Conference notes IRRI-KIIB

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Summary; this is not an official record of proceedings and specific remarks are not necessarily attributable.
 

Political developments in Kazakhstan  - Q&A session

The first panel was chaired by Ambassador Jan Grauls, Chairman of the Committee of Directors of the FPS Foreign Affairs. Mr. Yermukhamet Yertysbayev, Political advisor to the President of Kazakhstan explained the political evolution of Kazakhstan.

Summary of the debate:

- To the question of the influence of the revolutionary tide in Georgia, Ukraine and developments in Kyrgyzstan on the next presidential elections in 2006, Mr. Yertysbayev responded that there is no possibility for a revolution in Kazakhstan. But he stated that "it is impossible to describe what happened in Kyrgyzstan as a revolution. Two presidents, two parliaments existed. A crisis occurred, people were killed". He rejected such an old Marxist revolution. "Violence is not necessary for a new society to be born. In my opinion the stability of Kazakhstan is the wealth of the whole population. During the reform years, social cataclysm didn’t take place. Kazakhstan is called "the isle of stability in CIS".

It is the only CIS country where reforms went on without any violence or social cataclysm. Further reforms in the field of social policy, economic modernisation etc., will prevent revolutions.

- Kazakhstan is a unique state in terms of religious tolerance and interethnic harmony. The state considers believers to be citizens of Kazakhstan endowed with all rights. Regarding religious unions, they are considered as an integral part of the country's social structure. There is a climate of mutual understanding and tolerance between the representatives of different religions.

Kazakhstan, a multiethnic community, is the only CIS country with unique public institution - the Assembly of the Peoples of Kazakhstan as a consultative body whose mission is to help Kazakhstan authorities implement national policy by preserving interethnic concord and stability, elaborating recommendations on the development of friendly relations between the peoples of Kazakhstan, promoting their cultural and spiritual renascence. The country pursues a consistent policy of ensuring beneficial conditions for realization of interests of all ethnic groups in the country. The President follows the provisions of the Constitution that features that Citizens of Kazakhstan are guaranteed equality in rights and freedoms regardless of race, nationality, sex or language... "

- Regarding the investment contributions, the major investments came from the United States and the  European Union (mainly Great Britain, Italy, Germany, and Netherlands) ... The bulk of investment came to oil and gas industry and other sectors (mining, processing industry, realty transactions, rental and corporate services, transport and communication, and financial operations). The speaker emphasised the need of further investments so that the development could continue. The cooperation with developed countries, with US, is important for FDI.

- What is the Government doing to promote more even-handed development as well as on social and geographical level?

Mr. Yertysbayev conceded that there is a social non-homogeneity due to the reforms, as occurs in all post-Soviet countries. Great differences among regions in Kazakhstan appear and problems can be solved by medium and long-term solutions, such as by applying the right taxation and social policy, supported by direct investment and financing. United Nations has mentioned Kazakhstan’s efforts to fight poverty.
"Our government has started the implementation of a serious industrial innovation program “Strategy of Industrial and Innovational Development of the Republic of Kazakhstan for the period of up to 2015”, said the Political advisor.

The Strategy's main goal is to create conditions for the development of a competitive, high technology economy, achieve stable national development by diversification of economy's sectors, creation of modern corporate structures, diversion from the raw materials oriented development; and to prepare the conditions for the long-term transition to the service and technology economy.

Foreign Policy of Kazakhstan - Q& A session

The second panel was chaired by Ambassador Mark Geleyn, Director General on Bilateral Relations, FPS Foreign Affairs. The speakers included Mr. Alexey Volkov, Deputy Minister of Foreign Affairs of Kazakhstan, Mr. Kurt Juul, Head of the Unit on Caucasus and Central Asian countries, Directorate General of  External Relations, European Commission, Mr. Robert F. Simmons, NATO Secreatry General’s Special Representative on Caucasus and Central Asia, Mr. Bertrand de Crombrughhe, Permenant Represenatative of Belgium to the OSCE.

Summary of the debate:

It has been stated that Kazakhstan is the leader in Central Asia and that it will deal with the challenges and responsibilities accordingly. The government placed on its agenda the creation of an effective structure for 'Foreign Investment of Kazakhstan'. There are several political, economic and military structures where Kazakhstan carries the financial burden. It also joined the fight against terrorism and drug trafficking.

The idea announced by President Nazarbayev during his annual address to the People of Kazakhstan in February to establish the Union of Central Asian States aroused particular interest among politicians.

The Treaty of eternal friendship between Kazakhstan, Uzbekistan and Kyrgyzstan can serve as a solid foundation for such union. Three countries also have close cultural, linguistic and traditional relations. At the same time, Kazakhstan cooperates with all five Central Asian countries. Tajikistan and Turkmenistan are also invited for participating in local initiatives.

Kazakhstan is also a member of the Eurasian Economic Community,  a regional structure, together with Russia, Kyrgyzstan, Tajikistan and Belarus.

The relations with China are friendly and of strategic nature. The issue of borders has been solved positively. China and Russia are important partners of Kazakhstan.

EU cooperation with Kazakhstan is based on mutual interest and shared aspirations. Close relations with the European Union is of strategic importance for our country. The EU is one of the biggest trade and investment partners of Kazakhstan. In the last years the EU countries have invested more that USD 9 bln. into our country’s economy.

EU has a regional cooperation strategy with the Central Asian countries. Important issues are modern border management, combating drugs and terrorism, energy supplies...

Kazakhstan’s political desire is to expand its cooperation with NATO. It has gained valuable experience in peacekeeping operations.

The Economy of Kazakhstan – Q & A session

The third panel was chaired by Rudi Thomaes, Managing Director of the Federation of Belgian Enterprises (FEB-VBO). Speakers included Mrs. Zhanar Aitzhanova, Deputy Minister of Industry and Trade of Kazakhstan and Mr. Bernard Snoy, Former Administrator at the World Bank and the EBRD.

Summary of the debate:

Questions arose on the legal system of investments, on the repatriation rights of foreign investment.  

For the period from 1993 to 2004 Kazakhstan has drawn over 30 billion US dollars of direct foreign investments. The country has been recognised as a more advanced country than its neighbours in setting up a market economy. Kazakhstan is indeed a regulated country, but moving into the right direction. Some improvement of relevant regulation, regulatory bodies, and corporative behaviour is still needed.

The Council of Foreign Investors headed by President of the Republic of Kazakhstan is one of the tools to promptly solve problems and issues concerning investment activity. The Council has five joint working groups: on taxation, legislation, current operations of foreign investors, oil and gas sector, and investment image of Kazakhstan.

In January 2003 the Law "On Investments" came into force. One of the main features of the new Law is the guarantee of protection of investors’ rights in case of nationalisation and expropriation.

According to Minister Aitzhanova, “there is no legal framework for not having the foreign investors repatriating their capital in cases when they deem it necessary”…“I’m not aware of cases where due to highly regulatory framework foreign investors were not able to repatriate”. It is so that without any records to higher instances there is a legal framework to guarantee repatriation. “Kazakhstan has a legal framework for dispute settlement and it doesn’t have any restrictions for taking the cases to the international arbitration”, said the Minister.

Concerning the taxation, corporate income tax is determined at 30%. The individual income tax is 20%. Value added tax recently reduced from 20% to 15%. At this stage Kazakhstan is not talking about flat tax at individual and corporate tax..

A comment was also made on the telecom sector, where a step by step program of liberalisation is set up. There is no exclusive licence holder any more. The services are being provided by various private operators in a competitive climate. The telecommunication’s local network is shared.

 

Energy Complex of Kazakhstan – Q & A session

The fourth panel was chaired by Paul Hatry, Former Minister. 
Mr. N. Ospanov, Director for External Relations, Ministry of Economy and Budgetary Planning, Kazakhstan, Werner Symens, Managing Director, Atlas Copco, Belgium and Nina Commeau-Yannoussis, Chief of Unit, Energy and Transport, European Commission analysed the energy complex of Kazakhstan.

Summary of the debate:

Kazakhstan is planning to further develop nuclear energy. It has a cooperation agreement with the EU  in the field nuclear safety and also in the field of controlled nuclear fusion.

The government is considering the construction of a new nuclear plant in the southeast part of the country, near Lake “Balkash”. Due to rising demand in the south, support for the construction of the plant has received new momentum. Meanwhile the country cooperates with different organisations to protect the environment.

Concerning the supply of rural places, they have full supply of electric energy. In south of Kazakhstan gas field are exploited. In the north there are some problems in supplying people with energy, but Kazakhstan will build new power stations.

Energy saving questions and alternative energy were being discussed. For the moment research is done about solar energy.

*Further information:

http://www.inform.kz/txt/showarticle.php?lang=eng&id=118040:
"World politicians give high estimation to Kazakhstan reforms: Brussels forum".
Brussels. April 8. KAZINFORM. Thursday the Royal Institute of International Relations with assistance of Kazakhstan Embassy to Belgium carried out an expert seminar titled Focus on Kazakhstan...