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Institutional reforms. Economic development

26 September 2013
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The transition to the new market relations not only led to radical changes, but also spawned and developed many negative phenomena in society: racketeering, raiding, shadow economy, corruption, etc. Corruption has a negative impact on the national economy. Annual losses from corruption in the country amounted to billions of tenge.

Denationalization and privatization
The main stages of privatization in Kazakhstan

In Kazakhstan, privatization has significant features. Objective necessity was not to delay, but the acceleration of the formation of market-oriented economic structures and the critical layer of owners as effective businesses.

The legal basis for privatization have become laws of the Republic of Kazakhstan «On denationalization and privatization» from June 22, 1991 «On privatization» of December 23, 1995. Law «On denationalization and privatization» defined privatization as the sale of state property to the physical, non-state legal and foreign legal entities produced by the will of the state as owner, under special procedures. The objects of privatization were called such types of state property, as a state enterprise, institution, production and non-production units, the plant property, stocks, shares in the authorized capital of limited liability companies, and others.

The law «On denationalization and privatization» included following transformation of state property: property leasing, redemption of property leased, buy of property by the members of the personnel, sale of the property on competition or auction and transformation of SOEs into Joint Stock Company.
In the privatization of medium and large state-owned enterprises dominated the creation of joint-stock companies (JSC) and the privatization of small and medium-sized enterprises, objects of trade, public catering and consumer services primarily through direct sales.

Privatization in Kazakhstan took place in four steps. In the first stage — during the 1991–1992 — privatization was proactive when government authorities made the decision after receiving from the collective enterprise of the corresponding application. And only then conducted auctions, contests, or donate to the staff of industrial and social infrastructure. The first «program of privatization of state property in the Kazakh SSR in 1991–1992," which was based on the idea of maximum involvement of citizens in the process of changing ownership through their labor groups was developed.
At this stage of privatization, the formation of the housing market and creation of the necessary conditions for the development of market relations happened. Lease and collective enterprise had been formed. Utility objects had begun to sell at auction. The service market gradually began to form. These transformations gave impetus to the development of entrepreneurship, forming a layer of the owners.
According toe he first stage 4.7 thousand objects of state property has been transformed. 60% of the total number of privatized enterprises belongs to retail trade, catering, consumer service, utilities and others. Among them, the largest shares have objects of trade 29.6% and consumer services 25.8%.
Beginning of the second stage of privatization in Kazakhstan (1993–1995) was the adoption of the «National program of privatization in the Republic of Kazakhstan». It was the most massive and difficult period in the history of privatization, which was carried out in four major on-boards: small-scale privatization (auction and tender sale of objects of trade, consumer services and industrial enterprises employing up to 200 people), mass privatization (enterprises employing between 200 and 5,000 people), privatization on individual projects (companies with fewer than 5,000 people), privatization of agriculture.
It was envisaged to conduct large-scale privatizations which would concern mainly the basic branches of economy of Kazakhstan: large and medium state-owned enterprises in industry, agriculture, construction, banking, industries producing consumer goods. Privatization methods marked by diversity: the sale of shares through the stock exchange, auction, commercial tender, investment tender, direct sale, transfer companies in asset management and other.

The small-scale privatization was the important within the existing scale of the scope of privatization of objects. Six thousand objects were realized in the country. Thousands of private owned enterprises belonged to small and medium-sized business appeared and began to work productively. Unclaimed items were implemented in 1996 after multiple price cuts. The cost of small-scale privatization could be paid in cash (50%) and housing coupons (50%). Through the offices of the national savings bank introduced free sale and purchase of housing codes. Method of targeted sale by labor collectives was used in practice. 50% of funds from small-scale privatization were left in the local budget.

The transition to private ownership had become irreversible. This was required by the logic of the period. In June 1994, President of the Republic of Kazakhstan N. Nazarbayev made amendment in Parliament Economic Memorandum for the next three years, which has been defined economic strategy. It included stringent measures to reform the economy and the establishment of macroeconomic stabilization. The task to conduct a quick and vigorous privatization was set.

The third stage of privatization (1996–1998) became the stage of transition to a sector program, when the privatization of the electricity and oil and gas industry, as well as in the social sector — health, education, science and culture.

From this period the full-fledged domestic investors who were able to buy large industrial enterprises began to form. In total, 94 large enterprises were privatized in the second and third stages. 57 of them transferred to the ownership of foreign investors, it led to creation of the companies with the participation of the private and public capital and preserve jobs, also strengthen the economy.

The fourth stage of privatization began in 1999 and continues to the present time. It is characterized by new approaches to the distribution of powers between levels of government in the regulation and management of state property. The document that marked the beginning of the fourth stage of privatization should be called the privatization program and improving the management of state property for 1999–2000. The state retained a presence in certain strategically important sector of the economy, including ensuring the production of essential goods, products and services.

Reforming of the banking system

The Kazakh banking system was created in December 1990. In January 1991, the Law «On Banks and Banking Activities in the Kazakh SSR» contribute to the framework of two-level banking system. Republican State Bank was transformed into the National Bank of the Republic of Kazakhstan with the regional offices and branches. Thus, at the time of introduction in November 1993, Kazakhstan’s banking system has undergone a significant transformation: two-tier banking system functioned, all specialized banks were transformed into joint-stock, and the National Bank was granted a number of functions of the central bank.

Crucial for determining the status of the National Bank was signed in March 1995 by the President of N. Nazarbayev decree having the force of law «On the National Bank of the Republic of Kazakhstan». National Bank became an independent and accountable only for the head of state. In 1995 the first program of reform of the banking system of the republic was adopted.
The next important step in the development of the banking system was the transition program of second tier banks to international financial reporting standards, which was adopted in December 1996. Thus, in the 1990s, during the economic reforms in Kazakhstan was founded modern banking sector.

The introduction of the national currency

President of the Republic of Kazakhstan N. Nazarbayev at the beginning of the 1990s, was well aware that, following the reform of the pricing will inevitably be followed by monetary reform, and then become a purely Russian ruble currency. B. Yeltsin and v. Chernomyrdin repeatedly assured him that in that case Russia and Kazakhstan surely «synchronize their watches». However, politics is dominated by self-interest. Therefore, in early 1992, a secret decree on the preparation of the national currency — tenge was issued.

The introduction of the national currency was preceded by a long and complex negotiation process. It had dozens of meetings at various levels, including talks between the presidents of the two states — N. Nazarbayev and B. Yeltsin. Own national currency was printed in the UK and imported into the country. The President has created a government commission that developed the whole scenario administration tenge. It was a complex set of political, economic, technical and organizational measures.
As a result of decisive actions of the President and the Government of the national currency of the Republic of Kazakhstan — tenge — was successfully launched in November 15, 1993.

In 1997, by the presidential decree the Agency for Strategic Planning and Reforms, which has received a clear mandate of the Head of State, «look to the future, think about the model, the strategy — where to go Kazakhstan» was created.

In 2000, by the decree of the President of Kazakhstan was created the National fund. In 2000, the economy of the country was ready to make a new stage in its development. Transformation of the model involved active participation of the state in shaping the economic and political conditions that encourage the creation of transnational corporations, are able to compete in the market conditions both domestically and abroad. The process of formation of the export-oriented development model has begun.
By 2003, there were mainly completed structural reforms in the economy: carried out privatization of state property; formed economic environment, adequate standards of a developed market. Kazakhstan was among the first CIS member-states have been recognized by developed countries as a market economy.
The country moved from tactical tasks in industries as strategic in 2003. The Strategy of Industrial and Innovation Development for 2003–2015, aimed at diversifying the economy and overcoming the country’s dependence on commodity factor, have been supported by the President of Kazakhstan N. Nazarbayev.
As part of this strategy were implemented the first steps towards an active restructuring of the industry and to give the innovative nature of economic development, the creation of a favorable business environment, the development of manufacturing industry, improve the competitiveness of the economy. State institutions, created in accordance with the Strategy of Industrial and Innovation Development, were endowed with sufficient financial resources to lend to investment projects, as well as partially participate in the share capital of start-ups.

These measures make it possible to observe a high rate of growth of output, a fall in unemployment and a rise in real incomes. In the same 2003 was adopted by the National Program for oil and gas fields in the Kazakh section of the Caspian Sea for the period up to 2015.

On behalf of President November 25, 2008 The Government of Kazakhstan has developed and adopted an action plan to stabilize the economy and the financial sector in 2009–2010.

On behalf of the State acted National Welfare Fund «Samruk-Kazyna», whose main objective is to promote the development of Kazakhstan’s economy during the global crisis in attracting financing national development institutions. In 2008, the capitalization of the Distressed Assets Fund of the national budget was allocated to the first tranche of 52 billion tenge. In 2009, the authorized capital of the Fund is equal to 122 billion tenge.

The second important area of anti-crisis program was problems in the property market. State allocates 5 billon dollars (USD 3 billion — from the National Fund, and even potentially 2 billion — of the pension system).

The third direction of the crisis management program is to support small business. For small business support from the National Fund allocated $ 1 billion, which were used to refinance existing loans to small businesses, and the issuance of new ones. In this case, the credit rate does not exceed the pre-crisis level (no more than 14%).

At the beginning of September 2012 one of the most significant global rankings of countries' competitiveness — World Economic Forum (Davos, Switzerland) in its report for the year 2011 presented an assessment of Kazakhstan, which includes a complex system of statistical and predictive analysis of various sectors of the economy. This year Kazakhstan rose to 21th position and is located on the 51th place. Strategic understanding of the critical role of business in the economic development of Kazakhstan gradually led to sustainable economic development and improved livelihoods.

Small and medium enterprises (SMEs) of the country were able to take a significant niche in the state’s economy. More than a third of active entrepreneurs (40%) were employed in the business, whereas in the industry — only 11.4%. The share of employment in small business out of the total population in the country has increased from 23% in 2009 to 29% in 2011. In 2012, the business provided jobs to 2.5 million Kazakhs.

Source: B. Ayagan, H. Abzhanov, S. Seliverstov, M. Bekenova, The modern history of Kazakhstan: a textbook for students of non-historical disciplines (Baccalaureate) institutions of higher education. Under the general editorship of B. Ayagan. — Almaty: Raritet, 2010 — 432 p. 165–167, p. 200–228.

Material provided by the Institute of History of State CS of MES of Kazakhstan

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