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March 9, 2021

Kazakhstan has the potential to occupy the Eurasian region “financial harbor” niche

The Astana International Financial Centre (AIFC) will be ready to receive its first clients after the EXPO-2017 exhibition. This date was declared by the AIFC Manager Kairat Kelimbetov personally. Despite the fact that Western investors refer to the idea with some skepticism, and the Russian fear that “Astana” risks to become the new offshore zone, Kazakhstan has the potential to occupy the Eurasian region “financial harbor” niche.

The creation of the international financial hub which the Astana financial center was conceived to become has started for long time ago. The launched presidential plan “100 concrete steps” clearly defines how the state has to change to receive a new impetus to economic, and hence political and social development. The creation of an international financial center will play an important role in this process. Let’s start for example with the fact that the companies entering the AIFC will receive unprecedented conditions: no obligation to pay taxes for 50 years (this applies to VAT on imported raw materials used for investment projects), a really functioning model of Anglo-Saxon law, as well as a special visa and foreign exchange regimes.

“As to the operational work of the financial center, it is planned that the Kazakh exchange trading will pass to “Astana” where the IPO of all state-owned companies will take place”, Kairat Kelimbetov says. Right there, the assets of the National Fund and the Unified Pension Savings Fund will find their managers through the AIFC. Yet, by design, the state Islamic securities are planned to be placed at the financial center exchange.

“We understand that this project is a large and complex issue. It is important to be able to kindle our region’s interest, to turn AIFC in the center of financial services within the framework of the “Silk Road Economic Belt”. We need to take this niche and start to develop gradually. We look forward to the participation of international financial organizations, the big businessmen who come to Kazakhstan, making sure that they can work there. I am confident that with the full support the activities under this project will be interesting”, – the President of Kazakhstan Nursultan Nazarbayev emphasized at the meeting with members of the AIFC Management Board.

At the end of this year the financial center opportunities will be shown to investors. The members of the “Astana” Management Board note that if all the prescribed legislation and working conditions of the financial center are fulfilled, Kazakhstan will join the small group of countries able to integrate into the modern state-building stream. This is especially because there are no such sites in the Eurasian region. It is to be recalled that according to the development plan, the financial center will provide services to the market of Kyrgyzstan, Uzbekistan, Tajikistan, and Mongolia and the Caucasus in the future. During a meeting with Russian businessmen within the framework of the St. Petersburg Economic Forum, President Nursultan Nazarbayev also noted the reducing level of investment from Russia to Kazakhstan, as well as invited entrepreneurs of the strategically important state to work at the AIFC “Astana” site.

In fact, according to foreign financial analysts, the creation of financial center in Kazakhstan is not a bad idea. Now there is favorable economic time in the country: the national currency has experienced a series of devaluations, and the whole macroeconomics moved to inflation targeting, respectively, the prices in Kazakhstan are now at an acceptable level for investors and companies. This is especially as a special offer for the transfer of large and major state-owned enterprises into private hands is in force.

For the local capital market development, the Centre together with the strategic partner from among the leading exchanges in the world is working to establish high-tech exchange AIFC infrastructure. The talks with the London Stock Exchange and the Metal Exchange, NASDAQ, the Chicago Mercantile Exchange, NASDAQ Dubai, New York Stock Exchange have already taken place.

On the other hand, despite the attraction of foreign players in the AIFC area, analysts believe that it should be prohibited to left aside the local players, which in the future may become the successors of the technologies and way of doing business. All this taking into account the fact that foreign companies may come and go. The introduction of new business technologies will allow Kazakh players to develop quality financial services that can have a multiplier effect when the business model also applies to the domestic market.

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