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Kazakhstan’s key economic minister has given further details of the latest attempt to kick-start the country’s often-delayed privatization programme, and has pledged to put a new package of investment reforms to parliament in July.
Dossaev Erbolat, Minister for the Economy and Budget Planning, told Emerging Markets yesterday that a new round of privatization would commence in June. A new list of companies was approved for sale by President Nursultan Nazerbayev last week, he said, and the methods of sale will include auctions for direct sales and IPOs both domestically and “in external markets, if it’s possible.”
Mr Erbolat confirmed that the first companies on sale will include subsidiaries of Kazakhstan Temir Joly, the railway group, and KazMunaiGas, the oil and gas utility.
Such a programme has been talked about for many years; the so-called People’s IPO programme in 2012 saw KazTransOil floated, but other expected sales, including the rehabilitation of several nationalized banks and their reintroduction to the private sector, have not materialized.
Asked why the new programme would succeed where others have flagged, Mr Erbolat suggested that it had become a policy priority for the President. “When there was a financial crisis for Kazakhstan, the state made a few steps in 2008 and 2010 where the private sector segment of the economy decreased rapidly. And we want it back,” he said.
“The main idea of economic policy in Kazakhstan is to develop the private sector as a main driver of our economy… we are ready to move ahead.”
The programme would be accompanied by a new law, now in draft form, that would create a more formal division of the roles of state and the private sector, he said. “In the future, the state will keep assets and ownership just in strategically important spheres: only there, and no more.”
Mr Erbolat also said that a new package of investment reforms would be central to Kazakhstan’s strategy to become one of the world’s leading developed economies by 2050.
The reforms that will go to parliament include a number of initiatives, ranging from additional incentives for multinationals, such as exemptions from corporate income tax for 10 years, to measures that will address fears about investing in the country, such as a state guarantee against changing legislation. “Our latest survey shows that a lack of transparency in the regulatory environment is one of the main negative factors” for investors, Mr Erbolat said. “We are trying to introduce a degree of stability into policies” and provided “predictably regulated tariffs and prices.”
Other measures will include more streamlined visa processes, ease of access for the necessary labour force to develop new projects, and increased access to international arbitration.
Mr Erbolat also addressed concerns that the delay in the country’s vast Kashagan oilfield project, reported to be the biggest field outside the Middle East, would impact the country’s state budget. “For the state budget, we were not expecting any addition of income this year or next year,” he said. “For GDP growth, yes: maybe half a percent [impact], but we are trying right now to cover this with more exploration.”
