The John Batchelor Show

Friday 15 November 2019

Air Date: 
November 15, 2019

JOHN BATCHELOR SHOW
 
Hour One
 
On the Road to Tashkent
Sponsored by Scala.com
The Role of Capital Markets in the Development of Uzbekistan
Friday 15 November 2019/ Hour 1, Block A: Samir Taghiyev [Azerbaijani], senior regional manager for CIS countries at ICD, Almaty; Office of Islamic Corporation for the Development of the Private Sector (ICD) in Kazakhstan; in re:   Friend in common: head of Baku port.  We’re a private-sector arm of Islamic Development Bank. I’m in charge of Kyrgyzstan, Tajikistan, Kazakhstan, Uzbekistan, Turkmenistan, Azerbaijan.  Islam forbids charging interest, so a careful mechanism has been instituted: financial certificates, commonly referred to as "sharia compliant" bonds. Sukuk are defined by the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) as "securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets.” We work in sukuk, and we’re creating dollarized sukuk for a client who wants to be able to sell Islamic bonds to a complete world audience..  Our partners are the World Bank, the European Investment bank, [many majors].  My bank is headquartered in Jeddah.
Friday 15 November 2019/ Hour 1, Block B:  Samir Taghiyev [Azerbaijani], senior regional manager for CIS countries at ICD, Almaty; Office of Islamic Corporation for the Development of the Private Sector (ICD) in Kazakhstan; in re:  US-educated people are now given top governmental posts.  Dr Talleh, our friend in common from the Port of Baku, which will be integrated into the Silk Road, which also [motivates] us to aid our neighbors.  Turkish Economic Union.  Banks and financial firms both speak amiably with each other and compete with each other. Very healthy.
Friday 15 November 2019/ Hour 1, Block C:  Elena Khisamova, VP/Head: Equity Capital Markets, Gazprombank JSC, based in Uzbekistan; and Denis Shulakov, First Vice President of Gazprombank  (Joint Stock Company), based in Uzbekistan, Research Division; in re: Professional backgrounds. Finances in Central Asia; Uzbekistan is especially attractive: 33 million   people n the Middle of Central Asia, is underdeveloped, and [learning] to monetize what it has, including mineral assets. We provide the same services as American banks do. Ruble as an instrument of international finance, especially among Russophone CIS nations (Commonwealth of Independent States].
Friday 15 November 2019/ Hour 1, Block D:  Vassily Savin [Kyrgyz national], Head of Power & Utilities group, KPMG in Russia, in re: This conference in Uzbekistan is different from previous ones in that Uzbekistan is creating significant changes and reforms. I also cover Kazakhstan and Kyrgyzstan; much oil and gas reorganizing. Kazakh and Uzbek natural resources are similar. KPMG provides analyses, help in markets; we guide in business and assist in creating needed transparency.   Kyrgyzstan is beautiful, mountainous, and offers amazing hiking and camping.  [Especially Issyk Kul. —ed.] Ten years from now, per capita GDP will be much higher, technology will be considerably more advances, and Uzbekistan will develop faster than its neighbors. One factor will be a [much richer] educational system. 
 
Hour Two
 
On the Road to Tashkent 
Sponsored by Scala.com
The Role of Capital Markets in the Development of Uzbekistan
Friday 15 November 2019/ Hour 2, Block A: Atabek Nazirov, Capital Markets Development Agency Director, Uzbekistan;  in re: Main objective for today’s event to bring together all the main stakeholders in Central Asian capital markets.  Governments, SOEs, broker-dealers, asset managers, media, from all over the world. I’m very happy with how this is going. We need robust, efficient capital markets in order to build wealth. Should be at least the same size as the banking sector. Korea has done this.
Friday 15 November 2019/ Hour 2, Block B: Atabek Nazirov, Capital Markets Development Agency Director, Uzbekistan;  in re:   Atabek is supervising and the MC of a very large conference, The Role of Capital Markets in Uzbekistan – translation: the bankers are here!  If you add up the populations of all five “stans” plus Azerbaijan, Afghanistan, and the Caucasus, it’s huge.  Uzbekistan has made regional integration a foreign policy objective, and the former tension is going away, at least among policy makers.  Imperfections include water usage, but it’s all improving.  Regulators of Kazakhstan, Turkmenistan, and Afghanistan have sent representatives to a training here.   JB: I’ve been very impressed by the highly-educated and capable Afghan representatives.  AN: It’s the biggest exporter in Central Asia to Uzbekistan.  I’ve recently left the private sector to work in govt; was shocked to see some f how it functioned. We’re [fixing it]. 
Friday 15 November 2019/ Hour 2, Block C: Hannes Takacs, associate director; head of the ECM and CMI Dvpt, Local Currency & Capital Markets Dvpt; European Bank for reconstruction and Development (EBRD), answers the question of why Europe has sent representatives to Tashkent: All of Central Asia is developing, but Uzbekistan is especially exciting. It’s fully in transformation, and offers many, many opportunities for investing. We’re here now to support the Capital Markets Development Agency, which will open a new route for investors into the country. In most of the transformations, a country opens up, tries reforms, and welcomes foreigners.
Friday 15 November 2019/ Hour 2, Block D: Odilbek Isakov. Deputy Finance Minister, Republic of Uzbekistan, in re: I’m very pleased with the panel of speakers; Mr Nazirov has done a tremendous job of attracting investment banks, brokers, and some of the investors who’ve committed to [work]  here.  As for taxes, when the pie gets bigger  . . .    I’m a stakeholder, as well, because I issue government bonds.   We need to focus on what has to be done before they start trading in our securities market.  Need to ensure that the market works: sufficient blood in the system.  We have some infrastructure, not yet enough, need more liquidity.  Eventually, it’ll be open to our neighbors to raise capital in our market. Liquidity requires trust, transparency and confidence; all three under development. In the 1990s, we had hyperinflation where lots of people lost their savings, switched to dollars under the mattress. Trust will start with trust of the banking system, then trust in the currency (16% inflation now), fighting to bring down the inflation by 2022 – to single digits. Then savings will increase, and we’ll see money flowing in the system.  We must do a lot more work to convince foreign investors to come.  Legal framework for capital markets will be done next year, as well as a fresh law on public debt, which we’ll update.  Also, at least a couple of domestic IPOs.   
 
Hour Three
 
On the Road to Tashkent 
Sponsored by Scala.com
The Role of Capital Markets in the Development of Uzbekistan
Friday 15 November 2019/ Hour 3, Block A:  Ruslanbek K Davletov, Minister of Justice, Republic of Uzbekistan; in re:  Ministry of J is at the center of any reform in Uz b these days because reforms are base din the law. We want to open up the market, which is important for the economy.  Need the rule of law, a good and stable legal framework, and protections for investors. Need to make the market efficient and transparent, and combat corruption and deal with issues of currency and tax liberalization.  JB: Here at the conference are the major world banks, interested in investing and development: the Asia Development Bank, the European Development Bank, Japanese banks. RKD:  There have been enormous changes in the past few years, it’s a wholly different situation from formerly and still much evolving. Everyone can feel public pressure to act reforms quickly, which in turn make us move more efficiently. The justice system, a n important pillar of the state: ne court set up, bringing to justice many many corrupt officials, and the like.  Bringing into place a new capital markets law: we have courts and legislation, headed by the civil court; by April in 2020, we’ll bring in a [new civil court code of law] with more than 1,000 articles.  The USA is supporting us in formulating this.  Also new laws on corporate governance, limited liability companies, joint stock companies and on regulating capital markets.  All under review right now.  Regulated markets under Mr Nazirov. The US SEC has been here for days in conversation.  We’re looking at many many good models and learn from others’s experience.
Friday 15 November 2019/ Hour 3, Block B:  David Nicholls, CFA; Senior Analyst at East Capital, Russian Federation; based in Moscow, HQ in Stockholm; in re:  We’re a large public investor in CIS and he world.  Astonishing development in Russia and elsewhere in CIS, but in the last three years under the new president, a rapid development. He’s bringing in new laws, repatriating talented Uzbek expats. The whole world is talking about Uzbekistan; jus t look at the GDP growth numbers of 6%-plus. We look for high-quality companies with structural growth offering growth to the fast-growing consumer market. High-quality banks in Kazakhstan and Georgia are undervalued; we like them.  JB: Sheremyetyeva II is amazing – all the international franchises. What a transformation.    DN: Georgia is a good example of radical change – they’ve replaced the entire police service with young [and vetted] people.  Around CA: environmental improvements.  JB:  Under he old regime, no one ever failed, whereas business failure is critical to development of a strong economy. 
Friday 15 November 2019/ Hour 3, Block C:  Prakash Kejriwal, director, Indorama Corporation Pte Ltd, Singapore; in re: Uzbekistan’s premier-quality cotton acknowledges the global market and prospers. Under the USSR, cotton used to be shipped away; now, 90% of Uzbekistan’s production is utilized domestically for manufacturing finished products.
Friday 15 November 2019/ Hour 3, Block D:  Prakash Kejriwal, director, Indorama Corporation Pte Ltd, Singapore; in re: Uzbek culture is entirely familiar with and competent in commerce. It was deprived of the opportunity to practice commerce for decades, but now is developing swiftly and well.  It has an excellent future in business.
 
Hour Four
 
On the Road to Tashkent 
Sponsored by Scala.com
The Role of Capital Markets in the Development of Uzbekistan
Friday 15 November 2019/ Hour 4, Block A:  Samir Taghiyev, senior regional manager for CIS countries at ICD, Almaty; Office of Islamic Corporation for the Development of the Private Sector (ICD) in Kazakhstan; in re:   Sukuk, including dollarized sukuk.  Islam forbids charging interest, so a careful mechanism has been instituted: financial certificates, commonly referred to as "sharia compliant" bonds. Sukuk are defined by the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) as "securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets.”
Friday 15 November 2019/ Hour 4, Block B:  Samir Taghiyev, senior regional manager for CIS countries at ICD, Almaty; Office of Islamic Corporation for the Development of the Private Sector (ICD) in Kazakhstan; in re:  US-educated people are now given top governmental posts.  Dr Talleh, our friend in common.  Port of Baku will be integrated into the Silk Road, which also [motivates] us to aid our neighbors.  Turkish Economic Union.  Banks and financial firms both speak amiably with each other and compete with each other. Very healthy.
Friday 15 November 2019/ Hour 4, Block C: Elena Khisamova, VP/Head: Equity Capital Markets, Gazprombank JSC, based in Uzbekistan; and Denis Shulakov, First Vice President of Gazprombank  (Joint Stock Company), based in Uzbekistan, Research Division; in re: Professional backgrounds. Finances in Central Asia; Uzbekistan is especially attractive: 33 million   people n the Middle of Central Asia, is underdeveloped, and [learning] to monetize what it has, including mineral assets. We provide the same services as American banks do. Ruble as an instrument of international finance, especially among Russophone CIS nations (Commonwealth of Independent States].
Friday 15 November 2019/ Hour 4, Block D: Vassily Savin [Kyrgyz national], Head of Power & Utilities group, KPMG in Russia, in re: This conference in Uzbekistan is different from previous ones in that Uzbekistan is creating significant changes and reforms. I also cover Kazakhstan and Kyrgyzstan; much oil and gas reorganizing. Kazakh and Uzbek natural resources are similar. KPMG provides analyses, help in markets; we guide in business and assist in creating needed transparency.   Kyrgyzstan is beautiful, mountainous, and offers amazing hiking and camping.  [Especially Issyk Kul. —ed.] Ten years from now, per capita GDP will be much higher, technology will be considerably more advances, and Uzbekistan will develop faster than its neighbors. One factor will be a [much richer] educational system.   
 
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