The law was adopted by the Jogorku Kenesh of the Kyrgyz Republic on April 6, 2022.
The law is aimed at simplifying the procedure of Public procurement and minimizing corruption. It provides for the purchase of 4 methods, such as unlimited, restricted, request quotes and method from one source.
In this case, the law does not regulate purchases made by state and municipal enterprises, joint-stock companies, where 50 and more percent of the share in the authorized capital belongs to the state, including their property.
It should be noted that a number of public organizations were asked not to sign this law on the grounds that it contains corruption risks.
Exclusion of joint-stock companies and their subsidiaries and state / municipal enterprises under the Public Procurement law contains serious corruption risks. Concern raises the issue of ensuring transparency of purchases of joint-stock companies and their subsidiaries and state / municipal enterprises, taking into account that the annual volume of transactions and their purchases reaches 25 billion soms, and this is 38.5 percent of the total volume of state purchases in the country. At the same time, the cost savings from conducting transparent and open procurement procedures in 2021 among joint-stock companies and their subsidiaries and state / municipal enterprises amounted to 3.0 billion soms. On this day, the current portal of state purchases (http://zakupki.gov.kg/) provides openness and transparency, as there is a single point of access to information on the number of purchases made by buyers. The current Public Procurement law provides an opportunity for joint-stock companies and their subsidiaries and state / municipal enterprises to conduct their purchases transparently, openly and effectively. Also, as indicated above, there is a significant economy, which is achieved due to the expansion of competition.
However, with the exclusion of joint-stock companies and their subsidiaries and state / municipal enterprises from the operation of the Public Procurement law, there are serious corruption risks, such as:
• Increased corruption
Joint-stock companies and their subsidiaries and state / municipal enterprises will conduct closed purchases, awarding the victory only to their "favorite" suppliers. This, of course, will affect the increase in the prices of purchased goods, works and services, and you can generally forget about the economical spending of funds;
• Decreased state control over activities
of joint-stock companies and their subsidiaries and state / municipal enterprises and as a result, inefficient use of taxpayers' funds in Kyrgyzstan. It should be noted that all the above-mentioned organizations are part of the public sector, and almost all receive huge amounts of funds from the state budget in the form of subsidies, earmarked budgetary allocations, funds to increase authorized capital, concessional loans, and also in the form of payments from the population for the services provided;
• Non-transparent procurement
Purchases by Joint-stock companies and their subsidiaries and state / municipal enterprises want to be brought “into the shadows”, and this is a violation of the personal rights and freedoms of citizens established by the Constitution of the Kyrgyz Republic. Thus, Article 33 of the Constitution provides for the right of citizens to receive information about the activities of legal entities with the participation of state bodies and local self-government bodies, as well as organizations financed from the republican and local budgets.
• Limited purchases
Many business representatives will not have access to procurement conducted by joint-stock companies and their subsidiaries and state / municipal enterprises. Only affiliates and close associates, with whom it is easier to negotiate, will have access to purchases by joint-stock companies and their subsidiaries and state / municipal enterprises. Thus, the law "On Competition" is violated and the rights of entrepreneurs guaranteed by the law "On Protection of the Rights of Entrepreneurs" are infringed.
• Decreased trust on the part of business and civil society
Thus, the withdrawal of joint-stock companies, state enterprises joint-stock companies and their subsidiaries and state / municipal enterprises from the scope of the Public Procurement law will lead to the creation of conditions for the flourishing of corruption, which is a violation of the principles of the exercise of state power established by the Constitution. Recall that, in accordance with Article 4 of the Constitution, public officials are prohibited from carrying out actions that create conditions for corruption. At the same time, deputies of the Jogorku Kenesh are also public officials and, when making decisions, should be based on the country's international obligations, analysis of regulatory impact, and take into account the best international practices.
The actions of the Parliament can trigger a domino effect and lead to the collapse of the public procurement system, which has been working and developing exclusively in a positive direction for the past 7 years,” the civil sector said in an appeal.
