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CONTENTS
5 Kazakhstan Overview 7 Welcome from Lesley Batchelor OBE, FIEx (Grad) – Director General, The Institute of Export 9 Foreword from Dr Carolyn Browne, HM Ambassador Astana 11 About UK Trade & Investment (UKTI) 13 About this Guide
17 – Why Kazakhstan? 24 – Researching the market 29 – Getting here and advice about your stay 35 – Sector specific opportunities 45 – Preparing to export 51 – How to do business in Kazakhstan 59 – Business etiquette, language and culture 21 – What are the challenges?
65 Resources
66 – Contacts details 68 – Useful Links 69 – Additional Useful Links 71 – Trade Shows
72 Map of Kazakhstan 75 Quick Facts
www. Kazakhstan .Doing Business Guide .co.uk 3
Kazakhstan Overview
th Kazakhstan is the 9 largest country in the world, (the largest land-locked) and is located in central Asia, it is also one of the most sparsely populated with an estimated population of around 17.6 million.
The country has a dramatically-variable continental climate. In the cold and lengthy winter, temperatures as low as -40°C are not uncommon, as opposed to 40°C sweltering heat in the summer.
Kazakhstan is a republic, with the government and many large state companies based in the country’s capital city Astana, which has a fast-growing population. The city of Almaty, the previous capital, is still a commercial hub, with a much larger population than the capital. However, most international and national companies are now headquartered in Astana. With EXPO 2017 and the creation of the new Astana International Financial Centre, Astana is set to become the major commercial city in Kazakhstan. Other principal cities include Aktau, Atyrau, Karaganda, Shymkent and Pavlodar.
th Kazakhstan gained independence from the Soviet Union on the 16 December 1991, following its collapse. A relatively young country in some respects, Kazakhstan is ambitiously western, although it still carries a somewhat soviet legacy, principally in the overly-bureaucratic administration of business and property.
The UK is one of the top 5 largest investors in Kazakhstan. In 2014, bilateral trade between the UK and Kazakhstan equated to USD $1.2 billion.
The main UK exports are oil and gas, education, financial and business services, healthcare and medical equipment, architecture and design services, as well as mining.
www. Kazakhstan .Doing Business Guide .co.uk 5
The Art of Export
Choosing a great export training partner can really help your company take off in the export trade! We can help develop new ideas and find ways to drive down costs and produce sustainable improvements in your export business.
Our main aim is to help you achieve your export and international trade goals. If you do well, we do well.
THE H Join us today T E A A R • T Call: +44(0)1733 404 400
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N A T O I www.export.org.uk 23/4/15 10:01 Page 1
Welcome from Lesley Batchelor OBE, FIEx (Grad) -
Director General, Institute of Export
Preparing for any new market needs consideration when thinking about a country like Kazakhstan there are many issues both cultural and business linked that you need to think through.
This guide offers you the opportunity to think through your market issues and learn how to enter the market successfully and with as little pain as possible. The Institute of Export’s mission is to enhance the export performance of the United Kingdom by setting and maintaining professional standards in international trade management and export practice. This is principally achieved by the provision of education, training and practical support, a helpline and one-to-one assistance with paperwork.
Dedicated to professionalism and recognising the challenging and often complex trading conditions in international markets, the Institute is committed to the belief that real competitive advantage lies in competence and that commercial power, especially negotiating power, is underpinned by a sound basis of knowledge.
Why not contact us and find out how you can join? Lesley Batchelor OBE, FIEx (Grad) - Director General - Institute of Export www.export.org.uk
www. Kazakhstan .Doing Business Guide .co.uk 7
Foreword from Dr Carolyn Browne, HM Ambassador Astana
I am delighted to contribute to this guide to “Doing Business in Kazakhstan”. Kazakhstan is a key market for the UK. In 2013, David Cameron was the first ever serving UK Prime Minister to visit Kazakhstan. Following that visit, an Intergovernment Commission between the UK and Kazakhstan was set up, tasked with increasing our bilateral trade and investment. In November 2015, when President Nazarbayev visited the UK as a Guest of the British Government, it became clear how rapidly trade and investment between the two countries had developed in the meantime, including the signature of trade deals worth £3.2bn and agreement to extend joint work further into new sectors.
UKTI has currently identified three high value opportunity programmes in Kazakhstan: Oil & Gas, Mining and Education. The Oil & Gas programme is the most successful globally – having facilitated 48 new joint ventures and delivered over £6.4bn in business wins since 2013. In addition to these programmes, further sectors such as Financial and Professional Services, Manufacturing and Agribusiness are opening up – with opportunities for new partnerships and joint ventures.
In June 2017, Astana will open its doors to international visitors to experience EXPO2017 – based on the theme of Future Energy. The UK has confirmed its participation in EXPO2017, which will cement our bilateral long-term strategic partnership. Kazakhstan dominates the Central Asian region in terms of economic growth. Its economy is now larger than twice the size of all the other Central Asian economies put together. Being a resource based economy, the oil and gas sector is the key driver of the Kazakh economy and contributes to around 30% of GDP and 80% of exports. Kazakhstan was a founder member of the Eurasian Economic Union which was launched in January 2015, and in November 2015 Kazakhstan became a member of the WTO. WTO accession will allow the Kazakh economy to benefit from improved access to European and international foreign trade and increase investor confidence.
I am sure that this guide will be helpful to companies interested in this market. The UKTI team and the British Chamber of Commerce in Kazakhstan are here to help you. You can contact them through the Director of UKTI, David Ratcliffe by email: [email protected] or [email protected] I look forward to welcoming you to Kazakhstan in the near future. Dr Carolyn Browne HM Ambassador, Astana
www. Kazakhstan .Doing Business Guide .co.uk 9 Michael Wilson & Partners, Ltd. (MWP) is a full service law practice and business consultancy with offices in both Baku and Almaty covering Azerbaijan, Kazakhstan, the Central Asian Region and the Caucasus. MWP was established in Kazakhstan in 1998 and in Azerbaijan in 2003.
Our practice areas • Corporate/M&A • Competition • Establishment, Reorganisation & Liquidation of Companies, Branches and Representative Offices • Employment • Contracts • Mining and Energy • Dispute Resolution • Capital Markets • Banking and Finance • Currency Control • Forensics
Contact:
In Kazakhstan: In Azerbaijan: Contact name:
Nurly Tau Business Center SAT Plaza, 9th Floor Assel Kulisheva 7th Floor, Building 1A 133 Bashir Safaroglu [email protected] 5, Al-Farabi Avenue Street 050059 Almaty AZ 1009, Baku Kazakhstan Azerbaijan
Tel: +7 (727) 258 48 90 Tel: +994 12 497 8948 Fax: +7 (727) 258 48 94 Fax: +994 12 497 8947 Email: [email protected] Email: [email protected] Website: www.mwp.kz Website: www.mwp.az About UK Trade & Investment (UKTI)
UKTI is the British Government department that helps UK-based companies succeed in an increasingly global economy. UKTI also helps overseas companies bring their high quality investment to the UK’s economy. UKTI’s range of expert services are tailored to the needs of Individual businesses to maximise their international success. UKTI provides companies with knowledge, advice and practical support.
Through a range of unique services, including participation at selected tradeshows, outward trade missions and providing bespoke market intelligence, UKTI can help you crack foreign markets and get to grips quickly with overseas regulations and business practice.
With headquarters in London, UKTI have professional advisers around the UK and staff across more than 100 countries.
Contact UKTI
Contact your local International Trade Team or Scottish Development International (SDI), Welsh Government (WG) or Invest Northern Ireland (INI) offices to find out more about the range of services available to you.
You can find your nearest International Trade Team at: www.gov.uk/ukti
General UKTI enquiry number: +44 (0) 207 215 5000 UK Trade & Investment 1 Victoria Street London, SW1H 0ET United Kingdom
Email: [email protected]
www. Kazakhstan .Doing Business Guide .co.uk 11
N A T S H
K Doing Business in Kazakhstan A Z A K
ABOUT THIS GUIDE
This guide aims to provide a route map of the way ahead, together with signposts to other sources of help.
The main objective of this Doing Business in Kazakhstan Guide is to provide you with basic knowledge about Kazakhstan; an overview of its economy, business culture, potential opportunities and to identify the main issues associated with initial research, market entry, risk management and cultural and language issues.
We do not pretend to provide all the answers in the guide, but novice exporters in particular will find it a useful starting point. Further assistance is available from the UK Trade & Investment team in Kazakhstan. Full contact details are available in this guide.
A special thank you to KAZNEX INVEST for their contribution to the content in the guide.
This guide is available in four formats:
• Website (www.Kazakhstan.DoingBusinessGuide.co.uk) • a ‘free’ downloadable 'mobile device-friendly’ app • PDF download (please see the website for more details) and • this full colour hard-copy brochure
Doing Business in Kazakhstan Guide Team;
Project Director: Craig Smith Managing Editor: Olivia Taylor Sponsorship Manager: James Clowes Creative Manager: Paul King Creative Consultants: Twistedgifted www.twistedgifted.co.uk
Printed using materials from sustainable sources www. Kazakhstan .Doing Business Guide .co.uk ‘Doing Business in Kazakhstan Guide’ published in the UK by International Market Advisor Ltd. © 2016 International Market Advisor Ltd (unless otherwise stated). All rights reserved. Contains public sector information licensed under the Open Government Licence v3.0.
13 N A T S H K A Z A K Visit the Website and download the free
k Mobile App u . o c . e d
i Website and Mobile App features include: u G
s • Latest business news
s • Up-to-date travel advice e
n • Interactive ‘Supporting Organisations’ and ‘Market Experts’ profiles i
s • Essential contact details
u • Listings with links to up-and-coming trade shows B • Links to UK Trade & Investment (UKTI) international trade support g
n services i o D . n a t s h k a z a K . w w w
Powered by About International Market Advisor (IMA)
International Market Advisor (IMA) works The guides’ contents focus on the market with British and foreign government in question, how to approach that market departments, Embassies, High and the help and support available, and Commissions and international Chambers include informative market overviews, plus of Commerce throughout the world. Our details of business opportunities, listings work helps to identify the most efficient with website links to British and Foreign ways for British companies to trade with Government support services and essential and invest in opportunity-rich overseas private sector service-provider profiles. markets. Sponsoring a ‘Doing Business Guide’ During the last ten years IMA has therefore offers a unique opportunity to worked with the British Government's positively promote your products and overseas trade and investment department services to high-profile business leaders, UK Trade & Investment (UKTI), and has specific exporters, investors and effective written, designed, produced, launched business travellers who will be actively and distributed over one million copies of seeking out service providers to assist more than 100 country-specific print and them in developing their business interests multi-media based reports, guides and in the targeted markets. publications, including the internationally- recognised ‘Doing Business Guide’ series For more information on IMA of trade publications. These are composed please visit our website: of market and industry sector-specific, www.DoingBusinessGuides.com multi-format print and digital trade reports, together with some of the internet’s most Contact IMA visited international trade websites - all of which are designed to advise and assist Office address UK companies looking to trade with and invest in overseas markets. These reports International Market Advisor and guides are then distributed free-of- 1 Clough Street charge through the IMA and UKTI global Buxton networks - over 500 distribution outlets in SK17 6LJ total. Further distribution takes place at United Kingdom global exhibitions, roadshows, conferences Email and trade missions, and IMA receives daily requests for additional copies of the guides [email protected] from these networks and from businesses considering exporting. General enquiries switchboard +44 (0) 1298 79562 Each of IMA’s 'Doing Business Guides’ is produced in three formats: a full colour, Media enquiries glossy, paper-based brochure; a supporting fully-interactive and updatable multi-media Newsdesk & out of hours based website; and the website contents +44 (0) 1298 79562 available as a free-of-charge downloadable smartphone/tablet app.
www. Kazakhstan .Doing Business Guide .co.uk 15
? N A
KAZAKHSTAN T S H K
th A Kazakhstan is the 9 largest country Z A K
in the world, (the largest land-locked) Y and is located in central Asia, it is also H W one of the most sparsely populated with an estimated population of around 17.6 million.
www.Kazakhstan.DoingBusinessGuide.co.uk 17 N A T S H
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Why Kazakhstan? Astana. With EXPO 2017 and the creation of the new Astana International Financial Background Centre, Astana is set to become the major commercial city in Kazakhstan. Other th principal cities include Aktau, Atyrau, Kazakhstan is the 9 largest country in Karaganda, Shymkent and Pavlodar. the world, (the largest land-locked) and is The backbone and economic base of the located in central Asia, it is also one of the country could notably claim to be in the most sparsely populated with an estimated west, where most of the oil & gas reserves population of around 17.6 million. are located, with oil accounting for 80% of Kazakhstan’s exports. (Source – KAZNEX INVEST) Kazakhstan gained independence from the Approximately 60% of the population are th Soviet Union on the 16 December 1991, Kazakh and around 20% are of Russian following its collapse. A relatively young origin. country in some respects, Kazakhstan is ambitiously western, although it still carries The ethnic make-up of Kazakhstan also a somewhat soviet legacy, principally in consists of sizeable minorities of Germans, the overly-bureaucratic administration Ukrainians, Uzbeks and Tatars. Although of business and property. the Western expatriate communities are growing, they are still relatively small. (Source – UKTI) Kazakhstan is a religiously diverse country where more than 3000 religious associations operate, representing The history of modern Kazakhstan 40 denominations, the most dominant religions are Christianity and Islam. 1991 • Kazakh SSR transformed into (Source – KAZNEX INVEST) the Republic of Kazakhstan, state independence of the republic was The country has a dramatically-variable proclaimed. continental climate. In the cold and lengthy • Semipalatinsk nuclear test site was winter, temperatures as low as -40°C are closed. not uncommon, as opposed to 40°C sweltering heat in the summer. 1992 • Kazakhstan enters UN, OSCE and Kazakhstan is a republic, with the ECO. government and many large state • Kazakhstan acceded to the Treaty on companies based in the country’s capital non-proliferation of nuclear weapons city Astana, which has a fast-growing as nuclear-free country. population. The city of Almaty, the previous capital, is still a commercial hub, with a 1993 much larger population than the capital. • First Constitution of the Republic of However, most international and national Kazakhstan adopted. companies are now headquartered in • National currency introduced – Tenge. Visit the Website and download the free Mobile App 1997 2011 • Adopted strategy “Kazakhstan – 2030. • Customs control is abolished at Prosperity, security and improvement the borders of Russia, Belarus and of welfare of all Kazakhs”. Kazakhstan within the framework of the Customs union. 2000 • National Fund of the Republic of 2012 Kazakhstan was established. • Astana was declared as the venue for the "EXPO – 2017", where the theme 2006 of the exhibition is "Energy of the • In order to improve asset management Future." of the largest public corporations, • The ‘Common Economic Space’ State holding “Samruk” was created. was created (Russia, Belarus and • Created Sustained Development Fund Kazakhstan). “Kazyna” to increase investment and innovation activity in non-oil economic 2014 sector of Kazakhstan. • Signing of the agreement on the creation of the Eurasian Economic 2007 Union (Kazakhstan, Russia and • A decision made on transfer of the Belarus), as well as the addition of the base material sector revenues Republic of Armenia and the Kyrgyz (including revenues from oil) to the Republic to it, which was due to be National Fund, therefore, the state entered into force on 1st January budget is formed without “oil money”. 2015.
2008 2015 • Adopted a plan to stabilise the • Entry into force of the Eurasian economy and financial system of the Economic Union (Kazakhstan, Russia, country. Belarus, Armenia and Kyrgyzstan). • The main operator of stability plan • Kazakhstan joined the World Trade implementation is newly created fund Organization (WTO) “Samruk-Kazyna”. (Source – KAZNEX INVEST) 2010 • Government program on forced indus trial-innovative development for 2010- 2014 was adopted. • Customs union with Russia and Belarus created. • Kazakhstan’s OSCE chairmanship.
www. Kazakhstan .Doing Business Guide .co.uk 19 N A T S H
K Doing Business in Kazakhstan A Z A K
Strengths of the market British companies are well-represented in the financial and professional business A stable economy and the apparent ease services sectors, which are sophisticated of starting a business are among many for the region. strengths of the Kazakh market. Other benefits include a strong regulatory (Source – UKTI / KAZNEX INVEST) environment, a wide and expanding range of opportunities for companies Kazakhstan is in a favourable location, as the economy diversifies, and the right in the heart of Eurasia. The major development of a transparent and overland routes binding Asia and the effective business culture. Pacific Region with the Near East and Middle East as well as Europe, pass Doing business in Kazakhstan may also through Kazakhstan. Three out of the four open doors as a gateway to other central BRICS countries (Brazil, Russia, India, Asian markets, as well as to Russia, China, South Africa) are situated next Armenia, Kyrgyzstan and Belarus through to Kazakhstan: Russia and China adjoin the Customs Union agreement. Please Kazakhstan, with India geographically visit the Eurasian Economic Union (EAEU) in close proximity. for more information: www.eaeunion.org/?lang=en The favourable business climate and political stability have promoted a nd Ranked in 42 place in the Global considerable foreign direct investment Competitiveness Report 2015-2016 (FDI) flow in to Kazakhstan. Since 2005, (www3.weforum.org/docs/gcr/2015- Kazakhstan has attracted gross FDI of 2016/Global_Competitiveness_Report_20 over USD $208 billion. 15-2016.pdf) , Kazakhstan is also rated st 41 overall in the World Bank’s ‘Ease (Source – KAZNEX INVEST) of Doing Business Report’: www.doingbusiness.org/rankings. Investor protection Interestingly, in the same report for the The Republic of Kazakhstan Law № 373-II th ease of starting up a business, Kazakhstan on investments, dated January 8 2003, st is ranked as 21 out of 189 countries. provides various guarantees to minimise the risks that an investor may experience There are substantial opportunities when investing in Kazakhstan: in Kazakhstan for British companies, especially in the oil and gas sector • Guarantee of statutory protection for and extractive industries, due to investments made within the Republic mass-expansion and development in of Kazakhstan the Caspian Sea. There are also planned • Guarantees for use of income investments in the power, transport, • Openness in state activity concerning communications and agricultural sectors, investors is guaranteed as well as skills development, vocational • Guarantees of investors’ rights during training and retail sectors which all offer nationalisation or requisition significant opportunities for British companies. Visit the Website and download the free Mobile App According to the Doing Business 2016 In 2014, Kazakhstan published ‘Strategy Rank for Protecting Minority Investors, 2050’, with an objective to become one of th Kazakhstan is in 25 place. the top 30 most competitive nations by 2050. Visit the dedicated ‘Kazakhstan (Source – KAZNEX INVEST) 2050’ website for more information: www.strategy2050.kz/en
Economic overview (Source – UKTI)
The national currency of Kazakhstan is the Tenge. Economic geography Kazakhstan consists of five large For around eight years, up until 2007, economic regions: Kazakhstan recorded an average growth rate of about 10% per year, and although • North Kazakhstan – efficient grain the aftershock of the global financial crisis economy, extraction of iron ore and hit hard in 2008, a remarkably healthy coal, mechanical engineering, growth of 3-4% was still achieved. production of oil products and ferroalloys, and energy. Kazakhstan has the most stable economy of the Commonwealth of Independent • East Kazakhstan – efficient nonferrous States (CIS), of which it is a member, and industry, energy, mechanical is leading all central Asian countries in engineering and forestry products. terms of economic growth. With growth of 4.3% in 2014, the economy is forecast to • West Kazakhstan – is one of the grow by just 1.5% in 2015; markedly slowly largest oil and gas extraction regions. than the previous year. This is due to a combination of the fall in global oil prices, • Central Kazakhstan – efficient ferrous setbacks in oil production at Kashagan, and nonferrous industries, mechanical devaluation of the rouble and growing engineering, and cattle breeding. geopolitical risks in Russia. • South Kazakhstan – cotton, rice, wool, Currency depreciation is having a noted grain, fruits, vegetables, grapes; impact on inflation. efficient nonferrous industry, instrument manufacturing, light In terms of Gross Domestic Product manufacturing, food production, fish (GDP), oil and gas contributes to about farming, and forestry products. 20% (www.stat.gov.kz) . Oil and gas also accounts for around 80% of exports and (Source – KAZNEX INVEST) for 20% of budget revenues.
The massive oil fields at Tengiz and Karachaganak are currently responsible for the production of 40% of the country’s total output; however, future production is set to be dominated by the Kashagan field. However, there were initial production delays at Kashagan, which likely impacted on the GDP by approximately 0.5% in 2014.
www. Kazakhstan .Doing Business Guide .co.uk 21 N A T S H
K Doing Business in Kazakhstan A Z A K
Trade between the UK and Kazakhstan Many Kazakh companies look to Britain for financial services expertise and The UK is one of the top 10 largest investment, and there have been several investors in Kazakhstan. In 2014, bilateral large successful IPOs on the London trade between the UK and Kazakhstan Stock Exchange. There are well over a equated to USD $1.2 billion. hundred UK companies or joint ventures with British connections active in Back in 2013, UK exports to Kazakhstan Kazakhstan. equalled £514 million which was a slight increase on the year before. However, (Source – UKTI) between January and July 2014, although £185.8 million worth of goods were exported to Kazakhstan from the UK, Free Trade Agreements (FTAs) it marked a 30.5% decrease from the year previously, in comparison to 2013 Alongside Russia, Armenia, Kyrgyzstan at the same time. and Belarus, Kazakhstan is also a member of Eurasian Economic Union (ECU) – The main UK exports are oil and gas, incredibly, this allows access to a market education, financial and business services, of 182 million people. healthcare and medical equipment, architecture and design services, as As a member of the CIS, Kazakhstan, well as mining. along with 7 other member-states, signed the Commonwealth of Independent States th Since gaining independence in 1991, total Free Trade Area (CISFTA), on the 18 net FDI inflow to Kazakhstan between October 2011, although the agreement is 1992 to 2014 was $126.6 billion, yet to be ratified by Kazakhstan. according to UNCTAD’s data. Please visit: www.unctad.org/en/pages/Publication - (Source – UKTI) Webflyer.aspx?publicationid=1358 for more details.
According to the National Bank of the Republic of Kazakhstan, gross FDI inflow from the UK to Kazakhstan in the period from 2005 to the first half of 2015 was $11.5 billion. For more information visit: www.nationalbank.kz/?switch=english
(Source – KAZNEX INVEST)
Visit the Website and download the free Mobile App The structure of Kazakh State Bodies
(Source – KAZNEX INVEST)
www. Kazakhstan .Doing Business Guide .co.uk 23 N A T S H
K Doing Business in Kazakhstan A Z A K
through the provision of quality assistance Researching the market in representation to government, customised business services and It is advisable for UK companies with networking opportunities. no prior experience in Kazakhstan, to Visit: www.britishchamber.kz thoroughly research the market. UKTI and the Chamber work closely Without contacts or having someone on together and a UKTI team member will be the ground to do market investigation, it co-located with the Chamber in Astana. can be very difficult to make progress. The UKTI’s overseas team in Astana and To find out more about commissioning Atyrau are well-placed to help and are work, please contact your local UKTI therefore a particularly valuable resource. office. See: www.gov.uk/government/ They can provide a range of services to organisations/uk-trade-investment or British-based companies wishing to grow contact David Ratcliffe, the Director of their business in the Kazakhstan. Trade & Investment in Kazakhstan: [email protected] UKTI services include the provision of market information, validated lists of agents/potential partners, identifying key For more information, contact a UKTI market players or potential customers, Kazakhstan export adviser for a free establishing the interest of such contacts consultation, visit: in working with your company, and www.greatbusiness.gov.uk/ukti arranging appointments. In addition, they can also organise events for you to UK Trade and Investment (UKTI) publish meet contacts or promote a company and over 1,000 business opportunities per its products/services. month across all sectors and over 100 markets. Sign up to receive regular You can commission a UKTI Overseas business opportunities alerts: Market Introduction Service (OMIS) to www.businessopportunities.ukti.gov.uk/ assist your company to enter or expand home.html?guid=none your business in Kazakhstan. Under this service, the British Embassy’s Trade (Source – UKTI) & Investment Advisers, who have wide local experience and knowledge, can identify business partners and provide the support and advice most relevant to your company's specific needs in the market.
In addition, the British Chamber of Commerce in Kazakhstan was created in 2015 and has its offices in Astana. Its aim is to provide greater support to the British business community in Kazakhstan
Visit the Website and download the free Mobile App 8IBUZPVOFFEUPLOPXXIFO EPJOHCVTJOFTTJO,B[BLITUBO
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ZZZVFKQHLGHUJURXSFRP KAZAKHSTAN
Kazakhstan gained independence from the th Soviet Union on the 16 December 1991, following its collapse. A relatively young country in some respects, Kazakhstan is ambitiously western, although it still carries a somewhat soviet legacy, principally in the overly-bureaucratic administration of business and property.
T t w w w . K a z a k h s t a n . D o i n g B u s i n e s s G u i d e . c o . u k 2 9 GETTING HERE AND ADVICE ABOUT YOUR STAY N A T S H
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Getting here and advice about Travel advice your stay Although Astana and Almaty are generally Entry requirements safe, petty theft, robberies and car-jacking are not unknown. Visitors should be cautious and alert when travelling at night All visitors must have a valid passport. and it has been advised by the Embassy, th that single travellers should not enter into Between the 16 July 2015 and the st a taxi unless it is occupied by two or more 31 December 2017, Kazakhstan has people. Talk to your hotel or travel host, established a visa-free regime for UK as it may be possible to hire a car and citizens on stays of up to 15 days. driver for the duration of your visit. For longer stays while on business, a visa is required. For more detailed Regulations dictate that foreigners are information visit: www.kazembassy.org.uk/ required to carry their passports with them en/pages/page/74 at all times. The Embassy of the Republic of Before travelling to Kazakhstan, check the Kazakhstan in London provides full Foreign & Commonwealth Office (FCO) information about the entry requirements for the latest country information and for Kazakhstan, and about how to apply up-to-date travel advice: www.gov.uk/ for a visa, should you require one: foreign-travel-advice/kazakhstan
(Source – UKTI) Embassy of the Republic of Kazakhstan to the United Kingdom of Great Britain and Northern Ireland 125 Pall Mall London SW1Y 5EA UK
Tel: +44(0)207 925 1757 Fax: +44(0)207 930 8990
Email: [email protected]
Visit the website at: www.kazembassy.org.uk/en
(Source - Embassy of the Republic of Kazakhstan)
Visit the Website and download the free Mobile App Kazakhstan road infrastructure:
Kazakhstan airport infrastructure:
(Source – KAZNEX INVEST)
www. Kazakhstan .Doing Business Guide .co.uk 31
Doing Business in Kazakhstan
Flights to Kazakhstan Travelling from the airport
All Kazakh airlines except for Air Astana, Meet and greet transport services can be Kazakhstan’s national airline, are restricted arranged by many hotels, to provide from operating services to the European transport from the airport. Union (EU), due to compliance issues with internationally-accepted safety There is competition between the official requirements. Kazakh taxis and civilian drivers who offer a private ‘street taxi’ service. Caution must (Source – FCO Travel Advice) be taken when using any form of taxi and it is important to negotiate and agree a price before beginning any journey, as taxi It takes approximately 6 hours 20 minutes drivers will attempt to extract as much to fly directly from London to Astana. money as possible from foreigner visitors. Air Astana operates regular flights from Leaving a tip will not be expected and London to Astana (currently three times visitors should try to avoid payment with a week but will soon increase to five). large denomination notes, as it is unlikely There are also several internal flights that the drivers will offer any change, operating daily between Astana and whether able to or not. Almaty, also provided by Air Astana. Astana airport is approximately 16 km from On arrival, keep all baggage tags after the capital city itself. The number 10 bus collecting your luggage, as they need to service operates from the airport to the city be shown before leaving the airport. centre; however, it may be more practical to take a taxi, which will take around 15 Business travellers wishing to fly directly minutes. Astana is relatively small for a to Atyrau from Europe can use the Air capital city and most car journeys can be Astana services from Amsterdam and made in around 10 or 15 minutes. Istanbul, or Transaero from Moscow. It is around 12 km from the city of Almaty Please visit the Air Astana website for to Almaty airport. Public transport is more information: www.airastana.com available from the airport; however in best practice, taking a taxi is advisable. (Source – UKTI) The duration of the journey should be no longer than 30 minutes, however Almaty is renowned for its busy roads and traffic jams, so ensure that you allow ample time to reach your destination, especially when on a return journey to the airport.
From Atyrau airport to the city centre it is only a short journey.
(Source – UKTI)
www. Kazakhstan .Doing Business Guide .co.uk 33 KAZAKHSTAN
With estimated oil reserves of 5.3 billion tonnes, and approximately 3.3 trillion cubic metres of gas, Kazakhstan is in the top 10 countries in the world in terms of oil and gas reserves. The country plans extensive further development in extractive industries and in the Caspian Sea. 3 5 SECTOR SPECIFIC OPPORTUNITIES N A T S H
K Doing Business in Kazakhstan A Z A K
Sector specific opportunities Oil and gas
Expo 2017 With estimated oil reserves of 5.3 billion tonnes, and approximately 3.3 trillion cubic metres of gas, Kazakhstan is in the top Expo 2017 will be hosted by Kazakhstan. 10 countries in the world in terms of oil and gas reserves. The country plans extensive It is expected that there will be many further development in extractive industries promotional opportunities for UK companies and in the Caspian Sea. in relation to the theme of: ‘Energy of the Future’. There are a wide range of opportunities on offer to qualified UK companies Expected projects include: meeting local content requirements in the oil and gas industry. • construction of Expo City and the green village Opportunities include: • development of ‘Smart Astana’ using • engineering equipment supply the latest technology in urban planning, infrastructure, healthcare, • oil and gas equipment manufacturing education, safety and ecology • solid and liquid waste treatment and • transport infrastructure upgrade disposal projects • oil spill response and treatment • supply of low carbon technologies
• design, engineering, consultancy Contact the Deputy Head of UKTI services Kazakhstan, Goulnar Gabdulova at: [email protected] for more Planned investments in the power, information on opportunities in the oil transport, communications and agricultural and gas sector. sectors should offer significant opportunities for UK companies. (Source – UKTI)
Contact UKTI adviser Olga Protassova at: [email protected] , for more information on opportunities at Expo 2017, or visit the Expo 2017 website at: www.expo2017astana.com/en/
(Source – UKTI)
Visit the Website and download the free Mobile App Petrochemical industry Mining
The base petrochemical industry, (the The natural resources sector in Kazakhstan production of primary petrochemicals), is responsible for around 17% of GDP, is a new and promising sector in the 16% of exports and for the employment of economy of Kazakhstan. Kazakh about 200,000 people. It is one the world’s manufacturers, producing plastics for most promising emerging markets in this various purposes, e.g. for construction sector. materials, packaging etc., use base petrochemical products. To meet the There are opportunities for UK companies in: needs of these sectors, Kazakhstan receives annual imports of raw polymer • geological exploration materials to an average value of USD $400 million. Production of a domestic • mining software and systems market of base petrochemicals is about development 72 billion Tenge, while imports account for more than 70%. • drilling
Petrochemical products have high export • integrated project management potential. According to priority commodity groups, imports of macro-region countries • contract mining amount to more than USD $20 billion. • innovative equipment supply Priority activities: • laboratory and consultancy services • Production of other main organic chemicals • engineering services
• Production of primary plastics Contact UKTI adviser Olga Protassova at: • Production of primary synthetic [email protected], for more rubbers information on the mining sector.
Priority projects (Source – UKTI) From 2015 to 2019, the state policy on the development of the petrochemical sector will be aimed at creating new facilities producing primary polymers and organic compounds as raw materials for both the petrochemical industry itself, and chemical industry in general (facility-producing aromatic hydrocarbons in Atyrau region).
(Source – KAZNEX INVEST) www. Kazakhstan .Doing Business Guide .co.uk 37 N A T S H
K Doing Business in Kazakhstan A Z A K
Ferrous metallurgy Non-ferrous metallurgy
Ferrous metallurgy is part of a large historical Non-ferrous metallurgy is a key sector industry, and its share in secondary industry of secondary industry in the Republic of in Kazakhstan amounts to 13%. Ferrous Kazakhstan, forming the country's export metallurgy is a basis for development of potential. The products are fundamental engineering and metal work, its products in engineering, electrical engineering, are widely-used in all spheres of the construction and electronics. economy. Development of primary sectors, engineering and construction provides a Priority activities: fixed demand on the domestic market and macro region markets. • Production of noble (precious) metals
Priority activities: • Production of aluminium
• Production of cast-iron, steel and • Production of lead, zinc and stannum ferrous alloys • Production of copper • Production of pipes, pipelines, sections, steel fittings • Production of other non-ferrous metals
• Cold drawing (production of iron rod Priority projects and solid billet) From 2015 to 2019, the state policy on development of non-ferrous metallurgy of • Cold rolling of strips and narrow strips the country will increase production of the base metals copper, gold, titanium and • Cold moulding and folding aluminium, and increase in production of wire rods, wires, rolled stock, alloys, • Production of wires by cold drawing foils, jewellery, and products for related industries. Priority projects From 2015 to 2019, the state policy on (Source – KAZNEX INVEST) the development of ferrous industry will be aimed at implementing priority areas for production of high quality raw materials to produce steel (granulated iron and hot briquetted iron, increase in production of new types of ferrous alloys), production of new types of steel (piped and corrosion-resistant, heat-resistant and hot-resistant, tool, ball bearing, rail and spring steel) and increasing the product line of highly alloyed steel.
(Source – KAZNEX INVEST) Visit the Website and download the free Mobile App Agriculture Green energy
Agriculture is important to the Kazakh There is huge potential in renewable economy, which is evident from the energy in Kazakhstan, in particular country’s ranking among the top 10 grain hydropower, solar and wind. With only producers in the world. The government about a 1% contribution to the Kazakhstan is looking for regional development and energy balance, it is evident that this for investment in crop development, sector is virtually untapped. The food production and animal processing. government has created a plan for 2050, with a target for renewable energy to meet Major areas of opportunity for UK 3% of the total demand by 2020, and 30% exporters and investors include: by 2050.
• supply of pedigree animals and Opportunities for UK companies include: genetic material, artificial insemination and embryo transplant technologies • project management services
• supply of seeds, feed premix and • consultancy services in green energy, vaccines waste management, energy efficiency
• agricultural machinery and software • engineering and construction services for onshore wind, solar, biomass • farm management technologies and power services • innovative equipment supply for • agricultural consulting services, such onshore wind, solar, biomass as pasture development
• cooperation between scientific Contact UKTI adviser Olga Protassova at: research institutions [email protected] , for more information on opportunities in the green • vocational education energy sector
• water saving technologies and sustainable irrigation/water supply (Source – UKTI) systems
• development of organic agricultural standards
Contact UKTI adviser Olga Protassova at: [email protected] , for more information on opportunities in the agriculture sector
(Source – UKTI)
www. Kazakhstan .Doing Business Guide .co.uk 39
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On course for success Choosing a great export training partner can really help your company take off in the export trade! We can help develop new ideas and find ways to drive down costs and produce sustainable improvements in your export business. • Membership supports all aspects of your international trade • Leading UK authority on trading globally • Tailored training to support your business needs • Expert solutions for international trade Exporting great ideas to you. Join us today Call: +44(0)1733 404 400 email: [email protected]
www.export.org.uk 23/4/15 10:01 Page 4
Doing Business in Kazakhstan
Education There are education opportunities for:
Since the creation of the Presidential • education resources Scholarship Bolashak in 1993, more than 3,000 students have studied as part • vocational training of undergraduate, postgraduate and doctoral programmes in the UK. • accreditation of programmes Visit: www.kazembassy.org.uk/en • English language training The government is developing technical and vocational education. The shortage • corporate training of local expertise in the oil and gas, and mineral resources sectors in Kazakhstan, has resulted in large numbers of expats Contact UKTI adviser, Larissa Glukhova being recruited. at: [email protected] for more information on education and training Kasipkor was established in 2011 to opportunities. develop world-class colleges in cooperation with international partners in Kazakhstan. (Source – UKTI) There is also the established network of 15 Nazarbayev Intellectual Secondary Schools (NIS). These schools deliver courses in 3 languages (Kazakh, Russian and English), use English language in senior classes, annually recruit teachers abroad, cooperate with Cambridge International Examinations on teacher and curriculum development, and cooperate with the Cambridge University Press on developing learning materials. Visit the website for more information at: www.nis.edu.kz/en
www. Kazakhstan .Doing Business Guide .co.uk 41 Why Michael Wilson & Partners, Ltd.? Michael Wilson & Partners, Ltd. (MWP) is a full service law practice and business consultancy with offices in both Baku and Almaty covering Azerbaijan, Kazakhstan, the Central Asian Region and the Caucasus. MWP was established in Kazakhstan in 1998 and in Azerbaijan in 2003.
Combining years of collective experience in the CIS, MWP’s key personnel have been actively practicing in this region for more than 20 years on a resident full-time basis, taking a leading role on many of the groundbreaking transactions in a variety of sectors. Today, MWP continues to maintain its position as the region’s largest independent law firm. MWP has a market-leading team of lawyers, which is widely recognised for the quality of advice given to clients on all aspects of their various projects.
Our practice areas increase/reduction, dividend Establishment, Reorganisation & distribution) Liquidationof Companies, Branches Corporate/M&A • Regulatory compliance and Representative Offices • Full or limited legal due diligence • Corporate governance issues • Drafting and negotiating sales • Corporate structuring such as directors’ duties and and purchase agreements • Assisting in establishing liabilities, board composition and • Advising and assisting with commercial and non-commercial effectiveness and general board obtaining all necessary legal entities in the form of policies government approvals, including limited liability partnerships, joint • Director and senior executive merger control advice stock companies, branches and remuneration structuring and representative offices in Central disclosure, including employee Competition Asia, including Kazakhstan and share plans and incentive Azerbaijan arrangements, and director • Advising on economic • Drafting all necessary foundation contracts concentration or merger control documents • Preparation for annual general • Cartels • Advising on and assisting with meetings and other shareholder • Abus e of dominance the reorganisation, liquidation meetings and communications • Regulation of natural monopolies and bankruptcy procedures • Capital management (capital • Antimonopoly litigation Employment Dispute Resolution Currency Control
• Consulting on labour issues • Advising on tax/transfer pricing • Advising on currency regulation • Advising on and assisting with disputes and appeals and currency control issues obtaining work permits for • Alternative dispute resolution, • Assisting with registration or foreign employees by mediation and pre-dispute notification of currency • Visa support settlement negotiations transactions • Employment dispute resolution • Civil and administrative litigation, • Structuring of foreign trade • Analysis of existing and drafting litigation with state authorities transactions employment agreements, • International and domestic collective employment arbitrations Forensics agreements, financial liability • Enforcement of judgments of agreements and confidentiality courts and foreign arbitral • Fraud investigations agreements compliant with each awards • Legal analysis and risk of Kazakhstan, Azerbaijan, • Representation before tax assessment of fraud Kyrgyzstan legislation authorities and in courts of law • Compliance review and • Review of all HR documentation assessment with both local for compliance with Kazakhstan, Capital Markets laws/regulations and internal Azerbaijan, Kyrgyzstan corporate policies/regulations legislations • Advising on equity and equity- • Expert witness statements in • Advising on application of linked securities issues disputes and litigation incentives and disciplinary • Advising on domestic and • Remedies measures to employees international offerings of debt • Work health & safety securities, Islamic finance • Full support during audits by transactions, sovereign debt the labour authorities offerings Contact: • Advising on IPO on the Contracts Kazakhstan and foreign In Kazakhstan: securities exchange markets • Drafting and negotiating various • Advising on licensing for Nurly Tau Business Center kinds of contracts, including professional activities on the 7th Floor, Building 1A FIDIC-based, GAFTA-based securities, investment fund and 5, Al-Farabi Avenue contracts insurance market 050059 Almaty • Checking contracts for • Advising on regulation of Kazakhstan compliance with Kazakhstan brokers/dealers, investment and Azerbaijan legislation funds, insurance companies and Tel: +7 (727) 258 48 90 other professional participants of Fax: +7 (727) 258 48 94 Mining and Energy securities market • Advising on ISDA Master Email: [email protected] • Advising on subsoil use Agreements and on structuring Website: www.mwp.kz regulations, procurement by and marketing of derivative subsoil users, pipelines products In Azerbaijan: • Assisting with negotiations on, • Advising on the structured and compliance with, subsoil use finance issues SAT Plaza, 9th Floor contracts 133 Bashir Safaroglu Street • Advising and assisting with Banking and Finance AZ 1009, Baku obtaining permissions and Azerbaijan consents for acquisition of a • Bank lending and acquisition share in a subsoil user finance Tel: +994 12 497 8948 • Advising on environmental • Banking regulation and capital Fax: +994 12 497 8947 regulations adequacy • Advising on licensing and • Asset finance, real estate Email: [email protected] permitting issues. finance, trade finance and other Website: www.mwp.az types of finance • Syndicated loans Contact name: • Bank restructuring and insolvency • Islamic finance Assel Kulisheva [email protected] KAZAKHSTAN
It is important to be pro-active in building relationships with central and local government officials which can only work to strengthen your business in Kazakhstan. It is recommended that companies recruit local staff who have previous experience of working with other Western companies, or who have been educated in the West. w w w . K a z a k h s t a n . D o i n g B u s i n e s s G u i d e . c o . u k 4 5 PREPARING TO EXPORT N A T S H
K Doing Business in Kazakhstan A Z A K
Preparing to export Having a competent Kazakh partner can help alleviate many of the day-to-day Start-up considerations problems that may be faced when first entering the market. For example, unannounced visits from local tax officials The three main ways to enter the Kazakh are common with Kazakhstan’s adversarial market are by either setting up a joint tax system, therefore it is essential to keep venture (JV) with a local partner/company, an accurate and detailed paper-trail. exporting via an agent or distributor or by establishing and setting up a new Be aware of petty corruption within the company. police and customs, which if handled incorrectly can have the potential to cause The investment laws in Kazakhstan companies major problems. are applicable to both local and foreign companies, and in the priority sectors, Administrative bodies are politically they provide some financial incentives influenced and there are regional variants for investment. Although the government in the application of regulations. officially promotes foreign investment in Kazakhstan, there are mixed views (Source – UKTI) within the country as to the benefits. The government does not always make market access easy for foreign companies, Establishing a company which is evident in the overly-bureaucratic administration of business. All legal entities, branches and representative offices in Kazakhstan are subject to state Companies should be cautious about registration. You can register online via the making a commitment to invest, as it is Electronic Government – visit: said that the real negotiations begin when www.egov.kz/wps/portal/Content?content - the contract is signed. It is essential to Path=/egovcontent/for_businessmen/ seek financial and legal advice from a passport/pass042_mu&lang=en company with local experience, and employ a reputable local accountant. Business enterprises in Kazakhstan can For legal advice please visit: www.mwp.kz be operated as either limited liability partnerships which are separate legal It is important to be pro-active in building entities and subject to taxation, joint stock relationships with central and local companies (JSC) where shareholders government officials which can only have no liability and about USD $500,000 work to strengthen your business in in capital is needed, a representative office Kazakhstan. It is recommended that which can only conduct activities such as companies recruit local staff who have marketing and advertising or a branch previous experience of working with other which can carry out commercial activity, Western companies, or who have been but is not a separate legal entity. educated in the West.
Visit the Website and download the free Mobile App Representative offices and branches must • Power of Attorney to the appointed also be registered with the relevant regional director (with notarised translation) department of the Ministry of Justice. • documents of Kazakh partner, if A newly registered representative office appropriate or branch must comply with certain formalities, including: A number of Kazakh private companies have become agents/distributors or • registration for value added tax (VAT) authorised dealers for foreign companies. If one of these companies is an option, • obtaining a seal (official stamp of the it is important not to rush into a long-term entity) agreement however, without first having developed a good working relationship • opening a bank account with your potential representative, due to the fact that many local companies have (Source – UKTI) limited experience of undertaking the role of an agent/distributor.
Market entry (Source – UKTI)
Like many administrative business processes in Kazakhstan, procedures for registration of an office are bureaucratic. Companies need to be patient, and local legal, accountancy and financial advice is essential in guiding you through the process.
The following documents will be required, as a minimum, when registering a legal entity:
• an application form to the Ministry of Justice
• a copy of the board minutes authorising the establishment of an office (with translation)
• the founding documents of the company (with notarised translation)
• registration certificate of the foreign company (with translation)
www. Kazakhstan .Doing Business Guide .co.uk 47
Doing Business in Kazakhstan
Registration of foreign citizens Work permits and employment of foreign workers When entering Kazakhstan, a foreign citizen gets migration card with entry You need a permit to work in Kazakhstan. marks from Border Control Department. The permit must be obtained by the Kazakh employer. The head of a Upon arrival in Kazakhstan, the foreign company established by investment or citizen should register with the Local by a representative office does not need Migration Police Department within 5 days. a work permit, but all other ex-patriate staff are required to have one. Passports of citizens from 48 developed and politically stable countries (see: There is a drive to increase local www.invest.gov.kz for the list of countries) employment in Kazakhstan, and the are registered automatically via one of the number of work permits available to following: foreigners is based on a calculation of the percentage of the working population • Visas for business/tourist/private/ and culminated into an annual quota. diplomatic/service registered in Applications for permits for individual consular offices of Kazakhstan abroad, ex-patriates are assessed against the availability of equally-qualified Kazakh • OR immediately registered on the candidates, which unfortunately can state border in Border Control often be biased, with level of experience Departments. of candidates given little consideration.
In either of the two aforementioned cases, (Source – UKTI) the foreign citizen does not need register with Migration Police. For more information on public employment Passports of foreign citizens are registered law in Kazakhstan, please visit: free of charge and executed for up to 3 www.adilet.zan.kz/eng/docs/Z010000149 months. (Source – KAZNEX INVEST) In case of delay and/or avoidance of registration, an administrative responsibility of a fine and/or exclusion from Kazakhstan is enforced, with the possibility of prohibition to enter Kazakhstan for 5 years after such exclusion.
(Source – KAZNEX INVEST)
www. Kazakhstan .Doing Business Guide .co.uk 49 KAZAKHSTAN
Kazakhstan is a republic, with the government and many large state companies based in the country’s capital city Astana, which has a fast-growing population. The city of Almaty is central to business in Kazakhstan, with a much larger population than the capital. w w w . K a z a k h s t a n . D o i n g B u s i n e s s G u i d e . c o . u k 5 1 HOW TO DO BUSINESS IN KAZAKHSTAN
N A T S H
K Doing Business in Kazakhstan A Z A K
How to do business in Kazakhstan Labels should include:
Legal considerations • product name
• manufacturer UK companies should seek professional legal advice when entering into • country of origin agreements in Kazakhstan. • information on date of production For legal advice please visit: www.mwp.kz or visit the GOV.UK website for a list of • period of validity English-speaking law firms in Kazakhstan: www.gov.uk/government/publications/ • storage conditions kazakhstan-list-of-lawyers-translators • usage (Source – UKTI) It is possible that for certain activities, your partner may need to obtain licences and/or Standards and technical regulations certificates from state authorities. As a member of both the International (Source – UKTI) Organization for Standardization (ISO) (www.iso.org/iso/home/standards.htm) and the International Laboratory Accreditation Recruiting and retaining staff Cooperation (ILAC), Kazakhstan is gradually adopting international standards. It is recommended that companies recruit The Committee on Technical Regulation local staff who have previous experience and Metrology (Gosstandart) of working with other Western companies, (www.memst.kz/en/) is responsible for or who have been educated in the West. technical regulation in Kazakhstan, and product certification is managed by the Regardless of the high level of government-owned National Center of unemployment in Kazakhstan, recruitment Expertise and Certification can be a problem, especially when looking (www.naceks.kz/en/) , who have for skilled and semi-skilled candidates created a hologram displaying the who speak fluent English. There is word ‘Memstandard’, which has been a poor standard of vocational education introduced as a symbol of compliance. in Kazakhstan, with skill training and Product manufacturers or sellers who development often designated to individual obtain a certificate of conformity, can employers. There are however, many use a mark of conformity. established reputable recruitment agencies in Kazakhstan. The majority of products imported into Kazakhstan should be labelled in both (Source – UKTI) Kazakh and Russian.
Visit the Website and download the free Mobile App Intellectual property (IP) • Land tax from legal entities
The National Institute of Intellectual • Property tax from legal entities and Property (Kazpatent) is responsible for individual entrepreneurs intellectual property. • Vehicle tax from legal entities Although Kazakhstan is a signatory and involved in the majority of prominent • Pension taxes, social deductions international agreements and conventions with a focus on intellectual property, (Source – KAZNEX INVEST) enforcement of the law is weak. VAT It is strongly advised that you consult with VAT is charged at 12% on most goods and lawyers and market entry specialists in services in Kazakhstan. It is also charged order to formulate a strategy for protecting on imported goods. your IP, prior to entering the market. For more information, please visit: Please be aware that VAT is chargeable www.kazpatent.kz/index.php/en on company turnover generated in Kazakhstan. (Source – UKTI)
(Source – UKTI) Tax considerations Corporate income tax A double taxation agreement between The Tax Code has a corporate income tax the UK and Kazakhstan has been signed: rate for tax residents of 20% on worldwide www.hmrc.gov.uk/manuals/dtmanual/dt110 income. An annual property tax of 1.5% 50+.htm. There is also an agreement of average annual balance sheet value for the promotion and protection of of property owned is payable by legal investments. corporate entities.
Basic taxes Corporate income tax and social tax at Entrepreneurial activity of a foreign aggregate rate of 3% of income can be investor is usually subject to the paid if the legal entity has: following taxes and duties: • an income not exceeding USD • Corporate income tax (CIT) $166,000 over a calendar quarter
• Individual income tax (IIT) • average number of employees not exceeding 50 • Mineral extraction tax (MET) (Source – UKTI) • Tax on excess profit
• Value added tax (VAT)
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s f s Doing Business in Kazakhstan
In the case of excess of cost or weight standards on goods for personal use, a payment of customs duties and taxes with CR (customs receipt) is made at the rate of 30%, but not less than €4 euros per kilo in excess.
In the case of non-referral of goods to goods for personal use, the regulations of the agreement do not apply, i.e. generally established rules of customs legislation are applied.
Import/export of currency, securities, bills and checks:
• Within the customs area of the CU – it is performed without any restrictions and customs declaration.
• The simultaneous import/export to/from the customs territory of the Customs Union of cash and/or traveller’s checks for a total amount exceeding the equivalent of USD $10,000. These cash and/or traveller’s checks are subject to a customs declaration in writing, by filing the passenger customs declaration for the entire amount of imported cash and/or traveller’s checks.
For more information, contact:
The State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan:
010000, Astana, 10 bld., Beibitshilik str. Tel: +7 (7172) 701487 / 709932 Official website: www.kgd.gov.kz
(Source – KAZNEX INVEST) www. Kazakhstan .Doing Business Guide .co.uk 57 KAZAKHSTAN
The official language is Kazakh, although Russian is the most widely-spoken and the first business language of Kazakhstan. It may therefore be advisable to arrange for any important documents to be translated into both Kazakh and Russian to ensure that you are fully prepared.
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T: 0115 9705633 | E: [email protected] | www.astlanguage.com Business etiquette, language and Culture culture Kazakhstan is a melting pot of Soviet, Language European and Asian customs. In meetings, the traditional term of address of Mr/Mrs/Miss followed by a surname is The official language is Kazakh, although the usual way of addressing your host, Russian is the most widely-spoken and the unless you are advised to do otherwise. first business language of Kazakhstan. It The culture is nominally Muslim; therefore may therefore be advisable to arrange for there is an instilled traditional respect for any important documents to be translated the elderly or in general older people. into both Kazakh and Russian to ensure Despite this, there is no ban on pork that you are fully prepared products or alcohol, which is widely consumed. English is the second business language, and although the understanding and use Meals are an important factor in business, of English is growing in Kazakhstan, it is often opening the door to other, more behind many other areas of the world in formal meetings with potential partners. terms of the frequency and ease of the It is customary to be served several use of English. When visiting prospective dishes, and it is considered a great honour business partners, it is important to confirm if you are offered the sheep’s head. Meals in advance whether they speak English, often include large quantities of vodka and therefore, whether or not you will and/or brandy, so be prepared to join in need an interpreter. It is advisable to have with several toasts and perhaps even double-sided business cards with some dancing! Russian on one side and English on the other. It is a good idea to build up relationships and long-term partnerships that will (Source – UKTI) generate the necessary mutual trust required to cement lasting business, as Kazakhstan is a market for those committed to staying there. Therefore, expect lengthy negotiations, which may seem to end abruptly and unexpectedly with a placed order or a proposed agreement.
(Source – UKTI)
www. Kazakhstan .Doing Business Guide .co.uk 61 InternationalInternational businessbusiness cancan bebe difficultdifffffiicult
For 49 years we’ve helped British companies succeed in global markets. Let us help you.
JoinJoin us.us.
VVisitisit wwww.britishexpertise.orgww.britishexpertise.org EEmailmail [email protected]@britishexpertise.org TTelephoneelephone ++4444 ((0)0) 2200 77824824 11920920 Doing Business in Kazakhstan
The need to engage with foreign What are the challenges? companies means that Kazakhstan presents an open market, but heavy The Kazakh Government has passed bureaucracy and corruption applicable legislation to encourage more local content at operational level mean that in practice, in terms of projects, personnel, contracts, doing business can be somewhat goods and services. Local content is challenging. Also, acquiring good market determined by the ratio of costs of goods intelligence and gaining contacts is not as that are verified as being Kazakh and by straightforward as it may be in many other the number of Kazakh nationals employed. areas of the world. There can often be a In sectors such as subsoil contracts local suspicion of initial business approaches content has actually been defined. You and tracking down the right people who should take this into consideration while are prepared to openly engage at an planning operations and activities in early stage can be very difficult, and Kazakhstan. experienced business partners can be difficult to find. There are a number of other challenges in Kazakhstan including the over-reliance of Companies will also be notably confronted the economy on the extractive sector, by over-regulation on top of frequently heavy regulation when filing tax, obtaining changing regulations, a pressure to credit or registering property; and the often play a corporately responsible role, the incorrect implementation at local level, necessity of permits for foreign workers, of new laws centred on business unannounced tax inspections and environment improvements. bureaucratic and difficult legal framework.
Despite the benefits of the ease of (Source – UKTI) starting a business in Kazakhstan, corruption remains a problem, with the th country ranked 126 out of 175 in the Corruption Perceptions Index (CPI). For more information please visit the website to view the full CPI report: www.transparency.org/cpi2014/results
You should ensure that you take the necessary steps to comply with the requirements of the UK Bribery Act. It may even be necessary to put procedures in place in order to prevent bribery. For full details about the UK Bribery Act, please visit: www.gov.uk/government/publications/ bribery-act-2010-guidance
www. Kazakhstan .Doing Business Guide .co.uk 63 KAZAKHSTAN
The UK is one of the top 5 largest investors in Kazakhstan. In 2014, bilateral trade between the UK and Kazakhstan equated to USD $1.2 billion.The main UK exports are oil and gas, education, financial and business services, healthcare and medical equipment, architecture and design services, as well as mining. w w w . K a z a k h s t a n . D o i n g B u s i n e s s G u i d e . c o . u k 6 5 RESOURCES N A T S H
K Doing Business in Kazakhstan A Z A K
The Institute of Export Export House Minerva Business Park Lynch Wood Peterborough PE2 6FT, UK
Tel: +44 (0) 1733 404400 Website: www.export.org.uk
KAZNEX INVEST
Please contact KAZNEX INVEST on weekdays from 09:00 to 18:30 (Astana time) or visit the website at: www.invest.gov.kz
Pre-investment work: Contact name: Contact name: Mr. Rakhat MUKHTAROV Ms. Saltanat TURSYNOVA Position: Managing Director Position: Manager
Tel: +7 (7172) 91 90 40 (ext. 1112) Tel: +7 (7172) 91 90 40 (ext. 1071) Email: [email protected] Email: [email protected]
Investors support center (Investment For further contact details, please visit: Ombudsman): www.invest.gov.kz/?option= Contact name: Mr. Galym KALMENOV content&itemid=256 Position: Manager (Source – www.invest.gov.kz) Tel: +7 (7172) 91 90 40 (ext. 1094) Email: [email protected]
Visit the Website and download the free Mobile App UKTI Kazakhstan
Contact the UKTI team in Kazakhstan for more information and advice on opportunities for doing business in Kazakhstan:
UK Trade & Investment Kazakhstan Embassy of the Republic of Building Business Centre Renko, 6 floor Kazakhstan to the United Kingdom 62 Kosmonavtov Street of Great Britain and Northern Ireland Astana 125 Pall Mall 010000 London Kazakhstan SW1Y 5EA UK Email: [email protected] Telephone: (00)+ 7 7172 556 200 Tel: +44(0)207 925 1757 Fax: +44(0)207 930 8990 Email: [email protected]
Visit the website at: www.kazembassy.org.uk/en
(Source – UKTI)
www. Kazakhstan .Doing Business Guide .co.uk 67 C C s p a w B C U w U w E w T w T w H w C w F p R E E u E c u o r b r k r h C B x c x x u u w o M w I w e w K w w w w o o s a L p - n r e p o p p s l u g O C
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g n u s e o f r u l m t a e k i
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u m . r i b p
o u s v b ) ( r x l : n i : f k l o c i o . s e a h r / s d t m / Doing Business in Kazakhstan
International Trade: British Chambers of Commerce: www.britishchambers.org.uk Gov.uk: www.gov.uk/browse/business/ imports-exports IoD (Institute of Directors): www.iod.com OECD: www.oecd-ilibrary.org CBI (Confederation of British Industry): Overseas business risk: www.cbi.org.uk www.gov.uk/government/collections/ overseas-business-risk Institute of Export (IOE): www.export.org.uk Transparency International: www.transparency.org British Expertise: www.britishexpertise.org World Bank Group economy rankings: www.doingbusiness.org/rankings Department for Business, Innovation & Skills (BIS): World Economic Forum Global www.gov.uk/government/organisations/ Competitiveness report: department-for-business-innovation-skills www.weforum.org/reports/global- competitiveness-report-2014-2015 UKTI e-exporting programme: www.gov.uk/e-exporting UK Trade & Investment: www.gov.uk/government/organisations/ Source – UKTI uk-trade-investment
Additional Useful Links
UK Trade & Investment: www.gov.uk/government/organisations/ uk-trade-investment
Foreign & Commonwealth Office: www.gov.uk/government/organisations/ foreign-commonwealth-office
British Council: www.britishcouncil.org
Trade Tariff: www.gov.uk/trade-tariff
www. Kazakhstan .Doing Business Guide .co.uk 69
Doing Business in Kazakhstan
Trade Shows
A trade show is a method of promoting a business through the exhibition of goods and services, an organised exhibition of products, based on a central theme, where manufacturers meet to show their products to potential buyers.
Taking part in overseas exhibitions is an effective way for you to test markets, attract customers, appoint agents or distributors and make sales. UKTI's Tradeshow Access Programme (TAP) provides grant support for eligible SME firms to attend trade shows overseas.
Participation is usually as part of a group, a great advantage for inexperienced businesses, and is usually led by one of UKTI's Accredited Trade Association (ATOs). ATOs work with UKTI to raise the profile of UK groups and sectors at key exhibitions.
For more information, see the links below:
10 Times (formerly BizTradeShows.com) : www.10times.com/kazakhstan
British Expertise Events: www.britishexpertise.org
EventsEye.com online database: www.eventseye.com
UKTI online events search facility: www.events.ukti.gov.uk
www. Kazakhstan .Doing Business Guide .co.uk 71
N A T S H K A Z A K
Disclaimer
Whereas every effort has been made to In particular, none of the report's contents ensure that the information given in this should be construed as advice or guide is accurate, neither the Institute solicitation to purchase or sell securities, of Export (IOE), Invest in Kazakhstan, commodities or any other form of financial International Market Advisor (IMA), The instrument. No liability is accepted by British Embassy in Astana or UK Trade the Institute of Export (IOE), Invest in & Investment (UKTI), accept liability for Kazakhstan, International Market Advisor any errors, omissions or misleading (IMA), The British Embassy in Astana or statements and no warranty is given UK Trade & Investment (UKTI), for any or responsibility accepted as to the loss or damage (whether consequential standing of any individual, firm, company or otherwise) which may arise out of or in or other organisation mentioned. connection with the report. No warranty is given, or responsibility accepted as to the The purpose of this Doing Business standing of any individual, firm, company Guide, prepared by International Market or other organisation mentioned. Advisor (IMA) and produced by the Institute of Export (IOE), is to provide Contains public sector information information to help recipients form their licensed under the Open Government own judgments about making business Licence v3.0. decisions as to whether to invest or operate in a particular country. The report's contents were believed (at the time that the report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by the Institute of Export (IOE), Invest in Kazakhstan, International Market Advisor (IMA), The British Embassy in Astana or UK Trade & Investment (UKTI), as to the accuracy of the report, its completeness or its suitability for any purpose.
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