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A customs reform – removal of obstacles, corruption and criminality – provided a “clean” 300 billion KZT to the budget, just through the collection of VAT on imports in one single calendar year.

We have expressed some cautious confidence in 2018 concerning the upcoming government reforms in 2022. Especially with regards to inflation, it is obvious that not all development statistics are promising. Yet for the first time (maybe ever), the authorities tackled the issue at its core: the rule of law. We would like to remind you that “Government Integrity,” or the battle against corruption and kleptocracy, is where Kazakhstan lags most behind modern nations in terms of economic freedom.

Many people also still don’t fully understand how an economy is supposed to grow without money. Topics of discussion are currently about the sourcing of the cash and its intended use. This is why there are debates over taxation and allocation of resources.

And now, some unexpected news from one of the world’s most publicised and corrupt institutions: customs. The “Augean stables” were apparently cleared out slowly and methodically throughout last year.

For the record, in 2021 and 2022:

  • imports in KZT from countries outside the EAEU increased by 43%

  • transit in tonnes increased by 10%.

But VAT on imports increased by 80% (!) in one year – from 0.8 to 1.4 trillion KZT.

Once again, one reform at customs, aimed at elimination of barriers, corruption and crime, gave a “clean” 300 billion KZT to the budget, only from the VAT on imports and only in a year.

To understand the scale, due to this reform in only one year it is possible to finance:

  • schools for 100,000 children OR;

  • the entire national project “Modernisation of rural healthcare” with 655 facilities OR;

  • modernisation of the 2nd combined heat and power plant in Almaty.

Until the end of 2025, this reform alone will allow covering half of the budget of the Comfortable Schools national project.

In total, since the beginning of the year, customs officers have collected 3.3 trillion KZT, which is equivalent to the entire education budget from kindergartens to universities.

It is also noteworthy that foreign trade has become more competitive and accessible. The number of participants for the year increased twofold immediately – from 28.8 to 44.5 thousand.

Ways to achieve these indicators clearly characterise the importance of institutional solutions:

  1. Introduction of remote control without contact with participants. Customs officers are separated from decision-making, the system independently distributes declarations and determines risk.

  2. Increase of throughput at border checkpoints with China by 4 times.

  3. At long last, establishment of an online exchange of export declarations with the PRC – if earlier we tracked only 17% of imports, now another 80%, transported by rail, has been added.

Shadow schemes have been eliminated not only with China, but also with Turkey. For example, the efficiency of collecting payments from consumer goods has increased by almost 4 times.

The past year has brought to light three times as many violations. Income to the state budget from penalties increased from 51 to 182 billion KZT.

To summarise:

  • From words to deeds. It turns out that there is no need to write new economic policies and strategies. The state managed to carry out the most important reform in a year and is already ripping the results. This is quite close to the case of best practices in the reviews of international organisations.

  • Scaling. The state has shown that it can do something: a) within its sphere, b) without money, c) by changing the rules of the game, without rough and foolish norms. Business activity has increased, taxes have increased, competition has become fairer – everyone has won. It turns out that this is not a zero-sum game.

This approach, with its clear and hidden truths, must be applied in all critical areas. For many such “Augean stables” have been accumulated over last decades.


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