The Ministry of National Economy of Kazakhstan has initiated a public discussion of new legislation aimed at introducing a total ban on private companies substituting the economic functions of the state. In total, there are more than 50 such companies in the country.
The concept presented to the public doesn’t include any specific amendments to the current legislation but it provides an overall vision of the problem and suggests solutions. Concerning monopolies, the document by the ministry says that because so many private companies have possessed exclusive rights on the market, this system has produced excessive chains of agents.
THE DRAFT CONCEPT SAYS
Since there is no free competition, monopoly operators have demonstrated high risks of ineffective management, poor pricing policy and low quality of services. As President Kassym-Jomart Tokayev said monopoly operators, especially private companies have to be a thing of the past and all niches must be open for free competition.
As the Agency for Protection and Development of Competition reported, in 2021 there were more than 50 private companies with exclusive rights in fields such as IT, transportation, communications and finances.
The draft concept of the antimonopoly policy of the agency includes the task of reducing the number of single operators to thirty by 2025. On the other hand, the Ministry of National Economy wants to get rid of these private monopoly operators within the next five years.
One of the examples of an artificial monopoly is the situation with approach railways lines. According to the request to the prime minister of the country from deputies of the Ak Zhol party, the company called Center of Transportation Service (CTS) has acquired all the approach lines in Kazakhstan and has increased the cost of its services severalfold.
FROM THE TEXT OF THE REQUEST BY AK ZHOL PARTY
We have been receiving complaints about the situation from the Pavlodar, Kostanay, Turkestan, Almaty and Akmola regions. People are wondering how one company could be able to acquire these approach lines while local companies were denied the right to buy these land parcels. Now, if these companies’ outcry about tariff increases, the monopoly operator would just close the lines, denying businesses from receiving supplies and sending their products. Moreover, CTS wants these companies to pay it $187,360 of so-called compensation for missed profit for the period when the lines were closed by the operator due to businesses’ protests.
In a response to the deputies’ request, the head of the antimonopoly agency Serik Zhamangarin said that cap rates for CTS’s services were set for the 2016-2020 period. Therefore, the current company’s tariffs are outdated and illegal. As a result, the agency suggested CTS negotiate new tariffs.
However, the monopolist tried to challenge this order in court but failed. The company’s tariff has been decreased by 92% due to an increase in the volume of transported goods with no costs for maintenance or amortization.”
In January, another monopoly company Operator ROP, which had been responsible for gathering car recycling fees, was told to stop work. Now, all the car recycling fees are collected by the state enterprise Zhasyl Damu.