By Radwan Jakeem
NEW YORK (IDN) – Young and ambitious independent Kazakhstan is well-known for decisions marked by ingenuity and innovation. The creation of the Astana International Financial Center (AIFC) was no exception. In fact it confirmed the long-established tradition. The Center has turned out to be a unique project for the CIS countries. Backed by a court of its own, empowered by an arbitration facility, armed with stock exchange and a regulator, AIFC is becoming the “hub” drawing investors to Kazakhstan.
A financial hub in a post-Soviet state for the entire Central Asian region, based on the English common law, having a preferential tax regime and an independent financial court? Such a project would have been consigned to the realms of fantasy a few years ago. But the fact is that it is meanwhile a palpable reality.
The initiator and key organizer of the AIFC is President Nursultan Nazarbayev. During one of his public speeches, “Plan of the Nation – 100 Concrete Steps to Implement Five Institutional Reforms”, he proposed an extraordinary initiative: to create AIFC in Astana based on the ASTANA EXPO 2017 infrastructure. A similar center in Dubai became a reference point.
– President Nazarbayev proposed the consolidation of a special legal status of a financial center in the Constitution, 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 common law. The judiciary comprises a number of foreign experts. In a not-too-distant future, the financial hub of Kazakhstan would join the league of 20 advanced financial centers of the world.
What makes AIFC attractive to foreign investors? First of all, the most unprecedented preferential conditions in the entire region, including independent financial regulation based on international standards. The key posts are occupied by UK-recognized experts in the field of jurisprudence and international law. The English justice system is known worldwide, and the official London is recognized as an international legal center. Thus, this guarantees an impartial and fair trial.
In addition, the AIFC establishes a special legal regime that does not depend on the judicial system of Kazakhstan, but is based solely on the principles of English common 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, is notable, because it underlines Kazakhstan’s striving for an impeccable image and the creation of favorable conditions for the operation of large transnational companies.
The list of benefits accruing to investors is long. These are tax benefits for a period of 50 years. AIFC members are exempt from paying IIT (Individual Income Tax) and CIT (Corporate Income Tax) until January 1, 2066, etc. There is also, among other things, a simplified visa regime and an employment regime.
Foreign employees of AIFC, as well as their family members, receive an entry visa valid for up to 5 years. Citizens of the OECD, the United Arab Emirates, 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.
Even before the AIFC’s formal opening, more than 55 companies have registered with the center. According to the head of the International Financial Center Astana, Kairat Kelimbetov, by 2020 their number should exceed 500 companies.
Kazakhstan shows maximum consideration to foreign investors, and creating a favorable investment climate in the country has become one of the political and economic priorities.
To solve the problems of foreign entrepreneurs in the country, a special ministry for investment and development was created for the first time, thanks to which the receipt of public services for investors was simplified to the maximum and administrative barriers were reduced.
If we add here a diplomatic multi-vector policy, which President Nazarbayev followed all these years, it is not surprising that Kazakh proposals are in considerable demand, and foreign visits and summits in Astana end with business forums and new contracts.
“For us, a key indicator of efficiency, given that we do not collect taxes from financial institutions, will be the volume of attracted foreign investments,” says Kelimbetov. “We believe that this is common sense. Tens of billions of dollars in 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 Kazakh officials, 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 AIFC as part of the global financial system. The global network of financial centers that manage global cash flows runs across the globe — from Toronto to Sydney and from Tokyo to New York. Each of them has its own niche.
For its part, AIFC, having a unique geographical position, will provide access to the markets of Central Asia, the Eurasian Economic Union, the Caucasus and the countries of the Middle East.
Meanwhile, Western experts 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 of 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. [IDN-InDepthNews – 21 March 2019]
Photo credit: AIFC
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