Regions and Countries

	Table of Contents
p. 14 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Private Sector Operations IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Kazakhstan : III. Sector Strategies

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F. Private Sector Operations

44. Kazakhstan has an active private sector, encouraged by the Government that is attempting to put in place a modern, workable environment for doing business. However, problems and impediments still exist, including corruption, lack of suitable legal system and regulations, inefficient government administration, and banking restrictions. SMEs appear to suffer most from such problems.

45. The Government is committed to improving the climate for private sector development. The legal and regulatory framework has been developed to encourage provide sector investment. New laws to open up the insurance and leasing sectors are being drafted. In addition, the Government has completed privatization of small and medium-size SOEs and plans to sell large ones in the nonstrategic sectors.

46. To date, ADB has not yet made private sector investments in Kazakhstan. This resulted mainly from an earlier arrangement between ADB and EBRD that there would be a division of labor between the two institutions such that private sector operations would be the responsibility of EBRD. However, it is now felt by all parties that ADB has a relevant role to play in direct support to the private sector. Consequently, in consultation with the governments of the Central Asian DMCs, ADB prepared a Private Sector Strategy for Central Asia in March 1998. The strategy proposes that ADB respond to the region’s needs by (i) focusing on private sector operations that would be directly complementary to public sector programs; (ii) developing programs in those sectors that can have a direct impact on reducing the costs of transition, particularly in the social sectors; and (iii) seeking the maximum involvement of other investors or participants. The strategy recognizes that, given the programs of ADB and other funding agencies, there are opportunities for direct ADB assistance to the private sector in (i) the financial sector; (ii) infrastructure, especially in rehabilitation and operation projects; (iii) the "company towns" facing difficulties; (iv) agriculture to encourage farm restructuring; (v) SMEs; and (vi) social infrastructure to help create private sector service providers.

47. With the approval of the Private Sector Development Strategy by the Board in March 2000, ADB will be actively involved in private sector operations in Kazakhstan. Staff of the Private Sector Group visited the country in May 2000 and identified six projects for possible support. These are (i) an investment in the Almaty Commercial Bank; (ii) an investment in the Bank Turan Alem; (iii) an investment in Agristar, an agribusiness company; (iv) the Caspian Energy Infrastructure Project; (v) the Amangeldy Gas Project; and (vi) the Hurricane Kumkol Munai Gas Flaring Project.

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