ENTREPRENEURS’ RIGHTS IN NORTHERN KAZAKHSTAN

According to the Regional Statistics Board,
23% of the economically active population of the Northern Kazakhstan Region is involved in
small business. On the other hand, the private business sector is widely believed to be an
easy target for local government officials and a host of inspecting bodies who often
misuse their power to extort money. The Northern Kazakhstan Police Department reported
that 29 cases of bribery were committed in 1999. In December, a group of senior civil
servants were publicly accused of embezzling public money, abuse of power, and financial
fraud. Nearly all of the accused, however, were given amnesty.

The Northern Kazakhstan Entrepreneurs’ Rights Protection Association (ERPA) was
established in December 1999 to shield private business people from corrupt government
employees. In fact, ERPA is the only NGO in the region investigating allegations of
extortion and harassment of entrepreneurs. ERPA is currently carrying-out an independent
legal evaluation of the decisions concerning private businesses. The purposeful activities
of ERPA members have brought them recognition from government officials, who at first
tried to browbeat them.

Recent surveys conducted by legal consultants of the association have revealed that 76%
of the entrepreneurs and private farmers living in rural areas are not aware of their
rights. This can be attributed to the fact that in the countryside, information sources
are not available to a wide segment of the population. To remedy the situation, ERPA
members travel to remote rural areas to conduct seminars on business law and conduct
round-table sessions with local officials. Galina Ipatova, the director of the ERPA,
believes that the law-making bodies are creating an environment hostile for entrepreneurs
and favorable for corruption-prone officials. Disproportional high taxes and bureaucratic
procedures for licensing business activities force entrepreneurs to either "grease
the palms" of inspectors, or seek shelter in the shadow economy. In one instance, a
private shop owner complained that he had to pay 20,000 Tenge ($142) to get his license
renewed from the Fire Department. More than 20 government bodies have the power to inspect
private businesses under current regulations.

At the end of March, the association advanced some proposals to the government that
include upgrading the tax code, reducing the number of inspecting bodies, and raising the
monthly salary of tax inspectors who currently make a monthly average of $39. The low
salaries urge governmental employees to resort to extortion. Being short of funding, the
ERPA is now active in only two of the 13 districts of the Northern Kazakhstan Region, but
is planning to extend its activities to other areas later this year. In search of
international contacts, the ERPA has turned to The Eurasia Foundation, which is widely
known in the country for its active support of NGOs.

Marat Yermukanov