Authorities are developing plans to diversify Kazakhstan’s economy by using oil revenue.
Thursday, 31 Jan 2013
Financial & Professional Services Sector in
Kazakhstan is rich in natural resources, mainly oil and natural gas, but also coal and minerals,
including iron ore, chromium, uranium, copper, nickel, cobalt, gold and many others. Raw
minerals extraction is the biggest sector of Kazakhstan’s economy, making it overly
dependent on world market prices for mineral resources. Authorities are developing plans to
diversify the economy by using oil revenue.
Today, the level of foreign direct investment is among the highest in the former USSR.
Kazakhstan has seen growth levels of 7% in 2010, 7.5% in 2011 and 5% in 2012.
The financial condition of the banks under restructuring has improved, and the level of
systemic risks throughout the sector has decreased. The share of external liabilities in total
banking sector liabilities fell from 53.3% in January 2008, to 21.1% by April 2011. Deposits
have been growing steadily for the last 3 years or so.
Although both the banking and insurance sector suffered sharply during the recent world
financial crisis, when the insurance premiums declined from $1.1 billion to $900 million, the
market started recovering in 2010 with 15% growth, reaching $1 billion, according to the
Recently, the Samruk-Kazyna, the state holding company managing most of government
assets, started a national IPO program. KazTransOil was Kazakhstan's first national company
to float its shares in the "people's" IPO. KazTransOil floated 38,463,559 shares, accounting
for 10% of the company's declared common shares minus one share. Analysts expect dual
listings, with an offering in Almaty and either London or the Hong Kong. Since China is the
primary consumer of Kazakh raw materials, investor interest in Hong Kong is high, while
London remains the international hub of emerging markets investment.
Most of the international legal firms are based in Almaty, their main sector of interest being
ξ Provision of UK expertise in business education and professional skills development.
ξ Investing, advising, and insuring the development of Kazakhstan’s hydrocarbons and
other mineral resources.
ξ Supporting development of Kazakhstan's infrastructure.
ξ Further listing by Kazakh firms on LSE
ξ Provision of professional services for the development of the banking sector
ξ Fulfilling demand for British non-executive directors for Kazakhstani companies.
ξ Private-public partnerships (non oil sector and infrastructure development)
ξ Islamic finance
Getting into the market
All banking activities, including the acceptance of deposits, maintenance of correspondent
accounts, cash operations, money transfers, discounting operations and lending are subject to
licensing by the National Bank of Kazakhstan.
Non-resident insurance companies may open representative offices without having to obtain
approval from the NBK (representative office cannot carry out any business activity in
Kazakhstan), although they must notify the NBK about this. Non-resident insurance
companies are prohibited from establishing branch offices (as opposed to representative
offices) of in Kazakhstan.
More foreign law firms are opening branches in Kazakhstan, whereas before they would have
worked through local partners.