The latest amendments to the legislation on improving the business climate in Kazakhstan will help small businesses expand their current ventures or build new ones. In particular, the requirement to develop design documentation for low-tech constructions has been canceled.
Low-tech constructions are mobile complexes made of containers, blocks and modules; single-story buildings used for trade, catering and consumer service, which are built out of prefabricated constructions; warehouses and storage facilities with a height of no more than 7 meters and an area of up to 2,000 square meters; or open parking lots for 50 spaces or less. They also include greenhouses and hothouses, construction of which has been stimulated at the state level since 2015.
For greenhouses and more
Greenhouses were supposed to compensate for price swings due to seasonal price increase for vegetables, but during their construction, businesses faced significant barriers. Here’s a telling story of a Georgian businessman who was building a greenhouse in Aktyubinsk.
“He admitted that when he was building an identical greenhouse in Georgia, the permit for construction cost him 10,000 euros and was issued in two or three weeks. In Kazakhstan, the cost of permit reached 100,000 euros and the time period for issuing reached five months. If not for our involvement, he would have spent another six months waiting for the permit,” said Aydos Mamyt from the Anti-corruption Agency of Kazakhstan.
The eighth package of amendments to the legislation on improving the business climate, among other things, cancels the requirement to develop design documentation for low-tech construction objects.
“Without doubt, the changes are for the better: previously construction objects, regardless of being low-tech or not, had to undergo an examination and development of design documentation without exception,” explained Madina Nurtas, head of the business environment analysis and monitoring department at the Ministry of National Economy.
According to her, developing design documentation can take from a month to a year, and even longer, depending on complexity of the object.
Examination and design documentation are also no longer required for electrical networks with a capacity of up to 200 kW at business entities. A network of up to 200 kW is capable of serving a room lit by eighty-three 100-Watt bulbs. Previously, if an entrepreneur decided to expand their store and increase its lighting capabilities accordingly, they had to re-develop design documentation for construction or modernization of electrical networks, thus losing time and money. The ‘greenhouse’ amendment actually made life easier for all small and micro-businesses in the country, particularly in case a business decided to expand and increase its production and retail space.
Simplification of the procedures in this area can stimulate growth of projects in the field of commercial construction, as well as growth of companies implementing such projects on a turnkey basis, the Ministry of National Economy said.
An increase in the number of market players from the private sector will also be facilitated by the statutory reduction in the list of grounds for establishing organizations with state participation. Now state-owned enterprises can be created solely for the purpose of ensuring national security, introducing a state monopoly or due to insufficient development of competition in the product market, which will be determined based on the results of its analysis by the antimonopoly office.
“Analysis of the state of competitive landscape is already done when creating state-owned enterprises, or expanding or changing their line of business. The analysis determines their possible impact on the markets,” said Bakhyt Kozhikova, head of the legal support and methodology department of the Committee for the Protection and Development of Competition at the Ministry of National Economy.
According to her, to determine the level of development of competition in the product market, the following criteria are used:
- market concentration;
- shares of operating private entrepreneurship entities in this market;
- indicators of demand and ability to satisfy the demand by private entrepreneurship entities;
- and other structural features of the product market, for example, economic and administrative barriers to market entry.
After analysis of this data, a decision is made on the viability of state presence in the business environment in a particular area.
It bears reminding that at the beginning of the summer, Minister of National Economy Ruslan Dalenov announced that the state’s participation in the economy decreased to 16% by the end of 2019. This figure was calculated in the following way: the sum of gross added value of products developed by quasi-public companies was divided by the GDP of Kazakhstan. At the same time, the share of small and medium-sized enterprises in Kazakhstani GDP, according to the Ministry, amounted to 30.8%. The state KPI is to increase this figure to 35% by 2025.