Chairman and Chief Executive Officer of Ernst & Young James TURLEY:
"NEW INVESTORS ARE STILL APPREHENSDIVE OF INVESTING IN KAZAKHSTAN"

The Kazakh government has made a series of steps to bring in more foreign investments into the country: the work on the national investment plan is underway and simplification of visa regime for investors is most likely to come next. Chairman and Chief Executive Officer of Ernst & Young, James TURLEY, offered his opinion on the investment climate in the country and related global economy trends.

- What's your take on the investment climate in Kazakhstan? Yesterday the OECD stated that they viewed Kazakhstan as the country with major restrictions on investments?

- I think in many ways, the investment climate in Kazakhstan is similar to that in Russia. Ernst & Young works with both governments in terms of attracting foreign investment, and what we see is that those companies, who have already invested in Kazakhstan or in Russia, absolutely loved being there. They want to invest more, they have figured out how to make these investments work for them and acutely generating positive returns on those investments.

Companies that have not yet invested in Kazakhstan are a little bit afraid, like they are afraid of investing in Russia. Part of it is the fear of the unknown, part of this is the bureaucracy that makes it difficult to operate. So, the Government is doing everything it can to aggressively tackle this and streamline the administrative processes embracing global standards and providing transparency in governance. Many tax potential reforms are underway to make the taxes predictable. So, I think the investment climate is improving, but the country's image has to improve too.

Ernst & Young works with the Foreign Investors Council in Kazakhstan. We are currently conducting attractiveness study for Kazakhstan and the result of this survey cloud be released soon.

- Right now there are lots of negative comments about corporate governance standards in the government-owned companies in Kazakhstan. You are one of the auditors of Samruk-Kazyna.а What do you actually have in comment to this criticism?

- I can't comment on the specific client situations, but what I can comment is that part of what Ernst & Young and our entire profession do is try to improve transparency, improve governance, so that stakeholders in all government-owned entities have a better view of what is happening inside the business.а One of the things we are seeing in all emerging economies is a growing embracing of global standards of governance and transparency, because it is so important to foreign investors to have that kind of global view.

- In the opinion of the EBRD experts the economic growth of Kazakhstan in 2012 will probably total 6.5%, provided that the situation in the euro zone remains stable. In your opinion, what kind of impact can the recession in Europe possibly have on Kazakhstan?

- I think that when the EBRD is giving that GDP expectation for Kazakhstan and saying that they are assuming stability in Europe, they are really dealing with the sovereign debt piece of the crisis.а I think that what the governments have done within the euro zone have been very positive towards insuring that no uncoordinated or disastrous collapses occur in the sovereign debt situation. That means that the euro zone is very challenged for growth and there is no real growth in the most countries of Europe. I do not think the lack of growth there will be a major drain on Kazakhstan's economy, because Kazakhstan's economy has already factored that in.

I think, what the EBRD has it about right and I also would expect that the actions of the euro zone leaders have prevented any kind of destabilizing impact on Kazakhstan.

- What's your outlook on oil prices short-term and mid-term?

- I am not an expert in oil prices, or else I would have become an oil trader, instead of an accountant. But what we are seeing is continuing demand growth largely from the emerging economies and sporadic little mini shocks to the supply end, whether it is actions in the Middle East or actions in other places. I would expect it to be continuing operate pressure, but modest operate pressure on oil prices.

I would not expect in the near term a major spike, but more continued very modest operate movement.

- Some of the experts claimed that "hard landing" for the Chinese economy is already a given fact. What is your opinion on this?

- I do not share the views of those experts. I actually believe that the Chinese economy and the Chinese government has done a fine job of managing some of the asset-bubble risk the country was experiencing. I think they had done a good job in terms of overall containing credit risk. I think they largely contained inflation, so that it would not become a burden on the society.

I would expect thatа 7% GDP expectations would be approximately achieved. They are having continued trajectory and upper momentum in China will be the trend.а But this does not mean that there would be no bumps in the road, but the Chinese government has shown itself as very professional in dealing with these bumps.

- Kazakhstan is just about to finish its WTO accession talks this year and in 2013 the country expects to become a full-fledged WTO member.а Do you think this WTO accession may result in some new challengers for Kazakhstan given the current global economy situation?а Do you think local entrepreneurs are ready to compete globally?

- First of all, I believe that the WTO accession is an extremely important step for all countries around the world. Russia's accession is a very positive factor.а Many of us have been working for a long time to help see WTO accession for Russia.а With regard to Kazakhstan's accession to the WTO, I would not anticipate any negative repercussions.а I think that Kazakhstan has prepared itself to be a full-fledged member of the global trading community, and keeps doing the rights steps to be prepared for that. So I do not see any kind of shocks to the system, but I see gradual increases in global trade to the betterment of Kazakhstan's people.

I think, entrepreneurship is an incredibly important issue. Kazakhstan still has many state-owned industries in some sectors. Lots of efforts have been made by the government and others to encourage local entrepreneurship. I do think the country is ready for that. What they historically lack is some of the scale of operations and some of the capital to fund their businesses, but I think that those things will come and Kazakhstan's entrepreneurs will be able to compete very effectively. There is stability in Kazakhstan, there is a talent pool and there are good cost advantages. Kazakhstan has many things working for it to be globally competitive.

-Thanks for the interview!

March, 2012
й 2012 Interfax-Kazakhstan news agency
Copying and use of these materials without reference to the source is prohibited

 

March, 2012
© 2024 Interfax-Kazakhstan news agency
Copying and use of these materials without reference to the source is prohibited

Archive