Investors are Ready for Open Dialogue
In advance of the 28th Plenary Session of Foreign Investors’ Council, we asked Mr. Ulf Wokurka, the Chairman of Kazakhstan Foreign Investors’ Council Association’s Governing Board and the Co-Chairs of the FIC Working Groups from foreign side to tell our magazine about the tasks, the outcomes and the future plans of the Council for 2015.
You became KFICA Governing Board Chairman just under a year ago. What would you say is your main task in this place?
As you probably know, KFICA is a business association established for the voluntary cooperation of the largest corporate investors in Kazakhstan, whose top managers were appointed by the President of the country as members or observers in the Foreign Investors Council.
KFICA focuses its activities on maintaining a permanent dialogue between our corporate members and their Kazakh partners on a range of issues and within various levels of platforms which include permanent working groups, the FIC Interim Sessions chaired by the Prime Minister and held with the participation of all leaders from various government subdivisions who are key for the investment process, and activities specially organized on topics being particularly important for our members, such as legislation, taxation or the environment for further investments in projects to expand existing production assets and the creation of new industries, particularly by those investors, who have been in the country already for a long time and to whom certain investment privileges are often not being applied for this reason.
We think that this situation is not quite optimal: because it is much easier to expand or upgrade existing production capacities, rather than to create them from scratch, and because it is not always the best solution to do so with foreign partners who are just launching their activities in the country, while some of our members being proud of having worked in the Kazakhstan market for twenty and even twenty-five years.
We think that there is a significant, yet not fully developed potential in this area to intensify our fruitful cooperation. Well, here, in this respect my colleagues in KFICA Governing Board and I see our main task in the near future.
In your opinion, what is the role of your Association to provide interaction between Kazakhstan and foreign investors?
I think KFICA can serve not only as an additional communication channel between large foreign investors and the Kazakh authorities, but it is also ideally positioned to be a bridge for the exchange of information between Kazakhstan and the large number of potentially new investors.
I think our members would only benefit when the investor, who had previously only considered Kazakhstan, but still did not dare to come and get to work, will decide eventually to do this and also become a direct foreign investor. After all, the more foreign companies are in the country, the louder our voice and our opinions will be heard.
That is why our KFICA member companies are readily sharing with potentially new investors on their own example, how to work in Kazakhstan, what the opportunities for new business are, as well as what "hidden stumple stones" should be avoided with the help of the right partners in the country.
Some KFICA member companies regularly compile and publish surveys and comparative analyses, devoted to such topics as the investment climate in the country, or the results of the surveys of chief executive officers of certain Kazakh companies, which is certainly very interesting for newly incoming investors.
But frankly speaking, we still have to work on ourselves and cooperate more closely with the relevant Kazakh structures to attract and support foreign investment, such as for example KAZNEX Invest or of the Investment Committee of the Ministry of Investment and Development of the Republic of Kazakhstan.
Please, indicate the most pressing issues on the agenda of the Council's working groups.
The most pressing questions for any investor, whether domestic or foreign, are always the same: what is the return on my investment and within what period of time has it been paid back with a profit?
Well, these questions are getting their answer every day by a little bit, as it becomes clear, whether the investor was properly planning the business venture, whether the investor was able to anticipate correctly a certain demand and then to meet it successfully with the right supply.
These questions being common for all investors, however, they have some specific quality for foreign investors. After all, they have to cope with some additional riskswhich include, usually, a certain lack of language skills, a limited knowledge of the local peculiarities, mentality and work habits of all kinds, which sometimes significantly affect the efficiency of the investment. Yes, these additional risks are necessary to be studied carefully before coming and investing.
Well, here I was again on the same topic saying: people should be well informed about the fact that in the general investment conditions in Kazakhstan are good and even very attractive in certain so-called "priority" sectors.
How has the investment climate changed in Kazakhstan recent years?
Do you really want to hear it from me?! No, I do not think we should take with you a vain attempt to draw in a few minutes twenty-five years of history of the investment climate. We would better leave such a task for historians.
Nevertheless, let me say that the package of measures, which was launched at last year's Plenary Session of the FIC by the Head of state, in fact deserves the name of an unprecedented package of measures to encourage new investment in the country.
And we as an association of companies that are no longer new investors, but rather ‘the old ones’, or, if to speak a little more polite, the experienced investors in Kazakhstan, we would like to see a similar package of measures for those investors who have already been here long.
That is, we would like to see the package of measures for both domestic and foreign investors, if only they undertake their new investments in those industries that were declared a priority by the Government, that is, if they are aimed at the diversification and the modernization of the economy.
What measures, in your opinion, should the government take to improve the competitiveness of Kazakhstan in terms of attracting foreign direct investment in the processing sector of the economy?
I think I have just answered that question in the section of government measures that could effectively support the development of entrepreneurship in the country.
As for the competitiveness of a particular product or a particular company, it is a function of many internal and external factors. Accordingly, it is much harder to define competitiveness of a whole country.
Yes, of course, some agencies review on a regular basis all countries of the world, sorting them by a particular interpretation of competitiveness, and then they draw the important conclusions from this review. This is correct in general, perhaps, because it is provides for some general guidance.
However, at the same time I think it will be more interesting for everyone, if you look at the competitiveness of specific products, services and companies. It will be also more interesting, if you listen, when one or another manufacturer of particular goods or services complains about the occurrence of any obstacles or difficulties that suddenly undermine their competitiveness and force them to make adjustments, both on internal factors determining competitiveness, and on external factors doing the same.
As for the latter factors, I would see a special role for the Government to play in ensuring that the external environment for any manufacturer or service provider is effectively so that the respective manufacturer’s or service provider’s competitiveness was restored, preserved and sustainably maintained.
As you know, the FIC at the next meeting chaired by the President will discuss the development of agribusiness in Kazakhstan. How would you assess the potential in this area and how the community of foreign investors can help in this matter?
While we all see and recognize the huge potential for agribusiness in Kazakhstan today, we have no direct agricultural players among our members in the KFICA.
Only when we come to the subject a little wider, and I hasten to say that as part of our preparatory meetings with the Ministry of Agriculture, we heard support for this approach, we are able to offer at the forthcoming plenary session several forms of support for the development of agribusiness in the country.
We expect that the development banks which are members of the FIC and KFICA, will offer comprehensive programs to support farmers and cooperatives. Furthermore, an initiative of our members will be presented to train agricultural specialists in order to improve the logistics of transportation and food processing, as well as a partial solution to the question of adequate access of rural population to credit and many others issues.
I expect that we will have an open and lively dialogue on all these issues, the results of which will soon influence positively on the life and work in the rural sector.