What it takes to turn investor interest into investment - AmCham's Jeff Erlich

How do you evaluate a forum like this and the outcome it can produce in practical terms?

American companies take a hard-nosed business approach to an investment decision. At the end of the day, a business has to decide for itself whether it invests or not. But bilateral support and government support of this kind can and does increase the benefit side of the cost-benefit equation. An event like this is not the impetus that makes a company decide to invest. If a company is already looking at investing, though, it can increase the attractiveness of that investment.

What do you think should be on the agenda?

The governments are focused on deals, and that's correct, that's proper. If there's a multibillion-dollar announcement, it makes sense for the government to announce it. That's great for the country and obviously great for the investor. At the same time, we really need to look at the institutional infrastructure that supports a good business and investment climate. Generally that means the predictability and stability of legislation, and the ability of companies to have an open dialogue with the government.

On predictability and stability there's a bit of a paradox. On the one hand, the government looks at different areas and says it needs new legislation to promote data centers, or to promote the manufacturing sector. And that's true. But if the changes come too rapidly, without a long enough lead-in process, that can create instability. So even as the government works to improve the legislative base, doing it too quickly can have an adverse effect on how companies view investment attractiveness.

The other side is dialogue. Often a law or regulation is passed and overall it's good. Kazakhstan is not passing laws intended to hurt business. The government is trying to pass laws and regulations that are favorable to business. But sometimes there are unintended consequences, and you need a platform to work those out.

Erlich offered an example.

Medicine sold to SK Pharmacia is VAT exempt, but medicine sold in private pharmacies is not. That's good policy, the government shouldn't pay VAT to itself. But when the medicine is imported, customs officials can't tell whether it's destined for SK Pharmacia or a private pharmacy, so VAT gets applied to everything coming in, and the company ends up absorbing a cost it didn't anticipate. It's a procedural issue that can be worked out. We don't object to the VAT policy. The point is that practical problems arise from the change, and you need a channel to give that feedback to the government.

Do you see Kazakhstan as the U.S.'s leading partner in the region?

I represent the American Chamber of Commerce in Kazakhstan, and I love this country and want the best for it. But I also think the case is real. Since 1991, Kazakhstan has essentially maintained a pro-business, pro-investment approach. There have been some problems along the way, but the trajectory has been consistent. Uzbekistan only started about ten years ago. Before that it wasn't pro-investment or oriented toward international cooperation. So Kazakhstan has a lead, and as a result most major international companies are represented here. I want Kazakhstan to keep that leadership position. But Uzbekistan is doing everything it can to catch up, so Kazakhstan needs to keep working to stay ahead.

Does the current U.S. administration's focus shape this relationship?

Without a doubt, the U.S. government right now is focused on the business and economic relationship between Central Asia and the United States, and that's great. The C5+1 mechanism is largely built around business and economics. There are other areas of cooperation too, such as security, and those matter. But I fully support the focus on business.

Earlier, Qazinform News Agency reported that bilateral trade in goods between the United States and Kazakhstan surpassed $5 billion last year.