As a first question
I'd like to get an overview of the economy
of Kazakhstan. The economy has been reluctant
for 10 years. Could you give some reasons,
some aspects to this due?
During the 10 years we have achieved a significant
success. You should know the situation that
was 10 years ago; you are certainly familiar
with some negative sides. Now, the economy
has been stabilized. At first, not at the
expense of oil sector development, but because
of harmonious development. The economic situation
is stabilized; political situation is stabilized.
The economy is continuing its growth. There
have formed "sources" for internal
investments and market institutions: the banking
sector, large companies. We have a good credit
history with foreign institutions such as
the IMF.
Could you highlight the macro economy of Kazakhstan?
What is the main role your ministry plays?
You know the role of any Ministry of Finance.
As for us, we have the same tasks. But, of
we have priorities: development of budget
relations, effective monetary control over
the budgetary means, improvement of the tax
climate in the republic, effective privatization,
and effective borrowing.
Could you tell us a bit more about projects
for our readers to know about the financial
future?
As for the budgetary system, very soon we
will complete a project on implementing a
modern treasury system. This system will allow
us to spend our funds according to our goals.
For each budget it is very important: minimization
of expenditures up to the optimal level, I
mean the state purchases. As for the tax policy,
according to experts of independent institutions,
we have a very modern tax system, meeting
international standards. One of the important
aspects of a tax system is to implement a
new IT technology in tax administration, tax
collection, and electronic tax audit. During
the last four years we have been very active
working on it. During the next two years we
will finalize our job. It should be a very
modern tax system. If to compare with other
post soviet countries, I think that we will
have one of the most modern tax systems -
concerning tax code administration, audit,
quality - for next year. In reality t it will
be the best. I am hundred percent sure in
it!
For example we are implementing a very modern
electronic system to assembly declarations
from taxpayers. Another project is concerned
with individual and taxable incomes and control
over taxation of all the country, including
land payments, land tax, excises, and transport
tax. It is a very big job.
With regards to privatization, we are considering
creating good ground for investors. We want
to establish direct investments under governmental
control. We are exporting a lot of raw materials,
but we want to progress in the production
of final products - products with high value
added cost. This is part of our priorities
for further development.
As I have already mentioned, we have already
internal sources of financing, now our priorities
are changing and we are now paying more attention
to issues our government figured out for domestic
market. This year, for example, we have covered
eurobonds, which were issued in 1997 without
any harm to the budget. Our development bank
is issuing eurobonds with very comfortable
interest rate, it is 7.3%. it is very good.
It's like a sign of the good creditability
characteristic of our country. During this
year we have additional accommodation and
accumulation funds as well as the national
fund. We are now a negative creditor. We have
to establish all assets and all our activities.
What about taxes? How do you act in order
to attract more foreign investors?
Our general priority is oil and gas sector.
I can say the oil sector is a guiding sector
in Kazakhstan. If you study deeper the production
possibilities of Kazakhstan and the future
markets for our products, you will see that
we focus on producing final goods and semi-final
goods with high level of added value. Now
we are producing raw materials. If we could
produce semi-final products like copper products
and pipes, it would be good.
A very interesting area for foreign investors
is the agricultural sector of Kazakhstan.
You should know that the general priority
for all agro producers is the production of
ecologically pure products. We understand
now that the use of fertilizers has a negative
impact on people's health. We have the possibility
to raise such ecologically pure products in
Kazakhstan. The future of Kazakhstan should
be based on the production of grain, wheat,
and crops. It is a very interesting area to
invest, huge market: Russia, Europe, Iran,
India, China, etc.
We have good opportunities to develop the
chemical industry because we have some strong
production basis for it, highly qualified
labour, machinery, buildings.
We have opportunities for production of machinery,
especially for mining, oil industries, and
some construction materials. We have very
cheap raw materials for producing construction
materials; the price for energy is not so
high in our republic.
We need to develop the energy sector and infrastructures
in Kazakhstan because we have nice opportunities
as a transit country. Kazakhstan may serve
as a bridge between East and West since it
is located in the middle between South East
and European West. For example, some places
around Almaty hold a record of 325 sunny days.
But you know the problems with renovation
of the road system. We need to establish good
roads along the former Silk Way since it is
a very famous way not only for trading of
commodities. It should be a very big bridge
between East and West in terms of telecommunications.
Also the railway has a lot of potential. |
It would be
interesting to know about the relationships
with foreign financial institutions.
You can divide these relationships in 2: relationships
with the Kazakhstan state budget and with
Kazakhstan whole economy. Two years ago we
prepaid the loans of IMF. Our current budget
was financed through our financial resources:
tax payments, money from privatization, internal
debts. We do not need in the nearest future
to use any loans of foreign institutions like
IMF, ADB, IDB, EBRD, and IFC to cover any
budget deficit. The general direction in these
relationships is the development of big projects,
such as infrastructure projects. You know
that IDB has given a loan to develop our road
system. The Japanese government also tends
to give money to finance our infrastructure
projects: bridge in Semipalatinsk (about $150
mln) we are also looking for Japanese government
to finance development of some areas in Astana:
canalization and water supply, etc. EBRD gave
money to Aktau port construction. It is also
looking for giving money to big private companies,
to develop huge projects in metallurgy sector,
to build some infrastructure like pipelines.
We are very active in attracting this kind
of investments, loans for production and infrastructure
development. It is not just to cover our budget
deficits. We attract them for production and
infrastructure development. ADB and IDB also
want the government support to provide a good
implementation of the funds of these organizations.
We also try to issue our own financial instruments.
We would like to know about challenges and
priorities you have for the coming years.
I have said about priorities in the coming
2-3 years already. Of course, we have some
special programs for each sector, such as
treasury, tax system or privatization. Step-by-step
we follow this privatization policy. We try
to be more technocratic trying to implement
more IT technology. We have developed the
electronic declaration for our taxpayers,
for all the telecommunications sector of Kazakhstan.
It means a higher level of tax culture among
our taxpayers. As for the financial system,
if to establish it as a good machine it will
work without any delays. You know the money
circulation; it is impossible to stop it.
We want to improve our economy, treasury.
What is you vision of the future of Kazakhstan?
It is very important to have new leverages,
new financial instruments for our domestic
financial market, our pension funds, banks,
insurance companies. We need our own money
to establish good schemes and instruments
to reinvest this money into the domestic financial
intuitions. Government plays a leading role
in organizing these projects; it should serve
as a guarantor for success of these projects.
Government should be one of the portfolio
investors of these projects. It is very important
for foreign investors that government supports
some part of shares. But nothing should be
destroyed by bureaucrats, small officials.
It is a major task for our government to establish
some financial instruments for domestic investors
and foreign investors, not only in oil and
gas sector. You know it is not a problem to
find investors in that sector (oil and gas).
Also we have an idea of developing some IT
technology and software production in Kazakhstan.
You can ask even our students, Kazakh people
have strong mathematical skills; we have many
talented young people. We have to find investors
to develop our potential advantages: geographical,
political, mentality, economical, good educational
background. Kazakhstan is very interesting.
We have 40% of Kazakhstan on the European
side. It is not only geographically, but in
mentality also. Almaty is a Eurasian center.
The substantial part of our history is hunny,
skiffs, Turkish. You know from the history,
the population moved from center to east,
kazakhs are a mixture of European and Mongolian
races. Kazakh people have the same features,
but they are different at the same time. If
you compare Kazakhs from East, South, West
and North-n you will see the differences.
Could you elaborate more on your professional background?
My life is a very good example of what was
going in Kazakhstan during the last several
years. 12 years ago I finished my post-graduate
education in Moscow Academy of Sciences. In
1985 I graduated from Moscow State University.
Some years later I understood that we have
an education of a very high level. I have
spent a short period of time in Harvard; I
can say we are almost the same. In 1990 I
have finished my postgraduate studies. Then
I worked in the private sector. In 1994 I
started to work as a chairman in Halyk Savings
Bank, the big retail bank. Then I worked as
an assistant to President on economic issues.
Then I worked in the Ministry of State Revenues,
now it is merged with the Ministry of Finance.
That's my professional background.
Could you, please, give us a final message
about Kazakhstan to our readers?
If you want to know something about Kazakhstan,
it is better to come and see. I invite all
you readers here. Everybody will be surprised
with our territory; it seems to be a small
spot on a map. But it is huge in fact. Many
people think that post-Soviet countries have
many problems. But I want to say that in the
next 5 years we will have finished the most
important steps in our development. It will
be a healthy economy, a healthy society. It
is a very interesting country for Eastern
investors. Some countries have quota limitations
on products of light industry from different
countries. It is very good to have this production
scheme in Kazakhstan: we have enough labour
force. I was in Hong Kong in 1994, where I
have met some investors, there were many questions
on this issue. I think that southeast Kazakhstan
is a good area for them to invest. |
V.I.P. INTERVIEWS
