VZCZCXRO0420
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1724/01 2550831
ZNR UUUUU ZZH
R 110831Z SEP 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3249
INFO RUCNCIS/CIS COLLECTIVE 0633
RUEHAST/USOFFICE ALMATY 0718

UNCLAS SECTION 01 OF 02 ASTANA 001724 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV PGOV KZ
SUBJECT:  KAZAKHSTAN - TWO STEPS FORWARD, ONE STEP BACK ON DOING 
BUSINESS 
 
ASTANA 00001724  001.2 OF 002 
 
 
Summary 
------- 
 
¶1. The 2009 World Bank Doing Business report was published on 
September 10. It ranks Kazakhstan as the 70th out of 181 countries 
regarding the ease of doing business, a 10-place improvement from 
its revised rank of 80th place in the 2008 report. Kazakhstan made 
major gains in two specific Doing Business indicators -- 
"registering property" and "getting credit" -- but took a step 
backwards in several other indicators. 
 
Background 
---------- 
 
¶2. Published annually by IFC and the World Bank, Doing Business 
assesses the ease of doing business in a country based on 10 
factors: starting a business, dealing with construction permits, 
employing workers, registering property, getting credit, protecting 
investors, paying taxes, trading across borders, enforcing 
contracts, and closing a business.  The report has both rankings and 
absolute values. Rankings are a relative measure: if a country is 
reforming, but its pace of reforms is slower than that of other 
countries, its ranking may still deteriorate despite improvements. 
Absolute values (for example, the number of days or procedures 
required to obtain a construction permit) help provide a more 
objective picture of the situation within a country. 
 
¶3. Published for the sixth time, the report has become increasingly 
recognized as a tool to compare a country's position in the 
above-mentioned spheres against other countries, as well as against 
its own performance in the past. Moreover, the report helps 
governments set priority areas that need reforms most, and helps 
streamline these reforms along lines of improving specific Doing 
Business indicators. USAID closely looks at the report, since Doing 
Business figures serve as indicators for several USAID projects, 
including BEI and RTLC, and for the U.S.-Kazakhstan Program for 
Economic Development (PED). 
 
2009 Results 
------------ 
 
¶4. The greatest improvement for Kazakhstan in the 2009 Doing 
Business report was in the "registering property" indicator, with 
Kazakhstan's ranking improving from 77th to 25th place, or by 52 
places.  This improvement was the result of streamlining the 
registration process and reducing fees.  Kazakhstan also showed 
significant improvement in the "getting credit" indicator, with its 
ranking improving from 61st to 43rd place, or by 18 places.  This 
was the result of increased credit bureau coverage and improved 
access to credit information.  The first credit bureau in Kazakhstan 
was created with USAID assistance and continues to be a valuable 
partner for USAID projects in improving access to credit 
information. 
 
¶5. For Kazakhstan, the 2009 rankings and revised 2008 rankings for 
each Doing Business indicator are as follows: 
 
Doing Business - 2009: 70, 2008: 80, Change: +10 
Starting a Business - 2009: 78, 2008 61, Change: -17 
Construction Permits - 2009: 175, 2008: 176, Change: +1 
Employing Workers - 2009: 29; 2008: 23, Change: -6 
Registering Property - 2009: 25, 2008: 77, Change: +52 
Getting Credit - 2009: 43, 2008: 61, Change: +18 
Protecting Investors - 2009: 53, 2008: 49, Change: -4 
Paying Taxes - 2009: 49, 2008: 47, Change: -2 
Trading Across Borders - 2009: 180, 2008: 181, Change: +1 
Enforcing Contracts - 2009: 28, 2008: 28, Change: 0 
Closing a Business - 2009: 100, 2008: 103, Change: +3 
 
¶6. Regarding the decline in the "employing workers" indicator, the 
2007 labor law was cited as a negative reform which makes it more 
difficult to fire workers by forcing employers to reassign a worker 
before firing the worker.  While the ranking changes reflect a 
comparison to other countries, changes in absolute values help 
confirm an improvement in the overall business environment in 
Kazakhstan.  For example, the costs, relative to average annual 
income, to start a business and execute a construction project in 
Kazakhstan decreased by 32% over the 2008 Doing Business report. 
 
Additional Reforms 
------------------ 
 
¶7. Given the World Bank's survey and analysis cycle, additional 
reforms achieved in 2008 are expected to be reflected in future 
reports showing additional improvements in a number of indicators. 
The government of Kazakhstan is expected to meet with an upcoming 
Doing Business mission to the region, with the support of USAID, in 
order to strengthen the relationship between Kazakhstan and the 
Doing Business team.  This should facilitate increased accuracy of 
the Doing Business report and more rapid inclusion of reforms in 
future publications. 
 
ASTANA 00001724  002.2 OF 002 
 
 
 
ORDWAY