Newsletter Kazakhstan October 2019
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Economic Newsletter on Kazakhstan |October 2019 CONTENTS MACRO-ECONOMICS & FINANCE ......................................................................................2 ENERGY & NATURAL RESOURCES ......................................................................................7 TRANSPORT & COMMUNICATIONS................................................................................ 15 AGRICULTURE ................................................................................................................. 17 WASTE MANAGEMENT .................................................................................................. 19 EXHIBITIONS IN KAZAKHSTAN (November 2019) ........................................................... 21 CONTACTS ...................................................................................................................... 22 The Economic Section of the Embassy of the Kingdom of the Netherlands in Kazakhstan intends to distribute this newsletter as widely as possible among Dutch institutions, companies and persons from the Netherlands. The newsletter summarises economic news from various Kazakhstani and foreign publications and aims to provide accurate information. However, the Embassy cannot be held responsible for any mistakes or omissions in the bulletin. ECONOMIC NEWSLETTER, October 2019 Embassy of the Kingdom of the Netherlands MACRO-ECONOMICS & FINANCE Prime Minister of Kazakhstan Askar Mamin visited the Netherlands On 30 October 2019, Prime Minister of Kazakhstan Askar Mamin paid an official visit to the Netherlands. As part of his official visit to The Hague, Prime Minister Askar Mamin met with Dutch Prime Minister Mark Rutte and attended the opening of the Kazakhstan– Netherlands Business Forum. During the meeting with Mark Rutte, prospects for further development of trade, economic and investment cooperation, interaction in the energy, financial, transport and logistics, agricultural, IT and scientific fields were discussed. “The first President of the Republic of Kazakhstan Nursultan Nazarbayev laid the foundation for stable partnership relations between Kazakhstan and the Netherlands. The Head of State Kassym-Jomart Tokayev maintains the continuity of a multi-vector peace-loving foreign policy and pays special attention to strengthening bilateral cooperation,” Mamin said. The Netherlands is one of the key trade, economic and investment partners of Kazakhstan in Europe. Over the years of independence, the gross inflow of direct investment from the Netherlands to Kazakhstan exceeded $92 billion. Over 900 enterprises with the participation of Dutch capital operate in Kazakhstan. At the end of 2018, bilateral trade amounted to $6.5 billion. In turn, Mark Rutte expressed his confidence that the official visit of the prime minister of Kazakhstan to the Netherlands would give a significant impetus to the further development of bilateral cooperation. The prime ministers of Kazakhstan and the Kingdom of the Netherlands attended the opening of the 5th Kazakhstan-Netherlands Business Forum, in which five documents were signed in the presence of the heads of government of the two countries. The prime minister met with representatives of the Dutch companies Shell, Bitfury, Suez Group, Farm Frites, Dutch Fruit Solutions Kazakhstan, with whom they discussed the prospects for implementing projects in Kazakhstan in the field of energy, data processing and blockchain technology, education, agricultural processing, etc. The prime minister visited the World Horti Center, the center of knowledge and innovation for international greenhouse gardening, and got acquainted with the activities of Hardt Hyperloop, which is developing a new transport system, Hyperloop, which allows you to move shuttle capsules through lightweight steel pipes with speeds up to 1 thousand km / h, according to www.government.kz. 2 ECONOMIC NEWSLETTER, October 2019 Embassy of the Kingdom of the Netherlands Kazakhstan’s GDP growth in 2019 exceeds 4% In the medium term, the Government’s efforts to improve the business climate along with smooth political liberalisation, solid investments and pension reform can enhance potential economic growth by up to 4% Renaissance Capital Investment Company and Gazprombank forecast economic growth in Kazakhstan at 4% and 4.2% in 2019, respectively, Interfax-Kazakhstan reported. “The growth is due to consumption and investments, which are supported by fiscal stimulus and the restoration of consumer and business confidence against the background of smooth transit of power. (...) In the medium term, efforts to improve the business climate, together with smooth political liberalisation, solid investments and pension reform, can enhance potential economic growth by up to 4%,” the investment company’s economic study said. According to the company, sluggish export flows, strong import growth amid rising incomes and a sharp increase in demand for foreign currency in the first half of 2019 against expectations of currency depreciation before the presidential election, led to a depreciation of the tenge by 5% compared with a year ago. Renaissance Capital suggests that in 2020, tenge may strengthen by 3-4%. “We believe that the base rate will rise to 9.5% in 2020. An increase in real interest rates can at least partially offset the 5% jump in dollarisation of deposits in 2019 and, thus, support the appreciation of the tenge by 3-4%,” the company explained. Analysts note that privatisation remains one of the top priorities of the Government’s agenda, believing that 2020 could be the year of activation of IPOs and SPOs of Kazakhstani companies, opening up new opportunities for investors. Gazprombank analysts note that the economy of Kazakhstan is showing growth rates that exceed their expectations. In their opinion, the country’s strong economic indicators in January-September 2019 are due to the acceleration of industrial production growth, record-breaking construction rates, the expansion of domestic demand, which is supported by the growth of real incomes and the continued high growth of investments. “The growth of the economy of Kazakhstan in 2019 will amount to 4.2% against the backdrop of strong consumer demand and high investment activity,” analysts of Gazprombank said. Earlier, the World Bank improved the forecast for Kazakhstan’s GDP growth in 2019 to 3.9%, to 3.5% in 2020 and to 3.7% in 2021. In the spring of this year, the World Bank predicted Kazakhstan’s economic growth at 3.5% in 2019. The Asian Development Bank also raised the forecast for Kazakhstan’s GDP growth in 2019 to 3.7% and to 3.4% for 2020. In 2018, Kazakhstan’s GDP grew by 4.1%. According to the approved socio-economic forecast of Kazakhstan, the country’s GDP growth in 2019 is expected to reach 3.8%. In July, Director of the Department of Macroeconomic Analysis and Forecasting of the Ministry of National Economy Askar Japarkulov said that the growth of the economy of Kazakhstan in 2019 could turn out to be more than the planned level and exceed 4%, In Business reports. Kazakhstan jumps three spots to 25th in World Bank Doing Business Report Kazakhstan moved up three spots to 25th on the World Bank Doing Business 2020 report, according to the report published on October 24. Kazakhstan made improvements in issuing permits, ease of getting a loan and starting a business. However, difficulties in registering property and resolving insolvency remain, according to the report. “Improving the position of Kazakhstan in the Doing Business rating was made possible thanks to the ongoing systematic work of the government to reform existing legislation, improve the licensing system, simplify business creation procedures, optimise state control and oversight activities and improve the business climate,” according to comments on Kazakh Prime Minister Askar Mamin’s website. The moving up in the ranking became possible as Kazakhstan made starting a business easier by registering companies for value added tax at the time of incorporation. Another 3 ECONOMIC NEWSLETTER, October 2019 Embassy of the Kingdom of the Netherlands improvement was in the strengthened access to credit by automatically extending security interests to the products, proceeds and replacements of the original assets and by giving secured creditors absolute priority during insolvency proceedings, states the ranking report. Kazakhstan also improved access to credit information by reporting credit data from retailers, made dealing with construction permits easier by streamlining the expert evaluation of the construction project and by improving the process for obtaining a new water connection. At the same time, some difficulties of doing business in Kazakhstan remain unsolved or exacerbated by new policies, notes the report. “Kazakhstan also made transferring property more difficult by requiring additional proof of payment of state duties. Furthermore, Kazakhstan made resolving insolvency more difficult by requiring that all creditors vote on the rehabilitation plan, regardless of its impact on their interests,” states the report. In the new rankings, Kazakhstan is ahead of Iceland (26th place), Austria (27th place), Russia (28th place), Japan (29th place), Spain (30th place), Armenia (47th place), Belarus (49th place), Kyrgyzstan (80th place) and other countries. The top-ranking countries on the Doing Business index are New Zealand, Singapore and Hong Kong. The World Bank annually publishes the rating of 190 countries on favourable business conditions. The analysis involves