KazCham

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Central Asia’s largest transport and logistics centre has been launched in Astana, Kazakhstan.

The country’s railway operator, Kazakhstan Railways, has said that the centre will provide integrated storage services with a full cycle of multi-modal logistics.

Transport and logistics centres will also be built in other major cities in Kazakhstan, such as Aktobe, Pavlodar, Almaty, Uralsk, Atyrau, Kostanai and Semey as part of a programme to create external and internal terminal networks.

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In a major legislative development, Kazakhstan is implementing a new law on public-private partnerships. As such, our team has prepared an extended overview of the major aspects of this new law, which is due to enter into force next week on 23 November 2015.

Kazakhstan’s President Nazarbayev has signed the Law “On Public-Private Partnership” (the “Law”) which provides for the conditions of cooperation between the state and private businesses in Kazakhstan. The law is aimed at ensuring the country’s sustainable social and economic development and will enter into force on 23 November 2015.

The Law regulates the main approaches and phases for the implementation of public-private partnership (PPP) projects, and outlines the challenges, principles and defining characteristics of PPPs. It also provides guarantees for the rights and interests of the participants of PPPs, the forms of their participation in projects and the means of state support.

The participants of PPPs include: (i) the state (ii) entrepreneurs and (iii) financial organisations that provide project financing. The Law stipulates the conditions for sources of financing for PPP projects, the reimbursement of expenses to subjects and income generation.

The Law also stipulates that a private partner may be selected on the basis of (i)a tender or (ii) direct discussions. It also defines the qualification requirements that a potential private partner must satisfy in order to participate in a tender process, the conditions for a tender process and the procedure for the conclusion of PPP agreements.

Specifically, the new definitions include the following:

• “Private partner” – a sole entrepreneur, partnership, consortium or legal entity, except for persons acting as public partners in accordance with the Law, entered into a public-private partnership agreement;
• “Public partner” – the Republic of Kazakhstan, on behalf of which the Government of the Republic of Kazakhstan or local executive body of the region, city of republican status and the capital, as well as their other authorised state authorities and subjects of quasi-public sector, 50% and more of voting shares (interests in the charter capital) of which are directly or indirectly owned by the state, concluded a public-private partnership agreement;
• “Public-private partnerships” – a form of cooperation between the public and private partners corresponding to the characteristics defined in the Law;
• “Direct agreement” – a written agreement between the public partner, private partner and creditor of a private partner for the implementation of a public-private partnership project of special importance.

In addition, President Nazarbayev has signed the Law “On amendments and additions to some legislative acts of the Republic of Kazakhstan as to the public-private partnership”. The purpose of this legislative act is to bring current Kazakh legislation into compliance with the new Law.

This Law is also aimed at implementing some of the “100 Concrete Steps” and regulates the issues involved in attracting investment for the construction of infrastructure for the Kazakh population.

EBRD

EBRD loan and grants from central and local governments will help improve drinking water, cut waste.

The EBRD and the government of Kazakhstan are continuing to support water and wastewater modernization in the country with a financing package to upgrade the water supply in Taraz, a city of over 300,000 people and a provincial capital of the Jambyl region in the south of Kazakhstan. The project will also be supported by the city.

The EBRD will lend 1.05 billion tenge (€3.2 million equivalent) which will enable the municipal water and wastewater company SCE Taraz Su to modernize the water systems in the city to make them more energy efficient and reduce water losses.

The government of Kazakhstan is providing an investment grant of up to 945 million tenge (€2.9 million equivalent) and the local government – the city of Taraz – is extending a grant of up to 105 million tenge (up to €320,000 equivalent).

The project will be carried out under the umbrella of the Enhanced Partnership Arrangement between the EBRD and the government of Kazakhstan. Under that agreement, the government and the Bank are joining forces to modernize municipal and environmental infrastructure across the country.

The regional authorities – the oblast and city akimats –also intend to sign a project support agreement to facilitate the municipal company’s corporate reform plan, which is part of the EBRD-financed project. The company will aim to improve cost recovery for its services, promote water meters, improve internal audits and introduce an environmental and social action plan.

Janet Heckman, EBRD Director for Kazakhstan, said: “The EBRD and the government of Kazakhstan support a range of public utilities, from district heating to transport, in over 10 regions but we believe water and wastewater modernization, which directly benefit the lives of citizens, are of special importance.”

To date, the EBRD has invested over US$ 7 billion in Kazakhstan’s economy. In 2015 the EBRD is planning to invest close to US$ 1 billion in various sectors, with a focus on diversification.

Business Intelligence

Kazakhstan is keen to build a terminal at the Mundhra port on India’s western coast, which would provide direct connectivity with Iran’s Bandar Abbas port and thereby help Indian goods get direct access to Central Asia and beyond via the Iran-Turkmenistan-Kazakhstan railway line.

“The due diligence report for the Mundhra terminal is being done, and after that they will take a decision on completing the contract,” said Kazakhstan’s Ambassador to India, Bulat Sarsenbayev. “The Mundhra project is very important. Once completed it will change the whole logistics of moving goods from India to Kazakhstan and through Kazakhstan to Central Asia, to Russia, China and Europe.”

The 930km Kazakhstan-Turkmenistan-Iran railroad link connecting Central Asia to the Persian Gulf was inaugurated in December 2014. The railway line is part of the ambitious International North South Transport Corridor (INSTC), which is a ship, rail, and road route for moving freight between India, Russia, Iran, Europe and Central Asia.

Rough Guides

Straddling the cultural crossroads between Europe and Asia, Kazakhstan is an intriguingly cosmopolitan place. This vast country, which stretches from the Caspian Sea to China, is one of Asia’s most diverse, where ethnic Kazakhs and Russians rub shoulders with Uzbeks, Ukrainians, Tatars, Germans and many more in an enviably harmonious mix.

Almaty, its biggest city, may have ceded capital status to its flashy young rival, Astana, but it remains the country’s cultural and financial center, and custodian of the Kazakh soul. Spectacularly set beneath the snow-capped peaks of the imperious Zailysky-Alatau mountains, it’s a relaxed, pleasantly green city of fancy malls and fountains, black-windowed SUVs and broad, busy boulevards. It’s the sophisticated, modern hub of a booming petro-economy for sure, but one with enough surprises to make Almaty a highlight of any visit to Kazakhstan.

1. You can get a taste of life on the Silk Road

There’s no better introduction to Kazakhstan’s multifaceted ethnic patchwork than the bustling Green Bazaar market hall, where traders from across Central Asia and as far afield as Korea gather to hawk their wares.

Fresh produce is abundant: the foothills around Almaty lay strong claim to be the ancestral home of the apple (the city’s name literally means “father of the apple”) and the fruit here can grow to giant proportions.

Don’t miss sampling kurt, pungent but curiously addictive balls of dried cheese beloved of nomads out on the Kazakh steppe, though only strict meat-eaters should venture to the cavernous butcher’s hall, where long counters drip with slabs of horsemeat, undoubtedly the local favorite. Finish off with a glass of fresh kvas, a soft drink made from fermented bread, from one of the stalls outside. It knocks the socks off the widely available commercially produced bottles.

2. The ski slopes are fit for royalty

Barely half an hour’s drive from the city, the ski resort of Shymbulak hit the headlines in 2014 when Prince Harry took then girlfriend Cressida Bonas for a spin on the slopes. The resort is unexpectedly ritzy, and the skiing among the best in Central Asia. Almaty’s chilly, sunny winters guaranteeing cold, crisp snow well into April and invariably good conditions.

At any time of year, it’s well worth escaping the city smog to ride the 4km series of ski lifts, with their fetching leopard-print cabins (in homage to the seldom-seen snow leopards that still roam these mountains), up to the 3180-metre Talgar Pass. Various rocky hiking trails lead up into the surrounding peaks, snow-capped even in summer, and the views are spectacular.
3. You can visit the world’s second tallest wooden building

Flattened by earthquakes more than once, Almaty is not a city awash with historic buildings. Standing proudly defiant in leafy Panfilov Park, one dazzling exception is the Cathedral of the Holy Ascension – a confection of pastel-hued gables, brightly painted tiles and gilded domes – that rises almost 60m and was built without a single nail.

A magnificent gilt altarpiece dominates the opulent interior, where (predominantly) women – their heads covered in beautiful scarves – light candles and worship in hushed reverence. It’s a great place to experience Kazakhstan’s refreshingly open attitude to religion: Muslims and Atheists often visit along with their Russian Orthodox friends.

4. There’s some impressive socialist realist art and architecture

A stone’s throw from the Ascension Cathedral, Almaty’s Soviet War Memorial looms dramatically in front of the forbidding bulk of city’s former army headquarters: a powerfully built, jutting-jawed Red Army infantryman leaps, grenade in hand, from a relief of grim-faced soldiers. Oddly this is the city’s prime favored spot for wedding pictures.

For a more nuanced taste of Soviet art, head to the Kasteyev State Arts Museum, undoubtedly the city’s finest. The museum is named after Abilkhan Kasteev, regarded as Kazakhstan’s preeminent painter, and among the vast collection is a fascinating room devoted to his depictions of Soviet life, from epic canvases of the rapidly industrializing landscape to intimate portraits of peasant life.
5. The Russian baths are the finest in Central Asia

Perhaps Almaty’s one truly unmissable experience, the Arasan Baths complex is the most elaborately styled bathhouse in the region, built in the 1980s as a grand statement of late Soviet ambition. Pick up a towel, slippers and conical felt shapka (hat) and leave your modesty behind in the changing room.

There’s a Finnish sauna and a marble Turkish hammam but they’re invariably empty – you’ll find your fellow bathers in the ferociously hot Russian parilka (steam room), vigorously thrashing each other with vyeniki(bundles of oak or birch leaves), a wince-inducing ritual said to improve circulation.

The masochism doesn’t end there though: once out of the parilka, it’s de rigueur to upturn a pail of gasp-inducingly cold water over yourself. Finish up with a refreshing dip in the cool plunge pool, beneath a domed atrium so grand it wouldn’t feel out of place in imperial Rome.

Edward travelled to Almaty with Air Astana, who fly from London to Almaty via the capital, Astana, three times per week (from £370). Visa-free travel to Kazakhstan for visits of up to fifteen days is now available for nationals of nineteen countries, including the US, UK, Australia and others.

The Astana Times

Shymbulak Ski Resort tops the list of most popular destinations in the Commonwealth of Independent States (CIS) and neighboring countries.

Tourists traveling in CIS countries view the Kazakh resort near Almaty as the perfect destination for winter holidays, according to the online hotel booking service Oktogo.ru. The rating is based on data collected and the early reservations for the upcoming New Years’ holidays from Jan. 1-10.

Altai Alpes, located in East Kazakhstan, is also included on the list of the one-time Soviet Union’s most popular ski resorts.

Shymbulak is located in the picturesque Medeo Valley, which is also known as the home of the highest outdoor skating rink in the world. The beautiful resort is surrounded by woods and is just a few kilometers outside the city. The area offers a wide variety of slopes, from simple, gentle hills suitable for beginners to those with a 45-degree angle for professionals and daredevils.

This year there will be available two tracks: the blue one for beginners and black one for professionals. The measure is designed to ease the orientation and make skiing more enjoyable for all guests.

 

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In its October oil market report OPEC has forecast that Kazakhstan’s oil production will decrease by 20,000 barrels per day in 2015 to an average of 1.62 million barrels per day. In contrast, OPEC predicted in its earlier September oil market report that Kazakhstan’s oil production would decrease by 10,000 barrels per day in 2015.

Moreover, OPEC revised a forecast for Kazakhstan’s oil production for 2016. In its October oil market report, OPEC projected that oil production in Kazakhstan will decline by 30,000 barrels per day to an average of 1.57 million barrels per day in 2016, an upward revision of 10,000 barrels per day from the previous month’s forecast.

The report also noted that different sources have said that Kazakhstan’s giant Kashagan project is unlikely to start production before mid-2017.

Kazakhstan mainly produces oil from its largest Karachaganak and Tengiz oil fields.

Astana Times

Some might say this barren spot on the border between Kazakhstan and China is in the middle of nowhere. And they would be forgiven, for there were only a handful of people and cars spotted along the 300-km, five-hour train ride from Almaty to the nearby Altynkol station (that is, once you get out of the heavily-populated 40-50 km radius around Almaty beyond Zhetygen).

Others, like Belgian-born Karl Gheysen, Director General of KTZE–Khorgos Gateway, who is in charged with developing the place into a modern transport and logistics hub, call it “the new Dubai.”

It is the term Gheysen, who comes from Dubai Port World, the world’s third-largest container handler hired by Kazakhstan Temir Zholy (KTZ) national railway company to help it develop the hub, used again and again during the Oct. 19 presentation arranged on the spot for visiting foreign ambassadors and reporters.

“The story of Khorgos today is the story of Dubai some twenty years ago: back then, it was a small fishing port which then grew into what it is today because of the development of the shipping industry,” Gheysen told the visitors. “This is what is already happening here at Khorgos.”

Speaking to a packed hall of approximately 50 ambassadors and senior diplomats from different countries, as well as about 50 foreign and local reporters, Gheysen brought up a simple real-life example to show how shipping across Eurasia, not around it, is fast becoming much quicker and more profitable.

According to Gheysen, a Japanese car manufacturer producing cars in Japan chose to import cars into Kazakhstan. To ship them, the manufacturer loaded them on a ship in Japan which then sailed all the way under India, through the Suez Canal, through the Mediterranean, through Gibraltar, around Western Europe, past England and into the North Sea followed by the Baltic Sea. Once in Finland, the cars were taken ashore, loaded onto trains and shipped to Moscow. There they were handled, checked through customs, etc., before being loaded onto trains to be shipped to Kazakhstan. He declined to give numbers as to how much such a lengthy trip costs in terms of money and time, but he was keen to stress that shipping the cargo across China into Kazakhstan directly by train would take only five days and surely be more cost effective.

It is exactly this kind of container traffic that the Kazakh officials and managers at KTZ are aiming to attract with the development of the city as the critical milestone along the newly-revived Great Silk Road. Their feelings are mirrored by the Chinese, as all the developments are being done through the agreements between the two countries.

Both Astana and Beijing view the city as a key transit hub for handling cargo between China and Europe under China’s New Silk Road strategy, which aims to rebuild trade links across Eurasia. It fits perfectly well with Kazakhstan’s own Nurly Zhol infrastructure development program announced a year ago by President Nursultan Nazarbayev. Kazakhstan’s accession to the World Trade Organization, which is set to be effective this year, and its membership in the Eurasian Economic Union with its focus on the freedom of movement of goods and services, also bode well for the plans to develop Khorgos into a major hub in the heart of Eurasia.

Linking together the newly built Zhetygen–Khorgos railway line, the Western Europe-Western China road corridor and the Aktau port on the Caspian Sea, Khorgos–Eastern Gate special economic zone (SEZ) is seen as an important center for the consolidation and distribution of cargo flows along the New Silk Road and is expected to further Kazakhstan’s integration into the world transport and trade system.

KTZ took control of the development of Khorgos in mid-2011. Since then, numerous international agreements have been signed to develop the place and its various facilities. On Oct. 19 by KTZ Vice President Kanat Alpysbayev, the Kazakh government and the railroad invested in the range of $500 million to develop the Khorgos-related infrastructure, including for the construction of the Zhetygen-Khorgos rail line commissioned in 2011-2012.

Gheysen said the loading facilities at the so-called Dry Port KTZE-Khorgos Gateway, the first of its kind in Kazakhstan, offer an effective and economical option for transporting goods through the New Silk Road. Agreements have already been signed with companies such as Hewlett Packard (HP), Toyota, FESCO, DBSchenker and Bravis to compose container trains that will go through the Altynkol station and be handled by the Khorgos-Eastern Gate SEZ. Overall, Gheysen said around 25 companies “from all over Europe” have already signed agreements or memoranda of understanding with the zone’s developers willing to use this new route for delivery of their goods.

Sanzhar Elubayev, President of KTZExpress, a KTZ subsidiary, also stated at the presentation of the Khorgos International Cross-Border Cooperation Centre (ICBCC).

The ICBCC project opens up additional opportunities for expansion of international trade and the development of the tourism industry with the formation of the territory of the visa-free regime, attracting business community, tourists from near and far abroad, he said. At present, citizens of both countries can visit Khorgos ICBCC visa-free for up to 30 days at a time and there are no limits on the number of such visits. They can buy at ICBBC and duty-free import 1,500 euros ($1703.10) worth of goods weighing less than 50 kilograms to their own country.

Under this program, five investment projects to build export and import trade operations have been launched and 10 more projects are under consideration, said Elubayev in his presentation. The total volume of investment projects in the first phase is $300 million, he explained, and potential investors are welcome.

KTZ expects traffic volume between the Far East and Europe to reach around 170 million tons by 2020, also said Alpysbayev. He explained that the plan is to position the city to capture around 10 percent of trade between the Far East and Europe and added that the newly created infrastructure would allow shipping up to 40 million tons of cargo annually.

Foreign Minister Erlan Idrissov also highlighted that “Kazakhstan has been advocating for abandoning the philosophy of the Great Game and embracing the philosophy of the Great Gain for all. The strengthening of Kazakhstan’s role as a bridge between Asia and Europe is in our raw economic interest and initiatives such as the Silk Road Economic Belt will create a wealth of opportunities in the region and beyond. We are convinced that the development of trade and transportation links in the region has enough room to satisfy the interests and benefit all – Russia, China, the West, and, obviously, Kazakhstan.”

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Pakistan and Kazakhstan agreed on Wednesday to enhance cooperation between the two countries in various fields including economy, trade, energy, science and technology, and defence.

The agreement came during Pakistan Prime Minister Nawaz Sharif’s official visit to Kazakhstan.

The Pakistan prime minister also invited Kazakhstan to join the Chinese-Pakistani transport system, which will provide access to the warm waters of the Persian Gulf for Kazakhstan and other Central Asian countries.

Speaking to journalists after his talks with President Nazarbayev, Sharif said that Pakistan would be happy to import natural gas and oil from Kazakhstan. He also said that his country is interested in concluding an agreement on a free trade zone with the Eurasian Economic Union of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia

PwC Kazakhstan

Free trade zone agreement between Vietnam and the EEU The agreement signed on 29 May 2015 contemplates a decrease in import customs duties, obligations to protect intellectual property, collaboration in electronic commerce and state procurement and unified principles for competition. The agreement will take effect 60 days after being ratified by all EEU members and Vietnam.

Free trade zone agreement between the India and the EEU In June The EEU and India signed a statement to consider a free trade zone agreement.

The EEU has received proposals to sign FTAs from over 30 countries and regional associations.

Mutual access to national stock exchanges in the EEU In June Mr. Timur Suleimenov, the Minister of Economy and Financial Policy of the EEC, stated that participants of the EEU will provide mutual access to national stock exchanges in 2016. This should encourage integration of financial markets and encourage new joiners.