Aleksandr Lukashenko holds nationwide conference to discuss construction industry problems

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Nationwide sessions which will be held regularly will focus on topical issues concerning the development of the economy and society for the medium term, President of Belarus Aleksandr Lukashenko made the statement at the nationwide executive conference held on 10 December to discuss problems of the civil construction industry and ways to improve the management of executive personnel. 

The event took place in the Palace of Independence and lasted for almost six hours. The conference brought together over 250 people, including top officials, members of the government, local authorities.

At the beginning of the conference the President said that the event was a momentous one. He admitted that in his eyes the event resembled a plenary meeting of the Central Committee of the Communist Party. Back in the Soviet times executive personnel from all the regions would gather up for plenary meetings to openly discuss and jointly address the most important issues in the society life.

“The format and the large number of participants were necessitated by the topicality of the items on the agenda and the need to discuss the real situation in very important spheres from multiple angles in order to reach every region and every organization,” the President explained.

“It is necessary to raise and suggest solutions to the hottest and most important issues concerning the development of the economy and the society not only at present but also in the medium term,” Aleksandr Lukashenko said.

The head of state believes that it was necessary to gather such executive conferences at least every six months in order to send a signal to the entire society about emerging problems and ways to resolve them on a systematic basis. In his words, such a format of interaction between the President and the country’s executive personnel has not been worked out yet at the top level. “Moreover, we have even lost the accomplishments secured by the previous personnel of the Belarus President Administration. Therefore, we have agreed that in the future such conferences will be the norm,” Aleksandr Lukashenko emphasized. The President instructed the government to contact the Belarus President Administration to submit proposals regarding the industries that should be discussed at consequent conferences. According to the head of state, problems of the housing and utilities industry and the development of the agribusiness require discussion in the first place.

Speaking about the 10 December conference, the President said there were two items on the agenda: problems plaguing the civil construction industry and the need to improve the management of executive personnel. Aleksandr Lukashenko explained the choice of the construction industry as a discussion point: “Because, first, people complain a great deal about this industry. Second, it truly has accumulated so many negative things that decisive actions at all levels of the government, including the top level, are needed to overcome them”.

The President made it clear that the construction industry as a whole and housing construction in particular are the branches, which performance directly affects destinies of many people. Aleksandr Lukashenko said that a lot had changed since the USSR time but homes are still regarded as the most important category for assessing the wellbeing of every person, every family. “People spare no expense to build a house, an apartment. Huge financial resources on the scale of an average man are needed to build a home. And people either have to save money their entire life or borrow heavily and pay out loans through the nose”.

According to the President, serious problems of the country’s entire civil construction industry are concentrated in housing construction. Apart from objective factors the state of affairs has been brought about by, first and foremost, subjective factors, Aleksandr Lukashenko is convinced. “In essence, most of the problems have been created by executives, designers, construction companies and all of us. In order to overcome this lot of negative things an interagency working group with broad powers had to be created. I emphasize – an interagency group — because uncoordinated actions, lack of discipline, mutual complaints of various structures and narrow corporate interests had affected the construction industry,” the President said.

He reminded that the interagency group had been tasked with examining drawbacks at all stages of the investment process and sketching out ways out for the construction industry for the near term and the medium term using international experience.

According Aleksandr Lukashenko, unduly protracted projects and rampant price increases for new homes frustrate people the most. The cases of blatant cheating of shareholders were uncovered. “There were the cases when the construction announced, people transferred money, and then were left without new homes and money. Here we can speak of the pyramid,” Aleksandr Lukashenko said.

The President cited the example of the founders of OOO Antasam who stole more than Br900 million. After the criminal case was opened, the police seized about 18kg of gold bullion from them, about $10,000 in cash and arrested the bank accounts of about half a million dollars. Currently, the major players are in prison, the investigation continues. The founders have already allocated about Br5 billion to continue the construction. However, the house is still unfinished.

The President stressed that unfortunately this is not an isolated fact. For example, managers of the public association "Youth Residential Complex of Minsk” stole over Br1.2 billion. They used the investors’ money to build houses for themselves. They are now behind bars. The property of the defendants and their relatives is under arrest: a half dozen apartments in Minsk, three offices, one house, 12 cars, 5 land plots, foreign currency savings. The house has not yet been put into operation, but the Minsk City Council promises to get the construction resumed in January 2014.

The head of state said that he instructed to take stock of all distressed construction projects in June this year. "Today 200 out of 380 houses included in the list were already commissioned. By the end of the year, according to local authorities, about 100 houses will be put into operation, and the remaining 80-85 houses will be delivered in 2014,” Aleksandr Lukashenko said.

The President drew particular attention to the need to make sure these deadlines are met. "Previously I had ordered to finish all distressed construction projects by the end of this year. It will be tolerable if 80 out of these 400 homes will be commissioned in the first half of next year. But I warn you against cooking the statistics and reporting. Each project will be checked by the interdepartmental group led by the head of the Presidential Administration,” Aleksandr Lukashenko said.

The head of state demanded from the executive power, particularly from the chairmen of the district executive committees, to bring all distressed projects to their logical conclusion. "There are graphics, people in charge. Please keep an eye on the implementation of these projects,” the President said addressing the participants of the meeting.

However, the problem of the distressed construction projects is not addressed successfully in all regions. So far, the Minsk City Council has not dealt with the unfinished project by ZAO Terrastroiinvest in Pritytskogo Street. The construction has been put on hold, the builder was announced bankrupt. "The city authorities have not reacted. Each day of uncertainty is additional losses and price increases. People need to pay only as much as necessary, and not a kopeck more,” the head of state said.

In this context, President urged the local authorities to pay more attention to housing construction projects. According to him, the inter-departmental working group has prepared a "manual" which illustrates all stages of construction process. On the one hand, in the President's opinion, this book will help local authorities, because they do not have to invent anything but simply comply with what has been written in it. “On the other hand, local authorities have one home built per year. Is it difficult for them to deal with a project on their own?” the President asked a rhetorical question.

Standardized contracts for home construction will be worked out and enforced in Belarus. Aleksandr Lukashenko gave the relevant instruction to the government and the Supreme Court.

According to the President, the contract must clearly lay down the responsibilities of the sides regarding the financing, deadlines and the quality of construction work. “All the contracts should be literally on the desk of the district administration head. Municipal authorities will be the ones to control the fulfillment of the contracts,” stressed the head of state. In his opinion, the contractors that accumulate money of individuals have to meet very rigorous financial solvency requirements. Things are not always like that at present. “It turns out that after collecting money contractors in the civil engineering industry, including home construction, are free to spend money any way they want. It must not be like that,” the head of state demanded.

“Only the companies that have built at least 15% of the house (at least the basement floor, the first and second floors) should have the right to get funding from natural persons for the sake of further home construction,” said the President and added that the rule must be enforced. Apart from that, the National Bank should enable special procedures for the accounts used to accumulate this money and strictly control their designated spending. “All the money must be spent on home construction. And citizens should pay only as much as needed for smooth construction,” Aleksandr Lukashenko stressed.

Addressing the Presiding Judge of the Supreme Court, the President said he would like courts to immediately respond to citizens’ complaints regarding poor quality home construction or overdue home construction.

Aleksandr Lukashenko reminded that new homes for citizens eligible for preferential-rate loans and one-time subsidies for building or buying homes will be built only via government orders.

In line with plans of the government as much as 2.5 million m2 of housing will be built in 2014 using state support. Of the total about 800,000m2 will be built via government orders. In 2014 the cost of one square meter of the housing built via government orders will be equal to the average monthly salary in the country with slight adjustments depending on the date the house is commissioned in line with the construction time limit.

The introduction of government orders for housing construction using state support should rule out problem houses in housing construction. Citizens will no longer have to camp on the doorstep of various government agencies in their quest for redress. Homes will be available at understandable prices. Citizens will be free to calculate their spending taking into account the preferences they are entitled to in line with the law.

The President instructed the government to prepare the relevant documents soon in order to get the new system operational as from January 2014.

It is important to comply with the construction regulations, the Belarusian President said. "I have repeatedly demanded to ensure strict enforcement of the rules of the construction process. Everything should be clear, fast but strictly according to the rules. Speed in the construction should not be achieved at the expense of the mandatory stages,” Aleksandr Lukashenko said.

The head of state believes that "the government needs to adjust everything in such a way so that no one could cut corners and get instant profit, jeopardize the normal course of construction,” the President noted. "All participants in the construction process, namely investors, customers, designers and contractors, should be guided by the rules,” Aleksandr Lukashenko said.

According to him, it is not unusual when customers, still waiting on the design documentation, begin to work on the site without the design documentation with the hope that it can be developed in the course of construction. They say this saves time and money. However, in practice everything turns out the other way around. Alternations and delays, amendments to the design documentations lead to additional works and extra expenditures. Therefore, the President demanded to view side-by-side design and construction as the exception to the rule, applicable only to the highly efficient organizations and only with the approval of the head of state.

Speaking about investment planning and substantiation, the President underlined that there is a lot of bungling here. “The final cost of construction projects increases multiple times because the technical and economic feasibility of the projects has not been analyzed beforehand,” Aleksandr Lukashenko said.

In his words, wood processing industry is one of numerous examples. The head of state believes that the major source of problems in the industry is the absence of a preliminary and thorough substantiation of investments. As a result, the planned modernization of individual technological lines turned into construction of new companies, while the amount of funds required for that rose nearly four times.

According to Aleksandr Lukashenko, a lot of thoughtless decisions of this kind were made in the housing construction industry as well. “There was a much talked-about case with homes for families with many children in Belynichi where the budgetary funds were spent to construct housing with enhanced comfort instead of regular houses. As was expected, problems arouse when potential buyers were informed about the cost,” Aleksandr Lukashenko said. The head of state believes that situations like that are unacceptable.

The President instructed the government, the State Control Committee, the oblast executive committees and the Minsk City Council to introduce a mandatory pre-investment stage starting from 10 December. Aleksandr Lukashenko noted that this will help calculate the economic viability, technical feasibility and efficiency of investments. In other words, developers need to understand what to build and how much it will cost.

“We’d rather spend more time at the very beginning and make sure the project is not a non-starter, than make ill-considered decisions and rack our brains later trying to get out of a deadlock,” the President said.

The head of state noted: “We should not reinvent the wheel if a given construction project was implemented before. In this case the pre-investment stage should be much shorter and easier, but is should be adequate”.

“It is criminal to embark on construction without calculating its economic feasibility and payoff,” the head of state underlined.

Speaking about distribution of land plots for construction projects, the head of state emphasized that so far too many land plots are provided to developers free of charge, allegedly in order to reduce the cost of housing. However, in reality, the gratuitous distribution of land plots does not make the housing cheaper, but only increases the profits of developers. Therefore, many companies try every trick to get the land for free, and these tricks are close to fraud.

The head of state noted that the distribution of land plots free of charge was designed to stimulate greenfield production and cheapen housing construction. Aleksandr Lukashenko demanded that auctions should be the major instrument of assigning land plots.

“Ideally, the privileged distribution of land plots should only be used for government orders,” the President emphasized.

The head of state stressed that there are cases when individuals and economic operators get land plots for resale, not for construction. Aleksandr Lukashenko tasked the heads of district executive committees and governors to ban any takeovers until the project is implemented in full, be it the construction of a house or a cafe, a filling station or a factory.

Aleksandr Lukashenko demanded to maximally limit the cases when the new facilities are purposely designed bigger than the allocated land plot in order to have an opportunity to claim extension of the area free of charge. “Everything should be within reasonable limits,” the President said.

“I have been recently informed that red tape is still an issue in the sector. It is protraction in land plot allocation, backdating decisions, untimely measures to monitor the intended use of land,” the head of state said.

According to Aleksandr Lukashenko, Minsk and Minsk Oblast show the worst figures in the area. Addressing Minsk Mayor Nikolai Ladutko and Minsk Oblast Governor Semyon Shapiro, the President demanded to set up strict rules in land plot allocation and use. “The mechanism should run like clockwork,” Aleksandr Lukashenko stressed.

Diffusion of public funds on investment programs is inadmissible and will be stopped, Aleksandr Lukashenko said.

“Not a single project should be included in the state investment program without my consent. I warn the government and governors: diffusion of public funds is inadmissible and will be put to an end,” the head of state said.

Today’s situation is as follows: instead of serving as an example the state contractors often act as financially careless investors, the President said.

According to Aleksandr Lukashenko, insufficient and dispersed financing receives lots of criticism from the State Control Committee. “What is our main economist (Economy Minister Nikolai Snopkov) doing there?” the head of state asked. “What are you planning? Why do you submit to me an investment program which lacks financing resources?” the head of state wondered addressing Prime Minister Mikhail Myasnikovich.

The President stressed that a third of 23 facilities scheduled for completion under the state investment program this year have fallen behind schedule. The main reason is insufficient financing. “We need strict discipline in the area. Only projects with good design documentation and financing can be included into the program,” the head of state said.

The head of state noted that inadequate control at all the construction stages results in numerous complaints of the quality of delivered construction projects. “The construction industry should have an integral quality control system, not occasional checks. Teamwork of all the stakeholders is crucial,” the Belarusian leader said.

Aleksandr Lukashenko demanded zero-tolerance from the State Committee for Standardization while conducting examination of project documents: “There should be no indulgence or ambiguity while evaluating a project’s compliance with requirements”.

According to the President, the major objective of the examination is to prevent inefficient technical solutions, architectural frills, and overstated budgets. “At the same time, you should keep in mind that you are the first outpost safeguarding safety and reliability of facilities under construction,” the Belarusian leader said.

Aleksandr Lukashenko noted that the state construction surveillance service should act as the main state supervisor during all the stages of construction and installation works. “First of all, we need to strengthen the supervisory functions of the service at every construction stage. Keep in mind that the state construction surveillance service checks the facility under construction, not the one who builds it. This is done to make sure the facilities are safe. Simultaneously we need to toughen punishment for inspectors for overlooking the flaws,” the President said.

The President noted that defects and flaws revealed during the operation of facilities are sometimes not properly fixed. “People approach developers blaming them for the flaws, while developers start making excuses and weaseling their way out, because they have no real instruments to influence contractors. It turns into leapfrog with non-committal replies and red tape! Such cases abound in virtually all the regions when sheer construction flaws are not fixed for years. There are a lot of construction-related suits in courts. It turns out contractors simply have no money to eliminate the flaws,” Aleksandr Lukashenko said.

“I instruct the government to expand the responsibility of contractors by requiring them to reserve funds on a special account. These funds should be big enough to eliminate construction defects. Contractors will not grow poorer. In a year, if there are no complaints, they will get half of the money back. The remaining amount will be returned later, provided no construction flaws have been revealed. Otherwise, the flaws will be removed using the reserved funds,” the head of state said.

The President believes it is necessary to revise the existing procedure used to arrange public hearings concerning construction projects. “The procedure is necessary, but unfortunately the way it is done now is acquiring negative traits. Discussions often evolve into buffoonery. Particularly those involving housing density issues because some people can accept it and some cannot,” the Belarusian leader noted.

The head of state underlined that people’s deputies of all levels should be more actively involved in the process. “You should get involved when your voters are talked to, moreover, the talk is about burning issues,” Aleksandr Lukashenko said.

The existing procedure has to be changed, added the head of state.

According to the President, there are proposals to revive the state committee for construction in order to avoid doubling and poor coordination of actions. “I have already said that the Ministry of Construction and Architecture should be made responsible for the coordination of the whole regulatory system in the construction industry. Not a single document regulating construction should be adopted without their knowledge. At the same time I would not haste with reforms and transferring construction organizations into communal ownership. Everything is good in its proper time. I would be frank, I do not support fast radical reforms,” the head of state noted.

The President urged a cautious approach to the creation of construction holding companies and warned against artificial merges.

The head of state noted that recently the government has shown increased willingness to transfer economic entities to the supervision of local authorities. "And the latter do not mind. They think they will cope. Do not you see that they cannot have one house approved and built? And you want to give them big construction companies. Please think carefully before you carry out these reforms,” said the President.

And of course, the main thing is people who work at construction sites in the heat and in the cold. Their work is demanding and extremely hard, noted Aleksandr Lukashenko.

“Certainly, the construction industry has accumulated a lot of problems. The serious scale of the work has to do something with that. But I am strongly convinced that we can handle the problems. To do it, it is necessary to skillfully mobilize people, with construction companies and managers pushing in the right direction. Such a representative conference has been arranged with this goal in mind,” the President stressed.

“1 January is very close and you will have to work in new ways. I’ve raised this issue as well as the issue of the housing and utilities industry and agriculture because it is a matter of survival of our state,” stressed the Belarusian leader. “What country our children will get depends on us. Will they get a country with too much bureaucracy, a country riddled with corruption, a lacerated country? It won’t happen as long as I am the president”.

Aleksandr Lukashenko invited directors of enterprises connected with the construction industry to take part in the discussion of problem issues.

Director of the Minskgrazhdanproyekt Institute Oleg Bykovsky noted that engineering companies face problems they cannot handle on their own. Among them is personnel turnover due to a sharp wage reduction, tough competition in getting orders. In his words, due to corruption tenders are won by small firms that often fail to implement the project. “Cheap designing leads to expensive construction,” he said.

Speaking about tenders, Aleksandr Lukashenko stressed that such an attitude to the issue is inadmissible and it should be changed immediately.

“The talk is only about government funding and public construction. Everything that is directly related to ordinary Belarusians matters. this includes private firms and private construction, too,” the head of state stressed.

The second part of the nationwide conference was dedicated to the ways improve the management of executive personnel. Aleksandr Lukashenko believes that the work of civil servants should be absolutely transparent for the public.

According to the President, the executive personnel system that existed in the Soviet times was destroyed when the Soviet Union collapsed. Belarus had to recreate the system virtually out of ashes. “When restoring the system out of ruins and ashes, we relied on the best practices and took into account requirements of the time,” he said.

The President also said that the existing personnel management system in Belarus is a good one. The number of truly dedicated professionals in executive positions, who sincerely love their country and are willing to make it better, is rather large.

“I am told that successful corporate managers are unwilling to become part of the civil service. Low salaries, high requirements, and colossal responsibility for decisions are the reasons. In the past specialists, who managed to become executives, were primarily interested in the new status and new opportunities to use their skills, not the size of the salary. Nowadays some people view high-ranking positions as additional workload and a source of hazards”.

“More and more often the civil service has to employ unfit people, who are afraid or unwilling to show initiative, to make decisions on their own and bear the responsibility for results. It is necessary to find out what the source of the problem is. Are we going to end up with a fossil state machine with too much bureaucracy that will impede our development?” wondered the President.

Aleksandr Lukashenko asked those present what they could suggest as a way for the civil service to employ respected, talented, and creative thinkers. He said that some believe that an increase in salaries for civil servants is the way out. “You remember the negative response of the society after an increase in salaries for party workers in the early 1990s. Can we justify raising salaries for civil workers more now when the economic situation is not simple?” asked the head of state.

“On the other hand, virtually all the countries — in the West and in Asia and our neighbors — pay decent salaries to their civil servants. They believe that salaries are a way to attract highly qualified specialists and represent an effective measure against corruption. So however hard things can be we cannot disregard the problem. It does exist,” said the President.

He reminded that the number of civil servants was optimized in mid-2013 for the sake of raising salaries. “I am sure the government has not requisitioned this money. However, I am told that the real increase in salaries was below someone’s expectations. But consequent increases depend only on the state of economic affairs, which means they depend on our performance,” remarked the head of state.

“I do not mind a wage rise for civil servants. I do not mind a constant increase in wages. But how will we explain to people that we raised wages for ourselves considering huge backlogs of inventory, our failure to sell products, and our inability to do it. What will we say to people? We will have to say something. I will be the first to do it, you will be the next, and it will be harder for you, because you meet people face to face,” the President said addressing the attendees.

“We will increase wages for civil servants; we need to return to the ratio we used to have. We know it and we will find resources for it. But we want results. I will make this decision when I see results,” the head of state said.

“There should not be any indiscriminate wage rises. Our people are not that rich. They will not understand,” the President said.

At the same time Aleksandr Lukashenko noted that the state raises wages every year. “There was not a single year without a wage rise. We do it every year. However, whether the rises are big enough is another matter,” he said.

The President added that wages should be viewed in relation to the purchasing power. “Why do we not say that in Russia 500 dollars is only enough for a hand-to-mouth existence, while in Belarus you can live quite decently having this money? We do not say that. However, this should be taken into consideration,” the head of state said.

Aleksandr Lukashenko underlined that he had instructed the government, the Belarus President Administration to come up with a way to encourage executives depending on whether they manage to hit performance forecast targets. “Are you ready to present your proposals today?” asked the President.

Aleksandr Lukashenko believes that the work of civil servants should be absolutely transparent for the public.

“There are no and should not be any forbidden areas for criticism when it comes to the work of civil servants,” the head of state said.

At the same time the President noted that the criticism should be constructive and specific, not captious and indiscriminate. “Such an attitude to people who conscientiously serve the state is unacceptable,” Aleksandr Lukashenko said.

The President reminded that the perestroika period marked “a rampant campaign to defame party functionaries”; the repercussions of this campaign still influence the public perception of civil servants. “I do not want to idealize all Soviet functionaries, because there were all kinds of people among them, but decent, truly competent people who built the huge country were the majority. You cannot tar everyone with the same brush,” the head of state said.

Addressing the officials, Aleksandr Lukashenko noted that he expects them to work hard. “I told you that I will not run in front of you. I am tired of being on the move all the time travelling from Venezuela to Russia, performing somebody else’s functions and making sure that the money provided for domestic companies, like Borisovdrev, is not wasted, but used to put things in order, to say nothing of modernization,” the President said.

According to the head of state, everyone – from the chairman of the district executive committee up to First Deputy Premier Vladimir Semashko – was warned about the consequences if they do not fulfill the tasks set for them.

“You did not understand me, or rather you did, but thought you would be able to neglect my instructions and get away with it as usual. Your task now is to prove me wrong. You can do it only through your conscientious and dedicated work,” the President said.

“They keep raising election-related topics again and again. I am not as concerned about the election as some might think. They are trying to nail me down using the topic… I am fed up with the presidency, to be honest. Whether people will elect me or not will depend not only on you. I am not sure if I take part in the election. Only God knows it, we need to live to see it. You never know when everything will end. Anything might happen,” the head of state said.

Apart from that, the head of state said he would like to hear answers to a number of fundamental questions, in particular, questions whether executive positions in the civil service lack appeal due to systemic problems or due to individual failures at the local level, whether the existing system to recruit personnel for executive positions in the civil service can filter out light-fingered people. “I am interested in learning how my instruction to stop giving executive jobs to executives that have slipped is fulfilled. Why today young Belarusians are unwilling, I am told, to get employed by the civil service and become an executive in the future? Is the personnel reserve used effectively?” the head of state wondered.

Aleksandr Lukashenko said he would like to learn how the optimization of the state machine had affected its performance. The head of state said he was interested in proposals to resolve issues via the draft decree that will improve the management of executive personnel.