Kazakhstan, a young and ambitious state, has always been famous for the originality of its decisions aimed at attracting foreign investors into the country. The creation of the Astana International Financial Center (AIFC) was no exception, but rather confirmed the established tradition. It turned out to be a unique project for the CIS countries. With the help of its own court, arbitration, the exchange and its own AIFC regulator, it is poised to become the “center” of attracting investments into the economy of Kazakhstan.
Organization in the post-Soviet state of a financial hub for the entire Central Asian region, with a hub based on the principles of English law, having a preferential tax regime and an independent financial court … Just a few years ago, such a project could be considered extremely fantastic.
As the initiator and the main organizer of the AIFC, President Nursultan Nazarbayev of the republic, as is customary in this country, acted decisively. During one of his public speeches, “Plan of the Nation 100 Steps in 5 Institutional Reforms”, he voiced an extraordinary idea – to create AIFC in Astana based on ASTANA EXPO 2017 infrastructure. A similar center in Dubai became a reference point here.
– The consolidation of a special legal status of a financial center in the Constitution, and the establishment of a center as a financial hub for the CIS countries, as well as the entire region of West and Central Asia, – this is how the Kazakh leader outlined priorities, securing the existence of AIFC with the necessary decree. – Creation of an independent judiciary with its own jurisdiction, which will operate on the principles of English law. The judiciary is formed from a number of foreign experts. In the future, the financial hub of Kazakhstan should enter the 20 advanced financial centers of the world.
The rest was, figuratively speaking, a matter of technicality. During Nazarbayev’s official visit to the UK, the President of Kazakhstan met with Jacob Rothschild (a person who needs no introduction). Literally in a couple of days, the Kazakh parliament consolidated the status of the AIFC by law. And almost a year ago, in January 2018, the International Financial Center “Astana” received an official start.
What is attractive in AIFC for foreign investors? First of all, the most unprecedented preferential conditions throughout the region, including independent financial regulation based on international standards. Key posts here are given to the British – recognized experts in jurisprudence and international law. The English justice system is known worldwide, and official London is recognized by the international legal centers. Thus, this aspect is a guarantee of an unbiased and fair trial.
In addition, the AIFC establishes a special legal regime that does not depend on the judicial system of Kazakhstan, based solely on the principles of English law. And English is recognized as the official language of office work on the AIFC territory. The status and judges of the AIFC, which guarantee the protection of the rights and interests of foreign investors, emphasizes the aspiration of Kazakhstan to obtain an impeccable image and the creation of favorable conditions for the work of large transnational companies.
There is a long list of benefits for investors. These include the tax preferences for a period of 50 years – participants of the AIFC are exempt from paying IIT and CIT until January 1, 2066, etc. Among other things, there is also the simplified visa and employment regime. Foreign employees of the AIFC, as well as their family members, receive an entry visa valid for up to 5 years. Citizens of OECD, UAE, Malaysia, Singapore and Monaco, as well as countries designated by the government of Kazakhstan, are entitled to visa-free entry for up to 30 calendar days. And a small but pleasant bonus is the free rental of Class A offices in the first two years of operation.
Kazakhstan, therefore, shows maximum loyalty to foreign investors, and creating a favorable investment climate here has become one of political and economic priorities. To solve the problems of foreign entrepreneurs in the country, at first, a special Ministry for Investment and Development was created, thanks to whose activities, obtaining public services for investors was maximally simplified, and administrative barriers were reduced. It worked successfully until the end of last year, and, having completed its task, it was reorganized. The remaining functions and powers were transferred to the Ministry of National Economy and the Ministry of Foreign Affairs of the Republic of Kazakhstan. If we add here the diplomatic multi-vector policy that President Nazarbayev has adhered to all these years, it is not surprising that Kazakhstani proposals are in considerable demand, and foreign visits and summits in Astana end with business forums and new contracts.
The result is also obvious. Even before its opening, more than 55 companies registered with the AIFC. According to the manager of the International Financial Center Astana, Kairat Kelimbetov, by 2020 their number should exceed 500 companies.
“For us, the key indicator of efficiency, given that we do not collect taxes from financial institutions, will be the volume of attracted foreign investments,” Kelimbetov says. – We believe that this is common sense. These investments would never have come to Kazakhstan. Tens of billions of dollars of investment is the creation of new jobs, this is an increase in consumer demand in our country, and for us this will be a big plus.
According to the Prime Minister of the country Bakytzhan Sagintayev, which he voiced at the plenary session of the Astana Finance Days Forum, the AIFC will significantly expand the international opportunities of Kazakhstan itself, allow it to find and take its place in the overall pattern.
“Kazakhstan considers the AIFC as part of the global financial system,” the head of government notes. – The global chain of financial centers that manage global cash flows passes through almost the entire globe – from Toronto to Sydney and from Tokyo to New York. Each of them has its own niche.
For its part, the AIFC, having a unique geographical position, will provide access to the markets of Central Asia, the Eurasian Economic Union, the Transcaucasus, and the countries of the Middle East.
“Astana is one of the key links of the new transcontinental routes of the global initiative Belt and Road,” Sagintayev reminds. – Therefore, the AIFC will become a natural financial and economic bridge between Western China, Mongolia and the countries of Europe. All this opens up access to a giant market for more than 1 billion people.
Meanwhile, in Western expert circles, they also support the idea that a new financial bridge has appeared in the world between Europe and Asia. According to preliminary forecasts by the Kazakh authorities, the AIFC will be able to attract billions in investment in the country’s economy. The plans of Kazakhstan are, of course, evaluated as ambitious, but, given the current conditions, are quite feasible. Astana is well aware that competition for investors is increasing every day, and only a promising product that meets the requirements of the modern realities of the world economy can attract investment. It means that Kazakhstan will have to deliver. /// nCa, 25 February 2019