The Mazhilis of the Parliament of the Republic of Kazakhstan received for consideration, the Draft Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Transferring State Functions to a Competitive Environment".

Aizhan Bizhanova, Managing Director and Director of the Department for Legislation and Development of Self-Regulation, gave answers to frequently asked questions.

Regarding the absence of criteria for selecting state functions for transfer to a competitive environment

The head of state repeatedly noted the need to form a compact government, focused on the implementation of only a few of the most important strategic functions.

"Each ministry and department should be freed from its uncharacteristic functions, transferring them as much as possible from the centre to the regions and from the state to the private sector" (President's Address to the Nation dated by 1997 "Kazakhstan - 2030 Prosperity, Security and Welfare Improvement for All Kazakhstanis").

"In this connection, within the framework of the Nation's Plan - 100 concrete Steps, 97 step stipulates expansion of the opportunities for citizens to participate in the decision-making process through the development of self-regulation and the transfer of functions that are not characteristic of the state to a competitive environment. The government should become compact by reducing government-specific and redundant functions", - explains Aizhan Bizhanova.

At the first stage of implementation of the 97th Step of the Plan of the Nation, the Basic Law of the Republic of Kazakhstan "On Self-Regulation" was adopted, which defined the basic principles of self-regulation of entrepreneurial and professional activities.

At the second stage, the Commission under the Government of the Republic of Kazakhstan (Order of the Prime Minister No. 9 dated by 30^th of January 2016) was established to develop approaches to the transfer of state functions to the competitive environment, the Expert Group on the Mazhilis of the Parliament platform of the Republic of Kazakhstan.

At the same time, the protocol commission of the Commission dated by 20^th of April 2016 approved the basic approaches for transferring state functions to the competitive environment and SROs, which provide for the annual work of the Government of the Republic of Kazakhstan for the following consecutive events (stages):

Stage 1 - inventory of government functions (responsible government agency);

For reference: based on the results of the inventory, the Expert Group forms and submits to the Commission a list of functions proposed for transfer to a competitive environment and SROs. This list is subject to publication on the websites of the Ministry of National Economy of the Republic of Kazakhstan and NCE RK for public discussion and search for a potential competitive environment.

Stage 2 - analysis of market readiness and analysis of regulatory impact (determined depending on the mode of transmission);

For reference: the results of this stage of transferring state functions to a competitive environment and to self-regulating organizations, show the practical possibility of implementing state functions by a competitive environment and self-regulating organizations.

Stage 3 - review of the list of functions by the Commission (the responsible Expert Group under the Commission, the recommendations are made by the Commission);

Stage 4 - transferring functions to a competitive environment (implementation by the state bodies of the recommendations of the Commission by amending the regulatory legal acts of the Republic of Kazakhstan).

It should be noted that the above-mentioned approaches formed the basis for the draft law on the transfer of state functions to a competitive environment.

Along with this, the norms of the Methodology for conducting sectoral (departmental) functional reviews of the activities of state bodies (Order No. 84 of the Minister of National Economy of the Republic of Kazakhstan of February 27, 2017 No. 84) were taken into account when drafting the bill. It was registered with the Ministry of Justice of the Republic of Kazakhstan on March 27, 2017 with the No. 14941).

"One of the stages of carrying out a functional review of the activities of state bodies is the transfer of state functions to the competitive environment and SRO by identifying unusual and redundant functions of the state body", - the expert stressed.

For reference: in the framework of this methodology, the following definitions are given:

uncharacteristic function is a function of a public body that is not inherent in its activity and is subject to transfer to a competitive environment, to self-regulatory organizations or an exception corresponding to one of the following characteristics:

1) it is redundant (the exclusion of which from the administrative and managerial process of the state body will not lead to a decrease in the quality of work or the provision of a public service);

2) it is supportive;

3) it is basic, but at the same time it goes beyond state regulation, and the results and purposes of introducing such a function are ineffective (permissive or notification procedure, state control).

Thus, by identifying unusual functions, eliminating duplicate functions, and transferring non-traditional functions to the competitive environment and SRO, it is ensured that the optimal volume of functions is created in each specific government agency and the role of the state is established both in individual spheres (sectors) and at different levels of state management.

At the same time, it was the 97th Step that eliminated the existing "gaps" in the public administration system and determined practical and detailed solutions to enhance the ability of citizens to participate in management decisions through the development of the institute of self-regulation and the transfer of state functions to a competitive environment and SROs.

Thus, the establishment at the legislative level of approaches to transfer state functions to a competitive environment and the SRO will make the reform systemic and orderly.

The responsibility of the executor of state functions

"The draft law on the transfer of public functions to a competitive environment identified 5 main methods of transfer: outsourcing, state assignment, state social order, at the expense of service recipients, self-regulation based on mandatory membership (participation). It should be noted that this bill is a framework and provides for the consolidation of basic approaches to transfer of public functions to a competitive environment and to self-regulating organizations. Thus, the responsibility of market entities is established by sectoral regulatory legal acts of the Republic of Kazakhstan, depending on the chosen mode of transfer", - says the director.

Speaker gives an example: when transferring state functions to a competitive environment through state order, outsourcing, state assignment, responsibility is regulated within the framework of the branch laws of the Republic of Kazakhstan: the LRK "On State Social Order, Grants and Prizes for Non-Governmental Organizations in the Republic of Kazakhstan", Budget Code, "On public procurement ".

At the same time, according to Aizhan Bizhanova, in each specific case, the performer bears civil liability under the contract concluded between the state body and the executor.

In the case of the transfer of the state function to mandatory self-regulation, state control and supervision of the activities of self-regulatory organizations is regulated by Article 29 of the Law of the Republic of Kazakhstan "On Self-Regulation".

It should be noted that in areas where self-regulation based on mandatory membership (participation) will be introduced, there will be state control with its administrative impact, but exclusively for self-regulating organizations, which is in line with OECD principles.

Regarding the procedure for establishing contributions to SROs

"In order to neutralize the risks of unreasonable transfer of public functions to the competitive environment and SRO, there are three main methodological tools: passport functions, analysis of regulatory impact and market readiness analysis. The first stage in the transfer of public functions is the conduct by the state bodies on an annual basis of an inventory of their functions. Inventory includes analytical work to study the characteristics of each function for possible transfer to a competitive environment or self-regulatory organizations", - explains Aizhan Bizhanova.

According to her words, the quality of the implementation of state functions by the competitive environment will directly depend on the quality of the inventory of its functions carried out by state bodies.

"In this regard, the National Chamber, in cooperation with the Ministry of Education and Science, has developed a Passport function that includes a description of the characteristics of the function by the public authority (the purpose and objectives of the function, by whom it is implemented, the number of persons involved in its implementation, the cost of the function, as well as the results of the implementation of the function). For the qualitative implementation of certain state functions by the business community, business needs to improve its management processes, build up its professional staff potential, and develop its infrastructure. In this regard, the analysis of the level of market readiness is an important stage in the transfer of public functions", - she added.

Also, in order to reduce the risks of unreasonable and hasty transfer of functions of state bodies to a competitive environment, NCE proposed a model of market readiness analysis similar to the analysis of regulatory impact.

Given that the analysis of regulatory impact is used in the case of the transfer of public functions - self-regulation based on mandatory membership, the analysis of the readiness of the market is subject to state functions that are transferred in other ways - outsourcing, state social order, state assignment, at the expense of the service recipients.

It should be noted that the work on analyzing the market readiness and regulatory impact is based on information provided by state bodies on the basis of inventory results, in particular, on the information specified in the Function Passport.

Analysis of market readiness, as well as analysis of regulatory impact, includes procedures for conducting public hearings, studying international experience and filling in analytical forms that allow:

- to determine and evaluate the expediency of choosing the mode of transmission, taking into account the various opinions received during the discussions and analysis. Consider the possibility of applying various forms of transferring a function;

- analyze the costs and benefits, the impact of such a transfer on the state, the consumer, as well as the entrepreneur assuming the functions of the state;

- compare the cost of implementing a function defined by a competitive environment, with the value established by the state agency;

- identify the problems of the current state of the implementation of the function;

-compare the objectives established by the competitive environment with the goals set by the state body, and also in the subsequent evaluation of the results of such transfer.

All of the above indicators in general will make it possible to assess the quality of the performance of a state function by a competitive environment, and depending on the effectiveness of its implementation, consider further improvement of public administration.

At the same time, in order to exclude corruption risks in the SRO itself, the basic Law of the Republic of Kazakhstan "On Self-Regulation" regulates the mechanisms of corporate governance, provides for the rotation of the executive body, prescribed the procedure for holding the first general meeting of SRO members, the obligation to audit the annual financial statements of SROs and others.

With regard to the question of establishing contributions when introducing mandatory self-regulation, we note the following.

The Law of the Republic of Kazakhstan "On Self-Regulation" regulates that the procedure for making contributions, their targeted use and reporting on this is established by the charter of the SRO, which in turn is subject to approval at the general meeting of members (participants).

At the same time, taking into account the preservation of the principle of equality of all business entities, it is possible to reduce the membership fee for the entrepreneurs who are members of the National Chamber, who are also members of self-regulating organizations based on mandatory membership, by the decision of the Congress of the National Chamber.

Regarding the order of assigning the SRO status

There are two kinds of self-regulation in Kazakhstan today: voluntary and obligatory.

Voluntary self-regulation is introduced along with state regulation. According to the Law of the Republic of Kazakhstan "On Self-Regulation", the requirements and standards in such SRO are established above the requirements of the state.

Also, such associations of entrepreneurs and professional activities are required to provide property liability to consumers.

Thus, the state and the consumer only benefit from this kind of self-regulation.

"Regarding compulsory self-regulation, according to article 3 of the branch law, this kind of self-regulation is introduced by the industry law by conducting a procedure for analysing the regulatory impact. We note that the procedure for analysing costs and balances has been introduced into the legislation of the Republic of Kazakhstan as "smart regulation". The analysis of the regulatory impact includes not only the study of international experience, public discussions with all participants in the process (government body, deputies, business, consumer), but also the study of at least 3 possible alternative policy options", - said Aizhan Bizhanova.

In this case, according to the Business Code, any interested person has the right to develop his own version of the analysis of regulatory impact, which in turn ensures the adoption of the most balanced decision when introducing an SRO with mandatory membership (participation).