On Center Court

How have international chambers of commerce like AmCham contributed to the development of the business environment in Kazakhstan?

Both the foreign business community and the business community in general have made a huge contribution in every respect to the development in this country, not just to the economy, but to political development and social development as well. Foreign companies have helped to introduce Kazakhstan to the world, and brought it into the new century. Having a foreign business community here early on has been very helpful in this regard. The oil majors, such as Chevron and Exxon, were the first to come here in the 1990s, and as the decade progressed, economic development became more open. Now, a host of sectors are emerging as growth engines. By about the mid-1990s Kazakhstan was beginning to emerge from its Soviet past. But then, in 1997, there was a crisis in the banking sector that reverberated regionally and globally. That was a blow to economic development, but Kazakhstan was quite lucky to have talented people in its own government early on—people like Grigory Marchenko, Governor of the National Bank, who was instrumental in creating a strong banking system for Kazakhstan that still exists today. AmCham was formed in 1999 from a core of 36 American members, but it has grown into an association of over 200 members today, a mixture of European, Middle Eastern, Asia-Pacific, American, and Kazakhstani member companies. Over half of our corporate members are major international companies from diverse industry sectors and national affiliations in the top tier of membership with annual revenue in excess of $100 million per year. From what we see day-to-day, the big market movers really have a lot to do in terms of Kazakhstan’s development. They are vocal and AmCham ensures that their voices are heard at the very top where it matters. There are many investor issues that still require action. Foreign investors are active in this regard, and we see AmCham’s responsibility as organizing their access to the very top policy-makers and supporting them in every way. But Kazakhstan is listening, and that is important.

How does the growth of your member portfolio reflect Kazakhstan’s economic development?

As the largest and most influential foreign investor association in Kazakhstan, AmCham’s membership portfolio becomes more and more diverse year by year. Even during the financial crisis, our membership grew 20% per year. In terms of national participation, only half the membership is American and we actively promote the international diversity of our membership. This lends an invaluable depth and breadth to our perspective and to our voice. In terms of sectors, the largest representation in AmCham after oil and gas is banking and consumer products, demonstrating the country’s affluence. Luxury hotels, airlines, and financial services such as insurance and investment firms are major members, too. Accounting firms and law firms have more business than they can handle at the corporate level.

In which areas do you think Kazakhstan needs to improve to ensure the continuity of foreign investment?

Rule of law is probably at the top for AmCham members, along with anti-corruption, customs operations, taxation issues, and regional economic integration. If investors have a problem they need to feel that they can turn to the courts; that with legal representation they can receive a fair hearing and obtain a just solution to their problem. Unfortunately, that is not always the case. The judicial system does not always operate at the level that would be expected, particularly with relation to business disputes with the government. Too many disputes, including tax, environmental, administrative, and customs disputes, end up in the courts. Companies still make a lot of money here, and so they are willing to struggle through these various problems, but it’s frustrating and difficult. We hear a lot about these problems at AmCham and we do our best to promote the creation of a better-functioning judicial system, including a system that will allow disputes to be settled amicably out of court. However, it is only fair to say that these challenges are not unique to Kazakhstan. Most of our major corporate members operate worldwide and are familiar with these issues as part of their operations.

What role does AmCham play in developing the local business environment?

AmCham has developed a very strong advocacy voice in recent years that allows us to speak on behalf of our members directly to the Prime Minister. We have specialized working groups composed of CEOs who write policy papers that we present to the Prime Minister and that are then discussed by the Group Chairmen with the relevant ministers. We also organize public conferences with broad attendance by the media on issues like rule of law and anti-corruption to encourage public discussion of these issues. These conferences involve government ministers and, when they are held in Astana, are broadly attended by the government and diplomatic corps. It is difficult for our members to work individually on these problems, and so it is the purpose of a business association like AmCham to bring the challenges they face out into the public arena and to the attention of the government, where steps can be taken for systemic change. A company can only fight for itself, but we can speak for any number of companies. As I said earlier, the government is listening and the relationship with the government of Kazakhstan is a good one. The government understands how important foreign investment is for Kazakhstan and knows that investors only come when the business environment is supportive. Kazakhstan has benefitted from foreign investment and shows respect for both investors and for AmCham as their representative.

© The Business Year – February 2012