Kazakhstan´s
economy has been growing fast during last
ten years. One can really say that Kazakhstan
is slowly becoming a Central Asian tiger.
Could you please comment on the reasons of
the growth and what do you expect for the
future of Kazakhstan?
I do not fully agree, since during recent
ten years there were not only economic raises
but also economic falls. These were the
most difficult ten years. This was the most
dramatic time period for the economy of
our country. In the beginning of 1990s,
after the crash of the Soviet Union and
acquiring independence, Kazakhstan as well
as the other republics of the former USSR
experienced the economic collapse related
to a decreasing speed of the economic growth,
to breaking links in the economy, to the
stoppage of some production facilities and
as a consequence - worsening of the social
situation. We had to create almost everything
from zero, since the economy and first of
all the banking sector, financial sector
and real sector, all the basics of the social
policy were mostly built on Soviet fundamentals,
Soviet legislation and were regulated by
the socialistic standards.
Immediately after acquiring independence
the aim has been formulated to build the
open market economy of the liberal type.
And during the first half of the 1990s,
with a destroyed economy, the fundamentals
of the new state have been created, as well
as legal and economic systems adapted to
the market economy conditions and arrangements
for the economic growth. During quite a
short period of time we have formulated
absolutely liberal economic legislation.
We also adopted the civil code, tax and
customs regulations, laws on land, on bankruptcy,
on labour.
In one word, the legal base has been created
by us. Structural and institutional reforms
have been conducted. We have arranged the
pre-requisites for the economic growth.
In many aspects of its development Kazakhstan
is significantly different from its neighbours
in Central Asia and in CIS, since the speed
of conducted reforms were much higher and
the depth of those changes was much more
radical. We have held on the privatisation
of the state property quite fast, which
afforded us to attract sufficient investment
to the economy of our country, as well as
modern western management. And those privatised
enterprises served as examples for arranging
conditions, including political ones, for
the expansion of the presence of foreign
investors. I would like to emphasize that
in Kazakhstan there is a quite efficient
legislation, protecting foreign investments
and also stimulating domestic investments.
Unfortunately, the economy of our country
from the very beginning has been aimed at
the raw material sector and it depends now
heavily on the world situation on the market
of raw materials. Nevertheless during recent
three years country demonstrates relatively
high and stable speed of the economic growth.
During the period from 1999 till 2000 as
of January 1st, 2002, the accumulated economic
growth was equal to 25,7%, out of them 2,7%
for 1999, 9,8% - 2000 and 13,2% -2001. High
speed of the economic growth are maintained
in the current year. For the first quarter
it is equal to 10,7%. All this is going
on whist the relatively low inflation, which
was equal to 6,4% last year. The latter
in its turn allows to decrease the National
Bank´s rates of refinancing. Last
year it was equal to 9%, currently it is
already 8%. These resources are the lowest
rates in CIS countries. Decreasing of the
costs of credit resources naturally allows
to attract more investments for crediting
the real sector in larger scale.
At the moment, of course, our aim is, apart
from using what as given to us by Allah,
this is the Asian specifics - you have the
Asian audience, I mean apart from using
natural resources, to develop the processing
industry in a high speed, in particular
the service sector in oil and gas industry
as well as the enterprises with more deep
processing of raw materials. The improvement
of the economic situation has naturally
influenced the increasing of the possibilities
of the state in terms of the stabilization
of the social sector. As you know, in accordance
with our Constitution, every government
should adopt the programs of its actions,
means to submit them to the President for
his approval. So as a main purpose of our
Program, the program of actions of our Government,
we defined the improvement of the living
standards of the population of our country
based on the continuing economic growth,
eliminating limits for capital flow, development
of science and technology and deepening
of raw materials processing technologies.
Now you mentioned that Kazakhstan has
come a long way, and your aim of economic
growth is very clear. With this in mind,
could you give our readers an assessment
of the current state of the financial, banking
and insurance sectors.
Of course, first of all I would like to
emphasize that all the our achievements
in the field of economy are determined by
the internal political stability and weighted
external policy. As an evidence of the first
part of my statement I would like to say
the following. More than one hundred nations
are represented in Kazakhstani population.
And we have never have any ethnic, confessional
or any other conflicts. Proving the second
part of my statement I would say the following.
Next week we are having the Summit on security
and trust in Asia. As you may know Kazakhstan
has initiated this event. So this weighted
internal political situation and external
economic policy, these are, first of all,
the outputs of the activity of our President.
This goes without any doubts. It is natural
that when the situation in the country is
calm and all the conditions are created
for investing, when the country has a transparent
and stable legislation, the capital is always
willing to flow to such a country, especially
if this country is rich with mineral resources.
Besides, as you noted correctly, a developed
banking system, financial and insurance
sector are needed. With regard to the mentioned
above I would like to say that in our country
we have a relatively developed banking legislation.
Here I would like to pay your attention
to two laws: the Law on the National Bank
and the Law on Banks and Banking Activity.
The Law on Joint Stock companies and Securities
is in force. And also in December 2000 we
have adopted a Law on Insurance which is
in force now. This is, as we may say, the
legal base. Nowadays, there are 44 banks
of the second level acting in Kazakhstan.
In our country banking activity is based
on international standards. It is strictly
regulated by prudential norms. In our banking
sector we have implemented the most advanced
world technologies. Banking activity is
based on the international accounting standards.
In Kazakhstan we have such an important
financial institutions as the security stock
and the central depository. Speaking about
the trust to the financial sector, we may
look at the speed of the growth of deposits,
first of all deposits of the population.
As of today the amount up to one billion
three hundred and sixty eight million dollar.
The intensive development of the securities
market is going on. Though here I would
like to highlight one complication. We have
got a very active development of the securities
of the state, and, to my mind, not well
developed market of the securities of corporations.
I have to say that the experience of Kazakhstani
banking system is intensively studied by
our neighbours in CIS and, to some extent
it is becoming an export commodity.
A legal framework has been made in Kazakhstan,
that allows banking and financial sector
to modernize. A part of modernization is
to liberalize the market and to privatise
the market further. Could you indicate to
our readers how these trends are coming
to reality in Kazakhstan?
Yes, of course. As I have already mentioned
we have conducted the privatisation in a
relatively high speed. As of today about
eighty percent of the GDP is produced by
the private sector. The state owns only
the infrastructure sectors, such as major
railway transportation, major oil and gas
pipelines, electricity transportation, communications,
but not entirely. All the other sectors
are at the competitive market. There are
no limits for the privatisation in favour
of either domestic or foreign investors.
Let us take the sector of producing the
electricity. Out of twenty eight power stations
only two belong to the state companies,
others are private property. And there are
no limits, discrimination or differences.
Our Constitution stipulates very clearly
: "All forms of property are equal
with each other".
During our interview with the Minister
Tokayev, he was very proud to explain to us,
in general terms, the pension reforms in Kazakhstan,
which has accumulated a huge investments from
population. Besides these reforms, there is
also the National Oil Fund that is doing a
lot of good to the country in terms of investments.
|
Could you explain
to our readers in more detail about the pension
reforms and the specifics of the National
Oil Fund?
The pension reform was founded on the principle
of accumulation. Every participant of this
pension reform has his own personal accumulating
fund or account. The reform has been started
beginning with January 1st, 1998. Every
working individual has his individual social
code in accordance to which 10 % of his
compensation are transferred to his account.
Those savings are accumulated at the accumulated
pension funds. There are sixteen funds like
this. Pension fund, through companies managing
pension assets, allocate those resources
in high liquid assets. They are allocated
in shares of enterprises, that are included
into the list A at Kazakhstani stock exchange.
They are invested in Treasury bills (state
securities) and in the stocks of international
financial institutions and big international
corporations. Thus, from one side we achieve
the high level of security for pensions
assets, from the other side we provide the
relatively high level of revenue on investments
, which is distributed among investors.
And thirdly, considerable domestic investments
are forwarded to the development of the
real sector of economy. This is a unique
experience. No other post Soviet country
has a pension system like that. And, certainly,
it was a great risk for Kazakhstan. By the
way, I have been the leader of the working
group, that has been working on preparation
of the above reform. That time I was working
for the Ministry of Finance for the first
time.
Secondly, we have founded the National Oil
Fund. Roughly it looks as follows. The source
for this fund are the over and above the
plan receipts from the enterprise of oil
and gas and mining sectors. The scheme is
the following. In case we formulate the
budget based on the price of USD 19 per
barrel, then if this parameter is higher,
the difference is forwarded to the National
Oil Fund. In case when the price goes lower
than the one defined by the state budget,
certain amounts from the oil fund are forwarded
for financing the budget. Thus, the oil
fund performs two main functions. The first
one is the accumulative one. The fund accumulates
financial resources for future generations.
This is the first function, saving or accumulative.
And the second function is the stabilizing
one. In case of fluctuation of prices for
raw material resources the fund covers shortage
in the state budget. This, from one side,
allows us to provide the stability of budgeting
process. Just for your information, I would
like to mention that in 1997-1998 we had
to go to the parliament numerous times with
the suggested budget. Nowadays this situation
is very unlikely. From the other side we
have protected ourselves from the so called
´Dutch disease´. Currently,
the fund has accumulated more than one billion
six hundred million dollars. Taking into
account that it exists a bit longer than
one year we can easily calculate how fast
it is forming.
We have to keep in mind that all these
comments, reforms and changes are part of
big image, a big strategy for Kazakhstan
2030. This is important. And we see that
the government works towards the plan, not
spontaneously. This is essential, since
governments come and leave whereas strategic
goals and tasks stay.
Once I was working at one big plant. It
was in the Soviet times. The system of plans
and reports existed then yet. The Communist
party was very strictly controlling every
not produced machine. We always had a kind
of fever. Some years we were producing too
many machines (that was a plant producing
tractors), other years the produced number
was not high enough. Though we were not
lazy, we were working hard, we could not
manage. And this affected the bonuses for
our workers. There were 23 thousand workers
at that plant. A huge plant. Nothing helped.
So we decided to invite the scientists.
Academician Agamdegyan has come. Currently,
he is in Moscow serving as a head of Russian
Academy of Management. Even then he has
been an academician and a very wise person
with quite unusual approach. He came with
a large team and spent a long time at the
plant. He said a very simple thing: "Until
you are not able to see what is going to
happen with your plant in five-ten years,
we may work day and night, working days
and weekends without any output. Because
you do not have the final goal." Unfortunately,
he was right. After his visit we corrected
our policy and got the positive result.
In what has been said so far it is clear
what Kazakhstan´s major achievements
are. But, what do you see as your major
challenge?
As I have already emphasized, to our mind
the main reforms have been conducted and
conditions for the further development of
the economy have been created. Of course,
today and in future we will depend on the
world economic situation. And naturally,
we relate certain plans with the increasing
of production volumes, first of all in the
oil and gas sector. And that is also natural.
During last three years we add approximately
five million tons per year in terms of oil
extraction. We intend to utilize this situation
meaning further diversification of the ways
of oil and gas transportation firstly.
Secondly, we are going to deepen processing
of oil and gas and found the full fledged
oil chemical industry. As for the other
industries, mining complex is still a significant
part of our economy and it will be developed
according to almost same principles, which
means not just increasing the extraction
but also deepening the processing technologies,
creating the third and the forth levels.
So that we could export not just raw materials
but products.
And as I have already mentioned, the third,
and may be the main, strategic direction
is the development of the service sector,
which will accompany the development of
oil and gas industries as well as the mining
industry, and also the development of scientific
productions with the high level of added
value. The development of agriculture is
also very important for us. We have 42 %
of our population residing in rural areas.
In April of this year our President gave
a speech in Parliament, where he addressed
the people of Kazakhstan defining the development
of rural areas as our priority for the coming
three years. As you may know annually we
grow from 13 up to 18 millions tons of grain
and this is the wheat of high quality. And
now the task is not only maintaining this
level and increasing it, but also, and first
of all, creating processing manufactures
for agricultural products.
The same is concerned not only grain, but
also meat, milk, oil crops, cotton, etc..
Due to that the development of rural area
will be significantly budgeted. Only state
budgeting will be increasing by 30 % annually.
However, there is one very serious difficulty,
which has to be considered by us. This is
the implementation of private property principles
with regard to the land in agriculture.
Hopefully, we will find the solution already
by the end of this year. We use the assumption
that the land has to have the owner. Only
the owner is able to take care of his land
providing it with mineral fertilizers, implementing
the system of crop rotation, etc.. In this
case the land becomes the mortgage instrument
and serves as an assurance for getting loans,
etc.. I would like to emphasize that all
our reforms, including ones in economic
and social sectors as well as in political
one, they are not born spontaneously. Every
government, as I already mentioned, proposes
its own program. But the program of every
government is compiled in accordance with
the program that defines strategic directions
of the development of the country till 2030.
That program has been adopted in 1997. It
determines strategic priorities, goals,
resources. And all our actions are going
along with the above program.
As we indicated our readers form the
Asian, but the American and European business
communities. What would be your final message
to them?
Kazakhstan is a Euro-Asian country. That is
why we welcome cooperation with both Europe
and Asia. And on my opinion, during the age
of globalisation, in a kind of regional division,
this has a very conditional nature. We all
inhabit the same planet and we will finally
come to the process of building one and the
same global economy. That is why I invite
all those, who do not know Kazakhstan well
enough, to visit our country, because there
is a proverb in Asia: " Better see once
rather than hear a hundred times". |
V.I.P. INTERVIEWS 
