Corporate governance is at the very heart of the development of both a market economy and a democratic society. It is a key feature of the market system of competitive enterprise, especially rule of law issues. Corporate governance ultimately depends upon public-private sector cooperation to achieve both goals--the creation of a competitive market system and the development of law-based democratic society. Along with requirements for government to provide transparent access to information, citizens, and the business community must to be able to obtain information about companies in order to make informed decisions.

Building the Grassroots Foundation for Corporate Governance in Kazakhstan

Kazakhstan today faces an increasingly urgent choice between crony capitalism based on a system of clans and a competitive, open market economy. The lack of transparent institutions in Kazakhstan, the privatization scandals, the absence of clear and defined agricultural property rights, and unequal treatment of shareholders have created a lack of faith, ranging from distrust to disinterest, in both market economics and democratic development.

Under a CIPE grant, the University of International Business formed a coalition of stakeholders to promote the importance of corporate governance in Kazakhstan under a project entitled “Building the Grass Roots Foundation of Corporate Governance in Kazakhstan.” The University of International Business worked actively to promote the importance of instituting sound corporate governance practices by increasing awareness of the detriment that lack of such reform would have on the investment environment in the country. UIB has been the first organization to take on the task of enhancing dialogue on these issues in Kazakhstan. Utilizing the network of journalists established under the CIPE/NED-funded projects, UIB published over 40 articles on Corporate Governance that were printed in magazines and newspapers with a total circulation of 112,000. Almost 300 representatives of the business community and media participated in the round tables and the national conference, while UIB built a network of non-governmental organizations and privately-owned business that will be continue to be trained in ways to advance economic and democratic reforms through advancing corporate governance principles in Kazkakhstan.

Thanks to the effort made through this project, a team of about 30 private companies drafted the Corporate Governance Code to be implemented in Kazakhstan. This Code will now be used to further educate the business community and the general public on the importance of such regulations to the health of the economy. Endeavors such as this have been unprecedented in Kazakhstan prior to this project. See photos of the roundtable.

Developing Corporate Governance Standards in Uzbekistan

In a regional USAID corporate governance initiative, this CIPE-Tashkent Business Club (TBC) partnership produced numerous legislative changes that resulted from recommendations for creating corporate governance standards in Uzbekistan. The Cabinet of Ministers adopted proposals that would improve the environment for farmers in Andizhan region, one of the most populous areas of Uzbekistan based on TBC's proposals. It also adopted proposals that would improve the export/import conditions for small-and medium-sized businesses and reducing taxes for them, creating a much more favorable regional trading climate in the whole country. In addition, two presidential decrees elevated private property to a high priority status for the 2003 legislative agenda and excused certain enterprises from paying a VAT, which will strengthen local production. TBC gathered dozens of local producers in their roundtables and training programs, engaging them into the policy making process. TBC demonstrated that stimulating the market and protecting their private property is a direct responsibility of the local business community and can be affected on a national level by joining forces with each other.

Read more in the following publications:

CIPE Feature Service Articles
CIPE Overseas Report Articles
Combating Corruption in Central Asia