I would like to thank the Kazakh Government for co-hosting this roundtable discussion, and particularly to our distinguished guests, Karim Massimov, Prime Minister of Kazakhstan, Bakytzhan Sagyntaev, First Deputy Prime Minister of Kazakhstan, and Nika Gilauri, former Prime Minister of Georgia.
It is safe to assume that those of us in the room are familiar with the Doing Business report and the ten indicators that comprise the Distance to the Frontier rankings and relative rankings, so I will only mention a few key points.
I would like to mention some important changes being introduced from this year’s Doing Business 2016. The report now includes new measures of quality that have been rolled out across four indicators in 2016 including Dealing with Construction Permits, Getting Electricity, Registering Property, and Enforcing Contracts. These new measures are important because they assess the quality of service delivery to the private sector, and help incentivize proper implementation of reforms. Kazakhstan performs particularly well on the quality indices in the areas of Construction Permits and Protecting Investors.
Another big change in 2016 was increasing the relevance of the Trading Across Borders indicator to better reflect the trade patterns of DB countries, which included among other changes, the introduction of natural trading partners that may be linked by land rather than sea. Further changes to continue introducing quality indices will be rolled out in DB 2017.
Now turning to 2016 results, we can see that by any measure, Kazakhstan had an excellent year for private sector reforms. Kazakhstan was recognized with positive reforms in seven of ten topics, the most of any country in the world in 2016 while also improving by 3.34 percent in the Distance to the Frontier, also the greatest increase of any country in 2016. Topping it off, Kazakhstan broke into the top 50 for the first time, earning 41st place in the 2016 report. Clearly there is much that can be learned in how Kazakhstan achieved these impressive results.
First Deputy Prime Minister Sagyntaev has discussed the individual reforms that were adopted, and we can highlight some common themes from this list that provide some insights on how successful reformers think about regulation.
First, good regulators help firms grow and consider the lower capacity SMEs may have to comply with regulations. Kazakhstan improved the business registration process by eliminating requirements for SMEs to pay the state registration fee and to have a company seal. These are great steps to encourage something that all governments want more of – firms registering and operating in the formal economy. Similarly, Kazakhstan introduced a fast-track procedure in the civil code for small claims that allows for self-representation and quicker decisions by the courts. This boosts the efficiency of the court system, while allowing for quick resolution of small cases. Kazakhstan ranks 18th on the indicator for Paying Taxes, another area where a simplified tax regime for small businesses has contributed to a much reduced regulatory burden and greater incentives for formalization.