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Fast-Paced Reforms Lead to Improvements in Ease of Doing Business Across Kazakhstan

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Regions of Kazakhstan have made doing business easier by improving business regulation over the past two years, says the World Bank in a new report released today.

According to the subnational Doing Business in Kazakhstan 2019 report, the pace of reform has been fast across Kazakhstan. Lower performing regions cut the gap with Almaty city, the top performer, by half on getting electricity and dealing with construction permits. These reforms are reducing red tape for entrepreneurs and are moving the whole country toward global good practices in business regulation. Good practices found throughout the individual regions pave the way for reform-minded policy makers to improve further by replicating best practices in other locations.

The government of Kazakhstan is adopting unprecedented system-wide reforms aimed at improving the business climate, and reducing administrative barriers and business costs As a result, today Kazakhstan is among the top 30 countries in the World Bank’s Doing Business ranking. For further dynamic development of entrepreneurship in the country, the World Bank’s assessment of whether an economy has good rules and processes at the local level will help us significantly improve the local business climate,” said Arman Dzhumabekov, First Vice-Minister of National Economy of the Republic of Kazakhstan.

This is the second Doing Business report on Kazakhstan, examining the performance of 16 locations – 13 regions, as well as the cities of Almaty, Nur-Sultan, and Shymkent. It expands the scope of coverage from the eight locations that were measured in the first report produced in 2017.

“As Kazakhstan strives to improve opportunities for all citizens and diversify its economy through increasing the contribution of small and medium-size enterprises, the right regulatory environment can help entrepreneurs overcome obstacles such as low productivity and corruption. Better managing the pace of reforms and addressing gaps in implementation will enable firms to realize their full potential and contribute to growth,” said Ato Brown, World Bank Country Manager for Kazakhstan.

To determine the ease of doing business for small and medium-size enterprises, the report measures four regulatory areas – starting a business, dealing with construction permits, getting electricity, and registering property.

Across the areas measured, Almaty city scores highest, leading on three indicators – getting electricity, registering property and dealing with construction permits. Nur-Sultan ranks first on starting a business, owing to the availability of electronic processes and uptake in the use of the E-Government system. East Kazakhstan and Pavlodar also share the top score with Almaty city on registering property. These regions keep land registry titles in digital format. No location does equally well across all areas measured, but each location ranks in the top half on at least one indicator. This leaves room for all regions to learn from each other.

Notably, all eight locations that were studied in both the 2017 and 2019 reports improved their business environment, with Nur-Sultan making the most significant progress. Of the 24 reforms implemented since 2017, eight reforms decreased the time to start a business by more than half, on average. Significant reforms were observed in getting electricity; all eight locations improved the quality and reliability of power supply. The cities of Nur-Sultan and Shymkent, as well as the Karagandy region made the largest improvements in this area, through the recording and reporting of data on the frequency and duration of power outages. All eight locations also eliminated the need for an expert opinion after external works and streamlined requests for technical conditions.

Globally, Kazakhstan is improving faster than many economies and is competitive in the time and cost of doing business; in three out of the four regulatory areas measured in this study, the time needed to complete all requirements has dropped at a faster rate, on average, than in the Europe and Central Asia region and high-income OECD economies. However, challenges remain in procedural complexity, especially in dealing with construction permits, and, at the regional level, there are gaps in the implementation of central government reforms.

Going forward, the key to success will be ensuring that national initiatives are properly implemented, so that entrepreneurs can benefit from efficient and good quality service delivery at the local level. Kazakhstan can improve further by increasing ownership at the local level. Local policy makers need to go beyond the national initiatives and address regional obstacles to doing business through practical solutions that make service delivery more efficient.

The annual Doing Business report measures 190 economies globally, with Almaty city representing Kazakhstan as its largest business city. The subnational Doing Business in Kazakhstan reports aim to gain a broader understanding of the regulatory environment for businesses across the country. Tools like Doing Business in Kazakhstan 2019 help identify the implementation gaps at the point of service in the regions, to inform the policy agenda.

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MSMEs Key to Southeast Asia’s Post-COVID-19 Recovery

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Strengthening the dynamics of micro, small, and medium-sized enterprises (MSMEs) with innovation and internationalization will be key to revitalizing Southeast Asian economies devastated by the coronavirus disease (COVID-19) pandemic, according to a new report from the Asian Development Bank (ADB).

MSMEs are a critical driving force in Southeast Asian economies, accounting for an average of 97% of all enterprises and 69% of the national labor force from 2010 to 2019. They contributed an average of 41% of each country’s gross domestic product over the same period.

“MSMEs in Southeast Asian economies mainly focus on domestic markets and their level of entrepreneurship remain suboptimal. Supporting the development of MSMEs, particularly in technology adoption and participation in global supply chains, will contribute to inclusive growth and aid in recovery efforts from COVID-19,” said ADB Chief Economist Yasuyuki Sawada. “We’re confident that this new report, Asia Small and Medium-Sized Enterprise Monitor (ASM) 2020, which provides a rich set of data and analyses on MSME development in Southeast Asia pre-COVID-19 pandemic, would become a benchmark in helping design feasible government assistance for MSMEs amid a new normal in the region.”

The first volume of ASM 2020, released today at a virtual launch attended by ADB Vice-President for Knowledge Management and Sustainable Development Bambang Susantono, presents a detailed assessment of financial and nonfinancial issues facing MSMEs in Southeast Asia at both the country and regional levels. It also analyses policies and regulations surrounding MSME development and access to finance in each country in Southeast Asia.

Key findings from the report’s second volume, to be released on 28 October, examines the impact of COVID-19 on MSMEs in Indonesia, the Lao People’s Democratic Republic, the Philippines, and Thailand based on rapid surveys conducted from March to May this year. The challenges faced by MSMEs in the region have been exacerbated by COVID-19, with demand for MSME products and services declining since the onset of the pandemic. This has resulted in layoffs, reduced business operations, and a depressed outlook for the sector. The report explores policy approaches that could support MSMEs during and after the pandemic.

ASM 2020’s remaining two volumes will be released by the end of 2020. They comprise a thematic chapter analyzing the impact of fintech-based loans to tricycle drivers in the Philippines; and a technical assessment that will present ADB’s new Small and Medium-Sized Enterprise Development Index.

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Recession Deepens as COVID-19 Pandemic Threatens Jobs and Poverty Reduction in Western Balkans

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The COVID-19 pandemic has plunged the Western Balkans region into a deep recession, with drops in both domestic and foreign demand, coupled with disruptions in supply chains, forcing all six countries in the region into negative growth territory for 2020. According to the World Bank’s latest Regular Economic Report (RER), economic growth is forecast to contract by 4.8 percent in 2020, 1.7 percentage points lower than forecast in April. A second, stronger wave of the pandemic since mid-June is delaying economic recovery in the region. Travel restrictions and social distancing measures have also depressed growth in those countries more reliant on tourism.

The pandemic is further challenging labor markets in the region and threatening to undermine the progress that countries have made on improving the population’s welfare. By June, unemployment in the region had risen by a half of a percentage point, erasing 139,000 jobs. An additional 300,000 people are estimated to have fallen into poverty in Albania, Kosovo, Montenegro, and Serbia – a significant number, but less than half of the total that would have fallen into poverty had response measures not been put in place, notes the report.

“Like in much of the rest of the world, the COVID-19 pandemic is continuing to hit people hard in the Western Balkans, threatening threatening the health and economic well-being of people in all six countries,” says Linda Van Gelder, World Bank Country Director for the Western Balkans.

“As bad as this situation is, it would have been much worse had governments not taken swift measures from the outset of the crisis. The first priority remains getting the health crisis under control and limiting the economic damage. Policymakers in the region will then need to focus on strengthening their economic fundamentals for a resilient recovery.”  

According to the report, all six countries in the region were quick to introduce policies to protect lives and livelihoods. The introduction of large job-retention schemes, including employee subsidies, helped arrest some of the worst impacts of the pandemic on employment, while social assistance programs, such as cash transfers, helped protect the most vulnerable populations in the region in the face of lockdowns and other restrictions.

Despite these measures, however, the gains in labor force participation made in the region over the last few years have now been erased and progress on poverty reduction is being imperiled by the crisis. Compounding these challenges are soaring fiscal deficits in the region, as governments continue to spend more to counter the economic contractions in the face of plummeting revenues. With the end of the economic crisis uncertain, pressure on labor markets and incomes is likely to continue for some months.

“Apart from improved health systems and robust social protection mechanisms, policymakers in the region will need to take measures to enhance human capital, build stronger institutions and strengthen the rule of law. The unfortunate situation of needing to spend more in a time of declining revenues puts additional pressure on governments in the region to prioritize fiscal sustainability, including through improving public spending and strengthening tax compliance,” says Linda Van Gelder.

The report acknowledges that the speed of recovery, in the short term, will depend on how the pandemic evolves, the availability of a vaccine that allows for the normalization of economic activity, and a sustained recovery for the region’s main trading partner – the European Union (EU).

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Collapsing consumer demand amid lockdowns cripple Asia-Pacific garment industry

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Women at work in a garment factory in Hai Phong, Viet Nam. © ILO

The COVID-19 pandemic has triggered government lockdowns, collapsed consumer demand, and disrupted imports of raw materials, battering the Asia Pacific garment industry especially hard, according to a new report released on Wednesday by the International Labour Organization (ILO).

The UN labour agency highlighted that in the first half of 2020, Asian imports had dropped by up to 70 per cent.

Moreover, as of September, almost half of all garment supply chain jobs, were dependent on consumers living in countries where lockdown conditions were being most tightly imposed, leading to plummeting retail sales.

ILO Regional Director for Asia and the Pacific, Chihoko Asada Miyakawa, pointed out that the research highlights “the massive impact COVID-19 has had on the garment industry at every level”. 

Ripple effect

In 2019, the Asia-Pacific region had employed an estimated 65 million in the sector, accounting for 75 per cent of all garment workers worldwide, the report reveals.

Although governments in the region have responded proactively to the crisis, thousands of factories have been shuttered – either temporarily or indefinitely – prompting a sharp increase in worker layoffs and dismissals.

And the factories that have reopened, are often operating at reduced workforce capacity.

“The typical garment worker in the region lost out on at least two to four weeks of work and saw only three in five of her co-workers called back to the factory when it reopened”, said Christian Viegelahn, Labour Economist at the ILO Regional Office for Asia and the Pacific.

“Declines in earnings and delays in wage payments were also common among garment workers still employed in the second quarter of 2020”.

Women worst impacted

As women comprise the vast majority of the region’s garment workers, they are being disproportionately affected by the crisis, the report tracked.

Additionally, their situation is exacerbated by existing inequalities, including increased workloads and gender over-representation, as well as a rise in unpaid care work and subsequent loss of earnings

Moving forward

To mitigate the situation, the brief calls for inclusive social dialogue at national and workplace levels, in countries across the region.

It also recommends continued support for enterprises, along with extending social protection for workers, especially women. 

The ILO’s recent global Call to Action to support manufacturers and help them survive the pandemic’s economic disruption – and protect garment workers’ income, health and employment – was cited as “a promising example of industry-wide solidarity in addressing the crisis”.

“It is vital that governments, workers, employers and other industry stakeholders work together to navigate these unprecedented conditions and help forge a more human-centred future for the industry”, upheld Ms. Miyakawa.

Nuts and bolts

The study assessed the pandemic’s impact on supply chains, factories and workers in Bangladesh, Cambodia, China, India, Indonesia, Myanmar, Pakistan, Philippines, Sri Lanka and Viet Nam.

It is based on research and analysis of publicly available data together with interviews from across the sector in Asia.

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