Yerkin Tatishev of Kusto Group on the Post-Covid-19 World of Business in Kazakhstan and Beyond
By Space Coast Daily // September 2, 2020
Tatishev advocates for bureaucratic reform
Yerkin Tatishev, one of Kazakhstan’s most influential business entrepreneurs of the last 10 years, discusses the coronavirus crisis, Kazakhstan’s economy and growing a business.
The coronavirus crisis has led to volatility and uncertainty across the world’s economic and social systems. The pandemic has exposed weaknesses and struggles within the nation of Kazakhstan, but according to Yerkin Tatishev, the majority owner and Chairman of the Board of Directors of Kusto Group, the country has a lot to strive for: new growth points, human capital, knowledge, and prospects.
Covid-19 has proven it’s not only important but crucial that the government act in line with the principle of social justice. Playing games that only allow ‘the strongest to survive’ will lead to the destruction of the entire state economy.
“It is important to support both each individual family if it has been affected,” says Tatishev, “and each individual business if it has been affected by the pandemic.”
Kazakhstan must use the crisis as an opportunity to rise
The pandemic has had a devastating effect in many ways but with challenges come new prospects for growth and Kazakhstan is now in a unique position to rise.
This is particularly true across the country’s most prominent industries. Kazakhstan is fortunate to have abundant natural resources that it can rely on in even the most difficult of times. The energy sector continues to provide steady returns.
Tatishev believes that within the petrol industry there remains room for growth by providing new spirit and opportunities for small to medium-sized businesses to enter the market and develop.
Tatishev advocates for bureaucratic reform
This would undoubtedly require a drastic reduction in the bureaucracy that acts as a giant hurdle for entering the market.
“We have calculated that Kazpetrol Group, our oil company, spent four and a half years out of ten years of work waiting for the necessary documents. That is, in fact, every second day was non-working, for lack of a better word. Imagine what we could have done if we had received all this in a year and worked for nine years,’ says Tatishev.
It’s not just the company’s own productivity that suffers from this giant bureaucracy, the government loses out on major potential tax revenues by stifling economic activity. Yes, Kazpetrol would have earned more, but it also would have reinvested this money in the country or in other projects, or in expansion, which means more jobs and greater economic stability.
Beyond the energy industry
With first-hand experience, Tatishev sees agribusiness as an obvious sector for development because of Kazakhstan’s abundant land size and large rural population that lacks work opportunities, good working conditions, and good living wages.
The fact that Kazakhstan is surrounded by huge consumption markets – China, Russia, Europe, and the Middle East – means high export potential for agricultural products.
“It is beyond argument that the agricultural sector is hugely underdeveloped with only 5% of current GDP if I’m not mistaken,” Tatishev argues.
Kazakhstan’s agricultural potential
Kazakhstan is the ninth-largest territory and the world and much of this land is open fields, which means there are few obstacles preventing the realization of their potential as grazing land for livestock or cultivation fields for crops.
After signing a landmark deal with US-based Tyson Fresh Foods last year to build modern meat processing facilities in Kazakhstan, Tatishev now says the road forward in securing more international investors includes legislation reforms that provide these investors with stability guarantees and fight corruption.
Opening the country to large companies will help Kazakhstan overcome this crisis. Large companies have reserves, access to capital and can secure loans more easily. They have staying capacity and the ability to assist in developing a sound, stable infrastructure.
Last year, Kusto Group signed a deal with the American Valmont Industries to manufacture modern irrigation systems in Kazakhstan.
Kusto Group commits to agribusiness development
Tatishev concedes that building a strong and productive agricultural industry will take many years of hard work, but he is confident that once established, it will provide economic stability because the food market is one of the most stable, especially in terms of added value.
Agribusiness support services such as fertilizer producers, engineers, equipment manufacturers, transportation industries, processing, and agro IT solutions also benefit from a robust agriculture sector. In launching one industry, you have actually launched ten complementary industries that can support a large workforce.
Tatishev on Kusto Group’s success
Tatishev views his own business and financial success as not a feat to boast, but as a great responsibility to help others, do more and develop his native Kazakhstan. Kusto Group achieved independent status in 2002 and since that time, the company has experienced rapid growth.
Tatishev attributes Kusto Group’s continued success and qualitative, market-geared growth to its dedicated team members and ability to gain competence in the market. In a crisis, the quality of a team and its knowledge are the best indicators of the ability to survive and thrive.
Establishing an international perspective
The relationships and friendship you create when you build your business are other crucial elements to business success and growth. The fact that Kusto Group has operations around the world is a testament to the good personal relations Kusto and Tatishev have fostered.
This diversified, international focus has enabled the company to reduce country risks by having projects located all around the world, a strategy that has proven astute in the current state of the world.
Working in markets at different levels has also offered the company insights in applying knowledge gleaned from mature markets to emerging, developing markets.
Kusto Group’s corporate structure
Kusto Group has a unique corporate structure, with each subsidiary group operating with its own team and functional board of directors.
“Our group is independent. It is not vertical, hierarchical, it is horizontal,” says Tatishev. “And they work independently on a regular basis. At the level of the large group, we only look at strategic plans, review them quarterly, check the six-month implementation, we review the culture, what kind of people we have, the team, how we work, internal communications and resource allocation.”
Fostering a champion spirit
He believes that independence fosters personal qualitative growth with the goal of having Kusto Group’s companies become mini champions in their own industries whether that means regionally, nationally or worldwide. What is important is developing and maintaining the ‘champion spirit’, not necessarily quantity in the form of profit or volume, but in quality and approach.
“The most important thing is to keep yourself in good shape,” says Tatishev, “with a clear strategy, with a strong spirit.”
It is this mindset that Tatishev believes will allow Kusto Group and its team to emerge as a leader in the post-Covid-19 business world. The company’s Israel-based paint and construction material manufacturer, Tambour, expects to open a new dry mortar plant by the end of the year.
Tatishev also says that while progress on the deal with Tyson Foods may be delayed by the coronavirus pandemic, both parties remain committed. While the future may be uncertain, Tatishev and Kusto Group’s prospects and perspective remain optimistic.