Department of public monitoring and work with administrative barriers NCE RK informed about the results of its activities for 2015

In order to identify and to reduce administrative barriers, the Department of Public monitoring and work with administrative barriers conducts work in the following directions:

1. Analysis of the current legislation and presentation of recommendations for reduction of administrative barriers;

2. optimization of the licensing system;

3. The reform of the control and supervisory activities of state bodies;

4. The public monitoring;

5. The maintenance of the Register of problems of entrepreneurs and the map of solution of problems of business;

6. The introduction of regulatory impact analysis;

7. Consideration of complaints of business entities;

8. Examination of normative legal acts.

1. Analysis of the current legislation and presentation of recommendations for reduction of administrative barriers

In total the Department developed and proposed more than 980 amendments to the existing legislation of Kazakhstan, aimed at reduction of administrative barriers, 806 of them were approved. These amendments are implemented in the framework of the laws adopted by the Parliament of Kazakhstan.

1) Out of 806 approved amendment, 152 were adopted in December 2014 by the Law "On introducing amendments and addenda to some legislative acts of the Republic of Kazakhstan to radically improve conditions for doing business", which allowed to reduce significantly administrative barriers and to solve business problems, including:

- There was excluded the requirement to obtain a permission for emission into environment for objects of IV category;

- there was eliminated the need and fee for obtaining a permit for emission into the environment for farms working under a special tax regime. The costs of farms were reduced to over 12.4 billion tenge;

- there was extended the validity of the established maximum permissible emissions and discharges of pollutants and the validity of the positive conclusion of the state ecological expertise (for the objects of I, II, III categories - ten calendar years, IV category - indefinitely);

- There was solved the problem of the presence of sanitary-epidemiological expertise (required only in case of construction and reconstruction of objects of high epidemiological importance);

- the sanitary-epidemiological expertise was canceled for projects of survey and assessment work, the project documents for work on mining and other.

During the preparation of the law with the participation of NCE RK, there were addressed the most pressing business issues, such as:

- When changing the purpose of land for commercial purposes, it is not required to obtain a decision of LEB, which will reduce the costs of entrepreneurs in the amount of 150 million tenge per year;

- the costly and time-consuming procedure of commissioning of objects was simplified, from 2016 facilities in operation will be commissioned by the customer, the contractor and the representative of a technical supervision service;

- Streamlined procedure for obtaining land for construction in the village (the procedure is detailed, the land commission and preparation of a land project were excluded), operating expenses of entrepreneurs will be cut by over 4 billion tenge;

- There was abolished the obligation for legal persons - subjects of small and medium business to pay state registration fees and fees for the termination of the registration, which will save entrepreneurs more then 77,6 million tenge per year;

- There was abolished the obligation to have a seal that allows you to save more than 755.95 million tenge per year;

- There was solved the problem of the mandatory notarization of charter documents for limited liability companies, which are the subjects of small or medium-sized enterprises, that would save more than 375.94 million tenge per year.

The effect of the changes adopted in the framework of the law - the reduction of non-productive costs for business, reduction of time for receipt of permits, improvement of the efficiency of business, reduction of corruption in the interaction of business with the Government.

2. It should be noted that rules for mandatory notarization of various documents create a major barrier for entrepreneurs.

The Department carried out the work on introduction of amendments to Article 5 of the Law "On state service", in the frame of which during the provision of public services it is not required to demand from people, obtaining services, the notarized copies of documents, the originals of which are provided for verification to a service provider, except as provided by the legislation of the Republic of Kazakhstan, regulating issues of pension and social security. According to preliminary data, a reduction of notarization of documents in the delivery of public services will reduce the burden on businesses by 25 -26 million tenge.

3. At the same time by making changes and additions to the existing legislation were addressed the following issues:

- norms, setting buffer zones for dry-cleaners, laundries and car washes were excluded from the Sanitary Rules for the establishment of sanitary protection zones of industrial objects.

- There was addressed the issue on the abolition of 8 statistical forms, there were introduced changes to 151, the submission of 1 form was changed from monthly to quarterly basis. There were introduced changes to the Order of the Chairman of the Committee on Statistics of the Republic of Kazakhstan of MNE # 21 dated by 10/24/14 and #66 dated by 04.12.14.

The economic effect: the cost of doing business was reduced to 2 billion tenge per year.

- There were submitted proposals to the draft law "On amendments and additions to some legislative acts on regulation of trade" in terms of eliminating the ban on retail sales of beer in plastic bottles. The decision will save some 5,000 retail outlets and at least 20 thousand jobs.

- There were solved the problematic issues of heavy and large-sized special motor vehicles: the parameters of height, width and total weight were increased, (the accepted proposals will be fixed in the order of the Minister for Investment and Development of Kazakhstan "On approval of the permissible parameters of motor vehicles designed to be driven on the roads of the Republic of Kazakhstan". There were introduced changes to the Code of Administrative Offences, which reduced the amount of fines for vehicles, exceeding the weight parameters twice, and for some categories - 4 times (totaling in more than 300 million tenge)

- There were introduced changes to the Tax Code of the Republic of Kazakhstan (art. 645) so as to change the timing of the application of cash registers with the function of capture and transfer of data from 07/01/2014 to 07/01/2015, This will allow to reduce the costs of business to 3.8 billion tenge.

- The law of the Republic of Kazakhstan "On payments and money transfers" introduced suspensive rate of the installation and use of POS-terminals - from 01.01.2016 for businesses, using special tax regimes. Due to this norm, SMEs will not incur additional costs just to pay the fees for the transaction: the patent - at least 7 billion and the simplified declaration - not less than 10 billion tenge per year.

- There were introduced changes to the "standard of road services on the territory of the Republic of Kazakhstan" (order of the Acting Chairman of the Committee for Technical Regulation and Metrology # 205 dated by 10/25/14) that will allow 300 businesses to keep their business (1,200 jobs) and to reduce the costs of entrepreneurs at least to 150 million tenge.

4. The Department conducted a legal analysis to make appropriate recommendations on the following topics:

- Legal analysis on the activities of JSC "ICBC" Khorgos "and JSC" Management Company FEZ "Khorgos - Eastern Gate";

- Legal analysis of tariff setting in the electricity sector;

- Legal analysis of activity of socio-entrepreneurial corporations (SEC);

- Legal analysis on the establishment and operation of industrial zones in the Republic of Kazakhstan.

2. Optimization of the licensing system

With the active participation of employees of the Department, there was developed and adopted the Law "On permits and notifications". Adoption of the law was the logical culmination of a large systemic work on improvement of the licensing system of Kazakhstan.

So, in 2007 there was adopted a law "On Licensing", which approved an exhaustive list of licenses and introduced a "single window" and "silent consent" option.

In 2009 was approved the Concept of further reforming of the licensing system of 2009-2011, which included an inventory of the licensing system in order to implement the method of "guillotine".

In 2008 started the development of the State database "E-licensing", the full implementation of which was completed in 2012. In the same year began the expansion of its functionality for all screen resolutions.

Along with this, there was approved the Concept of further reforming of the licensing system for 2012-2015, the development of which was preceded by two stages of reduction of permits by 30%, which were carried out in accordance with the instructions of the President in 2011 and 2012. All previous experience was taken into account in the developed Concept.

The law allowed to solve the problem of the uncontrolled growth of the number of permits, so every new solution for businesses will be introduced only through the inclusion of a permit in the list approved by law and only after the state body - the initiator of the introduction of permit will have to conduct a regulatory impact analysis.

In addition, currently the Ministry of National Economy (with active participation of the Department) on behalf of the President of Kazakhstan Nursultan Nazarbayev developed a draft Law "On amendments and additions to some legislative acts on the reduction of permits and simplification of licensing procedures", providing 50 - percent reduction of permits.

At the legislative level, it is planned to reduce the number of permits by 50% (about 198 permissive documents).

As part of the work done at the site of NCE RK "Atameken", there were held 17 meetings of expert groups, during which was recommended the abolition of 198 permits, to optimize procedures for issuing - 182 permits.

To achieve effective and balanced results, there were made conceptual approaches, providing for the abolition of duplicate and unnecessary permits, their transfer to a notification procedure, as well as revision of the requirements to obtain them.

No inventory has been foreseen in respect of authorizations for the most hazardous activities (trafficking of arms, narcotics, nuclear energy, fire, etc.) and they remain regulated within the framework of the international obligations of the Republic of Kazakhstan.

The main purpose of the law was to reduce the administrative burden on business by eliminating duplicate and unnecessary permits, their transfer to the notification procedure and optimization of licensing procedures.

The draft law is supposed to make changes and additions to the 9 codes and about 35 laws of the Republic of Kazakhstan.

As a result, it will contribute to the overall development of entrepreneurship in the country, revitalizing of business and expansion of the boundaries of its activities, the growth of the national income due to the increase in aggregate output in the business sector, respectively - reducing unemployment and others, a positive social and economic impact, and will also create the most favorable conditions for doing business.

Due to the fact that a significant amount of permits were reduced and the procedure for issuance of permits was simplified, this will entail reduction of the financial costs for business:

- 2016 467 633.2 thousand tenge;

- 2017 500 358.3 thousand tenge;

- 2018 535 383.5 thousand tenge.

(data from the Appendix #1.6 to the minutes of the Republican Budget Commission #9 dated by 03.06.2015).

Currently, a draft law is under consideration at the Mazhilis (I reading was held).

3. Reform of the control and supervisory activities of state bodies

In accordance with the law of the cardinal measures there were canceled planned inspections and there was introduced a system consisting of three types of inspections (special arrangements for inspections, random, unplanned).

In implementation of the envisaged reforms, MNE together with NCE (the Department) has developed and approved the Technique of formation of the risk management system for state bodies.

Currently, MNE RK together with NCE (the Department) carried out the work on the development of new risk management system and forms of checklists.

Thus, in accordance with the new changes, the state control will focus on unscrupulous business entities, by definition of subjective and objective criteria.

From May to September this year, the Department received 51 projects of joint orders approving the risk assessment criteria and forms of checklists from 11 state agencies.

The Department by the results of the study of the developed by public authorities checklists presented more than 4,500 comments on unreasonable demands. The comments of NCE were accepted and improper requirements were excluded.

Thus, in the checklists in the field of industrial safety were included requirements that can’t be verified during the inspection – the ban on construction and installation works at height at a wind force of 5 points or more, during a storm, a rain and heavy snow, ice and fog with visibility less than 100 m, or presence of people in the cab of the vehicle of self-propelled units other than the driver on steep inclines. They also included generalized requirements, which are unacceptable for a checklist - compliance with the requirements established by the legislation of the Republic of Kazakhstan in the field of civil protection.

In addition, the checklists of two ministries included similar duplicate requirements.

For example, entrepreneurs got engaged in exploration and production of oil, gas and oil condensate, were included as controlled entities on the same issues as the Ministry of Energy and Ministry of Investment and Development. The remarks NCE were accepted, the unjustified remarks were excluded.

4. Public monitoring of the quality of public services

In order to determine the relationship of entrepreneurs to the quality of services, there were established personal misconduct deeds of employees of state agencies and organizations, the presence of the causes and conditions for corruption offenses in state bodies and presentation of proposals on how to improve the situation at NCE RK "Atameken". There public monitoring of the quality of public services is conducted.

1) in the period from January to February 2014

Public monitoring covered 30 public services.

In total, the public monitoring conducted surveys of 12,839 businesses, 141 focus groups, 327 "mystery shoppers", there were interviewed 589 respondents, 389 government agencies conducted surveillance for a total of 4614 hours.

In general, across the country the number of dissatisfaction of business with the quality of public services amounted to 35.4% of the total number of respondents.

The results were sent to the Government of the Republic of Kazakhstan and the Agency for Civil Service Affairs, as a result 74 officials were punished and amendments were introduced to 19 standards of public services.

2) in the period from October 2014 to February 2015.

Public monitoring covered 40 public services (public monitoring is being conducted in respect of 15 services repeatedly).

In total, the public monitoring conducted surveys of 22,421 businesses, 209 focus groups involving 1,317 people, 548 "mystery shoppers", there were interviewed 3177 respondents in 389 state bodies, there were conducted 1088 observations for a total of 3644 hours.

The results of the mass survey revealed that across the country the amount of dissatisfaction with the quality of public services of entrepreneurs is 16.6% of the total number of respondents.

It was found that there are cases of illegal actions of employees of public authorities and organizations at the request of illegal remuneration for services, lobbying interests of certain commercial structures, creation of conditions for corruption offenses by request of unauthorized documents, numerous violations of the order and timing of the provision of services, the loss of submitted documents, incompetence and rudeness of employees in state bodies and organizations, inaction of management of state bodies in respect of violations.

In addition, during the public monitoring was assessed the security of buildings and infrastructure, buildings of state bodies and organizations, creation of comfortable and convenient environment for the provision of public services (the certificate is attached).

In total there were surveyed 408 buildings in all regions of Kazakhstan, the evaluation was carried out by 15 criteria (the presence of electronic queue, waiting for a seat, information stands, application forms, devices for assessment of each worker, and others.).

Thus, it was found that the infrastructural of surveyed 147 buildings of local agencies meets to only 49% the requirements on quality and convenience of public services at local branches of the Committee on Consumer Protection of the Ministry of National Economy - 56%, the Ministry of Agriculture - 51%, etc.

Analytical materials on the results of the public monitoring are considered by the Government of the Republic of Kazakhstan and the Agency of the Republic of Kazakhstan for Civil Service Affairs and Anti-Corruption, and following consideration of a package of measures was adopted on how to improve the quality of public services.

The Register of problematic issues and maps for solution of problems

The register of problematic issues of entrepreneurs and map of their decision was published on the official Internet site of the National Chamber on February 19, 2014.

As part of the Register all the business problems are systematized in a single document, there were defined approaches to reduce existing administrative barriers there was conducted an assessment of the state of business in the country and there were identified priority areas in need of support, there was conducted monitoring of control of the implementation of the planned actions to address the challenges of entrepreneurship.

Currently, the Registry includes 446 problematic issues, formed on the basis of the proposals of entrepreneurs, regional business chambers and divisions of NCE RK.

446 issues, including:

1) 42 – for consideration by the structural units of the Headquarters of NCE RK;

2) 121 - at the consideration of state bodies;

3) 43 – were rejected by the public authorities;

4) 67 - solutions were approved by the public authorities;

5) 173 - resolved / implemented.

Analysis of the data shows that most problems arise among entrepreneurs in the field of taxation, agriculture, land relations, environmental regulation, construction, procurement, licensing system, transport, logistics and communications.

At present, the systematic work is carried out on the outstanding issues on the site of NCE at negotiation meetings with the participation of the first heads of state bodies, within which are developed approaches to address and to eliminate barriers to doing business in different industries and fields.

Today was held a meeting with Acting Chairman of the Committee for Construction, Housing and Communal Services and Land Management, Kosachev M.B., the Chairman of the State Revenue Committee Ergozhin D.E. at which it was agreed and there was worked out a package of measures to address the problems in the construction sector (redevelopment issues and the definition of "fine finish") and taxation (revision of the order of payment of VAT).

In addition, in order to encourage regional chambers for identification of administrative barriers, the Department initiated the proposal to include the identification of systemic problems in their rating assessment.

Moreover, on the initiative of the Department in order to minimize bureaucracy, there was approved the order of the Chairman of the Board of NCE "Atameken" dated by 02.04.2015 #17, in which was introduced the principle of "single window" for inclusion of systemic problems in the Register.

Thus, in February and November of this year, the Department received 232 problematic issues, of which 75 are included in the Register of problems.

Subsequently, the Register can become the basic document that will guide the Government of the Republic of Kazakhstan in the development of different programs, orders and decrees dealing with issues addressing businessmen and state support of entrepreneurship.

The introduction of Regulatory Impact Analysis

The law on drastic measures "On State Control and Supervision in the Republic of Kazakhstan," "On private entrepreneurship", "On Permits and Notifications", "On normative legal acts" with the active participation of NCE brings changes by introduction of Regulatory Impact Analysis (hereinafter - RIA).

RIA – is an analytical procedure for comparison of costs and benefits from the introduced regulatory tools (authorization and notification, introduction of control functions, information tools) for tougher regulation in respect of private enterprises related to requirements as well as to the existing regulatory instruments, allowing to assess the achievement of the objectives of state regulation in the future.

The introduction of RIA will increase the efficiency of the state policy regarding the use of specific regulatory tools through the evaluation of alternative approaches to regulation for achievement of certain goals or solution of well-defined problems.

There was held a meeting at NCE with experts from the World Bank on the issue of introduction RIA on January 30, 2015, which is directly involved and supports the introduction of RIA.

The World Bank has also developed during the first half of 2015:

1. Manuals for RIA;
2. Trainings for stakeholders;
3. Technical support was provided during two pilots (both new and existing regulatory instruments).

Along with this, in order to improve state policy regarding the use of specific regulatory tools through evaluation of alternative approaches to regulation for achievement of certain goals or solution of clearly defined problems, MNE, together with NCE "Atameken" (the Department) developed a technique for conduction and use of regulatory impact analysis for introduced and operating ones of permit or notification character.

The employees of the Department also conducted trainings for experts of NCE according to the approved schedule, in which advice was given on the procedure of RIA.

Currently, there is a problem with the introduction of RIA:

The need for RIA is set by law, but not all state bodies observe it.

For example, this year, the National Chamber of Entrepreneurs "Atameken" presented 22 drafts of concepts and laws (15 drafts of concepts and 7 draft laws on tax and customs administration, on the transition of Kazakhstan to "green economy", issues of industrial and innovation policy, mandatory social health insurance, etc.), which contained 78 regulators, while RIA was applied in respect of 11 of them.

Thus, the draft law prepared by MF RK in August 2015 "On amendments and additions to some legislative acts of Kazakhstan on issues of tax and customs administration" stipulated implementation of such requirements and additional regulatory tools as:

- 10 fold reduction of the threshold for registration as VAT taxpayers;

- An increase of more than 40 times of the size of the tax on extraction of mineral resources;

- The introduction of the control of government revenue bodies over waybills for import of goods and move through the territory of Kazakhstan, followed by the introduction of the electronic invoices;

- Creation of the system of an operator for collection and transfer of data to the state revenue bodies regarding control metering devices for ethyl alcohol and alcoholic beverages, mineral oils;

- Establishing minimum wholesale prices for vodka and special vodkas, strong alcoholic beverages;

- Definition of a new type of alcoholic beverages - beer drink and application in respect of it of a rate of excise duty at a rate equal to the rate of excise duty on beer.

However, none of these instruments of regulatory impact analysis were applied.

The Ministry of Health and Social Development conducts such an analysis only formally, first the draft law is introduced to the Parliament, only after that RIA for efficacy and the need for solutions is applied.

Thus, the draft law "On compulsory social health insurance" on September 2 was submitted to the Mazhilis, it has been approved in two readings and on 7th of October sent to the Senate. Only on 9^th of October 2015 the Ministry organized public discussions with the business community and conducted the regulatory impact analysis.

During the period under review the experts of the Department prepared and sent 14 alternative RIAs to developers of the draft laws.

In addition, the Department suggested following in order to encourage public bodies for reduction of administrative barriers for business by:

- The creation of independent non-state structure, which will analyze and report on the results of work of the Ministry, coordinate all projects of RIAs. This structure will have to be accountable solely to the Government. For an alternative we consider it is possible to create such an institution on the basis of NCE RK "Atameken";

- Analysis of the activities of state bodies on the results of their regulatory functions;

- Introduction of rating of state bodies to reduce administrative barriers;

- State agencies can be encouraged by determining 3 best state bodies on reduction of administrative barriers and 3 worst state agencies, which have increased administrative costs or didn’t carry out the reduction of administrative barriers.

As a result, there was conducted an analysis of the activities of 3 worst state agencies by making recommendations on how to reduce their staffing and funding;

- Disseminating of information to the Government and the Presidential Administration, the media coverage.

These initiatives were sent to the Government in a letter # 12812 on November 3, 2015, according to the resolution of the First Vice Prime Minister Sagintayev B.A. cramping ministry - MNE discusses proposals with NCE RK and central and local state bodies.

Examination of normative legal acts

In total during the period under review the Department received 370 government requests for examination of normative legal acts, the Department supervises 97 of them and acts as a co-executor in respect of 283.

An expert opinion was presented in respect of regulations: there were presented comments for 197 projects, 183 legal acts were agreed without comment.

Consideration of applications of businesses

During the reporting period, the Department reviewed 318 complaints / requests of businesses, RCE, state agencies, the Department is a supervisor in respect of 233 of them, and acts as a co-executor in respect of 85.

All requests / queries are dealt in accordance with established procedure, the relevant work is carried out and the answers are sent.