COMMON TO AN UNCOMMON DEGREE

Kazakhstan 2018 | ECONOMY | FOCUS: ASTANA INTERNATIONAL FINANCE CENTRE

Many eyes were set on Astana for Expo 2017, and Kazakhstan is hoping to carry this momentum forward into 2018 with a new financial hub.

Expo 2017 was intended to announce the emergence of Astana on the global stage, and 2018 will surely cement Kazakhstan's capital as an economic hub for the region. With the launch of the much-anticipated Astana International Financial Centre (AIFC) expected in July 2018, Kazakhstan will adopt a truly modern and vibrant vision for the future of its financial sector.

Situated on the exact site of the Expo in the world's largest spherical building, some 10km away from the center of Astana, the ambition to create such a hub was brought to life back in May 2015 when President Nursultan Nazarbayev signed a decree for the establishment of the AIFC. Outlining the core guidelines of the project, the President said: “It will be based on the principles of English law with a preferential tax regime and an independent financial court. We are confident that AIFC will be the core of the financial infrastructure in Kazakhstan, a further financial hub for the entire Central Asian region.”
Indeed, the AIFC's independence, through its adoption of Common Law, represents one of its core institutional strengths. In December 2017, the AIFC appointed the distinguished and hugely experienced Lord Harry Kenneth Woolf, a retired British barrister and judge, as its chief justice. He will ensure that the AIFC is independent from the judicial system of the Republic of Kazakhstan and oriented to the principles, norms, and precedents of the law of England and Wales and the high standards of other international financial centers, such as Hong Kong and Dubai.
Likewise, as highlighted in the President's decree, it is the AIFC's unique proximity to key emerging markets that is its other key advantage, and will no doubt prove a major pull-factor for investors around the world. With Kazakhstan neighboring western China, the Caucasus, the Eurasian Economic Union—with a population of almost 170 million people—and the fast-emerging Central Asian region, AIFC will leverage its unique offering to attract companies, banks, and investors alike to its shores. Moreover, national carrier Air Astana has put in place a strategy to establish direct routes from the capital to key financial hubs around the globe such as London, Frankfurt, Dubai, New York, Shanghai, Singapore, and Tokyo.
Nonetheless, AIFC has come a long way from its early blueprint to implement major strategic directions such as capital markets through the newly established Astana International Exchange (AIX), asset management, Islamic finance, private banking, fintech, and green finance. It has also announced the formation of an international center for green technologies and international IT start-up hub to be launched on its premises throughout 2018.
According to the Governor of AIFC and former Deputy Prime Minister, Kairat Kelimbetov, the first five years will be aimed at achieving self-sufficiency by reaching its designed capacity, which in the process should inject USD3-5 billion of FDI into Kazakhstan.
After that, AIFC has set its sights on becoming one of the world's top-30 financial centers in the next 20 years. From there, the economic windfall for Kazakhstan, according to the governor's forecasts, is limitless. Namely, Kelimbetov expects that over 10-15 years, the AIFC will be able to attract over USD40 billion in investments and, in this period, create around 17,000 new jobs, 40% of which will go to Kazakhstani citizens.
Simultaneously, Kazakhstan's economy will be revolutionized through the widespread privatization of its sovereign fund, Samruk Kazyna. Key state assets, such as Kazatomprom, Kazakhtelecom, and Air Astana are expected to be offered to international markets starting 4Q2018. And with a sizeable share of the offerings also expected to appear on a local exchange, the timing to launch the revolutionary AIFC could hardly have been more perfect.