In the first years after independence, Kazakhstan made major strategic decisions which, with hindsight, can be seen to have had a huge role in shaping the history of the country. The very early decision, for example, to renounce nuclear weapons did much to define Kazakhstan’s relationship with the world and underline the commitment to disarmament, peace and the widest possible cooperation between nations.
In the same way, the decision from the beginning to run an economy open to outside investment, partnerships and know-how has proved a powerful driver of Kazakhstan’s success. It has helped development outpace that of our neighbours, making the economy easily the most advanced in Central Asia and providing the resources to transform living standards and opportunities.
This investment and the partnerships it helped support was, for many years, channelled largely into harnessing Kazakhstan’s rich natural resources. But it is now more widely directed to support the modernisation and diversification of Kazakhstan’s economy, seen as key to continuing the country’s impressive progress.
This is why, too, such an emphasis has been put on creating the best possible environment for businesses, whether homegrown start-ups or large international partnerships, to succeed. There has been a recognition under both President Nursultan Nazarbayev and now President Kassym-Jomart Tokayev that it is the countries which do best in removing barriers to business growth which will prosper in the coming decades.
These barriers, of course, include unnecessary or inefficient regulation. As the World Bank says, such rules and red tape stifle entrepreneurial activity and damage employment and prosperity. Investment is discouraged and firms, if they believe they are being hindered rather than helped, can move operations overseas.
This is why there will be real satisfaction in Kazakhstan at the country’s performance in the World Bank’s authoritative report which assesses and compares 190 economies on the regulatory environment they provide for business. The annual Doing Business study enables countries to judge whether they are going in the right direction and how they are doing both regionally and globally.
The 2020 report, which has recently been published, underlined the remarkable progress that Kazakhstan has been making. The country was ranked 25th out of the 190 economies studied, three places better than last year and by far the highest ranked nation in Central Asia. In fact, Kazakhstan scored better than major economies such as France, Spain and Japan as well as Russia, China and India.
But it is by looking further back that the impact of government drive to improve regulation can perhaps best be judged. The 2010 report saw Kazakhstan back in 63rd place in the index. Even in 2015, it remained outside the best 50 countries, but determined and effective reforms have transformed this position.
What is even more promising is that Kazakhstan is now ranked within the top five globally for enforcing business contracts and protecting the rights of minority investors. These are both areas which the government has made a priority for improvement and which will help encourage both domestic and foreign investors. The World Bank study also singled out for praise recent improvements in areas such as value-added tax (VAT) registration for new firms, speeding up water connection and stream-limning property registration.
There is no doubt that Kazakhstan’s efforts are paying off, but the report also makes clear that there is no room for complacency. Countries across the world including within Central Asia are taking steps to follow Kazakhstan in improving their business environment. The gap between developed and developing countries, the World Bank found, is continuing to narrow.
This is why President Tokayev recently promised the government would do more to reduce burdens on start-ups, to support export businesses and attract foreign investment. The economies which succeed will be those which continue to improve their competitiveness and encourage entrepreneurial activity. Kazakhstan is determined to stay ahead in this vital race.
