December 2011
HOLIDAY ISSUE #47
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Dear Readers,
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Regulatory Reform ForumJONJEŠ/PWFNCFSCSPVHIUUPHFUIFSCBOLFSTUPFYBNJOFDIBMMFOHFTBOEQPTTJCMFTPMVUJPOT
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$IBNCFSJTQMFBTFEUPXPSLUPHFUIFSXJUIUIF#BOLVOEFSUIFAmCham Economic Policy Program XIJDIJTBDUJWFMZQVSTVJOHSFGPSNQSPKFDUTJOB
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UIBUQSPUFDUT$BOBEBqTCBOLTEVSJOHWPMBUJMFUJNFT(The Canadian Banking Regulatory Model: A Success?).
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Doris Bradbury
Executive Director
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ARTICLES
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by Jeffrey Mason............................................................
#47/2011
$IBMMFOHFT'BDJOH,B[BLITUBOT#BOLJOH4ZTUFN
by Grigoriy Marchenko...............................................
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by Michael Carter.......................................................
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by Ambassador Stephen Millar..................................
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by Hanz Holzhacker....................................................
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4ZTUFNJDBMMZ*NQPSUBOU'JOBODJBM*OTUJUVUJPOT
by Ulf Wokurka.........................................................................
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by Bodo Thöns
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CREDITS
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EDITOR IN CHIEF:
Doris Bradbury
DESIGN & LAYOUT:
Eidar Aliev
Walter Daniel
Kenneth Mack
Paul Cohn
President
Treasurer
Secretary
Managing Partner,
Partner, Ernst & Young
Director, Legal Services
PricewaterhouseCoopers
Chadbourne & Parke
PHOTOGRAPHER:
Nikolai Perervin
#0"3%.&.#&34
COVER ARTWORK:
Marat Bekeyev
Doris Bradbury
CONTRIBUTORS:
Michael Carter
Osman Kazdal
Jennifer Kane
Executive Director
Senior Commercial Officer
AmCham
US Commercial Services
General Manager
Coca-Cola Almaty
Michael Carter
Hans Holzhacker
Grigoriy Marchenko
Jeffrey Mason
Stephen Millar
Bodo Thöns
Ulf Wokurka
Tim Miller
Mark Pothast
General Director
General Manager
Tengizchevroil
Nestle Eurasia
Colette Reynolds
President, Caspian Region
ConocoPhillips
PUBLISHER:
American Chamber
of Commerce in Kazakhstan
Tel.: +7 (727) 330 92 50
Fax: +7 (727) 330 92 51
6
For information about the Chamber, please email info@amcham.kz
For information about Working Groups, Chamber's website, and Investors' Voice,
please contact Dimash Umbetov at dimash.umbetov@amcham.kz
To register for a Chamber event,
please email Administrative Assistant Sonya Bessonova at info@amcham.kz
To enquire about financial issues,
please contact Finance Manager Rimma Kazhemyakina at rimma.kazhemyakina@amcham.kz
#47/2011
$0/53*#65034
Michael Carter
AmCham Board Member Michael Carter has most recently served as the CEO of Visor Capital, the leading locally-based investment bank with operations in Almaty and
London. Visor Capital is actively involved in advising the Government of Kazakhstan on improvements to the investment environment for domestic and international
investors. Michael Carter joined Visor Capital’s management team as Head of Research in 2007, and became CEO in October 2008.
Prior to moving to Almaty, Michael worked for four years at ING Bank in Milan as Head of Italian Equities. Previously he was with UBS for six years in both Milan and
London in equity research. Before entering the investment business, Michael was a Consultant at Bain & Company in Milan, and also worked for a private equity fund
in the US focused on Oil service and Oil & Gas. Michael Carter holds a BA from U.C. Berkeley and an MBA from Georgetown University.
Hans Holzhacker, Chief Economist, ATF/Unicredit Bank KZ
Hans Holzhacker is Chief Economist at ATFBank Kazakhstan, a member of UniCredit Group. He has over 20 years’ experience as an economist specializing in the
economies of Central and Eastern Europe, and in setting up country-risk rating models. Prior to joining ATFBank in Almaty, Hans Holzhacker was a Vienna-based
Senior Economist focused on Russia and Ukraine for Bank Austria Creditanstalt, a member of UniCredit Group. There he coordinated the New Europe Research
Network and was responsible for CEE country ratings.
Hans Holzhacker also served as Senior Economist covering the Czech Republic, Slovakia, Slovenia and Ukraine at the Institute of International Finance in Washington,
DC from 1999-2001, as Head of Country Risk/Research at GiroCredit Research, Investmentbank Austria, from 1993-99, and as Central European Economist at
Nomura Research Institute from 1989-93. He holds a Ph.D. in Sociology and a Masters in Economics from the University of Vienna.
Grigoriy Marchenko, Governor, National Bank of Kazakhstan
Grigoriy Marchenko is currently serving his second term as Governor of the National Bank of Kazakhstan. He studied economics at the Moscow State Institute
of International Relations and pursued graduate studies at Georgetown University in Washington, D.C. He has held many senior positions in the Government of
Kazakhstan, including First Deputy Prime Minister, Chairman of the National Securities Commission, and Advisor to President Nazarbayev. He has also served in the
private sector as President of DB Securities in Kazakhstan and as CEO and Chairman of Halyk Bank.
Grigory Marchenko is widely viewed as having played a leading role in the creation of the banking structure of Kazakhstan, which is regarded as the leader and most
highly developed banking system in Central Asia. He was recalled to the National Bank as Governor in early 2009 to handle the challenges posed by global banking
FULVLV8QGHUKLVZDWFK.D]DNKVWDQPDLQWDLQHGEDQNLQJDQG¿VFDOVWDELOLW\0U0DUFKHQNRZDVDZDUGHG(XURPRQH\¶V2003 Central Bank Governor of the Year,
and was nominated to head the International Monetary Fund in September 2011.
Stephen Millar, Canadian Ambassador to Kazakhstan
Stephen Millar joined the Department of External Affairs and International Trade in 1982 after receiving a Master’s degree in Soviet and East European Studies from
Carleton University in Ottawa. He served as an analyst of Soviet bloc economies in the Economic Intelligence Division until 1991, travelling often to the Soviet Union
and Eastern Europe. From 1996 to 1998, Mr. Millar was the assistant to Canada’s Director at EBRD in London. From 1991 to 1996 and from 1998 until 2007, he held
a number of positions in the International Branch of the Department of Finance Canada, including as Chief of the International Institutions Section, where he was
responsible for managing Canada’s relations with the International Monetary Fund, World Bank and EBRD.
Mr. Millar was a Senior Trade Commissioner at the Embassy of Canada to Russia, with concurrent accreditation to Uzbekistan and Armenia, and was appointed
Canadian Ambassador to Kazakhstan, Kyrgyzstan and Tajikistan in July, 2009.
Bodo Thöns, Senior Representative, Commerzbank KZ
Bodo Thöns studied at Martin Luther University in Halle, Germany and at Moscow State University. He holds a PhD in economics from Moscow State University and
Humboldt University Berlin. In 1990 he joined Commerzbank AG in Frankfurt am Main and has more than 20 years experience in branch management, corporate
EDQNLQJDQG¿QDQFLDOLQVWLWXWLRQVDVZHOODVLQWUDGHDQGH[SRUW¿QDQFHLQ*HUPDQ\DQGDEURDG
Bodo Thöns has an extensive background in a broad range of issues concerning Central and Eastern Europe, Russia and Central Asia. From 1993-1998 he served
as the Commerzbank Representative in Moscow and Novosibirsk. In 2004-2007 he served as the Head of Commerzbank corporate banking in the Czech and Slovak
5HSXEOLFV,Q%RGR7KRQVZDVDSSRLQWHG+HDGRIWKH&RPPHU]EDQN2I¿FHLQ$OPDW\FRYHULQJ.D]DNKVWDQ.\UJ\]VWDQ7DMLNLVWDQDQG0RQJROLD
Ulf Wokurka, Managing Director, Deutsche Bank Kazakhstan
Ulf Wokurka studied at Martin Luther University in 1980-81 and graduated from Moscow State Institute of International Relations in 1989. In 1990 he joined Deutsche
%DQNLQ)UDQNIXUWDP0DLQ)URPWRKHZDV+HDGRIWKH5HSUHVHQWDWLYH2I¿FHVRI'HXWVFKH%DQNDQG0RUJDQ*UHQIHOO&RLQ$OPDW\)URPWR
KHZRUNHGLQ'HXWVFKH%DQN¶V/RQGRQ1HZ<RUNDQG)UDQNIXUWRI¿FHV)URPWR0U:RNXUNDZRUNHGDW6WDWH+ROGLQJ6DPUXNLQ$VWDQDDQGFKDLUHGWKH
KAZPOST Board of Directors. In 2007 Mr. Wokurka served on the Boards of the Kazakhstan Development Bank and Kazyna Capital Management.
)URPWRKHVHUYHGDV0DQDJLQJ'LUHFWRURI0HW]OHU$VVHW0DQDJHPHQW)UDQNIXUWDQGZDVDSSRLQWHG'HXWVFKH%DQN¶V&KLHI&RXQWU\2I¿FHULQ6HSWHPEHU
2010. In April 2011 Ulf Wokurka was elected an independent director on the Halyk Bank Board of Directors.
#47/2011
7
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DEUTSCHE BANK
TAIB KAZAK BANK
OCTAPHARMA
CORPORATE A
CORPORATE A
CORPORATE C
Ulf Wokurka (Managing Director)
Maruf Ahmed (Chairman)
Svetlana Safarova (Head of
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36,Al Farabi Avenue
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Almaty 050059 Kazakhstan
103 Furmanov Street
Almaty 050000 Kazakhstan
'RVW\N$YHQXH2IÀFH
Almaty 050051 Kazakhstan
Telephone: 7 (727) 356 10 68
Fax:
7 (727) 356 10 64
Telephone: 7 (727) 258 70 30, 258 70 40
Fax:
7 (727) 258 70 09
Tel: 7 (727) 320 15 41
Fax: 7 (727) 320 15 42
Email: Svetlana.safarova@octapharma.com,
safaris@list.ru
E-mail: danara.kulbayeva@db.com
Website: www.db.com
E-mail: taiball@taib.kz,
aigul@taib.kz
Website: www.taib.kz
Deutsche Bank was founded in 1870
and is a global leader among international
banks. The Bank’s 80,000 employees in 72
countries serve more than 13 million clients
world-wide. As a universal bank, Deutsche
Bank is able to provide the whole range of
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business divisions - Global Markets, Global
Equities, Global Corporate Finance, Global
Transaction Banking, Asset Management,
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Business Clients.
Deutsche Bank has been active in
Kazakhstan since 1993 through its
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ECA, and provides support to local banks and
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Since the foundation in 1998 of a brokerdealer company – DB Securities Kazakhstan
– its range of services in securities trading
and investment banking has expanded.
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TAIB Bank, a private bank based in
Bahrain, was established in 1979 and is
regulated by the Bahrain Monetary Agency.
Listed on the Bahrain Stock Exchange since
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banks with a focus on providing complete
wealth management solutions to both highnet-worth individuals and institutional
investors alike. The bank's strength lies in
identifying and creating unique investment
opportunities and is a testament to its 25
years of investment expertise and network of
six subsidiaries around the world.
The Bank’s headquarters are located
in TAIB Tower in the Diplomatic Area in
Manama, Bahrain. This is the home to TAIB
Bank, as well as to its brokerage subsidiary,
TAIB Securities.
TAIB Kazak Bank offers cash management
services across a broad spectrum of
commercial banking operations:
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Octapharma is an independent, Swissbased company founded in 1983. The Group
has since grown to include six production
plants in Austria, France, Germany, Sweden
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the US and in Europe, and 37 subsidiaries
DQG UHSUHVHQWDWLYH RIÀFHV :LWK RYHU employees, Octapharma currently sells in
over 80 countries. The Octapharma Almaty
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2009.
Octapharma’s core business is the
development, production and sale of safe
and effective medicines derived from human
proteins in the following areas: Haematology
(coagulation disorders), Immunotherapy
(immune disorders), Intensive Care and
Emergency Medicine.
The Octapharma Group-wide mission is
the safe and optimal use of human proteins.
The company meets its Mission through
the use of cutting-edge, validated viral
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Octapharma has implemented a strategy of
continuous investment in, and enhancement
of, existing products as well as ongoing
projects to develop a world-class portfolio of
human proteins.
#47/2011
/&8.&.#&34
UNIPHARM
JOHN DAVIDSON AND
ASSOCIATES
CARNEGIE ENDOWMENT
FOR INTERNATIONAL PEACE
CORPORATE C
CORPORATE C
NON-PROFIT
Michael Galvin (General Manager)
Stephen Grey (CEO)
Martha Brill Olcott (Co-Director)
350 5th Avenue, Suite 6701
New York, NY 10118
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$*UHYLOOHD3ODFH
Eagle Farm
Brisbane QLD 4009 Australia
Al-Farabi Kazakh National University
Department of International Relations
95 Karasai Batyr Street
Almaty 050012 Kazakhstan
Telephone: 61 7 3120 0900
Fax:
61 7 3120 0999
Telephone: 1 (202) 483 33 89
Fax:
E-mail: Ryan.Gunn@jda.com.au
Website: www.jda.com.au
E-mail: molcott@ceip.org
Website: www.carnegieendowment.org
John Davidson and Associates is a
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in Australia. It was established in 1990 and
has become an internationally recognised
leader in mining, oil and gas, engineering
and construction recruitment. JDA currently
handles successful recruitments in 71
countries and has ongoing relationships
with mining sector organisations, miners,
and mining services companies worldwide.
It is a ‘career broker’ for of the mining and
resources sector.
The JDA team of experienced consultants
and account managers have a strong
technical background and a reputation for
timely sourcing of corporate, operational and
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WRÀQGDSSRLQWPHQWVDQG([HFXWLYH6HDUFK
The company conducts global sourcing
across its strong international network, its
consultants possessing the ability to access
thousands of candidates worldwide.
JDA travelled to client sites across Central
Asia in August and September 2011 to learn
about their operations and discuss needs
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consulting is a process driven by the quality
of information and communication between
the client, JDA, and aspiring candidates. JDA
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and advance the career of its candidates.
The Carnegie Endowment for International
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dedicated to advancing cooperation between
nations and promoting active international
engagement by the United States. Carnegie
experts work on a range of issues, including
nonproliferation, global security and
terrorism, developments in Russia, Eurasia,
China, and the Middle East, international
economics, climate change and energy
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emerging powers and non-state actors.
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Central Asia is a Kazakhstan-based regional
program run jointly with Al-Farabi Kazakh
National University to foster an open
dialogue between Kazakh, Central Asian
and international academic and research
organizations, and business and government
structures, on a wide range of issues, from
regional and global security to energy and
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will promote research and analysis between
scholars from Central and South Asia, as
well as the international community, to
dramatically improve understanding and
inform dialogue in Astana, Washington and
other world capitals.
Tel.:
1 (212) 594 32 60
Email: mgalvin@unipharmus.com
Website: www.unipharmus.com
Unipharm is a privately-owned American
pharmaceutical company specializing
in the marketing and development of
quality over-the-counter (OTC) drugs and
nutritional products. An FDA-registered
company, Unipharm was established in
1992 in the United States. The company's
world headquarters is located in the Empire
State Building in New York City, and there
are nine branch offices worldwide.
The company’s brands have grown into
household names and include a broad
range of products for many different life
stages and different customer needs. Some
of the diverse consumer needs addressed
by Unipharm include cardio, beauty,
energy, child development, aging, memory
loss, prenatal, eyesight, weight loss and
immune support.
Unipharm exclusively sells its broad
range of quality merchandise through
pharmacies. It enjoys a market-leader
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Kazakhstan, and other CIS countries, as
well as an expanding position in other
markets. Unipharm has also expanded
to Asia where many of its preparations
have already been registered and are now
available to new customers.
#47/2011
9
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GRATA Law Firm is delighted to announce
the appointment of Maxim Grekov as
Counsel.
Paying Taxes 2012: Central Asia and
Eastern Europe Findings
Astana, November 23, 2011 - This is the sixth year that the
Global Indicators and Analysis group within the World Bank
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Paying Taxes 2012: The Global Picture measures the ease of
paying taxes in 183 economies around the world.
The report covers the cost of taxes borne by the case
study company as well as the administrative burden of tax
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Kazakhstan is ranked 17th in the world in terms of ease
of paying taxes, which makes it the top-ranked country not
only in Central Asia, but also in the CIS. Other countries
of Central Asia are ranked lower: Kyrgyz Republic (162),
Tajikistan (168) and Uzbekistan (157). Russia is 102nd,
and China is number 121 in the global ease of paying taxes
ranking.
According to the report and the methodology applied,
Kazakhstan performs well in terms of the number of tax
payments (total of 7 payments, ranked 11th) and reasonably
well in the area of total tax rate (ranked 41) with a rate of
28.6%, which is among the top 3 in the CIS). The area in
need of most improvement is the time required to comply.
It takes 188 hours to comply with all tax payments, ranked
68th on time compliance.
The overall results for Kazakhstan rank in the upper
quartiles in Central Asia and Eastern Europe: one tax per
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reduce the number of payments. The time to comply is below
both the regional and the world average and the TTR is also
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Peter
Burnie
Tax
Leading
Partner
at
PricewaterhouseCoopers, said, “While Kazakhstan's
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environment, taxpayers in Kazakhstan continue to face
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administration and dispute resolution, which are not
directly measured by the survey methodology.”
For more information about 3D\LQJ7D[HV, visit ZZZSZF
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Maxim Grekov has over 20 years of experience in
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Maxim Grekov has extensive experience advising
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and other Central Asia countries. His clients also include
multinational agencies like IFC, EBRD and ADB. In addition,
he is an experienced advisor to international and local
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GRATA Law Firm was founded in 1992. It is the leading law
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lawyers and a network of branches in Kazakhstan, Uzbekistan,
Azerbaijan, Kyrgyzstan, Tajikistan, Turkmenistan, Georgia,
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London and New York.
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#47/2011
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World AIDS Day in Kazakhstan –
Conversations with the UK
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December 1 – World AIDS Day.
The aim of the World Aids Day Rountable was to raise
awareness about HIV, discuss the stigmatization and
discrimination against people living with HIV in Kazakhstan
and globally, and share experience via videoconference
with UK expert Angela Costetsos from the Terrence Higgins
Trust, the leading and largest HIV and sexual health charity
in the UK, together with young people associated with the
Trust.
Young volunteers from the Dostar Youth Volunteer
Leadership Centre located in Shymkent, students from
Almaty, representatives of the Kazakhstan AIDS centre, a
number of NGOs, and Chevron participated in the Roundtable
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their experience and discussed how stigmatization and
discrimination against HIV-positive people affect society.
The highlight of the event was the videoconference
discussion which followed between the Roundtable group
in Almaty and the UK expert together with the young people
from the Terrence Higgins Trust.
The participants from Kazakhstan were inspired during
the videoconference by the UK speakers who shared their
experience, saying how useful and lively the discussion
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problems and challenges were similar in Kazakhstan and it
was very valuable and interesting to know about the HIV
situation in the UK. They were also impressed by what the
Terrence Higgins Trust does to overcome challenges and
change peoples’ attitudes towards HIV-positive people.
“I was impressed by the organization when I visited
the Terrence Higgins Trust website. It was impressive
and exciting to see and communicate directly with people
representing the organization who implement important
activities to raise people’s awareness and challenge prejudice
and discrimination,” said Nursultan Altynbek, a participant
from Shymkent.
#47/2011
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earning points for their employees’ next business trips
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BlueBiz points earned in this way are like cash (1 BlueBiz
point = 1 USD). Member companies will be able to spend
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Special offer for AmCham members - a Welcome Bonus
of 50 points! To receive this Bonus, AmCham members
should register their company in BlueBiz online at www.klm.
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11
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government sectors came together on November 11, 2011
to attend a special economic conference entitled Banking
Regulatory Reform for Kazakhstan: Creating Stability in a
Volatile Environment under the AmCham Economic Policy
Forum (AEPF) Series. 7KH )RUXP WKH WK $(3) FRQIHUHQFH
over the past 3 years, was sponsored by Ernst & Young and
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bring into the public domain issues in Kazakhstan’s investment
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to the Government of Kazakhstan, and recommendations that
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with government agencies.
The Forum format divided the day into morning and
afternoon sessions. The morning panel, which focused on
the Global Challenge of Banking Regulatory Reform was
moderated by Ulf Wokurka, Managing Director of Deutsche
Bank. The afternoon panel was centered on Challenges Facing
Kazakhstan’s Banks and Regulatory Reform, moderated
by Michael Carter, a prominent international equity and
investment expert. With many years of experience in the local
markets, the two moderators led the sessions with commentary
that sparked discussion among speakers and participants.
Grigoriy Marchenko opens the Banking Forum
Governor Marchenko further underlined that the National
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this role will be to analyze Basel III components and
incorporate the best aspects into Kazakhstan’s banking system
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of experts. Overcoming what Marchenko describes as the two
main problems in regulatory reform - its scope and Basel III’s
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systemic diversity - will be a challenge for the team, but one
that, if successful, could provide fruitful results.
Morning Panel: Banking Regulation, A Global Challenge
Hans Holzhacker, Senior Banker at ATF/Unicredit Bank,
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the urgency of banking regulatory reform and posing many
tough questions to would-be regulators and legislators who
will be implementing the reform package. Underlining the
importance of the typical credit cycles countries tend to follow,
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fall in the cycle and adjust their policies accordingly; otherwise,
he warns, imbalances and crises can occur.
National Bank Governor Grigoriy Marchenko speaks to the media
As usual for AmCham conferences, a large turn-out from the
local media was present, including Biznes I Vlast’, Kommersant,
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79 $VWDQD 79 %XVLQHVV :DYH .D]7$* and ([SUHVV .
Interviews were taken during the breaks with the Keynote
Speaker and noted panelists.
Keynote Speaker National Bank Governor Grigoriy
Marchenko
Always sought after for his comments and views on the
ÀQDQFLDO ZRUOG LQ .D]DNKVWDQ DQG DEURDG Governor of the
National Bank, Grigoriy Marchenko, opened the Forum with his
analysis of Kazakhstan’s current economy, providing historical
perspective of what has been achieved over the past 20 years
since independence. Heavily facilitated by the National Bank,
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RI VXSSRUWLQJ V\VWHPDWLFDOO\ LPSRUWDQW ÀQDQFLDO LQVWLWXWLRQV
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SME development, and increase public investment in industry.
Continual work on the tax code has made Kazakhstan’s code
one of the most developed in the CIS.
14
Hans Holzhacker, ATF/Unicredit Bank during coffee break
Mr. Holzhacker further shared the ‘Concept’ that Kazakhstan
has drawn up to reform the country’s economic growth and
funding model. The Concept covers capital adequacy, liquidity,
and statistical and loan provisions. Understanding how this
plan will be matched with the proposed adoption of Basel III
will be important for the future of Kazakhstan’s economy.
#47/2011
a different challenge, with widespread disagreement between
various agencies and Congress. Further complicating things
is the Dodd-Frank Act, which limits the introduction of new
regulations that might be less strict than existing legislation.
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Canada and Canadian Ambassador to Kazakhstan Stephen
Millar shared some insights on how and why it did so well
while the rest of the world was facing massive blowbacks. The
cultural impact cannot be ignored, as Canadian bankers and
regulators have always been traditionally conservative in their
policies and operations. Venture operations are controlled
mostly by the largest banks, which have little tolerance for
risky investments.
"35*$-&4
Building further on the idea of a stable and balanced economy,
Senior Representative for Commerzbank in Kazakhstan Bodo
Thöns gave a presentation entitled “%DVHO,,,&UHDWLQJD6WDEOH
5HJXODWRU\&OLPDWHµ He stressed that Basel III implementation,
if it is to become a global standard, will require consideration
of many national and cultural points of interest to ensure that
transition and adaptation goes smoothly. The new regulatory
framework centers on four main objectives: increasing capital
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institutions, and preventing calculation and methodological
errors.
Bodo Thöns, Commerzbank, at the podium
Mr. Thöns also examined the impact of Basel III on the
attractiveness of various loans in the future. SIFIs are likely
to suffer due to higher capital adequacy requirements, and
different bank products and business models will be affected.
Traditional loans will become more expensive, as will trade
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loans, and loans to banks. In summary, the speaker stressed
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in the future.
Ulf Wokurka, Managing Director for Deutsche Bank
Kazakhstan, the Moderator for the morning panel, gave
a presentation on what the reforms will mean for SIFIs.
Though Basel III will bring about large changes, he reminded
participants that this reform package is only one in a broader
regulatory agenda set by the G-20. Increases in Tier 1 core
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capital buffer remain the biggest concerns for banks, though
they are only one aspect of the agenda.
Ulf Wokurka answers a question from the audience
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contexts, Mr. Wokurka pointed out that the EU process is already
underway, and by 2019 the European Banking Authority will
have implemented approximately 150 standards. The US faces
#47/2011
Canadian Ambassador outlines the Canadian banking system
More importantly, perhaps, Ambassador Millar explained
that Canada did not deregulate its banks in the 1980s as did
the US and most other industrialized countries. While other
countries were lowering their capital requirements, Canada
was raising theirs, consistently maintaining their standards
above internationally-accepted ones. The interaction of
Canada’s regulatory agencies along with the dialogue between
the Government and private sector plays an important role in
keeping the system balanced.
Afternoon Panel: Kazakhstan’s Banks and
Regulatory Reform
The afternoon panel was moderated by AmCham Board
Member Michael Carter, a prominent international equity
and investment expert, who also led with a presentation
entitled “Banking in Kazakhstan – Is the Crisis Over?” He
summarized the current situation in Kazakhstan as no longer
being in a critical state, but as being stable with excess liquidity,
poor loan growth, a lack of overall growth, and declining
margins. Although this may not sound promising, he assured
participants that things are slowly improving.
He recommended that Kazakhstan take a “home-grown
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guiding it back to previous levels. The government should
invest in the housing sector, which took one of the biggest
hits and hasn’t had a true recovery. Mr. Carter believes that
Kazakhstan is now more resistant to crises than in 2007 with
a lack of acid bubbles and a 53% increase in foreign reserves
to buffer against future troubles. Banking consolidation may
be necessary in the future with Samryk Kazyna needing to
display leadership in mediating such consolidations.
15
"35*$-&4
presentation covered the mathematical calculations that would
change with the introduction of Basel III, especially the various
reserves (Special, Dynamic, Counter-Cyclical, and Systemic)
that would be required. Also included were the new liquidity
ratios and their timelines for introduction.
Michael Carter speaks about post-crisis Kazakhstan
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presented on the competitiveness of Kazakhstan’s banks
following the expected impact of regulatory reforms. There has
been sector recovery with good progress in deleveraging and
early, still fragile economic growth. Government programs
like the %XVLQHVV5RDGPDS, together with tax changes and
non-performing loan resolution mechanisms for the banking
sector, should provide further support for sector recovery.
Murat Koshenov, Halyk Bank, outlines Kazakhstan's
challenges
Mr. Koshenov talked about the anticipated impact of the
joint Customs Union and the Common Economic Space,
which are seen as attracting more investment and providing
growth opportunities. He also spoke about the effect that
Russia’s economy will have on Kazakhstan when the Union
and Economic Space are fully implemented. Returning to
Basel III, he posed several questions for discussion, notably
whether rapid implementation of Basel III might have adverse
effects and whether or not capital changes should be aligned
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reform are of concern to Kazakhstan’s commercial banks.
7KH ÀQDO LQGHSWK SUHVHQWDWLRQ ZDV JLYHQ E\ Nurlan
Abdrakhmanov, Head of the Strategy and Methodology
Department at the National Bank of Kazakhstan. His
16
Nurlan Abrakhmanov, NBK, discusses stronger regulation
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timeline showing their intended dates of introduction, with
incremental increases starting in 2013 and continuing until
2019. Mr. Abdrakhamanov commented that while many are
ZRUULHGWKDWIXUWKHUUHJXODWLRQZLOOVWLÁHJURZWKWKH1DWLRQDO
Bank will only be in favor of these or any other regulations
if they are seen as having positive impact. The changes will
not necessarily lead to banking consolidation, but they will
certainly lead to increased capitalization requirements.
The Forum thus examined Kazakhstan’s banking
environment from a variety of perspectives: in terms of the
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EDQNLQJ V\VWHP WKH LPSDFW RI WKH JOREDO ÀQDQFLDO
crisis, its recovery and ongoing banking restructuring, Basel
III and the impact its recommendations will have on the
global banking system, as well as Kazakhstan’s banks, and the
impact of the eurozone crisis, which is still unfolding. These
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Forum and the very heightened media presence attested to the
interest these issues have for a broad range of professionals
with an interest in public and economic policy.
Graham Settle, Asian Development Bank, queries a speaker
#47/2011
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#47/2011
starting with Basel I. When the Basel II recommendations
appeared, Kazakhstan expressed doubt about the new
recommendations. In hindsight, the Basel II standards caused
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banking models. The rating agencies followed the same model,
one reason the National Bank doesn’t always take their ratings
seriously. Moreover, the rating agencies do not maintain
RIÀFHVLQ.D]DNKVWDQDQGRQO\YLVLWWKHFRXQWU\WZLFHSHU\HDU
Their analysis is thus not as thorough or as well-informed as
could be desired.
The Basel III regulatory standards have been approved
in Kazakhstan by the Association of Financiers and will
be implemented by January 2013. However, the Basel III
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of Kazakhstan’s banking system. The two main problems are
that it is a sweeping program in its scope, but it fails to take into
consideration differences between countries and the diversity
of these countries’ economies. While the National Bank wants
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entire world. Basel IV may address this issue.
At the height of the crisis, Samryk-Kazyna acquired stakes
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the National Bank that Samruk-Kazyna should exit as soon
as possible, provided there is a solid buyer in the picture.
According to regulations, Samruk-Kazyna should have
exited BTA, Temir, and Alliance Banks within two years after
restructuring by September 2010.
While there is certainly interest in re-privatizing, the
current Eurozone crisis together with increased capitalization
requirements that will be introduced under Basel III have
made the banks unattractive to any buyers except East
Asian investors from Mumbai, Shanghai, and Hong Kong,
who, though they may have the investment capacity, aren’t
as familiar with Kazakhstani markets as are investors from
Europe and North America.
As the National Bank moves forward with its plans to
adapt and adopt Basel III, it will keep the Bank’s main goals
in mind:
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As Keynote Speaker at the $P&KDP%DQNLQJ..Forum, National
Bank Governor Grigoriy Marchenko presented an overview of
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Kazakhstan in 2007. He also commented at length on the need
for a new regulatory regime for Kazakhstan’s banking system,
outlining how the Basel III regulatory regulations adopted in
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Grigoriy Marchenko, who is currently serving his second
term as Kazakhstan’s Central Bank Governor, studied
economics at the Moscow Institute of International Relations
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University in Washington, D.C. He has held many senior
positions, including First Deputy Minister, Chairman of the
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Nazarbayev. Mr. Marchenko has also worked in the private
sector as CEO and Chairman of Halyk Bank. He was recalled
to the National Bank in early 2009 at the height of the global
banking crisis to handle the challenges posed to the country’s
banking system. Under his watch, Kazakhstan maintained
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Governor Marchenko stated that Kazakhstan has recovered
well from the global economic crisis, with growth up 7% in
2010. In fact, with the exception of ’07-’08, Kazakhstan has
enjoyed average growth of about 7% for the past 12 years. The
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pro-cyclicity featuring high growth rates of lending, leverage
and asset prices, and the high level of payments owed by
domestic banks on external liabilities. Mr. Marchenko noted
that the Kazakhstan banking sector’s foreign debt is being
resolved through restructuring.
Kazakhstan has taken measures to stimulate economic
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Government, the National Bank, and the Financial Supervisory
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support the country’s top four banks, complete residential
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assistance to small-medium businesses and the agricultural
sector, and increase public investment in industry. Further,
a new Tax Code adopted in January 2009 reduces corporate
income tax to 20%, replaces royalties on oil production with
mineral extraction, and reduces VAT from 13% to 12%.
Together with local agencies, the government is providing
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has decreased deposit rates to discourage banks from holding
funds and pushing lenders to invest in the real sector.
The National Bank sees its role as minimal, its priority
being responsibility for overall stability and macroprudential
regulation. The Bank has encouraged Islamic banking, but to
date only one Islamic bank from the Emirates has entered the
Kazakhstan market. The National Bank has been adamant
about adopting international sets of standards for the local
banking system, but is cautious in moving forward with the
appropriate changes. In 1996, the Bank moved to IFI standards,
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The expected results of the goals and the adoption of Basel
III in Kazakhstan are four-fold:
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industrial innovation plan
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inherent unpredictability
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17
#"/,*/(*/,";",)45"/*45)&$3*4*407&3
By Michael Carter
AmCham Board Member
For the past three years, it seems like one can’t even take
a taxi ride without hearing the word “crisis.” Regardless, it’s
safe to say Kazakhstan’s banking sector is out of intensive care
and has moved into a slightly more stable condition. We have
gone from a liquidity crisis and from having loan collateral
impairment from the collapse of the real estate bubble and
other loose lending practices to having excess liquidity, poor
loan growth, a lack of overall growth, and declining margins.
But in order to move ahead, the industry needs consolidation,
more capital, and to further develop industry skill sets and
expertise. At a time when potential international partners and
strategic investors are focused on their own larger problems, a
do-it-yourself approach may be necessary.
The quick answer is that consolidation could solve many of
the industry’s problems. If loan quality is bad, some banks will
need more capital, either through injection or creation of a state
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Banks need to further develop their skill sets and be willing to
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International banks are trying to reduce their assets, not
expand them. In response, Kazakhstan’s banks need a homegrown approach as foreign banks turn more inwards in their
focus. External debt has slowed, but is still rising. Most of this
growth is in inter-corporate loans, thus reducing stress on the
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needed to exert themselves, but in the future, they will need
to be more creative to ensure their continued existence and
growth.
The practice of making loose loans started outside
Kazakhstan, but soon infected the local market, peaking in
2006-2007. Since that time, more constraints from regulators
have decreased the Loan-to-deposit ratios. In 2007, banks had
a very weak deposit base, with loans to clients accounting for
more twice the deposit base. Today the rate stands at 130% (net
89%) and leverage is decreasing.
Asset Quality
Seven different real estate indices are available in Kazakhstan
and from looking at the graph of Almaty Residential Real Estate,
one can see that the real estate recovery is not V-shaped, but
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18
Loan quality is still deteriorating while standard loans have
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sector loan quality recognition.
Other problems include overdue payments continuing to
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currently accounts for 50% of equity in the banking sector,
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loan quality is questionable, then one would also question
the true value of the accrued interest in bank balance sheets,
as this is certainly one item that is subject to negotiation in
any loan restructuring. Taking this into account, it is fair to
ask whether or not a number of banks will have the needed
capital by January 2013, as Basel III implementation starts in
Kazakhstan.
It is essential to have tax law changes implemented to allow
the banking sector to restructure, write-down and dispose of
distressed loans and assets from their portfolio – something
currently made impracticable by a tax treatment that renders a
writedown a taxable event for both the lender and the borrower.
This would allow bank management to focus on developing
the future business of the banks. The tax law change would
bring many positive changes, but they will not solve the need
for fresh capital.
Asset Growth and Mix
Since the crisis, we have seen a more muted level of banks
assets growth. Unfortunately for bank earning power (and for
access to credit by the real economy), loan growth has been
disappointingly low. A recent pick up in loan volumes has
been mainly focused on retail sector lending, and not to the
SME and corporate sectors.
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the highest percentage of overdue loans by sector, explaining
why Governor Marchenko has made it more expensive to
lend to foreign entities. Foreign currency-denominated loans
have now declined to less than 40% and bank loan books are
mainly corporate and domestic. While deposits seem to be
growing, these are predominantly corporate deposits, which
are inherently a less stable deposit base upon which to extend
new loans – especially new loans of mid-term duration.
Conclusions
The current funding structure of Kazakhstan’s banking sector
is more “shock resistant” than in 2007 and contains no apparent
asset bubbles, thus reducing the risk of external shocks triggering
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did in 2008, increasing total foreign reserves by more than 53%
as a buffer against future crises.
Loan growth would alleviate asset quality issues and help
to drive growth of the non-resource economy, but it is still
not apparent in the SME and corporate sectors. Non-resource
development is traditionally the stable driver of an economy,
which is why Kazakhstan needs a growing banking sector with
a funding base that allows it to extend longer term credit to the
non-resource economy.
Further banking consolidation is needed – 39 banks are too
many. A more ideal number would be 10-12 banks to serve a
variety of clients. However, there are few external candidates to
drive this process, which might make Samruk-Kazyna the most
appropriate party to take the lead. This would be an opportunity
for Samruk-Kazyna to enhance its efforts to diversify the
economy by promoting the development of a sound banking
VHFWRUWKDWLVWKHO\QFKSLQWRWKHGLYHUVLÀFDWLRQHIIRUW
#47/2011
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By Ambassador Stephen Millar
Canadian Ambassador to Kazakhstan
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Canadian banking system proved extremely resilient. Canadian
banks did not fail and the Canadian housing market remained,
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were needed in Canada. In fact, the Canadian banking system
has been rated by the World Economic Forum as the world’s
soundest banking system. In 2008 the IMF Financial Stability
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system is “mature, sophisticated, and well-managed. Financial
stability is underpinned by sound macroeconomic policies and
strong prudential regulation and supervision”.
The most recent global recognition of the strengths of
Canada’s banking system was the appointment of Bank of
Canada Governor Mark Carney to replace Mario Draghi at
the head of the Financial Stability Board, which will acquire
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markets.
There are many reasons for Canada’s different approach to
banking regulatory control. First, there are cultural reasons
- risk aversion and the inherent conservatism of Canadian
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Canada venture capital operations are almost all in the hands
of the country’s largest commercial banks, which have a lower
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also means that venture capital operations are subject to
Canada’s regulatory system for banks.
Secondly, there are institutional reasons – Canada did not
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the U.S., U.K., and other industrialized countries in the 1980s
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Canadian regulations impose higher capital requirements,
as well as higher requirements for the quality of assets and
higher leverage ratios. In fact, Canada raised the capital
requirements for banks when other countries were lowering
theirs. Canadian banks are required to maintain capital in
excess of international minimum standards and typically hold
even higher amounts than required by Canadian regulation as
a buffer. Both the IMF and the Chinese government criticized
Canada some years ago for not doing enough to promote
securitization in its mortgage market.
Canada’s regulatory agencies work well together in
administering this framework:
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responsible for the overall system
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products
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safeguard the interests of individual borrowers
Another important factor behind the stability of Canada’s
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very little sub-prime lending. Unlike economies hardest hit
Stephen Millar, Canadian Ambassador to Kazakhstan
by the crisis, Canada has a highly restrictive mortgage market.
All mortgages with less than a 20 per cent down payment
must be insured; adjustable rate and interest-only mortgages
are unheard-of in Canada. Residential mortgage default
insurance is dominated by the state-owned Canada Mortgage
and Housing Corporation. As a result, less than 1 per cent
of Canadian mortgages are in default, versus 10 per cent in
the United States. Yet the rate of home ownership is virtually
identical in the two countries.
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1990s, the Canadian Government took strong measures to
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when it contributed to the global economic stimulus effort.
A weak point in this system is securities regulation. Canada
is a federal state whose banking issues are the responsibility
of federal authorities and whose securities regulation is the
responsibility of provincial and territorial authorities. There
is a need for a single securities regulator, and progress is being
made in this direction.
Among the risks facing Canadian banks, it should be pointed
out that Canadian banks and the Canadian economy are not
immune to global trends. Canada is a very open economy in
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trade. The United States is a very important trading partner.
Among Canada’s unique features is that it has a small
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cent of the total assets of the country’s banking sector. Foreign
banks account for only 49% of the banking sector. The low
presence of foreign banks is due largely to Canadian regulation
that limits concentration of bank share ownership. This also
reduces the scope for mergers and acquisitions.
Canada thus stands out in the global banking landscape
for the stability of its banking institutions and its sound,
well-administered regulatory environment. This is rooted in
cultural, historical, and institutional reasons and is in many
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of recent years and the sovereign debt crisis that is now
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policy emerge as a carefully-cultivated model of restraint,
prudence, coordination, and good management. Canada has
seen no institutional melt-downs or bail-outs, and though it
is impacted by global developments, it is well-positioned to
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#47/2011
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By Hans Holzhacker, Chief Economist
ATF/UniCredit Bank Kazakhstan
A broad spectrum of questions, answers and suggestions
arise when it comes to the role regulatory reform plays in
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Global bankruptcy, for example the Daily Kos says “this is not
capitalism at all, this is playing games with capital, failing to
invest in our society, failing to put capital to use to generate
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society, but rather just using $ to create paper gains that create
nothing. At what point will [they] give us real regulation that
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In a policy paper addressed to the G20, the wording by The
Institute of International Finance sounds – not surprisingly –
slightly different: “if banks are to play their part in supporting
economic recovery, G-20 leaders need to look beyond narrow
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FRQWH[W 3ROLF\PDNHUV VKRXOG FDOO D KDOW WR WKH LQWURGXFWLRQ
of new regulation while the core elements of reform, such
as increases in equity capital and recovery and resolution
arrangements, are put in place.” Global regulatory reform is
indeed needed, but recapitalizing European banks and other
broad measures will come at considerable cost, according to
the IIF, as banks will prefer to shrink risk assets rather than try
to raise expensive capital.
The current economic woes lead us to question whether
our economic model from the 1970s on has been based on
overexpansion of credit and whether we have now reached
the debt ceiling. Both the household debt to income ratio and
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advanced economies. Is this the limit? Or is the current need to
deleverage just part of the normal credit cycle?
Hans Holzhacker, Chief Economist, ATF/UniCredit Bank
This, then, leads to the next question: are new regulations
aimed at changing the debt-driven growth model or at
repairing it by stabilizing banks and adjusting policies for the
cycle? One way or the other, the regulatory agenda soon to
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adjustments across nine areas of banking are under discussion
globally. It can be expected that the regulatory environment
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on the best course of action undoubtedly lie ahead of us
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(KWWSZZZDIQN]DWWDFKPHQWVSXEOLVK
SGI was developed by the Central Bank and the Financial
Supervisory Agency two years ago and approved by
presidential decree in February 2010. One wonders whether the
&RQFHSWwas designed to fundamentally reform Kazakhstan’s
economic growth and funding model – for example, by
exerting tighter control over foreign funding and imposing
penalties for excessively rapid asset growth - or simply to
correct weaknesses in the banking system. The &RQFHSW made
important recommendations affecting bank capitalization,
liquidity, provisions, and in addition to the highlights
below, other recommendations to reduce off-balance sheet
activities. Some of this has already been put into practice.
It will be interesting to see whether the &RQFHSW continues
to be a reference point for further regulatory reform and, in
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plans to adopt as of 1 January 2013. It has been suggested, for
example, that the so-called k8 and k9 ratios (see below) may
be removed.
&RQFHSW Highlights:
Capital Adequacy
‡ For systemically important banks capital adequacy
requirements should be adjusted to include not only
risk-weighted assets but also Gap analysis, asset
concentration, wholesale funding share and loan
portfolio growth.
‡ If the duration gap is less than one year, minimum
capital adequacy remains unchanged at the previous
level; if the gap exceeds 3 years, minimum capital
adequacy increases several times over.
22
#47/2011
‡
The higher the share of wholesale funding, the higher
the requirements
Higher capital adequacy requirements must apply to
banks with rapid asset growth
Liquidity
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calculated on a consolidated basis, including nonÀQDQFLDORUJDQL]DWLRQVWKDWDUHSDUWRIWKHFRQJORPHUDWH
Liquidity ratios established for banks must apply.
‡ The ratio of total liabilities to deposits should be set
between 1.5-1.3.
‡ The k8, k9 (foreign funding) ratios must be tightened.
Provisions
‡ In addition to general and special provisions, statistical
provisions should be introduced based on a “hidden
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and can vary between 0%-5%.
‡ Fx loan provisioning will be tightened.
#47/2011
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for the global banking system. Massive regulatory reform
followed the 1873 crisis, as well as the crash of the 1920s-30s.
Another major wave of reform is now about to begin that will
involve a trade-off between stability and development. The
world cannot be made completely safe without suffocating
progress. Therefore regulation cannot be perfect and no doubt
there will be new bank crises in future.
However, regulation must be improved to prevent another
banking crash for the same reasons that underlie the current
banking crisis. While it is easy to blame bankers alone for the
current troubles, it will be more effective if all stakeholders
cooperate to bring about change with maximum skill and at
minimum cost.
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‡
23
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By Ulf Wokurka, Managing Director
Deutsche Bank Kazakhstan
The upcoming introduction of Basel III has people wondering
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system so complex, so interlinked and interdependent on a
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the effects with a high level of certainty. The situation in
Kazakhstan is perhaps a bit less convoluted, but even here
many are asking whether the planned changes to the local
banking regulations are too stringent, or perhaps not stringent
enough. How lawmakers answer that question will be seen in
the bumpy year ahead as banks gear up for the January 1, 2013
implementation deadline for the Basel III reforms.
It is important to keep in mind, though, that Basel III is just
one part of the 15-part broader G-20 regulatory agenda marking
an intensive drive to change the regulatory environment for
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prudential measures, transparency, technology, markets, and
interconnectivity.
The strengthened quality and quantity of capital promises
to be a major issue in the reform package, with increased
minimums for Tier 1 core capital. Starting in January 2013,
capital requirements will jump to 3.5% from their current 2%
and will increase to 4.5% by 2015. A capital conservation buffer
will then be introduced in 2016, incrementally increasing
to 2.5% by 2019. But capital is just one side of the equation.
Basel III hits risk-weighted assets as well, especially through
the introduction of so-called Credit Valuation Adjustments
(CVA).
There are three main areas where changes will be made to
the management of credit risks. The CVA will see a stand-alone
market risk charge for OTC derivatives, which will capture
potential mark-to-market losses. Hedges will be limited to
a single-name FUHGLW GHIDXOW VZDS (CDS), other equivalent
instruments referencing the counterparty directly and index
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The second area of changes will be in ([SHFWHG 3RVLWLYH
([SRVXUH(3( which will see the introduction of the “stressed
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general wrong-way risk as well as collateral disputes, liquidity
of collateral, and concentration of collateral types.
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way risk, changes to collateral, FHQWUDOFRXQWHUSDUWLHV&&3V and
correlation.
24
Ulf Wokurka, Managing Director, Deutsche Bank Kazakhstan
Overall, these changes have been introduced in order to no
longer recognize re-securitizations as eligible collateral or an
introduction of higher haircuts for securitizations. The Asset
9DOXH&RUUHODWLRn multiplier results in higher risk weight from
the ,QGHSHQGHQW 5HJXODWRU\ %RDUG IRU $XGLWRUV for unregulated
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The International Liquidity Risk Management framework
consists of two parts: the liquidity coverage ratio (LCR) and
the net stable funding ratio (NSFR). Key drivers for the LCR
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of FI balances, and additional funding for committed facilities,
conduits for asset-back commercial papers, collateral, and so
forth.
The observation period for this begins 2011 and will be
introduced as a minimum standard by 2015. The loan book is
the single biggest driver for the NSFR, but other key drivers
include substantial term-funding requirements on trading
assets other than government debt as well as for undrawn
committed facilities. The observation period here will begin in
2012 and be introduced as a minimum standard by 2018. The
concept behind these two ratios is right, but the parameters as
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The question remains: does Basel III go far enough? The
answer lies in the ability of regulators and lawmakers to
balance regulation with unintended consequences. The impact
assessments show a clear need for higher capital and for a more
harmonized liquidity framework, but there will be challenges
in calibrating this along with further challenges in assessing
impact. There are also large differences in public and private
sector assessment (see chart).
Furthermore, compliance with the larger Basel III
requirements implies an ability to cope with country to country
requirements.
#47/2011
Placing Basel III in Context
The European Basel III implementation process is already
underway, with proposals for legislation published on July 20,
2011. These were largely aligned with Basel III but also included
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mid-2012, at which point capital requirement regulations and
directives will apply to about 8,000 banks in the EU. Therefore,
we can expect more adjustments in EU context. The proposal
is split into two legal instruments:
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In total, there are 150 areas of work for the (XURSHDQ%DQNLQJ
$XWKRULW\ (%$ between 2012 and 2019. A large number of
ELQGLQJ WHFKQLFDO VWDQGDUGV DUH WR EH ÀQDOLVHG E\ with entailing consultation processes. There will be a political
focus on harmonizing the capital ratio requirements and the
implementation timetable.
The sovereign debt crisis evolving these days is likely to
raise questions of an overly heavy reliance on government
debt and the assumed low risk weightings for such sovereign
debt. There will also be parliamentary focus on SME lending
and impact on the broader economy.
Is Basel III relevant for U.S. banks? Yes, certainly it is
relevant given that the U.S. bank supervisory and regulatory
agencies are committed to the Basel III reform agenda, but
various industry representatives and Congress are raising
questions about the need for it. In its current regime, large
banks are already running Basel 1 and Basel 2 in parallel. The
Dodd-Frank Act (DFA) introduced the “worst of” rule, which
states that no new regime can be less tough than the existing
one (Collins Amendment). Any downward adjustment of
risk weight will require a compensating adjustment. Whereas
in Europe Basel 2.5 was in place, it stalled in the U.S. due to
ratings requirements as per DFA and related US regulation.
As revisions of the new regulations continue to take place, it
might be useful to keep a small adaptation of Lao Tzu’s quote in
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The risks of unintended consequences of Basel III should not
be overlooked:
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‡ McKinsey expects a drop in RoE from 20% to 7%
(potential recovery to max. 14% eventually) for top 13
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‡ Mitigating actions will probably include shrinking
balance sheets and redundancies
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business lines:
‡ Risk migration to ‘shadow banking’
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sector
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‡ Regulatory competition between jurisdictions
‡ Refocusing on home markets and regions which may
include retreat from global ambitions of FIs
o Liquidity and funding requirements:
‡ Ability of FIs to perform maturity transformation will
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By Bodo Thöns, Chief Representative
Commerzbank Kazakhstan
An important question for the future development of the
global economy will be the destiny of the debt-driven economy
and whether or not this model can survive. In response to
the global economic crisis, the Basel Committee on Banking
Commission has recently released the latest set of banking
regulations known as Basel-III. It is very comprehensive and
the largest institutions are in agreement with it, but how the
smaller institutions will implement these regulations remains
to be seen. There are many cultural and national nuances to
consider in its implementation that will affect how well local
banks can adapt.
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of the Basel III reforms. This is a program that should be
implemented while leaving room for national distinctions.
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able to cope with the massive market disruptions and several
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to improve bank regulation have led to the development
and proposal of substantial changes to the Basel regulatory
rules with an aggressive implementation timeline triggering
concerns about the impact on both banks and the economy.
Changes made in the Basel III publications dated July 16 and
July 26, 2010 have relaxed some areas and extended timelines,
but this is still a substantial change and there are still many
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track” working on these issues with G-20 issuing their approval
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for Leverage and Liquidity to cope better with future stress
situations.
The Regulators have four major objectives they are aiming
for with new regulations:
‡)LUVW there will be considerable qualitative and quantitative
increases to banks’ capital buffer in order to protect against
future crises and to prevent false risk incentives for investors.
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adding a capital stock loss transfer, additional buffers on core
capital, or even adding capital requirements for systemically
important major banks.
‡ 6HFRQG, the cyclical effects in stress scenarios will be
mitigated by implementing either an anti-cyclical capital buffer
or a penalty for OTC derivatives.
26
Bodo Thöns, Chief Representative, Commerzbank Kazakhstan
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and from the real economy would be achieved by raising
capital adequacy and notable bank obligations and having
minimum liquidity ratios for short term liquidity hedging as
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‡ )LQDOO\ decoupling from possible calculating and
methodological errors would be achieved by implementing
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conversion factors and OBS-items, and introducing a penalty
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The possible impact of the impact includes the following:
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transactions
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will decrease (LCR)
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‡7KHSHUFHQWDJHRIGHULYDWLYHVWUDQVDFWLRQVZLOOEH
reduced
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With the so-called Net Stable Funding Ratio, the regulators
introduce an instrument limiting maturity transformation
possibilities for banks. The maturity pattern of the assets and
liabilities side may vary strongly among credit institutions,
meaning banks that traditionally maintain a shortage in stable
customer deposits will have to reckon with additional expenses
#47/2011
#47/2011
business will be at a disadvantage due to new liquidity
regulations. In the end, though, only time and the reaction of
all competitors will show what will actually happen.
We can already see which customer segments and product
categories are likely to be affected. Those most affected will
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transactions and derivatives, and bank/insurance loans. Those
less affected include short-term loans, bonds, borrowing-base
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How greatly the terms of the individual products change in
the long term will depend greatly on the competitive position
of the given bank, which cannot be predicted at present.
Trends indicate that margins for the most affected products
may increase while, depending on the competitor, the opposite
would hold true for weaker products. Banks with access to the
capital market, however, will be able to mitigate the cost effects
through things like loan securitization.
Over the next year there will be many changes that banks
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through, but with patience and understanding, the system will
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crises.
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to balance this shortage. Additionally, it is foreseeable that there
will be increased competition for stable long-term customer
deposits. This is expected to trigger a rise in interest rates for
long-term investment products, which will in turn increase
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loans will be more attractive than long-term bank loans in the
future.
What will all this mean for corporate and retail loans? First, a
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of equity-backed products such as loans deteriorate. Banks
unwilling to bear the capital adequacy requirements by
themselves will most likely begin allocating a small portion to
their customers. Meanwhile, companies can ease their fears of
a credit crunch which has receded into the background.
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Furthermore, systemically important banks will suffer
competitive disadvantages compared to systemically less
important banks due to higher capital adequacy requirements.
The cost of transactions with large banks will rise 25% due to
an increased $VVHW9DOXH&RUUHODWLRQ)DFWRU$9& and interbank
27
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The autumn AmCham Luncheon Business Roundtable
series began in the Lotus Restaurant of the Rixos Almaty Hotel
with a dialogue with the newly-arrived U.S. Ambassador
to Kazakhstan, Kenneth J. Fairfax. Ambassador Fairfax
spoke about his diplomatic background, his experience with
AmChams in other countries, and his eagerness to work with
AmCham in Kazakhstan before taking a number of questions
from the audience. He encouraged the guests to speak about
their companies’ experience in Kazakhstan and to voice any
concerns relating to the investment climate.
A career U.S. diplomat, Ambassador Fairfax joined the State
Department in 1987. He has served in a number of overseas
postings, most recently as Minister-Counselor for Economic
Affairs in Iraq. His previous positions include Consul*HQHUDOLQ9LHW1DPDQGLQ3RODQG(FRQRPLFV&RXQVHORULQ
8NUDLQH 'HSXW\ 3ULQFLSDO 2IÀFHU LQ &DQDGD (QYLURQPHQW
6FLHQFHDQG7HFKQRORJ\2IÀFHULQ5XVVLDDQGRWKHUFRQVXODU
and economics positions in Korea and Oman. Ambassador
Fairfax has also served on the U.S. National Security Council
Staff as Director for Russia, Ukraine and Eurasia and Director
IRU 1XFOHDU 0DWHULDOV 6HFXULW\ 3ULRU WR MRLQLQJ WKH 6WDWH
'HSDUWPHQW0U)DLUID[ZDV3UHVLGHQWRIDVPDOOWHFKQRORJ\
company in Silicon Valley.
Ambassador Fairfax stressed the importance of AmChams
in all the countries where he has been posted, believing that the
real work of international relations and foreign policy occurs
between individuals, not between governments. Businesses
serve as incubators, developing understanding and new
knowledge, thus promoting good relations between countries
at the same time they promote economic development on
both sides of the ocean. The Ambassador pointed also out the
importance of Kazakhstan’s strategic location, both historically
and today, when the new Silk Road Initiative makes Almaty
a strategically important city, serving as a regional trade and
ÀQDQFLDOFHQWHUORFDWHGEHWZHHQ0RVFRZ'HOKL/RQGRQDQG
3DULV
Benjamin Paine (Chadboure and Parke), Mark Pothast
(Nestle) and guests
28
Kenneth Fairfax, U.S. Ambassador to Kazakhstan
7KH ÁRRU ZDV WKHQ RSHQHG WR TXHVWLRQV IURP OXQFKHRQ
guests. The Ambassador’s major points in response are
summarized below.
$PEDVVDGRU )DLUID[ FODULÀHG .D]DNKVWDQ·V UHFHQW
inclusion on the U.S. terrorist watch list, which he termed a
misunderstanding over a 12-year old document detailing
procedures for individuals who triggered primary and
secondary alarm levels. Kazakhstan has been removed from
the list.
The Customs Union has created challenges for the
business community. Some businesses feel the courts are not
interpreting the new legislation entailed by the Union equally
or fairly. There is a sense that the courts do not understand
the new laws or their application. Ambassador Fairfax
indicated that the Customs Union legislation may change
within the next six months to a year as the Union continues to
evolve and harmonization is sought through the World Trade
Organization accession process. The technical negotiations for
both the Customs Union and WTO will clarify many points
that are still hazy, and the courts will be expected to deepen
their grasp of the new laws.
Ambassador Fairfax listed some of the foreign policy
priorities for American-Kazakhstani relations in the years
ahead:
1. Further develop the Northern Distribution Network for
Afghanistan
2. Continue the US-Kazakhstani nuclear non-proliferation
process success
3. Work towards better regional integration and more
economic development through USAID
4. Advance commercial relations by diversifying away from
the heavy hydro-carbon market
5. Improve the investment climate by working together with
AmCham
6. Continue collaboration on counter-terrorism and drug
enforcement initiatives
7. Increase the number of exchange programs, building
Bolashak and similar exchange programs
8. Create more science and technology exchanges
#47/2011
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)&3*5"(&'06/%"5*0/41&",&3+".&430#&354
Often using raw data from the World Bank, IMF, ADB,
OECD, and the 'RLQJ %XVLQHVV 6XUYH\ the index focuses on
WHQ GLIIHUHQW ´IUHHGRPVµ WR DUULYH DW D ÀQDO VFRUH 5REHUWV
explained that Trade Freedom makes quality judgments about
a given country’s degree of non-tariff barriers, considered the
most important category because the majority of problems
currently originate in international trade. This indicator is
used by the Millennium Challenge Corporation in its eligibility
assessment for compacts and is therefore published earlier
than the others.
Monetary Freedom looks at the level of government
LQWHUYHQWLRQ LQ WKH HFRQRP\ LQ WHUPV RI LQÁDWLRQ DQG SULFH
controls, which send distorted price signals to producers and
consumers in their given countries. ,QYHVWPHQW)UHHGRP looks at
the treatment of foreign investors by host countries in terms of
policies and regulations. Financial Freedom examines whether
EDQNV DUH KHDYLO\ LQÁXHQFHG E\ JRYHUQPHQW LQ ZKLFK FDVH
credit allocation decisions might be based more on politics than
on merit. The Labor Score looks at minimum wages, mandatory
severance, and other work tools affecting entrepreneurs.
#47/2011
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On October 26, the second October Business Roundtable
EURXJKW $P&KDP PHPEHUV WRJHWKHU LQ WKH 5DKDW 3DODFH
Dzhambul Restaurant to hear James Roberts, Research
Fellow at the Washington DC-based Heritage Foundation's
Center for International Trade and Economics. The speaker
presented the ,QGH[RI(FRQRPLF)UHHGRPDQLQÁXHQWLDODQQXDO
analysis of the global economic climate, co-published by the
Heritage Foundation and the Wall Street Journal. Jim Roberts
served in the U.S. State Department for 25 years, has worked on
international trade issues, and has coordinated several major
U.S. assistance programs, including efforts to reform Eastern
Europe economies and to reconstruct Iraq.
The index was initiated in the mid-90s when the political
right felt that Americans didn’t fully appreciate the prosperity
they enjoyed. In response, there was a desire to create an index
to analyze that prosperity. The index was developed with
the goal of looking at outcomes instead of using a quality/
normative analysis and creating a data-driven product
in accordance with Heritage Foundation values (limited
government, civil society, low taxes, etc.). As a result, the index
focuses on individuals, entrepreneurs, the private sector and
the idea that the government should not be involved in the
HFRQRP\H[FHSWWRFUHDWHWKHFRQGLWLRQVIRULWWRÁRXULVK7KH
ÀQLVKHGSURGXFWKDVJURZQLQWRDQLPSRUWDQWWRRODWWUDFWLQJ
hundreds of thousands of website hits every year.
James Roberts, Research Fellow, Heritage Foundation
Center for International Trade and Economics
A score above 60 is considered good, so Kazakhstan with
a 2010 score of 62.1 is doing well for itself. It is interesting to
QRWHWKDWWKH86VFRUHGURSSHGEHORZIRUWKHÀUVWWLPHLQ
the ,QGH[ +RZHYHU WKH REMHFWLYH LVQ·W WR SRLQW ÀQJHUV
and condemn people or countries, but rather to encourage
them to perform better. Some areas in which Kazakhstan has
improved are in Labor and Taxation. Areas where there is
URRPIRULPSURYHPHQWDUHLQÁDWLRQPRQHWDU\IUHHGRPDQG
corruption.
The Kazakhstani government has devoted serious attention
to the World Bank’s'RLQJ%XVLQHVV6XUYH\, which has motivated
the country to improve its scores. Numerous government
LQLWLDWLYHV DUH EHLQJ LPSOHPHQWHG DQG VLJQLÀFDQW WLPH DQG
resources are going into these projects. This will undoubtedly
have a positive impact on the Heritage Foundation’s ratings
as well, but it’s important to look at the long-term results,
rather than year-to-year movements. The global economic
situation will continue to affect Kazakhstan, but decisions via
the Customs Union will also have a long-term effect.
James Roberts recently published a paper urging Ukraine to
aim for a free-trade agreement with the European Union and
not to push for entry into the Customs Unions. The economic
EHQHÀWVDUHFOHDUPLOOLRQSHRSOHZLWKFRPSDUDWLYHO\ORZ
*'3 LQ WKH &XVWRPV 8QLRQ VSDFH YHUVXV PLOOLRQ SHRSOH
ZLWK KLJK *'3 DQG JUHDWHU LQYHVWPHQW SRVVLELOLWLHV LQ WKH
European Union. Using the same logic, although Kazakhstan
has already joined the Customs Union, it should reach out to
the European community as much as possible.
29
2Q 6HSWHPEHU WKH ÀUVW AmCham Sundowner of the
autumn business season was held at the Rixos Almaty
Hotel, sponsored by Thunderbird Worldwide Kazakhstan
(Thunderbird School of Global Management) and the Rixos
Hotel, marking AmCham’s upcoming relocation to the Rixos
2IÀFH 7RZHU 7KH HYHQLQJ DWWUDFWHG D UHFRUG WXUQRXW RI members and guests, including a large contingent from the
7KXQGHUELUG*UDQG2SHQLQJFRQIHUHQFH to launch Thunderbird
RSHUDWLRQVDQGWKHQHZ7KXQGHUELUGRIÀFHLQ$OPDW\
Thunderbird, the globally known U.S. management school,
founded in 1946 in Colorado and operating in the CIS since
WKURXJK LWV 0RVFRZ RIÀFH RSHQHG DQ $OPDW\ RIÀFH LQ
September as the base for its operations in Central Asia and the
broader region. The Thunderbird Grand Opening was held at
the Rixos Hotel in a day-long management strategies conference
on September 30, attended by Thunderbird executives
from abroad. All participants were invited to the AmCham
Sundowner afterwards. Offering a range of programs tailored
to local content and delivered in a classroom environment,
Thunderbird also provides access to its top-ranked executive
education and master’s degree programs, delivered both live
and on-line. Thunderbird is an impressive new entrant to
Kazakhstan’s academic and educational environment.
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"53*904"-."5:)05&-
Doris Bradbury, Thunderbird CIS President Christopher Lee, and
Rixos General Manager Markus Schmidt open the Sundowner
As always, the Rixos provided an elegant setting and a
VXPSWXRXVEXIIHWGLQQHUZLWKÀQH)UHQFKZLQHLQLWVOX[XULRXV
Brasserie Restaurant. Rixos General Manager Markus Schmidt
spoke about the Hotel and the Brasserie, which is continuing to
develop its authentic French menu through the hotel’s French
executive chef and Thai pastry chef. He also invited guests to
visit the luxurious Rixos Royal Spa with its Eastern atmosphere
and array of European, Far Eastern, and Hammam-style
WKHUDSLHV6KLPPHULQJDQGÀOOHGZLWKOLJKWWKHYHU\(XURSHDQ
5L[RV+RWHOIXOO\OLYHVXSWRLWVÀYHVWDUUDWLQJDQGZLOOEHDQ
H[FHOOHQWKRPHEDVHIRUWKHQHZ$P&KDPRIÀFH
Doris Bradbury and former Board Member Ivan Doudin (Honeywell)
30
Christopher Lee and Thunderbird staff cut the cake for guests
A large cake from the Rixos kitchen marking the Thunderbird
Grand Opening was wheeled into the Brasserie Restaurant
and served to Sundowner guests. The evening was truly a
FHOHEUDWLRQIRUWKHQHZ$P&KDPRIÀFHIRUWKH5L[RV$OPDW\
Hotel with its high standards of hospitality, and for the new
7KXQGHUELUG RIÀFH LQ .D]DNKVWDQ ZLWK LWV LQWHUQDWLRQDO
reputation for training top executives for the world’s leading
corporations.
Leonard Hill, US Consulate General, and Charles Armitage,
KIMEP Professor
#47/2011
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The very stylist Dolce Gusto Coffee-Machine comes in a
three different models and bold colors and produces four
varieties of connoisseur coffee drinks – Cappuccino, Expresso,
Latte Macciato, and Lungo. A coffee station at the Sundowner
treated guests to sample cups of coffee throughout the evening,
and a Dolce Gusto coffee-maker was presented as a lottery
SUL]HWRD86&RQVXODURIÀFLDO
ADB and US Consulate General Staff with Nestle Lottery Winner
Royal Tulip Serving Staff in the Halloween Mood
The Royal Tulip Hotel also served as the setting for last
year’s Halloween Sundowner, a monopoly on this entertaining
holiday. The evening’s buffet featured Halloween-themed
dishes such as Uzbek pilaf-stuffed pumpkins and pumpkinshaped desserts. A DJ interspersed Miles Davis’ Pictures of
6SDLQ with selections from Thriller and sound effects from
classic Hollywood horror movies.
Nokia also presented a gift of its new N9 Smartphone
through a specially designed game for all Sundowner guests
using their mobile phones to dial responses to a series of
TXHVWLRQV7KHÀUVWSHUVRQWRVHQGWKHULJKWFRGHUHVSRQVHIRU
all questions won the new Smartphone – an entertaining game
that prompted all the guests to take out their mobile phones
and send their coded responses to the Nokia team in the Hotel
Ballroom.
The Nokia N9 Smartphone fuses innovative hardware and
software design, combining the latest in camera, navigation,
and audio applications with a new swipe feature that returns
the user immediately to home. The three home views of the
user interface provide fast access to apps usage, staying up
WRGDWHZLWKQRWLÀFDWLRQVDQGVRFLDOQHWZRUNVDQGVZLWFKLQJ
between activities. For further information, visit ZZZVZLSH
nokia.com
AmCham Board Member Walter Daniel, Irina Daniel, and
Doris Bradbury
The Sundowner was supported by Nestle, which is
introducing its new Dolce Gusto coffee machine and coffee
capsule system to Kazakhstan, and by Nokia, which is
presenting the innovative N9 Smartphone to the Kazakhstan
market. Both products were presented as lottery prizes to
lucky winners among the Sundowner guests.
Martin Quirke, Tamara Bocharova, and guests
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On 31 October 2011 AmCham held its third annual Halloween
Sundowner at the Royal Tulip Almaty Hotel, whose large,
columned marble Ballroom festooned with Halloween
decorations, provided the perfect setting for the occasion.
6WXIIHG VFDUHFURZV LQ FRIÀQV FDQGOHOLW SXPSNLQV FREZHEV
skeletal face-painted waiters created the right atmosphere for
Halloween night, lit by a full moon outside. The Sundowner
was in other ways a typical AmCham Sundowner and the 150
guests networked and enjoyed a very sociable evening.
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".$)".5)"/,4(*7*/(
"55)&*/5&3$0/5*/&/5"-"-."5:)05&On Thursday, November 24 the annual AmCham
Thanksgiving was celebrated, as always, at Almaty’s
InterContinental Hotel where Thanksgiving is a rite for
AmCham members and their families, bringing autumn to
a close and ushering in the winter holiday season. Over 200
guests joined AmCham Board members and the new U.S.
$PEDVVDGRU .HQQHWK )DLUID[ and his wife, Nyetta Yarkin, who
were joined at the Head Table by 86&RQVXO*HQHUDO0LFKDHO
6QRZGHQ $P&KDP ([HFXWLYH 'LUHFWRU 'RULV %UDGEXU\ %RDUG
6HFUHWDU\:DOWHU'DQLHO3Z&former Board member ,YDQ'RXGLQ
+RQH\ZHOO and +6%&&(2/DUV5HMGLQJall accompanied by
their spouses and children.
Thanksgiving Dinner featured typical American dishes for
this harvest celebration – turkey, squash, potatoes, and other
root vegetables, salads, pumpkin pie and other deserts. Wine
was served throughout dinner and seasonal bouquets adorned
each table.
Daniel Mota (KCell) in the Pumpkin Patch with young guests
Jazz was played throughout the evening by the Chamber’s
favorite group, Jazz Session. Mulled wine was served during
the pre-dinner cocktail outside the InterContinental Ballroom,
while children were led off to play and be entertained by
Lan Wu (ADB) with Marla Valdez (SNR Denton)
32
clowns, acrobats, magicians and a host of other entertainers.
The children enjoyed their own menu, but were free to come
and go, visiting their parents at tables in the Ballroom. One
table was composed entirely of children while their parents
occupied their own table nearby.
After AmCham Board Secretary Walter Daniel welcomed
guests, Ambassador Fairfax spoke about the history and
meaning of Thanksgiving. Later in the evening Walter Daniel
conducted the lottery, assisted by a crowd of children anxious
to draw the winning ticket. Outstanding lottery gifts were
donated by Air Astana and Etihad Airways (both airlines
offering 2 round-trip tickets to any destination worldwide),
Avon (a series of delectable holiday gifts), InterContinental
Hotel EUXQFK DQG GLQQHU FHUWLÀFDWHV IRU WKH Bosphorus
Restaurant and Asian Café), and DHL (worldwide delivery
FHUWLÀFDWHV
Ambassador Fairfax, Michael Carter, and Ivan Doudin
$IWHU WKH ORWWHU\ WKH GDQFH ÁRRU ÀOOHG XS ZLWK FKLOGUHQ
and their parents. Children are always the most enthusiastic
dancers at AmCham events, but this year teenagers and
members joined them until it was time to leave, the next
morning ushering in another working day.
Children actively participate in the festivities
#47/2011
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#47/2011
33
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7KH$P&KDP:RUNLQJ*URXSVDFURVV.D]DNKVWDQFRQWLQXHWREH
RQHRIWKHPRVWG\QDPLFEHQHÀWVRIIHUHGWR&KDPEHUPHPEHUVVHHNLQJ
WR UHPDLQ DEUHDVW RI GHYHORSPHQWV LQ PDQ\ GLIIHUHQW DUHDV YLWDO WR
WKHLU FRUSRUDWH SROLF\ DQG RSHUDWLRQV 7KHVH *URXSV LQFRUSRUDWH
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RWKHUUHJLRQV7KH$P&KDP(FRQRPLF3ROLF\0DQDJHUWUDYHOVIURP
$OPDW\WRDWWHQGJURXSPHHWLQJVLQRWKHUORFDWLRQVWKXVPDLQWDLQLQJ
$P&KDP·VRYHUYLHZRI:RUNLQJ*URXSDFWLYLW\
7KHQXPEHURI*URXSVFRQWLQXHVWRH[SDQGDQGDVRI-DQXDU\
WKH\ZLOOQXPEHU²LQ$OPDW\LQ$W\UDXLQ$VWDQD
DQG QHZ *URXSV LQ $NWDX +XPDQ 5HVRXUFHV DQG 7D[ 7KH
&KDPEHUFRQVLGHUVLWV:RUNLQJ*URXSVDYLWDOVHUYLFHWRPHPEHUV
RQH WKDW DOVR EULQJV DGGHG GHSWK WR $P&KDP DQG LWV DELOLW\ WR
DGYRFDWHIRUDQLPSURYHGEXVLQHVVHQYLURQPHQWZLWKWKH*RYHUQPHQW
of Kazakhstan.
Almaty Human Resources
September The HR Working Group examined the
LPSRUWDQFH DQG EHQHÀWV RI JUDGLQJ V\VWHPV ZLWKLQ ODUJH
corporations with an overview from Denkerst. Microsoft and
Air Astana then shared their experience and discussed their
own internal grading systems. Whereas Microsoft has a
very structured system with mandatory reviews every 18-24
months, Air Astana, as a younger and smaller company, has
D PRUH ÁH[LEOH VHW RI JUDGLQJ VFDOHV WKDW DOORZ IRU JURZWK
within a single position. Lastly, Ernst & Young gave an update
on proposed migration and work permit rules for foreign
employees, with exemptions for operators, contractors and
sub-contractors working on the Kashagan, Karachaganak and
Tengiz projects.
November
Thunderbird Worldwide took the reins at this
HR Working Group meeting, leading the group with a nonstandard format that included a training game they typically
use in corporate trainings. The meeting attracted the largest
attendance of any AmCham Working Group to date with 42
present. The game was based on the idea of inter-governmental
cooperation and the sharing of resources, food and minerals.
The lessons learned at the end of the game demonstrated the
QHHGIRUHIIHFWLYHFRPPXQLFDWLRQVKRZLQJKRZFRQÁLFWVFDQ
occur between departments. In the end, the resources belong to
HYHU\RQHLQWKHFRPSDQ\EXWDUHQRWDOZD\VXVHGHIÀFLHQWO\
when departments or individuals focus on protecting their
RZQLQWHUHVWVÀUVW
Almaty Corporate Social Responsibility
September
Eurasia Foundation opened the meeting
by sharing information about the new $U1DP\]&65$ZDUG
competition. AES gave a presentation about their CSR
activities, which are typically involved in education, health,
and work with orphanages. The company has also engaged in
construction of kindergartens and work with war veterans. The
Civil Alliance was present to announce the 2011 International
1*2&RQIHUHQFH and the WKDQQXDO&LYLO)RUXP, which attracts
3UHVLGHQW 1D]DUED\HY·V DWWHQWLRQ HYHU\ \HDU 7KH )RUXP
works to develop recommendations for the civil sector and
other social programs.
November
IAB was represented by Bakhytnur
Otarbayev, who spoke about her recent experiences in
Kyrgyzstan at CSR Week. She explored some of the different
GHÀQLWLRQV RI &65 XVHG E\ FRPSDQLHV DQG 1*2V DQG WKH
LQÁXHQFHWKH\FDQKDYHRQVKDSLQJWKHYLVLRQRIDFRPSDQ\·V
34
CSR activities. British American Tobacco followed this
presentation with a presentation on their own CSR activities.
As a tobacco company, it was interesting to learn about the
BAT approach to CSR, which does not involve promoting the
company’s name through these activities. Most CSR projects
are delivered through local NGOs for this purpose.
Chevron likewise presented on their CSR activities,
mainly education and scholarship programs often involving
purchasing laboratory equipment for partner universities.
They discussed the criteria applied when selecting projects for
funding. Chevron outlined their joint program with EFCA to
train unemployed women in a trade or skill and the microcredit
loans they offer to help launch businesses.
Almaty Tax
September
7KH ÀUVW PHHWLQJ LQ 6HSWHPEHU LQFOXGHG
a presentation by Baker McKenzie on VAT corporate income
tax, which covered grounds for deducting VAT, calculating
thin capitalization, the concept of related parties, exemptions
for gains on shares and stakes, disposing of property outside
Kazakhstan, and income under governments with preferential
tax treatment. This was followed with a presentation on
international taxation by $QJHOV1LND$GYLVRU\.
The second meeting in September included another
SUHVHQWDWLRQRQ9$7SD\PHQWRI9$7E\FUHGLWVLPSOLÀHG
VAT refund procedures, and VAT debt balance refunds, one
of the most important changes in the tax code. The &HQWUDO
$VLDQ7D[5HVHDUFK&HQWHU then discussed the latest changes in
the tax code in detail, centered on individual taxes and general
provisions/ tax administration.
October
This month’s meeting focused on the taxation
of foreign companies in Kazakhstan, beginning with a
discussion of the criteria for determining residency or nonresidency according to Kazakhstan’s legislation. This included
a discussion on the permanent establishment of non-residents.
The group also explored international tax treaties on double
taxation and taxation of income of non-resident individuals.
November Vera Kapatsina of $QJHOV1LND$GYLVRU\presented
on the features of transfer pricing legislation in Kazakhstan,
EHJLQQLQJ ZLWK D JHQHUDO GHÀQLWLRQ RI WUDQVIHU SULFLQJ 6KH
continued with legal sources regulating transfer pricing, areas
where it is applied, and methods for determining market price.
Ms. Kapatsina then delivered a second presentation devoted
to adjustment of taxable imports for VAT purposes in the
Customs Union and transfer pricing.
Astana Foreign Investment
November
The US Embassy presented on its support
for foreign investment in Kazakhstan: advising Washington
on the country’s political and economic situation, as well
as advocating for commercial development in Kazakhstan.
Samryk Kazyna then spoke about the opening of a new Center
IRU7D[5HVHDUFKWKDWZLOOIXOÀOOIRXUREMHFWLYHVFUHDWLRQRID
public statistics database, archiving historical work such as
previous draft legislation, performing analytical work and
soliciting feedback, and monitoring tax revenues/ refunds.
Astana Tax Working Group
November
Deloitte opened the meeting with a
presentation on VAT related to the Customs Union and on
Customs Duties. The speakers covered issues of documentation,
#47/2011
exchange of information between government bodies, and the
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GHÀQLWLRQVDQGSURYLVLRQVRIWKHWD[DQGFXVWRPVOHJLVODWLRQ
The &HQWUDO$VLDQ7D[5HVHDUFK&HQWHU gave a presentation on
the deductibility of notional expenses (charges made from
+HDG 2IÀFH WR 3HUPDQHQW (VWDEOLVKPHQW DQG GHPRQVWUDWHG
different conceptual approaches using UN and OECD
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DVDUHVXOWRILQWHUSUHWDWLRQUHODWLQJWRÀQDOEHQHÀFLDU\LQFRPH
were also discussed.
Atyrau Corporate Social Responsibility Working Group
September
The &LYLO $OOLDQFH RI .D]DNKVWDQ discussed
their proposal to create a &RPPXQLW\ 'HYHORSPHQW 3URMHFW in
Kazakhstan’s western regions. They also announced the
2011 International NGO Conference and the 5th annual
Civil Forum which will be held in early October. The group
decided that offering NGO support and training would a
worthy investment, but would require further dialogue with
the Alliance. TengizChevroil then presented their 3DUWLFLSDWRU\
Needs Assessment, which highlighted areas of greatest CSR
need, and their biennial CSR Report.
Atyrau Tax Working Group
September
KPMG opened the meeting with an
overview of three pieces of legislation affected by changes in
the tax laws - corporate income tax, individual income tax, and
VAT for non-resident taxation. There was a proposal to request
WKHWD[DXWKRULWLHVWRSXEOLVKVDPSOHVRIWKHDFFHSWHGFHUWLÀFDWHV
of residency for each country with which Kazakhstan has
signed a double taxation avoidance treaty.
November
+HOG DV D MRLQW PHHWLQJ ZLWK WKH .30*
Business Breakfast, the Central Asian Tax Research Center
discussed permanent establishment and some lesser-known
situations, for example if a company opens a permanent
HVWDEOLVKPHQWEXWQRWDEUDQFKRIÀFH3DUWRIWKHSUHVHQWDWLRQ
centered on determining the tax base of a branch/ permanent
HVWDEOLVKPHQW LQFOXGLQJ GHGXFWLELOLW\ RI KHDG RIÀFH JHQHUDO
administrative and managerial expenses. This is currently
an important topic for a number of AmCham members
ZKR ÀQG WKDW JRYHUQPHQW WD[ RIÀFLDOV PD\ GLYHUJH LQ WKHLU
interpretations of the regulations. Legislation deals with
many of these issues, but interpretation of the legislation and
implementation are still weak.
Atyrau Human Resources Working Group
November
The meeting opened with introduction
of the new Working Group Chair, Derek Toffer, Director of
Business Development at Fluor. The most recent work permit
legislation covering exemptions for the Karachaganak, Tengiz
and Caspian projects was discussed. It is still unclear what the
outcome will be for manpower agencies, who were recently
banned from contracting staff to companies, but who have
instead turned to service contracts, though this doesn’t hold
force in Mangystau oblast’. Members were encouraged to
sign up for the Foreign Investor Council’s mailing list to stay
abreast of new developments in labor ratios and other local
content issues.
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AmCham advocacy has advanced in recent months with
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is anticipated to begin working with the Government of
Kazakhstan in the spring of 2012.
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of Kazakhstan will resume their work in the spring.
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listed below have evolved from the Working Groups, White
3DSHUV &RQIHUHQFHV DQG 3XEOLFDWLRQV ODXQFKHG LQ under the 86.D]DNKVWDQ 3XEOLF3ULYDWH (FRQRPLF 3DUWQHUVKLS
,QLWLDWLYH33(3,, later renamed the $P&KDP(FRQRPLF3ROLF\
3URJUDP $(33 %RWK 33(3, DQG $(33 ZHUH DQG FRQWLQXH
to be headed by AmCham on behalf of its members and the
broader business community with the objective of improving
Kazakhstan’s business environment.
AEPP Rule of Law Project Team
On October 13 the Rule of Law Project Team headed by
Marla Valdez, Managing Partner, SNR Denton joined a
Working Group of Deputy Ministers at the Ministry of Justice
in Astana to draft new legislation affecting the business
community.
7KH$(333URMHFW7HDPLVFXUUHQWO\SUHSDULQJDSROLF\SDSHU
for this Working Group containing targeted recommendations
for removing tax and administrative matters resulting from
government audits from the courts, as well as removing
criminal liability for these matters where no criminal intent has
been demonstrated. This approach would relieve the courts of
the burden of adjudicating complex business disputes and
facilitate resolution of cases for companies involved.
The AmCham Rule of Law Forum: Protecting Investor
Interests on -XQH in Astana formed part of the AmChamMinistry of Justice3URMHFW7HDPZRUNDQGZDVDJUHHGXSRQ
with 'HSXW\3ULPH0LQLVWHU2U\QED\HY in February.
AEPP Banking Reform Project Team
In late October, 1DWLRQDO %DQN RI .D]DNKVWDQ *RYHUQRU
Marchenko requested that the AmCham Banking Reform
Team assist a team composed by the Bank to study the Basel
III recommendations for banking regulatory reform. The
objective is to select those recommendations appropriate to
Kazakhstan’s banking system for introduction on 1 January
2013.
Headed by Ulf Wokurka, Country Director for Deutsche
Bank Kazakhstan, the Team has met several times with its
counterpart team at the National Bank in Almaty, formally
launching its joint work December 9. The project will develop
in 3 stages with AmCham present at each stage: presentation
of recommendations from the Basel III package, review by
Kazakhstan’s commercial banks (37 banks), and drafting new
banking legislation. The Financiers Association of Kazakhstan
also participates in this process.
The AmCham Banking Regulatory Reform Forum: Creating
a Stable Financial System in a Volatile Environment on
1RYHPEHU in Almaty formed part of the AmCham -National
%DQN3URMHFW7HDPZRUNDQGZDVDJUHHGXSRQZLWK*RYHUQRU
Marchenko in October.
AEPP Customs and Trade Facilitation (Regional Economic
Integration) Project Team
The Trade and Customs Project Team will launch their work
following the next AmCham Forum conference, planned for the
spring of 2012. This conference will be devoted to examining
the impact of the 5XVVLD.D]DNKVWDQ%HODUXV&XVWRPV8QLRQand
Kazakhstan’s accession to the World Trade Organization.
The conference is anticipated to involve participation by
Russian specialists on the Customs Union and WTO accession,
both processes in which Kazakhstan’s position is closely allied
with Russian policy.
phone +7 (727) 259 91 73 / 259 84 56
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