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Kazakhstan: Government Moves To Support Small Business

Almaty, 21 March 1997 (RFE/RL) -- Five years after independence Kazakhstan is moving to support the country's small business sector in recognition of its key importance to national economic development.

The government recently held a special round table session in Almaty dedicated to the subject of how the authorities can help foster small and medium-sized private business activities.

The session can be seen as part of the overall drive by the government of President Nursultan Nazarbayev to reverse the steep economic decline which has characterised the post-Soviet years. In the Soviet era Kazakhstan was the site of much large-scale industrial and mining development directed from Moscow, with limited participation from the local Kazakhs. This left the country more than usually unprepared for the challenges of the new era.

Kazakh economy minister Omirzaq Shukeyev told a press conference after the round-table session that Nazarbayev and the government had started discussing possibilities for incentives and support for small businesses. Shukeyev also said that according to a presidential decree a special working group on the issue had been organized within the Kazakh government.

The chairman of the Kazakh state anti-monopoly committee Nikolai Radostovets told the press conference that a chief element in defining the policy of state support of small businesses was to differentiate those enterprises which produced objects or offered services, and those which were involved in trade activities.

Radostovets said that private companies and small firms at present are encountering huge problems, for instance with public utilities like electricity and water supply. He cited the example of a small bakery which he said had had to pay $9,000 or $10,000 only for connection to the electricity supply system. Additionally for connection to the water supply system a small business owner must pay about $1,000.

An RFE/RL correspondent in Almaty reports that the other tough problem faced by the owners of Kazakh private businesses is the bribery system. It's no secret that to get things done the owners of businesses big and small frequently have to give a whole series of bribes, starting with common racketeers and ending with members of official commissions.

Even worse, to get a credit from a bank often requires payment of a bribe to the bank's administration.

Radostovets' anti-monopoly committee carried out a series of checks on the order of Prime Minister Akejan Kajegeldin which revealed that such state agencies as the Energy Control Agency, the Commission on Tests and Registration of Chemical and Biologic Products, and the Commission on Technical Control of Small Ships, routinely received illegal fees from clients.

Radostovets said that as a result, under a special presidential decree all the fees not set out in Kazakh laws or decrees were declared illegal. From now on, state control inspectorates and commissions will continue to have the right to fine the owners of small businesses for various infringements, but no locally-imposed "fees" of any kind may be taken from them. Such fees, which are not approved by the central authorities, are thinly disguised bribes.

Deputy Justice Minister Vladimir Borisov, who was also at the press conference, stressed the importance of making easier the process of registration of small businesses in Kazakhstan.

He said that in the near future all registration processes will be unified in one system and computerized, so that every regional administration could register any kind of small business on its territory itself without waiting for any approval from the center.

The people of Kazakhstan, though lacking experience of market mechanisms, have certainly tried to utilize the new opportunities for individual effort open to them. In the first years of independence, the most clearly identified opportunity was in the basic importation of foreign goods which could then be sold for an immediate profit on the domestic market.

It took longer for people to realise the possibilities for supplying the market with goods and services generated internally. But by 1996, some 112,000 private small businesses were registered with the Kazakh state inspectorate for taxes. Many more businesses were thought to be operating illegally without registration. The failure rate of small businesses has however been high, as they struggled with difficult conditions, high costs, taxes and bribery.

According to Economy Minister Shukeyev, some 15 percent of the country's domestic economy is already in the hands of private small businesses. This percentage seems likely to rise as a result of the government's changing attitude to small business, which represents a recognition that such activity is the backbone of any normal society's economic development.

Merhat Sharipzhan is a staff member in RFE/RL's Kazakh Service.