Media
Anyone can become a prime-minister tomorrow
Serikbay, what is your viewpoint on the development of entrepreneurship in Kazakhstan?
From your publications I learnt about the establishment of National Chamber of Entrepreneurs. The idea itself is a good one. What do businessmen want from the state? They want not to be distracted from what they do and to have broad options for operations. If one holds an opinion poll among them, I am quite sure 99% of them will say: let the state make legislation in such a manner that there was no barriers for the business and so that it would support all the undertakings. I think the majority wants exactly this. And only huge magnates are interested in protection of their interests all over the world and within the Customs Union, they want preferences to be made for them. There are five magnates for the whole country; they are welcomed in government, take part in discussion of allowances and donations mechanisms. I think the chamber of entrepreneurs must be directed towards key needs of entrepreneurs, this will balance the rules of the game. Everybody will know that in case any regulations are violated, the official protection from the association will step in.
Today there is an export program in operation in Kazakhstan, the state promotes our businessmen to enter foreign market. Should the state assist there any way? Or is it better to remove all the barriers and this will be enough – let the business compete in an open market?
Yes, I am for open competition and market conditions. Media often asks me regarding support from the state, whether it should take place or not, is it necessary to grant anything? I usually reply that they should take a look at the statistic and see which companies have taken grants and what has changed. For certain these companies are asking for second and third donations. What would one need to create such overprotected environment? I believe that each entrepreneur must establish himself locally, and only after that if he wants to expand to other markets, the state may assist. In any case, the products produced by such company must be competitive on local market, and then they will not meet difficulties abroad. We have representative offices in India, Singapore, Germany, we work with these countries, study their legislation and decide for ourselves which country worth entering and which one does not.
You come from Kazakhstan, but your business started in Russia…
Yes, when I was 16 I left for Saint-Petersburg convinced that with the knowledge I receive in Moscow and Petersburg I will be much useful to Kazakhstan. In Russia I founded a telecommunication company providing dispatch communication services. This was the reason for my award in the Entrepreneur of the Year. A lot of people in Russia and Kazakhstan say: stop selling raw materials, there still have not been created consumer products which would be marked with “Made in Russia” or “Made in Kazakhstan”. In the frame of the contest my competitors were such large enterprises as Uralkalii, Taif, which have billionaires at their back. However, it seemed like there was a principal question for the contest – who can be considered as an example to follow? The one who has taken lots of natural resources, or the one who gives more to the top? It is not what entrepreneurship is about. That is why the facilitators of the contest state that the contest is for those who the younger generation will look up to, the one who built his business from nothing, without relations and links. They can be such role models.
An such business, which has no relational support, is the one mostly interested in clear legislation?
Surely it is. For example, we are planning to build wind power station in Kazakhstan and realize that this project will not succeed right now, although the country gained a right to host EXPO 2017 thanks to the president, and one of the leading topic there is green technologies. Why? Because there is no legislation. No investors will come to Kazakhstan until there are transparent laws for investment returns. I can place a wind power plant, but there will be nobody to buy energy from me. Regional Energy Commissions are half way to bankruptcy; no one will give money against them. National company KEGOC says that there is no law, we are not going to violate it, and I understand them
Until the state sets clear laws, even KEGOC must purchase 100% of the energy produced, investor will have no interest to come here. In Kazakhstan and CIS one of the main difficulties is to write correct laws. Those, who make laws today, have never business, and thus do not know what it needs.
I think that the heads of ministries and departments must have developed at least one successful project of company in their lives. Otherwise the officials all good ideas will turn upside down. For example, the president declared a program call “100 schools, 100 hospitals” – that is right, it need to be done. But the providers will build the building for the sake of appearance, implement the budget, give report, but it shall never mean that population will get qualified education or medical treatment, and to think that is exactly what the essence of the program was.
If we want to concentrate on the quality of education, then it is necessary to understand how many teachers are needed, what skills they must have. Only then we will be allowed to say that there will be the effect needed. In the similar manner we sometimes see the law being made – just to tick the box, without even a proper understanding of how they will work. Let’s take Information Technologies Park in Almaty – the building is ready, but no effect can be seen. What is the way to reach this effect?
There is no need to invent a bicycle again. Read a book called “Singapore miracle”. It seems like nothing can be simpler, but still people enter governmental service not on the basis of assessment, i.e. qualification. There must be healthy competition. If somebody wants to be a prime-minister one day, he must be aware which requirements are set forth for such position. “Tomorrow any one can become a prime-minister” – these is the message when motivating people.
Write down which skills and competences must the head of the government have – in relation to patriotism, language skills, education, professional experience, etc. These points have to be properly described together with assessment system being transparent to public. At all should also include good level of salary; this is how it is made in Singapore – and successful all over the world.
Kazakhstan understand very well that $5000will not allow highly ranked official to take care of his family, ensure proper education to his children, travel abroad, welcome guests, etc. If he is furnished with the above, he will have fewer implications for stealing. And ordinary people will approve high salaries for officials, as he manages billions in the country’s budget, as he rules “the international corporation”. Kazakhstan must be a role model for other countries.
We have a joint program with Temasek foundation, Kazakhstan people utilize it. Bolashak also brings back lots of smart and talented guys. The question is whether they are allowed to bring their ideas to life and to what extent. People are often stuck at medium levels.
Absolutely right. The education must begin with top-managers so that they understand what exactly is offered by the young people who are back from abroad. You can spend money, send young people to study, but then their ideas will be banned at the top level. Then what sense does it make to spend money? Everybody needs to study in order to talk the same language with professional managers. That is why I say there must be prescribed exact rules for the game, so that the people, who are eager to grow professionally, knew the assessment criteria and requirements. The country must strive for transparency – any transaction made by the official, no matter in cash or from the card, must be properly recorded as it is done in Europe, then only honest and skillful people will come to work in civil service. In order to sweep away the barriers for business we need qualified and competent people above there.
How do you see the cooperation between banks and power authorities in terms of legislation in order for the laws to truly contribute to the economy?
National charmer of entrepreneurs could just well work with the wishes and suggestions from businessmen and legally transform these suggestions into legal rules. Then there no longer will be such situations, when the government approves documents without asking anybody’s opinion and without even wondering what it will be like to obey these new documents. In Singapore tasks for schools are set on the following way: they take best students from each faculty and send them to work in regions, and pay one of the highest salaries, take care of all his domestic issues, train them permanently. As a result, the most outstanding graduates work not for Microsoft or Exxon, but are aimed at regional development. For the state budget such expenses for graduates would constitute less than 0.1% of GDP. When Kazakhstan reaches developed countries in intellectual development of population, this will become a systematic approach.
But you, vice versa, move from Russia to Kazakhstan.
I see that the situation demonstrates positive trend in comparison with other CIS countries. For example, nowadays all the people, who wrote some computer programs, such as Facebook, work with them at home, and when they need investors, they look for them on the Internet, so there is no need to support them, to build offices for them. Better give them knowledge. Once there was a research made about which institutes on former Soviet Union area are capable of preparing good IT specialists. It turned out that there are only two of them – communications institute named after Bonch-Bruevich and Mechanics and Optics institute. Both are situated in Saint-Petersburg. And that is all for the whole territory of Soviet Union! How can an IT specialist be born here? People can produce mobile applications in local institutes, but in order to create something more fundamental one needs basis. World champions in programming over the last years have been students from one Petersburg university. Let’s invite their professors to give lectures, and that will constitute the technological transfer. In such case I would aim to develop processing of raw materials, so much of which we have, this would also increase the employment of the population. Let build processing plants, teach people, increase their skills – and tomorrow they will be international level engineers, will earn much money. We need to decide what will save our competitive advantages in long term perspective and establish good conditions for its development.
You work in both Russia and Kazakhstan. In your opinion which countries of the Customs Union have better economic outlooks?
Kazakhstan has crazy potential. If we talk about Belarus, the current approach will not bring investments to the country. As for Russia, it is several points lower than Kazakhstan in Doing Business rating. So, Kazakhstan already has better environment, but it needs to keep improving. If more businessmen are involved in the process, more feedback is received from them, permanently talks about further development are held, then we will progress faster, and will not introduce improvement for rating purposes only. The more transparency there is, the less corruption we will have. Investment attraction of Kazakhstan will increase!
Author: Oleg Khe
