Page 21 - bne_newspaper_May_11_2018b

Eurasia
May 11, 2018 www.intellinews.com I Page 21
Privatisation drives fail to shift state out of Kazakh economy
Nizom Khodjayev in Tashkent
The Kazakh state remains in control of a large share of the economy — though the exact
level of state control is unclear — despite the government’s launch of large scale privatisation programmes. Under the latest programme seven state-owned companies will be IPO’d starting from this year, while a significant chunk of the privatisation drive covers small and medium-sized companies with the aim of boosting competition and decreasing the role of the state within the economy. However, Kazakhstan is not known
for having well organised government initiatives — a fact that becomes especially clear when government initiatives are combined with the post-Soviet country’s inability to commit to free markets.
The privatisation plan, which covers 904 companies, was originally set for a four-year stretch between 2016-2020. The government supposedly wants to lower the state control in the economy to 15% by the end of the privatisations and IPOs. It’s not clear what the starting point
is though. Back in 2014, Kazakhstan’s finance minister said that state control in the economy was estimated at 40%, but also admitted that the government doesn't know the exact size of state control in the Kazakh economy.
The latest figures reported by the Kazakh authorities in February 2018 show the current programme is 71% complete. It covers 622 companies but so far only 367 have been sold, while the remaining 255 facilities were put up for
The government in Astana (pictured) has struggled to commit to the free market, and the state is in control of a large share of the economy.
liquidation or reorganisation in 2016-2017. These figures suggest that nearly half of the companies may never make it into private hands.
Mounting privatisation failures
The government’s privatisation failures can be traced back to the previous 2014-2016 attempt, when it set out to sell off 782 state-owned organisations but only succeeded in pushing 254 of them or 32% of the total. As a result, the 2016- 2020 initiative was born to right the wrongs of the previous attempt.
There are further questions regarding the funds raised through sales of companies in the last four years. The proceeds from sales of state-owned entities amounted to KZT256bn (€643.7mn), which amounts to less than 1% of state budget revenues in the four-year period, according to figures
cited by Kazakh economist and lower house of parliament member Aikyn Konurov in February.
The results appear even more dubious when the benefits of the programme to the Central Asian nation’s economy are evaluated. According to Konurov’s figures, 54% of the companies sold so far are municipal services companies, mostly focused on utilities distribution to residential areas. If the goal of the drive was to stimulate competition, it seems doomed to fall flat on
its face as municipal services companies
in Kazakhstan are bound by infrastructural
and other limitations that prevent them from competing with one another. That leads to another