Karim Massimov’s government should make space for private entrepreneurs to develop Kazakhstan’s non-commodities sectors, one of the country’s leading economists has said.
“We are at a fork in the road”, Rakhim Oshakpayev, executive director of the Association of Economists of Kazakhstan, told Emerging Markets. “The government seems to be poised to undertake some important institutional reforms, and this is very welcome.
“We have a good chance to build up strong markets and a good reputation. In agriculture, for example, we are a world leader in terms of agricultural land area per capita. We could become a mini-Argentina in Asia.”
Oshakpayev said that Kazakhstan’s fiscal management was better than Russia’s, but that the tax system should be made transparent and simple. “We think the government should report how much VAT it raises, and how much VAT is returned to exporters. This would enable us to see whether the balance is negative.
“Entrepreneurs are prepared to pay taxes, but they need a guarantee that once they have paid there will not be further hidden taxes to reckon with.”
It was also vital to redefine the line between the private and public sectors and curtail the role of quasi-state corporations that were crowding out private business, Oshakpayev said.
He said Massimov had already taken vital steps towards a strategy for private Kazakh business, by starting consultations with Atameken, an umbrella group for business associations. The process has been bolstered by the appointment as chairman of Atameken of Timur Kulibayev, son-in-law of president Nursultan Nazarbayev, president of Kazmunaigaz and one of Kazakhstan’s most powerful businessmen.
“This is a transparent, legal way for entrepreneurs to express their opinions on political issues”, Oshakpayev said. “As a transition country, we have not had such traditions.”
Oshakpayev warned that any attempt to integrate the customs union with Russia and Belarus too rapidly could have a negative impact on the Kazakh economy. “The integration of the EU took 15 or 20 years. This process should not be rushed.”
He added that political stability ensured by the recent presidential election, and macroeconomic stability provided by the growth of the national oil fund, which now stands at more than $70 billion, were positive factors.
Private-sector economists from outside Kazakhstan agreed with Oshakpayev that diversification from dependence on oil, gas and metals is vital, and that private business was best placed to undertake it.
Anton Stroutchenevski at Troika Dialog in Moscow said that “the quality of Kazakh economic policy” is an important advantage. Although the economy is as dependent on Russia’s on commodity exports, “budget policy is much more moderate: Kazakhstan is saving its money in case of emergencies, and avoided excessive pre-election spending”.
Sergei Kastyanenko, economist at Sigma Bleyzer in Kiev, said Kazakhstan’s fiscal policy approach is an important strength. “Reserves have been managed in a reasonable way, and not used excessively for social payments.”