Keywords

Introduction

Following the collapse of the Soviet Union, Kazakhstan has emerged as a key regional business hub in Central Asia. This can largely be explained by the strong ambition and willingness of the Kazakhstan government to develop its business climate by facilitating domestic and foreign investments. According to 2020 World Bank rankings on the ease of doing business, Kazakhstan ranked twenty-fifth from 190 countries examined (World Bank, 2020), compared with its 2010 ranking of sixty-fifth (World Bank, 2010). This indicates good opportunities exist for entrepreneurs to open and run their own businesses. To calculate the rating, the World Bank takes into account the following characteristics of the business environment: the processes of incorporation, securing a building permit, obtaining an electricity connection, transferring property, accessing credit, protecting minority investors, paying taxes, engaging in international trade, enforcing contracts, and resolving insolvency (World Bank, 2020). In this chapter, whilst emphasising the importance these characteristics, I specifically examine how legal regulations in the food service industry (that is, gastronomic entrepreneurship) are designed, applied and enforced in daily life situations. In doing so, my aim is to explore the everyday social life of these global indicators by examining the lived experiences of gastronomic entrepreneurs and their daily encounters with the legal system. In other words, using Roscoe Pound’s (1910) terms, this chapter primarily focuses on understanding the relationship or divergence between ‘law-in-books’ and ‘law-in-action’, as manifested in the everyday experiences of entrepreneurs operating in the food service industry in Taldykorgan.

For any country, the food service industry plays a key economic role given that such enterprises not only provide the population with food, but also create places of work, provide employment for the population, liberate more people from needing to cook, and improve the quality of life of the population, thereby freeing up time for individuals to spend on holiday with children and friends (Gvozdovskaya, 2018). The important function of food service is connected to assisting in developing small- and medium-sized enterprises (SMEs) in the country. Notably, most food service enterprises in the country take the form of small enterprises; only a small number of restaurant businesses can be classified as large enterprises. The restaurant business is attractive and promising: the right choice of location and concept, its atmosphere, and a highly qualified staff allows one to garner market attention and result in high profits and investments.

Accordingly, the restaurant business is one of the most dynamic areas of entrepreneurial activity in Kazakhstan, where changes are associated with reforming the methods and forms of organising food service enterprises. The sphere of food service is now of interest to many, ranging from ordinary citizens, government officials, and public organisations, as well as researchers from various scientific fields. In Taldykorgan, the administrative centre of the Zhetysu region, Kazakhstan), a city with a population of about 150,000 people (AZNations, 2023), there are a large number of food service facilities. More specifically, from 1 to 20 restaurants, cafes, canteens, and other gastronomy facilities exist per 1 km2. Given the ever-increasing number of food service facilities in Kazakhstan, in the specific example of the city of Taldykorgan, the following questions naturally arise:

  • Is it easy to open a restaurant business in Kazakhstan?

  • How are legal norms regulating entrepreneurship activities perceived and experienced by businesspersons operating in the food service industry?

  • What legal and other issues and challenges do entrepreneurs and others face when running a food service business in the city?

  • What empirical and policy implications can be drawn from the case study of Taldykorgan for global indicators such as the World Bank’s doing business index?

Review of the Relevant Literature

Extensive research exists on the legal regulation of entrepreneurship. In Kazakhstan, a considerable number of scholarly works have been devoted to the development of business law. One of the first such works is Bitemirov’s (1998) study, ‘Legal foundations of small and medium-sized entrepreneurship in the Republic of Kazakhstan’, which offers proposals aimed at improving entrepreneurship and business law, include the types of liability for violating laws on entrepreneurship. The concepts of normative legal acts on entrepreneurship in the legal system were scientifically substantiated in Bitemirov’s study. Illustrating the role of the state in both the development and support of entrepreneurship, its economic and legal foundations are also developed (Bitemirov, 1998). Similarly, Romankova (1996), in her study, entitled ‘Legal regulation of entrepreneurial activity of citizens in the Republic of Kazakhstan’, offered solutions to problems related to the legal regulation of citizen entrepreneurship. Specifically, she provided justification for proposals intended to improve civil legislation alongside outlining the need for the independent legal regulation of relationships arising during the process of entrepreneurial activity amongst citizens. One key idea common to both of these studies is that they granted a huge leap in the codification of business law. In addition, the works of Moroz (2010b), which consider both complex problems in the development of entrepreneurial law and the development of entrepreneurial legislation, are of great importance for the development of entrepreneurial law as a part of rights more generally.

Beyond Kazakhstan itself, growing scholarly interest has turned towards analyses of the Kazakh business and legal environments. For instance, in their article, US-based scholars Tugut and Lee (2007) analysed the opportunities and challenges faced by foreign firms in Kazakhstan, putting forth active strategies to help multinational corporations succeed in this attractive emerging market. Their study also discusses the legal environment for doing business. Another relevant study appeared in a book by Barth et al. (2001), in which the authors discuss how to conduct legally and ethically appropriate business in the Kazakh context.

Notably, the aforementioned studies address issues of entrepreneurship in general without providing insights into their application to specific business sectors and fields. Identifying studies that specifically address the legal regulation of gastronomic entrepreneurship in Kazakhstan remains difficult. Addressing this research gap is particularly intriguing given the ever-increasing number of food service facilities in Kazakhstan, particularly from a socio-legal perspective. Doing so may allow us to understand the social life of global indicators and how they reflect or challenge the lived experiences of micro-level entrepreneurs.

This chapter is based on a study of public legal relationships in the field of entrepreneurship, namely, in the food service industry. The full-fledged economic development of a country depends on the existence of a free-market economy and a well-functioning legal environment. But, it should be noted that the existence of a good regulatory framework on paper does not automatically imply that laws work in practice and achieve their intended aims. In order to understand whether it is easy to open and run a business in the food service sector, it is necessary to consider the relationships developing between public authorities and entrepreneurs, to study the problems of implementing legislation in the field of gastronomic business, and to understand business implementation issues. Many new cafes, restaurants, and bars are opened every single month in most cities in Kazakhstan. Unfortunately, most of them close during their first weeks of operation, with more closing within a few months. Despite this, the restaurant business remains popular. Investments continue growing, and chain establishments operating under a franchise, including international franchises, continue to expand in Kazakhstan. Given the number of food service facilities, we can hypothesise that, in general, the opening of a gastronomic business does not cause any specific difficulties. However, even if legislation looks perfect on paper (‘law-in-books’), its implementation might be shaped by various extra-legal and inf0rmal processes (‘law-in-action’), such as through regulatory gaps, conflicts in legal rules, ambiguity in specific norms, and the risk of corruption in regulatory legal acts. One possible inference from the above observations is that there is a need to examine the relationship or divergence between ‘law-in-books’ and ‘law-in-action’ when studying the lived experiences of gastronomic entrepreneurs and their daily encounters with the legal system.

Materials and Methods

Traditionally, the study of legal issues within legal research has focused on developing doctrines and new concepts to aid in the comprehension of legal materials and problems, specifically aimed at filling gaps in both new and outdated laws and regulations. In particular, importance is placed on studying the implementation of law arising from practice. The adoption of a new law or any regulatory legal act entails the emergence of new rights and obligations for subjects to whom the new legal acts are intended. Therefore, even a newly adopted law may undergo frequent changes during the course of its practical application. In this chapter, I examine the legal basis, possibilities, and features of the development of gastronomic entrepreneurship in the Kazakh business environment, relying on the example of one city, Taldykorgan.

To conduct this study, I employ a method of analysis on normative legal acts. In my analysis, I examined both existing legal acts and acts subsequently deemed invalid. This made it possible to recreate the chronology of changes in legislation applicable to gastronomic entrepreneurship. The analysis of existing acts allowed me to identify gaps and conflicts in the legislation, making it possible to identify the shortcomings of and problems in current legislation. The information and empirical basis of this study is the Constitution of the Republic of Kazakhstan and other legislative acts (see Statutes Cited at the end of this chapter) regulating the sphere of gastronomic entrepreneurship, official data from statistical agencies, and national reports.

In addition to the legal review, I also relied on a socio-legal method to analyse how legal acts and regulations (‘law-in-books’) work and are applied and enforced in daily life situations (‘law-in-action’). To complete this task, I employed qualitative research methods involving semi-structured interviews with entrepreneurs operating in the food service industry. These qualitative data collection methods provided valuable insights into the lived experiences, perspectives, and challenges faced by gastronomic entrepreneurs. Interviews also enabled me to gather rich and detailed information about the legal issues gastronomic entrepreneurs encounter when opening and running their businesses. In addition to this qualitative study, I also conducted a review of secondary sources, including an analysis of previous research, to understand the information obtained through empirical studies conducted by Kazakhstan and foreign researchers alike.

Based on the methods employed in this study as well as on the data collected, this chapter is divided into two parts. The first part concerns the analysis of relevant normative legal acts and issues related to legal regulations from business law. The second part summarises the problems related to the implementation of these laws in the daily practices and lives of entrepreneurs operating in the food service industry. In the subsequent sections, I first present a review of the ‘law-in-books’, followed by the presentation and analysis of the interview data on the lived experiences of gastronomic entrepreneurs, illustrating the ‘law-in-action’ in the food service industry.

‘Law-in-Books’: Entrepreneurial legislation in the Republic of Kazakhstan

The first restaurants and cafes in Kazakhstan appeared long before the country gained independence, establishments primarily situated in Kazakhstan’s larger cities. In general, restaurants and other food service facilities operated in accordance with the regime of the Soviet era (vlast.kz, n.d).

The development of private entrepreneurship began intensively in Kazakhstan following independence in 1991. This was the beginning of the first stage in the development of entrepreneurial legislation. Thus, in 1992, the Law of the Republic of Kazakhstan ‘On the Protection and Support of Private Entrepreneurship’ was adopted. This law defined private entrepreneurship as the activity of citizens and non-state legal entities aimed at generating income based on the property of citizens themselves (individual entrepreneurship) or non-state legal entities (private entrepreneurship of legal entities). In addition, the activities carried out on behalf of citizens or non-state legal entities were done so at their own risk and were their own responsibility.

The 1992 law greatly contributed to the development of the food service industry, defining the primary forms and ways of protecting private entrepreneurship and consolidating support for private entrepreneurship. The main advantage of this law was that it directly provided freedom to entrepreneurs, namely, a policy for preventing direct intervention from the state in private entrepreneurial activities. The responsibility of state bodies and officials related to violating the rights of private entrepreneurs was outlined in this law.

The adoption of the 1991 law, ‘On the Tax System in the Republic of Kazakhstan’, identified and divided business entities into small, medium, and large businesses, and significantly contributed to the development of entrepreneurship.

Another important legislative development stemmed from the adoption of the Civil Code of the Republic of Kazakhstan on 27 December 1994. The codification of civil legislation occupies a large and rather important place in developing entrepreneurship and legislation. The adoption of a general level civil code can be attributed to the first stage of development of entrepreneurial legislation. The Civil Code is a special normative act in the regulation of private legal relationships, including entrepreneurship. Civil legislation regulates commodity–monetary and other property relations based on the principle of the equality of participants, as well as personal non-property relations related to property. Thus, participants in relationships regulated by civil legislation can be citizens, legal entities, the state, as well as administrative-territorial units.

The adoption of the aforementioned regulatory legal acts represents the formation of market-based relationships in post-independent Kazakhstan.

Following the consolidation of the primary regulatory legal acts in Kazakhstan, much attention was paid to the formation of a sense of independence amongst businesses. This resulted from the fact that, despite current legislation, representatives of private entrepreneurships were subjected to various restrictions as well as pressure from governmental agencies. The post-Soviet influence existed here as well, of course, because neither the state nor the citizens of Kazakhstan could yet see business as an independent and truly legal structure equated with the state (Abilkalamov, 2019).

The beginning of the second stage of development of entrepreneurial legislation accompanied the enactment of Kazakhstan law No. 131-I, ‘On State Support for Small Entrepreneurship’, dated 19 June 1997, and Kazakhstan law No. 135-I, ‘On Individual Entrepreneurship’, dated 19 June 1997.

The law on state support of small businesses introduced several key principles aimed at developing the business environment, namely: (1) the principle of priority for small business development in the Republic of Kazakhstan; (2) the principle of the complexity of state support for small businesses; (3) the principle of the accessibility of infrastructure to support small businesses and measures taken for all small businesses; and (4) the principle of international cooperation in the field of support and development for small businesses. The introduction of these principles aimed to increase the activity of small businesses, namely, with through state support (Kaldiyarov et al., 2021). In essence, the state chose the development of small businesses as its priority, since it was small businesses that stimulated growth in the economy. Moreover, the state placed importance on legislating the right of citizens to freely engage in entrepreneurial activity and to form a system of state guarantees for individual entrepreneurs.

Similarly, the law on individual entrepreneurship aimed to ensure the rights of citizens to freely engage in entrepreneurial activity established by the Constitution of the Republic of Kazakhstan, the formation of a system of state guarantees for individual entrepreneurship. This law established the concept, forms, and types of individual entrepreneurship recognised by the state.

As Moroz (2015) noted, the law ‘On State Support for Direct Investment’, dated 28 February 1997, positively impacted business relations. Specifically, this law defined crucial tasks such as the introduction of new technologies, advanced equipment, and know-how; the saturation of the domestic market with high-quality goods and services; state support and the stimulation of domestic producers; the development of export-oriented and import-substituting industries; the creation of new jobs; and improvement to the natural environment amongst others.

On 31 January 2006, the Kazakhstan law ‘On Private Entrepreneurship’ was adopted, marking the beginning of the third stage of the development of entrepreneurial legislation. This law represented the first step towards the codification of business legislation, and contained numerous regulatory legal acts that were in force before its adoption. In this way, it systematised legislation related to entrepreneurial activity. In addition, this law was intended to regulate public relations arising through the implementation of private entrepreneurship by individuals and non-state legal entities. In doing so, the law determined the basic legal, economic, and social conditions and guarantees ensuring the freedom of private entrepreneurship in Kazakhstan.

On 29 October 2015, the 2006 law was annulled following the introduction of law No. 375-V, the ‘Entrepreneurial Code of the Republic of Kazakhstan’.

The main rationale for adopting the Entrepreneurial Code was to systematise the legal norms governing entrepreneurial activities, unifying them through a single legislative act. This strategy allowed the Kazakhstan government to establish a single legislative act that outlined the general principles of entrepreneurial activities rather than requiring numerous acts to regulate entrepreneurial relationships. Interestingly, a total of 101 changes have been made to the Entrepreneurial Code since its adoption.Footnote 1 Entrepreneurs note that they spend a considerable amount of time attempting to understand the ever-changing regulations, leading to increasing explicit and implicit transaction costs. State regulations of entrepreneurial activities should consider the impact of collective actions, as well as informal institutional restrictions on the development of business structures (Dubrova & Sarbassov, 2017). On the one hand, this suggests that the Entrepreneurial Code was not adopted in its ideal form. On the other hand, the changes made indicate that some norms did not take root in practice and thus required improvements and adjustments.

In the Entrepreneurial Code, we see norms that have a clear semantic intersection with the Civil Code of the Republic of Kazakhstan. In the context of language and communication, this semantic intersection occurs when two or more terms, phrases, or sentences share a common meaning or convey similar information. Moreover, a large number of blanket normsFootnote 2 appear in the text of the Entrepreneurial Code, which largely indicates its declarative nature and raises doubts about the necessity of its adoption (Piptyuk, 2020). In 2019, the Government of the Republic of Kazakhstan adopted Resolution No. 1060, ‘On Some Measures of State Support for Private Entrepreneurship’, which contains ten different rules to support entrepreneurship, including subsidising, preferential lending, various types of guarantees, and issues of state grants to support new business ideas.

Based on the above, we can conclude that the development of business legislation has undergone multiple changes. These changes indicate a positive practice in running and opening any business, including in the food service industry. However, in spite of the fact that the business environment and conditions might look promising when examining the ‘law-in-books’, an analysis of ‘law-in-action’ may provide a different picture, as I show in the next section.

‘Law-in-Action’: Is It Easy to Open and Run a Gastronomic Business in Kazakhstan?

Currently, the food service industry in Kazakhstan is represented by a huge number of enterprises with different levels of service, product quality, and equipment used. Despite the fact that the population density of Kazakhstan is considered relatively low (7 people per 1 km2), the number of public food service facilities is rather huge, and increasing daily.

In Kazakhstan, food service facilities fall into several types. First, a toykhana is a kind of large restaurant, but one used or reserved for special events such as weddings, anniversaries, or for a funeral dinner. Such restaurants can accommodate from 200 to 1000 guests. Second, we find restaurants representing an ordinary place suitable for a daily visit. The third category includes cafés, fast food restaurants, bars and pubs, and coffee shops. Table 10.1 summarises the types of food service facilities in the city of Taldykorgan (excluding canteens and street food).

Table 10.1 Catering facilities in Taldykorgan (excluding canteens and street food)
Full size table

Interestingly, according to legislation, food service facilities are not divided into specific type. The types of food service facilities indicated in the table were identified solely by their name and concept. At the same time, there are two classifications for the general economic activity of these facilitiesFootnote 3:

  1. 1.

    restaurant activities and the provision of food delivery services (561),

  2. 2.

    delivery of ready-made food-to-order and other catering activities (562).

When registering as an individual entrepreneur or a legal entity, it is necessary to specify the type of activity for the business according to the general classification for the type of economic activity. This is based on the classification and coding of all types of economic activities as stipulated in Decree No. 30 (2021).

To open a small cafe, one should register as an individual entrepreneur. When registering, they should choose a tax regime: on the basis of a patent, on the basis of a simplified declaration, a tax regime with a fixed deduction, or a generally established tax regime. Most are advised to focus either on the simplified tax regime or on the generally established regime. When applying a special tax regime on the basis of a simplified declaration, a tax liability arises—3% of income (sales turnover) excluding expenditures. If the sole proprietor applies a generally established regime, the tax liability is 10% of profits. This is a great help to a new entrepreneur whose financial turnover does not yet yield huge profits.

At first glance, the existence of the large number of restaurants, cafes, and bars tells us that these types of businesses are easy to start. However, is this the case? As mentioned above, well-designed legislation in Kazakhstan regulates entrepreneurship, which, in theory, should enable one to start a business easily and quickly in the food service industry. Thus, several options are available for those seeking to open their own restaurant or cafe: building one’s own restaurant; buying a ready-made business; or renting a ready-made business.

The first option is the most difficult. Primarily, the problem is not that construction takes a certain amount of time, money, and other resources, but that bureaucratic delays are common.

The construction of any structure is regulated by the ‘Rules for the Organisation of the Development and the Passage of Licensing Procedures in the Field of Construction’, approved by Order of the Minister of the National Economy of the Republic of Kazakhstan (2015). In general, the establishment of a new restaurant can take one of two forms: through the implementation of construction projects or through reconstructing (redeveloping or re-equipping) the premises (individual parts) of existing buildings and structures associated with changes in load-bearing and enclosing (external) structures, engineering systems, and equipment.

When building a restaurant, one needs a plot of land and to construct an entirely new building. However, when buying an established business, an existing building requires redevelopment. In general, according to the above order, the procedures for both construction and redevelopment are clear. Nevertheless, entrepreneurs who have opened food service facilities have encountered various bureaucratic delays. Specifically, entrepreneurs claim that state agencies authorised to issue a document may return the application several times, each time indicating a new reason for refusal. For example:

It is much easier to buy a ready-made restaurant than to open your own. First, you need to change the purpose and intended use of the structure. To do this, you need to contact an architect who has a licence to prepare an architectural design for a future restaurant or bar. Then, you submit documents to the public service centre to obtain a permit for the conversion of your premises. At the same time, you need to grab the title documents for housing (a contract for privatisation, donation, or sales agreement) and a technical passport for an apartment or a design assignment. Next, it is necessary to conclude a contract with a licensed construction company and with a designer who will supervise the repair work.

After that, it is necessary to notify the Department of Control and Quality of the Urban Environment about the start of construction and installation work. Only then can you return to the public service centre to replace the old technical passport with a new one. However, it all seems easy and simple. The state bodies authorised to issue a document may return your application to you several times, each time indicating a new reason in the reason for refusal. Despite compliance with all deadlines according to the legislation, a positive response can be expected several months later. In this case, you cannot do anything without circumventing the law and using your connections, which will help you obtain permits more quickly. Of course, there are a lot of advantages to owning a restaurant. First of all, you can choose the location of your structure yourself and build a concept from the ground up. For all of this, you should have enough money. If you have already built a restaurant and want to expand, make an extension, and so on, you will need to go through almost all of the same procedures again. (Amangeldi, male, 38-year-old businessman)

Many entrepreneurs are not in a hurry to buy a space, choosing to rent instead since this reduces the budgetary burden. However, if this space is not originally intended for food service provision, the entrepreneur will wait for approval at almost all of the same stages as those necessary for construction. Some norms even involve two-fold formulations leading to the risk of corruption. For instance, subparagraph 2 of Article 39 of the Rules for the Organization of Development and the Passage of Licensing Procedures in the field of construction (Order of the Minister of National Economy of the Republic of Kazakhstan, 30 November 2015), stipulates that a refusal by the provider of engineering and utility services to issue technical specifications is allowed in the absence of networks or other property necessary for the provision of the service. In this case, under ‘other property’, the service provider can refer to any items at its discretion, as well as turn a blind eye any shortcomings in favourable conditions for the service provider.

When it comes to renting a ready-made restaurant business, entrepreneurs conclude a lease agreement on the property and open an individual enterprise or a legal entity. In rare cases, they may take the business under management. It should be noted that large businesses are primarily taken under management.

I had big plans to open my own cafe. However, buying a location costs a lot of money. Then, I decided to rent a ready-made premise, which used to be a supermarket. I opened a halal cafe. And, I didn't lose money. During the COVID-19 pandemic, my business colleagues—owners of restaurants and bars—paid heavy taxes, although restaurants did not work.Footnote 4 Many of them had to close, especially those who owned big toykhana. Banquets, as well as catering work in general, were prohibited. And, delivery from large restaurants did not work. Taxes, loans, and utilities went on as usual, but the work stood still. But, I made a mistake in the fact that the cafe was rented. During the pandemic, the work of cafés was suspended, and the cafe did not bring in an income, but people reluctantly ordered delivery since they mainly used fast food delivery services. The rent had to be paid in full, however. In addition, now the rent can be raised at any time. But, after I received permission to open a cafe, everything returned to normal and my income increased. But, as I mentioned, the rent also increased and is increasing every year. (Karim, male, 45-year-old businessman, owner of halal cafe)

Despite the fact that the city of Taldykorgan is considered one of the smallest cities in Kazakhstan, well-known franchises both at the national and international levels are gradually beginning to spread across the city. However, one interviewee noted that state officials find various reasons to make entrepreneurs’ lives difficult. In turn, legal and bureaucratic hurdles force entrepreneurs to look for informal channels and extra-legal methods to do business, as described here:

In general, I consider the franchise a successful investment if, of course, you work correctly and choose the franchise that is suitable for the population. Why did I decide to open a franchise? Firstly, the concept—there is no need to come up with a restaurant concept, come up with a menu, and organise training for the staff. Secondly, you do not need to hire designers to develop the project. But, you should know that a franchise can be cheap, medium, and large. The advantages of a franchise are that if you open a tavern or a pizzeria there, for example, the franchise may already have a brand in the city, region, republic, or world. In global franchises, the amount is impressive; a local franchise will be cheaper.

The cons of a franchise are that you have to be one-hundred-percent in line with the franchise. You need to take the franchise owner’s licence, and a licence costs a lot of money.

And, this is not about buying the document itself, but about investments. For example, it is necessary that the building and its size, the design of the restaurant, furniture, equipment, and kitchen—everything must be in full compliance with the franchise’s requirements. The advantages are that there is training for staff, and there are specific people who come and teach or pay for travel expenses if people go to another country or city to learn [about the franchise]. If you have opened a global brand or a Kazakh brand and spent a lot of money, there would be a return since people already know this restaurant, and there is no great need to promote it. Many people try to open cafes themselves, but they fail to manage restaurants, and they go bankrupt. So, those who do not have enough strength to develop an idea and concept do not. But, if they have money, they buy a franchise.

There are always difficulties and there always will be. For instance, construction and renovation in full accordance with the franchise—this is a big one. If they say that there should be light bulbs and such doors, such items should be exactly like that. Also, logistics and delivery—it is very expensive. The biggest difficulty is to approve a draft of the project from the city architect, which is generally difficult along with receiving approval for your draft architecture. Officials always turn down the first draft because they simply don't like your design. For example, they may not like the porch or facade of a building. They say, ‘How will the city look in this colour?’ Even the installation of a ramp takes a lot of time and is subject to inspection. You send a draft to the architect, and they consider it for two weeks. Then, after two weeks, they provide an answer with ten negative comments. In general, I know that my colleagues had great ideas for business projects, but almost 90% were refused, and they could not build because there was always something that did not comply with the law. Therefore, businessmen gave up and did not do anything. After the architect, city planners still have to grant approval, and there are also several refusals. You can walk like this for a very long time. However, a franchise has clear deadlines, and if you don’t meet them, then your contract is terminated. So, you have to look for friends who will help speed up the approval process. (Aliya, female, 41-year-old businesswoman, franchise restaurant owner)

In theory, when reading legal regulations, the process of opening and running a restaurant in Kazakhstan seems quite straightforward. Administrative barriers seem low, whereby, in theory, it should be a fairly simple process. However, in practice, as shown above, it is much more difficult to open and then manage a restaurant. This represents the most common mistake—everyone fails at management. It is difficult to manage a restaurant because few personnel, concepts, and knowledge exist in Kazakhstan. Even investors do not really understand what they want (Korostelyeva, 2019).

Considering the new and more precise legislation, the state does not interfere in doing business if the entrepreneur adheres to the rules. Not satisfied with endless inspections that prevent them from focusing on work, the Kazakhstan government introduced a moratorium on any inspections. In order to improve the conditions for the development of small entrepreneurship, including micro-entrepreneurship, the Kazakhstan President adopted a decree (No. 229, 2019). According to this decree, centralised state and local executive bodies were instructed to halt inspections and preventive control and supervisory visits to small businesses, including micro-enterprises, from 1 January 2020 through 1 January 2023. This measure became an effective means through state law to protect the rights and legitimate interests of entrepreneurs. In 2022, the moratorium was extended until 1 January 2024. Moreover, according to the Entrepreneurial Code of the Republic of Kazakhstan, conducting state control and supervision over small businesses, including micro-enterprises, is prohibited for three years from the date of registration with the state (except for established legal entities which are reorganised and legal successors of reorganised legal entities), with the exception of unscheduled inspections (see paragraph 6, Article 131).

However, this does not mean that the business entity is completely exempt from any checks. Exceptions are outlined in the order itself. Despite the moratorium, there are a number of exceptions that allow public authorities to monitor the activities of entrepreneurs.

For example, the moratorium does not impose a ban on unscheduled inspections. An unscheduled inspection is assigned by the control and supervisory body. The appointment of an unscheduled inspection can relate to a specific subject (object) of control and supervision in an effort to prevent and (or) eliminate an immediate threat to human life and health, the environment, the legitimate interests of individuals and legal entities, or the state (paragraph 4 of Article 144, Entrepreneurial Code). Paragraph 5, Article 144 of the Entrepreneurial Code lists those instances when an unscheduled inspection may occur. Specifically, subparagraph 3 of this Article deserves special attention. It states: ‘The grounds for an unscheduled inspection of subjects (objects) of control and supervision include appeals from individuals and legal entities related to violations of the requirements of Kazakhstan legislation in the presence of convincing grounds and supporting evidence.’ It is not entirely clear how these appeals are registered, whether it is necessary to make an official statement by means of an electronic digital signature or to go to a specific state body, or whether it is sufficient to call and report a violation. These uncertainties may lead to unfavourable consequences to an entrepreneur. Specifically, a state agency that must accept an appeal at its discretion will assess whether the grounds and evidence are convincing. Then, there can be a large number of such appeals, ranging from submissions from unfriendly customers to submissions from competitors.

Small businesses remain the riskiest businesses. Specifically, small business entities are rather vulnerable to all market changes and shocks because they have much fewer opportunities and resources compared with medium-sized and even larger businesses. But, small businesses perform stabilising functions in the economy, allowing for the creation and maintenance of a competitive environment and providing equal access to entrepreneurial activities for all participants (Moroz, 2010a). Kazakhstan’s Basic Law recognises and equally protects state and private property (Constitution of the Republic of Kazakhstan, Article 6). According to paragraph 6, Article 38 of the Entrepreneurial Code, for small businesses that do not have unfulfilled obligations and are classified by state bodies as entities with minor and medium degrees of risk, Kazakh laws provide a simplified procedure for their reorganisation and voluntary liquidation. This applies to the types of state support available to SMEs. State support for SMEs is provided according to the types of state support for private entrepreneurship as stipulated in Article 93 of the Entrepreneurial Code.

My interviews with entrepreneurs indicate that, despite the fact that Kazakh legislation provides various support measures, most representatives of SMEs do not have sufficient information about the proposed measures. The National Chamber of Entrepreneurs of the Republic of Kazakhstan ‘Atameken’ is recognised as a provider of non-financial support, and the joint-stock company Entrepreneurship Development Fund ‘Damu’ as a financial agency issues grants and provides preferential lending. However, during interviews, I learned that few entrepreneurs knew about either agencies, and did not know that they can consult with either of these agencies on doing business, receive training, and share experiences. Thus, we can conclude that the institutions in charge of providing state support measures, such as ‘Damu’, ‘Atameken’, and regional business departments, are inadequately engaged in informing and providing public services, despite their mandate and extensive infrastructure.

Discussion and Concluding Remarks

In general, the legal regulation of entrepreneurship in the Republic of Kazakhstan is at a fairly high level, which contributes to the development of business in the country. Based on the findings in this chapter, it is clear that, in general, people who have the means to do so can open a business. The state provides various grants, subsidies for efficient sectors of the economy, and innovative and green projects. But, in order to receive funds, it is necessary to navigate complex and cumbersome legal and bureaucratic procedures, an endeavour which often requires the use of informal and extra-legal methods and solutions. In addition, the food service industry is not always innovative. The empirical data collected through interviews demonstrate that not a single entrepreneur managed to receive a grant or a preferential loan specifically for a restaurant business. My results, in this sense, reinforce the findings of Moroz (2010a, August), who points out that the dispersion of public funds for all kinds of training programmes and informational support to SMEs is not a highly justified business support mechanism. It is unlikely that various training seminars and internships will help an entrepreneur find working capital or secure loans. In general, legislation in Kazakhstan contains a sufficient number of norms to regulate the activities of entrepreneurs. Regular business closures are associated with a lack of funds due to competition, a lack of turnover, and a lack of knowledge in conducting business. More importantly, many businesses fail due to bureaucratic and legal uncertainties, whereby only those businesses with informal connections and networks have better chances of succeeding.

To conclude, this analysis of legislation in the Republic of Kazakhstan related to the legal regulation of gastronomic entrepreneurship has demonstrated that considerable discrepancy exists between the ‘law-in-books’ and ‘law-in-action’. Although the government of Kazakhstan is taking steps to simplify business registration procedures and create a more favourable environment for entrepreneurship, my analysis suggests that both the legislation and its implementation mechanisms require improvement in order to create a more favourable business climate. In terms of doing business today, as indicated in this study, a moratorium on the inspections of SMEs was introduced. Only time will tell how business will be conducted once the moratorium is lifted. Past experience shows that endless checks by government agencies did not allow entrepreneurs room to ‘breathe’. All of this resulted in the introduction of the moratorium, which today shows positive results. Kazakhstan needs to continue improving the business climate to facilitate registration procedures, obtain permits, and reduce bureaucratic barriers. Thus, based on my analysis, I recommend increasing the availability of financial resources to businesses. It is necessary to increase the availability of credit and financial resources for entrepreneurs to help them implement their projects. It is also necessary to develop human capital, since most food service facilities closed due to a lack of knowledge in the field of business.