Dear readers, today we would like to speak about leasing
as the way to launch new business and create a leasing company.
This article pursues the objective to dwell on explicit
and implicit profits of leasing-givers.
We shall begin with the assertion of leasing to be no new
instrument in world economics. Leasing sprang up first in
the USA in 1952, in San Francisco, where the first leasing
company was formed. Then this financial tool enjoyed a wide
spread all over the world. It is worth mentioning that the
Soviet economics used leasing intensively in their outward
activity. Yet before "perestroika" in the USSR
leasing operations were carried out by such organizations
dealing with foreign trade as "Autoexport", "Aviaexport",
"Sovcomflect", "Sovfraht", "Tractorexport".
The prevailing volume of operations befell East-West trade,
first of all, import of equipment from developed capitalist
countries. Outward trade organizations functioned as consumers
of services whereas a generating role belonged to Soviet
and foreign banks and leasing companies created with their
help. Among the latters one can call "Promlease"
created in 1974 in France by the commercial bank for Northern
Europe ("Eurobank") and "Credi Leone";
"East-West - Leasing" created by "Morgan
Grenfill and Co Ltd" and Moscow popular bank in England;
"Donau-Bank" in Austria. Leasing was properly
considered as one of the ways of rising the effectiveness
of economy in our country. It was at that time when he began
to be supposing that leasing may be more resultative than
traditional credit lines opened by foreign banks for 7-8
years in favor of "Vnesheconombank" or the latter's
credit in foreign currency. That is the history of the question.
The intensive rise of financial leasing should be imputed
to those advantages the latter accords under certain conditions
in comparison with a purchase of assets for the money borrowed
through a trivial credit operation.
(E. Rid, R. Kotter, E. Gill, R. Smith. "Commercial
Banks". M. Cosmopolis, 1991 - in Russian).
Let us dwell a bit on economic profit of leasing. The economic
essence of leasing is easily explicable by the features
of property relations springing up under leasing transactions.
Equipment (property) - a subject of leasing treaty is a
property of leasing-giver, a leasing-receiver is entitled
to the right of possession and utilization of this equipment
during the term stipulated by the treaty provided he/she
pays a certain sum of money for it.
In order to become a proprietor of equipment (property)
a leasing-giver acquires it pursuant to a purchase-sale
agreement from a vendor (purveyor) having paid its full
cost.
If the term of utilization exceeds that one of the agreement
after the time ensues the equipment remains in possession
of a leasing-receiver but with a residual cost.
Brokerage renumeration is a source of coverage of leasing-giver's
expenses connected with the concrete transaction and that
one of gaining profit; the second consideration being of
primary importance.
So, it is a leasing transaction proper that is of interest
for a leasing-giver as it contains economic gain.
It is due to its manifold economic sense that leasing is
spreading wider and wider in post-Soviet countries. A big
number of leasing companies are launched in Russian Federation,
Belarus, Ukraine and also in Central Asian countries except
Tajikistan. Leasing in these countries evolved sweepingly
as local entrepreneurs understood clearly that mutual relations
on leasing-basis rest on adequately weighty economic grounds
being a method of launching a highly reliable and lucrative
business for a long period of time.
Some years ago industrialists and bankers of the majority
of CIS countries were fond of creating financial-industrial
empires and obtaining fabulous incomes through state bonds.
Now they display elevated interest in investments beset
with manufacturing industry. And here the state helped them
to take a right decision as to where resources should be
deposited. In all CIS countries the system of tax benefits
is envisaged to stimulate local businessmen for leasing
property. Thus, the state promotes the renovation of the
fund of basic means of its industrial and agricultural enterprises.
In Tajikistan the state begins to understand the importance
of leasing services for local economy, they have already
adopted the Law "On Financial Leasing"; leasing
changes concerned with privileged regime of taxation in
reference to leasing transaction participants being on consideration.
Financial institutes have matured enough to start mastering
leasing services market. In our republic there is no that
complete set of financial tools which might help to obtain
super profit. But there is a great need in renovation of
worn out basic funds, industrial and agricultural enterprises
must replace urgently their equipment. One may say too that
potential leasing-receivers are ready to regularly pay to
leasing-givers for their services. But in this chain there
is no main link up to now - that of a leasing-giver.
Pursuant to the Law "On Financial Leasing" it
is no licensable kind of business. I.e. you needn't have
a license if you wish to accord leasing services but any
corporate body or natural person having adequate money at
their disposal either. Banks themselves needn't take up
this sort of activity, but they may create an affiliated
leasing company; being a self-sufficient artificial person
it will specialize just in this type of services.
For today one can single out six basic types of leasing
companies in world practice:
1. Leasing companies - filial companies of big banks
or being commercial banks themselves;
It is a mostly spread variant of leasing companies appearance.
The majority of banks must look upon leasing as an additional
tool of crediting. Such approach is mutually beneficial.
On the one hand, feeding an infantile leasing company with
financial resources a bank helps it to become independent.
On the other hand, when a crisis situation springs up in
economy some banks can keep themselves going due to the
treaties concluded by their companies. Leasing transactions
make a crediting portfolio of a bank more stable.
According to experts' appraisals filials of big banks have
the best chances for converting into thriving universal
companies. The only compulsory term for this is an absence
of excessive patronage on the part of a bank-institutor.
In the majority of cases these companies orient on accordance
of leasing services to a wide circle of clients but advantageous
attention to the clients of their own bank is not excluded.
As a rule, banks not only finance their filials but deliver
them clients out of those who directly apply to banks for
credits to acquire basic resources either. On the other
hand, clients being not served in a bank-institutor apply
directly to leasing companies. Thus a bank can extend an
existing client base. Leasing can help in re-reformation
of the structure of the client base, in competitive struggle
for new clients. It is natural that the companies included
into the structure of big banks have a lot of orders themselves.
As a rule, they remind Western banks using the most modern
methods of work.
2. Leasing companies formed according to branch indicator
are oriented on the outfits of concrete realms. The fields
mostly attractive for leasing in Tajikistan are the following
ones: agriculture, construction, transport (air- and railway
conveyance) food and light industries.
3. Semi-commercial leasing companies - they are created
with participation of state or local bodies and financed
(practically or completely) at the cost of respective budgets
- and also regional organizations assigned to support small
business. This type of leasing companies is distinguished
with tough orientation on transaction with certain clients,
it is especially typical of the companies created immediately
by state and local powerful frameworks. The terms of transactions
proposed by these companies resorting usually to privileged
budget financing are more attractive for clients in comparison
with those of commercial leasing companies, however, availability
of their services is limited strongly. Often the question
of efficacy or, at least, reliability of realized leasing
projects doesn't strand so acutely for them as for commercial
leasing companies.
4. Leasing companies created by trading companies
don't have direct ties either with bank or industrial or
state resources. As a rule, these companies are created
for attraction of corporative clients enabled to purchase
big amounts of equipment, for example, office or trade equipment
and etc.
5. Foreign firms - purveyors of equipment, auto transport
media and technologies, especially lorries carrying large
freights; over the latest time this tendency being transferred
to producers of multiplying office equipment in some cases
beset with printing. They use leasing as an instrument for
trading off their production. They were compelled to form
leasing companies to the issue of gradual saturation of
market and intensified competition.
6. International leasing companies. These ones take
advantage of having cheaper credit resources in comparison
with those they get in their own countries, they beware
unknown local leasing companies. Their basic activity is
financing of sales beset with the equipment of foreign purveyors
traded off to local outfits and foreign firms.
The variety of leasing companies should be put down to a
huge and manifold market of leasing services consumers all
of whom can't be satisfied by simple companies. Cooperation
with a leasing company pertaining to one of the types, as
a rule, has peculiarities which should be taken into account
when conducting negotiations, choosing a final leasing-giver
and concluding a contract.
We consider that any of the enumerated types of leasing
companies may appear in Tajikistan and each of them will
find its own clients.
Summing up we may expose those benefits a potential leasing-giver
can see taking a decision whether to ply leasing or not:
For a non-bank leasing company the latters are to the
following effect:
1. Reclamation of a new niche of the market non-occupied
by anyone yet, it will afford to create an influential and
highly profitable financial structure oriented on long term
activity.
2. Absence of licensing that will permit to create
a financial institute dealing basically with operations
on credit.
3. Absence of regulating standards enforced by superior
organizations limiting the activity of other financial institutes
(banks, crediting comradeships).
4. Harmonious accumulation of monetary means, both
assets and liabilities, to the effect of financing projects.
5. Obtaining of highly accrued interests during a
long period of time.
6. Low per cent of risk when conducting operations
as the subject of leasing remains to be the property of
the company until the term of the treaty ensues.
As for bank sphere leasing grants the following additional
availabilities:
1. A bank extends a spectrum of services for clients,
it becomes more available being more attractive as a loan-giver.
2. A risk of losses is reduced in connection with
insolvency of a leasing-receiver (the right for property
in regard to a subject of leasing ensuring a contract remains
with the bank itself or with its filial company).
3. A crediting portfolio of the bank is extended
becoming more variegated.
4. Gained income in the kind of brokerage. Apart
from it if a bank creates a filial company.
5. The latter becomes a large-scale loaner for the
bank in the course of durable time.
6. A leasing company is a reliable loaner which redeems
credit partially every month.
7. Insurance companies created under banks have a
constant client (it will be in future as now no any insurance
company or pension fund are created).
8. A leasing company may put its resources into a
deposit in its own bank.
9. Banks are limited in according loans, but if bank
has a very reliable client it is necessary to attract it
with an additional service - that of leasing - several financial
institutes can be applied simultaneously, a bank can fund
a very lucrative and large-scale transaction avoiding violation
of standards.
10. Apart from it a bank can form a fund of potential
losses on loans and the scales of leasing transactions of
a filial company won't sway over the size of the fund.
11. Flexible character of leasing payment schedule
affords to observe a balance of interests of both leasing-giver
and leasing-receiver.
12. That thing is important for a bank that a company
procures new clients for it as the latters may be proposed
to open accounts namely in this bank.
13. A leasing company is more mobile than a bank
in reference to taking decisions, it accelerates the process
of work; the fact is attractive for clients.
14. A leasing company doesn't need a big staff, the
only term is a high qualification of employees and good
technical equipment.
