08ASTANA2474, KAZAKHSTAN: GOVERNMENT REDOUBLING EFFORTS TO MAKE

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Reference ID Created Released Classification Origin
08ASTANA2474 2008-12-18 16:27 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO9933
RR RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW
RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHNP RUEHPOD RUEHPW RUEHROV
RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHTA #2474/01 3531627
ZNR UUUUU ZZH
R 181627Z DEC 08
FM AMEMBASSY ASTANA
INFO RUCNCIS/CIS COLLECTIVE 0937
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0339
RUEHKO/AMEMBASSY TOKYO 1044
RUEHIT/AMCONSUL ISTANBUL 0130
RUCNDT/USMISSION USUN NEW YORK 2098
RUEHNO/USMISSION USNATO 2430
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0504
RUEKJCS/SECDEF WASHDC 0413
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 0993

UNCLAS SECTION 01 OF 03 ASTANA 002474 
 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
STATE PLEASE PASS USAID 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EINV KZ
SUBJECT:  KAZAKHSTAN:  GOVERNMENT REDOUBLING EFFORTS TO MAKE 
PROGRESS ON WORLD BANK DOING BUSINESS INDICATORS 
 
ASTANA 00002474  001.2 OF 003 
 
 
1.  SUMMARY:  Prime Minister Masimov has redoubled the Government of 
Kazakhstan's commitment to reforms to improve the legal environment 
for business, making this a top priority since the September release 
of the 2009 World Bank Doing Business (WBDB) report.  In November, 
Masimov ordered each relevant ministry to prepare a comprehensive 
action plan on improving the business environment through a focus on 
the indicators used in the WBDB report.  On December 10, Masimov and 
Stefka Slavova, Senior Economist of the World Bank's Doing Business 
Reform Unit, chaired a USAID-organized conference on the 
government's WBDB action plan which was attended by over 150 
representatives of the public and private sectors and the media.  We 
expect Kazakhstan's reforms to significantly improve the underlying 
business environment measured by seven of the ten WBDB indicators: 
Trading Across Borders, Protecting Investors, Getting Credit, 
Starting a Business, Registering Property, Dealing with Construction 
Permits, and Closing a Business.  Additional reform work is also 
underway in areas not covered by the WBDB report -- including 
licensing and permitting systems and inspections.  END SUMMARY. 
 
ORGANIZED FOR REFORM 
 
2.  The Government of Kazakhstan established a Commission on the 
Reduction of Administrative Barriers in March 2008 to deal with a 
wide range of reforms to improve the business environment.  With the 
publication of the 2009 Doing Business report in September, Prime 
Minister Masimov ordered more focused work in key areas highlighted 
by the WBDB report and tasked Deputy Prime Minister Yerbol Orynbayev 
to facilitate the creation and implementation of action plans by the 
relevant government ministries.  Orynbayev established a working 
group with senior-level representatives from a number of ministries 
and government agencies -- including vice ministers of justice, 
finance, and industry and trade -- as well as representatives of 
private sector business associations and USAID's Business 
Environment Improvement (BEI) and Regional Trade Liberalization and 
Customs (RTLC) projects. 
 
3.  There are five expert groups under the working group which are 
focused on WBDB indicators:  Starting a Business and Registering 
Property; Closing a Business (Bankruptcy); Dealing with Construction 
Permits; Trading Across Borders; and Protecting Investors and 
Getting Credit.  Each expert group is led by a specific ministry and 
also includes representatives from other affected government 
agencies, the Atameken business association, the Forum of 
Entrepreneurs, and USAID's BEI or RTLC project. 
 
CONFERENCE HIGHLIGHTS ACTION PLANS 
 
4.  During the December 10 conference in Astana, each expert group 
presented initial action plans on reforms in their areas, with 
specific targets for improvements in Kazakhstan's ranking on the 
WBDB indicators. 
 
5.  Vice Minister of Economy and Budget Planning Marat Kusainov 
presented highlights from the action plan for improving the Trading 
Across Borders indicator.  For the short term, his ministry 
proposes, among other things, to make amendments in the Customs Code 
to reduce the number of required customs documents and to limit the 
time frame for customs processing to two days; introduce the 
one-stop shopping principle for import/export procedures; increase 
public access to information on import/export procedures, 
regulations, service providers, and tariffs; implement electronic 
declaration of goods; and shorten the list of goods subject to 
licensing. 
 
6.  Deputy Head of the Agency for Financial Control Alina 
Aldambergen introduced highlights from the action plan for the 
Protecting Investors indicator.  Proposed reforms include requiring 
the publication of additional information in corporate financial 
reports. 
 
7.  Deputy Head of the Agency for Financial Control Alina 
 
ASTANA 00002474  002.2 OF 003 
 
 
Aldambergen was the presenter regarding the Getting Credit 
indicator.  The proposals for improving this indicator included 
simplifying the process of gathering information on the credit 
histories of legal entities, and reducing the administrative 
expenditures of credit information suppliers and credit bureaus. 
 
8.  Vice Minister of Justice Marat Beketayev prese
nted highlights of 
the action plan for improving the Starting a Business indicator. 
Proposals in this action plan included reducing the time frame for 
registering a business to three days and limiting the time for 
issuing a tax registration to one day. 
 
9.  Beketayev also introduced the highlights of the action plan for 
the Registering Property indicator.  The proposals to the improve 
this indicator included reducing the time required for confirmation 
of property to one day by allowing documents to be provided 
electronically at public service centers and via the internet; 
reducing costs for notary registration of documents to 6,000 tenge 
(approximately $50); and reducing the time required for registration 
of ownership rights to ten days. 
 
10.  Vice Minister of Finance Ruslan Dalenov discussed plans for 
improving the Closing a Business indicator, for which work has only 
just begun.  The Finance Ministry presented a series of questions to 
the World Bank in early December.  When a response is received, the 
ministry will formulate more concrete proposals.  In any event, 
Dalenov said he tentatively aims to improve this indicator by 30 
percent. 
 
11.  Vice Minister of Industry and Trade Yedel Mamytbekov presented 
highlights of his ministry's 2008 work on the Dealing with 
Construction Permits indicator, and plans for additional reforms. 
The construction permitting process has already been significantly 
modified by reforms.  The time required to receive technical 
conditions for connection to water, sewage, and telephone utilities 
has been reduced from ten to five days.  Requirements to obtain 
approvals from local fire departments, the sanitary and epidemiology 
service, and the seismological agency have been eliminated. 
Requirements to obtain certain permits from local architecture and 
town planning authorities have been removed.  Fees have been 
eliminated for electrical connections by small and medium 
businesses.  The requirement to obtain local government approval 
prior for putting a building into service has been eliminated.  A 
number of other reforms have also been instituted. 
 
12.  Mamytbekov's future actions include amending regulations in 
three legislative acts and four government decrees.  In total, he 
expects that existing and proposed changes will reduce the 
construction permitting process to 11 procedures from 38, the 
timeframe for constructing permitting to 81 days from 231, and the 
cost from approximately $87,800 to about $3,200 -- a reduction due 
mostly to savings in electrical connection fees. 
 
COMMENT 
 
13.  Government will for these reforms is strong, in part due to the 
global financial crisis, which has affected Kazakhstan's growth and 
brought greater public attention to the need to improve the business 
environment.  The role of Prime Minister Masimov and Deputy Prime 
Minister Orynbayev in diligently pursuing specific, WBDB-related 
reforms cannot be underestimated.  In addition, the appointment of 
the USAID BEI project's country manager to the position of special 
advisor to Masimov has also been helpful.  The December 10 
conference allowed for public airing of the action plans.  Masimov's 
supportive remarks at the conference underscored the seriousness 
with which he is approaching this issue.  As Masimov put it, 
"improvement of the investment environment, establishing absolutely 
new forms of profitable partnerships between the state and private 
sectors, is always one of the most important parts of the 
government's work."  It is important to note that despite 
Kazakhstan's WBDB efforts, U.S. and other foreign companies still 
 
ASTANA 00002474  003.2 OF 003 
 
 
face many difficulties doing business in Kazakhstan, especially with 
local officials, who have their own interests and are not always 
fully supportive of the central government's efforts to improve the 
country's business climate.   END COMMENT. 
 
HOAGLAND

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