RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/KAZ/30
12 October 2000
(00-4201)
Working Party on the
Accession of KazakstanOriginal:  English
ACCESSION OF KAZAKSTAN
Memorandum on Privatization
The Ministry of the Economy of the Republic of Kazakstan has submitted the following
information.
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The structure of enterprises according to the forms of ownership in general and in branch
sections as of 1 April 2000 is presented in Table 1.  As shown in the Table, as of 1 April 2000 in the
Republic accounted about 126 thousand enterprises, of which 1.8 per cent are large enterprises,
8.8 per cent medium size and 89.4 per cent are small enterprises.  The share of state enterprises in the
total number of enterprises amounts only 18 per cent.  Communal and personal sector of services
accounts for the biggest part of the state enterprises, which constitute 15 per cent share of allenterprises.  Private enterprises, however, dominate in nearly all sectors of the economy, but
particularly in agriculture – 93.8 per cent of all enterprises in agricultural sector and construction –
92.1 per cent.
Table 1
Total Ownership
units per cent State Private Mixed ForeignShares of
subgroups
Total 125,968 100.0 18.0 76.3 3.6 2.0 100.0
Small enterprises1112,660 100.0 14.1 80.5 3.2 2.2 89.4
Medium enterprises211,054 100.0 55.1 38.4 6.1 0.4 8.8
Large enterprises32,254 100.0 35.2 50.3 13.3 1.2 1.8
Industry 13,587 100.0 5.4 83.4 8.6 2.6 100.0
Small enterprises 11,892 100.0 4.5 86.6 6.2 2.7 87.5
Medium enterprises 1,211 100.0 11.9 65.1 21.6 1.4 8.9
Large enterprises 484 100.0 11.8 50.6 33.9 3.7 3.6
Construction 8,991 100.0 1.8 92.1 4.6 1.6 100.0
Small enterprises 8,296 100.0 1.4 93.2 3.8 1.6 92.3
Medium enterprises 593 100.0 6.9 80.6 12.0 0.5 6.6
Large enterprises 102 100.0 5.9 65.7 25.5 2.9 1.1
Agriculture 10,132 100.0 3.9 93.8 2.1 0.2 100.0
Small enterprises 7,799 100.0 3.4 94.8 1.6 0.3 77.0
                                                     
1 Enterprises with less than 50 employees
2 Enterprises with 50-250 employees
3 Enterprises with more than 250 employeesWT/ACC/KAZ/30
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Medium enterprises 1,609 100.0 6.7 90.0 3.3 0.1 15.9
Large enterprises 724 100.0 3.9 91.2 4.8 0.1 7.1
Transport and
communication5,282 100.0 4.9 83.4 8.8 3.0 100.0
Small enterprises 4,574 100.0 2.6 87.3 6.8 3.3 86.6
Medium enterprises 596 100.0 18.0 63.1 18.5 0.5 11.3
Large enterprises 112 100.0 27.7 33.0 36.6 2.7 2.1
Trade and catering 37,020 100.0 0.5 91.7 3.8 4.0 100.0
Small enterprises 36,437 100.0 0.5 91.9 3.6 4.1 98.4
Medium enterprises 535 100.0 3.2 81.5 15.1 0.2 1.4
Large enterprises 48 100.0 4.2 81.3 12.5 2.1 0.1
Personal and public
services9,405 100.0 15.0 83.4 1.2 0.4 100.0
Small enterprises 8,957 100.0 13.2 85.4 1.0 0.4 95.2
Medium enterprises 397 100.0 54.4 41.8 3.0 0.8 4.2
Large enterprises 51 100.0 29.4 58.8 11.8 0.0 0.5
Other  sectors 41,551 100.0 47.2 50.1 1.9 0.9 100.0
Small enterprises 34,705 100.0 38.8 58.2 2.0 1.0 83.5
Medium enterprises 6,113 100.0 89.3 9.0 1.5 0.3 14.7
Large enterprises 733 100.0 89.4 7.6 2.9 0.1 1.8
Sources: The Agency of the Republic of Kazakstan for Statistics (ARKS); КЕТ  calculations.
1. History
First stage of privatization process (1991-1992) was characterized as the beginning of the
state ownership re-structuring through the stake holding of the majority of enterprises with a different
degree of  the state participation.  At that stage, the privatization was of “the initiative nature”,
because state bodies were adopting a decision on privatization only after an application for
privatization had been filed by a collective of the enterprise.  The Small privatization Program,
approved by that time, became the foundation for formation of the basis of originating of a bignumber of owners, who saturated the consumer market and the market of services, contributed into
the development of the competition and entrepreneurship.
In 1991-1992, by way of conduction of auctions and tenders, 4 770 objects of state ownership
were sold. Privatization in the agricultural sector was conducted under the initiative of an owner. Atthe first stage of reforms, 472 of 2120 state agricultural firms were privatized.
Second stage (1993-1995). The adoption of  “The National program of privatization of a state
property in the Republic of Kazakstan for 1993-1995 years ” in March 1993 marked the new turning
point in implementation of transformational processes of the state property.
For the first time in CIS countries, the system of initiative privatization was eliminated and
the unified management system and privatization of a state property was created.
Changes were made in the national legislation according to which the system of municipal
property, the collective buy-out of firms were eliminated, and the Law “About rent ” was cancelled.
The program envisaged the following main directions: small (auction and competitive sale of trade
objects, consumer services and industrial enterprises with not more than 200 employees), massWT/ACC/KAZ/30
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privatization (enterprises with from 200 to 5,000 employees), privatization under the personal projects
(enterprises with more than 5,000 employees).
During that period, within the framework of small privatization, 6,037 objects were
privatized.  It is necessary to stress, that at the second stage, the deposited sum by a buyer for thestate-owned property, acquired by him, could consist for 50 per cent of money resources, and for 50
per cent of the housing coupons, used at the first stage of privatization only for the buy-out of
housing.  Free sale and purchase of the housing coupons that are carried out through the divisions of
the Savings bank has been introduced.
The privatization of enterprises was the preliminary stage of mass privatization and
privatization under individual projects.  The scheme of initial distribution of the stocks was alsounified – 10  per cent of the stocks were allocated for the members of collectives of enterprises, and
90  per cent remained under state property.
Mass privatization process assumed the of creation institutional investors, which did not exist
before, the so called the investment privatization funds (IPF), which accumulated the populationcoupons and used them as single payment instrument at specialized coupon auctions on sale of the
state shares of joint-stock companies.
At that period, 169 IPF were licensed, 22 coupon auctions were conducted, the stocks of
1,688 joint-stock companies of general nominal value 3,138 million Tenges were sold, so 1,127million coupons were disbursed.  In the second half of 1995, the State committee on privatization has
undertaken the first steps on organization of sales of the state shares for money resources.  The
legislative base was prepared, the scheme of pecuniary tenders was tested and the mass sale of joint-
stock companies’ stocks at auctions and tenders began.  Up to the end of year the state shares of 373
joint-stock companies were realized.
During that period, the privatization under the individual projects of large and unique objects
and enterprises, producing commodities or executing activity of special social significance, and also
being natural monopoly of the state in the branches of a heavy and chemical industry, in a mining and
processing of mineral resources, in power engineering, metallurgy, transport, large department stores
and telecommunications was started.
Besides, in 1993-1995 1,490 state farms were privatized in the republic. Within the
framework of privatization of the agricultural sector 1,967 enterprises, consisting 93 per cent of all
agricultural objects were sold. The branches on processing of agricultural production, such as
alimentary, milling, elevators, were sold or transferred under the following scheme:  10 per cent of the
non-voting shares remained to the workers, 10 per cent  with the right of prime sale remained to the
working persons, 51 per cent to the producers, suppliers and adjacent companies and 29  per cent - to
the state.  Nowadays, the remained state stocks are mainly privatized through the opened privatization
pecuniary auctions to order to include foreign and local participation.  By the end of 1995 more than
84 per cent (1,862 enterprises) state enterprises in the agricultural sector were privatized.
Third stage (1996-1998). In February 1996, the Program of privatization and re-structuring of
a state property in the Republic of Kazakstan for 1996-1998 years was approved, the main purpose of
which was the achievement and fastening of dominance of a private sector in the economy of the
Republic of Kazakstan through the completion of privatization process.  Achievement of this purpose
was implemented through the re-structuring of objects, remained in the state property.  During theimplementation of the Program, openness and publicity of privatization on the basis of application of
the extremely market, competitive forms of privatization were abided.
At that stage, any privatization of state ownership was implemented only for money
resources.WT/ACC/KAZ/30
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The privatization of object under the individual projects, the sale to definite investor under
agreed conditions were stipulated.  The selection of the proposed definite investor has been
implemented on the tender basis.
In relation with the top priority branches of economy of Kazakstan, such as oil and gas
industry, power engineering, transport and co mmunication, ferrous and non-ferrous metallurgy,
diagnostic and analytical works started to be carried out.  They become the basis for the formation of
optimal property structure  in these branches as a whole, and also for the strategy of its achievement.
Based on the results of diagnostic and analytical works, the Government of the Republic of Kazakstan
approved the branch industry programs of privatization and re-structuring, the purpose of which was
the achievement and fastening of dominance of a private sector in the economy on the basis ofactivation of the process of privatization of enterprises of oil and gas and transport-communication
complexes, industry, public health services, education, science, culture and sports.
Special program on object privatization was worked out on each of the indicated branch of
industry, and predominantly under the individual projects with taking into account of the proposals ofthe interested central and local authorities of the Republic of Kazakstan, objects of privatization itself
with attraction of professional advisers.
At that stage, the Government concentrated at privatization of individual enterprises, increase
of incomes from the privatization through the conduction of competitive tenders, defining ofappropriate strategic investors and increase of enterprises’ efficiency by means of usage of the long-
term contracts with the foreign businessmen on management transfer.
The Contracts on management transfer were concluded in such industry branches as
metallurgy, production of chemicals, Saccharum and petroleum refining.  Among large enterprises arePavlodar aluminum plant, Transnational company "Kazchrome", main gas pipelines, Pavlodar oil
Refinery plant.
Of 66 enterprises, on which the contracts on management transfer were concluded, further, 26
enterprises of them were sold to management companies.
Within the framework of the privatization programs to the end of 1998, 3,276 of the joint-
stock companies and economic partnerships, what constitutes 65 per cent of total number of the
established joint-stock companies and economic partnerships, 2,606 objects of social sphere (for
1997-1998), separate units of property and property complexes of enterprises were privatized.
In 1998, under the individual projects ten enterprises were exhibited to tenders, 8 of theme
were sold, among them for the first time - one of the largest banks of Kazakstan was privatized, that
was OJSC “ Bank Turan-Alem ”.
At third stage, within the framework of small privatization, 6,262 objects of state property
were sold, and in August 1997, the Program of small privatization was finished.
In 1993-1996, with the purpose of the development of the market of transportation services
through the segmentation of vehicles from motor transportation enterprises 9,226 units of motor-
vehicle transport were privatized.  Within the framework of small privatization the state shares of 150
motor-vehicle transport enterprises were sold.  Thus, the sphere of cargo auto transportation wascompletely de-monopolized.WT/ACC/KAZ/30
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2. Current status
Fourth stage (1999-2000).  With the purpose of further implementation of the efficient state
ownership management for the period of 1999-2000, the Program of privatization and increase the
state-owned property efficient management for the 1999-2000 years was worked out.  The key point
of this program is the division of property to the republican and municipal, that has the objective of
more efficient management of the state-owned property.  Thus, the first substantial steps to local self-
management and the independence of regions have been made.
In 1999, the state shares and shares of participation in 953 joint-stock companies and
economic partnerships were transferred to the munici pal property.  The right of adoption of decisions
and implementation of privatization of municipal property objects was assigned to Akims of, Astana
city and Almaty city.
The Government of the Republic of Kazakstan has determined nine leading enterprises as
“blue chips ”, in which at present the state has sh are participation. This list includes the following
joint-stock companies: “Mangistaumunaigas”, “Aktyubemunaigas”, “Kazzink”, “Ust-Kamenogorskiititano-magnievy combinat” (UKTMC), “SSGPO” (mining company in Sokolov and Sarbai),
“Aluminii Kazakstana”,  “TNK Kazkrom”, “Narodnyi Savings Bank of Kazakstan”, “Kazaktelecom”.
The Commission to conduct a tender was created in order to select the councillors on privatization of
the state shares of these joint-stock companies: “Mangistaumunaigas”, “Aktyubemunaigas”,
“Kazzink”, “Ust-Kamenogorskii titano-magnievy combinat” (UKTMC), “SSGPO” (mining companyin Sokolov and Sarbai), “Aluminii Kazakstana ”,  “TNK Kazkrom.  In 1999 the privatization of part
of the state shares of joint-stock company “Narodnyi Savings Bank of Kazakstan” was conducted.
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