H.E. Mr. Mukhtar Tileuberdi, First Deputy Minister of Foreign Affairs of the Republic of Kazakhstan: “Economic Diplomacy of Kazakhstan”

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In line with instructions outlined by the President of the Republic of Kazakhstan, Nursultan Nazarbayev, on “economizing” Kazakhstan’s foreign policy, the following are key priorities for the government: attracting foreign investment and innovative technologies to priority sectors of Kazakhstan’s economy, and promoting the production of Kazakh enterprises in foreign markets. These priorities are of particular concern to the Ministry of Foreign Affairs.

President Nazarbayev places significant emphasis on enhancing economic diplomacy. Almost all of the president’s official visits abroad include meetings with the foreign business community, and negotiations around commercial agreements.

During the president’s visit to Iran in 2016, 48 agreements worth US $1.4 billion were signed. His visit to Turkey resulted in 20 agreements worth US $520 million; 10 agreements totaling US $200 million were signed in Saudi Arabia; 13 documents worth US $1.2 billion were signed in Japan; and during his visit to South Korea, the president signed 24 contracts worth US $640 million dollars.

Interest in cooperating with our country is primarily due to a favorable investment climate. This has been reiterated by international ratings. In the 2017 Doing Business report, Kazakhstan ranked 36th out of 190 countries. Favorable conditions in Kazakhstan include a simplified tax regime, stability of national legislation and concluded contracts, a wide package of investment preferences, and much more.

There are a number of benefits for investors who conduct business in the priority sectors of Kazakhstan’s economy, such as metallurgy, oil refining, machinery, chemical industry, and food production. These include exemption from payment of customs duties, stability of tax legislation, and state land grants (covering land plots, buildings, etc.).

For investment projects that cost at least 2 million Monthly Calculation Index[1] (approx. 11.5 million euros) and are implemented in priority sectors, it is possible to obtain a separate investment contract with the state. This is in line with a special incentive package available to investors, which includes:

– Tax benefits for corporate income tax and land tax (10 years), and property tax (8 years);

– Stability of tax rates (excluding VAT and excises), environmental charges and payments for a period of 10 years;

– Investment subsidy – compensation of up to 30 per cent of the investor’s capital expenditures;

– Simplified import of foreign labor to implement projects.

Platforms for direct dialogue between investors and the government have been established and are functioning successfully. Platforms include the Council of Foreign Investors (under the President of the Republic of Kazakhstan), and the Council for Improving the Investment Climate (under the Prime Minister of the Republic of Kazakhstan). In order to protect the rights and legitimate interests of investors, the Institute of the Investment Ombudsman was established. This serves as a platform for investors to engage with the state, and is a solution to current problems facing investors in extrajudicial and pre-trial order.

This year – with the expert support of the World Bank – Kazakhstan adopted a national strategy for attracting investment. It clearly defines coordination mechanisms for all state bodies and national companies, including procedures and algorithms for interaction, targeted sources of investment, and measures to further improve the investment climate in line with OECD recommendations.

The government has also approved the National Export Strategy. This document is aimed at establishing a unified and integral policy that fosters the growth of non-resource exports. It includes a set of specific measures to promote Kazakhstan’s exports.

These measures are supported by institutional transformations. In order to improve interactions between investors and the government sector, Kazakh Invest NC JSC was established. Kazakh Invest NC JSC is a national investment company which has been given broad powers and functions of operation and technical nature. This includes the provision of relevant public services.

The company acts as a ‘single negotiator’ with TNCs and large investors, acting on behalf of the government. It engages with investors as a ‘one-stop shop’, facilitating interaction with government agencies and solving emerging issues on-the-ground.

In order to expand cooperation with foreign investors, Kazakh Invest NC JSC offices have opened in the United States, Germany, France, Turkey, Great Britain, the United Arab Emirates, and the People’s Republic of China.

Simultaneously, Kazakh Export – a national company tasked with promoting Kazakh goods and services to foreign markets – was established. The aim of Kazakh Export is to support the export of Kazakhstan’s non-commodity goods and services in priority sectors through both financial and non-financial measures.

Special investment advisors from the Ministry of Investment and Development have also been appointed to focus on working with investors in ten countries: Germany, France, China, Great Britain, South Korea, Japan, Iran, Italy, and the United States.

When discussing Kazakhstan’s investment climate, it is important to acknowledge the country’s liberal visa policy, which offers convenient opportunities to the business sector and tourists alike.

As of January 1 2017, Kazakhstan has adopted a visa-free regime allowing entry for 30 calendar days for citizens from 45 countries (OECD countries, EU countries, including Romania; the United Arab Emirates, Malaysia, Singapore, and Monaco).

Kazakhstan has a mutual visa-free regime in place with twenty countries, and agreements with the UAE and Cuba are anticipated. In recent years, visa-free travel agreements with Brazil, Argentina, Ecuador, South Korea, and the UAE have been established. Similar agreements with Israel, Sri Lanka, and Macao are currently under consideration.

Our goal is to implement fundamental reforms to create an investment climate that reflects the best standards and experience of OECD countries.

In order to reduce the state’s involvement in the economy, the government adopted the Comprehensive Plan of Privatization (2016-2020), approving a list of organizations to be privatized.

Approximately 800 enterprises belonging to state organizations or national management holdings – worth a total of US $10 billion – will be introduced to the competitive environment. Privatization of companies will occur across various sectors of the economy, including mining and smelting, oil refining, energy, transport and communication, and others. This program offers interesting and promising opportunities for foreign investors, and the government is ready to engage in substantive negotiations.

As is widely known, Kazakhstan is the largest land-locked country in the world. It is important for our country to promote transit transport capacity and ensure connectivity with the rest of the world. Doing so is critical for attracting foreign investment as it significantly impacts on the efficiency of export production.

To develop Kazakhstan’s transit transport capacity, extensive work is being carried out with foreign governments and business communities, as well as with diplomatic personnel in Kazakhstan.

Between January and July 2017, the total volume of transit cargo transportation amounted to 179.4 thousand TEU (twenty-foot equivalent unit – standard unit for measuring the capacity of freight vehicles) – approximately 57.2 thousand TEU (147%) more than the similar period in 2016.

At the end of 2016, Kazakhstan rose from 77th to 40th in the global Logistics Performance Index. This rise reflects the benefits of the Western Europe-Western China International Transit Corridor, which opens access to the port of Lianyungang (PRC) and the Kazakhstan-Turkmenistan-Iran railway corridor, which leads to the port of Bandar Abbas (Iran), among others.

Transportation of cargo by rail on the Western Europe-Western China route takes 10-12 days, significantly faster than the 45 days by sea.

Success in attracting investment depends largely on the financial sector, including the degree to which it meets international standards, as well as how relatable and convenient it is for companies. With this in mind, at the initiative of the President of the Republic of Kazakhstan, Nursultan Nazarbayev, the Astana International Finance Centre (AIFC) will launch in Astana on January 1 2018.

The AIFC will be based on the principles of English law, and will include a preferential tax regime, an independent financial court, and arbitration as well as a regulator. Therefore the AIFC is inspired by the experience of such renowned finance centers as Dubai and London. A number of agreements have been signed between the AIFC administration and leading global players in the financial market so far (e.g. the Shanghai Stock Exchange and the NASDAQ stock market). In order to strengthen Kazakhstan’s asset management market, information exchange has been established with leaders from the banking sectors in America, Europe, Japan, and the Islamic world. Among them are GoldmanSachs, UBS, CreditSuisse, JuliusBär, DeutscheBank, among others.

The AIFC will be headquartered in the modern facilities of EXPO 2017, which was held successfully in Astana this year.

The AIFC is so called a legacy of the exhibition, which also includes two other ambitious projects – the International Centre for the Development of ‘Green’ Technologies and the International Technology Park for IT Start-ups.

We invite the Romanian business community to explore a range of opportunities for cooperating with Kazakhstan through the AIFC, the International Centre for the Development of “Green” Technologies, and the International Technology Park for IT Start-ups – all of which are expected to be growth areas for Kazakhstan.

We regard Romania is as a promising and important economic partner. The results of our cooperation are already visible. In 2016, turnover amounted to 774.2 million euros; the gross volume of mutual investment between 2005 and the first half of 2017 amounted to 825 million euros; 29 entities with the participation of Romanian capital are successfully operating in Kazakhstan.

We are eager and ready to strengthen our cooperation. In Romania, the fields of metallurgy, engineering, oil refining, and agriculture are highly developed. Kazakhstan has a keen practical interest in these areas. And to have mutually productive partnership our country enjoys those of most favorable conditions which remain to be further prioritized.