73947
Economy Profile:
Kazakhstan
Doing Business 2013 Kazakhstan 2
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Smarter Regulations for Small and Medium-Size Enterprises. Washington, DC: World
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Doing Business 2013 Kazakhstan 3
CONTENTS
Introduction .................................................................................................................................. 4
The business environment .......................................................................................................... 5
Starting a business ..................................................................................................................... 14
Dealing with construction permits ........................................................................................... 23
Getting electricity ....................................................................................................................... 39
Registering property .................................................................................................................. 46
Getting credit .............................................................................................................................. 55
Protecting investors ................................................................................................................... 62
Paying taxes ................................................................................................................................ 71
Trading across borders .............................................................................................................. 79
Enforcing contracts .................................................................................................................... 88
Resolving insolvency .................................................................................................................. 99
Employing workers .................................................................................................................. 105
Data notes ................................................................................................................................. 112
Resources on the Doing Business website ............................................................................ 117
Doing Business 2013 Kazakhstan 4
INTRODUCTION
Doing Business sheds light on how easy or difficult it is the paying taxes indicators, which cover the period
for a local entrepreneur to open and run a small to January–December 2011).
medium-size business when complying with relevant
The Doing Business methodology has limitations. Other
regulations. It measures and tracks changes in
areas important to business—such as an economy‘s
regulations affecting 11 areas in the life cycle of a
proximity to large markets, the quality of its
business: starting a business, dealing with construction
infrastructure services (other than those related to
permits, getting electricity, registering property,
trading across borders and getting electricity), the
getting credit, protecting investors, paying taxes,
security of property from theft and looting, the
trading across borders, enforcing contracts, resolving
transparency of government procurement,
insolvency and employing workers.
macroeconomic conditions or the underlying strength
In a series of annual reports Doing Business presents of institutions—are not directly studied by Doing
quantitative indicators on business regulations and the Business. The indicators refer to a specific type of
protection of property rights that can be compared business, generally a local limited liability company
across 185 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Because
over time. The data set covers 46 economies in Sub- standard assumptions are used in the data collection,
Saharan Africa, 33 in Latin America and the Caribbean, comparisons and benchmarks are valid across
24 in East Asia and the Pacific, 24 in Eastern Europe economies. The data not only highlight the extent of
and Central Asia, 19 in the Middle East and North obstacles to doing business; they also help identify the
Africa and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers in
income economies. The indicators are used to analyze designing regulatory reform.
economic outcomes and identify what reforms have
More information is available in the full report. Doing
worked, where and why.
Business 2013 presents the indicators, analyzes their
This economy profile presents the Doing Business relationship with economic outcomes and presents
indicators for Kazakhstan. To allow useful comparison, business regulatory reforms. The data, along with
it also provides data for other selected economies information on ordering Doing Business 2013, are
(comparator economies) for each indicator. The data in available on the Doing Business website at
this report are current as of June 1, 2012 (except for http://www.doingbusiness.org.
Doing Business 2013 Kazakhstan 5
THE BUSINESS ENVIRONMENT
For policy makers trying to improve their economy‘s
regulatory environment for business, a good place to ECONOMY OVERVIEW
start is to find out how it compares with the regulatory
environment in other economies. Doing Business
provides an aggregate ranking on the ease of doing
Region: Eastern Europe & Central Asia
business based on indicator sets that measure and
benchmark regulations applying to domestic small to Income category: Upper middle income
medium-size businesses through their life cycle.
Economies are ranked from 1 to 185 by the ease of Population: 16,558,459
doing business index. For each economy the index is
calculated as the ranking on the simple average of its GNI per capita (US$): 8,220
percentile rankings on each of the 10 topics included in
the index in Doing Business 2013: starting a business, DB2013 rank: 49
dealing with construction permits, getting electricity,
registering property, getting credit, protecting DB2012 rank: 56*
investors, paying taxes, trading across borders,
Change in rank: 7
enforcing contracts and resolving insolvency. The
ranking on each topic is the simple average of the
percentile rankings on its component indicators (see * DB2012 ranking shown is not last year‘s published
the data notes for more details). The employing workers ranking but a comparable ranking for DB2012 that
indicators are not included in this year‘s aggregate ease captures the effects of such factors as data
of doing business ranking, but the data are presented corrections and the addition of 2 economies
in this year‘s economy profile. (Barbados and Malta) to the sample this year. See
the data notes for sources and definitions.
The aggregate ranking on the ease of doing business
benchmarks each economy‘s performance on the
indicators against that of all other economies in the
Doing Business sample (figure 1.1). While this ranking
tells much about the business environment in an
economy, it does not tell the whole story. The ranking on
the ease of doing business, and the underlying
indicators, do not measure all aspects of the business
environment that matter to firms and investors or that
affect the competitiveness of the economy. Still, a high
ranking does mean that the government has created a
regulatory environment conducive to operating a
business.
Doing Business 2013 Kazakhstan 6
THE BUSINESS ENVIRONMENT
Figure 1.1 Where economies stand in the global ranking on the ease of doing business
Source: Doing Business database.
Doing Business 2013 Kazakhstan 7
THE BUSINESS ENVIRONMENT
For policy makers, knowing where their economy relative to the regional average (figure 1.2). The
stands in the aggregate ranking on the ease of economy‘s rankings on the topics included in the
doing business is useful. Also useful is to know how ease of doing business index provide another
it ranks relative to comparator economies and perspective (figure 1.3).
Figure 1.2 How Kazakhstan and comparator economies rank on the ease of doing business
Source: Doing Business database.
Doing Business 2013 Kazakhstan 8
THE BUSINESS ENVIRONMENT
Figure 1.3 How Kazakhstan ranks on Doing Business topics
Source: Doing Business database.
Doing Business 2013 Kazakhstan 9
THE BUSINESS ENVIRONMENT
Just as the overall ranking on the ease of doing business year Doing Business introduced the distance to frontier
tells only part of the story, so do changes in that ranking. measure. This measure shows how far each economy is
Yearly movements in rankings can provide some indication from the best performance achieved by any economy since
of changes in an economy‘s regulatory environment for 2005 on each indicator in 9 Doing Business indicator sets.
firms, but they are always relative. An economy‘s ranking
Comparing the measure for an economy at 2 points in
might change because of developments in other
time allows users to assess how much the economy‘s
economies. An economy that implemented business
regulatory environment as measured by Doing Business
regulation reforms may fail to rise in the rankings (or may
has changed over time—how far it has moved toward (or
even drop) if it is passed by others whose business
away from) the most efficient practices and strongest
regulation reforms had a more significant impact as
regulations in areas covered by Doing Business (figure 1.4).
measured by Doing Business.
The results may show that the pace of change varies widely
Moreover, year-to-year changes in the overall rankings do across the areas measured. They also may show that an
not reflect how the business regulatory environment in an economy is relatively close to the frontier in some areas
economy has changed over time—or how it has changed and relatively far from it in others.
in different areas. To aid in assessing such changes, last
Figure 1.4 How far has Kazakhstan come in the areas measured by Doing Business?
Note: The distance to frontier measure shows how far on average an economy is from the best performance achieved by any
economy on each Doing Business indicator since 2005. The measure is normalized to range between 0 and 100, with 100 representing
the best performance (the frontier). The overall distance to frontier is the average of the distance to frontier in the 9 indicator sets
shown in the figure. See the data notes for more details on the distance to frontier measure.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 10
THE BUSINESS ENVIRONMENT
The absolute values of the indicators tell another part business regulation—such as a regulatory process that
of the story (table 1.1). The indicators, on their own or can be completed with a small number of procedures
in comparison with the indicators of a good practice in a few days and at a low cost. Comparison of the
economy or those of comparator economies in the economy‘s indicators today with those in the previous
region, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist—
numbers of procedures, long delays or high costs. Or and where they are diminishing.
they may reveal unexpected strengths in an area of
Table 1.1 Summary of Doing Business indicators for Kazakhstan
Kyrgyz Republic DB2013
Best performer globally
Kazakhstan DB2013
Kazakhstan DB2012
Russian Federation
Tajikistan DB2013
Moldova DB2013
Ukraine DB2013
Indicator
DB2013
DB2013
Starting a Business (rank) 25 55 15 92 101 77 50 New Zealand (1)
Procedures (number) 6 6 2 7 8 5 7 New Zealand (1)*
Time (days) 19 19 10 9 18 24 22 New Zealand (1)
Cost (% of income per
0.6 0.8 2.8 5.7 2.0 27.1 1.5 Slovenia (0.0)
capita)
Paid-in Min. Capital (% of
0.0 0.0 0.0 8.7 1.4 0.0 0.0 91 Economies (0.0)*
income per capita)
Dealing with Construction Hong Kong SAR, China
155 150 67 168 178 180 183
Permits (rank) (1)
Hong Kong SAR, China
Procedures (number) 32 32 12 26 42 24 20
(6)*
Time (days) 189 189 142 291 344 228 375 Singapore (26)
Cost (% of income per
103.5 119.9 140.6 69.3 129.2 638.5 1,262.6 Qatar (1.1)
capita)
Doing Business 2013 Kazakhstan 11
Kyrgyz Republic DB2013
Best performer globally
Kazakhstan DB2013
Kazakhstan DB2012
Russian Federation
Tajikistan DB2013
Moldova DB2013
Ukraine DB2013
Indicator
DB2013
DB2013
Getting Electricity (rank) 80 81 177 161 184 181 166 Iceland (1)
Procedures (number) 6 6 7 7 10 9 11 Germany (3)*
Time (days) 88 88 159 140 281 185 285 Germany (17)
Cost (% of income per
71.1 88.4 2,428.6 578.0 1,573.7 1,140.6 192.3 Japan (0.0)
capita)
Registering Property
28 28 11 16 46 82 149 Georgia (1)
(rank)
Procedures (number) 4 4 4 5 5 6 10 Georgia (1)*
Time (days) 40 40 5 5 44 37 69 Portugal (1)
Cost (% of property value) 0.1 0.1 1.8 0.9 0.2 4.3 3.7 Belarus (0.0)*
Getting Credit (rank) 83 97 12 40 104 180 23 United Kingdom (1)*
Strength of legal rights
4 3 10 8 3 2 9 Malaysia (10)*
index (0-10)
Depth of credit
5 5 4 4 5 0 4 United Kingdom (6)*
information index (0-6)
Public registry coverage
0.0 0.0 0.0 0.0 0.0 0.0 0.0 Portugal (90.7)
(% of adults)
Private bureau coverage United Kingdom
39.3 37.6 24.6 3.9 45.4 0.0 23.3
(% of adults) (100.0)*
Protecting Investors
10 10 13 82 117 25 117 New Zealand (1)
(rank)
Extent of disclosure index Hong Kong SAR, China
9 9 8 7 6 8 5
(0-10) (10)*
Doing Business 2013 Kazakhstan 12
Kyrgyz Republic DB2013
Best performer globally
Kazakhstan DB2013
Kazakhstan DB2012
Russian Federation
Tajikistan DB2013
Moldova DB2013
Ukraine DB2013
Indicator
DB2013
DB2013
Extent of director liability
6 6 7 3 2 6 2 Singapore (9)*
index (0-10)
Ease of shareholder suits
9 9 8 6 6 6 7 New Zealand (10)*
index (0-10)
Strength of investor
8.0 8.0 7.7 5.3 4.7 6.7 4.7 New Zealand (9.7)
protection index (0-10)
United Arab Emirates
Paying Taxes (rank) 17 16 168 109 64 175 165
(1)
Payments (number per Hong Kong SAR, China
7 7 51 48 7 69 28
year) (3)*
United Arab Emirates
Time (hours per year) 188 188 210 220 177 224 491
(12)
Trading Across Borders
182 178 174 142 162 184 145 Singapore (1)
(rank)
Documents to export
9 9 8 7 8 11 6 France (2)
(number)
Time to export (days) 81 76 63 32 21 71 30 Singapore (5)*
Cost to export (US$ per
4,685 3,130 4,160 1,545 2,820 8,450 1,865 Malaysia (435)
container)
Documents to import
12 12 10 7 11 11 8 France (2)
(number)
Time to import (days) 69 62 75 35 36 72 33 Singapore (4)
Cost to import (US$ per
4,665 3,290 4,700 1,870 2,920 9,800 2,155 Malaysia (420)
container)
Enforcing Contracts (rank) 28 28 47 26 11 43 42 Luxembourg (1)
Doing Business 2013 Kazakhstan 13
Kyrgyz Republic DB2013
Best performer globally
Kazakhstan DB2013
Kazakhstan DB2012
Russian Federation
Tajikistan DB2013
Moldova DB2013
Ukraine DB2013
Indicator
DB2013
DB2013
Time (days) 370 370 260 327 270 430 343 Singapore (150)
Cost (% of claim) 22.0 22.0 29.0 28.6 13.4 25.5 41.5 Bhutan (0.1)
Procedures (number) 37 37 38 31 36 35 30 Ireland (21)*
Resolving Insolvency
55 55 155 91 53 79 157 Japan (1)
(rank)
Time (years) 1.5 1.5 4.0 2.8 2.0 1.7 2.9 Ireland (0.4)
Cost (% of estate) 15 15 15 9 9 9 42 Singapore (1)*
Outcome (0 as piecemeal
sale and 1 as going 0 0 0 0 0 0
concern)
Recovery rate (cents on
43.1 42.7 9.1 32.0 43.4 36.0 8.7 Japan (92.8)
the dollar)
Note: DB2012 rankings shown are not last year‘s published rankings but comparable rankings for DB2012 tha t capture the effects of
such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year. The ranking
methodology for the paying taxes indicators changed in Doing Business 2013; see the data notes for details. For more information
on “no practice�? marks, see the data notes. Data for the outcome of the resolving insolvency indicator are not available for
DB2012.
* Two or more economies share the top ranking on this indicator. A number shown in place of an economy‘s name indicates the
number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website
(http://www.doingbusiness.org).
Source: Doing Business database.
Doing Business 2013 Kazakhstan 14
STARTING A BUSINESS
Formal registration of companies has many WHAT THE STARTING A BUSINESS
immediate benefits for the companies and for
business owners and employees. Legal entities can INDICATORS MEASURE
outlive their founders. Resources are pooled as
several shareholders join forces to start a company. Procedures to legally start and operate a
Formally registered companies have access to company (number)
services and institutions from courts to banks as
Preregistration (for example, name
well as to new markets. And their employees can
verification or reservation, notarization)
benefit from protections provided by the law. An
additional benefit comes with limited liability Registration in the economy‘s largest
companies. These limit the financial liability of business city
company owners to their investments, so personal
Postregistration (for example, social security
assets of the owners are not put at risk. Where
registration, company seal)
governments make registration easy, more
entrepreneurs start businesses in the formal sector, Time required to complete each procedure
creating more good jobs and generating more (calendar days)
revenue for the government.
Does not include time spent gathering
What do the indicators cover? information
Doing Business measures the ease of starting a Each procedure starts on a separate day
business in an economy by recording all Procedure completed once final document is
procedures officially required or commonly done in received
practice by an entrepreneur to start up and
formally operate an industrial or commercial No prior contact with officials
business—as well as the time and cost required to Cost required to complete each procedure
complete these procedures. It also records the (% of income per capita)
paid-in minimum capital that companies must
deposit before registration (or within 3 months). Official costs only, no bribes
The ranking on the ease of starting a business is No professional fees unless services required
the simple average of the percentile rankings on by law
the 4 component indicators: procedures, time, cost
and paid-in minimum capital requirement. Paid-in minimum capital (% of income
per capita)
To make the data comparable across economies,
Doing Business uses several assumptions about the Deposited in a bank or with a notary before
business and the procedures. It assumes that all registration (or within 3 months)
information is readily available to the entrepreneur Has a start-up capital of 10 times income per
and that there has been no prior contact with capita.
officials. It also assumes that the entrepreneur will
Has a turnover of at least 100 times income per
pay no bribes. And it assumes that the business:
capita.
Is a limited liability company, located in the
Does not qualify for any special benefits.
largest business city.
Does not own real estate.
Has between 10 and 50 employees.
Is 100% domestically owned.
Conducts general commercial or industrial
activities.
Doing Business 2013 Kazakhstan 15
STARTING A BUSINESS
Where does the economy stand today?
What does it take to start a business in Kazakhstan? costs 0.6% of income per capita and requires paid-in
According to data collected by Doing Business, starting minimum capital of 0.0% of income per capita (figure
a business there requires 6 procedures, takes 19 days, 2.1).
Figure 2.1 What it takes to start a business in Kazakhstan
Paid-in minimum capital (% of income per capita): 0.0
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the
procedures reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 16
STARTING A BUSINESS
Globally, Kazakhstan stands at 25 in the ranking of 185 regional average ranking provide other useful
economies on the ease of starting a business (figure information for assessing how easy it is for an
2.2). The rankings for comparator economies and the entrepreneur in Kazakhstan to start a business.
Figure 2.2 How Kazakhstan and comparator economies rank on the ease of starting a business
Source: Doing Business database.
Doing Business 2013 Kazakhstan 17
STARTING A BUSINESS
What are the changes over time?
While the most recent Doing Business data reflect how process have changed—and which have not (table 2.1).
easy (or difficult) it is to start a business in Kazakhstan That can help identify where the potential for
today, data over time show which aspects of the improvement is greatest.
Table 2.1 The ease of starting a business in Kazakhstan over time
By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. .. 55 25
Procedures
10 10 8 8 8 8 7 6 6 6
(number)
Time (days) 26 26 25 21 21 21 20 19 19 19
Cost (% of
income per 11.1 10.5 8.6 7.0 7.6 5.2 4.8 1.0 0.8 0.6
capita)
Paid-in Min.
Capital (% of
35.8 32.7 28.1 23.1 22.9 15.9 13.4 0.0 0.0 0.0
income per
capita)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the
addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 18
STARTING A BUSINESS
Equally helpful may be the benchmarks provided by what is possible in making it easier to start a business.
the economies that over time have had the best And changes in regional averages can show where
performance regionally or globally on the procedures, Kazakhstan is keeping up—and where it is falling
time, cost or paid-in minimum capital required to start behind.
a business (figure 2.3). These benchmarks help show
Figure 2.3 Has starting a business become easier over time?
Procedures (number)
Time (days)
Doing Business 2013 Kazakhstan 19
STARTING A BUSINESS
Cost (% of income per capita)
Paid-in minimum capital (% of income per capita)
Note: Ninety-one economies globally have no paid-in minimum capital requirement.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 20
STARTING A BUSINESS
Economies around the world have taken steps making greater firm satisfaction and savings and more
it easier to start a business—streamlining procedures registered businesses, financial resources and job
by setting up a one-stop shop, making procedures opportunities.
simpler or faster by introducing technology and
What business registration reforms has Doing Business
reducing or eliminating minimum capital requirements.
recorded in Kazakhstan (table 2.2)?
Many have undertaken business registration reforms in
stages—and they often are part of a larger regulatory
reform program. Among the benefits have been
Table 2.2 How has Kazakhstan made starting a business easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
Kazakhstan simplified the business start up process by
DB2010 simplifying documentation requirements and abolishing the
requirement to register at the local tax office.
Kazakhstan eased business start-up by reducing the minimum
capital requirement to 100 tenge ($0.70) and eliminating the
DB2011
need to have the memorandum of association and company
charter notarized.
DB2012 No reform as measured by Doing Business.
Kazakhstan made starting a business easier by eliminating the
DB2013 requirement to pay in minimum capital within 3 months after
incorporation.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 21
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Kazakhstan is a set of specific procedures—the
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new City: Almaty
firm. These are identified by Doing Business
through collaboration with relevant local Legal Form: Private Limited Liability Company
professionals and the study of laws, regulations and Paid in Minimum Capital Requirement: None
publicly available information on business entry in
that economy. Following is a detailed summary of Start-up Capital: 10 times GNI per capita
those procedures, along with the associated time
and cost. These procedures are those that apply to
a company matching the standard assumptions
(the ―standardized company‖) used by Doing
Business in collecting the data (see the section in
this chapter on what the indicators measure).
Summary of procedures for starting a business in Kazakhstan—and the time and cost
Time to
No. Procedure Cost to complete
complete
Pay registration fee into the account of the Ministry of Justice
A fee for registration of the company is paid to the bank. It‘s a separate
window (a bank branch) inside the building of the Center for servicing included in procedure
1 1 day
populations. Registration fee has to be paid and a receipt submitted 2
when submitting the package of documents.
State registration of legal entity and tax registration at the Public
Registration Center
The following documents should be submitted to the registrar:
• Application form;
• Standard articles of association (3 copies);
2 • Copies of ID; 14 days KZT 3236
• Document confirming the payment of the state registration fee (KZT
3236);
• If necessary, the Power of attorney on the representative shall also be
presented
Registration fees are 2 times the Index (1 MCI = KZT 1618)
Make a company seal
3 1 day KZT 2,000 - KZT 4,500
To make a company seal, promoters must file a copy of certificate of
state registration of the company; a power of attorney, if the person is
Doing Business 2013 Kazakhstan 22
Time to
No. Procedure Cost to complete
complete
not the director; the taxpayer registration certificate; and a letter of
application requesting the seal, with required information about the
seal content.
Notarize certificate of state registration and other post-registration
documents
Under the Tax Code of Januar 1, 2009 Article 536(15), the notary fee for
certifying copies of the state registration and other postregistration
documents shall be 10% of the MCI per page. Each registration
document is a two-page document, and the total for one set of certified 1 day 10% MCI per page
4
copies (if the charter had 10 pages) would be 10% of MCI x 16 pages.
One set of notarized copies of the registration documents and the
charter is usually required to open a bank account. Additional copies
would be needed if the company were to apply for work permits to
employ expatriates, obtain licenses and other operational permits, or
set up subsidiaries or acquire shares or ownership interests in other
legal entities.
Open the current account in the bank
To open a current account, the founder must provide the bank with the
following documents:
• Cards with sample signatures and an imprint of the company seal.
• Copy of a document, distributed by the tax authority, confirming
registration with the tax authority. 1 day no charge
5
• Copy of the state registration certificate of legal entity from the
registration body of the Ministry of Justice of the Republic of
Kazakhstan.
• Notarized copy of the charter, or other document confirming activity
of the legal entity operating on the basis of a standard charter.
• Copies of identity documents for person(s) listed on the signature
card(s) and company founders.
• Application for bank account setup (bank-provided form).
Register for the obligatory insurance of life and health for
employees
Each employee should have employer-paid insurance according to the
Law On Obligatory Insurance of The Liability of the Employer for Life
and Health Tort to The Employee in Discharge of Labor and (Official)
Duties (February 7, 2005) that became effective on July 1, 2005.The
6 amount of insurance premium payable by an employer depends on 1 day no charge
insurance risks and wages. To assess risks, the insurance companies
place all insurable personnel into three categories: administrative,
operational, and support. Amounts of the insurance premium vary from
0.04% to 9.99%. According to 7 May 2007 amendments to the law on
obligatory insurance, an employer is required to get an insurance policy
within 10 business days from the date of state registration indicated in
the company's Certificate of State Registration
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 23
DEALING WITH CONSTRUCTION PERMITS
Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION
public. But it needs to be efficient, to avoid
PERMITS INDICATORS MEASURE
excessive constraints on a sector that plays an
important part in every economy. Where complying
with building regulations is excessively costly in Procedures to legally build a warehouse
time and money, many builders opt out. They may (number)
pay bribes to pass inspections or simply build Submitting all relevant documents and
illegally, leading to hazardous construction that obtaining all necessary clearances, licenses,
puts public safety at risk. Where compliance is permits and certificates
simple, straightforward and inexpensive, everyone Completing all required notifications and
is better off. receiving all necessary inspections
What do the indicators cover? Obtaining utility connections for water,
Doing Business records the procedures, time and sewerage and a fixed telephone line
cost for a business to obtain all the necessary Registering the warehouse after its
approvals to build a simple commercial warehouse completion (if required for use as collateral or
in the economy‘s largest business city, connect it to for transfer of the warehouse)
basic utilities and register the property so that it Time required to complete each procedure
can be used as collateral or transferred to another (calendar days)
entity.
Does not include time spent gathering
The ranking on the ease of dealing with information
construction permits is the simple average of the
Each procedure starts on a separate day
percentile rankings on its component indicators:
procedures, time and cost. Procedure completed once final document is
received
To make the data comparable across economies,
Doing Business uses several assumptions about the No prior contact with officials
business and the warehouse, including the utility Cost required to complete each procedure (%
connections. of income per capita)
The business: Official costs only, no bribes
Is a limited liability company operating in
Will be connected to water, sewerage
the construction business and located in
(sewage system, septic tank or their
the largest business city.
equivalent) and a fixed telephone line. The
Is domestically owned and operated. connection to each utility network will be 10
meters (32 feet, 10 inches) long.
Has 60 builders and other employees.
Will be used for general storage, such as of
The warehouse:
books or stationery (not for goods requiring
Is a new construction (there was no special conditions).
previous construction on the land).
Will take 30 weeks to construct (excluding all
Has complete architectural and technical delays due to administrative and regulatory
plans prepared by a licensed architect. requirements).
Doing Business 2013 Kazakhstan 24
DEALING WITH CONSTRUCTION PERMITS
Where does the economy stand today?
What does it take to comply with the formalities to permits there requires 32 procedures, takes 189 days
build a warehouse in Kazakhstan? According to data and costs 103.5% of income per capita (figure 3.1).
collected by Doing Business, dealing with construction
Figure 3.1 What it takes to comply with formalities to build a warehouse in Kazakhstan
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on
the procedures reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 25
DEALING WITH CONSTRUCTION PERMITS
Globally, Kazakhstan stands at 155 in the ranking of ranking provide other useful information for assessing
185 economies on the ease of dealing with how easy it is for an entrepreneur in Kazakhstan to
construction permits (figure 3.2). The rankings for legally build a warehouse.
comparator economies and the regional average
Figure 3.2 How Kazakhstan and comparator economies rank on the ease of dealing with construction permits
Source: Doing Business database.
Doing Business 2013 Kazakhstan 26
DEALING WITH CONSTRUCTION PERMITS
What are the changes over time?
While the most recent Doing Business data reflect how aspects of the process have changed—and which have
easy (or difficult) it is to deal with construction permits not (table 3.1). That can help identify where the
in Kazakhstan today, data over time show which potential for improvement is greatest.
Table 3.1 The ease of dealing with construction permits in Kazakhstan over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 150 155
Procedures (number) 36 36 36 36 35 32 32 32
Time (days) 258 258 258 258 244 189 189 189
Cost (% of income
385.3 297.5 249.4 178.9 151.9 142.6 119.9 103.5
per capita)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as dat a corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year. For more information on ―no practice‖ marks, see the
data notes.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 27
DEALING WITH CONSTRUCTION PERMITS
Equally helpful may be the benchmarks provided by possible in making it easier to deal with construction
the economies that over time have had the best permits. And changes in regional averages can show
performance regionally or globally on the procedures, where Kazakhstan is keeping up—and where it is
time or cost required to deal with construction permits falling behind.
(figure 3.3). These benchmarks help show what is
Figure 3.3 Has dealing with construction permits become easier over time?
Procedures (number)
Time (days)
Doing Business 2013 Kazakhstan 28
DEALING WITH CONSTRUCTION PERMITS
Cost (% of income per capita)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 29
DEALING WITH CONSTRUCTION PERMITS
Smart regulation ensures that standards are met while building safety while keeping compliance costs
making compliance easy and accessible to all. reasonable, governments around the world have
Coherent and transparent rules, efficient processes and worked on consolidating permitting requirements.
adequate allocation of resources are especially What construction permitting reforms has Doing
important in sectors where safety is at stake. Business recorded in Kazakhstan (table 3.2)?
Construction is one of them. In an effort to ensure
Table 3.2 How has Kazakhstan made dealing with construction permits easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
Kazakhstan eased the process of dealing with construction
permits by eliminating the requirement to pay for new
DB2010
electrical connection, reduced the time-limits for building
permits, and reduced cost to obtain topographic surveys.
Kazakhstan made dealing with construction permits easier by
DB2011 implementing a one-stop shop related to technical conditions
for utilities.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 30
DEALING WITH CONSTRUCTION PERMITS
What are the details?
The indicators reported here for Kazakhstan are
BUILDING A WAREHOUSE
based on a set of specific procedures—the steps
that a company must complete to legally build a
warehouse—identified by Doing Business through City : Almaty
information collected from experts in construction
licensing, including architects, construction
Estimated
lawyers, construction firms, utility service providers KZT 67,124,704
Warehouse Value :
and public officials who deal with building
regulations. These procedures are those that apply The procedures, along with the associated time and
to a company and structure matching the standard cost, are summarized below.
assumptions used by Doing Business in collecting
the data (see the section in this chapter on what
the indicators cover).
Summary of procedures for dealing with construction permits in Kazakhstan —and the time and cost
Time to
No. Procedure Cost to complete
complete
Request and obtain land allocation permit from Almaty City
Akimat
BuildCo applies to City Akimat to obtain the Decision of Mayor of City
of Almaty. The Decision gives the right to design the project for the
next 12 months on the specified land. Resolution of Government of
Kazakhstan N 425 as of May 6, 2008 provides for a new ―Rule of 10 days no charge
1
issuance of baseline materials and data for designing of new
construction‖. According to this Rule all local municipalities must issue
the location permit for small and medium companies within 10 days
and for large scale companies within 30 days. However, the Akimat of
Almaty continues to issue the location permit regardless of size of
companies in 30 days. In some cases in practice this procedure may
end up taking up to 12 months.
* Notarize documents
BuildCo provides a copy of the following four documents totaling seven
pages:
• Governmental registration certificate (double sided)
• Statistical card (single sided)
• Taxpayer registration number (double sided)
• The deed of ownership of land (two pages)
2 1 day KZT 1,058
This procedure is required when applicants do not have all the original
documents. In case applicants have the original of all documents, they
can submit their documents without notarization and can show them
for verification.
Notarizations may be carried out by private notaries or state notaries.
The fees of both private notaries and state notaries are calculated with
reference to a monthly calculation index (MCI) which is established by
Parliament for each year in the national budget. The MCI for 2011 is
Doing Business 2013 Kazakhstan 31
Time to
No. Procedure Cost to complete
complete
equal to KZT 1,512.00. State notaries charge 10% of the MCI for each
side of a page to be notarized. Thus, for 7 pages the charge is KZT
1,058.40 (10% of 1,512.00 X 7). The fees for private notaries in Almaty
were established at 20% of MCI at a meeting of the private notaries on
January 31, 2008. It is most likely that companies will opt for public
notaries since it is cheaper. Notarization is completed in a day.
Request and obtain architectural planning Assignment (APZ) and
technical conditions for utility connections
To obtain an architectural-planning assignment, the company must
submit a business plan and project feasibility study to the city
architecture department. The application must include any plans for
construction, a description of the business activities to take place on
site, and estimated utility hook-up and consumption requirements. In
addition, the company must submit a copy of the property title along
with the plot document, approval of engineering-geological estimation
of the plot, and company registration documents
The architectural-planning assignment is a permit to develop a building
plan/design/project. The design estimates are valid for 3 years from the
date of its approval. It includes some provisions and requirements that
must be taken into account while developing the project and building,
in particular, the requirement that an opinion be obtained on the
project from the seismological agency and the sanitary and
epidemiologic authorities, as well as project appraisal, and so forth.
After obtaining the architectural-planning assignment, the company
should develop a project (design) and must then obtain several
agencies' approvals of the project in accordance with the architectural- 30 days no charge
3
planning assignment and the applicable laws. Each of these agencies
reviews the application documents and the project, and may physically
inspect the land.
As a prerequisite to signing the permit, each department signs a
technical approval or ―contract‖ with the company. The contract often
requires the signatures of several officers in a department. The contract
indicates the department‘s approval of the company‘s technical
proposals and sets forth the responsibilities of the investor to abide by
the terms and conditions of the approval.
As of May 6, 2008 Government Resolution N 425 approved new ―Rule
of issuance of baseline materials and data for designing of new
construction‖. According to it the architectural-planning assignment
should be issued within 3 working days for small enterprises, and for all
the rest no more than 5 working days. In case of BuildCo it is 5 working
days, since it has 60 employees and is considered a medium company.
There is no official charge for it. There is no official charge by law, but
the architectural-planning assignment is prepared by the commercial
organization in the administration which charges KZT 30,000.00 for the
architectural-planning assignment based on the decision of Almaty City
Architecture and Town-Planning Department. Based on the technical
conditions issued by the utility providers, the Almaty City Architecture
and Town-Planning Department issues an architectural-planning
Doing Business 2013 Kazakhstan 32
Time to
No. Procedure Cost to complete
complete
assignment, which serves as the authorization to start the development
of the project from the design organizations. The applicable law is the
Law on Architectural, City Planning, and Construction Activity in the
Republic of Kazakhstan,‖ Law No. 232-II, dated July 16, 2001.
On September 29, 2009 amendments were adopted to the regulation
approved by the above mentioned Government Resolution No. 425,
dated May 6, 2008. Pursuant to these amendments: 1. architectural-
planning assignment (APZ) and technical conditions for the connection
to sources of engineering and municipal utilities (Technical Conditions)
are issued by local Akimat; 2. in order to obtain APZ and Technical
Conditions BuildCo will have to submit to Akimat of Almaty City an
application which must include (i) permit to use the land plot for the
construction of a warehouse and (ii) assignement for construction
approved by BuildCo; 3. local Akimat is required not later than on the
next day following the receipt of an application to forward the request
for Technical Conditions to the appropriate utilities providers, and 4.
utilities providers are required to provide the Technical Conditions or,
in case of refusal, the motivated explanation of the refusal. The term for
the consideration and issue of APZ and Technical Conditions by local
Akimat may not exceed 8 business days, except for certain construction
projects specified in the regulation where the relevant term may be not
more than 15 business days from the date of the application.
* Hire a topographic specialist and obtain topographic plan
Topographical surveying of land is a licensed activity (complex
procedure) performed by very few companies. As of January 2009 due
to severe construction crisis in Kazakhstan‘s financial capital Almaty, 1 day KZT 14,500
4
and decline in demand, topographic surveying companies have
reduced their prices. Cost per hectare of conducting a topographic
survey now can range anywhere between KZT 9,000.00 to KZT
20,000.00. This is a significant jump from previous cost of KZT 33,000.00
to KZT 95,000.00.
* Receive on-site inspection
5 1 day no charge
This inspection happens parallel to the issuance of Architectural
Planning Assignment.
* Request and obtain project clearance from Sanitation and
Epidemiological Authority (SES)
According to Law on Radiological Safety of Population N 219-I as of
April 23, 1998 and other by-laws the Sanitation and Epidemiologic
Authority (SES) examines the construction projects for their compliance 30 days KZT 30,000
6
with state radiological, sanitary and hygienic regulations. No specific
time limit is expressly provided by law for this procedure. However,
according to practice it takes 1 -- 3 months. The SES will conduct an
inspection to undertake a radiological measurement. The approval is
obtained after the fee is paid. The fee is based on various factors is
approximately KZT 30,000.00.
* Request and obtain approval from local fire department 21 days no charge
7
Doing Business 2013 Kazakhstan 33
Time to
No. Procedure Cost to complete
complete
This procedure is regulated by the Government Resolution No. 48, as of
January 24, 2005 "On approval of the Rules of obtaining approval on
projects standards, regulations and rules established requirements of
fire protection on construction objects".
The Fire Service Department issues the project clearance to ensure that
fire norms have been adequately met in the project design. Comments
for revision or endorsement are also issued. There is no time-limit
stipulated for this procedure and it can take up to 1 month. Any
subsequent consideration would take 15 days.
* Request and obtain approval from water authority
It is the responsibility of the State Expertise Authority to issue the
technical conditions for connection to water, heat, and electricity, under
the Governmental Decree on the Order of Conducting State Expertise,
Decree No. 918, dated August 19, 2002 (with changes and amendments
dated July 7, 2006). Yet companies have to consult with the water and
sewage company.
No on-site inspection is required by law; however, in practice,
8 inspections take place. The water and sewage company examines the 24 days no charge
submitted project of devices and constructions for the connection and
issues its conclusion on it. With inspection this procedure may take 30
days. The state act which regulated specified provision (Instructions for
use of municipal water pipe and sewage in cities and settlements of
Republic Kazakhstan, adopted by The Order of the Ministry of Economy
and Trade of Republic Kazakhstan #80, May 30, 1997) was not
registered by Ministry of Justice and has no legal effect but yet is
continued to be used.
* Request and obtain environmental expertise of documentation
In accordance with the Article 50 of Ecological Code RK No 212-III
January 9, 2007 the time for getting approval of local Environment
Protection Authority can't be more than 3 months.
Subjects of environmental expertise are divided into 4 categories
depending on the hazard class of the facility to be inspected pursuant
to the sanitary classification. The environmental expertise with respect
to facilities of the 2nd, 3rd and 4th categories is performed by the
Akimats of Almaty City. A warehouse falls under the 4th category. 25 days no charge
9
Once the documents are provided for the environmental expertise, the
Agency conducts the preliminary examination of the submitted
documents as to their completeness and compliance with the legal
requirements. The term for the preliminary examination of documents
may not exceed 2 weeks from the date of submission of documents.
Once the preliminary examination of documents is completed, the
environmental expertise is performed which term may not exceed 3
months.
* Request and obtain opinion of the seismological agency on the
project from Republican Enterprise Kazakhstan Scientific Institute 16 days KZT 10,000
10
“Kaz NIISA�?
Doing Business 2013 Kazakhstan 34
Time to
No. Procedure Cost to complete
complete
Republican Enterprise Kazakhstan Scientific Institute (Kaz NIISA) carries
out the seismological survey, required for areas subject to dangerous
levels of seismic activity. The only document required is the project
design. A specialist makes a field visit, reviews the project design
documents, and issues a finding that is attached to the project. The
minimum time it takes is 10 days and may cost anywhere from KZT
10,000.00 to KZT 100,000.00.
Request and obtain expert examination of project documentation
With limited exceptions provided by law, all projects must undergo
expert examination to ascertain if the project conforms to the
numerous constructions standards. What might be called state
expertise is conducted by Republican State Enterprise "Gosekspertiza"
which is authorized by the Government to conduct expertise of state-
related projects, projects of high technical complexity, social, transport
and recreational infrastructure projects. The projects will be subject to
expertise on compliance with regulations on frame stability, frame
functioning stability, and labor conditions and protection. In essence,
the project is checked against numerous construction standards
(SNIPs). Subject to the limited exceptions, the expertise for all other
projects may be performed by any duly licensed expert specialist or
non-governmental expert organization.
The cost and time for performance of services by private expert 15 days KZT 321,248
11
individuals or organizations are not established by law and will be
subject to negotiation and the circumstances of each project. The cost
will be 247.00 x 1300.6 sq. m. = KZT 321,248.00.
On October 23, 2009 the Government Resolution No. 1656 established
the criteria for determining whether a facility is of high or low technical
complexity. According to this regulation, free-standing warehouses
which do not require special conditions for the storage of goods are
considered to be facilities of low technical complexity. The expert
examination of the warehouse construction project be handled by
Gosekspertiza, it should not take more than 15 calendar days.
If the project is sent to Gosexpertiza the official time limit is 45 days. If
the project is complex it may be extended to 60 days and for
technically simple projects of small business time should not exceed 15
days.
Request and obtain Project Clearance from the local architecture
and town-planning authorities
Project clearance from the local architecture and town-planning
authorities involves verifying the project‘s conformity with the
architectural-planning assignment and with the set of technical 30 days no charge
12
conditions.
The following documents should be submitted:
• An application to the Architecture and Town-Planning Department
Chief Executive
• The architectural-planning assignment
Doing Business 2013 Kazakhstan 35
Time to
No. Procedure Cost to complete
complete
• Documentation confirming the title to the land
• Topographical survey
• Approvals and opinions of the seismological, fire, sanitary-and-
epidemiologic, and environmental agencies
• Independent or state experts‘ examinations; licenses of the developer
and the expert organization, and so forth
Request and obtain Rendering Building and Assembly Jobs Permit
from the State Architectural Supervision Authorities
The following documents should be submitted to obtain this permit:
• An application form
• Land plot permit for construction purposes, approved project with a
favorable expert examination
• A license to perform architectural activities, town-planning and
building activity with a list of building types and assembly jobs
• Approved building general plan
• Agreement made with the developer to conduct supervision and
maintenance of the construction process
• A form signed by the general contractor and building owner
13 • Certificates of ―earthquake-proof construction‖ and ―geodesy in 11 days no charge
construction‖ (if applicable)
The applicable law is the Law on Architectural, City Planning, and
Construction Activity in the Republic of Kazakhstan,‖ Law No. 232-II,
dated July 16, 2001. Before starting construction work, the company
must notify the proper authorities.
Under Government Decree Number 1467, signed on September 29,
2009, amended the Government Decree Number 425 of May 6, 2008
"On Measures for improving the issuance of construction permits", the
time for obtaining building and assembly jobs permit has been reduced
from 14 days to 11 days.
Receive inspection by Sanitary and Epidemiology Service - I
The SES will inspect the site during construction. The inspector issues 1 day KZT 3,000
14
an inspection report identifying any irregularities and may return to
verify that adequate changes have been made. In addition to that SES
will charge KZT 3,000.00 for radiological measurement.
Receive inspection by the Fire Service - II
The Fire Service may inspect the site one or two times during
construction. The inspector issues an inspection report identifying any
irregularities and may return to verify that adequate changes have been
made. Administrative fines could be imposed if mistakes are found. The 1 day no charge
15
applicable law is the Law on Architectural, City Planning, and
Construction Activity in the Republic of Kazakhstan, Law No. 242-II,
dated July 16, 2001; and the Governmental Decree Confirming the
Rules of Obtaining Approval Procedures for Construction of New and
Reconstruction of Existing Buildings, Decree No. 1313, dated December
13, 2002.
Doing Business 2013 Kazakhstan 36
Time to
No. Procedure Cost to complete
complete
Receive inspection by the Social Protection - III
16 1 day no charge
Receive an inspection by the Almaty City Department of
Architecture and Town-Planning Control after foundation works-IV
BuildCo may receive inspections from the Almaty City Department on
Architecture and Town-Planning Control at various stages of the
construction process: laying the foundation, finishing the first floor,
roofing, and so forth. The inspector issues an inspection report 1 day no charge
17
identifying any irregularities and may return to verify that adequate
changes have been made. Administrative fines could be imposed if
mistakes are found. The building control agency does not require prior
request of inspection. The applicable law is the Law of the Republic of
Kazakhstan on Architectural, City Planning, and Construction Activity in
the Republic of Kazakhstan, Law No. 242-11, dated July 16, 2001. In
practice there may be more inspections.
Receive inspection by Almaty City Department of Architecture and
Town-Planning Control after floor works - V
BuildCo receives an inspection from the Almaty City Department on
Architecture and Town-Planning Control at various stages of the
construction process: laying the foundation, finishing the first floor,
18 roofing, and so forth. The inspector issues an inspection report 1 day no charge
identifying any irregularities and may return to verify that adequate
changes have been made. Administrative fines could be imposed if
mistakes are found. The building control agency does not require prior
request of inspection. The applicable law is the Law of the Republic of
Kazakhstan on Architectural, City Planning, and Construction Activity in
the Republic of Kazakhstan, Law No. 242-11, dated July 16, 2001.
Receive inspection by Almaty City Department of Architecture and
Town-Planning Control after roof works - VI
BuildCo receives an inspection from the Almaty City Department on
Architecture and Town-Planning Control at various stages of the
construction process: laying the foundation, finishing the first floor,
19 roofing, and so forth. The inspector issues an inspection report 1 day no charge
identifying any irregularities and may return to verify that adequate
changes have been made. Administrative fines could be imposed if
mistakes are found. The building control agency does not require prior
request of inspection. The applicable law is the Law of the Republic of
Kazakhstan on Architectural, City Planning, and Construction Activity in
the Republic of Kazakhstan, Law No. 242-11, dated July 16, 2001.
Hire Construction Technology Supervision Company
A licensed construction engineering supervision company carries out
the technical process of checking the different stages of the building. 1 day USD 5,202
20
BuildCo is unlikely to have a license for this area of expertise. Such
activities do not replace the inspections mentioned above but occur in
parallel to them. The average price is USD 3 -- 6 dollars per square
meter, and may depend on the complexity of construction.
21 * Receive inspection from water authorities 1 day no charge
Doing Business 2013 Kazakhstan 37
Time to
No. Procedure Cost to complete
complete
* Connect to water services
22 6 days no charge
* Request and obtain telephone connection
23 3 days KZT 26,800
The connection fee for fixed telephone line services by Kazakhtelecom
was reduced in 2009 from KZT 36,800.00 to KZT 26,800.00.
Request acceptance of the building from Working Commission
The company convenes a Working Commission upon the completion of
construction. Although the legislation stipulates for Working
24 Commission to be an exclusive relationship between building owner 1 day KZT 28,844
and contractor, in practice, the companies will have to involve Sanitary
and Epidemiological Authority and Fire Department at this stage.
Inspection will take place before the Act of Working Commission is
drafted and signed by all parties.
Receive inspection by the Working Commission
The Working Commission, which is also comprised of Sanitary and 1 day no charge
25
Epidemiological Authority and Fire Department, will have to inspect the
site. If the building has been built according to specifications, the
inspection takes 1 -- 2 days.
Obtain Act from Working Commission
The applicable law is the Law on Architectural, City Planning, and
Construction Activity in the Republic of Kazakhstan, Law No. 242-II, 20 days no charge
26
dated July 16, 2001; and the Governmental Decree Confirming the
Rules of Obtaining Approval Procedures for Construction of New and
Reconstruction of Existing Buildings, Decree No. 1313, dated December
13, 2002.
Request acceptance of the building from the Acceptance
Commission
After the Working Commission, the Acceptance Commission will
inspect the building. The approval is signed by all members of the
Commission: construction authority, city office of the land agency, city
department of sanitation, city fire department, state agency for
construction control, local water company, local electric company, and
Kazakh Telecom, and then sent it to the Akimat for approval. If the
27 building has been built according to specifications, the inspections take 1 day KZT 34,844
1 -- 2 days.
The SES will inspect the building along with other authorities but a
separate application must be filed. It may come together with others or
on a separate day to undertake a final radiological measurement. The
cost for that is KZT 6,000.00. If not followed up it may take 1 -- 3
months. The approval from the SES is pre-requisite to obtain the
approval of Acceptance Commission.
Doing Business 2013 Kazakhstan 38
Time to
No. Procedure Cost to complete
complete
Receive inspection by the Acceptance Commission
The Acceptance Commission may inspect the building. The approval is 1 day no charge
28
signed by all members of the commission and then sent to the Akimat
for approval. If the building has been built according to specifications,
the inspections will take 1 -- 2 days.
Obtain approval of Acceptance Commission
29 20 days no charge
Once the Act of Acceptance Commission is signed it needs to be
endorsed by amity City Akim.
Obtain a technical passport
30 30 days KZT 800
Before registering the building with the real property registry, it is
required to obtain a ―technical passport‖.
* Receive inspection for the technical passport
31 1 day KZT 26,800
Register BuildCo's right to the warehouse
Time: 15 business days if the building is registered in the usual order,
and 2 business days if it is registered in an accelerated procedure.
Cost: KZT 12,730.00 if the building is registered in the usual order, and
KZT 70,650.00 if it is registered in an accelerated procedure.
BuildCo must register the building with the Department of Justice at
the place of location of the warehouse. Amendments were made to the
Kazakhstan Law on State Registration of Immovable Property and
Transactions Related in 2008, which provide for both usual and
accelerated registration. The standard term for the registration in the
usual order is 15 business days, and for the accelerated registration -- 2 2 days KZT 70,650
32
business days. The registration fees are calculated on the basis of MCI
which is for 2009 year is equal to KZT 1,413.00. The registration fee for
the registration performed in the usual order is 10 MCI = KZT
14,130.00, and for the accelerated registration - 50 MCI = KZT
73,650.00.
The documents to be submitted include an application, legal
documents proving ownership, payment receipt, identification or legal
entity registration certificate, charter, decision of the Akimat approving
the building for use, the act of the state commission on approval for
use, and so forth. An officer of the Registration Service Committee
accepts the documents and issues a receipt that lists the documents
received and indicates date and time the documents were received.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 39
GETTING ELECTRICITY
Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY
for businesses. To counter weak electricity supply,
many firms in developing economies have to rely INDICATORS MEASURE
on self-supply, often at a prohibitively high cost.
Whether electricity is reliably available or not, the Procedures to obtain an electricity
first step for a customer is always to gain access by connection (number)
obtaining a connection.
Submitting all relevant documents and
What do the indicators cover? obtaining all necessary clearances and permits
Doing Business records all procedures required for Completing all required notifications and
a local business to obtain a permanent electricity receiving all necessary inspections
connection and supply for a standardized
warehouse, as well as the time and cost to Obtaining external installation works and
complete them. These procedures include possibly purchasing material for these works
applications and contracts with electricity utilities, Concluding any necessary supply contract and
clearances from other agencies and the external obtaining final supply
and final connection works. The ranking on the
ease of getting electricity is the simple average of Time required to complete each procedure
the percentile rankings on its component (calendar days)
indicators: procedures, time and cost. To make the Is at least 1 calendar day
data comparable across economies, several
assumptions are used. Each procedure starts on a separate day
The warehouse: Does not include time spent gathering
information
Is located in the economy‘s largest
business city, in an area where other Reflects the time spent in practice, with little
warehouses are located. follow-up and no prior contact with officials
Is not in a special economic zone where Cost required to complete each procedure
the connection would be eligible for (% of income per capita)
subsidization or faster service. Official costs only, no bribes
Has road access. The connection works Excludes value added tax
involve the crossing of a road or roads but
are carried out on public land.
Is 150 meters long.
Is a new construction being connected to
Is to either the low-voltage or the medium-
electricity for the first time.
voltage distribution network and either overhead
Has 2 stories, both above ground, with a or underground, whichever is more common in
total surface of about 1,300.6 square the economy and in the area where the
meters (14,000 square feet), and is built on warehouse is located. The length of any
a plot of 929 square meters (10,000 square connection in the customer‘s private domain is
feet). negligible.
The electricity connection: Involves installing one electricity meter. The
monthly electricity consumption will be 0.07
Is a 3-phase, 4-wire Y, 140-kilovolt-ampere
gigawatt-hour (GWh). The internal electrical
(kVA) (subscribed capacity) connection.
wiring has been completed.
Doing Business 2013 Kazakhstan 40
GETTING ELECTRICITY
Where does the economy stand today?
What does it take to obtain a new electricity procedures, takes 88 days and costs 71.1% of income
connection in Kazakhstan? According to data collected per capita (figure 4.1).
by Doing Business, getting electricity there requires 6
Figure 4.1 What it takes to obtain an electricity connection in Kazakhstan
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures
reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 41
GETTING ELECTRICITY
Globally, Kazakhstan stands at 80 in the ranking of 185 regional average ranking provide another perspective
economies on the ease of getting electricity (figure in assessing how easy it is for an entrepreneur in
4.2). The rankings for comparator economies and the Kazakhstan to connect a warehouse to electricity.
Figure 4.2 How Kazakhstan and comparator economies rank on the ease of getting electricity
Source: Doing Business database.
Doing Business 2013 Kazakhstan 42
GETTING ELECTRICITY
Even more helpful than rankings on the ease of getting performers on these indicators may provide useful
electricity may be the indicators underlying those benchmarks.
rankings (table 4.1). And regional and global best
Table 4.1 The ease of getting electricity in Kazakhstan
Best performer in
Best performer
Indicator Kazakhstan DB2013 Kazakhstan DB2012 Eastern Europe &
globally DB2013
Central Asia DB2013
Rank 80 81 Georgia (50) Iceland (1)
Procedures
(number) 6 6 Georgia (4) Germany (3)*
Time (days) 88 88 Kosovo (48) Germany (17)
Cost (% of income
per capita) 71.1 88.4 Lithuania (55.4) Japan (0.0)
Note: DB2012 rankings shown are not last year‘s published rankings but comparable rankings for DB2012 that capture the
effects of such factors as data corrections and the addition of 2 economies (Barbados and Malta) to the sample this year.
* Two or more economies share the top ranking on this indicator. For a list of these economies, see the Doing Business website
(http://www.doingbusiness.org).
Source: Doing Business database.
Doing Business 2013 Kazakhstan 43
GETTING ELECTRICITY
Obtaining an electricity connection is essential to safety in the connection process while keeping
enable a business to conduct its most basic operations. connection costs reasonable, governments around the
In many economies the connection process is world have worked to consolidate requirements for
complicated by the multiple laws and regulations obtaining an electricity connection. What reforms in
involved—covering service quality, general safety, getting electricity has Doing Business recorded in
technical standards, procurement practices and Kazakhstan (table 4.2)?
internal wiring installations. In an effort to ensure
Table 4.2 How has Kazakhstan made getting electricity easier—or not?
By Doing Business report year
DB year Reform
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 44
GETTING ELECTRICITY
What are the details?
The indicators reported here for Kazakhstan are based
OBTAINING AN ELECTRICITY CONNECTION
on a set of specific procedures—the steps that an
entrepreneur must complete to get a warehouse
connected to electricity by the local distribution City: Almaty
utility—identified by Doing Business. Data are collected
from the distribution utility, then completed and
Name of Utility: Alatau Zharyk
verified by electricity regulatory agencies and
independent professionals such as electrical engineers, The procedures are those that apply to a warehouse
electrical contractors and construction companies. The and electricity connection matching the standard
electricity distribution utility surveyed is the one assumptions used by Doing Business in collecting the
serving the area (or areas) in which warehouses are data (see the section in this chapter on what the
located. If there is a choice of distribution utilities, the indicators cover). The procedures, along with the
one serving the largest number of customers is associated time and cost, are summarized below.
selected.
Summary of procedures for getting electricity in Kazakhstan—and the time and cost
Time to
No. Procedure Cost to complete
complete
Submit an application for an electricity connection to the
Department of Architecture and Urban Planning and await technical
conditions
The customer submits an application for the electricity
connection/technical conditions to Almaty Urban Planning and
Architecture Department and awaits issuance of technical conditions.
The technical conditions for electricity are received together with
technical conditions from other utilities (water, gas, etc.). 14 calendar days no charge
1
With the application the customer must submit the following documents:
Application for technical conditions, Documents on property rights,
identification documents, calculation of the required load, topographic
map/survey. The specifications in technical conditions among other
things define the capacity of the existing electricity facilities in the
geographic location where the customer's warehouse is located and
specify which substation or which point in the network is allocated for
the customer.
Await completion and coordination of the electrical project design
by a private electrical design firm and its approval
After the technical conditions are issued the customer hires a private
project design company to prepare a project design of the external 26 calendar days KZT 255,000.0
2
connection and if not available at this point a topographic plan of the
location of the warehouse. The same company on behalf of the
customer obtains an approval of the project at multiple organizations.
The time recorded for this procedure includes time for the preparation of
the project and its coordination/approval.
Doing Business 2013 Kazakhstan 45
Time to
No. Procedure Cost to complete
complete
Obtain an excavation permit at the Department of Architectural and
Urban Planning Supervision in the city of Almaty and Almaty region 7 calendar days no charge
3
The excavation permit is obtained by the electrical contractor.
Await completion of the external connection works by an electrical
contractor
After the electrical design is prepared specially licensed electrical
installation company is hired to complete the external connection works.
The meter is installed by the same electrical contractor. 27 calendar days KZT 750,000.0
4
After the external connection works are over all the installations and the
cable have to be tested. The private company carrying out the external
connection works has to issue a certificate of completion of works and
clear a number of various technical documents (about 28) with various
agencies.
Await and obtain inspection of the external connection works by
Alatau Zharyk and other members of the acceptance committee
The electrical contractor on behalf of the customer submits a written 7 calendar days no charge
5
request for the inspection of the completed external connection works.
The works must be approved by an acceptance committee (members of
the committee include: Alatau Zharyk, Committee on State Energy
Supervision, Customer, electrical contractor).
Conclude a supply contract with supply company and await for the
meter to be sealed by Alatau Zharyk
According to the Law "On Electric Power Industry of the Republic of
Kazakhstan" the electricity supply contract is concluded with the supply 7 calendar days no charge
6
company "AlmatyEnergoSbyt." After signing the contract,
"AlmatyEnergoSbyt" directly notifies the distribution utility "Alatau
Zharyk" without interacting with the client. Once Alatau Zharyk receives
an application for sealing the meter, its representative visits the building
site within 2 days to seal the meter.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 46
REGISTERING PROPERTY
Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY
Effective administration of land is part of that. If
INDICATORS MEASURE
formal property transfer is too costly or
complicated, formal titles might go informal
again. And where property is informal or poorly Procedures to legally transfer title on
administered, it has little chance of being immovable property (number)
accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens,
finance. notarizing sales agreement, paying property
transfer taxes)
What do the indicators cover?
Registration in the economy‘s largest business
Doing Business records the full sequence of city
procedures necessary for a business to purchase
property from another business and transfer the Postregistration (for example, filing title with
the municipality)
property title to the buyer‘s name. The transaction
is considered complete when it is opposable to Time required to complete each procedure
third parties and when the buyer can use the (calendar days)
property, use it as collateral for a bank loan or
Does not include time spent gathering
resell it. The ranking on the ease of registering information
property is the simple average of the percentile
rankings on its component indicators: procedures, Each procedure starts on a separate day
time and cost. Procedure completed once final document is
received
To make the data comparable across economies,
several assumptions about the parties to the No prior contact with officials
transaction, the property and the procedures are
Cost required to complete each procedure
used.
(% of property value)
The parties (buyer and seller):
Official costs only, no bribes
Are limited liability companies, 100% No value added or capital gains taxes included
domestically and privately owned.
Are located in the periurban area of the
economy‘s largest business city. Has no mortgages attached and has been
under the same ownership for the past 10
Have 50 employees each, all of whom are
years.
nationals.
Consists of 557.4 square meters (6,000 square
Perform general commercial activities.
feet) of land and a 10-year-old, 2-story
The property (fully owned by the seller): warehouse of 929 square meters (10,000
Has a value of 50 times income per capita. square feet). The warehouse is in good
The sale price equals the value. condition and complies with all safety
standards, building codes and legal
Is registered in the land registry or requirements. The property will be transferred
cadastre, or both, and is free of title in its entirety.
disputes.
Is located in a periurban commercial zone,
and no rezoning is required.
Doing Business 2013 Kazakhstan 47
REGISTERING PROPERTY
Where does the economy stand today?
What does it take to complete a property transfer in procedures, takes 40 days and costs 0.1% of the
Kazakhstan? According to data collected by Doing property value (figure 5.1).
Business, registering property there requires 4
Figure 5.1 What it takes to register property in Kazakhstan
Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of
the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the
procedures reflected here, see the summary at the end of this chapter.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 48
REGISTERING PROPERTY
Globally, Kazakhstan stands at 28 in the ranking of 185 regional average ranking provide other useful
economies on the ease of registering property (figure information for assessing how easy it is for an
5.2). The rankings for comparator economies and the entrepreneur in Kazakhstan to transfer property.
Figure 5.2 How Kazakhstan and comparator economies rank on the ease of registering property
Source: Doing Business database.
Doing Business 2013 Kazakhstan 49
REGISTERING PROPERTY
What are the changes over time?
While the most recent Doing Business data reflect how of the process have changed—and which have not
easy (or difficult) it is to register property in (table 5.1). That can help identify where the potential
Kazakhstan today, data over time show which aspects for improvement is greatest.
Table 5.1 The ease of registering property in Kazakhstan over time
By Doing Business report year
Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. 28 28
Procedures
(number) 7 7 7 7 4 4 4 4 4
Time (days) 52 52 51 52 39 39 40 40 40
Cost (% of property
value) 1.7 1.4 1.8 0.9 0.1 0.1 0.1 0.1 0.1
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year. For more information on ―no practice‖ marks, see
the data notes.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 50
REGISTERING PROPERTY
Equally helpful may be the benchmarks provided by possible in making it easier to register property. And
the economies that over time have had the best changes in regional averages can show where
performance regionally or globally on the procedures, Kazakhstan is keeping up—and where it is falling
time or cost required to complete a property transfer behind.
(figure 5.3). These benchmarks help show what is
Figure 5.3 Has registering property become easier over time?
Procedures (number)
Time (days)
Doing Business 2013 Kazakhstan 51
REGISTERING PROPERTY
Cost (% of property value)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 52
REGISTERING PROPERTY
Economies worldwide have been making it easier for have cut the time required substantially—enabling
entrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. What
as by computerizing land registries, introducing time property registration reforms has Doing Business
limits for procedures and setting low fixed fees. Many recorded in Kazakhstan (table 5.2)?
Table 5.2 How has Kazakhstan made registering property easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
The new Law on State Registration created a new unified
registry for all lands and buildings and introduced Public
DB2009 Service Centres as competent authorities for property
transactions in the country, reducing the number of procedural
requirements and the time.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business
reports for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 53
REGISTERING PROPERTY
What are the details?
The indicators reported here are based on a set of
STANDARD PROPERTY TRANSFER
specific procedures—the steps that a buyer and
seller must complete to transfer the property to the
buyer‘s name—identified by Doing Business City: Almaty
through information collected from local property Property Value: KZT 70,706,477
lawyers, notaries and property registries. These
procedures are those that apply to a transaction The procedures, along with the associated time and
matching the standard assumptions used by Doing cost, are summarized below.
Business in collecting the data (see the section in
this chapter on what the indicators cover).
Summary of procedures for registering property in Kazakhstan—and the time and cost
Time to
No. Procedure Cost to complete
complete
KZT 22,327 = is
charged for
* Obtain a technical passport of the property inspection of the
land with total area
According to the Decree of the Government of the Republic of of 557.4 sq.m (cost:
Kazakhstan, No. 2121 approving Standards of State Service "Issuance of KZT 5.99/sq.m),
Technical Passport of Real Estate Objects" dated December 15, 2009, a inspection of the
technical passport is issued by Centers for Real Estate or Population 17-21 days non-industrial
1
Service Centers. The detailed Procedure is provided at www.minjust.kz.
warehouse with are
Accordingly, technical passport for immovable property with an area up
of 929 square meters
to one thousand (1,000) sq.m. is provided within fifteen (15) working
(KZT 15.59/ sq.m)
days and for immovable property with an area over one thousand (1,000)
sq.m. - within one month (day of application and issuance are not and the basic fee for
included in the above term). the technical
inspection (KZT
4,413).
* Obtain a non-encumbrance certificate
According to the Decree of the Government of the Republic of
Kazakhstan, No. 2121 dated December 15, 2009 approving Standards of
the State Service "Issuance of Cerificates on Registered Rights
(Encumbrances) to Immovable Property and its Technical
2 Characteristsics", the non-encumbrance certificate is issued via 1-2 days no cost
Population Service Centers. The non-encumbrance certificate is issued
within 3-5 days and is free of change.
There is also an online oprtion available to obtain electronic version of
the certificate from www.e-gov.kz.
Notarization of seller’s and buyer’s incorporation documents and 1 day KZT 16,180+ KZT
3
the sale-purchase agreement 161,8 for
Doing Business 2013 Kazakhstan 54
Time to
No. Procedure Cost to complete
complete
certification of each
According to Article 536, paragraph 1 of the Tax Code No.99-IV dated page of corporate
December 10, 2008, which came into effect January 1, 2009, if at least documents
one of the parties entering into a sale and purchase agreement is a legal
entity, notarization of the transaction shall cost one thousand (1,000)
percent of the monthly calculation index (MCI). As of January 1, 2012,
one MCI equals to KZT 1,618. The cost of certification of copies of
corporate documents is 10% of the MCI per page. As such the notary fee
for certification of the sale-purchase agreement amounts to KZT 16,180
and the fee for certification of each page of the corporate documents
costs KZT 161,8 per page.
Registration of the title at the Registration Service Committee
The Law Amending Legal Acts of the Republic of Kazakhstan on Taxation
on November 12, 2008 established new statutory time limit of 15
working days for the regular Procedure and 2 days for the expedited
Procedure. Other business centers take 7 days for expedited Procedures.
The cost of registration of non-residential premises (both the regular and KZT 16,180 = 10
expedited Procedures) depends on the number of buildings located on times the monthly
the land plot being bought: 15 working days
calculation index
4 • 1 building - 10 x Monthly Index (1,618 for 2012) = KZT 16,180 (regular) and 2 to 7
(regular Procedure)
• 2-5 buildings - 15 x Monthly Index = KZT 24,270 days (expedited)
or 30 MCI, i.e. 48,540
• 6-10 buildings - 20 x Monthly Index = KZT 32,360
(expedited)
The documentation shall include:
• A filled in standard application form;
• 2 original copies of the notarized sale-purchase agreement (obtained in
Procedure 3);
• Non-encumbrance certificate (obtained in Procedure 1);
• Technical passport of the property (obtained in Procedure 2).
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 55
GETTING CREDIT
Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS
credit and improve its allocation: credit information
MEASURE
systems and the legal rights of borrowers and
lenders in collateral and bankruptcy laws. Credit
information systems enable lenders to view a Strength of legal rights index (0–10)
potential borrower‘s financial history (positive or Protection of rights of borrowers and lenders
negative)—valuable information to consider when through collateral laws
assessing risk. And they permit borrowers to Protection of secured creditors‘ rights through
establish a good credit history that will allow easier bankruptcy laws
access to credit. Sound collateral laws enable
businesses to use their assets, especially movable Depth of credit information index (0–6)
property, as security to generate capital—while Scope and accessibility of credit information
strong creditors‘ rights have been associated with distributed by public credit registries and
higher ratios of private sector credit to GDP. private credit bureaus
What do the indicators cover? Public credit registry coverage (% of adults)
Doing Business assesses the sharing of credit Number of individuals and firms listed in
information and the legal rights of borrowers and public credit registry as percentage of adult
lenders with respect to secured transactions population
through 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults)
information index measures rules and practices
Number of individuals and firms listed in
affecting the coverage, scope and accessibility of
largest private credit bureau as percentage of
credit information available through a public credit
adult population
registry or a private credit bureau. The strength of
legal rights index measures whether certain features
that facilitate lending exist within the applicable
collateral and bankruptcy laws. Doing Business uses
case scenarios to determine the scope of the Has 100 employees.
secured transactions system, involving a secured Is 100% domestically owned, as is the lender.
borrower and a secured lender and examining legal
The ranking on the ease of getting credit is based on
restrictions on the use of movable collateral. These
the percentile rankings on the sum of its component
scenarios assume that the borrower:
indicators: the depth of credit information index and
Is a private, limited liability company. the strength of legal rights index.
Has its headquarters and only base of
operations in the largest business city.
Doing Business 2013 Kazakhstan 56
GETTING CREDIT
Where does the economy stand today?
How well do the credit information system and Globally, Kazakhstan stands at 83 in the ranking of 185
collateral and bankruptcy laws in Kazakhstan facilitate economies on the ease of getting credit (figure 6.1).
access to credit? The economy has a score of 5 on the The rankings for comparator economies and the
depth of credit information index and a score of 4 on regional average ranking provide other useful
the strength of legal rights index (see the summary of information for assessing how well regulations and
scoring at the end of this chapter for details). Higher institutions in Kazakhstan support lending and
scores indicate more credit information and stronger borrowing.
legal rights for borrowers and lenders.
Figure 6.1 How Kazakhstan and comparator economies rank on the ease of getting credit
Source: Doing Business database.
Doing Business 2013 Kazakhstan 57
GETTING CREDIT
What are the changes over time?
While the most recent Doing Business data reflect how institutions and regulations have been strengthened —
well the credit information system and collateral and and where they have not (table 6.1). That can help
bankruptcy laws in Kazakhstan support lending and identify where the potential for improvement is
borrowing today, data over time can help show where greatest.
Table 6.1 The ease of getting credit in Kazakhstan over time
By Doing Business report year
Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. 97 83
Strength of legal rights
3 3 3 3 3 3 3 3 4
index (0-10)
Depth of credit
0 0 4 4 5 5 5 5 5
information index (0-6)
Public registry
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
coverage (% of adults)
Private bureau
0.0 0.0 5.5 13.7 25.6 29.5 29.9 37.6 39.3
coverage (% of adults)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 58
GETTING CREDIT
One way to put an economy‘s score on the getting and shows the number of economies with this score in
credit indicators into context is to see where the 2012 as well as the regional average score. Figure 6.3
economy stands in the distribution of scores across shows the same thing for the depth of credit
economies. Figure 6.2 highlights the score on the information index.
strength of legal rights index for Kazakhstan in 2012
Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared—
and lenders? and how widely?
Number of economies with each score on strength of legal Number of economies with each score on depth of credit
rights index (0–10), 2012 information index (0–6), 2012
Note: Higher scores indicate that collateral and bankruptcy Note: Higher scores indicate the availability of more credit
laws are better designed to facilitate access to credit. information, from either a public credit registry or a private
Source: Doing Business database. credit bureau, to facilitate lending decisions. Regional
averages for the depth of credit information index exclude
economies with no public registry or private bureau.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 59
GETTING CREDIT
When economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs‘
and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doing
and increase the scope, coverage and accessibility of Business recorded in Kazakhstan (table 6.2)?
Table 6.2 How has Kazakhstan made getting credit easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
Kazakhstan‘s private credit bureau is adding 2 new suppliers of
information a month, including retailers such as furniture
companies and utilities like the gas company. Coupled to a
DB2009 credit boom, coverage shot up by 80%. Now even consumers
who do not have a bank account or a credit card can build a
credit history, improving their chances to obtain credit in the
future.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
Kazakhstan strengthened its legal framework for secured
DB2013 transactions by introducing new grounds for relief from an
automatic stay during rehabilitation proceedings.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 60
GETTING CREDIT
What are the details?
The getting credit indicators reported here for The data on the legal rights of borrowers and lenders
Kazakhstan are based on detailed information are gathered through a survey of financial lawyers and
collected in that economy. The data on credit verified through analysis of laws and regulations as
information sharing are collected through a survey of a well as public sources of information on collateral and
public credit registry or private credit bureau (if one bankruptcy laws. For the strength of legal rights index,
exists). To construct the depth of credit information a score of 1 is assigned for each of 8 aspects related to
index, a score of 1 is assigned for each of 6 features of legal rights in collateral law and 2 aspects in
the public credit registry or private credit bureau (see bankruptcy law.
summary of scoring below).
Summary of scoring for the getting credit indicators in Kazakhstan
Eastern Europe &
OECD high income
Indicator Kazakhstan Central Asia
average
average
Strength of legal rights index (0-10) 4 7 7
Depth of credit information index (0-6) 5 5 5
Public registry coverage (% of adults) 0.0 31.9 31.5
Private bureau coverage (% of adults) 39.3 44.8 74.6
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once. Regional averages for the depth of credit information index exclude economies with no public registry or private bureau.
Regional averages for the public registry coverage exclude economies with no public registry. Regional averages for the private
bureau coverage exclude economies with no private bureau.
Strength of legal rights index (0–10) Index score: 4
Can any business use movable assets as collateral while keeping possession of the assets;
Yes
and any financial institution accept such assets as collateral ?
Does the law allow businesses to grant a non possessory security right in a single category
Yes
of movable assets, without requiring a specific description of collateral?
Does the law allow businesses to grant a non possessory security right in substantially all of
No
its assets, without requiring a specific description of collateral?
May a security right extend to future or after-acquired assets, and may it extend
No
automatically to the products, proceeds or replacements of the original assets ?
Is a general description of debts and obligations permitted in collateral agreements; can all
types of debts and obligations be secured between parties; and can the collateral agreement No
include a maximum amount for which the assets are encumbered?
Is a collateral registry in operation, that is unified geographically and by asset type, with an
No
electronic database indexed by debtor's names?
Doing Business 2013 Kazakhstan 61
Strength of legal rights index (0–10) Index score: 4
Are secured creditors paid first (i.e. before general tax claims and employee claims) when a
No
debtor defaults outside an insolvency procedure?
Are secured creditors paid first (i.e. before general tax claims and employee claims) when a
No
business is liquidated?
Are secured creditors either not subject to an automatic stay or moratorium on enforcement
procedures when a debtor enters a court-supervised reorganization procedure, or the law Yes
provides secured creditors with grounds for relief from an automatic stay or
Does the law allow parties to agree in a collateral agreement that the lender may enforce its
Yes
security right out of court, at the time a security interest is created?
Private credit Public credit
Depth of credit information index (0–6) Index score: 5
bureau registry
Are data on both firms and individuals distributed? Yes No 1
Are both positive and negative data distributed? Yes No 1
Does the registry distribute credit information from
retailers, trade creditors or utility companies as well No No 0
as financial institutions?
Are more than 2 years of historical credit information
Yes No 1
distributed?
Is data on all loans below 1% of income per capita
Yes No 1
distributed?
Is it guaranteed by law that borrowers can inspect
Yes No 1
their data in the largest credit registry?
Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry.
Coverage Private credit bureau Public credit registry
Number of firms 86,922 0
Number of individuals 4,368,387 0
Source: Doing Business database.
Doing Business 2013 Kazakhstan 62
PROTECTING INVESTORS
Investor protections matter for the ability of WHAT THE PROTECTING INVESTORS
companies to raise the capital they need to grow,
INDICATORS MEASURE
innovate, diversify and compete. If the laws do not
provide such protections, investors may be reluctant
to invest unless they become the controlling Extent of disclosure index (0–10)
shareholders. Strong regulations clearly define Who can approve related-party transactions
related-party transactions, promote clear and efficient
Disclosure requirements in case of related-
disclosure requirements, require shareholder party transactions
participation in major decisions of the company and
set clear standards of accountability for company Extent of director liability index (0–10)
insiders. Ability of shareholders to hold interested
What do the indicators cover? parties and members of the approving body
liable in case of related-party transactions
Doing Business measures the strength of minority
Available legal remedies (damages, repayment
shareholder protections against directors‘ use of
of profits, fines, imprisonment and rescission
corporate assets for personal gain—or self-dealing. of the transaction)
The indicators distinguish 3 dimensions of investor
protections: transparency of related-party Ability of shareholders to sue directly or
transactions (extent of disclosure index), liability for derivatively
self-dealing (extent of director liability index) and Ease of shareholder suits index (0–10)
shareholders‘ ability to sue officers and directors for
Access to internal corporate documents
misconduct (ease of shareholder suits index). The
(directly or through a government inspector)
ranking on the strength of investor protection index is
the simple average of the percentile rankings on Documents and information available during
these 3 indices. To make the data comparable across trial
economies, a case study uses several assumptions Strength of investor protection index (0–10)
about the business and the transaction.
Simple average of the extent of disclosure,
The business (Buyer): extent of director liability and ease of
shareholder suits indices
Is a publicly traded corporation listed on the
economy‘s most important stock exchange (or
at least a large private company with multiple
the company purchase used trucks from another
shareholders).
company he owns.
Has a board of directors and a chief executive
The price is higher than the going price for used
officer (CEO) who may legally act on behalf of
trucks, but the transaction goes forward.
Buyer where permitted, even if this is not
specifically required by law. All required approvals are obtained, and all
required disclosures made, though the transaction
The transaction involves the following details:
is prejudicial to Buyer.
Mr. James, a director and the majority
Shareholders sue the interested parties and the
shareholder of the company, proposes that
members of the board of directors.
Doing Business 2013 Kazakhstan 63
PROTECTING INVESTORS
Where does the economy stand today?
How strong are investor protections in Kazakhstan? index (figure 7.1). While the indicator does not
The economy has a score of 8.0 on the strength of measure all aspects related to the protection of
investor protection index, with a higher score minority investors, a higher ranking does indicate that
indicating stronger protections (see the summary of an economy‘s regulations offer stronger investor
scoring at the end of this chapter for details). protections against self-dealing in the areas measured.
Globally, Kazakhstan stands at 10 in the ranking of 185
economies on the strength of investor protection
Figure 7.1 How Kazakhstan and comparator economies rank on the strength of investor protection index
Source: Doing Business database.
Doing Business 2013 Kazakhstan 64
PROTECTING INVESTORS
What are the changes over time?
While the most recent Doing Business data reflect how the global ranking on the strength of investor
well regulations in Kazakhstan protect minority protection index over time shows whether the
investors today, data over time show whether the economy is slipping behind other economies in
protections have been strengthened (table 7.1). And investor protections—or surpassing them.
Table 7.1 The strength of investor protections in Kazakhstan over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 10 10
Extent of disclosure
7 7 7 7 7 8 9 9
index (0-10)
Extent of director
liability index (0- 1 1 1 1 1 1 6 6
10)
Ease of shareholder
9 9 9 9 9 9 9 9
suits index (0-10)
Strength of
investor protection 5.7 5.7 5.7 5.7 5.7 6.0 8.0 8.0
index (0-10)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 65
PROTECTING INVESTORS
One way to put an economy‘s scores on the protecting shows the number of economies with this score in
investors indicators into context is to see where the 2012 as well as the regional average score. Figure 7.3
economy stands in the distribution of scores across shows the same thing for the extent of director liability
economies. Figure 7.2 highlights the score on the index, and figure 7.4 for the ease of shareholder suits
extent of disclosure index for Kazakhstan in 2012 and index.
Figure 7.2 How strong are disclosure requirements? Figure 7.3 How strong is the liability regime for directors?
Number of economies with each score on extent of
Number of economies with each score on extent of
director liability index (0–10), 2012
disclosure index (0–10), 2012
Note: Higher scores indicate greater liability of directors.
Note: Higher scores indicate greater disclosure.
No economy receives a score of 10 on the extent of
Source: Doing Business database.
director liability index.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 66
PROTECTING INVESTORS
Figure 7.4 How easy is access to internal corporate documents?
Number of economies with each score on ease of
shareholder suits index (0–10), 2012
Note: Higher scores indicate greater powers of shareholders
to challenge the transaction.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 67
PROTECTING INVESTORS
The scores recorded over time for Kazakhstan on the changes over time in the regional average score on
strength of investor protection index may also be this index.
revealing (figure 7.5). Equally interesting may be the
Figure 7.5 Have investor protections become stronger over time?
Strength of investor protection index (0–10)
Note: The higher the score, the stronger the investor protections.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 68
PROTECTING INVESTORS
Economies with the strongest protections of minority time. So reforms to strengthen investor protections
investors from self-dealing require more disclosure may move ahead on different fronts—such as through
and define clear duties for directors. They also have new or amended company laws or civil procedure
well-functioning courts and up-to-date procedural rules. What investor protection reforms has Doing
rules that give minority investors the means to prove Business recorded in Kazakhstan (table 7.2)?
their case and obtain a judgment within a reasonable
Table 7.2 How has Kazakhstan strengthened investor protections—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
Kazakhstan strengthened investor protections by requiring
DB2011
greater corporate disclosure in company annual reports.
Kazakhstan strengthened investor protections by regulating the
approval of transactions between interested parties and making
DB2012
it easier to sue directors in cases of prejudicial transactions
between interested parties.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for
these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 69
PROTECTING INVESTORS
What are the details?
The protecting investors indicators reported here for ease of shareholder suits indices, a score is assigned
Kazakhstan are based on detailed information for each of a range of conditions relating to disclosure,
collected through a survey of corporate and securities director liability and shareholder suits in a standard
lawyers as well as on securities regulations, company case study transaction (see the notes at the end of this
laws and court rules of evidence. To construct the chapter). The summary below shows the details
extent of disclosure, extent of director liability and underlying the scores for Kazakhstan.
Summary of scoring for the protecting investors indicators in Kazakhstan
Eastern Europe &
OECD high income
Indicator Kazakhstan Central Asia
average
average
Extent of disclosure index (0-10) 9 7 6
Extent of director liability index (0-10) 6 5 5
Ease of shareholder suits index (0-10) 9 6 7
Strength of investor protection index (0-10) 8.0 5.9 6.1
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Score Score description
Extent of disclosure index (0-10) 9
What corporate body provides legally sufficient Shareholders meeting and Mr. James
3
approval for the transaction? is not allowed to vote
Whether disclosure of the conflict of interest by Mr.
2 Full disclosure of all material facts
James to the board of directors is required?
Whether immediate disclosure of the transaction to Disclosure on the transaction and Mr.
2
the public and/or shareholders is required? James' conflict of interest
Whether disclosure of the transaction in published
1 Disclosure on the transaction only
periodic filings (annual reports) is required?
Whether an external body must review the terms of
1 Yes
the transaction before it takes place?
Extent of director liability index (0-10) 6
Whether shareholders can sue directly or derivatively
for the damage that the Buyer-Seller transaction 1 Yes
causes to the company?
Doing Business 2013 Kazakhstan 70
Score Score description
Whether shareholders can hold Mr. James liable for Liable for unfair/oppressive
the damage that the Buyer-Seller transaction causes 2 transaction or prejudicial to minority
to the company? shareholders
Whether shareholders can hold members of the
approving body liable for the damage that the Buyer- 1 Liable for negligence
Seller transaction causes to the company?
Whether a court can void the transaction upon a Not possible or only in case of Seller's
0
successful claim by a shareholder plaintiff? fraud or bad faith
Whether Mr. James pays damages for the harm
caused to the company upon a successful claim by 1 Yes
the shareholder plaintiff?
Whether Mr. James repays profits made from the
transaction upon a successful claim by the 1 Yes
shareholder plaintiff?
Whether fines and imprisonment can be applied
0 No
against Mr. James?
Ease of shareholder suits index (0-10) 9
Whether shareholders owning 10% or less of Buyer's
shares can inspect transaction documents before 1 Yes
filing suit?
Whether shareholders owning 10% or less of Buyer's
shares can request an inspector to investigate the 1 Yes
transaction?
Whether the plaintiff can obtain any documents from Any information that may lead to the
4
the defendant and witnesses during trial? discovery of relevant information
Whether the plaintiff can request categories of
documents from the defendant without identifying 0 No
specific ones?
Whether the plaintiff can directly question the
2 Yes, without approval from the judge
defendant and witnesses during trial?
Whether the level of proof required for civil suits is
1 Yes
lower than that of criminal cases?
Strength of investor protection index (0-10) 8.0
Source: Doing Business database.
Doing Business 2013 Kazakhstan 71
PAYING TAXES
Taxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORS
infrastructure and services that are crucial for a MEASURE
properly functioning economy. But the level of tax
rates needs to be carefully chosen—and needless Tax payments for a manufacturing company
complexity in tax rules avoided. According to in 2011 (number per year adjusted for
Doing Business data, in economies where it is more electronic or joint filing and payment)
difficult and costly to pay taxes, larger shares of
economic activity end up in the informal sector — Total number of taxes and contributions paid,
where businesses pay no taxes at all. including consumption taxes (value added tax,
sales tax or goods and service tax)
What do the indicators cover?
Method and frequency of filing and payment
Using a case scenario, Doing Business measures
Time required to comply with 3 major taxes
the taxes and mandatory contributions that a
(hours per year)
medium-size company must pay in a given year as
well as the administrative burden of paying taxes Collecting information and computing the tax
and contributions. This case scenario uses a set of payable
financial statements and assumptions about Completing tax return forms, filing with
transactions made over the year. Information is proper agencies
also compiled on the frequency of filing and
Arranging payment or withholding
payments as well as time taken to comply with tax
laws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, if
the simple average of the percentile rankings on required
its component indicators: number of annual Total tax rate (% of profit before all taxes)
payments, time and total tax rate, with a threshold
1 Profit or corporate income tax
being applied to the total tax rate. To make the
data comparable across economies, several Social contributions and labor taxes paid by
assumptions about the business and the taxes and the employer
contributions are used. Property and property transfer taxes
TaxpayerCo is a medium-size business that Dividend, capital gains and financial
started operations on January 1, 2010. transactions taxes
The business starts from the same financial Waste collection, vehicle, road and other taxes
position in each economy. All the taxes
Taxes and mandatory contributions include
and mandatory contributions paid during
corporate income tax, turnover tax and all
the second year of operation are recorded.
labor taxes and contributions paid by the
Taxes and mandatory contributions are company.
measured at all levels of government.
A range of standard deductions and
exemptions are also recorded.
1
The threshold is defined as the highest total tax rate among the top 15% of economies in the ranking on the total tax rate. It is calculated and
adjusted on a yearly basis. The threshold is not based on any economic theory of an ―optimal tax rate‖ that min imizes distortions or maximizes
efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates
levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the
indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company
because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than
manufacturing or from natural resources (all of which are outside the scope of the methodology). This year‘s threshold is 25.7%.
Doing Business 2013 Kazakhstan 72
PAYING TAXES
Where does the economy stand today?
What is the administrative burden of complying with Globally, Kazakhstan stands at 17 in the ranking of 185
taxes in Kazakhstan—and how much do firms pay in economies on the ease of paying taxes (figure 8.1). The
taxes? On average, firms make 7 tax payments a year, rankings for comparator economies and the regional
spend 188 hours a year filing, preparing and paying average ranking provide other useful information for
taxes and pay total taxes amounting to 28.6% of profit assessing the tax compliance burden for businesses in
(see the summary at the end of this chapter for Kazakhstan.
details).
Figure 8.1 How Kazakhstan and comparator economies rank on the ease of paying taxes
Note: DB2013 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of
25.7% applied in DB2013, the total tax rate is set at 25.7% for the purpose of calculating the ranking on the ease of paying
taxes.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 73
PAYING TAXES
What are the changes over time?
While the most recent Doing Business data reflect how of the process have changed — and which have not
easy (or difficult) it is to comply with tax rules in (table 8.1). That can help identify where the potential
Kazakhstan today, data over time show which aspects for easing tax compliance is greatest.
Table 8.1 The ease of paying taxes in Kazakhstan over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 16 17
Payments (number per
8 8 8 8 8 7 7 7
year)
Time (hours per year) 271 271 271 271 271 271 188 188
Total tax rate (% profit) 43.1 43.1 40.3 40.5 34.7 28.6 28.6 28.6
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year. DB2013 rankings reflect changes to the
methodology. For all economies with a total tax rate below the threshold of 25.7% applied in DB2013, the total tax rate is set at
25.7% for the purpose of calculating the ranking on the ease of paying taxes.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 74
PAYING TAXES
Equally helpful may be the benchmarks provided by possible in easing the administrative burden of tax
the economies that over time have had the best compliance. And changes in regional averages can
performance regionally or globally on the number of show where Kazakhstan is keeping up—and where it is
payments or the time required to prepare and file falling behind.
taxes (figure 8.2). These benchmarks help show what is
Figure 8.2 Has paying taxes become easier over time?
Payments (number per year)
Time (hours per year)
Doing Business 2013 Kazakhstan 75
PAYING TAXES
Total tax rate (% of profit)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 76
PAYING TAXES
Economies around the world have made paying taxes concrete results. Some economies simplifying tax
faster and easier for businesses—such as by payment and reducing rates have seen tax revenue
consolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded in
payments or offering electronic filing and payment. Kazakhstan (table 8.2)?
Many have lowered tax rates. Changes have brought
Table 8.2 How has Kazakhstan made paying taxes easier—or not?
By Doing Business report year
DB year Reform
Kazakhstan made paying taxes easier by lowering sanctions for
DB2008
late payments of taxes.
DB2009 No reform as measured by Doing Business.
Kazakhstan reduced the tax burden on companies by reducing
DB2010 the social tax for 2008 and by reducing the corporate income
tax rate from 30% to 10% for 2009.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 77
PAYING TAXES
What are the details?
The indicators reported here for Kazakhstan are
LOCATION OF STANDARDIZED COMPANY
based on a standard set of taxes and contributions
that would be paid by the case study company
used by Doing Business in collecting the data (see City: Almaty
the section in this chapter on what the indicators
cover). Tax practitioners are asked to review
standard financial statements as well as a standard
list of transactions that the company completed
The taxes and contributions paid are listed in the
during the year. Respondents are asked how much
summary below, along with the associated number of
in taxes and mandatory contributions the business
payments, time and tax rate.
must pay and what the process is for doing so.
Summary of tax rates and administrative burden in Kazakhstan
Eastern Europe &
OECD high income
Indicator Kazakhstan Central Asia
average
average
Payments (number per year) 7 28 12
Time (hours per year) 188 260 176
Profit tax (%) 15.9 9.1 15.2
Labor tax and contributions (%) 11.2 22.1 23.8
Other taxes (%) 1.6 9.3 3.7
Total tax rate (% profit) 28.6 40.5 42.7
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Total tax
Tax or mandatory Payments Notes on Time Statutory Notes on
Tax base rate (% of
contribution (number) payments (hours) tax rate total tax rate
profit)
taxable
Corporate income tax 1 online filing 75 20% 15.9
profit
gross
salaries less
obligatory
Social Tax 1 online filing 70 11% 11.2
pension
contributio
ns
Doing Business 2013 Kazakhstan 78
Total tax
Tax or mandatory Payments Notes on Time Statutory Notes on
Tax base rate (% of
contribution (number) payments (hours) tax rate total tax rate
profit)
property
online filing annual
Property tax 0 0 2% 1.4
and paid jointly average net
book value
fuel and
waste
Environment pollution fee 1 online filing 0 KZT 998 0.1
consumptio
n
KZT 28.95
Land tax 1 online filing 0 per square land area 0.1
meter
carrying
Vehicle tax 1 online filing 0 9 MCI 0.1
capacity
KZT 500 per number of
Fuel tax 1 0 0 small amount
1 liter tone liters
Value added tax (VAT) 1 online filing 43 12% value added 0 not included
Totals 7 188 28.6
Source: Doing Business database.
Doing Business 2013 Kazakhstan 79
TRADING ACROSS BORDERS
In today‘s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS
economies easier is increasingly important for
INDICATORS MEASURE
business. Excessive document requirements,
burdensome customs procedures, inefficient port
operations and inadequate infrastructure all lead to Documents required to export and import
extra costs and delays for exporters and importers, (number)
stifling trade potential. Research shows that Bank documents
exporters in developing countries gain more from
Customs clearance documents
a 10% drop in their trading costs than from a
similar reduction in the tariffs applied to their Port and terminal handling documents
products in global markets. Transport documents
What do the indicators cover? Time required to export and import (days)
Doing Business measures the time and cost Obtaining, filling out and submitting all the
(excluding tariffs and the time and cost for sea documents
transport) associated with exporting and importing
Inland transport and handling
a standard shipment of goods by sea transport,
and the number of documents necessary to Customs clearance and inspections
complete the transaction. The indicators cover Port and terminal handling
procedural requirements such as documentation
Does not include sea transport time
requirements and procedures at customs and other
regulatory agencies as well as at the port. They also Cost required to export and import (US$ per
cover trade logistics, including the time and cost of container)
inland transport to the largest business city. The
All documentation
ranking on the ease of trading across borders is
the simple average of the percentile rankings on its Inland transport and handling
component indicators: documents, time and cost Customs clearance and inspections
to export and import.
Port and terminal handling
To make the data comparable across economies,
Official costs only, no bribes
Doing Business uses several assumptions about the
business and the traded goods.
The business:
Is of medium size and employs 60 people. Do not require refrigeration or any other
special environment.
Is located in the periurban area of the
economy‘s largest business city. Do not require any special phytosanitary or
environmental safety standards other than
Is a private, limited liability company,
accepted international standards.
domestically owned, formally registered
and operating under commercial laws and Are one of the economy‘s leading export or
regulations of the economy. import products.
The traded goods: Are transported in a dry-cargo, 20-foot full
container load.
Are not hazardous nor do they include
military items.
Doing Business 2013 Kazakhstan 80
TRADING ACROSS BORDERS
Where does the economy stand today?
What does it take to export or import in Kazakhstan? Globally, Kazakhstan stands at 182 in the ranking of
According to data collected by Doing Business, 185 economies on the ease of trading across borders
exporting a standard container of goods requires 9 (figure 9.1). The rankings for comparator economies
documents, takes 81 days and costs $4685. Importing and the regional average ranking provide other useful
the same container of goods requires 12 documents, information for assessing how easy it is for a business
takes 69 days and costs $4665 (see the summary of in Kazakhstan to export and import goods.
procedures and documents at the end of this chapter
for details).
Figure 9.1 How Kazakhstan and comparator economies rank on the ease of trading across borders
Source: Doing Business database.
Doing Business 2013 Kazakhstan 81
TRADING ACROSS BORDERS
What are the changes over time?
While the most recent Doing Business data reflect how process have changed—and which have not (table 9.1).
easy (or difficult) it is to export or import in Kazakhstan That can help identify where the potential for
today, data over time show which aspects of the improvement is greatest.
Table 9.1 The ease of trading across borders in Kazakhstan over time
By Doing Business report year
Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. 178 182
Documents to export
10 10 10 10 10 9 9 9
(number)
Time to export (days) 89 89 89 89 84 76 76 81
Cost to export (US$ per
2,730 2,730 2,730 3,005 3,005 3,005 3,130 4,685
container)
Documents to import
13 13 13 13 13 12 12 12
(number)
Time to import (days) 76 76 76 76 71 62 62 69
Cost to import (US$ per
2,780 2,780 2,780 3,055 3,055 3,055 3,290 4,665
container)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects o f such factors as data corrections and
the addition of 2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 82
TRADING ACROSS BORDERS
Equally helpful may be the benchmarks provided by These benchmarks help show what is possible in
the economies that over time have had the best making it easier to trade across borders. And changes
performance regionally or globally on the documents, in regional averages can show where Kazakhstan is
time or cost required to export or import (figure 9.2). keeping up—and where it is falling behind.
Figure 9.2 Has trading across borders become easier over time?
Documents to export (number)
Time to export (days)
Doing Business 2013 Kazakhstan 83
TRADING ACROSS BORDERS
Cost to export (US$ per container)
Documents to import (number)
Doing Business 2013 Kazakhstan 84
TRADING ACROSS BORDERS
Time to import (days)
Cost to import (US$ per container)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 85
TRADING ACROSS BORDERS
In economies around the world, trading across borders systems. These changes help improve the trading
as measured by Doing Business has become faster and environment and boost firms‘ international
easier over the years. Governments have introduced competitiveness. What trade reforms has Doing
tools to facilitate trade—including single windows, Business recorded in Kazakhstan (table 9.2)?
risk-based inspections and electronic data interchange
Table 9.2 How has Kazakhstan made trading across borders easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
Kazakhstan speeded up trade through efforts to modernize
DB2011 customs, including implementation of a risk management
system and improvements in customs automation.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 86
TRADING ACROSS BORDERS
What are the details?
The indicators reported here for Kazakhstan are
LOCATION OF STANDARDIZED COMPANY
based on a set of specific procedural requirements
for trading a standard shipment of goods by ocean
transport (see the section in this chapter on what City: Almaty
the indicators cover). Information on the
procedures as well as the required documents and
the time and cost to complete each procedure is The procedural requirements, and the associated time
collected from local freight forwarders, shipping and cost, for exporting and importing a standard
lines, customs brokers, port officials and banks. shipment of goods are listed in the summary below,
along with the required documents.
Summary of procedures and documents for trading across borders in Kazakhstan
Eastern Europe &
OECD high income
Indicator Kazakhstan Central Asia
average
average
Documents to export (number) 9 7 4
Time to export (days) 81 26 10
Cost to export (US$ per container) 4,685 2,134 1,028
Documents to import (number) 12 8 5
Time to import (days) 69 29 10
Cost to import (US$ per container) 4,665 2,349 1,080
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Procedures to export Time (days) Cost (US$)
Documents preparation 21 330
Customs clearance and technical control 9 425
Ports and terminal handling 5 330
Inland transportation and handling 46 3,600
Totals 81 4,685
Procedures to import Time (days) Cost (US$)
Documents preparation 21 310
Doing Business 2013 Kazakhstan 87
Procedures to import Time (days) Cost (US$)
Customs clearance and technical control 9 425
Ports and terminal handling 4 330
Inland transportation and handling 35 3,600
Totals 69 4,665
Documents to export Documents to import
Bill of lading Bill of lading
Certificate of conformity Cargo release order
Certificate of Origin Certificate of conformity
Commercial invoice Certificate of origin
Customs export declaration Commercial invoice
Packing list Customs import declaration
Railway bill (Transport document) Inspection report
Terminal handling receipts Packing list
Transit application/document Railway bill (Transport document)
Source: Doing Business database. Technical standard certificate
Terminal handling receipts
Transit document
Doing Business 2013 Kazakhstan 88
ENFORCING CONTRACTS
Well-functioning courts help businesses expand WHAT THE ENFORCING CONTRACTS
their network and markets. Without effective
INDICATORS MEASURE
contract enforcement, people might well do
business only with family, friends and others with
whom they have established relationships. Where Procedures to enforce a contract through
contract enforcement is efficient, firms are more the courts (number)
likely to engage with new borrowers or customers, Any interaction between the parties in a
and they have greater access to credit. commercial dispute, or between them and
the judge or court officer
What do the indicators cover?
Steps to file and serve the case
Doing Business measures the efficiency of the
judicial system in resolving a commercial dispute Steps for trial and judgment
before local courts. Following the step-by-step Steps to enforce the judgment
evolution of a standardized case study, it collects
Time required to complete procedures
data relating to the time, cost and procedural
(calendar days)
complexity of resolving a commercial lawsuit. The
ranking on the ease of enforcing contracts is the Time to file and serve the case
simple average of the percentile rankings on its Time for trial and obtaining judgment
component indicators: procedures, time and cost.
Time to enforce the judgment
The dispute in the case study involves the breach
of a sales contract between 2 domestic businesses. Cost required to complete procedures (% of
The case study assumes that the court hears an claim)
expert on the quality of the goods in dispute. This No bribes
distinguishes the case from simple debt
Average attorney fees
enforcement. To make the data comparable across
economies, Doing Business uses several Court costs
assumptions about the case: Enforcement costs
The seller and buyer are located in the
economy‘s largest business city.
The buyer orders custom-made goods,
The dispute on the quality of the goods
then fails to pay.
requires an expert opinion.
The seller sues the buyer before a
The judge decides in favor of the seller; there
competent court.
is no appeal.
The value of the claim is 200% of income
The seller enforces the judgment through a
per capita.
public sale of the buyer‘s movable assets.
The seller requests a pretrial attachment to
secure the claim.
Doing Business 2013 Kazakhstan 89
ENFORCING CONTRACTS
Where does the economy stand today?
How efficient is the process of resolving a commercial Globally, Kazakhstan stands at 28 in the ranking of 185
dispute through the courts in Kazakhstan? According economies on the ease of enforcing contracts (figure
to data collected by Doing Business, enforcing a 10.1). The rankings for comparator economies and the
contract takes 370 days, costs 22.0% of the value of regional average ranking provide other useful
the claim and requires 37 procedures (see the benchmarks for assessing the efficiency of contract
summary at the end of this chapter for details). enforcement in Kazakhstan.
Figure 10.1 How Kazakhstan and comparator economies rank on the ease of enforcing contracts
Source: Doing Business database.
Doing Business 2013 Kazakhstan 90
ENFORCING CONTRACTS
What are the changes over time?
While the most recent Doing Business data reflect how over time help identify which areas have changed and
easy (or difficult) it is to enforce a contract in where the potential for improvement is greatest (table
Kazakhstan today, data on the underlying indicators 10.1).
Table 10.1 The ease of enforcing contracts in Kazakhstan over time
By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. .. 28 28
Time (days) 410 410 390 390 390 390 390 390 370 370
Cost (% of claim) 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0 22.0
Procedures (number) 41 41 37 37 37 37 37 37 37 37
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last year‘s
published rankings but comparable rankings for DB2012 that capture the effects of such factors as data corrections and the addition of
2 economies (Barbados and Malta) to the sample this year.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 91
ENFORCING CONTRACTS
Equally helpful may be the benchmarks provided by help show what is possible in improving the efficiency
the economies that over time have had the best of contract enforcement. And changes in regional
performance regionally or globally on the number of averages can show where Kazakhstan is keeping up—
steps, time or cost required to enforce a contract and where it is falling behind.
through the courts (figure 10.2). These benchmarks
Figure 10.2 Has enforcing contracts become easier over time?
Time (days)
Cost (% of claim)
Doing Business 2013 Kazakhstan 92
ENFORCING CONTRACTS
Procedures (number)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 93
ENFORCING CONTRACTS
Economies in all regions have improved contract periodic reviews to clear inactive cases from the docket
enforcement in recent years. A judiciary can be and by making procedures faster. What reforms
improved in different ways. Higher-income economies making it easier (or more difficult) to enforce contracts
tend to look for ways to enhance efficiency by has Doing Business recorded in Kazakhstan (table
introducing new technology. Lower-income economies 10.2)?
often work on reducing backlogs by introducing
Table 10.2 How has Kazakhstan made enforcing contracts easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
DB2013 No reform as measured by Doing Business.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 94
ENFORCING CONTRACTS
What are the details?
The indicators reported here for Kazakhstan are
COMPETENT COURT
based on a set of specific procedural steps
required to resolve a standardized commercial
dispute through the courts (see the section in this City: Almaty
chapter on what the indicators cover). These
procedures, and the time and cost of completing The procedures for resolving a commercial lawsuit, and
them, are identified through study of the codes of the associated time and cost, are listed in the summary
civil procedure and other court regulations, as well below.
as through surveys completed by local litigation
lawyers (and, in a quarter of the economies
covered by Doing Business, by judges as well).
Summary of procedures for enforcing a contract in Kazakhstan—and the time and cost
Eastern Europe &
OECD high income
Indicator Kazakhstan Central Asia
average
average
Time (days) 370 414 510
Filing and service 15
Trial and judgment 135
Enforcement of judgment 220
Cost (% of claim) 22.0 25.8 20.1
Attorney cost (% of claim) 8.5
Court cost (% of claim) 3.5
Enforcement Cost (% of claim) 10.0
Procedures (number) 37 37 31
Note: In cases where an economy‘s regional classification is ―OECD high income,‖ regional averages above are only displayed
once.
Doing Business 2013 Kazakhstan 95
ENFORCING CONTRACTS
No. Procedure
Filing and service:
1 Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the contract.
2 Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to represent him before the court.
Plaintiff’s filing of summons and complaint: Plaintiff files his summons and complaint with the court, orally or in
*
writing.
* Plaintiff’s payment of court fees: Plaintiff pays court duties, stamp duties, or any other type of court fee.
Registration of court case: The court administration registers the lawsuit or court case. This includes assigning a
3
reference number to the lawsuit or court case.
Assignment of court case to a judge: The court case is assigned to a specific judge through a random procedure,
*
automated system, ruling of an administrative judge, court officer, etc.
Court scrutiny of summons and complaint: A judge examines Plaintiff's summons and complaint for formal
4
requirements.
Judge admits summons and complaint: After verifying the formal requirements, the judge decides to admit
*
Plaintiff‘s summons and complaint.
5 Court order for service: Upon Plaintiff‘s request, judge orders process be served on Defendant.
Delivery of summons and complaint to person authorized to perform service of process on Defendant: The
6 judge or a court officer delivers the summons to a summoning office, officer, or authorized person (including
Plaintiff), for service of process on Defendant.
Mailing of summons and complaint: Court or process server, including (private) bailiff, mails summons and
*
complaint to Defendant.
First attempt at physical delivery: A first attempt to physically deliver summons and complaint to Defendant is
7
successful in the majority of cases.
Second attempt at physical delivery: If a first attempt was not successful, a second attempt to physically deliver
8
the summons and complaint to Defendant is required by law or standard practice.
* Proof of service: Plaintiff submits proof of service to court.
Application for pre-judgment attachment: Plaintiff submits an application in writing for the attachment of
*
Defendant's property prior to judgment. (see assumption 5)
Decision on pre-judgment attachment: The judge decides whether to grant Plaintiff‘s request for pre-judgment
* attachment of Defendant‘s property and notifies Plaintiff and Defendant of the decision. This step may include
requesting that Plaintiff submit guarantees or bonds to secure Defendant
Pre-judgment attachment.: Defendant's property is attached prior to judgment. Attachment is either physical or
9
achieved by registering, marking, debiting or separating assets. (see assumption 5)
Doing Business 2013 Kazakhstan 96
No. Procedure
Custody of assets attached prior to judgment: Defendant's attached assets are put under enforcement officer's or
10
(private) bailiff's care. (see assumption 5)
Report on pre-judgment attachment: Court enforcement officer or (private) bailiff issues and delivers a report on
11
the attachment of Defendant‘s property to the judge. (see assumption 5)
Trial and judgment:
Defendant’s filing of preliminary exemptions: Defendant presents preliminary exemptions to the court.
* Preliminary exemptions differ from answers on the merits of the claim. Examples of preliminary exemptions are
statute of limitations, jurisdictions, etc.
Defendant’s filing of defense or answer to Plaintiff’s claim: Defendant files a written pleading which includes his
12 defense or answer on the merits of the case. Defendant's written answer may or may not include witness statements,
expert statements, the documents Defendant relies on as evidence and the legal authori
Deadline for Plaintiff to answer Defendant's defense or answer: Judge sets the deadline by which Plaintiff will be
13
allowed to answer Defendant's defense or answer.
Plaintiff’s written response to Defendant's defense or answer: Plaintiff responds to Defendant‘s defense or
14 answer with a written pleading. Plaintiff's answer may or may not include a witness statements or expert (witness)
statements.
Filing of pleadings: Plaintiff and Defendant file written pleadings and submissions with the court and transmit
15 copies of the written pleadings or submissions to one another. The pleadings may or may not include witness
statements or expert (witness) statements.
Adjournments: Court procedure is delayed because one or both parties request and obtain an adjournment to
16
submit written pleadings.
17 Framing of issues: Plaintiff and Defendant assist the court in framing issues on which evidence is to be presented.
Court appointment of independent expert: Judge appoints, either at the parties' request or at his own initiative,
* an independent expert to decide whether the quality of the goods Plaintiff delivered to Defendant is adequate. (see
assumption 6-b of this case)
Notification of court-appointment of independent expert: The court notifies both parties that the court is
18
appointing an independent expert. (see assumption 6-b of this case)
Delivery of expert report by court-appointed expert: The independent expert appointed by the court delivers his
*
or her expert report to the court. (see assumption 6-b of this case)
Pre-trial conference on procedure: The judge meets with the parties to discuss procedural issues (for example
19 which applications and motions parties intend to file, which documents parties intend to rely on, what will be
presented as evidence the oral hearing or trial, etc.)
Setting of date for mediation hearing: The judge sets a date for a mediation hearing, sometimes also called a
*
'pre-trial conference,' and notifies the parties of the hearing date.
Mediation hearing: The judge during this informal meeting with the parties encourages them to settle the case. The
20 judge acts as mediator. If the case cannot be settled, the judge may draft a pre-trial conference report, after which
the case may be allocated to another judg
* Setting of date(s) for oral hearing or trial: The judge sets the date(s) for the oral hearing or trial.
Doing Business 2013 Kazakhstan 97
No. Procedure
* List of (expert) witnesses: The parties file a list of (expert) witnesses with the court. (see assumption 6-a)
Summoning of (expert) witnesses: The court summons (expert) witnesses to appear in court for the oral hearing
21
or trial. (see assumption 6-a)
Oral hearing (prevalent in civil law): The parties argue the merits of the case at an oral hearing before the judge.
22
Witnesses and a court-appointed independent expert may be heard and questioned at the oral hearing.
Adjournments: Court proceedings are delayed because one or both parties request and obtain an adjournment
23
during the oral hearing or trial, resulting in an additional or later trial or hearing date.
Final arguments: The parties present their final factual and legal arguments to the court either by oral presentation
*
or by a written submission.
24 Judgment date: The judge sets a date for delivery of the judgment.
25 Notification of judgment in court: The parties are notified of the judgment at a court hearing.
26 Writing of judgment: The judge produces a written copy of the judgment.
27 Registration of judgment: The court office registers the judgment after receiving a written copy of the judgment.
28 Plaintiff's receipt of a copy of written judgment: Plaintiff receives a copy of the written judgment.
Notification of Defendant of judgment: Plaintiff or court formally notifies the Defendant of the judgment. The
29
appeal period starts to run the day the Defendant is formally notified of the judgment.
Appeal period: By law, Defendant has the opportunity to appeal the judgment during a period specified in the law.
30
Defendant decides not to appeal. Judgment becomes final the day the appeal period ends.
Reimbursement by Defendant of Plaintiff's court fees: The judgment obliges Defendant to reimburse Plaintiff for
31
the court fees Plaintiff has advanced, because Defendant has lost the case.
Enforcement of judgment:
Plaintiff’s request for enforcement order: Plaintiff applies to the court to obtain the enforcement order ('seal' on
*
judgment).
Attachment of enforcement order to judgment: The judge attaches the enforcement order (‗seal‘) to the
32
judgment.
Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer or a
*
(private) bailiff.
Request to Defendant to comply voluntarily with judgment: Plaintiff, a court enforcement officer or a (private)
33 bailiff requests Defendant to voluntarily comply with the judgment, giving Defendant a last chance to comply
voluntarily with the judgment.
Identification of Defendant's assets for attachment by court official or Defendant: Judge, a court enforcement
34
officer, a (private) bailiff or the Defendant himself identifies Defendant's movable assets for attachment.
35 Attachment: Defendant‘s movable goods are attached (physically or by registering, marking or separating assets).
Valuation or appraisal of attached movable goods: The court or court appointed valuation expert evaluates the
36
attached goods.
Doing Business 2013 Kazakhstan 98
No. Procedure
37 Sale through public auction: The Defendant‘s movable property is sold at public auction.
Distribution of proceeds: The proceeds of the public auction are distributed to various creditors (including
38
Plaintiff), according to the rules of priority.
* Takes place simultaneously with another procedure.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 99
RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY
ensuring the survival of economically efficient
companies and reallocating the resources of INDICATORS MEASURE
inefficient ones. Fast and cheap insolvency
proceedings result in the speedy return of Time required to recover debt (years)
businesses to normal operation and increase
Measured in calendar years
returns to creditors. By improving the expectations
of creditors and debtors about the outcome of Appeals and requests for extension are
insolvency proceedings, well-functioning included
insolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’s
save more viable businesses and thereby improve estate)
growth and sustainability in the economy overall.
Measured as percentage of estate value
What do the indicators cover?
Court fees
Doing Business studies the time, cost and outcome Fees of insolvency administrators
of insolvency proceedings involving domestic
entities. It does not measure insolvency Lawyers‘ fees
proceedings of individuals and financial Assessors‘ and auctioneers‘ fees
institutions. The data are derived from survey
Other related fees
responses by local insolvency practitioners and
verified through a study of laws and regulations as Recovery rate for creditors (cents on the
well as public information on bankruptcy systems. dollar)
The ranking on the ease of resolving insolvency is Measures the cents on the dollar recovered
based on the recovery rate, which is recorded as by creditors
cents on the dollar recouped by creditors through Present value of debt recovered
reorganization, liquidation or debt enforcement
Official costs of the insolvency proceedings
(foreclosure) proceedings. The recovery rate is a
are deducted
function of time, cost and other factors, such as
lending rate and the likelihood of the company Depreciation of furniture is taken into
continuing to operate. account
To make the data comparable across economies, Outcome for the business (survival or not)
Doing Business uses several assumptions about the affects the maximum value that can be
recovered
business and the case. It assumes that the
company:
Is a domestically owned, limited liability
company operating a hotel.
Has 201 employees, 1 main secured creditor
Operates in the economy‘s largest business and 50 unsecured creditors.
city.
Has a higher value as a going concern—and
the efficient outcome is either reorganization
or sale as a going concern, not piecemeal
liquidation.
Doing Business 2013 Kazakhstan 100
RESOLVING INSOLVENCY
Where does the economy stand today?
Speed, low costs and continuation of viable businesses piecemeal sale. The average recovery rate is 43.1 cents
characterize the top-performing economies. How on the dollar.
efficient are insolvency proceedings in Kazakhstan?
Globally, Kazakhstan stands at 55 in the ranking of 185
According to data collected by Doing Business,
economies on the ease of resolving insolvency (figure
resolving insolvency takes 1.5 years on average and
11.1). The rankings for comparator economies and the
costs 15% of the debtor‘s estate, with the most likely
regional average ranking provide other useful
outcome being that the company will be sold as
benchmarks for assessing the efficiency of insolvency
proceedings in Kazakhstan.
Figure 11.1 How Kazakhstan and comparator economies rank on the ease of resolving insolvency
Source: Doing Business database.
Doing Business 2013 Kazakhstan 101
RESOLVING INSOLVENCY
What are the changes over time?
While the most recent Doing Business data reflect the changed—and where it has not (table 11.1). That can
efficiency of insolvency proceedings in Kazakhstan help identify where the potential for improvement is
today, data over time show where the efficiency has greatest.
Table 11.1 The ease of resolving insolvency in Kazakhstan over time
By Doing Business report year
Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013
Rank .. .. .. .. .. .. .. .. 55 55
Time (years) 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5
Cost (% of estate) 15 15 15 15 15 15 15 15 15 15
Recovery rate
(cents on the 30.3 30.3 36.4 39.3 39.1 40.6 40.6 43.3 42.7 43.1
dollar)
Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings shown are not last
year‘s published rankings but comparable rankings for DB2012 that capture the effects of such factors as data correction s and the
addition of 2 economies (Barbados and Malta) to the sample this year. ―No practice‖ indicates that in each of the previous 5 years
the economy had no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This
means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for
―no practice‖ economies is 0.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 102
RESOLVING INSOLVENCY
Equally helpful may be the benchmarks provided by possible in improving the efficiency of insolvency
the economies that over time have had the best proceedings. And changes in regional averages can
performance regionally or globally on the time or cost show where Kazakhstan is keeping up—and where it is
of insolvency proceedings or on the recovery rate falling behind.
(figure 11.2). These benchmarks help show what is
Figure 11.2 Has resolving insolvency become easier over time?
Time (years)
Cost (% of estate)
Doing Business 2013 Kazakhstan 103
RESOLVING INSOLVENCY
Recovery rate (cents on the dollar)
Note: Regional averages on time and cost exclude economies with a “no practice�? mark.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 104
RESOLVING INSOLVENCY
A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have
companies that are financially distressed but been aimed at helping more of the viable businesses
economically viable from inefficient companies that survive. What insolvency reforms has Doing Business
should be liquidated. But in some insolvency systems recorded in Kazakhstan (table 11.2)?
even viable businesses are liquidated. This is starting to
Table 11.2 How has Kazakhstan made resolving insolvency easier—or not?
By Doing Business report year
DB year Reform
DB2008 No reform as measured by Doing Business.
DB2009 No reform as measured by Doing Business.
DB2010 No reform as measured by Doing Business.
DB2011 No reform as measured by Doing Business.
DB2012 No reform as measured by Doing Business.
Kazakhstan strengthened its insolvency process by introducing
an accelerated rehabilitation proceeding, extending the period
for rehabilitation, expanding the powers of and improving
qualification requirements for insolvency administrators,
DB2013 changing requirements for bankruptcy filings, extending the
rights of creditors, changing regulations related to the
continuation of operations, introducing a time limit for
adopting a rehabilitation plan and adding court supervision
requirements.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 105
EMPLOYING WORKERS
Doing Business measures flexibility in the regulation of Particular data for Kazakhstan are presented here
employment, specifically as it affects the hiring and without scoring.
redundancy of workers and the rigidity of working
hours. From 2007 to 2011 improvements were made to To make the data on employing workers comparable
align the methodology for the employing workers across economies, several assumptions about the
indicators with the letter and spirit of the International worker and the business are used.
Labour Organization (ILO) conventions. Only 4 of the
188 ILO conventions cover areas measured by Doing The worker:
Business: employee termination, weekend work,
holiday with pay and night work. The Doing Business Earns a salary plus benefits equal to the
methodology is fully consistent with these 4 economy‘s average wage during the entire
conventions. The ILO conventions covering areas period of his employment.
related to the employing workers indicators do not Has a pay period that is the most common for
include the ILO core labor standards—8 conventions workers in the economy.
covering the right to collective bargaining, the Is a lawful citizen who belongs to the same
elimination of forced labor, the abolition of child labor race and religion as the majority of the
and equitable treatment in employment practices. economy‘s population.
Resides in the economy‘s largest business city.
Between 2009 and 2011 the World Bank Group worked
Is not a member of a labor union, unless
with a consultative group—including labor lawyers,
membership is mandatory.
employer and employee representatives, and experts
from the ILO, the Organisation for Economic Co-
The business:
operation and Development, civil society and the
private sector—to review the employing workers
Is a limited liability company.
methodology and explore future areas of research.
Operates in the economy‘s largest business
city.
A full report with the conclusions of the consultative
Is 100% domestically owned.
group is available at http://www.doingbusiness.org/
Operates in the manufacturing sector.
methodology/employing-workers.
Has 60 employees.
Is subject to collective bargaining agreements
Doing Business 2013 does not present rankings of
in economies where such agreements cover
economies on the employing workers indicators or
more than half the manufacturing sector and
include the topic in the aggregate ranking on the ease
apply even to firms not party to them.
of doing business. The report does present the data on
Abides by every law and regulation but does
the employing workers indicators in an annex. Detailed
not grant workers more benefits than
data collected on labor regulations are available on the
mandated by law, regulation or (if applicable)
Doing Business website (http://www.doing business.org).
collective bargaining agreement.
Doing Business 2013 Kazakhstan 106
EMPLOYING WORKERS
What do some of the data show?
One of the employing workers indicators is the worker in his or her first job. Doing Business data show
difficulty of hiring index. This measure assesses, among the trend in the minimum wage applied by Kazakhstan
other things, the minimum wage for a 19-year-old (figure 12.1).
Figure 12.1 Has the minimum wage for a 19-year-old worker or an apprentice increased over time?
Minimum wage (US$ per month)
Note: A horizontal line along the x-axis of the figure indicates that the economy has no minimum wage.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 107
EMPLOYING WORKERS
Employment laws are needed to protect workers from past 4 years did so in ways that increased labor market
arbitrary or unfair treatment and to ensure efficient flexibility. What changes did Kazakhstan adopt that
contracting between employers and workers. Many affected the Doing Business indicators on employing
economies that changed their labor regulations in the workers (table 12.1)?
Table 12.1 What changes did Kazakhstan make in employing workers in 2012?
Reform
No reform as measured by Doing Business.
Source: Doing Business database.
Doing Business 2013 Kazakhstan 108
EMPLOYING WORKERS
What are the details?
The data on employing workers reported here for lawyers and public officials. Employment laws and
Kazakhstan are based on a detailed survey of regulations as well as secondary sources are reviewed
employment regulations that is completed by local to ensure accuracy.
Rigidity of employment index
The rigidity of employment index measures 3 areas of labor regulation: difficulty of hiring, rigidity of hours and
difficulty of redundancy.
Difficulty of hiring index
The difficulty of hiring index measures whether fixed- worker. (The average value added per worker is the
term contracts are prohibited for permanent tasks; the ratio of an economy‘s gross national income per capita
maximum cumulative duration of fixed-term contracts; to the working-age population as a percentage of the
and the ratio of the minimum wage for a trainee or total population.)
first-time employee to the average value added per
Difficulty of hiring index Data
Fixed-term contracts prohibited for permanent tasks? No
Maximum length of a single fixed-term contract (months) No limit - Art. 29, Labor Code, 2007
Maximum length of fixed-term contracts, including renewals (months) No limit
Minimum wage for a 19-year old worker or an apprentice (US$/month) 0.1
Ratio of minimum wage to value added per worker 0.00
Source: Doing Business database.
Doing Business 2013 Kazakhstan 109
EMPLOYING WORKERS
Rigidity of hours index
The rigidity of hours index has 5 components: whether respond to a seasonal increase in production; and
there are restrictions on night work; whether there are whether the average paid annual leave for a worker
restrictions on weekly holiday work; whether the with 1 year of tenure, a worker with 5 years and a
workweek can consist of 5.5 days or is more than 6 worker with 10 years is more than 26 working days or
days; whether the workweek can extend to 50 hours or fewer than 15 working days.
more (including overtime) for 2 months a year to
Rigidity of hours index Data
40 hours/week with a maximum of 8
hours/day if a 5-day workweek or a
Standard workday in manufacturing (hours) maximum of 7 hours/day if a 6-day
workweek - Arts. 77 and 82 Labor
Code, 2007
50-hour workweek allowed for 2 months a year in case of a seasonal Yes
increase in production?
Maximum working days per week 6.0
Premium for night work (% of hourly pay) in case of continuous 50%
operations
Premium for work on weekly rest day (% of hourly pay) in case of 100%
continuous operations
Major restrictions on night work in case of continuous operations? No
Major restrictions on weekly holiday in case of continuous operations? No
Paid annual leave for a worker with 1 year of tenure (in working days) 18.0
Paid annual leave for a worker with 5 years of tenure (in working days) 18.0
Paid annual leave for a worker with 10 years of tenure (in working days) 18.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 18.0
working days)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 110
EMPLOYING WORKERS
Difficulty of redundancy index
The difficulty of redundancy index has 8 components: worker; whether the employer needs approval from a
whether redundancy is disallowed as a basis for third party to terminate a group of 9 redundant
terminating workers; whether the employer needs to workers; whether the law requires the employer to
notify a third party (such as a government agency) to reassign or retrain a worker before making the worker
terminate 1 redundant worker; whether the employer redundant; whether priority rules apply for
needs to notify a third party to terminate a group of 9 redundancies; and whether priority rules apply for
redundant workers; whether the employer needs reemployment.
approval from a third party to terminate 1 redundant
Difficulty of redundancy index Data
Dismissal due to redundancy allowed by law? Yes
Third-party notification if 1 worker is dismissed? Yes
Third-party approval if 1 worker is dismissed? No
Third-party notification if 9 workers are dismissed? Yes
Third-party approval if 9 workers are dismissed? No
Retraining or reassignment obligation before redundancy? Yes
Priority rules for redundancies? No
Priority rules for reemployment? No
Source: Doing Business database.
Doing Business 2013 Kazakhstan 111
EMPLOYING WORKERS
Redundancy cost
The redundancy cost indicator measures the cost of notice requirements and severance payments
advance notice requirements, severance payments and applicable to a worker with 1 year of tenure, a worker
penalties due when terminating a redundant worker, with 5 years and a worker with 10 years is used to
expressed in weeks of salary. The average value of assign the score.
Redundancy cost indicator Data
Notice period for redundancy dismissal (for a worker with 1 year of tenure, in salary 4.3
weeks)
Notice period for redundancy dismissal (for a worker with 5 years of tenure, in 4.3
salary weeks)
Notice period for redundancy dismissal (for a worker with 10 years of tenure, in 4.3
salary weeks)
Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 4.3
of tenure, in salary weeks)
Severance pay for redundancy dismissal (for a worker with 1 year of tenure, in 4.3
salary weeks)
Severance pay for redundancy dismissal (for a worker with 5 years of tenure, in 4.3
salary weeks)
Severance pay for redundancy dismissal (for a worker with 10 years of tenure, in 4.3
salary weeks)
Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 4.3
of tenure, in salary weeks)
Source: Doing Business database.
Doing Business 2013 Kazakhstan 112
DATA NOTES
The indicators presented and analyzed in Doing
Business measure business regulation and the ECONOMY CHARACTERISTICS
protection of property rights—and their effect on
businesses, especially small and medium-size domestic
firms. First, the indicators document the complexity of
Gross national income per capita
regulation, such as the number of procedures to start a
business or to register and transfer commercial Doing Business 2013 reports 2011 income per capita
property. Second, they gauge the time and cost of as published in the World Bank‘s World Development
achieving a regulatory goal or complying with Indicators 2012. Income is calculated using the Atlas
method (current US$). For cost indicators expressed
regulation, such as the time and cost to enforce a
as a percentage of income per capita, 2011 gross
contract, go through bankruptcy or trade across
national income (GNI) in U.S. dollars is used as the
borders. Third, they measure the extent of legal denominator. GNI data were not available from the
protections of property, for example, the protections World Bank for Afghanistan; Australia; The Bahamas;
of investors against looting by company directors or Bahrain; Barbados; Brunei Darussalam; Cyprus;
the range of assets that can be used as collateral Djibouti; Guyana; the Islamic Republic of Iran;
according to secured transactions laws. Fourth, a set of Kuwait; Malta; New Zealand; Oman; Puerto Rico
indicators documents the tax burden on businesses. (territory of the United States); Sudan; Suriname; the
Finally, a set of data covers different aspects of Syrian Arab Republic; Timor-Leste; West Bank and
employment regulation. Gaza; and the Republic of Yemen. In these cases
GDP or GNP per capita data and growth rates from
The data for all sets of indicators in Doing Business the International Monetary Fund‘s World Economic
2
2013 are for June 2012. Outlook database and the Economist Intelligence
Unit were used.
Region and income group
Methodology
Doing Business uses the World Bank regional and
The Doing Business data are collected in a
income group classifications, available at
standardized way. To start, the Doing Business team, http://data.worldbank.org/about/country-
with academic advisers, designs a questionnaire. The classifications. The World Bank does not assign
questionnaire uses a simple business case to ensure regional classifications to high-income economies.
comparability across economies and over time —with For the purpose of the Doing Business report, high-
assumptions about the legal form of the business, its income OECD economies are assigned the ―regional‖
size, its location and the nature of its operations. classification OECD high income. Figures and tables
Questionnaires are administered through more than presenting regional averages include economies
9,600 local experts, including lawyers, business from all income groups (low, lower middle, upper
consultants, accountants, freight forwarders, middle and high income).
government officials and other professionals routinely Population
administering or advising on legal and regulatory
Doing Business 2013 reports midyear 2011
requirements. These experts have several rounds of
population statistics as published in World
interaction with the Doing Business team, involving
Development Indicators 2012.
conference calls, written correspondence and visits by
the team. For Doing Business 2013 team members
visited 24 economies to verify data and recruit The Doing Business methodology offers several
respondents. The data from questionnaires are advantages. It is transparent, using factual information
subjected to numerous rounds of verification, leading about what laws and regulations say and allowing
to revisions or expansions of the information collected. multiple interactions with local respondents to clarify
potential misinterpretations of questions. Having
2
The data for paying taxes refer to January – December 2011.
Doing Business 2013 Kazakhstan 113
representative samples of respondents is not an issue; 2013 would differ from the recollection of
Doing Business is not a statistical survey, and the texts entrepreneurs reported in the World Bank Enterprise
of the relevant laws and regulations are collected and Surveys or other perception surveys.
answers checked for accuracy. The methodology is
inexpensive and easily replicable, so data can be
collected in a large sample of economies. Because Subnational Doing Business indicators
standard assumptions are used in the data collection,
This year Doing Business completed subnational
comparisons and benchmarks are valid across
studies for Indonesia, Kenya, Mexico, the Russian
economies. Finally, the data not only highlight the Federation and the United Arab Emirates. Each of
extent of specific regulatory obstacles to business but
these countries had already asked to have subnational
also identify their source and point to what might be
data in the past, and this year Doing Business updated
reformed. the indicators, measured improvements over time and
Information on the methodology for each Doing expanded geographic coverage to additional cities or
Business topic can be found on the Doing Business added additional indicators. Doing Business also
website at http://www.doingbusiness.org/methodology/. published regional studies for the Arab world, the East
African Community and member states of the
Organization for the Harmonization of Business Law in
Limits to what is measured Africa (OHADA).
The Doing Business methodology has 5 limitations that The subnational studies point to differences in
should be considered when interpreting the data. First, business regulation and its implementation —as well as
the collected data refer to businesses in the economy‘s in the pace of regulatory reform—across cities in the
largest business city (which in some economies differs same economy. For several economies subnational
from the capital) and may not be representative of studies are now periodically updated to measure
regulation in other parts of the economy. To address change over time or to expand geographic coverage
this limitation, subnational Doing Business indicators to additional cities. This year that is the case for all the
were created (see the section on subnational Doing subnational studies published.
Business indicators). Second, the data often focus on a
specific business form—generally a limited liability
company (or its legal equivalent) of a specified size — Changes in what is measured
and may not be representative of the regulation on
The ranking methodology for paying taxes was
other businesses, for example, sole proprietorships. updated this year. The threshold for the total tax rate
Third, transactions described in a standardized case
introduced last year for the purpose of calculating the
scenario refer to a specific set of issues and may not
ranking on the ease of paying taxes was updated. All
represent the full set of issues a business encounters. economies with a total tax rate below the threshold
Fourth, the measures of time involve an element of
(which is calculated and adjusted on a yearly basis)
judgment by the expert respondents. When sources
receive the same ranking on the total tax rate
indicate different estimates, the time indicators indicator. The threshold is not based on any economic
reported in Doing Business represent the median
theory of an ―optimal tax rate‖ that minimizes
values of several responses given under the
distortions or maximizes efficiency in the tax system of
assumptions of the standardized case. an economy overall. Instead, it is mainly empirical in
Finally, the methodology assumes that a business has nature, set at the lower end of the distribution of tax
full information on what is required and does not rates levied on medium-size enterprises in the
waste time when completing procedures. In practice, manufacturing sector as observed through the paying
completing a procedure may take longer if the taxes indicators. This reduces the bias in the indicators
business lacks information or is unable to follow up toward economies that do not need to levy significant
promptly. Alternatively, the business may choose to taxes on companies like the Doing Business
disregard some burdensome procedures. For both standardized case study company because they raise
reasons the time delays reported in Doing Business public revenue in other ways—for example, through
Doing Business 2013 Kazakhstan 114
taxes on foreign companies, through taxes on sectors investors, paying taxes, trading across borders,
other than manufacturing or from natural resources enforcing contracts, and resolving insolvency. The
(all of which are outside the scope of the employing workers indicators are not included in this
methodology). Giving the same ranking to all year‘s aggregate ease of doing business ranking. In
economies whose total tax rate is below the threshold addition to this year‘s ranking, Doing Business presents
avoids awarding economies in the scoring for having a comparable ranking for the previous year, adjusted
an unusually low total tax rate, often for reasons for any changes in methodology as well as additions of
3
unrelated to government policies toward enterprises. economies or topics.
For example, economies that are very small or that are
Construction of the ease of doing business index
rich in natural resources do not need to levy broad-
based taxes. Here is one example of how the ease of doing business
index is constructed. In Finland it takes 3 procedures,
14 days and 4% of annual income per capita in fees to
Data challenges and revisions register a property. On these 3 indicators Finland ranks
in the 6th, 16th and 39th percentiles. So on average
Most laws and regulations underlying the Doing
Finland ranks in the 20th percentile on the ease of
Business data are available on the Doing Business
registering property. It ranks in the 30th percentile on
website at http://www.doingbusiness.org. All the th
starting a business, 28 percentile on getting credit,
sample questionnaires and the details underlying the
24th percentile on paying taxes, 13th percentile on
indicators are also published on the website. Questions
enforcing contracts, 5th percentile on trading across
on the methodology and challenges to data can be
borders and so on. Higher rankings indicate simpler
submitted through the website‘s ―Ask a Question‖
regulation and stronger protection of property rights.
function at http://www.doingbusiness.org.
The simple average of Finland‘s percentile rankings on
all topics is 21st. When all economies are ordered by
Ease of doing business and distance to their average percentile rankings, Finland stands at 11
frontier in the aggregate ranking on the ease of doing
business.
Doing Business 2013 presents results for 2 aggregate
measures: the aggregate ranking on the ease of doing More complex aggregation methods—such as
business and the distance to frontier measure. The principal components and unobserved components—
ease of doing business ranking compares economies yield a ranking nearly identical to the simple average
4
with one another, while the distance to frontier used by Doing Business. Thus, Doing Business uses
measure benchmarks economies to the frontier in the simplest method: weighting all topics equally and,
regulatory practice, measuring the absolute distance to
the best performance on each indicator. Both
measures can be used for comparisons over time.
3
In case of revisions to the methodology or corrections to the
underlying data, the data are back-calculated to provide a
When compared across years, the distance to frontier
comparable time series since the year the relevant economy or topic
measure shows how much the regulatory environment was first included in the data set. The time series is available on the
for local entrepreneurs in each economy has changed Doing Business website (http://www.doingbusiness.org). Six topics
over time in absolute terms, while the ease of doing and more than 50 economies have been added since the inception
business ranking can show only relative change. of the project. Earlier rankings on the ease of doing business are
therefore not comparable.
Ease of doing business 4
See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita
Ramalho, ―Doing Business Indicators: Why Aggregate, and How to
The ease of doing business index ranks economies Do It‖ (World Bank, Washington, DC, 2005). Principal components
from 1 to 185. For each economy the ranking is and unobserved components methods yield a ranking nearly
calculated as the simple average of the percentile identical to that from the simple average method because both
rankings on each of the 10 topics included in the index these methods assign roughly equal weights to the topics, since the
pairwise correlations among indicators do not differ much. An
in Doing Business 2013: starting a business, dealing
alternative to the simple average method is to give different weights
with construction permits, getting electricity, to the topics, depending on which are considered of more or less
registering property, getting credit, protecting importance in the context of a specific economy.
Doing Business 2013 Kazakhstan 115
within each topic, giving equal weight to each of the ability of different government agencies to deliver
5
topic components. tangible results in their area of responsibility.
If an economy has no laws or regulations covering a Economies that improved the most across 3 or more
specific area—for example, insolvency—it receives a Doing Business topics in 2011/12
―no practice‖ mark. Similarly, an economy receives a
Doing Business 2013 uses a simple method to calculate
―no practice‖ or ―not possible‖ mark if regulation exists
which economies improved the most in the ease of
but is never used in practice or if a competing
doing business. First, it selects the economies that in
regulation prohibits such practice. Either way, a ―no
2011/12 implemented regulatory reforms making it
practice‖ mark puts the economy at the bottom of the
easier to do business in 3 or more of the 10 topics
ranking on the relevant indicator. 6
included in this year‘s ease of doing business ranking.
The ease of doing business index is limited in scope. It Twenty-three economies meet this criterion: Benin,
does not account for an economy‘s proximity to large Burundi, Costa Rica, the Czech Republic, Georgia,
markets, the quality of its infrastructure services (other Greece, Guinea, Kazakhstan, Korea, the Lao People‘s
than services related to trading across borders and Democratic Republic, Liberia, Mongolia, the
getting electricity), the strength of its financial system, Netherlands, Panama, Poland, Portugal, Serbia, the
the security of property from theft and looting, Slovak Republic, Slovenia, Sri Lanka, Ukraine, the
macroeconomic conditions or the strength of United Arab Emirates and Uzbekistan. Second, Doing
underlying institutions. Business ranks these economies on the increase in
their ranking on the ease of doing business from the
Variability of economies‘ rankings across topics
previous year using comparable rankings.
Each indicator set measures a different aspect of the
Selecting the economies that implemented regulatory
business regulatory environment. The rankings of an
reforms in at least 3 topics and improved the most in
economy can vary, sometimes significantly, across
the aggregate ranking is intended to highlight
indicator sets. The average correlation coefficient
economies with ongoing, broad-based reform
between the 10 indicator sets included in the
programs.
aggregate ranking is 0.37, and the coefficients
between any 2 sets of indicators range from 0.19 Distance to frontier measure
(between dealing with construction permits and
A drawback of the ease of doing business ranking is
getting credit) to 0.60 (between starting a business
that it can measure the regulatory performance of
and protecting investors). These correlations suggest
economies only relative to the performance of others.
that economies rarely score universally well or
It does not provide information on how the absolute
universally badly on the indicators.
quality of the regulatory environment is improving
Consider the example of Canada. It stands at 17 in the over time. Nor does it provide information on how
aggregate ranking on the ease of doing business. Its large the gaps are between economies at a single
ranking is 3 on starting a business, and 4 on both point in time.
resolving insolvency and protecting investors. But its
The distance to frontier measure is designed to
ranking is only 62 on enforcing contracts, 69 on
address both shortcomings, complementing the ease
dealing with construction permits and 152 on getting
of doing business ranking. This measure illustrates the
electricity.
distance of an economy to the ―frontier,‖ and the
Variation in performance across the indicator sets is change in the measure over time shows the extent to
not at all unusual. It reflects differences in the degree which the economy has closed this gap. The frontier is
of priority that government authorities give to a score derived from the most efficient practice or
particular areas of business regulation reform and the highest score achieved on each of the component
indicators in 9 Doing Business indicator sets (excluding
5 6
A technical note on the different aggregation and weighting Doing Business reforms making it more difficult to do business are
methods is available on the Doing Business website subtracted from the total number of those making it easier to do
(http://www.doingbusiness.org). business.
Doing Business 2013 Kazakhstan 116
the employing workers and getting electricity The maximum (max) and minimum (min) observed
indicators) by any economy since 2005. In starting a values are computed for the 174 economies included
business, for example, New Zealand has achieved the in the Doing Business sample since 2005 and for all
highest performance on the time (1 day), Canada and years (from 2005 to 2012). The year 2005 was chosen
New Zealand on the number of procedures required as the baseline for the economy sample because it was
(1), Slovenia on the cost (0% of income per capita) and the first year in which data were available for the
Australia and 90 other economies on the paid-in majority of economies (a total of 174) and for all 9
minimum capital requirement (0% of income per indicator sets included in the measure. To mitigate the
capita). Calculating the distance to frontier for each effects of extreme outliers in the distributions of the
economy involves 2 main steps. First, individual rescaled data (very few economies need 694 days to
indicator scores are normalized to a common unit: complete the procedures to start a business, but many
th
except for the total tax rate. To do so, each of the 28 need 9 days), the maximum (max) is defined as the 95
component indicators y is rescaled to (max − y)/(max percentile of the pooled data for all economies and all
− min), with the minimum value (min) representing the years for each indicator. The exceptions are the getting
frontier—the highest performance on that indicator credit, protecting investors and resolving insolvency
across all economies since 2005. For the total tax rate, indicators, whose construction precludes outliers.
consistent with the calculation of the rankings, the
Take Ghana, which has a score of 67 on the distance to
frontier is defined as the total tax rate corresponding
th frontier measure for 2012. This score indicates that the
to the 15 percentile based on the overall distribution
economy is 33 percentage points away from the
of total tax rates for all years. Second, for each
frontier constructed from the best performances
economy the scores obtained for individual indicators
across all economies and all years. Ghana was further
are aggregated through simple averaging into one
from the frontier in 2005, with a score of 54. The
distance to frontier score. An economy‘s distance to
difference between the scores shows an improvement
frontier is indicated on a scale from 0 to 100, where 0
over time.
represents the lowest performance and 100 the
frontier. The distance to frontier measure can also be used for
comparisons across economies in the same year,
The difference between an economy‘s distance to
complementing the ease of doing business ranking.
frontier score in 2005 and its score in 2012 illustrates
For example, Ghana stands at 64 this year in the ease
the extent to which the economy has closed the gap to
of doing business ranking, while Peru, which is 29
the frontier over time. And in any given year the score
percentage points from the frontier, stands at 43.
measures how far an economy is from the highest
performance at that time.
Doing Business 2013 Kazakhstan 117
RESOURCES ON THE DOING BUSINESS WEBSITE
Current features Doing Business reforms
News on the Doing Business project Short summaries of DB2013 business regulation
http://www.doingbusiness.org reforms, lists of reforms since DB2008 and a
ranking simulation tool
Rankings http://www.doingbusiness.org/reforms/
How economies rank—from 1 to 185
http://www.doingbusiness.org/rankings/ Historical data
Customized data sets since DB2004
Data http://www.doingbusiness.org/custom-query/
All the data for 185 economies—topic rankings,
indicator values, lists of regulatory procedures and Law library
details underlying indicators Online collection of business laws and regulations
http://www.doingbusiness.org/data/ relating to business and gender issues
http://www.doingbusiness.org/law-library/
Reports http://wbl.worldbank.org/
Access to Doing Business reports as well as
subnational and regional reports, reform case Contributors
studies and customized economy and regional More than 9,600 specialists in 185 economies who
profiles participate in Doing Business
http://www.doingbusiness.org/reports/ http://www.doingbusiness.org/contributors/doing-
business/
Methodology
The methodologies and research papers NEW! Entrepreneurship data
underlying Doing Business Data on business density for 130 economies
http://www.doingbusiness.org/methodology/ http://www.doingbusiness.org/data/exploretopics/e
ntrepreneurship
Research
Abstracts of papers on Doing Business topics and More to come
related policy issues Coming soon—information on good practices and
http://www.doingbusiness.org/research/ data on transparency and on the distance to
frontier
Doing Business 2013 Kazakhstan 118