Julie Kussidi, EUROBAK Executive Director conducted an Exclusive interview with Erlan Dosymbekov, EUROBAK Chairman, Managing Partner for Central Asia and Kazakhstan for Ernst & Young, and Kazakhstan Foreign Investor’s Council Association Chairman, with EUROBAK members who participated by asking their questions via Zoom.
J.K. Thank you, Erlan, for taking this opportunity to be with us and answer the few questions we have for you, knowing that this discussion here will be of great interest to our EUROBAK members and the business community. The ability to adapt quickly is one of the most important traits to have since the global COVID-19 pandemic broke out. What does the ability to adapt quickly mean for business?
E.D. Thank you, Julie and I am honored to be speaking in front of the membership in my capacity as the Chairman of EUROBAK. By the way and talking about adapting, when I was offered this position, I was somewhat hesitant, as you know. At the time, along with my main job at EY, I was already chair of another business association and was actively involved in various business councils and working groups. So my primary concern was that all that, combined with my prospective EUROBAK chairmanship, could have arguably led to a conflict of interest. It was also crucial that I distribute my time across all these tasks so that I can continue performing them at a high level. Thankfully, this issue was resolved after I discussed it with you and the rest of the EUROBAK board members, and we collectively decided that my chairing two major business associations, however unusual it may seem at first glance, is rather a benefit than a conflict. This to me serves as demonstration of how to adapt as the Board looked at it as a positive change that we needed to make in a relatively unusual situation.
When it comes to business, the ability to adapt quickly to any conditions means being able to restructure existing processes within a short period of time in order to continue business with minimum losses, which this adaptation may bring. The COVID-19 pandemic is the most prominent example of the conditions to which businesses had to adapt quickly.
J.K. When you were talking about how you agreed to be the EUROBAK Chairman while being the KFIСA Chairman it crossed my mind that this is the first time ever since these two associations were established. We strongly believe that this is only for the benefit of the business community, because this is what associations are all about; they exist only to serve members and when there’s better communication between associations it only means more constructive dialogue with the government, better interaction and networking opportunities between the business community and investors as well as an overall better communication strategy for those who are interested in coming to Kazakhstan and investing here. I think it is for the best and the first time in history.
In terms of business going online, how did you personally react to this and did you often manage to participate in the numerous events that were held last year? Maybe there are some events you remember best or were a highlight of the year?
E.D. Given that meetings with clients, members of associations and other concerned parties make up a substantial part of our activities, the pandemic has been a major challenge to many companies, including business associations. And in 2020 we couldn’t meet offline as often as we would have liked. It’s important to mention here that our companies made a rather quick transition from an in-person to online format. We held quite a few online events and EUROBAK performed remarkably well on this front. As far as I remember, among those events were many high-level, really useful meetings, the most notable ones being with Bakytzhan Sagintayev, the Akim of Almaty and Altai Kulginov, the Akim of Nur-Sultan, as well as meetings with Erlan Khairov and Gulzhana Karagusova.
J.K. To give some numbers to support what you are saying, the European Business Association of Kazakhstan has held 180 events altogether since March 2020, with 8,500 people participating from 12 countries and 21 cities, and this has never happened before. And this is a huge expansion if you think of the statistics of 2019, when we had 84 events with 3,500 people participating from only one country, Kazakhstan, and only two cities, Almaty and Nur-Sultan. So when you think about the expansion it is mind-blowing and we are excited to see what is going to happen next with this online technology. Also, when you were talking about meeting with Mr Sagintayev you recalled that EUROBAK suggested organizing the Foreign Investors’ Council of Almaty as a platform where the business community and the investment community could engage with the Akim of one of the biggest cities of Kazakhstan. Well, we are having our first meeting very shortly and this can be counted as one of the achievements of the association. EUROBAK has a special role in coordinating everybody within the Foreign Investors’ Council of Almaty. Also, to add to what you were saying, we knew that a meeting in person couldn’t be happening and EUROBAK instead launched this e-Introduction where new EUROBAK members are e-introduced to other members. It can never replace a personal networking opportunity, but still this is an innovative solution that we came up with at the very beginning of the lockdowns. Thank you, Mr Erlan, for being there as an active board member to support all these initiatives, because without your support it would not be possible. Our members were also there to support us and board members in particular.
J.K. Erlan, considering that we are in the online era and social media has a huge role now, we were looking for your public profile in social media. Maybe we searched badly, but can we find it in social media somewhere? Do you think it’s a good promotion tool for a personal brand or running a business? Or, maybe you think as one of our speakers who was interviewed earlier said that social media is a waste of time for business people and you shouldn’t spend any time there? So, what is your position on using social media?
E.D. You are right. Today, the role of social media in companies’ activities can hardly be overstated, as they can serve as a very effective means of developing business, depending on the purpose for which they’re used. As digital becomes increasingly pervasive, social media emerge as a handy tool for promoting one’s personal and professional brand. Indeed, I don’t have a personal social media account – mostly because our professional accounts are administered by EY and it ensures that all keynote events in which I participate are covered in detail. Therefore, there’s probably not much use in duplicating this content on a personal page.
J.K. Yes, and your team does do an amazing job. We all know what is happening with EY and also with you, even in your other roles as chairman of the board for Kazakhstan Foreign Investors’ Council Association (KFICA).
In that role, how do you see KFICA in the future for the business community not only in Kazakhstan but also in countries who are interested in investing in Kazakhstan? And can KFICA influence the attractiveness of Kazakhstan for investors? What steps can it recommend to the country’s top leadership to improve the situation in this area?
E.D. Over the past 10-15 years, Kazakhstan has made remarkable headway in attracting foreign investment, and KFICA, as a forum that represents major foreign investors, has contributed much to this effort. The Foreign Investors’ Council has five working groups maintaining a dialogue with the government. One of the groups, which I co-chair with the Minister of National Economy, focuses on investment policy matters. Our work there generally involves offering global best practices and we therefore often tap into the resources of KFICA members in other countries. So the working group leverages, one way or another, the expertise of the foreign investment community, which extends far beyond Kazakhstan’s borders. It has certainly done a lot. Among its many achievements was the decision to decriminalize violations of tax law. This required tremendous efforts and many years of work on proposals aimed at reducing criminal liability, which were finally incorporated as amendments to the Criminal Code of the Republic of Kazakhstan.
As regards the role of KFICA in the business and investors’ community, it is in fact very important, as it consists of major investors in Kazakhstan who continuously work on improving the country’s investment climate. Furthermore, KFICA collectively and its members individually can serve as brand ambassadors for Kazakhstan in the eyes of perspective foreign investors who are considering investing here.
As for further steps towards increasing Kazakhstan’s investment attractiveness, regardless of the significant progress made thus far, improvements are still required in quite a few areas. These include greater legislative stability, more consistent law application practices, rule of law in general, less bureaucracy in the system and so on and so forth. EUROBAK, KFICA as well as other business associations stand ready to support the Government in this important endeavor.
J.K. Erlan, when you talk about the investment legislative committee of KFICA, I remember when it was just an idea to establish this kind of working group within KFICA, it was an initiative from within EUROBAK. We strongly believe that it is very important to work on the investment attractiveness and the image of Kazakhstan as an investment destination. We are extremely supportive of the government establishing this kind of working group within KFICA. The European Business Association of Kazakhstan has a great opportunity to be a member of these committees within KFICA and EUROBAK members also have an opportunity to contribute toward the work that KFICA is doing with Kazakhstan. And now with you being the chairman of EUROBAK and chairman of KFICA, there’s a very direct connection and communication, which is extremely important. As I said, you cannot over-emphasize the importance of this communication opportunity. So, when talking about the image of Kazakhstan as an investment destination some of the key factors here are the rule of law and the enforcement of legislation. And obviously this is one of the factors when looking at any country, taking this into consideration.
What work is being carried out in this regard, when it comes to the rule of law and legislative work? What industries are the most attractive to foreign investors in Kazakhstan right now from this perspective? Is it tax legislation, customs legislation, or how the law is applied that actually brings these industries to the attention of foreign investors and makes the country of Kazakhstan more attractive?
E.D. As I have already mentioned, Rule of law is one of the elements of a country’s business environment and investment climate. This is something that first comes to mind for a foreign investor looking to invest in the country. Furthermore, the rule of law and its enforcement are topics that prospective investors always discuss with current investors in order to get an accurate picture. According to investors, laws and regulations have steadily evolved over the past 10-15 years. While this is a good sign that the government is positively disposed towards changes and improvements in current laws, the laws are not always consistently applied. And an intrinsic problem here is that a logical provision in the law cannot be straightforwardly applied and major issues therefore remain unresolved.
J.K. You mention some of the issues that are still hindering foreign companies from investing in the Kazakhstan economy, but when a company does make a decision to even look at the country what questions should the company have the answers to before entering or starting their business in Kazakhstan? What are the main answers they should have?
E.D. Today, before making an investment decision a new investor has to gather a whole lot of facts about the host country, from its geographic settings to access to major markets, the quality of human capital, etc. On our part, we need to continue with improvements to investment policy and laws in order to attract new investors and retain existing ones. We shouldn’t forget about growing competition for foreign direct investment both globally and in individual regions.
J.K. What do you think, Erlan, about the Astana International Financial Centre (AIFC), including the opportunity to go to that court that operates under English law? Do you think this adds to the attractiveness of Kazakhstan when we talk about Central Asian countries and CIS countries?
E.D. The AIFC was originally established with a view to enhancing Kazakhstan’s investment image, and this initiative has admittedly been very timely and relevant. If you look at the way it operates, one example of its attractiveness is the ability to apply English law and refer disputes to English courts. On the practical front though, it’s about how many investors we’ll be able to attract, considering that litigation practice before the AIFC came into existence was not always positive. Nevertheless, the AIFC is forging ahead with a new judicial system and we hope that these efforts will help to improve the situation for foreign investors.
J.K. Thank you, Erlan, for sharing your views on the very important topic of attracting investors to Kazakhstan, as we know foreign direct investment has been one of the key objectives and goals for the government of Kazakhstan and it was and is still a lot of work. To wrap up our interview with you, Erlan, let’s go back to your role as chairman of the EUROBAK board of directors, what objectives did you set the board for this year? What goals have you already achieved, in your opinion, and what remains to be done?
E.D. First of all, I’d like to thank the EUROBAK board and its members for their hard work and the tremendous efforts they’ve recently put into it.
As always, we’ll continue to work on hot topics within the remit of the Tax, HR and FMCG Committees, and will also give special attention and support to the Digital Committee, considering that technology advancements are now high on the government’s agenda. I’m sure that the Healthcare Committee, established at the initiative of EY and other EUROBAK members representing the pharma community, has a very full agenda. We’ll continue our regular work in the spirit of EUROBAK and we’ll stay in close contact with other EUROBAK members.
J.K. Well, thank you very much, Erlan. Thank you for your leadership and for your support and for always being there for EUROBAK over the years, in particular this year in your role as the chairman of the board.Related Topics