Some public services are planned to be transferred to private companies. How much could tariffs increase?

Ирина Орлонская Economy
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Today, January 13, the Cabinet of Ministers proposed a draft law on outsourcing state and municipal services. This issue was reviewed by the Constitutional Legislation Committee of the Jogorku Kenesh during the first reading.

In the explanatory note to the draft law, it is emphasized that within the framework of the existing state order, a significant number of services are provided free of charge; however, budgetary capabilities do not always allow for covering all potential recipients.

Choro Seitov cited the example of how private notaries can perform legal services currently provided by state bodies and suggested transferring similar services to private individuals and legal entities. For instance, transportation services can also be outsourced to the private sector. Quality control will be carried out by authorized bodies, and the list of services and criteria for performers will be defined in subordinate legislation.

“It is expected that outsourcing services will create new opportunities for business and open up the market. Previously, all these services were under state control, but now this will change,” he noted.

Seitov added that criteria will be established for private individuals and entities wishing to provide these services, including the necessary qualifications and equipment, which will also be specified in subordinate legislation.

Deputy Kubanychbek Samakov noted that the current legislation already allows private companies to provide state and municipal services.

“What is new here if similar provisions are already in place?” he asked.

“We are proposing an expansion of this provision. For example, if the service is large and complex, then part of it can be outsourced to a private organization to reduce the burden on the state body. The applicant will be able to choose a private performer for faster service delivery,” explained the Deputy Minister.

The deputy expressed concerns that this could lead to price increases, as private performers typically aim for profit.

“This draft law includes changes to tariffs for state and private services. State bodies report that they provide services at cost, which does not cover their expenses,” clarified Seitov.

“So, we are indeed raising tariffs for state services, right?” asked the deputy.

“Yes, this is related to the need to improve the material and technical base,” the official replied.

“Why should the improvement of the material and technical base fall on the shoulders of citizens? People are already complaining about barriers to receiving state services, and now there will be an increase in prices as well,” noted the parliamentarian.

The deputy also pointed out that the control over private service providers will be carried out by state bodies.

“I don’t understand: you outsource services and then check the performers yourselves, while increasing tariffs for state services. What is the logic?” expressed the deputy's bewilderment.

According to Seitov, the draft law provides for the possibility of changing tariffs to improve the quality and volume of state services.

“The law states that the payment amount should not exceed the cost of the service, yet you claim that payments will increase to improve the base. This is a contradiction,” noted Samakov.

Seitov assured that the deputy's comments would be taken into account.

“State bodies regularly review the tariffing of their services, as many of them have not changed for 10-15 years, while expenses are rising. Therefore, there will be a review of the cost of services,” he added.
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