No apartments, no money
The problem of deceived participants in the shared construction of multi-apartment residential buildings in the Kyrgyz Republic is relevant to this day. People who have suffered from unscrupulous businessmen are forced to participate in protests in order to draw attention to their misfortune. We are talking about thousands of Kyrgyz who invested money in the future roof over their heads at various stages of building houses and in the end received no apartments.
Law enforcement agencies accept requests and initiate criminal proceedings. As, for example, in the recent case of a company that promised to build 11 nine-storey buildings in Bishkek. Arab investors were supposed to participate in the project. But when about three million dollars were collected from those who wanted to buy apartments at affordable prices … In general, the result of this “construction”, which even began, but, as it soon turned out , only as a distraction, was the arrest of the head of the company and the initiation of criminal proceedings for article “fraud”.
As reported in the capital’s police department, the applicants claim that the money collected was squandered in the business. “An investigation is ongoing,” police said.
No such law
The situation is aggravated by the fact that participants in shared construction in the Kyrgyz Republic are not protected by law, and the state, although issuing permits to construction companies, is not responsible for what they promise. In other words, people act, as they say, at their own risk. According to former member of parliament Aida Kasymaliyeva, who spoke about it several times in the media, including in the RG, urgent measures must be taken.
- The mechanism that leaves people homeless and without money works well. For example, a company is registered with the Ministry of Justice, while no one checks the amount of capital and the presence of assets of its founders. Then she concludes an agreement with the owner of the land, after which, having developed a construction project and approved it in the relevant government agencies, she begins to attract money from shareholders. After a while, the extraction of the foundation pit and the laying of the foundation simply disappears. The owner of the land again makes a deal with another construction company, which has no idea of the shareholders. She completes the construction of the house and sells apartments to completely different people, the ex-MP explained.
Vladimir Pluzhnik, head of the Vigens Center for Consumer Rights Protection, also supports Aida Kasymaliyeva. “The country does not yet have legislation governing housing construction. Therefore, it is difficult to resolve disputes between shareholders and developers in court,” he told reporters.
At the same time, Vladimir Pluzhnik believes that the situation will not change, because construction companies have a strong lobby in government structures and they will do everything in their power to leave everything as it is.
option by option
How can we disagree with him, if only in 2022 two attempts had been made to adopt a document that would provide “guarantees to shareholders and create the conditions for the successful and conscientious implementation of the intentions of customers, developers and investors”? Firstly, the Cabinet suggested drawing on the experience of the Russian Federation, when shareholders deposit money in special escrow accounts in banks, and the construction company does not have access to funds as long as the house is not put into service.
But then this proposal was withdrawn, and a new one was presented – a softened version of the first, already without an escrow account. As the Gosstroy of the Kyrgyz Republic explains, today it is very difficult to build houses on your own or on credit and to provide access to shareholders’ money only after handing over the keys to the lucky owners of apartments. Especially against the background of the rising cost of building materials.
However, this softened version, having passed the stage of public debate, has disappeared from the field of information.
Gosstroy recently presented the third draft of an important document – with minor changes. This time around, the chances of the country finally passing a legal act that will protect shareholder rights are high. However, the process is now under the control of the President of the Kyrgyz Republic. Sadyr Japarov, we recall, after the recent earthquake in Turkey and Syria, demanded to restore order in the construction of housing in the republic.
Join the register
According to the draft regulations on participation in the construction of apartment buildings proposed by Gosstroy, it is proposed to create an open register of objects under construction in Kyrgyzstan. This will be a single electronic database containing developer information. Only companies in good faith that have all the necessary title deeds will be able to enter the register.
“A non-registered developer may not advertise construction projects, carry out civil law transactions on them and carry out financial transactions,” the regulation says.
As stated in the draft document, customer funds may be used only for the purpose of fulfilling contractual obligations. “It is prohibited to direct client funds for the following purposes: to cover other borrowings; allocation of financial aid; constitution of the approved fund of economic entities, acquisition of stocks, shares and bonds; acquisition of goods (works and services) unrelated to construction; payment of dividends to the founders (shareholders) until the site is fully commissioned. The business manager is personally responsible for the intended use of client funds,” the draft stresses.
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