Embassy of Kazakhstan

07/07/08

POLITICS
Kazakh, Russian presidents hail strategic partnership

ECONOMY
Kazakhstan may halve corporate income tax rate
EBRD steps up support for small businesses in Kazakhstan 
Vimpelcom pays $562 mln to up Kazakh unit stake
Kazakhstan Joined the World Petroleum Council

OTHER NEWS
Kazakhstan beyond Borat
The Wider View: Whitney's palace performance as Kazakhstan's capital city turns ten

Category: General

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Kazakhstan News Bulletin Released by the Embassy of the Republic of Kazakhstan to the United States of America   1401 16 Street, NW, Washington, DC 20036 Tel.: (202)232-5488 Fax: (202)232-5845 E-mail: washington@kazakhembus.com Web-site: www.kazakhembus.com

No 19 July 7, 2008

 

POLITICS

 

• Kazakh, Russian presidents hail strategic partnership

 

ECONOMY

 

• Kazakhstan may halve corporate income tax rate
• EBRD steps up support for small businesses in Kazakhstan 
• Vimpelcom pays $562 mln to up Kazakh unit stake
• Kazakhstan Joined the World Petroleum Council

 

OTHER NEWS

 

• Kazakhstan beyond Borat
• The Wider View: Whitney's palace performance as Kazakhstan's capital city turns ten

 

 

POLITICS

 

Kazakh, Russian presidents hail strategic partnership

 

Xinhua, China  

 

Kazakh President Nursultan Nazarbayev and his Russian counterpart Dmitry Medvedev hailed the two countries friendship and strategic partnership on Saturday, the Kazakh Telegraph Agency reported.

 

Speaking at celebrations for the 10th anniversary of Astana becoming the country's capital, Nazarbayev said Russia has been and will always be Kazakhstan's reliable friend and strategic partner.

 

The brotherly relations with Russia are of great significance to Kazakhstan, Nazarbayev said.

 

Medvedev, who arrived in Kazakhstan Saturday for the anniversary, said the two countries were not only strategic partners but also brothers who support each other. Russia treasures the friendship with Kazakhstan, he said.

 

Astana replaced Almaty as Kazakhstan's capital in 1998.

 

 

 

ECONOMY

 

Kazakhstan may halve corporate income tax rate

Reuters

 

Kazakhstan may halve the corporate income tax rate to 15 percent while introducing a tax of up to 20 percent that will apply only to the oil and mining sectors, an oil industry group official said on Friday.

 

The government is drafting a new tax code which it hopes will foster economic growth thanks to lower overall taxes while boosting revenues from the key oil and mining industries. The authorities have yet to announce planned tax rates.

 

On Friday, an official from KazEnergy, an oil industry group headed by President Nursultan Nazarbayev's influential son-in-law Timur Kulibayev, shed some light on the tax reform plans.

 

"The corporate income tax is being cut to 15 percent from 30 percent with the gap to be filled by revenues from the minerals extraction tax," KazEnergy Executive Director Azamat Aubakirov, member of a working group developing the new tax code, told a tax conference on Friday.

 

He said the government was considering two schemes for the minerals extraction tax, which will replace royalty payments.

 

The idea was to introduce either a flat 20 percent rate or a scale ranging from 5 to 20 percent depending on extraction volume, Aubakirov said.

 

"We (KazEnergy) have proposed a range of 4 to 20 percent, taking into account the specifics of each field," he said.

 

The new tax code, due to be drafted by fall, will take effect next year.

 

 

EBRD steps up support for small businesses in Kazakhstan       

 

The Financial

 

The EBRD is providing a 5-year loan to Bank CenterCredit (BCC) to support the expansion and further development of micro, small and medium-sized enterprises (MSMEs) in Kazakhstan.

 

The distinctive feature of the deal is that the $50 million credit will be on-lent to local companies outside the major cities Almaty and Astana where access to finance remains difficult.

 

The MSME sector is an important provider of employment and is increasingly important for the Kazakh economy. The government sees the growth of small businesses as key to the sustainable development of an economy which is otherwise dominated by natural resources. The demand from local micro and small businesses for loans, especially longer term funding, is increasing.

 

It is here that the EBRD can play a vital role because through its credit lines to local banks like BCC the Bank facilitates access to finance at times when this is especially needed.

 

The EBRD loan will consist of two equal portions. The first portion will be for loans below $200,000, focused on the smallest businesses with an average loan size expected to be $10,000. The second portion will be used to finance loans worth the equivalent of $200,000 to $500,000, aimed at small and medium-sized enterprises.

 

The loan is supported by a $58,000 Technical Cooperation grant provided by the Grand Duchy of Luxembourg to improve the efficiency of small business lending.

 

Jean-Marc Peterschmitt, EBRD Director, Bank Relationships, said that the loan will support the development and expansion of BCC’s MSME business. He emphasised that the EBRD “stands ready to support the Kazakh economy especially at a time when this is more needed than ever.”

 

BCC believes that the loan will help to further promote its strong position and ensure its sustainable growth by increasing its market share in Kazakhstan. “The EBRD loan is also recognition of our bank as a stable financial institution with a strong reputation and well-defined policy”, BCC Chairman of the Management Board Vladislav Lee said. The financing is also a welcome signal of the EBRD’s confidence in Kazakhstan’s economy which is expected to encourage more foreign investments, he added.

 

Bank CenterCredit and the EBRD have been partners since 1997 when BCC joined the EBRD Kazakhstan Small Business Programme I.

 

Today, BCC is a universal bank focused on micro, small and medium sized enterprises as well as private individuals. It is the sixth largest commercial bank in Kazakhstan in terms of assets.

 

The EBRD is the largest single investor outside the oil and gas sector in Kazakhstan. To date the Bank has signed about 100 projects and invested some €3.5 billion in the country.

 

 

Vimpelcom pays $562 mln to up Kazakh unit stake

 

Reuters

 

Russia's second-largest mobile phone operator Vimpelcom said on Friday it had paid $561.8 million to boost its stake in Kazakhstan's carrier Kar-Tel to 75 percent.

 

Vimpelcom has bought a further 25 percent minus one share in Kar-Tel in addition to 50 percent plus one share it already owned, spokeswoman for Vimpelcom Yelena Prokhorova told Reuters.

 

"The shares were acquired from our partner in Kar-Tel, Crowell Investments Limited. Vimpelcom has an option to buy the remaining 25 percent," Prokhorova said.

 

Vimpelcom bought 100 percent of Kar-Tel, the second largest cellular operator in Kazakhstan, in September 2004 for $350 million plus the assumption of nearly $75 million in debt.

 

It later sold 50 percent minus one share in the operator to Crowell Investments Limited, a Cypriot company beneficially owned by shareholders of Kazakhstan's ATF Bank.

 

Vimpelcom and Crowell also entered into an agreement that granted a call option to Vimpelcom to reacquire up to the entire stake from Crowell subject to certain conditions.

 

Vimpelcom, owned by Norway's Telenor and Russian billionaire Mikhail Fridman's Alfa Group, has more than 52 million clients in Russia and the former Soviet states of Armenia, Georgia, Kazakhstan, Tajikistan, Ukraine and Uzbekistan.

 

Kazakhstan is Vimpelcom's largest market in the CIS where it services around 4.8 million mobile subscribers and has a 39.5 percent market share.

 

In the first quarter, revenues from Vimpelcom's operations in Kazakhstan rose 36.3 percent to $162.8 million.

 

 

Kazakhstan Joined the World Petroleum Council

 

Kommersant, Russia

 

Kazakhstan has joined the World Petroleum Council (WPC), Interfax reported July 1 with reference to KazEnergy association of oil, gas and energy companies of Kazakhstan.

The membership in WPC provides the maximum access to update information on the latest worldwide research, technological discoveries and achievements in the gas and oil field as well as to the current data related to production, technology and economy, KazEnergy announced in the statement.

 

Joining WPC will boost the status of oil industry of Kazakhstan, secure new agreements on the international cooperation and could be regarded as another move towards improving the country’s image worldwide, KazEnergy specified.

 

Kazakhstan joined WPC during the World Petroleum Congress that is currently held in Madrid and that will last until July 3.

 

 

 

OTHER NEWS

 

Kazakhstan beyond Borat

A British journalist offers a colorful look at an ancient land and its people.

 

Christian Science Monitor

 

Ask any Western family heading to Kazakhstan to adopt a child: It’s hard to scare up readable English books on the Central Asian nation, and even harder to find an upbeat one. Like the rolling Kazakh steppe, the few existing volumes tend to be dry and bleak.

Into this landscape comes Christopher Robbins’s Apples Are From Kazakhstan: The Land That Disappeared, a colorful, whimsically illustrated travelogue about the past and present of an ancient land and its people.

 

Many foreigners couldn’t find Kazakhstan, a nation the size of Western Europe, on a map – and the country’s history is just as mysterious.

 

“Modern Kazakhstan occupies a region of Central Asia that is not only a lacuna in the knowledge of most of the West, but has also been shrouded in mystery from the beginning of time,” Robbins writes. “To the ancients it was an unexplored and inaccessible world more myth than reality.” For today’s average Westerner, little has changed, but Robbins aims to alter that.

 

As his title suggests, along with the rich artistic and social legacies of its once nomadic inhabitants, and the vital role it played as a Silk Road caravan route, the land is thought to have given the world apples, tulips, and possibly even King Arthur.

 

From the hat-shaped airport in the former Kazakh capital, Almaty, to the spiky, oil-funded grandeur of its present one, Astana, the book shatters the pervasive image of today’s Kazakhstan as a backward land of bigotry and Borat.

 

“I took to Almaty, the apple city, from the beginning,” Robbins writes – despite the pounding of an all-night disco under his hotel room and some evocatively Soviet encounters with the hotel staff. Once installed in a cozy apartment near Russian revolutionary Leon Trotsky’s former exile digs, Robbins spends his days visiting golden eagle hunters, Kazakh antiquities experts, and of course the famous apple orchards.

 

When he leaves Almaty to travel to Astana, he seems to share the regrets of legions of bureaucrats who’ve been ordered to relocate to the odd new capital. This shiny $10-billion metropolis “bang in the middle of nowhere” is so thick with construction cranes, “so spanking new, so lacking in a settled identity, it seems unreal.”

 

From there Robbins heads northeast, finally hitting the southern edge of Siberia in the “scruffy” city of Semipalatinsk. Once home to exiled novelist Fyodor Dostoevsky. the area later became the nerve center of Soviet nuclear weapons testing. Kazakhstan was the USSR’s Nevada, and its citizens were unwittting human guinea pigs in radiation experiments that poisoned the people and their land for 40 years.

 

Throughout his journey, Robbins also meanders through Kazakhstan’s past and politics: from the military might of Genghis Khan; to the collectivising policies of “The Great Gardener,” Joseph Stalin; to the modern ambitions of Kazakh President Nursultan Nazarbayev.

 

Nearly two decades into his presidency, foreign observers remain divided about Nazarbayev. His celebrated decision to dismantle the country’s Soviet nuclear stockpile touched off an explosion of investment in Kazakhstan’s vast oil and mineral resources. But corruption charges and high-profile murders of opposition journalists have left many skeptical.

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