Addressing trust divide, attracting more investments among Kazakh policy priorities

By Assel Satubaldina

The year 2019 has been rich with Kazakh political and economic changes. The resignation of the country’s First President Nursultan Nazarbayev in March, after almost three decades in office, and the early presidential elections in June that saw the victory of former Senate Speaker Kassym-Jomart Tokayev, are among the key milestones of the transition.

edge councils public trust meeting

The first meeting of the National Council of Public Trust. Photo credit: akorda.kz.

“I am a reformer, so there will be no status quo,” said Tokayev in a June interview with The Wall Street Journal.

“Without political transformation, Kazakhstan will not be a success story. Without political reforms, there will be no progress in economic reforms,” he added, thereby signalling the move from the “economy first, then politics” principle which prevailed in the country and explaining the country’s steady, yet significant economic growth under his concepts.

Though the continuity of Nazarbayev’s policy vector has been a priority for Tokayev and was part of his election campaign, some of his decisions have been innovative. Among the latest is creating the National Council of Public Trust, intended to find the address the growing divide between society and the government.

The council was established July 17 with the main goal to “formulate suggestions and recommendations on the current issues of the state policy based on a broad discussion with the representatives of society, political parties and civil society,” reads the decree.

The new body, composed of 44 public figures, civil society and human rights activists and journalists, also includes children’s rights commissioners and an ombudsperson to protect entrepreneurs.

Presidential advisor and political scientist Yerlan Karin, speaking at the July 17 press conference, noted selecting the council members was based on “how long they were engaged in the actualisation of certain problems.”

“We met with different figures and activists and asked for their suggestions and vision of the council format, because we were creating a new platform and we needed to take into account all suggestions, including who should be on it. We considered the competency of people. We have a lot of so-called situation leaders, who, for example, appear today, raise some topic and then suddenly disappear. We could not rely on them. I believe the council is quite representative,” he added, reported tengrinews.kz.

Council meetings are organised at least three times a year. Tokayev chaired the first meeting on Sept. 6, where participants raised concerns about pension system and land reform, the latter on the agenda since 2016 when citizens protested against the amendments that would have allowed foreign citizens purchase land, and called for amendments to media, election and party laws, among other issues.

Kazakh President Kassym-Jomart Tokayev

“We need new solutions to old problems. The best ideas of the council members meant to modernise the political system, reboot the social and economic policy, reform law enforcement and judiciary, will find their real use,” wrote Tokayev on his Twitter account after the meeting.

At a time when the country was witnessing stronger political opposition, more dissenting voices and a series of demonstrations in the big cities, the idea to form such an institution received mixed reaction from citizens. Some said such a move happened at the right time, while others said it could not replace “real political reform.”

Kazakh political scientist Dossym Satpayev, in his piece for the Central Asian Analytical Network, said creating the council could be seen as a “more situational reaction to external factors, rather [than] a well-developed strategic move.”

“It deals more with the concerns of the government about the growing protest sentiments in the society and does not look like the long thought initiative to start the reform from the top. Tactics again prevail over the strategy,” he wrote.

Aiman Zhussupova, an expert at the capital-based Institute of World Economy and Politics, countered by saying the country needs the council at this stage of its development.

“There are several reasons. First, it is not a secret that the society and the government currently, in many ways, need reform in how they interact. Many representatives of the establishment at the highest level criticise the authorities for formalism that pertains to them, which has long been generating discontent among the citizens. The level of consciousness is growing every year,” she said in an interview for this story.

The situation requires constructive measures.

“On the one hand, the needs of the citizens, the society should be clearly defined per se, while on the other hand, there needs to be an understanding that the government listens to them,” she added.

The council’s open-door meetings and live translation on social networks are among the positive features that legitimise the institution in people’s minds.

“A lot of what was said at those meetings and suggestions and comments from the council members later received broad coverage in the media and on social networks. This shows the importance of those topics and gives an opportunity for the development of public discourse and dialogue within the civil society and formation of the societal opinion,” said Zhussupova.

Nursultan nazarbayev

Kazakhstan’s First President Nursultan Nazarbayev

The diversity of specialists and experts across areas lends to the council’s importance, yet it also presents challenges.

“The first is whether these issues and the suggested solutions will be considered and will be reflected in real life. Certainly, as some experts say, the recognition of the problem is a very significant aspect in itself,” she said.

Some, however, viewed the council as a means to “decrease protest sentiments among people and blow off steam.” To prove its real significance, follow-up work needs to widely covered and reported.

The efficiency of the council’s working groups is another challenge.

“As the council members themselves noted, many of them, prominent public figures, are not in the best relations. Their desire to stand out and show their significance and consequently their reluctance to work within the groups, which does not bring about obvious benefits, is a contribution to the common cause. Here, we can only hope for their consciousness and their willingness to contribute to the development of their country and justify their presence in the organisation that stands for the society’s interest,” said Zhussupova.

Some activists, however, call for more “efficient measures.”

“To get over the political crisis, the authorities should first of all demonstrate their political will and return the trust of citizens through effective measures. The condition for the start of a public dialogue on the political reforms in Kazakhstan should be the steps that guarantee fundamental rights and freedoms to every citizen,” wrote the recently created Oyan Qazaqstan (Wake Up Kazakhstan) civic movement on its Facebook page.

The group called on the government to reform the law on public rallies to only require notification of a protest, not necessity seek permission to hold it ahead of time. They also asked to review allow greater media freedom and bring the law in line with international standards, including those of the Organisation for Security and Co-operation in Europe (OSCE) and its Office for Democratic Institutions and Human Rights.

Satpayev also questioned the need to form the council, as its creation shows the “ineffective Parliament, local executive bodies, political parties and other fake political institutions that failed to play the role of an effective mediator between the government and the society.”

To show the body’s real significance, the government would need to opt for some bold decisions to show its serious intentions, including changes to media, party and election legislation, he added.

Push to attract foreign investments

Along with the changes in the country’s political life, Kazakhstan also expanded its ambitious, reform push to attract investments, capitalising on the country’s location that enables connection to European, Asian and Middle Eastern markets and use of the largest international trade corridors.

In April, Kazakhstan created the Coordination Council to Attract Investments chaired by Prime Minister Askar Mamin. Last December, building on many years in investment development, the nation significantly reorganised the internal investor support system.

Kazakhstan set up a three-level system to draw more investors – the external level through the country’s embassies; central level overseen by the government, Kazakh Invest and national companies; and the regional level. The foreign ministry has been given functions and powers to implement the state policy.

Since its independence in 1991, Kazakhstan has attracted more than $330 billion and $24.8 billion in 2018.

Kazakhstan moved up three spots, from 28th last year to 25th of 190 countries, in the World Bank Doing Business 2020 report. In the last 12 years, the country has advanced 38 places. Kazakhstan is ahead of Iceland (26th), Austria (27th), Russia (28th), Japan (29th), Spain (30th), Armenia (47th) and Kyrgyzstan (80th).

The country remains the number one investment destination in the Central Asian region, accounting for approximately 75 percent of the total foreign direct investment inflows into the region, but its ambitions go beyond that figure with countries worldwide increasingly vying for foreign investments.

The new body is intended to help the government with one of its priorities to attract $34 billion annually by 2025 and bring the share of foreign direct investments to 30 percent of the gross domestic product (GDP).

“At this point, the indicator seems to be non achievable, because since 2012, the investment activity in the country remained not higher than 20 percent of the gross domestic product. At the same time, however, the growth of investment in fixed assets in Kazakhstan in 2018 was a record high of 17.2 percent in annual terms. This indicator grew faster only in 2005, 34.1 percent. Given the slowing investment dynamics in Kazakhstan’s main trade partners, it is a brilliant indicator,” wrote expert Sergei Domnin for exclusive.kz.

Kazakh Prime Minister Askar mamim

Kazakh Prime Minister Askar Mamim

The council joins other efforts, including the new investment framework that will unify the process of assessing and promoting investment opportunities and Kazakh Invest, which serves as a single negotiator with investors on the government’s behalf with its representative offices worldwide.

“In recent years, we have witnessed fluctuation in attracting investments. Amidst the globally decreasing trust of investors in the developing economies, the competition for investments is growing. It is, therefore, particularly important for us to build effective mechanisms to draw investments. Unfortunately, direct foreign investments in non-oil sectors do not reach even 5 percent of the total volume,” said First Deputy Prime Minister and Minister of Finance Alikhan Smailov in April, reported primeminister.kz.

The Astana International Financial Centre (AIFC) has been designated as the single centre to coordinate investments in Kazakhstan and is being positioned as the regional investment hub.

“It is important to make maximum use of the existing potential and existing tools of the AIFC financial market,” said Mamin at the Oct. 22 council meeting.

The council will tackle the inefficient coordination between state bodies, among other issues.

“We need to speed up the decision making process, given the growing competition. This is not just a consultation body. We plan to grant additional competency to the council, so that the council can review all the conditions and proposals of strategic investors during one meeting,” said the then Kazakh Invest Chair Saparbek Tuyakbayev, reported 24 TV channel.

Among the challenging factors investors often note in doing business in Kazakhstan, and the new investment push seeks to address, are the lapses in the rule of law, volatility of the tenge rate, infrastructure weakness, land allocation, decriminalisation of tax offenses and migration.

“With the current competition for capital, which is growing, I am pleased that the government is developing a new approach to attract foreign investments. The stock exchange is working, there is an arbitration centre based on English law, there is a regulator. The AIFC can really become a very effective body to attract investments. What investors would like to see is a good investment climate and investment opportunities,” said European Bank for Reconstruction and Development (EBRD) Director for Kazakhstan Agris Preimanis, reported the Prime Minister’s press service.

 

 

 

 

 

 

 

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