AIFC Governor: strengthen the financial market and a favorable environment for global investors

 Dubai -31 May 2024 :  His Excellency Renat Bekturov, Governor of the Astana International Financial Center, stressed the importance of the strategic partnership between Kazakhstan and the United Arab Emirates, and announced the presence of 300 Emirati companies in Kazakhstan and more than 100 joint projects with Emirati partners in Kazakhstan in sectors such as trade, manufacturing, real estate and finance.

The governor revealed the existence of 8 projects worth $4.1 billion, in the fields of tourism, transportation, logistics services, oil and gas, education, construction, and agriculture, while he expected that additional investment cooperation in the field of transportation and logistics services would continue, as well as expanding it to include the field of renewable energy with the conclusion of bilateral agreements.

Mr.  Bekturov expected further growth in bilateral partnerships and economic cooperation between the two sides, and enhanced prospects for cooperation with Emirati companies within the Astana Financial Center, which he described as promising, as the center is an ideal platform for Emirati companies seeking to expand their presence in Central Asia, by taking advantage of the infrastructure. The strong position, regulatory framework and strategic location.

In the following comprehensive dialogue, the Governor of the Astana Financial Center revealed the most specific goals and expectations for enhancing economic cooperation between Kazakhstan, the UAE, and the countries of the Middle East and North Africa region, and how to develop cooperation in the field of investment and financial center issues. He explained the number of companies registered in the Astana Financial Center, and expectations regarding their contribution. In Kazakhstan’s GDP, he talked about the Belt and Road Initiative, and how the government of Kazakhstan and the UAE can support the project in this effort.

 What are the more specific goals and expectations for the enhancement of economic cooperation with UAE and MENA countries?

The enhancement of economic cooperation between Kazakhstan and the UAE, as well as MENA countries, holds immense potential for mutual benefit and prosperity.

In 2023, Kazakhstan’s exports of goods to the UAE amounted to $210 million, with metals as the main export position. Conversely, imports from the UAE to Kazakhstan reached $119 million in 2023, marking a significant 65% year-on-year growth. Electronics, vehicles, machinery for the majority of imports from the UAE. Clearly, there is significant room for growth in bilateral trade.

The economic and trade cooperation between Kazakhstan and the UAE has been steadily strengthening, underscored by growing investments, agreements, and joint ventures. This trend reflects the increasing synergy between our countries, reinforced by the growing number of investment projects, agreements, and joint ventures.

The number of Kazakhstan-UAE joint ventures and UAE companies operating in Kazakhstan has demonstrated remarkable growth in recent years. Currently, over 100 joint ventures with UAE partners operate in Kazakhstan across sectors such as trade, manufacturing, real estate, and finance. Furthermore, approximately 300 UAE companies operate in Kazakhstan in various fields, including trade, transport and logistics, finance, ICT, and construction. There is also significant potential for cooperation in food security and energy transition minerals.

2. How can cooperation with UAE develop in the field of investment, financial centers issues?

Currently, 33 companies from the UAE are registered at the AIFC, primarily operating in sectors such as financial services and insurance (10), professional, scientific, and technical activities (7), information and communication technology (6), and others (10).

Among them is Presight AI Ltd., a company engaged in AI development, which together with Kazakhstan’s Samruk-Kazyna is involved in projects to build a supercomputer in Kazakhstan and construct a data processing centre (DPC).

Also, Caspian Integrated Maritime Solutions ltd. is a joint venture between Kazakhstan and the UAE to develop projects within the Middle corridor.

Gross FDI from the UAE to Kazakhstan has been steadily growing in the last years, reaching $869 million in 2023 (about 4% of total FDI inflow to Kazakhstan in 2023). Cumulative total gross FDI from the UAE to Kazakhstan since 2005 stands at $4,1 billion

Currently, there are 8 projects with the UAE investors in Kazakhstan, which are valued at around $4,1 billion. The portfolio includes projects in tourism, transport and logistics, oil and gas, education, construction, and agriculture.

Further investment cooperation is expected to continue in transport and logistics, as well as to be expanded to the field of renewable energy as bilateral agreements have been concluded.

3. The AIFC has been functioning since 2018. Could you please tell us a little bit about the progress it has made? What new principal companies have come to the AIFC, what do they find special in this platform?

Since its launch in 2018, Astana International Financial Centre (AIFC) has evolved into a renowned financial institution, playing a pivotal role in the advancement of the Kazakhstani financial market. The AIFC offers a conducive environment for global investors, supported by an independent regulator and a robust justice system through the AIFC Court and the International Arbitration Centre (IAC).

AIFC has steadily emerged as a significant platform, not only for Kazakhstan but for the entire Central Asian region, establishing itself as a dynamic hub for finance and investment. In particular, as of the latest Global Financial Centres Index (GFCI) 35, the AIFC ranked first in Eastern Europe and Central Asia, solidifying its position as a leading financial centre in the region. Additionally, topping the region in the Global Green Finance Index (GGFI) 12 showcases our commitment to sustainable finance and environmental responsibility.

A significant achievement of the AIFC is the development of its infrastructure, notably the Astana International Exchange (AIX), which provides modern trading platforms and a low-risk clearing and settlement infrastructure, enhancing investor confidence. The AIFC creates favourable business conditions by offering tax incentives, new organisational and legal frameworks, and streamlined labour and visa procedures. It has introduced innovative services previously unavailable in Kazakhstan, such as cryptocurrency exchanges, digital asset trading, crowdfunding platforms, and standardised green financing.

The AIFC Court and the International Arbitration Centre have heard and enforced more than 2600 cases to the 100% satisfaction of the parties to the dispute since the start of their operations on 1 January 2018. These disputes encompassed a wide range of commercial matters involving investors from 28 countries.

In 2023, the AIFC Green Finance Centre verified around 60% of green bonds and loans in Kazakhstan, demonstrating its significant influence in the broader Central Asian region.

The AIFC’s commitment to high regulatory standards has been recognised by international bodies such as the International Organisation of Securities Commissions (IOSCO) and the Financial Action Task Force (FATF)/Eurasian Group (EAG). A notable highlight in recent progress is the inclusion of AIX in the Tabadul Hub, fostering regional and global integration.

Leading global custodian banks, including J.P. Morgan, Bank of New York, State Street, Citi, BNP Paribas and Northern Trust have become depositary clients of the AIX via Citi Kazakhstan, holding securities listed on the exchange. Additionally, the number of retail investors on AIX reached an impressive 1,7 million as of April 2024, highlighting the exchange’s growing popularity and robust investor base. AIFC has achieved the creation of an integrated capital market where both foreign and Kazakh investors actively participate.

4. How many companies registered in the AFIC and what about the expectations of its contribution to the GDP of Kazakhstan?

The AIFC hosts over 2700 companies from 78 countries, reaching a historical maximum of over 600 new registrations in 2023 alone, including leading financial firms, global service providers, cryptocurrency exchanges, venture capital companies and regional development banks. Prominent firms such as KPMG, EY, PwC, Deloitte, Binance, Bybit, Most Ventures, China Construction Bank Corporation, and China Development Bank are part of the AIFC’s ecosystem.

Notable companies include Polymetal, one of the world’s top 10 gold and silver producers, and Amicorp, a global provider of trust and fund administration services. Sergio Gironella, representative of Amicorp Group in CIS region, noted at the opening ceremony that Kazakhstan is becoming the leader of the region, and the AIFC is helping significantly by offering an ecosystem based on common law. It uses international currencies like the euro and dollar, making it very easy for clients to set up a base here for international trading or investments in the region.

In the last 5 years, the number of AIFC participants has gradually increased every year, with an average annual growth of over 500 companies or by approximately 57%.

Thanks to these registered companies, the AIFC has successfully attracted more than $11,9 billion to the Kazakh economy. Approximately 40% of these funds were raised on the AIX, while 60% of these funds were accumulated by direct investments of AIFC participants.

The majority of these participants come from key industries such as finance and insurance, information and communication, professional, scientific, and technical activities, wholesale and retail trade, and mining. Their active involvement has not only diversified Kazakhstan’s economic landscape but also fostered productivity and innovation across various sectors. This widespread participation has led to increased economic activity, job creation and technological advancement, all of which significantly contribute to the country’s GDP growth.

 

5. Regarding Belt and Road Initiative, how can the government of Kazakhstan and UAE corporate to support the project this effort? Are there any government programs that aim at the creation of new skills adapted to the BRI needs?

Kazakhstan plays an important role under the BRI as two out of six economic corridors pass through Kazakhstan. The BRI also provides opportunities to all participating countries, including Kazakhstan and the UAE, to develop infrastructure, improve connectivity as well as increase manufacturing capacity and international trade volume, thus stimulating the overall development of the economies.

Aligned with the objectives of the BRI, Kazakhstan’s domestic policies emphasize the development of transport and logistics infrastructure, further reinforcing its commitment to the initiative’s goals.

The collaboration between Kazakhstan and the UAE in transport and logistics is already underway. Notably, DP World provides management services to strategic assets such as the Aktau Port and Khorgos Special Economic Zone (SEZ), positioned along the Middle Corridor—a key route of the BRI. This exchange of experience is instrumental in enhancing trade connectivity along the New Silk Route and fostering business ties between the two countries.

The AIFC is also doing its part in promoting the BRI. Our guiding principles are financial regulation in accordance with the highest international standards, creating and maintaining a robust financial infrastructure, providing independent judicial system, and an emphasis on innovation and expertise to enable businesses to attract capital.

Examples of the AIFC’s contributions to the BRI include the listing of the first RMB-denominated bond on the Astana International Exchange’s Belt and Road Market in 2020. This bond raised RMB 1 billion to support local infrastructure and BRI projects, underscoring AIX’s significance as a partner in accessing capital markets for BRI funding.

Moreover, the AIFC Green Finance Centre (GFC) is a Central Asian chapter of the Green Investment Principles (GIP), promoting green investment within the BRI framework. By assisting regional banks in “greening” their operations and facilitating access to global capital markets for green projects, the AIFC GFC contributes to sustainable development along the BRI route.

For instance, AIFC GFC has assisted several potential GIP signatories in applying for this status. One of the successful cases is that Doscredobank from Kyrgyzstan became the first bank in Central Asia to meet all the requirements.

AIFC is also working on building connectivity between Central Asia and other Asian nations to ensure that the corridor operates effectively with international joint ventures aimed at working along the Middle Corridor registered at AIFC. As previously mentioned, Caspian Integrated Maritime Solutions Ltd is a JV between KazMunayGaz and Abu Dhabi Ports group established in the AIFC. The JV provides maritime and coastal freight transport services in the Caspian Sea by creating and expanding the fleet capacity in the region.

As we look ahead, the prospects for collaboration with UAE businesses within the AIFC are promising. AIFC is an ideal platform for UAE firms seeking to expand their presence in Central Asia. By leveraging the AIFC’s robust infrastructure, regulatory framework and strategic location, we anticipate further growth in bilateral partnerships and economic cooperation between Kazakhstan and the UAE.