This summer, Kazakhstan will deliver an official presentation of Astana’s International Financial Centre (AIFC). The platform was launched at the beginning of this year. The project is set to become the core element of Central Asian country’s financial infrastructure. Kazakhstan, which has historically attracted investors due to its political stability, strong economy and balanced foreign policy, is rapidly increasing its investment potential.
AIFC Governor Kairat Kelimbetov, a former governor of the central bank, held a press conference earlier this year where he said that the AIFC should attract up to $5 billion in FDI by no later than 2023 and up to $40 billion within about a decade.
Astana has set an ambitious goal for AIFC, and envision it to become a financial hub for Central Asia, the Caucasus, Eurasian Economic Union, the Middle East, West China, Mongolia and Europe.
According to Mr Kelimbetov, the AIFC has raised active interest among potential investors and will act as a modern high-tech infrastructure, with a favourable jurisdiction providing all the necessary conditions for attracting both direct and portfolio foreign investments.
The new platform helps investors to pour cash into public state-owned companies, including the national oil and gas company KazMunayGas, railway operator Kazakh Railways, air carrier Air Astana, power producer Samruk Energy, mining companies and the world’s largest uranium producer Kazatomprom.
The legal conditions of AIFC have been adopted. The court on the base of English law has been created. The participants will get benefits, including visa and tax privileges.
Astana has already adopted 47 laws and regulations within the framework of the English common law. These laws represent the best practice of similar international financial centers such as London, Dubai, Singapore, and Hong Kong.
The appointment as Chief Justice of one of the most eminent and respected English judges suggests a real commitment to the development and operation of a common law court underpinned by the highest judicial standards.
A significant step for the new Kazakh project was the registration of the Development Bank of China. This is an essential incentive for the flow of solid investors from the People’s Republic of China. The interest is due to the fact that Kazakhstan perfectly fits into the model of the Chinese “One Belt, One Road” infrastructure program.
In addition to Chinese investment, Islamic financing also plays an important role in AIFC. Its share will roughly amount to one fifth of the total investments. Islamic banks will be able to introduce new financial technologies, such as crowdfunding and micro-financing.
It is expected that by the end of this year, approximately 100 companies will register at the Astana’s International Financial Centre, and during 2019 there will be at least 250 of them, while by the end of 2020, that number will reach 500.
“Let’s look at the example of Dubai which has been functioning since 2004. At first, the Dubai International Financial Center worked slowly, but nowadays the number of registered companies from all over the world exceeds one thousand. We also hope that AIFC will take a rightful place in the global ranking of international financial hubs,” Mr Kelimbetov emphasised.
The AIFC is part of a large strategy of diversification Central Asia’s largest economy. The idea of its creation came during the financial crisis 2007-2008, and further materialised in 2015, when oil prices and other minerals collapsed – the main source of national revenues for Kazakhstan.
Kazakhstan’s economic diversification will undoubtedly remain a strategic priority for years to come. It is essential for the country’s future stability as the volatility of oil prices is unlikely to go away in the context of electric vehicles’ growing appeal and the ongoing disruption caused by the shale-oil production in the United States.
It is notable that AIFC has a great interest among Russian companies that are ready to become residents and place their capital in it, despite the fact that the Kazakh platform is similar to Moscow’s International Financial Centre. But Russian business have trust in Astana, possibly because of the prospects of new EU and US sanctions.
The official presentation of the AIFC will be 5 July, during the 20th anniversary of Astana as the nation’s capital. The ceremony will take place after the Astana Finance Days Investment Summit and World Islamic Economic Forum which will be attended by a number of high-level delegations.
The Brussels Times