Constitutional Law of the Republic of Kazakhstan on the Astana International Financial Center (hereinafter referred as Law), which defines legal framework of functioning of the AIFC, was enacted on December 7, 2015. In order to implement the Law, the Regulations of the AIFC Management Council and its membership and borders of the AIFC were approved by Presidential Decrees № 160 and № 161 dated 31 December 2015. The same day, the National Bank of the Republic of Kazakhstan capitalized KZT 1.7 bln. (4.8 mln. US dollars) of JSC AIFC Authority, established on Dec.
28, 2015, with transfer of tenure rights of the stock of share to the Ministry of Finance of the Republic of Kazakhstan.
The AIFC will be located on the infrastructure base of the international exhibition EXPO 2017.
Key strategic directions of the AIFC activity are the following:
1) Capital market;
2) assets management market and its expertise;
3) welfare management of individuals;
4) islamic financing (issue of Islamic securities sukuk, introduction of “Islamic windows” in the traditional second-tier banks, creation of conditions for the conversion of the banks and guaranteeing of deposits);
5) alternative financing (funds of direct investments, hedge funds, venture capital).
In addition, an issue of development of such widely used in the western trading floors financial instruments as Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN) will be addressed.
In order to improve business and investment attractiveness of the AIFC, the following measures will be provided:
1) Tax exemptions for a period of 50 years (zero rates of corporate income tax, individual income tax, real estate tax);
2) Simplified exchange rate regime, visa and labor regimes;
3) An independent legal system, based on principles of Common Law and similar to the world`s leading financial centers;
4) English as the official language of all AIFC activity (public relations, legal proceedings, transactions);
5) Connection with key financial centers around the world via direct flights.
Astana will position itself as a major financial centre for Central Asia, the Caucasus Republics, EAEU, countries of the Middle East and Europe. The creation of the AIFC will accommodate the growing financial needs of the region in accordance with international standards. To achieve this the country possesses all necessary internal and external competitive advantages (geographical location, economic and political stability, favorable tax climate). In general, the AIFC can be attractive for foreign partners with regard to transfers of the assets and its subsequent investment to perspective projects of post-Soviet countries.
Activities of the AIFC on making certain decisions will be detached and independent. In this context, the main arguments for foreign investors in the work within AIFC platform are the following:
1) The most reliable and secure space for foreign investments within the territory of the former Soviet Union;
2) Placement of the most profitable shares of the former Soviet Union countries` companies on the AIFC Stock Exchange (The Russian Federation, Central Asia, Caucasus);
3) Judicial resolution of disputes (civil, civil procedural and financial relations, as well as administrative procedures) is carried out by Center`s independent Court only (which is not the part of Kazakhstan`s courts). In case of arbitration agreement between the parties, the dispute is considered by the International Arbitration Center.
Thus, further development of AIFC within the frameworks of these pillars will promote significant development of the securities market, ensure its integration with international capital markets, attract foreign investments into the country, thus giving a significant boost to diversification of the economy of Kazakhstan, and influencing positively both the economic and social factors of the country development.
Kazakhstan is preparing to serve as a unique gateway for global and European investors. We would like to establish a close cooperation with the USA Europe and attract the expertise of the leading financial companies in sphere of investment banking, asset management, private banking, insurance etc., as well as companies providing services in consulting, law support, audit and accounting.
At this stage, in order to ensure successful development of the AIFC we need an active support from the IAC, especially, on the following directions:
• Promotion of the AIFC activities and enhancing its image in the international arena
• Foster contacts with the world’s leading financial centers, financial institutions, organizations and companies interested in the AIFC activities and willing to open their representative offices in AIFC including:
– investment banks,
– asset management companies,
– private banking firms,
– Islamic banks,
– insurance companies,
– law firms,
– auditing firms,
– accounting and
– consulting firms.
• Provide best practice recommendations of the world’s leading financial centers (London, Zurich, Geneva, Frankfurt, Luxembourg, and others.) in the following areas:
– independent financial regulation in terms of legislative support, effective structure and process of making regulatory decisions, as well as their appeal;
– introduction of an independent judicial system based on common law, with the establishment of the Courts and the Arbitration center;
– development of new financial technology in the financial sector.