Kazakhstan Is Gearing Up For Major Reforms In Its Financial Sector
With the planned launch of a high-tech exchange, new financial court and introduction of English Common Law, Kazakhstan is gearing up for major reforms in its financial sector. Establishment of Astana International Financial Centre (AIFC) is part of the structural reforms of the Republic of Kazakhstan designed to diversify the country’s economy mainly through development of new types of financial services, Kairat Nematovich Kelimbetov, Governor of Astana International Financial Centre told The Peninsula.
“At the moment we are in a process of selecting a reliable and highly advanced strategic partner from among global exchanges. As for creation of an independent financial court with qualified judges with practical experience in countries with the jurisdiction of English law, it is essential for successful operation of AIFC. Independent AIFC jurisdiction based on English law, will affect the civil, commercial, corporate law, the regulation of labour relations, securities market, trust management.”
The AIFC Courts is expected to start its operation in the beginning of 2018. In order to attract foreign participants to AIFC, visa-free regime for up to 30 days for citizens of member countries of the Organization for Economic Cooperation and Development (OECD), the United Arab Emirates, Malaysia, the Principality of Monaco and the Republic of Singapore will be introduced.A special visa regime for a term of up to 5 yearswill apply for the staff of the Centre, participants of the Centre and their families, he said.
Development of Kazakhstan’s capital market is a primary strategic goal of AIFC and its achievement is crucial for successful implementation of AIFC project. A liquid capital market will attract additional foreign investment and accelerate growth of domestic economy.
To increase liquidity of the local capital market AIFC Exchange will become a platform for attracting investments into Kazakhstan’s economy through conducting IPO’s of “national champions” and through privatization of state-owned enterprises (SOEs) in the frame of the Comprehensive privatization plan for 2016-2020.
As the Government announced a new wave of privatizations that should take place in AIFC in 2018-2020, the market infrastructure should be fully operational in time for the IPOs, the companies that are going to be privatized need enough lead time to prepare for the IPO, to run the pre-IPO campaign and therefore they need to know which listing rules they will need to adhere. The first trades in equities are planned to be lunched on AIFC Exchange in September 2017.
AIFC will play an important role in implementation of the privatization program through establishing the financial market infrastructure, developing regulations, attracting foreign investors, providing transparency and information disclosure, establishing necessary mechanisms to ensure secondary market liquidity and many other.
On the potential partnership with Qatar, Nematovich, who is also the former Deputy Prime Minister of Kazakhstan and former chairman of the National Bank of Kazakhstan said: “Kazakhstan and Qatar are similar by their economics. We are the biggest oil producer in the region and among the top 20 oil producers with an output of 1.6 million barrels per day, which will double in the next 10 years to three million bpd. That will rank us among the top seven oil producers in the region. Qatar is the richest country for natural gas resourses and it is the biggest expoter of oil and gas products.”
“One of the key pillars in our new financial centre is Islamic finance. We are planning to develop Islamic banking and Islamic finance, insurance and takaful. The new regulation framework will allow us to bring local players and foreign investors together.” AIFC and Qatar Financial Centre Regulatory Authority have signed a Memorandum of Understanding on August 2016. The purpose of MoU is to establish a formal basis for cooperation between the Parties to exchange information and expertise in connection with financial sector and financial centre development; financial services regulation and supervision. I believe our countries have more common speres where we can cooperate.