization is approved by many specialists, the financialisation is judged more negatively due to its effect of resource redeployment from the real sector to finance economy. In spite of different rendering the process of financialisation is generally defined as an important element of globalization of the world economy accompanied by stronger role of financial segment in the social and economic development, and its weaker role in raising the investment potential of the real economy. We can say that the finance becomes a separate and independent sector rather than an intermediary. Besides financialisation includes the process of transforming financial capital into virtual, really fancy forms of derivatives. While tradition securities (stocks and bonds) are usually considered paper or fake capital, the derivative securities (futures, options, FX and interest swaps, warrants, options on futures, etc.) are tier two fancy capital. The success of the first stage of financial technologies leads to their wide use to reduce risks, to insure deals, to secure different assets. Derivatives were more often used within specular vector of financial capital, raising its shell and virtual nature. At the same time, while some derivatives improve the financial sector, others threaten both the financial and the real sector of economy. First of all it is the securitization of the low-liquid, the so-called “junk” assets and so on. In addition to stronger role of financial sector the financialisation results in its separation from the real economy. We can’t speak about total break up, of course, especially with industry. But the process becomes unpredictable because investments get into the speculative zone, and the real competitiveness is added or replaced by the virtual one, i.e. stock exchange speculations. In other words the financial system previously supporting the development of material production, has become dominant and started defining the changes in the reproduction system at the national and global levels. According to the chief research officer of RAS Rus-

lan Grinberg “financial capital has turned from a servant to a lord”. In the context of financialisation the real liquidity becomes fake, leading to higher risks. The securitization in full swing provoked chain multiplication of derivatives. Thus today’s world GDP based on added value amounts to about $80 trillion while the valuation of OTC derivatives reaches about $500 trillion. There are different points of view, sometimes very contradictory regarding financialisation phenomena. So experts believe that the derivatives markets stabilize the financial system. For example the former Chairman of the Federal Reserve of the USA Alan Greenspan repeatedly argued that the forex boom “is good for economy, it expands business,

raises income of the consumers and economic development in general”. At the same time the famous investor Warren Buffett called the derivatives “weapons of mass destruction”. Financialisation is global phenomena, however it differs from one country to another. Latin America is no exclusion. Considering the Latin American experience such important issues are in focus: the place and role of financial innovations in the structure of the Latin American market, domination of some innovations, reasons of their origin and the outlook. And another question is whether financialisation is a barrier or a mechanism for positive changes in the process of capital accumulation and its application in the real economy.

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Tackling these question one should mention first of all, that the Latin American financial market is nowadays going through transformation, development and structure complicating, while at the same time lagging behind the leading foreign markets. It mainly replicates both successful and negative elements of industrial economies, and in the best case it adjusts their mechanisms with regards to the local conditions. We believe that the financial market in Latin America in general and its innovations are usually on the second place and look like an adjusted variant of the industrial countries’ experience. The financialisation of Latin America appeared in mid-1990-s. It was based on privatization, liberalization of financial

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

markets, removal of barriers for the foreign capital flows, including credit and banking system, free quotation for national currencies, removal or simplification of the limits on export and import transactions and other measures a la Washington consensus. At the beginning of ХХI century following certain global economic trends the formation of financial sub culture accelerated as well, absorbing the practices of advanced echelon financial markets. However due to relatively weak financial sector (in comparison to industrial countries and even some developing ones) financial innovations in the Latin America are carried out quite slowly – in the mode of catching-up development.

Another reason is that the introduction of financial innovations, including derivatives, requires an extensive and diverse credit and banking system with better inclusion, more liquid forex market, qualified workers in the sphere of financial engineering and other conditions, such as financial awareness of business and households in general. As a result the most well-known innovations and successful mechanisms and instruments are not widely implemented in the countries of the region. Moreover the gap between the financial market and the real economy in Latin America plays out different to the Western countries. Bad interaction between financial capital and real economy is stipulated by weak forex market and its low popularity among a wide range of households, small and medium enterprises, which in their turn lack experience and opportunities to access the formalized sources of loans. The capitalization of the financial system of Latin America comes out to about 150% of GDP. In Eurozone this ratio amounts to average 350%, in England – 500%, in Japan – over 600%. The financial market of Latin American countries shows low inclusion as well. In OECD countries 90% of individuals (over 15 years old) use services of credit and banking system, while in Latin America the share is not more than 40% and is lower than worldwide average (50%). The forex segment of financial system also demonstrates low potential. Large corporations practically hold the monopoly on the stock market, and its liquidity is negatively influenced by the practice of transfer of capital to offshore zones and other illegal transactions. The loses of Latin America caused by illegal capital transfer have increased from $120.9 billion in 2004 to $212 billion in 2013, total for period – $1.6 trillion. Due to the above mentioned and some other reasons financial innovations, like derivatives market, are not very much involved (in terms of quantity and quality) into the formation of financial economy in Latin America. Moreover corrosive influence is obvious not only due to inner problems of financial system but also because of its vulnerability to the after-effect of global financial market shocks and monetary policies of capitalism centers. One of the important factors for financialisation in certain countries of the region is foreign capital flow, for example in the form of subsidiaries of transnational companies which use the same forms and instruments on the Latin American financial market as they do

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Analytics

Signing the agreement on cooperation between FBA EAC and the National Committee of the development of economic cooperation with Latin American countries (CN CEPLA). О. Berezovoy – General Director of FBA EAC and иТ. Мashkova – General Director of CN CEPLA

for their parent companies. Resulting from the internationalization of Latin American banking institutes the credit policy transforms showing a certain retreat from traditional scheme of service for the real economy and increase of the profits from open-market operations as well as from OTC trading channels. Consequently, in spite of the efforts to increase investment potential of the economy by monetary authorities, the average share of loans to private sector in GDP in the region is 40% in comparison to 149% in Eurozone. In Brazil and Columbia it amounts to 70% and 35% correspondingly, in Mexico – 32%, in Argentina – only 15%. These figures evidence that neither domestic, nor foreign investment potential of financialisation is fully put into force due to bad mechanisms and instruments of fund raising and its transformation into long-term investments. Latin American economy is following financial trends at a low pace. Financialisation is mostly noticed in Brazil, Mexico, Argentina and less in Chile, Peru, Columbia and the Dominican Republic. The derivatives market is quite weak, developing more or less only in Brazil. Annual turnover of derivatives in Brazil amounts to about $200 billion (9% of GDP). In Mexico, following Brazil, it is $15–20 billion, while in the industrial countries the average figure is $14–15 trillion (36% on GDP). Consequently the analysis of Latin American financial innovations reveals that there are very few original, not to mention breakthrough financial products in any segments of financial market.

Mostly it is imitation of the tried and tested financial innovations or their customization and localization on the Latin American market, at best – improvement. The changes on the global financial market also stipulated changes in the system of foreign financing of Latin American countries – lager share of portfolio investments in foreign financing. They improve the liquidity of the domestic markets in the countries which receive them, but are far from long-term capital investments into the real sector. Practice shows that the dynamics of these flows is often marked by hitches and pivots, which compounds the vulnerability of national financial systems. In 2010–2014 portfolio investments in the region amounted to 53% of total raised capital in comparison to 30% in the previous five years. In 2017 portfolio investments flow increased to $87.6 billion per year in comparison to $60 billion in 2015. Together with faster short-term capital inflows there is a trend of less FDI. In 2016–2017 FDI amount decreased by 16.4% (from $ 369.7 billion to $291.0 billion). The trend carries on in 2018 according to ECLAC. Rebalancing and restructuring of foreign capital flow towards a larger share of short-term resources (hot money) and smaller share of FDI in fact double the strike with negative effect on the economic perspectives for most Latin American countries, and in addition make them more dependent on the unpredictable policy of the Western investors.

As a result the upsets of financialisation weaken the region’s resilience to external turmoil, negate the effectiveness of macroeconomic instruments of overcoming the adverse effect; they threaten to worsen macroeconomic environment necessary for labor productivity, structural reforms and long-term social progress. In the annual UNCTAD report on trade and development 2016 the experts mention that the developing countries become more vulnerable to the turmoil of the global financial markets including massive speculative capital flows. Considering the unstable financial system of Latin American countries the financialisation provokes additional restrictions on investments. The rise of financial sector in its current forms is yet another reason for social disparity since the income of the financial sector is distributed among a small number of speculators, intermediaries and large owners (according to ECLA more than 187 million people in the region live in poverty, and 62 million – on the rims). All this considerably reduces the opportunities of a wider usage of the creative instruments of financialisation in Latin American economy and its investment potential. In this case one can’t ignore that one problem in the region will not be solved without economic growth which depends on the level of production financing. After 1980 the savings ratio in Latin America never reached the levels of 1960-s and 1970-s (over 20% of GDP). In 2018 the investments in equity in the region in general amounted to only 17.9% of NMP, which dooms a whole range of Latin American countries economically and socially. At the same time the existing problems should not reflect poorly on financial innovations in general and in Latin America in particular. Their triggering role is out of any doubt. That’s why Latin American countries face a challenge to work out an effective mechanism of the derivatives market regulation, cutting off all negative trends and encouraging creative instruments. The best way here seems to combine foreign experience and search for own “breakthrough points” creating effective financial products which meet the reality, abilities and prospects of financial market, with the aim to involve it into the speed real economy reproduction. Using only foreign experiences and practices and adjusting them is unlikely to be effective. In these conditions it is crucial to improve the original function of the financial market which is to support industry, speed up economy and raise the living standards of the population.

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HR DEVELOPMENT CENTER

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Global Economy

“

IN 60 YEARS OF ITS EXISTENCE COSMONAUTICS HAS BECOME A SPECIFIC AREA WHICH SATISFIES A LOT OF DEMANDS OF THE MODERN SOCIETY AND PROVIDES FOR UNIQUE OPPORTUNITIES IN DIFFERENT SPHERES.

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SPACE MARKET: STRUCTURE AND TRENDS Ivan Moiseev, Head of Institute of Space Policy, Scientific Supervisor of Moscow Space Club, Member of Expert Council under the Government of the Russian Federation

Goals and tasks of cosmonautics The Law of the Russian Federation "On Space Activities" determines the following goals of cosmonautics: “…to develop economic growth of the country, to raise fortune of the population of the Russian Federation through rational and effective use of space equipment, space materials and space technologies, and through broader scale of their use; to strengthen and develop scientific and technical and intellectual potential of space industry and its infrastructure; to strengthen defense and security of the Russian Federation; to further improve and collect scientific knowledge about the Earth, the space and celestial bodies; to develop and expand international cooperation of the Russian Federation for further integration of the Russian Federation into the system of world economic relations and international security”. This statutory provision of Russian legislation sets the priority of economic focus in the space activity. It hasn’t always been so: in the first ten years of cosmonautics in Russia (USSR at that time) political tasks were a priority de facto, and from mid-60s to mid-80s military issues were in the focus. The goals of space activity can be divided in two categories. The first one is construction and use of space systems, the second one is exploitation of space systems for the demands of people and companies. In modern terminology these two categories are often called “upstream” and “downstream” (literally: “up the stream” and “down the stream”). Picture 1. shows the main functional blocks of “upstream” category.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

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Global Economy

CONSTRUCTION AND USE OF SPACE SYSTEMS

ORGANIZATION

PRODUCTION

INFRASTRUCTURE

Government control

Boosters

Space

Space crafts

Earth

Economic control

Legislation

Picture 1. Construction and use of space systems

These task blocks are necessary to launch space crafts to the space, where they can create opportunities for exploita-

tion of space systems (“downstream” category). Picture 2. shows the main ways for exploitation of space systems.

MAIN TASK GROUPS FOR SPACE ACTIVITY

FUNDAMENTAL

APPLICATION

Scientific research

Communication

Military

Manned flights

ERS

Meteo

Navigation

Picture 2. Tasks solved by space systems

Here every block can be characterized by the area of exploitation, by physical and technical solutions. Each block includes many tasks, for example communication includes TV and radio broadcasting, fixed and mobile communication, internet. We could continue dividing, each block can include hundreds or even thousands of projects. On the first level all tasks can be divided into two – fundamental and application tasks. Fundamental ones are aimed to extend our knowledge and gain basic experience. They include astronomical and astrophysical research with the help of space telescopes, exploration of planets and other objects of the Solar system, materials science and bioassays. Manned flights are also in the category of fundamental tasks and there are a lot of them even though application tasks can be accomplished on the manned crafts. From economic point of view fundamental tasks are expensive and are usually financed from the state budget (hardly ever from scientific funds or university budgets). Later fundamental tasks may become useful and applicable. Application tasks solved with space system have certain consumers of their results. First of all these are tasks to ensure communication, Earth remote sensing (ERS), navigation. Application tasks also include launching of various space crafts aimed at test operations and training before future projects. Comparative “shares” of the main space focus areas can be seen on Picture 3. (data period 01.01.2001-31.12.2017). Financing of application programs is diverse. In general these programs are profitable (except military ones) and could be financed by those who use their results or by investors. However the creation of space crafts for application programs is very often financed from the state budget – such as meteorology, navigation, partly communications and ERS. During the first years of the Space age it was all financed only by the governments (of the USSR and the USA at that time). And the idea that space is a governmental focus area dominates nowadays. However after the USA approved Communication Satellite Act in 1962 the share of non-governmental sector in the space market was constantly on the rise, and today it amounts to 80%. Many predict its further growth with regards to the state space politics of Europe and USA. This politics is as follows: while some area of cosmonautics is unprofitable, it is financed by the state, however once it become profitable, the state does its best to hand it over to private sector.

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MAIN SPACE FOCUS AREAS science — 5,3%

manned programs — 24,7%

military programs — 16,3%

technologies — 1,9%

communication — 37,3%

ERS and meteo — 7,3%

amounted to $62 billion, more than a half of which is in the USA ($35,957 billion). Among the world leaders are also Europe ($10,376 billion), China ($4,909 billion), Russia ($3,182 billion), Japan ($3,018 billion) and India ($1,092 billion). Picture 4 shows revenue changes in WSM. We should underline here what a space activity implies in general opinion – construction and launch of boosters and space crafts. But financially this activity has not as large share as the sectors of exploitation the results of these launches and the work of Space Agency. Subjects of sectors also differ – a satellite or a booster can be constructed only by large countries or companies, while the Earth equipment and services can be provided by small and medium enterprises.

navigation — 7,1%

Countries-participants of space activity

Picture 3. Shares of the main space focus areas. The estimation is based on the booster lift-off weight, used in these areas

World Space Market Tens of countries and groups of countries, hundreds of large international and national companies and organizations cooperate and participate today to solve tasks of astronautics and use the results of its activity. To fully estimate and evaluate the role of space activity in the world economy a special term has appeared recently – World Space Market (WSM). It hasn’t become common yet, different schools comprehend its structure in different ways, characterize it in different figures. Moreover when we compare or sum up economic indicators of the space industry in different countries, some of these figures should be treated carefully. This happens due to different appraisal objects, various methods, part of information is unavailable, currency exchange indexes fluctuate and often can’t be calculated correctly in the light of specific features of space industry in different countries. These figures can be considered adequate if they coincide with actual space activity (in particular the statistics of space craft launches) and with data from different sources. With regard to aforesaid and basing on data of research organizations (Satellite Industry Association, Space Foundation, Euroconsult) the turnover of WSM in 2017 was about $350 billion. More conservative estimates say $300–400 billion which is about 0.25% of global GDP.

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

And the turnover grows rapidly, by 7–9% each year, twice as fast as world economic growth in general (3.9%). Depending on the purpose of research WSM can be divided into two sectors – public (budgetary) and private. These sectors are interconnected. According to Euroconsult in 2017 public expenditure on space programs

There are three levels of participation in space activity: 1. Countries with own space ports, boosters and satellites (sometimes such countries are called “spacefaring nations”). There are ten such countries for today (in brackets is the year of the first successful launch of a satellite): Russia (USSR, 1957), USA (1958), Europe (France, 1965), Japan (1970), China (1970), India (1980), Israel (1988), Iran (2009), DPRK (2012)

REVENUES OF THE WORLD SPACE MARKET, bil.$

Satellite services

Satellite production

Earth equipment

Booster production

Picture 4. Revenue changes in WSM in the main segments

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Global Economy

ticket” to the space arena. At the same time countries have a choice – either to carry on their own space activity or to purchase its results in the World Space Market.

and the Republic of Korea (2013). European countries are in one category because their space programs are closely connected. 2. Countries with own satellites. As of 31.12.2017 there were 76 such countries. This year Kenia, Costa Rica and Bangladesh launched their first satellites too. 3. Countries which exploit the results of space activity – these are all countries of the world. Picture 5. shows the level of participation of different countries in the space activity in 2017. The method is similar with the one in space focus areas research – booster lift-off weight. The number of countries-participants of space activity has grown in the recent years. The reasons are general technical and economic development of many countries, as well as cheaper “entrance

trol and legislation for space industry, low economic effectiveness of some programs, institutional shortcomings. All these problems were characterized by the management of space industry as “system crisis”. At the same time to solve many of these problems is still cheaper and faster than to construct new boosters and satellites. Time and money can be found within the development of organization of the space sector. Better legislation can improve the situation too, especially for investments in space activity, for the reforms of governmental control of cosmonautics in Russia, for the development of innovative institutes. There are examples in history when crisis drives fast development. Cosmonautics in Russia has good chances in this regard.

Russia in the World Space Market Different sources estimate Russia’s share in WSM from 0.5 to 1%. In public financing of space activity its share exceeds 5%, physical volume (Russia’s booster lift-off weight) – more than 16%. The number of employees in the space industry in Russia is about 250 thousand people (0.35% of all employed people), which is three times more than in the USA. There are several reasons for this. Technological problems reflected in high accident rate, weak governmental con-

SPACE ACTIVITY IN DIFFERENT COUNTRIES, 2017

40%

35%

30%

25%

20%

15%

10%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

US RU CN EU IN JP IR KR TW BR AO DZ ID VE MA IL AU KZ CL EC AE CA TR ZA UA

USА Russia China Europe India Japan International relations South Korea Taiwan Brazil Angola Algeria Indonesia Venezuela Morocco Israel Australia Kazakhstan Chile Ecuador UAE Canada Turkey South Africa Ukraine

35,9529% 16,2919% 14,2162% 12,7603% 5,9103% 5,7370% 4,1993% 1,2247% 0,7884% 0,6796% 0,6763% 0,6114% 0,4147% 0,3335% 0,1967% 0,0030% 0,0009% 0,0007% 0,0005% 0,0004% 0,0004% 0,0003% 0,0003% 0,0003% 0,0001%

0 US

Picture 5. Physical volumes of space activity in different countries

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Founder’s page. IBC

THE MAIN TASK OF A BANK IS TO ASSIST CLIENTS ON NOVEMBER 30, 2018 AN OPEN MEETING OF THE INTERNATIONAL BANKING COUNCIL (IBC) WAS HELD IN LOTTE HOTEL MOSCOW, WITHIN THE FRAMEWORK OF THE FIFTH MOSCOW INTERNATIONAL FINANCIAL AND ECONOMIC FORUM.

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Alexander Murychev, Bakhytbek Baiseitov

Opening the meeting, Alexander Murychev, the Chairman of IBC, invited its participants to greet the new member of the council – the Association of Montenegrin Banks, noting the active growth of the organization over the past few years.. “In this fact there are at least two aspects, – the President of FBA EAC, Bakhytbek Baiseitov continued. – On the one hand, after a long period of all divisions and fights for independence, banking associations (as, indeed, countries) understood that there are areas where it is much more reasonable to combine the efforts. On the other hand, the political and economic situation itself makes one get out of a kind of selfisolation which is often mistaken for sovereignty». As the President of FBA EAC, he noted that he was pleased that FBA acted as the host country of this pre-anniversary IBC meeting and would do everything to ensure that this meeting was held at a high professional level, and that the participants remembered it for a long time. Further in his statement, he noted that all banking systems solve similar problems: they introduce new technologies, structure relations between commercial credit organizations and the regulator, have the “adventure” of national currencies and so on. And the link “commercial bank-regulator” is one of the most troublesome because nobody knows what other innovations the Central Bank will offer. «Perhaps, affected by Basel, soon we all will be obliged to assess not only the financial condition of a client, but its ethic condition too”, – Mr. Baiseitov

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

each position is just a link in the chain of digital economy. “In fact, recently the problem of security comes first more often”, – continued the speaker. “Obviously it can’t be solved just my technical means – hackers and frauds are always half-step ahead and react to all the traps at once”. “Probably the best effect can be achieved by uniting technical and regulating efforts” – summarized Т. Zharkova Andrey Melnikov, Vice-President of the Association “Russia” went on with the issue of information security. Some figures in his report raise hackles. Thus according to the World Economic Forum total loses after cyber-attacks in 2017 amounted to trillion dollars (!). “Considering previous experience the forecast is unnerving, - warned the speaker. – If we don’t meet this challenge the loss might exceed 8 trillion in a couple of years”. He also provided another fact: “The world community is aware of only 20% of cyber-crimes while about 80% of companies-victims hide this information to keep confidence of their clients and market position”. “Perhaps such ostrich policy lead to the situation where our IT specialists either lag behind the criminals or are reluctant to mobilize their search for information security”, - added Melnikov. “Specialists believe that information security is the area where it is crucial to unite all efforts. And such steps are already being taken”, – he continued, speaking about the launch of a platform for data exchange which allows to get the most updated and verified data about the threats including those based on cyber-intelligence data. The platform has been working for five months

joked. In general “the charm of international standards” is passing off. First of all due to the fact that strict rules of Basel and international reporting requirements are not always for good. “If we look to them all the time, – pointed the speaker – it may lead to the failure to do the main work of a bank – helping its clients”. However, very few private independent banks are left. After that the meeting turned to its focus area. Alexander Murychev offered Tatyana Zharkova, Managing Director of the Association “Fintech” to open the discussion. Introducing the speaker he mentioned that the structure she represented was quite new and had existed since the beginning of 2017 having already become name however. “Today everyReference one, not only in Russia, speaks about the digital International Banking Council transformation, so it’s quite time for “Fintech”, – The International Coordination Council of Bank Associations is a public said A. Murychev. organization open to banking associations of all countries interested in cooperation. According to ZharkoThe decision on the establishment of the IBC was made on September 3, va the Association focus2004. The objective of integration is an effective coordination of efforts es mainly on financial of the banking associations at maximizing opportunities of banks in еру and banking sector interstate economic cooperation. which is prepared for digBanking associations of Azerbaijan, Armenia, Belarus, Bosnia and Herzeitalization more than othgovina, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Serbia, Tajiker sectors. However there istan, Uzbekistan, Ukraine, and Montenegro as well as the CIS Financial are a lot of unsolved (or and Banking Council, the Banking Association for Central and Eastern partly solved) tasks in the Europe and the Financial and Banking Association of Euro-Asian Cooperbanking system as well. ation are members of the IBC. The speaker pointed out The Chairman of the IBC is Alexander Murychev, Executive Vice-Presisome of them: remote dent of the Russian Union of Industrialists and Entrepreneurs, Chairman of the Coordinating Council of the Financial and Banking Association of identification, instant Euro-Asian Cooperation. payments and security, of course. All of them are closely connected and

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Founder’s page. IBC

in a pilot mode, and now the development of the projects depends only on the activity of the banks ready to join those 28 credit organizations already working on the platform. Another look on digital transformation was introduced by Samvel Chzmachian, the representative of the Union of Banks of Armenia. First of all he reminded the meeting that according to the prognoses of the “Banking 2020 report” non-banking players will win no less than one third of income from the classical credit organizations by 2020. In addition “technical giants, social networks and online platforms are able to replace the whole range of banking services”. One can rejoice or grieve about this fact but according to the speaker, “banks have to build up their own model of a hybrid of finance and the latest digital technologies”. Samvel Chzmachian complained that in his country “a lot of banks, especially the small ones, haven’t woken up yet, strongly believing in the invincibility of their business model”.

Nevertheless, one of the leading banks of the Republic – Ameriabank has recently launched a powerful center for data processing, necessary to any banking system aimed at development. His colleague, Evocabank, has parlayed into different applications. “In other words the leaders of the banking sector are trying to keep up with the times and entrain those who lag a little”, – said S.Chzmachian, remembering the Armenian proverb “Adjust or die”. The banks of Serbia and Montenegro are quite successful. The heads of their banking associations Veroljub Dugalić and Bratislav Pejaković spoke about it. The ways of integration into the new realities of Azerbaijan banks were presented by Narmin Ganieva – representative of the Azerbaijan Banks Association, where people are also concerned about the creation of a system of instant payments and remote identification, supervision and information security. Of great interest was the speech of Andrey Lisitsyn who represented the

National Payment Council. He informed about information security of financial technologies on the territory of Eurasian Economic Union in general. In the second part of the meeting only IBC members remained to discuss the current issues of the Council. In particular there was a unanimous decision to rename the IBC. Now the full name is International Coordination Council of Banking Associations, the short name is IBC. With this regard it was offered to make changes to all fundamental documents of the Council. Besides the IBC members decided to organize the next meeting in Kyrgyzstan at the end of May, 2019 with the discussion of the future topic in absentia. The IBC Meeting also established a new award of the organization – for charity. Summing up the IBC open meeting one wants to repeat after the speakers – in our days it is more important than ever to consolidate the efforts of all interested parties. Together it is easier to solve serious and similar problems.

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The program of IBC included the visit to the halls of the Grand Kremlin Palace

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

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Founder’s page. IBC

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

ARMENIA:

REGULATION AND DEVELOPMENT

OF FINANCIAL TECHNOLOGIES: PROBLEMS, RISKS, SECURITY Nobody denies today that fast development of financial technologies makes the life of traditional banks more difficult, they take maximum efforts to hold clients. Fintech startups encroach their fields: they focus on one aspect and with modern technologies they either change

dramatically this segment of banking activity or improve it so significantly that the inert traditional system can’t keep up with them. According to «Banking 2020 report», by 2020 non-banking players will take over one third of the banks’ revenues.

There are other strong competitors as well, like technological giants, social networks and online platforms, able to replace the whole traditional range of banking services. The world is becoming more digital, so the banks have to build their own hybrid model of finance and

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advanced digital technologies. As it is said, “if you can’t beat them, join them!” A less positive formula “adjust or die” also reflects the current situation. Figuratively of course. But whatever it is the time has set the challenge and we have to meet it … With this regard in Armenia many banks, small in particular, haven’t woken up yet and strongly believe in the invincibility of their business model. And they are wrong. Here conservatism is not only inappropriate but also fatal. For example the market of P2P payments is growing rapidly – between individuals’ cards and e-wallets. Without mediators and commissions. The European Union has even taken on the model of open banking. Today the banking system is going though fundamental transformation, and it’s clear that banks can’t limit to selling only financial services, but they must become a platform offering a wide range of services on a “one-stop” principle. And this is where business analysis is necessary together with other relevant technologies and approaches. A good example is Ameriabank – one of the leading banks in Armenia – which has recently built an advanced data-pro-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

cessing center. In general banks have accumulated an enormous amount of information to be processed, first of all in retail services, online financing, mobile bank solutions and other digital channels. And today this big data is effectively processed by new program instruments alternative to traditional data processing systems. Nowadays it’s important to know how to work with the existing data and know how to improve it using the information from different sources. In its turn new requirements appear regarding the work with this data, the applications for its processing and the capacities of computers. In particular the infrastructure of the newly opened data-center of Ameriabank allows to use effectively marketing solutions, to define credit limits, to improve score-cards – in other words the data-center will be used for different banking services. It’s worth mentioning that when the bank was ordering this project the consultants had the task to provide the center with plenty of equipment, engineer support and capacity to spare for at least three or four years. Similar powerful data-centers can also help banks take more decisions automatically, extending this practice form individuals to small and medium business. Today many products do not involve humans at all, while the updated scoring is going to exclude human factor and thus reduce risks for a bank. Another Armenian bank – Evocabank – is actively using different applications constantly extending their functions. For example one of these applications allows more than 200 types of payments 24/7 including utility payments, delivery, traffic fines, taxed, parking and CMTPL, transactions within social networks as well as e-wallets, bookmakers and online games payments. These examples show how fintech is used in the banking system of Armenia. However there are very few of them. IT is hardly the most important competitive instrument of the financial market of Armenia – whereas we have a traditionally strong math school and IT has been developing rapidly for many years. Most Armenian banks still stick to oldschool services and are reluctant to invest in technologies – especially small banks for which the solutions are too complicated, expensive and not always repaid. But the future is in advanced technologies, and lagging banks can’t obtain all the diversity of fintech at once. One should work on financial technologies constantly and together with clients grow up to the level where we all will be in 10 years’ time.

Especially if your client base is young and technologically competent, and dictates you its own terms judging by its demands and habits. Previously you had to take efforts to persuade clients use new technologies, while now they demand pioneer products themselves. For such clients, young ones first of all, mobile applications, online banking, P2P-transactions are ordinary today and a set piece of banking services. This regards to relations and mutual influence of fintech and clients’ behavior. One should also mention information security of financial technologies in the EAEU space. This issue is no less challenging. We are glad to inform that the Bank of Russia and the Central Bank of Armenia have concluded an agreement on interaction in information security, and starting from September 17, 2018 they began information exchange about computer attacks and experience exchange about fighting them. The terms of the agreement imply that the parties shall inform each other about computer incidents. With technical opportunities available they shall carry out a complex analysis of this information and pass on the results to the other party. On behalf of the Bank of Russia the interaction with Armenia will be conducted by FinCenter. Armenia is the second EAEU country after Kazakhstan to conclude such agreement with the Bank of Russia. In the future similar agreements are planned with the national banks of Belarus and Kyrgyzstan. Broader international cooperation with EAEU countries on information security of financial technologies aims to create common cyber-space and confidential financial environment within the integration union. Noteworthy is that FinCenter on behalf of the Bank of Russia provides advisory and methodical assistance to central/national banks of EAEU with the creation of their own response units for computer incidents. In conclusion I would like to remind you that the latest IMF and WB annual meeting on Bali adopted a mediumterm plan fixing a turn to fintech market of the global financial authorities (Bali Fintech Agenda, BFA). The Meeting agreed that in small and poor countries fintech will improve financial inclusion and expand global financial markets. Today around 1.7 billion people have no access to financial services, so fintech can be considered not only as a challenge or a problem for banking society but also as a window for new opportunities.

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PRACTICE

“

PRECIOUS METALS ARE AN IMPORTANT PART OF THE MATERIAL BASIS FOR A COUNTRY’S ECONOMY. IN THE CURRENT RUSSIAN SITUATION GOLD-MINING IS THE INDUSTRY WHICH IS MOST FULLY INTEGRATED INTO THE WORLD HOUSEHOLD. DOMESTIC GOLD-MINING COMPANIES ARE AMONG THE LEADERS ON THE GLOBAL MARKET.

”

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GOLD-MINING IN BURYATIA: PROBLEMS AND OUTLOOK Precious metals are an important part of the material basis for a country’s economy. In the current Russian situation gold-mining is the industry which is most fully integrated into the world household. Domestic gold-mining companies are among the leaders on the global market. Besides according to the State balance of mineral reserves, the volume of gold storage in Russia exceeds 13.1 tons (14% of the world explored reserves), and these figures make our country one of the top three in the world. As a result we can argue that gold-mining is one of the leading sectors of the Russian industry both by the results and by the potential. 28 regions of Russia conduct the extraction of precious metals. More than 500 enterprises of different forms of property are independent subsoil users in this sector. The total amount of employees in the sector is about 350 thousand people. Russia possesses an enormous mineral resources base, providing for increased extraction of precious metal. However our country is only on the fifth position in gold production in the world. One of the regions with massive gold-mining is the Republic of Buryatia. The Republic is located in the center of the Eastern Siberia and is included into the Siberian Federal District. The most part of Lake Baikal (about 60% of the coast line) in on its territory. In gold-mining Buryatia ranks 11th in Russia (3.2%) and 3d in the Siberian Federal District (11.9%). The extraction of placer gold on the territory of Buryatia has been the leading sector of the mining industry for 150 years. Before the Revolution and up to the 1950s the placer gold development was conducted in the basin of the river Vitim, and far less in the district of the rivers Jida, Chiloi, Kurba and Kotera. Only rich placer gold deposits were developed

Sergey Lyasota, General Director of “Yaruna” Ltd.

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PRACTICE

with gold content of 1–5 g/cu m, mostly with “muscular” technology – without interfering into the ecology of the river valleys. Starting from 1950-s due to the development in rich deposits gold-mining became non-profitable and was almost closed down in Zakamensk, Khovrin, North-Baikal regions but proceeded in Bauntovsk and Eravinsk districts. However in 1990-s prospectors’ teams appeared, with powerful excavation equipment which allowed to resume profitable mining of poor deposits in all regions of Buryatia with placer gold reserves. As experience has shown there are no technologies of extraction of placer gold without polluting water. That is why most countries with placer goldmining (like the famous gold placers in Alaska, California, Brazil) switched to the development of hardrock gold deposits. Buryatia also follows this trend. The ecological security of production comes in the first place today. According to ecological-economic zonation for placer gold mining the territory of Buryatia can be divided into the Baikal region, where business activities are strictly regulated by the Federal Law

“On Lake Baikal protection” and the basin of the river Vitim which is under general rules. In the area of Lake Baikal placer gold mining is against all ecological standards and international obligations which Russia and Buryatia have taken when agreed to recognize Lake Baikal a natural heritage under UNESCO. This status implies legal prohibition of such devastating industry as placer gold mining on the specially protected territory of Baikal, first of all near direct tributaries of the lake. At the same time it’s clear that considering the current social and economic changes and financial turbulence in Buryatia it’s impossible to change significantly the existing structure of placer gold extraction. There is only one solution in fact. The main reserves of placer gold of Buryatia are located beyond the Baikal region – in the basin of the river Vitim (Bauntovsk and Muyskiy districts). There are promising lands, and rapid exploration works would allow to increase commercial reserves and refocus relevant enterprises in Baikal region. Kyakhtinskiy district is hardly explored. In the Soviet period exploration works there aimed to find radioactive elements, while gold was discovered acci-

dentally. The development of these lands could compensate loses after the termination of the dangerous exploitation of gold placer on the banks of Lake Baikal. This is our licensed focus area. In 2017 in the Republic of Buryatia 5.7 tons of gold (placer and non-placer) were extracted with the use of different technologies. In comparison to 2016 the volume of extraction reduced by 4%. Only hardrock gold-mining shows increase, with large mining companies and branches of corporations involved. However the reserves are not big enough, rich and available placers have been developed. Recently the attention is drawn to the new promising districts, for example Yeravinskiy district. Besides in the last three years dozens of licenses were applied for and issued. These are licenses for geological development, including search, assessment and exploration of gold placers. While in some areas the reserves are protected

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and winning licenses are given. The figures will increase also after the Law on unrestricted inwash (being reviewed in the Magadan region), as well as after easier licensing for small unattractive placers, – but this depends on the Federal center. “Yaruna” Ltd. at the stage of applying for the development licenses studies the promising areas looking through geological documents in funds, and then sends qualified experts to the areas to follow geological routes, wash samples, study economic and ecological issues of the future project. As a result of our work we have obtained development licenses in the areas of “Baisa” in Buryatia and “Dzhugzhon” in the Amur region. These licenses imply further extraction of metal after the exploration works (by the right of pioneering). Today it’s the cheapest way to start extraction. In Buryatia, like in other regions, several gold-mining companies usually

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

work under the principle of interaction based on personal contacts, acquaintances and joint work of field experts (geologists, mine surveyor, crew captains and so on), and in some cases territorial allegiance is determined only by taxes. Very often these connections spread over several regions and even countries. In particular almost all explorations in Mongolia were conducted with the help of experts from the “old” Soviet school in Russia which is considered the best one. Being the closest neighbors geologists from Buryatia were also involved. In the light of political changes in Mongolia the new president holds a line of closer connections with our country; the Mongolians more often appear in “Centersibnedra” and other public offices. Now we can hope for the return of our geological presence in Mongolia. It is not difficult to get data (legally, of course) about a promising deposit, de-

posit sales, ecological problems and new technologies. This allows to avoid mistakes and problems with regards to public authorities, sales and purchases, forest sector, ecology etc. We involve a number of companies in this work («Granit» Ltd., «SINTEK» Ltd., «Monolit Geologia » Ltd., «Uralspetstroy» Ltd., «Lider DV Plus» Ltd.), while “Yaruna” Ltd. acts as a financial and analytical center. We can verify the promising areas for sale or for purchase, we carry out expertise for anybody. We also provide expertise on the stage of search and exploration, before financing the extraction. Our company aims to cooperate with European and Asian countries, because we need long-term investments, stable cooperation with business, experts and scientists, with the real sector of economy, with large, medium and small business, to expand cooperation of science and industry.

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History with geography

“

ISSYK-KUL LAKE IS AN AMAZING HIGH ALTITUDE LAKE, ONE OF THE CLEAREST ON THE PLANET. THE UNIQUE CLIMATE, THE ENCHANTING BEAUTY OF THE LAKE, LYING IN THE FRAMING OF SNOWY MOUNTAINS AND CONIFEROUS FORESTS, THE WATER IS NOT INFERIOR IN COMPOSITION TO THE SEA, – ALL THIS LEADS HERE MORE AND MORE PEOPLE WHO WANT TO REST AND IMPROVE THEIR HEALTH FAR FROM NOISY MEGACITIESIN VIRGIN NATURE'S LAP.

”

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ISSYK-KUL LAKE – AN OASIS ON THE GREAT SILK ROAD Nikolay Schetnikov, Director of the Kyrgyz-British travel company “Dostuk-Trekking”

Issyk-Kul Lake is located in Kyrgyzstan and considered one of the most unique high mountain lakes. On the map it reminds a blue lens. The lake's southern shore is dominated by the ruggedly beautiful Teskey Ala-Too Range of the Tian Shan mountains. The Kungey Alatau of the Tian Shan runs parallel to the north shore. Issyk-Kul Lake is 180 kilometres long, up to 60 kilometres wide. It is the second-largest mountain lake in the world behind Lake Titicaca in South America. It is at an altitude of 1,602 metres, and reaches 702 metres in depth that is the second rate after Lake Baikal. The mean water temperature varies from a winter minimum of −0°C to a summer maximum of 24°C. The lake water's salinity is approx. From ancient times, in many cultures this lake is known by different names: Jehai – “Hot Lake”, Idyk-Kul

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

– “Sacred Lake”, “Salt Lake”, IssykKul – “Hot Lake”. There are some scientific versions and many legends about how the Lake was formed. A centuries-old history of the lake development is well known from Sako-Usun (1–2 BC) to the modern (Kyrgyz) period which is reflected in various historical monuments such as: the underwater ancient Chigu city (Red Valley town) known as the capital of nomadic usuns and the Tien Shan shopping center on the Great Silk Road, the legendary Christian monastery of Armenian brothers which holds the relics of the Holy Apostle and Evangelist Matthew, etc. The periods of prosperity and decline of the settlements in the Issyk-Kul area changed depending on historical and geographical factors. The Medieval heyday of trade points is connected with the Great Silk Road. The period of decline of

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History with geography

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land routes of the Silk Road and the discovery of the maritime trade route of China and Europe, the rising the level of lake’s water, the infestation of the hordes of Genghis Khan have led to the decline and complete oblivion of medieval cities and settlements. The next turbulent period of the development of the coast lake is associated with the middle of the 19th century when The Kyrgyz tribes turned to Russia with a request for their entry into the protectorate of the Russian Empire. This period was marked by the world geographical discoveries of Russian geographers and travelers P.P. Semenov, Tian-Shansky and N.M. Przhivalskogo. A massive development of the territory by Russian immigrants began. The first Russian settlements in the Issyk-Kul area were military fortifications – Aksu and Karakol, founded in 1863–1873. They received their names from the nearby rivers Ak-Suu, Karakol. With the beginning of the settlements of peasantry, numerous villages began to be founded. One of the first Russian settlements was the village of Slivkino, named after the first settler – Slivkin. The peasant Slivkin founded his own farm in 1867 in Issyk-Kul (later the village of Slivkino – Pokrovka – now Kyzyl Suu). On the maps of 1876, the villages of Teploklyuchenka (now Ak Suu), Preobrazhenskoye (now Tyup), Semenovka appeared. In 1888 a Russian immigrant M.Bachin built a hut in the KyzylTokoy tract, which gave rise to the village of Bachino. In 1909 this village in 15 houses was renamed Rybachino. In 1916 there were 24 houses and 96 residents. During the period of the Stolypin reforms the settlement of Russians in the region became widespread. In 1911 all regions were reopened for relocation. The

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

number of Russian villages has increased. The resettlement villages received their names by the names of the first settlers: Semenovka, Grigorievka, Lipinskoe, Samsonovka (now Kochkorka); Koltsovka (now Bokonbaevo). In the late 20s – early 30s, the first Kyrgyz settlements (villages) appeared on the shores of Lake Issyk-Kul. The beginning of the Soviet period is characterized by the rapid development of the agrarian livestock and resortrecreational areas of the economy. In the post-war period, the mining industry began to develop. Special emphasis is placed on the activity of transport trade enterprise “Kitaitorg”, based in Rybachye. The ancient trade Great Silk Road was again in demand. It was used for the trade between the USSR and a resurgent communist China. In the administration centre of Issuk-Kul oblast – the city of Przhevalsk, the training centers began to open, and in Rybachye a shipping company was created. In the later stages of the Soviet period in 1970–1990, Issuk-Kul Lake became a popular all – Union health resort of the USSR. Millions of tourists from all the Union republics annually had a rest in resort, boarding houses and camp sites in the Issyk-Kul region. Following the breakup of the USSR and the creation of independent states on the basis of the union republics, the economy of the Kyrgyz Republic collapsed. This greatly influenced the development of the region: the majority of resort and recreational facilities were closed and over time were destroyed. However the early 2000s coincided with the gradual and then rapid growth of the construction of new and reconstruction of old tourism and recreation

facilities in the waters of the Issyk-Kul lake and in the adjacent territories. This is especially true for the northern coast of the lake where many private modern leisure and tourism facilities were built. Near the village of Tomchi an international airport was built. Unlike the northern coast, the southern one is not so widely developed although according to its natural and geographical characteristics, it is more interesting and promising for the organization of numerous modern resort and recreation centers. The main positive factors include the purest water and numerous sandy beaches, due to the deeper structure of the bottom of the lake, proximity to the lake of the forest zone, which is a favorable condition for the development of winter recreation, the presence in the mountain gorges of a large number of thermal springs. The main touristic center of the southern coast is the village of Tamga where the airport was built in the Soviet time. Unfortunately, currently, it is completely abandoned. In this area it was planned to build a large international training center for the main summer and winter Olympic sports. But due to the well-known political events of 2010 and later on financial problems, this project will be resolved in the future. The time takes its course. The Great Silk Road is being reborn. China and Kyrgyzstan are no longer connected by trails with difficult passes but by a modern highway which can take one day from Issyk-Kul to Chinese city – Kashgar. Cars of many foreign brands replaced caravans of camels and horses. Instead of merchants, dervishes and conquerors, numerous groups of tourists from different countries travel along the Great Silk Road.

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Discoveries

“

…A SECRET STUDY SHOWED THAT QUASI-CRYSTALS ARE PROMISING CANDIDATES FOR STORAGE OF HIGH-ENERGY, METAL MATRIX COMPONENTS, THERMAL BARRIERS, EXOTIC COATINGS, INFRARED SENSORS, THE USE OF POWERFUL LASERS AND ELECTROMAGNETISM. SOME HIGH STRENGTH ALLOYS AND SURGICAL INSTRUMENTS ARE ALREADY ON THE MARKET. <…> THE LATTICE OF QUASI-CRYSTALS OF HYDROGEN AND OTHER UNNAMED MATERIAL SERVED AS THE BASIS FOR THE PLASMA ENGINE OF THE ROZWELL APPARATUS.

”

David Wilcock in the book «Divine Cosmos» (chapter 3 «Sacred Geometry in Quantum Reality»), citing the words of former employee of Groom Lake/ Area 51 Edgar Fouche about the alleged crash of an unidentified object in Roswell (New Mexico) in 1947

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QUASI-CRYSTALLINE TECHNOLOGICAL PROGRESS Valery Kriachko, Geological and Mineralogical Sciences Doctor, Corresponding Member, Russian Academy of of Geopolitical Problems

Quasi-crystalline technological progress – does it really exist? I’m sure that few people are ready to answer this question. So what's the hitch? It wasn't very long ago, in 1984, when Daniel Shechtman experimentally obtained quasi-crystals – metal alloys of manganese and aluminum with the composition of AlMn6. Originality of the discovery was that the material having a fifth axis of symmetry could not be obtained. The fundamental concepts of quantum physics and mineralogy assert so. Without going into details, it can be definitely argued: this discovery was not only theoretical, but also promised the emergence of a number of new technologies. However, the anticipated breakthrough is coming to naught quickly, new technical solutions do not emerge. In Russia, these technologies are developed in such respected scientific structures as The Joint Institute for Nuclear Research (city Dubna), the National University of Science and Technology «MISIS», Skolkovo. However, research is limited to the creation of thin-film coatings and their use. The reason is that it was impossible to obtain the bulk synthesis of quasi-crystalline materials using available technologies. But the necessary scientific forces were found abroad – Professor Paul Steinhardt, Director of the Center for Theoretical Science, Princeton University, took up the research. He decided to get a hint from nature – by studying the processes that

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

took place in terrestrial conditions. He spent about ten years on this. According to him, evidence of the existence of quasi-crystalline materials could not be obtained for a long time. However, when it would seem, all the chances were lost, it was heard from the famous Italian mineralogist Luca Bindi (now the director of the Museum of Natural History of the University of Florence) that he had found a sample of the mineral Hatyrkit in the museum’s collection, which he kindly sent to Paul Steinhardt. It was there that the first natural quasi-crystal was discovered, later called icosahedrite. We can say that from that moment it all began. The fact is that the mineralogical material provided by Luc Bindi was completely insufficient to answer all the questions facing the researchers. In addition, it turned out that the place of finding of this sample is unknown! It took many years to find out where this sample came from and what it was. All the details of these studies are described in the works of Paul and Luke, as well as in many articles and reviews about them in the world press. I would like to start with returning to 2011. At that time a joint Russian-American-Italian expedition to Chukotka was formed, the supervisor of which was Paul Steinhardt himself, and the actual head was Valery Kryachko, the author of this article. This happened due to the following circumstances. In 1979, as a researcher at the Northeastern Research Institute in Magadan, I was lucky to ex-

amine a platinum mineralization in the gold placer of Listvenitovy creek, which flows into the Yomrautvaam river (the right tributary of the Khatyrka river in the south of Chukotka) to find a sample – the intergrowth containing four new minerals: Khatyrkit, Kupalit and two more untitled minerals based on copper, zinc and aluminum in various proportions. In one of the two samples, a quasi-crystal icosahedrit Al63Cu24Fe13 with fifth axis of symmetry was found. Later, after the expedition, a decagonite was found with the tenth axis of symmetry, Al71Ni24Fe5, and the later – decagonite Al62Cu31Fe6.8 with the fifth axis of symmetry. After that expedition, the results of which turned out to be promising, already in 2012, the Russian expedition of the Institute of Geo-Chemistry of the Academy of Sciences of Russia (GEOHI) was sent to the same place. The expedition was theoretically prepared by me – of course, at the request of the staff of the institute. I think that Russian researchers had the right to such opportunity. In addition, the main results of the research of the expedition-2011 have already been received, most of them published, and the Russian members of the expedition (including me) were the authors of these publications. After receiving the research results, GEOHI employees approached me with the idea of writing a critical article. I supported this proposal, being in full confidence that the materials of our

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Discoveries

expedition are 100% convincing. I was very interested in what arguments they could put forward. The article was published. It caused negative emotions among Americans and Italians, apparently due to the fact that it cast a shadow on the natural triumph of their work. That, as a matter of fact, was the basis for writing this material. And this is of crucial importance, because this circumstance should allow us to proceed to the next stage in the development of this theme. The main critical idea of GEOKHI researchers was that the minerals of the matrix of the Zn, Cu, Al system, based on current concepts, could not be formed on the basis of strict limitations on the compatibility of these elements, and, at the same time, the minerals of the Al, Fe, Cu ( quasi-crystals) have much higher-temperature than matrix Zn, Сu, Al. If, as it is supposed, some Al, Fe, Cu and Al, Fe, Ni were formed at a temperature of 1200 degrees, then other Zn, Cu, Al – at a temperature of 400 degrees. This circumstance gave grounds for scientists from GEOKHI to doubt the veracity of the descriptions given in our articles. Therein the intrigue lies. So, how come? Here I have to digress a little from the direct narration and move a little from the peaceful tone. Of course, I follow all the works on this topic that are conducted in Russia, and I am amazed that they are carried out in such a narrow range – I have already mentioned this at the beginning of the article. Therefore no one is working to solve the problem of sustainable synthesis and to obtain any significant amount of quasi-crystalline material. The Italian-American side also could not solve this problem. They successfully proved that the occurrence of the above two groups of

minerals is associated with the collision of two asteroids in space with the occurrence of pressures of 100 thousand atmospheres and a temperature of 1200 degrees. As a result, the melt formed in the Khatyrka meteorite, which we found, formed two groups of minerals with different crystallization temperatures. One of them has quasi-crystal structures. So, how come? Here is the question, without answering which, we will not be able to go forward. This concerns not only our researchers, but also American and many other. In this regard, here is what is surprising. A magnificent book by Sergei Nikolayevich Golubev, The Emergence of Life and the Formation of a Mass of Elementary Particles in the World of Quasi-crystalline Vacuum, has already been published. This book is the main prompt on our topic. Well, Americans can’t read not English-language literature, but our people can! I can’t say that the said book provides direct answers to all questions, but makes it possible to begin to address the problem. This is a completely new physics, this is the physics of the mechanisms for the self-assembly of nanostructures and quasi-structures. This assembly can be carried out only from the gas phase. This is a prerequisite and allows you to carry out this process – self-assembly in a quasi-crystalline vacuum. Most likely, it is the carrier of programs that carry out the self-assembly of atoms that are in a state of freedom with respect to each other. Quasi-crystalline vacuum is a kind of matrix for the implementation of many processes. And most likely, the pressure to which Khatyrka's meteorite has undergone is only a factor in the occurrence of high temperatures, which, in their turn, form the gaseous state of a group of metals in the form of

organometallic compounds. In this connection, the temperatures during the crystallization of quasi-crystals were low and close in value, as in the formation of the Cu, Zn, Al systems and the quasicrystals of the Al, Cu, Fe and Al, Ni, Fe systems. The mixability of the Cu, Zn, Al system, which is so high in the Halkofil and Litophilic components, was due to the dislocations formed under strong dynamic loads, which we were able to obtain in our experiments. The formation of quasi-crystals by the method of self-assembly occurs from the gas phase, which is an organometallic compound based on chlorine, carbon and metals. This means that, contrary to the opinion of American researchers, the

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THE APPLICATION OF QUASI-CRYSTALLINE MATERIALS Application

Properties

QC alloys

Dispersion- hardening particles in aluminum alloys and steels

Hardness and high mechanical properties at elevated temperatures

Systems based on Al - Fe - Cr, martensite-ageing steel

Thermal barriers in turbines and internal combustion engines

Low Conductivity

Al–Co–Cr–Fe, Al–Cu–Fe

Hydrogen accumulation

High hydrogen adsorption capacity

КК на основе Ti

Non-stick coatings for cookware and protective coatings in chemically active environments

Corrosion resistance, high hardness, low surface energy

Al–Cu–Fe–Cr

Tool Covers

Wear resistance, low friction coefficient

Al–B–Cu–Fe, Al–Pd–Mn

Chemical Catalysts

Catalytic activity

Al–Cu–Fe, Al– Pd–B, Al–Pd–Fe, Al–Pd– Mn, Al–Cu–Co, Al–Pd–Co и др.

Selective light absorbers

Absorption of light of certain wavelengths

Al–Cu–Fe, Al–Cu–Fe–Cr

prestigious American academic journals. This is an excellent international team of scientists, authors of articles from the best institutions in the USA, Italy and Russia. I hope that after the release of this article, the misunderstanding in connection with the publication of researchers from GEOKHI of the Academy of Sciences of the Russian Federation will be overcome, which will allow a more thorough understanding of the processes of formation of quasi-crystalline materials and, therefore, master the synthesis of quasi-crystals. Without a doubt, this process will accelerate their introduction into various industries, and therefore the production of photonic semiconductors, new lasers, the transmission of electricity without wires, new heavy-duty materials... This course of events is evidenced by many materials. For example, this is what Yu.V. Milman, N.A. Efimov and I.V. Goncharov in the article "Quasi-crystals – a new class of solids with unique physical properties": «Currently, QC have already found a number of industrial applications. Thus, the hardening of dispersed particles made it possible to obtain high-strength aluminum alloys for operation at elevated temperatures <…>. By the same principle, high-strength martensitic aging steels of composition Fe – 12%, Cr – 9%, Ni – 2%, Cu – 1%, Ti for surgical instruments were obtained. A number of QC have extremely low thermal conductivity, which allows the use of coatings of them as thermal barriers in the elements

of various engines. It is a very significant factor that QC have a thermal expansion coefficient (TEC) close to the TEC of the metal substrate, which leads to an increased resistance to the influence of thermal cycling. For example, in France, Al – Cu – Fe – Cr coatings are widely used in household items (pans, irons, etc.); in Spain, bench tests of aircraft engines with QC coatings Al – Co – Fe – Cr as thermal barriers. In the USA, it is supposed to use QC due to their high hardness and wear resistance at elevated temperatures for coatings on missile bodies. It is planned to use QC materials for hydrogen accumulation in hydrogen energy in electrochemical and energy-saving devices, etc. This use is due to both the chemical composition and the weak packing of atoms in QC. Recently, there have been papers describing the use of QC as effective catalysts in chemical reactions. The main areas of application of QC materials of different types are given in the table: Quasi-crystals contribute some mysteriousness to solid state physics. This is due to the absence of translational symmetry in the arrangement of atoms and the presence of rotational symmetry of the 5th order …». As you can see, the future of technology related to quasi-crystals, promises us a lot of interesting and certainly useful. It is important to continue research and not to stop at what has already been achieved. However, it can also be said about the science in general...

temperature of 1200 degrees is not needed. Most likely, these are the same 400 degrees as during crystallization of minerals of the system Cu, Zn, Al. In case of implementation of the quasi-crystals crystallization mechanism for Al, Cu, Fe and Al, Ni, Fe systems proposed by us, the contradictions described by GEOCHI researchers lose their bases, since crystallization occurred from materials in different states: ionic state of Cu, Zn alloys and volatile organometallic compounds Al, Cu, Ni, Fe (for example, as in the Kudryavy volcano on Iturup island – AlCuFeCl2 [P (C4H9) 3]2). In this case, the crystallization temperature ranges from 900 to 300 degrees, which does not contradict with our ideas. In other words, it is a physics that differs significantly from the traditional one – with a wide range of variations in the processes performed, which allow the formation of quasi-crystals. As for the expedition in the summer 2011, it was not a simple one. It was carried out on two all-terrain vehicles – from Anadyr to the south of Chukotka. Distance – 350 km one way. Ten hours of travel per day – duribg four days. The researchers were six Americans, an Italian and three Russians, two all-terrain vehicle drivers and a cook. Seven days on the road and ten expedition days. Success was achieved, and it is true. Nine fragments of meteorites containing quasi-crystals were discovered. They are described, and descriptions are published in a number of articles in the most

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

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Bank. Bank. Bank

UNDER THE STABILITY SIGN The construction of the Belarusian atomic power station is financed with the participation of OJSC “Bank BelVEB”

Alexander Kuchinsky, Chairman of the Association of Belarusian Banks

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For Belarusian banking system 2018 ended under the financial stability sign and business activity. 24 operating banks in 2018 increased their equity capital by 10,1 %. The banks’ demands on the economy in the national currency have risen by 18,8% since the beginning of the year and in foreign currency – by 1%. Nearly three quarters of money, directed at the development of the economy, is longterm loans, formed by domestic recourses of banks. Loan debts, issued by banks to economic sectors in all currencies, in comparison to the beginning of the 2018, have increased by 17,3%. The main role here plays the Development Bank of the Republic of Belarus. Its landmark project is the construction of a second runway at the National Airport Minsk, plus a number of new road sections, construction and reconstruction of sport facilities for the European Games 2019. The most powerful player on the financial market is Joint-Stock Savings Bank Belarusbank, the ratio of its assets to GDP is 27%. With its credit support, the largest projects in the country are being implemented, for example the construction of a mining and beneficiation complex, and a high-technology metalworks in production of tinned plate and cold-rolled sheet is being built from scratch. How not to mention the Belarusian atomic power station, where OJSC “Bank BelVEB” is the agent bank to invest? The volume of investments is 9 billion dollars. Priorbank is a leader in the share of non-cash payments on individual’s cards which is 55%. Innovation technologies are successfully introduced, in particular, voice biometry of authorized representatives of clients – legal entities. Belarusian banks actively attract foreign investments and credit recourses for their clients. For example, the total amount of foreign trade projects of clients implemented by Belagroprombank OJSC at the expense of foreign credit resources in the last 3 years amounted to more than 2 billion dollars. By the way, small and medium businesses should become the main growth driver of the economy in the coming years. For 2018 the debt of banks on loans to small and medium businesses in Belarusian rubles and foreign currency in-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

creased by 19%. Over 4.2 billion dollars has been allocated to support it. At 70% this is a long-term appropriation. Almost 60% of the funds went to support of small and micro organizations. In December 2018, the average interest rate on loans in Belarusian rubles was about 11,02% per annum, in foreign currency6,03%. Paritetbank increased the loan portfolio for small and medium-sized businesses by 78% over the year, BTA Bank – by almost 60%. In Belinvestbank, about 30 thousand clients of SMB are served, of which more than 10 thousand are women entrepreneurs. Belinvestbank makes an emphasis on women’s business together with the EBRD within the framework of the Women's Support Program “Women in Business”. In doing so, the share of overdue and delay debts in the total amount of outstanding loans to economic sectors, as at January 1, 2019 was 1,1%. Not so much. In addition, banks behave here most correctly, thinking primarily not about profit but about the financial health of clients. The goal is not to recovery bad debts at any costs but to solve the problem on the basis of a balance of interests while maintaining the client’s business and its loyalty to the bank. At the initiative of Belarusbank, Presidential Decree

№4 of August 21, 2017 appeared, allowing the debtors to default on the active banking operations to receive money directly from its debtors. An example can be called the history of the financial recovery of the state-owned OJSC Gomelhlebprom with the participation of Belinvestbank. Gomelhlebprom’s debt exceeded its annual revenue and the majority of creditors filed lawsuits. But the joint works has improved the quality of enterprises management, and increase its solvency. This is a new direction of work for the Belarusian banking system on the transformation of the public sector. Belarusian banks are actively participating in solving actual problems of the society. Most of them have developed a systematic approach to raising the corporate social responsibility of their business. For example, VTB Bank implements the program “World Without Tears”, by helping medical facilities in 17 cities of the country. Alfa-Bank and Belgasprombank help Modern Art. People in the country know the project BPSSberbank “Do good”. In 2018 Belarusian Banks sponsored about 16 million dollars. More than half of this amount is allocated to veterans, the disabled, large families, family-type children's homes and health care facilities.

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Technologies

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ECOR-SP IS A RUSSIAN DEVELOPER AND MANUFACTURER OF ENVIRONMENTALLY FRIENDLY ORGANOMINERAL BIOLOGICS BASED ON PEAT EXTRACT, MICROORGANISM STRAINS, HUMIC ACID GROUPS, LOW MOLECULAR WEIGHT ORGANIC ACIDS WITH UNIQUE CHARACTERISTICS THAT PROVIDE COMPETITIVE ADVANTAGES IN THE AGRICULTURAL MARKET. THE COMPANY'S MISSION IS TO EXTRACT AND TRANSFORM THE ESSENTIAL POWER OF NATURE FOR THE BENEFIT OF RUSSIA. THE COMPANY'S GOAL IS THE INTRODUCTION OF EFFECTIVE BIOTECHNOLOGIES WITH THE MAXIMUM ENVIRONMENTAL AND ECONOMIC EFFECT.

”

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HIDDEN RESERVES: BIOTECHNOLOGY IN THE SERVICE OF AIC

Zair Syamiullin, Senior partner of ECOR-SP LLC

Global challenges in the development of the world agro-industrial complex accelerated growth in food demand, as well as increased consumption of livestock products significantly increase the burden on agro-ecosystems and contribute to the growth of longterm risks of instability on international agrifood markets. According to FAO and OECD estimates, as a result of population and income per capita growth, global agricultural production should increase by 60–70% in 2050 compared to 2000s, which will mean the need to produce additional 940 million tons of grain and 200–300 million tons of meat annually. Experts assume a long-term risk of exceeding the growth rate of demand over the growth rate of supply. It is explained by the fact that average annual productivity gains in agriculture are gradually declining, while population growth rates are stable. The global goal for Russia, set by President V.V. Putin, is to increase exports of Russian agricultural products to $ 45 billion by 2024. The Ministry of Agriculture of the Russian Federation and the regions plan to take appropriate measures to develop the export potential of crop and livestock products, including the stimulation of: reserves for increasing yields; use of innovation technologies in production;

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

large-scale implementations of precision farming models. Being a Russian producer of organomineral products for agriculture, ECOR-SP believes that the drivers and solutions for the goal set by the President of Russia will be: A) Introduction of technologies revealing the genetic potential of crops with levelling of the yield limiting factors (reserve No.1); B) Creation of new collaborative designs and partner models for providing agricultural producers with affordable, innovative, efficient agrarian technologies and their analysis (reserve No.2). C) Systemic, long-term, attentive attitude to the agricultural lands fertility and providing producers with a sufficient number of complex, environmentally friendly organic prolonged action fertilisers at an affordable price (reserve No.3). It gives confidence that the system of views between government and business in solving this problem lies in the field of a deeper understanding of the physiological processes of plant growth, their genetic expression and development of the industry in closer contact with technical progress, that in turn will give a programmed increase in yield with improved quality characteristics while reducing the cost of production.

Where can the reserves be found? Reserve No.1 is in the intensive crop production model itself (a.k.a the Norman Borlaug model), brought by Nikita Khrushchev from the USA in the mid60s of the 20th century. The model consists of four fundamental "immutable truths": best cultivar or hybrid; large amount of mineral fertilisers; great plant protection by means of chemicals; sufficient water supply. Unfortunately, it turned out later that this model significantly weakens soils and in fact deprives them of longterm fertility, since a progressive, systemic deactivation of active humus occurs. This determined the fixation and reduction in yield and blocked even the theoretical possibility of crops achieving their genetic potential. The final understanding that new advanced farming technologies are impossible without introducing the principles of biologically influenced farming into the model of intensive crop production became obvious being proved by specialist scientists and research organisations. In other words, it is necessary to provide competent plant protection together with high-quality humic fertilisers. It helps, above all, to increase the resistance

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Technologies

Under the Reserve No.3 of crops to adverse environECOR-SP considers the mental factors (heat and ECOR-SP offers a NEW GENERATION OF HUMATES – technology of processing cold), contribute to the use concentrated potassium humate ECO-SP. This is a litter and manure into comof pesticides and other 100% natural organic product from environmentally plex, environmentally stressful situations, and as a friendly raw materials of low-lying centuries-old peat. friendly organomineral ferresult, leads to an increase ECO-SP is a complex organomineral fertiliser with a tilisers of prolonged action in yield and product qualifull set of nutrients (NPK), humic acids, fulvic acids, providing long-term stabilty. Due to the impact on the amino acids, low molecular weight organic acids, ity in increasing the power plant immune system, the chelated micro and macro elements. of the Russian agro-indushumic agro-agent helps retrial complex. Strategically, duce plant damage by bacThe presence of beneficial microflora and biologically this can become a “supportterial and fungal diseases, active organic hormones creates all the conditions for ing structure” to solve the which allows optimising the the full chemical regulation of crops growth and deproblem of low fecundity use of chemical plant provelopment. of crop production while tection products and inModern production technology, filtration, ozonation, stabilising phytosanitary creasing their effectiveness. homogenization and the use of structured, prepared risks. The use of tank humate water were able to extract the living force of nature According to the Instimixtures with plant protecand transform it into a systemic, positive impact on tute of Agroengineering tion products has already the soil, seed and plant metabolism. and Environmental Probentered the practice of lems of Agricultural Promany advanced farms, and The formula for the economic efficiency of the use of duction, poultry litter the results of this applicahumic-containing organomineral fertiliser ECO-SP in amounts to about 11% of tion are excellent. And modern farming technology is as follows: the total organic waste of adding to this process the increase in the yield of crops; livestock and poultry farmsupport of soil fertility improvement of the quality of the agricultural crops; ing, that is 45.0–55.5 million through the work with crop tons per year of organic residues and seed treatment improvement of fertile soil properties; matter with a humidity of with the use of high-quality reduction of mineral fertilisation; 40–68%. humic agents removes the reduction of applying PPP rates; Data analysis for proquestion of how to get high cessing organic waste indiresults with the highest posreduction of weather conditions force. cates large volumes of availsible cost optimisation. able raw materials, resultIt is apparent that the ing in a loss of valuable resources in the gistics costs. As for medium and small constant use of high-quality humic ferform of organic substances and nutrients farmers, they would receive products tilisers in agronomic processes helps the that our agricultural enterprises urgenton-time at the lowest price and maxicrop to realise its maximum genetic poly need to reach new heights in growing mum quality making online orders for tential of yield and quality. A logical quality products and maintaining soil the production of fertilisers prompt. conclusion is being emerged that the fertility. With the support of the state, such large-scale introduction of nature-like The endless ascertainment of violamodel will make it possible to apply liqhumic technologies increases the proftions of environmental protection legisuid organomineral fertilisers on a large itability of domestic crop production lation and the imposition of penalties for scale without a significant financial burand should be supported by the state. poultry farms do not create the condiden on the processing of a hectare, to imThis is a new level of agriculture, tions for a practical solution to poultry prove the fertility of the lands and inwhich awakens the essential force of Namanure disposal. And the versatility of crease the yield. ture, and this is the high time for this rethis problem eliminates the possibility of This approach fits perfectly into the serve to be taken advantage of! "flat" solutions. ideology of forecasts and strategy develReserve No.2 means innovations in The introduction and scaling of the opment of agriculture in Russia, CIS and collaborative designs and partner modtechnology offered by ECOR-SP will EEU for the next decade. This model can els, the purpose of which is to support bring a significant environmental and show its vitality and prospects for furthe market and their own needs with efeconomic efficiency and create a new ther planning to scale and expand withfective agrotechnologies and services. high-performance export-oriented proin the Eurasian integration in the impleOne of the "designs" with underduction and logistics sector of granulatmentation of the economic and agriculstandable mathematics and general ecoed bird droppings with a volume of up tural experiment. nomic effect of the introduction can be to 7 million tons per year. This process Based on current trends on the digitithe design of a scalable, innovative line will start the cyclic nature of the agrosation of the economy, the whole process of production of high-quality, environecosystem, create new workplaces and of the implementation of the experiment mentally friendly organomineral, humark the prospects for reaching largeshould be reflected in the online service mus-containing fertilisers with specified tonnage exports. Many regard this as an with the involvement of research organcharacteristics and implementation acadditional impetus for the expansion of isations, agro-UAV for monitoring of cording to the principle of "state plan". modern agricultural infrastructure fields, analytical data processing software The peculiarity of this model is in (ports, warehouses, processing indusand support in the specialised media. A creating a production for the agreed tries) and the addition of projected significant amount of data will form the needs of agricultural holdings and large transport indicators to the large-scale basis for the construction of artificial infarms, which, working together on the Chinese “One Belt, One Road” logistics telligence in the segment of biologized implementation of this model, would initiative. progressive agriculture. minimise production costs, sales and lo-

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ECOR-SP develops innovational solutions, the essence of which lies in economically sound, waste-free continuous litter processing technology and production on its basis of high-quality, highly efficient, environmentally friendly organomineral prolonged-action fertilisers with low capital and operating costs. The basis of the technology is the accelerated bioconversion of fresh litter with environmentally friendly organic reagent ECO-SP. Accelerated bioconversion is a transfer of fresh litter from 3rd hazard class to 4th class at minimum labour, time and financial costs while retaining the maximum possible beneficial properties of the litter mass as a raw material for the production of fertilisers. The organomineral degradator ECO-SP is an organic reagent with unique indicators of the enzymatic activity of biological catalysts, high reducing activity and humic compounds.

In the age of total increase in the cost of resources and reduction of soil fertility, the models of sustainable intensification of crop production are becoming increasingly important, while preserving and improving natural resources. This is a competent long-term business approach that has replaced the traditional stereotypes. Significant for all people challenges of our time are firmly connected to the issues of Eurasian aero-integration and

port-oriented and innovative agribusiness and become a solid foundation for the expansion of export potential. The Global Breakthrough scenario, considered in the forecast of scientific and technological development of the agro-industrial complex of the Russian Federation for the period up to 2030, approved at a joint meeting of the Presidium and the Collegium of the Scientific and Technical Council of the Ministry of Agriculture of Russia on March 30, 2016, is possible to be implemented! Russia has every chance of becoming the world's largest producer of agricultural products.

the need to create prerequisites for the formation of innovative approaches to solving long-term food security strategies. In this situation, Russia and its partners in the CIS and the EEU need to make timely start-up of reserves for improving resource efficiency in the agroindustrial complexes and introduce actively promising technological innovations. These actions will strengthen the formation of a globally competitive, ex-

Technologies and products promoted by ECOR-SP are low-cost for enterprises, cost-effective and environmentally friendly. This is a unique combination of careful nature management and nature-like technologies of the circular economy, which provides the formation of strategic reserves in ensuring the independence and competitiveness of the Russian domestic agro-industrial complex.

Gross output of grain in Russia Actual results before 2018

Anticipated results up to 2028

Million tons

What actions can advance the anticipation to the fact?

How can we solve low crop yield?

SOURCE: ROSSTAT, MINISTRY OF AGRICULTURE, «PROZERNO» EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

ANTICIPATED RESULT 61

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Business in the countries

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GYEONGGI-DO IS ONE OF THE MOST POPULATED PROVINCES OF THE REPUBLIC OF KOREA. THE ADMINISTRATIVE CENTER IS SUWON CITY (ABOUT 1.2 MILLION PEOPLE). SEOUL, THE LARGEST CITY OF THE COUNTRY AND ITS CAPITAL, IS LOCATED IN THE CENTER OF THE PROVINCE BUT THE CITY HAS A SPECIAL STATUS NONINTEGRATED INTO THE PROVINCE.

”

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GYEONGGI-DO – THE DRIVER OF THE REPUBLIC OF KOREA Kyungjun Kim, General Director, PBKO Holdings Corp, The Republic of Korea

2017 evidenced the early change of leadership in the Republic of Korea. The President elect Moon Jae-in announced the policy of extended cooperation with Russia. Herewith the Korean party adopted the program “New Northern Policy” and announced the incentive of “nine bridges” uniting our countries in such industries as shipbuilding, harbor development, employment and development of the Northern Sea Route, oil and gas, railway development, electrical energy, agriculture, fishing and workplaces creation. The Russian government supported the idea, and during the Eastern Economic Forum – 2017 the President of the Russian Federation V. Putin in his

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

turn suggested transforming these incentives into real projects. Following basic agreements between the leaders of the countries the practical part of the projects is carries out by the federal and regional state structures, governmental and private companies and businesses. The implementation is facilitated by the mutual visa-free regime for tourist and business trips, adopted on January 1, 2014. One of the examples of dynamic cooperation between the Republic of Korea and the Russian Federation is the activity of the Gyeonggi-do administration – one of the most populated province of the Republic with 13 million people. The administrative center of Gyeonggi-do is Suwon City.

Just like Moscow and the Moscow Region Seoul, the capital of the Republic of Korea is located in the center of province Gyeonggi-do but the city has a special status nonintegrated into the province. The population of Seoul is about 10 million people, about a half of 52 million people living in the Republic of Korea, live and work in Seoul and Gyeonggi-do. The delegation of Gyeonggi-do regularly visits different regions of Russia developing bilateral relations and cooperation in different areas. Basically one of the main advantages of the province is its geographic location close to Russia and the EAEU and CIS countries. Another important fact is that in Gyeonggi-do there are head-quarters

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Business in the countries

of the largest industrial Korean corporations (Samsung Electronics, LG Electronics, Hyundai Motor Group etc.), Pangyo Techno Valley and Gwanggyo Techno Valley, branches of the institute KITECH for the support of SME, technoparks and a large number of hi-tech companies. The administration of the province is interested in investments to the region, and the Euro-Asian vector is in the focus of Gyeonggi-do interests. One of the effective and popular forms of cooperation is the search for new technologies and their joint commercialization with the Korean partners. Gyeonggi-do supports companies which transfer their technologies to the province, set up their offices and production here. The province takes various measures to support such incentives. There are already some examples of the incipient cooperation between Gyeonggi-do and Russia. Thus in 2017 the Company Group “Far-East Transport Company” and the government of Gyeonggi-do signed a memorandum of cooperation and agreed to work together to create logistic and trade ties and relations, to attract investment to the transport facilities, to the Nakhodka sea fish port and container terminals, as well as to the development of the chain of cold storages and distribution of fish. On 7th June 2017 the ceremony of opening the Representative office “Gyeonggi Business Center” at the premises of the municipal government of Gyeonggi-do in Russia and CIS (“Gyeonggi Business Center – Moscow”), aimed to provide complex solutions for business of the most populated province of the Republic of Korea was held. Joint investment projects will be supported by municipal authorities in ac-

cordance with governmental goals and tasks and with regards to the mechanisms and instruments of state support. On September 22, 2017 in Moscow a four-party memorandum was signed on technical cooperation to design a selfdriving car between Gyeonggi-do, the Innovation center Skolkovo, “LATINTERKOM” and the Korean corporation “Prosence Co., Ltd.” And in 2018 Gyeonggi-do signed a memorandum of cooperation with State Corporation “Rostec” which will become a partner of the most hi-tech region of the Republic of Korea in machine tool technology, engineering, metal industry, electronics and optics. This partnership implies an

alliance of the opportunities of Russian development companies and technological capacity of Gyeonggi-do as well as investments. There are other examples of partnership: the province cooperates with a number of other Russian companies, and Gyeonggi-do already has a platform for further development of Russian technology – for example Gyeonggi-do Science and Business Accelerator (GBSA). Hopefully the relations between Gyeonggi-do and Russia will only strengthen. Particularly that on January 23, 2019 FBA EAC headquarters hosted the meeting of the representatives of the province’s authorities. The Korean delegation was represented by Deputy Director of the Investment Promotion Division of Gyeonggi Provincial Government Choi Won-Kyoo, Project Manager of the Investment Promotion Division of Gyeonggi Provincial Government Cho Eun-Suk and и Manager of the Investment Promotion Division of Gyeonggi Provincial Government Choi Hye-Kyo ng. The representatives of Korean company PBKO Holdings Corp. and Korean-Russian company Secufibre Co., Ltd. also participated at the meeting. The meeting was initiated by the Korean party in the face of the official visit of the President of Russia V.Putin to the Korean Republic in 2019. The head of the Korean delegation Choi Won-Kyoo spoke about the Republic in general and about the projects carried out in Gyeonggi-do first of all in R&D area. He also expressed interest in cooperation

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with Eurasian countries and in the investment promotion for the development of enterprises as well as in commercialization of the fundamental technologies in the province. Besides, Mr. Choi Won-Kyoo informed that the new governor of the province is currently providing governmental support to SME companies, and is seeking for private investments as well.

It is worth mentioning that Gyeonggi-do province is always ready to assist in the search for suitable Korean partners and technologies, to provide information about support programs for R&D both at the level of the region and at the governmental level, as well as to ensure administrative and financial support. For a start of cooperation Gyeonggi-do can offer to set up an office or a representa-

tive office of a partner company on the territory of the province. In conclusion it is important to say that potential economic partners from the EAEU and CIS countries willing to cooperate with counterparties on the territory of the Republic of Korea will find in Gyeonggi-do assistance to speed up their business in the current conditions and at the current level.

The meeting of FBA EAC management with the representatives of the Government of Gyeonggi-do province (23.01.2019)

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

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Expert opinion

CONTROL OVER CUSTOMS PAYMENTS IN THE DEVELOPMENT OF DIGITAL TECHNOLOGY

“

THE INTRODUCTION OF A NEW APPROACH TO TAKE INTO ACCOUNT CASH PAYMENTS FOR CUSTOMS PAYMENTS ALLOWS NOT ONLY TO GET AWAY ADVANCE PAYMENTS BUT ALSO TO USE THE WORKING CAPITAL OF A COMPANY MORE EFFECTIVELY.

”

Olga Alekseeva, Head of Customer Service LLC "Multiservice payment system"

The history of the creation of plastic cards for customs duties payment dates back to 1998 when as part of an experience in St. Petersburg, the first attempts were made to reduce the time required for cash and customs clearance through the use of customs plastic. Then in 2001, the technology of customs duties payments with the help of special bank cards was launched through POS-terminals, installed at customs posts and in the offices of legal entities. Since the customs began to actively engage with digital technologies and in-

troduced compulsory electronic declaration, participants of foreign economic activities have a need for the same technological payment mechanism. In 2013, the operator of customs payments LLC "Multiservice payment system" together with the Russian Federal Customs Service presented the technology for online customs duties payments through a personal account of the payment service without using payment terminals. In 2014, the service of remote payment of customs duties was launched, realized with the help of custom card “Round”.

With the development of information exchange with the Federal Customs Service of Russia it was possible to automatically generate accountings on all transactions made using the Round card. The next important step was the integration of the payment functions of the service into the interface of the electronic declaration programs. In new reality this tool has become the most popular among the Foreign Economic Activities participants. One of the main factors in the popularization of remote payment technolo-

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gy among companies was the high level of security and reliability. A special card account, opened with the acquiring bank, is tightly earmarked therefore it could be made only from company that holds the account and only in capacity of payment for customs operations on the Single Personal Account or regional customs accounts. The protected mode of the account also excludes the possibility of erroneous payment transactions. The growing need of participants of foreign economic activity in information services has resulted to the fact that the main focus in the development of the service was made on the formation of a single information-digital space for companies. Interaction with the Federal Customs Service of Russia allowed to form reports on all payment transactions. A service was developed providing the opportunity to send electronic reports to the Federal Tax Service, the Social Security Fund, the Pension Fund of the Russian Federation and the Federal State Statistics Service. Solutions on automating workflow with customs representatives,

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

services to verify the integrity of existing and potential contractors, services for cargo insurance online and many others were presented. The possibility of remote payment is integrated into the personal account of the participant of foreign trade activities and the Round card holders can make remote payments also on the FCS of Russia portal. The personal account on the FCS of Russia website is intended for personalized information interaction between a foreign trade activity participant and the customs bodies: it simplifies and speeds up the workflow, allows for single time placement of accompanying and permitting documents and makes possible to generate electronic documents. The personal account of the payment service provides an opportunity of effectively use the working assets of the company, get away from advance payment, cash balances on different budget classification codes when using both the ELS and personal accounts at the customs level, and automate the cash flow ac-

counting processes. In the personal account in real time all information needed for the administration of the process of customs clearance and accounting of customs payment is generated. The particular relevance of the Round service acquired after companies switched to working with a single personal account resource. The new system requires from companies the revision of business-processes, connected with financial accounting. The participants of foreign trade activities are used to getting consolidated information broken down by spending money for each specific declaration and payment document. However it is no longer possible because of the implementation of passthrough recording of receipt and expenditure of money from all customs. Many companies solve this problem by using the payment history in the personal account of the Round service where the binding of check numbers to the numbers of the documents of payment grounds is preserved. In addition, the service could insure the formation of a payment instruction in the bank for each completed transaction for submission to the tax authorities as a proof of payment of VAT when the return procedure is completed. The service also makes it possible to solve the decision of division the customs clearance of different trade flows and recording of spending money of legal entities with separate branches when the parent organization and the separate branch has the same TIN but different checkpoints. When using the Round payment service, the branch and the parent organization use two different special card accounts for customs payments and accordingly two different accountings and bank statements on completed transactions. Thus, the introduction of a new approach to take into account cash payments for customs payments allows not only to get away advance payments but also to use the working capital of a company more effectively. The use of a payment service helps financiers of companies with maximum accuracy to plan a cash flow budget, the company's payment calendar for the short and long term. And participants of foreign trade activity, switched over to the single business account, the service allows to solve issues regarding refund of previously paid VAT on imported goods, and also provides a tool for managing and dividing product flows when accounting for funds of legal entities with the divisional organizational structure or branches separated from the head office.

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History of money

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FROM THE GERMAN LANGUAGE THE WORD “NOTGELD” MEANS EMERGENCY/NECESSITY MONEY. THIS TRANSLATION FULLY REFLECTS THE CONTENT OF THESE BANKNOTES BECAUSE THEY WERE ACTIVELY USED AS AN EMERGENCY MECHANISM IN THE MONETARY SYSTEM OF GERMANY FROM 1914 TO 1924. HOWEVER SOME NOTGELD WAS IN CIRCULATION JUST FOR A FEW MONTHS, OTHER HAS EXISTED FOR MANY YEARS.

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NOTGELD – EMERGENCY MONEY OF GERMANY Every financial crisis leaves its mark, and even after decades, it is not difficult to find it in the monetary system of the state. Thus, the crisis events, which took place in Germany, at the beginning of the 20th century, led to an interesting monetary mechanism, as a result of which today, a century later, in many specialty shops you could find unusual bills of small size with intricate and colorful images. They are called “Notgeld”. From the German language the word “Notgeld” means emergency/necessity money. This translation fully reflects the content of these banknotes because they were actively used as an emergency mechanism in the monetary system of Germany from 1914 to 1924. However some Notgeld was in circulation just for a few months, other has existed for many years. The introduction of Notgeld was caused by an acute shortage of a bargaining chip on the territory of Germany. First of all, the reason of this was the consequences of the First World War. When its outcome became known, silver began to disappear sharply from circulation. As a result of these phenomena, the State Bank of Germany had to go to extreme measure, giving authority to a number of major urban centers and municipalities to issue their own subsidiary bonds which were in circulation along with the national currency. Today, studying these monetary surrogates, one can learn about the cultural aspects of a particular region, its customs. It is the originality of Notgeld that arouses the interest of many specialists in the field of money circulation and collectors of paper banknotes. In their opinion, the first Notgeld was issued in Bremen, on July 31, 1914, with

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

the face value of 1,2 and 2,5 marks. Those banknotes had no numbers and signatures and total emissions amounted to only 100 marks. This issue of Notgeld is especially rare and today the value of the remaining banknotes is quite high. The redoubled situation with subsidiary money gradually led to the fact that the list of cities, having emissions rights, gradually increased. Thus, many, even not the biggest cities issued their own money surrogates. Moreover, at some point, Notgeld began to be issued not only by big companies but also by snackbars and small shops. In total today there are more than 10 thousand of all kinds of Notgeld issues. Special attention should be paid to the materials of which Notgeld was made. Among them were not only paper bonds but also zinc, aluminum, leather, wood and even cloth. It is noteworthy that due to the shortage of materials Notgeld was printed on old playing cards, tablecloths and other things that were at least a little fit. The variety of images on Notgeld is also surprising and makes us study every single banknote. So, on the bonds you could find views of cities, military installations, factories, people and even strange images, the subject of which sometimes border on madness. In 1924 Germany made the switch to new money and the practice if issuing and using Notgeld began to be eradicated. Their fate was sealed, Notgeld turned into the collectible object…. Due to the colossal variety of Notgeld has led to the fact that their cataloging is extremely difficult and the cost of individual copies reaches quite impressive amounts.

Vitaly Krasnikov, аnalyst

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Financial system of Eurasian countries

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BOSNIA AND HERZEGOVINA IS A SMALL COUNTRY IN THE SOUTH-EAST EUROPE WITH A POPULATION OF 3.5 MILLION PEOPLE. ITS RESIDENTS SPEAK BOSNIA, CROATIAN AND SERBIAN LANGUAGES. THE TERRITORY OF BOSNIA AND HERZEGOVINA OF 51197 SQUARE KILOMETERS LIES IN THE WEST OF THE BALKAN PENINSULA AND IS SURROUNDED BY CROATIA, SERBIA AND MONTENEGRO. THE MAXIMUM LENGTH OF THE COUNTRY FROM THE WEST TO THE EAST AS WELL AS FROM THE NORTH TO THE SOUTH IS ABOUT 280 KM. THESE LANDS ARE CONSIDERED AN ANCIENT CROSS-ROAD OF THE EAST AND THE WEST.

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THE BANKING SECTOR IN BOSNIA AND HERZEGOVINA: BURN TO REBORN Berislav Kutle, General Director Banks Association of Bosnia and Herzegovina

Bosnia and Herzegovina is a country in Southeastern Europe, located within the Balkan Peninsula. Bosnia and Herzegovina is bordered by Croatia to the north, west and south, Serbia to the east and Montenegro to the southeast, sharing a maritime border with Italy. It si almost landlocked country – it has a narrow coast at the Adriatic Sea, about 20 kilometers (12 miles) long, surrounding the town of Neum. Population of Bosnia and Herzegovina is 3,5 million. Bosnia and Herzegov-

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

ina is home to three ethnic constituent peoples, Bosniaks, Serbs, and Croats, plus a number of smaller groups including Jews and Roma. Sarajevo is the Capital and largest city. The convertible mark (konvertibilna marka – KM) – the national currency is pegged to the euro through a currency board arrangement within Central banko f BiH, which has maintained confidence in the currency and has facilitated reliable trade links with European partners (1 EUR = 1,95583 KM)

Bosnia and Herzegovina’s Nominal GDP Per Capita is forecasted to be 5,703.869 USD in Dec 2018 as reported by International Monetary Fund – World Economic Outlook. It records an increase from the last reported number of 5,180.778 USD in Dec 2017. Looking ahead, Bosnia and Herzegovina’s Nominal GDP Per Capita is projected to stand at 7,731.390 USD in Dec 2023. According the B-H Directorate for Economic Planning, budget revenues rose 8.0% yoy to EUR1.8bn in 1Q18, with the strongest

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Financial system of Eurasian countries

positive contribution from 8.4% yoy higher VAT intake, followed by social contributions (+5.9% yoy) and toll revenues (+46.4% yoy) after administrative price hikes. BiH financial system is dominated by commercial banks. Currently 23 banks operate on the market. As Bosnia and Herzegovina is consisted of two entities: Federation of BiH and Republic of Srpska, there are two supervising bodies – two banking agencies for the banking sector: Banking Agency of Federation of BiH and Banking Agency of Republic of Srpska. In 2018, the banking sector proved to be a generator of business of BiH economy. Despite great competition, decreased interest rates and modest credit growth, the results of the sector's operations show profitability that has not been recorded in recent history. All banks achieve historically best results. According to preliminary data, as of December 2018, net profit of banks amounted 367,1 million KM (214,8 million USD) that is by 10% higher compared to previous year. Total assets of the banking sector, as of December 2018 amounted 30,9 billion KM (18,08 billion of USD), and grew by 10% compared to 2017. Credit growth in the same period was for 5,7% higher compared to 2017, while the total value of loans reached the level of KM 19.5 billion (11,4 billion USD). Legal entities (10,2 billion KM =5,9 billion USD) grew by 4,4% and loans to the individuals (9,2 billion KM = 5,4 billion USD) by 7.2% Deposits grew by 10,5% compared to 2017 and reached the level of KM 21.75 billion (12,72 billion USD). Deposits of le-

gal entities had much higher growth (14,3%) than deposits of individuals (7,7%). Loans to legal entities amounted to KM 10.2 billion (5,9 billion USD)(52.8% of share), while loans to individuals amounted to KM 9.1 billion (5,4 billion USD)(47.2% of share). The increase in deposits and loans enabled the increase of economic activity throughout the country. The growth rate of total loans for the period 2018 – 2019 could range around 5.5% y/y, and in the period from 2020 to 2021, about 4% y/y. With its reorganization that included a significant reduction in operating costs and a reduction in interest rates on loans,

banks have a significant impact on improving the overall economic situation in the country. Great attention is paid to reducing costs, through cost optimization, business reorganization, and investment in digitization as a new opportunity to generate revenue. The total number of active cards last year was above 2 million. The banking industry provides to its customers competitive offer as all the countries in the Region. The banking sector of Bosnia and Herzegovina emerged as a phoenix as postwar of the ‘90s. With the breakdown of the state of Yugoslavia in six independent states, a

Interest rates in Bosnia and Herzegovina and the region

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single payment system has disappeared, and therefore a solely banking in the state. Opposite to Bosnia and Herzegovina, in all other newly emerging countries banking relies on banks from the former state. In BiH, a complete banking system disappeared (in a war whirlpool, so a completely new system had to be formed. In order to form a new system all the relevant factors were missing. There was no new banking regulation, the money was extremely limiting factor, and the qualified banking staff was not even in its infancy. Under such conditions, the banking sector began to develop. It took almost

10 years to develop the appropriate banking regulations (banking agencies as banking supervisors) together with optimal staff and initial capitalization of banks. Going through these development phases, banking has also influenced parallel development of the economy. The economy, in almost all segments, has evolved from scratch. The old big business entities were market unsustainable, and the new ones in the collapsed land were still to be built. In such conditions the banking sector played a key role. With the development of corporate, the number of employees and the need for new products for the population in-

Interest rates in Bosnia and Herzegovina and the region KS

2012

2013

2014

2015

2016

2017

2018

BiH

8.38

8.03

7.42

7.12

6.31

5.43

4.95

Hrvatska

6.78

5.82

5.28

4.74

4.43

3.76

3.02

Srbija

11.74

11.12

9.44

7.30

5.63

5.18

5.12

Makedonija

7.64

6.96

6.52

6.80

6.37

5.97

5.61

Montenegro

9.25

9.00

8.67

7.54

6.44

6.02

5.61

NPL percentage in Bosnia and Herzegovina and the region – The World Bank data (2017) Albanija

13,23

Srbija

9,80

Hrvatska

11,20

Rumunija

7,95

Bugarska

10,43

Makedonija

6,09

BiH

10,04

Slovenija

3,20

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

creased, all of which multiplied the development of banks. Another important fact is the entry of foreign banking groups in the BiH market. With the entry of these banks, the development, quality and capabilities of banks were accelerated. Over the next few years, BiH banking offered the same quality of services as EU banks. The banking sector has been developing with an accelerated pace towards the global crisis of 2008, which our banking felt solidly. After that year, nothing is the same as before. We have all accepted the new regulation – rules of the game so that banking can fulfill its fundamental role. Today, the banking sector of Bosnia and Herzegovina does not stay behing the banking sector of the EU by quality at any segment. We are talking about self-sustaining, profitable banking with an never-lower NPL rate, as well as an ever-increasing ratio of revenues and expenditures. As such we stick to our core values: sustainability, transparency, excellence and entrepreneurship. We understand that we must be in the service of clients, suppliers, employees, the community, and as such we must achieve satisfactory return on capital. The banking sector is the most established part of the BIH society. Ss such it is the carrior of all developments in all segments.

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Financial system of Eurasian countries

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UZBEKISTAN IS LOCATED IN THE CENTER OF THE CENTRAL ASIA AND BORDERS WITH THE FOLLOWING STATES: KAZAKHSTAN, KYRGYZSTAN, TAJIKISTAN, AFGHANISTAN AND TURKMENISTAN. ABOUT 1/3 OF THE COUNTRY IS COVERED WITH PLAIN AND DESERTS WHILE THE REST OF THE COUNTRY IS MOUNTAINOUS AREA, OASES AND VALLEYS. THE POPULATION OF UZBEKISTAN IS 33 MILLION PEOPLE. THANKS TO GRADUAL REFORMS IN ALL SECTORS AND AREAS OF THE NATIONAL ECONOMY UZBEKISTAN HAS ENSURED A RELIABLE FOUNDATION FOR SUSTAINABLE DEVELOPMENT. ACCORDING TO THE FAMOUS WORLD ECONOMIC FORUM RATING UZBEKISTAN RANKS IN THE TOP 5 COUNTRIES WITH THE HIGHEST SPEED OF ECONOMIC DEVELOPMENT.

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MONETARY LIBERALIZATION

OF ECONOMY AS THE MOST IMPORTANT DEVELOPMENT FACTOR FOR THE REPUBLIC OF UZBEKISTAN Bakhtiyar Khamidov, General Director of UZBEKISTAN BANKING ASSOCIATION

The economy of the Republic of Uzbekistan during the years of independence was developing on the basis of national model, with regards to the social and economic potential of the country, the history of the Uzbek people, national values as well as the best world experiences. Thanks to gradual reforms in all sectors of Uzbek economy, its structure has changed dramatically ensuring a reliable foundation for sustainable development. One of the evidence is the balance of the main macroeconomic figures which can be seen in the recent years. According to the famous World Economic Forum rating Uzbekistan ranks in the top 5 countries with the highest speed of the economic development. Further development and liberalization are among the key focus areas defined by the President of the Republic

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

Shavkat Mirziyoyev in the Development Strategy of the Republic of Uzbekistan in 2017–2021. It implies the achievement of macroeconomic stability and sustainable growth of economy and its sectors, profound structural and institutional changes, increased competition of goods due to the processing of mineral resources, higher potential of the regions, districts and cities, intense agricultural development. The results of 2018 evidence the growth of GDP by 105.1% in comparison the previous year (in 2017 – 104.5%). At the same time the share of GDP ran at 59.4%, and CPI inflation – 14.3%. It is worth mentioning that Uzbekistan is one of the largest economies of the Central Asian region. About 24% of GDP comes from industrial sectors. Economic growth is mostly stipulated by high rate of industry (114.4%) and

construction (109.9%). At the same time overheating are mining (125.4%) and processing (113.2%) industries. The growing consumer demand encouraged the production of consumer goods (115.9%), trade (105.5%) and services (108.4%). Foreign trade turnover in the previous year increased by 27.3%, export by 13.6% – due to further development of export potential and stronger competition of the national economy. In 2018 the monetary policy aimed at stability of the national currency, at the achievement of the determined macroeconomic figures, stimulation of the production of goods for export and better competition on foreign market. To reach this goal and continue further reforms and liberalization of the banking system certain measures were taken to form a full-fledged market of banking

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Financial system of Eurasian countries

External turnover of the Republic of Uzbekistan ($m) 2017

Import

Export

services, to ensure sustainable development of the banking system, to raise the effectiveness of commercial banks and other credit organizations and expand their participation in the investment processes, on securities market and in the structural economic changes. Investment activity was also stimulated last year. As a result in 2018 the amount of investments to the economy grew by 18.1% including centralized investments – by 159.9% and non-centralized – by 105.3%, besides the investments grew to the large and small enterprises as well. Raising income and living standards of people is one of the main tasks in the ensuring of their social security. With this regard 2018 brought a two-stage salary rise with nominal growth by 25% in comparison to the same period previous year. The measures to create competitive environment, favorable for the small business, to support and ensure freedom of its activity induced this sector considerably. In 2018 the number of newly established companies of small business was 48.9 thousand, accompanied by additional workplaces. Within the State program in 2018 76 thousand projects were executed amounting to UZS 21 trillion and 1 billion US dollars. Within the programs “Obod kishlok” (comfortable village) and “Obod mahalla” (comfortable district) UZS 3 trillion were invested into the provision of amenities to create comfortable life in more than

January–December 2018

Еxternal turnover

400 villages and mahallas of the Republic of Uzbekistan. A big work has been conducted to provide the population with housing: according to the Program on construction of affordable housing under the revised standard designs in the rural areas in 2017– 2021, affirmed by the order of the President of the Republic of Uzbekistan more than 53 thousand of affordable houses and apartments were constructed; about 65 thousand families were provided with housing. The Program also implies the construction of 1136 multistorey apartment houses (50 286 apartments) were built and 75 houses were constructed in the rural areas. Within the programs “Every family is an entrepreneur” and “Youth is our future” UZS 2 trillion in total were allocated for more than 2600 local business projects. Preschool education reforms are also in the focus of the President of the Republic of Uzbekistan. In the recent two years the number of pre-schools increased by 1400 and today amounts to 6367. To continue reforms of preschool education sector, including private, to enlarge the network and improve the material and technical equipment of pre-schools, to cover more kids and to create favorable conditions for public-private partnerships in the sector the Resolution of the President dated 05.04.2018 №PP-3651 “On the measures to stimulate and develop the preschool education system” adopted the Provisions for public-private partnership in the preschool education sector. The

Export

Import

number of public-private pre-schools doubled last year, today there are 568 already. Another thousand kindergartens are on the way. Higher education has also gone through dramatic changes: in the recent two years five new institutes appeared as well as 12 branches of prestigious foreign institutes. Social sector was also in the focus in 2018, together with social protection of the population and the improvement of remuneration system, leading to the rise of the real income of the population by 12% in comparison to 2017. It is worth mentioning that the ongoing reforms in Uzbekistan and their results are acknowledged by the leading rating agencies. For example Fitch Ratings and Standard&Poor’s assigned a sovereign credit rating to the country for the first time. This rating has the prognoses “stable” and means weak possibility of figures decrease in the nearest 12–18 months. JPMorgan Chase, the largest USA bank by assets, became Uzbekistan’s adviser to gain the sovereign credit rating and sovereign bond issue. As a result of the reforms new market mechanisms are introduced in the banking system, financial availability for the entrepreneurs and the populations improve. New banking services are introduced which simplify exchange transactions for people, self-employed entrepreneur now can buy foreign currency under certain conditions.

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The Resolution of the President of the Republic of Uzbekistan №ПП-3272 dated 13.09.2017 “On further development of monetary policy” focuses in particular on the new targets of principles and mechanisms of monetary policy of the Central Bank. The relevant complex of measures for 2017–2021 is also approved and includes gradual move towards inflation targeting applied by central banks in many countries for the stability of domestic prices. Through the whole period of the banking system development the state policy has created special conditions for banks and stipulated financing of the sectors which are crucial for national economy and socially significant. The focus areas of banks financing are investment projects which introduce modern technologies and resource-saving technologies, create new hi-tech types of production, develop infrastructure, support small business and private sectors of production industry. At the same time it is worth mentioning that the majority of state banks in the banking system hiders competition and development in the sector, weakens monetary policy and makes large banks ineffective in providing their traditional services. With this regard the President of the Republic of Uzbekistan instructed to raise money from the private sector to the share capital of banks and to reduce state’s share, as well as to increase the number of foreign banks in the country.

After that the cooperation with international and foreign financial institutes became more active. There is European Bank of Reconstruction and Development on the financial market of the Republic. In 2017 credit agreements were signed with the bank at the amount of $ 186 million; this year 15 investment projects are planned. The cooperation with the World Bank Group is also developing: the amount of earmarked funds in 2018 was $840 million – the highest figure in the last five years. The largest partner of Uzbekistan in the international investments is the Asian Development Bank with a portfolio of investment projects in the Republic up to 2020 amounting to $2.9 billion. This cooperation is successful in energy and transport sectors, city infrastructure, improvement of state services and access to financing for small and medium enterprises, agriculture. In the medium-term future the main targets are defined to set the guidelines of banking sector in Uzbekistan. First of all it is financial stability of banks and wider range of financial services on the domestic market. Secondly it is the participation of Uzbek banks on the global capital market. All these measures evidence the intentions and commitment of the country to integrate into the world economy. The Decree of the President of the Republic of Uzbekistan №УП–5177 dated 02.09.2017 “On the priority measures

of liberalization of the monetary policy” was the follow-up of the execution of the targets set in the Strategy of five priority development area in the Republic of Uzbekistan in 2017–2021 (to introduce market mechanisms of monetary regulation, to encourage export potential of the country, to attract FDI, to develop competition of domestic producers at the foreign and domestic markets, to improve investment climate and business environment in the Republic). This Decree introduced conversion for the current international transactions for many companies, created equal and transparent sale conditions for the purchase of foreign currency at the market rate. Legal entities now have an opportunity to freely convert their equity capital into foreign currency in banks without limits or additional requirements, control of reasons, delay of transaction. The national currency devaluation (almost two times) eliminated the imbalance between import and export transactions when two different rates at the market reduced interest in export of own production. The Decree also cancelled the obligation to sell part of currency earnings from export of goods (labor, services) for all exporters, no matter the form of ownership and exported products. An important result of the first steps of liberalization of the currency market was the adjustment of prices of cash and noncash, shut-down of shadow market.

Structure of goods and services export ($m) 2017

Cotton fiber Food products Chemical production and articles made from it Energy products and oil products Primary metals EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

January–December 2018

Machinery and equipment Services Gold Textile Other 77

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Financial system of Eurasian countries

In 2018 the external turnover of the Republic amounted to $ 33 815.3 million and increased by 27.3% in comparison to the same period previous year. The volume of export amounted to $ 14 257.9 million (growth rate– 13.6%), import – $19 557.4 million (growth rate – 39.6%). In 2018 the number of foreign trade operators increased by 446 in comparison to the same period previous year and reached 3509 last year. The development of foreign trade relations of Uzbekistan is guided by the real needs of national economy which is going through market reforms. Today foreign capital is invested into 456 projects for the amount of $23 billion. Resulting from the government’s policy of wider cooperation with CIS countries their share in the external turnover in 2018 amounted to 36,8%; the growth rate was 136.9% in comparison to the same period previous year. China and Russia have the largest share in Uzbekistan’s exports - 35,5%. The gradual policy of moderate external loans has presented to Uzbekistan the image of a financially reliable international partner, who repays its obligations in time; has allowed to form necessary forex reserves, to focus currency resources on the priority areas of modernization, technology and diversification of the main sectors of the real economy.

To speed up economy and raise investment prospects of the country Uzbekistan has approved a Concept of the improvement of tax policy which was widely discussed with the participation of business society, foreign financial institutes and recognized experts. According to this Concept important changes are carried out in the tax policy of Uzbekistan. For example previously the maximum income tax rate was 22.5%, and now it is 12%, insurance payments of 8% were cancelled. The high rate of the single social payment was reduced from 25% to 12%, mandatory deductions of 3.2% to the Non-budgetary pension fund, special-purpose road and education funds were cancelled. Customs duties were also reduced for almost 3500 types of goods; excise duties for about 800 items were reduced as well. There will be to customs duties for the raw materials, equipment and technic which are not produced in Uzbekistan but are imported for industry engineering. The requirements to 138 types of licenses and allowances were simplified, 42 documented were fully cancelled. Starting from 2018 part of taxes which have exceeded the anticipated parameters remain in local budgets, thus the regions have received additional UZS 5.5 trillion. It is six times more than in 2017 and 32 times more than in 2016. The main goal of the Tax concept 2019 is to reduce the tax burden, to cre-

ate a simplified and stable tax system and thus to improve competition of the economy and create the most favorable conditions for business and investors. Considering the aforesaid and as a follow-up of the work started in 2018 the President of the Republic of Uzbekistan has announced 2019 The year of active investments and social development. In 2019 about UZS 138 trillion of investments from all sources are planned to be spent, that is by 16% more than in 2018. In comparison to the previous year the amount of FDI will increase almost 1.5 times and reach $4.2 million putting into service 142 modern enterprises. There is no doubt that all measures taken will first of all ensure advanced development and modernization of the economic sectors, industrial and social infrastructure, complex diversification and higher competition of the industrial production. In addition these complex measures will create a foundation for more intense investment policy, focused efforts and reasonable resource exploitation with regards to all work aimed at the funds raise and implementation, including FDI. All the abovementioned will allow to carry out the strategic and priority investment projects of technical and technological modernization of the existing production and to create new advanced factories, followed by better employment and living standards.

Structure of goods and services export ($m)

2017 January–December 2018

China Russian Federation Kazakhstan Turkey Afghanistan Kyrgyzstan Tajikistan 78

China Russian Federation Kazakhstan Turkey Afghanistan Kyrgyzstan Tajikistan

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EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019

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PHOTO CONTEST

PHOTO CONTEST “THE WORLD THROUGH THE EYES OF A PHOTOGRAPHER” – 2018

RESULTS Photographic art became a routine long ago. There is no wonder to anyone when we see people snapping moments of our lives, catching the reality and surroundings into their cameras, smartphones or even a film. And nobody doubts that photography is an art. However it wasn’t always so: it took time for the photography to find its place in the art, to prove its right for this place and to stand in one row with paintings, sculpture, cinematography… And to stand there on merit: since the photography not only reflects the reality – it reflects the reality in accordance with the outlook of a photo-artist, his idea reflected in the picture. Here we find philosophy, beauty; and here is no place for falsity like in any other art. And the main thing is that the picture reflects the inner world of an artist, thus enriching us too – those who contemplate his works. Today in the era of digital technologies photography is quite available. However the technologies haven’t made the process easier – rather vice versa: the more complicated instruments are, the higher requirements are there for the master and his virtuosity and talent.

At the same time the technical progress has played positive role too. Today not only professionals can tap into the art of photography, but also armatures have such opportunity, those people who want to share the beauty of the surrounding works, who have fine appreciation of this world, sometimes even better than professionals. And this is wonderful, since creativity is part of our life which makes it meaningful… That was how the idea of the contest appeared – for those who wanted to share their view of the world, to awake emotions and the sense of belonging to the beauty – and thus to make our life more interesting and diverse. At the beginning of 2018 the Editorial board of the Eurasian Financial & Economic Herald announced the international contest “The world through the eyes of a photographer” for non-professional photographers. There were different topics: from «native nature», «countries and cities» to «world of emotions» and «family album». During the last year on the page of the magazine readers saw the works of non-professional photographers from different parts of the world. About 40

Ksenia Tereshenko, Legal Counsel of FBA EAC took the first prize

people from 17 countries presented their works; 520 pictures were sent in total. On November 30, 2018 within the ceremony «Financial Elite of Eurasia” which gathered 150 people, there was a wrap-up of the contest. Finalists were: Alexander Shokhin – Russia Shakhir Jailan– Turkey Natik Agasalim Ogly Isaev– Azerbaijan Irina Belonosova – China Ksenia Tereshenko– Russia Olga Kupchinova– Belarus Demchigjav Molomjamts– Mongolia Elena Alasavichyute– Lithuania Alexander Misurkin– Russia Vladislav Vetrovets– the Czech Republic Zlatko Saye– Slovenia Manish Kumar– India Tatiana Kalina– Kazakhstan The guests of the evening reception formed “people’s” jury who voted digitally. The interactive voting determined three best pictures and three best photographers. Ksenia Tereshenko, Legal Counsel of FBA EAC took the first prize. Alexander Misurkin, Hero of the Russian Federation, space-pilot of Russia ranked second. Manish Kumar, General director of Soltex group was the third. The Editorial board of the Eurasian Financial & Economic Herald also presented People's Choice Award. The award went to Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs. Unfortunately Mr. Shokhin couldn’t attend the ceremony, and the award was taken by Alexander Murychev, Executive Vice-President of RSPP. There is great news for those who couldn’t take part in the contest last year: the contest goes on! We are looking forward to new authors and new works for the contest “The world through the eyes of a photographer” – 2019!

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PICTURES – WINNERS OF THE COMPETITION “THE WORLD THROUGH THE EYES OF A PHOTOGRAPHER” – 2018

EURASIAN FINANCIAL & ECONOMIC HERALD | #1(6) 2019