DOING BUSINESS IN KAZAKHSTAN 2019 getting Dealing with electricity construction permits Comparing Business Regulation for Domestic Firms in 16 Kazakhstani Locations with 189 Other Economies © 2019 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 19 18 17 16 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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DOING BUSINESS IN KAZAKHSTAN 2019 getting Dealing with electricity construction permits Comparing Business Regulation for Domestic Firms in 16 Kazakhstani Locations with 189 Other Economies Resources on the Doing Business website Doing Business in Kazakhstan 2019 Subnational and regional projects http://www.doingbusiness.org/kazakhstan Differences in business regulations at the subnational and regional level Current features http://www.doingbusiness.org/subnational News on the Doing Business project http://www.doingbusiness.org Historical data Customized data sets since DB2004 Rankings http://www.doingbusiness.org/custom-query How economies rank—from 1 to 190 http://www.doingbusiness.org/rankings Law library Online collection of business laws and regulations Data relating to business All the data for 190 economies—topic rankings, indicator http://www.doingbusiness.org/law-library values, lists of regulatory procedures and details underlying indicators Entrepreneurship data http://www.doingbusiness.org/data Data on new business density (number of newly registered companies per 1,000 working-age people) Reports for 143 economies Access to Doing Business reports as well as subnational and http://www.doingbusiness.org/data regional reports, case studies and customized economy and /exploretopics/entrepreneurship regional profiles http://www.doingbusiness.org/reports Ease of doing business score Data benchmarking 190 economies to the best Methodology regulatory practice and an ease of doing business The methodologies and research papers underlying Doing score calculator Business http://www.doingbusiness.org/en/data http://www.doingbusiness.org/methodology /doing-business-score Research Information on good practices Abstracts of papers on Doing Business topics and related Showing where the many good policy issues practices identified by Doing Business have http://www.doingbusiness.org/research been adopted http://www.doingbusiness.org/data Doing Business reforms /good-practice Short summaries of DB2019 business regulation reforms and lists of reforms since DB2006 http://www.doingbusiness.org/reforms Contents 1 Overview 14 Methodology 15 About Doing Business and Doing Business in Kazakhstan 2019 Starting a business 28  38 Dealing with construction permits 52 Getting electricity 64 Registering property 74 Data notes 92 Indicator snapshots 94 Location snapshots 100 Indicator details 106 Acknowledgments DOING BUSINESS IN KAZAKHSTAN 2019 ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 1 Overview MAIN FINDINGS ƒƒ All eight locations benchmarked in Doing Business in Kazakhstan 2017 improved their business environment, with the city of Nur-Sultan advancing the most. ƒƒ Lower-performing regions in Kazakhstan are improving in three of the four indicators measured—and the gap between these lower-performing regions and the best performers was reduced by more than half for getting electricity and dealing with construction permits. ƒƒ Twenty-four reforms making it easier to do business have been recorded across the eight locations since 2016, including several reforms initiated by the central government and implemented locally. ƒƒ On aggregate, across the four regulatory areas measured, the city of Almaty has the most business-friendly regulation and Zhambyl (Taraz) the least. Almaty city still ranks highest on three indicator sets, just as it did in Doing Business in Kazakhstan 2017: dealing with construction permits, getting electricity and registering property. East Kazakhstan (Oskemen) and Pavlodar share the top ranking on registering property. ƒƒ Good practices can be found across Kazakhstan in the areas of regulation measured. Reform-minded policy makers can make tangible improvements by replicating measures already successfully implemented within the country. 2 DOING BUSINESS IN KAZAKHSTAN 2019 In any economy, creating a level play- Better business regulations can also A key for success will be to ensure that ing field for small and medium-size reduce corruption. In a survey of reform initiatives are properly imple- enterprises (SMEs) is crucial to ensure companies in Kazakhstan in 2013, 19% mented across the country, so that that entrepreneurs with good, innova- of the firms indicated that corruption entrepreneurs benefit from efficient, high- tive ideas can start and grow busi- is the biggest obstacle for operating a quality service delivery at the local level. nesses, generate employment and help business.5 But evidence suggests that Pacing of reforms is also crucial to allow diversify the economy. This is particu- better business regulation can tackle the relevant public and private stakehold- larly true in a country like Kazakhstan, corruption by increasing transparency ers to assimilate new regulations and to which relies heavily on extractive (figure 1.1). When business regulations reduce the risk of creating confusion with industries and where industrial and are less cumbersome and more a heavy flow of regulatory changes. Tools service sectors are still crowded out transparent, they limit the number of like Doing Business in Kazakhstan 2019 by state-owned-enterprises. Many interactions between entrepreneurs and help identify the implementation gaps at of the country’s leading sectors are public officials, reducing opportunities the point of service in the regions, provid- dominated by companies owned by for rent-seeking. ing essential input to inform the policy Kazakhstan’s national holding company agenda (box 1.1). Samruk-Kazyna—including the extrac- The government of Kazakhstan has tive sector, transport and logistics, and embarked on a bold program to reform information and telecommunications.1 the investment climate, an effort that WHAT ARE THE MAIN has already transformed the regula- FINDINGS? Having the right regulatory environment tory landscape at the national level. can help improve the business climate. Kazakhstani authorities have imple- It is easiest to start a business in the Business regulations that are clear, sim- mented 43 reforms acknowledged city of Nur-Sultan; deal with construc- ple and coherent can provide the stable by Doing Business since 2008. This tion permitting in Almaty city and and predictable rules that firms need to effort is ongoing under the Business Kyzylorda; obtain an electricity connec- function effectively, encouraging sustain- Roadmap 2020 and extends beyond tion in Almaty city, Mangystau (Aktau) able long-term growth and diversified it with the Kazakhstan 2050 Strategy, and Aktobe; and register property in economic development. Conversely, which aims to position the country East Kazakhstan (Oskemen), Pavlodar excessive regulation can constrain firms’ among the 30 most developed nations and the city of Almaty (table 1.1). On ability to scale up and compete, thus by 2050. aggregate across the four regulatory undercutting their chances to become more productive, operate internationally FIGURE 1.1  Where business regulations are efficient, entrepreneurs perceive officials and attract foreign investment. as less corrupt Good commercial regulation is a Ease of doing business score powerful tool that can help SMEs (0–100) 100 overcome major obstacles that affect 90 entrepreneurs in Kazakhstan, such 80 as low productivity and corruption.2 70 Kazakhstan has many SMEs by interna- 60 tional standards, but their contribution to the economy is low.3 To increase 50 their share of economic activity, entre- 40 preneurs should be able to spend less 30 time dealing with administrative mat- 20 ters and more time growing their busi- 10 nesses and creating jobs. This requires 0 0 10 20 30 40 50 60 70 80 90 100 streamlined business regulations. The Corruption Perceptions Index (0–100) government has already set a target to double the contribution of SMEs to Source: Doing Business and Transparency International databases. economic growth by 2050—to 50%, Note: The scatter represents 177 Doing Business economies for which Transparency International has data. The ease of doing business score is normalized to range from 0 to 100, with 100 representing the best up from 25% today—and to boost regulatory performance (the higher the score, the better). The data are from Doing Business 2019. Transparency productivity, which has been falling in International’s Corruption Perceptions Index measures levels of public sector corruption as perceived by experts and businesspeople. The data shown here are for 2018. The index uses a scale of 0 to 100, where 0 is highly Kazakhstan for the past few years.4 corrupt and 100 is very clean. OVERVIEW 3 BOX 1.1  What is Doing Business in Kazakhstan 2019 and what does it measure? Doing Business measures the regulatory business environment for small and medium-size enterprises. It assesses wheth- er an economy has good rules and processes to yield positive outcomes for entrepreneurs and increased economic activity. Recognizing that governments play a vital role in bolstering private sector development, it promotes smart regulation. The key premise is simple: clear laws and regulations afford entrepreneurs the confidence and the opportunities to invest. Rules should be efficient, transparent, accessible and enforceable. In the annual Doing Business assessment measuring 190 economies globally, the city of Almaty represents Kazakhstan as its largest business city. However, the city of Almaty does not tell the full story. Kazakhstan has 14 regions (called oblasts) and 177 districts. Depending on where they operate their business, entrepreneurs may encounter differences in how local officials implement business regulations. Doing Business in Kazakhstan 2019 is the second subnational Doing Business study for the country. This edition of the report expands the scope of the first study to eight new regions: Akmola (Kokshetau), Atyrau, the Almaty region (Taldykorgan), Kyzylorda, Mangystau (Aktau), North Kazakhstan (Petropavl), West Kazakhstan (Oral) and Zhambyl (Taraz). In this edition the Doing Business measurement applies to 13 regions as well as the cities of Almaty, Nur-Sultan (formerly Astana) and Shymkent.a For the eight locations covered in the first report, this study updates the findings across the four regulatory areas: starting a busi- ness, dealing with construction permits, getting electricity and registering property. For the eight locations measured for the first time, it provides a baseline of data across these regulatory areas. The objective of the study is to gain a broader understanding of the business regulatory environment across Kazakhstan— beyond the city of Almaty—as well as to provide good-practice examples and reform recommendations to help guide policy at the national and subnational levels. Petropavl NORTH KAZAKHSTAN Kokshetau PAVLODAR Oral AKMOLA KOSTANAY Oskemen WEST NUR-SULTAN KAZAKHSTAN EAST KAZAKHSTAN AKTOBE ATYRAU KARAGANDY Taldykorgan MANGYSTAU KYZYLORDA ALMATY Aktau ZHAMBYL Almaty Taraz Shymkent IBRD 42896 | BENCHMARKED OBLASTS MARCH 2019 SELECTED CITY/TOWN This map was produced by the Cartography Unit of the World Bank Group. The CITIES WITH REGIONAL STATUS boundaries, colors, denominations and any other information shown on this map do not imply, on the part of the World Bank Group, any judgment on the OBLAST BOUNDARIES legal status of any territory, or any endorsement or acceptance of such boundaries. The locations were selected in agreement with the Ministry of National Economy. All regions are represented except for the Turkistan region (in grey, above), which a.  was created on June 19, 2018, after the Doing Business in Kazakhstan 2019 project had kicked off. 4 DOING BUSINESS IN KAZAKHSTAN 2019 TABLE 1.1  Where is doing business easier in Kazakhstan—and where not? Starting a Dealing with Ease of doing business business construction permits Getting electricity Registering property Aggregate Aggregate Aggregate ease of ease of ease of DB DB score DB score Ease of DB Ease of DB Ease of DB Ease of DB Location ranking 2018 2016 Rank score Rank score Rank score Rank score Almaty city 1 83.74 80.64 9 94.43 1 76.47 1 81.62 1 82.44 Mangystau (Aktau) 2 83.04 11 94.42 4 76.03 2 81.05 14 80.65 Aktobe 3 81.67 78.46 2 94.44 9 74.59 3 76.89 6 80.77 Kyzylorda 4 81.52 8 94.43 2 76.24 6 74.64 6 80.77 Pavlodar 5 81.36 76.90 2 94.44 11 74.22 7 74.35 1 82.44 Atyrau 6 81.32 9 94.43 13 73.87 4 76.23 6 80.77 North Kazakhstan 7 80.77 12 92.63 12 73.88 5 74.96 4 81.61 (Petropavl) Kostanay 8 80.75 78.41 5 94.43 7 74.99 10 72.81 6 80.77 Akmola (Kokshetau) 9 80.48 14 92.46 3 76.07 12 71.79 4 81.61 Nur-Sultan 10 80.38 72.09 1 94.56 8 74.80 13 71.51 14 80.65 West Kazakhstan 11 80.27 2 94.44 15 72.75 8 73.13 6 80.77 (Oral) Shymkent 12 80.18 73.43 6 94.43 16 72.59 9 72.92 6 80.77 Almaty region 13 80.06 15 91.14 5 75.99 11 72.46 14 80.65 (Taldykorgan) Karagandy 14 79.40 73.58 7 94.43 10 74.54 16 67.86 6 80.77 East Kazakhstan 15 79.16 76.33 13 92.63 14 73.60 15 67.99 1 82.44 (Oskemen) Zhambyl (Taraz) 16 78.92 16 91.09 6 75.23 14 68.59 6 80.77 Source: Doing Business database. Note: The aggregate ease of doing business rankings are based on the average of each location’s ease of doing business scores for the four indicators measured in the report. The score for each indicator shows how far a location is from the best performance achieved by any economy on each Doing Business indicator. The score is normalized to range from 0 to 100, with 100 representing the best regulatory performance (the higher the score, the better). The scores for both 2016 and 2018 are based on the most recent Doing Business methodology. For more details, see the chapter “About Doing Business and Doing Business in Kazakhstan 2019.” A green arrow indicates an improvement in the score between 2016 and 2018 for the eight locations benchmarked in Doing Business in Kazakhstan 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. areas measured, the city of Almaty has year. It now scores a perfect 8 on the at the local Public Service Center (PSC). the most business-friendly regulation reliability of supply and transparency of This was made possible by establishing and Zhambyl (Taraz) the least. tariffs index.6 an electronic communication channel between the Department of Architecture Almaty city still ranks highest on three Almaty city also leads in dealing with and the water and sewerage utility. indicator sets, just as it did in Doing construction permits. An entrepreneur Business in Kazakhstan 2017: dealing now experiences fewer delays when East Kazakhstan (Oskemen), Pavlodar with construction permits, getting completing permitting procedures, both and Almaty city share the top ranking electricity and registering property. In those administered by public agencies on the registering property indicator set. the area of getting electricity, it consoli- and those administered by licensed pri- In all three locations a property transfer dated its lead with two reforms. First, vate companies. This decline in delays is is completed in 4.5 days, but what sets the city decreased the time to obtain due partly to strict oversight and partly to these regions apart is their score on the technical conditions from seven days the fact that legally set time frames are quality of land administration index. to five by reducing the number of sig- respected more diligently than in many These are the only locations where both natories required to approve and issue other places in Kazakhstan. In addition, the titles at the land registry and the maps this document. Second, it improved the Almaty is the only city where entre- at the cadastre are scanned. Meanwhile, reliability of the power supply by reduc- preneurs can apply for an architectural the capital city, Nur-Sultan, remains ing the frequency of outages from 1.2 planning assignment and the technical the easiest place to start a business in to less than 1 outage per customer per conditions through a single entry point Kazakhstan. Its performance is driven by OVERVIEW 5 a higher level of digitization, including in (VAT) when starting a business and to system like the one in Almaty city to the use of the e-government portal. obtain construction permits. monitor, prevent and restore outages, it could slash the number of outages from A closer look at the indicator rankings No location does equally well across all an average of three per customer per shows that locations in Kazakhstan the areas measured. Conversely, each year to just one. That would give it the continue to make progress on the ease of location ranks in the top half on at least maximum score on the quality index for doing business, but they still have room one indicator. Variations in performance electricity, and its ranking on the ease of for improvement. across indicators can help local policy getting electricity would improve by 10 makers identify which regulatory area places to the top position, on par with All eight locations benchmarked in they can implement more efficiently by Almaty city. Only two locations make the Doing Business in Kazakhstan 2017 learning from another location that does top half of the ranking across all indica- improved their business environment, better. For instance, while the Almaty tors: Kyzylorda and the city of Almaty. with the city of Nur-Sultan advancing region (Taldykorgan) ranks high on deal- the most (figure 1.2).7 This suggests a ing with construction permits (it ranks The lower-performing regions in countrywide trend toward global good 5 out of the 16 locations measured), Kazakhstan are converging toward practices, with less red tape for entrepre- its position on getting electricity is far the top performers in three indicators neurs. Nur-Sultan, which was ranked last lower (it ranks 11 out of 16). Almaty could measured—and the gap between these in the first study, has adopted multiple share good practices in the construction lower-performing regions and the best reforms since 2016. In the area of getting permitting process with other regions, performers was cut in more than half electricity, the improvements it has made but it could also learn from others about for getting electricity and dealing with in the reliability of supply and transpar- getting electricity. Take the case of moni- construction permits. In 2016 the gap ency of tariffs make it easier for SMEs to toring and restoring power outages. The between the best performer on the operate. Entrepreneurs across all regions city of Taldykorgan (in the Almaty region) aggregate ease of doing business score, have also benefited from two streamlined records three times as many electric- Almaty city, and the worst, Nur-Sultan procedures implemented at the national ity outages as the city of Almaty. If city, was 8.55 points. However, in 2018 level to register for the value added tax Taldykorgan implemented an automated the gap between the best performer, FIGURE 1.2  The city of Nur-Sultan made the most progress among the eight locations benchmarked in Doing Business in Kazakhstan 2017 Nur-Sultan 8.3 2016 2018 Shymkent 6.8 Karagandy 5.8 Pavlodar 4.5 Aktobe 3.2 Oskemen 2.8 Almaty city 3.1 Kostanay 2.3 50 55 60 65 70 75 80 85 90 95 100 Aggregate ease of doing business score (0–100) Source: Doing Business database. Note: The aggregate ease of doing business score is the average score for the four indicators benchmarked in this report. The score is normalized to range from 0 to 100, with 100 representing the best regulatory performance (the higher the score, the better). The scores for both 2016 and 2018 are based on the most recent Doing Business methodology. For more details, see the chapter “About Doing Business and Doing Business in Kazakhstan 2019.” 6 DOING BUSINESS IN KAZAKHSTAN 2019 Almaty city, and the worst, Zhambyl lawyers in some regions such as Aktobe In getting electricity and dealing with (Taraz), dropped by nearly half, to 4.82 and Kostanay, reducing the time, cost construction permits, local authorities points (figure 1.3). The gap has narrowed and number of procedures for business play a significant role in determining and the most in the case of getting electricity registration in these locations and bring- implementing business regulations. For and starting a business and to a lesser ing them in line with best performers getting electricity, the gap between the extent in dealing with construction per- such as Nur-Sultan. East Kazakhstan best and worst performer was reduced by mits. Increased adoption of electronic (Oskemen) is the only location where more than 60%, due to better monitoring platforms for business and VAT regis- the majority of entrepreneurs continue to of electrical outages by Karagandy and trations has eliminated the reliance on retain lawyers for business registration. the cities of Nur-Sultan and Shymkent. FIGURE 1.3  The eight locations benchmarked in Doing Business in Kazakhstan 2017 continue to converge toward the best national performance in three regulatory areas Starting a business Dealing with construction permits 100 100 Ease of doing business score (0–100) 95 78 94 76 93 74 92 72 91 70 90 68 89 66 0 0 2016 2018 2016 2018 Getting electricity Aggregate ease of doing business score 100 100 86 Ease of doing business score (0–100) 90 Best 84 (83.74) 80 82 Best 70 (80.64) 80 Worst (78.92) 60 78 76 50 74 40 Worst 72 (72.09) 0 0 2016 2018 2016 2018 Almaty city Aktobe Pavlodar Kostanay Nur-Sultan Shymkent Karagandy Oskemen Source: Doing Business database. Note: The aggregate ease of doing business score is the average score for the four indicators benchmarked in this report. The score is normalized to range from 0 to 100, with 100 representing the best regulatory performance (the higher the score, the better). The scores for both 2016 and 2018 are based on the most recent Doing Business methodology. For more details, see the chapter “About Doing Business and Doing Business in Kazakhstan 2019.” OVERVIEW 7 Similar improvements in lagging regions stock company that consolidates that gap has now closed by more than have not been evident for the registering various offices and operates as a one- half, to 39 days. property indicator, even though there is stop shop for more than 750 public ample room to improve in the quality of services.8 Individual agencies and the Kazakhstan outperforms many econo- land administration systems. Public Service Centers are now closely mies in terms of the time and cost of doing monitored to make sure they meet the business and the pace of improvements National reforms related to dealing with legal time limits. While not all locations —but regulations remain cumbersome. construction permits have also resulted have managed to comply with the legal It takes less than half the time on average in some convergence toward good prac- deadlines to complete construction- to start a business in Kazakhstan than it tices, though to a lesser extent. The time related services, most are closer than does in the other Europe and Central Asia it takes to deal with construction permits before. In 2016 the difference in time (ECA) economies and the OECD high- decreased due to the strict oversight between the best performer on dealing income economies, and less than a quar- of the state corporation Government with construction permits (Almaty city) ter of the time to transfer property (figure for Citizens, a noncommercial joint and the worst (Shymkent) was 82 days; 1.4). The cost of doing business also FIGURE 1.4  The time and cost of doing business are lower in Kazakhstan and have improved faster than in ECA and in OECD high- income economies Time Cost (days) (% of income per capita) 180 175 400 393.5 170 160 360 155 148 153 320 325.1 140 280 120 115 115 110 240 100 200 80 80 77 72 160 69 60 120 40 80 69.7 62.4 20.7 22 64.2 20 46.7 12.98 20.3 20 40 9 9 12.9 5 5.9 3.5 4.2 9 5.0 5 4 0.5 0.8 4.6 3.1 2.1 4.0 1.6 1.5 0.03 0.1 2.6 4.0 0 0 Starting a Dealing with Getting Registering Starting a Dealing with Getting Registering business construction electricity property business construction electricity property permits permits 2016 2018 Kazakhstan ECA OECD high income Source: Doing Business database. Note: The averages for Europe and Central Asia (ECA) are based on economy-level data for the 23 ECA economies. The OECD high-income averages are based on economy-level data for the 33 OECD high-income economies. 8 DOING BUSINESS IN KAZAKHSTAN 2019 tends to be lower, except in construction There are gaps at the regional level in the eight locations benchmarked in Doing permitting. The cost to start a business, implementation of central government Business in Kazakhstan 2017. Most of the connect to the electricity grid and register reforms. Some regulations have been reforms were geared toward streamlining a property in Kazakhstan is a fraction of improved on the books but have not been postincorporation requirements using these costs in ECA and OECD high- implemented in practice. Both the private online services. For example, in 2016 income economies. For instance, it costs sector and public agencies sometimes entrepreneurs had to complete VAT reg- 46.7% of income per capita to obtain struggle with the pace of reforms, which istration in person at the State Revenue electricity in Kazakhstan—less than 15% might explain some failures in the imple- Committee office. Now they have the of the average in all ECA economies. mentation of new rules. For example, the option to register for VAT electronically e-government portal used for company via the e-government portal during incor- Locations in Kazakhstan have also been registration has been enhanced with the poration, or through the State Revenue faster at reducing the cost and time to do option to open a bank account online Committee’s website. In addition, the business. In three out of the four regula- and to subscribe to a mandatory insur- chief executive officer of a newly incor- tory areas benchmarked in this study ance policy to cover employees against porated company is no longer required (starting a business, dealing with con- accidents, all in a single interaction. But to visit the office of the State Revenue struction permits and getting electricity), in practice, entrepreneurs continue to Committee to take a photograph upon the time to complete all the necessary visit banks in person to provide signature company registration; this change requirements has dropped at a faster samples and an imprint of a company reduced the VAT registration time from rate on average than in ECA and among seal. This happens despite the 2015 elim- one week to a day. OECD high-income economies. Between ination of the requirement to request seal 2016 and 2018 the average time it took to samples to open a bank account and the Improvements to the business envi- start a business decreased by more than 2018 amendments to the Entrepreneurial ronment also came as a result of half in Kazakhstan compared with less Code prohibiting financial institutions local reform efforts. East Kazakhstan than 1% in OECD high-income and ECA from demanding seal imprints. Similarly, (Oskemen), Kostanay, Pavlodar and economies. The significant decrease was despite the opportunity to subscribe to Shymkent city introduced systems to thanks to greater use of e-government insurance within the e-portal (offered improve the quality of electricity dis- online platforms to incorporate a com- by three different carriers), no company tribution. And in Aktobe and Kostanay, pany and register for VAT. Similarly, had made use of the service by the end as in five of the other regions measured between 2016 and 2018 the average cost of the year. in 2016, entrepreneurs now rely less to register a business dropped by about on lawyers for business incorporation, 30% in Kazakhstan compared with 15% prefering to visit the PSC directly to in OECD high-income economies and WHAT HAS CHANGED? register their business online. This has 5% in ECA economies. eliminated one procedure in both loca- Following the release of the first subna- tions, cut the time required to start a Despite the relative speed and lower tional report, Doing Business in Kazakhstan business by one day and reduced the costs, challenges remain due to proce- 2017, the eight locations measured and cost to register a business by more dural complexity. Dealing with business the central government set out to imple- than 90%—to only 0.2% of income per regulations is still more cumbersome in ment reforms aimed at improving the capita—because entrepreneurs who Kazakhstan than in OECD high-income delivery of services and the quality of do not use lawyers do not have to pay and ECA economies. Bottlenecks remain, regulation. Only two years separate the attorney fees. As a result, Aktobe is the particularly in the area of dealing with two reports; nevertheless, 24 reforms region that has improved the most in construction permits, where entrepre- making it easier to do business have been starting a business since 2016. neurs need to obtain a lot of clearances recorded across the eight locations (table and approvals before and after construc- 1.2), including several reforms initiated by All eight locations have made construc- tion. While it takes an average of 13 the central government and implemented tion permitting faster since 2016 by procedures to deal with construction locally. Some regulatory changes related reducing approval times, streamlining permits in OECD high-income econo- to dealing with construction permits and and eliminating procedures, and improv- mies and 16 in ECA economies, it takes registering property, however, made it ing electronic platforms. These changes 18 procedures in Kazakhstan, on aver- slightly more difficult to do business. were implemented at the national level age. In Almaty city, where the process and have had an effect throughout all is least cumbersome, entrepreneurs still Eight reforms between 2016 and 2018 the benchmarked locations. Kazakhstan have to fulfill 17 requirements to obtain a reduced the time to start a business by eliminated the clearance of the plans for construction permit. more than half on average across the engineering networks by the Department OVERVIEW 9 TABLE 1.2  Who has made it easier to do business since 2016? Starting a business Dealing with construction permits Getting electricity Location National Regional National Regional National Regional Almaty city ✔ ✔ ✔ Aktobe ✔ ✔ ✔ ✔ Pavlodar ✔ ✔ ✔ ✔ Shymkent ✔ ✔ ✔ ✔ Kostanay ✔ ✔ ✔ ✔ ✔ Nur-Sultan ✔ ✔ ✔ East Kazakhstan (Oskemen) ✔ ✔ ✔ ✔ Karagandy ✔ ✔ ✔ Source: Doing Business database. Note: This table presents only regulatory reforms making it easier to do business, implemented between December 2016 and December 2018 for the locations benchmarked in Doing Business in Kazakhstan 2017. If a location has also implemented changes making it more difficult to do business, only those reforms with a net positive impact are recorded above. See the respective indicator chapters for disaggregated lists of reforms and changes. No positive reform was recorded in the area of registering property. of Architecture; this reduced the time to improved in this area were Karagandy and Eliminating the need for an expert opin- deal with construction permits by 5 days the cities of Nur-Sultan and Shymkent, ion after external works has reduced in Aktobe and 15 days in East Kazakhstan mainly due to the recording and reporting the number of procedures, cost and (Oskemen). Kazakhstan also merged the of data on the frequency and duration of time to obtain a new electricity con- water utility site inspection with the pro- power outages. nection. The private contractors hired cedure to connect to water and sewerage to do the external works—not the services, eliminating the need for two All locations benchmarked in 2016 now expert providing an opinion—are now separate interactions. Property registra- record and make such data public—a responsible for ensuring compliance tion costs were also lowered by 90% for result of new requirements on utilities to with quality standards, and distribu- SMEs. In an effort to make construction provide outage data to the Committee tion utilities inspect the work to ensure permitting easier, Kazakhstan increased for Atomic and Energy Supervision and that all approved standards have the number of construction permitting Control, as well as the imposition of been met. services carried out by the PSCs, where fines on local utilities that exceed certain the legally set deadlines to complete pro- outage limits. All locations, including Finally, most locations have stream- cedures are monitored more closely. Not those benchmarked for the first time, lined the request to obtain technical all changes streamlined the construction now keep information on outages, while conditions, complying with the five- permitting process, however. For exam- only half of the locations benchmarked day regulatory deadline. In 2016 the ple, in an effort to simplify postconstruc- in Doing Business in Kazakhstan 2017 Committee for Atomic and Energy tion procedures, Kazakhstan replaced the were doing so in 2015. In addition, in Supervision and Control implemented technical passport with a new procedure. 2018 Mangystau (Aktau) and Pavlodar reforms that mandated utilities to issue The problem is that entrepreneurs con- instituted an automated mechanism and approve technical conditions in five tinue to request—and the administration for monitoring and restoring outages, days for a connection of 200 kilowatt- continues to issue—a technical passport. like the cities of Nur-Sultan and Almaty hours or less, and prescribed a fine on In practice, then, this reform has added did in 2015. Another change since 2016 utilities that failed to meet the new a new step and complicated the process is that the Committee for Atomic and regulatory timeline. To comply with instead of simplifying it. Energy Supervision and Control imposes these regulations, utilities have stream- a fine of 125 MCI on electric utilities lined the approval process for technical Some of the most extensive reforms when outages exceed a certain cap.9 conditions. Such is the case in Almaty were observed in getting electricity. All These reforms have improved the qual- city, where the utility has reduced the eight locations benchmarked in Doing ity and reliability of power supply across number of signatories required to issue Business in Kazakhstan 2017 improved the Kazakhstan. For locations benchmarked and approve technical conditions, quality and reliability of power supply, in the previous study, the average reli- shortening the associated processing eliminating the need for an expert opinion ability of supply and transparency of time from seven to five days. Across and streamlining requests for technical tariffs index has gone up by 1 point the locations benchmarked in Doing conditions. The locations that most (from 5.2 to 6.2). Business in Kazakhstan 2017, the average 10 DOING BUSINESS IN KAZAKHSTAN 2019 time to obtain technical conditions needed to issue technical conditions, fol- dropped by about two days. THE WAY FORWARD lowing Almaty city’s example. Locations in Kazakhstan unified all The city of Almaty, first measured in Local good practices can be found within services for property registration under Doing Business in Kazakhstan 2017, has the regions as well. If Almaty city, which the control of the state corporation been a champion of regulatory reform. represents Kazakhstan in the global Doing Government for Citizens. This change, Thanks to its continuous improvement, Business report, provided an electricity introduced in July 2018, streamlines the it has held on to its top position among connection as quickly as North Kazakhstan property transfer process by hosting locations benchmarked in Doing Business (Petropavl)—46 days—and at the same several services under one roof. However, in Kazakhstan 2019. And now it is sharing cost as Kyzylorda—27.9% of income per one of the reform’s negative consequenc- its good practices and lessons learned capita—Kazakhstan’s global ranking on es—expected to be temporary—was to with other regions. In a peer-to-peer getting electricity would jump 36 spots, add a step for the payment of state reg- event organized by the Ministry of Energy, from 76 to 40, all else being equal. That istration fees. For the time being, entre- Almaty city explained its new online sys- would put it on par with Brazil and ahead preneurs need to go back to the notary to tem to apply for technical conditions and of OECD high-income economies such as upload the receipt of payments made at its plan to streamline the approval process. Luxembourg and New Zealand. Similarly, Kazpost or at a commercial bank; this is Other highlights of the meeting included a lowering the cost of dealing with construc- necessary so the payments can be linked discussion of how to efficiently implement tion permits to that of Kostanay—1.6% to their property transfer file. (Previously, reforms decided at the central level, as of the warehouse value—and the time all payments made at Kazpost or at a well as a presentation by power supply to that of Kyzylorda or Akmola—96.5 commercial bank were directly linked to and distribution companies on good prac- days—would improve Kazakhstan’s global the property transfer file of the buyer.) tices. Some regions credit the lessons they ranking on dealing with construction per- Other changes were positive, like the learned from Almaty city’s experience mits from 35 to 28, putting it on par with ones introduced in September 2018 that with helping them improve the process Ireland and ahead of the Kyrgyz Republic lowered the registration fee by 85%, to of connecting to the electricity grid. In and Ukraine (figure 1.5). 0.03% of the property value—placing fact, East Kazakhstan (Oskemen), North the country among the least expensive Kazakhstan (Petropavl) and Shymkent city The study shows that overall, opportuni- places to register a property globally. reduced the number of internal approvals ties to learn good practices can come FIGURE 1.5  If all good practices across Kazakhstan’s regions were adopted, the country’s global ranking would improve Kazakhstan (average performance) Best practices across Kazakhstan Average ease of doing business rank in 2019 Hypothetical ease of doing business rank Starting a business Starting a business 4 procedures, 4.5 days, 0.18% of income per capita, 4 procedures, 5.3 days, 0.5% of income per capita, 20 no paid-in minimum capital requirement no paid-in minimum capital requirement 22 22 Registering property Registering property 4 procedures, 4.5 days, 0.03% of property value, 4 procedures, 4.7 days, 0.03% of property value, 25 score of 17 on the quality of land administration index score of 15.5 on the quality of land administration index 25 Ease of doing business Ease of doing business (potential global rank: 25, on par with Germany) (ranked 30 in ) 30 28 Dealing with construction permits 17 procedures, 96.5 days, 1.6% of warehouse value, score of 13 on the building quality control index 40 Getting electricity Dealing with construction permits 6 procedures, 46 days, 27.9% of income per capita, 18 procedures, 115.2 days, 2.1% of warehouse value, 46 score of 8 on the reliability of supply score of 13 on the building quality control index and transparency of tariffs index Getting electricity 6 procedures, 69 days, 46.7% of income per capita, 80 score of 6 on the reliability of supply and transparency of tariffs index Source: Doing Business database. Note: The average ease of doing business rankings are based on the average performance of the four regulatory areas for the 16 locations benchmarked; the hypothetical rankings are based on the best performances recorded within the country. Those scores are used, along with Almaty city’s actual scores for six other regulatory areas measured by Doing Business (enforcing contracts, getting credit, protecting minority investors, paying taxes, trading across borders and resolving insolvency), to calculate the hypothetical best score for the overall ease of doing business and the corresponding global ranking. OVERVIEW 11 from within. Placed on a global map TABLE 1.3  Summary of reform recommendations to improve the ease of doing with the 190 economies Doing Business business in Kazakhstan benchmarks around the world, the What can be improved? Relevant institutions and stakeholders average location in Kazakhstan would rank number 32.10 However, if it were to Starting a business adopt all the best internal practices in Make the e-government portal more functional State corporation Government for Citizens the four regulatory areas benchmarked in the study, its position on the global Complete the phase-out of company seals in practice Department of Justice ranking would improve to 25—on par with Germany and ahead of Azerbaijan. Improve service delivery at Public Service Centers Government for Citizens Entrepreneurs in the city of Almaty would Develop performance indicators to monitor save 31.5 days for the four areas covered. State Revenue Committee implementation of reforms Dealing with construction permits Some regulatory changes are suggested Integrate electronic platforms and improve communication in the various chapters of this study Administration of Architecture and Town Planning between agencies involved in construction permitting (table 1.3). Improving the efficiency of Administration of State Architectural and Introduce mandatory insurance regimes for latent defects business regulations has been high on Construction Control (GASK) the agenda at the central level. But a Take the existing classification of risk categories for buildings Ministry of Investment and Development - top-down approach has some limits. a step further and introduce risk-based inspections Committee on Construction, Housing A new wave of regulatory reforms Clarify the role of GASK in construction supervision Government for Citizens would benefit from the input of local stakeholders; this in turn would increase Ministry of Investment and Development - Committee on Construction, Housing; Ministry the sense of ownership of regulatory Implement reforms fully, with ample dissemination of of National Economy; Government for Citizens; information to civil servants and the public reform at the local level and reduce gaps Administration of Architecture and Town Plan- ning; Utilities in implementation. Provide technical consultation services on construction Government for Citizens permitting to entrepreneurs at the Public Service Centers Increase ownership at the local level Ministry of Investment and Development - Committee on Construction, Housing; Kazakhstan has an impressive track record Increase efficiency by consolidating procedures Government for Citizens; Administration of of national reforms, but local policy makers Architecture and Town Planning; Utilities need to go beyond the national framework Getting electricity and address the different obstacles to Administration of State Architectural and Further streamline and enforce rules on excavation permits doing business at the regional level. They Construction Control (GASK) or its equivalent should be empowered to introduce practi- Streamline the approval process for project design Committee for Atomic and Energy Supervision and Control cal solutions that make service delivery at the point of contact with customers more Consider eliminating the requirement for the scheme of Distribution and other utility companies (water, connection route where applicable telephone and gas) efficient and inclusive. Streamline workflow and interaction between Electricity supplier distribution utilities and suppliers Good initiatives at the local level exist. Committee for Atomic and Energy Supervision Take Pavlodar, for example. Like Almaty Create more incentives to improve transparency and and Control and Regional Distribution Utility reliability of power supply across all locations city, Pavlodar created a comprehensive Companies platform to assist entrepreneurs and Registering property citizens alike, called Open Pavlodar. The Improve transparency and accountability in the land Government for Citizens governor announced further efforts to administration system provide potential investors in the region Strengthen the reliability of the land administration with a full range of services from 10 gov- infrastructure by continuing the digitization of titles Government for Citizens and cadastral maps ernment agencies. Inspired by examples from the Republic of South Korea, Japan Promote the Public Service Centers for property registration Government for Citizens and Georgia, the Pavlodar “Investor’s House” is scheduled to operate as a one- Expand geographic coverage Government for Citizens stop shop for potential investors by the Source: Doing Business database. end of 2019.11 Other regions could learn Note: For a detailed explanation of each recommendation, see the section “What can be improved?” in each corresponding chapter. from this initiative and adapt it locally. 12 DOING BUSINESS IN KAZAKHSTAN 2019 There are many ways in which the central Manage the pace of reforms public officials felt ill-prepared to explain government could incentivize local own- The pace of reforms aimed at improv- how to open a bank account through the ership and initiatives to improve business ing the efficiency and transparency of e-government platform. regulation. It could follow the example of business regulation must be managed the Asia-Pacific Economic Cooperation to avoid confusion for the implement- Improve staff retention and (APEC). Improving the region’s business ing agency as well as the customer. capacity to provide better regulatory environment has been a focus Full implementation of new regulations support to entrepreneurs of APEC, and member economies have implies proper dissemination campaigns Educating local stakeholders on appli- pledged to carry out regulatory reforms to explain how the new rules apply and cable regulations is challenging with both collectively and unilaterally.12 To how they replace the previous legal fast-paced reform. It becomes even help monitor and assess members’ prog- framework. Staff in the public agencies more complicated when the turnover in ress toward these commitments, APEC involved must be trained beforehand public agencies—especially at PSCs—is set measurable targets with specific to adequately answer questions from high. Staff retention rates are generally timelines. While these targets are set future users. If staff members them- low across the country, and the incen- at the regional level, APEC also encour- selves are struggling to keep up with tive of higher private sector salaries ages its members to draft plans for their rapid legislative changes and to explain leads to high attrition rates. To provide own economy that will aid in achieving what the new rules are, entrepreneurs entrepreneurs with better services, it APEC-wide targets. One set of targets may decide to comply with both the is essential to identify ways to make that APEC has chosen for this purpose is old and the new requirements to be on trained employees stay, such as by based on Doing Business indicators, and the safe side, defeating the purpose of offering them a clear and rewarding repeated benchmarking exercises are streamlining the regulation. career track. Recent plans to raise sala- conducted to measure progress toward ries in the public sector by 30% may the goals. For example, Kazakhstan passed a law mitigate the exodus of public officials.14 intending to get rid of a three-step APEC also encourages capacity-building process to obtain a technical passport Collect better statistics and activities among members in support for newly constructed buildings. Under make them widely available of its goals. It has selected “champion the new procedure, a single step at the Monitoring the implementation of economies” to provide capacity-building local PSC should now suffice, as the reforms and evaluating their impact assistance to other members. This act of acceptance and the approved will require good data at the central, approach has worked. The APEC’s Ease project design are used to enter tech- regional and city levels. Without access of Doing Business—Interim Assessment nical characteristics of the building to granular statistics, national and local 2015–2017 found that APEC’s combined into the State Database of Registered policy makers are not aware of or cannot progress in 2016 was largely exceeding Property. In practice, however, entre- explain bottlenecks in some areas. Yet the initial target.13 Some Kazakhstani preneurs continue to request—and the statistics on agency performance, service regions could become regulatory cham- administration continues to issue—a uptake and client demand remain mostly pions for the country, researching and technical passport, as this document incomplete, and local policy makers often piloting reforms in a given regulatory is still necessary for business purposes lack access to them. For instance, there is area. Sharing the same national legal and other than registering property rights. no data on the number of entrepreneurs regulatory framework would then make Consequently, entrepreneurs cur- who register new businesses on the it easier to replicate local good practices. rently comply with both the former e-government platform individually or and the current construction permit- through PSCs, or on those who solicit Other structures could be used as well ting regulation, which has added a the services of a lawyer. Similarly, there to frame peer-learning initiatives. Take new procedure and made the process are no statistics on the location of entre- the example of Malaysia, which cre- more cumbersome. preneurs who attempt to obtain a bank ated a high-powered task force called account and insurance online, preventing PEMUDAH to address bureaucracy. The It is commonly reported—especially in regional comparison and further analysis. role of the agency is to benchmark good less populous, more remote locations— practices to improve the ease of doing that there is a lack of consistent dissemi- Lack of awareness about the level of use business; enhance collaboration among nation and training workshops on new of the e-government platform, includ- public and private sector agencies to reforms. This particularly affects areas ing the speed of uptake of new services improve the country’s competitiveness; where reforms are moving at a fast pace, offered, prevents regional authorities from and monitor the implementation of the such as in starting a business. Following customizing local outreach campaigns reform initiatives across the country. recent changes in 2018, for example, and incentivizing entrepreneurs to use OVERVIEW 13 all the postregistration services available 8. Government for Citizens was created through the merger of four state-owned enterprises: online. For example, many public officials the Public Service Center of the Ministry of in regional offices assumed that entre- Investment and Development; the Real Estate preneurs were using the e-government Center of the Ministry of Justice; the Scientific and Production Center of the Land Cadastre portal to open a bank account and obtain under the Ministry of National Economy; and mandatory accident insurance for employ- the State Center of Pension Payments of the ees, but in reality entrepreneurs simply do Ministry of Health and Social Development. 9. The monthly calculation index (MCI) is a not use the system due to its technical value established by law to calculate social limitations. These difficulties were missed benefits as well as penalties, taxes and other by local policy makers, which prevented charges. It is determined annually during the budgeting process and is based on the local agencies from deploying measures to expected inflation rate for the next year. One solve issues and bring the e-government MCI was equivalent to KZT 2,405 ($7.42) in portal to its full potential. 2018 and to KZT 2,525 ($7.79) in 2019. 10. The average ease of doing business score for all locations is 77.46, slightly below the city of Almaty, which represents Kazakhstan in the NOTES global study, ranking 28 with a score of 77.89. 11. The Astana Times. March 1, 2019. “Pavlodar to open Investor’s House to boost regional 1. OECD. 2018. Reforming Kazakhstan: Progress, economy.” Available at: https:/ /astanatimes Challenges and Opportunities. Paris: OECD .com/2019/03/pavlodar-to-open-investors Publishing. -house-to-boost-regional-economy/. 2. World Bank. 2019. “Kazakhstan: Reversing 12. World Bank. 2012. Doing Business 2013: Productivity Stagnation.” Country Economic Smarter Regulations for Small and Medium-size Memorandum. Washington, DC: World Bank. Enterprises. Washington, DC: World Bank 3. OECD. 2018. SME and Entrepreneurship Group. Policy in Kazakhstan 2018: OECD Studies on 13. APEC Secretariat, APEC Policy Support Unit. SMEs and Entrepreneurship. Paris: OECD 2018. APEC’s Ease of Doing Business—Interim Publishing. Available at https:/ /doi Assessment 2015-2017 (publication number: .org/10.1787/9789264301450-en. APEC#218-SE-01.11). Although SME density is high, with more 14. Kazpravda. February 27, 2019. “Nazarbayev than 10 SMEs per 100 working-age adults tasked to raise public sector wages by 30%” (surpassed only by the Czech Republic among (https:/ /kazpravda.kz/en/news/president the OECD countries), evidence suggests that /nazarbayev-tasked-to-raise-public-sector only 25% of Kazakhstan’s gross value added -wages-by-30); Kazinform International News comes from SMEs, which is lower than in any Agency. February 27, 2019. “Wages of low- OECD economy. paid public sector employees to be raised by 4. OECD. 2018. SME and Entrepreneurship Policy 30%—Nazarbayev” (https:/ /www.inform in Kazakhstan 2018: OECD Studies on SMEs and .kz/en/wages-of-low-paid-public-sector Entrepreneurship. Paris: OECD Publishing. -employees-to-be-raised-by-30-nazarbayev 5. Enterprise Survey database (http:/ / _a3502525). www.enterprisesurveys.org/data /exploreeconomies/2013/kazakhstan), World Bank. 6. The reliability of supply and transparency of tariffs index encompasses quantitative data on the duration and frequency of power outages as well as qualitative information on the mechanisms put in place by the utility for monitoring power outages and restoring power supply, the reporting relationship between the utility and the regulator for power outages, the transparency and accessibility of tariffs, and lastly, whether the utility faces a financial deterrent aimed at limiting outages (such as a requirement to compensate customers or pay fines when outages exceed a certain cap). More information on the methodology is provided in “About Doing Business and Doing Business in Kazakhstan 2019.” 7. Progress between 2016 and 2018 can be measured only for the eight locations that were included in the Doing Business in Kazakhstan 2017 report. No baseline is available for the eight locations that are benchmarked for the first time in Doing Business in Kazakhstan 2019. AT A G L ANCE Doing Business in Kazakhstan 2019 The second subnational report of the Doing Business in Kazakhstan series Doing Business in Kazakhstan 2019 This report contains data current as Doing Business measures aspects focuses on business regulations and of December 15, 2018 and includes of regulation that enable or hinder their enforcement across four Doing comparisons with other economies entrepreneurs in starting, operating or Business areas. It goes beyond Almaty based on data from Doing Business 2019: expanding a business—and provides City to benchmark the cities of Training for Reform. recommendations and good practices Nur-Sultan and Shymkent, as well for improving the business environment. as thirteen other Kazakhstani regions across four regulatory areas. Four Doing Business indicator sets covering areas of national and local jurisdiction or practice Starting a business Registering property Records the procedures, time, cost and Records the procedures, time and cost required to paid-in minimum capital required for a transfer a property title from one domestic firm small or medium-size domestic limited to another so that the buyer can use the property liability company to formally operate. to expand its business, use it as collateral or, if necessary, sell it; assesses the quality of the land administration system. Dealing with construction permits Getting electricity Records the procedures, time and cost required Records the procedures, time and cost required for a small or medium-size domestic business to or a business to obtain a permanent commercial obtain the approvals needed to build a commercial electricity connection for a standardized warehouse; warehouse and connect it to water and sewerage; assesses the reliability of the electricity supply and assesses the quality control and safety mechanisms the transparency of tariffs. in the construction permitting system. 16 locations Akmola (Kokshetau), Aktobe, Atyrau, Almaty (Taldykorgan), East Kazakhstan (Oskemen), Karagandy, Kostanay, Kyzylorda, Mangystau (Aktau), North Kazakhstan (Petropavl), Pavlodar, West Kazakhstan (Oral), Zhambyl (Taraz), the city of Almaty, the city of Nur-Sultan and the city of Shymkent. Advantages and limitations of the Doing Business methodology Focus on the law and practice Reliance on expert respondents Doing Business does not cover: Makes the indicators “actionable” Reflects knowledge of those with ✘ Security because the law is what policy most experience. ✘ Market size makers can change. ✘ Macroeconomic stability Focus on domestic and formal sector ✘ State of the financial system Use of standardized case scenarios Keeps attention on the formal sector, ✘ Prevalence of bribery and corruption Enables comparability across where firms are most productive, but ✘L evel of training and skills of the locations but reduces the scope of does not reflect the informal sector or labor force the data. foreign firms. This project was requested by the Ministry of National Economy of the Republic of Kazakhstan and implemented by the Global Indicators Group (Development Economics) of the World Bank Group. ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 15 About Doing Business and Doing Business in Kazakhstan 2019 MAIN FINDINGS ƒƒ Doing Business measures aspects of business regulation affecting small and medium-size domestic firms defined based on standardized case scenarios and located in the largest business city of 190 economies. In addition, for 11 economies a second city is covered. ƒƒ Doing Business covers 11 areas of business regulation. Ten of these areas—starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency—are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. ƒƒ Doing Business in Kazakhstan 2019 covers four of these areas: starting a business, dealing with construction permits, getting electricity and registering property. ƒƒ Doing Business and Doing Business in Kazakhstan 2019 rely on four main sources of information: relevant laws and regulations, expert respondents, government authorities (national and local) and World Bank Group specialists. ƒƒ Doing Business data are widely used by governments, researchers, international organizations and think tanks to guide policies, conduct research and develop new indexes. ƒƒ There are no methodological changes in Doing Business 2019 data. 16 DOING BUSINESS IN KAZAKHSTAN 2019 Doing Business is founded on the enforcing contracts and resolving beyond the largest business city of an principle that economic activity benefits insolvency. Doing Business also measures economy. They measure variation in from clear and coherent rules: rules that features of labor market regulation. regulations or in the implementation set out strong property rights, facilitate Although Doing Business does not of national laws across locations the resolution of disputes and provide present rankings of economies on the within an economy (as in Kazakhstan) ontractual partners with protections labor market regulation indicators or or a region (as in the European Union). against arbitrariness and abuse. Such include the topic in the aggregate ease Projects are undertaken at the request rules are much more effective in of doing business score or ranking on the of governments. promoting growth and development ease of doing business, it does present when they are efficient, transparent and the data for these indicators. Subnational Data collected by subnational stud- accessible to those for whom they are Doing Business studies cover a subset ies show that there can be substantial intended. The strength and inclusivity of the 11 areas of business regulation variation within an economy (figure 2.1). of the rules also have a crucial bearing that Doing Business covers across 190 In Mexico in 2016, for example, register- on how societies distribute the benefits economies (table 2.1). These studies ing a property transfer took as few as 9 and finance the costs of development focus on indicators that are most likely days in the state of Puebla and as many strategies and policies. to vary from city to city, such as those as 78 in Oaxaca. Indeed, within the same on dealing with construction permits or economy one can find locations that Good rules create an environment where registering property. Indicators that use a perform as well as economies ranking new entrants with drive and innovative legal scoring methodology, such as those in the top 20 on the ease of registering ideas can get started in business and on getting credit or protecting minority property and locations that perform where productive firms can invest, investors, are typically excluded because as poorly as economies ranking in the expand and create new jobs. The role of they mostly look at national laws with bottom 40 on that indicator. government policy in the daily operations general applicability. of small and medium-size domestic firms The subnational Doing Business studies is a central focus of the Doing Business The subnational Doing Business stud- produce disaggregated data on business data. The objective is to encourage ies expand the Doing Business analysis regulation. But they go beyond a data regulation that is efficient, transparent and easy to implement so that businesses TABLE 2.1 What Doing Business and subnational Doing Business studies can thrive and promote economic and measure—11 areas of business regulation social progress. Doing Business data focus Indicator set What is measured on the 11 areas of regulation affecting small and medium-size domestic firms in Included in subnational Doing Business reports the largest business city of an economy. Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company The project uses standardized case studies to provide objective, quantitative Dealing with construction permits Procedures, time and cost to complete all formalities to build a commercial warehouse and the quality control and safety measures that can be compared across mechanisms in the construction permitting system 190 economies. Getting electricity Procedures, time and cost to get connected to the electrical grid, the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of FACTORS MEASURED BY the land administration system DOING BUSINESS AND Trading across borders Time and cost to export the product of comparative advantage and import auto parts SUBNATIONAL DOING Enforcing contracts Time and cost to resolve a commercial dispute and the quality of BUSINESS STUDIES judicial processes Not typically included in subnational Doing Business reports Doing Business captures several important dimensions of the regulatory environ- Getting credit Movable collateral laws and credit information systems ment as it applies to local firms. It Protecting minority investors Minority shareholders’ rights in related-party transactions and in provides quantitative indicators on corporate governance regulation for starting a business, dealing Paying taxes Payments, time and total tax rate for a firm to comply with all tax with construction permits, getting regulations as well as postfiling processes electricity, registering property, getting Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency credit, protecting minority investors, and the strength of the legal framework for insolvency paying taxes, trading across borders, Labor market regulation Flexibility in employment regulation and aspects of job quality ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 17 FIGURE 2.1  Different locations, different regulatory processes, same economy Time to register property (days) 80 Oaxaca (78) Isiolo (73) 60 58 Wroclaw (51) Mangaung (52) Mombasa (41) 40 33 32 26 Johannesburg Melilla (26) Bialystok (23) 20 (18) 17 Madrid Puebla (12.5) (9) 0 Kenya Mexico Poland South Africa Spain Least time Most time Average time Source: Subnational Doing Business database. Note: The average time shown for each economy is based on all locations covered by the data: 11 cities in Kenya in 2016, 32 states in Mexico in 2016, 18 cities in Poland in 2015, 9 cities in South Africa in 2015 and 19 cities in Spain in 2015. collection exercise. They have proved Since 2005 subnational reports have How the indicators are selected to be strong motivators for regulatory covered 529 locations in 77 economies, The design of the Doing Business reform at the local level: including Colombia, the Arab Republic indicators has been informed by of Egypt, Italy, the Philippines and theoretical insights gleaned from ƒƒ The data produced are comparable Serbia (figure 2.2). Seventeen econo- extensive research and the literature across locations within the economy mies—including Colombia, Indonesia, on the role of institutions in enabling and internationally, enabling loca- Kenya, Mexico, Nigeria, the Philippines, economic development.1 In addition, tions to benchmark their results both the Russian Federation, and South the background papers developing the locally and globally. Comparisons of Africa—have undertaken two or more methodology for each of the Doing locations within the same economy rounds of subnational data collection to Business indicator sets have established that share the same legal and regu- measure progress over time. Recently the importance of the rules and regula- latory framework can be revealing: subnational studies were completed in tions that Doing Business focuses on local officials find it hard to explain Afghanistan, Colombia, the European for such economic outcomes as trade why Doing Business is more dif- Union (Bulgaria, Hungary and Romania volumes, foreign direct investment ficult in their jurisdiction than in a in one report and Croatia, the Czech (FDI), market capitalization in stock neighboring one. Republic, Portugal and Slovakia in exchanges and private credit as a another) and Mozambique. Ongoing percentage of GDP.2 ƒƒ Pointing out good practices that studies include those in the European exist in some locations but not oth- Union (Greece, Ireland and Italy), Peru, The choice of the 11 sets of Doing ers within an economy helps policy and Malaysia. Business indicators has also been makers recognize the potential for guided by economic research and firm- replicating these good practices. This Doing Business in Kazakhstan 2019 is the level data, specifically data from the can prompt discussions of regulatory second subnational Doing Business study World Bank Enterprise Surveys.3 These reform across different levels of for Kazakhstan. It benchmarks business surveys provide data highlighting the government, providing opportuni- regulations and their enforcement in main obstacles to business activity as ties for local governments and sixteen locations across four regulatory reported by entrepreneurs in more than agencies to learn from one another areas (starting a business, dealing with 136,880 companies in 139 economies. and resulting in local ownership and construction permits, getting electricity Access to finance and access to elec- capacity building. and registering property). tricity, for example, are among the 18 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 2.2  Comparing regulation at the local level: subnational Doing Business studies 84 cities 83 cities in OECD in Europe and Central Asia high-income economies 30 cities in the Middle East and North Africa 46 cities 76 cities in South Asia in East Asia and the Pacific 82 cities 109 cities in Sub-Saharan Africa in Latin America and the Caribbean IBRD 43044 | AUGUST 2018 This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations and any other ECONOMIES WITH ONE SUBNATIONAL OR REGIONAL STUDY information shown on this map do not imply, on the part of the World Bank ECONOMIES WITH MORE THAN ONE SUBNATIONAL OR REGIONAL STUDY Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Source: Subnational Doing Business database. factors identified by the surveys as no regulation—but those where govern- ranking compares economies with one important to businesses—inspiring the ments have managed to create rules that another; the ease of doing business score design of the Doing Business indicators facilitate interactions in the marketplace benchmarks economies with respect to on getting credit and getting electricity. without needlessly hindering the develop- regulatory best practice, showing the ment of the private sector. absolute distance to the best regula- Some Doing Business indicators give a tory performance on each Doing Business higher score for more regulation and The four Doing Business indicator sets indicator. When compared across years, better-functioning institutions (such included in this study—starting a busi- the ease of doing business score shows as courts). For example, in the area of ness, dealing with construction permits, how much the regulatory environment protecting minority investors higher getting electricity and registering property for local entrepreneurs in an economy scores are given for stricter disclosure —were selected in collaboration with the has changed over time in absolute terms, requirements for related-party transac- Ministry of National Economy. They are while the ease of doing business ranking tions. Higher scores are also given for a based on their relevance for the country’s can show only how much the regulatory simplified way of applying regulation that development and their ability to show environment has changed relative to that keeps compliance costs for firms low— variation across the locations covered. in ther economies. such as by easing the burden of business start-up formalities with a one-stop shop Ease of doing business score or through a single online portal. Finally, EASE OF DOING BUSINESS The ease of doing business score cap- Doing Business scores reward economies SCORE AND EASE OF DOING tures the gap between an economy’s that apply a risk-based approach to BUSINESS RANKING performance and a measure of best regulation as a way to address social practice across the entire sample of 41 and environmental concerns—such as The Doing Business report presents indicators for 10 Doing Business topics by imposing a greater regulatory bur- results for two aggregate measures: the (the labor market regulation indicators den on activities that pose a high risk ease of doing business score (formerly are excluded). For starting a business, to the population and a lesser one on called the distance to frontier score) for example, New Zealand and Georgia lower-risk activities. Thus the economies and the ease of doing business ranking, have the lowest number of procedures that rank highest on the ease of doing which is based on the ease of doing busi- required (1). New Zealand also holds business are not those where there is ness score. The ease of doing business the shortest time to start a business ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 19 (0.5 days), while Slovenia has the lowest the best regulatory performance on the performance if the economy reforms cost (0.0). Australia, Colombia and 115 indicator across all economies since after the best regulatory performance other economies have no paid-in mini- 2005 or the third year in which data is set. For example, the best regulatory mum capital requirement (table 2.2). for the indicator were collected. Both performance for the time to get elec- the best regulatory performance and tricity is set at 18 days. In the Republic Calculation of the ease of doing the worst regulatory performance are of Korea it now takes 13 days to get business score established every five years based on electricity while in the United Arab Calculating the ease of doing business the Doing Business data for the year in Emirates it takes just 10 days. Although score for each economy involves two which they are established and remain the two economies have different main steps. In the first step individual at that level for the five years regard- times, both economies score 100 on component indicators are normalized less of any changes in data in interim the time to get electricity because they to a common unit where each of the 41 years. Thus an economy may establish have exceeded the threshold of 18 days. component indicators y (except for the the best regulatory performance for total tax and contribution rate) is res- an indicator even though it may not For scores such as those on the strength caled using the linear transformation have the highest score in a subsequent of legal rights index or the quality of land (worst − y)/(worst − best). In this for- year. Conversely, an economy may administration index, the best regula- mulation the highest score represents score higher than the best regulatory tory performance is set at the highest TABLE 2.2 Which economies set the best regulatory performance? Economy setting the best regulatory Best regulatory Worst regulatory Topic and indicator performance performance performance Starting a business Procedures (number) New Zealand 1 18a Time (days) New Zealand 0.5 100b Cost (% of income per capita) Slovenia 0.0 200.0b Minimum capital (% of income per capita) Australia; Colombia c 0.0 400.0b Dealing with construction permits Procedures (number) No economy was a best performer as of May 5 30a 1, 2018. Time (days) No economy was a best performer as of May 26 373b 1, 2018. Cost (% of warehouse value) No economy was a best performer as of May 0.0 20.0b 1, 2018. Building quality control index (0–15) Luxembourg; New Zealand; United Arab 15 0d Emirates Getting electricity Procedures (number) Germany; Republic of Korea 3 9a Time (days) Republic of Korea; St. Kitts and Nevis; United 18 248b Arab Emirates Cost (% of income per capita) Japan 0.0 8,100.0b Reliability of supply and transparency of tariffs index (0–8) Belgium; Ireland; Malaysia 8 0d Registering property Procedures (number) Georgia; Norway; Portugal; Sweden 1 13a Time (days) Georgia; New Zealand; Portugal 1 210b Cost (% of property value) Saudi Arabia 0.0 15.0b Quality of land administration index (0–30) No economy has reached the best 30 0d performance yet. Source: Doing Business database. a. Worst performance is defined as the 99th percentile among all economies in the Doing Business sample. b. Worst performance is defined as the 95th percentile among all economies in the Doing Business sample. c. Another 115 economies also have a paid-in minimum capital requirement of 0.0. d. Worst performance is the worst value recorded. 20 DOING BUSINESS IN KAZAKHSTAN 2019 possible value (although no economy FIGURE 2.3  How are scores calculated for indicators? has yet reached that value in the case of the latter). For the total tax and contribu- A time-and-motion topic: getting electricity tion rate, consistent with the use of a Getting electricity threshold in calculating the rankings on score for procedures 100 Best regulatory performance this indicator, the best regulatory per- formance is defined as the total tax and Best regulatory performance contribution rate at the 15th percentile 3 procedures 80 of the overall distribution for all years included in the analysis up to and including Doing Business 2015. For the time to pay 60 taxes, the best regulatory performance is defined as the lowest time recorded among all economies that levy the three 40 major taxes: profit tax, labor taxes and Worst mandatory contributions, and value regulatory added tax (VAT) or sales tax. For the 20 performance (99th percentile): different times to trade across borders, the 9 procedures best regulatory performance is defined as 1 hour even though in many economies 0 0 1 2 3 4 5 6 7 8 9 10 the time is less than that. In the same Procedures (number) formulation, to mitigate the effects of extreme outliers in the distributions of Source: Doing Business database. the rescaled data for most component indicators (very few economies need 700 days to complete the procedures to construction permits, getting electricity, between its score and the best regulatory start a business, but many need 9 days), registering property, getting credit, performance over time. In any given year the worst performance is calculated after protecting minority investors, paying the score measures how far an economy the removal of outliers. The definition of taxes, trading across borders, enforcing is from the best regulatory performance outliers is based on the distribution for contracts and resolving insolvency. More at that time. each component indicator. To simplify complex aggregation methods—such as the process two rules were defined: the principal components and unobserved Ease of doing business ranking 95th percentile is used for the indicators components—yield a ranking nearly The ease of doing business ranking ranges with the most dispersed distributions identical to the simple average used from 1 to 190. The ranking of economies (including minimum capital, number of by Doing Business.4 Thus Doing Business is determined by sorting the aggregate payments to pay taxes, and the time and uses the simplest method: weighting all ease of doing business scores, rounded cost indicators), and the 99th percentile topics equally and, within each topic, to two decimals. is used for number of procedures. No giving equal weight to each of the outlier is removed for component indica- topic components.5 tors bound by definition or construction, FACTORS NOT MEASURED including legal index scores (such as An economy’s score is indicated on a BY DOING BUSINESS AND the depth of credit information index, scale from 0 to 100, where 0 represents SUBNATIONAL DOING extent of disclosure index and strength of the worst regulatory performance and BUSINESS STUDIES insolvency framework index) and the 100 the best regulatory performance. recovery rate (figure 2.3). All score calculations are based on a Many important policy areas are not maximum of five decimals. However, covered by Doing Business; even within In the second step for calculating the topic ranking calculations and the ease the areas it covers its scope is narrow ease of doing business score, the scores of doing business ranking calculations (table 2.3). Doing Business does not obtained for individual indicators for are based on two decimals. The differ- measure the full range of factors, policies each economy are aggregated through ence between an economy’s score in and institutions that affect the quality simple averaging into one score, first any previous year and its score in Doing of an economy’s business environment for each topic and then across all 10 Business 2019 illustrates the extent to or its national competitiveness. It does topics: starting a business, dealing with which the economy has closed the gap not, for example, capture aspects of ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 21 TABLE 2.3 What Doing Business does the indicators do not measure—nor are study—in the largest business city of the not cover they intended to measure—the benefits economy. The reality is that business reg- of the social and economic programs ulations and their enforcement may differ Macroeconomic stability funded with tax revenues. Measuring within a country, particularly in federal Development of the financial system the quality and efficiency of business states and large economies. But gathering Quality of the labor force regulation provides only one input into data for every relevant jurisdiction in Incidence of bribery and corruption the debate on the regulatory burden each of the 190 economies covered by Market size associated with achieving regulatory Doing Business is not feasible. Beginning Lack of security objectives, which can differ across econ- in 2014, Doing Business extended its omies. Doing Business provides a starting global coverage to include the second point for this discussion and should largest business city in economies with macroeconomic stability, development be used in conjunction with additional a population of more than 100 million of the financial system, market size, the data sources. Other World Bank Group as of 2013. To complement the global incidence of bribery and corruption or the databases that provide comprehensive assessment, subnational Doing Business quality of the labor force. data related to some areas of Doing studies generate data at the local Business include: Women, Business and level, beyond the largest business city—a The focus is deliberately narrow the Law, which measures legal restric- potentially useful tool for policy makers. even within the relatively small set of tions on women’s economic opportuni- indicators included in Doing Business. The ties in 189 economies; the Logistic Doing Business recognizes the limitations time and cost required for the logistical Performance Index, which benchmarks of the standardized case scenarios and process of exporting and importing the performance of trade logistics in assumptions. But while such assumptions goods is captured in the trading across 160 economies; the World Governance come at the expense of generality, they borders indicators, for example, but they Indicators, which provides data on also help to ensure the comparability do not measure the cost of tariffs or of different dimensions of governance of data. Some Doing Business topics are international transport. Doing Business in 214 economies; and Country Policy complex, and so it is important that the provides a narrow perspective on the and Institutional Assessments, which standardized cases are defined care- infrastructure challenges that firms face, measure the quality of policies and fully. For example, the standardized case particularly in the developing world, institutions in International Development scenario usually involves a limited liability through these indicators. It does not Association (IDA) economies.6 company or its legal equivalent. There are address the extent to which inadequate two reasons for this assumption. First, roads, rail, ports and communications private, limited liability companies are may add to firms’ costs and undermine ADVANTAGES AND the most prevalent business form (for competitiveness (except to the extent LIMITATIONS OF THE firms with more than one owner) in many that the trading across borders indicators METHODOLOGY economies around the world. Second, indirectly measure the quality of ports this choice reflects the focus of Doing and border connections). Similar to the The Doing Business methodology is Business on expanding opportunities indicators on trading across borders, designed to be an easily replicable way for entrepreneurship: investors are all aspects of commercial legislation to benchmark specific characteristics encouraged to venture into business are not covered by those on starting a of business regulation—how they are when potential losses are limited to their business or protecting minority investors. implemented by governments and capital participation. Given that Doing Business measures experienced by private firms on the only a few features of each area that ground. Its advantages and limitations Another assumption underlying the it covers, business regulatory reforms should be understood when using the Doing Business indicators is that entre- should not focus only on these narrow data (table 2.4). preneurs have knowledge of and comply areas and should be evaluated within a with applicable regulations. In practice, broader perspective. Ensuring comparability of the data across entrepreneurs may not be aware of what a global set of economies is a central needs to be done or how to comply with Doing Business does not attempt to quan- consideration for the Doing Business regulations and may lose considerable tify all costs and benefits of a particular indicators, which are developed around time trying to find out. Alternatively, they law or regulation to society as a whole. standardized case scenarios with specific may intentionally avoid compliance—by The paying taxes indicators measure the assumptions. One such assumption is not registering for social security, for total tax and contribution rate, which, in the location of a standardized business— example. Firms may opt for bribery and isolation, is a cost to businesses. However, the subject of the Doing Business case other informal arrangements intended 22 DOING BUSINESS IN KAZAKHSTAN 2019 TABLE 2.4 Advantages and limitations of the Doing Business methodology local authorities in each of the locations measured to discuss the preliminary data Feature Advantages Limitations and gather their feedback (figure 2.4). Use of standardized case Makes data comparable across Reduces scope of data; only scenarios economies and methodology regulatory reforms in areas transparent measured can be systematically Relevant laws and regulations tracked Indicators presented in Doing Business Focus on largest business citya Makes data collection Reduces representativeness of in Kazakhstan 2019 are based mostly on manageable (cost-effective) and data for an economy if there are data comparable significant differences across laws and regulations. Besides participat- locations ing in interviews or filling out written Focus on domestic and formal Keeps attention on formal Unable to reflect reality for questionnaires, expert respondents sector sector—where regulations are informal sector­—important where provided references to the relevant relevant and firms are most that is large—or for foreign firms productive facing a different set of constraints laws, regulations and fee schedules, Reliance on expert respondents Ensures that data reflect Indicators less able to capture which were collected and analyzed by knowledge of those with most variation in experience among the Subnational Doing Business team. experience in conducting types of entrepreneurs transactions measured The Doing Business indicators are based Focus on the law Makes indicators “actionable”— Where systematic compliance because the law is what policy with the law is lacking, regulatory mostly on laws and regulations: approxi- makers can change changes will not achieve full mately two-thirds of the data embedded results desired in the Doing Business indicators are Source: Doing Business database. a. In economies with a population of more than 100 million as of 2013, Doing Business covers business regulation in based on a reading of the law. In addi- both the largest and the second largest business city. Subnational Doing Business studies go beyond the largest business tion to filling out questionnaires, Doing city within a country or region. Business respondents submit references to the relevant laws, regulations and fee to bypass the rules where regulation is requirements as well as their imple- schedules. The Doing Business team particularly onerous—an aspect that mentation in practice as experienced collects the texts of the relevant laws and helps explain differences between the by private firms. The report covers 190 regulations and checks the questionnaire de jure data provided by Doing Business economies—including some of the small- responses for accuracy. The team will and the de facto insights offered by the est and poorest economies, for which examine the civil procedure code, for World Bank Enterprise Surveys.7 Levels of little or no data are available from other example, to check the maximum number informality tend to be higher in econo- sources. The data are collected through of adjournments in a commercial court mies with particularly burdensome several rounds of communication with dispute, and read the insolvency code to regulation. Compared with their formal expert respondents (both private sector identify if the debtor can initiate liquidation sector counterparts, firms in the informal practitioners and government officials), or reorganization proceedings. These and sector typically grow more slowly, have through responses to questionnaires, other types of laws are available on the poorer access to credit and employ conference calls, written correspondence Doing Business law library website.9 Since fewer workers—and these workers and visits by the team. Doing Business the data collection process involves an remain outside the protections of labor relies on four main sources of informa- annual update of an established database, law and, more generally, other legal tion: the relevant laws and regulations, having a very large sample of respondents protections embedded in the law.8 Firms Doing Business respondents, the govern- is not strictly necessary. In principle, the in the informal sector are also less likely ments of the economies covered and the role of the contributors is largely advisory— to pay taxes. Doing Business measures World Bank Group regional staff. For a helping the Doing Business team to locate one set of factors that help explain the detailed explanation of the Doing Business and understand the laws and regulations. occurrence of informality and give policy methodology, see the data notes at There are quickly diminishing returns makers insights into potential areas of http://www.doingbusiness.org. to an expanded pool of contributors. regulatory reform. This notwithstanding, the number of Subnational Doing Business follows similar contributors rose by 70% between 2010 data collection methods. However, sub- and 2018. DATA COLLECTION IN national Doing Business studies are driven PRACTICE by client demand and do not follow the Extensive consultations with multiple same timeline as global Doing Business contributors are conducted by the team The Doing Business data are based publications. They incorporate a “right of to minimize measurement errors for on a detailed reading of domestic reply” period, which consists of a series the rest of the data. For some indicators laws, regulations and administrative of consultative working meetings with —for example, those on dealing with ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 23 FIGURE 2.4  Typical stages of a Subnational Doing Business project Stage 1 Stage 2 Stage 3 Stage 4 Client inquiry Project setup and Project kickoff Data collection and request engagement with and preparation of local partners preliminary results Stage 6 Stage 6 Stage 5 Launch of Data verification, Presentation of final results construction of preliminary results final indicators and to public officials report drafting (”right of reply”) construction permits, enforcing contracts regulatory arrangements, most of the out 10 such transactions each month. The and resolving insolvency—the time respondents are legal professionals such incorporation lawyers and other experts component and part of the cost component as lawyers or conveyancers. Architects, providing information to Doing Business (where fee schedules are lacking) are engineers, electrical engineers and other are therefore better able to assess the based on actual practice rather than professionals answered the question- process of starting a business than are the law on the books. This introduces a naires related to dealing with construction individual firms. They also have access to degree of judgment by respondents on permits and getting electricity. current regulations and practices, while a what actual practice looks like. When firm may have faced a different set of rules respondents disagree, the time indicators The Doing Business approach is to work when incorporating years before. The reported by Doing Business represent the with legal practitioners or other profes- second reason is that the Doing Business median values of several responses given sionals who regularly undertake the questionnaires mostly gather legal infor- under the assumptions of the standard- transactions involved. Following the mation, which firms are unlikely to be fully ized case. standard methodological approach for familiar with. For example, few firms will time-and-motion studies, Doing Business know about all the main legal procedures Expert respondents in Kazakhstan 2019 breaks down each involved in resolving a commercial dispute For Doing Business in Kazakhstan 2019 process or transaction, such as starting through the courts, even if they have gone more than 400 professionals across all a business or registering a building, into through the process themselves. But a locations assisted in providing the data separate steps to ensure a better estimate litigation lawyer should have little difficulty that inform the four areas covered. The of time. The time estimate for each step in providing the requested information on Subnational Doing Business website and was given by practitioners with significant all the procedures. the acknowledgments section of this and routine experience in the transaction. report list the names and credentials of Governments and World Bank those respondents who wished to be There are two main reasons that Doing Group staff acknowledged. Selected on the basis Business does not survey firms. The first After analyzing laws and regulations of their expertise, respondents are relates to the frequency with which firms and conducting follow-up interviews professionals who routinely administer engage in the transactions captured by with respondents for Doing Business in or advise on the legal and regulatory the indicators, which is generally low. Kazakhstan 2019, the Subnational Doing requirements in the specific areas For example, a firm goes through the Business team shared the preliminary covered by Doing Business in Kazakhstan start-up process once in its existence, findings with the relevant government 2019. Because of the focus on legal and while an incorporation lawyer may carry and public authorities in each location. 24 DOING BUSINESS IN KAZAKHSTAN 2019 Through this process, government regulatory reform is needed, including suggest that doing so should come at the officials have the opportunity to provide areas well beyond those measured by expense of other worthy policy goals. their feedback on the preliminary data, Doing Business. give updates on their new and ongoing Over the past decade governments have regulatory reform initiatives, and share Many Doing Business indicators can be increasingly turned to Doing Business their reform experiences and stories. considered “actionable.” For example, as a repository of actionable, objec- Over time, these right of reply meetings governments can set the minimum tive data providing unique insights into have become an essential milestone of capital requirement for new firms, invest good practices worldwide as they have subnational Doing Business projects to in company and property registries to come to understand the importance of enhance the quality of the studies and increase their efficiency, or improve the business regulation as a driving force of motivate local governments to have great- efficiency of tax administration by adopt- competitiveness. To ensure the coordina- er ownership of the reform process. The ing the latest technology to facilitate the tion of efforts across agencies, economies final data are analyzed and incorporated preparation, filing and payment of taxes such as Colombia, Malaysia and the into a comprehensive written report, by the business community. And they Russian Federation have formed regulatory which is shared and peer-reviewed by can undertake court reforms to shorten reform committees. These committees World Bank Group specialists. delays in the enforcement of contracts. use the Doing Business indicators as one But some Doing Business indicators input to inform their programs for improv- capture procedures, time and costs that ing the business environment. More than USES OF THE DOING involve private sector participants, such 70 other economies have also formed BUSINESS DATA as lawyers, notaries, architects, electri- such committees. In East Asia and the cians or freight forwarders. Governments Pacific, they include Brunei Darussalam; Doing Business was designed with two may have little influence in the short Indonesia; the Republic of Korea; main types of users in mind: policy run over the fees these professions Myanmar; the Philippines; Sri Lanka; makers and researchers. It is a tool charge, though much can be achieved Taiwan, China; and Thailand. In the Middle that governments can use to design by strengthening professional licensing East and North Africa: Algeria, the Arab sound business regulatory policies. regimes and preventing anticompetitive Republic of Egypt, Israel, Kuwait, Morocco, Nevertheless, the Doing Business data behavior. And governments have no Qatar, Saudi Arabia and the United Arab are limited in scope and should be control over the geographic location of Emirates. In South Asia: Afghanistan, complemented with other sources of their economy, a factor that can adversely Bangladesh, India and Pakistan. In Europe information. Doing Business focuses on a affect businesses. and Central Asia: Albania, Azerbaijan, few specific rules relevant to the specific Croatia, Georgia, Kazakhstan, Kosovo, case studies analyzed. These rules and While many Doing Business indicators the Kyrgyz Republic, the Republic of case studies are chosen to be illustrative are actionable, this does not necessarily North Macedonia, Moldova, Montenegro, of the business regulatory environment, mean that they are all “action-worthy” in Poland, Tajikistan, Turkey, Ukraine and but they are not a comprehensive a particular context. Business regulatory Uzbekistan. In Sub-Saharan Africa: Benin, description of that environment. By reforms are only one element of a strategy Burundi, the Comoros, the Democratic providing a unique data set that enables aimed at improving competitiveness Republic of Congo, the Republic of Congo, analysis aimed at better understanding and establishing a solid foundation for Côte d’Ivoire, Guinea, Guinea-Bissau, the role of business regulation in sustainable economic growth. There are Kenya, Liberia, Madagascar, Malawi, economic development, Doing Business is many other important goals to pursue Mali, Mauritius, Niger, Nigeria, Rwanda, also an important source of information —such as effective management of Senegal, Sierra Leone, Sudan, Tanzania, for researchers. public finances, adequate attention to Togo, Zambia and Zimbabwe. And in Latin education and training, adoption of the America and the Caribbean: Argentina, Governments and policy makers latest technologies to boost economic Brazil, Chile, Costa Rica, the Dominican Doing Business offers policy makers a productivity and the quality of public Republic, Guatemala, Jamaica, Mexico, benchmarking tool useful in stimulating services, and appropriate regard for air Nicaragua, Panama, Peru and St. Lucia. policy debate, both by exposing poten- and water quality to safeguard public Governments have reported more than tial challenges and by identifying good health. Governments must decide what 3,500 regulatory reforms, 1,116 of which practices and lessons learned. Despite the set of priorities best suits their needs. To have been informed by Doing Business narrow focus of the indicators, the initial say that governments should work toward since 2003.10 debate in an economy on the results they a sensible set of rules for private sector highlight typically turns into a deeper activity (as embodied, for example, in Many economies share knowledge on discussion on areas where business the Doing Business indicators) does not the regulatory reform process related to ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 25 the areas measured by Doing Business. Efficient and non-distortionary business economies with flexible entry regulations, Among the most common venues for regulations are crucial for productivity. A a 1% increase in trade is associated with this knowledge sharing are peer-to-peer study on India, for example, shows that an increase of more than 0.5% in income learning events—workshops where offi- inefficient licensing and size restrictions per capita but has no positive income cials from different governments across cause a misallocation of resources, effects in economies with more rigid reg- a region or even across the globe meet reducing total factor productivity (TFP) ulation.24 Research has also shown that to discuss the challenges of regulatory by preventing efficient firms from potential gains for consumers from import reform and to share their experiences. achieving their optimal scale and allowing competition are reduced in economies inefficient firms to remain in the market.16 with cumbersome regulation.25 Researchers The study concludes that removing these Doing Business data are widely used by restrictions would boost TFP by 40-60%. Even though Doing Business measures researchers in academia, think tanks, In the European Union and Japan, implicit aspects of business regulation affecting international organizations and other taxes on capital use were shown to domestic firms, several studies indicate institutions. Since 2003, thousands of reduce the average size of firms by 20%, that better business regulation is researchers have utilized Doing Business output by 8.1% and output per firm by associated with higher levels of FDI.26 data or its conceptual framework to ana- 25.6%.17 A recent study on Côte d’Ivoire, Also, the impact of FDI on domestic lyze the impact of business regulation on Ethiopia, Ghana and Kenya demonstrates investment depends on how business- various economic outcomes. This section large productivity gains following the friendly entry regulations are in the provides a brief overview of studies removal of firm-level distortions caused host economy. A study shows that FDI published in the top 100 journals during by uneven regulations and a poor can crowd out domestic investment in the last 10 years or recently distributed business environment.18 Research also economies with costly processes for as a working paper of a well-established shows that raising the efficiency level of starting a business.27 Another study institution.11 The papers cited here are bankruptcy laws in select OECD high- points out that economies with simpler just a few examples of research done in income economies to that of the United processes for starting a business have the areas measured by Doing Business.12 A States would increase the TFP of the higher international market integration comprehensive review of the literature is former by about 30% through a rise in on average.28 provided in the research chapters of Doing bank loans to large firms.19 Business 2014 and Doing Business 2015. A well-designed insolvency framework In many economies, companies engaged is a vital determinant of debt recovery. Regulation of firm entry is one of the most in international trade struggle with high A reform making bankruptcy laws more investigated areas of business regulation. trade costs arising from transport, logistics efficient in Colombia, for example, The results of this body of research and regulations that impede their improved the recovery rate of viable firms suggest that excessive regulation of competitiveness and growth potential. significantly.29 In India the establishment entry increases the number of informal With the Doing Business indicators on of debt recovery tribunals reduced non- businesses and employment. A natural trading across borders, several empirical performing loans by 28% and lowered experimental study in Mexico found studies have assessed how trade costs interest rates on larger loans, suggesting that reforms that simplified business affect the export and import perfor- that faster processing of debt recovery registration increased registration by mance of economies. A rich body of cases cut the cost of credit.30 A recent 5% and wage employment by 2.2%.13 empirical research shows that efficient study using Doing Business data showed These reforms also resulted in 14.9% of infrastructure and a healthy business that insolvency resolution is one of the informal business owners shifting to the environment are positively linked to main drivers behind “missing” corporate formal economy.14 In Portugal, reforms export performance.20 According to a bond markets in many economies.31 reducing the time and cost for company study, a 1-day increase in transit time formalization increased the number of reduces exports by an average of 7% More borrowers gain access to credit in business start-ups by 17% and created in Sub-Saharan Africa.21 Another study economies with a robust legal system seven new jobs per 100,000 inhabitants found that a 1-day delay in transport time that supports the use of movable assets per month. These new start-ups were for landlocked economies and for time- as collateral and a well-developed credit more likely to be female-owned, were sensitive agricultural and manufacturing information sharing system. In a multi- smaller and headed by less experienced products reduce trade by more than 1% economy study, the introduction of and less-educated entrepreneurs com- for each day of delay.22 Delays in cus- collateral registries for movable assets pared to others, suggesting that the toms clearance also negatively impact a was shown to increase firms’ access reform created a more inclusive environ- firm’s ability to export, particularly when to finance by approximately 8%.32 ment for aspiring entrepreneurs.15 goods are destined for new clients.23 In Creditors’ ability to use movable assets, 26 DOING BUSINESS IN KAZAKHSTAN 2019 vis-à-vis real estate, is shown to increase most widely used is starting a business, to the simple average method is to give different weights to the topics, depending on which are the debt capacity of firms.33 An in-depth followed by labor market regulation and considered of more or less importance in the review of global bank flows revealed that paying taxes. These indexes typically context of a specific economy. firms in economies with better credit combine Doing Business data with data 5. For getting credit, indicators are weighted proportionally, according to their contribution information sharing systems and higher from other sources to assess an economy to the total score, with a weight of 60% branch penetration evade taxes to a along a particular aggregate dimension assigned to the strength of legal rights index lesser degree.34 such as competitiveness or innovation. and 40% to the depth of credit information index. Indicators for all other topics are The Heritage Foundation’s Index of assigned equal weights. There is also a large body of work Economic Freedom, for example, has used 6. For more information on these databases, investigating the distortionary effects 22 Doing Business indicators to measure see their websites: Women, Business and the Law (https:/ /wbl.worldbank.org/); Logistic of high tax rates and cumbersome tax the degree of economic freedom in the Performance Index (https:/ /lpi.worldbank. codes and procedures. After a tax reform world in four areas, including rule of law, org/); World Governance Indicators (http:/ / in Brazil, business licensing among retail government size, regulatory efficiency and info.worldbank.org/governance/wgi/#home); Country Policy and Institutional Assessments firms rose by 13%.35 Research shows market openness.42 Economies that score (https://datacatalog.worldbank.org/dataset that a 10% reduction in tax complexity is better in these four areas also tend to have /country-policy-and-institutional-assessment). comparable to a 1% reduction in effective a high degree of economic freedom. 7. Hallward-Driemeier, Mary and Lant Pritchett. 2015. “How Business Is Done in the corporate tax rates36 and higher tax rates Developing World: Deals versus Rules.” Journal discourage entry.37 A recent study finds Similarly, the World Economic Forum of Economic Perspectives 29, no. 3: 121–40 that a lower tax compliance burden has uses Doing Business data in its Global 8. Schneider, Friedrich. 2005. “The Informal Sector in 145 Countries.” Department of a positive impact on the productivity of Competitiveness Index to demonstrate Economics, University Linz, Linz, Austria; small and young firms.38 how competitiveness is a global driver of La Porta, Rafael, and Andrei Shleifer. 2008. economic growth. The organization also “The Unofficial Economy and Economic Development.” Tuck School of Business Labor market regulation—as measured by uses 13 Doing Business indicators in five Working Paper 2009-57, Dartmouth College, Doing Business—has been shown to have indexes that measure institutions, product Hanover, NH, available at Social Science important implications for economies. market efficiency, labor market efficiency, Research Network (SSRN) at http:/ /ssrn.com /abstract=1304760 According to one study, graduating from financial market development and busi- 9. For the law library, see the website at http:/ / school during a time of adverse economic ness dynamism. These publicly acces- www.doingbusiness.org/law-library. conditions has a persistent, harmful effect sible sources expand the general business 10. These are reforms for which Doing Business is aware that information provided by Doing on workers’ subsequent employment environment data generated by Doing Business was used in shaping the reform opportunities. The persistence of this Business by incorporating it into the study agenda. negative effect is stronger in economies of other important social and economic 11. The journal and institution rankings are from Research Papers in Economics (RePEc) and with stricter employment protection issues across economies and regions. cover the last 10 years. They can be accessed legislation.39 Rigid employment protection They prove that, taken individually, at https://ideas.repec.org/top/top.journals legislation can also have negative Doing Business indicators remain a useful .simple10.html and https:/ /ideas.repec.org /top/top.inst.allbest10.html. distributional consequences. A study starting point for a rich body of analysis 12. Since 2003, when the Doing Business report analyzing the labor market regulation across different areas and dimensions in was first published, more than 3,400 research literature points out that the impact of the research world. articles discussing how regulation in the areas measured by Doing Business influence labor market regulation on productivity economic outcomes have been published in could be in either direction, and the peer-reviewed academic journals and 1,360 magnitude of the impact is modest. The NOTES of these are published in the top 100 journals. Another 9,450 are published as working study provides clear evidence that labor papers, books, reports, dissertations or market regulation equalizes the income 1. Djankov, Simeon. 2016. “The Doing Business research notes. Project: How It Started: Correspondence.” 13. Bruhn Miriam, 2011. “License to Sell: The of the covered workers, but youth, women Journal of Economic Perspectives 30 (1): 247–48 Effect of Business Registration Reform on and less- skilled workers generally are left 2. These papers are available on the Doing Entrepreneurial Activity in Mexico.” Review of outside this coverage and the benefits.40 Business website at http:/ /www.doingbusiness Economics and Statistics 93, no. 1: 382–86. .org/methodology. 14. Bruhn, Miriam. 2013. “A Tale of Two Species: 3. For more on the World Bank Enterprise Revisiting the Effect of Registration Reform on Indexes Surveys, see the website at http:/ /www Informal Business Owners in Mexico.” Journal Doing Business identified 20 different data .enterprisesurveys.org. of Development Economics 103: 275–83. 4. See Djankov and others 2005. Principal 15. Branstetter, Lee G., Francisco Lima, Lowell J. projects or indexes that use Doing Business components and unobserved components Taylor and Ana Venâncio. 2013. “Do Entry as one of its sources of data.41 Most of methods yield a ranking nearly identical to that Regulations Deter Entrepreneurship and Job these projects or institutions use indicator from the simple average method because both Creation? Evidence from Recent Reforms these methods assign roughly equal weights in Portugal.” Economic Journal, published level data and not the aggregate ease of to the topics, since the pairwise correlations electronically July 16, 2013. https://doi.org doing business ranking. The indicator set among topics do not differ much. An alternative /10.1111//ecoj.12044. ABOUT DOING BUSINESS AND DOING BUSINESS IN KAZAKHSTAN 2019 27 16. Hsieh, Chang-Tai, and Peter J. Klenow. 2009. 33. Calomiris, Charles, Mauricio Larrain, José “Misallocation and Manufacturing TFP in Liberti and Jason Sturgess. 2017. “How China and India.” Quarterly Journal of Economics Collateral Laws Shape Lending and 124 (4): 1403–48. Sectoral Activity.” Journal of Financial Economics 17. Guner, Nezih, Gustavo Ventura and Yi Xu. 123 (1): 163–88. 2008. “Macroeconomic Implications of 34. Beck, Thorsten, Chen Lin and Yue Ma. 2014. Size-Dependent Policies.” Review of Economic “Why Do Firms Evade Taxes? The Role of Dynamics 11: 721–44. Information Sharing and Financial Sector 18. Cirera, Xavier, Roberto N. Fattal Jaef and Outreach.” Journal of Finance 69: 763–817. Hibret B. Maemir. 2017. “Taxing the Good? 35. Monteiro, Joana, and Juliano J. Assunção. Distortions, Misallocation, and Productivity in 2012. “Coming Out of the Shadows? Sub-Saharan Africa.” Policy Research Working Estimating the Impact of Bureaucracy Paper 7949, World Bank, Washington, DC. Simplification and Tax Cut on Formality 19. Neira, Julian. 2017. “Bankruptcy and Cross- in Brazilian Microenterprises.” Journal of Country Differences in Productivity.” Journal Development Economics 99: 105–15. of Economic Behavior and Organization (2017). 36. Lawless, Martina. 2013. “Do Complicated Tax Available from http:/ /dx.doi.org/10.1016/j.jebo Systems Prevent Foreign Direct Investment?” .2017.07.011 Economica 80, no. 317: 1–22. 20. Portugal-Perez, Alberto, and John S. 37. Belitski, Maksim, Farzana Chowdhury and Wilson. 2011. “Export Performance and Sameeksha Desai. 2016. “Taxes, Corruption Trade Facilitation Reform: Hard and Soft and Entry.” Small Business Economics 47 (1): Infrastructure.” World Development 40, no. 7: 201–16. 1295–1307. 38. Dabla-Norris, Era, Florian Misch, Duncan 21. Freund, Caroline, and Nadia Rocha. 2011. Cleary and Munawer Khwaja. 2017. “Tax “What Constrains Africa’s Exports?” World Administration and Firm Performance: Bank Economic Review 25, no. 3: 361–86. New Data and Evidence for Emerging Market 22. Djankov, Simeon, Caroline Freund and Cong and Developing Economies.” IMF Working S. Pham. 2010. “Trading on Time.” Review of Paper 17/95, International Monetary Fund, Economics and Statistics 92, no. 1: 166–73. Washington, DC. 23. Martincus, Christian Volpe, Jeronimo Carballo 39. Kawaguchi, Daiji, and Tetsushi Murao. 2014. and Alejandro Graziano. 2015. “Customs.” “Labor-Market Institutions and Long-Term Journal of International Economics 96 (2015): Effects of Youth Unemployment.” Journal of 119–37. Money, Credit and Banking 46, S2: 95–116. 24. Freund, Caroline, and Bineswaree Bolaky. 40. Betcherman, Gordon. 2015. “Labor Market 2008. “Trade, Regulations, and Income.” Regulations: What Do We Know About Their Journal of Development Economics 87: 309–21. Impacts in Developing Countries?” 25. Amiti, Mary, and Amit K. Khandelwal. 2011. World Bank Research Observer 30: 124–53. “Import Competition and Quality Upgrading.” 41. The projects or indexes using Doing Business Review of Statistics and Economics 95 (2): as a source of data are the following: Citi 476–90. and Imperial College London’s Digital 26. Corcoran, Adrian, and Robert Gillanders. 2015. Money Index; Cornell University and the “Foreign Direct Investment and the Ease of World Intellectual Property Organization’s Doing Business.” Review of World Economics Global Innovation Index (GII); DHL’s Global 151, no. 1: 103–26. Connectedness Index (GCI); Fraser Institute’s 27. Munemo, Jonathan. 2014. “Business Start- Economic Freedom of the World (EFW) index; Up Regulations and the Complementarity Heritage Foundation’s Index of Economic between Foreign and Domestic Investment.” Freedom (IEF); INSEAD’s Global Talent Review of World Economics 150, no. 4: 745–61. Competitiveness Index (GTCI); International 28. Norbäck, Pehr-Johan, Lars Persson and Robin Institute for Management Development’s Douhan. 2014. “Entrepreneurship Policy World Competitiveness Yearbook; KPMG’s and Globalization.” Journal of Development Change Readiness Index (CRI); Legatum Economics 110: 22–38. Institute’s Legatum Prosperity Index; 29. Giné, Xavier, and Inessa Love. 2010. “Do Millennium Challenge Corporation’s Open Reorganization Costs Matter for Efficiency? Data Catalog; Oxford University’s International Evidence from a Bankruptcy Reform in Civil Service Effectiveness (InCiSE) Index; Colombia.” Journal of Law and Economics 53, PricewaterhouseCoopers’ Paying Taxes no. 4: 833–64. 2018: In-depth Analysis on Tax Systems 30. Visaria, Sujata. 2009. “Legal Reform and Loan in 190 Economies Report; TRACE’s Bribery Repayment: The Microeconomic Impact of Debt Risk Matrix; U.S. Chamber of Commerce’s Recovery Tribunals in India.” American Economic Global Rule of Law and Business Dashboard; Journal: Applied Economics 1, no. 3: 59–81. University of Gothenburg’s Quality of 31. Becker, Bo, and Jens Josephson. 2016. Government (QoG) Standard Dataset; and “Insolvency Resolution and the Missing World Economic Forum’s Enabling Trade High-Yield Bond Markets.” The Review of Index (ETI), Global Competitiveness Index Financial Studies 29 (10): 2814–49. (GCI); Human Capital Index (HCI), Networked 32. Love, Inessa, María Soledad Martínez Readiness Index (NRI) and Travel and Tourism Pería and Sandeep Singh. 2013. “Collateral Competitiveness Index (TTCI). Registries for Movable Assets: Does Their 42. For more on the Heritage Foundation’s Index Introduction Spur Firms’ Access to Bank of Economic Freedom, see the website at Finance?” Policy Research Working Paper http://heritage.org/index. 6477, World Bank, Washington, DC. 28 DOING BUSINESS IN KAZAKHSTAN 2019 Starting a Business MAIN FINDINGS ƒƒ Across the 16 locations measured, starting a business takes from four to six procedures, costs between 0.2% and 2.2% of income per capita and takes between 4.5 and 6 days. ƒƒ Of the eight locations benchmarked in 2016, Aktobe has made the most progress toward global good practices in starting a business. ƒƒ Zhambyl (Taraz) and the Almaty region (Taldykorgan) lag behind the rest of the locations because of a slower transition to electronic registration services. ƒƒ In 2018 Kazakhstan integrated registration for a bank account and for mandatory accident insurance into its online platform for business registration. However, uptake has been low due to a lack of full automation. STARTING A BUSINESS 29 Cumbersome business regulations— climate to promote formal entrepreneur- along with other factors, such as high ship and diversify its economy.4 Today it HOW DOES STARTING taxes—drive entrepreneurs to the takes only 5.3 days on average to com- A BUSINESS WORK IN informal sector. In 2007 it took around plete business registration—three weeks KAZAKHSTAN? a month to comply with all regulatory less than in 2007. This has had a positive requirements to start an enterprise in impact on Kazakhstan’s economy. In 2017 Across the 16 locations measured, start- Kazakhstan. Back then, the size of the workers in the informal sector accounted ing a business requires 4.4 procedures, informal sector equaled over a third of for less than 20% of total employment, half costs 0.5% of income per capita and takes the total gross domestic product.1 Up to the share of a decade ago.5 And formalized 5.3 days on average. The Department a quarter of small and medium-size enterprises filled the gap. Between 2007 of Justice has the official mandate to enterprises (SMEs) operated infor- and 2017 the number of active SMEs incorporate new businesses, including mally while overall, the shadow economy more than quadrupled,6 creating over 1 the limited liability companies studied by employed 38.2% of the population.2 million new jobs.7 Yet entrepreneurs still Doing Business.10 Informality has significant economic see competition from the informal sector and social costs. Workers in the informal as one of the biggest obstacles to doing The first step—incorporating the compa- sector earn less, lack labor protection business in Kazakhstan.8 And despite ny—is done through one of three options. and have limited access to on-the-job progress, in 2018 the informal economy The first option is for the entrepreneur training. Informal firms also grow more in Kazakhstan continued to be bigger to directly register his or her business slowly, employ fewer people and present than in most middle-income economies.9 online through the e-government portal unfair competition to formal businesses.3 That is why streamlining the business (egov). The second option is to register start-up process further remains crucial a business on the same portal but at a But much has changed since 2007. Over to increasing formalization, attracting new Public Service Center (PSC) of the state the past decade Kazakhstan has been entrepreneurs and improving the ease of corporation Government for Citizens, committed to improving its business doing business in Kazakhstan. with the assistance of public servants. The third option is to delegate the busi- ness registration task to an attorney, who What Does Starting a Business Measure? registers the company on behalf of the Doing Business measures the number of procedures as well as the time, cost entrepreneur on the same e-government and paid-in minimum capital required for a small to medium-size limited portal or in person. liability company to start up and formally operate (see figure). To make the data comparable across locations, Doing Business uses a standardized limited liability The most efficient way to incorporate a company that is 100% domestically owned, has start-up capital equivalent to 10 company is through direct registration on times income per capita, engages in general industrial or commercial activities the egov portal. Applicants must have an and employs between 10 and 50 people within the first month of operations. electronic digital signature to incorporate a business. Through the portal, SMEs choose a legal form of entity, select a What are the time, cost, paid-in minimum capital and number of procedures to get a local limited liability name and provide a notification of com- company up and running? mencement of entrepreneurial activity. But it is more common for entrepreneurs Cost (% of income per capita) to use a third party to assist in the process. Either they go to the local PSC, where a Formal operation trained civil servant helps them complete the company registration on egov, or they Paid-in minimum $ Number of hire an attorney to prepare incorporation capital procedures documents and complete the registra- tion process on their behalf online; but this latter option is less common overall. Involving a third party increases the time Entrepreneur Time and cost of starting a business. Preregistration Registration Postregistration (days) During incorporation the entrepreneur also has the option to register for the value added tax (VAT) with the State 30 DOING BUSINESS IN KAZAKHSTAN 2019 Revenue Committee. VAT registration FIGURE 3.1  Full automation would greatly reduce the complexity of starting a business is mandatory for companies reaching an annual turnover of KZT 72,150,000 ($222,562)—the type of company covered by the Doing Business methodol- ogy. If the entrepreneur does not wish to Obtain state registratio n register voluntarily for VAT at the time of legal entity and register for VAT of incorporation, it is possible to pro- ceed online through the State Revenue Make a company sea Committee’s website (Salyk), or in l person at the State Revenue Committee. Make a company sea If VAT registration is not done online l Open a bank account during company incorporation, it must be completed within the first 10 days of the Integrate all requirements into a dig Provide employees wit ital h month after a turnover of 30,000 MCI11 one-stop-shop on mandatory life and e-government is reached, by submitting a VAT registra- health insurance 2 procedures in the futu tion form either in person or through the re? 4+ procedures in 201 9 Salyk website.12 Online service In-person service Three additional steps are required in practice to start operating a business: obtaining a company seal, opening a bank account and subscribing to manda- Source: Doing Business database. tory accident insurance for employees (figure 3.1). Entrepreneurs continue to obtain a company seal even though the legal BOX 3.1  The use of the e-government portal to open a bank account remains limited requirement to have a seal to open a In early 2019 Kazakhstan had 208,742 active SMEs.a Requests to open a bank ac- bank account was eliminated in 2015 and count through egov were submitted in only 1.2% of all cases (442 requests), and the Entrepreneurial Code has prohibited only 37 requests were approved.b financial organizations from demanding a Several limitations of the platform were identified by users and banks alike. First, seal since 2018. Not all commercial banks only four banks are accredited to offer bank accounts via egov, and in October updated their signature cards to indicate 2018 one bank was suspended due to a temporary license removal. Eight com- that seal samples had become optional, mercial banks are preparing to develop and test their connectivity with egov. Two and entrepreneurs continue to obtain of them were expected to conclude the testing period before February 2019. Two seals prior to opening an account.13 additional banks expressed interest in being included in the portal in the future. Growing interest from commercial banks in the service is good news: usage is By law, it has been possible to open a bank expected to increase as the platform becomes more competitive. account through egov since January 2018.14 In addition to the current limited number of service providers, feedback from ap- But in practice, the majority of entrepre- plicants referred to the length of the online application form for opening a bank neurs continue to open the account in account. Applicants also noted the inability to review the form before submission. person (box 3.1). Between January 1 and Preventing users from spotting and correcting potential errors or missed items November 22, 2018, only 442 applicants limits the effectiveness of the portal, as incomplete or erroneous applications are requested to open a bank account through automatically rejected. egov, representing only 1.2% of new busi- There is room for improvement in offering the service through egov. The applica- nesses. And even then, in-person signature tion form could be simplified, for example. Also, users could be provided with samples were required to complete the the terms and conditions applicable to each bank, saving applicants time when process, defeating the purpose of opening comparing offers from the various banks. the account online. Official statistics from the Ministry of National Economy of the Republic of Kazakhstan, Committee on a.  Statistics, accessed on January 15, 2019, at http://www.stat.gov.kz. Official statistics on SMEs from the Ministry of Justice of the Republic of Kazakhstan for January 1, 2018, b.  The last step is to obtain manda- through November 22, 2018, provided by the State Revenue Committee. tory insurance for employees against STARTING A BUSINESS 31 accidents during performance of their TABLE 3.1  Starting a business in Kazakhstan—where is it easier? duties. This must be obtained within Ease of doing Cost the first 10 days of the month following business score Procedures Time (% of income per the date of state registration.15 Three Location Rank (0–100) (number) (days) capita) insurance companies launched this Nur-Sultan 1 94.56 4 4.5 0.21 service online through egov between Aktobe 2 94.44 4 5 0.18 January 1 and May 28, 2018, but due West Kazakhstan 2 94.44 4 5 0.18 to technical issues and lack of full (Oral) automation, only 37 entrepreneurs Pavlodar 2 94.44 4 5 0.18 were able to request insurance online in Kostanay 5 94.43 4 5 0.18 2018. It was not possible to complete Shymkent 6 94.43 4 5 0.20 the process and obtain insurance online Karagandy 7 94.43 4 5 0.21 because the company bank account requested through egov had not yet Kyzylorda 8 94.43 4 5 0.23 been activated and therefore did not Almaty city 9 94.43 4 5 0.24 have the deposits required to cover Atyrau 9 94.43 4 5 0.24 insurance premiums. As a result, entre- Mangystau 11 94.42 4 5 0.28 preneurs continued to complete this (Aktau) postregistration requirement in person, North Kazakhstan 12 92.63 5 6 0.82 at the preferred insurance company. (Petropavl) East Kazakhstan 13 92.63 5 6 0.88 (Oskemen) HOW THE PROCESS Akmola (Kokshetau) 14 92.46 5 6 2.19 COMPARES Almaty region 15 91.14 6 6 1.00 (Taldykorgan) Kazakhstan, represented by the city of Zhambyl (Taraz) 16 91.09 6 6 1.37 Almaty, ranked number 36 globally in Source: Doing Business database. starting a business, as measured in Doing Note: Rankings are based on the average ease of doing business score for the procedures, time, cost and paid-in Business 2019—ahead of OECD high- minimum capital associated with starting a business. The score is normalized to range from 0 to 100, with 100 representing the best regulatory performance (the higher the score, the better). For more details, see the chapter income economies including Switzerland “About Doing Business and Doing Business in Kazakhstan 2019.” The complete data set can be found on the (77) and Luxembourg (73). But Doing Business website at http://www.doingbusiness.org. Kazakhstan was below regional neighbors such as the Kyrgyz Republic (35), the the type of VAT registration selected. six steps—two more than in most other Russian Federation (32) and Uzbekistan In East Kazakhstan (Oskemen), already locations—because VAT registration is (12) and also below the best regional measured in 2016, as well as in North not done directly on the e-government performers in Europe and Central Asia Kazakhstan (Petropavl), Akmola website at the time of company incorpo- (ECA)—Georgia (2) and Armenia (8). (Kokshetau), Zhambyl (Taraz) and the ration. In those regions VAT registration Almaty region (Taldykorgan), which are is done through the local State Revenue The easiest place to start a business measured for the first time, entrepre- Committee, either in person or online in Kazakhstan is still the city of Nur- neurs commonly seek the assistance via the Salyk website. Each municipality Sultan, where the process requires four of a lawyer to start a business, which is responsible for implementing its own procedures, takes 4.5 days and costs adds a procedure (figure 3.2). The level public outreach and awareness campaign 0.2% of income per capita (table 3.1). of internet penetration partly explains to inform the public about new services, Entrepreneurs in Nur-Sultan take the discrepancy between locations. amendments and simplifications that advantage of online services; business Internet usage in Akmola, where attor- make starting a business easier. For incorporation and VAT registration are neys are commonly hired to register example, the city of Almaty created mul- completed in one step on egov. a company, is among the lowest in tiple channels to reach entrepreneurs on a Kazakhstan; it is highest in Nur-Sultan, weekly basis, including on local TV, radio Starting a business in Kazakhstan where entrepreneurs commonly regis- and social media. In Zhambyl (Taraz) takes between four and six procedures. ter a company online.16 and the Almaty region (Taldykorgan), by Variations in the number of procedures contrast, the campaign is less active and are driven by the decision to use a law- In Zhambyl (Taraz) and the Almaty as a result, public awareness and use of yer to incorporate the company and by region (Taldykorgan) the process takes online services has been lower. These 32 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 3.2  Incorporating a business takes an additional step in a third of the locations Petropavl NORTH KAZAKHSTAN Kostanay (92.63) Kokshetau Pavlodar KOSTANAY NUR-SULTAN (94.43) AKMOLA (94.56) PAVLODAR Oral (92.46) (94.44) WEST KAZAKHSTAN (94.44) Aktobe Oskemen Karagandy AKTOBE EAST KAZAKHSTAN ATYRAU Atyrau (94.44) (92.63) (94.43) KARAGANDY (94.43) ALMATY KYZYLORDA (91.14) Aktau (94.43) Taldykorgan ZHAMBYL ALMATY MANGYSTAU Kyzylorda (91.09) (94.43) (94.42) Taraz SHYMKENT (94.43) Incorporating a business: 1 procedure (online)–1.5 days 1 procedure (with VAT registration at PSC)–2 days 2 procedures (hiring a lawyer and registration)–2 days Source: Doing Business database. two regions record the lowest share of in five locations where entrepreneurs before the company is registered on the voluntary VAT registrations through egov commonly use attorneys for the busi- entrepreneur’s behalf. (figure 3.3). ness registration process (figure 3.4).17 Incorporating a business through a law- The costs of starting a business are The time to start a business ranges yer takes time; incorporation documents lower in Kazakhstan than in both OECD between 4.5 and 6 days. It takes longest must first be prepared and reviewed high-income economies and ECA economies, on average. Cost differ- ences across regions are driven mainly FIGURE 3.3  Voluntary VAT registration at the time of incorporation is the most by the use of attorney services and the common way to register for VAT in all but two locations use of company seals. While starting a business costs just 0.2% of income Share of voluntary VAT registrations on egov at company incorporation per capita in nine locations, in Akmola North Kazakhstan 94% (Kokshetau)—the most expensive 36% Karagandy 32% 94% place to start a business—the costs Kostanay 90% 25% equal 2.2% of income per capita. There, Atyrau 82% 36% 76% soliciting the services of an attorney for Pavlodar 30% Akmola 69% incorporating a new business can cost 21% Almaty city 24% 67% KZT 50,000 ($154). In locations where East Kazakhstan 24% 64% entrepreneurs commonly retain attor- Nur-Sultan 64% 28% neys for company incorporation, the West Kazakhstan 60% cost ranges from KZT 15,000 ($46) in Lorem ipsum dolor sit amet, 20% Mangystau 56% 36% Kyzylorda 55% North Kazakhstan (Petropavl) to twice 20% Almaty (Taldykorgan) 22% 45% that in Zhambyl (Taraz). In Zhambyl, Zhambyl 24% 45% where entrepreneurs seem less aware of the available electronic options, the 2017 2018 higher cost for an attorney is driven by an increase in demand. The opposite Source: Doing Business database. appears to be true in North Kazakhstan Note: Data obtained from the State Revenue Committee. No data were available for the city of Shymkent or for the Aktobe region. (Petropavl), where lower costs go hand STARTING A BUSINESS 33 X X X X FIGUREX3.4  X Locations in Kazakhstan outperform X X on cost but show room for improvement comparator economies on the other components Procedures Time Cost (number) (days) (% of income per capita) 0 New Zealand New Zealand 0.5 Slovenia (global best) (global best), Georgia (global best) 0 1 1 0.2 10 locations 1.5 Georgia 2 0.3 Mangystau 2.5 Kazakhstan average 0.54 2 3 Azerbaijan 3.5 0.8 North Kazakhstan 4 4.5 Nur-Sultan 0.9 East Kazakhstan Azerbaijan 3 Kazakhstan average 5.0 10 locations East Kazakhstan, 1.0 Almaty region 6.0 North Kazakhstan, Akmola, Kyrgyz Republic, Almaty city, Zhambyl Russian Federation 1.1 Russian Federation, 11 locations 9 OECD (9.3) Tajikistan 4 1.4 Zhambyl Kazakhstan average (4.4) Kyrgyz Republic 10 Kyrgyz Republic 1.9 OECD (4.9) Russian Federation (10.1) Akmola, Georgia 2.2 Akmola 5 East Kazakhstan, Tajikistan 11 ECA (5.2) Shymkent OECD 3.1 12 Almaty region ECA (12.9) ECA 4.6 6 Zhambyl 13 Tajikistan 18 Source: Doing Business database. Note: The averages for Europe and Central Asia (ECA) are based on economy-level data for the 23 ECA economies. The OECD averages are based on economy-level data for the 33 OECD high-income economies. in hand with a net decrease in company to start a business decreased from 9.3 registrations in the last three years.18 In WHAT HAS CHANGED? days in 2016 to 5.3 days in 2018 in the East Kazakhstan (Oskemen), already eight locations previously benchmarked benchmarked in 2016, entrepreneurs Doing Business in Kazakhstan 2017 found by Doing Business in Kazakhstan 2017. still prefer to hire lawyers, but with that it was becoming more common to Reforms improved the average ease of increased use of the streamlined use the electronic portal (egov) for incor- doing business score by 2.43 points, electronic business registration pro- porating new businesses and rarer to hire from 91.25 to 93.68. This is equivalent cess the costs of retaining a lawyer a lawyer for this purpose. At the same to going from position 52 to position 27 also decreased.19 time, the study found room for improve- in the global Doing Business 2019 ranking. ment in all postregistration requirements Aktobe, the location that has improved Costs for obtaining company seals differ that were still completed in person (reg- the most since 2016, became the second across the country. The process is most istering for VAT, making a company seal, easiest location in Kazakhstan to start expensive in Mangystau (Aktau), at KZT opening a bank account and subscribing a business. 7,200 ($22), and Atyrau, at KZT 6,250 to a mandatory accident insurance policy ($19), where obtaining a seal is fastest. for employees). At the local level, a major improvement In Aktobe, West Kazakhstan (Oral) and in two locations resulted from eliminat- Pavlodar, where starting a business is Doing Business in Kazakhstan 2019 finds ing the involvement of attorneys in the least expensive, prices for company that local and national reforms since start-up process—a step that reduced seals are lowest, at KZT 4,500 ($14). 2016 have tackled some of these gaps in the number of procedures by one, the Entrepreneurs in those locations incor- all locations, particularly by integrating time required to start a business by a day porate their businesses at a total cost of postregistration requirements in egov, and the cost by more than 90% (to 0.2% 0.2% of income per capita, significantly streamlining VAT registration and further of income per capita). Entrepreneurs in less than in the rest of the ECA economies eliminating involvement of third parties in Aktobe and Kostanay no longer seek the (4.6% of income per capita on average). the registration process. Overall, the time assistance of lawyers to register their 34 DOING BUSINESS IN KAZAKHSTAN 2019 company, and instead visit the local PSC from seven days to one, which translated immediately assigned a tax identification to register a business online with the into a four-day reduction in the overall number (TIN).25 The tax register is auto- help of a trained employee. The declin- time required to start a business across matically updated, and a taxpayer certifi- ing trend in the use of lawyers is not the country.22 In some locations, such as cate is delivered electronically within 24 new. Research in 2016 revealed that an Almaty city, staff at the State Revenue hours. Integrating the VAT registration attorney from the city of Nur-Sultan was Committee had to be transferred due to requirement into egov reduced by one the registering just one company per week, a internal efficiency gains and a decrease in number of procedures to start a business. sharp decline from the year before, when employees’ workloads. This streamlining of procedures placed it was a company every day.20 Due to the 11 Kazakhstani locations on par with the simple business start-up process online, The reduction in the number of steps performance of the Kyrgyz Republic, the entrepreneurs became able to take on required to start a business since 2016 Russian Federation and Tajikistan as well company registration independently or was driven by an upward trend in the as with Norway and the Netherlands. In with some assistance from local PSCs, use of online services and the inclusion Zhambyl (Taraz) and the Almaty region as was seen in Aktobe and Kostanay of postregistration procedures such as (Taldykorgan), online options to register throughout 2018. Out of the eight loca- VAT registration on the egov portal.23 for VAT were introduced, but available tions measured in the previous study, Entrepreneurs can now register for VAT statistics show that their uptake has been entrepreneurs in just one location—East at the time they incorporate their com- slower. Entrepreneurs in these locations Kazakhstan (Oskemen)—continue to pany. This change created a convenient continue to fulfill this requirement in handle the registration process with the new option. In 2017 it was still most person at the State Revenue Committee help of a lawyer (table 3.2). common to undertake VAT registration in after receiving help with company regis- person, at the office of the State Revenue tration from lawyers. Significant amendments to the Tax Code Committee. But since May 2017 entre- resulted in improvements that reduced preneurs have been able to complete VAT Theoretically, entrepreneurs can open the time to start a business in all eight registration online, both through egov and a bank account and obtain mandatory locations measured in Doing Business through the State Revenue Committee’s accident insurance for employees online in Kazakhstan 2017. As of January 2018, website.24 The notification-based service through the egov portal. But in practice for example, a company’s chief execu- on egov, which is fully integrated with the neither option is used. tive officer is no longer required to go to business start-up process, became the the State Revenue Committee to take a fastest and most popular way for volun- Since January 1, 2018, companies can photograph upon company incorpora- tary VAT registration for SMEs in 2018. request to open a bank account during tion.21 VAT registration, deregistration incorporation. The entrepreneur fills out and reregistration procedures were also At the time of company incorporation, an application form and has the option to streamlined through stricter time limits entrepreneurs simply need to make submit additional documents (including to process applications. This decreased the selection on the online company the company charter, an excerpt from the time required to register for VAT registration form and the company is the securities exchange register and TABLE 3.2  Eight locations made it easier to start a business since 2016 Introduced voluntary VAT Made starting a business Reduced time required for registration online on the Eliminated retaining a Location easier overall VAT registration e-government website lawyer in practice Aktobe ✔ ✔ ✔ ✔ Almaty city ✔ ✔ ✔ Nur-Sultan ✔ ✔ ✔ Karagandy ✔ ✔ ✔ Kostanay ✔ ✔ ✔ ✔ East Kazakhstan (Oskemen) ✔ ✔ ✔ Pavlodar ✔ ✔ ✔ Shymkent ✔ ✔ ✔ Source: Doing Business database. Note: This table presents only regulatory reforms making it easier to do business, implemented between December 2016 and December 2018 for the locations benchmarked in Doing Business in Kazakhstan 2017. ✔ = Doing Business reform making it easier to do business STARTING A BUSINESS 35 power of attorney). Once these forms are opened for 37 applications, no insurance still require a signature card to verify the submitted, the selected bank receives the contracts were concluded through egov identity of business owners, and that request and an employee must approve in 2018. includes an imprint of the company seal. it manually. This new service, which aims to make it easier to open a bank account, In the short term, a review function The government of Kazakhstan should does not show significant uptake; only could be added to make egov more user- not only enforce the Entrepreneurial 8.4% of online applications were suc- friendly and functional. This would limit Code, which now prohibits financial cessful in 2018 (see box 3.1). The benefits the number of automatically rejected organizations from requiring a seal, but of the online application are offset by the requests by allowing applicants to review should also encourage banks to stop inability to complete the process online the information they filled out and correct requesting seals. Company seals are because applicants must go to the bank errors before submitting the forms. To not required to start a business in 123 of in person to fill out a signature card after increase competitiveness and usage of the 190 economies covered globally by submitting the online request. In May the service, customers should also have Doing Business. 2018 amendments to the Entrepreneurial an opportunity to compare the terms and Code prohibited all state bodies and conditions of different banks and insur- In Hong Kong SAR, China, company seals financial organizations from demanding ance companies on egov. were abolished in the spring of 2014 and seal imprints on documents from busi- the Companies Registry launched a pro- nesses, with the aim of discontinuing the In the long term, more commercial motion and publicity campaign to inform use of seals, particularly for opening a banks and insurance companies could entrepreneurs about the reform. A year bank account.26 However, entrepreneurs be included in the portal. Eight banks are later, results of an online survey reported used seals throughout 2018 and continue expected to join egov in the future. The that 82% of new SMEs that were incor- to consider them necessary to start busi- addition of more options will no doubt porated online did not obtain a seal.29 As ness operations. attract more customers. a result of successful reform implementa- tion in practice, Hong Kong improved its The online option to subscribe to a Like Kazakhstan, other economies are performance in the global ranking on the mandatory accident insurance policy for implementing reforms to improve condi- ease of starting a business, climbing from employees is not used in practice.27 In tions for entrepreneurs. In 2015 Norway, number 8 to number 5. 2018 three insurance companies were ranked 22 in the ease of starting a busi- included in egov, but they recorded only ness, improved the process by introduc- Improve service delivery at PSCs 37 requests for mandatory accident insur- ing electronic bank account registration. Throughout 2018 Kazakhstan added ance for employees. All requests were This service is free, and the account new postregistration services to egov. rejected and not a single contract signed is operationalized once the company These new services could streamline the during the year.28 The exact reason for the passes registration. Unlike in Kazakhstan, process of starting a business, but they low popularity of the service is not known; where CEOs go to the bank to provide have yet to catch on. Entrepreneurs are applicants and insurance companies seal samples and signature samples either not aware of the new services or reported technical issues to the adminis- after requesting a bank account online do not know how to use them. Ideally, trators of egov. An additional bottleneck through egov, the process in Norway is employees at the Public Service Centers was created by the requirement to have an fully electronic. The account is registered should explain to entrepreneurs how operational bank account opened online. through the bank’s website and entrepre- to benefit from the new services. But Without a functioning bank account with neurs do not visit the bank in person to PSCs offer more than 750 services, and sufficient funds, the entrepreneur could complete registration or to operationalize changes are introduced frequently, which not pay the insurance premium, which the account. As a result, streamlining makes it hard for the civil servants to stay prevented successful completion of this the process of opening a bank account up to date. Although they are briefed on postregistration requirement. decreased the time required to complete changes, training is limited due to the this procedure in Norway to the lowest scope of services offered. time recorded by Doing Business. WHAT CAN BE IMPROVED Most PSC employees do not realize Complete the phase-out of that applicants must go to the bank in Make the e-government portal company seals in practice person to fill out a signature card before more functional Despite legislative efforts to abolish the they can activate their account. And Banks and insurance companies see little use of company seals, newly created PSC employees outside major cities return on their investment to connect to companies continue to get one for the seem unaware that it is not possible to egov. While bank accounts have been purpose of opening a bank account. Banks request mandatory accident insurance 36 DOING BUSINESS IN KAZAKHSTAN 2019 for employees without applying for a insurance simultaneously online through What Did We Learn Over the Last 20 Years?” IMF Working Papers. Washington, DC: IMF. bank account simultaneously.30 Since egov. Without data, it is unclear why 10. Incorporation of a limited liability company these civil servants—the primary point of new services are not used, whether it is (LLC) in Kazakhstan is regulated by several contact for entrepreneurs—do not have because entrepreneurs do not want to laws, including the Law of the Republic of Kazakhstan on State Registration of Legal immediate experience or training in using use them or find them too complicated, Entities, Branches and Representations, as the egov options for these procedures, or due to technical issues on egov. well as the Tax Code, effective April 17, 1995, entrepreneurs continue to go to the bank No. 2198. 11. The monthly calculation index (MCI) is a or the insurance company in person. Increasing the range of information col- value established by law to calculate social In the short term, the PSC in Akmola lected and designing a feedback mecha- benefits as well as penalties, taxes and other (Kokshetau) filled this gap by arranging nism for entrepreneurs and PSC staff (the charges. It is determined annually during the budgeting process and is based on the weekly walk-in VAT consultations with point people most commonly involved expected inflation rate for the next year. One the employees of the State Revenue in company incorporation) will make it MCI was equivalent to KZT 2,405 ($7.42) in Committee. But in the medium term, in possible to monitor the speed of transi- 2018 and to KZT 2,525 ($7.79) in 2019. 12. A company must register for VAT when the locations where entrepreneurs rely tion to e-services. Disaggregating data its annual turnover reaches 30,000 MCI on PSCs to register a business, the use will inform regional comparisons and (monthly calculation index), in accordance of e-government services will increase enable policy makers to design targeted with the provisions of Article 568.5 of the Tax Code. only if PSC employees receive the solutions for local SMEs. On a national 13. On January 1, 2015, the requirement to obtain training they need to provide compre- level, performance monitoring will enable a company seal for business start-up was hensive assistance during the company a broader assessment of policy reforms eliminated by the Law of the Republic of Kazakhstan on Amendments and Additions registration process. and help identify any bottlenecks and to Certain Legislative Acts of the Republic technical or design issues. of Kazakhstan in Relation to Issues of Develop performance indicators Fundamental Improvement of the Business Environment in the Republic of Kazakhstan to monitor implementation of (No. NQ 269-V), December 29, 2014. reforms 14. Law of the Republic of Kazakhstan on NOTES Payments and Payment Systems, Article 25 Kazakhstan has made significant prog- No.11 – VI, effective July 26, 2016, as amended ress improving its national statistical 1. Schneider, Friedrich, Andreas Buehn and on January 1, 2019. system, mainly through the government’s Claudio E. Montenegro. 2010. “New Estimates 15. Law of the Republic of Kazakhstan on for the Shadow Economies all over the World.” Obligatory Insurance of Employees against e-statistics initiative KAZSTAT. But International Economic Journal 24 (4): 443-461. Accidents in the Performance of Work and shortcomings remain. For example, the 2. Rutkowski, J. 2011. Costs of Doing Business: (Official) Duties, effective February 7, 2005, Committee on Statistics of the Ministry Causes of Informal Employment in Kazakhstan. No. 30-III, as amended July 2, 2018. Washington, DC: World Bank. 16. Digital Report. May 31, 2017. “Review of of National Economy produces limited 3. Loayza, Norman V. 2018. Informality: Why Is Kazakhstan telecom market: Internet access data on SMEs. Collecting and dissemi- It So Widespread and How Can It Be Reduced? and Internet services.” Available at https:/ / nating additional information is critical Washington, DC: World Bank. digital.report/kazahstan-dostup-v-internet/. 4. Kazakhstan introduced the 2050 Strategy 17. Attorneys are used in business registration for evidence-based decision making. It in 2012, calling for widespread reforms to in East Kazakhstan (Oskemen), Akmola would enable public officials to monitor increase economic diversification and create (Kokshetau), the Almaty region (Taldykorgan), and evaluate the success of SME policies, a favorable environment for entrepreneurship North Kazakhstan (Petropavl) and Zhambyl while becoming a top-30 economy by 2050. (Taraz). while increasing accountability. 5. OECD. 2018. Reforming Kazakhstan: Progress, 18. According to data collected by the Committee Challenges and Opportunities. Paris: OECD on Statistics, SME registrations in Zhambyl Currently public officials across Publishing. (Taraz) increased from 920 to 1,215 new firms 6. In 2007 there were 55,865 small and 2,476 per year between 2016 and 2018. During the Kazakhstan do not have access to medium-size active enterprises in Kazakhstan. same period, the number of newly registered substantive data and therefore cannot By 2017 the number of active SMEs had SMEs in North Kazakhstan (Petropavl) evaluate the success of the reforms grown to 208,742 and 2,618, respectively. decreased from 732 to 623. Ministry Source: Ministry of National Economy of of National Economy of the Republic of and policies they promote to SMEs. the Republic of Kazakhstan, Committee on Kazakhstan, Committee on Statistics, official Particularly on the local level, no tools Statistics. Available at www.stat.gov.kz. statistics accessed on January 14, 2019, are available to identify the causes for 7. Ministry of National Economy of the Republic http://stat.gov.kz. of Kazakhstan, Committee on Statistics. 19. While in 2017 it cost KZK 20,000 ($61.70) to the low uptake of some services. For 8. European Bank for Reconstruction and retain a lawyer, in 2018 the price decreased to example, many local officials assume Development (EBRD). 2017. Kazakhstan KZK 17,500 ($53.98). that entrepreneurs in Kazakhstan take diagnostic paper: Assessing progress and 20. The decline in the use of lawyers for business challenges in developing sustainable market start-up is a trend seen across Kazakhstan full advantage of the streamlined busi- economy. London: EBRD; OECD. 2018. SME and reflects the increase in popularity of the ness registration process; in fact, they and Entrepreneurship Policy in Kazakhstan: OECD simplified business start-up process, which can do not. Entrepreneurs do not complete Studies on SMEs and Entrepreneurship, pp. 40 be completed by entrepreneurs on their own. and 110. Paris: OECD Publishing. 21. Cancellation of the requirement to photograph company incorporation, VAT registration, 9. Medina, Leandro, and Friedrich Schneider. the owners of the company is regulated by bank account registration and mandatory 2018. “Shadow Economies Around the World: the Code of the Republic of Kazakhstan on STARTING A BUSINESS 37 Taxes and Other Obligatory Payments into the Budget (Tax Code), effective December 10, 2008, as amended January 1, 2019, and the Law of the Republic of Kazakhstan on Countering the Laundering of Illegal Assets and the Financing of Terrorism, Article 13, effective August 28, 2009, as amended February 27, 2017. 22. Changes in time limits are regulated by the Code of the Republic of Kazakhstan on Taxes and Other Obligatory Payments into the Budget (Tax Code), effective December 10, 2008, as amended January 1, 2019, and the Law of the Republic of Kazakhstan on Countering the Laundering of Illegal Assets and the Financing of Terrorism, Article 13, effective August 28, 2009, as amended February 27, 2017. 23. Law of the Republic of Kazakhstan on State Registration of Legal Entities, Branches and Representations, effective April 17, 1995, No. 2198. February 27, 2017, No. 49-VI. 24. Law of the Republic of Kazakhstan on State Registration of Legal Entities, Branches and Representations, effective April 17, 1995, No. 2198. February 27, 2017, No. 49-VI. Information about this service is published at http:/ /www.almaty.adilet.gov.kz/kk/node /166526. 25. To register as a voluntary VAT payer, the entrepreneur indicates “yes” to the option in egov when registering a company. No further steps are required. The company is considered a VAT payer when the registration is submitted. 26. Amendment to the Law of the Republic of Kazakhstan on Changes and Amendments to Certain Legislative Acts of the Republic of Kazakhstan on Improving Regulation of Entrepreneurial Activity. Amendment to the Entrepreneurial Code, effective May 24, 2018. 27. The size of the premium depends on risks as well as the employee’s annual salary, and it is regulated by Article 17 of the Law of the Republic of Kazakhstan on Obligatory Insurance of Employees against Accidents in the Performance of Work and (Official) Duties, effective February 7, 2005, No. 30-III, as amended July 2, 2018. 28. Official statistics on SMEs from the Ministry of Justice of the Republic of Kazakhstan for January 1, 2018, through November 22, 2018, provided by the State Revenue Committee. 29. Doing Business database. 30. Based on interviews conducted by the Doing Business team. 38 DOING BUSINESS IN KAZAKHSTAN 2019 Dealing with Construction Permits MAIN FINDINGS ƒƒ Dealing with construction permits is easiest in Almaty city and most difficult in Shymkent. ƒƒ East Kazakhstan (Oskemen) and the cities of Shymkent and Nur-Sultan have shown the most improvement since 2016 by increasing compliance with established time frames at the Public Service Centers. ƒƒ Kazakhstan gets high marks globally on the building quality control index but does not have risk-based inspection mechanisms or mandatory insurance requirements to cover structural defects after construction is completed. ƒƒ Eight previously measured locations in Kazakhstan have improved construction permitting since 2016 by reducing approval times, streamlining and eliminating cumbersome procedures, and improving electronic platforms. ƒƒ Kazakhstan could enhance efficiency by further consolidating procedures, integrating electronic platforms and improving communication between relevant approving agencies. It could also strengthen regulation by clearly defining the role of the public sector in construction supervision and allowing time for reforms to be fully implemented. DEALING WITH CONSTRUCTION PERMITS 39 Kazakhstan’s economy expanded by easier for entrepreneurs. Conversely, an and accountability and leaves less room 4.1% in 2018.1 The government has overly complex regulatory framework for safety violations. attributed this growth to an increase in hurts business and may push con- trade and to the revival of the construc- struction into the informal economy. tion industry, which accounted for 5.3% Construction is a labor- and resource- HOW DOES CONSTRUCTION of GDP in the first nine months of the intensive undertaking that requires the PERMITTING WORK IN year.2 While the oil and gas industry still cooperation of many different players. KAZAKHSTAN? accounts for the largest share of GDP, the Across Kazakhstan it takes 17 to 18 pro- construction sector is taking a larger role cedures to get construction permits—4 All building and construction activity in in the economy. It has consistently grown to 5 more than in the average OECD high- Kazakhstan falls under the same regula- since 2010, surpassing the agricultural income economy. Reducing the number tion—the Law on Architectural, Town sector’s contribution to GDP.3 of parties involved and steps required Planning and Construction Activity. to realize a construction project is a However, approval and clearances of con- To continue encouraging the growth of way that governments can simplify the struction projects are performed locally by the construction sector, it is critical to process for small and medium-size enter- the regional authorities in each location. strike the right balance between safety prises (SMEs). Establishing transparent and efficiency. Smart regulation ensures and streamlined interactions between Kazakhstan requires more procedures to public safety and secures revenue for the the various stakeholders in construction comply with the construction permitting government while making the process leads to a higher sense of responsibility process than the average for any region What Does Dealing with Construction Permits Measure? To measure the ease of dealing with construction permits, Doing Business records the procedures, time and cost required for a small or medium-size business to obtain the approvals needed to build a commercial warehouse and connect it to water and sewerage. This includes all inspections and certificates needed before, during and after construction of the warehouse. To make the data comparable across locations, it is assumed that the warehouse is in the periurban area of the analyzed business city, that it is not in a special economic or industrial zone and that it will be used for the general storage of nonhazardous materi- als such as books. In addition, Doing Business compiles a building quality control index that measures the underlying quality of construction regulations and controls. The index accounts for one-fourth of the ease of doing business score for dealing with construction permits (see figure). Dealing with construction permits: measuring the efficiency and quality of building regulation Number of Every interaction with an external party (i.e., municipality, inspectors, utilities) is considered a procedure: procedures to Starts with first filing of the application or request and is completed when final document or service is legally build a received (construction permits and utility connections) warehouse Rankings are based on scores for four indicators Time required to Time is recorded in calendar days; complete each Captures the median duration of each procedure Days to comply Cost to comply procedure with formalities to build a with formalities, as % of warehouse warehouse value Cost required to Cost is recorded as a % of the warehouse value 25% 25% complete each Time Cost procedure 25% 25% Procedures Building quality control index Building quality Assesses the quality of building regulation and its Steps to comply with Quality of building formalities; completed regulation and its control index (0–15) implementation when final document implementation is received 40 DOING BUSINESS IN KAZAKHSTAN 2019 evaluated by Doing Business—17 proce- prepares the APZ and requests the tech- approval of the Eskiz, the applicant must dures in Almaty city and 18 in the other nical conditions from the utility provider. obtain clearance of the plans for engi- cities and regions benchmarked. Nine of The applicant should receive both the neering networks from the utilities that the steps are required before construc- APZ and the technical conditions from issued the technical conditions. While a tion begins and only one takes place the PSC no later than six business days commission of the local Department of during construction (figure 4.1). after submitting the application.6 Architecture holds weekly meetings with the participation of local utilities to review Before applying for an architectural In practice, however, the “single win- project documentation, in practice the planning assignment (APZ)4—a permit dow” principle for these procedures applicant obtains the clearance separately to develop a building plan or struc- functions only in Almaty city, thanks to from each utility to speed up the process. tural designs for the project—the builder an electronic communication channel needs to complete three steps. First, between the Department of Architecture After completing all these steps, the applicant must obtain topographic and the local utility (box 4.1). Due to the builder must still meet an addi- and geological studies of the land plot; the lack of formal mechanisms (such as tional requirement for project approval these services are performed by private coordination guidelines and an integrated (figure 4.2)—submitting the project licensed firms. Then the builder goes communication system) in the other 15 design for a comprehensive expert to the local utility company to request locations,7 it is faster for the builder to evaluation of project documentation. technical conditions for the connection obtain the technical conditions directly For technically straightforward projects, to water supply and sewerage services.5 from the utility service. the expert evaluation is conducted by In theory, this step should not be neces- accredited private evaluation firms. Only sary. By law, the builder should apply Once the builder obtains the topographic after successfully completing this review through a local Public Service Center and geological surveys, technical condi- is the project considered approved. (PSC), which functions as the front office tions and the APZ, he or she prepares for the state corporation Government for and submits the draft architectural sketch Once the project documentation is Citizens. The PSC then liaises with the (Eskiz) via the PSC to the Department approved, the applicant must hire a tech- local Department of Architecture, which of Architecture for approval.8 Following nical supervision company to oversee FIGURE 4.1  Nine of the 17–18 procedures across the 16 locations apply before construction begins Stage Agency BEFORE CONSTRUCTION Procedures Get topographic and geological surveys of land plot Licensed private firm www. Obtain technical conditions and architectural planning assignment (APZ) Municipality; utilities Seek approval of architectural sketch (Eskiz) and engineering plans Municipality; utilities www. Obtain comprehensive expert examination of project documentation Licensed private firm Hire construction supervision company or specialist Licensed private firm or individual www. Notify GASK of start of construction GASK DURING CONSTRUCTION Receive visit from GASK GASK CONNECTION TO UTILITIES Receive inspection and connect to water and sewerage systems Utilities AFTER CONSTRUCTION www. Register act of acceptance at GBDRN, Department of Architecture and GASK Land Cadastre; GASK Register ownership rights to warehouse Public Service Center (Government for Citizens) Request technical passport, receive inspection and obtain technical passport Public Service Center (Government for Citizens) Government or utility service Private sector service www. Online service Procedure Source: Doing Business database. DEALING WITH CONSTRUCTION PERMITS 41 BOX 4.1  Almaty city leads the way in facilitating communication between the Department of Architecture and utility service providers In principle, a Public Service Center (PSC) should provide a single entry point for a small business to request the architectural planning assignment (APZ) and technical conditions for connection to water and sewerage. However, this is not the case in most Kazakhstani locations. Most applicants obtain the technical conditions from the utility company on their own and then apply for the APZ separately, adding 11.5 days on average to the process. Almaty city is the only measured location that has made the single-entry point work in practice. It has done so by stream- lining the process, improving coordination between the Department of Architecture and utility companies and implementing an electronic document workflow within the Electronic Akimat system,a an integrated platform that allows the Department of Architecture and utility companies to seamlessly exchange documents. Almaty city was the first location to pilot a communica- tion channel between the two agencies in 2016. Currently it takes a builder 10 days to obtain the APZ and technical conditions there—nearly half the time it takes on average for the two procedures across the country (19.5 days). In 2019 Almaty city plans to allow applicants to apply for the APZ and the technical conditions online, reducing the number of trips to the PSC. Single window for architectural planning assignment (APZ) and technical conditions in Almaty city Public Service Center Department of Water Utility Company (PSC) Architecture Client applies for APZ Forwards the request to and technical Prepares TCs water utility company conditions (TCs) Collects TCs, prepares Sends TCs electronically Issues the APZ and TCs APZ and sends package and delivers a paper to client to PSC copy by courier Documents for APZ: Documents for Technical conditions: • Application form • Application form • ID • Specifications checklist • Project request • Title documents • Specifications checklist Electronic Akimat (“Electronic Municipality”) is a state-run electronic management system aimed at introducing e-government platforms in the daily work of local a.  executive bodies to help them streamline procedures and shift to electronic document workflow. FIGURE 4.2  Obtaining a project approval in Kazakhstan requires five procedures involving three separate entities* Obtain Obtain clearance Obtain clearance Obtain approval Obtain technical architectural of plans for of main project of architectural conditions planning engineering (architectural and sketch (Eskiz) assignment (APZ) networks engineering plans) Source: Doing Business database. * The entities involved are the respective water and sewerage utility provider in each location, the Department of Architecture and the PSC. 42 DOING BUSINESS IN KAZAKHSTAN 2019 the course of construction and notify the building to the water supply network and than their counterparts in Europe and Administration of State Architectural and the sewerage system. Central Asia (ECA) and in OECD high- Construction Control (GASK) about the income economies. Across Kazakhstan start of construction works. The appli- After construction the builder must dealing with construction permits requires cant submits the notification through complete seven different steps with the an average of 18 procedures, takes 115 the e-license website (https://elicense authorities, most of which are initiated at days and costs 2.1% of the warehouse .kz/) and receives a confirmation ticket.9 the local PSC. The building company and value. The process is similarly complex The notification is completed online in all the technical supervision firm sign the act across the ECA economies as a whole, locations except Nur-Sultan, where it is of acceptance, certifying that the building but it takes over a month longer on aver- still common to submit the notification in is ready for occupancy. In Kazakhstan the age and costs nearly twice as much—16 person. In Nur-Sultan GASK authorities authorities are not present at this stage for procedures and 170 days, at a cost of 4% ask that the client register the ticket in relatively simple projects such as the one of the warehouse value. By comparison, person after receiving it online, so many in the Doing Business study. The applicant the process of obtaining construction applicants save time by simply submit- must submit three copies of the act of permits in OECD high-income economies ting the notification in person. acceptance to the PSC, which then for- is simpler and less expensive, taking an wards them to three different agencies: one average of 13 procedures and costing 1.5% The applicant may begin construction copy to the State Database of Registered of the warehouse value; however, it takes a works as soon as the notification is Property (GBDRN), which enters the month and a half longer than in the aver- submitted. A February 2018 decree10 technical characteristics into the data- age Kazakhstani location to go through eliminated the requirement for GASK base, and the other two to GASK and the the process. to inspect the site before construction Department of Architecture, both of which starts. In practice, however, a repre- register and archive the act of acceptance.11 Compared globally, all benchmarked sentative of GASK generally still pays All three procedures occur simultaneously locations in Kazakhstan have a high score a visit to the construction site to visu- and when the applicant picks up the act on the building quality control index—13 ally check that the site is in fact located of acceptance from the PSC it is stamped out of 15 possible points. This is ahead of where the documents specify and that by all three agencies. These agencies do Azerbaijan (12 points), Tajikistan (12), the it is properly fenced. not have a shared database, so the PSC Kyrgyz Republic (11) and Uzbekistan (11). interacts with each of them separately to The only economy with a higher score Kazakhstani law mandates that an entre- process the act of acceptance. After receiv- on the building quality control index in preneur hire a private technical supervi- ing the stamped act of acceptance, the the region is the Russian Federation, with sion specialist to oversee construction applicant applies at the PSC to register the 14 points (figure 4.3). The building qual- and submit monthly reports to GASK. rights to the warehouse.12 ity control index assesses both quality This third-party technical supervisor control and safety mechanisms in six pri- also certifies that the building is ready Finally, the applicant typically obtains a mary areas (for a maximum of 15 points): for occupancy after construction is com- technical passport specifying the tech- transparency and quality of building regu- plete. To save time, it is common practice nical characteristics of the completed lations; quality control before, during and to sign a contract with the technical building. Even though this document is after construction; liability and insurance supervisor while the project documenta- no longer required to register property regimes; and professional certifications. tion is still being reviewed by the private rights for newly constructed buildings, In Kazakhstan the Law on Architectural, evaluation firm. Akmola (Kokshetau) is banks (and sometimes other agencies) Town Planning and Construction Activity the only location where builders prefer to request a technical passport for other sets the legal framework for construction, wait for the results of the expert evalua- purposes, so applicants obtain it. This while technical aspects are covered in tion before signing a contract, in order to involves three procedures: submitting the Construction Norms and Rules. The avoid having to make any changes to the an application at the PSC; having an legal framework is national, but municipal contract later. inspection done by the Department of and regional authorities are expected to Land Registry and Technical Inspection provide feedback on the implementation During construction the builder prepares of Immovable Property, which is part of of new reforms and make suggestions the site for connection to water and Government for Citizens; and receiving for further changes. In practice, though, sewerage by conducting excavation and the technical passport from the PSC. interviews with representatives of plumbing works. Once the applicant regional authorities revealed that their informs the utility company that the Despite dealing with a complex process, involvement in this process is minor and site is ready to be connected, the utility builders across Kazakhstan obtain con- that the reform agenda is primarily driven schedules an appointment to connect the struction permits at least a month faster by the authorities in the capital. DEALING WITH CONSTRUCTION PERMITS 43 X X X X X 4.3  FIGURE X has high quality standards butXrequires more procedures X permits in Kazakhstan is fast and Dealing with construction than in OECD high-income economies EFFICIENCY OF CONSTRUCTION PERMITTING BUILDING QUALITY CONTROL Procedures Time Cost Index (number) (days) (% of warehouse value) (0–15) 0 0 Korea, Rep. (global best) 27.5 Georgia 63 8 economies (global best)** 0.2 96.5 Akmola, Kyzylorda Luxembourg, 15 Georgia 0.3 New Zealand, UAE 99.5 Almaty region, Mangystau 4 economies 102.5 Almaty city Russian Federation 1.2 (global best) 8 107.5 Zhambyl (global best)* 113 Nur-Sultan Armenia 1.4 Russian Federation 14 Kazakhstan average 115 Azerbaijan 115.5 Kyrgyz Republic, OECD 1.5 Kyrgyz Republic, Georgia 11 117.5 Karagandy 1.6 Kostanay 13 All 16 locations 118.5 Akobe, Kostanay Aktobe, Almaty region, OECD 12.7 120.5 Pavlodar Azerbaijan 1.9 Kyzylorda, Mangystau 121.5 Atyrau Azerbaijan, Tajikistan, ECA 12 Russian Federation 15 123.5 North Kazakhstan Tajikistan 2.0 Akmola, Karagandy 128.5 East Kazakhstan Nur-Sultan, Pavlodar, Kazakhstan average 2.1 OECD 11.5 ECA 16 Kyrgyz Republic 135.5 East Kazakhstan, Zhambyl 137.5 West Kazakhstan 2.2 Almaty city, Shymkent, Kyrgyz Republic, Uzbekistan Uzbekistan 17 Almaty city 141.5 Shymkent North Kazakhstan 11 OECD 151.5 2.3 Atyrau, West Kazakhstan Azerbaijan 18 15 locations ECA 153.1 Uzbekistan 3.3 Armenia 9 20 Tajikistan 170.1 Armenia ECA 4.0 Russian Federation 182 Georgia 7 Tajikistan 25 Uzbekistan 194 Azerbaijan 4.5 Source: Doing Business database. Note: OECD is the average for OECD high-income economies; ECA is the average for economies of Europe and Central Asia. * These are Denmark, the Marshall Islands, Cyprus and Montenegro. ** These are Mongolia, St. Vincent and the Grenadines, Trinidad and Tobago, Barbados, Estonia, Suriname, the Czech Republic and the Slovak Republic. A good performance on the building reports to the regional authorities during and sewerage systems varies in practice quality control index is buttressed by construction. After construction is com- across Kazakhstan. accessibility to information, quality con- plete, final inspections are carried out by trol before, during and after construction the in-house engineer and the technical Obtaining the necessary approvals to and qualified professionals working in the supervision company. If structural defects build a warehouse and connect it to water construction industry. There is still room are discovered after a building has been and sewerage systems requires between for improvement on setting mandatory occupied, Kazakhstani law holds the 17 and 18 procedures, takes between insurance regimes to safeguard against architect or engineer in charge of drawing 96.5 and 141.5 days and costs between defects in construction and on introduc- the plans, the professional in charge of the 1.6% and 2.3% of the warehouse value. ing a mechanism of risk-based techni- technical supervision and the construc- The process is easiest in Almaty city and cal inspections during construction.13 tion company legally liable. However, most difficult in Shymkent (table 4.1). In Kazakhstan makes all building regula- there is no legal obligation for any of the Almaty city entrepreneurs can obtain the tions and information on all required involved parties to obtain a mandatory APZ and the technical conditions for the construction permitting steps available insurance policy to cover possible defects. connection to water and sewerage at a to the public online and clearly specifies Finally, Kazakhstan has formal qualifica- single window. Overall, the process there the fees for government services. Local tion requirements for the professionals takes 102.5 days at a cost of 2.2% of authorities in all the locations are staffed involved in reviewing the plans and super- the warehouse value. The same process with licensed architects and engineers vising construction activities. in Shymkent will cost the same but will who verify that the building plans follow require an extra procedure and take 39 the building regulations and who partici- How the process compares additional days. pate in approving the plans. The project Even though the construction permit- designer and the independent technical ting system is legally mandated at the In four regions—Kyzylorda, Akmola supervision company responsible for the national level, the efficiency of building (Kokshetau), Mangystau (Aktau) project are required to submit monthly a warehouse and connecting it to water and Almaty region (Taldykorgan)—the 44 DOING BUSINESS IN KAZAKHSTAN 2019 TABLE 4.1  Dealing with construction permits in Kazakhstan—where is it easier? geological studies, dating back to Soviet times. Another advantage: these loca- Ease of doing Cost Building quality business score Procedures Time (% of warehouse control index tions have a large number of highly pro- Location Rank (0–100) (number) (days) value) (0–15) fessional laboratories—five in Kokshetau Almaty city 1 76.47 17 102.5 2.2 13 and four in the city of Kyzylorda—where Kyzylorda 2 76.24 18 96.5 1.9 13 soil testing and analysis are performed. In the Almaty region (Taldykorgan) builders Akmola 3 76.07 18 96.5 2.0 13 (Kokshetau) credit the mild winters for keeping the Mangystau 4 76.03 18 99.5 1.9 13 process moving, as topographic surveys (Aktau) and geological studies can be conducted Almaty region 5 75.99 18 99.5 2.0 13 year-round with few interruptions. (Taldykorgan) Zhambyl 6 75.23 18 107.5 2.1 13 Securing the expert evaluation of proj- (Taraz) ect documentation is the longest step Kostanay 7 74.99 18 118.5 1.6 13 in the process and the second largest Nur-Sultan 8 74.80 18 113 2.1 13 driver of time differences after obtaining Aktobe 9 74.59 18 118.5 1.9 13 topographic and geological studies. The time ranges from 25 days in Mangystau, Karagandy 10 74.54 18 117.5 2.0 13 Aktobe and Pavlodar to 40 days in North Pavlodar 11 74.22 18 120.5 2.1 13 Kazakhstan (Petropavl) and Zhambyl North (Taraz). While licensed private firms have Kazakhstan 12 73.88 18 123.5 2.2 13 (Petropavl) an incentive to conduct the evaluation in a timely manner in order to attract more Atyrau 13 73.87 18 121.5 2.3 13 business, they are often understaffed and East have a backlog of projects to evaluate. Kazakhstan 14 73.60 18 128.5 2.1 13 (Oskemen) In practice, completing the evaluation West requires several rounds of revisions and Kazakhstan 15 72.75 18 137.5 2.3 13 consultations, taking far longer than the (Oral) legal time limit of 14 days. While project Shymkent 16 72.59 18 141.5 2.2 13 evaluation accounts for 21% to 37% of Source: Doing Business database. the total time it takes to build a ware- Note: Rankings are based on the average ease of doing business score for the procedures, time and cost associated house and connect it to utilities, the main with dealing with construction permits as well as for the building quality control index. The ease of doing business score is normalized to range from 0 to 100, with 100 representing the best regulatory practices (the higher the score, drivers of the variation in time across the the better). The ease of doing business score from the 2019 report includes all data revisions and methodological locations are the waiting times to obtain changes implemented since the Doing Business in Kazakhstan 2017 report. In addition, the inclusion of 8 new locations in the 2019 report produced changes in the classification of previous reports on the economy. For more topographic and geological studies details, see the chapter “About Doing Business and Doing Business in Kazakhstan 2019.” (figure 4.4), which can range from 8% to 23% of the total time. construction permitting process takes for each in Kyzylorda. The average in less than 100 days, thanks to fast turn- Kazakhstan is 8 days for a topographic Services rendered by licensed private around times for getting topographic study and 18 days for a geological study. sector professionals account for nearly and geological surveys and for obtaining all the cost of the construction pro- technical conditions and clearances Interactions with the water utility are cess—and are also the greatest source of from the utility. At 96.5 days overall, the also fast in these four regions. It takes 7 variations across locations. The average permitting process is faster in Kyzylorda days to obtain technical conditions for cost of dealing with construction permits and Akmola than in Armenia (98 days), the water and sewerage connection in in Kazakhstan is 2.1% of the warehouse and at 99.5 days it is faster in Mangystau all four locations and 4 days to obtain value—KZT 2,624,374 ($8,095)—and and Almaty region (Taldykorgan) than in a clearance of the plans for engineering ranges from 1.6% of the warehouse Estonia (103 days). It takes only 6 days to networks in Almaty region (Taldykorgan) value in Kostanay to 2.3% in Atyrau. The obtain a topographic survey and 12 days and Kyzylorda. Across Kazakhstan these entrepreneur incurs the highest expenses to get a geological study in Almaty region procedures take on average 9.5 days when obtaining topographic and geologi- (Taldykorgan), while in Mangystau it and 8.6 days, respectively. Historically, cal studies, receiving an expert evaluation takes only 7 days and 11 days for these Akmola and Kyzylorda are regions with of the project documentation and hiring a procedures, respectively, and 7 days specific technical expertise in the field of construction supervision specialist. These DEALING WITH CONSTRUCTION PERMITS 45 FIGURE 4.4  Waiting times for topographic and geological studies are the main drivers of the variation in time in construction permitting Total time (days) Akmola (Kokshetau) 12 15 9 4 32 18 6.5 96.5 Kyzylorda 8 15 14 4 30 20 5.5 96.5 Almaty region (Taldykorgan) 12 15 14 4 30 19 5.5 99.5 Mangystau (Aktau) 11 15 14 10 25 19 5.5 99.5 Almaty city 14 10 14 10 30 19 5.5 102.5 Zhambyl (Taraz) 10 14 14 5 40 19 5.5 107.5 Nur-Sultan 17 20 14 7 30 19 6 113.0 Karagandy 26 16 14 7 30 19 5.5 117.5 Aktobe 15 26 14 14 25 19 5.5 118.5 Kostanay 15 21 16 7 35 19 5.5 118.5 Pavlodar 21 29 7 14 25 19 5.5 120.5 Atyrau 17 22 14 11 33 19 5.5 121.5 North Kazakhstan (Petropavl) 22 15 11 12 40 18 5.5 123.5 East Kazakhstan (Oskemen) 30 23 14 5 33 18 5.5 128.5 West Kazakhstan (Oral) 25 25 14 14 35 19 5.5 137.5 Shymkent 30 31 14 9 30 22 5.5 141.5 0 20 40 60 80 100 120 140 160 Time to deal with construction permits (days) Topographic and geological surveys Architectural planning assignment (APZ) & technical conditions Approval of architectural sketch (Eskiz) Clearances of engineering plans Expert examination Registration & technical passport Other Source: Doing Business database. services are all rendered by licensed Builders in Kostanay claim that the lower when compared with the national private sector firms in Kazakhstan and market for private firms and laboratories average of KZT 1,556,128 ($4,800). The account for 96% of the cost of dealing offering geological studies in the city geological survey is most expensive in with construction permits (figure 4.5). In is oversaturated, driving competition Atyrau (KZT 600,000, or ($1,851); one Kostanay a builder spends KZT 300,000 and lowering prices. Hiring a licensed explanation is that Atyrau’s main focus is ($925) on a geological survey, which is private construction supervisor is also oil production, which increases demand 28% lower than the national average for cheapest in Kostanay, where it costs the (and therefore prices) for specialized this procedure (KZT 417,319, or $1,287). builder KZT 1,200,000 ($3,702)—23% services such as geological surveys. FIGURE 4.5  Private sector services account for 96% of the cost of dealing with construction permits Type of fee, as a share of total cost across Kazakhstan Cost of dealing with construction permits, Kazakhstan average Technical Utility - water KZT 2,624,374 ($8,095) passport and sewerage 2.3% 1.5% Other: technical Kostanay characteristics KZT registration 2,057,504 Mangystau ($6,347)KZT 2,393,151 0.2% ($7,382) Shymkent Kyzylorda KZT North KZT 2,821,326 Kazakhstan 2,405,518 Evaluation of Almaty city ($8,703) KZT ($7,420) KZT 2,829,002 project documents Almaty region 2,743,505 ($9,727) KZT 16% ($8,463) 2,439,010 West Kazakhstan ($7,524) Atyrau East Kazakhstan KZT Aktobe KZT KZT 2,986,706 2,947,894 KZT Technical supervision 2,739,427 ($9,093) 2,471,845 Topographic and ($9,213) 59% ($8,450) ($7,625) geological studies Pavlodar Akmola 21% KZT KZT 2,699,768 2,571,473 Karagandy ($8,328) Nur-Sultan ($7,932) Zhambyl KZT KZT KZT 2,595,474 2,661,179 2,627,205 ($8,006) ($8,209) ($8,104) Source: Doing Business database. Note: Costs are based on the assumed Doing Business warehouse, valued at KZT 127,888,723.76 ($394,500). 46 DOING BUSINESS IN KAZAKHSTAN 2019 Obtaining a private expert evaluation checks this information during the In an effort to make construction per- of the project documentation is most expert evaluation of project documen- mitting easier, Kazakhstan has put more expensive in Almaty city (KZT 448,000, tation.14 This reform reduced the time of these services under the umbrella of or $1,382), which is in part due to the to obtain construction permits by 17.5 the PSCs. Relying on PSCs to be the high demand for such services in the days in Aktobe and 52.5 days in East intermediary between the builder and largest business city. Finally, hiring a pri- Kazakhstan (Oskemen). the authority has brought many oth- vate construction supervision specialist erwise cumbersome procedures under is most expensive in West Kazakhstan In March 2018 Kazakhstan merged one roof. While the applicant must (Oral), at KZT 1,800,020 ($5,553). the water utility site inspection with still complete a long list of procedures, the procedure to connect to water and strict internal guidelines on compliance sewerage, eliminating the need for two have had a positive impact on the time WHAT HAS CHANGED? separate interactions.15 As all the con- it takes PSCs to comply with construc- struction works to prepare the site for the tion permitting. For example, the act Eight previously measured locations in connection are carried out by the building of acceptance must be filed with three Kazakhstan have improved construc- company, the water utility comes on separate entities, but the applicant now tion permitting since 2016 by reducing the day of the connection to make sure needs to go just to the local PSC instead approval times, streamlining and that the builder is ready to connect to of visiting each agency separately. It is eliminating cumbersome procedures, the main water source and supervises up to the PSC to make sure that the and improving electronic platforms the connection. This step eliminated 1 time limits for registering the act of (table 4.2). These changes were procedure and reduced the time by 1 day acceptance with the three agencies are implemented at the national level and in all locations. respected. Because these procedures have had an effect throughout all the now go through the PSC, the legally benchmarked locations. Kazakhstan created additional incentives mandated time limits to register the for entrepreneurs to build by lowering act of acceptance and to register prop- At the national level Kazakhstan property registration costs by 90% for erty rights to the warehouse are being eliminated the need for clearance of small businesses. Previously, the cost respected in all benchmarked locations. the plans for engineering networks for property registration was measured by the Department of Architecture in in units of the monthly calculation index In fact, it takes less time now than in 2017 February 2018. The builder previously (MCI) and constituted 10 times the for most construction-related procedures had to obtain this clearance from both MCI.16 However, thanks to legislation conducted through PSCs. This improve- the Department of Architecture and passed in September 2018, the cost of ment is due in part to the strict oversight the water utility service provider, which registration for small businesses17 was exercised by Government for Citizens constituted two separate procedures. reduced to a flat fee of KZT 2,147.30 to make sure that individual agencies Today only the water utility’s clearance ($6.62), which reduced the cost for this and PSCs are meeting the deadlines for is required, as a licensed architect procedure across Kazakhstan. completing procedures. The regulator TABLE 4.2  Who has made it easier to deal with construction permits since 2016? Reduced approval Streamlined Improved Improved electronic Location Overall time procedures efficiency notification mechanisms Aktobe ✔ ✔ ✔ ✔ ✔ Almaty city ✔ ✔ ✔ ✔ ✔ Nur-Sultan ✔ ✔ ✔ ✔ East Kazakhstan ✔ ✔ ✔ ✔ ✔ (Oskemen) Karagandy ✔ ✔ ✔ ✔ ✔ Kostanay ✔ ✔ ✔ ✔ ✔ Pavlodar ✔ ✔ ✔ ✔ ✔ Shymkent ✔ ✔ ✔ ✔ ✔ Source: Doing Business database. Note: This table records all Doing Business reforms that occurred between December 2016 and December 2018. ✔ = Doing Business improvement making it easier to deal with construction permits. DEALING WITH CONSTRUCTION PERMITS 47 requires the agencies to submit monthly submits the act of acceptance to the PSC, some of the procedures that are admin- tracking reports of their work, with a it is registered at the same time with the istered by PSCs after construction, such system of warnings and fines established GBDRN, GASK and the Department of as registering the act of acceptance with for exceeding legal time limits. Architecture. However, entrepreneurs the GBDRN, GASK and the Department continue to request—and the adminis- of Architecture and registering the rights As a result, deadlines are being met. It takes tration continues to issue—a technical to the warehouse. For this to work, the one day to complete the registrations of passport, as this is still necessary for government would need to unify the the act of acceptance with GBDRN, GASK other purposes; for example, banks electronic databases between these and the Department of Architecture, three require it to use a building as collateral. agencies to facilitate coordination. The days to register the rights of the ware- In practice, then, this reform has added improvement would reduce the number house and one day to request a technical a new procedure and complicated the of interactions between the applicant passport. In nine locations applicants can process instead of simplifying it. and the PSC by three steps. obtain a technical passport within the official time limit of 12 days.18 Integrate electronic platforms WHAT CAN BE IMPROVED? and improve communication Despite improvements, some locations between agencies involved in are still struggling to meet deadlines to Increase efficiency by construction permitting issue approvals and clearances. Builders in consolidating procedures Kazakhstan has already made tremen- East Kazakhstan, Kostanay and Shymkent One of the main bottlenecks for construc- dous leaps in its efforts to improve still experience delays in obtaining a tech- tion permitting in Kazakhstan is the large coordination between agencies and nical passport for a completed building.19 number of clearances and approvals an increase the number of construction Nevertheless, channeling this procedure entrepreneur must obtain before and permitting services that can now be only through the PSC is helping these after construction. A Kazakhstani builder completed online. Consequently, the cities close the gap. The process is 9 days must complete five more steps on average number of required procedures to faster in Oskemen than it was in 2016 than a builder in the average OECD high- build a warehouse in Almaty city has and 13 days faster in Shymkent. Locations income economy. Of the 17 to 18 required gone down from 28 in 2013 to 17 in have also reduced the time to obtain the procedures, 9 are necessary before con- 2019. This trend is expected to con- APZ and the approval of the architectural struction works may even begin. tinue. In December 2017 the govern- sketch, or Eskiz. Notably, the time it takes ment approved the launch of Digital for builders to obtain the APZ has been Despite continuous efforts to try to Kazakhstan22—a five-year program that reduced by 7 days in Nur-Sultan, 12 days in reduce the number of required steps, uses digital technologies to improve East Kazakhstan and 11 days in Shymkent. construction permitting in Kazakhstan many of the services offered to citizens. The approval of the Eskiz now takes 9 still has several areas where procedures Kazakhstan could use this initiative fewer days in Nur-Sultan than in 2016, 6 could be consolidated. While the plans for as an opportunity to strengthen com- fewer days in Kostanay and 5 fewer days engineering networks are no longer being munication mechanisms and integrate in Shymkent.20 separately approved by the Department electronic portals between agencies of Architecture, they continue to require involved in construction permitting and Not all changes have made construc- clearance by the utility. This clearance is oversight across the country. tion permitting easier for entrepreneurs, later repeated during the comprehensive though, and a well-meaning reform can evaluation of project documentation by a For example, the use of an online have unintended consequences. Take private company. Kazakhstan could sim- communication platform between the the technical passport. In an effort to plify this process by making the technical Department of Architecture and utility simplify postconstruction procedures, conditions from the utilities available on service providers has improved efficiency Kazakhstan eliminated the need to obtain the online platform used by the expert in Almaty city and made it easier for the this document for newly constructed committee (epsd.kz). The private evalua- agencies to prepare and exchange docu- buildings—a cumbersome procedure tion firm could then review the engineer- ments necessary for the development of requiring three separate interactions ing plans against the technical conditions the construction project. This mechanism with authorities. The technical passport issued by the utility. In some locations is not fully implemented in any of the was replaced by a new procedure, where eliminating the separate clearance by the other benchmarked locations, although the act of acceptance and the approved utility could save builders two weeks. plans to do so are in the pipeline. project design are used to enter technical characteristics of the building into the To reduce the number of postconstruc- The United Arab Emirates serves as an GBDRN database.21 When the applicant tion steps, Kazakhstan could consolidate example of an economy where a similar 48 DOING BUSINESS IN KAZAKHSTAN 2019 reform was successfully implemented. In contractual obligations establish the This classification system also leads to May 2014 the Dubai municipality granted liability term (usually 10 years) and insur- a variation in the legal deadlines to com- the Dubai Civil Defense Authority direct ance requirements. In Kazakhstan latent plete certain procedures, with more com- access to its e-permitting system in order defect liability coverage is not usually plex projects having longer time limits for to review and grant approvals online. This addressed in contracts and most parties review. However, the existing risk catego- innovation made it possible to request and do not obtain such insurance in practice. rization does not determine the type and obtain the civil defense approval jointly number of inspections required during with the request for the no-objection Liability insurance is vital in the construc- the construction process. The inspection certificates and the building permit, tion industry because it ensures account- process in Kazakhstan is in the hands reducing the number of procedures and ability of practitioners and enforcement of private third-party companies and days required to complete the process. agencies and provides safeguards to in-house engineers. While conducting project owners as well as to the public. In technical inspections during construction Integrating the electronic platforms used Kazakhstan, where many construction- is critical to ensure construction safety, by the various agencies involved in con- related services tend to be handed taking into account potential risks of the struction would also allow for enhanced over to the private sector, protection different project types is, arguably, even coordination. At the moment representa- mechanisms such as decennial liability more important. Currently Kazakhstan tives of these agencies—the Department insurance are essential. Nowadays for a lacks a mechanism to differentiate the of Architecture, GASK and the State simple construction project, everything inspection process based on the project’s Evaluation of Projects (GosEkspertiza)23 from project design to expert evaluation size, purpose, category of risk or potential —are unable to view information on the of project documentation to technical danger to the public. status of approvals, clearances or super- supervision can be outsourced to the vision handled by the other agencies. A private sector, which simplifies the Introducing risk-based inspections is not shared database would allow a GASK construction process for the builder without difficulty. Some prerequisites representative, for example, to easily and increases efficiency. The practice include having a strong legal system check on a construction project to see of involving private sector professionals in place, being able to accurately clas- whether the documentation has been in the construction permitting process sify buildings by risk and ensuring proper evaluated at GosEkspertiza. makes it important to institute legal training for inspectors and engineers, requirements for insurance regimes. among other criteria. Introducing coordination mechanisms and integrating platforms would increase Recently, India and Togo introduced legal Differentiating technical inspections by transparency, improve efficiency and help requirements for parties to subscribe to category of construction risk has multiple decrease the number of human interac- latent defect liability insurance, holding benefits. It would allow for potentially tions between parties, thereby decreas- architects and engineers who designed dangerous projects to be treated with ing the number of procedures the builder the project, the professional in charge of more scrutiny, increasing building safety. has to complete separately. technical inspections during construction It would also help allocate resources and the construction company liable. In more wisely and efficiently and could Introduce mandatory insurance addition, while there is no legal require- simplify the process of obtaining some regimes for latent defects ment in the Philippines to subscribe to of the approvals before and after con- In Kazakhstan, if structural defects are latent defect liability insurance, involved struction for less complicated projects. discovered in a building once it is in parties now commonly obtain insurance By spending less time on low-risk con- use, the liability falls on the architect plans to protect themselves in case of struction, inspectors could devote more or engineer who designed the plans, structural defects discovered after con- attention to higher-risk projects such as the professional who was in charge of struction is complete.24 high-rises or power plants. the supervision and the construction company. However, purchasing liabil- Take the existing classification Here Kazakhstan could take a page from ity insurance to cover costs associated of risk categories for buildings a the Russian Federation, which intro- with structural defects (“latent defect step further and introduce risk- duced a system in which the number of liability insurance”) is not required by law. based inspections inspections varies depending on the risk Without insurance, payment of damages Kazakhstan has a system for classifying categories of construction projects. Since by those found liable can be difficult if not construction projects by risk level, which Kazakhstan already has a detailed build- impossible to secure. In many countries affects the permitting process for obtain- ing classification system in place, the where there is no legal requirement to ing approvals and carrying out the expert next logical step is to introduce legisla- purchase latent defect liability insurance, evaluation of project documentation. tive changes that would outline a matrix DEALING WITH CONSTRUCTION PERMITS 49 of inspections during the construction parties to understand. There also needs for entrepreneurs and officials alike, and process, taking the potential risk level to be oversight of the private sector to has added an extra step to an already into consideration. Such a matrix would ensure that the required inspections are cumbersome process. clearly prescribe the type, number, and actually taking place. In the 1990s New frequency of inspections, depending on Zealand attempted to hand over many of When an economy is on a path of the category of the construction project. the regulatory duties to the private sector rapid development, many changes are without ensuring that proper private cer- often introduced in short periods of Clarify the role of GASK in tification requirements were in place. This time. While the intention is to make a construction supervision resulted in the “leaky building syndrome,” process more efficient and transparent, In an effort to prevent unauthorized with the cost of repairing 42,000 leaky rapid changes can lead to confusion inspections and to reduce corruption buildings amounting to more than $8.3 for the implementing agency as well as risks, Kazakhstan has over time moved billion. The attempt to switch entirely to for the client. A legislative body needs away from inspections conducted exclu- third-party inspections backfired, and time to fully implement a reform in sively by GASK and has handed over New Zealand eventually reverted to the practice, properly disseminate informa- most of the responsibilities for ensuring traditional public sector regulatory role.25 tion regarding impending changes and quality and safety in construction to train the various agencies involved. If the private sector and to the in-house Similarly, barring GASK entirely from the permitting agencies are themselves engineer. However, the change has not official inspections during the construc- struggling to keep up with implementing been smoothly implemented. Frequent tion process could lead to long-term rapid legislative changes, the builder revisions to the regulation have created quality and safety risks. Since GASK’s may circumvent certain legally required confusion among builders and GASK main duty is to ensure safety practices procedures in order to complete the representatives regarding the power the in construction, inspection protocols project in the scheduled time frame, inspection authority now has. The confu- could be strengthened by allowing the increasing corruption risks and putting sion is amplified by the fact that neither officials on-site once during construction the safety of the construction project the entrepreneurs nor the local authori- to mitigate the risk that the construction in question. ties are always certain about the stage of project does not follow GASK-approved implementation of new regulations. construction standards. When new regulations go into effect, they must be accompanied by a strong Builders and GASK authorities alike Implement reforms fully, dissemination campaign that com- report that unauthorized site visits and with ample dissemination of municates the changes to the relevant general visual inspections by GASK information to civil servants and authorities and the public in writing and inspectors continue to take place. GASK the public that includes procedural manuals, clear inspectors should inspect a site only Kazakhstan recently abolished the guidelines and regular training workshops when an official complaint is filed. At requirement to obtain a technical for local agencies and clients. On the side the same time, inspections conducted passport for newly constructed build- of the permitting authorities, reports in by private licensed experts allegedly do ings. Instead, it is sufficient to simply the regions—especially in less populous, not occur regularly, are unreliable and do register the technical characteristics of more remote locations—suggest that not always ensure safety of construction. the building in the GBDRN database—a there is a lack of consistent dissemination Builders interviewed in the context of new procedure that was introduced to and training workshops on new reforms. this study report that they sometimes replace the procedures for obtaining Local and regional authorities across nominally sign contracts with technical a technical passport. While officially Kazakhstan should receive training on supervisors to expedite construction but a builder no longer needs to obtain a major changes in construction permitting that inspections do not necessarily take technical passport in order to register procedures so that they can understand place in practice. For this reason, GASK property rights, the study found that them and communicate them to the inspectors in many regions expect entrepreneurs continue to obtain a tech- public. This requires building rapport that some inspection functions will be nical passport for newly constructed between the central legislative body, local returned to GASK authorities in 2019. buildings, as it remains required in later implementing authorities and the public. operations (e.g., to be used as collateral Targeted training workshops and effec- While giving the private sector more at the bank). This reform has thus far tive, ongoing communication campaigns responsibility in construction supervision failed to simplify the process, since in with civil servants and the public would is generally a good practice—so long as practice builders continue obtaining a improve the quality of public service in the mission is well-defined and regu- technical passport (a three-step pro- construction and eliminate misinterpre- lated—the process must be easy for all cess). Moreover, it has caused confusion tation of regulatory changes.26 50 DOING BUSINESS IN KAZAKHSTAN 2019 Provide technical consultation Kazakhstan.” October 17. Available at https: entity registration certificate and the act of //ru.sputniknews.kz/economy/20181016 acceptance signed and stamped by GBDRN, services on construction /7625992/kazakhstan-vvp-rost.html. GASK and the Department of Architecture. permitting to entrepreneurs at 2. Ministry of National Economy of the Republic 13. While a law defining risk categories for the Public Service Centers of Kazakhstan. Committee on Statistics. buildings exists, it has no impact on Site table downloaded on December 16, construction supervision procedures. PSCs coordinate construction permitting 2018. Available at http:/ /stat.gov.kz. 14. Based on Order No. 135 of the Minister of services between the entrepreneur and 3. Ministry of National Economy. Committee on Investment and Development dated February the relevant public agency. As a result, Statistics. Site table downloaded on December 26, 2018 (On Changes and Amendments to 16, 2018. Available at http:/ /stat.gov.kz. Certain Decrees of the Minister of National builders have fewer direct interactions 4. The APZ, which is issued by the local office Economy of the Republic of Kazakhstan), with construction experts responsible for of the Department of Architecture, includes and Order No. 111 of the Minister of National reviewing and approving the documenta- provisions and requirements that the Economy dated March 15, 2018 (On entrepreneur must take into account while Amendments to Order No. 153 of the Minister tion for their projects. While this has developing the project. of National Economy of the Republic of simplified many processes by creating a 5. Technical conditions indicate the technical Kazakhstan). single entry point, applicants’ technical aspects of connecting to the utilities, such as 15. This reform was passed on March 15, 2018 the available capacity in that region, points of (Order No. 111 of the Ministry of National queries may go beyond the expertise of the connections and engineering solutions. Economy). representatives staffing the PSCs. This can 6. The APZ is supposed to be issued within six 16. The monthly calculation index (MCI) is a lead to delays—for example, if the applicant business days from the time of application. value established by law to calculate social Within this six-day period, the Department benefits as well as penalties, taxes and other needs to consult with the Department of of Architecture is supposed to obtain charges. It is determined annually during Architecture before being able to submit technical conditions from the respective the budgeting process and is based on the the necessary documentation—and can water service provider, which has two expected inflation rate for the next year. One business days to turn around the request. MCI was equivalent to KZT 2,405 ($7.42) in cause misinformation if a PSC representa- This is the deadline that water authorities 2018 and to KZT 2,525 ($7.79) in 2019. tive tries to solve an issue beyond his or her are having a hard time meeting, and delays 17. Based on Order No. 418 of the Minister of direct expertise. In the long run, this could at this stage can hold up the issuance of the Information and Communications dated APZ. This is why builders continue to obtain September 27, 2018 (On Setting Prices result in complicating the communication the technical conditions on their own in all on Goods (Services) in the area of State process and cause delays in submitting locations except Almaty city. Registration of Property Rights). applications and receiving the necessary 7. In all locations except Almaty city the 18. These nine locations are Aktobe, Almaty Department of Architecture has to send region (Taldykorgan), Almaty city, Nur-Sultan, clearances and approvals. someone on foot to the utility service Karagandy, Mangystau, Pavlodar, West providers to submit the application for Kazakhstan and Zhambyl. A possible solution would be to allow technical conditions and then to pick up the 19. Obtaining a technical passport takes 13 days prepared document. in East Kazakhstan, 14 days in Kostanay and entrepreneurs to consult technical experts 8. The official time limit for the approval of the 17 days in Shymkent. at the Department of Architecture prior Eskiz is 10 business days for buildings that 20. The times for obtaining approval of the Eskiz to submitting an application to a PSC. are not technically complex and 15 business have also gone down in Aktobe (by 3 days), days for technically complex buildings. In Almaty City (by 2 days) and East Kazakhstan These experts could establish “office practice, the time to obtain approval of the (by 1 day). hours” at PSCs on certain days of the Eskiz for the warehouse assumed in this 21. This takes two days (one day to submit the week to provide consultation services on study varies from 9 to 15 calendar days application and another to pick it up) and across locations. costs KZT 4,933 ($15.22). The change was construction-related issues. The Russian 9. While the confirmation ticket is issued introduced as a result of changes to Law No. Federation’s multifunctional centers immediately, GASK reviews the documents 49 on Amendments to Certain Legislative have a similar consultation service for within one business day, and if authorities Acts of the Republic of Kazakhstan in Relation discover any inconsistencies, they may recall to Issues of Improvement of the Civil Law, legal issues related to incorporation the ticket. In that case, construction activities Banking Law and Improvement of Conditions procedures and property registration. must be halted until the issues are fixed. of Business Activity, as of February 27, 2017, Kazakhstan could take such an approach 10. Order No. 135 of the Minister of Investment and changes to Article 18 of Law No. 310 (“On and Development of the Republic of further and provide an array of consulta- Kazakhstan dated February 26, 2018 (On government registration of property rights”) as of July 26, 2017. tions on technical aspects of the con- Changes and Amendments to Certain Decrees of the Minister of National Economy 22. The Digital Kazakhstan program is being struction process. Making consultation implemented across the country from 2018 of the Republic of Kazakhstan), canceled services commonplace would, in turn, the requirement for GASK to inspect the to 2022, and many of the 120 projects are lead to more complete applications and site before construction, which had been already underway. The program aims to put established in construction rules issued in the economy on a digital path in five key a lower rate of refusals and requests for 2015 (Decree No. 750 of the Minister of areas: digitalizing the different branches revisions from the technical agency. National Economy). of the economy; providing state services 11. Sending the act of acceptance to GASK and for businesses and individuals online; the Department of Architecture is essentially a implementing the Digital Silk Way for the notification to both agencies that construction transfer, storage and processing of data; NOTES works have been completed. transforming human capital development; and 12. The following documents must be creating an innovative ecosystem. For more 1. Sputnik Kazakhstan. 2018. “Softening of submitted to the PSC to register property information, see https:/ /digitalkz.kz/en/about- inflation pressure and increase in investment rights: an application, proof of ownership, the-program/. demand drive economic activity in payment receipt, identification or legal DEALING WITH CONSTRUCTION PERMITS 51 23. The state enterprise GosEkspertiza evaluates government-funded projects, projects of high technical complexity and social, transportation and recreational infrastructure construction. 24. World Bank. 2019. Doing Business 2019: Training for Reform. Washington, DC: World Bank. 25. World Bank. 2018. Doing Business 2018: Reforming to Create Jobs. “Dealing with Construction Permits: Private sector participation in construction regulation.” Washington, DC: World Bank. 26. World Bank. 2019. Doing Business 2019: Training for Reform. 52 DOING BUSINESS IN KAZAKHSTAN 2019 Getting Electricity MAIN FINDINGS ƒƒ Obtaining a new electricity connection in Kazakhstan is easiest in Almaty city and Mangystau (Aktau) and most difficult in East Kazakhstan (Oskemen) and Karagandy. ƒƒ Kazakhstan has made obtaining a new electricity connection easier by eliminating the need to obtain an expert opinion after completion of external works. ƒƒ Among the eight locations benchmarked in 2017, Nur-Sultan, Shymkent and Karagandy have made the most progress toward the best regulatory performance in getting electricity. ƒƒ The time to obtain a project design and its approval accounts for more than a third of the total time to obtain a new electricity connection. ƒƒ Only the cities of Almaty and Nur-Sultan and the Mangystau (Aktau) and Pavlodar regions have automated systems to monitor and restore outages. Other locations could follow suit. GETTING ELECTRICITY 53 Kazakhstan has made tremendous Unreliable power supply may also push of power generation and distribution. progress in improving access to electric- firms to cope with more expensive but The Electricity Grid Operating Company ity over the past few years. In 2015 the less productive strategies such as self- (KEGOC)—a state-owned company— economy achieved 100% electrification, generation, increasing production costs maintains monopoly over the power bringing electricity within the reach of the and making firms less competitive.3 transmission system.4 entire population.1 But getting connected to the national grid can still be a cumber- Connecting a warehouse to an electricity some process, and even after a customer HOW DOES GETTING grid in Kazakhstan involves between six is connected, supply can be unreliable. ELECTRICITY WORK IN and eight steps, depending on the location In 2019 it took over two months for new KAZAKHSTAN? (figure 5.1). The first step is to request a businesses in Kazakhstan to obtain a new connection and obtain technical condi- electricity connection, and more than a Getting electricity in Kazakhstan is tions at the office of the local distribution third of electricity distribution utilities governed by the Laws on the Electric utility. In Almaty city only, the request for had inadequate monitoring and records Power Industry and the Rules on the Use technical conditions can be made online, on outages. of Electrical Energy. Under the orders of but most applicants complete the process the Ministry of Energy, several legisla- in person. Next, the distribution utility Yet access to reliable electricity has tive amendments aimed at improving determines the load demand (in kilowatt- many benefits for local firms and their the efficiency and quality of power hours, kWh); verifies whether an under- economies. It boosts their productiv- supply have been made to these laws, ground or overhead connection is needed; ity and competitiveness and promotes most recently in 2017. The laws grant and determines whether an existing sub- broad-based growth across regions. In the Committee for Atomic and Energy station can accommodate the requested economies where regional disparities Supervision and Control the mandate to load or if a new substation must be in stable power supply are high, firms supervise and regulate the energy mar- installed. A technical officer prepares and may choose to concentrate in loca- ket. Private participation in the energy issues the technical conditions based on tions where electricity disruption is sector has increased in recent years, these specifications. Technical conditions minimal, widening regional inequality.2 with private firms controlling over 85% identify the electricity facilities available What Does Getting Electricity Measure? Doing Business records all procedures required for a business to obtain Getting electricity: measuring efficiency, a permanent electricity connection and supply for a standardized warehouse. reliability and transparency These procedures include applications and contracts with electricity utilities, all necessary inspections and clearances from the distribution utility and Rankings are based on scores other agencies, and the external and final connection works. To make the for four indicators data comparable across locations, several assumptions about the warehouse and the electricity connection are used. The location of the warehouse is Days to obtain an Cost to obtain a electricity connection connection, as % of assumed to be within city limits, the subscribed capacity of the connection income per capita 140 kilovolt-amperes (kVA), and the length of the connection 150 meters. Doing Business also measures how reliable the supply of energy is and how 25% 25% Time Cost transparent the consumption tariffs are. Its reliability of supply and transparency of tariffs index encompasses quantitative data on the duration and frequency 25% 25% Procedures Reliability of power outages as well as qualitative information on several aspects: of supply and transparency the mechanisms put in place by the utility for monitoring power outages and of tariffs restoring power supply, the reporting relationship between the utility and the regulator for power outages, the transparency and accessibility of tariffs and Steps to file a connection Power outages and application, prepare a regulatory mechanisms whether the utility faces a financial deterrent aimed at limiting outages. design, complete works, in place to monitor The index accounts for one-fourth of the ease of doing business score for getting obtain approvals, go through and reduce them; inspections, install a meter transparency of tariffs electricity (see figure). In addition, Doing Business records the price of electricity and sign a supply contract in each location covered.a a. While Doing Business records the price of electricity, it does not include these data when calculating the score or the ranking on the ease of getting electricity. 54 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 5.1  Obtaining an electricity connection in Kazakhstan takes six to eight procedures an external contractor to complete the external works. Distribution utilities that have the license to design the project can Submit an application for connection and await technical conditions also undertake the external works—drill- Obtain the scheme of the connection route (and collect sign-offs) ing, digging and installation of poles and Await completion and approval of the project design a transformer (if required)—although it is common practice to use a third-party Obtain clearance/permit for ground works (excavation, drilling or pole installation) contractor to do so. As of January 2017, Await completion of external works an expert opinion is no longer required Apply for connection and await inspection and issuance of relevant documents after the completion of external works.7 The contractor is responsible for the Sign a supply contract and await sealing of the meter and energizing points of the connection allocated to Apply for connection and await sealing of the meter and energizing the customer, while the utility company retains responsibility for the rest. Procedure present in all regions Procedure present in certain regions only After completion of the external works, Source: Doing Business database. the entrepreneur applies to the distribu- tion utility for a connection. The utility sends an inspector to conduct an on-site in the geographic location and specify the completes all approvals on behalf of inspection to verify that the external and substation and a connection point in the the client. In Almaty city and North internal works have been done accord- network allocated to the customer. Kazakhstan (Petropavl) the Department ing to the technical conditions. The of Architecture coordinates the approval utility grants approval for connection by The next step is the preparation of the process to save time. In Almaty city, for issuing the act of segregation of electri- connection works, which can be done example, an approved copy of the project cal grid balance ownership and mainte- either by a licensed contractor hired design is sent through an electronic docu- nance—which demarcates ownership by the entrepreneur or by the utility.5 ment flow to all the relevant agencies to and responsibilities for maintenance However, in Nur-Sultan, Karagandy, East complete the approval process. between the distribution utility and the Kazakhstan (Oskemen) and Pavlodar the client on the new connection lines—and entrepreneur must obtain a scheme of the Next, entrepreneurs obtain an excavation the act of meter acceptance, which connection route from the Department of clearance or permit, a process that varies confirms that the meter complies with Architecture or the City Cadastre Center from region to region. In eight locations,6 applicable standards. before preparation of the project design. applicants submit an online notification to The scheme maps the route of the new the Administration of State Architectural Finally, the applicant signs a contract, in connection within the existing com- and Construction Control (GASK), attach- person, with the electricity supplier. The munications network, indicating how the ing the whole package of documents and electricity supplier notifies the distribu- planned route crosses or impacts existing approval gathered for the project design. tion utility that the sales contract for utility lines. Once GASK has reviewed the file, the electricity has been completed. The utility applicant receives a confirmation through goes to the site to seal and power up the The project design maps the route for the same online platform, authorizing the meter. However, in Nur-Sultan the client the external cables and lists the speci- beginning of the external works. In the must file a separate application at a cost fications and materials needed for the eight other locations, applicants must of KZT 36,800 ($113.50) for the on-site external works. To ensure that the new apply for an excavation permit in person visit to seal and energize the meter. cable routes do not interfere with existing with the Department of Communal utility connections—water and sewage, Services, Passenger Transport and Roads How do Kazakhstani regions telephone, gas, heating, roads and elec- (or its equivalent) and await its issuance compare globally? tricity—approval of the project design is before external works begin. The issuing Getting electricity across regions in required from multiple agencies, includ- agency also provides a list of all the utility Kazakhstan is on average faster and ing the Department of Architecture, the agencies that must be physically present cheaper, though procedurally more Department of Communal Services, to inspect the work during excavation. complex, than in the average OECD high- Passenger Transport and Roads (or its income or Europe and Central Asia (ECA) equivalent) and other relevant agen- Following approval for the excavation economy. Across Kazakhstan it takes an cies. Usually the licensed contractor clearance, an entrepreneur must hire average of 6.3 procedures and 69 days, GETTING ELECTRICITY 55 at a cost of 46.7% of income per capita, Kazakhstan still have room to improve How the process compares to obtain an electricity connection (figure the efficiency of the connection process Obtaining a new electricity connection 5.2). The average ECA economy takes and the quality of electricity services to and accessing reliable power supply is 50% longer and costs seven times more converge with best regional perform- easiest in Almaty city, followed closely than the average region in Kazakhstan. ers. Kazakhstan’s average score of 5.9 by Mangystau (Aktau) (table 5.1). The However, the process is more cumber- out of 8 on the reliability of supply and process requires six procedures in both, some in Kazakhstan than in the Russian transparency of tariffs index reflects and the time and costs are slightly lower Federation and Uzbekistan, where it transparent tariffs and more reliable in Almaty city (71 days, 39.3% of income takes two and four procedures, respec- connections than the average ECA per capita) than in Mangysatu (76 days, tively. Notably, electricity connection is economy (5.5). It surpasses Georgia (5) 46.9%). Almaty city’s ease of doing also eight times cheaper in the Russian and Tajikistan (0) and trails the Russian business score of 81.62 on the getting Federation than in Kazakhstan. Federation and Uzbekistan (8); both of electricity indicator puts it on par with the latter two economies have instituted the Netherlands, which ranks 56 among Despite substantial improvements an automated mechanism for monitor- 190 global economies; Mangystau’s over the past two years, locations in ing and restoring outages. score of 81.05 puts it between Croatia X X 5.2  Getting electricity in Kazakhstan FIGURE X X and more reliable but procedurally is on average faster, cheaper more complex than X Xaverage for Europe and Central Asia the X X EFFICIENCY OF GETTING ELECTRICITY RELIABILITY OF SUPPLY AND TRANSPARENCY OF TARIFFS Procedures Time Cost Index (number) (days) (% of income (0–8) per capita) 0 China, Japan and 0 United Arab Emirates United Arab Emirates (global best) Almaty city, 1 (global best) 10 Russian Federation 20 21 global best* 8 Mangystau, Kyzylorda Nur-Sultan East Kazakhstan, Russian Federation, 20 West Kazakhstan OECD 2 40 Almaty city, Almaty region Azerbaijan, 7 Pavlodar United Arab Emirates Kazakhstan average North Kazakhstan Moldova (global best) Aktobe, Karagandy, Atyrau 30 Akmola OECD Mangystau, Nur-Sultan Aktobe, Atyrau, Georgia 3 60 Shymkent, Kostanay, 6 Kyzylorda Pavlodar Azerbaijan 40 North Kazakhstan Zhambyl Kazakhstan average ECA Uzbekistan 4 Georgia 5 8 Oblasts 50 80 OECD Aktobe Atyrau, West Kazakhstan Azerbaijan 5 60 Shymkent, Kostanay 140 4 Zhambyl ECA Kazakhstan average Almaty region Pavlodar Georgia 70 Almaty city 160 Moldova 6 Almaty city, Georgia 3 East Kazakhstan Kazakhstan average 11 Oblasts Russian Federation Karagandy Akmola, Zhambyl OECD, Kyzylorda Mangystau 300 Azerbaijan, 7 East Kazakhstan, Kyzylorda 2 ECA Kyrgyz Republic Karagandy, Pavlodar Moldova, 80 Nur-Sultan 600 Uzbekistan Moldova 8 Nur-Sultan 1 100 Uzbekistan, Kyrgyz Republic 700 ECA, Kyrgyz Republic 800 Tajikistan 9 Tajikistan 135 Tajikistan Kyrgyz Republic, 900 Tajikistan 0 Source: Doing Business database. OECD = OECD high-income economies. ECA = Europe and Central Asia. * The global best on the reliability of supply and transparency of tariffs index are: Czech Republic; Germany; Hong Kong SAR, China; Ireland; Japan; Korea, Rep.; Lithuania; Malaysia; Netherlands; Norway; Portugal; Russian Federation; Slovak Republic; Slovenia; Spain; Sweden; Thailand; United Arab Emirates; United Kingdom; United States– New York; and Uzbekistan. 56 DOING BUSINESS IN KAZAKHSTAN 2019 TABLE 5.1 Getting electricity in Kazakhstan is easiest in Almaty city and Mangystau and most difficult in East Kazakhstan (Oskemen) and Karagandy Reliability of supply and transparency of tariffs Best regulatory Procedures Time Cost index Location Rank performer (number) (days) (% of income per capita) (0–8) Almaty city 1 81.62 6 71 39.3 8 Mangystau (Aktau) 2 81.05 6 76 46.9 8 Aktobe 3 76.89 6 57 40.1 6 Atyrau 4 76.23 6 63 41.1 6 North Kazakhstan (Petropavl) 5 74.96 6 46 39.9 5 Kyzylorda 6 74.64 6 78 27.9 6 Pavlodar 7 74.35 7 70 67.1 7 West Kazakhstan (Oral) 8 73.13 6 63 33.7 5 Shymkent 9 72.92 6 64 66.5 5 Kostanay 10 72.81 6 65 66.5 5 Almaty region (Taldykorgan) 11 72.46 6 69 39.3 5 Akmola (Kokshetau) 12 71.79 6 75 45.0 5 Nur-Sultan 13 71.51 8 87 51.0 8 Zhambyl (Taraz) 14 68.59 6 75 70.4 4 East Kazakhstan (Oskemen) 15 67.99 7 72 32.6 5 Karagandy 16 67.86 7 73 40.1 5 Source: Doing Business database. Note: Rankings are based on the average ease of doing business score for the procedures, time and cost associated with getting electricity as well as for the reliability of supply and transparency of tariffs index. The score is normalized to range from 0 to 100, with 100 representing the best regulatory performance (the higher the score, the better). (80.50), which ranks 61, and Turkey additional procedures in Nur-Sultan: the Almaty region (Taldykorgan) and the city (81.23), which ranks 60. These loca- requirement to obtain the scheme of of Shymkent. tions outperform their peers for two the connection route before the project main reasons. First, Almaty city has design and the need for a separate appli- Project design and approval takes about a streamlined the application process for cation to the distribution utility to energize third of the total time to complete a new issuing technical conditions, reducing and seal the meter. In West Kazakhstan electricity connection and ranges from the number of approvals needed from (Oral), East Kazakhstan (Oskemen) 10 days in East Kazakhstan (Oskemen) five to two. Since 2018, only the techni- and Karagandy, where a scheme of to four times longer in Kostanay (figure cal specialist who prepares the technical the connection route is also required 5.3). Improved coordination between conditions and the chief engineer are before project design, the process takes GASK offices and other utility agencies involved in the approval process. This seven procedures. and streamlined approvals by the distri- has reduced the time to process techni- bution utility make it nearly two weeks cal conditions from seven to five days. In Nur-Sultan also has the country’s slowest faster to obtain project design approvals addition, in the past two years Almaty process for getting electricity, at 87 days; in East Kazakhstan and North Kazakhstan city and Mangystau have improved this is on par with Uzbekistan (88 days) (Petropavl), than in the average region. In the reliability of power supply. Almaty and almost twice as long as in North North Kazakhstan, for example, applicants city has reduced the frequency of out- Kazakhstan (Petropavl)—the fastest place submit the project design for all approvals ages, while Mangystau has introduced in Kazakhstan to complete a new con- only at the GASK office, which organizes an automated system for supervisory nection. The two additional procedures weekly meetings with representatives control and data acquisition (SCADA) in Nur-Sultan add two weeks to the total from all relevant agencies to approve new to monitor outages and restore power. time to obtain a new connection. In North projects. Applicants are notified once all Kazakhstan applicants can complete the approvals are granted. In addition, the Obtaining a new electricity connection project design and obtain all approvals in distribution utility no longer requires takes six procedures in most places in about two weeks. The same process takes approval of the project design, since its Kazakhstan. The process includes two more than a month in Almaty city, the officials visit the site during and after GETTING ELECTRICITY 57 FIGURE 5.3  Project design and approval account for more than a third of the total time to obtain a connection East Kazakhstan 10 6.5% Karagandy 14 7.2% North Kazakhstan 15 6.6% Nur-Sultan 20 Mangystau 24 39.3% 6.6% Pavlodar 28 Zhambyl 30 West Kazakhstan 30 26.0% 7.8% Kyzylorda 30 Atyrau 30 Akmola 30 Aktobe 32 Almaty region 33 Completion and approval of project design Almaty city 33 Excavation notice External works Shymkent 34 Inspection and issuance of relevant documents Kostanay 41 Supply contract signed 0 10 20 30 40 50 Technical conditions Scheme of connection route Time (days) to complete project design and approval Source: Doing Business database. Note: For Nur-Sultan the extra time to apply for energizing and sealing the meter is added to the time for signing the supply contract. external works. These simplifications is often needed for a new connection— location has instituted a mechanism mean that it takes about half the time (15 Zhambyl (Taraz), Pavlodar, Kostanay for monitoring outages and restoring days) to complete project design and its and Shymkent—the project design and power, and partly to its score on SAIFI approval in Petropavl relative to the aver- external works are more complex and and SAIDI indices. The cities of Almaty age of 27 days in the rest of Kazakhstan. expensive. The cost to obtain a new elec- and Nur-Sultan as well as the Mangystau tricity connection is highest in Zhambyl and Pavlodar regions have implemented External works account for a quarter (fig- (70.4% of income per capita) and low- a SCADA system (the acronym stands ure 5.3) of the total time to obtain a new est in Kyzylorda (27.9% of income per for supervisory control and data acquisi- electricity connection, ranging from about capita), where the distribution utility tion) and score 1 point each on these a week in Kostanay to a month in four (KERCC) carries out external works at a components. In Kyzylorda the SCADA regions.8 Here, the variation depends on relatively competitive price.9 The average monitors only outages. Zhambyl (Taraz) the nature and type of connection required. cost of external works in the four regions scores 0 on communication of tariffs and In Kostanay and the city of Shymkent, where transformers are needed—KZT tariff changes because it is the only loca- where this procedure is fastest (five and 1.425 million ($4,396)—is almost double tion where customers must visit the local seven days, respectively), the most com- that of the other locations, and the cost of electricity seller to obtain information mon type of connection involves installa- project design—KZT 300,000 ($925)— about tariffs. All locations score points tion of poles that carry overhead cables is about one-third higher (figure 5.4). on regulatory monitoring and financial to low-voltage networks. In Kyzylorda and deterrents aimed at limiting outages, as Mangystau (Aktau), where this procedure The cities of Almaty and Nur-Sultan and these are enforced at the national level. takes up to a month, it requires digging the Mangystau region lead the pack on and installing underground cables, often the reliability of supply and transparency to medium-voltage networks. of tariffs index, with a score of 8 out of a WHAT HAS CHANGED? possible 8, while Zhambyl (Taraz) ranks The installation of a transformer is the lowest with a score of 4 (table 5.2). All eight locations benchmarked in Doing main driver of costs across Kazakhstan. Variations in the quality index across Business in Kazakhstan 2017 have imple- In four locations where a transformer locations are due partly to whether a mented reforms reducing the time, cost 58 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 5.4  The need for a transformer nearly doubles the cost of external works and and complexity to obtain a new electricity increases project design costs by a third connection. In addition, seven (all except Kostanay) have improved the quality and Cost (KZT, thousands) reliability of power supply (table 5.3). 1,600 New government regulations and policies have been important in fostering change; 1,400 peer-to-peer learning has also had a role 1,200 in disseminating good practices. There is evidence that utilities are learning from 1,000 each other (box 5.1)—including locations 800 that were not benchmarked in the previ- ous study. However, the level of imple- 600 mentation differs across the country. 400 200 Among the locations that were bench- marked in 2017, the cities of Nur-Sultan 0 and Shymkent and the Karagandy region External works Project design have made the most progress toward the best regulatory performance in getting Average cost in Zhambyl (Taraz), Pavlodar, Kostanay and Shymkent city electricity. Nur-Sultan has improved its Average cost in other locations ease of doing business score for getting electricity by 30.07 points (from 41.44 Source: Doing Business database. to 71.51), while Shymkent and Karagandy TABLE 5.2 All locations have room for improvement in terms of reliability of electricity supply, except for Almaty and Nur-Sultan cities and Mangystau (Aktau) Reliability of supply Total duration and Mechanisms Mechanisms Financial deterrents Communication of and transparency of frequency of outages for monitoring for restoring Regulatory aimed at limiting tariffs and tariff tariffs index per customer per year outages service monitoring outages changes Location (0–8) (0–3) (0–1) (0–1) (0–1) (0–1) (0–1) Almaty city 8 3 1 1 1 1 1 Mangystau (Aktau) 8 3 1 1 1 1 1 Nur-Sultan 8 3 1 1 1 1 1 Pavlodar 7 2 1 1 1 1 1 Aktobe 6 3 0 0 1 1 1 Atyrau 6 3 0 0 1 1 1 Kyzylorda 6 2 1 0 1 1 1 North Kazakhstan 5 2 0 0 1 1 1 (Petropavl) West Kazakhstan 5 2 0 0 1 1 1 (Oral) Shymkent 5 2 0 0 1 1 1 Kostanay 5 2 0 0 1 1 1 Almaty region 5 0 0 1 1 1 2 (Taldykorgan) Akmola 5 2 0 0 1 1 1 (Kokshetau) East Kazakhstan 5 0 0 1 1 1 2 (Oskemen) Karagandy 5 2 0 0 1 1 1 Zhambyl (Taraz) 4 2 0 0 1 1 0 Source: Doing Business database. = Maximum points obtained GETTING ELECTRICITY 59 TABLE 5.3 All eight locations benchmarked in 2016 have made it easier to obtain a new electricity connection in 2018 Reduced the time Reduced the Removed a procedure Made getting to obtain a new cost to obtain a new for getting a new Improved the quality and Location electricity easier overall electricity connection electricity connection electricity connection reliability of power supply Almaty city ✔ ✔ ✔ ✔ ✔ Aktobe ✔ ✔ ✔ ✔ ✔ Pavlodar ✔ ✔ ✔ ✔ ✔ Shymkent ✔ ✔ ✔ ✔ ✔ Kostanay ✔ ✔ ✔ ✔ Nur-Sultan ✔ ✔ ✔ ✔ ✔ East Kazakhstan ✔ ✔ ✔ ✔ ✔ (Oskemen) Karagandy ✔ ✔ ✔ ✔ ✔ Source: Doing Business database. Note: This table records Doing Business reforms and changes that occurred between December 2016 and December 2018 for locations that were included in Doing Business in Kazakhstan 2017. ✔ = Doing Business reform making it easier to obtain a new electricity connection have improved their scores by 20.71 and supply and transparency of tariffs index Locations have made progress on three 20.48 points, respectively. These loca- since they now record and report SAIDI key fronts—eliminating the need to pro- tions now score points on the reliability of and SAIFI values (figure 5.5). vide an expert opinion on external works, streamlining the requirement to obtain technical conditions and improving the BOX 5.1  Benefits of peer learning for electricity connection across Kazakhstan reliability of power supply by collecting Following the publication of Doing Business in Kazakhstan 2017, the Ministry of and publishing SAIDI and SAIFI data. Energy organized a peer-to-peer learning workshop in Almaty city, gathering officials from major public and private distribution utilities and suppliers. The aim At the national level, Kazakhstan was to provide a forum for all regions to discuss how to efficiently implement eliminated the need to provide an expert reforms that had been introduced by the ministry, and give power supply and opinion after completion of external distribution companies an opportunity to discuss and share good practices. works. Previously, applicants had to hire Almaty city explained its new online system to apply for technical conditions and its a private company to assess whether the plan to streamline the approval process. Officials from the Ministry of Energy stressed external works met the standards speci- the need for utilities to address requests for electricity electronically. Utilities also fied in the technical conditions—a set of discussed how the implementation of an electronic map of utility connections in each approved design and construction rules region could help simplify and expedite project design and approvals. referred to by the Russian acronym SNiP. Following the event, representatives from some utilities said that learning from It took on average 3.6 days and cost KZT Almaty city’s good practices had helped them implement improvements. After 87,500 ($464) to fulfill this mandatory hearing about Almaty city’s one-stop shop experience, Petropavl implemented requirement in 2015. Yet the procedure a similar customer center where applicants can obtain all necessary information was redundant because distribution utili- and apply for technical conditions in one place. Petropavl is considering the ties often visited the site to conduct an possibility of moving the process online, and Nur-Sultan city and the Almaty inspection and ensure that all technical region (Taldykorgan) plan to do the same. In addition, Shymkent, East Kazakhstan and construction requirements were (Oskemen) and North Kazakhstan (Petropavl) reduced the number of internal met. Moreover, while external works approvals required to issue technical conditions from five to two, to meet new are conducted by licensed and certified legislative amendments. These locations have also simplified the approval experts (engineers with Access Group process for project design and reduced the time to issue technical conditions in line with new legislative requirements.a Certification 3 and 4), who are also legally liable for latent defects, those pro- Such events are a testament to how coordination between regulators and the viding expert opinions were not required private sector and peer-learning events can bolster reforms. It turns out that to have any specialized qualification or changes can happen faster and cheaper when cities and regions pool resources license. Today, clients and private experts and share successful practices. hired to do the work are responsible for Interview with public officials during right of reply in the cities of Nur-Sultan and Almaty on November a.  26, 2018, and November 29, 2018. meeting quality standards, and distribu- tion utilities inspect the work to ensure 60 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 5.5  Nur-Sultan, Shymkent and Karagandy advanced the most toward the best regulatory performance in getting electricity since 2016 Ease of doing business score for getting electricity (0–100) 0 10 20 30 40 50 60 70 80 90 100 Kostanay 4.9 East Kazakhstan (Oskemen) 5.5 Aktobe 7.8 2016 2018 Almaty city 7.98 Pavlodar 14.68 Karagandy 20.48 Shymkent 20.7 Nur-Sultan 30.07 Source: Doing Business database. Note: Rankings are based on the average ease of doing business score for the procedures, time and cost associated with getting electricity as well as for the reliability of supply and transparency of tariffs index. The score is normalized to range from 0 to 100, with 100 representing the best regulatory performance (the higher the score, the better). that all approved standards have been from seven to five days. Across the loca- the previous study, these simplifications met. This has reduced the number of pro- tions benchmarked in Doing Business in have reduced the time to process techni- cedures, cost and time to obtain a new Kazakhstan 2017, the average time to cal conditions by an average of two days. electricity connection. obtain technical conditions has dropped by about two days. Reforms are not confined to improving Kazakhstan has also streamlined the the efficiency of the connection process. process required to obtain technical Other locations have followed suit. In Positive changes have also taken place conditions. In 2017 the Committee for Pavlodar applicants can request technical to improve the reliability of supply and Atomic and Energy Supervision and conditions by sending the documents transparency of tariffs. All regions and Control implemented reforms that required by email. Original documents the cities of Almaty, Nur-Sultan and mandated utilities to issue and approve are submitted at the time of pickup of the Shymkent now record and disclose data technical conditions in at most five days technical conditions—saving an addition- on the frequency and duration of outag- for a connection with 200 kWh or less.10 al trip for the process and reducing the es—SAIDI and SAIFI. Since 2016 utilities To enforce these requirements, the com- time by two days, in line with the required have been required to provide this data mittee now requires utilities to submit five days. In Petropavl (not included in the to the Committee for Atomic and Energy monthly data on the time used to process 2017 study) the distribution utility estab- Supervision and Control by end-January technical conditions, and a fine of 25 lished a one-stop shop for customers in of each year. They are fined 125 MCI if MCI11 is imposed on utilities that exceed 2016 and introduced an electronic docu- SAIDI and SAIFI numbers exceed four the five-day limit. To stay within the ment management system which allows hours and four incidents, respectively. time limit, utilities have streamlined the the chief engineer to track the process in In 2015 only four locations out of the approval process for technical conditions. real time. Automated alerts and remind- eight benchmarked in Doing Business in Such is the case in Almaty city, where ers are issued when the time allotted for Kazakhstan 2017 kept records on outages. the number of officials handling approv- processing the documents at each stage In 2018 all 16 locations benchmarked als went from five to only two, cutting has passed. Kostanay has done the same. kept information on outages, thanks to the time to process technical conditions Across the eight locations measured in new regulations of April 2016 that made GETTING ELECTRICITY 61 it mandatory for all utilities to supply In the other locations applicants con- go to GASK to request the list of agencies these records.12 In addition, average dura- tinue to apply for the excavation permit that need to approve the project design, tion and frequency of outages have gone in person from GASK and either the GASK could simply issue the excavation down by 0.9 hours and 0.5 incidents for Department of Communal Services, clearance at the same time. The good locations that recorded these numbers Passenger Transport and Roads or the news is that current amendments intro- in 2015.13 In 2015 only the cities of Department of Public Utility Services.16 duced in 2018 already aim to achieve Nur-Sultan and Almaty had instituted An applicant must visit the relevant this. However, in practice the change an automated mechanism for monitor- agency twice: first to submit all required has not simplified the process to obtain ing and restoring outages. They were documents in person, and second to pick the excavation clearance, as the law still joined in 2018 by Mangystau (Aktau) up the excavation permit. In Pavlodar requires a separate interaction between and Pavlodar. Northern Kazakhstan and Nur-Sultan the process is even more the installation contractor and GASK (Petropavl) is currently in the process of cumbersome, as the entrepreneur must officials. To simplify the process GASK establishing one. Similarly, in 2015 only collect sign-offs from multiple utilities could issue the clearance automatically Almaty city faced a fine from the regula- before submitting it to the Department of without requiring a separate applica- tor if outages exceeded a certain limit. Communal Services, Passenger Transport tion—either online or physically at the Since 2017 the Committee for Atomic and Road, which issues the permit. ln office—to obtain the clearance or permit. and Energy Supervision and Control Nur-Sultan this process takes 20 days, This would eliminate a procedure and imposes a fine of 125 MCI on any electric mainly due to the requirement for mul- reduce the time required to obtain a new utility when outages exceed a certain tiple sign-offs as well as the volume of electricity connection. cap. For locations benchmarked in the applications received by the municipality previous study, the average reliability of for all external works. Streamline the approval process supply and transparency of tariffs index for project design has gone up by 1 point (from 5.2 to 6.2). The rest of Kazakhstan could follow the One of the major bottlenecks in the pro- Pavlodar made the most progress among example of Almaty city and five other cess of obtaining electricity in Kazakhstan the eight locations—improving its index locations that have moved from a permit- continues to be the delays associated by 3 points (from 4 in 2016 to 7 in 2018). based process to an online clearance with the approval of project design. In system. Doing so could reduce the time most locations this requires approval to obtain an excavation clearance by two from at least seven agencies.17 Two inter- WHAT CAN BE IMPROVED days. GASK could also improve its back- actions with GASK are also required dur- office processes to speed up clearance ing approval—first to submit the project Further streamline and enforce issuance and encourage all locations to design and obtain the list of agencies for rules on excavation permits shift from physical permits to an elec- which approval is required, and second to In 2016 Kazakhstan introduced new legis- tronic clearance. Better yet, Kazakhstan return the list to GASK after all approvals lation to improve the process of obtaining could follow the example of Poland and are obtained. Private sector professionals an excavation permit.14 The law required the Islamic Republic of Iran and have the argue that approval time accounts for half the private contractor tasked with the utility obtain the excavation clearance of the time to complete this procedure. excavation permit to request a clearance directly from GASK without involving the from GASK before commencing external customer. In 2015 the Islamic Republic of Here Kazakhstan can learn good prac- works. In 2018 only five regions and Iran eliminated the need for the customer tices from within. In the short term one the city of Almaty commonly used an to obtain an excavation permit for electric- way to simplify the process would be to online platform to obtain an excavation ity connection by having the utility obtain follow the example of North Kazakhstan permit.15 For those locations, applicants it directly. Poland did the same in 2017 by (Petropavl), where simultaneous approv- file for a permit online and receive a eliminating the need to have an excava- als are obtained in weekly meetings notification of receipt through the same tion permit altogether. Officials of the coordinated by GASK with all agencies platform. This notification serves as a utility and municipality are present during involved. This cuts the time almost in formal clearance to begin external works. excavation to ensure that external works half, from an average of 27 days to two At the back office GASK simply notifies are done in accordance with required weeks to complete project design and the relevant agencies of the location and standards and regulations. obtain all approvals. Locations could time of the planned work without the also set specific timelines for approval of applicant’s involvement. It takes on aver- One way to streamline the process would project designs, and dedicated employ- age four days to obtain the notification be to merge the approval of project ees could be assigned to ensure that receipt from GASK once an application is design with the one for excavation clear- the approval process complies with the submitted online. ance or permit. Since applicants already required timelines. This could reduce 62 DOING BUSINESS IN KAZAKHSTAN 2019 approval time for project design and In other regions and the city of Almaty, 17,900 ($55) for the utility to conduct help identify where bottlenecks occur in a project is designed based on informa- an inspection in Nur-Sultan. In North the approval process. tion provided in the technical conditions. Kazakhstan (Petropavl) inspections cost The design includes a cable scheme that KZT 20,000 ($62). In the long term municipalities should sketches the planned route for the power consider the possibility of merging utility lines on a topographical map of the ware- Kazakhstan could benefit by streamlin- maps so that approval requests for proj- house—rather than requiring a separate ing communication and coordination ect design can be assessed and obtained procedure. Since utilities approve the between the distribution supplier and the from a single agency, such as GASK. project design in these locations, the seller for energizing the connection. After Officials in the private sector argue that validity of the sketched route and its completion of external works, applicants one major reason why applicants visit impact on the existing utility infrastruc- could apply for final connection with the various utilities for approval is that utility ture can be ascertained as part of the supplier at the same time they apply for maps—which show the connection route approval before external works begin. inspection with the distribution utility. of different utilities (water and sewage, This change will eliminate the extra costs, At the back office the seller and distribu- heating, telecommunications and elec- time and procedures associated with this tion utility could coordinate to energize tricity) in each location—are not linked. procedure in these locations. the connection and issue the necessary Another example of streamlining the documents without the applicant mak- process can be found in Moscow, where In the long term, through coordination ing separate trips to the two agencies. United Electric Grid Company (MOESK) with the municipalities, GASK and all In Austria and Germany, for example, coordinates all the approvals required for utility agencies involved, the distribu- customers submit only one application to project design and external works with- tion utility could issue the scheme of get a connection contract, and all agen- out involving the applicant. Customers connection route together with the cies involved coordinate with each other can track the status of their application technical conditions, eliminating this to issue the necessary documentation after every stage and receive a notifica- procedure and the associated time and and switch on the power supply. tion by text message when the process cost. Here too Kazakhstan can learn is complete. Consequently, these simpli- from other economies in the region. In Create more incentives to fications have cut the time to obtain an 2016 Azerbaijan streamlined the process improve transparency and electricity connection by 10 days. of obtaining a new electricity connec- reliability of power supply tion by making electronic connection across all locations Consider eliminating the maps available, which reduced the time Kazakhstan has made significant requirement for the scheme of needed to determine new customer progress in improving the reliability of connection route where applicable connection points. power supply over the past two years. In After the approval of technical condi- 2016 the government established caps tions, in Nur-Sultan city, East Kazakhstan, Streamline workflow and on the frequency and duration of out- Karagandy and Pavlodar the customer interaction between distribution ages and fines on utilities that exceed needs to obtain a scheme mapping utilities and suppliers the cap. Three locations—Almaty city, the route of the new connection within After external works are completed, Nur-Sultan and Mangystau (Aktau)— the existing communications network, energizing the connection is usually a implemented the SCADA systems indicating how the planned route will two-step process: the customer first that automatically detect outages and impact other utility lines. This require- needs to apply for inspection from the restore power. This has improved the ment adds an extra procedure, an aver- distribution utility and then sign a final reliability of power supply in these loca- age of 18 days and an average cost of connection contract with the seller tions. The rest of the regions could be KZT 41,667 ($221). Entrepreneurs in East after the inspection. It takes 4.3 days encouraged to follow suit. Kazakhstan and Karagandy must obtain on average to complete the process of approval from the various utilities on the signing a supply contract and 5 days Locations with SCADA should also be scheme of the connection route before to apply for and await inspection of the encouraged to broaden their coverage. project design can begin; consequently, external works. Nur-Sultan requires an In Nur-Sultan city and Mangystau the it takes 26 and 25 days, respectively, extra procedure after signing a contract SCADA system does not cover the util- to complete the scheme of connection with the seller; the applicant goes back ity companies’ entire zone of operations. and obtain approval. to the utility to make a final application Out of the 57 substations managed by for connection. This extra procedure the major distribution utility (AESK) in In the short term these locations can takes four days and costs KZT 36,800 Mangystau, only 52 percent are cov- learn good practices from their peers. ($114). There is an additional cost of KZT ered by its SCADA system. Expanding GETTING ELECTRICITY 63 infrastructure that improves reliability benefits as well as penalties, taxes and other charges. It is determined annually during of power supply should be a priority. In the budgeting process and is based on the the short term this will entail significant expected inflation rate for the next year. One upfront investment and a feasibility study, MCI was equivalent to KZT 2,405 ($7.42) in 2018 and to KZT 2,525 ($7.79) in 2019. especially in small regions. In the medium 12. The new regulations were in amendments to long term, however, utilities could to the Laws on the Electric Power Industry make the installation of monitoring sys- and the Code of Administrative Offenses. Order No. 214 of the Ministry of Energy tems part of their planned medium-term on Approving Indicators of Energy Supply capital expenditures, to help improve the Stability and Rules of Definition. quality and reliability of power supply. 13. The locations that recorded duration and frequency of outages in 2015 were Almaty city, Aktobe, East Kazakhstan (Oskemen), Kostanay and Pavlodar. NOTES 14. Decree of the Government of the Republic of Kazakhstan No. 901, dated December 2016. 15. An online platform is used in West 1. World Development Indicators, World Bank, Kazakhstan (Oral), North Kazakhstan Washington DC, 2016. (Petropavl), Mangystau (Aktau), Kyzylorda 2. Scott, Andrew, Emily Darko, Alberto and Atyrau. Lemma and Juan-Pablo Rud. 2014. How 16. Applicants go to the Department of does electricity insecurity affect businesses Communal Services Passenger Transport in low and middle-income countries? and Roads in Aktobe, East Kazakhstan Shaping Policy for Development. Overseas (Oskemen), Karagandy and Pavlodar, and Development InstituteAvailable at https:/ / to the Department of Public Utility Services pdfs.semanticscholar.org/175d/e6754356775 in Akmola (Kokshetau), the Almaty region 5030f926239016167f9386646.pdf. (Taldykorgan) and Zhambyl (Taraz). 3. Fisher-Vanden, Karen, Erin T. Mansur and 17. The seven agencies are the Department of Qiong Juliana Wang. “Electricity shortages Architecture; Department of Communal and firm productivity: Evidence from China’s Services, Passenger Transport and Roads; the industrial firms.” Journal of Development distribution utility; and utilities in charge of Economics 114 (2015): 172-188. gas, water, heating and telecommunications. 4. Mills, Deborah, and Ben Howard, Burlingtons Legal LLP. 2014. “Electricity regulation in Kazakhstan: Overview.” Thomson Reuters Practical Law. Available at https://content .next.westlaw.com/Document /I234956c0d58d11e398db8b09b4f043e0 /View/FullText.html?contextData=(sc.Defa ult)&transitionType=Default&firstPage=true &bhcp=1. 5. The “Yellow Pages Law” limits the function of state-owned enterprises in activities where the private sector is deemed efficient, including external connection design. In some locations a privately owned utility designs the external works. 6. Akmola (Kokshetau), Almaty city, Almaty region (Taldykorgan), Kyzylorda, Mangystau (Aktau), North Kazakhstan (Petropavl), West Kazakhstan (Oral) and Zhambyl (Taraz). 7. Article 22 of the Amendments to the Rules of Energy from the Ministry of Energy issued on December 8, 2016. 8. Akmola (Kokshetau), Kyzylorda, Mangystau (Aktau) and Zhambyl (Taraz). 9. Working with the European Bank for Reconstruction and Development (EBRD) to modernize its electricity infrastructure in the Kyzylorda region, Kyzylorda Distribution Electric Grid Company (KRECC) provides excavation and external works installation at a lower cost. See https:/ /kapital.kz /economic/31692/elektroseti-kyzylordinskoj -oblasti-moderniziruyut.html. 10. Amendment to the Rules of Energy Use. Order No. 143. 11. The monthly calculation index (MCI) is a value established by law to calculate social 64 DOING BUSINESS IN KAZAKHSTAN 2019 Registering Property MAIN FINDINGS ƒƒ Kazakhstan unified all property registration services and placed them under the control of the state corporation Government for Citizens. ƒƒ Almaty city, East Kazakhstan (Oskemen) and Pavlodar are the easiest places to transfer property, while Mangystau (Aktau), Nur-Sultan city and the Almaty region (Taldykorgan) are the most challenging. ƒƒ Changes introduced in September 2018 lowered the registration fees by 85%, to 0.03% of the property value, placing the country among the least expensive places to register a property globally. ƒƒ Almaty city, East Kazakhstan (Oskemen) and Pavlodar lead on the quality of land administration index, thanks to digitization of the land registry and cadastre maps. ƒƒ Payments made at the post office or a commercial bank are no longer automatically reflected in the State Database of Registered Property, a change that has made the property transfer more cumbersome. REGISTERING PROPERTY 65 Small and medium-size enterprises an entrepreneur must be able to prove Government for Citizens. These efforts (SMEs) in Kazakhstan suffer from insuf- ownership by a legally recognized land have paid off. They have helped decrease ficient access to finance. A 2013 study title. Secure land rights not only ease the time and cost of obtaining property found that firms in Kazakhstan identified access to credit but also encourage documents and increased the transpar- access to finance as one of the top five investment and can increase tax revenue ency of the process. Six years ago a com- obstacles for the business environment, collection. Evidence shows that firms and pany purchasing land had to go through after applicable tax rates, education level individuals invest more in economies a 40-day process before registering a of workers, competitors’ practices in the with secure land rights.3 Take the case of property; now it takes an average of 4.7 informal sector and corruption.1 The Argentina. When land titles were granted days. Kazakhstan has moved up 6 places same study revealed that in the last five to households with unregistered lands, in the Doing Business ranking on the reg- years more than a third of loan applica- investment in existing properties went istering property indicators since 2013, tions by SMEs had been rejected. In the up by 40%.4 Reliable land registries and placing it among the top 25 economies same period local banks have doubled cadastres also allow governments to in the world. the value of collateral needed to get a more easily assess properties and collect loan, which now must cover 170% of tax revenues. the loan amount. Getting finance is most HOW DOES PROPERTY difficult in the regions outside the large Kazakhstan has been strengthening REGISTRATION WORK IN business centers of Almaty city and the property rights and improving its land KAZAKHSTAN? city of Nur-Sultan.2 Land, an important administration system since 2013. It has source of wealth, could facilitate access instituted electronic registration of prop- As of 20185 Government for Citizens to credit for SMEs when used as col- erty and created Public Service Centers has the authority over property transfers lateral. But to use real estate as security (PSCs) under the state corporation in Kazakhstan (box 6.1). Registering What Does Registering Property Measure? Doing Business records the full sequence of procedures necessary for a business to purchase a property from another business and formally transfer the property title to the buyer’s name. The process starts with obtaining the required documents, such as a copy of the seller’s title, and ends when the buyer is registered as the new property owner. Every procedure required by law or necessary in practice is recorded—along with the associated time and cost—whether it is the responsibility of the seller or the buyer and even if it must be completed by a third party on their behalf. In addition, Doing Business assesses the quality of the land administration system through indices measuring reliability, transparency, coverage and the availability of dispute resolution mechanisms. Rankings on the ease of registering property are based on the procedures, time and cost to register property as well as the quality of land administration index (see figure). Registering property: measuring the efficiency and quality of the land administration system Rankings are based on scores for four indicators Days to transfer Cost to transfer property between property, as % of Measures whether the land registry and mapping system (cadastre) Reliability have adequate infrastructure to guarantee high standards and two local companies property value reduce risk of errors Measures whether and how the land administration system makes Transparency Time Cost land-related information publicly available 25% 25% 25% 25% Procedures Quality Measures the extent to which the land registry and mapping system of land Coverage (cadastre) provide complete geographic coverage of privately held administration land parcels index Steps to transfer Measures the accessibility of conflict resolution mechanisms and property so that it Dispute the extent of liability for entities or agents recording land can be sold or resolution transactions used as collateral 66 DOING BUSINESS IN KAZAKHSTAN 2019 BOX 6.1  Land administration framework in Kazakhstan In April 2016 Kazakhstan created the state corporation Government for Citizens,a which consolidates various offices and oper- ates as a one-stop shop for more than 750 public services. On July 30, 2018, the mandate for the registration of property was transferred from the Department of Justice (the local arm of the Ministry of Justice) to Government for Citizens, a move that placed all government land administration services under the single umbrella. However, the Department of Justice has retained oversight functions over property registration, such as monitoring violations of stipulated deadlines. Local PSCs act as a front office for Government for Citizens, receiving applications from individuals and enterprises. Separately from the PSCs, Government for Citizens maintains back offices that perform cadastral and land registry services. The organization of the land registry and cadastre differs between locations. In cities with special status—Almaty, Nur-Sultan and Shymkent—land registries and cadastres are separate agencies: the Administration for Land Registry, which conducts prop- erty registration, and the Administration for Cadastre, which maintains plans, measures plots and conducts soil surveys. In the other locations, land registries and cadastres merged into the local Department of Cadastre and Registration of Rights on Immovable Property. The change of property registration authority from the Department of Justice to Government for Citizens entails moving land registry employees and records to the latter’s premises. All current land registry employees have now been transferred to the Government for Citizens payroll. In some locations, such as Nur-Sultan city, both the records and the employees have also been physically transferred to the premises of Government for Citizens, which facilitates the process of verifying parties’ signatures during the property transfer process initiated at the PSC. In others, such as Kostanay, Zhambyl (Taraz) or Almaty city, the front and back offices of Government for Citizens are still in different buildings.b The next step is to consolidate the administration of all land services to create a unified cadastre under the Digital Kazakhstan program.c The country aims to merge two databases: the State Database of Registered Property (GBDRN) and the Automated Information System of the State Cadastre and Technical Support (AISGZK). The unified cadastre is expected to be fully opera- tional in 2021. a. Government for Citizens is a noncommercial joint stock company created through the merger of four state-owned enterprises: the Public Service Center of the Ministry of Investment and Development; the Real Estate Center of the Ministry of Justice; the Scientific and Production Center of the Land Cadastre under the Ministry of National Economy; and the State Center of Pension Payments of the Ministry of Health and Social Development. b. Data provided by public officials interviewed during meetings with the Doing Business team. c. The Digital Kazakhstan website is https://digitalkz.kz/en/. property requires four main steps on behalf of the company. To do so, the Business study pay exclusively through (figure 6.1). Parties can choose to use notary checks the parties’ identification bank transfers. the services of a notary or register cards, the company charter, the company property themselves through a Public resolution allowing the sale, the power In practice, bank cards are used mostly Service Center. Most transactions for of attorney empowering the buyer and by individuals and large corporations.7 citizens are recorded at a PSC, but seller to act, and the original title. Despite the recent change in the autho- businesses like the ones covered in the rized body overseeing the registration Doing Business case study more often Second, the notary submits the duly process, the current payment system use a notary. notarized sale-purchase agreement does not yet recognize Government electronically through ENIS, which gener- for Citizens as a payment recipient. To First, the notary conducts due diligence ates an invoice with the state registration complete the payment made through to confirm that the property does not fees that the buyer must pay. A unique Kazpost or a commercial bank, the have any encumbrances, liens or other identification number on the invoice ties notary must submit the buyer’s proof of attachments that could prevent the sale. the payment to the application processed payment through ENIS, together with Notaries can obtain relevant information through ENIS. the application certified by the notary’s using the Unified Notary Information digital signature. Only then is payment System (ENIS),6 which provides access to The buyer must leave the notary’s office to reflected in the property database.8 the State Database of Registered Property pay the fees at the post office (Kazpost) (GBDRN) and the State Database of or a commercial bank. Although the law Finally, for the property transfer to be Legal Entities. The notary confirms the governing the registration of property completed, a registration officer at the identity of the parties’ representatives allows bank card payments through the land registry needs to verify the applica- against ENIS by ensuring that they are e-government portal (egov), busi- tion submitted by the notary and confirm authorized to conduct the transaction nesses like the ones covered in the Doing the validity of the transfer. The notary REGISTERING PROPERTY 67 FIGURE 6.1  The main stages of property registration are the same across Kazakhstan Step 1 Conduct due diligence Notary conducts due Parties conduct due diligence on behalf of diligence through parties through ENIS egov.kz or at PSC Step 2 Draft sale-purchase agreement and verify signatures Parties draft sale- Notary Notary drafts and purchase agreement and PSC notarizes sale-purchase agreement verify signatures at land registry Step 3 Pay registration fee at Kazpost or commercial bank Buyer goes back to Buyer goes back to PSC notary’s office to submit to submit application proof of payment Step 4 Register property at land registry PSC = Public Service Center ENIS = Unified Notary Information System Source: Doing Business database. receives the final documents and shares registry for processing. The land registry 3.5 days, at a cost of 0.2% of the prop- them with the new owner. The registra- has three days to complete the registra- erty value. Kazakhstan is one of the least tion must be completed within one day tion. Once the process is completed, the expensive locations globally for register- of the date following the application’s parties receive a text message notifying ing property, coming in at number 6. submission to Government for Citizens.9 them that the registration documents are ready for pick-up at the PSC. Locations across Kazakhstan vary little Another way to register a property on the registering property indicators transfer is to submit a paper-based appli- How the process compares (table 6.1). Eleven locations score 15 cation at a Public Service Center. Parties A property transfer across the 16 loca- points on the quality of land administra- involved in the transaction first check the tions benchmarked takes on average tion index, while the others score only property themselves for encumbrances, four procedures and 4.7 days, at a cost moderately higher. Property registra- either through egov or in person at the of 0.03% of the property value (figure tion takes slightly longer in Mangystau local PSC, at no cost. Once they have 6.2). The process is less complex in (Aktau), Nur-Sultan city and the Almaty completed the due diligence and have Kazakhstan than in OECD high-income region (Taldykorgan), where registration drafted the sale-purchase agreement, the economies, on average, or economies documents are sent back to notaries two parties go to the land registry to verify from the Europe and Central Asia region days after their submission—instead of the signatures, including the identity of (ECA), where the process takes 4.7 and one day in all other locations. the parties, their legal capacities and the 5.3 procedures, respectively. Transferring free expression of their will to transfer the property is also four times faster in One reason for exceeding the stipu- property. The buyer then visits the PSC to Kazakhstan than in the average OECD lated deadline could be the workload of submit the application after he or she has high-income economy. However, the registration specialists. In the Almaty paid the state registration fees at Kazpost process is more cumbersome (albeit less region (Taldykorgan), Nur-Sultan city and or at a commercial bank. A courier takes expensive) than in the Kyrgyz Republic, Mangystau (Aktau), the rate of applica- the application from the PSC to the land where it takes three procedures and tions processed per registration specialist 68 DOING BUSINESS IN KAZAKHSTAN 2019 X X X X X X X X FIGURE 6.2  Kazakhstan locations score high on the efficiency of property registration but show room for improvement on the quality of land administration EFFICIENCY OF QUALITY OF LAND PROPERTY REGISTRATION ADMINISTRATION Procedures Time Cost Index (number) (days) (% of property value) (0–30) 0 5 economies 28.5 4 economies 1 2 economies 1 5 economies (global best)**** (global best)* (global best)** (global best)*** 0 All 16 locations 28 Kazakhstan 2 27 2 Russian Federation .1 Azerbaijan Russian Federation 26 25 Azerbaijan Kyrgyz Republic 3 Kyrgyz Republic .2 3 Kyrgyz Republic 24 Kyrgyz Republic 4 OECD 23 Kazakhstan Kazakhstan average 13 locations .3 19.5 Russian Federation 4 All 16 locations ECA 19 OECD 5 Mangystau, .4 Azerbaijan Nur-Sultan, Uzbekistan 18.5 Tajikistan 5 Almaty region 18 ECA Russian Federation 13 Uzbekistan 1 17.5 17 3 locations***** 9 OECD 20 ECA 2 Uzbekistan 16.5 ECA Tajikistan 16 Akmola, North Kazakhstan Tajikistan 36 3 Kazakhstan average 15.5 15 11 locations Brazil 14 Uzbekistan 46 OECD 4 Tajikistan 7.5 0 Source: Doing Business database. Note: OECD is the average for the 33 OECD high-income economies; ECA is the average for the 23 economies of Europe and Central Asia. * These are Georgia, Norway, Portugal and Sweden. ** These are Georgia and New Zealand. *** These are Belarus, Georgia, Kiribati, Saudi Arabia and the Slovak Republic. **** These are Lithuania; Rwanda; Singapore; Taiwan, China; and the Netherlands. ***** These are Almaty city, East Kazakhstan (Oskemen) and Pavlodar. TABLE 6.1  Registering property in Kazakhstan—where is it easier? Ease of doing business score Procedures Time Cost Quality of land administration index Location Rank (0–100) (number) (days) (% of property value) (0–30) Almaty city 1 82.44 4 4.5 0.03 17 Pavlodar 1 82.44 4 4.5 0.03 17 East Kazakhstan (Oskemen) 1 82.44 4 4.5 0.03 17 Akmola (Kokshetau) 4 81.61 4 4.5 0.03 16 North Kazakhstan (Petropavl) 4 81.61 4 4.5 0.03 16 West Kazakhstan (Oral) 6 80.77 4 4.5 0.03 15 Aktobe 6 80.77 4 4.5 0.03 15 Shymkent 6 80.77 4 4.5 0.03 15 Atyrau 6 80.77 4 4.5 0.03 15 Karagandy 6 80.77 4 4.5 0.03 15 Kostanay 6 80.77 4 4.5 0.03 15 Kyzylorda 6 80.77 4 4.5 0.03 15 Zhambyl (Taraz) 6 80.77 4 4.5 0.03 15 Mangystau (Aktau) 14 80.65 4 5.5 0.03 15 Nur-Sultan 14 80.65 4 5.5 0.03 15 Almaty region (Taldykorgan) 14 80.65 4 5.5 0.03 15 Source: Doing Business database. Note: Rankings are based on the ease of doing business score for registering property indicators. REGISTERING PROPERTY 69 is a third higher than in the remaining 13 administration system is associated with FIGURE 6.4  Notary fees make up more locations—430 applications on average greater access to credit, lower income than 90% of the cost to register property per month, compared with 321 elsewhere inequality and lower incidence of bribery in Kazakhstan (figure 6.3).10 at the land registry.14 7% Entrepreneurs in all the locations mea- The Doing Business methodology ana- sured must follow the same four steps lyzes the quality of land administration and pay the same amount to transfer systems. This is done through four main 38% 55% property. The cost of registering prop- dimensions: reliability of infrastructure erty is the same everywhere, since the (0 to 8 points), geographic coverage (0 relevant fees are regulated nationally. to 8), transparency of information (0 to Transferring property between two legal 6) and land dispute resolution (0 to 8). entities costs only 0.03% of the property The sum of these dimensions provides value. This cost includes notary fees to the overall score on the quality of land Notary’s fee for drafting and notarization draft and notarize the sale-purchase administration index. Notary’s service fee State registration fee agreement and to initiate the transfer,11 both of which are linked to the value of Kazakhstan’s score on this index reveals Source: Doing Business database. the monthly calculation index (MCI).12 ample room to converge with interna- Notary fees represent more than 90% tional good practices. The cities and of the overall cost to register property in regions measured score between 15 found in the type of infrastructure used to Kazakhstan (figure 6.4). The registration and 17 out of 30 possible points on the keep titles and plans, measured by the reli- cost also includes fixed state registration quality index, placing them close to the ability of infrastructure index (figure 6.5). fees of KZT 3,221 ($9.93).13 40th percentile globally, on par with Only three locations keep land registry South Africa (15 points) and Romania titles in scanned format: Almaty city, East Quality of land administration (17 points). Kazakhstan lags behind the Kazakhstan (Oskemen) and Pavlodar. As While procedural complexity, time and OECD high-income average (23 points) of July 2018, Oskemen had more than cost of property registration all matter and that of the Russian Federation (26 95% of scanned titles in archives, hav- for doing business, good land administra- points) but scores more than twice as ing started scanning in 2012. However, tion goes beyond efficiency. It ensures high as Tajikistan (7.5 points). throughout the rest of East Kazakhstan property owners a secure title, backed most titles are still kept in paper format.15 by a reliable land administration system. Differences in quality of land administra- The main reason for this discrepancy is A transparent, complete and secure land tion across locations in Kazakhstan are that the process of scanning requires significant financial resources, special equipment and devices to print bar codes FIGURE 6.3  Officials in the Almaty region (Taldykorgan), Nur-Sultan city and Mangystau process one-third more applications than in the other locations and store images, and in East Kazakhstan these were provided only to Oskemen. Monthly applications processed per specialist Other locations also initiated the process (August–October 2018) 500 of scanning titles but still have not com- 430 pleted it. Karagandy and Zhambyl (Taraz) 450 started scanning their records in 2007 and 400 2013, respectively, while Kyzylorda initi- 350 321 ated the process in 2009 and has scanned 300 35% of the titles so far. 250 200 In terms of cadastral plans, only five 150 locations—Almaty city, East Kazakhstan (Oskemen), Akmola (Kokshetau), 100 Pavlodar and North Kazakhstan 50 (Petropavl)—keep them in scanned 0 format; the other 11 keep them in paper Almaty region (Taldykorgan), Remaining 13 locations Nur-Sultan, Mangystau (Aktau) form. Only Almaty city, East Kazakhstan (Oskemen) and Pavlodar keep both Source: Doing Business database. titles and plans in scanned format, 70 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 6.5  There is room to improve on the reliability of infrastructure index Almaty city, Akmola (Kokshetau), 11 East Kazakhstan (Oskemen), Pavlodar North Kazakhstan locations Reliability of Infrastructure index 6 5 4 (0–8 points) Paper form How are land Computer / Scanned titles kept? Computer / Fully digital Electronic Yes database for checking for No encumbrances? Paper form How are the map Computer / Scanned plans kept? Computer / Fully digital Electronic Yes database for providing cadastral No information? Information Separate databases stored in a Different databases single database? but linked Single database Same Yes identification number for No properties? No points Full point * Two points Source: Doing Business database. which accounts for their higher score time limits for service delivery—provides full coverage.16 The main reasons are on reliability of infrastructure. Other parties with critical information on the untimely action by land owners register- aspects of this index show no variations transactions they undertake and reduces ing the land and a failure to enforce the between locations. mistakes and opportunities for bribery. Code of Administrative Offenses. Land All locations score 3.5 out of 6 points on registration is mandatory, but owners The push to scan land records comes the transparency of information index. do not always register their land, or they from the national government, which The list of documents required for prop- may delay in doing so. As a result, not decides on the timeline and allocates erty registration and the fees for both all privately held land plots are formally resources accordingly. The scan- the property transaction and access to registered and mapped.17 ning process started in 2007, when plans are published online for the whole Kazakhstan had 6 million land plots to country on different websites. However, With 7.5 points out of a possible 8 for scan. One third of them remained to be information on land ownership is still not land dispute resolution, Kazakhstan scanned as of December 2018. The gov- publicly accessible. places among the top 20 economies in ernment aims to have 100% of records the world on this indicator. Local courts scanned by 2021. Budgets are allocated Geographic coverage of property regis- in Kazakhstan resolve land dispute claims according to the volume of the backlog; tration and cadastral systems remains in less than a year, for which the country hence the biggest share of budgets goes the biggest challenge for Kazakhstan. scores the maximum 3 points. Recent to locations with the largest number of All locations receive 0 out of 8 possible reforms introduced the concept of state unscanned records. points on this index. The cadastral cover- guarantee for property registration, age for the country is 87.8% and varies which places Kazakhstan among the best Making land-related information publicly from one region to another. Not a single performers globally on the land dispute available—including fee schedules and location covered by this study achieves resolution index. REGISTERING PROPERTY 71 involved must issue new time standards comments and recommendations con- WHAT HAS CHANGED SINCE that will make the one-day procedure cerning all types of cadastral activities. 2016? the sole available deadline for respond- ing to paper-based applications. Kazakhstan could also strengthen The main change since 2016 was the the transparency of property rights. transfer of responsibility for property- Fixed registration fees were introduced in Information on the ownership of prop- related services from the Department September 2018, lowering the registra- erty is restricted, as it can be obtained of Justice to Government for Citizens, tion fees by 85%. Prior to the reform, the only with the owner’s permission. through Public Service Centers. All gov- state registration fee was stipulated by Making property ownership information ernment bodies dealing with land admin- the Tax Code and linked to the monthly open to the public would enable poten- istration now operate under the umbrella calculation index. The reform sets out tial investors to review relevant data of a single institution—Government for fixed fees, regardless of the value of the before deciding on investment. Here Citizens. This has the potential to stream- MCI, which reduces the cost from KZT Kazakhstan could look to England and line the property registration process, as 21,210 ($65.43) to KZT 3,221 ($9.94). Wales, where the land registry database the land registry and the cadastre now is publicly accessible by law. All title are under same umbrella as the entity Kazakhstan has also made information plans, land registers and any relevant that receives the applications. more transparent since 2016. The cadas- deeds or documents are available online tre information system now publishes through the land registry’s website. The However, the change in agency has also the fee schedule for cadastral plans on land registry also developed an appli- created a new difficulty in the property its website.20 cation for a “citizen-friendly view” of registration process. Payments made at registered titles.22 Kazpost or a commercial bank are not automatically reflected in the GBDRN, WHAT CAN BE IMPROVED? In November 2018 Kazakhstan started as Government for Citizens is not rec- to publish statistics tracking the number ognized as a payment recipient. As a Improve transparency and of property transactions online; how- result, parties must return to the notary’s accountability in the land ever, they are on two separate websites.23 office to submit proof of payment. This administration system Authorities could consider establishing a has increased the number of procedures A functioning land administration system single website containing all land-related for property transfer from three to four, rests on clear and credible information. information for both the land registry and affecting the parties across all bench- Countries with transparent land adminis- the cadastre. The recent integration of marked locations. In November 2018 the tration systems provide more efficient ser- the land registry and the cadastre under Ministry of Justice initiated a project to vices and enjoy stronger public confidence the umbrella of Government for Citizens, link Kazpost with the ENIS system, which in the system, which leads to increased as well as the ongoing project of a unified will eventually allow the parties to pay investment. Kazakhstan improved cadastre, could facilitate this endeavor. fees through ENIS, directly at the notary’s transparency of information, but it could office. The payment will be immediately do more. For example, the time frame to Strengthen the reliability reflected in the GBDRN.18 deliver an updated cadastral plan is not of the land administration available online. For the full benefits of infrastructure by continuing Another notable change was to abolish cadastral transparency, authorities could the digitization of titles and the expedited procedure for a paper- consider posting such information online cadastral maps based application to register a property and making it free to access. Kazakhstan could continue to increase transfer. The expedited procedure cost the level of computerization of its land three times the regular procedure and Kazakhstan lacks a specific, separate registry and cadastral archives. The had the same one-day deadline that mechanism for filing complaints with goal should be to gradually develop a now applies only to online applications the cadastre. The country could create fully digital, unified cadastre and property submitted via a notary.19 The plan is to an independent complaint mechanism registry. Locations covered in this study reduce the processing time for property for issues related to plans and maps. The score unevenly on this portion. Even transfer registrations submitted in per- Government for Citizens website21 could locations within the same regions keep son at PSCs from the current three days serve as a platform and incorporate the their titles and maps in different forms. to one day. Relevant changes in law gov- same approach as with the property Digitization of land-related archives erning property registration have been registration complaint mechanism. This improves the quality of documents and introduced but not yet implemented. website could host a portal that would makes land registration procedures faster For this to happen, the state agencies allow clients to submit complaints, and more efficient.24 Kazakhstan could 72 DOING BUSINESS IN KAZAKHSTAN 2019 look to Denmark, which in 2009 began a other premises. Kazakhstan could look to into the Budget (Tax Code), No. 99-IV of December 10, 2008, available at http:/ /adilet process to modernize its land registry by Thailand, which between 1984 and 2004 .zan.kz/rus/docs/K080000099. The fee digitizing and automating property regis- implemented one of the world’s largest for legal and technical services is regulated tration. Once digitization was complete, land titling programs, using efficient, by Article 30-1 of the Law of the Republic of Kazakhstan on Notaries (No. 155-I) of July 14, the land registry introduced electronic systematic land titling procedures and 1997, available at https:/ /online.zakon.kz lodgment of property transfers. As a issuing more than 8.5 million titles. /document/?doc_id=1008028#pos=3;-250. result, over five years the time to transfer 12. The monthly calculation index (MCI) is a value established by law to calculate social a property dropped from 42 to 4 days. benefits as well as penalties, taxes and other NOTES charges. It is determined annually during Promote Public Service Centers the budgeting process and is based on the expected inflation rate for the next year. for property registration 1. Enterprise Survey database (http:/ / One MCI was equivalent to KZT 2,405 www.enterprisesurveys.org/data Most of the businesses covered in this /exploreeconomies/2013/kazakhstan), ($7.42) in 2018. study register property through notaries. World Bank. 13. These fees include the fee for registration of 2. European Bank for Reconstruction and land in the amount of KZT 1,073.70 ($3.31) However, reforms that have been initiat- and the fee for registration of the building in Development (EBRD). “Strategy for ed or are being planned could favor appli- Kazakhstan.” Available at: https:/ /www.ebrd the amount of KZT 2,147.30 ($6.62). The fees cations through the PSCs. Kazakhstan .com/where-we-are/kazakhstan/overview are regulated by Order No. 418 of the Minister .html. of Information and Communication of the has already initiated steps to reduce Republic of Kazakhstan of September 27, 3. Demirguc-Kunt, Asli, and Vojislav deadlines for registrations through the Maksimovic. 1998. “Law, Finance, and Firm 2018, available at http:/ /zan.gov.kz PSC to one day. Moreover, the ongoing Growth.” The Journal of Finance 53 (6): 2107- /client/#!/doc/125074/rus. 2137. 14. World Bank. 2014. Doing Business: Going pilot project in East Kazakhstan allows Beyond Efficiency. “Registering property: 4. Galiani, Sebastian, and Ernesto Schargrodsky. land registry employees to go to the 2010. “Property Rights for the Poor: Effects of Measuring the quality of land administration local PSC and verify the signatures.25 Land Titling.” Journal of Public Economics 94 systems.” Washington, DC: World Bank. (9-10): 700-729. 15. Oskemen has 207,739 titles, of which Registration fees could also be paid at 198,000 have been scanned. Data provided 5. See Article 79, paragraph 1, of the Law of commercial banks or Kazpost counters the Republic of Kazakhstan on Changes and by public officials interviewed during meetings located on the premises of the PSC; that Amendments to Certain Legislative Acts of with the Doing Business team. the Republic of Kazakhstan on Improving 16. For cadastral coverage in different regions, see way, the parties would not need to go to http:/ /aisgzk.kz/aisgzk/ru/content/transfer/. Regulation of Entrepreneurial Activity, May the land registry for verification of sig- 24, 2018, available at https:/ /online.zakon.kz 17. Article 460 of the Code of Administrative natures or leave the PSC to pay the fees. /Document/?doc_id=36227306#pos=3;-254; Offenses of Kazakhstan establishes that Article 1, paragraph 27, of the Law of citizens who fail to register their land are To make the PSC the preferred option subject to administrative penalties. The city of the Republic of Kazakhstan on State for property registration, thus reducing Registration of Rights to Immovable Property Kyzylorda conducted a land tenure legalization the cost for entrepreneurs, Kazakhstan (No. 310-III), July 26, 2007, available at process from 2007 to 2010, relying on the https:/ /online.zakon.kz/Document/?doc_ landowners to provide information. However, could upgrade egov and include some the Land Registry found that the information id=30118294#pos=4;-250. features of ENIS, such as the ability to 6. For more on the ENIS portal, see its website at provided was off by 5 to 7%. When the Land receive the registration document in the http://enis.kz/. Registry identifies a discrepancy, it informs the 7. Payment through the e-government portal municipality (Akimat), which is responsible personal account of the company rep- for resolving the issue in court. Data provided requires possession of a bank card. SMEs resentative or individual entrepreneur. covered in this study do not hold corporate by Kyzylorda public officials interviewed by This would circumvent the current need bank cards and instead pay the fees via bank the Doing Business team. transfers. 18. Data provided by public officials from Nur-Sultan to go to the local PSC and personally city interviewed by the Doing Business team. 8. Public sector contributors from Almaty pick up the registration document. city reported that proof of payment can be 19. Article 23, paragraph 3, of the Law of submitted to the notary’s personal ENIS the Republic of Kazakhstan on State Registration of Rights to Immovable Property Expand geographic coverage account without going back to the notary’s (No. 310-III), July 26, 2007, available at: office. Research shows that less than 25% of 9. See Article 23, paragraph 1, of the Law https:/ /online.zakon.kz/Document/?doc_ economies have all land plots registered of the Republic of Kazakhstan on State id=30118294#pos=4;-250. Registration of Rights to Immovable Property 20. The cadastre information system website and mapped; this shortfall contributes to address is http:/ /www.aisgzk.kz/aisgzk/ru/. (No. 310-III), July 26, 2007, available at: insecurity regarding parties’ interests.26 https:/ /online.zakon.kz/Document/?doc_ 21. The Government for Citizens website address Full geographic coverage is achieved id=30118294#pos=4;-250. is https:/ /gov4c.kz/ru/. 10. Number of applications per region for August, 22. Hilhorst, Thea, and Frederic Meunier, eds. when all privately held lands are regis- 2015. How Innovations in Land Administration September and October 2018 available tered and mapped and the information at https:/ /gov4c.kz/ru/gosuslugi/doing- Reform Improve on Doing Business: Cases from is readily available to the parties.27 As business/registraciya-sobstvennosti/. Number Lithuania, the Republic of Korea, Rwanda and the of registration specialists per region provided United Kingdom. Washington, DC: World Bank. the cadastral coverage for the country 23. The two websites for tracking property by representative of Government for Citizens is nearly 90%, Kazakhstan should focus in the city of Nur-Sultan. statistics in Kazakhstan are https:/ /gov4c.kz its efforts on mapping the remaining 11. The fee for notarial acts is regulated by Article /ru/gosuslugi/doing-business/registraciya- 536 of the Code of the Republic of Kazakhstan sobstvennosti/ and https:/ /open-almaty.kz land lots and registering buildings and /ru/nao-pravitelstvo-dlya-grazhdan. on Taxes and Other Obligatory Payments REGISTERING PROPERTY 73 24. Wehrmann, Babette. 2010. “Governance and Land Tenure in Eastern Europe and Commonwealth of Independent States (CIS).” Land Tenure Working Paper 16. Rome: Food and Agriculture Organization. 25. Data provided by public officials from East Kazakhstan interviewed during meetings with the Doing Business team. 26. Deininger, Klaus, Harris Selod and Anthony Burns. 2012. The Land Governance Assessment Framework: Identifying and Monitoring Good Practice in the Land Sector. Washington, DC: World Bank. 27. UNECE (United Nations Economic Commission for Europe). 2012. Policy Framework for Sustainable Real Estate Markets: Principles and Guidance for the Development of a Country’s Real Estate Sector. Geneva: UNECE. 74 DOING BUSINESS IN KAZAKHSTAN 2019 Data Notes The indicators presented and analyzed current as of December 15, 2018. The including lawyers, business consultants, in Doing Business in Kazakhstan 2019 data for the 189 other economies used architects, engineers, public officials and measure business regulation and the for comparison are based on the indi- other professionals routinely adminis- protection of property rights as well as cators in Doing Business 2019: Training tering or advising on legal and regulatory their effect on businesses, especially for Reform, the 16th in a series of requirements. These experts had several small and medium-size domestic firms. annual reports published by the World rounds of interaction with the project First, the indicators document the Bank Group. team, involving conference calls, written complexity of regulation, such as the correspondence and visits by the team. number of procedures to start a busi- The data from questionnaires were sub- ness or to register a transfer of com- METHODOLOGY jected to numerous rounds of verifica- mercial property. Second, they gauge tion, leading to revisions or expansions the time and cost to achieve a regula- The data for Doing Business in Kazakhstan of the information collected. tory goal or comply with regulation, 2019 were collected in a standardized such as the time and cost to connect a way. To start, the team customized the The Doing Business methodology offers warehouse to the electricity grid. Third, Doing Business questionnaires for the several advantages. It is transparent, they measure the extent of legal pro- specific study in Kazakhstan. The ques- using factual information about what tections, for example, the protections tionnaires use a simple business case to laws and regulations say and allowing of property rights. ensure comparability across locations multiple interactions with local respon- and economies and over time—with dents to clarify potential misinterpreta- This report presents Doing Business assumptions about the legal form of the tions of questions. Having representative indicators for 16 Kazakhstani locations. business, its size, its location and the samples of respondents is not an issue; The data for all sets of indicators in nature of its operations. Questionnaires Doing Business is not a statistical survey, Doing Business in Kazakhstan 2019 are were administered to local experts, and the texts of the relevant laws and Economy characteristics Gross national income per capita Doing Business in Kazakhstan 2019 relies on 2017 income per capita data as published in the World Bank’s World Development Indicators 2018. Income is calculated using the Atlas method (in current U.S. dollars). For cost indicators expressed as a per- centage of income per capita, 2017 gross national income (GNI) per capita in current U.S. dollars is used as the denominator. Kazakhstan’s income per capita for 2017 is $7,890 (KZT 2,557,775). Region and income group Doing Business uses the World Bank regional and income group classifications, available at http://data.worldbank.org/about /country-and-lending-groups. Regional averages presented in figures and tables in Doing Business in Kazakhstan 2019 include economies from all income groups (low, lower middle, upper middle and high income). Exchange rate The exchange rate for the U.S. dollar used in Doing Business in Kazakhstan 2019 is as follows: USD 1 = 324.18 Kazakhstani tenge (KZT). DATA NOTES 75 regulations are collected and answers FIGURE 7.2  Starting a business: getting checked for accuracy. The methodol- STARTING A BUSINESS a local limited liability company up and ogy is easily replicable, so data can be running collected in a large sample of locations Doing Business records all procedures Rankings are based on and economies. Because standard officially required, or commonly done scores for four indicators assumptions are used in the data collec- in practice, for an entrepreneur to start 25% Time 25% Cost tion, comparisons and benchmarks are up and formally operate an industrial Preregistration, As % of income valid across locations. Finally, the data or commercial business, as well as the registration and per capita, no postregistration bribes included not only highlight the extent of specific time and cost to complete these (in calendar days) regulatory obstacles to business but procedures and the paid-in minimum 12.5% 12.5% also identify their source and point to capital requirement (figure 7.1). These women men what might be reformed. procedures include the processes 12.5% 12.5% men women entrepreneurs undergo when obtaining 12.5% 25% all necessary approvals, licenses and women Paid-in LIMITS TO WHAT IS permits and completing any required minimum 12.5% capital men MEASURED notifications, verifications or inscrip- tions for the company and employees 25% Paid-in 25% Procedures minimum capital The Doing Business methodology has four with relevant authorities. Procedures are Funds deposited in a limitations that should be considered completed when bank or with a notary final document before registration (or when interpreting the data. First, the data The ranking of locations on the ease of is received up to three months after often focus on a specific business form— starting a business is determined by sort- incorporation), as % of income per capita generally a limited liability company ing their scores for starting a business. (or its legal equivalent) of a specified These scores are the simple average of size—and may not be representative of the scores for each of the component Information is also collected on the the regulation on other businesses (for indicators (figure 7.2). sequence in which procedures are to example, sole proprietorships). Second, be completed and whether procedures transactions described in a standardized After a study of laws, regulations and may be carried out simultaneously. It is case scenario refer to a specific set of publicly available information on busi- assumed that any required information issues and may not represent the full ness entry, a detailed list of procedures is readily available and that the entre- set of issues that a business encounters. is developed, along with the time and preneur will pay no bribes. If answers Third, the measures of time involve cost to comply with each procedure by local experts differ, inquiries continue an element of judgment by the expert under normal circumstances and the until the data are reconciled. respondents. When sources indicate paid-in minimum capital requirement. different estimates, the time indicators Subsequently, local incorporation law- To make the data comparable across reported in Doing Business represent the yers, notaries and government officials locations, several assumptions about the median values of several responses given complete and verify the data. businesses and the procedures are used. under the assumptions of the standard- ized case. FIGURE 7.1  What are the time, cost, paid-in minimum capital and number of Finally, the methodology assumes that a procedures to get a local limited liability company up and running? business has full information on what is Cost required and does not waste time when (% of income per capita) completing procedures. In practice, com- Formal operation pleting a procedure may take longer if the business lacks information or is unable Paid-in to follow up promptly. Alternatively, $ Number of minimum the business may choose to disregard capital procedures some burdensome procedures. For both reasons the time delays reported in Doing Business would differ from the recollec- Entrepreneur tion of entrepreneurs reported in the Time (days) World Bank Enterprise Surveys or other Preregistration Registration Postregistration firm-level surveys. 76 DOING BUSINESS IN KAZAKHSTAN 2019 Assumptions about the business Procedures TABLE 7.1  What do the starting The business: A procedure is defined as any interac- a business indicators measure? ƒƒ Is a limited liability company (or its legal tion of the company founders with Procedures to legally start and formally equivalent). If there is more than one external parties (for example, govern- operate a company (number) type of limited liability company in the ment agencies, lawyers, auditors or Preregistration (for example, name verification or economy, the limited liability form most notaries) or spouses (if legally required). reservation, notarization) common among domestic firms is cho- Interactions between company founders Registration in the selected location sen. Information on the most common or company officers and employees are Postregistration (for example, social security form is obtained from incorporation not counted as procedures. Procedures registration, company seal) lawyers or the statistical office. that must be completed in the same Obtaining approval from spouse to start a ƒƒ Operates in the selected location. building but in different offices or at dif- business or to leave the home to register the company ƒƒ Is 100% domestically owned and ferent counters are counted as separate Obtaining any gender specific document for has five owners, none of whom is a procedures. If founders have to visit the company registration and operation or national legal entity. same office several times for different identification card ƒƒ Has start-up capital of 10 times income sequential procedures, each is counted Time required to complete each procedure per capita. separately. The founders are assumed (calendar days) ƒƒ Performs general industrial or com- to complete all procedures themselves, Does not include time spent gathering information mercial activities, such as the produc- without middlemen, facilitators, accoun- tion or sale to the public of products tants or lawyers, unless the use of such Each procedure starts on a separate day (two procedures cannot start on the same day)— or services. The business does not a third party is mandated by law or though procedures that can be fully completed perform foreign trade activities and solicited by the majority of entrepre- online are an exception to this rule does not handle products subject to a neurs. If the services of professionals Registration process considered completed once final incorporation document is received or special tax regime, for example, liquor are required, procedures conducted company can officially start operating or tobacco. It is not using heavily pol- by such professionals on behalf of the No prior contact with officials takes place luting production processes. company are counted as separate pro- Cost required to complete each procedure ƒƒ Leases the commercial plant or offices cedures. Each electronic procedure is (% of income per capita) and is not a proprietor of real estate. The counted as a separate procedure. Both Official costs only, no bribes amount of the annual lease for the office pre- and postincorporation procedures No professional fees unless services required by space is equivalent to one income per that are officially required or commonly law or commonly used in practice capita. The size of the entire office space done in practice for an entrepreneur to Paid-in minimum capital (% of income per is approximately 929 square meters formally operate a business are recorded capita) (10,000 square feet). (table 7.1). Funds deposited in a bank or with a notary ƒƒ Does not qualify for investment incen- before registration (or up to three months after incorporation) tives or any special benefits. Procedures required for official cor- ƒƒ Has at least 10 and up to 50 employ- respondence or transactions with public ees one month after the commence- agencies are also included. For example, are excluded. For example, procedures to ment of operations, all of them if a company seal or stamp is required comply with environmental regulations domestic nationals. on official documents, such as tax dec- are included only when they apply to all ƒƒ Has a turnover of at least 100 times larations, obtaining the seal or stamp is businesses conducting general commer- income per capita. counted. Similarly, if a company must cial or industrial activities. Procedures ƒƒ Has a company deed 10 pages long. open a bank account in order to complete that the company undergoes to connect any subsequent procedure—such as reg- to electricity, water, gas or waste disposal The owners: istering for value added tax or showing services are not included in the starting a ƒƒ Have reached the legal age of proof of minimum capital deposit—this business indicators. majority and are capable of making transaction is included as a procedure. decisions as an adult. If there is Shortcuts are counted only if they fulfill Time no legal age of majority, they are four criteria: they are legal, they are avail- Time is recorded in calendar days. assumed to be 30 years old. able to the general public, they are used The measure captures the median ƒƒ Are sane, competent and in good by the majority of companies, and avoid- duration that incorporation lawyers health and have no criminal record. ing them causes delays. or notaries indicate is necessary in ƒƒ Are married and their marriages are practice to complete a procedure with monogamous and registered with Only procedures required of all businesses minimum follow-up with government the authorities. are covered. Industry-specific procedures agencies and no unofficial payments. DATA NOTES 77 It is assumed that the minimum time median reported value is applied. In all the score gap is classified as a reform required for each procedure is one cases the cost excludes bribes. (for more details, see the chapter on day, except for procedures that can “About Doing Business and Doing Business be fully completed online, for which Paid-in minimum capital in Kazakhstan 2019”). For example, if the the time required is recorded as half The paid-in minimum capital requirement implementation of a new one-stop shop a day. Although procedures may take reflects the amount that the entrepreneur for company registration reduces time place simultaneously, they cannot start needs to deposit in a bank or with a third and procedures in a way that the overall on the same day (that is, simultane- party (for example, a notary) before gap decreases by 2% or more, the change ous procedures start on consecutive registration or up to three months after is classified as a reform. On the contrary, days), again with the exception of incorporation. It is recorded as a percent- minor fee updates or other small changes procedures that can be fully completed age of the economy’s income per capita. in the indicators that have an aggregate online. A registration process is con- The amount is typically specified in the impact of less than 2% on the gap are not sidered completed once the company commercial code or the company law. classified as a reform, but the data are has received the final incorporation The legal provision needs to be adopted, updated accordingly. document or can officially commence enforced and fully implemented. Any business operations. If a procedure can legal limitation of the company’s opera- This methodology was developed by be accelerated legally for an additional tions or decisions related to the payment Djankov and others (2002) and is adopted cost, the fastest procedure is chosen of the minimum capital requirement is here with minor changes. The data details if that option is more beneficial to the recorded. In case the legal minimum cap- on starting a business can be found at location’s score. It is assumed that the ital is provided per share, it is multiplied http://www.doingbusiness.org. entrepreneur does not waste time and by the number of shareholders owning commits to completing each remaining the company. Many economies require procedure without delay. The time that minimum capital but allow businesses to DEALING WITH the entrepreneur spends on gathering pay only a part of it before registration, CONSTRUCTION PERMITS information is not taken into account. with the rest to be paid after the first It is assumed that the entrepreneur is year of operation. In El Salvador in May Doing Business records all procedures aware of all entry requirements and 2018, for example, the minimum capital required for a business in the construc- their sequence from the beginning but requirement was $2,000, of which 5% tion industry to build a warehouse, has had no prior contact with any of the needed to be paid before registration. along with the time and cost to officials involved. Therefore, the paid-in minimum capital complete each procedure. In addition, recorded for El Salvador is $100, or 2.7% Doing Business compiles the building Cost of income per capita. quality control index, evaluating the Cost is recorded as a percentage of the quality of building regulations, the economy’s income per capita. It includes REFORMS strength of quality control and safety all official fees and fees for legal or The starting a business indicator set mechanisms, liability and insurance professional services if such services tracks changes related to the ease of regimes, and professional certification are required by law or commonly used incorporating and operating a limited requirements. Information is collected in practice. Fees for purchasing and liability company since the last bench- through a questionnaire administered legalizing company books are included marked study in 2017. Depending on to experts in construction licensing, if these transactions are required by law. the impact on the data, certain changes including architects, civil engineers, con- Although value added tax registration are classified as reforms in order to struction lawyers, construction firms, can be counted as a separate procedure, acknowledge the implementation of utility service providers and public offi- value added tax is not part of the incorpo- significant changes. Reforms are divided cials who deal with building regulations, ration cost. The company law, the com- into two types: those that make it easier including approvals, permit issuance mercial code, and specific regulations to do business and those changes that and inspections. and fee schedules are used as sources make it more difficult to do business. The for calculating costs. In the absence of starting a business indicator set uses one The ranking of locations on the ease fee schedules, a government officer’s criterion to recognize a reform. of dealing with construction permits is estimate is taken as an official source. determined by sorting their scores for In the absence of a government officer’s The aggregate gap on the overall score dealing with construction permits. These estimate, estimates by incorporation of the indicator set is used to assess the scores are the simple average of the scores lawyers are used. If several incorporation impact of data changes. Any data update for each of the component indicators experts provide different estimates, the that leads to a change of 2% or more on (figure 7.3). 78 DOING BUSINESS IN KAZAKHSTAN 2019 FIGURE 7.3  Dealing with construction FIGURE 7.4  What are the time, cost and number of procedures to comply with permits: efficiency and quality of building formalities to build a warehouse? regulation Rankings are based on Cost scores for four indicators (% of warehouse value) Days to comply Cost to comply with formalities Completed with formalities, to build a as % of warehouse warehouse warehouse value Number of procedures 25% 25% Time Cost 25% 25% A business in the Procedures Building construction quality industry Time control index Preconstruction Construction Postconstruction (days) and utilities Steps to comply Quality of building with formalities; regulation and its completed when implementation final document is received Doing Business also records procedures to have any other employees who are for obtaining connections for water and technical or licensed experts, such as sewerage. Procedures necessary to regis- geological or topographical experts. EFFICIENCY OF ter the warehouse so that it can be used ƒƒ Has paid all taxes and taken out CONSTRUCTION PERMITTING as collateral or transferred to another all necessary insurance applicable Doing Business divides the process of entity are also counted. to its general business activity (for building a warehouse into distinct pro- example, accident insurance for con- cedures in the questionnaire and solicits To make the data comparable across loca- struction workers and third-person data for calculating the time and cost to tions, several assumptions about the con- liability insurance). complete each procedure (figure 7.4). struction company, the warehouse project ƒƒ Owns the land on which the ware- These procedures include but are not and the utility connections are used. house will be built and will sell the limited to: warehouse upon its completion. ƒƒ Obtaining all plans and surveys Assumptions about the required by the architect and the construction company Assumptions about the engineer to start the design of the The construction company (BuildCo): warehouse building plans (for example, topo- ƒƒ Is a limited liability company (or its The warehouse: graphical surveys, location maps or legal equivalent). ƒƒ Will be used for general storage soil tests). ƒƒ Operates in the selected location. activities, such as storage of books or ƒƒ Obtaining and submitting to the ƒƒ Is 100% domestically and privately stationery. The warehouse will not be authorities all relevant project-specif- owned. used for any goods requiring special ic documents (for example, building ƒƒ Has five owners, none of whom is a conditions, such as food, chemicals or plans, site maps and certificates of legal entity. pharmaceuticals. urbanism). ƒƒ Is fully licensed and insured to carry ƒƒ Will have two stories, both above ƒƒ Hiring external third-party super- out construction projects, such as ground, with a total constructed area visors, engineers or inspectors building warehouses. of approximately 1,300.6 square (if necessary). ƒƒ Has 60 builders and other employees, meters (14,000 square feet). Each ƒƒ Obtaining all necessary clearances, all of them nationals with the techni- floor will be 3 meters (9 feet, 10 licenses, permits and certificates. cal expertise and professional experi- inches) high. ƒƒ Submitting all required notifications ence necessary to obtain construction ƒƒ Will have road access and be located in for the start and end of construction permits and approvals. the periurban area of the selected loca- and for inspections. ƒƒ Has a licensed architect and a tion (that is, on the fringes of the loca- ƒƒ Requesting and receiving all neces- licensed engineer, both registered tion but still within its official limits). sary inspections (unless completed with the local association of architects ƒƒ Will not be located in a special eco- by a private, third-party inspector). or engineers. BuildCo is not assumed nomic or industrial zone. DATA NOTES 79 ƒƒ Will be located on a land plot of ƒƒ Will have an average water use of TABLE 7.2  What do the indicators on approximately 929 square meters 662 liters (175 gallons) a day and an the efficiency of construction permitting (10,000 square feet) that is 100% average wastewater flow of 568 liters measure? owned by BuildCo and is accurately (150 gallons) a day. Will have a peak Procedures to legally build a warehouse registered in the cadastre and land water use of 1,325 liters (350 gallons) (number) registry where freehold titles exist. a day and a peak wastewater flow of Submitting all relevant documents and obtaining However, when the land is owned 1,136 liters (300 gallons) a day. all necessary clearances, licenses, permits and certificates by the government and leased by ƒƒ Will have a constant level of water Submitting all required notifications and receiving BuildCo, it is assumed that BuildCo demand and wastewater flow all necessary inspections will register the land in the cadastre throughout the year. Obtaining utility connections for water and or land registry or both, whichever is ƒƒ Will be 1 inch in diameter for the water sewerage applicable, at the completion of the connection and 4 inches in diameter Registering the warehouse after its completion warehouse. for the sewerage connection. (if required for use as collateral or for transfer of the warehouse) ƒƒ Is valued at 50 times income per capita. Procedures Time required to complete each procedure (calendar days) ƒƒ Will be a new construction (there was A procedure is any interaction of the Does not include time spent gathering no previous construction on the land), company’s employees or managers, or information with no trees, natural water sources, any party acting on behalf of the com- Each procedure starts on a separate day— natural reserves or historical monu- pany, with external parties, including though procedures that can be fully completed ments of any kind on the plot. government agencies, notaries, the land online are an exception to this rule ƒƒ Will have complete architectural and registry, the cadastre, utility companies Procedure considered completed once final document is received technical plans prepared by a licensed and public inspectors—and the hiring of architect and a licensed engineer. If external private inspectors and techni- No prior contact with officials preparation of the plans requires such cal experts where needed. Interactions Cost required to complete each procedure (% of warehouse value) steps as obtaining further documen- between company employees, such as Official costs only, no bribes tation or getting prior approvals from development of the warehouse plans and external agencies, these are counted inspections conducted by employees, as procedures. are not counted as procedures. However, for each procedure is one day, except for ƒƒ Will include all technical equipment interactions with external parties that procedures that can be fully completed required to be fully operational. are required for the architect to prepare online, for which the time required is ƒƒ Will take 30 weeks to construct the plans and drawings (such as obtain- recorded as half a day. Although proce- (excluding all delays due to adminis- ing topographic or geological surveys), dures may take place simultaneously, trative and regulatory requirements). or to have such documents approved they cannot start on the same day (that or stamped by external parties, are is, simultaneous procedures start on Assumptions about the utility counted as procedures. Procedures that consecutive days), again with the excep- connections the company undergoes to connect the tion of procedures that can be fully The water and sewerage connections: warehouse to water and sewerage are completed online. If a procedure can be ƒƒ Will be 150 meters (492 feet) from included. All procedures that are legally accelerated legally for an additional cost the existing water source and sewer required, or that are done in practice by and the accelerated procedure is used tap. If there is no water delivery infra- the majority of companies, to build a by the majority of companies, the fast- structure in the location, a borehole warehouse are counted, even if they may est procedure is chosen. It is assumed will be dug. If there is no sewerage be avoided in exceptional cases. This that BuildCo does not waste time and infrastructure, a septic tank in the includes obtaining technical conditions commits to completing each remaining smallest size available will be installed for electricity or clearance of the electrical procedure without delay. The time that or built. plans only if they are required to obtain a BuildCo spends on gathering information ƒƒ Will not require water for fire protec- building permit (table 7.2). is not taken into account. It is assumed tion reasons; a fire extinguishing that BuildCo is aware of all building system (dry system) will be used Time requirements and their sequence from instead. If a wet fire protection system Time is recorded in calendar days. The the beginning. is required by law, it is assumed that measure captures the median duration the water demand specified below that local experts indicate is necessary Cost also covers the water needed for to complete a procedure in practice. It is Cost is recorded as a percentage of the fire protection. assumed that the minimum time required warehouse value (assumed to be 50 80 DOING BUSINESS IN KAZAKHSTAN 2019 times income per capita). Only official specified. A score of 1 is assigned if TABLE 7.3  What do the indicators on costs are recorded. All the fees associated the building regulations (including building quality control measure? with completing the procedures to legally the building code) or any accessible Quality of building regulations index (0–2) build a warehouse are recorded, including website, brochure or pamphlet clearly Accessibility of building regulations (0–1) those associated with obtaining land use specifies the list of required docu- approvals and preconstruction design ments to submit, the fees to be paid Clarity of requirements for obtaining a building permit (0–1) clearances; receiving inspections before, and all required preapprovals of the Quality control before construction index during and after construction; obtain- drawings or plans (for example, elec- (0–1) ing utility connections; and registering trical, water and sewerage, or envi- Whether licensed or technical experts approve the warehouse property. Nonrecurring ronmental clearances) by the relevant building plans (0–1) taxes required for the completion of the agencies; 0 if none of these sources Quality control during construction index warehouse project are also recorded. specify any of these requirements or if (0–3) Sales taxes (such as value added tax) these sources specify fewer than the Types of inspections legally mandated during or capital gains taxes are not recorded. three requirements mentioned here. construction (0–2) Nor are deposits that must be paid up Implementation of legally mandated inspections in practice (0–1) front and are later refunded. The building The index ranges from 0 to 2, with Quality control after construction index code, information from local experts, and higher values indicating clearer and (0–3) specific regulations and fee schedules are more transparent building regulations. Final inspection legally mandated after used as sources for costs. If several local In New Zealand, for example, all relevant construction (0–2) partners provide different estimates, the legislation can be found on an official Implementation of legally mandated final median reported value is used. government website (a score of 1). The inspection in practice (0–1) legislation specifies the list of required Liability and insurance regimes index (0–2) BUILDING QUALITY CONTROL documents to submit, the fees to be paid, Parties held legally liable for structural flaws after The building quality control index is based and all required preapprovals of the draw- building occupancy (0–1) on six other indices—the quality of build- ings or plans by the relevant agencies (a Parties legally mandated to obtain insurance to ing regulations, quality control before score of 1). Adding these numbers gives cover structural flaws after building occupancy or insurance commonly obtained in practice (0–1) construction, quality control during con- New Zealand a score of 2 on the quality Professional certifications index (0–4) struction, quality control after construc- of building regulations index. Qualification requirements for individual who tion, liability and insurance regimes, and approves building plans (0–2) professional certifications indices (table Quality control before Qualification requirements for individual who 7.3). The indicator is based on the same construction index supervises construction or conducts inspections case study assumptions as the measures The quality control before construction (0–2) of efficiency. index has one component: Building quality control index (0–15) ƒƒ Whether by law a licensed architect Sum of the quality of building regulations, quality Quality of building regulations or licensed engineer is part of the control before construction, quality control during construction, quality control after construction, index committee or team that reviews and liability and insurance regimes, and professional The quality of building regulations index approves building permit applications certifications indices has two components: and whether that person has the ƒƒ Whether building regulations are eas- authority to refuse an application if ily accessible. A score of 1 is assigned the plans are not in compliance with committee or team that approves the if building regulations (including the the building regulations. A score of plans at the relevant permit-issuing building code) or regulations dealing 1 is assigned if the national associa- authority; 0 if no licensed architect or with construction permits are avail- tion of architects or engineers (or its engineer is involved in the review of able on a website that is updated as equivalent) must review the building the plans to ensure their compliance new regulations are passed; 0.5 if the plans, if an independent firm or expert with the building regulations. building regulations are available free who is a licensed architect or engineer of charge (or for a nominal fee) at the must review the plans, if the architect The index ranges from 0 to 1, with higher relevant permit-issuing authority; 0 if or engineer who prepared the plans values indicating better quality control the building regulations must be pur- must submit an attestation to the in the review of the building plans. In chased or if they are not made easily permit-issuing authority stating that Rwanda, for example, the City Hall in Kigali accessible anywhere. the plans are in compliance with the must review the building permit applica- ƒƒ Whether the requirements for obtain- building regulations or if a licensed tion, including the plans and drawings, and ing a building permit are clearly architect or engineer is part of the both a licensed architect and a licensed DATA NOTES 81 engineer are part of the team that reviews Control Authority rarely conducts these of Port-au-Prince is legally mandated the plans and drawings. Rwanda therefore inspections in practice (a score of 0). to conduct a final inspection under the receives a score of 1 on the quality control Adding these numbers gives Antigua and national Building Code of 2012 (a score before construction index. Barbuda a score of 1 on the quality control of 2). However, most of the time the final during construction index. inspection does not occur in practice (a Quality control during score of 0). Adding these numbers gives construction index Quality control after Haiti a score of 2 on the quality control The quality control during construction construction index after construction index. index has two components: The quality control after construction ƒƒ Whether inspections are mandated by index has two components: Liability and insurance regimes law during the construction process. ƒƒ Whether a final inspection is man- index A score of 2 is assigned if an in-house dated by law in order to verify that The liability and insurance regimes index supervising engineer (that is, an the building was built in accordance has two components: employee of the building company), with the approved plans and existing ƒƒ Whether any parties involved in the an external supervising engineer building regulations. A score of 2 is construction process are held legally or a government agency is legally assigned if an in-house supervising liable for latent defects such as struc- mandated to conduct risk-based engineer (that is, an employee of tural flaws or problems in the building inspections. A score of 1 is assigned the building company), an external once it is in use. A score of 1 is assigned if an in-house supervising engineer supervising engineer or an external if at least two of the following parties (that is, an employee of the building inspections firm is legally mandated are held legally liable for structural company), an external supervising to verify that the building has been flaws or problems in the building once engineer or an external inspections built in accordance with the approved it is in use: the architect or engineer firm is legally mandated to conduct plans and existing building regulations who designed the plans for the build- technical inspections at different or if a government agency is legally ing, the professional or agency that stages during the construction of the mandated to conduct a final inspec- conducted technical inspections, or building or if a government agency tion upon completion of the building; the construction company; 0.5 if only is legally mandated only to conduct 0 if no final inspection is mandated one of the parties is held legally liable technical inspections at different by law after construction and no third for structural flaws or problems in the stages during the construction. A party is required to verify that the building once it is in use; 0 if no party score of 0 is assigned if a government building has been built in accordance is held legally liable for structural flaws agency is legally mandated to conduct with the approved plans and existing or problems in the building once it is unscheduled inspections or if no tech- building regulations. in use, if the project owner or investor nical inspections are mandated by law. ƒƒ Whether the final inspection is imple- is the only party held liable, if liability ƒƒ Whether inspections during con- mented in practice. A score of 1 is is determined in court or if liability is struction are implemented in practice. assigned if the legally mandated final stipulated in a contract. A score of 1 is assigned if the legally inspection after construction always ƒƒ Whether any parties involved in mandated inspections during con- occurs in practice or if a supervis- the construction process are legally struction always occur in practice; 0 ing engineer or firm attests that the required to obtain a latent defect if the legally mandated inspections do building has been built in accordance liability—or decennial (10-year) not occur in practice, if the inspections with the approved plans and existing liability—insurance policy to cover occur most of the time but not always building regulations; 0 if the legally possible structural flaws or problems or if inspections are not mandated by mandated final inspection does not in the building once it is in use. A law regardless of whether or not they occur in practice, if the legally man- score of 1 is assigned if the architect commonly occur in practice. dated final inspection occurs most or engineer who designed the plans of the time but not always or if a final for the building, the professional or The index ranges from 0 to 3, with higher inspection is not mandated by law agency that conducted the technical values indicating better quality control regardless of whether or not it com- inspections, the construction com- during the construction process. In monly occurs in practice. pany, or the project owner or investor Antigua and Barbuda, for example, the is required by law to obtain either a Development Control Authority is legally The index ranges from 0 to 3, with decennial liability insurance policy or a mandated to conduct phased inspections higher values indicating better quality latent defect liability insurance policy under the Physical Planning Act of 2003 control after the construction process. to cover possible structural flaws or (a score of 1). However, the Development In Haiti, for example, the Municipality problems in the building once it is in 82 DOING BUSINESS IN KAZAKHSTAN 2019 use or if a decennial liability insurance experience, must have a university The index ranges from 0 to 4, with higher policy or a latent defect liability insur- degree (a minimum of a bachelor’s) in values indicating greater professional ance policy is commonly obtained architecture or engineering and must certification requirements. in practice by the majority of any of also either be a registered member these parties even if not required by of the national order (association) of In Albania, for example, the professional law. A score of 0 is assigned if no party architects or engineers or pass a quali- conducting technical inspections during is required by law to obtain either a fication exam. A score of 1 is assigned if construction must have a minimum num- decennial liability insurance policy or the professional must have a university ber of years of experience as well as a rel- a latent defect liability insurance policy degree (a minimum of a bachelor’s) in evant university degree and must also be and such insurance is not commonly architecture or engineering and must a registered architect or engineer (a score obtained in practice by any party, if also either have a minimum number of 2). However, the professional respon- the requirement to obtain an insur- of years of practical experience or be sible for verifying that the architectural ance policy is stipulated in a contract, a registered member of the national plans or drawings are in compliance with if any party must obtain a professional order (association) of architects or building regulations must only have a insurance or all-risk insurance policy to engineers or pass a qualification minimum number of years of experience cover the safety of workers or any other exam. A score of 0 is assigned if the and a university degree in architecture or defects during construction but not a professional must meet only one of the engineering (a score of 1). Adding these decennial liability insurance or latent requirements, if the professional must numbers gives Albania a score of 3 on the defect liability insurance policy that meet two of the requirements but nei- professional certifications index. would cover defects after the building ther of the two is to have a university is in use, or if any party is required to degree, or if the professional is subject Building quality control index pay for any damages caused on their to no qualification requirements. The building quality control index is the own without having to obtain an insur- ƒƒ The qualification requirements for the sum of the scores on the quality of build- ance policy. professional who conducts the techni- ing regulations, quality control before cal inspections during construction. A construction, quality control during The index ranges from 0 to 2, with higher score of 2 is assigned if the regulation construction, quality control after con- values indicating more stringent latent mandates that the professional must struction, liability and insurance regimes, defect liability and insurance regimes. have a minimum number of years of and professional certifications indices. In Madagascar, for example, under practical experience, must have a The index ranges from 0 to 15, with higher article 1792 of the Civil Code both the university degree (a minimum of a values indicating better quality control and architect who designed the plans and the bachelor’s) in engineering and must safety mechanisms in the construction construction company are held legally also either be a registered member regulatory system. liable for latent defects for a period of 10 of the national order of engineers or years after the completion of the building pass a qualification exam. A score of 1 REFORMS (a score of 1). However, there is no legal is assigned if the regulation mandates The indicator set on dealing with con- requirement for any party to obtain a that the professional must have a struction permits tracks changes related decennial liability insurance policy to university degree (a minimum of a to the efficiency and quality of construc- cover structural defects, nor do most par- bachelor’s) in engineering and must tion permitting systems since the last ties obtain such insurance in practice (a also either have a minimum number benchmarked study in 2017. Depending score of 0). Adding these numbers gives of years of practical experience or be on the impact on the data, certain changes Madagascar a score of 1 on the liability a registered member of the national are classified as reforms in order to and insurance regimes index. order (association) of engineers or acknowledge the implementation of sig- architects or pass a qualification nificant changes. Reforms are divided into Professional certifications index exam. A score of 0 is assigned if the two types: those that make it easier to do The professional certifications index has regulation mandates that the profes- business and those changes that make it two components: sional must meet only one of the more difficult to do business. The dealing ƒƒ The qualification requirements for the requirements, if they mandate that with construction permits indicator set professional responsible for verifying the professional must meet two of uses one criterion to recognize a reform. that the architectural plans or drawings the requirements but neither of the The aggregate gap on the overall score are in compliance with the building two is to have a university degree, or if of the indicator set is used to assess the regulations. A score of 2 is assigned no national or state regulation deter- impact of data changes. Any data update if this professional must have a mines the professional’s qualification that leads to a change of 2% or more on minimum number of years of practical requirements. the score gap is classified as a reform DATA NOTES 83 (for more details, see the chapter on In addition, Doing Business compiles the FIGURE 7.6  Getting electricity: “About Doing Business and Doing Business reliability of supply and transparency of efficiency, reliability and transparency in Kazakhstan 2019”). For example, if the tariffs index (included in the aggregate implementation of a new electronic per- score and the ranking on the ease of Rankings are based on scores for four indicators mitting system reduces time in a way that doing business) and measures the the overall gap decreases by 2% or more, price of electricity (omitted from these Days to obtain Cost to obtain a an electricity connection, as % of such a change is classified as a reform. On aggregate measures). The reliability of connection income per capita the contrary, minor fee updates or other supply and transparency of tariffs index smaller changes in the indicators that have encompasses quantitative data on the an aggregate impact of less than 2% on duration and frequency of power out- 25% 25% the gap are not classified as a reform, but ages as well as qualitative information Time Cost 25% 25% their impact is still reflected in the most on the mechanisms put in place by the Procedures Reliability updated data for this indicator set. utility for monitoring power outages of supply and transparency and restoring power supply, the report- of tariffs The data details on dealing with con- ing relationship between the utility and Steps to file a connection Power outages struction permits can be found at the regulator for power outages, the application, prepare and regulatory a design, complete mechanisms in http://www.doingbusiness.org. transparency and accessibility of tariffs works, obtain approvals, place to monitor and whether the utility faces a financial go through inspections, and reduce them; install a meter and transparency of deterrent aimed at limiting outages sign a supply tariffs GETTING ELECTRICITY (such as a requirement to compensate contract customers or pay fines when outages Doing Business records all procedures exceed a certain cap). Note: The price of electricity is measured but does required for a business to obtain a perma- not count for the rankings. nent electricity connection and supply for The ranking of locations on the ease a standardized warehouse (figure 7.5). of getting electricity is determined by the data, including data on the transpar- These procedures include applications sorting their scores for getting electric- ency of tariffs and the procedures for and contracts with electricity utilities, ity. These scores are the simple average obtaining an electricity connection, are all necessary inspections and clearances of the scores for all the component collected from all market players—the from the distribution utility and other indicators except the price of electricity electricity distribution utility, electric- agencies, and the external and final con- (figure 7.6). ity regulatory agencies and independent nection works. The questionnaire divides professionals such as electrical engineers, the process of getting an electricity Data on reliability of supply are collected electrical contractors and construction connection into distinct procedures and from the electricity distribution utilities companies. The electricity distribution solicits data for calculating the time and or regulators, depending on the specific utility consulted is the one serving the cost to complete each procedure. technical nature of the data. The rest of area (or areas) where warehouses are located. If there is a choice of distribu- tion utilities, the one serving the largest FIGURE 7.5  Doing Business measures the connection process at the level of number of customers is selected. distribution utilities To make the data comparable across locations, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. Assumptions about the Generation Transmission warehouse The warehouse: ƒƒ Is owned by a local entrepreneur. Distribution ƒƒ Is located in the selected location. u New connections u Network operation and maintenance ƒƒ Is located in an area where similar u Metering and billing warehouses are typically located. In Customer this area a new electricity connection is not eligible for a special investment 84 DOING BUSINESS IN KAZAKHSTAN 2019 promotion regime (offering special at 80% of capacity on average, and TABLE 7.4 What do the getting subsidization or faster service, there are no electricity cuts (assumed electricity indicators measure? for example). for reasons of simplicity). Procedures to obtain an electricity ƒƒ Is located in an area with no physical ƒƒ The monthly energy consumption is connection (number) constraints. For example, the property 26,880 kilowatt-hours (kWh); hourly Submitting all relevant documents and obtaining is not near a railway. consumption is 112 kWh. all necessary clearances and permits ƒƒ Is a new construction and is being con- ƒƒ If multiple electricity suppliers exist, Completing all required notifications and nected to electricity for the first time. the warehouse is served by the receiving all necessary inspections ƒƒ Has two stories, both above cheapest supplier. Obtaining external installation works and possibly purchasing material for these works ground, with a total surface area of ƒƒ Tariffs effective in March of the cur- approximately 1,300.6 square meters rent year are used for calculation of Concluding any necessary supply contract and obtaining final supply (14,000 square feet). The plot of the price of electricity for the ware- Time required to complete each procedure land on which it is built is 929 square house. Although March has 31 days, (calendar days) meters (10,000 square feet). for calculation purposes only 30 days Is at least one calendar day ƒƒ Is used for the storage of goods. are used. Each procedure starts on a separate day Assumptions about the Procedures Does not include time spent gathering information electricity connection A procedure is defined as any interac- Reflects the time spent in practice, with little The electricity connection: tion of the company’s employees or its follow-up and no prior contact with officials ƒƒ Is a permanent one. main electrician or electrical engineer Cost required to complete each procedure ƒƒ Is a three-phase, four-wire Y connec- (that is, the one who may have done (% of income per capita) tion with a subscribed capacity of 140 the internal wiring) with external par- Official costs only, no bribes kilovolt-amperes (kVA) with a power ties, such as the electricity distribution Value added tax excluded factor of 1, when 1 kVA = 1 kilowatt utility, electricity supply utilities, gov- Reliability of supply and transparency of (kW). ernment agencies, electrical contrac- tariffs index (0–8) ƒƒ Has a length of 150 meters. The con- tors and electrical firms. Interactions Duration and frequency of power outages nection is to either the low-voltage between company employees and steps Tools to monitor power outages or the medium-voltage distribution related to the internal electrical wiring, Tools to restore power supply network and is either overhead or such as the design and execution of the Regulatory monitoring of utilities' performance underground, whichever is more com- internal electrical installation plans, are mon in the area where the warehouse not counted as procedures. Procedures Financial deterrents aimed at limiting outages is located. that must be completed with the same Transparency and accessibility of tariffs ƒƒ Requires works that involve the utility but with different departments Price of electricity (cents per kilowatt-hour) crossing of a 10-meter-wide road (by are counted as separate procedures Price based on monthly bill for commercial excavation or overhead lines) but are (table 7.4). warehouse in case study all carried out on public land. There is Note: While Doing Business measures the price no crossing of other owners’ private The company’s employees are assumed of electricity, it does not include these data when calculating the score for getting electricity or the property because the warehouse has to complete all procedures themselves ranking on the ease of getting electricity. access to a road. unless the use of a third party is man- ƒƒ Includes only negligible length in the dated (for example, if only an electrician Time customer’s private domain. registered with the utility is allowed to ƒƒ Does not require work to install the submit an application). If the company Time is recorded in calendar days. The internal wiring of the warehouse. can, but is not required to, request the measure captures the median duration This has already been completed services of professionals (such as a that the electricity utility and experts indi- up to and including the customer’s private firm rather than the utility for cate is necessary in practice, rather than service panel or switchboard and the the external works), these procedures required by law, to complete a procedure meter base. are recorded if they are commonly with minimum follow-up and no extra done. The procedures counted include payments. It is assumed that the mini- Assumptions about the monthly only the most likely cases (for example, mum time required for each procedure is consumption for March more than 50% of the time the utility one day. Although procedures may take ƒƒ The warehouse operates 30 days a has the material) and those followed place simultaneously, they cannot start month from 9:00 a.m. to 5:00 p.m. (8 in practice for connecting a warehouse on the same day (that is, simultaneous hours a day), with equipment utilized to electricity. procedures start on consecutive days). DATA NOTES 85 It is assumed that the company does not the first monthly consumption bills, it is not RELIABILITY OF SUPPLY AND waste time and commits to completing recorded. To calculate the present value TRANSPARENCY OF TARIFFS each remaining procedure without delay. of the lost interest earnings, the end-2017 INDEX The time that the company spends on lending rates from the International Doing Business uses the system average gathering information is not taken into Monetary Fund’s International Financial interruption duration index (SAIDI) account. It is assumed that the com- Statistics are used. In cases where the and the system average interruption pany is aware of all electricity connection security deposit is returned with interest, frequency index (SAIFI) to measure the requirements and their sequence from the difference between the lending rate duration and frequency of power out- the beginning. and the interest paid by the utility is used to ages in each of the selected locations. calculate the present value. SAIDI is the average total duration of Cost outages over the course of a year for Cost is recorded as a percentage of the In some economies the security deposit each customer served, while SAIFI is economy’s income per capita. Costs are can be put up in the form of a bond: the average number of service inter- recorded exclusive of value added tax. the company can obtain from a bank ruptions experienced by a customer All the fees and costs associated with or an insurance company a guarantee in a year. Annual data (covering the completing the procedures to connect issued on the assets it holds with that calendar year) are collected from a warehouse to electricity are recorded, financial institution. In contrast to the distribution utility companies and including those related to obtaining scenario in which the customer pays national regulators on SAIDI and SAIFI. clearances from government agencies, the deposit in cash to the utility, in this Both SAIDI and SAIFI estimates should applying for the connection, receiving scenario the company does not lose include planned and unplanned outages inspections of both the site and the ownership control over the full amount as well as load shedding. internal wiring, purchasing material, and can continue using it. In return the getting the actual connection works and company will pay the bank a commis- A location is eligible to obtain a score on paying a security deposit. Information sion for obtaining the bond. The com- the reliability of supply and transparency from local experts and specific regula- mission charged may vary depending of tariffs index if the utility collects data tions and fee schedules are used as on the credit standing of the company. on electricity outages (measuring the sources for costs. If several local part- The best possible credit standing and average total duration of outages per ners provide different estimates, the thus the lowest possible commission customer and the average number of median reported value is used. In all are assumed. Where a bond can be put outages per customer) and the SAIDI cases the cost excludes bribes. up, the value recorded for the deposit value is below a threshold of 100 hours is the annual commission times the and the SAIFI value below a threshold of Security deposit five years assumed to be the length of 100 outages. Utilities may require security deposits as the contract. If both options exist, the a guarantee against the possible failure cheaper alternative is recorded. Because the focus is on measuring the of customers to pay their consumption reliability of the electricity supply, a bills. For this reason, the security deposit In Hong Kong SAR, China, a customer location is not eligible to obtain a score for a new customer is most often calcu- requesting a 140-kVA electricity con- if outages are too frequent or long- lated as a function of the customer’s nection in March 2018 would have had lasting for the electricity supply to be estimated consumption. to put up a security deposit of 64,721 considered reliable—that is, if the SAIDI Hong Kong dollars (about $8,240) in or SAIFI value exceeds the determined Doing Business does not record the full cash or check, and the deposit would threshold. A location is also not eligible amount of the security deposit. If the have been returned only at the end of the to obtain a score if data on power out- deposit is based on the customer’s actual contract. The customer could instead ages are not collected or are collected consumption, this basis is the one assumed have invested this money at the prevail- only partially (for example, if data on in the case study. Rather than the full ing lending rate of 5.0%. Over the five planned outages or load shedding are amount of the security deposit, Doing years of the contract, this would imply a not included in the calculation of SAIDI Business records the present value of the present value of lost interest earnings of and SAIFI) and if the minimum outage losses in interest earnings experienced by 14,008 Hong Kong dollars ($1,780). In time considered for calculation of SAIDI the customer because the utility holds the contrast, if the customer chose to settle and SAIFI is more than five minutes. security deposit over a prolonged period, the deposit with a bank guarantee at in most cases until the end of the contract an annual rate of 1.5%, the amount lost For all locations that meet the criteria as (assumed to be after five years). In cases over the five years would be just 4,854 determined by Doing Business, a score on where the security deposit is used to cover Hong Kong dollars ($620). the reliability of supply and transparency 86 DOING BUSINESS IN KAZAKHSTAN 2019 of tariffs index is calculated on the basis The index ranges from 0 to 8, with in the calculation of SAIDI and SAIFI. of the following six components: higher values indicating greater reli- Thus, based on the criteria established, ƒƒ What the SAIDI and SAIFI values are. ability of electricity supply and greater Suriname cannot receive a score on the If SAIDI and SAIFI are 12 (equivalent to transparency of tariffs. In the United index even though the utility uses auto- an outage of one hour each month) or Kingdom, for example, the distribution mated systems for monitoring outages below, a score of 1 is assigned. If SAIDI utility company UK Power Networks and restoring power supply and there is and SAIFI are 4 (equivalent to an out- uses SAIDI and SAIFI metrics to monitor transparency around electricity tariffs. age of one hour each quarter) or below, and collect data on power outages. In 1 additional point is assigned. Finally, if 2017 the average total duration of power If an economy location issued no elec- SAIDI and SAIFI are 1 (equivalent to an outages in London was 0.27 hours per tricity connections between December outage of one hour per year) or below, customer and the average number of 2016 and December 2018, or if electricity 1 more point is assigned. outages experienced by a customer was was not provided during that period, the ƒƒ What tools are used by the distribution 0.13. Both SAIDI and SAIFI are below economy receives a “no practice” mark utility to monitor power outages. A the threshold and indicate that there on the procedures, time and cost indica- score of 1 is assigned if the utility uses was less than one outage a year per tors. In addition, a “no practice” economy automated tools, such as the super- customer, for a total duration of less receives a score of 0 on the reliability of visory control and data acquisition than one hour. Therefore, the economy supply and transparency of tariffs index (SCADA) system; 0 if it relies solely on not only meets the eligibility criteria even if, for example, there is regulatory calls from customers and records and for obtaining a score on the index; it oversight of utilities on power interrup- monitors outages manually. also receives a score of 3 on the first tions, for example. ƒƒ What tools are used by the distribu- component of the index. The utility uses tion utility to restore power supply. the automatic GE PowerOn Control Price of electricity A score of 1 is assigned if the utility System to identify faults in the network Doing Business measures the price of uses automated tools, such as the (a score of 1) and to restore electricity electricity but does not include these SCADA system; 0 if it relies solely service (a score of 1). The Office of Gas data when calculating the score for on manual resources for service and Electricity Markets, an independent getting electricity or the ranking on restoration, such as field crews or national regulatory authority, actively the ease of getting electricity. The data maintenance personnel. reviews the utility’s performance in pro- are available on the Doing Business ƒƒ Whether a regulator—that is, an viding reliable electricity service (a score website (http://www.doingbusiness entity separate from the utility— of 1) and requires the utility to compen- .org) and are based on standardized monitors the utility’s performance sate customers if outages last longer assumptions to ensure comparability on reliability of supply. A score of 1 than a maximum period defined by the across economies. is assigned if the regulator performs regulator (a score of 1). Customers are periodic or real-time reviews; 0 if it notified of a change in tariffs ahead The price of electricity is measured in does not monitor power outages and of the next billing cycle and can easily U.S. cents per kilowatt-hour. On the basis does not require the utility to report check effective tariffs online (a score of of the assumptions about monthly con- on reliability of supply. 1). Adding these numbers gives the sumption, a monthly bill for a commer- ƒƒ Whether financial deterrents exist to United Kingdom a total score of 8 on the cial warehouse in each of the selected limit outages. A score of 1 is assigned reliability of supply and transparency of locations in Kazakhstan is computed for if the utility compensates customers tariffs index. the month of March. As noted, the ware- when outages exceed a certain cap, house uses electricity 30 days a month, if the utility is fined by the regulator On the other hand, several economies from 9:00 a.m. to 5:00 p.m., so different when outages exceed a certain cap or receive a score of 0 on this index. The tariff schedules may apply if a time-of- if both these conditions are met; 0 if reason may be that outages occur more use tariff is available. no compensation mechanism of any than once a month and none of the kind is available. mechanisms and tools measured by the REFORMS ƒƒ Whether electricity tariffs are trans- index are in place. A location may also The indicator set on getting electricity parent and easily available. A score receive a score of 0 if either the SAIDI tracks changes related to the efficiency of 1 is assigned if effective tariffs are or SAIFI value (or both) exceeds the of the connection process, as well as available online and customers are threshold of 100 or if not all outages the reliability of power supply and notified of a change in tariff a full bill- were considered when calculating the transparency of tariffs. Depending on ing cycle (that is, one month) ahead indices. In Suriname, for example, the the impact on the data, certain changes of time; 0 if not. utility does not include load shedding are classified as reforms. Reforms DATA NOTES 87 are divided into two types: those that by Carolin Geginat and Rita Ramalho FIGURE 7.7  Registering property: make it easier to do business and those (“Electricity Connections and Firm efficiency and quality of land changes that make it more difficult to Performance in 183 Countries,” Global administration system do business. The getting electricity Indicators Group, World Bank Group, indicator set uses two criteria to recog- Washington, DC, 2015) and is adopted Rankings are based on scores for four indicators nize a reform. here with minor changes. Days to transfer Cost to transfer property between two property, as % of First, the aggregate gap on the overall local companies property value score of the indicator set is used to REGISTERING PROPERTY assess the impact of data changes. Any data update that leads to a change of Doing Business records the full sequence 25% 25% 2% or more on the score gap is classified of procedures necessary for a business Time Cost as a reform (for more details, see the (the buyer) to purchase a property from 25% 25% Procedures Quality chapter on “About Doing Business and another business (the seller) and to trans- of land administration index Doing Business in Kazakhstan 2019”). For fer the property title to the buyer’s name example, if the implementation of a new so that the buyer can use the property for Steps to transfer Reliability, single window at the utility reduces the expanding its business, use the property property so that it transparency and can be sold or used coverage of land time to process new connection requests as collateral in taking new loans or, if nec- as collateral administration system; in a way that the overall gap decreases by essary, sell the property to another busi- protection against land disputes; equal access 2% or more, such a change is classified ness. It also measures the time and cost to property rights as a reform. On the other hand, minor fee to complete each of these procedures. updates from the utility or other small In addition, Doing Business measures the changes that have an aggregate impact quality of the land administration system of less than 2% on the gap are not clas- in each economy. The quality of land lawyers, notaries and property registries sified as a reform, but their impact is still administration index has five dimensions: provide information on procedures as reflected in the most updated indicators reliability of infrastructure, transparency well as the time and cost to complete for this topic. of information, geographic coverage, land each of them. dispute resolution and equal access to Second, to be considered a reform, property rights. To make the data comparable across changes in the data must be tied to locations, several assumptions about an initiative led by the utility or by the The ranking of locations on the ease the parties to the transaction, the prop- government—and not an exogenous of registering property is determined erty and the procedures are used. event. For example, if outages increase by sorting their scores for registering considerably from one year to the next property. These scores are the simple Assumptions about the parties due to inclement weather, this cannot average of the scores for each of the The parties (buyer and seller): be considered a reform that makes doing component indicators (figure 7.7). ƒƒ Are limited liability companies (or the business harder. Similarly, if the cost of legal equivalent). electricity-related materials (such as EFFICIENCY OF TRANSFERRING ƒƒ Are located in the periurban area of cabling or transformers) decreases due PROPERTY the selected location. to a currency appreciation, this cannot As recorded by Doing Business, the pro- ƒƒ Are 100% domestically and privately be considered a reform that makes doing cess of transferring property starts with owned. business easier. However, if a utility obtaining the necessary documents, such ƒƒ Have 50 employees each, all of whom establishes a one-stop shop to streamline as a copy of the seller’s title if necessary, are nationals. the connection process or if it installs an and conducting due diligence if required. ƒƒ Perform general commercial activities. automated system to improve monitor- The transaction is considered complete ing of power outages and restoration of when it is opposable to third parties and Assumptions about the property electricity services, these actions would when the buyer can use the property, use The property: be considered reforms that made doing it as collateral for a bank loan or resell it ƒƒ Has a value of 50 times income per business easier. (figure 7.8). Every procedure required by capita. The sale price equals the value. law or necessary in practice is included, ƒƒ Is fully owned by the seller. The data details on getting electricity can whether it is the responsibility of the sell- ƒƒ Has no mortgages attached and has be found at http://www.doingbusiness.org. er or the buyer or must be completed by a been under the same ownership for The initial methodology was developed third party on their behalf. Local property the past 10 years. 88 DOING BUSINESS IN KAZAKHSTAN 2019 procedure available and used by the FIGURE 7.8 What are the time, cost and number of procedures required to transfer property between two local companies? majority of property owners is chosen. If procedures can be undertaken simul- Cost taneously, it is assumed that they are. (% of property value) It is assumed that the parties involved Buyer can use the property, are aware of all requirements and their resell it or use it as sequence from the beginning. Time collateral spent on gathering information is not Number of Land & two-story procedures considered. If time estimates differ warehouse among sources, the median reported Seller with property value is used. registered and no title disputes Time Preregistration Registration Postregistration (days) Cost Cost is recorded as a percentage of the property value, assumed to be equivalent ƒƒ Is registered in the land registry or between company officers and employ- to 50 times income per capita. Only offi- cadastre, or both, and is free of title ees are not considered. All procedures cial costs required by law are recorded, disputes. that are legally or in practice required for including fees, transfer taxes, stamp ƒƒ Is located in a periurban commercial registering property are recorded, even duties and any other payment to the zone, and no rezoning is required. if they may be avoided in exceptional property registry, notaries, public agen- ƒƒ Consists of land and a building. The cases (table 7.5). If a procedure can be cies or lawyers. Other taxes, such as land area is 557.4 square meters accelerated legally for an additional cost, capital gains tax or value added tax, are (6,000 square feet). A two-story the fastest procedure is chosen if that excluded from the cost measure. Both warehouse of 929 square meters option is more beneficial to the location’s (10,000 square feet) is located on the score and if it is used by the majority of TABLE 7.5  What do the indicators on land. The warehouse is 10 years old, is property owners. Although the buyer the efficiency of transferring property in good condition and complies with may use lawyers or other professionals measure? all safety standards, building codes where necessary in the registration pro- Procedures to legally transfer title on and other legal requirements. It has cess, it is assumed that the buyer does immovable property (number) no heating system. The property of not employ an outside facilitator in the Preregistration procedures (for example, checking land and building will be transferred in registration process unless legally or in for liens, notarizing sales agreement, paying property transfer taxes) its entirety. practice required to do so. ƒƒ Will not be subject to renovations Registration procedures in the selected location or additional building following the Time Postregistration procedures (for example, filing title with municipality) purchase. Time is recorded in calendar days. The ƒƒ Has no trees, natural water sources, measure captures the median dura- Time required to complete each procedure natural reserves or historical monu- tion that property lawyers, notaries or Does not include time spent gathering information ments of any kind. registry officials indicate is necessary ƒƒ Will not be used for special purposes, to complete a procedure. It is assumed Each procedure starts on a separate day— though procedures that can be fully completed and no special permits, such as for that the minimum time required for online are an exception to this rule residential use, industrial plants, each procedure is one day, except for Procedure considered completed once final waste storage or certain types of agri- procedures that can be fully completed document is received cultural activities, are required. online, for which the time required No prior contact with officials ƒƒ Has no occupants, and no other party is recorded as half a day. Although Cost required to complete each procedure holds a legal interest in it. procedures may take place simultane- (% of property value) ously, they cannot start on the same Official costs only (such as administrative fees, duties and taxes) Procedures day (again except for procedures that A procedure is defined as any interaction can be fully completed online). It is Value added tax, capital gains taxa and illicit payments are excluded of the buyer or the seller, their agents (if assumed that the buyer does not waste a. There is an exception in this report: the capital an agent is legally or in practice required) time and commits to completing each gains tax is included in the calculation of the or the property with external parties, remaining procedure without delay. cost for those states where the tax is charged based on the total value of the property and including government agencies, inspec- If a procedure can be accelerated for not only the profits. tors, notaries and lawyers. Interactions an additional cost, the fastest legal DATA NOTES 89 costs borne by the buyer and those borne scanned; 0 if the majority are kept in ƒƒ How immovable property is identi- by the seller are included. If cost esti- paper format. fied. A score of 1 is assigned if there is mates differ among sources, the median ƒƒ Whether there is an electronic data- a unique number to identify property reported value is used. base for checking for encumbrances. for the majority of land plots; 0 if there A score of 1 is assigned if yes; 0 if no. are multiple identifiers. QUALITY OF LAND ƒƒ How maps of land plots are kept at ADMINISTRATION the mapping agency of the selected The index ranges from 0 to 8, with The quality of land administration index location. A score of 2 is assigned if higher values indicating a higher quality is composed of five other indices: the the majority of maps are fully digital; of infrastructure for ensuring the reli- reliability of infrastructure, transpar- 1 if the majority are scanned; 0 if the ability of information on property titles ency of information, geographic cover- majority are kept in paper format. and boundaries. In Turkey, for example, age, land dispute resolution and equal ƒƒ Whether there is a geographic informa- the land registry offices in Istanbul access to property rights indices (table tion system—an electronic database for maintain titles in a fully digital format 7.6). Data are collected for each of the recording boundaries, checking plans (a score of 2) and have a fully electronic selected locations. and providing cadastral information. A database to check for encumbrances (a score of 1 is assigned if yes; 0 if no. score of 1). The Cadastral Directorate Reliability of infrastructure index ƒƒ How the land ownership registry offices in Istanbul have digital maps The reliability of infrastructure index has and mapping agency are linked. A (a score of 2), and the Geographical six components: score of 1 is assigned if information Information Directorate has a public ƒƒ How land titles are kept at the registry about land ownership and maps are portal allowing users to check the plans of the selected location. A score of 2 kept in a single database or in linked and cadastral information on parcels is assigned if the majority of land titles databases; 0 if there is no connection along with satellite images (a score of are fully digital; 1 if the majority are between the different databases. 1). Databases about land ownership and maps are linked through the TAKBIS system, an integrated information TABLE 7.6  What do the indicators on the quality of land administration measure? system for the land registry offices and Reliability of infrastructure index (0–8) cadastral offices (a score of 1). Finally, Type of system for archiving information on land ownership there is a unique identifying number for Availability of electronic database to check for encumbrances properties (a score of 1). Adding these Type of system for archiving maps numbers gives Turkey a score of 8 on Availability of geographic information system the reliability of infrastructure index. Link between property ownership registry and mapping system Transparency of information index Transparency of information index (0–6) The transparency of information index Accessibility of information on land ownership has 10 components: Accessibility of maps of land plots ƒƒ Whether information on land owner- Publication of fee schedules, lists of registration documents, service standards ship is made publicly available. A Availability of a specific and separate mechanism for complaints score of 1 is assigned if information on land ownership is accessible by Publication of statistics about the number of property transactions anyone; 0 if access is restricted. Geographic coverage index (0–8) ƒƒ Whether the list of documents Coverage of land registry at the level of the selected location and the economy required for completing any type of Coverage of mapping agency at the level of the selected location and the economy property transaction is made publicly Land dispute resolution index (0–8) available. A score of 0.5 is assigned Legal framework for immovable property registration if the list of documents is accessible Mechanisms to prevent and resolve land disputes online or on a public board; 0 if it is not made available to the public or if it Equal access to property rights index (-2–0) can be obtained only in person. Unequal ownership rights to property between unmarried men and women ƒƒ Whether the fee schedule for Unequal ownership rights to property between married men and women completing any type of property Quality of land administration index (0–30) transaction is made publicly available. Sum of the reliability of infrastructure, transparency of information, geographic coverage, land dispute A score of 0.5 is assigned if the fee resolution and equal access to property rights indices schedule is accessible online or on a 90 DOING BUSINESS IN KAZAKHSTAN 2019 public board, free of charge; 0 if it is about a problem that occurred at if all privately held land plots in the not made available to the public or if it the mapping agency. A score of economy are formally registered at can be obtained only in person. 0.5 is assigned if there is a specific the land registry; 0 if not. ƒƒ Whether the agency in charge of and separate mechanism for filing a ƒƒ How complete the coverage of the immovable property registration com- complaint; 0 if there is only a general mapping agency is at the level of mits to delivering a legally binding mechanism or no mechanism. the selected location. A score of 2 document that proves property own- is assigned if all privately held land ership within a specific time frame. A The index ranges from 0 to 6, with higher plots in the location are mapped; score of 0.5 is assigned if the service values indicating greater transparency in 0 if not. standard is accessible online or on the land administration system. In the ƒƒ How complete the coverage of the a public board; 0 if it is not made Netherlands, for example, anyone who mapping agency is at the level of the available to the public or if it can be pays a fee can consult the land owner- economy. A score of 2 is assigned obtained only in person. ship database (a score of 1). Information if all privately held land plots in the ƒƒ Whether there is a specific and sepa- can be obtained at the office, by mail economy are mapped; 0 if not. rate mechanism for filing complaints or online using the Kadaster website about a problem that occurred at (http://www.kadaster.nl). Anyone can The index ranges from 0 to 8, with higher the agency in charge of immovable also get information online about the list values indicating greater geographic property registration. A score of 1 of documents to submit for property reg- coverage in land ownership registration is assigned if there is a specific and istration (a score of 0.5), the fee schedule and cadastral mapping. In Japan, for separate mechanism for filing a for registration (a score of 0.5) and the example, all privately held land plots are complaint; 0 if there is only a general service standards (a score of 0.5). And formally registered at the land registry in mechanism or no mechanism. anyone facing a problem at the land Tokyo and Osaka (a score of 2) and the ƒƒ Whether there are publicly available registry can file a complaint or report an economy as a whole (a score of 2). Also, official statistics tracking the number error by filling in a specific form online all privately held land plots are mapped in of transactions at the immovable (a score of 1). In addition, the Kadaster both cities (a score of 2) and the economy property registration agency. A score makes statistics about land transactions as a whole (a score of 2). Adding these of 0.5 is assigned if statistics are pub- available to the public, reporting a total of numbers gives Japan a score of 8 on the lished about property transfers in the 214,793 property transfers in Amsterdam geographic coverage index. selected location in the past calendar in 2016 (a score of 0.5). Moreover, any- year; 0 if no such statistics are made one who pays a fee can consult online Land dispute resolution index publicly available. cadastral maps (a score of 0.5). It is also The land dispute resolution index assess- ƒƒ Whether maps of land plots are made possible to get public access to the fee es the legal framework for immovable publicly available. A score of 0.5 is schedule for map consultation (a score property registration and the accessibility assigned if maps are accessible by of 0.5), the service standards for delivery of dispute resolution mechanisms. The anyone; 0 if access is restricted. of an updated plan (a score of 0.5) and a index has eight components: ƒƒ Whether the fee schedule for specific mechanism for filing a complaint ƒƒ Whether the law requires that all accessing maps is made publicly about a map (a score of 0.5). Adding property sale transactions be reg- available. A score of 0.5 is assigned these numbers gives the Netherlands a istered at the immovable property if the fee schedule is accessible score of 6 on the transparency of infor- registry to make them opposable to online or on a public board, free of mation index. third parties. A score of 1.5 is assigned charge; 0 if it is not made available if yes; 0 if no. to the public or if it can be obtained Geographic coverage index ƒƒ Whether the formal system of only in person. The geographic coverage index has four immovable property registration is ƒƒ Whether the mapping agency components: subject to a guarantee. A score of 0.5 commits to delivering an updated ƒƒ How complete the coverage of the is assigned if either a state or a private map within a specific time frame. A land registry is at the level of the guarantee over immovable property score of 0.5 is assigned if the service selected location. A score of 2 is registration is required by law; 0 if no standard is accessible online or on assigned if all privately held land plots such guarantee is required. a public board; 0 if it is not made in the location are formally registered ƒƒ Whether there is a specific compen- available to the public or if it can be at the land registry; 0 if not. sation mechanism to cover for losses obtained only in person. ƒƒ How complete the coverage of the incurred by parties who engaged in ƒƒ Whether there is a specific and sepa- land registry is at the level of the good faith in a property transaction rate mechanism for filing complaints economy. A score of 2 is assigned based on erroneous information DATA NOTES 91 certified by the immovable property by the state (a score of 0.5) and has First, the aggregate gap on the overall registry. A score of 0.5 is assigned if a compensation mechanism to cover score of the indicator set is used to yes; 0 if no. losses incurred by parties who engaged assess the impact of data changes. Any ƒƒ Whether the legal system requires in good faith in a property transaction data update that leads to a change of verification of the legal validity of the based on an error by the registry (a score 2% or more in the score gap is classified documents necessary for a property of 0.5). In accordance with the Proceeds as a reform (for more details, see the transaction. A score of 0.5 is assigned of Crime Act 2002 and the Money chapter on “About Doing Business and if there is a review of legal validity, Laundering Regulations 2007, a lawyer Doing Business in Kazakhstan 2019”). For either by the registrar or by a profes- verifies the legal validity of the docu- example, if the implementation of a new sional (such as a notary or lawyer); 0 ments in a property transaction (a score electronic property registration system if there is no review. of 0.5) and the identity of the parties (a reduces time in a way that the overall gap ƒƒ Whether the legal system requires score of 0.5). The United Kingdom has a decreases by 2% or more, such a change verification of the identity of the par- national database to verify the accuracy is classified as a reform. On the contrary, ties to a property transaction. A score of identity documents (a score of 1). In a minor fee updates or other smaller of 0.5 is assigned if there is verifica- land dispute between two British compa- changes in the indicators that have an tion of identity, either by the registrar nies over the tenure rights of a property aggregate impact of less than 2% on the or by a professional (such as a notary worth $2,026,500, the Land Registration gap are not classified as a reform, but or lawyer); 0 if there is no verification. division of the Property Chamber (First- their impact is still reflected in the most ƒƒ Whether there is a national database tier Tribunal) gives a decision in less than updated data for this indicator set. to verify the accuracy of identity one year (a score of 3). Finally, statistics documents. A score of 1 is assigned if about land disputes are collected and Second, the overall score on the quality of such a national database is available; published; there were a total of 1,154 land land administration is also considered as 0 if not. disputes in the country in 2017 (a score a criterion. Any change of 1 point or more ƒƒ How much time it takes to obtain a of 0.5). Adding these numbers gives the on the overall quality score is acknowl- decision from a court of first instance United Kingdom a score of 8 on the land edged as a reform. For instance, the (without appeal) in a standard land dispute resolution index. completion of the geographic coverage of dispute between two local businesses the land registry of the selected location over tenure rights worth 50 times Quality of land administration (2 points) is considered a reform. income per capita and located in index the selected location. A score of 3 is The quality of land administration index is The data details on registering property can assigned if it takes less than one year; the sum of the scores on the reliability of be found at http://www.doingbusiness.org. 2 if it takes between one and two infrastructure, transparency of informa- years; 1 if it takes between two and tion, geographic coverage, land dispute three years; 0 if it takes more than resolution and equal access to property three years. rights indices. The index ranges from 0 to ƒƒ Whether there are publicly avail- 30, with higher values indicating better able statistics on the number of quality of the land administration system. land disputes in the first instance. A score of 0.5 is assigned if statistics REFORMS are published about land disputes The registering property indicator set in the economy in the past calendar tracks changes related to the efficiency year; 0 if no such statistics are made and quality of land administration sys- publicly available. tems since the last benchmarked study in 2017. Depending on the impact on The index ranges from 0 to 8, with the data, certain changes are classified higher values indicating greater protec- as reforms in order to acknowledge the tion against land disputes. In the United implementation of significant changes. Kingdom, for example, according to the Reforms are divided into two types: those Land Registration Act 2002 property that make it easier to do business and transactions must be registered at the those changes that make it more difficult land registry to make them opposable to do business. The registering property to third parties (a score of 1.5). The indicator set uses two criteria to recog- property transfer system is guaranteed nize a reform. 92 DOING BUSINESS IN KAZAKHSTAN 2019 Indicator Snapshots Starting a business Cost Paid-in minimum Ease of doing Ease of starting a Procedures Time (% of income per capital business score business Location (number) (days) capita) (% of income per capita) (0–100) (rank) Akmola (Kokshetau) 5 6 2.19 0.0 92.46 14 Aktobe 4 5 0.18 0.0 94.44 2 Almaty city 4 5 0.24 0.0 94.43 9 Almaty region (Taldykorgan) 6 6 1.00 0.0 91.14 15 Atyrau 4 5 0.24 0.0 94.43 9 East Kazakhstan (Oskemen) 5 6 0.88 0.0 92.63 13 Karagandy 4 5 0.21 0.0 94.43 7 Kostanay 4 5 0.18 0.0 94.43 5 Kyzylorda 4 5 0.23 0.0 94.43 8 Mangystau (Aktau) 4 5 0.28 0.0 94.42 11 North Kazakhstan (Petropavl) 5 6 0.82 0.0 92.63 12 Nur-Sultan 4 4.5 0.21 0.0 94.56 1 Pavlodar 4 5 0.18 0.0 94.44 2 Shymkent 4 5 0.20 0.0 94.43 6 West Kazakhstan (Oral) 4 5 0.18 0.0 94.44 2 Zhambyl (Taraz) 6 6 1.37 0.0 91.09 16 Dealing with construction permits Cost Building quality Ease of doing Ease of dealing with Procedures Time (% of warehouse control index business score construction permits Location (number) (days) value) (0–15) (0–100) (rank) Akmola (Kokshetau) 18 96.5 2.0 13 76.07 3 Aktobe 18 118.5 1.9 13 74.59 9 Almaty city 17 102.5 2.2 13 76.47 1 Almaty region (Taldykorgan) 18 99.5 2.0 13 75.99 5 Atyrau 18 121.5 2.3 13 73.87 13 East Kazakhstan (Oskemen) 18 128.5 2.1 13 73.60 14 Karagandy 18 117.5 2.0 13 74.54 10 Kostanay 18 118.5 1.6 13 74.99 7 Kyzylorda 18 96.5 1.9 13 76.24 2 Mangystau (Aktau) 18 99.5 1.9 13 76.03 4 North Kazakhstan (Petropavl) 18 123.5 2.2 13 73.88 12 Nur-Sultan 18 113 2.1 13 74.80 8 Pavlodar 18 120.5 2.1 13 74.22 11 Shymkent 18 141.5 2.2 13 72.59 16 West Kazakhstan (Oral) 18 137.5 2.3 13 72.75 15 Zhambyl (Taraz) 18 107.5 2.1 13 75.23 6 INDICATOR SNAPSHOTS 93 Getting electricity Reliability of supply Cost and transparency of Ease of doing Ease of getting Procedures Time (% of income per tariffs index business score electricity Location (number) (days) capita) (0–8) (0–100) (rank) Akmola (Kokshetau) 6 75 45.0 5 71.79 12 Aktobe 6 57 40.1 6 76.89 3 Almaty city 6 71 39.3 8 81.62 1 Almaty region (Taldykorgan) 6 69 39.3 5 72.46 11 Atyrau 6 63 41.1 6 76.23 4 East Kazakhstan (Oskemen) 7 72 32.6 5 67.99 15 Karagandy 7 73 40.1 5 67.86 16 Kostanay 6 65 66.5 5 72.81 10 Kyzylorda 6 78 27.9 6 74.64 6 Mangystau (Aktau) 6 76 46.9 8 81.05 2 North Kazakhstan (Petropavl) 6 46 39.9 5 74.96 5 Nur-Sultan 8 87 51.0 8 71.51 13 Pavlodar 7 70 67.1 7 74.35 7 Shymkent 6 64 66.5 5 72.92 9 West Kazakhstan (Oral) 6 63 33.7 5 73.13 8 Zhambyl (Taraz) 6 75 70.4 4 68.59 14 Registering property Quality of land Ease of doing Ease of registering Procedures Time Cost administration index business score property Location (number) (days) (% of property value) (0–30) (0–100) (rank) Akmola (Kokshetau) 4 4.5 0.03 16 81.61 4 Aktobe 4 4.5 0.03 15 80.77 6 Almaty city 4 4.5 0.03 17 82.44 1 Almaty region (Taldykorgan) 4 5.5 0.03 15 80.65 14 Atyrau 4 4.5 0.03 15 80.77 6 East Kazakhstan (Oskemen) 4 4.5 0.03 17 82.44 1 Karagandy 4 4.5 0.03 15 80.77 6 Kostanay 4 4.5 0.03 15 80.77 6 Kyzylorda 4 4.5 0.03 15 80.77 6 Mangystau (Aktau) 4 5.5 0.03 15 80.65 14 North Kazakhstan (Petropavl) 4 4.5 0.03 16 81.61 4 Nur-Sultan 4 5.5 0.03 15 80.65 14 Pavlodar 4 4.5 0.03 17 82.44 1 Shymkent 4 4.5 0.03 15 80.77 6 West Kazakhstan (Oral) 4 4.5 0.03 15 80.77 6 Zhambyl (Taraz) 4 4.5 0.03 15 80.77 6 94 DOING BUSINESS IN KAZAKHSTAN 2019 Location Snapshots AKMOLA (KOKSHETAU) Aggregate rank (1–16): 9 Ease of doing business score 4 indicator average: 80.48 Population: 738,942 Starting a business (rank) 14 Getting electricity (rank) 12 Ease of doing business score (0–100) 92.46 Ease of doing business score (0–100) 71.79 Procedures (number) 5 Procedures (number) 6 Time (days) 6 Time (days) 75 Cost (% of income per capita) 2.19 Cost (% of income per capita) 45.0 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 3 Registering property (rank) 4 Ease of doing business score (0–100) 76.07 Ease of doing business score (0–100) 81.61 Procedures (number) 18 Procedures (number) 4 Time (days) 96.5 Time (days) 4.5 Cost (% of warehouse value) 2.0 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 16 AKTOBE Aggregate rank (1–16): 3 Ease of doing business score 4 indicator average: 81.67 Population: 857,711 Starting a business (rank) 2 Getting electricity (rank) 3 Ease of doing business score (0–100) 94.44 Ease of doing business score (0–100) 76.89 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 57 Cost (% of income per capita) 0.18 Cost (% of income per capita) 40.1 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 6 Dealing with construction permits (rank) 9 Registering property (rank) 6 Ease of doing business score (0–100) 74.59 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 118.5 Time (days) 4.5 Cost (% of warehouse value) 1.9 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 Sources: Doing Business database; Committee on Statistics, Ministry of National Economy of the Republic of Kazakhstan (for population data). Note: The procedures to start a business are the same for men and women across all 16 locations. LOCATION SNAPSHOTS 95 ALMATY CITY Aggregate rank (1–16): 1 Ease of doing business score 4 indicator average: 83.74 Population: 1,801,993 Starting a business (rank) 9 Getting electricity (rank) 1 Ease of doing business score (0–100) 94.43 Ease of doing business score (0–100) 81.62 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 71 Cost (% of income per capita) 0.24 Cost (% of income per capita) 39.3 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 8 Dealing with construction permits (rank) 1 Registering property (rank) 1 Ease of doing business score (0–100) 76.47 Ease of doing business score (0–100) 82.44 Procedures (number) 17 Procedures (number) 4 Time (days) 102.5 Time (days) 4.5 Cost (% of warehouse value) 2.2 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 17 ALMATY REGION (TALDYKORGAN) Aggregate rank (1–16): 13 Ease of doing business score 4 indicator average: 80.06 Population: 2,017,277 Starting a business (rank) 15 Getting electricity (rank) 11 Ease of doing business score (0–100) 91.14 Ease of doing business score (0–100) 72.46 Procedures (number) 6 Procedures (number) 6 Time (days) 6 Time (days) 69 Cost (% of income per capita) 1.00 Cost (% of income per capita) 39.3 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 5 Registering property (rank) 14 Ease of doing business score (0–100) 75.99 Ease of doing business score (0–100) 80.65 Procedures (number) 18 Procedures (number) 4 Time (days) 99.5 Time (days) 5.5 Cost (% of warehouse value) 2.0 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 ATYRAU Aggregate rank (1–16): 6 Ease of doing business score 4 indicator average: 81.32 Population: 620,684 Starting a business (rank) 9 Getting electricity (rank) 4 Ease of doing business score (0–100) 94.43 Ease of doing business score (0–100) 76.23 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 63 Cost (% of income per capita) 0.24 Cost (% of income per capita) 41.1 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 6 Dealing with construction permits (rank) 13 Registering property (rank) 6 Ease of doing business score (0–100) 73.87 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 121.5 Time (days) 4.5 Cost (% of warehouse value) 2.3 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 Sources: Doing Business database; Committee on Statistics, Ministry of National Economy of the Republic of Kazakhstan (for population data). Note: The procedures to start a business are the same for men and women across all 16 locations. 96 DOING BUSINESS IN KAZAKHSTAN 2019 EAST KAZAKHSTAN (OSKEMEN) Aggregate rank (1–16): 15 Ease of doing business score 4 indicator average: 79.16 Population: 1,383,745 Starting a business (rank) 13 Getting electricity (rank) 15 Ease of doing business score (0–100) 92.63 Ease of doing business score (0–100) 67.99 Procedures (number) 5 Procedures (number) 7 Time (days) 6 Time (days) 72 Cost (% of income per capita) 0.88 Cost (% of income per capita) 32.6 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 14 Registering property (rank) 1 Ease of doing business score (0–100) 73.60 Ease of doing business score (0–100) 82.44 Procedures (number) 18 Procedures (number) 4 Time (days) 128.5 Time (days) 4.5 Cost (% of warehouse value) 2.1 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 17 KARAGANDY Aggregate rank (1–16): 14 Ease of doing business score 4 indicator average: 79.40 Population: 1,380,538 Starting a business (rank) 7 Getting electricity (rank) 16 Ease of doing business score (0–100) 94.43 Ease of doing business score (0–100) 67.86 Procedures (number) 4 Procedures (number) 7 Time (days) 5 Time (days) 73 Cost (% of income per capita) 0.21 Cost (% of income per capita) 40.1 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 10 Registering property (rank) 6 Ease of doing business score (0–100) 74.54 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 117.5 Time (days) 4.5 Cost (% of warehouse value) 2.0 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 KOSTANAY Aggregate rank (1–16): 8 Ease of doing business score 4 indicator average: 80.75 Population: 875,616 Starting a business (rank) 5 Getting electricity (rank) 10 Ease of doing business score (0–100) 94.43 Ease of doing business score (0–100) 72.81 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 65 Cost (% of income per capita) 0.18 Cost (% of income per capita) 66.5 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 7 Registering property (rank) 6 Ease of doing business score (0–100) 74.99 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 118.5 Time (days) 4.5 Cost (% of warehouse value) 1.6 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 Sources: Doing Business database; Committee on Statistics, Ministry of National Economy of the Republic of Kazakhstan (for population data). Note: The procedures to start a business are the same for men and women across all 16 locations. LOCATION SNAPSHOTS 97 KYZYLORDA Aggregate rank (1–16): 4 Ease of doing business score 4 indicator average: 81.52 opulation: 783,156 Starting a business (rank) 8 Getting electricity (rank) 6 Ease of doing business score (0–100) 94.43 Ease of doing business score (0–100) 74.64 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 78 Cost (% of income per capita) 0.23 Cost (% of income per capita) 27.9 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 6 Dealing with construction permits (rank) 2 Registering property (rank) 6 Ease of doing business score (0–100) 76.24 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 96.5 Time (days) 4.5 Cost (% of warehouse value) 1.9 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 MANGYSTAU (AKTAU) Aggregate rank (1–16): 2 Ease of doing business score 4 indicator average: 83.04 Population: 660,317 Starting a business (rank) 11 Getting electricity (rank) 2 Ease of doing business score (0–100) 94.42 Ease of doing business score (0–100) 81.05 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 76 Cost (% of income per capita) 0.28 Cost (% of income per capita) 46.9 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 8 Dealing with construction permits (rank) 4 Registering property (rank) 14 Ease of doing business score (0–100) 76.03 Ease of doing business score (0–100) 80.65 Procedures (number) 18 Procedures (number) 4 Time (days) 99.5 Time (days) 5.5 Cost (% of warehouse value) 1.9 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 NORTH KAZAKHSTAN (PETROPAVL) Aggregate rank (1–16): 7 Ease of doing business score 4 indicator average: 80.77 Population: 558,584 Starting a business (rank) 12 Getting electricity (rank) 5 Ease of doing business score (0–100) 92.63 Ease of doing businesss score (0–100) 74.96 Procedures (number) 5 Procedures (number) 6 Time (days) 6 Time (days) 46 Cost (% of income per capita) 0.82 Cost (% of income per capita) 39.9 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 12 Registering property (rank) 4 Ease of doing business score (0–100) 73.88 Ease of doing business score (0–100) 81.61 Procedures (number) 18 Procedures (number) 4 Time (days) 123.5 Time (days) 4.5 Cost (% of warehouse value) 2.2 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 16 Sources: Doing Business database; Committee on Statistics, Ministry of National Economy of the Republic of Kazakhstan (for population data). Note: The procedures to start a business are the same for men and women across all 16 locations. 98 DOING BUSINESS IN KAZAKHSTAN 2019 NUR-SULTAN Aggregate rank (1–16): 10 Ease of doing business score 4 indicator average: 80.38 Population: 1,030,577 Starting a business (rank) 1 Getting electricity (rank) 13 Ease of doing business score (0–100) 94.56 Ease of doing business score (0–100) 71.51 Procedures (number) 4 Procedures (number) 8 Time (days) 4.5 Time (days) 87 Cost (% of income per capita) 0.21 Cost (% of income per capita) 51.0 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 8 Dealing with construction permits (rank) 8 Registering property (rank) 14 Ease of doing business score (0–100) 74.80 Ease of doing business score (0–100) 80.65 Procedures (number) 18 Procedures (number) 4 Time (days) 113 Time (days) 5.5 Cost (% of warehouse value) 2.1 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 PAVLODAR Aggregate rank (1–16): 5 Ease of doing business score 4 indicator average: 81.36 Population: 754,854 Starting a business (rank) 2 Getting electricity (rank) 7 Ease of doing business score (0–100) 94.44 Ease of doing business score (0–100) 74.35 Procedures (number) 4 Procedures (number) 7 Time (days) 5 Time (days) 70 Cost (% of income per capita) 0.18 Cost (% of income per capita) 67.1 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 7 Dealing with construction permits (rank) 11 Registering property (rank) 1 Ease of doing business score (0–100) 74.22 Ease of doing business score (0–100) 82.44 Procedures (number) 18 Procedures (number) 4 Time (days) 120.5 Time (days) 4.5 Cost (% of warehouse value) 2.1 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 17 SHYMKENT Aggregate rank (1–16): 12 Ease of doing business score 4 indicator average: 80.18 Population: 952,170 Starting a business (rank) 6 Getting electricity (rank) 9 Ease of doing business score (0–100) 94.43 Ease of doing business score (0–100) 72.92 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 64 Cost (% of income per capita) 0.20 Cost (% of income per capita) 66.5 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 16 Registering property (rank) 6 Ease of doing business score (0–100) 72.59 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 141.5 Time (days) 4.5 Cost (% of warehouse value) 2.2 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 Sources: Doing Business database; Committee on Statistics, Ministry of National Economy of the Republic of Kazakhstan (for population data). Note: The procedures to start a business are the same for men and women across all 16 locations. LOCATION SNAPSHOTS 99 WEST KAZAKHSTAN (ORAL) Aggregate rank (1–16): 11 Ease of doing business score 4 indicator average: 80.27 Population: 646,927 Starting a business (rank) 2 Getting electricity (rank) 8 Ease of doing business score (0–100) 94.44 Ease of doing business score (0–100) 73.13 Procedures (number) 4 Procedures (number) 6 Time (days) 5 Time (days) 63 Cost (% of income per capita) 0.18 Cost (% of income per capita) 33.7 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 5 Dealing with construction permits (rank) 15 Registering property (rank) 6 Ease of doing business score (0–100) 72.75 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 137.5 Time (days) 4.5 Cost (% of warehouse value) 2.30 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 ZHAMBYL (TARAZ) Aggregate rank (1–16): 16 Ease of doing business score 4 indicator average: 78.92 Population: 1,117,200 Starting a business (rank) 16 Getting electricity (rank) 14 Ease of doing business score (0–100) 91.09 Ease of doing business score (0–100) 68.59 Procedures (number) 6 Procedures (number) 6 Time (days) 6 Time (days) 75 Cost (% of income per capita) 1.37 Cost (% of income per capita) 70.4 Minimum capital (% of income per capita) 0 Reliability of supply and transparency of tariffs index (0–8) 4 Dealing with construction permits (rank) 6 Registering property (rank) 6 Ease of doing business score (0–100) 75.23 Ease of doing business score (0–100) 80.77 Procedures (number) 18 Procedures (number) 4 Time (days) 107.5 Time (days) 4.5 Cost (% of warehouse value) 2.10 Cost (% of property value) 0.03 Building quality control index (0–15) 13 Quality of land administration index (0–30) 15 Sources: Doing Business database; Committee on Statistics, Ministry of National Economy of the Republic of Kazakhstan (for population data). Note: The procedures to start a business are the same for men and women across all 16 locations. 100 Indicator Details STARTING A BUSINESS Procedures required to start a business, by location Standard company legal form: Limited Liability Partnership DOING BUSINESS IN KAZAKHSTAN 2019 Minimum capital requirement: KZT 0 Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Data as of: December 2018  etain a lawyer to prepare the incorporation 1. R Time 1 1 1 1 1 documents* (days) Cost 50,000 20,000 17,500 15,000 30,000 (KZT)  tate registration of legal entity and VAT 2. S Time 2 2 2 1 2 2 2 2 2 2 2 1.5 2 2 2 1 registration (days) Cost - - - - - - - - - - - - - - - - (KZT) 3. Make a company seal Time 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 (days) Cost 6,000 4,500 6,200 5,700 6,250 5,000 5,450 4,700 6,000 7,200 6,000 5,250 4,500 5,000 4,500 5,000 (KZT)  pen the company account in the bank** 4. O Time 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 (days) Cost - - - - - - - - - - - - - - - - (KZT)  egister for VAT*** 5. R Time 1 1 (days) Cost - - (KZT)  egister for obligatory life and health 6. R Time 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 insurance for employees (days) Cost - - - - - - - - - - - - - - - - (KZT) Source: Doing Business database. * Procedure exists only in Akmola, Almaty region (Taldykorgan), East Kazakhstan, North Kazakhstan, Zhambyl. ** Takes place simultaneously with another procedure. *** In Almaty city and Zhambyl VAT is applied for separately, not at the time of company registration on e-gov. REGISTERING PROPERTY Procedures required to transfer property, by location Property value: KZT 127, 888,724 Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Data as of: December 2018 1. Conduct due diligence on the property Time 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 (days) Cost - - - - - - - - - - - - - - - - (KZT)  otarization of the sale-purchase 2. N Time 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 agreement (days) Cost 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 40,885 (KZT)  ay registration fees at the post office or 3. P Time 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 commercial bank (days) Cost 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 3,221 (KZT)  egistration of the title document at the 4. R Time 2 2 2 3 2 2 2 2 2 3 2 3 2 2 2 2 Government for Citizens (days) Cost - - - - - - - - - - - - - - - - (KZT) Quality of land administration index Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Quality of land administration index (0–30) 16 15 17 15 15 17 15 15 15 15 16 15 17 15 15 15 Reliability of infrastructure index (0–8) 5 4 6 4 4 6 4 4 4 4 5 4 6 4 4 4 Transparency of information index (0–6) 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 Geographic coverage index (0–8) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Land dispute resolution index (0–8) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Source: Doing Business database. INDICATOR DETAILS 101 102 DEALING WITH CONSTRUCTION PERMITS Procedures required to build a warehouse and to connect to utilities, by location Warehouse value: KZT 127,888,724 Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Data as of: December 2018  btain geological survey of the 1. O Time (days) 12 15 14 12 17 30 26 15 7 11 22 17 21 30 25 10 land plot Cost (KZT) 550,000 487,500 450,000 387,500 600,000 500,000 525,000 300,000 400,000 475,000 550,000 565,766 500,000 450,000 575,000 500,000  btain topographic survey of the 2. O Time (days) 5 7 7 6 6 7 6 7 7 7 13 7 14 10 11 7 land plot Cost (KZT) 32,500 50,000 35,000 30,000 82,500 50,000 75,000 35,000 60,000 50,000 32,500 65,000 60,000 50,000 50,000 62,500 DOING BUSINESS IN KAZAKHSTAN 2019  equest and obtain technical 3. R Time (days) 7 11 - 7 7 13 11 7 7 7 7 7 15 19 11 6 conditions for the connection to water supply and sewage service Cost (KZT) - - - - - - - - - - - - - - - -  equest and obtain Architectural 4. R Time (days) 8 15 10 8 15 10 5 14 8 8 8 13 14 12 14 8 Planning Assignment (APZ) from the department of architecture and Cost (KZT) - - - - - - - - - - - - - - - - town planning*  equest and obtain approval of the Time (days) 5. R 9 14 14 14 14 14 14 16 14 14 11 14 7 14 14 14 architectural drawings (Eskiz) from the department of architecture and Cost (KZT) - - - - - - - - - - - - - - - - town planning  equest and obtain clearance of the Time (days) 6. R 4 14 10 4 11 5 7 7 4 10 12 7 14 9 14 5 plans for engineering networks from the water and sewage authority Cost (KZT) - - - - - - - - - - - - - - - -  ubmit project documentation 7. S Time (days) 32 25 30 30 33 33 30 35 30 25 40 30 25 30 35 40 to the single window to undergo expert evaluation Cost (KZT) 400,000 416,470 448,000 417,000 414,000 415,000 415,000 428,630 415,000 414,000 417,000 414,000 414,000 417,000 415,000 417,000  ire construction supervision 8. H Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 company/specialist Cost (KZT) 1,479,854 1,400,000 1,686,381 1,526,636 1,767,332 1,662,553 1,500,000 1,200,000 1,439,444 1,331,277 1,724,583 1,403,500 1,637,894 1,790,442 1,800,020 1,548,131  otify the Administration of State 9. N Time (days) 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 1 0.5 0.5 0.5 0.5 Architectural and Construction Control (GASK) about the start of Cost (KZT) - - - - - - - - - - - - - - - - construction  eceive visit from Administration 10. R Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 of State Architectural and Construction Control (GASK) Cost (KZT) - - - - - - - - - - - - - - - -  eceive connection to water and 11. R Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 sewage systems Cost (KZT) 36,245 45,000 56,250 5,000 50,000 39,000 7,600 21,000 18,200 50,000 32,045 140,038 15,000 41,010 35,000 26,700 12. Submit Act of Acceptance to Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 register technical characteristics of the warehouse in the government Cost (KZT) 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 4,403.15 information database "Registry of Property" (GBDRN) 13. Submit Act of Acceptance for Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 registration at the Administration of State Architectural and Cost (KZT) - - - - - - - - - - - - - - - - Construction Control (GASK)  ubmit Act of Acceptance for 14. S Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 registration at the Department of Architecture and Town Planning Cost (KZT) - - - - - - - - - - - - - - - -  egister BuildCo's rights to the 15. R Time (days) 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 warehouse Cost (KZT) 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 2,147 16. Request a technical passport Time (days) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Cost (KZT) 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465 2,465  eceive a technical inspection for Time (days) 17. R 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 the issuance of technical passport Cost (KZT) - - - - - - - - - - - - - - - - 18. Obtain a technical passport Time (days) 13 14 14 14 14 13 14 14 15 14 13 14 14 17 14 14 Cost (KZT) 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 63,859 * In Almaty technical conditions are requested and obtained at the same time with APZ. Building quality control index Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Building quality control index (0–15) 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 Quality of building regulations index (0–2) 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Quality control before construction index (0–1) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Quality control during construction index (0–3) 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Quality control after construction index (0–3) 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Liability and insurance regimes index (0–2) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Professional certifications index (0–4) 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 Source: Doing Business database. Note: The data details for the building quality control index can be found for each location at http://doingbusiness.org/kazakhstan. INDICATOR DETAILS 103 104 GETTING ELECTRICITY Procedures required to obtain a permanent electricity connection and supply for a warehouse, by location Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Data as of: December 2018  ubmit connection application and 1. S Time (days) 5 5 5 5 4 5 5 5 5 5 5 5 5 5 5 5 await technical conditions Cost (KZT) - - - - - - - - - - - - - - - - 2. Obtain the scheme of the Time (days) - - - - - 26 25 - - - - 10 11 - - - connection route (and collect sign-offs)* Cost (KZT) - - - - - 35,000 75,000 - - - - - 15,000 - - - DOING BUSINESS IN KAZAKHSTAN 2019 Await completion and approval of 3.  Time (days) 30 32 33 33 30 10 14 41 30 24 15 20 28 34 30 30 the project design Cost (KZT) 150,000 350,000 255,000 255,000 250,000 150,000 200,000 300,000 212,500 250,000 200,000 250,000 300,000 300,000 200,000 300,000  btain authorization for ground 4. O Time (days) 4 3 4 4 4 9 4 4 4 4 4 20 6 4 4 4 works (excavation, drilling or pole installation) Cost (KZT) - - - - - - - - - - - - - - - - Await completion of external works 5.  Time (days) 30 9 22 22 20 11 12 5 30 30 18 14 12 7 15 30 by the electrical contractor Cost (KZT) 1,000,000 675,000 750,000 750,000 800,000 650,000 750,000 1,400,000 500,000 950,000 800,000 1,000,000 1,400,000 1,400,000 662,000 1,500,000 Await inspection and issuance of 6.  Time (days) 3 3 4 2 2 6 3 4 6 10 3 10 3 7 4 3 relevant documents Cost (KZT) - - - - - - - - - - 20,000 17,900 - - - -  ign a supply contract and await 7. S Time (days) 3 5 3 3 3 5 10 6 3 3 1 4 5 7 5 3 sealing of the meter and energizing Cost (KZT) - - - - - - - - - - - - - - - - 8. Apply for connection and await Time (days) 4 sealing of the meter and energizing** Cost (KZT) 36,800  his procedure is requred in East Kazakhstan (Oskemen), Karagandy, Nur-Sultan and Pavlodar. In Nur-Sultan and Pavlodar, it involves only obtaining the scheme of the connection route, while in East Kazakhstan and Karagandy, it also * T involves collecting sign-offs from relevant institutions. **  Procedure exists only in Nur-Sultan. 105 Reliability of supply and transparency of tariffs index Akmola (Kokshetau) Aktobe Almaty city Almaty region (Taldykorgan) Atyrau East Kazakhstan (Oskemen) Karagandy Kostanay Kyzylorda Mangystau (Aktau) North Kazakhstan (Petropavl) Nur-Sultan Pavlodar Shymkent West Kazakhstan (Oral) Zhambyl (Taraz) Reliability of supply and transparency of tariff index (0–8) 5 6 8 5 6 5 5 5 6 8 5 8 7 5 5 4 Total duration and frequency of outages per customer a year (0–3) 2 3 3 2 3 2 2 2 2 3 2 3 2 2 2 2 Mechanisms for monitoring outages (0–1) 0 0 1 0 0 0 0 0 1 1 0 1 1 0 0 0 Mechanisms for restoring service (0–1) 0 0 1 0 0 0 0 0 0 1 0 1 1 0 0 0 Regulatory monitoring (0–1) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Financial deterrents aimed at limiting outages (0–1) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Communication of tariffs and tariff changes (0–1) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 Source: Doing Business database. Note: The data details for the reliability of supply and transparency of tariff index can be found for each location at http://doingbusiness.org/kazakhstan. INDICATOR DETAILS 105 106 DOING BUSINESS IN KAZAKHSTAN 2019 Acknowledgments Doing Business in Kazakhstan 2019 was collaboration with Shynar Jetpissova, during the consultation and data review produced by the Global Indicators Rayna Zhang and the Europe and period. The names of those wishing to be Group of the Development Economics Central Asia External Relations Team acknowledged are listed on the following Vice Presidency of the World Bank (led by Carl Patrick Hanlon). The pages and online at www.doingbusiness Group. The team was led by Eugene webpage (http://www.doingbusiness .org/Kazakhstan. Bempong Nyantakyi and Julien Vilquin. .org/Kazakhstan) was developed by It comprised Azizbek Bakiyev, Marko Varun Doiphode, Akash Pradhan and Grujicic, Yelizaveta Krupochkina, Denisa Kamalesh Sengaonkar. The full report Pacholska and Yelizaveta Yanovich was edited by Janelle Conaway. Rachel from the Subnational Doing Business Moore Weller edited the overview, Unit of the Global Indicators Group and as well. Corporate Visions produced Gaukhar Ospanova from the Finance, the layout. Competitiveness & Innovation Global Practice. The study was prepared under The project was requested by the the direction of Pilar Salgado-Otónel. Ministry of National Economy (MNE) Francis Ato Brown and Marialisa Motta of the Republic of Kazakhstan. It was provided guidance. implemented with the collaboration of the MNE’s Department of Entrepreneurship The team is grateful for valuable peer Development and the Economic Research review comments provided by colleagues Institute (ERI) of Kazakhstan. The MNE from across the World Bank Group. team was led by Madina Nurtas. Saltanat Edgar Chavez, Valeria Perotti and Yeraly Yunussova and Bakytgul Zhabaginova Beksultan reviewed the full text. Experts provided support on behalf of the ERI, in each of the four indicator areas covered under the direction of Dinara Akynbekova. were consulted during the drafting of the individual chapters: Yuriy Valentinovich Data collection was carried out in collab- Avramov, Diane Davoine, Marie Lily oration with Grata International Law Firm Delion, Viktoriya Ereshchenko, Alejandro (whose team comprised Maksim Burak, Espinosa-Wang, Frédéric Meunier, Nadia Alexandra Lyutikova and Aigul Sabyr), Novik, Jayashree Srinivasan, Erick Tjong and with Arys Research (whose team was and Farrukh Umarov. comprised of Dina Abzhanova, Zhanna Maxutova and Laura Zharashayev). Aigerim Aiguzhina, Gulmira Akshatyrova, Ainoura Alzhanova, Aisulu Mailybayeva, More than 400 lawyers, notaries, urban Carlos I. Mejía, Madalina Papahagi, planners, engineers, architects, contrac- Monique Pelloux Patron, Tommaso tors and public officials contributed to the Rooms, Moussa Ze Traoré, and Yelena Doing Business in Kazakhstan 2019 study. Yakovleva, provided valuable assis- The team would like to express its special tance at different stages of the project. gratitude to the national and regional gov- The communications campaign was ernment officials who participated in the designed and led by Chisako Fukuda in project and provided valuable comments ACKNOWLEDGMENTS 107 PRIVATE SECTOR Kairat Akhmetkaliyev Bar Association of East Nurbol Kissembayev GRATA International Fazylbek Darbayev AKTOBE Yernar Kalenov Ainur Kushkinbayeva CONTRIBUTORS Kazakhstan Region Dmitriy Bessarab Agency on Attracting Department of Justice AKMOLA Vladimir Cheranev Individual Entrepreneur Investments LLP Ainagul Satybaldievna Project-engineering Utegenova Darina Melnik Dastan Imangaziyev Nikolay Aleshin center Litera 3 LLP State Revenue Department YuriDa LLP White Pearl LLP Aleshin Individual Gleb Trashkov Entrepreneur Saltanat Zhumabaevna Azamat Kazhimuratov Akgul Kulmambetova Arkhimas LLP Gubaidullina Business Active LLP Best Engineering Project LLP Yevgeniy Valov Anuar Sarsengali Elektrik Pvl Individual Department of Justice Samat Bekbasynov Bekmurat Saktaganov Entrepreneur Alita LLP Kurylys Stroi Service LLP ALMATY CITY Asylkhan Shaubaev Dinara Zharaspayeva Viktor Murashkin Notary Chamber of Anton Solovyev Akerke Kozhakhmetova Aza Bi LLP Akmola Region Sofiproekt LLP Alimbek Agybayev Department of Justice Anastasiya Ameyeva Krendel LLP Yerlan Zakiryanov Svetlana Vorobyeva Elmira Berdenova Notary Chamber of East Notary Chamber of CaspianProject LLP State Revenue Department Kazakhstan Region SHYMKENT Akmola Region Medet Tursynkhan Aibar Tolebayev Saltanat Kuttybaeva Natalya Bussova Dastan Abildin Total Souths OIL LLP State Revenue Department Yuridicheskaya kompaniya “Reputatsiya” LLP Tauekel Zharylgassov Abay Tazhibaev Salima Richardovna AKTOBE Ayan.S-Aktau LLP Mira Mussupova Smart Oil LLP Dzhurunova Sergey Bogomolov Almaty City branch of Notary Chamber of East Akkumis Seisova Aslan Seitkulov Bogomolov Proekt Group LLP the National Bank Kazakhstan Region Private Notary Public Souths OIL LLP Nurbol Doshniyazov Akkumis Seisova Mira Kamzina TengriStroyInvest LLP KARAGANDY Nurken Ismailov Department of methodology Gulnar Chelpekova Nur Invest Individual Oylybay Imagambetov Sandygul Amanzholova Femida Law Firm LLP of financial markets, Entrepreneur National Bank of the Inshab LLP Notary Chamber Samad Saidirasulov Republic of Kazakhstan Saniya Nurmakhambetova Tatyana Gerasimenko NORTH KAZAKHSTAN Bereke TC Sofya Eduardovna Dushkina Aktobinsk Project VTV Company LLP Dinara Doskenova Institute LLP GRATA International Abay Tazhibaev Department for Regulation Erlan Samanov of Non-Bank Financial Smart-oil LLP Igor Abakumov Vadim Filimonov Marina Deinega Organizations, National Abakumov I.Y. Individual Private practice Yerlan Aytbai Bank of the Republic Olivia Construction Entrepreneur Karatay LLP of Kazakhstan Company Sanzhar Zhumabaev Valentin Konuk Alem SK Business centre Alik Ganeyev Aizhan Kalyaskarovna Nurzat Kayirov Private law practice SCAT JSC Kalyaskarova Stroykorporatsiya 2017 Tamara Kolkova Zaira Kaissar Sevgrazhdanproekt LLP Department for Regulation Alexander Kazachenko WEST KAZAKHSTAN of Non-Bank Financial GRATA International Aeroport Saryarka LLP Sergey Tsepukh Vladislav Dronov Organizations, National Serikpay Omirbayev Alfa-Sever LLP Intek-ONMR LLP Bank of the Republic ALMATY CITY of Kazakhstan LuxElectroMontazh LLP Vitaliy Dolgushin Aisulu Seitzhan Zhastalap Kabiyev Ernst&Young Kazakhstan Adel Akhmetova Osnovaniye LLP Sana Market LLP Bella Maratovna Chikanova Notary Chamber of Denis Rogachov Almaty City Branch of Anuar Tolubayev Sergey Fadin the National Bank Karagandy Region Edinstvo LLP Certus Consulting Group ABEngineering com LLP Darya Markina Altynai Karieva Alina Imangazina Assel Kabiyeva Eleonora Baktybayeva Department of the Payment MG Partners LLP GRATA International Natalya Pylskaya Restan LLP Systems, National Bank of Tatyana Lebedeva Chamber of North the Republic of Kazakhstan Almat Karymsakov Saule Kaztuganova Law Firm “Grand” LLP Kazakhstan Region Energis Control LLP Private Notary Akerke Balgabayevna Ibragim Kouky Kozhakhmetova KOSTANAY NUR-SULTAN Grata International ZHAMBYL Department of Justice Aslan Tuleubaev Daniyar Iklassov Marat Atyshev Salamat Kalzhanov Samal Omarova Bar Association of MG Partner LLP GRATA International Regional department Public Notary Kostanay oblast Nurgul Mukasheva Nikolay Kolbassin of Nuclear and Energy Meruert Tnaliyeva Mikhail Shevchenko Akmola Kurylys control department Law company Gritsenko E. A. ARNA Partners Irina and Co LLP Materialdary LLP Marat Olzhabekov Nurbol Zharassovich Denis Kozhakhmetov Daniyar Takenov Mynkozhayev ALMATY REGION Taraz-Technoproekt LLP KostanayEnergo LLP Astana Yurist LLP Department of Justice (TALDYKORGAN) Yuriy Tskhay Andrey Petrenko Andrey Kravchenko Berik Beketuly Expertiza LLP ALMATY REGION Transalpina LLP Consulting StroyGroup LLP Sut Master-M LLP Kazybek Burlibayev (TALDYKORGAN) Alibek Muhkamejanov Nurken Alzhanov Rakhimzhan Amangeldy Nomad Insurance Askar Kenzhenov Private Notary Highville Kazakhstan LLP Amangeldyuly Individual Nikolay Kolbassin Administration of Energy Entrepreneur Yeshmukhamet Shyktybayev Askar Algazinov and Communal Services Law Company Gritsenko E.A. Amir Akhmetov Granit LLP Igor Kim Aliya Abdikerova Individual Entrepreneur Arailym Beisenbayeva ATYRAU Notary ATYRAU Notary Chamber of Nurzada Garifollaevna KYZYLORDA Nur-Sultan city Bauyrzhan Zhinaliyev Zhubanova Ildar Jumiyan Eurasian Bank JSB Dmitry Tyan Shynar Akhmetzhanova State Revenue Department Kaz Legal & Accounting Services (KLAS) LLP GRATA International Public Notary Abzal Kushmurzayev Maksat Daribaev Administration of Aliya Sabitova GRATA International PAVLODAR PUBLIC SECTOR State Architectural Nurzhan Manasov and Construction Egida Individual Marat Alzhanov Kazakhstan Project- OFFICIALS Control (GASK) EAST KAZAKHSTAN Entrepreneur Andrei Romanov research institute AKMOLA Madi Mukhsanov Stanislav Pyagay Kazakhstanproject LLP Department of Justice Goszakupki Consulting LLP Zhoba LLP Alexander Koval Anar Temirbayeva Department of Justice Islana Ilyasova EAST KAZAKHSTAN Asfir Trans Logistics LLP Bar Association of East MANGYSTAU Aliya Serikovna Utekina Serzhan Mukhamedzhanov Kazakhstan Region Saltanat Abpasova Gulim Ratayeva State Revenue Department Department of Justice Notary GRATA International Gulzhan Sabalakova Department of Justice 108 DOING BUSINESS IN KAZAKHSTAN 2019 KARAGANDY PAVLODAR Ainur Manarbekovna Yernur Kozhamzharov Abekeeva Department of Justice Department of Justice Medet Serekbaevich Shokanov Entrepreneurship, Trade KOSTANAY and Tourism Office of Azamat Sultanov Pavlodar region Department of Justice Gulzhanat Zholamanovna SHYMKENT Zhakayeva Nurlan Ebekeshov State Revenue Department Department of Justice Andrey Glasskov Serzhan Zhandarbekovich EPK-Forfait LLP Sartpaev Department of Justice Shokan Aidarbek Administration of Communal Services WEST KAZAKHSTAN Murat Berdykulov KYZYLORDA Department of Justice Irina Zhumabaevna Bakisheva Timur Nurzhanovich Tulepov Department of Justice State Revenue Department Malika Sultanbek Asem Amangeldina Department of Department of Justice entrepreneurship and tourism ZHAMBYL Kumysai Akhanova MANGYSTAU Department of Justice Aizat Tilenbayev Almas Yerzhanuly Yerkebai Department of Justice Akimat of Zhambyl region Timur Khabdullaevich Sadvakasov Talgat Sagadatuly Kambatarov State Revenue Department Department of Entrepreneurship and Trade Gulmira Nurmakhambetovna Kozhabek Smagzamovich Kaltayeva Abdirov Department of Justice State Corporation Government for Citizens Akhat Baydullaevich Kydyrkhan State Corporation Government for Citizens NORTH KAZAKHSTAN Ainar Makhmetova Department of Justice Ainar Amanzholovna Makhmetova Department of Justice Galiya Seitbatalovna Zhusupova State Revenue Department Karlygash Serikovna Shakenova State Revenue Department Saken Utebayev Administration of State Architectural and Construction Control (GASK) Yerikbay Azretkulovich Regional department of Nuclear and Energy control department Tatyana Kovaleva Department of Justice NUR-SULTAN Aigul Satova Department of Justice Erkin Mukhtarovich Yeskendirov Investment and Development of Entrepreneurship Department Aisulu Ilynichna Turtkarina Department of Justice L. Urzhanova State Revenue Committee Mayra Balieva Department of Justice www.doingbusiness.org/kazakhstan