"Initially a braking force, not a steering mechanism": MP proposes scrutinizing the "Samruk-Kazyna" fund operations.
Let's Break the Economy's Brake: Deputy Zhubanov Suggests a Radical Revamp of the "Samruk-Kazyna" Fund
Deputy Adil Zhubanov of the Mazhilis is making waves with his proposal to shake up the "Samruk-Kazyna" National Welfare Fund. He's not mincing words - he thinks it's time to put a fresh spin on the fund's operations.
According to our sources, Zhubanov sent a strong message to Prime Minister Olzhas Bektenov, stating that the fund needs a major overhaul. In his opinion, it's become more of a roadblock than a catalyst for the Kazakhstani economy.
The disagreement goes back to the fund's inception in 2008, when it was envisioned as a strategic anti-crisis policy agency and driver of long-term growth, resembling internationally renowned funds such as Temasek Holdings in Singapore. However, against the theory, the fund appears to be struggling with efficiency and transparency issues.
In his appeal, Zhubanov pointed out that some of the fund's units are interfering in the market economy, with one particularly concerning statistic: In 2023, over 60% of all purchases by the "Samruk-Kazyna" Group of Companies were sourced from a single supplier. Similar trends can be seen in JSC "Baiterek," with approximately half of the purchases originating from a solitary vendor. This goes against market principles and could potentially lead to monopolization and corruption.
Moreover, according to Zhubanov, Kazakhstan lacks the robust institutional control mechanisms enjoyed by Singapore - a discrepancy reflected in the Corruption Perceptions Index, where Kazakhstan lags behind in 93rd place, while Singapore ranks a respectable 5th. Adding to the concerns, around half of Kazakhstan's GDP is controlled by a single fund, with no regular external audits.
On top of these issues, Zhubanov highlighted the fund's underperforming key assets, such as KazMunaiGas, Kazakhstan Temir Zholy, and KEGOC, as well as growing debt loads and the absence of clear strategies for tackling these problems.
Given these challenges, Zhubanov suggested some radical reforms, including conducting an external audit of the fund and its subsidiaries with the involvement of independent experts, gradually shifting relevant assets into a competitive market while retaining state control over strategic sectors, and developing a mechanism for transforming the fund that includes eliminating single-source purchases, transferring non-core assets to market conditions, and updating the boards of directors with professionals of independent standing.
He also proposed considering the fund's continued existence in its current form, and if reforms cannot be implemented, to initiate the transfer of assets to the management of relevant ministries. Zhubanov believes that maintaining the existing fund model, which duplicates the private sector and discourages competition, hurts the country's investment appeal and increases public mistrust in institutions.
It's worth noting that this isn't Zhubanov's first criticism of the "Samruk-Kazyna" fund. In a recent presentation in the Majilis regarding the government's and Supreme Audit Chamber's report on the execution of the country's budget for 2024, he called for the organization's dismantling.
The "Samruk-Kazyna" fund's response to the proposal is yet to be seen. Keep an eye on this space for further updates.
Here's a quick overview of the suggested changes to the "Samruk-Kazyna" fund:
- External Audit: A comprehensive review by independent experts to assess corporate governance, procurement practices, and resource allocation.
- Market Competition: Promoting competition by diversifying assets and fostering private sector participation.
- Governance: Renewing the boards of directors to encourage diverse perspectives and better decision-making.
- Transparency: Transparent tender processes to reduce monopolization and encourage competition.
Stay tuned as we continue to cover the developments surrounding the "Samruk-Kazyna" fund's potential transformation!
- The proposed reforms for the "Samruk-Kazyna" fund, as suggested by Deputy Zhubanov, call for an external audit by independent experts to scrutinize corporate governance, procurement practices, and resource allocation, aiming to enhance transparency and efficiency.
- In the realm of business and politics, Deputy Zhubanov has advocated for the "Samruk-Kazyna" fund to transition into a more market-driven model, promoting competition by diversifying assets, fostering private sector participation, and reconstituting the boards of directors with professionals of independent standing to stimulate general-news discussions about Kazakhstan's economic future.
