Reduction of administrative barriers stimulated business activity


Maria Peshkova

Reduction of administrative barriers stimulated business activityThrough the years of independence the business sector has played a prominent part in Kazakhstan’s economy. The state reached the main strategic goal – created all necessary conditions for the development of small and medium businesses. An opportunity to be engaged in business has become a real and integral part of the life of the Kazakhstanis.

Improvement of business climate, support of small and medium businesses and strengthening of interaction with business community are still the priority issues on the public policy agenda.

Active implementation of measures under the government’s anti-recessionary program aimed at promoting entrepreneurship allowed to reduce administrative barriers for business.

Due to the efforts of the governmental commission on elimination of administrative barriers Kazakhstan saw improvement of business climate. Among the world’s economies, Kazakhstan improved business regulation the most in 2010, according to Doing Business 2011: Making a Difference for Entrepreneurs, the eighth in a series of annual reports published by IFC and the World Bank.

Kazakhstan improved conditions for starting a business, obtaining construction permits, protecting investors, and trading across borders. As a result, it moved up 15 places in the rankings on the ease of doing business-to 59 among 183 economies.

The main positive results of the country’s reforms within the framework of Doing Business became the improvement of investment attractiveness of the state in global context, increase in domestic investments, and stabilization of foreign investments.

Besides, reduction of administrative barriers stimulated business activity, accelerated development of small and medium businesses. Cutting time and cost of administrative procedures, improving legislation and minimization of contacts of businessmen with officials allowed to reduce corruption in this sphere.

Kazakhstan for the first time topped the list of 10 countries that have conducted successful reforms to improve the business climate. Last year the government launched a pilot program on development of entrepreneurship, which is called Business Road Map-2020.  Its main purpose is rehabilitation of business sector, in particular through subsidizing interest rate on existing bank loans to a debtor. 225 projects with KZT 101.2 billion of the total volume of credits were improved under this program. Thus, production output of small and medium businesses increased by 1.99 percent at the end of 2010.

In January 2011 the National Bank of Kazakhstan held a regular monitoring of enterprises to assess the situation in the real economy sector in the fourth quarter of 2010.

The number of enterprises involved in the poll, which represent the main sectors of the country’s economy, increased from 2,139 in the third quarter of 2010 to 2,171. In the fourth quarter of 2010, 21.9% of companies noted a decrease in demand for finished products. Despite this, in general the business activity increased, which can be seen in a noticeable increase in turnover of working capital from 45.2% in the third quarter to 52.6% in the fourth quarter of the last year. The increase is due mostly to the significant sales revenue growth in the mining industry, and due to rising oil prices.

Prices for finished products have been relatively stable: in comparison with the previous quarter, 69.2% of enterprises mentioned the stability of prices, 25.9% – growth; 4.4% – cut in prices. Investment activity of enterprises continued to increase: the proportion of enterprises not financing investment fell to 39.0%, and the number of companies, which used their own funds and bank loans significantly increased up to 59.8%.