Astana: Open for Business
Kazakhstan is striving to maximize the new opportunities created by the Fourth Industrial Revolution and the Belt & Road Initiative (BRI), which has already transformed connectivity across Central Asia.
The complete, systemic overhaul of large companies and supply chains in this age of digitalization plays to the strengths of the burgeoning New Economy. Kazakhstan’s overarching development plan, Strategy 2050, was launched in 2012 with the objective of propelling the country into the world’s Top 30 global economies by the middle of the century. A key tenet to this strategy is the ability to develop new markets and partnerships and to create a favorable investment climate.
Kazakhstan’s transition from a former Soviet Union republic to a nascent market economy has not been without its challenges, but today there is plenty of reason for optimism. Real GDP continues to rise (up 4 percent last year), and the country’s level of foreign direct investment is the highest in the region; on a net accumulated basis, FDI stands at almost $300 billion.
Initially led by investment in the oil, gas and mining sectors, funding has spread more generally across businesses and industries in recent years. This diversification has been helped through ongoing liberalization of FDI laws and the provision of incentives, including tax reductions and government subsidies.
The country’s strong focus on creating a new financial infrastructure and investment culture is embodied in the formation of the Astana International Financial Centre (AIFC), which includes a new stock exchange—the Astana International Exchange (AIX)—and a fintech and research and development hub. The AIFC includes a series of specialized facilities and services for different funding types, ranging from corporate and project funding to trade finance.
Financial technology companies are among those that recognize Kazakhstan’s potential. Mastercard, for example, has been involved in the development of Kazakhstan’s cashless economy for over 20 years. In 2017 it signed an agreement with the AIFC designed to drive cashless technology innovations throughout the country, and the company has created a multifunctional Resident Card that combines access to financial and non-financial services. Next on the list is establishing a fintech startup accelerator program.
Nina Villems, Regional VP and Managing Director of Mastercard, calls Kazakhstan a “priority market.” The company has established partnerships with most of the country’s financial institutions, trade bodies and service enterprises.
“Our presence is strong,” she says. “We implement targeted programs in partnership with banks and merchants; develop special offers and unfold Mastercard programs for mass and premium segments; and introduce new technologies to the market, such as digital money transfers via social networks and one-touch payments with smartphones.”*
Celebrating its 20th anniversary this year, Astana is a gleaming, hi-tech capital city with strong business credentials. Its population of 1 million residents, has an average age of just 30, and place a strong emphasis on their careers and education.
The AIFC is located in the iconic glass sphere that formed the centerpiece of Astana Expo 2017. It is fitted with the latest technology to ensure security and efficiency, and provides the integrity required for an aspiring international financial center of excellence. The AIFC believes that the local establishment of foreign asset management companies will provide an effective boost to the development of local asset management and capital markets.
Kairat Kelimbetov, Governor of AIFC, says: “We understand that we have to diversify our structure of global investors to bring them to sectors that we want to develop, which are tourism, agriculture, food processing, the services industry and financial services.
“We are the place where the West meets the East, and this is a very good combination for us to develop infrastructure in this part of the world.”
Written by Arif Durrani, for Bloomberg Media Studios
*Source: Business Kazakhstan 2018: A New Era of Finance and Investment
