The temperature in the shadow

At the House of Friendship on May 30th in Almaty, the FEK, along with Bank CenterCredit, held the conference “The Role of the Business Community in Realizing the Presidential Address to the People of Kazakhstan.” 

Akzhol Sadeshov

The primary aim of the conference was to discuss the participation of small and medium-sized enterprises (SMEs) in achieving the goals set by Kazakhstani President Nursultan Nazarbaev for raising Kazakhstan to the level of being one of the fifty most competitive countries in the world. In the opinion of the participants, the target requires deepening the dialogue between business and the authorities.
As outlined by the business community, the most important goals are the creation of conditions for fair competition and a decrease in the volume of commerce falling under the shadow economy. As is well known at present, those are impediments to the development of business, and a barrier to implementing the tasks outlined by the head of the country.
In the words of Raimbek Batalov, chairman of the Council of the FEK, “Shadow business has always been a problem in achieving competitiveness within our national economy.”
Sophia Aisagalieva, executive director of FEK, stated, “According to the strategy for the development of Kazakhstan for the period up to 2030, by that time we should have entered the list of the fifty most competitive countries. However, this does not seem possible without transparency within business activities. At present, being transparent is not profitable for businesses, as they automatically become uncompetitive.”
This issue is moved into sharp relief due to the planned entrance of Kazakhstan into the World Trade Organization (WTO). In such a case, there arrives a necessity to increase the competitiveness of domestic production, on both the internal and external markets.
According to various representatives of the business community, the reasons for the concealment of entrepreneurial activities are diverse. Included among these are: high tax burdens, ineffective customs tariff policies, insurmountable administrative barriers, overly regulated licensing procedures, and underdeveloped infrastructure necessary for carrying out business activities. Additionally, one may include onto the above list, a lack of transparency in the procedures for state purchases, as well as in the provision of services by government organs.
At the same time, businesspeople understand that in preparing suggestions for moving commerce out of the shadow, a balance of interests must be achieved between business and state, joint solutions must be found, research must be carried out, and pressing issues must be openly discussed.
An Action Program for 2006-08 was prepared along these lines by the FEK for review by the business circles of Almaty. The plan consists of four main sections: tax policy and administration, customs tariff policy and administration, licensing, and supporting infrastructure for business. The program’s focus on solving these issues is explained by the FEK’s intention to concentrate on solving the most painful problem – fighting the shadow economy. According to a statement by the organization, when the government developed its action plan for combating illicit trade, only measures were presented for increasing administrative pressures on business. Unfortunately, that plan did not take into account the arguments of businesspeople that strengthening of administrative barriers, and the creation of new ones, as well as a great number of various inspections – done without the implementation of systematic economic measures – could only push businesses to undertake further shadow operations.
According to official statistics, the share of the unobserved economy within the gross national product (GNP) is 24.4%, including unregistered businesses (13.9%) and concealed income (10.5%).
In the words of Sophia Aisagalieva, “Based on unofficial estimates by experts, we believe that the data presented by the State Statistics Agency of the RK on the gross national product is considerably diminished.” Moreover, according to Naurzbai Akhanov, director of the Agent-service Ltd., “Official statistics estimate the share of the shadow economy as 24.4% because the international system supposes this index should not exceed 30% for a civilized economy. According to the estimates of independent analysts, the share of the shadow economy in our country has reached 80%. This fact says that the problem has transitioned from the sphere of economics to that of culture. Citizens of the country almost have