Sustainable Public Procurement in the Kyrgyz Republic

31/01/2022
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Kalieva Aian

Abstract: The article discusses "sustainable" public procurement (Sustainable Public Procurement), which, along with economic efficiency, takes into account the positive impact on the environment and solves social problems. How public procurement can contribute to the sustainable development of the country and an overview of the current state of the Kyrgyz Republic on the introduction of sustainable public procurement.

Keywords: public procurement; sustainable development; sustainable public procurement.

Due to the deterioration of the environment and a number of environmental problems causing global warming and increasing social and economic tensions in countries, in particular in recent years due to the COVID-19 coronavirus pandemic, the issue of ensuring sustainable development, identified at the UN World Conference in 1992 (UN Convention on Environment and Development, 1992), has become acute for the world community.

According to the UN, the global economy shrank by 4.3% in 2020. The crisis caused by the virus has been called the strongest in the last 90 years. The emerging situation with the COVID-19 pandemic showed all the inequalities between people and countries and made it clear once again that the world needs sustainable development.

Sustainable development involves ensuring economic stability, environmental protection and achieving social justice (UN Conference on Sustainable Development, 2012). Environmentally safe production, rational consumption, reduction of social imbalance in society, economic support for developing industries and countries allow countries to move towards sustainable development.

One of the effective mechanisms for implementing the sustainable development strategy for States is public procurement. Acting as the largest buyer in the market and having the political will and authority, the state can influence producers and consumers through public procurement and promote sustainable production and consumption. A number of countries at different levels of economic and social development apply sustainable procurement in practice, stimulating the production of environmentally friendly products, the secondary use of resources, supporting small businesses, addressing issues of social equality of national and ethnic minorities, creating new jobs and stimulating fair trade.

Thus, public procurement really contributes to sustainable development.

Sustainable development and sustainable public procurement in the Kyrgyz Republic.

Sustainable development is a process that meets the needs of the present without undermining the ability of future generations to meet their own needs (Our Common Future, 1987). Sustainable development "includes components such as social justice, environmental protection and economic development" (Weybrecht, 2010).

Social justice includes issues such as human rights, peace, security, justice, gender equality, cultural diversity, etc. Environmental protection implies protection in the field of water supply, energy, agriculture, biodiversity maintenance, protection of animals, fish, forests, etc. Economic development refers to "understanding the potential of economic growth and includes issues of poverty reduction, responsible consumption, corporate responsibility, energy efficiency, rational waste management, education issues, etc." ((Weitbrecht, 2010).

Public procurement can be one of the effective mechanisms for the transition to sustainable development. There are several reasons for this. First of all, a huge share of budget funds is spent on public procurement. According to the European Commission, public procurement expenditures in European countries account for 13.67% of GDP (Public Procurement Indicators, 2014). According to the International Institute for Sustainable Development, in OECD countries, expenditures on public procurement of goods and services range from 45% to 65% of the national budget, which is 12-17% of GDP (Procurement&Public-PrivatePartnerships).

According to data taken from the official portal of public procurement of the Kyrgyz Republic(http://cds.zakupki.gov.kg/statistic/procedures ) in 2020, the total cost of completed tenders amounted to 36.7 billion soms, which is equal to 21% of the total amount of state budget expenditures for 2020. (https://budget.okmot.kg/ru ). However, the share of successfully completed lots was only 54%, which indicates the inefficient work of purchasing organizations to assimilate the state budget.

Compared with the indicators of the OECD countries, expenditures on public procurement of goods and services in the Kyrgyz Republic are lower, but despite this, the state is still the largest customer of goods and services in the country.

The demand for ecological products from the state gives a signal to the market and promotes the spread of the "useful habit" of purchasing environmentally friendly goods, fair trade goods by private consumers. This, in turn, stimulates the production of environmentally friendly products and the development of socially responsible business (Preuss, 2009). As a result, all this contributes to solving economic, environmental and social problems.

What does it look like in practice? The state, being the largest customer on the market, makes a decree to budget organizations to purchase only energy-saving lamps, this will increase the demand for energy-saving light bulbs on the market.

In order to support small and medium-sized businesses, when concluding contracts, the state could first of all give preference to suppliers who are residents of the Kyrgyz Republic. Often, in practice, situations arise when factories themselves or exclusive distributors of goods and equipment that are located on the territory of the Russian Federation, the Republic of Kazakhstan or China participate in certain large contests on the EGZ portal. Of course, in such cases, all profits from the transaction and taxes go to the treasury of another state. As for the above-mentioned countries, public procurement in these countries takes place on official portals that are available only to residents of the country.

On the part of the state , the following benefits are provided by the state to maintain domestic products:

  • when purchasing goods that are produced in the Kyrgyz Republic by internal suppliers, the purchasing organization is obliged to provide benefits in the amount of 20 percent on the offered price when evaluating competitive bids, if there are necessary certificates for the supplied goods confirming the safety and quality of products.
  • If the subject of procurement is work that can be performed by internal contractors of the Kyrgyz Republic and foreign contractors, the procuring entity is obliged to provide benefits in the amount of 20 percent to internal contractors, provided that the internal contractor uses at least 70 percent of local labor resources and at least 30 percent of local raw materials and materials. (According to article 4, paragraph 3, 4 of the Law "On Public Procurement" dated April 3, 2015 No. 72).

On the environmental side of sustainable development, the Kyrgyz Republic needs decisive reforms. The revealed environmental damage at the Kumtor gold mine, as well as the primacy of the city of Bishkek in the rankings of the world's cities with the dirtiest air, make it clear that the environmental component must also be taken into account in setting priorities for the state.

To date, the introduction of sustainable public procurement is only being introduced in the Kyrgyz Republic. Kyrgyzstan is one of the countries for the implementation of the UNDA SPP Project, which is led by the European Office of the United Nations Environment Programme (UNEP) and implemented jointly with the United Nations Economic Commission for Europe (UNECE) and the Green Growth Knowledge Platform (GGKP), aimed at strengthening the capacity of individual countries in the EECCA region in the field of sustainable public procurement and increasing the ability of businesses to respond to public auctions with sustainability criteria. The project is being implemented in the period from 2018 to 2021.

In the document NSR-2040, for focused and active movement towards such a picture of the country's future, the priority directions of the Kyrgyz Republic until 2023 are defined:

  1. Stimulating technological modernization
  2. Modernization and implementation of energy-efficient technologies.
  3. Increasing the participation of renewable energy sources.
  4. Expansion of the area of green spaces.
  5. Conservation of tailings dumps and ensuring safety
  6. Rational management of water resources.
  7. Development of waste disposal and recycling infrastructure.

According to the program for the development of the "green" economy in the Kyrgyz Republic for 2019-2023, which is currently at the stage of approval in the Government of the Kyrgyz Republic, the goals for sustainable public procurement are also outlined.

The goal is to increase the share of sustainable public procurement to 30% by 2023, and to 50% by 2040.

To achieve it, the following tasks will be solved:

3.1. Improve legislation in the field of public procurement. Improvement of legislation in the field of public procurement, including provisions on technical specifications and relevant certificates for goods supplied, works performed and services rendered, confirming environmental criteria, product safety and quality, including requirements for social aspects. The Government's activities will be aimed at promoting the implementation of sustainable procurement and trade policies within the framework of multilateral and regional cooperation with the EAEU and the WTO. Regulations and instructions on evaluation criteria will be developed for purchasing organizations to determine sustainable/ "green" goods and services.

3.2. Promote the development of environmental certification. The development of environmental certification will be implemented through the introduction of international standards for sustainable procurement. Organizations will be assisted in the development and implementation of successful practices and policies for the implementation of sustainable purchases. It is also planned to introduce criteria that will allow the evaluation of goods and services produced according to established international labor standards (ILO, Fair Trade, etc.). Mechanisms will be developed to stimulate sustainable public procurement for suppliers, including providing access to preferential sources of financing.

3.3. To increase the potential of suppliers and purchasing organizations for the transition to sustainable public procurement. Increasing the capacity of purchasing state organizations and suppliers will be carried out through the development and implementation of training programs for both universities and training centers. Specialized courses for university teachers on sustainable/"green" public procurement will also be held on an ongoing basis.

Conclusion

In world practice, sustainable public procurement as a mechanism for implementing sustainable development policy is becoming increasingly widespread. For the successful implementation of the principles of sustainable public procurement in the Kyrgyz Republic, it is necessary first of all to improve legislation in the field of public procurement, in which it is necessary to stimulate the work of domestic producers and suppliers of residents of the Kyrgyz Republic, as well as pay more attention to the environmental component of the country.

List of used literature

  1. Shadrina E.V., Romodina I.V. Article: PUBLIC PROCUREMENT FOR SUSTAINABLE DEVELOPMENT: INTERNATIONAL EXPERIENCE URL:https://vgmu.hse.ru/data/2017/04/05/1168492363/%D0%A8%D0%B0%D0%B4%D1%80%D0%B8%D0%BD%D0%B0,%20%D0%A0%D0%BE%D0%BC%D0%BE%D0%B4%D0%B8%D0%BD%D0%B0%201-2017.pdf
  2. The future we want. UN Conference on Sustainable Development RIO+20. 2012. URL: https://rio20.un.org/sites/rio20.un.org/fi les/a-conf.216-l-1_russian.pdf.pdf (дата обращения: 07.07.2016).
  3. Convention on Environment and Development. The agenda for the XXI century. 1992, Rio de Janeiro. URL: http://www.un.org/ru/documents/decl_conv/conventions/agenda21 (дата обращения: 02.05.2016)
  4. Official portal of public procurement URL: http://zakupki.gov.kg/
  5. Overview of the current state of the Kyrgyz Republic on the implementation of sustainable public procurement (UGP) https://www.greengrowthknowledge.org/sites/default/files/uploads/RUS%20Full%20assessment%20of%20institution%20and%20legal%20framework%20Kyrgyzstan.pdf
  6. The Law "On Public Procurement of the Kyrgyz Republic (http://cbd.minjust.gov.kg/act/view/ru-ru/111125)
  7. Open budget website (https://budget.okmot.kg/ru)