By Bruce Wilson, Senior Consultant, The PBN Company, Almaty

Karim Masimov, Kazakhstan’s Prime Minister, has floated the idea of requiring foreign businesses that operate in Kazakhstan to keep a share of their funds in domestic banks. The need to help Kazakh banks is understandable, but would the proposal have a detrimental impact on the economy?

Kazakhstan’s banking sector still has serious problems, despite significant emergency investments by the government. Many banks, burdened by enormous foreign debts, are also mired in corruption scandals, and the damage to their reputations has further dampened economic activity throughout the country. Foreign investors, so the theory goes, are the ideal candidates to step in and help to bolster the banks’ balance sheets.

Foreign businesses have a vested interest in Kazakhstan’s economic health in general and the viability of the financial sector in particular. However, the merits of Masimov’s idea must be off-set against the additional damage that may be done to Kazakhstan’s international reputation. The proposal will be seen abroad as an additional challenge to investing in Kazakhstan - a constraint adding to the existing costs and risks of doing business in the country. If foreign businesses reduce their investments as a result the plan will backfire, further hampering Kazakhstan’s ability to attract capital and technical know-how. Ultimately, it may reduce the competitiveness of Kazakh products in the global market, raise prices for local Kazakh consumers and hinder rather than expedite Kazakhstan’s economic recovery.

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By Yekaterina Syrtsova, Associate Account Manager, The PBN Company, Almaty

The proposed Customs Union between Russia, Kazakhstan, Belarus - and now possibly Kyrgyzstan - has received extensive coverage, with much attention focused on the impact on Russia’s accession to the World Trade Organization. However, while there are many potential benefits for Russia in terms greater access to Kazakh markets, what is in the Customs Union for Kazakhstan? A lively debated has been prompted about the economic and the political merits of going along with Russia’s proposal.

The Union is an obvious win for Kazakh industries that supply the Russian market, such as metallurgy, coal and chemicals. It will stimulate development of Kazakhstan’s Russian exports in these sectors by eliminating the customs duties they currently pay, making them more competitive. The Union will also simplify on-going issues relating to transit of Kazakhstan’s oil through Russian pipeline systems. For many years transit routes in general - and the expansion of the Caspian Pipeline Consortium in particular - have been a matter of political dispute with Moscow. That situation may now change.

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By Yekaterina Syrtsova, Associate Account Manager, The PBN Company, Almaty

Thirty active Kazakh government blogs have been set up since Prime Minister Karim Masimov started a campaign on January 30 to encourage blogging among ministers, governors and heads of various state agencies. All the blogs follow a Q&A format, but now new questions are being raised as the blogs take on unexpected uses.

By far the most popular government blog to date is the Prime Minister’s. Despite some complaints about the efficiency of official blogs, most questions have been answered and Karimov even posts video responses. There have been obvious positive changes in official blogging, improving the overall quality of the Internet in Kazakhstan.

Interestingly, Kazakhstanis have started to use the official blogs as a way to complain about the dishonesty of their employers. The PM’s blog is full of posts describing what is said to be an “epidemic of companies firing employees and reducing staff”. According to the complaints, firms are not paying social security allowances and are asking that employees take “indefinite salary breaks” or are “forced to leave ‘voluntarily’.”

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By Yekaterina Syrtsova, Associate Account Manager, The PBN Company, Almaty

At the end of April the Majilis, Kazakhstan’s lower chamber of Parliament, unanimously passed draft amendments to the media law which, if enacted, would give authorities the right to block any local or foreign website in Kazakhstan on the grounds of “violating national legislation.”

Aimed at regulating “online resources” such as blogs, forums, social networks, chat rooms and even online shops and libraries, the law gives them all the legal status of “media outlet.”  The Prosecutor General of Kazakhstan would have the right to issue a decision to block a website, and the decision would then have to be approved by the City Court of Astana.

According to a post on NewEurasia.net, a blog network on Central Asia, “many bloggers believe that the government wants a legal tool for filtering the web.” For example, LiveJournal, a leading Russian-language blog platform, has been blocked in Kazakhstan since early October last year without any official explanation.

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