In modern conditions of economic development in Kyrgyzstan, the introduction of new financial instruments plays a key role in stimulating sectoral growth and improving the country’s financial infrastructure. In this context, the State Development Bank presents a new loan product aimed at supporting light industry, a strategically important sector of the economy.
Deputy Head of the State Development Bank Azizbek Saipidinov told the editorial board of “Akchabar” about the main aspects of this product and its advantages for companies in the garment industry.
— AZIZBEK KAZAKBAYEVICH, WHAT IS THE STATE DEVELOPMENT BANK DOING NOW AND WHAT IS ITS MAIN GOAL?
— The State Development Bank started functioning in April last year. The Bank is a specialized financial development institution, the main purpose of which is to diversify and stimulate the development of our country’s economy.
During its formation, the bank carried out work on organizational, personnel, legislative issues, as well as established the main internal business processes and internal regulatory framework, including lending. This allowed the state bank to start financing projects back in 2023, while making a profit is not our main goal. Thus, the State Development Bank offers loans at low rates, which are significantly lower than the average market rates – from 6% to 14% per annum on a medium and long-term basis.
At this stage, taking into account the priorities of the state investment policy and economic development, the State Bank has identified sectors in which projects will be financed primarily — industry, mining and processing of raw materials, green finance, IT technology, E-commerce, transport and logistics, as well as other industries that meet the goals and objectives of the bank.
By the way, given the importance of light industry for the country’s economy, the State Bank has developed a special loan product.
—PLEASE TELL US WHAT ADVANTAGES DOES THE NEW PRODUCT OFFER TO COMPANIES FROM THE GARMENT INDUSTRY?
—The new product allows companies operating in the field of clothing and textile production to receive financing at low rates. Today, the commercial sector offers business lending rates from 19% and above, while the average loan term is up to 3 years, much less often — up to 5 years.
— AZIZBEK KAZAKBAYEVICH, HOW DOES THE NEW PRODUCT MEET THE UNIQUE FINANCIAL NEEDS AND PROBLEMS FACED BY WORKERS IN THE GARMENT INDUSTRY?
— Before developing the product, the State Development Bank held a meeting at the Ministry of Economy and Commerce of the Kyrgyz Republic with representatives of the garment industry and received feedback on their needs. Obviously, the main need of workers in the garment industry, as well as almost any type of business, is a lack of working capital and the high cost of credit resources. Taking into account these factors, we have developed a loan product that allows us to obtain financing not only to increase the main production capacities, but also to replenish working capital at a rate below the market average for similar projects.
—CAN YOU PROVIDE DETAILED INFORMATION ON THE CRITERIA BY WHICH GARMENT INDUSTRY WORKERS CAN ACCESS THIS NEW PRODUCT?
— Yes, of course. As a rule, these are subjects of the light (clothing and textile) industry that have been operating for at least 6 months.
The projects should be aimed at diversifying and stimulating the light industry in the Kyrgyz Republic, creating jobs and leveling the economic development of the regions.
Within the framework of this program, the intended purpose should be such areas of financing as:
- acquisition, renovation, expansion and modernization of fixed assets, including repair of premises and equipment;
- replenishment of working capital, including the purchase of fabric, consumables and other working capital.
More detailed information can be found on the bank’s website or at partner banks through which the new program is being implemented.
— AZIZBEK KAZAKBAYEVICH, WHAT ARE THE INTEREST RATES AND REPAYMENT TERMS ASSOCIATED WITH THE NEW PRODUCT?
— In general, the bank has several types of loans, and the conditions depend on the scale of the business and the amount of the planned loan.
Specifically, this product involves lending from 1 million soms through partner banks. The rate will be up to 14% per annum, and the term will be up to 5 years. At this stage, the partner banks are CJSC Bank of Asia, JSC Bank Bai-Tushum, JSC Bakai Bank. Customers can contact these banks for more detailed information and submit a request for financing.
If the loan amount is 10 million soms or higher, then the rate will be significantly lower — from 9% and the loan term can be extended to 8 years, while registration and issuance is also carried out through partner banks.
If the loan amount is 20 million soms or higher, then in this case the rate is even lower — from 6%, and the maximum term is up to 10 years. In this case, the client can contact the State Development Bank directly, where he can get a free consultation or go to the website and leave a request.
— HOW DOES THE PROCESS OF APPLYING FOR AND APPROVING A LOAN FOR A NEW PRODUCT WORK?
—As I mentioned earlier, the process of submitting and reviewing a loan application can take place through the State Bank directly or through a partner bank, depending on the loan amount.
If the amount is less than 20 million soms, the issue is carried out by the partner bank and is carried out in accordance with its regulatory requirements. This is usually the standard, generally accepted process for applying for a loan from commercial banks.
If the amount of the application is 20 million soms or more, consideration is carried out through the State Bank directly.
As a rule, the process (from application to loan issuance) of providing a complete set of documents takes about 1 month if the borrower is solvent and meets the criteria of the program. Of course, the timing depends on many factors, such as the amount of financing, the scale of the business, its target orientation, etc.
— HOW DOES THE NEW PRODUCT ALIGN WITH THE BROADER GOALS AND INITIATIVES OF THE STATE DEVELOPMENT BANK TO SUPPORT ECONOMIC DEVELOPMENT AND EMPOWERMENT?
— Light industry is a priority industry for the country. Development and investment in this sector of the economy are part of the approved strategy of the State Development Bank, as they have a positive multiplier effect: creating new jobs, increasing budget revenues, strengthening the country’s export potential and, of course, GDP growth.
— WHAT MEASURES ARE BEING TAKEN TO ENSURE TRANSPARENCY AND FAIRNESS IN THE DISTRIBUTION OF THIS NEW PRODUCT TO WORKERS IN THE GARMENT INDUSTRY?
—To inform the subjects of light industry, letters were sent to such specialized associations as the Association of Light Industry Enterprises of the Kyrgyz Republic LEGPROM, the Association of Fashion and Textiles, the Business Association of ZHIA, the Association of Suppliers (Manufacturers and Distributors), the Union of Legal Entities, the Union of Textile Industry Enterprises Soyuztextil with information about the launch of a new loan product.
Also, the State Development Bank, together with the Ministry of Economy and Commerce of the Kyrgyz Republic and partner banks, plans to hold events to inform stakeholders about this loan program.
In general, interested companies have the same access to information. Applications are accepted and processed in the order in which they were received, subject to the provision of a complete set of documents required for the loan. Financing will be provided to a solvent company that meets the financing criteria.
— AZIZBEK KAZAKBAYEVICH, HAS FINANCING BEEN ALREADY PROVIDED WITHIN THE FRAMEWORK OF THE NEW PRODUCT? IF SO, COULD YOU PROVIDE INFORMATION ON HOW MUCH AND TO WHOM IT WAS ISSUED AND UNDER WHAT CONDITIONS?
— Yes, two light industry companies have already received financing. The disbursements of credit resources were carried out through partner banks in accordance with the above conditions, the bank is not entitled to disclose more detailed information due to the requirements for maintaining bank secrecy.
As we noted above, the bank is ready to finance the business directly in the amount of over 20 million soms on even more favorable terms.
At the same time, any light industry company with smaller loan amounts has the opportunity to contact a partner bank and get a loan if the requirements and conditions of this program are met.
In turn, the state bank is ready to finance the light industry in sufficient volume to contribute to the development of the industry and the economy as a whole.