Investors' Voice December 2014

IV Investors' Voice
The American Chamber of Commerce in Kazakhstan
Ka z a k h s t a n ' s L e a d i n g I n t e r n a t i o n a l B u s i n e s s A s s o c i a t i o n
December 2014
HOLIDAY ISSUE #62
AmCham Advocacy 2014: Improving
Kazakhstan's Investment Climate
Microsoft - Software Piracy, A Threat to
Cybersecurity
Beeline - Predictions for the Mobile
Telecommunications Market
Kcell - Rapid Progress in Kazakhstan's
Mobile Industry
EBRD - Current Dilemmas in Banking
and Insurance
Tele2 - Proposals for the Kazakhstan
Telecommunications Market
Al Hilal Bank - Islamic Banking in
Kazakhstan
London-Almaty Insurance - Kazakhstan's Insurance
Industry: Facilitating Industry Development
Definitive Advice.
Practical Guidance.
Powerful Advocacy.
Dechert’s Kazakhstan team advises domestic, foreign and multinational clients on
corporate, mergers and acquisitions, capital markets, corporate finance, energy and natural resources,
litigation and arbitration, regulatory and tax matters.
Our Almaty office offers services in Russian, Kazakh, English and Mandarin. Working closely with our
colleagues in Europe, the United States, Asia and the Middle East, we combine the reach, resources
and experience of a 900-lawyer international law firm with strong local ties and an established
presence in the region.
That’s why Chambers Global 2012 praised Dechert’s “experienced lawyers who can . . . point [clients]
in the right direction,” and why domestic and foreign clients in sectors including energy and natural
resources, financial services, construction, manufacturing, food and beverage, and technology, media
and telecommunications rely on us in Kazakhstan and around the world.
For more information, please contact:
Kenneth E. Mack
+7 727 258 5088
kenneth.mack@dechert.com
dechert.com
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EDITOR’S NOTE
Dear Readers,
The December issue of Investors' Voice for 2014 offers a sampling of presentations by AmCham
members at the this year's Council to Improve the Investment Climate; the platform for dialogue
created by Kazakhstan's Prime Minister, Karim Massimov, exclusively for AmCham and its
members. The Council was launched three years ago following several years of increasing
advocacy by AmCham, which has consistently worked together with the Prime Minister's Office to
make our members' voices heard at the most senior levels of the Government of Kazakhstan.
It speaks well for Kazakhstan's forward-looking Government that AmCham efforts have been
supported by the Prime Minister, who chairs each monthly Council meeting. In 2014, the Prime
Minister has also invited AmCham to attend weekly Cabinet meetings where the issues in this year's AmCham Investment
White Paper: Top Ten Barriers to Foreign Investment, are debated.
Because Council sessions have limited attendance, it has not been possible to include all AmCham members in these
monthly meetings. Members often enquire about the topics discussed at the Council, topics that range from policy issues
affecting all industries to industry-specific presentations. Past issues of Investors Voice published Council presentations
on challenges such as Rule of Law, Judicial Independence, Criminalization of Investor Disputes, and Intellectual Property
Rights. In 2014 the Council has tended to focus on industry-specific challenges, beginning with the Customs Union and
proceeding to the financial industry, technology, and the oil industry - VAT refunds, environmental penalties, and engineering/
construction licenses.
In the present issue we offer our readers articles based on recent Council presentations - views from the telecommunications,
banking, and insurance industries, as well as an overview of product piracy that is still only too prevalent in Kazakhstan. The
Government has taken a strong position to curtail product piracy in all forms.
In the year ahead, AmCham will continue to open up Council discussions to our members, and will engage members in
Council proceedings as often as possible. In the meantime, AmCham wishes all its members and readers a very happy
holiday season. We look forward to seeing all of you in 2015!
Doris Bradbury
Executive Director
TABLE OF CONTENTS
ARTICLES
Software Piracy, A Threat to Cybersecurity
by Alexey Reshtenko..........................................................10
Cover Artwork: The Family and the Structure of
the World by Eduard Kazarian
Kcell - Rapid Progress in Kazakhstan's Mobile
Telecommunications Industry
by Rikard Slunga.................................................................11
Investing in Kazakhstan's Power Industry: The Legal
Framework
by Shaimerden Chikanayev............................................18
Beeline - Predictions for the Mobile
Telecommunications Market
by Taras Parkhomenko......................................................12
CHAMBER EVENTS
Tele2 - Proposals for the Kazakhstan
Telecommunications Market
by Pietari Kivikko................................................................13
The EBRD Role in the Telecommunications Sector
by Janet Heckman............................................................14
Kazakhstan's Insurance Industry: Facilitating Industry
Development
by Yergali Begimbetov........................................................15
Al Hilal Bank - Islamic Banking in Kazakhstan
by Prasad Abraham..........................................................16
EBRD - Current Dilemmas in Banking and Insurance
by Dr. Agris Preimanis....................................................17
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AmCham September Business Roundtable.............22
Almaty Autumn Sundowner..........................................23
Atyrau Renaissance Sundowner.................................24
Almaty Halloween Sundowner.....................................26
Aktau Renaissance Sundowner..................................28
AmCham Thanksgiving Celebration..........................30
Almaty Winter Holiday Sundowner.............................32
Working Group Update.............................33
Advocacy Update............................................35
Member News......................................................36
New Member Profiles..................................38
5
BOARD OF DIRECTORS
CREDITS
EXECUTIVE COMMITTEE
EDITOR IN CHIEF:
Doris Bradbury
PHOTOGRAPHER:
Dmitry Skegin
Walter Daniel
Kenneth Mack
Janet Heckman
Paul Cohn
President
Vice President
Treasurer
Secretary
Managing Partner
Kazakhstan Director
Partner
Director, Legal Services
Dechert
EBRD
Ernst & Young
PricewaterhouseCoopers
COVER ARTWORK:
Eduard Kazarian
BOARD MEMBERS
CONTRIBUTORS:
Prasad Abraham
Yergali Begimbetov
Shaimerden Chikanayev
Janet Heckman
Pietari Kivikko
Taras Parkhomenko
Dr. Agris Preimanis
Alexey Reshtenko
Rikard Slunga
PUBLISHER:
American Chamber
of Commerce in Kazakhstan
Tel.: +7 (727) 330 92 50
Fax: +7 (727) 330 92 51
6
Doris Bradbury
Theresa Grencik
Osman Kazdal
Executive Director
U.S. Consul General
General Manager
AmCham
US Embassy
Coca-Cola Almaty
Oybek Khalilov
Andrei Kurilin
Tim Miller
Mark Pothast
General Manager
Chief Executive Officer
General Director
General Manager
AIG
Citibank Kazakhstan
Tengizchevroil
Nestle Eurasia
For information about the Chamber, please email info@amcham.kz
For information about Investors' Voice and Chamber's website
please contact Saniya Yergaliyeva at Saniya.Yergaliyeva@amcham.kz
To register for a Chamber event,
please email Administrative Assistant Malika Kazymbetova at info@amcham.kz
To enquire about financial issues,
please contact Finance Director Rimma Kazhemyakina at Rimma.Kazhemyakina@amcham.kz
#62/2014
CONTRIBUTORS
Prasad Abraham, CEO, Al Hilal Bank Kazakhstan
Prasad Abraham's banking career began at Citibank in 1977. In 1983, he joined the Arab Banking Corporation (ABC) in Bahrain, where he served as Group Chief
Auditor until 2013, serving on the Audit Committee of the parent company, as well as on the Audit Committees of Banco Atlantico in Spain, ABC Daus in Frankfurt,
and ABC International Bank in the UK. In 2004, Mr. Abraham was appointed Deputy CEO of ABC International Bank in London.
In 2007, he was involved in coordination and pre-opening efforts to establish Al Hilal Bank in Abu Dhabi, and in 2008 he was appointed Al Hilal's Chief Operating
Officer. When the Bank opened a subsidiary in Kazakhstan, Prasad Abraham was appointed CEO of the new subsidiary.
Yergali Begimbetov, Chairman, London-Almaty Insurance Company
Yergali Begimbetov has been Chairman of London-Almaty Insurance Company since 2003. Between 2000-2003, he served as Vice President, then as Acting CEO
at KBS Garant Insurance Company. From February, 2003 he was Advisor to the CEO at BankTuranAlem (BTA Bank).
Yergali Begimbetov graduated from the Almaty Power Engineering Institute in 1994 as an Automation Engineer. He received extensive insurance training at
Nationwide and Grange Insurance in the United States, as well as in Finance and Accounting at Arthur Andersen and Ernst & Young.
Shaimerden Chikanayev, Partner, GRATA Law Firm (Almaty / Ulaanbaatar)
Shaimerden Chikanayev is a Partner in the GRATA Banking and Finance Group and heads the firm’s Mongolia practice, dividing his time between Almaty and
Ulaanbaatar. With over 10 years of experience as a Kazakhstani lawyer, Mr. Chikanayev focuses his practice on a wide range of finance and M&A transactions,
including project finance and capital markets, infrastructure transactions, and workouts and restructurings in many industries. He was formerly an Associate in the
Almaty office of Dewey & Leboeuf and In-House Counsel at the London EBRD headquarters.
Shaimerden Chikanayev received his LL.M. from Duke University Law School, and his BA in Law from Eurasian National University Faculty of Law.
Janet Heckman, Kazakhstan Country Director, European Bank for Reconstruction and Development (EBRD)
Janet Heckman is Kazakhstan Country Director for the EBRD, appointed in July 2012. Prior to joining EBRD, Ms. Heckman worked for Citigroup as a Managing
Director in corporate banking for 32 years in the UK, Algeria, Bulgaria, Romania, Hungary, Greece and Bahrain.
Janet Heckman holds an MSFS degree in International Relations from Georgetown University and an undergraduate degree in History from Kenyon College. She
was AmCham Vice President in Romania and served on the AmCham Board in Bulgaria. She was also Chairman of the Fulbright Board in Bulgaria and a Board
Member in Hungary and Romania.
Pietari Kivikko, Chief Executive Officer, Tele 2 Kazakhstan
Pietari Kivikko began his career in telecommunications 16 years ago as a financial controller at Sonera, and was later promoted to Head of Finance for the
company's international mobile operations. In 2003 he joined the Moscow head office of MegaFon as Director of Financial Planning and Analysis, after which he
served as CFO for Fintur Holdings/ TeliaSonera Eurasia in Istanbul. In 2010 Pietari Kivikko was appointed CFO of Tele2, and in 2013 he became Chief Executive
Officer of Tele 2 Kazakhstan.
Pietari Kivikko holds a Master's degree in Economics from the School of Economics and Business Administration in Turku, Finland.
Taras Parkhomenko, Chief Executive Officer, Beeline Kazakhstan
Taras Parkhomenko began his career in marketing and strategic planning at Golden Telecom, where he worked between 1996-2002. From 2003-2006, he served
as Director of Marketing at Arterium, one of the largest pharmaceutical companies in Ukraine. In August 2006 Mr. Parkhomenko joined Kyivstar as Deputy Director
for Strategic Affairs, later heading the Marketing Department. In February 2013 he was appointed CEO of Beeline Kazakhstan.
Taras Parkhomenko graduated in engineering and economics from Kyiv International Civil Aviation University in 1996. In 2002 he received a diploma from the
British Chartered Institute of Marketing (CIM).
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7
CONTRIBUTORS (Con't)
Dr. Agris Preimanis, Lead Economist for Central Asia, EBRD
Dr. Agris Preimanis is the EBRD Lead Economist for Central Asia, working with governments, regulators, and the private sector on formulating economic policies,
strategies and structural reforms. Dr. Preimanis also maintains a broader role in the venture capital and private equity sector across the entire EBRD region.
Before the EBRD, Dr. Preimanis worked for ten years at Oxera, a UK-based advisory firm, advising financial services firms and regulators in the UK, Europe and
the US. He holds a D.Phil. in Financial Economics from Oxford University, an MSc in Finance from Birkbeck College, and a BSc and BA from Stockholm School
of Economics in Riga.
Alexey Reshtenko, General Manager, Microsoft Kazakhstan
Alexey Reshtenko has worked at Microsoft since 2001, starting as Partner Account Manager in NW Russia, then as NW Russia District Manager. Between 20062007 he headed the Microsoft SMB Department, returning to St. Petersburg as District Manager, then as Regional Sales Manager for Russia 2008-2012. Mr.
Reshtenko was appointed General Manager of Microsoft Kazakhstan in November 2013, after serving as Microsoft General Manager for New Markets (South
Caucasus, Central Asia, Belarus, Moldova) 2012-2013.
Alexey Reshtenko holds an Engineering degree from St. Petersburg State Telecommunications University.
Rikard Slunga, Chief Executive Officer, Kcell Kazakhstan
Rikard Slunga was appointed CEO at Kcell Kazakhstan in November 2014. From April to November 2014, he served as ICT Director at Kcell. Between 20062009, he was Chief Executive Officer at Nordisk Mobiltelefon Sverige (Sweden). From 2000 to 2003, he held the position of CTO at ORANGE Sverige.
Between 1998-2000, Mr. Slunga served as Business Manager at Telia Mobile AB. Mr. Slunga also worked as a Consultant at Malakit company (Sweden) and a
Director at the Swedish telecommunications company, ReWiCom.
Rikard Slunga holds a Master's degree in Engineering.
ARTICLES
SOFTWARE PIRACY – A THREAT TO
CYBERSECURITY
By Alexey Reshtenko, General Director
Microsoft Kazakhstan
What is Cybercrime and What are Its Risks?
Today there is a huge shift in the perception of cybercrime on
the part of both consumers and corporate customers, all of whom
are concerned about the security of their data as well as their
privacy. However, there is not always a clear understanding of
what cybercrime is and what risks it entails for software users.
First, the term 'cybercrime' needs to be defined. According to
Interpol, crimes against cybersecurity are divided into 3 broad
areas: attacks against computer hardware and software, for
example, botnets, malware, and network intrusion; financial crimes,
such as online fraud, penetration of online financial services and
phishing; and abuse, especially of children. Malware is, in fact,
a whole group of digital 'microbes' like Trojan horses, viruses,
keystroke loggers, password stealers, backdoors, spywares,
ransonware and netbot.
According to a recently released joint study by IDC and the
National University of Singapore (“The Dangerous World of
Counterfeit and Pirated Software”, IDC, March 2013), malware is
a huge global industry today. Malware usually affects computers
in search of financial gain. One common source of malware is
pirated software. Respondents in the IDC study reported that 54%
of the people they knew who used pirated software experienced
security problems.
In addition to an incomplete understanding of what constitutes
cybercrime, users often do not fully realize the related risks. For
consumers the most common risks are loss of personal and
financial data, as well as reputational risks. For companies, the
stakes are much higher: as an example, in 2013, 110 million
credit cards and personal information of customers of a major US
discount retail chain were breached by criminals using malware.
This single breach cost this company $400 million in lost holiday
sales, a very significant financial (and reputational) loss.
There are several modes of protection against cybercrime. The
IDC study cites the following:
• For consumers - understanding that pirated software is not
free, but rather that it bears risks to online safety and security.
Consumers need to be vigilant in identifying software that
looks or appears legitimate but is not, and buy computers
only from trusted stores or online sites.
• For companies - only legitimate and secure software should
be used, and software and cybersecurity audits should be
regularly performed. Companies should also enforce strict IT
procurement and usage policy measures company-wide, and
monitor employees' unauthorized, potentially piracy-related
activities.
• For governments - their populations and government agencies
should be alerted to cybersecurity and malware threats from
software piracy. They need to be fully aware and sensitized
to the dangers to sensitive government information. Lastly,
governments need to ensure they have a strong detection
and enforcement infrastructure for preventing intellectual
property theft and cybersecurity abuses.
10
According to the latest BSA Global Software Survey
published in June 2014, the percentage and commercial value
of unlicensed software installed on personal computers by
geographic region was:
• Central and Eastern Europe: 61% (USD 5,318M)
• Russia: 62% (USD 2,658M), Belarus: 86% (USD 173M),
Georgia: 90% (USD 40M), Azerbaijan: 85% (USD 103M),
Armenia: 86% (USD 26M).
• Western Europe: 29% (USD 12,766M), North America: 19%
(USD 10,853M), Middle East and Africa: 59% USD 4,309M),
Asia Pacific: 62% (USD 21,041M), Latin America: 59% (USD
8,422M).
• Kazakhstan: 74% (USD 136M)
• Worldwide: 43% (USD 62,709M).
Effective enforcement against software piracy is important
as it entails the following negative consequences:
• Low innovation and lack of investment
• Limited local IP/IT industry, low motivation for local IT
producers
• Fewer employment opportunities in the IT field
• Less government taxes
• Unfair competition among both sellers and users of software
• Risk of malware from unlicensed software, opening access
for cybercrimes
BSA | The Software Alliance (www.bsa.org) is the leading
advocate for the global software industry before governments
and in the international marketplace. Its members are among
the world’s most innovative companies, creating software
solutions that spark the economy and improve modern life. With
headquarters in Washington DC and operations in more than 60
countries around the world, BSA pioneers compliance programs
that promote legal software use and advocates for public policies
that foster technology innovation and drive growth in the digital
economy.
Microsoft is a member of BSA and adheres to BSA principles,
which protect the entire software industry along with consumers,
businesses, and governments. This role is inherent in Microsoft's
corporate mandate and responsibilities towards all of its users
worldwide, including in Kazakhstan and across the CIS.
Kazakhstan Legislation Protecting Software - Software
protection is regulated by the following national legislation:
• the Law of Kazakhstan “On Copyright and Related Rights”
• the Civil Code of Kazakhstan (Articles 971 – 984)
• the Code on Administrative Breaches of Kazakhstan (Article
129)
• the Criminal Code of Kazakhstan (Article 184)
As of January 1, 2015, the new Criminal Code of Kazakhstan
will come into force, under which any breach of intellectual
property rights shall be considered as a criminal offence, entailing
(depending on the breach) punishment for the company and
company management. Punishment may be a monetary fine up
to $51,000, a ban on participation in public works, arrest and
imprisonment up to 6 years, followed by a ban on holding specific
positions or engaging in specific types of activity.
Criminal liability is accompanied by civil liability (i.e. compensation
of losses and damages to the copyright owner).
#62/2014
KCELL - RAPID PROGRESS IN KAZAKHSTAN'S
MOBILE TELECOMMUNICATIONS INDUSTRY
Mobile technology has radically transformed the world around
us and the mobile evolution is moving forward at unprecedented
speeds. It is expanding the digital frontiers far beyond what was
imaginable even just a few years ago thanks to global broadband
technologies such as 3G, 4G and the forthcoming 5G networks.
These innovations open up new opportunities and services
that will enhance the daily lives of individuals, allow businesses
to grow further and facilitate the public sector to become even
more efficient. These advances in the mobile industry create new
opportunities for innovative applications, including services like
eGov and mGov as well as the steady flow of new devices and
tablets.
As mobile phone capabilities increase and customer prices
decrease, mobile technology can address additional challenges
as well. The digital divide within a country or society can widen
rapidly when modern cutting edge technology is introduced in
an urban environment while rural areas often lag behind without
steady access to broadband internet. However, this current
technological situation is not necessarily the future status quo. The
mobile industry can make a significant contribution to reducing this
digital divide in rural areas by offering mobile broadband internet
access based on the right circumstances, such as low, far-reaching
frequencies combined with modern broadband technologies.
To remain competitive in this Digital Age, it is critically important
that Kazakhstan secures the ideal conditions to stimulate
introduction of the new global broadband technologies currently
implemented almost everywhere worldwide. To complete this
task, the existing frequency bands, for example 900 MHz, must
to be reframed into continuous blocks of 5MHz in order to access
global broadband technologies such as 3G, 4G and soon 5G.
This reconfiguration is something that most countries around the
world have done recently or are in the process of completing. It is
indeed a welcome sign that this nationwide upgrade is currently
underway in Kazakhstan and will provide further improvements
and investments in rural areas.
This complex solution which combines frequency reframing,
technology neutrality and modern transmission will provide
tremendous growth for the mobile communication sector in all
parts of the country and similarly stimulate further investment on
behalf of the telecom industry. With the right conditions, the mobile
industry will create fantastic solutions across the country for the
public sector (M-Gov), businesses (M2M), social services (distant
learning and telemedicine), entertainment, and security. Kcell is
in constant contact with the appropriate regulators concerning
these issues, and anticipates further constructive discussions that
will result in positive progress in mobile network coverage and
quality.
As a corollary, another innovative approach to mobile
communication, in which the entire industry has taken an interest,
is introduction of mobile payment solutions. It is widely known that
manufacturers of mobile devices have made significant progress
in this aspect of the consumer experience. Most mobile providers
already include a special chip that permits payment directly from
the user’s device. Furthermore, it is not just the technological
#62/2014
hardware but also software, such as mobile wallets, which will
allow subscribers to easily and quickly complete cashless microtransactions.
As a mobile operator operating in Kazakhstan with international
expertise, Kcell may vastly contribute to the development of this
innovative technology. However, to promote this novel concept,
government support is essential to procure the cooperation of the
national and commercial banks. At Kcell, our plans are already
progressing steadily in this direction, such as recently launching a
service for credit card payments called K-pay.
ARTICLES
By Rikard Slunga, Chief Executive Officer
Kcell
Kcell is furthermore proud to support and positively contribute
to educational and innovation clusters. Kcell has already launched
joint cooperation with the School of Engineering at Nazarbayev
University to share our knowledge and expertise. For instance, we
actively contributed to the Second Research Week conducted at
Nazarbayev University during the final week of November 2014.
We will continue our cooperation with the university, as there are
myriad opportunities to educate young and local technical experts
who will play a great role in the future of Kazakhstan’s IT and
telecommunications industries.
Finally, Kcell is carefully studying how to contribute to the Almaty
Innovative Cluster, which, with the participation of President
Nazarbayev, officially opened in mid-December 2014. This Cluster
incorporates numerous initiatives, such as inviting industry experts
from abroad to lead coaching sessions, or establishing R&D
laboratories and supporting local start-up projects. Regardless of
what the future of mobile technology may hold, Kcell will continue
to work tirelessly with the Ministry of Investment and Development
and the ICT Fund to achieve these goals and more.
11
ARTICLES
BEELINE - PREDICTIONS FOR THE
MOBILE TELECOMMUNICATIONS MARKET
By Taras Parkhomenko, Chief Executive Officer
Beeline
The mobile telecommunications industry is in a
stage of market saturation, and consequently the
market growth rate is slowing down. According
to Beeline’s expectations, in 2015 the market
may show negative growth year-on-year. This
reduction is driven by a decrease in revenue from
inter-operator traffic correlating to a 20% reduction
in the Mobile Termination Rate (MTR), among
other factors.
Further analysis indicates that the sole growing
revenue stream is in the Mobile Internet sector.
This increase will in effect, have a positive impact
on market revenue dynamics. In the current
situation, the introduction of new technologies in
the mobile market is becoming progressively more
urgent than ever before. Moreover, the launch
of 4th Generation (4G) networks by key mobile
telecommunications companies may result in a
new positive impetus in overall market dynamics.
In this case, the terms for the implementation of
4G networks will be a key factor for success. These terms include
two main factors, both of which merit further attention.
Firstly, there is the serious question of issuing licenses for
4G Long-Term Evolution (LTE), in combination with the release
of operators for this corresponding frequency resource in the
appropriate range (800 MHz and 1800 Hz). Practice shows that
network rollout and market saturation with relevant user-terminals
takes between 1.5 - 3 years to complete. The delay in the 4G
tendering and licensing usually closes the window of opportunities
to invest in a full-scale network rollout. This situation can be best
exemplified when telecommunication companies must operate in
the present circumstances of declining revenue streams and tight
cost-economy modes.
12
It is likewise important not to overlook the optimal moment
in time to invest in the widest-possible 4G coverage. Beeline’s
strategic plans occupy an important place to ensure proper
telecommunications quality within the framework of the fastapproaching EXPO-2017 in Astana. In preparation for this
international event, Beeline is prepared to provide the highestquality 4G coverage across the 25-hectare territory designated
for the EXPO-2017 pavilions. In order to provide the highest
quality coverage, the timely allocation of proper frequencies and
appropriate licenses is an absolute prerequisite and accordingly
must be guaranteed in advance.
Lastly, another critical concern is the introduction of a
technological neutrality principle for existing frequencies. This
provision is needed to establish the most
efficient utilization of limited frequency
resources and to stimulate the most
productive competitive environment in the
mobile market. It is important to keep in
mind the above factors governing a limited
time-frame for operators’ investment
capabilities, as well as the rate of
deployment of network coverage rollout.
Beeline has already been entrusted
with complete licensing obligations for
deployment of 3rd Generation (3G)
services, which have been implemented
in full.
At this moment, as a leading
telecommunications firm, Beeline is fully
prepared to leap forward into the next
digital era with the introduction of highquality mobile services based upon 4G
technologies.
#62/2014
TELE2 - PROPOSALS FOR THE
KAZAKHSTAN TELECOMMUNICATIONS MARKET
market, as well as in the economy of Kazakhstan, presently
stands at approximately USD 700 million. With this net cash flow
into Kazakhstan, Tele2 is the largest net foreign investor in the
Tele2 is one of Europe’s fastest growing telecommunications country’s telecommunications sector. As of Q3 2014, Tele2 owned
operators with the mission to provide the best service to our approximately 10% of the national telecommunications market,
customers at the lowest possible prices. Ever since Jan Stenbeck and between January - September 2014, Tele2 had 3.1 million
founded the company in 1993, Tele2 has been a highly competitive customers in Kazakhstan.
challenger to all the markets in which the company operates. With
In regard to the telecommunications market in Kazakhstan,
a 51% stake in the company, the majority shareholder of Tele2 is recent regulatory changes have improved the investment climate
Investment AB Kinnevik in Sweden owned by Cristina and Max for the industry. Among these changes are regulations which
Stenbeck. In May 2006, Tele2 was first listed under the ticker are actively driving MNP, pending the final date of commercial
symbols Tele2 A and Tele2 B on the Stockholm Stock Exchange, introduction. There has also been a gradual decrease in MTR over
and since October 2006, on the Nasdaq OMX Stockholm Large the past three years, although further reduction is still needed.
Cap List.
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is oneto
of the
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key initiatives currently being
the telecommunications
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new
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implemented.
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commercial
introduction
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expected
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2015
protect
dominant
mobile
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from
additional
mobile operators from additional competition. As a means to improve the conditions
for competition.
pending final
confi
rmation
from
the
administrative
regulator.
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a
means
to
improve
the
conditions
for
competition
in the
competition in the telecommunications market, further action to lower MTR is needed on
Tele2 also
will
stress
that
the
high
Mobile
Termination
Rate
(MTR),
telecommunications
market,
further
action
to
lower
MTR
is
needed
behalf of the relevant government agencies.
the rates for inter-operator traffic, remains a major competitive on behalf of the relevant government agencies.
barrier in Tele2
the telecommunications
market. Further
government
Tele2 further acknowledges
the need
for greater transparency in
further acknowledges
the need
for greater transparency
in regulation
licensing
action willand
helpradio
to create
fairer conditions
for competition,
thus itregulation
andissue
radio spectrum
spectrum
resources.
To this extent,
remainslicensing
a critical
that resources. To this extent,
advancingtelecommunications
the development of Kazakhstan's
telecommunications
it remains
a critical
issue that
regulators
regulators
establish a coherent
long-term
strategy
andtelecommunications
planning
services. In
addition,
Tele2
also
recommends
coherent
long-term
establish
a
coherent
long-term
strategy
and
planning
that
clearly
that clearly communicates a timetable and plan of action for future licensing and
planning ofspectrum
radio spectrum
resources
and
a
transparent
licensing
communicates
a
timetable
and
plan
of
action
for
future
licensing
availability. This lack of visibility and clear timetables heavily affects mobile
process tooperators’
improve investment
conditions.
and
availability.
This lacklikewise
of visibility and clear timetables
investment
and technology decisions.
Asspectrum
a result,
this situation
As previously mentioned, Tele2 entered Kazakhstan's heavily affects mobile operators’ investment and technology
warrants greater clarification on behalf of telecommunications regulatory bodies.
telecommunications market in 2010. Tele2’s direct foreign decisions. As a result, this situation likewise warrants greater
investment in the development of the telecommunications clarification on behalf of telecommunications regulatory bodies.
#62/2014
ARTICLES
By Pietari Kivikko, Chief Executive Officer
Tele2 Kazakhstan
13
ARTICLES
THE EBRD ROLE IN THE TELECOMMUNICATIONS SECTOR
By Janet Heckman, Country Director for Kazakhstan
European Bank for Reconstruction and Development (EBRD)
Background
The European Bank for Reconstruction and Development
(EBRD) has been involved in the telecommunications sector in
Kazakhstan since EBRD’s earliest days, both in terms of financing
and in provision of technical cooperation expertise to policy and
regulatory authorities. The EBRD continues its engagement with
sector stakeholders, both public and private, and would welcome
an opportunity to expand that engagement consistent with
government policy, the EBRD mandate and strategy, and market
demand.
Furthermore, EBRD has been approached by Altel with a
view to EBRD participating, along with the Development Bank
of Kazakhstan (DBK), in the financing of capital expenditure of
USD300m by Altel on the roll-out of Altel’s fourth-generation (4G/
LTE) mobile network. EBRD believes this approach provides a
significant opportunity to renew and deepen the EBRD/Kazakhstan
partnership in the development of the telecommunications sector.
Outlined below are the opportunities and challenges that this
partnership presents, as well as the steps available to address
the challenges and benefits from taking these steps. EBRD
would welcome a more detailed discussion on these issues under
guidance from the Prime Minister’s Office.
investment. Lastly, the EBRD notes the need for further and better
competition in the sector, particularly with respect to the fixed
segment.
EBRD/Kazakhstan Enhanced Cooperation
The EBRD believes that its ongoing discussions with Altel and
Kazakhtelecom present a significant opportunity to build upon and
enhance the already successful EBRD/Kazakhstan partnership.
Such enhanced partnership can include access to both EBRD
finance/investment (for Kazakhtelecom, Altel or, more broadly,
in the sector), as well as expertise and funding for the further
development of the sector's policy, regulatory and institutional
framework.
The EBRD deems that significant benefits can flow to Altel,
Kazakhtelecom, the Government, and EBRD from an enhanced
relationship in the telecommunications sector. Benefits can flow
from the EBRD’s reputation and credibility as an investor in the
sector and in Kazakhstan, as well as from the signals of confidence
that such a partnership can send to the market.
Moreover, the EBRD has the ability to support future
development of the company with both debt and equity; as well
as access to expertise and funding from EBRD’s dedicated Legal
Transition Team for technical assistance on policy, regulatory and
institutional framework development in the telecommunications
sector. Finally, and of greatest importance, the character of EBRD
as a patient investor with a long-term view lends stability and
credibility to a partnership that will promote development in the
telecommunications sector.
Telecommunications Sector Transition Challenges
The EBRD has observed the key transition challenges of the
telecommunications sector in Kazakhstan. Such difficulties include
the need for further and better development of telecommunications
infrastructure, in particular the extension of high-speed and ultrahigh-speed broadband internet throughout the country.
There is a similar demand to enhance the sector's institutional
structure and capacity, particularly with respect to the robustness
of policy and regulatory functions. In addition, this sector must
quicken the adoption and implementation of proven international
best practice regulatory policies and methodologies with the aim of
attracting new investment into the sector and accelerating planned
14
#62/2014
KAZAKHSTAN'S INSURANCE INDUSTRY:
FACILITATING INDUSTRY DEVELOPMENT
With Kazakhstan's accession to the World Trade Organization
(WTO) and Common Economic Space (CEE), it is expected that
competition will significantly increase when large international
companies, in particular Russian companies, enter Kazakhstan's
insurance market. This scenario entails strong competitors that
will affect the quality of services provided and will put Kazakhstani
insurance companies in a difficult position.
The only factors that will help Kazakhstani insurance companies
retain customers are innovative and technological superiority.
Operation costs will also be a major factor, a feature of international
competitive insurance markets.
The following suggestions are offered to improve insurance
legislation and the quality of services to consumers
1. Compulsory Vehicle Insurance (Compulsory Insurance
of Vehicle Owners' Civil Liability)
a) Transitioning from paper insurance policies on forms bearing
the policy-holder's original signature to electronic policies issued
on e-ticket forms.
This electronic approach to issuing insurance policies will
significantly speed up issuance of policies and reduce operation
costs. Since compulsory vehicle insurance is fully regulated by law,
and accounting and premium payments are recorded in a single
insurance database, the customer's consent to the insurance may
serve as payment of the premium.
Consequently, the terms and conditions for this class of
insurance can be publicly announced and placed on the Internet.
This will greatly reduce insurance companies' dependence
on insurance agents because sales can be conducted via the
Internet. Insurance companies' operations costs will be reduced,
and the company's profits can be used to improve its services and
technological infrastructure.
b) Integration of the United Insurance Database with databases
of the Ministry of Internal Affairs (MIA) and Ministry of Justice
(Public Service Center - PSC)
Integration with the databases of the Ministry of Internal Affairs
and the Ministry of Justice will significantly improve insurance
services and reduce fraud in the insurance market. As a result
of this integration, the number of fake insurance policies will be
reduced and insurance coverage can be increased. The police
will be able to automatically check insurance coverage, as well as
verify information about the vehicle's owner. This will in turn reduce
corruption, since checking the database will be recorded and can
be checked against the penalty for lack of insurance coverage.
These integrated databases will also eliminate the need to
keep original insurance policies on hand at all times. Database
integration will also provide automatic reconciliation of driver
identification, driver's licenses, and other documents. This
integrated approach will greatly reduce the risks associated with
providing false information, and will reduce fraud by unscrupulous
insurance agents and car owners.
c) Creation of a National Motor Vehicle Bureau in Kazakhstan
As a result of growing integration within the Common Economic
Space (CES) and the prospect of integrated CES motor vehicle
#62/2014
insurance, a National Motor Vehicle Bureau should be created in
Kazakhstan. This is needed first of all to promote development
of motor vehicle insurance in Kazakhstan and to participate in
international motor insurance systems such as the Green Card.
To organize a National Motor Vehicle Bureau, the existing
infrastructure of the Insurance Indemnity Guarantee Fund (IIGF)
may be used, but changed to a self-regulatory organization.
However, this requires a decision by the National Bank of
Kazakhstan to incorporate the IIGF and develop it into an IIGF
infrastructure cluster. Delaying a decision on this issue will
negatively impact Kazakhstan's competitive position within the
CES in vehicle insurance - the largest and most socially important
class of compulsory insurance in Kazakhstan today.
ARTICLES
By Yergali Begimbetov, Chairman
London-Almaty Insurance Company
2. Professional Responsibility and Mutual Insurance
Societies
a) Eliminating compulsory civil liability insurance for notaries,
auditors, tour operators, and travel agents, and instituting
professional liability insurance by mutual insurance companies.
Compulsory civil liability insurance for professionals (auditors,
notaries, tour operators, travel agents) has been shown to be
ineffective, especially civil liability insurance for tour operators and
travel agents. Civil liability insurance has come to be interpreted
by the courts as a financial guarantee for claims by tour operators
and travel agents against insurers in cases of financial default by
the tour operator.
Government regulation of professional communities is minimal,
yet if professionals fail to perform or improperly perform their
duties, this can entail serious financial and social consequences
for which they should bear responsibility (as in the case of tour
operators).
Current initiatives to create professional liability insurance (for
real estate developers, doctors, etc.), are not feasible from the
insurers' point of view because there are no criteria for professional
risks nor are professionals properly regulated.
International practice shows that professional liability is best
insured by mutual insurance societies, which can also perform the
function of industry self-regulation.
In Kazakhstan the law on mutual insurance societies is planned
to place the emphasis on loss arising from a professional's failure
to perform his/her duties. However, insurers believe this law must
be modernized to meet international best practices, thus resolving
both insurance liability issues and regulation of professional
entities.
15
ARTICLES
AL HILAL BANK - ISLAMIC BANKING
IN KAZAKHSTAN
By Prasad Abraham, Chief Executive Officer
Al Hilal Bank Kazakhstan
Global Islamic financial assets have recently reached USD 1.7
trillion. Although Islamic financial growth rates are higher than
conventional rates, Islamic financial assets are currently only 3%
of total global banking assets. These two factors would indicate
that Islamic Finance is a new, dynamic and rapidly-growing
economic trend, a trend that will continue to develop in the major
centers of the international financial community. In this context the
launch of Al Hilal Bank in Kazakhstan can be seen as part of the
spread of Islamic banking to the world's financial centers.
Al Hilal Bank Kazakhstan is a subsidiary of the state-owned Al
Hilal Bank UAE. The Kazakhstan branch was founded in 2010
under an intergovernmental agreement between the Governments
of Kazakhstan and the United Arab Emirates. With its head office
in Almaty, Al Hilal Bank has two other branches in Kazakhstan in
Astana and Shymkent.
In 2011 the first Takaful Insurance company was opened in
Kazakhstan, although operations to date are limited in scope. In
2013 the Kazakhstan Ijara Company, of which ICD (subsidiary
of IDB) and Al Hilal Bank are major shareholders, was created
for Islamic leasing and financing of small and medium-size
businesses. Then, in 2014 Zaman Bank announced its plans to
convert to Islamic banking practices.
Whilst these developments represent some degree of progress
in the growth of Islamic finance in Kazakhstan, it did not meet the
original expectations of the leadership of the country. To address
these issues, in 2012 the President’s Administration initiated the
launch of the Islamic Financial Development Roadmap. This
initiative brought together all relevant stakeholders responsible
for the further growth and development of Islamic finance in
Kazakhstan. As part of the Roadmap, several important issues
have been addressed. The most important achievement is that a
number of proposed amendments to the existing Islamic Banking
law are currently under review in parliament.
Since its inception, Al Hilal Kazakhstan has financed projects in
the amount of USD 200 million in a variety of industries, including
national companies. The activities of the first Islamic bank in
Kazakhstan are aimed at realizing the vision of President Nursultan
16
Nazarbayev - that Almaty will become a Regional Financial Centre
by 2020. Shareholders and the Al Hilal Bank management are fully
committed to making this vision a reality.
The rapid growth of Islamic finance activities in Kazakhstan has
been the subject of close attention from Russia and a number of
other countries in Central Asia, all of which noted the success of
the first Islamic bank in the CIS, and Kazakhstan’s success in
adopting advanced Islamic financial practices. These success
stories have prompted other countries of the region, such as
Azerbaijan, Kyrgyzstan and Tajikistan to initiate their own plans for
Islamic finance, and many are in the process of establishing the
framework for Islamic financial development.
As part of recent discussions to further strengthen and enhance
Kazakhstan’s leadership position in Islamic finance a number of
new recommendations have been addressed.
• New focus on the Roadmap. The National Bank of
Kazakhstan, which possesses extensive resources and
knowledge, will assume the leadership role in steering the
direction of the Roadmap related initiatives. The National
Bank will also coordinate with the tax authorities to make
the appropriate tax decisions for Islamic Banking products.
There will also be key performance metrics to measure the
effectiveness and progress of the Roadmap.
• An active Sukuk market is a key indicator of Islamic financial
market development. If the country launches a sovereign
Sukuk program, it will deliver a strong message regarding
the Government’s commitment to the continued growth and
progress of the Islamic fiancé industry. Once this happens, it
will be a natural catalyst to encourage Sukuk issuance from
a number of corporate institutions in Kazakhstan, Russia and
other Central Asian countries that have already expressed
interest, but are waiting for some evidence of institutional
support. Once there is a critical mass of local and regional
Sukuk issues, it will only be natural to launch facilities to
enable Sukuk trading on the KASE, which will further cement
Kazakhstan’s leadership position in this important segment.
• National companies should be actively encouraged to allocate
about 2-3% of their total financial services through Islamic
structures. This will create a greater degree of awareness
about the benefits of this alternate means of finance, and will
contribute to the organic growth of Islamic finance.
• Kazakhstan should consider establishing an Islamic Finance
and Economy Centre or Institute, which would have as its
mission the creation of educational and financial awareness.
There is still a lack of clear understanding about basic
Islamic Finance principles. An Islamic Finance Center could
disseminate information and provide methodological support
for the development of Islamic Finance in Kazakhstan.
#62/2014
CURRENT DILEMMAS IN BANKING
AND INSURANCE
The National Bank of Kazakhstan (NBK) has recently taken
many positive measures to address virtually all key concerns in the
financial sector. However, it is the goal of this article to emphasize
several important issues that should and can be resolved in a
timely fashion.
The single most important challenge facing the financial sector
remains non-performing loans (NPLs). This problem has been
contained and poses no risk to financial sector stability. However,
the existing high level of NPLs, with many larger banks carrying
NPLs in excess of 10% of their loan portfolio, remains a significant
drag on economic growth. At such high levels, senior management
of banks spends significant amount of time on NPL resolution,
leaving insufficient time to focus on increasing new lending and
introducing new products. When combined with constraints on
capital, banks continue to have limited ability to provide credit
to the real economy. This situation is a significant burden on the
banking sector.
To relieve this problem, decisive action is urgently needed.
The National Bank of Kazakhstan has undertaken steps in this
direction, a positive sign. To further mitigate this issue, the National
Bank Governor should follow through with implementing NBK’s
policies aimed at improving the effectiveness and increasing
relevance of the Distressed Asset Fund, as well as to oversee the
successful restructuring of the BTA/KKB merger. By resolving the
NPL problem, banks will not only be in a position to re-focus on
lending but also to augment the profitability of the banking sector.
Moreover, higher profits in this sector can serve as a catalyst to
attract more international banks and strategic investors - a key
government priority.
Secondly, the funding base of Kazakhstan's banks must be
improved and diversified. The reinvigoration of the initiative to
develop the Almaty Regional Financial Center (ARFC) is key
to this effort. This initiative can facilitate the necessary impetus
which, in the short run, could create incentives to develop local
capital markets and their complimenting service sector. The
initiative will be successful if designed, first and foremost, to help
improve domestic capital markets, plus private banking and other
services. This would help establish a platform to develop a strong
regional center in the medium term. The ARFC Concept currently
being developed by the NBK, should capture this sentiment,
and the structures that will be developed, including the Foreign
Investor Council-type consultative body, should have the remit to
help develop local capital markets as well.
The corporate governance of banks also warrants improvement.
Although governance and transparency in the banking sector is
of good quality on paper, the practical implementation of these
procedures often does not attain the necessary quality level. The
National Bank is planning to further improve governance and
transparency, and the Governor's continued direct participation to
advance these efforts would be greatly welcomed.
Improvements in governance are notoriously difficult to achieve.
This process will eventually change both behaviour and mentality,
but it will take considerable time. It is important to note that as
banks resume significant growth in their credit portfolios, corporate
governance and transparency must be of sufficient quality to
ensure that some of the excesses seen not only in Kazakhstan,
but in many other countries before the financial crisis, are not
#62/2014
repeated. The National Bank's supervisory capacity also merits
expansion in order to monitor the quality of internal practices more
effectively.
Finally, action must be taken to gradually reduce statefinanced programs that channel subsidized credit through
banks to corporations and SMEs, and to redesign them in more
commercial terms. These programs played a critical role in the
post-crisis period and they are still important. However, in the
current economic environment the negative side-effects of these
programs, in their current form with high concession and subsidy
elements, might soon start to outweigh the benefits. Ultimately,
in their current form, these programs reduce incentives for banks
to identify other sources of funding; thereby reducing their ability
to use commercial funding and to lend commercially to the real
economy. In other words, this issue is about redesigning the
programs, rather than discontinuing them.
In conclusion, the EBRD would like to re-emphasize its highly
supportive stance towards the banking sector and engagement
in the National Bank's work to handle the above challenges, to
introduce Basel III regulations, develop a strong Kazakhstan Stock
Exchange, and improve the corporate governance of companies
in the real sector.
ARTICLES
By Dr. Agris Preimanis, Lead Economist for Central Asia
European Bank for Reconstruction and Development (EBRD)
Insurance Sector
In comparison to the banking sector, the insurance sector
in Kazakhstan remains in its infancy. As a result, this creates
significant residual risks to the government, financial institutions,
corporations and individuals which, in other countries, are typically
covered by insurance. This situation demands reform. One
positive sign is that the new Financial Sector Strategy developed
by the NBK acknowledges the prominent role that should be
played by the insurance sector. However, at this time, there are
three immediate priorities worth highlighting.
First, the key objective for insurance reform must be to restore
and improve trust in the insurance sector. One common drawback
is that corporations, despite incurring massive risks, forego
insuring products and services due to widespread uncertainty
that local insurance will genuinely cover losses if risks do in fact
materialize. Of great importance is the gradual introduction of
Solvency II regulations based on the EU Directive (2009/138/
EC) designed to monitor capital held by insurance companies to
mitigate risk insolvency. These and other regulations are critical to
restore trust in the insurance sector, which ultimately will serve to
ignite robust economic benefits.
Second, the poor quality and mistrust that affects perceptions
of the insurance sector is exacerbated by the lack of domestic
reinsurance companies, combined with the difficulty of monitoring
the quality of reinsurance coverage obtained by domestic insurance
companies abroad. While the NBK is taking steps to remedy the
situation, the severity of this issue justifies a more concerted effort,
including expanding the NBK's capacity to supervise the sector.
Third, strong corporate governance and internal practices must
be introduced into the insurance sector. Although this can equally
be said of the banking sector, poor governance in the insurance
industry is arguably compounded by the sector's weaker level of
maturity, professionalism, and technical complexity. Ultimately, it
would be advantageous to the National Bank to extend its current
efforts to improve banking industry corporate governance to the
insurance industry, as well as to other non-banking and financial
institutions.
17
ARTICLES
INVESTING IN KAZAKHSTAN'S POWER INDUSTRY:
THE LEGAL FRAMEWORK
By Shaimerden Chikanayev, Partner
GRATA Law Firm
Current Legal and Regulatory Regime
There are currently eight large power plants of national
importance in Kazakhstan: four thermal power plants and four
hydropower plants. There are also a number of smaller regional
power stations.
Power is transmitted through the transmission networks by
transmission companies. The transmission companies can be
of two levels: the first is a system operator, which operates the
national transmission network, and the second is a regional power
company, which transmits power through the regional electric
grids.
The Kazakhstan Electrical Grids Operating Company (KEGOC),
the system operator, is the national transmission company that
owns and operates the national electrical grid. It manages the
electricity market and international electricity exchange system.
In Kazakhstan there are also 18 regional power companies in
each region (administrative regions), large cities, and the capital
city - Astana.
The system operator and regional electricity companies
transmit electric power sold by power plants (power generating
companies), in accordance with the power purchase agreements
concluded with consumers and/or power supplying companies.
The relationships between the power generating companies on
the one hand, and between the system operator and regional
electrical grid companies, on the other hand, are governed by
separate agreements concluded between them.
Beside the above market players, there are about 124,000 power
supplying companies in Kazakhstan engaged in the distribution of
power among the country's end consumers.
The Kazakhstan Law 'On the Electric Power Industry', dated
9 July 2004, was amended in 2009 to attract power investments
through a new tariff-setting system for electrical power generation
under which investors assume certain investment committments
in return for a reasonable tariff (the tariff for investments
mechanism).
The Law provides for a two-level system: at a lower level - the
'ceiling tariff' (when power producers may set their own tariffs up
to the regulated maximum), and at an upper level - the 'estimated
tariff' and 'individual tariff', which can exceed the ceiling tariff
subject to the approval of the appropriate government agency.
Special regulations were adopted for the ceiling, estimated and
individual tariffs.
18
In accordance with the Law 'On the Electric Power Industry', a
generating company may ad arbitrium set its tariff by virtue of a
contract with a counterparty. Such a tariff shall in no way exceed
the ceiling-regulated tariff set for sales by generating companies.
The ceiling tariff varies according to the group to which a given
generating company belongs, and we can ascertain the ceiling
tariff applicable to the end of 2015. However, starting from 2016
the current system of ceiling, investment, and estimated tariffs will
be abolished and replaced by formation of a 'capacity market', as
described below.
For now, while Kazakhstan's capacity market is not yet
functioning, if the investment commitments of a generating
company cannot be discharged through sales based on the ceiling
tariff, Kazakhstani law allows generating companies to seek and
apply the estimated or individual tariff.
It should be noted that according to the Law 'On the Electric
Power Industry', the wholesale electricity market of Kazakhstan
is divided into three types: (a) decentralised market, (b) balancing
market, and (c) centralised market.
#62/2014
ARTICLES
A decentralised market is meant for the purchase of electricity
based on agreements freely made, but at prices not exceeding the
ceiling tariffs.
A balancing market is for hourly financial and physical control
over power imbalances on a single grid. Participation in the
balancing market is obligatory for all participants in the wholesale
electricity market.
A centralised market is an electricity market governed by a
special purpose company to ensure communication between
buyers and sellers. Sales in the centralised market are also divided
into three types: (a) short-term sales (outright sales), (b) mediumterm sales (week, month), and (c) long-term sales (quarter, year).
Possible Project Implementation Options
Concession Agreement
From the legal perspective, one option for implementing a project
for financing and construction of a power plant in Kazakhstan
(hereinafter - the 'Project') is the 'concession' defined as: "activities
aimed at the creation (reconstruction) and operation of concession
objects and performed at the expense of the concessionaire or
with co-finance by a grantor" (Article 1.6 of the Concession Law).
Concession benefits are the following:
• an adjusted and clear legal framework as well as definite,
though not clearly positive, experience in applying a
concession agreement.
• state concession liabilities are protected against
sequestering.
• concessionaires, who are subjects of a 'natural monopoly',
may enjoy special tariffs (which can be determined according
to formulas specified in concession agreements) and will
be exempted from the general tariff regulation of natural
monopolies (i.e., a concessionaire will be better protected
against the risk of default on its obligations to repay credit
as a result of insufficient income from the Project due to, for
example, inadequate tariffs for thermal energy).
• a concessionaire may rely not only on the sale of goods
produced as a source of compensation for its costs and income,
but also on (i) government subsidies in cases established by
#62/2014
the laws of Kazakhstan and (ii) a fee for availability (availability
payment) of a concession object, which includes payments
from the national budget to compensate for the investment
and the concessionaire's operating costs.
• the possibility of one or more of the following forms of
government support:
1. government guarantees on infrastructure bonds within
concession agreements;
2. government guarantees on loans raised to finance
concession projects;
3. transfer of exclusive rights to a government-owned IP
object to a concessionaire;
4. in-kind grants in accordance with the Kazakhstani law;
5. co-financing of concession projects;
6. guarantees of government consumption of a certain volume
of goods (works, services), when a principal consumer of
goods produced by a concessionaire is the state.
19
ARTICLES
However, the concession mechanism has significant
disadvantages and risks, including, as stated in Article 14.2 of
the Concession Law, when a concession object not transferable
to state ownership (not Build-Transfer-Operate) is created,
government support measures provided for in subparagraphs
1., 2. and 5. above shall not be granted to a concessionaire.
Moreover, a guarantee of state consumption of a certain volume
of goods as a measure of government support is declarative in
nature, because, first, it is not clear when the principle consumer
of goods is the state and, second, the implementation mechanism
of government support is not specified.
A mechanism for making an availability payment for a concession
object has not yet been defined. Moreover, the availability payment
cannot apply for Project purposes in the area of power since,
according to Article 7.3 of the Concession Law, the availability
payment can only apply to concession projects categorized as
socially significant projects. These projects are for construction
and operation of motorways, water pipelines, schools, pre-schools,
hospitals, and clinics, but not power stations.
Please note that if either a company acting as a concessionaire
for the Project or a potential concessionaire is a new legal entity
created for Project purposes, the Consortium (founders) must
meet certain qualifications:
1.possess sufficient funds and resources to perform obligations
under the concession agreement;
2.be solvent, not under liquidation, possessing property free
from seizure, and not be engaged in activity suspended under
Kazakhstani legislation;
3.not be subject to a court ruling for failure to perform obligations
under a concession agreement concluded in the last three
years;
4.have equity capital of at least 10% of the cost of the
creation (reconstruction) of a concession object. This means
equity, money and other assets belonging to a potential
concessionaire directly involved in the concession project.
20
Concession is also less attractive in terms of project financing
because a concession object (i.e., the power plant itself) cannot
be a pledged subject during the validity period (Article 5.5 of the
Concession Law).
In general, excessive regulation of concession relations and
conditions of concession agreements reduce flexibility of the
parties in determining Project conditions, which are important for
the successful structuring of a 'bankable project'.
The process of granting concessions in Kazakhstan is quite
bureaucratic and time-consuming. In practice it will take at
least a year. Finally, for many investors the main weakness of a
concession is the need to participate in a concession tender and
the risk of not winning the Project despite the time and resources
required to prepare the tender.
Agreement for Construction of Generating Plants
Beginning in 2016 a preferred alternative to a Project concession
agreement will be an 'agreement for construction of generating
plants' with the Ministry of Investment and Development based on
a new 'Capacities Market' model. Up to the end of 2015, according
to information published by the Government, ceiling tariffs will be
used in Kazakhstan (as described above), while from 2016 the
'capacities market' model will be used (i.e. the energy market and
capacities market will operate in parallel).
It is expected that Kazakhstan's capacities market will consist
of two segments: a market of long-term contracts (for new power
producers) and of short-term contracts (for existing producers).
New power plants will have a guaranteed return on investment
(i.e. guaranteed capacity sale), because the system operator
(KEGOK) undertakes to procure certified capacity volumes (i.e.
the equivalent of the availability payment) from these plants on
a priority basis at prices specified by the tender, while existing
plants will operate at market rates without benefits and with ceiling
tariffs. It is assumed that most investment will be worked out by
the investor through the capacity payment, which will be fully
redeemed by KEGOK. This will be approximately 80% of cash flow,
#62/2014
ARTICLES
with the remaining 20% received by a generating company from
the sale of electricity on the free market (i.e. with no guarantee of
electricity sales).
Current legislation obliges KEGOK to develop an annual
forecast balance of electricity and capacity for a seven-year period
by 15 October each year and to publish it in the media.
Based on the KEGOK forecasts, the Ministry of Energy will
annually determine an anticipated deficit of electric power, as
well as develop and approve a promising layout of electrical
capacities. This information will be provided on the Ministry's
website. Moreover, to meet the forecast deficit of electric power,
the Ministry of Energy must hold tenders for the construction of
newly-commissioned generating plants.
The Ministry of Energy signs the agreements for construction
of newly-commissioned generating plants with the tender winner,
fixing the commissioning date of the generating plants and
the tender-winner's liability for failure to perform or improper
performance of the terms of the agreement.
Within thirty calendar days after the signing of the above
agreement, KEGOK signs the agreement with the tender winner to
purchase services to maintain the electrical capacity of the newlycommissioned generating plants at a price, volume and on the
terms specified by the appropriate government agency.
It should be noted that if KEGOC defaults under the service
agreement on the terms for maintaining electrical capacity due to
financial difficulties, it is expected that the Government will provide
financial assistance to KEGOK from the national budget (i.e. an
indirect government guarantee for the obligations of a single
capacity buyer). Unfortunately, this legal provision is not entirely
clear, so how this indirect state guarantee would work in practice
remains in question.
In general, however, the capacities market will make it possible
to structure the investment for attractive projects (bankable
projects) in the electric power industry. A potential investor may
accordingly consult (even now, in 2014) the Ministry of Energy and
KEGOK on the terms for the next tender and participation options
to implement a Project.
CHAMBER EVENTS
ALMATY SEPTEMBER ROUNDTABLE LUNCHEON ON
PIRACY AND SMUGGLING ACROSS REGIONAL BORDERS
Donald Townsend, Regional U.S. Intellectual Property
Rights (IPR) Attaché, Russia and the CIS
The AmCham Business Roundtable on September 26 featured
Donald Townsend, Regional U.S. Intellectual Property Rights
(IPR) Attaché to Russia and the CIS, who spoke about efforts to
control and eliminate counterfeit products in the pharmaceutical,
technology, and consumer industries in Central Asia. A former U.S.
patent attorney specializing in international intellectual property law
with an academic background in chemistry, Mr. Townsend works
on a number of intellectual property issues, including patents,
trademarks, copyrights, and their enforcement.
Mr. Townsend began his talk with an introduction to the U.S.
Patent and Trade Office’s IPR Program. Explaining that IPR
Attachés work with regional governments and industry stakeholders
to address IP issues, including protection, enforcement, and
legislative reform. The program was formally instituted in 2006
to promote high standards of IP protection and enforcement
internationally. The initial focus of the program was on the BRICS
countries and, given its very serious IPR issues, China remains
the epicenter of the program’s focus.
However, IPR Attachés, most of whom are attorneys, are now
deployed worldwide, including in Moscow, where the speaker
is based. Moscow is a regional post covering all of the Former
Soviet Union, including Kazakhstan. Given the Former Soviet
Union’s status as a center for piracy, Mr. Townsend’s work faces
unique institutional challenges in addressing both protection and
enforcement, which involves the cooperation of host country IP
offices, enforcement agencies, and government officials, as well
as coordination with the U.S. Patent and Trade Office, the Office of
the U.S. Trade Representative, and the relevant U.S. Embassies.
Moreover, such efforts involve regular meetings with industry and
industry organizations to hear concerns, as well as conducting
IPR-related training programs for customs officials and other
relevant agencies.
The United States currently has IP Action Plans with both
Russia and Ukraine (signed October 2010 and December 2012,
respectively). These Action Plans stress improvements in IPR
enforcement. Particular IPR concerns facing the region include
the flow of counterfeit goods from China via the Customs Union/
Kyrgyzstan-China border, insufficient cooperation between
Customs and right-holders, and widespread internet piracy. A
common issue that there is currently neither implementation
22
of the law nor any operational process in place to address its
implementation.
The US, Russia, and Ukraine have agreed to increase the level
of IP enforcement, including, in particular, increased enforcement
of laws against counterfeiting, piracy, and the circumvention of
technological protection measures as well as the imposition of
penalties and sentences that deter further violations. Measures
to achieve this will include: conducting unannounced raids of
plants, retail outlets, and warehouses to detect, seize, and, where
appropriate, destroy goods that violate intellectual property rights;
the seizure and destruction of goods that violate intellectual
property rights and the equipment and materials used to produce
them; the promotion of transparency and public awareness of IPR
enforcement mechanisms; an increase in the frequency of openair market inspections and action against the sale of counterfeit
and pirated goods; and modification of the portfolios of a number
of Interior Ministry officers to include IPR enforcement and
inspection, as well as training programs.
In a second presentation, Mr. Townsend expanded upon a
number of issues specific to Central Asia — most significantly,
the trafficking of counterfeit goods from China to Russia via
Kazakhstan and Kyrgyzstan. He explained that via Kyrgyzstan’s
Dordoi market—one of the largest markets for counterfeit goods
in the world, and the largest in the Former Soviet Union —
Chinese goods are trafficked to the rest of the region, including
Kazakhstan. Traffickers who have purchased counterfeit Chinese
goods wholesale from Dordoi exploit a loophole in the Customs
Union Customs Code which allows individual traffickers to bypass
IPR protection procedures when transferring goods through the
customs border for “personal use.” Often, traffickers will exploit
this loophole while crossing the Customs Union border five or
more times a day, making $50 or more a day — an impressive sum
relative to significantly lower average income in Kyrgyzstan.
Given Kazakhstan’s status as a member of the Eurasian
Customs Union, which creates open borders between Kazakhstan,
Russia, and Belarus, Kazakhstan has become a major transit point
for counterfeit goods traveling from China to Russia via Dordoi
and other such markets. Nonetheless, although IPR issues clearly
represent a daunting challenge to the region, with the work of IPR
attachés and the cooperation of government agencies, border
officials, and other relevant agencies, Kazakhstan will be able to
more effectively control the flow of illicit trade across its borders.
#62/2014
ALMATY AUTUMN SUNDOWNER AT
SAFRAN RESTAURANT
CHAMBER EVENTS
WPRE-30-Col-Blk
WPRE-20-Col-Blk
On a warm Friday evening, September 26, AmCham and
the
Safran Restaurant has been a member favorite for many
Sundowner sponsors, Fluor and Worley Parsons, welcomed years, and often serves as the setting for the AmCham autumn
AmCham members and guests back from the summer holidays Sundowner. With a recent renovation, the restaurant has
as the autumn business season got underway. With KIOGE, maintained its traditional Middle-Eastern warm pumpkin tones
Kazakhstan's major October oil and gas conference, about to begin,
with elaborate, low-hanging chandeliers, and its traditional Middle
WPRE-15-Col-Blk
the oil industry geared up for another strong year in Kazakhstan. Eastern - Caucasian fusion menu with some new and innovative
Fluor and Worley Parsons have joined forces in a partnership for additions. As always, the abundance of buffet dishes - plov,
major long-term oil industry projects, opening a joint project offi
ce khachapuri, dolmati, and many other regional specialties - filled the
WPRE-12-Col-Blk
in Almaty as immediate neighbors of the AmCham office in the tables and waiters ensured no guest's plate remained empty. The
Rixos Hotel Business Center. AmCham is pleased to have two restaurant's service and hospitality was impeccable, a guarantee
such major forces in the oil and gas industry working in such WPRE-10-Col-Blk
close that AmCham members will return again and again throughout the
proximity in Almaty.
year ahead.
#62/2014
23
CHAMBER EVENTS
ATYRAU AUTUMN SUNDOWNER
SPONSORED BY TENGIZCHEVROIL
On Friday evening, October 17, AmCham held an Atyrau
Sundowner sponsored by Tengizchevroil, Kazakhstan's leading
oil and gas consortium headed by Chevron. TCO is a leading
AmCham member whose General Director, Tim Miller, serves on
the AmCham Board of Directors. TCO also chairs the AmCham
Corporate Social Responsibility Working Group (Chanel Jolly) and
serves as the AmCham Resident Regional Representative (David
MacInnis) in Atyrau. Tengizchevroil is also the winner of a record
number of AmCham Achievement Awards - six awards in six years,
including Executive of the Year in 2009 (Todd Levy), Excellence
in Innovation 2008), Environmental/ Health and Safety (2009),
and Community Service (2010). TCO takes justifiable pride in its
level of social contributions to the Atyrau region between 1993
and 2014 - $875 million to support the broadest possible range
of community service initiatives that have greatly benefitted the
people of the region. TCO is a truly outstanding corporate citizen
in Kazakhstan's oil industry.
The setting for the October Sundowner was the Renaissance
Atyrau Hotel, one of the two five-star Renaissance Hotels in
the Caspian region that have been members of AmCham since
opening eight years ago. Renaissance Hotel facilities, services,
and hospitality are unparalleled, ensuring that AmCham always
holds its functions and meetings on their premises. With a new
Malaysian chef at the Atyrau Hotel, AmCham requested a Malysianthemed buffet for the evening, an exotic change of pace that was
much appreciated by Sundowner guests. The new Renaissance
General Manager, Ioan Maties, joined the guests for the evening.
24
#62/2014
HALLOWEEN SUNDOWNER AT
ROYAL TULIP ALMATY HOTEL
26
#62/2014
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CHAMBER EVENTS
NOVEMBER AKTAU SUNDOWNER
SPONSORED BY OMV PETROM
Sponsored by OMV Petrom, a long-time AmCham member,
AmCham held its traditional Aktau Sundowner to mark the opening
of the Mangystau Oil & Gas Infrastructure Exhibition on Monday
evening, November 10, in the Lobby Lounge of the Renaissance
Aktau Hotel. Attended by AmCham Caspian members, many from
other cities attending the Exhibition that opened the following day,
a warm and convivial evening was enjoyed at the Renaissance,
which has been an AmCham member since its opening. Both
Renaissance Hotels in the Caspian region have retained
their freshness, comfort, and superb sense of hospitality. The
Renaissance Aktau Hotel is particularly fortunate in benefitting
from its direct view out over the shores of the Caspian Sea.
OMV is Austria's largest industrial company, a major employer
in Aktau, and the major Austrian presence in Kazakhstan.
Headquartered in Vienna, OMV Petrom is an international and
integrated oil and gas company operating in 30 countries worldwide
with a total labor force of nearly 30,000 staff. It has participated in
AmCham discussions, speaking out on industry issues with the
Prime Minister and Cabinet Ministers at the Council to Improve the
Investment Climate in Astana.
28
#62/2014
AMCHAM THANKSGIVING CELEBRATION AT
THE INTERCONTINENTAL HOTEL 2014
THANKSGIVING SPONSORS
CHAMBER EVENTS
HOLIDAY SUNDOWNER AT THE ALMATY
INTERCONTINENTAL HOTEL JBAR
On Friday evening, 12 December, AmCham members and
guests met for a festive evening to share a final seasonal drink
in the InterContinental Almaty Hotel's warm and cozy JBar, a
favorite meeting place for the business community. Sponsored
by AmCham and the Intercontinental Hotel, the Sundowner was
our Holiday gift to AmCham members. Seasonal music and jazz
served as a backdrop in the JBar while the hotel hallways and
lobby brightly decorated with holiday lights to ring in the season.
The traditional towering Holiday Fir Tree soaring upwards in the
32
lobby was ablaze with stars, ribbons, and twinkling holiday lights,
as were the hotel's massive grounds, where the approaches to the
hotel were decorated with Snow Maidens, Santa Claus (or Ded
Moroz, as you wish), scampering reindeer, sleighs, and all the
other symbols of the winter holidays and approaching New Year.
New AmCham members came to meet many long-standing
members and the AmCham Board, while a sumptuous buffet with
free-flowing wine and soft drinks kept revellers' spirits at peak
for several hours. The following day marked the beginning of the
seasonal exodus as members departed for their home countries
to celebrate the holidays with family and friends. AmCham wishes
all its members and their families a very happy winter holiday
wherever they may celebrate it across the world.
#62/2014
AMCHAM WORKING GROUP UPDATE
NOVEMBER - DECEMBER 2014
Almaty CSR Working Group
November The November 20th meeting began with KIMEP
Assistant Professor Vladimir Tyutyuryukov, Central Asian Tax
Research Center (CATRC), providing a brief update on the draft
for tax incentives on the CSR national concept in Kazakhstan.
His report highlighted CSR tax incentives already in place such
as personnel training expenses. He concluded with a wide set of
CATRC CSR-related tax recommendations ranging from improved
transparency to deductions for single parents.
The next presentation was led by Gaukhar Kozhasheva,
Research and Development Manager at the Eurasia Foundation
of Central Asia (EFCA), who shared the outcome of a meeting
on CSR reform with the Tripartite Commission. This draft, coauthored with the Embassy of the Netherlands, was rejected
by the commission due to concerns over perceptions of CSR at
senior levels of the Government of Kazakhstan. Following a lively
debate, both EFCA and CATRC agreed to amend the draft.
The final block of the meeting brainstormed CSR projects for
the holiday season. Among the suggestions included projects
such as gifts for orphanages, shelters for the homeless, and green
initiatives introduced by Xeniya Shilini, Kagazy Recycling Public
Relations Manager.
December This 5 December CSR meeting featured two new
eco-friendly Holiday Season CSR programs. Xeniya Shilini, Public
Relations Manager of Kagazy Recycling presented an overview of
the “Save the Christmas Trees” campaign: a social-media driven
ecological campaign to exchange waste paper in return for artisandesigned Christmas trees constructed of 100% recycled products.
Following the campaign, Kagazy Recycling will publish the results
of this pilot program.
Afterward, Dauren Zholdasbayev, Executive Director of
PosodiDerevo.kz, presented the “Rent the Christmas Trees”
program: a novel green initiative to rent live, potted fir trees for the
holiday season which will be re-planted in Almaty in the spring.
In the spring, project participants will be involved at official replanting events which additionally are designed to raise public
environmental awareness in Kazakhstan.
Almaty HR Working Group
November On November 14, the Human Resources Working
Group met to discuss corporate culture in Kazakhstan - its
importance, major criteria, planning and implementation as well
as challenges and key factors for success. Opening remarks
were made by WG Chairman Dmitriy Nadirov of European
Insurance, followed by Guest Speaker Andrey Kurilin, CEO of
Citibank, who led an open discussion of corporate culture focused
on his experiences within a multinational corporation. Stressing
the importance of ethics in the workplace, Mr. Kurilin said that
a positive corporate culture does not rest solely upon human
resources, but also upon the leadership’s ability to disseminate
rules and ethics among personnel and provide opportunities for
employees to express their concerns.
Follow-up questions included issues such as recruitment, overcommunication of rules, ethics, how geopolitical conflicts affect
international corporations like Citibank, and why the separation
of politics and business is critical to respecting the individual and
company alike. Suggested themes for the next Working group
meeting consisted of successful career paths from HR to CEO,
corporate branding and perception, personnel fluidity, and new
technologies to improve HR productivity.
#62/2014
Almaty Customs and Trade Working Group
November During the November 19 meeting, Guest Speaker
Dentons Associate Stanislav Lechshak, delivered an overview of
the transition from the Eurasian Economic Community (EEC) to the
Eurasian Economic Union (EEU). The first part of the presentation
focused on the EEU, including a brief account of the creation of the
Customs Union (CU); the process by which the regulations of CU
customs issues prevail over the national legislation of Kazakhstan;
the basis of indirect tax payments between member states; and
the legislative bodies governing the EEU. As of January 1, 2015,
the Union aims at further liberalization of goods, services, financial
capital and workforce between the member states. Currently, the
EEU has three official members: Russia, Kazakhstan and Belarus,
with the possible entry of other Central Asian states.
The speaker then outlined the key customs principles of the
Union such as an internal market of goods, unified customs tariffs,
and regulatory measures impacting on foreign trade with third
countries. At the next Customs and Trade meeting, members plan
to address these new changes to the Customs Code effective
January 1, 2015.
WORKING GROUPS UPDATE
Almaty Working Groups
Almaty Tax Working Group
November The November 21 meeting began with an update
on WG plans, including a possible White Paper dedicated to tax
matters. Issues that may be covered in the Paper may be royalties
double taxation; VAT on imports without adjusted returns; the low
threshold criminalizing tax cases and fines based on virtually any
tax audit; and corporate income tax deductibility issues.
Following this discussion, Igor Kolupaev, Counselor at Baker
& McKenzie led a technical discussion and presentation on
permanent establishment issues. Finally, the group exchanged
views on the most important draft amendments to the Tax Code.
During the next TWG meeting, when the new amendments will
have been signed into law, Bakhytzhan Kadyrov, Counselor at
Morgan Lewis, will deliver a follow-up presentation together with
speakers from the judiciary and tax authorities.
Almaty Technology and Innovation Working Group
November The agenda of this November 25 meeting focused
on Kazakhstan ICT-market growth forecasts for CY2015 and the
latest data on ICT market dynamics projects in CY2015 led by
IDC Central Asia Regional Director Andrew Beklemishev. During
the presentation, he noted that current IT market segments in
Kazakhstan consisted of 80% hardware, 10% software and 10%
services. In his predictions, the future of IT markets in Kazakhstan
will be based on the service sector, but will remain in hardware
for the foreseeable future. Beklemishev then acknowledged the
widespread use of smartphones and tables have kept the market
afloat, but warned of hardware market oversaturation.
The final portion of the speaker's presentation highlighted the
inhibitors and drivers of the IT market. Devaluation of the Kazakh
Tenge remains an issue of increasing alarm as is the influence
of the Russia-Ukraine crisis on Kazakhstan. The falling price of
oil has already affected other industries. This can be observed
in the cessation of all government tenders for further e-learning
programs. Conversely, positive drivers include the Government
USD 3 billion budget allocation for IT infrastructure and e-health
and e-gov programs. Overall, the meeting concluded that the
outlook for ICT market growth in CY2015 remain positive.
33
WORKING GROUPS UPDATE
Astana Working Groups
Astana Foreign Investment Working Group
November The November 12 meeting was hosted by the
Embassy of Turkey and began with a presentation by World
Bank Senior Economist Dorsati Madani and her colleague, Ilyas
Sarsenov, the chief contributors to the recently released World
Bank report, Kazakhstan Bi-annual Economic Update, Fall 2014,
Kazakhstan: Growth Slows as External Pressures Rise. Madani
provided an overview of the report, focusing on Kazakhstan’s
2014 moderated GDP growth and rise in inflation; government
macroeconomic policies to stimulate demand; as well as current
predictions for 2015 suggesting higher GDP growth, but not without
risks such as rising inflation and falling oil prices. She concluded
her remarks by referring to President Nazarbayev’s November
Address to the Nation that included a number of ambitious
economic programs.
Then, Niall Leonard, Head of the Trade Section at the European
Union Delegation began by saying that Kazakhstan remains a
safe and attractive environment for foreign direct investment (FDI)
as it has a stable domestic environment and positive international
cooperation. He noted there are problems as well, including
distance, climate and infrastructure challenges, in addition to the
issues in the recent AmCham White Paper, Improving Kazakhstan’s
Investment Climate: Top Ten Barriers to Foreign Investment.
Mr. Leonard then added that Turkish Ambassador Tüzel has
been an ardent support of the FI-WG and was asked to share his
thoughts. Ambassador Tüzel commented that several of the issues
addressed during the meeting have been raised and discussed
within both the diplomatic and business communities. He also
noted that the President’s vision, while positive and proactive, is
not complemented at the working level with the government. As
a result, the effects are lost as a lack of coordination results in
reduced efficiencies and an inability to effectively leverage FDI.
A lengthy discussion ensued with many questions and comments
from the attendees. The next meeting is planned for February
2015.
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AMCHAM ADVOCACY UPDATE
SEPTEMBER - DECEMBER 2014
• VAT Refunds Working Group - Ministry of Finance
Chair: Finance Minister Bakhyt Sultanov
AmCham Leader, Michael Ahern, PwC Tax Partner
AmCham members: PricewatershouseCoopers, Dentons,
International Tax and Investment Center (ITIC), Shell, NCOC,
Maersk Oil, Petrom, Baker Hughes, KIMEP CATRC
• Intellectual Property Rights Working Group (Product
Piracy and kontrafakty) - Ministry of Justice
Chair: Justice Minister Berik Imashev
AmCham Leaders: Donald Townsend, IPR Regional
IPR Attache, US Embassy Moscow and Yuri Bolotov,
Managing Partner, BMF Law Firm
AmCham members: Microsoft, Hewlett-Packard, Merck, Eli
Lilly, Abbott, GlaxoSmithKline, Sanofi, Procter & Gamble,
Avon
• Engineering and Construction Licenses Working Group Ministry of the National Economy
Chair: National Economy Minister Yerbolat Dosaev
AmCham Leader: Walter Daniel, National Partner, Dechert
Law Firm
AmCham members: Halliburton, Fluor, ILF, VK Studio
September Council Session: 1) VAT Refunds, 2)
Engineering/ Construction Licenses, 3) Environmental
Payments
The first autumn Council session after a 2-month summer break
dealt with a series of critical issues impacting the oil industry.
1) The VAT refunds problem arises from VAT pre-payments often
amounting to hundreds of millions of dollars that oil companies are
required to make during the exploratory stage before production
begins. Once production begins, the VAT is required to be refunded
to the companies. However, refunds are normally delayed for
years, often leading the companies to the courts. This has been a
serious and intractable problem for the oil industry for many years,
and requires urgent legislative reform. (NCOC and OMV Petrom
delivered Council presentations.)
2) Engineering and Construction Licenses are difficult, if not
impossible, for companies that have entered into partnerships
for the purpose of implementing specific projects. The stringent
requirements for prior experience do not take into consideration
the individual experience of each partner, but only their partnership
experience which, as new partnerships, lack the requisite track
record. This problem has excluded highly qualified engineering
and construction companies working in many industry sectors from
#62/2014
qualifying for the licenses, without which they cannot implement
major projects. The legislation requires urgent reform. (Fluor and
VK Studio delivered Council presentations.)
3) Environmental Payments are diverse in nature, but mainly
apply to the gas flaring and gas emissions that are integral to the
oil production process. Additional payments are often assessed by
regional authorities in the Caspian region without substantiation,
and such payments can only be challenged in the courts. Oil
companies also wish for their legitimate environmental payments
to be applied to environmental remediation, which is not often the
case. The legislation and practice require urgent reform. (AmCham
President Kenneth Mack delivered a Council presentation on
behalf of AmCham oil industry member companies).
ADVOCACY UPDATE
AmCham advocacy has experienced a quantitative leap since
the autumn, expanding beyond the monthly sessions of the Council
to Improve the Investment Climate to include presentations at
weekly Cabinet meetings at the invitation of Prime Minister
Massimov and the creation of 3 new AmCham Working Groups
with the Government, each chaired by the respective Minister, to
resolve investor issues discussed at the Council.
The Cabinet presentations and the Working Groups emerged
from the AmCham White Paper, Top Ten Barriers to Foreign
Investment in Kazakhstan, submitted to the Prime Minister in June.
The White Paper became required reading for Cabinet Ministers
and served to kick-start Government activity aimed at reforming
the legislation and practices that create these barriers.
The three new Working Groups formed in September on the
Prime Minister's instructions are:
October Council Session: Banking and Insurance
in Kazakhstan
The October Council session was devoted to two sectors of the
financial industry: banking and insurance, both at a critical stage
in their development in Kazakhstan.
1) Banking presenters were Citibank and Al-Hilal Bank. Citibank
has been the leading foreign corporate bank in Kazakhstan for 20
years. It is now virtually the only foreign bank conducting banking
activity, although other banks maintain representative offices
providing consultative services. Citibank spoke about the impact
of the withdrawal and sale of foreign banks in Kazakhstan, and
the National Bank's need to address the non-performing loans
problem that continues to cripple local banks following the 2008
financial crisis. Al Hilal Bank spoke about the slow progress of
Islamic banking in Kazakhstan and the need for further support
from the National Bank.
2) Insurance presenters were AIG and London-Almaty
Insurance Company, offering a study in contrasts as one of the
world's largest insurance companies spoke about the burdensome
regulatory requirements impacting their operations and a smaller
local insurance company spoke about the expected impact of the
Customs Union. London-Almaty proposed several innovations that
would enable the local insurance sector to maintain a competitive
stance vis-a-vis the Russian insurance companies that will be their
major competitors in the Common Economic Space.
National Bank Governor Kairat Kelimbetov responded to both
the banking and insurance presentations by outlining the Bank's
policy and efforts to support the financial sector, noting the
insurance sector's still-underdeveloped status and the strategy to
resolve the NPL problem, among many other challenges facing
the health and stability of Kazakhstan's banking system.
December Council Session: The Future of
Telecommunications in Kazakhstan
This Council session, the last before the holiday season, featured
presentations by the Chief Executive Officers of the 3 major foreign
telecoms in Kazakhstan - Kcell, Beeline, and Tele2. The session
was also attended by the Chairman of Kazakhtelecom, thus
creating a rare opportunity for all four of the major telecom players
to exchange views on the future of the industry. The presentations
by Kcell, Beeline, and Tele2 are published in this issue of Investors'
Voice, along with an overview of the sector by the EBRD.
Prime Minister Massimov delivered a lengthy response to the
presentations, outlining an ambitious Government strategy to
further develop telecommunications in Kazakhstan, recognizing
its critical importance to the country's economic and business
development. He invited all 3 foreign telecoms to participate in
further meetings on this subject in early 2015.
35
MEMBER NEWS
MEMBER NEWS
AECOM Kazakhstan Passes British
Standards Institution (BSI)
Two-Stage ISO Certification Process
Bureau Veritas Kazakhstan Receives
Energy Conservation
and Efficiency Accreditation
Following months of preparation, including a detailed review
of all internal work orders, as well as business procedures and
processes, AECOM Kazakhstan has successfully passed the
British Standards Institution (BSI) two-stage ISO certification
process. This challenge involved the full participation of virtually all
our personnel, departments and local offices in Kazakhstan. The
extent of this certification includes: ISO 9001:2008; BS EN ISO
14001:2004; and BS OHSAS 18001:2007. These accreditations
are required to provide services like pre-construction planning,
project management, construction management supervision and
consultancy services such as design management.
During this ISO certification assessment, the BSI concluded that
AECOM’s report was based on objective evidence and, in general,
effective. The benefits of the certification are broadly recognized
within the industry to provide more business possibilities and
competitive advantages. Furthermore, certified International
Standards bring AECOM Kazakhstan technological, economic
and social benefits. These advantages enable us to create
valuable synergy between technical specifications of products
and services, thus enhancing industry efficacy and overcoming
obstacles in international trade. AECOM’s compliance with
International Standards greatly reassures our clients that AECOM
products are environmentally safe, efficient and healthy.
The benefits of the BSI two-stage ICO accreditation for AECOM
Kazakhstan include:
On August 4, 2014, Bureau Veritas Kazakhstan received a
certificate of accreditation for energy conservation and efficiency,
authorizing Bureau Veritas to perform energy audits for industrial
enterprises, buildings and facilities.
According to Kazakhstan's Law "On Energy Conservation and
Energy Efficiency", an energy audit is mandatory for companies
listed in the State Energy Registry. An energy audit involves
observation and analysis to develop procedures for better energy
conservation and efficiency at companies, buildings and facilities.
The audit includes economic, ecological and social benefits for
companies in the Registry.
An energy audit performed by Bureau Veritas Kazakhstan
is advantageous in that it is performed by highly qualified
international specialists with experience in audits of energy
management systems, quality management, environment and
social responsibility programs. The audit monitors greenhouse
gas emissions, and certifies buildings and facilities under BREEAM
and LEED international standards. Veritas auditors have extensive
experience in the power industry and have performed energy
audits in the CIS and internationally.
• Cost savings: International Standards optimise operations,
which then enhance the bottom line.
• Enhanced customer satisfaction: International Standards
augment quality control, enhance customer satisfaction and
increase sales.
• Access to new markets: International Standards prevent
trade barriers and open up global markets.
• Increased market share: International Standards increase
productivity and competitive advantage.
• Environmental benefits: International Standards reduce
negative impact on the environment.
Currently, International Standards are a strategic set of tools
and guidelines that AECOM Kazakhstan can employ to assist
companies tackle some of the most demanding challenges of
modern business. This certification improves our company’s ability
to ensure that our business operations are as efficient as possible,
which, in return, increases productivity and facilitates company
access to new markets and industries.
36
#62/2014
MEMBER NEWS
Aigoul Kenjebayeva Receives Title of
Honorary Consul of Norway
in Almaty
Ambassador to the Kingdom of Norway, Ole Johan Bjørnøy,
presented Aigoul Kenjebayeva, Dentons’ Managing Partner
in Kazakhstan, with the prestigious title of Honorary Consul of
Norway in Almaty.
Speaking about relations between Norway and Kazakhstan,
Mr.Bjørnøy said that Almaty ia a great source of pride for Norway
as well as Kazakhstan. Kazakhstan is a nation not only with
big resources but with big ambitions to match, and it has every
opportunity to turn these ambitions into reality. These aspirations
begin in Astana and are brought to life in Almaty, and it is for
this reason Norway needs an Honorary Consul in Almaty. The
Government of Kazakhstan is striving to attract foreign investors,
and Norway supports this by assisting its citizens with their work
here, improving the investment climate and contributing to the
development of the economy.
Both Kazakhstan and Norway support the idea of strong,
independent women. In Mr. Bjørnøy’s view, Aigoul Kenjebayeva
fits the description. She has contributed considerably to the
economic development of the country and is a vital asset.
On behalf of the Minister of Foreign Affairs of Norway, Mr.
Bjørnøy thanked Ms.Kenjebayeva for accepting the title of the
Honorary Consul of Norway in Almaty.
“I will do my best to promote further cooperation between
our countries in Almaty and the Almaty region,” said Aigoul
Kenjebayeva. “I will also support the efforts of the Embassy of
Norway and Norwegian companies operating in Kazakhstan
to develop relations in the country’s economy. Kazakhstan is
a young independent state, and I'm excited to see the way it is
developing diplomatic relations with so many countries around the
world. Norway and Kazakhstan are very far from each other, but
at the same time they are very close. I am confident that we can
work together and in this way contribute to the cause of peace and
friendship throughout the world.”
#62/2014
Morgan Lewis Opens Second Office
in Central Asia
Firm Formalizes Existing Operations
in Capital of Kazakhstan
Morgan Lewis has opened a new office in the Kazakhstan
capital of Astana, formalizing its existing presence in the Central
Asian country. The firm has operated and served its global clients
in the region from Morgan Lewis’s Almaty office since 2012.
Morgan Lewis lawyers in Kazakhstan handle a wide variety
of corporate, investment, energy, finance, telecommunications,
utilities and other business transactions—both within the country
and the broader Central Asia and Caspian region—with an
emphasis on energy, banking and capital markets projects. The
firm recently served as English, U.S. and Kazakhstan legal adviser
to Intergas Central Asia, the operator of Kazakhstan’s national
natural gas pipeline system on a successful consent solicitation
involving $600 million in Notes.
“Our presence in Astana allows us to provide important support
for our clients and facilitates our interaction with the Kazakhstan
government agencies that drive many of their projects,” said Firm
Chair Jami McKeon.
The office will be under the leadership of Aset Shyngyssov, who
is also the Managing Partner of the firm’s Almaty office and will
initially host three resident lawyers. Mr. Shyngyssov has more than
15 years of experience handling complex transactions in a wide
range of industries throughout Kazakhstan and Central Asia, and
his presence in both offices enables their seamless cooperation
and integration.
“Although we have been working with our clients in Astana for
years, a permanent office in the capital brings us closer to many of
them, further enhancing our ability to serve both our existing and
future clients,” Mr. Shyngyssov said.
Both offices in Kazakhstan offer local and international clients
access to a full range of legal services, with a focus on significant
mergers and acquisitions, joint ventures, corporate finance, debt
and equity capital markets transactions, and disputes. Morgan
Lewis lawyers also advise on matters involving intellectual
property, real property, tax, environmental law, competition law,
anti-bribery compliance, and corporate governance, among other
matters.
Morgan Lewis’s Astana office is located at:
Kaskad Business Center
Floor 7, Office #72/1
6/1 Kabanbai Batyr Avenue
Astana 010000 Kazakhstan
37
NEW MEMBERS
WELCOME ADDITIONS TO THE CHAMBER
ABBOTT
LABORATORIES
ABBVIE
BIOPHARMACEUTICALS
KAZAKHSTAN
CORPORATE A
CORPORATE A
Marek Edris
General Manager
Khan-Tengri 2 Business Center
117/6 Dostyk Avenue
Almaty 050059 Kazakhstan
Telephone: 7 (727) 244 75 44
Fax:
7 (727) 244 76 44
Email: marek.edris@abbott.com
Website: www.abbott.com
Abbott Laboratories is an American
pharmaceuticals and healthcare products
company operating in over 130 countries
worldwide with 90,000 employees. Company
headquarters are locted in North Chicago.
The company was founded by Chicago
physician Wallace Calvin Abbott in 1888. In
2010 Abbott Laboratories revenues were
over $35 billion. It is traded on the NYSE
under ABT and is a component of the S&P
500.
The representative office of Abbott
Laboratories in Kazakhstan was opened
in 2008 and contains two units: Abbott
Established Products (EPD) and Abbott
Diagnostics. The Abbott Established
Products Division (EPD) is a leader in
therapeutic areas such as gastroenterology,
women's health and immunology. The
company's portfolio contains internationally
recognized brands Creon, Heptral, Duphalac,
Duphaston, IRS 19, Immudon, Influvac and
others. Abbott also produces a range of
medical devices, nutritional supplements,
animal health products, and performs
diagnostics services. Its in-vitro diagnostics
business performs blood screening, and
its diagnostic instrument systems are used
worldwide by hospitals, laboratories, blood
banks, and physicians' offices
Abbott is among the top ten pharmaceutical
companies in Kazakhstan.
38
AVIS RENT A CAR
CORPORATE A
Ronald Beno
CIS Regional Manager
Tengyz Towers Business Center
30A/1 Satpayev Street, Office 97
Almaty 050000 Kazakhstan
Telephone: 7 (727) 222 14 18
Fax:
7 (727) 398 94 88
Email: dinara.bazylzhanova@abbvie.com
Website: www.abbvie.com
AbbVie Biopharmaceuticals is a global
research-based specialty biopharmaceuticals
company spun off from Abbott Laboratories
in January 2013. It is officially listed on
the NYSE under the ticker symbol ABBV.
The company currently employs 250,000
people in approximately 170 countries.
For the second consecutive year, Science
Magazine has named AbbVie a top employer
in the biotechnology, pharmaceutical and
biopharmaceutical industries.
Abbvie’s products are used to treat
chronic auto-immune diseases ranging from
rheumatoid arthritis to psoriasis and from HIV
to Parkinson’s disease.
The Illinois-based firm generates the bulk
of its revenue from its anti-inflammatory
drug Humira, used to treat arthritis, and
from AndroGel, a topical testosterone
replacement therapy (TRT) drug. AbbVie
posted net earnings of $4.13 billion in its first
year independent of Abbot. Sales from its top
product, Humira, are expected to reach $12
billion in 2014.
A pipeline of AbbVie drugs awaits approval,
including a combination therapy treatment for
hepatitis C. The company also is developing
new drugs for blood cancers and other
diseases.
Ali Erem Erturan
Country Manager
240/46 Furmanov Street
Almaty 050000 Kazakhstan
Telephone: 7 (727) 262 24 53
Fax:
7 (727) 262 24 53
Email: info@avis.com.kz
Website: www.avis.com.kz
AVIS Kazakhstan launched its operations
as a branch of Avis Turkey in 2014. Avis
Turkey, founded 40 years ago as part of
Turkey’s largest corporate conglomerate,
Koç Holding, manages a total park of 28,000
vehicles for both short- and long-term rental.
AVIS has 86 offices in 4 countries (Turkey,
Azerbaijan, Northern Iraq and Kazakhstan).
Avis Kazakhstan provides long-term
and short-tem car rental service from a
fleet size of 300 vehicles. Avis Kazakhstan
offers brand new vehicles, 4WD’s, pick-ups
and buses in accordance with customer
needs and requirements, with or without
drivers. As a company oriented towards
customer satisfaction, Avis provides its
customers with effective car rental solutions
- such as 7/24 road assistance, car and
tire replacement, maintenance, insurance,
and fuel management. Avis Kazakhstan’s
headquarters are located in Almaty and it
operates throughout Kazakhstan.
AVIS Kazakhstan has the goal of being
the leading company in the rental car
sector, always providing new applications
and services to meet increased customer
expectations, as well as developing the car
rental market in Kazakshtan.
#62/2014
WELCOME ADDITIONS TO THE CHAMBER
NEW MEMBERS
TELE2
CASPIAN MOTORS
CORPORATE B
CORPORATE A
Pietari Kivikko
Chief Executive Officer
101 Tole bi Street
Almaty 050012 Kazakhstan
Telephone: 7 (727) 356 95 95
Fax:
7 (727) 355 47 07
Email: infokz@tele2.com
Website: www.tele2.kz
Tele2 is one of the fastest growing
European telecommunications operators,
offering its services to customers at a low
price. The company serves over 13 million
customers in nine countries around the world.
Tele2 offers mobile voice and broadband
services, fixed broadband and telephony,
data network, cable TV and content services.
Tele2 was one of the first operators to
launch 4G services. Since the company was
established by Jan Stenbeck in 1993, Tele2
has challenged monopolies, both public
and private. Tele2 has been listed on the
NASDAQ OMX Stockholm since 1996.
In Kazakhstan, Tele2 entered the market
in 2010 upon completing the acquisition
of the local operator. After the company's
integration into the Tele2 business group, a
complete upgrade of equipment compatible
with the latest 3G HSPA+ technology and,
update of the product portfolio and marketing
platform, the network was re-launched under
the Tele2 brand. The key advantages of the
new brand include good quality and low
prices.
Across Kazakhstan, services under the
Tele2 brand are provided by Mobile TelecomService.
#62/2014
Yevgeniy Kuznetsov
General Manager
161A Suyunbay Avenue
Almaty 050016 Kazakhstan
Telephone: 7 (727) 380 73 21
Email: Mihails.Kvetnis@rmagroup.net
Website: www.rmagroup.net
Caspian Motors is the Kazakhstan
subsidiary of RMA Group, a leading
international specialized vehicles and power
equipment supplier to emerging markets for
over 25 years. Caspian Motors has been
importing and distributing Ford vehicles and
RMA/GFS modified vehicles in Kazakhstan
since 2010, through 3 retail outlets (Astana,
Almaty and Atyrau) and a dealer network.
For the past 5 years Caspian Motors has
been the official dealer for Jaguar Land
Rovers through its dealership in Astana and
Almaty. The company employs about 150
Kazakhstani staff.
Since 2011 RMA Group has provided
SDMO power generator supply and servicing
since through another local subsidiary, RMA
Kazakhstan.
RMA Group is a global company with
operations in 21 countries employing 8,000
staff. Headquartered in Bangkok, Thailand,
RMA provides customer-driven, tailored
solutions in automotive, infrastructure,
engineering, financing services, and food
service sectors for customers in emerging
markets through to fully developed markets.
RMA Group is the only Approved Vehicle
Modifier for Land Rover vehicles and a
Qualified Vehicle Modifier for Ford vehicles
in Asia, bringing to customers tailor-made
solutions for the mining industry, industrial
sites, military purpose, utility vehicles and
ambulances.
COMMERCIAL RE
GROUP
CORPORATE B
Bagdat Akhmetov
Chief Executive Officer
240V Furmanov Street
Almaty 050059 Kazakhstan
Telephone: 7 (727) 313 25 25
Fax:
7 (727) 356 40 24
Email: info@cregroup.kz
Website: www.cregroup.kz
Commercial RE Group is the fastest
growing property management company in
Kazakhstan. Since 2009 its professional team
has leased and managed 200,000+ square
meters of class A and B office buildings and
retail spaces in Almaty and Astana.
Commercial RE international tenants
include a mix of start-ups, acquisitions and
Fortune 500 companies. Because of the
Group's exclusive range of properties, it
can offer high-end facilities to suit various
budgets. The goal of our team is to listen to
the clients so that we can provide the right
space to fit any requirements and at the
same time delivering high-quality property
management services including knowledgebased maintenance and dedication to
superior customer expectations.
Commercial RE property and tenant
managers have a leader-oriented mentality for
responsibilities they perform and the decisions
they make in favor of clients. They are fully
committed to the effort and take ownership
for both the success and challenges in their
managed properties. While always attentive
to new opportunities, Commercial RE
professionals also understand the urgency of
immediate issues and respond promptly with
innovative solutions.
39
NEW MEMBERS
WELCOME ADDITIONS TO THE CHAMBER
ESENTAI
APARTMENTS
LONDON-ALMATY
INSURANCE COMPANY
CORPORATE B
CORPORATE B
Eldar Serkebayev
Chief Executive Officer
Yergali Begimbetov
Chairman of the Board
Esentai Complex
72/1 Al Farabi Avenue
Almaty 050000 Kazakhstan
Nurly Tau Business Center
19/1 Al-Farabi Avenue
Almaty 050000 Kazakhstan
38B Shashkina Street
Almaty 050040 Kazakhstan
Telephone: 7 (727) 328 77 77
Telephone: 7 (727) 311 07 77
Fax:
7 (727) 311 07 77
Telephone: 7 (727) 264 28 88
Fax:
7 (727) 264 63 64
Email: svoetmann@gmail.com
Website: www.esentaiapartments.com
Email: info@laic.kz
Website: www.laic.kz
Email: ghrcca@columbia.edu
Website: www.ghrcca.columbia.edu
Esentai Apartments is the final stage in
the Esentai Park Complex, consisting of
the Esentai Tower, Esentai Mall, The RitzCarlton, Almaty and Haileybury School.
Designed by Skidmore, Owings, and Merrill
(SOM), a Pritzker Prize-winning New York
architecture firm in collaboration with Leslie
Robertson Associates, Esentai Apartments is
a new landmark in luxurious living suited to
Almaty's modern and business lifestyle in the
city's most prestigious location.
It consists of 3 luxury residential apartment
towers: Tower A is a condominium tower
with ownership vested in the individual unit
owners, and Towers B and C are apartments
belonging to KUSA KKB-2.
All 3 Towers together offer various types of
apartments and duplexes (80 sq.m. up to 500
sq.m.) priced from $500,000 to $4 million.
The apartments can be purchased designready. The Bulthaup kitchens contain topof-the-line Gaggenau and Miele appliances,
granite countertops, and the bathrooms
are finished in marble with Villeroy&Boch
and Dorndracht fittings. Teak terraces offer
stunning panorama views of Almaty and the
Tien Shan Mountains soaring above the city.
Residents have full access to all
thoughtfully designed facilities and services
of Esentai Park, along with the privilege of
exclusive services from The Ritz-Carlton,
Almaty. Concierge service in the lobby of
Esentai Apartments will graciously take care
of an array of tasks.
Founded in 1997, the London-Almaty
Insurance Company is a subsidiary of BTA
Bank. It provides vehicle, property, accident,
and travellers insurance for individuals, and
vehicle, property, cargo, civil liability, and
accident insurance, as well as water, railway,
and air transport insurance for companies.
The Company is committed to quality
and to a daily improvement of its internal
processes and services. London-Almaty
appreciates the importance of customer
satisfaction in maintaining and growing its
business, and thus strives to exceed its
clients’ expectations.
Teamwork is critical to the results
achieved daily at London-Almaty Insurance
Company, and it is encouraged through a
work environment that provides employees
with ample opportunities for professional
development and realization of their ideas.
This fosters the development of attractive
business projects that cater to the comfort
and objectives of the company’s clients.
The Global Health Research Center
of Central Asia (GHRCCA) integrates a
multidisciplinary team of faculty, scientists,
researchers, and students to advance
solutions to health and social issues in
Central Asia and the region. The Center’s
core activities are designed to improve
the health and well-being of vulnerable
populations in the region. About 10 years ago,
Columbia University established GHRCCA
with a branch office in Almaty. The Center
has Regional Representatives in Tajikistan
and Kyrgyzstan.
Research: GHRCCA brings together
faculty, scientists, researchers, and students
from different disciplines and fields from
Columbia University and other universities
in Central Asia and worldwide to generate
scientific and innovative solutions to public
health and social challenges.
Education and Training: Using an
interdisciplinary approach, GHRCCA aims
to advance knowledge, scholarship, and
curriculum on health and social challenges
in Central Asia and Mongolia. GHRCCA
provides educational exchanges and
programs for faculty, scientists, researchers,
and students from the region.
Policy and Dissemination: GHRCCA
collaborates with government, international
and local non-governmental organizations
to implement evidence-based, sustainable
solutions into policies, programs, and
systems of care.
GLOBAL HEALTH
RESEARCH CENTER
OF CENTRAL ASIA
NON-PROFIT
40
Dr. Nabila El-Bassel
Director
#62/2014
INFORMATION AND MEMBERSHIP
APPLICATION
ABOUT THE CHAMBER
Registered in Kazakhstan as a non-profit organization in March of 1999 with 36 charter members, the American
Chamber of Commerce in Kazakhstan currently represents over 200 member companies including US, multinational,
and local businesses in 30 industry sectors. Their collective investment in Kazakhstan's economy is several billion
USD. The Chamber in Kazakhstan is a member of the US Chamber of Commerce in Washington D.C. and has working
relationships with many regional business associations.
BENEFITS OF MEMBERSHIP
33
Chamber members participate in an organization existing solely to serve members
33
Chamber actively advocates for reform of the business environment with Kazakhstan Government at senior levels
33
Members may attend 15 Working Groups in 4 cities
33
Monthly speaker luncheons with senior government and business leaders are reserved for members
33
Seminars, conferences, monthly social networking events and charitable activities are organized for Chamber members
33
Chamber membership contact lists are available exclusively to Chamber members
33
Economic, political, legal, social, charitable and business development information is distributed to members
33
Member companies provide exclusive discounts on products and services to other Chamber members
33
Access to the Members' Only section on the AmCham Website
33
Publishing opportunities are available in the Chamber magazine, Investors' Voice, and in the annual Membership Directory
MEMBERSHIP APPLICATION
Company Name
Industry Area
CEO Name, Signature, Email
Contact Individual
Title(s)
Address
Tel.
Fax:
E-mail
Please include us in the following Working Groups:
Almaty (6)
Foreign Investment
Human Resources
Tax
Corporate Social Responsiblity
Technology and Innovation
Trade and Customs
Atyrau (4)
Aktau (3)
Astana (2)
Corporate Social Responsiblity
Human Resources
Trade and Customs
Tax
Human Resources
Trade and Customs
Tax
Foreign Investment
Tax
WORKING GROUPS
Working Groups made up of representatives from our member companies provide comment, discussion and
submission of positions and represent the united interests of the business community in Kazakhstan by identifying
challenges faced by investors and proactively addressing them. Each group meets regularly, providing a forum
for networking and the exchange of information. Groups are formed on an as-needed basis at the request of our
membership.
OFFICE
GOVERNANCE
The Chamber is governed by a Board of Directors elected annually from
and by the membership. Directors currently and in the past have included
individuals from the following company members:
AES
AIG Insurance
Baker & McKenzie
Bracewell & Giuliani
BG Group
Citibank
Conoco Phillips
Coca-Cola
Dechert
Deloitte
DUCAT
EBRD
Ernst & Young
GE International
Halliburton
Honeywell
HSBC
Hyatt Hotel
Intercontinental Almaty Hotel
KIMEP
KPMG
LeBoeuf, Lamb, Greene & MacRae
Nestle
PetroKazakhstan
PricewaterhouseCoopers
Philip Morris
Raytheon
Scot Holland CBRE
Tengizchevroil
USAID
Visor Capital
White & Case
Rixos Almaty Hotel Office Tower, 8th floor
506/99 Seifullin Street/Kabanbay Batyr
050012 Almaty Kazakhstan
Tel.: +7 (727) 330 92 50
Fax: +7 (727) 330 92 51
www.amcham.kz
Doris Bradbury
Executive Director
Doris.Bradbury@amcham.kz
Rimma Kazhemyakina
Finance Director
Rimma.Kazhemyakina@amcham.kz
Adam Grode
Working Group Manager
Adam.Grode@amcham.kz
Almas Serikuly
Government Relations Coordinator
Almas.Serikuly@amcham.kz
Dinara Tolebayeva
Events / New Membership Coordinator
Dinara.Tolebayeva@amcham.kz
Saniya Yergaliyeva
Publications / Communications Coordinator
Saniya.Yergaliyeva@amcham.kz
Madiya Orazkhan
Administrative Assistant
Madiya.Orazkhan@amcham.kz
Lida Golovko
Accountant
Lida.Golovko@amcham.kz
Izabel Safadi
Marketing Intern
intern@amcham.kz
Anatoly Konovalov
Technical Support
Chamber IP provided by Beeline Business TM www.b2b.beeline.kz
REGIONAL REPRESENTATIVES
David MacInnis
Resident Representative, Atyrau
dmacinnis@tengizchevroil.com
Robert Bosworth
Resident Representative, Astana
bosworth_robert@bah.com
MEMBERSHIP CATEGORIES AND ANNUAL FEES
Corporate A (Worldwide revenues in excess of 100 million USD) Corporate В (Worldwide revenues between 2-100 million USD)
Corporate С (Worldwide revenues not exceeding 2 million USD) Non-Profit
Individual**
$5,000 USD
$3,800 USD
$2,700 USD
$1,500 USD
$500 USD
Corporate membership entitles a company to delegate 3 individuals as Chamber voting members. The number of persons from each company
participating in working groups, forums, and business roundtables is usually not limited.
**lndividual memberships are available only under special circumstances, for persons not associated with a company.
All applications for membership must be approved by the Board of Directors of the American Chamber of Commerce in Kazakhstan. For further
information about membership benefits, the application process, or Investors' Voice magazine, please contact: info@amcham.kz
AVIS DIFFERENCE
AND QUALITY
IN KAZAKHSTAN.
We are awaiting for you at our Avis Kazakhstan office to get the
quality and advantages of Avis long–term car rental service.
Furmanov Street 240 Office
246 Almaty Republic of Kazakhstan
Phone: +7 727 262 24 53
info@avis.com.kz | www.avis.com.kz