State-owned enterprises (SOEs) play a crucial role in the Kazakh economy, particularly in sectors such as energy and mining. They are present in at least 20 out of 30 sectors of the economy and account for around 6.2% of the national employment. Kazakhstan's ownership structure for SOEs is dispersed across a number of large holding companies, with Samruk-Kazyna being the most significant one.

While there is no centralised or consolidated information available to assess the operational effectiveness of SOEs compared to their private sector peers, the two largest holding companies – Samruk-Kazyna and Baiterek – provide a good indication. Samruk-Kazyna’s revenues amounted to 14% of GDP in 2021 and had accumulated a debt of 11.8% of GDP. In 2021, Baiterek’s revenues amounted to 0.13% of GDP, and its total debt to 9.8% of GDP.

In light of its large SOE sector, the Kazakh government has embarked on substantial reform efforts aimed at enhancing the governance and performance of SOEs. In 2023, the Kazakh President announced a need to reduce the share of the state in the economy and to reform SOEs, in line with the 2025 National Development Plan and the 2030 Concept for the Development of Public Administration, including the intention to accelerate the privatisation process. Against the background of this call for reform, the Ministry of National Economy developed a seven-point action plan due for implementation by 2028. The outcomes of the action plan are thus only partially assessed by this Review and, as a result, the main findings summarised below should be read as inputs to support Kazakhstan’s reform plans going forward.

The reform plans, which are still underway, can benefit from continued commitment to ensure their implementation. The current legal framework needs clarity in defining ownership rationales, and the lack of an overarching ownership policy results in variance in expectations for and modes of accountability among SOEs. Kazakhstan’s legal and regulatory framework for SOEs is complex and is further complicated by frequent revisions.

The development of a unified ownership entity would support informed and active state ownership, and can reduce opportunities for undue interference. Centralisation of ownership would further support more effective oversight of entities like Samruk-Kazyna, which would allow the Government to make an informed assessment of its performance. A clearer separation between government ownership and regulatory functions, can help to ensure a level playing field and foster investor confidence necessary for privatisation plans.

The corporate governance framework should focus on ensuring transparent board nomination procedures, board efficiency and respect of minority shareholders’ rights. Despite the existence of a National Corporate Governance Code, SOEs are also guided by another two codes issued by the Ministry of National Economy and Samruk-Kazyna, respectively, thus resulting in conflicting expectations for SOEs. Despite existing legal provisions for stakeholder protection, issues persist due to a gap between written law and implementation. Moreover, stakeholders note concerns relating to the transparency around board nomination procedures. The majority composition of boards by government officials raises concerns about objective decision-making and the need for professionalised, independent and autonomous boards.

Kazakhstan must develop standardised and robust disclosure and reporting requirements to strengthen accountability of SOEs. While some SOEs under national holding companies adhere to stricter reporting requirements, there is still a high level of variability in implementation across individual SOEs, and issues with reporting of material related party transactions, inadequate internal controls and lack of regular external audits are noted.

The government is encouraged to ensure a level playing field for both public and private companies, by clarifying and improving public service obligation requirements. SOEs should be required to maintain separate accounts for commercial and non-commercial activities to ensure competitively neutral compensation for carrying out public service obligations.

Looking ahead, Kazakhstan should focus on designing a holistic ownership policy, enhancing transparency and implementing reforms in corporate governance to align with international standards and foster investor confidence. Addressing these issues will contribute to the effective performance, accountability, and transparency of Kazakhstan's SOEs and in the broader economy.