Kazakhstan makes leap in Doing Business 2016 report
By Aynur Karimova
Kazakhstan, an energy-rich Central Asian country with a population of 17.3 million, has improved its position in the Doing Business 2016 annual ranking of the World Bank and the International Finance Corporation by 36 points.
The report “Doing Business 2016: Measuring Regulatory Quality and Efficiency” published on October 28 said Kazakhstan ranked 41st among 189 world countries, improving its position from the 77th place in Doing Business 2015 report.
"Kazakhstan made starting a business simpler by eliminating registration fees for small and medium-size firms, shortening registration times and eliminating the legal requirement to use a company seal," the report noted.
Compared with last year's results, Kazakhstan achieved its greatest successes in the categories of starting a business (21st against 55th), dealing with construction permits (92nd against 154th), getting electricity (71st against 97th), getting credit (70th against 71st), trading across borders (122nd against 185th), enforcing contracts (9th against 30th) and resolving insolvency (47th against 63rd).
"Kazakhstan made dealing with construction permits easier by eliminating the requirement to obtain a topographic survey of the land plot," the report said. "Kazakhstan made transferring property easier by eliminating the requirement to obtain a technical passport for the transfer and to have the seller’s and buyer’s incorporation documents notarized."
The country also made enforcing contracts easier by introducing a simplified fast-track procedure for small claims and by streamlining the rules for enforcement proceedings.
"Kazakhstan made resolving insolvency easier by allowing creditors to initiate reorganization proceedings and encouraging sales of assets as a going concern," the report noted. "Kazakhstan also improved its bankruptcy regime, by explicitly authorizing post-commencement finance and granting it priority over existing unsecured claims."
In general, Kazakhstan improved its position from 77th last year to 63rd in this year’s report titled “Doing Business 2016: Measuring Regulatory Quality and Efficiency,” published on October 28.
Singapore is at the top of world ranking on creating the most favorable conditions for business. The top ten countries include New Zealand, Denmark, Korea, Hong Kong, United Kingdom, United States, Sweden, Norway and Finland.
Kazakh experts believe that the rise in Kazakhstan's position in the report is a sign of the effectiveness of the economic policy pursued by the government.
Economic Researches Institute Chairman Maksat Mukhanov told journalists that Kazakhstan's improved ranking will pave the way for foreign investments in the country.
"Doing Business is a world-famous rating, which is used by investors before they invest in the projects in a given country. Improvement of Kazakhstan's position in the ranking is an important assessment of activities of the state, primarily, the work of the president and the government in conducting reforms," he said.
Mukhanov also noted that the Kazakh government has successfully carried out a lot of measures toward improving the business climate in the country.
"According to international experts, implementation of five institutional reforms initiated by the Head of State will allow creating good conditions for development of small and medium-sized businesses, and economic development of Kazakhstan as a whole," he added.
The economist believes that an important point in this regard is the confidence of businesses in the state.
"Public-private partnership is a priority of the state policy in the field of support of entrepreneurship. This is an important issue that contributes to economic growth and employment of population," he concluded.
Today, Kazakhstan, the largest economy in the Central Asian region, is keen on developing a sound investment climate to attract foreign direct investment in various economic sectors. The country periodically extends a unilateral visa-free regime for a year for citizens of countries that are actively investing in the Kazakh economy.
Analyses show that Kazakhstan is on the list of countries that receive the highest foreign direct investment, which amounted to $180 billion in 2013.
According to estimates by experts and investors operating in the country, today Kazakhstan has created the best investment conditions in the Central Asian region.
The World Bank has recognized Kazakhstan as a country favorable for investment. It maintains a low international debt while its currency reserves exceed $100 billion.
Ten special economic zones operate in Kazakhstan. Entrepreneurs enjoy full support of government and tax preferences in these zones.
Investors in priority sectors – metallurgy, petrochemical, oil refining, engineering, construction materials, and food production sectors – are exempt from corporate income tax and land tax for a period of 10 years and property tax for eight years.
The stability of tax legislation is guaranteed for investors. The government provides investment subsidies up to 30 percent for construction and the procurement of equipment.
According to the Kazakh law "On Investments," investors are exempt from customs duties on the import of equipment, its components and spare parts, raw materials and supplies, as well as kind grants of not more than 30 percent of the total investment in fixed assets.
Kazakhstan is also focused on the creation of an open labor market. The country grants the right to employ a foreign labor force beyond the quota for a period of more than one year for construction contracts, renovation, or completion of a construction project.
Kazakhstan is undergoing institutional reforms aimed at improving the business climate. An international financial center will begin operating next year in Astana.
The country offers legal regulation for investment issues based on English law, with the proceedings in English involving foreign judges.
The government also considers the exemption of foreign investors from the payment of corporate and individual income taxes for 10 years.
In Kazakhstan, foreign businessmen do not need to go to state agencies for the relevant documents, since the Ministry of Investment and Development handles these claims.
Kazakhstan has also created an investment climate monitoring system. The Council of Foreign Investors, envisioned by the Kazakh president, addresses strategic issues, while the Council for Improvement of Investment Climate, created under the prime minister, is engaged in improvements on tax legislation and customs duties. Kazakhstan’s investment ombudsman is focused on resolving investor problems.
The government plans to transfer to the e-government platform to eliminate all contact between civil servants and investors. It will be possible to obtain all permits online thanks to the electronic document management system.
Thus, all measures taken toward improving the business climate in Kazakhstan have yielded positive results and paved the way for the country in making great strides in the Doing Business 2016 report.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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