The topic of the dependence of the tenge against the rouble and the reaction of the government of Kazakhstan to this became one of the most acute at the VIII Kazakhstan Growth Forum held in Almaty. Forbes.kz gathered opinions of Kazakh businessmen on how to react to the current conditions.
The mission of Kazakhstan Growth Forum was the development of solutions to enhance competitiveness. Vice Prime Minister Yerbolat Dosayev flew in from Astana to join the forum to discuss the situation in the economy with the business community. He presented a report on structural and institutional problems of Kazakhstan, stipulating the economic priorities of the country and plans for structural transformation.
"We thought that a significant reduction in the tax burden would allow the business to feel better. Business would pay more, but we would be able to implement many wonderful projects, and increase spending on social projects. But in fact we entered a new period of crisis. We did not get the expected economic effect," Erbolat Dosayev admitted.
The Vice Prime Minister explained that now 44% of the country's budget is spent on social purposes, and in three years their proportion will reach 48%. The investment part of the budget is very small, about 14%.
Under such conditions, the government places great hopes on reviving the economy, focusing on the financial sector and agriculture, the vice prime minister said.
"Wake us up in five years and ask what is happening in the banking system. Most likely, the answer will be: we are helping it. The same will happen with the agricultural sector. We have saved it many times," economist Rakhim Oshakbayev, director of the TALAP Centre for Applied Research, commented ironically.
The Vice Prime Minister advised businessmen to enter foreign markets. Now 70% of Kazakhstan's business is focused on government purchases and purchases of the semi-public sector.
"I believe that the ideal prospect for Kazakhstan's business is to become nomads," he summed up.
Being a nomad is a wonderful thing, but it's even better to live in an atmosphere of stability, the participants of K18 Kazakhstan Growth Forum think. Heads of major Kazakhstani companies described the volatility of the exchange rate as the main threat to their business.
There were entrepreneurs from the rating of 50 richest businessmen of the Fobres Kazakhstan magazine, who can hardly be accused of lethargy. New markets are always welcome. Thus, a large beverage producer in Kazakhstan RG Brand sells juices in Russia, recently opened a branch in Uzbekistan, and looks to western China and Azerbaijan. Its head, Kairat Mazhibayev, asked what the government will do if oil prices fall or if the trade wars between Russia and the West develop into an even more severe scenario.
"Does the government have a contingency plan? If it does, we businessmen fail to notice it. It was very popular to talk about dedollarisation, about replacing the dollar with the tenge. Now we are talking about deroublisation. We do not look at the tenge rate in the morning, we are looking at the rouble exchange rate! This has been a year of missed opportunities and serious threats, connected primarily with the Russian factor," Kairat Majibaev complained.
Kairat Majibaev was supported by Aidan Karibzhanov, the chairman of the board of directors and majority shareholder of the Visor Holding investment company with assets in telecommunications, construction, pharmaceutical and financial sectors in the CIS and South-East Asia.
"There are many factors that, strictly speaking, do not depend on us, such as the price of oil, or what is happening in Russia. Risks do not come from there at all. Do not set ambitious for the future. It is better to prepare for Plan B, which will take into account all the risks associated with sanctions and exports," Karibzhanov added.
The moderator of the panel discussion, the head of the Centras Group financial holding, Yeldar Abdrazakov, noted: "The rouble is the main target for us, whether we like it or not, [since] the economy of Kazakhstan is identical to the Russian economy." The speaker illustrated his speech with a slide with the image of Timon and Pumba from the The Lion King cartoon.
In the hall, a survey was conducted on which are the main concerns of Kazakh businessmen. Participants of the Kazakhstan Growth Forum put the deroublisation among the top three problems for business, along with corruption and the search for professional employees.
"Dependence is depressing," Astana Group owner Nurlan Smagulov explained on the sidelines of the forum.
"Of course, we are highly dependent on Russian imports. […] I wish we were not dependent on the rouble exchange rate, but there would be some agreement on joint strategies. Now, when something is being done in Russia, we are not consulted at all. We are just following trends and policies," the businessman added.
"We do not know what to do next. Maybe there is some kind of generation crisis or the general situation in the country, in an economy where there are no clear landmarks or signs where to move. We want to understand in which country we will live in five years, in ten years, fifteen. There is no understanding, it is very eclectic. The economic vector is not visible," Aidan Karibzhanov summed up, adding that, since nothing else works out for the country, it is always possible to return to one simple and understandable kind of action - attraction of foreign investments.
