Kazakhstan and Investment Community: New Horizons of Co-operation
Mr. Dave Skeels, Country Representative, British Gas Kazakhstan, Chairman of Kazakhstan Foreign Investors Council Association answers questions from our magazine
In December 2000 our magazine wrote about the activities of FIC under the President of RK. What are the results of FIC activities for the last 2 years?
Since the 4th Plenary Session and your article on FIC activities at the end of 2000 a great deal has happened.
Firstly I would like to comment on the Foreign Investors Council itself. The Council and support structure have, I really believe, come a long way and become much stronger and efficient as an institution. The dialogue that takes place between the chief executives of key investing companies and the country’s leadership on important issues regarding the countries development are becoming increasingly meaningful for all stakeholders. Naturally investment climate issues dominate, but broader aspect are discussed, just as at the current 8th Plenary Session planned for December 6, 2002 which has a theme of “Diversification of the Economy”. However the FIC dialogue is not just limited to broad issues raised by these Chief Executives. The cooperation and effort, which is undertaken by both Government and Foreign Investors parties involved in the working groups is impressive. Through these FIC working groups (legal, tax, operations and image enhancement) and the FIC Secretariat there is an increasing linkage to the broader investment community: including the Kazakhstan Petroleum Association, Amcham and Eurobak. A number of Round Tables have taken place during the last year in which all these parties together with the Government have discussed serious technical issues related to legislation and other factors directly affecting investors (both domestic and foreign) on a day to day basis. This extensive dialogue between the government and investors, especially with respect to the development of legislation, shows the very mature attitude of the Republic.
Also in the interests of communicating with the community, the FIC website has been created on www.fic.kz. This already provides background on the Council and its objectives and increasing information will be provided regarding the work of the Council and its Plenary Sessions.
Please, tell about the most important issues concerning the investment community, which are discussed within the FIC nowadays?
A number of subjects are being discussed at present but as mentioned above the theme at this time is the Diversification of the Economy. Under this umbrella are specific topics such as proposals to enhance the development of small and medium Kazakhstani enterprises as well as creating a better environment for the development of tourism. In addition a number of areas for further improvement of the legal and tax systems are being discussed and the general working environment for business.
Which measures, do you think, the Government of Kazakhstan should take in order to improve the investment climate in the country?
We can answer this question in two parts.
Firstly we can address the investment climate itself. This is rather an abstract concept and we should remember that impressions are very important. Ensuring that the current investors feel as though they are receiving a fair opportunity to undertake their business, under the contracts they have made with the Government and in a stable environment with support from the Government, is important. Investors who are comfortable that Kazakhstan is a good place to invest are the best advertisement that the country can want to encourage further investment.
Secondly, this is the continued progress in the development of the legal and fiscal framework in the country. This is where Kazakhstan has excelled amongst its peers countries. Over the last 10 years a good and workable framework has been developed. This framework needs to continue to evolve so Kazakhstan can keep ahead of its competitors in winning incoming investments and also increase the standard of living of the population.
In your opinion, what Kazakhstan should do in order to become the full member of the WTO?
It must be remembered that this is a very complex process which requires many separate and joint negotiations with many countries. Consequently we may consider that Kazakhstan needs to continue its dedicated effort and be persistent in its attempts to reach mutual agreement in its many bilateral and multilateral negotiations.
How do you assess the outlook for future investments in the economy of Kazakhstan?
First of all in any attempt of prediction of the future you can be assured that most likely you will be wrong. However if we use the past to project into the future this gives a measure of confidence in the prediction. If we look back over more than 10 years at the progress that Kazakhstan has made since independence; there is no other term that can be used to describe that progress other than “impressive”. If the Government and leadership continue build a stable and open society, with the impressive resources the country has, both physical and human, the future is very bright.
The Foreign Investors Council under the Kazakh President is an advisory body established by presidential decree # 3985 of 30th June 1998. The Constitution and laws of Kazakhstan, presidential decrees and other legislative documents of Kazakhstan, and the provision on the Foreign Investors Council constitute the legal framework of the Council's activity. The Council is headed by the Kazakh President, who approves agendas and presides at the Council's sessions.
The main goal of the Council is to support economic reforms carried out in Kazakhstan, ensure a direct dialogue between the government and investors operating in Kazakhstan, and promptly solve problems relative to the investment activity.
The other crucial tasks set before the Council are:
• Submitting to the Kazakh President proposals on improving the legislation regulating investment issues as well as on implementing Kazakhstan's large investment programmes and projects of international importance;
• Elaborating recommendations on improvement of the investment climate and on a strategy of attracting foreign investment to Kazakhstan's economy;
• Developing suggestions on integrating Kazakhstan's economy into international economic processes.
To successfully accomplish the declared tasks, the Council holds close plenary sessions (at least once a year), intermediate meetings, round-table discussions and presentations. The Council members consider a wide scope of issues concerned with perfecting Kazakhstan's investment image, improving the situation in the judicial, taxation and tax administration systems, and enhancing transparency of the law-making process. The Council is responsible for licensing recruitment of foreign workforce, preventing conflicts and settlement of investment disputes extrajudicially, coordinating tariff policy and transport rates with the neighbouring countries, simplifying entry and departure procedures for executives of foreign companies, fighting red tape and corruption, and insuring investment against political and regulatory risks.
To elaborate recommendations for regular meetings of the Council and implement the decisions made, four joint working groups are operating within the Council: on taxation, legislation, day-to-day operation of foreign investors and enhancement of the investment image of Kazakhstan. The Council's activity is coordinated by its working body -the Investment Committee under the Kazakh Ministry of Industry and Trade.
Good will and a positive approach to maintaining a constructive dialogue between state bodies and transnational companies, respect for a partner's position and effective exchange of experience - all these allow solving the most complicated questions Kazakhstan and the international investment community faces on-the-fly.
Table of contents
Bogatyr Access Komir, the Power of the Land Dennis C. Price
Ispat Karmet, a Leader of the Steel Industry of Kazakhstan Nawal Kishore Choudhary
Factors Influencing the Growth in Tax Revenues from the Oil and Gas Sector in 2001 Janat Berdalina, Inna Alkhimova
Distribution of Powers with Respect to Oil Operations Between State Agencies and KazMunaiGas National Company Kanatbek Safinov
Means of Performance Guarantee Anatoly Didenko
The Environmental Aspects of Subsoil Use in Kazakhstan Vasily Skolsky
