Honourable Mission of Business
Vice Minister of Health and Social Development of the Republic of Kazakhstan Daulet Argandykov answers the questions of Kazakhstan magazine.
Mr.Argandykov, the National Paryz Award is being held for some years now. How do you evaluate its role in the development of Kazakhstan’s business social responsibility?
Today, managing sustainable development in the country is going to be of particular relevance. Strong economy and public welfare are integral factors of business growth in Kazakhstan. Therefore, business entities should be looking for opportunities to conduct their activities in accordance with the needs of society. In turn, the Government of the Republic pays increasing attention to the promotion of the concept of business’ corporate social responsibility (CSR) and to the creation of favourable conditions for the development of a socially responsible culture among businessmen.
The President of Kazakhstan N.A. Nazarbayev in his speech at the National Forum on Social Responsibility of Business held on January 24, 2008 in Zhezkazgan noted that the formation of a sense of social responsibility of the State and of business is one of the basic conditions for sustainable development. He called on entrepreneurs for showing a more responsible attitude in problems solution in social and labour relations, developing and improving collective-contractual arrangements. This includes issues of wages, occupational health and safety, professional readiness and increase in the qualification of specialists. Business should take part in the construction of social projects.
At the same time, at the Forum, the Head of State created an annual award in matter of business social responsibility Paryz aimed at the development of CSR principles, promotion of enterprises’ participation in the solution of the most currently important social problems of society and formation of positive perception of the socially responsible business in the public consciousness.
Since then, the Paryz award became a kind of indicator for comprehensive interaction between the authorities and businessmen, contributing to preservation, enhancement and development of strong partnership between them.
It is encouraging that in recent years, social issues are a concern for executives of an increasing number of enterprises. Above all, there is an understanding that aid for workers is not just charity, but a strategic foresight. This is because an employee treated with care and attention is both a business partner, and a person interested in the overall success of your business.
Since the award exists more than two thousand small, medium and large business entities have already participated in it. What is the dynamics of submitted applications year by year? Is it possible to suggest that companies are increasingly interested in this initiative?
Current year 2014 confirms growing interest in understanding the social responsibility, thus, this time, 584 enterprises from all regions of the country announced their participation in Paryz Award. By comparison, in 2013 there were 534 applications submitted, in 2012 they were 525, in 2011 – 509, in 2010 – 434, in 2009 – 321, and in 2008 – 296.
Kostanai Oblast with 69 companies expressing a desire to participate in the contest is a leader. It is followed by East-Kazakhstan (56 applicants) and Pavlodar (50 applicants) oblasts.
The largest number of contestants – 261 – participated in the Best Socially Responsible Company nomination. It covers the activities of candidates implementing social programmes aimed at supporting their own staff, social inclusion of people with disabilities and improving the well-being of the society as a whole.
There were 98 companies participating in the new nomination the Best Enterprise in Occupational Safety. Its main criteria include measures to create conditions that allow maintaining the employees’ health in course of employment.
For the nomination the Best Collective Agreement 114 business entities applied. This nomination covers collective agreements, significantly improving and strengthening the workers' labour and social rights stipulated by legislation of the Republic of Kazakhstan.
In the nomination Contribution to Environment 111 applications were received. It selects the companies most distinguished in implementing ecological programmes aimed at improving the environment.
What are the main award criteria for Paryz Grand Prix – the title of Social Responsibility Leader?
The highest award is to be given to an applicant, who has obtained the highest performance in the implementation of corporate social and environmental responsibility principles. In previous years the title of the best and Paryz Grand Prix was received by many famous companies of Kazakhstan.
Among them is the Kazakhmys Corporation (2008 year) that was one of the first in the Republic to start to actively implement the values and principles of CSR. The Corporation has focused its efforts on occupational safety, stability of wages, additional medical and social insurance, social protection for its employees and retirees. Local school graduates are provided with grants to study in the most prestigious universities. In all regions, where Kazakhmys units operate, there are kindergartens, which are in the books of the Corporation. Kazakhmys sponsors basketball, volleyball and hockey teams, boxing and wrestling sections, Taekwondo sports school and Football Academy.
The next winner is Turgai Petroleum JSC, which, as part of the project Integrated Gas Processing Plant, has created more than 350 jobs with 100% local content. In 2009, the company sent over 126 million KZT for education and training of local specialists, as well as technical and specialized education. In addition, in 2004 to 2009, within the scope of social responsibility of business in the form of sponsorship Turgai Petroleum transferred 1.2 billion KZT to the account of Demeu Corporate Fund affiliated with the Akimat of Kyzylorda Oblasr. In order to support the poor and vulnerable segments of the population, as well as representatives of culture and sports, the company has implemented various social programmes worth more than 600 million KZT.
Another Grand Prix recipients – CNPC-AMG JSC – increases the levels and direction of incentives for all categories of workers. So, in 2010, vacation health improvement financial assistance amounted to 158.8 million KZT, the total size of social package per year per employee amounted to 185.2 thousand KZT. Incurred expenses for sponsorship and charitable purposes were worth 815 million KZT.
The 2011 winner Tengizchevroil LLP had allocated 2.9 billion KZT to the “Igilik” program in 2010, a major portion of these funds being aimed at continuation of work on the Reconstruction of the water-supply system Project in Kulsary. 116 million KZT was directed to improvement of public health care, education and training. The company has provided mortgage loans at zero rate, granting the employees with financial assistance in higher and/or post-graduate education.
In its turn, KazTransOil JSC (2012) funded the construction of social facilities totalling 4.1 billion KZT, including residential house in Usharal, five multifunctional sports grounds in Pavlodar, six five-floor apartment buildings in Uralsk, multifunctional sports grounds in Karaganda, Kokshetau, Kostanai, Petropavlovsk, Semey and Ust-Kamenogorsk, a kindergarten for 170 children in Atasu village in the Karaganda Oblast. In addition two multifunctional sports grounds were built in Usharal and a sports complex in Pavlodar. The company also provided sponsoring (charitable) assistance totalling 2.6 billion KZT.
Last year, the highest award of the contest was received by Ust-Kamenogorsk titanium-magnesium plant JSC, which implemented a project valued at 1.1 billion KZT for the construction of a health centre in Novaya Sogra village, including out-patient clinic for 240 patients per shift for residents of Ust-Kamenogorsk and other oblasts. Social costs of the company amounted to 359 million KZT, and about 40 million KZT were spent on employee trainings.
I wish to emphasize that a valuable contribution to the development of social responsibility is made by small business entities as well.
Is there expected any provision of privileges and preferences for the winners? If so, what are they?
I consider that the most important encouragement for laureates is the State's recognition of their contribution to the society. As you know, award winners receive the right to use the awards logo for promotional purposes for a three years period, and this is a guarantee for future prosperity of their business.
In addition, the Tax Code of the Republic of Kazakhstan (Art. 133) contains measures to encourage entrepreneurs involved in social projects. So, taxpayers have a right to reduce the taxable income in the total amount not exceeding 3% of it, on such expenses as value of the property transferred free of charge to non-profit organizations and organizations working in the social field, sponsoring and charitable aid.
Also, Article 147 of the Code contains measures to encourage business involved in social projects in the form of lower corporate income tax rates.
In addition, the public procurement law provides for the provision of certain discounts in competitive procedures to reduce the relative prices of the potential supplier application subject to the inclusion of local content.
What do you think on the development prospects of the awards? How is it able to continue to serve as an instrument for the CSR development?
This year Paryz Awards will be held for the seventh time, and its program includes a few changes. In particular, a new nomination, the Best Enterprise in Occupational Safety, is introduced. It is intended to incite private business entities to create safe working conditions, to take care of workers health in their jobs.
In addition, there are some adjustments, which made the selection process on the basis of regional tripartite commissions on social partnership more transparent, as well as optimizing the procedure for receiving applications.
I am sure that the significance of Paryz Awards will grow year after year, since the potential for development of business communities and increase of their role in the social partnership is very large.