The national chamber of entrepreneurs of the Republic Kazakhstan "Atameken"
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HOW TO CLOSE THE DOORS OF NEW GOVERNMENT ENTERPRISES

29 March 2018
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Atameken NCE RK held a meeting of the Council for the Protection of Competition chaired by Yeldar Abdrazakov, with the participation of Yulia Yakupbayeva, Deputy Chairman of the Board of Atameken NCE RK, representatives of the Committee on Regulation of Natural Monopolies and Protection of Competition, representatives of the Ministry of Finance of the Republic of Kazakhstan, experts and business representatives from all regions of the Republic of Kazakhstan.

Aydin Bikebayev, Senior Partner of the Sayat Zholshy and Partners law firm, spoke on the implementation of the Yellow Pages Rules.

According to the Yellow Pages Rules, the state should not compete with business. As Bikebayev noted, in Kazakhstan the principles of these rules have already been legislated for a long time, however there are gaps in the implementation mechanism that hinder their effective application.

In order to prove his words, he noted that the number of state-owned companies should decrease as a result of privatization, but as the experience of previous years shows, this figure may increase again.

The basis is the norms laid down in the Business Code, as well as in the Decree of the Government of the Republic of Kazakhstan under the number 1095, whereby legal entities with state participation are allowed to carry out more than 300 types of activities. Thus, the entry point to the business is fairly open and easy for the state.

Yeldar Abdrazakov asked directly the representatives of the antimonopoly authority: "Why, despite the privatization course taken, new enterprises with state participation continue to appear in the Republic of Kazakhstan?" Deputy Chairman of the Committee for Regulation of Natural Monopolies and Protection of Competition (CRNMPC) Rustam Akhmetov explained that despite the created "filters", the initiators of the establishment of state enterprises are the sectoral ministries that pursue their goals.

"The key problem is that we create "obstacles", but the state has another task - to attract investments. Participating in the project, the state acts as a guarantor of business for investors. What guarantee do we have that the investor will come to us, if one of the enterprises closes? If we are talking about legislative inconsistencies, we agree that we need to control a level of fulfilling obligations by state companies. But the entrepreneur himself should be able to contact us directly if he sees that the state enterprise is present in the market and limits its activities. Now entrepreneurs don't have such an opportunity according to the business code," - Rustam Akhmetov said.

In her turn, Yulia Yakupbayeva noted that the issue requires a systemic solution.

"It is necessary to conceptually revise all inventory approaches, because now it is not in a systematic way, but individually. Finally, it is necessary to move away from the object-based approach to inventory, and apply sector-based approaches. The list of activities that are allowed to deal with state-owned companies, which were mentioned today, is such as the production of canned goods, jewelry, metal barrels, earthworks and repair work - in short, something that private businesses can easily handle. It is necessary to gradually reduce this list and move to long-term contracts for business," - Yulia Yakupbaeva noted.

Expert Rustam Akberdin agreed that the mechanism of performing state functions through long-term contracts is the most promising for private business nowadays.

Member of Council Petr Svoik paid attention to the imperfection of the methodology for determining the state's share in the economy. According to the Ministry of Economy, the state's share is estimated at 18.6%, but at the same time, the assets of state companies, according to Svoik, are about 70%. Participants of the meeting announced the proposal to revise the methodology for accounting for the state's share in the economy. 

Members of the Council raised the issue of the responsibility of state company executives, who often violate the statutory activities, competing with the private market, and continue their activities even after the authorized body's decision to eliminate them.

At the end of the event, the participants agreed to develop the Road Map in conjunction with the CRNMPC, which will include the following directions:

  • revision of the legislation regarding the admission of new state companies to the market;
  • improving privatization mechanisms;
  • monitoring and reduction of spheres with state participation;
  • development of cross-border competition;
  • improvement of the work of the Conciliation Commission on Investigations of Antimonopoly Violations;

improving the methodology for assessing the share of state participation in the economy.

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