STIMULATING THOUGHT

Kazakhstan 2017 | ECONOMY | INTERVIEW

TBY talks to Doris Bradbury, Executive Director of the American Chamber of Commerce (AmCham) in Kazakhstan, on strategies for supporting growth, developing supportive structures for SMEs, and creating a more sustainable agriculture sector.

Doris Bradbury
BIOGRAPHY
Doris Bradbury joined the American Chamber of Commerce in Kazakhstan as Executive Director in May 2006. A career specialist in the countries of the post-Soviet Union, she began her career teaching at the University of St. Andrews, UK before embarking on international work. After working for over a decade with the Canadian Government in Ottawa, she served as a Senior Associate Director at the Carter Center in Atlanta, and worked extensively in Moscow. A graduate of McGill University (Canada), the University of Edinburgh (UK), having conducted Ph.D. research at the University of London and Moscow State University, she has broad professional experience in Canada, the US, Russia, Ukraine, and Kazakhstan.

How do you welcome the government's initiatives to stimulate economic growth?

The oil industry remains the foundation of Kazakhstan's economic prosperity, but the government understands that it must balance the country's dependence on oil with other sources of economic growth. AmCham has devoted many council sessions to exploring strategies that will foster economic growth and investment. Taxation reform has been a particular focus for AmCham this past year, and we have been fortunate in being able to bring Canadian tax specialists and senior OECD speakers to the council to contribute to these discussions. AmCham pushed hard to persuade the government to retain VAT rather than replacing VAT with a sales tax, which would have been seriously detrimental to the country's investment climate. We were pleased that the government listened and decided to retain the VAT, although its implementation continues to need improvement. However, we sometimes feel that the government is doing too much through too many programs that come and go with the aim of stimulating economic growth. Strong economies develop when the entrepreneurial spirit is allowed to flourish and when the government is not deciding through actions that are reminiscent of outdated Five-Year Plans on how sectors should develop. The government must extricate its thinking from past economic models that set guidelines and goals for the country's economy. The population is well educated, energetic, imaginative, and has its own economic goals. Economic freedom is the best stimulus for economic growth.

How challenging is it for the government to develop the SME sector?

Although AmCham is not really an association of SME companies, we are mindful of Kazakhstan's need to encourage and support SME development. After all, the largest global companies all began as SMEs, and the entrepreneurial spirit in which Kazakhstan is so rich is the beginning of all economic success. But SMEs have a hard time developing beyond the early stages in Kazakhstan. Taxation, regulation, and corruption are obstacles that the larger companies can handle or combat, but smaller companies quickly succumb under pressure. The Customs Union has also not been good for SMEs, which cannot easily complete with the cheaper and more plentiful products that flow into the country from Russia and Belarus. AmCham held a council session on SME development last spring and has brought problems requiring solution from individual SME companies to the council, but the government has not shown adequate interest in supporting SMEs, despite lip service to the country's need for entrepreneurship. SME successes are few and far between.

What trends or interest have you seen in the agricultural sector over the last year?

Agriculture is high on the government's list of priority sectors for Kazakhstan's economic diversification and it is definitely an area in which the country could excel. However, although there is serious interest in developing agriculture and a large portion of the country's population is still living in rural areas and engaged in farming, agricultural policy awaits the fundamental reform essential to supporting agriculture and agribusiness. First and foremost, land reform is an absolute necessity, but popular resistance to opening up land ownership and land leasing has so far blocked the government's attempts at land reform. Social and educational reform to improve rural life and provide opportunities to young people is also necessary to encourage the population to regard farming as attractive and economically beneficial to their future. Although there are some large and well-known agricultural conglomerates operating in Kazakhstan, these are exceptions. Small farmers need support so that they too can make a good living and build a sustainable agricultural and agribusiness sector. The truth, as can be seen in the country's supermarkets or corner shops, is that Kazakhstan's food supply is overwhelmingly dependent on imports. Yet the country could be self-sustaining in agriculture and enjoy a high level of food security. This was the subject of a major AmCham conference two years ago, and is a constant topic in the diversification debate.