The Kazakhstan administration has introduced a roadmap to expand capital markets and attract more foreign capital in every sector into the country as part of its aim of becoming a Eurasian regional leader in the financial sector.
Within a short timeframe, the Nur-Sultan government has taken significant steps in both the conventional financial system and in Islamic finance as borne out by the progress it has made to date.
Kazakhstan, which has hosted many important international events, like EXPO-2017, has already made its mark in the financial sector with concrete developments during the four-day Astana Finance Days forum on Monday, July 1.
The event saw experts discuss financial markets and the steps that are needed to integrate the Eurasian region into the international financial system. Participants shared views on financial technologies, the regional future of capital markets, Islamic financial practices, the creation of qualified manpower in the field of finance, as well as the role of the financial sector in the transformation of the economy.
Under the forum's theme to make Kazakhstan the 'Financial Center of Eurasia', the event offered the Kazakh administration a platform to share its goal with international finance professionals so the country can move forward in expanding its role in the sector while also diversifying its economy away from over-dependence on oil and mining revenues.
Kazakhstan's activities within this framework are as follows:
⁃ Astana International Finance Center
The Astana International Finance Center (AIFC), with a decree on its establishment signed in 2015, became operational in July 2018. The AIFC is located in an enormous campus where the EXPO-2017 is organized and has showcased steps that Kazakhstan wants to take in the financial sector to international financial players. The Astana Finance Days forum is an event to also promote this goal.
AIFC Senior Manager Kairat Kelimbetov, highlighting the center’s rapidly rising ranking among international financial centers, said it aims to produce a fluid and balanced capital market not only for Kazakhstan but for the entire region.
The AIFC Management Council, headed by Kazakh President Qasym-Jomart Toqayev, includes key financial players like JP Morgan Chase’s Chairman Jacob Frenkel, Sberbank’s CEO Herman Gref and the European Bank for Reconstruction and Development’s President Suma Chakrabarti.
- Astana International Stock Exchange
The Astana International Stock Exchange (AIX), which claims to be the largest stock exchange in the region, plans to create an alternative capital platform for the banking sector by using its wide pool of financial instruments. The Shanghai Stock Exchange, the Silk Road Fund and Goldman Sachs are among the strategic partners of AIX, which cooperates with Nasdaq in the technology sector. AIX is also used as a platform for the privatization of large public companies in Kazakhstan. The public offering of Kazatomprom, the world's largest uranium producer, was completed in November 2018 on the stock exchange.
- AIFC Court and International Arbitration Center
During the Astana Finance Days, the president officially launched a new court and arbitration center, which was established in order to provide assurance to international companies on disputes. The court and the arbitration center’s legal systems will be based on English "common" law.
The court and arbitration center were structured in line with the Kazakhstan government's target of bringing Western capital to the country. To this end, many Western legal experts were employed in key positions. British Lord Harry Kenneth Woolf will head the tribunal, while the entire board of judges consists of U.K.-based lawyers.
The head of the International Arbitration Center is Barbara Dohmann QC, a former judge of the High Court of England and Wales. The center aims to become the leading application center for commercial disputes in the Eurasian region. The government will cover the expenses of both centers for two years allowing applicants to avail of legal services free of charge.
- Islamic Finance Center
Another important step of the Kazakh administration was the roadmap that targeted a leadership role in Islamic finance. The administration made a consultancy agreement with the Zico Group, which specializes in Islamic finance within the Association of Southeast Asian Nations (ASEAN). With this agreement, the government aims to increase the share of Islamic finance in the financial system from 1% to 10% in five years while strengthening its role as an overall financial center. As per the consultancy company's guidance, regulations and changes to institutional planning will be swift and echoed during comprehensive sessions on Islamic finance at the Astana Finance Days forum.
Within the framework of the financial system structure, prepared by the founding President Nursultan Nazarbayev, Kazakhstan will continue to give full tax exemptions to foreign capital into the country until 2066 while a newly implemented Expat Center will support foreign company employees in the country.
Reporting by Fırat Gazel in Nur-Sultan, Kazakhstan
Writing by Firdevs Yuksel