The Kazakhstan government recently announced a roadmap of specific and immediate measures designed to incentivise foreign direct investment and further privatise key sectors of its economy. The roadmap broadly outlines a series of measures to be implemented by the government in 2014.
Proposed incentives for qualified investment projects:
- Stabilization of tax rates, tariffs and environmental obligations
- Exemption from corporate income tax
- Rebate of up to 30% of investment costs upon completion of investment project
- Guaranteed off-take by state-owned companies of goods and services produced by the investment project
- Improved dispute settlement mechanisms and access to international commercial arbitration
Proposed investment reforms and undertakings:
- State authorities and state-owned companies to participate in direct negotiations in relation to implementation of “anchor” investment projects
- Single-window system for obtaining various state authorisations and the investment ombudsman
- Maximum term for lease of agricultural land by foreign investors to be extended and subsidies to agricultural companies
- Improvement of VAT administration and procedures for VAT return
- Natural monopoly reforms including a new tariff policy
- Reforms related to concession projects
- Financing and improvement of bank distressed asset buy-out procedures by a specialised state-owned fund
The roadmap also mandates the continuation of the “People’s IPO” programme of national companies and a new wave of privatisation of state-owned companies beginning in June 2014. The Kazakhstan government has approved the privatisation of 106 companies affiliated with the Kazakhstan Sovereign Wealth Fund “Samruk-Kazyna” JSC between 2014 and 2018. Major players in the Kazakhstan market to be privatised by auction in 2014 include:
|
Company |
% of equity to be privatised | |
|
Kazmortransflot LLP, the national maritime shipping company |
49% | |
|
Euro-Asia Air JSC, a subsidiary of KazMunaiGas, owns and operates helicopters and airplanes |
100% | |
|
Maikainzoloto JSC, a gold mining and production company |
25% | |
|
Kazakh Oil and Gas Institute JSC, a subsidiary of KazMunaiGas JSC, providing design, engineering and research services in the oil and gas industry |
100% | |
|
Subsidiaries of Kazakhstan Temir Zholy JSC, the national railway company, which carry out various works and services in the railroad industry |
up to 100% | |
|
Subsidiaries of Samruk-Energy JSC, which produce, supply and distribute electricity |
up to 100% | |
|
Subsidiaries of Kazakhstan Engineering JSC, which manufacture various types machinery and equipment |
up to 100% | |
|
Others |
up to 100% |
Kazakhstan: key facts
- Ninth largest country in the world
- Sixth largest country around the world in terms of mineral resources
- Mineral and resources base consists of 5,004 fields: estimated cost is around USD46 trillion
- Customs union with Russia and Belarus provides access to Russian and Belarusian markets
- Three of four BRIC countries are situated next to Kazakhstan: Russia, China, and India
- Russia and China are the largest trading partners
- Trade relations with Germany, Turkey, Switzerland, the Czech Republic, Italy, the U.S., Great Britain, South Korea, and others
Client Alerts 2014 - 132