Society should take part in management

— In your opinion, how do the people of Kazakhstan perceive large and medium-sized business?
— As far as I understand, perception is generally positive, because many people connect the improvements in their lives with the development of business. For many people, life has improved; of course, the changes of income flow down from the top to the bottom of society’s hierarchy.

— What framework is the relationship between business and society built on? Can we say that society considers business to be a very important element of the country’s life?
— Privatization took place in 1995 and 1996. Large assets are owned by foreigners or were privatized by people in power. Therefore, there probably is something of a negative attitude towards those businesses. However, everything that has been developing during the last 5 years, was launched from scratch.

— How strong is the potential for civic protest in Kazakhstan?
— I think in the early 1990s the potential was higher than it is now. Then the situation was more critical and complicated, and the potential for protest was many times stronger. However, at that time the government understood that it shouldn’t rock the boat, whereas now they are more relaxed.

— How ready are those in power to recognize the existing political and social needs of society?
— I think that political power should be balanced, and then the self-regulating mechanism will work. When the executive branch works inappropriately, the legislative and judicial branches take the appropriate actions. This is the balance. Speaking about recent incidents, like the one in Shanyrak, the executive didn’t react properly in response to events. The parliament has a lot of power, but the problem is that some members of parliament are not the real representatives of their electorate; they don’t care if they are not re-elected next time. The problem is in the non-transparency of parliament formation, the high level of bureaucracy of the power and the absence of feedback.

— Last week, I had a meeting with some businessmen, at which we discussed the issue of the relationship between business and society. An interesting point of view was expressed there; someone said that this relationship depends on the relations between the government and business, because the government forms the social perception of the business.
— Everything depends on the government in our country. It can manipulate public opinion using the mass media, and also controls the law enforcement entities, which can be used against some businesses and damage their reputation.

— Do the people in power have such a strategy of discrediting business?
— No, because the people in power are themselves involved in businesses, and if they form a negative attitude to business, it would mean a negative attitude to them. Moreover, the President says that we need some number of millionaires; local “Abramovichs”. It is in the government’s interests to increase the volume of legitimate assets.

— Speaking of business’s attitude toward the government, what is the model of the relationship now? Patron-client or partnership?
— Currently, attempts are being made to build up the relationship between the government and the business sector. Since the gaining of independence, many businesses have been launched. Today, banks can lend up to 1 billion USD, so further development of the production industry has become possible only recently. The government is working on it now, and we’ve been invited to show our break-through projects. The government wants to arrange contacts with business; we have received some signals proving this.

— What would you say about the accusations towards the bankers for increasing foreign borrowing and expansion into foreign markets?
— These accusations are also addressed to the government. If the internal market experiences a deficit, it is the government’s problem, because the government should create a competitive environment, increase the attractiveness of all industries and carry out changes in taxation and the investment structure. The government doesn’t form attractive industries, and therefore, we find more interesting projects abroad. By the way, it is a natural market process.

— What do you think of Mr. Marat Tazhin’s idea that the MFA should also take part in assessments of foreign investment and political risks for Kazakhstan’s companies, in order that our business doesn’t go to countries with high levels of risk?
— To assess such risks, the MFA would need to have an appropriate classification structure for the risks. As they don’t possess this, they would have to create economic departments parallel to the Ministry of Economy and Budget Planning. Besides, assessing countries is very complicated, because there are political, economical, industry-based and investment risks. We have been working in this industry for a long time, and still we have some problems. That’s why I think the idea is unrealistic, and it also contradicts legislation. How can the MFA control private investments when the legislation provides freedom of entrepreneurship and allows the running of businesses abroad? The MFA doesn’t have the legislative grounds to prohibit investments into foreign countries.

— Would you say that Karim Masimov, the Prime-Minister, is trying to arrange partnership relations with the business sector? — Yes. But I’d say that many officials are already connected with businesses, and others want to develop the partnership relations.
— Let’s turn to the forecasts. In your opinion, how will the relationship between the government and business develop in the next 5 to 10 years? — I think a trend exists. Especially taking into account that some highly ranked officials are connected with businesses and they are interested in building good relations. Besides, power and business are integrated all over the world. It is the basis for a country’s stability, including its stability of economic policy and base for development.

— Do you know that in December 2004, three months before the events in Kyrgyzstan, Bermet Akaeva and Adil Toygonbaev were asked a question about their strategy in the event of an emergency. They were sure that there would be no unpredicted situations. As we all know, they were wrong. Does your business have a definite strategy in case of a critical situation, especially connected to a change of power?
— We are not in Kyrgyzstan. The situation here is more predictable. Akaev had to leave because he didn’t understand the process of managing the country. However, we closely observe the changes at the top of the elite, and I don’t believe that a situation similar to the one in Kyrgyzstan could occur here. Moreover, maybe there are some plans, but I’m not aware of them. We are ready to deal with any potential scenario, and there is a possibility for further development in any scenario.

— What do you think of more active participation by business in the political life of the country? Many people think that it is not businesses’ concern.
— I don’t think businesses are going to participate in mass-meetings or enter political parties; however, we support some political programs that help to realize our economic plans. This will always be done. Currently our actions program is realized through a group of officials, who are also interested in solving different problems. We have a more direct connection with power, than through the structures of political parties. Moreover, we don’t have a political party. We use our personal connections in parliament.

— Here you mentioned the issue of lobbying for your interests. What do you think about the law that regulates lobbying?
— The law should have been introduced even earlier. Everybody understands that this process should be transparent. There should be a system in place that would allow businessmen to lobby for our interests openly. It would also be easier for the government if politicians openly stated whose interests they represented.

— In your opinion, what are the main problems within the business society?
— Business society will not be united, because businesses are always in a competitive environment. Of course, they can lobby for common interests in taxation or other legislation. However, there is no need for unification in the form of associations and other joining. The reasons are the presence of corruption, raid seizures and the unbalanced judicial system. All of this doesn’t allow unification for some of the segments.

— Can we say that raid seizures are the only process in the post-soviet countries where businesses continue to fight for their survival?
— When raid seizures include forging documents, using administrative power to press people and put them into jail, when they are forced to sign documents, it becomes robbery and corruption.

— What needs to be done to neutralize the problems in the near future?
— The system needs to be rebuilt. Freedom of speech should exist in reality, because mass media are the cleaners of society. The President shouldn’t be in an information vacuum. In practice, he has limited access to information, because the press is limited and everybody has taboos; the disease is being hidden.

— What do you think of administrative reform? The government has decided to introduce elements of corporate management into the state apparatus, and one of the goals of this is to reduce corruption.
— This reform is suggested because of an absence of responsibility. Now ministers cannot solve any problem, because they don’t have enough authority. Society should take part in the management; without it, the idea of the reform is just an imitation. For example, let’s look at the institutes of development. There is a need for the institutes, but we also need a clear economic policy, which would explain the roles of its participants. However, in our country I don’t see a clear policy behind the name “innovation industrial policy”. There is also a need for the export-import banks and development banks, but they don’t have a clear strategy; thus, there is no proper motivation system used for the staff. It has come to a situation where these development institutions start to compete with the private sector. What they should do is finance investment projects such as roads and other infrastructure, if the private investors are not interested. Anyhow, it should be done within the framework of the government’s economic strategy.

— Is business society ready to help in developing such a strategy?
— Business society doesn’t have to do it. Therefore, it is important to have a competitive political spirit, when the government is formed by the parties and persons that were supported by the public. If they do everything right and successfully, they will be re-elected next time. Business doesn’t have to write the program of actions, because the people who come to the government should already have done so. Of course, we can point out some problems, and the government should solve the problems in return for our support at elections.

— What problems are large and medium-sized businesses likely to face in the near future?
— Global problems, because we are integrating with the world community. First of all, there are the economic threats. For example, falling oil prices. Our government should be ready for different changes. If it takes adequate actions, including in the area of taxation, then everything will be fine. If it makes mistakes, then the wrong actions of our government also present a type of threat.

— Is the banking system of Kazakhstan ready for the new challenges?
— The banks have long been working in a competitive environment. I don’t think that entering the WTO presents any threats to the banks. The process of entering is another issue. Has anyone explained why do we need to do it now? I understand the desire to create an image of a civilized country, the desire to have a nice tie and suit, the desire to demonstrate knowledge of different languages. But if we don’t have the resources to maintain it, the tie will soon become dirty. Entering the WTO should be a thoughtful process. However, maybe we are ready; maybe our industry and agriculture are ready. After all, Kyrgyzstan has been a member of the WTO for a long time, but what benefits have been gained from their membership? In practice, they have benefited very little because the fact of membership on its own does not mean anything.