Kazakhstan: New, Improving Customs of the Country

Today the World Bank announced the approval of a new loan to Kazakhstan for developing better customs procedures.  The total project cost is USD 62 million, with Kazakhstan committing 43.5 million and the World Bank 18.5 million to the effort.  This is a fantastic step for the state, and it dovetails with many of the other efforts Kazakhstan is making to develop trade in the Central Asian region.

According to the stats in the press release (emphasis added):

The Government of Kazakhstan's focus on customs reform over the last several years has led to strengthening of the legislative base, increases in revenue collection, and the simplification of customs procedures. As a result, the average customs tariff in Kazakhstan is less than 10 percent, the country has eliminated almost all export taxes, and there has been a recent reduction in tariffs for food and other products.

This is the kind of  good news that is going to keep Kazakhstan from having bread riots; it will stimulate home business and international trade.  Furthermore, it cuts down on corrupt practices.  And how is that?  I’m sure I don't know all the ways one can take a bite out of enterprise, but let's list a few:

1. Simplified customs procedures are by their nature more transparent–everyone can figure out what the rules are and if they are getting the runaround.

2. Legislative support means that the law is not adjudicated on the local level, with transactions at the point of entry or exit subject to additional fees, “legal interpretation”, fines, favors, tips, or bribes.

3.  Lowering tariffs means more revenue collection, because the cost differential between official fees and unofficial bribes becomes negligible.  As a result, the cost of business is better served by exporting and importing within the law.  The fees go into the government's bank account and not into the grey or black market, personal, Swiss, or Cayman Island bank accounts out of the state.

There's still plenty to do, and Kazakhstan and the World Bank are giving it a go:

However, the customs development agenda remains large. According to the latest World Bank report "Connecting to Compete" which measures effectiveness of trade logistics in various countries, Kazakhstan is on the 139th** place out of 150 countries in the area of customs effectiveness.

But the World Bank's point in their report is not that trade logistics addresses only negatives.  There is a marked correlation between easy trade and state prosperity.  On page 17 of the report, they note that -the competitive advantage of states erodes in the face of unpredictable trading regimes – and later in the report, they note that reliability and predictability in customs regimes matter even more than cost in establishing commerce.  I think that could be called eradicating the “What Now??!!” syndrome for the business world.  . . and for food consumers. . . in Kazakhstan.

Just out of curiosity, I looked up the other states in Central Asia in “Connecting to Compete“:
In the report (not the press release)
Pakistan's score was 2.62, for 68 out of 150;
Iran's score was 2.51, for 78 out of 150;
Kyrgyzstan's score was 2.35, for 103 out of 150;
Uzbekistan's score was 2.16, for 129 out of 150;
Kazakhstan's score was 2.12, for 133 out of 150**; (a discrepancy from press release?)
Mongolia's score was 2.08, for 136 out of 150;
Tajikistan's score was 1.21 our of 5, for 146 out of 150; and
Afghanistan's score was , for 150 out of 150. 
Turkmenistan was not scored.

Photo: Kazakhstan's Embassy in Austria