Improving the Legal Environment for Business and Investment in Central Asia

Annex A. Methodology

Overview of the OECD monitoring framework

In the framework of the Central Asia Competitiveness IV Project co-financed by the European Union under its Central Asia Invest Initiative, the OECD has been reviewing progress in addressing problems in the business and investment climate, foregrounding the need for long-term reforms to encourage investment and private sector development in Central Asia. The OECD Eurasia Competitiveness Programme, in collaboration with representatives from the governments of Central Asia, private sector representatives, and other development partners, and with contributions from international experts, carried out analysis, data collection and consultations with stakeholders in each Central Asian country to assess progress in business environment reform implementation and developed updated recommendations for institutions and policies to support long-term growth prospects.

This report assesses progress and remaining challenges for the five Central Asia countries in implementing the three priority reforms areas identified in 2020 to improve the legal environment for business (Table A A.1).

Table A A.1. Priority reforms in the legal environment for business in Central Asia

Kazakhstan	Kyrgyzstan	Tajikistan	Turkmenistan	Uzbekistan
Operational environment for firms Implement consistently and thoroughly the new code for entrepreneurs	Operational environment for firms Streamline the legal environment for entrepreneurs and small businesses, especially legislation and service delivery	Legal and regulatory framework for investment Ensure the implementation of existing laws for investment and entrepreneurial activity, and improve the accessibility of necessary information	Legal and regulatory framework for investment Enforce, streamline, and publish all legislation on investment on the Ministry of Justice’s legal database to ensure transparency	Legal and regulatory framework for investment Ensure proper implementation of the new investment law and remove sectoral restrictions
Legal and regulatory framework for investment Improve dispute settlement for all businesses operating in the country	Contract enforcement Ensure transparent fair and efficient contract enforcement for businesses	Contract enforcement Improve the enforcement of contracts and arbitral decisions in domestic courts	Operational environment for firms Develop a simplified targeted legal framework and support for SMEs and small entrepreneurs	Operational environment for firms Streamline and consolidate business-related legislation and licenses for domestic firms and entrepreneurs
Trade facilitation Enhance trade facilitation and improve cooperation between agencies involved in export procedures	Taxation Simplify the tax code and tax administration for companies of all sizes	Taxation Make tax administration simpler, more consistent and more transparent	Business registration Streamline business registration and licensing, and introduce a one-stop-shop	Taxation Ensure changes to tax requirements are predictable, and improve tax administration for small firms

Source: (OECD, 2020_[1]).

The analysis also considered the effect of the COVID-19 pandemic and the disruption caused by Russia’s war in Ukraine on the ability of the governments to implement the corresponding recommendations (Figure A A.1). In particular, the OECD assessment integrated three main dimensions: (i) a measure of implementation progress based on the reforms identified with the government in 2020; (ii) an assessment of the causes of any implementation delays; and (iii) an assessment of new challenges and priority areas for action.

Figure A A.1. Example of detailed policy recommendations (2020)

Source: (OECD, 2020_[1]), OECD analysis (2023).

The monitoring exercise relied on a continuous dialogue between the OECD, the governments of the region, the private sector, and international partners, including through working group meetings and several bilateral consultations in late 2022 and 2023 (Table A A.2). In particular, the OECD used a series of monitoring tools, including a matrix table of recommendations, questionnaires, data requests and collection, as well as an analysis of existing surveys and interviews to collect data and information. For each country-specific priority, the OECD assessed the current state of implementation, identified challenges and priority areas for further action, and discussed possible drivers for implementation.

Table A A.2. List of OECD public-private working group meetings

Agenda of meetings	Key participants	Date
Regional launch event	Ministry of Trade and Integration of the Republic of Kazakhstan, Ministry of Finance of the Republic of Kazakhstan, Agency for Financial Monitoring of the Republic of Kazakhstan, Ministry of Finance of the Kyrgyz Republic, Ministry of Economy and Commerce of the Kyrgyz Republic, Tax Committee of the Republic of Tajikistan, State Committee for Investment and State Property Management of the Republic of Tajikistan, Ministry of Economy and Finance of Turkmenistan, Agency for Strategic Reforms under the President of the Republic of Uzbekistan, Ministry of Investments, Industry and Trade of the Republic of Uzbekistan, Ministry of Justice of the Republic of Uzbekistan, Ministry of Innovative Development of the Republic of Uzbekistan	13 December 2022
Kyrgyzstan: discussion of methodology, initial findings and priorities	Ministry of Economy and Commerce, State Tax Service, Ministry of Justice	20 June 2023
Uzbekistan: discussion of methodology, initial findings and priorities	Agency for Strategic Reforms under the President of the Republic of Uzbekistan, Ministry of Economy and Finance, Ministry of Investments, Industry and Trade, State Tax Committee, Ministry of Justice, IT Park, Digital Economy Research Centre	23 June 2023
Kazakhstan: discussion of methodology, initial findings and priorities	Ministry of National Economy, Atameken, Ministry of Justice, State Revenue Committee, Kazakh Invest, Ministry of Digital Development, Innovations, and Aerospace Industry, QazIndustry, Economic Research Institute	27 June 2023
Tajikistan: discussion of methodology, initial findings and priorities	Ministry of Economic Development and Trade, Tax Committee, State Committee for Investment and State Property Management	17 July 2023
Turkmenistan: discussion of methodology, initial findings and priorities	Ministry of Economy of Finance, Ministry of Trade and Foreign Economic Relations, Union of Entrepreneurs and Industrialists, Tax Committee	8 November 2023

The approach taken by the project was split into two components:

• The OECD developed two sets of detailed questionnaires for each country-specific priority, based on the 2020 recommendations broken down into several measurable policy areas (Figure A A.2). The first set of questionnaires was issued to the governments in each country and gave the OECD a robust overview of the de jure regulatory conditions and reforms for business since 2020.

  A second questionnaire was sent to business associations and international organisations active in each country of the region and discussed during online, anonymous interviews, as a means of obtaining a better understanding of improvements and remaining challenges in the implementation of reforms and the operational environment for firms.

Figure A A.2. Example of policy dimensions used in the OECD assessment

Source: (OECD, 2020_[1]), OECD analysis (2023).

• Online interviews were conducted with representatives of the public and private sector, as well as international organisations in each project country, during which the OECD discussed the findings of the questionnaire, received additional input and clarification, and heard from public and private sector stakeholders on legal and implementation challenges.

Table A A.3. Questionnaires collected by the OECD among in January 2023 for the review

Country	Institution
Kazakhstan	Ministry of National Economy of the Republic of Kazakhstan
	Ministry of Trade and Integration of the Republic of Kazakhstan
	National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken”
	Astana International Financial Centre (AIFC)
Kyrgyzstan	Ministry of Economy and Commerce of the Kyrgyz Republic
	Ministry of Justice of the Kyrgyz Republic
	State Tax Service of the Kyrgyz Republic
	International Business Council
	Business Ombudsman Institute of the Kyrgyz Republic
Tajikistan	Tax Committee of the Republic of Tajikistan
	State Committee for Investment and State Property Management of the Republic of Tajikistan
Turkmenistan	Ministry of Economy and Finance of Turkmenistan
	Union of Entrepreneurs and Industrialists
Uzbekistan	Agency for Strategic Reforms under the President of the Republic of Uzbekistan
	Ministry of Justice of the Republic of Uzbekistan
	Ministry of Investments, Industry and Trade of the Republic of Uzbekistan
	Customs Committee of the Republic of Uzbekistan