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U.S.-Kazakhstan Public Private Economic Initiative

Frank Mermoud, Special Representative for Commercial and Business Affairs
Remarks at the U.S.-Kazakhstan Public Private Economic Initiative Conference
Astana, Kazakhstan
June 24, 2008

As prepared

On behalf of the U.S. Department of State, I would like to welcome the participating U.S. and Kazakh officials; it is an honor and a pleasure to be here with all of you. And I especially want to thank the representatives of the U.S. and Kazakh business communities for whom we launch this initiative and to whom we entrust its success.

The Governments of the United States and Kazakhstan, the American Chamber of Commerce in Kazakhstan, the U.S.-Kazakhstan Business Association, Atamekan, and the Forum of Entrepreneurs have dedicated substantial time and effort to this initiative over the past year. I want to specifically recognize those organizations and those individuals that have shown such enthusiasm and commitment to the project.

While we reflect on the launch of this initiative with pride, this event prepares us to look toward the work ahead of us with confidence. Today, we begin to reinforce our business and economic relationships using the six pillars of this partnership.

Mr. Prime Minister, we have had a very productive morning hearing from expert speakers on all of the pillars who have helped to provide guidance and counsel on an activist way forward and who have volunteered and organized themselves into working groups to ensure the life of this initiative. You will hear more on that during the interactive session this afternoon. What is very apparent from this morning’s session and from lessons we have learned working with other economies that it is the government AND the private sector who together create the culture for a country’s economic success. It is the government that begins by setting the stage by creating the right environment for business. The government then steps back and allows the private sector to do what they do best and that is to innovate, create, provide jobs and grow an economy.

In its 16 years of independence since the collapse of the Soviet Union, Kazakhstan has developed a progressive market economy that stands out in the region and is on its way to creating the culture I just referred to. Privatization and economic reform makes Kazakhstan accessible to global financial and commercial markets, and attracts foreign investment. The result: more than $50 billion in foreign direct investment since 1993, and I am pleased to say that the United States takes the lead in that.[1]

Since taking office, PM Masimov has used his leadership to diversify the economy beyond natural resource extraction, develop a regional financial industry, and fight corruption. Consequently, many companies, including GE and Citigroup, are expanding their operations in Kazakhstan. GDP grew an estimated 8.5% in 2007, (greater than in prominent emerging markets Russia and Brazil).[2] PM Masimov and the Kazakhs are to be congratulated.

Of course, there is always more that can be done and that is why we are here today. For instance, as we encourage Transparency and Rule of Law, we must emphasize consistency of governance. Companies will not risk investment if they perceive nepotistic access to contracts or information, dynamic tax code, or discretionary regulation. (Some have raised concerns over the handling of AES’s investments in the energy sector.) To continue to attract foreign investment, Kazakhstan must be careful to respect contractual inviolability and to apply regulation consistently.

U.S. companies are interested in investing in Kazakhstan, but they need to know that their investments are protected by an impartial and transparent legal system that is above arbitrary government intervention.

However, we should not overlook Kazakhstan’s commitment to changing its shortcoming into its strength. This very initiative exemplifies the Kazakh program to improve the conditions for the private sector to do business competitively, to innovate, and to inspire progress and prosperity. Already, the World Economic Forum recognized Kazakhstan as one of the two most competitive economies in the Commonwealth of Independent States (61st globally, Russia ranks 58th).[3] The Strategy for Innovative Industrial Development for 2015 sets high standards for Kazakh policy so that the economy will develop alongside the most advanced in the world. While the “EU recommends its members increase allocations for science to 2.5% of GDP,” Kazakhstan aims to direct up to 3% of GDP to science by 2015.[4] These policies, which reflect Kazakhstan’s enthusiasm for competitive entrepreneurship, will attract the world’s best companies and offer Kazakhstan a future of extraordinary opportunities.

The United States appreciates Kazakhstan’s leadership and looks forward to participating actively in this partnership with our two governments setting the stage for economic growth and allowing our respective private sectors to create the culture in which to thrive and prosper.

Thank you. I now have the great honor and privilege of introducing an individual I have met with several times, have gotten to know during this process and have the greatest respect and admiration for, His Excellency, Prime Minister Masimov.



[1] http://www.kazembassy.org/
[2] https://www.cia.gov/library/publications/the-world-factbook/geos/kz.html
[3] The World Economic Forum, The Global Competitiveness Report 2007-2008, http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm &
Embassy of the Rep. of Kazakhstan, “Kazakhstan Shows First Fruits of National Innovation Strategy,” Kazakhstan News Bulletin 5, no. 46 (November 3, 2005).
[4] Innovative Industrial Development Strategy of the Rep. of Kazakhstan for 2003-2015 (2003), http://www.kazakhembus.com/BusinessandEconomy.html



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