For long, value of land in Ukraine was assessed not from the economic viewpoint, but was based on administrative and ideological principles. Land was subject to control, it was a symbol of the wealth of nation, and definitely not a commodity or property s

UKRAINE’S MARKET FOR NON-AGRICULTURAL LAND TAKES SHAPE

For long, value of land in Ukraine was assessed not from the economic viewpoint, but was based on administrative and ideological principles. Land was subject to control, it was a symbol of the wealth of nation, and definitely not a commodity or property subject to personal responsibility of a particular owner.

Up to the moment, Ukrainian hide-lands have been divided into agricultural and enterprise ones. Such a division takes its origin from the Soviet times, when there was no owner to make a decision on the most effective use of land. Instead, there was a control mechanism aimed at avoiding utilization of land for non-agricultural purposes. And yet, administrative-based approach appeared to be not that efficient compared to the market-based one…

Along with this, due to certain historical preconditions, most Ukrainians today have become prisoners to their excessive pride for allegedly unique Ukrainian black earth (chernozem). This abstract feeling should in no way be related to the actual practice of efficient land use. Actually, this feeling arises from the fear to turn a national sanctity into an exchangeable commodity.

In this situation, the process of land privatization, even with its economic expediency, cannot avoid getting stuck in inertial administrative technologies. The process also encounters a lot of ideological stereotypes. Needless to say, it is hardly possible to overcome these two obstacles at once. Foremost, there is a need in organizational efforts aimed at creating market relations and making businessmen become involved. Secondly, it takes a while to change the present system of values even with the favorable effects of the mentioned measures.

To facilitate the process of enterprise land privatization, in 1997 the international consulting project Ukrainian Enterprise Land Sales (UKRels) was developed on the basis of the Intergovernmental Ukrainian-American Treaty. The project was backed by the USAID. Presently, implementation of this project is done via 27 regional offices all over Ukraine. According to head of the project Louis Feoro, two years ago, at the dawn of the project, the Ukrainian land market was no more than a fantasy. Now it has become a reality. Indeed, starting from the early days of the project, over 17 thousand managers of large, medium, and small enterprises, as well as local officials attended UKRels information seminars. Thousands of Ukrainian enterprises started privatizing land with assistance of professionals involved in the project. During a two-year period, within the frames of the project, there were made 2,200 transactions involving the total of UAH 75-80 mln. on sale of enterprise land in 54% of all administrative regions of Ukraine. Thus, some 6.5 sale transactions were conducted daily. As a result, local budget revenues daily added about UAH 300,000.

Experts involved in the Project stress these figures tend to grow steadily. Most bargains were made last year. Yet, sales are expected to reach the high in May 2000. According to estimates, the total earnings from sale transactions will account for some UAH 10 mln. this May. In general, until the project completion (scheduled for October 2000), it is planned to carry out another 3,000 sale operations totally worth UAH 100 mln.

It is worth mentioning that large-scale process of enterprise land privatization has just started. However, Ukraine possesses a huge economic potential in this field. Experts with the project have calculated that mass privatization of these areas could bring in UAH 1.7 bln. to the Ukrainian budget. Thus, presently, Ukraine got only a 3% return on its privatization potential in this sector.

Perhaps, everybody is aware of privatization benefits for land nestling any enterprise – these are quite obvious. Foremost, land privatization enhances investment attractiveness of the enterprise. In this light, during the recent months, at least two foreign investment funds with the total investment capacity for USD 100 mln. have emerged in Ukraine, namely Global Finance and Euro Ventures Benelux. These funds are ready to invest from USD 500,000 to USD 5 mln. in every target enterprise. They certainly pay priority to the enterprises with privatized land. Secondly, the enterprise with private hide-land gets new economic opportunities to receive current assets, specifically, through turning land into property, the owner can add it to assets (the authorized capital) and issue new shares. Besides, the owner can get mortgage loans (under preferential low interest rates). Further, more than 60% of the enterprises, which have already privatized their hide-land, view the property right as a guarantee against possible violation of rental agreements (this is practiced by local authorities to change purpose of land usage or increase rental payments). Nevertheless, only a few enterprises have made a decision to enjoy these benefits. Why is that?

First of all, this occurs due to immature legislation. Legislative base has been forming for 7 years, and now it mainly consists of Decrees issued by the President of Ukraine. The first Decree "On privatization of gas stations involved in sales of fuel and lubricants to the population solely" dates back to December 29, 1993. Later, the Decree "On privatization and rent of nonagricultural land for entrepreneurial activities" of July 12, 1995, appeared. However, the main measure is the one stated in the 1996 Constitution. According to Alexander Ryabchenko chairing the Control Committee for Privatization, the Constitution was to show global intention of the State from now on to protect the private property right. Later, two other Presidential Decrees were issued, namely "On sale of nonagricultural land lots" of January 19, 1999, and "On peculiarities of privatization of unfinished construction sites" of May 28, 1999. Though all these Decrees provide the necessary legal grounds for enterprise land privatization, they are definitely not enough to develop the land market in Ukraine.

According to Mr. Ryabchenko, civilized land market can emerge on the basis of essential laws. Up to the moment, the Ukrainian Parliament has approved a draft Law "On privatization of land in unfinished construction sites" in the first reading. Yet, for ten months now, it has not been submitted to the second reading. The approved privatization program for 2000-2002 gave a green light to privatization of land in unfinished construction sites. Upon customer’s request, the latter may be subject to privatization along with the land itself. Prior to this, the Land Code should be passed (summer may see its approval in the first reading, while the second consideration can take place in autumn), as well as the new Civil Code and the Law "On mortgage". Nevertheless, since the agrarians are not ready to discuss privatization issues, many of the draft laws may be not put to the vote. Moreover, Alexander Ryabchenko claims, even within the parliamentary majority, the agrarians hold back the draft Law "On mortgage". The Land Code is the top priority for these folks, although it may take at least half a year…

Coincidentally, intensified privatization is encouraged for economic reasons solely. These mainly origin from the notable domestic and foreign debts of the State. Mr. Ryabchenko stresses, however, the final goal of the privatization is to create an efficient economy, rather than obtain revenues for the State. As a matter of fact, this task requires the ultimate and optimal conditions for privatization.

Nevertheless, the impressive number of sale transactions is not the most important accomplishment of UKRels. Their greatest merit is formation of the institutional infrastructure. This allowed developing and implementing hide-land privatization mechanisms suitable for Ukraine and meeting world standards. For example, the key mechanism of land assessment has been developed.

Starting from 1993, the Decree of the President of Ukraine "On privatization of gas stations involved in sales of fuel and lubricants to the population solely" added a new provision. This document authorized privatization of enterprise land for cash. The mechanism of land assessment was based on expert evaluation back then. In 1995, in the Presidential Decree "On privatization and rent of nonagricultural land for entrepreneurial activities", the mechanism of land assessment was sophisticated and amended. From that time on, sale price was fixed on the basis of expert conclusion and methodology worked out by the Cabinet of Ministers. Simultaneously to issuance of the Decree, the Cabinet’s Regulation "On temporary methods to assess agricultural land and settlement land" was passed. This Regulation is still effective. According to Alexander Drapikovskiy, senior expert with the Ukrainian Assessors Society, this methodology is rather immature. Otherwise, from 40% to 80% of land could have been sold out back then.

Only in 1997, expert assessment methods started their development within the frames of UKRels project. In 1998, the State Land Committee, the State Property Fund, and the State Construction Committee passed methodological recommendations as to expert assessment of land. In 1999, after issuance of the Decrees of the President of Ukraine "On sale of nonagricultural land" and "On peculiarities of privatization of unfinished construction sites", this methodology was acknowledged by the State and approved with the Cabinet’s Regulation.

Therefore, presently, there are two ways to calculate the land value. The first one is based on the Cabinet’s methodology of 1995, and the other on the methodology of expert assessment approved by the Cabinet in 1999. In a situation with the seller as a single entity, i.e. the State, such a doubleness threatens with significant overvalue. Alexander Drapikovskiy stresses that monopolistic overestimation of land cost by state officials automatically leads to narrowing of sales and, subsequently, of local budget revenues. Actually, intensive privatization was registered only in the regions where local budgets suffer permanent deficit and, therefore, are interested in its replenishment. Lack of funds pushes local authorities to sell land at its real market price fixed in compliance with the expert appraisal. On the contrary, in the regions with proficite budget, local authorities tend to overestimate land cost and thus block the privatization process.

Moreover, according to Alexander Drapikovskiy, not only the draft Land Code fails to spell out the solution to this problem, but rather the opposite. The expert claims the Land Code is strictly oriented at regulating relations between the State as a seller and a potential buyer. This makes the buyer dependent on the seller and, consequently, slows down forming of the secondary market.

One can hardly say that the state officials underestimate the gravity of the problems arising from enterprise land privatization. At one of the round-table meetings conducted by UKRels, Deputy Head of the Presidential Administration Pavel Gaidutskiy declared that the authorities do not have the effective means to control interaction between the primary and the secondary land markets. Since the only counter-party, i.e. the buyer, is interested in land privatization, while the other, i.e. the seller represented by state officials, is indifferent, privatization procedure itself becomes non-transparent. This often leads to shadowiness of the economy, bribery, and other violations of the market principles. In turn, lack of optimal mechanisms of primary market functioning gives no chance to development of the secondary market.

Pavel Gaidutskiy says, in such conditions it is necessary to deprive the buyer of every possible benefit from shadowiness of market relations, that is to provide means of effective interaction between the primary and the secondary land markets. Specifically, it is necessary to create tax mechanisms to compensate monopoly rent, the system to regulate selection of investors, sales, re-sale terms, etc. All these mechanisms must be worked out gradually, on separate market segments.

On the whole, Alexander Ryabchenko believes, privatization of any object must be carried out as a right solely and exclusively upon the buyer’s initiative. Any physical or legal entity has the right for privatization, yet the State bears an obligation to sell. It appears that the State regards its new "obligation" with more attention. There still is sufficient portion of pluralism in land relations of business entities. An enterprise is allowed to rent hide-land, buy it, or obtain permission of local authorities for permanent use. The latter definitely looks archaic when referring to the market-oriented economy. State policy in this context is rather clear today. Anatoliy Yurchenko, Head of the Chief Directorate for Land Affairs with the State Land Committee, has recently announced that the institute of permanent land usage would play itself out by 2003. Land of state-owned enterprises would make the only exception. A. Yurchenko mentions local authorities have already been authorized to gradually liquidate the institute of permanent land use and switch to rent or land privatization.

Yet, despite numerous problems in the way of the Ukrainian land market, it will certainly develop further. The process is expected to intensify in autumn. UKRels Project has not only facilitated the market formation process, but also prepared organizational grounds required to launch its own initiatives. Joint efforts of Ukrainian experts within UKRels, a number of commercial institutions involved in UKRels implementation in the regions of Ukraine, the Ukrainian League of Industrialists and Entrepreneurs, the Investment Business Association, the International Investment Support Fund, and, finally, the International Center for Privatization, Investment and Management resulted in establishment of the All-Ukrainian League for Support of Land Market Development. This non-commercial institution is aimed to preserve and expand UKRels network to make it the core for private infrastructure formation in the land market later. The League’s start-up plans for the nearest future include involvement of private consulting companies in the field of legislation, assessment, and financial institutions to operate on the land market; creation of specialized investment institutions to finance land market transactions; submission of proposals as to maturing of land market development laws for experts working for local authorities; rendering assistance in development and implementation of market behavior strategy to the League’s members, etc.

Revenues raised (‘000UAH)

The number of sale transactions

Comments

Louis FEORO, Head with the Ukrainian Enterprise Land Sales (UKRels) project

– Today the State Land Committee gradually eliminates the institute of permanent land use in regard to enterprise land. Its policy also tends to facilitate and speed up privatization of enterprise land. On the contrary, a large number of local authorities aim to sell land to companies at the highest rates possible. This is especially true for the industrial centers with investment-attractive enterprises. Do you suppose a contradiction may be created artificially to force the companies to privatize overcharged land under external pressure?

– This contradiction is really the case for some regions in Ukraine. However, I suppose it is not so much the matter of political conflict between the central government and local executives. The problem should rather be referred to local authorities, who have got blur idea of what they should do for their own benefit.

For misunderstanding of the land price problem by local authorities, there was not a sale transaction registered in 44% of all the Ukrainian regions. Our land assessing experts consider its market value, whereas local authorities very often declare it "undesirably low", thus, frustrating the deal.

Sometimes, the life itself ends the deadlock. For instance, Rovno region needs investments worth a total of USD 130 mln. Local executives make all their efforts in search of funds. Should the land, currently available for privatization at market price, be sold, regional budget would raise some UAH 125 mln. Favorable examples of the neighboring regions also exert influence on decisions made by local authorities.

– And yet, let us take a look at the regions with no sales successful… Fancy some large strategic enterprise needs investments (for modernization or restructuring), and a potential investor sets privatization of enterprise land as a precondition. Anticipating big money, local authorities ask overcharge. From your viewpoint, how should such collision be resolved?

– Similar cases are quite often in our work. Hence, we first try to convince the overcharging authorities of imprudent decisions. We arrange meetings between deputies and assessors, and expert-assessors explain the factors underlying the price formation, answer questions, and provide information on economic consequences of particular decisions of local legislators.

One shouldn’t forget that two or three years ago, the assessment principle was not even an idea. Presently, it is clearly spelled in the laws. There is a requirement to consider expert-assessed value when establishing the land price.

Moreover, the feature of transparency, or publicity, is extremely important in this procedure. When our experts work on assessment conclusion, they address the local legislative authorities with proposals containing rather reasonable market value. Authorities make a decision, which is available to the public. In case when local authorities reject the proposal and ask for higher rate, the public will also be notified of this decision.

When local executive administration overestimates the market value of land, thus impeding the sale transaction, its decision should be regarded as political, but not economic. Price negotiation procedure that takes place between the seller and the buyer has a purely economic nature. Should local executives decide to give overestimation, such step gains political context. In case legislative authorities start making political decisions on economic issues, neither sale nor budget revenues will come true. Everybody is well aware of that. The deputies taking short-sighted decisions will inevitably bear responsibility to their electors.

– Does UKRels participate in forming mechanisms to credit enterprises for land purchase?

– Cases happen when the buyer agrees on the price, but does not have the cash. Then, we offer various support to enterprises, such as installment payments, promissory note payment, etc.

Seeking financial sources for land redemption has always been a problem in Ukraine. To our regret, the Law "On mortgage" has not been ratified yet, and the land cannot be treated as pawn to obtain bank loans. Hence, the installment practice is rather popular presently. Nevertheless, this kind of financing does not cover all the cases and land mortgage loans are to be introduced. Installment is traditionally granted for 1-2 years, whereas a bank may issue long-term loans for the period from 10 to 30 years.

We are glad the draft Law "On mortgage" is presently under consideration in the Ukrainian Parliament. UKRels experts take active part in discussion, and we expect the draft to be ratified till the end of the present year. However, since it has not come to effect yet, we are working out other methods to borrow bank money for land redemption. We now have three experts, i.e. the first one specializes on the western region, the second one on the eastern, and the third one on the southern part of Ukraine. Their task is to design financial layouts for three counterparties, which would optimally consider interests of the officials, enterprises, and banks when land purchase or sale occurs.

We have conducted a survey that showed the number of sale transactions could increase tenfold if enterprises had "access" to financial funds. Should Ukraine acquire developed system of credits, no less than 22,000 sale transactions could have been performed by this day.

– How willing are the banks now to issue loans to

enterprises?

– We have tried to negotiate with a large number of banks on this issue, and many of them are interested to issue loans for land purchase or land mortgage operations. However, none of these agrees to conduct such operations till the Law "On mortgage" is passed. Additional problem is that banks lack experience to perform such transactions. These two factors are serious obstacles on the way of credit system development.

– Do UKRels experts participate in development of the draft Land Code? What is your opinion on this draft?

– They certainly take the most active part… The draft makes a step forward towards land affairs development. However, I have to admit this draft Land Code is not as practical as the previous one. We nevertheless believe that our proposals will finally be considered in the entire volume.

As a conclusion, I would like to stress that time will lead to pressure of the economic necessity, on the one hand, and pressure from the public, on the other hand, to overcome the politics-based opposition and give judgement and bring change to decisions of the authorities.

Alexander RYABCHENKO, Head with the Verkhovna Rada (Ukrainian Parliament) Control Commission for Privatization

– How would you describe the current state of affairs on enterprise land market?

– Enterprise land market in Ukraine? Does it actually exist?

A market must register demand, on the one hand, and supply, on the other hand, as well as some level of business activity. To my mind, the state of affairs in land privatization by enterprises suggests neither developed demand structure, nor sufficient supply.

– Do you suppose the reason lies in companies not possessing sufficient funds for land purchase, whereas local executives in most large industrial centers tend to fix extremely high prices? Legal acts, namely the Land Code and the Law "On mortgage", are in progress now. To what extent could they contribute to introduction of economic solutions to these problems?

– Should the Law "On mortgage" be passed, it would bring some fresh opportunities. Yet, the agrarians insist that the Land Code be of a top priority.

– How do they explain this?

– The point is that the Law "On mortgage" deals with the basic issues of crediting enterprises on real estate security, and on mortgage land particularly. When this draft Law is approved, not only it will bring new efficient means of purchase, crediting, etc., but it will also lead to the mortgage market formation. It suggests an entity, having bought a number of mortgage papers, acquires a right for some share of mortgage assets. Since the credit business has always been somewhat risky, the agrarians want to define certain restrictions for land mortgage at first. These should be of a top priority in the Land Code. Apparently, the restrictions will refer to those mortgage relations that appear as a result of outstanding and unpaid loans. Yet, I suppose this kind of relations is not ready yet.

– Will land division into agricultural and enterprise lands remain in the new draft of the Land Code? You know that agricultural crediting meets unpredicted risk, whereas the situation in manufacturing is more predictable, especially when a loan is given to the regular client of the lending bank…

– Land division must remain in legislation, since both land statuses have different assignments, different roles in the economy, and attitude of the law should also be different to each of them. In addition, the Parliament does not hold any furious debates or arguments on enterprise land privatization. The "majority" would always encounter 266 voters in favor of this privatization.

– Then why do debates on legislation for agricultural land market slow down the development of legislation for enterprise land market?

– Just because it does not make sense to pass a separate law regarding an individual issue before approval of the common set of acts that would introduce single rules all over the business community.

– And how soon should we expect the essential land Law to be passed?

– Rather soon. However, their approval is not the most important deal. I suppose the executive power has more significance for the land reform than the legislative. You cannot imagine deputies going to conduct privatization in the regions of Ukraine!..

– As a matter of fact, the State Land Committee has made a decision to play out the institute of permanent land usage by 2003. How much time do enterprises have then, considering the Land Code and the Law "On mortgage" be passed no earlier than by the end of the year 2000? Do you believe that over 90% of the enterprise land could be privatized within two years?

– Impossible. There used to be similar concept of housing privatization. Rental agreements were expected to be transformed into urgent lease agreements, whereas prices for housing in the center should have been sharply raised, thus making outskirts housing socially guaranteed. Yet, these expectations failed to come true.

– Could this be a good idea for the State to follow this way?

– I do not think so. Similar decisions contain some negative sense because they can not be implemented in complex, but only on the local level. To change attitude of the companies to the land, a large set of problems should be solved.

What was the original idea of the State Land Committee? To switch all companies to urgent lease agreements and then see who and how uses the land. Should an enterprise pay as it is determined, we shall provide it with the long-term lease. The land of the enterprise, which is unable to pay or properly use it, will be put up for sale. Speculatively, it sounds good, but in practice it lacks integrity. The Cabinet of Ministers could not even handle it despite the efforts to perform something like that. The least of the tasks is to fix normal prices. How can the land tax amount payable exceed rental payment?

Lack of experience or desire to carry out complex measures is the main reason why the land reform does not progress at the pace expected.

– Don’t you think that the general picture of land privatization follows the pattern of privatization in industry? And that privatization plans are drafted not for efficient economy, but to get revenues for the budget?

– To my regret, it really is so. Thus, the State has to cover even more budget shortages each year. I would strongly oppose looking at land sale as a financial source for budget revenues only. The perspective of land sale should be different, such as enhancement of land use efficiency, introduction of a new economic resource, etc…

Anatoliy YURCHENKO, Head of the Chief Directorate for Land Affairs with the State Land Committee of Ukraine

– What are the grounds for the State Land Committee’s decision to eliminate the institute of permanent land usage by 2003, and why is such a time limit set?

– Foremost, market relations do not suggest land usage for free. The only exceptions are the non-profit organizations or companies.

I understand this reform is not favored by enterprises that became joint-stock companies during the privatization process. They used to own land for free, and many of these do not even possess state certificates granting the right for permanent land usage. They are still not interested in land resource as their property, and they have reasons for that. Land is not related to fixed assets of the company, it still has no value. There is neither differentiated taxation, nor the mortgage institute yet.

– What do rates of the land tax depend on?

– They depend on location. The Cabinet’s 1995 methodology was the basis to conduct assessment of all enterprise land. The land tax is set in compliance with the original value of the land lot. However, it doesn’t depend on many other important factors regarding application of the lot. Should the land be involved in community-important activity, the tax should be reduced. On the other hand, as infrastructure develops on the land itself and the area around, the land value will naturally go up encouraging the owner and local authorities. Along with this, the land tax must contribute to improvement of the land quality, increase in cost and demand for certain land lots.

The State Land Committee’s policy is aimed at involving the land in market relations as soon as possible to see the return on land. From my perspective, potential land owners able to become full-fledged market entities have either already privatized the land, are in process of privatization, or will do this in the nearest future. A two-year period is enough for those who are ready to enter market relations.

I really think reformation that requires notable social and political expenses must be fast; in this case only we can expect fast feedback.

– Is the complex of preconditions for reforms already in place? No essential laws have been passed, local authorities frequently fail to grasp the genuine meaning of land privatization, companies lack financial sources for land purchase… Could the State Land Committee’s policy lead to the situation when enterprises will be put in a no-way-out position?

– Let us take a wider look at this problem. The new draft of the Land Code provides division of land into state-owned and community-owned. There is land subject to local authorities solely. There is land that in some way represents the State interests owing to strategic enterprises located on it. The division also provides different approaches to enterprise land privatization.

As regards large manufactures, they are the only entities to possess their own land. When local legislative authorities overprice the land, it shall be considered a small disadvantage of the land market formation. Unfortunately, understanding of own actions does not come to every local executive. They only want to get the highest revenues for their local budgets. When a free lot is for sale at an auction or a tender, the price may vary greatly. Another matter is with manufacturing enterprises. In this case, local authoritues must consider the assessed value when taking a decision.

– Should this assessment be conducted by expert or on the basis of the Cabinet’s methods dated 1995?

– It should be assessment performed on the basis of the Cabinet’s mechanism. Assessed value concluded by the experts may be considered, and yet sale must be conducted by the financially assessed value. Assessment results are officially acknowledgeded and available in every city. In addition, some cases encounter expert-assessed value to be unreasonably low. Even though purchase or rent procedure can be performed at the underestimated rate, the very idea of privatization for cash fails to make sense in this case.

– Privatization may certainly have its nuances. Since deals are not always transparent, at any time the price may be set anyhow despite the legislation. Has the State Land Committee worked out any mechanism to control sale transactions regarding proper performance?

– The State, and the State Land Committee particularly, control the progress of land privatization. There is the State Land Planning Expert Board. It controls land cost defined as a result of either assessment. Depending on expert examination results, the bargain is held.

Besides, land authorities conduct every step in legal registration of the property right for land. By the way, according to the effective Land Code, this procedure takes 2-3 years. In the new draft Land Code, the procedure is remarkably simplified and lasts 2-3 months at the high.

– What are the other significant amendments to the draft Land Code?

– From now on, the seller will be responsible for legal registration of the property right for land. The buyer may select an object, win a tender, and, if it is a direct sale, provide the necessary documentation. Coincidentally the purchase contract, the buyer must receive an act confirming the property right.

Numerous constrains regarding certain types of land exploration are also canceled. The most general rules remained as regards the area zoning (division into industrial zones, park zones, etc). In other words, the new draft of the Land Code differentiates the process of property acquirement from the process of land exploration. Hence, there is also a division between the property right and the right for business use.

– Does it refer exclusively to enterprise land?

– It certainly does, although some explanations need to be made prior to this. Agricultural land can only be given for nonagricultural use in the exclusive cases, if a sharp social necessity appears. Yet, we have thought about the permission terms to use agricultural land for nonagricultural purposes. I am talking about a special tax aimed to make up for the loss of agriculture-suitable land to the State. Imagine that you need some particular land lot. Its cost is assessed from the perspective of this resource renewal for agricultural purposes. The cost of renewal makes the amount the buyer must compensate.

– Is there some differentiation regarding mortgage land use in the new Land Code? Do you consider mortgage principles must be equal for agricultural and enterprise land?

– I do not think that agricultural land must be granted some advantages. In the Law "On mortgage", several features of enterprise land mortgage may be described, but there is no notable difference. You possess some property, it is assessed in some way. Should you put this property on mortgage, you will receive loans at some terms, and that is it. Another matter is that liquidation of this property resource may be different; therefore, interest and terms must be different as well…

– Do you have suspicions that as the secondary land market develops, the State may lose control over the situation and this would lead to sufficient social losses?

– No, I do not think so.

Interviewed by Elena GERASIMOVA