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Kazakhstan protects business and investments

by October 24, 2018 General

Attracting investment policy in the economy is important in every country of the world, as nowadays the sustainable development of the economy of any country is impossible without active participation in international economic relations. Therefore, one of the topical issues is a set of measures undertaken and aimed at creating the favorable investment climate and increasing foreign investments. How does Kazakhstan protect foreign investors? Read in the piece of the Information Agency.

What do foreign investments provide to a receiving country? First of all, this is a stable source of financing, expansion and reconstruction of production. As a rule, country’s relations with foreign markets expand, competitiveness of the economy is stimulated. And competitiveness of country’s economy is largely determined by attractiveness for investors. In addition to the fact that attracted funding allows for the expansion and reconstruction of production, at the same time there is a transfer of advanced technologies, licenses and patents for inventions, as well as trademarks that increase the marketing attractiveness of products.

But competition between countries for foreign investments and changes in the world economy requires the adoption of a dynamic framework concept of investment policy, since the volume of attracted foreign investments, their quality and efficiency are largely determined by the investment climate. This affects what capital comes into the country, how harmoniously foreign funds will fit into the structure of the economy, how effectively the state, regions and enterprises can use the benefits of foreign investments, and, finally, what will be the result of ongoing projects.

For all this, a proper mechanism for attracting foreign investments is needed, which implies the development of the legislative framework of the country attracting these investments. Having embarked on a modernization of the economy and becoming one of the top 30 countries in the world, Kazakhstan has formed a clear state policy aimed at creating the most attractive investment climate. For example, the Strategy Kazakhstan-2050 emphasizes that our model is based on the active role of the state in attracting foreign investment. What does it mean? First of all, it is an understandable scheme for launching an enterprise, reducing administrative barriers during coordination with state agencies and minimizing the costs of all paper procedures.

Creation of a special Project Office in Kazakhstan to protect the interests of foreign investors became one of the steps in this direction. The Project Office was created at the site of the Investor Services Center within the tripartite memorandum on cooperation between the Ministry of Foreign Affairs, the Ministry for Investment and Development and the Agency of the Republic of Kazakhstan for Civil Service Affairs and Anticorruption in order to pool efforts and improve investment attractiveness, signed on April 11, 2018 during the international business forum on the topic: Investment climate in the Republic of Kazakhstan: the institution of investment ombudsman and anticorruption mechanisms.

The Project Office is largely focused on protecting investors in all situations, even if they are negative that sometimes occur not only in Kazakhstan, but also in many other countries of the world. We have a really viable business environment, and, of course, sometimes we have to face such challenges. The Government of Kazakhstan is conducting a comprehensive work on creating conditions for investors, including work on OECD standards, which is a very prestigious organization and their standards, transferring the practice, which is very important for our country. We always listen carefully to our foreign partners and create all the necessary conditions, Minister of Foreign Affairs of Kazakhstan, Kairat Abdrakhmanov, said.

According to Chairman of the Agency of the Republic of Kazakhstan for Civil Service Affairs and Anticorruption, Alik Shpekbayev, there are still questions in the country that prevent investors from unlocking their full potential and realizing new business ideas. Among the problematic issues are corruption risks and administrative barriers.

Protecting Business and Investments project on anticorruption support of business and investments has been launched with the aim of boosting investment attraction. The main objective of the project is to eliminate bureaucratic delays and corruption costs in the process of investors and businessmen who applied to the Agency for anti-corruption support, Alik Shpekbayev said at a meeting with the foreign diplomatic corps.

The head of the ACSAA stressed that Kazakhstan has created all conditions for easy business operations. The Council of Foreign Investors functions effectively, the Astana International Financial Center has been established. The country became an associate member of the OECD Investment Committee and signed about 50 investment protection agreements.

Since the establishment of the Project Office in June this year many domestic and foreign investors are involved in the anticorruption support of their projects. Currently, more than 160 foreign and domestic business projects with a total value of about 6 trillion tenge (equivalent to 16.4 billion dollars) are under maintenance. About 40 per cent of them are projects with the participation of such foreign countries as Azerbaijan, Great Britain, Germany, Denmark, Iran, China, Korea, Malaysia, the Netherlands, the United Arab Emirates, Poland, Russia, Slovakia, Turkey, France, Switzerland, Japan. Such support is provided free of charge. We are available 24 hours a day, 7 days a week, Shpekbayev informed.

He also spoke about the results of the Agency’s work on protection of foreign and domestic business projects against corruption, having noted that not a single project had been involved in litigation with government agencies since joining the agreement.

In practice, the very fact that an investor joins the agreement with our Agency already changes the attitude of officials and rescues a businessman from any corruption risks. Our Project Offices in the regions directly consider the applications of entrepreneurs, providing comprehensive legal assistance. Thus, over the period of the project implementation, 153 appeals were received, 129 of which were resolved in favor of entrepreneurs, the rest are at the elaboration stage. ACSAA acts as a guarantor of the observance of all the conditions stated by the state bodies at the government level. Thus, our project is aimed at introducing a service approach in the work of civil servants, excluding administrative pressure and corruption costs throughout the entire life cycle of an investment project, Shpekbayev assured.

According to him, during the project implementation period, 153 appeals were received, 129 of which were resolved in favor of entrepreneurs, the rest are under consideration.

For example, the Project Office in Shymkent restored the legal rights and interests of Bal Textile, with the participation of Turkey, operating in the production of carpets and rugs in the Ontustik FEZ. Due to technical errors, the company was fined 50 million tenge. As a result of the joint consideration of the issue by employees of the state revenue bodies of the region, the companies granted the right to adjust the declaration in accordance with the Code of Customs Regulation of Kazakhstan. The second case occurred in Almaty. The company Asia Steel by Corporation faced legal conflicts in the processing of working visas for narrow technical specialists from China. The Project Office worked out the issue with the Almaty Migration Service and resolved it positively. Based on appeals, the Agency summarizes and analyzes the most frequent systemic problems with laying out specific proposals for eliminating administrative barriers and corruption risks, Alik Shpekbayev said.

At the same time, he presented a video about the work of the Project Office and called on the diplomatic corps to inform the businessmen of their countries about the creation of such an effective tool for anti-corruption support of investment projects in Kazakhstan.

Mass entrepreneurship and investments are a guarantee of a high level of employment of the population. These are new jobs, information technologies, high value-added products and so on. Today there should be no pressure on the business, some people see the business as a cash cow. Therefore, I warn you once again that everything that is being done today to support the business is a day of tomorrow – a high guaranteed salary, sufficient pensions, scholarships, modern infrastructure, Shpekbayev urged.

In turn, Vice-Minister for Investment and Development of Kazakhstan Timur Toktabayev noted that today Kazakhstan is taking concrete measures aimed at attracting investors, by increasing confidence in our country, implementing a long-term and predictable policy, creating a transparent and business-friendly investment climate. This is one of the country’s top priorities.

According to him, in order to objectively consider issues and make collegial recommendations for the resolution of the investment ombudsman, there is an investment group that includes first deputy heads of the General Prosecutor’s Office, the Ministries of Finance, Justice, Foreign Affairs, Agriculture, National Economy, Culture and Sport. It is important to note that the consideration of investment ombudsman is a form of pre-trial and out-of-court settlement of disputes. And thus designed to prevent the creation of a conflict situation.

Following the results of 9 months, the investment ombudsman reviewed 37 appeals. Of which, a number of issues were resolved in favor of investors. These are the projects of the Russian company in the field of gasification, the Kazakh-German project in the chemical industry and many others. For example, an appeal was received from a foreign beverage company that had questions about infrastructure. We have carried out work to resolve this issue on the basis of which the company continued to carry out its work in Kazakhstan. In addition, we were approached by a large retail company. The issues were related to the burden of land. After providing proper support, the issue was resolved in favor of the investor. Based on the existing practice, problematic issues most often arise among investors in the areas of tax, customs, labor law, licensing, and also land relations, Toktabayev said.

The Vice-Minister noted that on the basis of the complaints received, work is underway to decriminalize tax offenses.

In 2018, according to four appeals, the issue was resolved in favor of investors. According to 20, recommendations were made for their resolution. In general, the investment ombudsman institution is an effective tool for monitoring the thin spots of our investment climate. Thanks to appeals from investors, we not only implement feedback, but also highlight areas for subsequent systematic work to improve legislation, Toktabayev concluded.

Extraordinary and Plenipotentiary Ambassador of Belarus to Kazakhstan Anatoly Nichkasov noted the special role and unconditional efficiency of the project.

Representatives of diplomatic missions and international organizations expressed their readiness to provide the necessary assistance in attracting potential investors, and also wished the project initiators to firmly follow the planned course to improve the investment attractiveness of Kazakhstan.

We remind that the President of Kazakhstan in his Address to the people of Kazakhstan on October 5, 2018 stressed the need to protect business as a priority of the state and the Government.

Source: Kazakhstan 2050