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  HOME | Business & Economy (Click here for more)

Astana International Financial Center Marks Year of Challenges, Advances

NUR-SULTAN – At his inauguration last month, newly elected Kazakh President Kassym-Jomart Tokayev pledged to continue the long-term development strategy envisioned by his mentor, Kazakhstan’s omnipotent ruler, Nursultan Nazarbayev, who retired in March after nearly 30 years at the helm of the oil-and-minerals-rich Central Asian country.

The business-as-usual approach caused a sigh of relief among investors, but sparked a series of protests that led to the arrest of hundreds who were hoping for tangible reforms rather than a cast of new characters after decades of authoritarian rule.

But for the 71 percent of the electorate who voted for the former Senate speaker on June 9, the current situation in Kazakhstan is already a sign of progress, as one Kazakh grandmother told EFE.

“As children my parents went hungry. Under Soviet rule millions of Kazakhs died of starvation, including two of my uncles, and many others were sent off to die in wars. Now we don’t go hungry and there is peace. Many people today want change, but I am wary.”

The government has since acknowledged that the security forces’ crackdown on protesters was ill-advised and last Sunday, opponents of nuclear power, pro-democracy activists and advocates for other causes were allowed to roam the capital Nur-Sultan unhindered by police for the first time in more than a decade.

Tokayev has gone so far as to set up a National Council of Public Trust “to embrace all the representatives of society, including the youth,” that is scheduled to begin work in August.

He also pledged to accelerate implementation of Nazarbayev’s 100-step blueprint for institutional reforms aimed at modernizing Kazakh society.

“First, I will work on the implementation of the Third Modernization in Kazakhstan: the Five Institutional Reforms and other important strategic state projects. In other words, I am going to work to deliver on the First President’s long-term strategy,” Tokayev said at his inauguration.

Most of the steps deal with domestic projects and infrastructure, but for the outside world looking in, the most important aspect of the blueprint, Step 70, was Nazarbayev’s establishment of the Astana International Financial Center, which was officially launched a year ago this week and serves as a financial hub for Central Asia, the Eurasian Economic Union, the Middle East, Western China, Mongolia and Europe.

“Apart from purely financial development, the AIFC should work to become the engine of growth investment into the economy and become the main project factory for the entire country,” Tokayev said.

The AIFC is a pro-market development project that encompasses a British law-based court, an arbitration center, an Islamic finance center and the country’s first stock market, the AIX.

AIFC Governor Kairat Kelimbetov told a meeting of the center’s management council, held Tuesday in the framework of the four-day annual Astana Finance Days, that the AIFC is targeting three markets: the Eurasian Economic Market; Central Asia; and the regional aspects of China’s Belt and Road Initiative.

“In the past 12 months we have registered more than 200 companies, most notably the China Development Bank and the China Construction Bank, and we are looking forward to becoming the financial hub for the Belt and Road in Central Asia,” Kelimbetov said.

Several Russian companies, especially energy firms, have set up offices at the AIFC, and the financial center’s partners include Nasdaq and Goldman Sachs.

Kelimbetov predicted that the next 10 years would be key to the further development of the AIFC and of the entire Kazakh economy.

The chairman of the AIX Management Board, Timothy Bennett, a former CEO of New Zealand’s NZX, acknowledged that the stock exchange was off to a slow start.

“It’s a three-to-five year journey. The pillar of the AIX’s product set is the country’s privatization program, but at the moment that is insufficient to build a new market place,” he said.

“So the AIX has developed a new rule set called the Belt and Road Market to be specifically targeted at those companies and infrastructure projects that will raise money as part of China’s Belt and Road Initiatives,” Bennett said.

The president of the European Bank for Reconstruction and Development, Suma Chakrabarti, praised Nazarbayev’s vision in creating the AIFC.

“I applaud his role in effecting the transformation of the country from what was once a former Soviet republic to now a flourishing modern state, and the AIFC is a shining example of that.”

“The AIFC has grown into a fully operational financial center. It has attracted foreign shareholders, installed modern trading technologies and has introduced English law to Central Asia,” Chakrabarti said.

Much is riding on the success of the AIFC, which is seen as the foundation of the government’s push to turn the country into a market economy, expand the nation’s middle class, accelerate democratic reforms and temper social discontent.

Despite the slow start, the AIFC this year shot up 10 spots to rank first in Eastern Europe and Central Asia on the Global Financial Centers Index, and 51st worldwide.

“So it is safe to say that all the necessary conditions have been established, now we need practical and tangible results,” President Tokayev concluded.

 

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