Undeclared Assets
Undeclared Assets
Even though a government campaign to legalise capital and property in Kazakstan revealed assets worth the equivalent of nine per cent of the country’s gross domestic product, NBCentralAsia experts say the grey economy will continue to flourish.
The government’s drive to bring Kazakstan’s economy out of the shadows ended on July 31 with the results published a few days later.
The campaign began in July 2006 but initially had such a feeble response that it had to be extended twice. In the end, assets valued at 828 billion tenge, around 6.7 billion US dollars, were officially declared and registered, including 536 billion tenge, or 4.4 billion dollars, in money.
According to a KazInform news agency report, the grey economy is estimated at the equivalent of 25 to 35 per cent of GDP.
Despite apparent success of this “amnesty”, NBCentralAsia economists doubt it will make a significant dent in the size of the illegal economy.
Kanat Berentaev, deputy director of the Public Issues Research Centre and an economist, points out that most declarations involved cash rather than business assets.
As a result, Kazakstan will acquire “a few dozen multi-millionaires and one or two billionaires”. The bulk of those owning up were not individuals, however, but companies that were already paying tax but whose ownership was incorrectly registered. In addition, there were some private homes and summer residences that are unlikely to net the state much in the way of tax. Berentaev’s conclusion is that the grey economy remains largely unaffected.
Political scientist Aydos Sarimov agrees that the process of legalisation does not automatically mean the shadow economy will go away, since it failed to address the reasons why the phenomenon exists.
“Legalisation is not the same as curbing the grey economy,” he said. “All it has done is allow some people to declare their assets. There’s been no parallel war on corruption, and no laws to eliminate it.”
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
The government’s drive to bring Kazakstan’s economy out of the shadows ended on July 31 with the results published a few days later.
The campaign began in July 2006 but initially had such a feeble response that it had to be extended twice. In the end, assets valued at 828 billion tenge, around 6.7 billion US dollars, were officially declared and registered, including 536 billion tenge, or 4.4 billion dollars, in money.
According to a KazInform news agency report, the grey economy is estimated at the equivalent of 25 to 35 per cent of GDP.
Despite apparent success of this “amnesty”, NBCentralAsia economists doubt it will make a significant dent in the size of the illegal economy.
Kanat Berentaev, deputy director of the Public Issues Research Centre and an economist, points out that most declarations involved cash rather than business assets.
As a result, Kazakstan will acquire “a few dozen multi-millionaires and one or two billionaires”. The bulk of those owning up were not individuals, however, but companies that were already paying tax but whose ownership was incorrectly registered. In addition, there were some private homes and summer residences that are unlikely to net the state much in the way of tax. Berentaev’s conclusion is that the grey economy remains largely unaffected.
Political scientist Aydos Sarimov agrees that the process of legalisation does not automatically mean the shadow economy will go away, since it failed to address the reasons why the phenomenon exists.
“Legalisation is not the same as curbing the grey economy,” he said. “All it has done is allow some people to declare their assets. There’s been no parallel war on corruption, and no laws to eliminate it.”
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
