Investors' Voice December 2014
Transcription
Investors' Voice December 2014
IV Investors' Voice The American Chamber of Commerce in Kazakhstan Ka z a k h s t a n ' s L e a d i n g I n t e r n a t i o n a l B u s i n e s s A s s o c i a t i o n December 2014 HOLIDAY ISSUE #62 AmCham Advocacy 2014: Improving Kazakhstan's Investment Climate Microsoft - Software Piracy, A Threat to Cybersecurity Beeline - Predictions for the Mobile Telecommunications Market Kcell - Rapid Progress in Kazakhstan's Mobile Industry EBRD - Current Dilemmas in Banking and Insurance Tele2 - Proposals for the Kazakhstan Telecommunications Market Al Hilal Bank - Islamic Banking in Kazakhstan London-Almaty Insurance - Kazakhstan's Insurance Industry: Facilitating Industry Development Definitive Advice. Practical Guidance. Powerful Advocacy. Dechert’s Kazakhstan team advises domestic, foreign and multinational clients on corporate, mergers and acquisitions, capital markets, corporate finance, energy and natural resources, litigation and arbitration, regulatory and tax matters. Our Almaty office offers services in Russian, Kazakh, English and Mandarin. Working closely with our colleagues in Europe, the United States, Asia and the Middle East, we combine the reach, resources and experience of a 900-lawyer international law firm with strong local ties and an established presence in the region. That’s why Chambers Global 2012 praised Dechert’s “experienced lawyers who can . . . point [clients] in the right direction,” and why domestic and foreign clients in sectors including energy and natural resources, financial services, construction, manufacturing, food and beverage, and technology, media and telecommunications rely on us in Kazakhstan and around the world. For more information, please contact: Kenneth E. Mack +7 727 258 5088 [email protected] dechert.com Almaty • Austin • Beijing • Boston • Brussels • Charlotte • Chicago • Dubai • Dublin • Frankfurt • Hartford • Hong Kong • London • Los Angeles Luxembourg • Moscow • Munich • New York • Orange County • Paris • Philadelphia • Princeton • San Francisco • Silicon Valley • Tbilisi • Washington, D.C. EDITOR’S NOTE Dear Readers, The December issue of Investors' Voice for 2014 offers a sampling of presentations by AmCham members at the this year's Council to Improve the Investment Climate; the platform for dialogue created by Kazakhstan's Prime Minister, Karim Massimov, exclusively for AmCham and its members. The Council was launched three years ago following several years of increasing advocacy by AmCham, which has consistently worked together with the Prime Minister's Office to make our members' voices heard at the most senior levels of the Government of Kazakhstan. It speaks well for Kazakhstan's forward-looking Government that AmCham efforts have been supported by the Prime Minister, who chairs each monthly Council meeting. In 2014, the Prime Minister has also invited AmCham to attend weekly Cabinet meetings where the issues in this year's AmCham Investment White Paper: Top Ten Barriers to Foreign Investment, are debated. Because Council sessions have limited attendance, it has not been possible to include all AmCham members in these monthly meetings. Members often enquire about the topics discussed at the Council, topics that range from policy issues affecting all industries to industry-specific presentations. Past issues of Investors Voice published Council presentations on challenges such as Rule of Law, Judicial Independence, Criminalization of Investor Disputes, and Intellectual Property Rights. In 2014 the Council has tended to focus on industry-specific challenges, beginning with the Customs Union and proceeding to the financial industry, technology, and the oil industry - VAT refunds, environmental penalties, and engineering/ construction licenses. In the present issue we offer our readers articles based on recent Council presentations - views from the telecommunications, banking, and insurance industries, as well as an overview of product piracy that is still only too prevalent in Kazakhstan. The Government has taken a strong position to curtail product piracy in all forms. In the year ahead, AmCham will continue to open up Council discussions to our members, and will engage members in Council proceedings as often as possible. In the meantime, AmCham wishes all its members and readers a very happy holiday season. We look forward to seeing all of you in 2015! Doris Bradbury Executive Director TABLE OF CONTENTS ARTICLES Software Piracy, A Threat to Cybersecurity by Alexey Reshtenko..........................................................10 Cover Artwork: The Family and the Structure of the World by Eduard Kazarian Kcell - Rapid Progress in Kazakhstan's Mobile Telecommunications Industry by Rikard Slunga.................................................................11 Investing in Kazakhstan's Power Industry: The Legal Framework by Shaimerden Chikanayev............................................18 Beeline - Predictions for the Mobile Telecommunications Market by Taras Parkhomenko......................................................12 CHAMBER EVENTS Tele2 - Proposals for the Kazakhstan Telecommunications Market by Pietari Kivikko................................................................13 The EBRD Role in the Telecommunications Sector by Janet Heckman............................................................14 Kazakhstan's Insurance Industry: Facilitating Industry Development by Yergali Begimbetov........................................................15 Al Hilal Bank - Islamic Banking in Kazakhstan by Prasad Abraham..........................................................16 EBRD - Current Dilemmas in Banking and Insurance by Dr. Agris Preimanis....................................................17 #62/2014 AmCham September Business Roundtable.............22 Almaty Autumn Sundowner..........................................23 Atyrau Renaissance Sundowner.................................24 Almaty Halloween Sundowner.....................................26 Aktau Renaissance Sundowner..................................28 AmCham Thanksgiving Celebration..........................30 Almaty Winter Holiday Sundowner.............................32 Working Group Update.............................33 Advocacy Update............................................35 Member News......................................................36 New Member Profiles..................................38 5 BOARD OF DIRECTORS CREDITS EXECUTIVE COMMITTEE EDITOR IN CHIEF: Doris Bradbury PHOTOGRAPHER: Dmitry Skegin Walter Daniel Kenneth Mack Janet Heckman Paul Cohn President Vice President Treasurer Secretary Managing Partner Kazakhstan Director Partner Director, Legal Services Dechert EBRD Ernst & Young PricewaterhouseCoopers COVER ARTWORK: Eduard Kazarian BOARD MEMBERS CONTRIBUTORS: Prasad Abraham Yergali Begimbetov Shaimerden Chikanayev Janet Heckman Pietari Kivikko Taras Parkhomenko Dr. Agris Preimanis Alexey Reshtenko Rikard Slunga PUBLISHER: American Chamber of Commerce in Kazakhstan Tel.: +7 (727) 330 92 50 Fax: +7 (727) 330 92 51 6 Doris Bradbury Theresa Grencik Osman Kazdal Executive Director U.S. Consul General General Manager AmCham US Embassy Coca-Cola Almaty Oybek Khalilov Andrei Kurilin Tim Miller Mark Pothast General Manager Chief Executive Officer General Director General Manager AIG Citibank Kazakhstan Tengizchevroil Nestle Eurasia For information about the Chamber, please email [email protected] For information about Investors' Voice and Chamber's website please contact Saniya Yergaliyeva at [email protected] To register for a Chamber event, please email Administrative Assistant Malika Kazymbetova at [email protected] To enquire about financial issues, please contact Finance Director Rimma Kazhemyakina at [email protected] #62/2014 CONTRIBUTORS Prasad Abraham, CEO, Al Hilal Bank Kazakhstan Prasad Abraham's banking career began at Citibank in 1977. In 1983, he joined the Arab Banking Corporation (ABC) in Bahrain, where he served as Group Chief Auditor until 2013, serving on the Audit Committee of the parent company, as well as on the Audit Committees of Banco Atlantico in Spain, ABC Daus in Frankfurt, and ABC International Bank in the UK. In 2004, Mr. Abraham was appointed Deputy CEO of ABC International Bank in London. In 2007, he was involved in coordination and pre-opening efforts to establish Al Hilal Bank in Abu Dhabi, and in 2008 he was appointed Al Hilal's Chief Operating Officer. When the Bank opened a subsidiary in Kazakhstan, Prasad Abraham was appointed CEO of the new subsidiary. Yergali Begimbetov, Chairman, London-Almaty Insurance Company Yergali Begimbetov has been Chairman of London-Almaty Insurance Company since 2003. Between 2000-2003, he served as Vice President, then as Acting CEO at KBS Garant Insurance Company. From February, 2003 he was Advisor to the CEO at BankTuranAlem (BTA Bank). Yergali Begimbetov graduated from the Almaty Power Engineering Institute in 1994 as an Automation Engineer. He received extensive insurance training at Nationwide and Grange Insurance in the United States, as well as in Finance and Accounting at Arthur Andersen and Ernst & Young. Shaimerden Chikanayev, Partner, GRATA Law Firm (Almaty / Ulaanbaatar) Shaimerden Chikanayev is a Partner in the GRATA Banking and Finance Group and heads the firm’s Mongolia practice, dividing his time between Almaty and Ulaanbaatar. With over 10 years of experience as a Kazakhstani lawyer, Mr. Chikanayev focuses his practice on a wide range of finance and M&A transactions, including project finance and capital markets, infrastructure transactions, and workouts and restructurings in many industries. He was formerly an Associate in the Almaty office of Dewey & Leboeuf and In-House Counsel at the London EBRD headquarters. Shaimerden Chikanayev received his LL.M. from Duke University Law School, and his BA in Law from Eurasian National University Faculty of Law. Janet Heckman, Kazakhstan Country Director, European Bank for Reconstruction and Development (EBRD) Janet Heckman is Kazakhstan Country Director for the EBRD, appointed in July 2012. Prior to joining EBRD, Ms. Heckman worked for Citigroup as a Managing Director in corporate banking for 32 years in the UK, Algeria, Bulgaria, Romania, Hungary, Greece and Bahrain. Janet Heckman holds an MSFS degree in International Relations from Georgetown University and an undergraduate degree in History from Kenyon College. She was AmCham Vice President in Romania and served on the AmCham Board in Bulgaria. She was also Chairman of the Fulbright Board in Bulgaria and a Board Member in Hungary and Romania. Pietari Kivikko, Chief Executive Officer, Tele 2 Kazakhstan Pietari Kivikko began his career in telecommunications 16 years ago as a financial controller at Sonera, and was later promoted to Head of Finance for the company's international mobile operations. In 2003 he joined the Moscow head office of MegaFon as Director of Financial Planning and Analysis, after which he served as CFO for Fintur Holdings/ TeliaSonera Eurasia in Istanbul. In 2010 Pietari Kivikko was appointed CFO of Tele2, and in 2013 he became Chief Executive Officer of Tele 2 Kazakhstan. Pietari Kivikko holds a Master's degree in Economics from the School of Economics and Business Administration in Turku, Finland. Taras Parkhomenko, Chief Executive Officer, Beeline Kazakhstan Taras Parkhomenko began his career in marketing and strategic planning at Golden Telecom, where he worked between 1996-2002. From 2003-2006, he served as Director of Marketing at Arterium, one of the largest pharmaceutical companies in Ukraine. In August 2006 Mr. Parkhomenko joined Kyivstar as Deputy Director for Strategic Affairs, later heading the Marketing Department. In February 2013 he was appointed CEO of Beeline Kazakhstan. Taras Parkhomenko graduated in engineering and economics from Kyiv International Civil Aviation University in 1996. In 2002 he received a diploma from the British Chartered Institute of Marketing (CIM). #62/2014 7 CONTRIBUTORS (Con't) Dr. Agris Preimanis, Lead Economist for Central Asia, EBRD Dr. Agris Preimanis is the EBRD Lead Economist for Central Asia, working with governments, regulators, and the private sector on formulating economic policies, strategies and structural reforms. Dr. Preimanis also maintains a broader role in the venture capital and private equity sector across the entire EBRD region. Before the EBRD, Dr. Preimanis worked for ten years at Oxera, a UK-based advisory firm, advising financial services firms and regulators in the UK, Europe and the US. He holds a D.Phil. in Financial Economics from Oxford University, an MSc in Finance from Birkbeck College, and a BSc and BA from Stockholm School of Economics in Riga. Alexey Reshtenko, General Manager, Microsoft Kazakhstan Alexey Reshtenko has worked at Microsoft since 2001, starting as Partner Account Manager in NW Russia, then as NW Russia District Manager. Between 20062007 he headed the Microsoft SMB Department, returning to St. Petersburg as District Manager, then as Regional Sales Manager for Russia 2008-2012. Mr. Reshtenko was appointed General Manager of Microsoft Kazakhstan in November 2013, after serving as Microsoft General Manager for New Markets (South Caucasus, Central Asia, Belarus, Moldova) 2012-2013. Alexey Reshtenko holds an Engineering degree from St. Petersburg State Telecommunications University. Rikard Slunga, Chief Executive Officer, Kcell Kazakhstan Rikard Slunga was appointed CEO at Kcell Kazakhstan in November 2014. From April to November 2014, he served as ICT Director at Kcell. Between 20062009, he was Chief Executive Officer at Nordisk Mobiltelefon Sverige (Sweden). From 2000 to 2003, he held the position of CTO at ORANGE Sverige. Between 1998-2000, Mr. Slunga served as Business Manager at Telia Mobile AB. Mr. Slunga also worked as a Consultant at Malakit company (Sweden) and a Director at the Swedish telecommunications company, ReWiCom. Rikard Slunga holds a Master's degree in Engineering. ARTICLES SOFTWARE PIRACY – A THREAT TO CYBERSECURITY By Alexey Reshtenko, General Director Microsoft Kazakhstan What is Cybercrime and What are Its Risks? Today there is a huge shift in the perception of cybercrime on the part of both consumers and corporate customers, all of whom are concerned about the security of their data as well as their privacy. However, there is not always a clear understanding of what cybercrime is and what risks it entails for software users. First, the term 'cybercrime' needs to be defined. According to Interpol, crimes against cybersecurity are divided into 3 broad areas: attacks against computer hardware and software, for example, botnets, malware, and network intrusion; financial crimes, such as online fraud, penetration of online financial services and phishing; and abuse, especially of children. Malware is, in fact, a whole group of digital 'microbes' like Trojan horses, viruses, keystroke loggers, password stealers, backdoors, spywares, ransonware and netbot. According to a recently released joint study by IDC and the National University of Singapore (“The Dangerous World of Counterfeit and Pirated Software”, IDC, March 2013), malware is a huge global industry today. Malware usually affects computers in search of financial gain. One common source of malware is pirated software. Respondents in the IDC study reported that 54% of the people they knew who used pirated software experienced security problems. In addition to an incomplete understanding of what constitutes cybercrime, users often do not fully realize the related risks. For consumers the most common risks are loss of personal and financial data, as well as reputational risks. For companies, the stakes are much higher: as an example, in 2013, 110 million credit cards and personal information of customers of a major US discount retail chain were breached by criminals using malware. This single breach cost this company $400 million in lost holiday sales, a very significant financial (and reputational) loss. There are several modes of protection against cybercrime. The IDC study cites the following: • For consumers - understanding that pirated software is not free, but rather that it bears risks to online safety and security. Consumers need to be vigilant in identifying software that looks or appears legitimate but is not, and buy computers only from trusted stores or online sites. • For companies - only legitimate and secure software should be used, and software and cybersecurity audits should be regularly performed. Companies should also enforce strict IT procurement and usage policy measures company-wide, and monitor employees' unauthorized, potentially piracy-related activities. • For governments - their populations and government agencies should be alerted to cybersecurity and malware threats from software piracy. They need to be fully aware and sensitized to the dangers to sensitive government information. Lastly, governments need to ensure they have a strong detection and enforcement infrastructure for preventing intellectual property theft and cybersecurity abuses. 10 According to the latest BSA Global Software Survey published in June 2014, the percentage and commercial value of unlicensed software installed on personal computers by geographic region was: • Central and Eastern Europe: 61% (USD 5,318M) • Russia: 62% (USD 2,658M), Belarus: 86% (USD 173M), Georgia: 90% (USD 40M), Azerbaijan: 85% (USD 103M), Armenia: 86% (USD 26M). • Western Europe: 29% (USD 12,766M), North America: 19% (USD 10,853M), Middle East and Africa: 59% USD 4,309M), Asia Pacific: 62% (USD 21,041M), Latin America: 59% (USD 8,422M). • Kazakhstan: 74% (USD 136M) • Worldwide: 43% (USD 62,709M). Effective enforcement against software piracy is important as it entails the following negative consequences: • Low innovation and lack of investment • Limited local IP/IT industry, low motivation for local IT producers • Fewer employment opportunities in the IT field • Less government taxes • Unfair competition among both sellers and users of software • Risk of malware from unlicensed software, opening access for cybercrimes BSA | The Software Alliance (www.bsa.org) is the leading advocate for the global software industry before governments and in the international marketplace. Its members are among the world’s most innovative companies, creating software solutions that spark the economy and improve modern life. With headquarters in Washington DC and operations in more than 60 countries around the world, BSA pioneers compliance programs that promote legal software use and advocates for public policies that foster technology innovation and drive growth in the digital economy. Microsoft is a member of BSA and adheres to BSA principles, which protect the entire software industry along with consumers, businesses, and governments. This role is inherent in Microsoft's corporate mandate and responsibilities towards all of its users worldwide, including in Kazakhstan and across the CIS. Kazakhstan Legislation Protecting Software - Software protection is regulated by the following national legislation: • the Law of Kazakhstan “On Copyright and Related Rights” • the Civil Code of Kazakhstan (Articles 971 – 984) • the Code on Administrative Breaches of Kazakhstan (Article 129) • the Criminal Code of Kazakhstan (Article 184) As of January 1, 2015, the new Criminal Code of Kazakhstan will come into force, under which any breach of intellectual property rights shall be considered as a criminal offence, entailing (depending on the breach) punishment for the company and company management. Punishment may be a monetary fine up to $51,000, a ban on participation in public works, arrest and imprisonment up to 6 years, followed by a ban on holding specific positions or engaging in specific types of activity. Criminal liability is accompanied by civil liability (i.e. compensation of losses and damages to the copyright owner). #62/2014 KCELL - RAPID PROGRESS IN KAZAKHSTAN'S MOBILE TELECOMMUNICATIONS INDUSTRY Mobile technology has radically transformed the world around us and the mobile evolution is moving forward at unprecedented speeds. It is expanding the digital frontiers far beyond what was imaginable even just a few years ago thanks to global broadband technologies such as 3G, 4G and the forthcoming 5G networks. These innovations open up new opportunities and services that will enhance the daily lives of individuals, allow businesses to grow further and facilitate the public sector to become even more efficient. These advances in the mobile industry create new opportunities for innovative applications, including services like eGov and mGov as well as the steady flow of new devices and tablets. As mobile phone capabilities increase and customer prices decrease, mobile technology can address additional challenges as well. The digital divide within a country or society can widen rapidly when modern cutting edge technology is introduced in an urban environment while rural areas often lag behind without steady access to broadband internet. However, this current technological situation is not necessarily the future status quo. The mobile industry can make a significant contribution to reducing this digital divide in rural areas by offering mobile broadband internet access based on the right circumstances, such as low, far-reaching frequencies combined with modern broadband technologies. To remain competitive in this Digital Age, it is critically important that Kazakhstan secures the ideal conditions to stimulate introduction of the new global broadband technologies currently implemented almost everywhere worldwide. To complete this task, the existing frequency bands, for example 900 MHz, must to be reframed into continuous blocks of 5MHz in order to access global broadband technologies such as 3G, 4G and soon 5G. This reconfiguration is something that most countries around the world have done recently or are in the process of completing. It is indeed a welcome sign that this nationwide upgrade is currently underway in Kazakhstan and will provide further improvements and investments in rural areas. This complex solution which combines frequency reframing, technology neutrality and modern transmission will provide tremendous growth for the mobile communication sector in all parts of the country and similarly stimulate further investment on behalf of the telecom industry. With the right conditions, the mobile industry will create fantastic solutions across the country for the public sector (M-Gov), businesses (M2M), social services (distant learning and telemedicine), entertainment, and security. Kcell is in constant contact with the appropriate regulators concerning these issues, and anticipates further constructive discussions that will result in positive progress in mobile network coverage and quality. As a corollary, another innovative approach to mobile communication, in which the entire industry has taken an interest, is introduction of mobile payment solutions. It is widely known that manufacturers of mobile devices have made significant progress in this aspect of the consumer experience. Most mobile providers already include a special chip that permits payment directly from the user’s device. Furthermore, it is not just the technological #62/2014 hardware but also software, such as mobile wallets, which will allow subscribers to easily and quickly complete cashless microtransactions. As a mobile operator operating in Kazakhstan with international expertise, Kcell may vastly contribute to the development of this innovative technology. However, to promote this novel concept, government support is essential to procure the cooperation of the national and commercial banks. At Kcell, our plans are already progressing steadily in this direction, such as recently launching a service for credit card payments called K-pay. ARTICLES By Rikard Slunga, Chief Executive Officer Kcell Kcell is furthermore proud to support and positively contribute to educational and innovation clusters. Kcell has already launched joint cooperation with the School of Engineering at Nazarbayev University to share our knowledge and expertise. For instance, we actively contributed to the Second Research Week conducted at Nazarbayev University during the final week of November 2014. We will continue our cooperation with the university, as there are myriad opportunities to educate young and local technical experts who will play a great role in the future of Kazakhstan’s IT and telecommunications industries. Finally, Kcell is carefully studying how to contribute to the Almaty Innovative Cluster, which, with the participation of President Nazarbayev, officially opened in mid-December 2014. This Cluster incorporates numerous initiatives, such as inviting industry experts from abroad to lead coaching sessions, or establishing R&D laboratories and supporting local start-up projects. Regardless of what the future of mobile technology may hold, Kcell will continue to work tirelessly with the Ministry of Investment and Development and the ICT Fund to achieve these goals and more. 11 ARTICLES BEELINE - PREDICTIONS FOR THE MOBILE TELECOMMUNICATIONS MARKET By Taras Parkhomenko, Chief Executive Officer Beeline The mobile telecommunications industry is in a stage of market saturation, and consequently the market growth rate is slowing down. According to Beeline’s expectations, in 2015 the market may show negative growth year-on-year. This reduction is driven by a decrease in revenue from inter-operator traffic correlating to a 20% reduction in the Mobile Termination Rate (MTR), among other factors. Further analysis indicates that the sole growing revenue stream is in the Mobile Internet sector. This increase will in effect, have a positive impact on market revenue dynamics. In the current situation, the introduction of new technologies in the mobile market is becoming progressively more urgent than ever before. Moreover, the launch of 4th Generation (4G) networks by key mobile telecommunications companies may result in a new positive impetus in overall market dynamics. In this case, the terms for the implementation of 4G networks will be a key factor for success. These terms include two main factors, both of which merit further attention. Firstly, there is the serious question of issuing licenses for 4G Long-Term Evolution (LTE), in combination with the release of operators for this corresponding frequency resource in the appropriate range (800 MHz and 1800 Hz). Practice shows that network rollout and market saturation with relevant user-terminals takes between 1.5 - 3 years to complete. The delay in the 4G tendering and licensing usually closes the window of opportunities to invest in a full-scale network rollout. This situation can be best exemplified when telecommunication companies must operate in the present circumstances of declining revenue streams and tight cost-economy modes. 12 It is likewise important not to overlook the optimal moment in time to invest in the widest-possible 4G coverage. Beeline’s strategic plans occupy an important place to ensure proper telecommunications quality within the framework of the fastapproaching EXPO-2017 in Astana. In preparation for this international event, Beeline is prepared to provide the highestquality 4G coverage across the 25-hectare territory designated for the EXPO-2017 pavilions. In order to provide the highest quality coverage, the timely allocation of proper frequencies and appropriate licenses is an absolute prerequisite and accordingly must be guaranteed in advance. Lastly, another critical concern is the introduction of a technological neutrality principle for existing frequencies. This provision is needed to establish the most efficient utilization of limited frequency resources and to stimulate the most productive competitive environment in the mobile market. It is important to keep in mind the above factors governing a limited time-frame for operators’ investment capabilities, as well as the rate of deployment of network coverage rollout. Beeline has already been entrusted with complete licensing obligations for deployment of 3rd Generation (3G) services, which have been implemented in full. At this moment, as a leading telecommunications firm, Beeline is fully prepared to leap forward into the next digital era with the introduction of highquality mobile services based upon 4G technologies. #62/2014 TELE2 - PROPOSALS FOR THE KAZAKHSTAN TELECOMMUNICATIONS MARKET market, as well as in the economy of Kazakhstan, presently stands at approximately USD 700 million. With this net cash flow into Kazakhstan, Tele2 is the largest net foreign investor in the Tele2 is one of Europe’s fastest growing telecommunications country’s telecommunications sector. As of Q3 2014, Tele2 owned operators with the mission to provide the best service to our approximately 10% of the national telecommunications market, customers at the lowest possible prices. Ever since Jan Stenbeck and between January - September 2014, Tele2 had 3.1 million founded the company in 1993, Tele2 has been a highly competitive customers in Kazakhstan. challenger to all the markets in which the company operates. With In regard to the telecommunications market in Kazakhstan, a 51% stake in the company, the majority shareholder of Tele2 is recent regulatory changes have improved the investment climate Investment AB Kinnevik in Sweden owned by Cristina and Max for the industry. Among these changes are regulations which Stenbeck. In May 2006, Tele2 was first listed under the ticker are actively driving MNP, pending the final date of commercial symbols Tele2 A and Tele2 B on the Stockholm Stock Exchange, introduction. There has also been a gradual decrease in MTR over and since October 2006, on the Nasdaq OMX Stockholm Large the past three years, although further reduction is still needed. Cap List. One step in the right direction is technological neutrality for 2G and Currently, Tele2 currently offers mobile voice and broadband 3G mobile networks. Formalized responsibility and coordination for data 2G and 3G mobile Formalized responsibility services, fitechnological xed broadband neutrality and telephony, networks, cable networks. between mobile operators and the Ministry ofand Internal Affairs have television coordination and content services. According our most recent between mobiletooperators and theled Ministry Internal Affairs policies have led to initialofsteps to implement for to the use of a signal survey, Tele2 presently 13.6 million customers 9 countries: initial stepsserves to implement policies infor the use of jammer a signal jammer to avoid negative to avoid a negative impact on network service quality. the Netherlands, Austria, Croatia, Sweden, Estonia, Additionally, Tele2 has recognized further steps needed to impactGermany, on network service quality. Latvia, Lithuania, and, since 2010, Kazakhstan. Furthermore, improve competition and investment conditions. High MTR levels Tele2 wasAdditionally, one of the first mobile to are a barrier competition in the mobile Tele2telecommunications has recognizedoperators further steps needed to for improve competition andtelecommunications launch 4Ginvestment services. market as Despite aingradual reduction in MTR during the conditions. High MTR levels are a barrier fora whole. competition the mobile In this article, Tele2 will discuss on-going initiatives and changes past few years,reduction it still remains telecommunications market as a whole. Despite a gradual in comparatively MTR duringhigh thein Kazakhstan. in telecommunications regulation intended to improve conditions for high In comparison, the current MTR in Kazakhstan past few years, it still remains comparatively in Kazakhstan. In comparison, the stands at USD fair and open marketMTR competition. Mobile Number Portability (MNP),0.06; 0.06; in Russia,USD USD 0.03; in the EU, USD current in Kazakhstan stands at USD in Russia, 0.03;and and in the EU, 0.02 on average. which allows mobile users to switch providers without changing As a corollary, high MTR is a substantial fi nancial USD 0.02 on average. As a corollary, high MTR is a substantial financial burden for burden for new their original number, is oneto of the manytelecommunications key initiatives currently being the telecommunications market while it continues to new entrants marketentrants while ittocontinues to protect dominant implemented. Its commercial introduction is expected in 1H 2015 protect dominant mobile operators from additional mobile operators from additional competition. As a means to improve the conditions for competition. pending final confi rmation from the administrative regulator. As a means to improve the conditions for competition in the competition in the telecommunications market, further action to lower MTR is needed on Tele2 also will stress that the high Mobile Termination Rate (MTR), telecommunications market, further action to lower MTR is needed behalf of the relevant government agencies. the rates for inter-operator traffic, remains a major competitive on behalf of the relevant government agencies. barrier in Tele2 the telecommunications market. Further government Tele2 further acknowledges the need for greater transparency in further acknowledges the need for greater transparency in regulation licensing action willand helpradio to create fairer conditions for competition, thus itregulation andissue radio spectrum spectrum resources. To this extent, remainslicensing a critical that resources. To this extent, advancingtelecommunications the development of Kazakhstan's telecommunications it remains a critical issue that regulators regulators establish a coherent long-term strategy andtelecommunications planning services. In addition, Tele2 also recommends coherent long-term establish a coherent long-term strategy and planning that clearly that clearly communicates a timetable and plan of action for future licensing and planning ofspectrum radio spectrum resources and a transparent licensing communicates a timetable and plan of action for future licensing availability. This lack of visibility and clear timetables heavily affects mobile process tooperators’ improve investment conditions. and availability. This lacklikewise of visibility and clear timetables investment and technology decisions. Asspectrum a result, this situation As previously mentioned, Tele2 entered Kazakhstan's heavily affects mobile operators’ investment and technology warrants greater clarification on behalf of telecommunications regulatory bodies. telecommunications market in 2010. Tele2’s direct foreign decisions. As a result, this situation likewise warrants greater investment in the development of the telecommunications clarification on behalf of telecommunications regulatory bodies. #62/2014 ARTICLES By Pietari Kivikko, Chief Executive Officer Tele2 Kazakhstan 13 ARTICLES THE EBRD ROLE IN THE TELECOMMUNICATIONS SECTOR By Janet Heckman, Country Director for Kazakhstan European Bank for Reconstruction and Development (EBRD) Background The European Bank for Reconstruction and Development (EBRD) has been involved in the telecommunications sector in Kazakhstan since EBRD’s earliest days, both in terms of financing and in provision of technical cooperation expertise to policy and regulatory authorities. The EBRD continues its engagement with sector stakeholders, both public and private, and would welcome an opportunity to expand that engagement consistent with government policy, the EBRD mandate and strategy, and market demand. Furthermore, EBRD has been approached by Altel with a view to EBRD participating, along with the Development Bank of Kazakhstan (DBK), in the financing of capital expenditure of USD300m by Altel on the roll-out of Altel’s fourth-generation (4G/ LTE) mobile network. EBRD believes this approach provides a significant opportunity to renew and deepen the EBRD/Kazakhstan partnership in the development of the telecommunications sector. Outlined below are the opportunities and challenges that this partnership presents, as well as the steps available to address the challenges and benefits from taking these steps. EBRD would welcome a more detailed discussion on these issues under guidance from the Prime Minister’s Office. investment. Lastly, the EBRD notes the need for further and better competition in the sector, particularly with respect to the fixed segment. EBRD/Kazakhstan Enhanced Cooperation The EBRD believes that its ongoing discussions with Altel and Kazakhtelecom present a significant opportunity to build upon and enhance the already successful EBRD/Kazakhstan partnership. Such enhanced partnership can include access to both EBRD finance/investment (for Kazakhtelecom, Altel or, more broadly, in the sector), as well as expertise and funding for the further development of the sector's policy, regulatory and institutional framework. The EBRD deems that significant benefits can flow to Altel, Kazakhtelecom, the Government, and EBRD from an enhanced relationship in the telecommunications sector. Benefits can flow from the EBRD’s reputation and credibility as an investor in the sector and in Kazakhstan, as well as from the signals of confidence that such a partnership can send to the market. Moreover, the EBRD has the ability to support future development of the company with both debt and equity; as well as access to expertise and funding from EBRD’s dedicated Legal Transition Team for technical assistance on policy, regulatory and institutional framework development in the telecommunications sector. Finally, and of greatest importance, the character of EBRD as a patient investor with a long-term view lends stability and credibility to a partnership that will promote development in the telecommunications sector. Telecommunications Sector Transition Challenges The EBRD has observed the key transition challenges of the telecommunications sector in Kazakhstan. Such difficulties include the need for further and better development of telecommunications infrastructure, in particular the extension of high-speed and ultrahigh-speed broadband internet throughout the country. There is a similar demand to enhance the sector's institutional structure and capacity, particularly with respect to the robustness of policy and regulatory functions. In addition, this sector must quicken the adoption and implementation of proven international best practice regulatory policies and methodologies with the aim of attracting new investment into the sector and accelerating planned 14 #62/2014 KAZAKHSTAN'S INSURANCE INDUSTRY: FACILITATING INDUSTRY DEVELOPMENT With Kazakhstan's accession to the World Trade Organization (WTO) and Common Economic Space (CEE), it is expected that competition will significantly increase when large international companies, in particular Russian companies, enter Kazakhstan's insurance market. This scenario entails strong competitors that will affect the quality of services provided and will put Kazakhstani insurance companies in a difficult position. The only factors that will help Kazakhstani insurance companies retain customers are innovative and technological superiority. Operation costs will also be a major factor, a feature of international competitive insurance markets. The following suggestions are offered to improve insurance legislation and the quality of services to consumers 1. Compulsory Vehicle Insurance (Compulsory Insurance of Vehicle Owners' Civil Liability) a) Transitioning from paper insurance policies on forms bearing the policy-holder's original signature to electronic policies issued on e-ticket forms. This electronic approach to issuing insurance policies will significantly speed up issuance of policies and reduce operation costs. Since compulsory vehicle insurance is fully regulated by law, and accounting and premium payments are recorded in a single insurance database, the customer's consent to the insurance may serve as payment of the premium. Consequently, the terms and conditions for this class of insurance can be publicly announced and placed on the Internet. This will greatly reduce insurance companies' dependence on insurance agents because sales can be conducted via the Internet. Insurance companies' operations costs will be reduced, and the company's profits can be used to improve its services and technological infrastructure. b) Integration of the United Insurance Database with databases of the Ministry of Internal Affairs (MIA) and Ministry of Justice (Public Service Center - PSC) Integration with the databases of the Ministry of Internal Affairs and the Ministry of Justice will significantly improve insurance services and reduce fraud in the insurance market. As a result of this integration, the number of fake insurance policies will be reduced and insurance coverage can be increased. The police will be able to automatically check insurance coverage, as well as verify information about the vehicle's owner. This will in turn reduce corruption, since checking the database will be recorded and can be checked against the penalty for lack of insurance coverage. These integrated databases will also eliminate the need to keep original insurance policies on hand at all times. Database integration will also provide automatic reconciliation of driver identification, driver's licenses, and other documents. This integrated approach will greatly reduce the risks associated with providing false information, and will reduce fraud by unscrupulous insurance agents and car owners. c) Creation of a National Motor Vehicle Bureau in Kazakhstan As a result of growing integration within the Common Economic Space (CES) and the prospect of integrated CES motor vehicle #62/2014 insurance, a National Motor Vehicle Bureau should be created in Kazakhstan. This is needed first of all to promote development of motor vehicle insurance in Kazakhstan and to participate in international motor insurance systems such as the Green Card. To organize a National Motor Vehicle Bureau, the existing infrastructure of the Insurance Indemnity Guarantee Fund (IIGF) may be used, but changed to a self-regulatory organization. However, this requires a decision by the National Bank of Kazakhstan to incorporate the IIGF and develop it into an IIGF infrastructure cluster. Delaying a decision on this issue will negatively impact Kazakhstan's competitive position within the CES in vehicle insurance - the largest and most socially important class of compulsory insurance in Kazakhstan today. ARTICLES By Yergali Begimbetov, Chairman London-Almaty Insurance Company 2. Professional Responsibility and Mutual Insurance Societies a) Eliminating compulsory civil liability insurance for notaries, auditors, tour operators, and travel agents, and instituting professional liability insurance by mutual insurance companies. Compulsory civil liability insurance for professionals (auditors, notaries, tour operators, travel agents) has been shown to be ineffective, especially civil liability insurance for tour operators and travel agents. Civil liability insurance has come to be interpreted by the courts as a financial guarantee for claims by tour operators and travel agents against insurers in cases of financial default by the tour operator. Government regulation of professional communities is minimal, yet if professionals fail to perform or improperly perform their duties, this can entail serious financial and social consequences for which they should bear responsibility (as in the case of tour operators). Current initiatives to create professional liability insurance (for real estate developers, doctors, etc.), are not feasible from the insurers' point of view because there are no criteria for professional risks nor are professionals properly regulated. International practice shows that professional liability is best insured by mutual insurance societies, which can also perform the function of industry self-regulation. In Kazakhstan the law on mutual insurance societies is planned to place the emphasis on loss arising from a professional's failure to perform his/her duties. However, insurers believe this law must be modernized to meet international best practices, thus resolving both insurance liability issues and regulation of professional entities. 15 ARTICLES AL HILAL BANK - ISLAMIC BANKING IN KAZAKHSTAN By Prasad Abraham, Chief Executive Officer Al Hilal Bank Kazakhstan Global Islamic financial assets have recently reached USD 1.7 trillion. Although Islamic financial growth rates are higher than conventional rates, Islamic financial assets are currently only 3% of total global banking assets. These two factors would indicate that Islamic Finance is a new, dynamic and rapidly-growing economic trend, a trend that will continue to develop in the major centers of the international financial community. In this context the launch of Al Hilal Bank in Kazakhstan can be seen as part of the spread of Islamic banking to the world's financial centers. Al Hilal Bank Kazakhstan is a subsidiary of the state-owned Al Hilal Bank UAE. The Kazakhstan branch was founded in 2010 under an intergovernmental agreement between the Governments of Kazakhstan and the United Arab Emirates. With its head office in Almaty, Al Hilal Bank has two other branches in Kazakhstan in Astana and Shymkent. In 2011 the first Takaful Insurance company was opened in Kazakhstan, although operations to date are limited in scope. In 2013 the Kazakhstan Ijara Company, of which ICD (subsidiary of IDB) and Al Hilal Bank are major shareholders, was created for Islamic leasing and financing of small and medium-size businesses. Then, in 2014 Zaman Bank announced its plans to convert to Islamic banking practices. Whilst these developments represent some degree of progress in the growth of Islamic finance in Kazakhstan, it did not meet the original expectations of the leadership of the country. To address these issues, in 2012 the President’s Administration initiated the launch of the Islamic Financial Development Roadmap. This initiative brought together all relevant stakeholders responsible for the further growth and development of Islamic finance in Kazakhstan. As part of the Roadmap, several important issues have been addressed. The most important achievement is that a number of proposed amendments to the existing Islamic Banking law are currently under review in parliament. Since its inception, Al Hilal Kazakhstan has financed projects in the amount of USD 200 million in a variety of industries, including national companies. The activities of the first Islamic bank in Kazakhstan are aimed at realizing the vision of President Nursultan 16 Nazarbayev - that Almaty will become a Regional Financial Centre by 2020. Shareholders and the Al Hilal Bank management are fully committed to making this vision a reality. The rapid growth of Islamic finance activities in Kazakhstan has been the subject of close attention from Russia and a number of other countries in Central Asia, all of which noted the success of the first Islamic bank in the CIS, and Kazakhstan’s success in adopting advanced Islamic financial practices. These success stories have prompted other countries of the region, such as Azerbaijan, Kyrgyzstan and Tajikistan to initiate their own plans for Islamic finance, and many are in the process of establishing the framework for Islamic financial development. As part of recent discussions to further strengthen and enhance Kazakhstan’s leadership position in Islamic finance a number of new recommendations have been addressed. • New focus on the Roadmap. The National Bank of Kazakhstan, which possesses extensive resources and knowledge, will assume the leadership role in steering the direction of the Roadmap related initiatives. The National Bank will also coordinate with the tax authorities to make the appropriate tax decisions for Islamic Banking products. There will also be key performance metrics to measure the effectiveness and progress of the Roadmap. • An active Sukuk market is a key indicator of Islamic financial market development. If the country launches a sovereign Sukuk program, it will deliver a strong message regarding the Government’s commitment to the continued growth and progress of the Islamic fiancé industry. Once this happens, it will be a natural catalyst to encourage Sukuk issuance from a number of corporate institutions in Kazakhstan, Russia and other Central Asian countries that have already expressed interest, but are waiting for some evidence of institutional support. Once there is a critical mass of local and regional Sukuk issues, it will only be natural to launch facilities to enable Sukuk trading on the KASE, which will further cement Kazakhstan’s leadership position in this important segment. • National companies should be actively encouraged to allocate about 2-3% of their total financial services through Islamic structures. This will create a greater degree of awareness about the benefits of this alternate means of finance, and will contribute to the organic growth of Islamic finance. • Kazakhstan should consider establishing an Islamic Finance and Economy Centre or Institute, which would have as its mission the creation of educational and financial awareness. There is still a lack of clear understanding about basic Islamic Finance principles. An Islamic Finance Center could disseminate information and provide methodological support for the development of Islamic Finance in Kazakhstan. #62/2014 CURRENT DILEMMAS IN BANKING AND INSURANCE The National Bank of Kazakhstan (NBK) has recently taken many positive measures to address virtually all key concerns in the financial sector. However, it is the goal of this article to emphasize several important issues that should and can be resolved in a timely fashion. The single most important challenge facing the financial sector remains non-performing loans (NPLs). This problem has been contained and poses no risk to financial sector stability. However, the existing high level of NPLs, with many larger banks carrying NPLs in excess of 10% of their loan portfolio, remains a significant drag on economic growth. At such high levels, senior management of banks spends significant amount of time on NPL resolution, leaving insufficient time to focus on increasing new lending and introducing new products. When combined with constraints on capital, banks continue to have limited ability to provide credit to the real economy. This situation is a significant burden on the banking sector. To relieve this problem, decisive action is urgently needed. The National Bank of Kazakhstan has undertaken steps in this direction, a positive sign. To further mitigate this issue, the National Bank Governor should follow through with implementing NBK’s policies aimed at improving the effectiveness and increasing relevance of the Distressed Asset Fund, as well as to oversee the successful restructuring of the BTA/KKB merger. By resolving the NPL problem, banks will not only be in a position to re-focus on lending but also to augment the profitability of the banking sector. Moreover, higher profits in this sector can serve as a catalyst to attract more international banks and strategic investors - a key government priority. Secondly, the funding base of Kazakhstan's banks must be improved and diversified. The reinvigoration of the initiative to develop the Almaty Regional Financial Center (ARFC) is key to this effort. This initiative can facilitate the necessary impetus which, in the short run, could create incentives to develop local capital markets and their complimenting service sector. The initiative will be successful if designed, first and foremost, to help improve domestic capital markets, plus private banking and other services. This would help establish a platform to develop a strong regional center in the medium term. The ARFC Concept currently being developed by the NBK, should capture this sentiment, and the structures that will be developed, including the Foreign Investor Council-type consultative body, should have the remit to help develop local capital markets as well. The corporate governance of banks also warrants improvement. Although governance and transparency in the banking sector is of good quality on paper, the practical implementation of these procedures often does not attain the necessary quality level. The National Bank is planning to further improve governance and transparency, and the Governor's continued direct participation to advance these efforts would be greatly welcomed. Improvements in governance are notoriously difficult to achieve. This process will eventually change both behaviour and mentality, but it will take considerable time. It is important to note that as banks resume significant growth in their credit portfolios, corporate governance and transparency must be of sufficient quality to ensure that some of the excesses seen not only in Kazakhstan, but in many other countries before the financial crisis, are not #62/2014 repeated. The National Bank's supervisory capacity also merits expansion in order to monitor the quality of internal practices more effectively. Finally, action must be taken to gradually reduce statefinanced programs that channel subsidized credit through banks to corporations and SMEs, and to redesign them in more commercial terms. These programs played a critical role in the post-crisis period and they are still important. However, in the current economic environment the negative side-effects of these programs, in their current form with high concession and subsidy elements, might soon start to outweigh the benefits. Ultimately, in their current form, these programs reduce incentives for banks to identify other sources of funding; thereby reducing their ability to use commercial funding and to lend commercially to the real economy. In other words, this issue is about redesigning the programs, rather than discontinuing them. In conclusion, the EBRD would like to re-emphasize its highly supportive stance towards the banking sector and engagement in the National Bank's work to handle the above challenges, to introduce Basel III regulations, develop a strong Kazakhstan Stock Exchange, and improve the corporate governance of companies in the real sector. ARTICLES By Dr. Agris Preimanis, Lead Economist for Central Asia European Bank for Reconstruction and Development (EBRD) Insurance Sector In comparison to the banking sector, the insurance sector in Kazakhstan remains in its infancy. As a result, this creates significant residual risks to the government, financial institutions, corporations and individuals which, in other countries, are typically covered by insurance. This situation demands reform. One positive sign is that the new Financial Sector Strategy developed by the NBK acknowledges the prominent role that should be played by the insurance sector. However, at this time, there are three immediate priorities worth highlighting. First, the key objective for insurance reform must be to restore and improve trust in the insurance sector. One common drawback is that corporations, despite incurring massive risks, forego insuring products and services due to widespread uncertainty that local insurance will genuinely cover losses if risks do in fact materialize. Of great importance is the gradual introduction of Solvency II regulations based on the EU Directive (2009/138/ EC) designed to monitor capital held by insurance companies to mitigate risk insolvency. These and other regulations are critical to restore trust in the insurance sector, which ultimately will serve to ignite robust economic benefits. Second, the poor quality and mistrust that affects perceptions of the insurance sector is exacerbated by the lack of domestic reinsurance companies, combined with the difficulty of monitoring the quality of reinsurance coverage obtained by domestic insurance companies abroad. While the NBK is taking steps to remedy the situation, the severity of this issue justifies a more concerted effort, including expanding the NBK's capacity to supervise the sector. Third, strong corporate governance and internal practices must be introduced into the insurance sector. Although this can equally be said of the banking sector, poor governance in the insurance industry is arguably compounded by the sector's weaker level of maturity, professionalism, and technical complexity. Ultimately, it would be advantageous to the National Bank to extend its current efforts to improve banking industry corporate governance to the insurance industry, as well as to other non-banking and financial institutions. 17 ARTICLES INVESTING IN KAZAKHSTAN'S POWER INDUSTRY: THE LEGAL FRAMEWORK By Shaimerden Chikanayev, Partner GRATA Law Firm Current Legal and Regulatory Regime There are currently eight large power plants of national importance in Kazakhstan: four thermal power plants and four hydropower plants. There are also a number of smaller regional power stations. Power is transmitted through the transmission networks by transmission companies. The transmission companies can be of two levels: the first is a system operator, which operates the national transmission network, and the second is a regional power company, which transmits power through the regional electric grids. The Kazakhstan Electrical Grids Operating Company (KEGOC), the system operator, is the national transmission company that owns and operates the national electrical grid. It manages the electricity market and international electricity exchange system. In Kazakhstan there are also 18 regional power companies in each region (administrative regions), large cities, and the capital city - Astana. The system operator and regional electricity companies transmit electric power sold by power plants (power generating companies), in accordance with the power purchase agreements concluded with consumers and/or power supplying companies. The relationships between the power generating companies on the one hand, and between the system operator and regional electrical grid companies, on the other hand, are governed by separate agreements concluded between them. Beside the above market players, there are about 124,000 power supplying companies in Kazakhstan engaged in the distribution of power among the country's end consumers. The Kazakhstan Law 'On the Electric Power Industry', dated 9 July 2004, was amended in 2009 to attract power investments through a new tariff-setting system for electrical power generation under which investors assume certain investment committments in return for a reasonable tariff (the tariff for investments mechanism). The Law provides for a two-level system: at a lower level - the 'ceiling tariff' (when power producers may set their own tariffs up to the regulated maximum), and at an upper level - the 'estimated tariff' and 'individual tariff', which can exceed the ceiling tariff subject to the approval of the appropriate government agency. Special regulations were adopted for the ceiling, estimated and individual tariffs. 18 In accordance with the Law 'On the Electric Power Industry', a generating company may ad arbitrium set its tariff by virtue of a contract with a counterparty. Such a tariff shall in no way exceed the ceiling-regulated tariff set for sales by generating companies. The ceiling tariff varies according to the group to which a given generating company belongs, and we can ascertain the ceiling tariff applicable to the end of 2015. However, starting from 2016 the current system of ceiling, investment, and estimated tariffs will be abolished and replaced by formation of a 'capacity market', as described below. For now, while Kazakhstan's capacity market is not yet functioning, if the investment commitments of a generating company cannot be discharged through sales based on the ceiling tariff, Kazakhstani law allows generating companies to seek and apply the estimated or individual tariff. It should be noted that according to the Law 'On the Electric Power Industry', the wholesale electricity market of Kazakhstan is divided into three types: (a) decentralised market, (b) balancing market, and (c) centralised market. #62/2014 ARTICLES A decentralised market is meant for the purchase of electricity based on agreements freely made, but at prices not exceeding the ceiling tariffs. A balancing market is for hourly financial and physical control over power imbalances on a single grid. Participation in the balancing market is obligatory for all participants in the wholesale electricity market. A centralised market is an electricity market governed by a special purpose company to ensure communication between buyers and sellers. Sales in the centralised market are also divided into three types: (a) short-term sales (outright sales), (b) mediumterm sales (week, month), and (c) long-term sales (quarter, year). Possible Project Implementation Options Concession Agreement From the legal perspective, one option for implementing a project for financing and construction of a power plant in Kazakhstan (hereinafter - the 'Project') is the 'concession' defined as: "activities aimed at the creation (reconstruction) and operation of concession objects and performed at the expense of the concessionaire or with co-finance by a grantor" (Article 1.6 of the Concession Law). Concession benefits are the following: • an adjusted and clear legal framework as well as definite, though not clearly positive, experience in applying a concession agreement. • state concession liabilities are protected against sequestering. • concessionaires, who are subjects of a 'natural monopoly', may enjoy special tariffs (which can be determined according to formulas specified in concession agreements) and will be exempted from the general tariff regulation of natural monopolies (i.e., a concessionaire will be better protected against the risk of default on its obligations to repay credit as a result of insufficient income from the Project due to, for example, inadequate tariffs for thermal energy). • a concessionaire may rely not only on the sale of goods produced as a source of compensation for its costs and income, but also on (i) government subsidies in cases established by #62/2014 the laws of Kazakhstan and (ii) a fee for availability (availability payment) of a concession object, which includes payments from the national budget to compensate for the investment and the concessionaire's operating costs. • the possibility of one or more of the following forms of government support: 1. government guarantees on infrastructure bonds within concession agreements; 2. government guarantees on loans raised to finance concession projects; 3. transfer of exclusive rights to a government-owned IP object to a concessionaire; 4. in-kind grants in accordance with the Kazakhstani law; 5. co-financing of concession projects; 6. guarantees of government consumption of a certain volume of goods (works, services), when a principal consumer of goods produced by a concessionaire is the state. 19 ARTICLES However, the concession mechanism has significant disadvantages and risks, including, as stated in Article 14.2 of the Concession Law, when a concession object not transferable to state ownership (not Build-Transfer-Operate) is created, government support measures provided for in subparagraphs 1., 2. and 5. above shall not be granted to a concessionaire. Moreover, a guarantee of state consumption of a certain volume of goods as a measure of government support is declarative in nature, because, first, it is not clear when the principle consumer of goods is the state and, second, the implementation mechanism of government support is not specified. A mechanism for making an availability payment for a concession object has not yet been defined. Moreover, the availability payment cannot apply for Project purposes in the area of power since, according to Article 7.3 of the Concession Law, the availability payment can only apply to concession projects categorized as socially significant projects. These projects are for construction and operation of motorways, water pipelines, schools, pre-schools, hospitals, and clinics, but not power stations. Please note that if either a company acting as a concessionaire for the Project or a potential concessionaire is a new legal entity created for Project purposes, the Consortium (founders) must meet certain qualifications: 1.possess sufficient funds and resources to perform obligations under the concession agreement; 2.be solvent, not under liquidation, possessing property free from seizure, and not be engaged in activity suspended under Kazakhstani legislation; 3.not be subject to a court ruling for failure to perform obligations under a concession agreement concluded in the last three years; 4.have equity capital of at least 10% of the cost of the creation (reconstruction) of a concession object. This means equity, money and other assets belonging to a potential concessionaire directly involved in the concession project. 20 Concession is also less attractive in terms of project financing because a concession object (i.e., the power plant itself) cannot be a pledged subject during the validity period (Article 5.5 of the Concession Law). In general, excessive regulation of concession relations and conditions of concession agreements reduce flexibility of the parties in determining Project conditions, which are important for the successful structuring of a 'bankable project'. The process of granting concessions in Kazakhstan is quite bureaucratic and time-consuming. In practice it will take at least a year. Finally, for many investors the main weakness of a concession is the need to participate in a concession tender and the risk of not winning the Project despite the time and resources required to prepare the tender. Agreement for Construction of Generating Plants Beginning in 2016 a preferred alternative to a Project concession agreement will be an 'agreement for construction of generating plants' with the Ministry of Investment and Development based on a new 'Capacities Market' model. Up to the end of 2015, according to information published by the Government, ceiling tariffs will be used in Kazakhstan (as described above), while from 2016 the 'capacities market' model will be used (i.e. the energy market and capacities market will operate in parallel). It is expected that Kazakhstan's capacities market will consist of two segments: a market of long-term contracts (for new power producers) and of short-term contracts (for existing producers). New power plants will have a guaranteed return on investment (i.e. guaranteed capacity sale), because the system operator (KEGOK) undertakes to procure certified capacity volumes (i.e. the equivalent of the availability payment) from these plants on a priority basis at prices specified by the tender, while existing plants will operate at market rates without benefits and with ceiling tariffs. It is assumed that most investment will be worked out by the investor through the capacity payment, which will be fully redeemed by KEGOK. This will be approximately 80% of cash flow, #62/2014 ARTICLES with the remaining 20% received by a generating company from the sale of electricity on the free market (i.e. with no guarantee of electricity sales). Current legislation obliges KEGOK to develop an annual forecast balance of electricity and capacity for a seven-year period by 15 October each year and to publish it in the media. Based on the KEGOK forecasts, the Ministry of Energy will annually determine an anticipated deficit of electric power, as well as develop and approve a promising layout of electrical capacities. This information will be provided on the Ministry's website. Moreover, to meet the forecast deficit of electric power, the Ministry of Energy must hold tenders for the construction of newly-commissioned generating plants. The Ministry of Energy signs the agreements for construction of newly-commissioned generating plants with the tender winner, fixing the commissioning date of the generating plants and the tender-winner's liability for failure to perform or improper performance of the terms of the agreement. Within thirty calendar days after the signing of the above agreement, KEGOK signs the agreement with the tender winner to purchase services to maintain the electrical capacity of the newlycommissioned generating plants at a price, volume and on the terms specified by the appropriate government agency. It should be noted that if KEGOC defaults under the service agreement on the terms for maintaining electrical capacity due to financial difficulties, it is expected that the Government will provide financial assistance to KEGOK from the national budget (i.e. an indirect government guarantee for the obligations of a single capacity buyer). Unfortunately, this legal provision is not entirely clear, so how this indirect state guarantee would work in practice remains in question. In general, however, the capacities market will make it possible to structure the investment for attractive projects (bankable projects) in the electric power industry. A potential investor may accordingly consult (even now, in 2014) the Ministry of Energy and KEGOK on the terms for the next tender and participation options to implement a Project. CHAMBER EVENTS ALMATY SEPTEMBER ROUNDTABLE LUNCHEON ON PIRACY AND SMUGGLING ACROSS REGIONAL BORDERS Donald Townsend, Regional U.S. Intellectual Property Rights (IPR) Attaché, Russia and the CIS The AmCham Business Roundtable on September 26 featured Donald Townsend, Regional U.S. Intellectual Property Rights (IPR) Attaché to Russia and the CIS, who spoke about efforts to control and eliminate counterfeit products in the pharmaceutical, technology, and consumer industries in Central Asia. A former U.S. patent attorney specializing in international intellectual property law with an academic background in chemistry, Mr. Townsend works on a number of intellectual property issues, including patents, trademarks, copyrights, and their enforcement. Mr. Townsend began his talk with an introduction to the U.S. Patent and Trade Office’s IPR Program. Explaining that IPR Attachés work with regional governments and industry stakeholders to address IP issues, including protection, enforcement, and legislative reform. The program was formally instituted in 2006 to promote high standards of IP protection and enforcement internationally. The initial focus of the program was on the BRICS countries and, given its very serious IPR issues, China remains the epicenter of the program’s focus. However, IPR Attachés, most of whom are attorneys, are now deployed worldwide, including in Moscow, where the speaker is based. Moscow is a regional post covering all of the Former Soviet Union, including Kazakhstan. Given the Former Soviet Union’s status as a center for piracy, Mr. Townsend’s work faces unique institutional challenges in addressing both protection and enforcement, which involves the cooperation of host country IP offices, enforcement agencies, and government officials, as well as coordination with the U.S. Patent and Trade Office, the Office of the U.S. Trade Representative, and the relevant U.S. Embassies. Moreover, such efforts involve regular meetings with industry and industry organizations to hear concerns, as well as conducting IPR-related training programs for customs officials and other relevant agencies. The United States currently has IP Action Plans with both Russia and Ukraine (signed October 2010 and December 2012, respectively). These Action Plans stress improvements in IPR enforcement. Particular IPR concerns facing the region include the flow of counterfeit goods from China via the Customs Union/ Kyrgyzstan-China border, insufficient cooperation between Customs and right-holders, and widespread internet piracy. A common issue that there is currently neither implementation 22 of the law nor any operational process in place to address its implementation. The US, Russia, and Ukraine have agreed to increase the level of IP enforcement, including, in particular, increased enforcement of laws against counterfeiting, piracy, and the circumvention of technological protection measures as well as the imposition of penalties and sentences that deter further violations. Measures to achieve this will include: conducting unannounced raids of plants, retail outlets, and warehouses to detect, seize, and, where appropriate, destroy goods that violate intellectual property rights; the seizure and destruction of goods that violate intellectual property rights and the equipment and materials used to produce them; the promotion of transparency and public awareness of IPR enforcement mechanisms; an increase in the frequency of openair market inspections and action against the sale of counterfeit and pirated goods; and modification of the portfolios of a number of Interior Ministry officers to include IPR enforcement and inspection, as well as training programs. In a second presentation, Mr. Townsend expanded upon a number of issues specific to Central Asia — most significantly, the trafficking of counterfeit goods from China to Russia via Kazakhstan and Kyrgyzstan. He explained that via Kyrgyzstan’s Dordoi market—one of the largest markets for counterfeit goods in the world, and the largest in the Former Soviet Union — Chinese goods are trafficked to the rest of the region, including Kazakhstan. Traffickers who have purchased counterfeit Chinese goods wholesale from Dordoi exploit a loophole in the Customs Union Customs Code which allows individual traffickers to bypass IPR protection procedures when transferring goods through the customs border for “personal use.” Often, traffickers will exploit this loophole while crossing the Customs Union border five or more times a day, making $50 or more a day — an impressive sum relative to significantly lower average income in Kyrgyzstan. Given Kazakhstan’s status as a member of the Eurasian Customs Union, which creates open borders between Kazakhstan, Russia, and Belarus, Kazakhstan has become a major transit point for counterfeit goods traveling from China to Russia via Dordoi and other such markets. Nonetheless, although IPR issues clearly represent a daunting challenge to the region, with the work of IPR attachés and the cooperation of government agencies, border officials, and other relevant agencies, Kazakhstan will be able to more effectively control the flow of illicit trade across its borders. #62/2014 ALMATY AUTUMN SUNDOWNER AT SAFRAN RESTAURANT CHAMBER EVENTS WPRE-30-Col-Blk WPRE-20-Col-Blk On a warm Friday evening, September 26, AmCham and the Safran Restaurant has been a member favorite for many Sundowner sponsors, Fluor and Worley Parsons, welcomed years, and often serves as the setting for the AmCham autumn AmCham members and guests back from the summer holidays Sundowner. With a recent renovation, the restaurant has as the autumn business season got underway. With KIOGE, maintained its traditional Middle-Eastern warm pumpkin tones Kazakhstan's major October oil and gas conference, about to begin, with elaborate, low-hanging chandeliers, and its traditional Middle WPRE-15-Col-Blk the oil industry geared up for another strong year in Kazakhstan. Eastern - Caucasian fusion menu with some new and innovative Fluor and Worley Parsons have joined forces in a partnership for additions. As always, the abundance of buffet dishes - plov, major long-term oil industry projects, opening a joint project offi ce khachapuri, dolmati, and many other regional specialties - filled the WPRE-12-Col-Blk in Almaty as immediate neighbors of the AmCham office in the tables and waiters ensured no guest's plate remained empty. The Rixos Hotel Business Center. AmCham is pleased to have two restaurant's service and hospitality was impeccable, a guarantee such major forces in the oil and gas industry working in such WPRE-10-Col-Blk close that AmCham members will return again and again throughout the proximity in Almaty. year ahead. #62/2014 23 CHAMBER EVENTS ATYRAU AUTUMN SUNDOWNER SPONSORED BY TENGIZCHEVROIL On Friday evening, October 17, AmCham held an Atyrau Sundowner sponsored by Tengizchevroil, Kazakhstan's leading oil and gas consortium headed by Chevron. TCO is a leading AmCham member whose General Director, Tim Miller, serves on the AmCham Board of Directors. TCO also chairs the AmCham Corporate Social Responsibility Working Group (Chanel Jolly) and serves as the AmCham Resident Regional Representative (David MacInnis) in Atyrau. Tengizchevroil is also the winner of a record number of AmCham Achievement Awards - six awards in six years, including Executive of the Year in 2009 (Todd Levy), Excellence in Innovation 2008), Environmental/ Health and Safety (2009), and Community Service (2010). TCO takes justifiable pride in its level of social contributions to the Atyrau region between 1993 and 2014 - $875 million to support the broadest possible range of community service initiatives that have greatly benefitted the people of the region. TCO is a truly outstanding corporate citizen in Kazakhstan's oil industry. The setting for the October Sundowner was the Renaissance Atyrau Hotel, one of the two five-star Renaissance Hotels in the Caspian region that have been members of AmCham since opening eight years ago. Renaissance Hotel facilities, services, and hospitality are unparalleled, ensuring that AmCham always holds its functions and meetings on their premises. With a new Malaysian chef at the Atyrau Hotel, AmCham requested a Malysianthemed buffet for the evening, an exotic change of pace that was much appreciated by Sundowner guests. The new Renaissance General Manager, Ioan Maties, joined the guests for the evening. 24 #62/2014 HALLOWEEN SUNDOWNER AT ROYAL TULIP ALMATY HOTEL 26 #62/2014 165 spacious rooms prepared with love 2/401 M.Ospanov street, Almaty, Republic of Kazakhstan T 100 3000 727 7+ F 111 3000 727 7+ [email protected] www.goldentulip.com www.royaltulipalmaty.com www.grandballroom.kz relax in style high-quality service We are at the social pages: Use the application royaltulipalmaty (IOS, Android) HotelsForYou CHAMBER EVENTS NOVEMBER AKTAU SUNDOWNER SPONSORED BY OMV PETROM Sponsored by OMV Petrom, a long-time AmCham member, AmCham held its traditional Aktau Sundowner to mark the opening of the Mangystau Oil & Gas Infrastructure Exhibition on Monday evening, November 10, in the Lobby Lounge of the Renaissance Aktau Hotel. Attended by AmCham Caspian members, many from other cities attending the Exhibition that opened the following day, a warm and convivial evening was enjoyed at the Renaissance, which has been an AmCham member since its opening. Both Renaissance Hotels in the Caspian region have retained their freshness, comfort, and superb sense of hospitality. The Renaissance Aktau Hotel is particularly fortunate in benefitting from its direct view out over the shores of the Caspian Sea. OMV is Austria's largest industrial company, a major employer in Aktau, and the major Austrian presence in Kazakhstan. Headquartered in Vienna, OMV Petrom is an international and integrated oil and gas company operating in 30 countries worldwide with a total labor force of nearly 30,000 staff. It has participated in AmCham discussions, speaking out on industry issues with the Prime Minister and Cabinet Ministers at the Council to Improve the Investment Climate in Astana. 28 #62/2014 AMCHAM THANKSGIVING CELEBRATION AT THE INTERCONTINENTAL HOTEL 2014 THANKSGIVING SPONSORS CHAMBER EVENTS HOLIDAY SUNDOWNER AT THE ALMATY INTERCONTINENTAL HOTEL JBAR On Friday evening, 12 December, AmCham members and guests met for a festive evening to share a final seasonal drink in the InterContinental Almaty Hotel's warm and cozy JBar, a favorite meeting place for the business community. Sponsored by AmCham and the Intercontinental Hotel, the Sundowner was our Holiday gift to AmCham members. Seasonal music and jazz served as a backdrop in the JBar while the hotel hallways and lobby brightly decorated with holiday lights to ring in the season. The traditional towering Holiday Fir Tree soaring upwards in the 32 lobby was ablaze with stars, ribbons, and twinkling holiday lights, as were the hotel's massive grounds, where the approaches to the hotel were decorated with Snow Maidens, Santa Claus (or Ded Moroz, as you wish), scampering reindeer, sleighs, and all the other symbols of the winter holidays and approaching New Year. New AmCham members came to meet many long-standing members and the AmCham Board, while a sumptuous buffet with free-flowing wine and soft drinks kept revellers' spirits at peak for several hours. The following day marked the beginning of the seasonal exodus as members departed for their home countries to celebrate the holidays with family and friends. AmCham wishes all its members and their families a very happy winter holiday wherever they may celebrate it across the world. #62/2014 AMCHAM WORKING GROUP UPDATE NOVEMBER - DECEMBER 2014 Almaty CSR Working Group November The November 20th meeting began with KIMEP Assistant Professor Vladimir Tyutyuryukov, Central Asian Tax Research Center (CATRC), providing a brief update on the draft for tax incentives on the CSR national concept in Kazakhstan. His report highlighted CSR tax incentives already in place such as personnel training expenses. He concluded with a wide set of CATRC CSR-related tax recommendations ranging from improved transparency to deductions for single parents. The next presentation was led by Gaukhar Kozhasheva, Research and Development Manager at the Eurasia Foundation of Central Asia (EFCA), who shared the outcome of a meeting on CSR reform with the Tripartite Commission. This draft, coauthored with the Embassy of the Netherlands, was rejected by the commission due to concerns over perceptions of CSR at senior levels of the Government of Kazakhstan. Following a lively debate, both EFCA and CATRC agreed to amend the draft. The final block of the meeting brainstormed CSR projects for the holiday season. Among the suggestions included projects such as gifts for orphanages, shelters for the homeless, and green initiatives introduced by Xeniya Shilini, Kagazy Recycling Public Relations Manager. December This 5 December CSR meeting featured two new eco-friendly Holiday Season CSR programs. Xeniya Shilini, Public Relations Manager of Kagazy Recycling presented an overview of the “Save the Christmas Trees” campaign: a social-media driven ecological campaign to exchange waste paper in return for artisandesigned Christmas trees constructed of 100% recycled products. Following the campaign, Kagazy Recycling will publish the results of this pilot program. Afterward, Dauren Zholdasbayev, Executive Director of PosodiDerevo.kz, presented the “Rent the Christmas Trees” program: a novel green initiative to rent live, potted fir trees for the holiday season which will be re-planted in Almaty in the spring. In the spring, project participants will be involved at official replanting events which additionally are designed to raise public environmental awareness in Kazakhstan. Almaty HR Working Group November On November 14, the Human Resources Working Group met to discuss corporate culture in Kazakhstan - its importance, major criteria, planning and implementation as well as challenges and key factors for success. Opening remarks were made by WG Chairman Dmitriy Nadirov of European Insurance, followed by Guest Speaker Andrey Kurilin, CEO of Citibank, who led an open discussion of corporate culture focused on his experiences within a multinational corporation. Stressing the importance of ethics in the workplace, Mr. Kurilin said that a positive corporate culture does not rest solely upon human resources, but also upon the leadership’s ability to disseminate rules and ethics among personnel and provide opportunities for employees to express their concerns. Follow-up questions included issues such as recruitment, overcommunication of rules, ethics, how geopolitical conflicts affect international corporations like Citibank, and why the separation of politics and business is critical to respecting the individual and company alike. Suggested themes for the next Working group meeting consisted of successful career paths from HR to CEO, corporate branding and perception, personnel fluidity, and new technologies to improve HR productivity. #62/2014 Almaty Customs and Trade Working Group November During the November 19 meeting, Guest Speaker Dentons Associate Stanislav Lechshak, delivered an overview of the transition from the Eurasian Economic Community (EEC) to the Eurasian Economic Union (EEU). The first part of the presentation focused on the EEU, including a brief account of the creation of the Customs Union (CU); the process by which the regulations of CU customs issues prevail over the national legislation of Kazakhstan; the basis of indirect tax payments between member states; and the legislative bodies governing the EEU. As of January 1, 2015, the Union aims at further liberalization of goods, services, financial capital and workforce between the member states. Currently, the EEU has three official members: Russia, Kazakhstan and Belarus, with the possible entry of other Central Asian states. The speaker then outlined the key customs principles of the Union such as an internal market of goods, unified customs tariffs, and regulatory measures impacting on foreign trade with third countries. At the next Customs and Trade meeting, members plan to address these new changes to the Customs Code effective January 1, 2015. WORKING GROUPS UPDATE Almaty Working Groups Almaty Tax Working Group November The November 21 meeting began with an update on WG plans, including a possible White Paper dedicated to tax matters. Issues that may be covered in the Paper may be royalties double taxation; VAT on imports without adjusted returns; the low threshold criminalizing tax cases and fines based on virtually any tax audit; and corporate income tax deductibility issues. Following this discussion, Igor Kolupaev, Counselor at Baker & McKenzie led a technical discussion and presentation on permanent establishment issues. Finally, the group exchanged views on the most important draft amendments to the Tax Code. During the next TWG meeting, when the new amendments will have been signed into law, Bakhytzhan Kadyrov, Counselor at Morgan Lewis, will deliver a follow-up presentation together with speakers from the judiciary and tax authorities. Almaty Technology and Innovation Working Group November The agenda of this November 25 meeting focused on Kazakhstan ICT-market growth forecasts for CY2015 and the latest data on ICT market dynamics projects in CY2015 led by IDC Central Asia Regional Director Andrew Beklemishev. During the presentation, he noted that current IT market segments in Kazakhstan consisted of 80% hardware, 10% software and 10% services. In his predictions, the future of IT markets in Kazakhstan will be based on the service sector, but will remain in hardware for the foreseeable future. Beklemishev then acknowledged the widespread use of smartphones and tables have kept the market afloat, but warned of hardware market oversaturation. The final portion of the speaker's presentation highlighted the inhibitors and drivers of the IT market. Devaluation of the Kazakh Tenge remains an issue of increasing alarm as is the influence of the Russia-Ukraine crisis on Kazakhstan. The falling price of oil has already affected other industries. This can be observed in the cessation of all government tenders for further e-learning programs. Conversely, positive drivers include the Government USD 3 billion budget allocation for IT infrastructure and e-health and e-gov programs. Overall, the meeting concluded that the outlook for ICT market growth in CY2015 remain positive. 33 WORKING GROUPS UPDATE Astana Working Groups Astana Foreign Investment Working Group November The November 12 meeting was hosted by the Embassy of Turkey and began with a presentation by World Bank Senior Economist Dorsati Madani and her colleague, Ilyas Sarsenov, the chief contributors to the recently released World Bank report, Kazakhstan Bi-annual Economic Update, Fall 2014, Kazakhstan: Growth Slows as External Pressures Rise. Madani provided an overview of the report, focusing on Kazakhstan’s 2014 moderated GDP growth and rise in inflation; government macroeconomic policies to stimulate demand; as well as current predictions for 2015 suggesting higher GDP growth, but not without risks such as rising inflation and falling oil prices. She concluded her remarks by referring to President Nazarbayev’s November Address to the Nation that included a number of ambitious economic programs. Then, Niall Leonard, Head of the Trade Section at the European Union Delegation began by saying that Kazakhstan remains a safe and attractive environment for foreign direct investment (FDI) as it has a stable domestic environment and positive international cooperation. He noted there are problems as well, including distance, climate and infrastructure challenges, in addition to the issues in the recent AmCham White Paper, Improving Kazakhstan’s Investment Climate: Top Ten Barriers to Foreign Investment. Mr. Leonard then added that Turkish Ambassador Tüzel has been an ardent support of the FI-WG and was asked to share his thoughts. Ambassador Tüzel commented that several of the issues addressed during the meeting have been raised and discussed within both the diplomatic and business communities. He also noted that the President’s vision, while positive and proactive, is not complemented at the working level with the government. As a result, the effects are lost as a lack of coordination results in reduced efficiencies and an inability to effectively leverage FDI. A lengthy discussion ensued with many questions and comments from the attendees. The next meeting is planned for February 2015. QUALITY MANAGEMENT CENTER and Professional Evaluation and Certification Board INVITE PROFESSIONALS TO PARTICIPATE IN: the International Certified Management System Training Courses and Examination: Certified ISO 31000 Risk Manager, 2,5 days – February 9-11, 2015 Certified ISO 22301 Foundation, 2 days - February 24-25, 2015 Certified ISO 9001 Lead Implementer, 5 days – April, 2015 Certified ISO 27001 Lead Implementer, 5 days – April 6-10, 2015 Certification Exams, which allow to apply for Certified Lead Implementer, Certified Lead Auditor and other credentials. 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For registration and more information, please, contact us: Almaty (727) 279 18 02, 279 71 90, [email protected] AMCHAM ADVOCACY UPDATE SEPTEMBER - DECEMBER 2014 • VAT Refunds Working Group - Ministry of Finance Chair: Finance Minister Bakhyt Sultanov AmCham Leader, Michael Ahern, PwC Tax Partner AmCham members: PricewatershouseCoopers, Dentons, International Tax and Investment Center (ITIC), Shell, NCOC, Maersk Oil, Petrom, Baker Hughes, KIMEP CATRC • Intellectual Property Rights Working Group (Product Piracy and kontrafakty) - Ministry of Justice Chair: Justice Minister Berik Imashev AmCham Leaders: Donald Townsend, IPR Regional IPR Attache, US Embassy Moscow and Yuri Bolotov, Managing Partner, BMF Law Firm AmCham members: Microsoft, Hewlett-Packard, Merck, Eli Lilly, Abbott, GlaxoSmithKline, Sanofi, Procter & Gamble, Avon • Engineering and Construction Licenses Working Group Ministry of the National Economy Chair: National Economy Minister Yerbolat Dosaev AmCham Leader: Walter Daniel, National Partner, Dechert Law Firm AmCham members: Halliburton, Fluor, ILF, VK Studio September Council Session: 1) VAT Refunds, 2) Engineering/ Construction Licenses, 3) Environmental Payments The first autumn Council session after a 2-month summer break dealt with a series of critical issues impacting the oil industry. 1) The VAT refunds problem arises from VAT pre-payments often amounting to hundreds of millions of dollars that oil companies are required to make during the exploratory stage before production begins. Once production begins, the VAT is required to be refunded to the companies. However, refunds are normally delayed for years, often leading the companies to the courts. This has been a serious and intractable problem for the oil industry for many years, and requires urgent legislative reform. (NCOC and OMV Petrom delivered Council presentations.) 2) Engineering and Construction Licenses are difficult, if not impossible, for companies that have entered into partnerships for the purpose of implementing specific projects. The stringent requirements for prior experience do not take into consideration the individual experience of each partner, but only their partnership experience which, as new partnerships, lack the requisite track record. This problem has excluded highly qualified engineering and construction companies working in many industry sectors from #62/2014 qualifying for the licenses, without which they cannot implement major projects. The legislation requires urgent reform. (Fluor and VK Studio delivered Council presentations.) 3) Environmental Payments are diverse in nature, but mainly apply to the gas flaring and gas emissions that are integral to the oil production process. Additional payments are often assessed by regional authorities in the Caspian region without substantiation, and such payments can only be challenged in the courts. Oil companies also wish for their legitimate environmental payments to be applied to environmental remediation, which is not often the case. The legislation and practice require urgent reform. (AmCham President Kenneth Mack delivered a Council presentation on behalf of AmCham oil industry member companies). ADVOCACY UPDATE AmCham advocacy has experienced a quantitative leap since the autumn, expanding beyond the monthly sessions of the Council to Improve the Investment Climate to include presentations at weekly Cabinet meetings at the invitation of Prime Minister Massimov and the creation of 3 new AmCham Working Groups with the Government, each chaired by the respective Minister, to resolve investor issues discussed at the Council. The Cabinet presentations and the Working Groups emerged from the AmCham White Paper, Top Ten Barriers to Foreign Investment in Kazakhstan, submitted to the Prime Minister in June. The White Paper became required reading for Cabinet Ministers and served to kick-start Government activity aimed at reforming the legislation and practices that create these barriers. The three new Working Groups formed in September on the Prime Minister's instructions are: October Council Session: Banking and Insurance in Kazakhstan The October Council session was devoted to two sectors of the financial industry: banking and insurance, both at a critical stage in their development in Kazakhstan. 1) Banking presenters were Citibank and Al-Hilal Bank. Citibank has been the leading foreign corporate bank in Kazakhstan for 20 years. It is now virtually the only foreign bank conducting banking activity, although other banks maintain representative offices providing consultative services. Citibank spoke about the impact of the withdrawal and sale of foreign banks in Kazakhstan, and the National Bank's need to address the non-performing loans problem that continues to cripple local banks following the 2008 financial crisis. Al Hilal Bank spoke about the slow progress of Islamic banking in Kazakhstan and the need for further support from the National Bank. 2) Insurance presenters were AIG and London-Almaty Insurance Company, offering a study in contrasts as one of the world's largest insurance companies spoke about the burdensome regulatory requirements impacting their operations and a smaller local insurance company spoke about the expected impact of the Customs Union. London-Almaty proposed several innovations that would enable the local insurance sector to maintain a competitive stance vis-a-vis the Russian insurance companies that will be their major competitors in the Common Economic Space. National Bank Governor Kairat Kelimbetov responded to both the banking and insurance presentations by outlining the Bank's policy and efforts to support the financial sector, noting the insurance sector's still-underdeveloped status and the strategy to resolve the NPL problem, among many other challenges facing the health and stability of Kazakhstan's banking system. December Council Session: The Future of Telecommunications in Kazakhstan This Council session, the last before the holiday season, featured presentations by the Chief Executive Officers of the 3 major foreign telecoms in Kazakhstan - Kcell, Beeline, and Tele2. The session was also attended by the Chairman of Kazakhtelecom, thus creating a rare opportunity for all four of the major telecom players to exchange views on the future of the industry. The presentations by Kcell, Beeline, and Tele2 are published in this issue of Investors' Voice, along with an overview of the sector by the EBRD. Prime Minister Massimov delivered a lengthy response to the presentations, outlining an ambitious Government strategy to further develop telecommunications in Kazakhstan, recognizing its critical importance to the country's economic and business development. He invited all 3 foreign telecoms to participate in further meetings on this subject in early 2015. 35 MEMBER NEWS MEMBER NEWS AECOM Kazakhstan Passes British Standards Institution (BSI) Two-Stage ISO Certification Process Bureau Veritas Kazakhstan Receives Energy Conservation and Efficiency Accreditation Following months of preparation, including a detailed review of all internal work orders, as well as business procedures and processes, AECOM Kazakhstan has successfully passed the British Standards Institution (BSI) two-stage ISO certification process. This challenge involved the full participation of virtually all our personnel, departments and local offices in Kazakhstan. The extent of this certification includes: ISO 9001:2008; BS EN ISO 14001:2004; and BS OHSAS 18001:2007. These accreditations are required to provide services like pre-construction planning, project management, construction management supervision and consultancy services such as design management. During this ISO certification assessment, the BSI concluded that AECOM’s report was based on objective evidence and, in general, effective. The benefits of the certification are broadly recognized within the industry to provide more business possibilities and competitive advantages. Furthermore, certified International Standards bring AECOM Kazakhstan technological, economic and social benefits. These advantages enable us to create valuable synergy between technical specifications of products and services, thus enhancing industry efficacy and overcoming obstacles in international trade. AECOM’s compliance with International Standards greatly reassures our clients that AECOM products are environmentally safe, efficient and healthy. The benefits of the BSI two-stage ICO accreditation for AECOM Kazakhstan include: On August 4, 2014, Bureau Veritas Kazakhstan received a certificate of accreditation for energy conservation and efficiency, authorizing Bureau Veritas to perform energy audits for industrial enterprises, buildings and facilities. According to Kazakhstan's Law "On Energy Conservation and Energy Efficiency", an energy audit is mandatory for companies listed in the State Energy Registry. An energy audit involves observation and analysis to develop procedures for better energy conservation and efficiency at companies, buildings and facilities. The audit includes economic, ecological and social benefits for companies in the Registry. An energy audit performed by Bureau Veritas Kazakhstan is advantageous in that it is performed by highly qualified international specialists with experience in audits of energy management systems, quality management, environment and social responsibility programs. The audit monitors greenhouse gas emissions, and certifies buildings and facilities under BREEAM and LEED international standards. Veritas auditors have extensive experience in the power industry and have performed energy audits in the CIS and internationally. • Cost savings: International Standards optimise operations, which then enhance the bottom line. • Enhanced customer satisfaction: International Standards augment quality control, enhance customer satisfaction and increase sales. • Access to new markets: International Standards prevent trade barriers and open up global markets. • Increased market share: International Standards increase productivity and competitive advantage. • Environmental benefits: International Standards reduce negative impact on the environment. Currently, International Standards are a strategic set of tools and guidelines that AECOM Kazakhstan can employ to assist companies tackle some of the most demanding challenges of modern business. This certification improves our company’s ability to ensure that our business operations are as efficient as possible, which, in return, increases productivity and facilitates company access to new markets and industries. 36 #62/2014 MEMBER NEWS Aigoul Kenjebayeva Receives Title of Honorary Consul of Norway in Almaty Ambassador to the Kingdom of Norway, Ole Johan Bjørnøy, presented Aigoul Kenjebayeva, Dentons’ Managing Partner in Kazakhstan, with the prestigious title of Honorary Consul of Norway in Almaty. Speaking about relations between Norway and Kazakhstan, Mr.Bjørnøy said that Almaty ia a great source of pride for Norway as well as Kazakhstan. Kazakhstan is a nation not only with big resources but with big ambitions to match, and it has every opportunity to turn these ambitions into reality. These aspirations begin in Astana and are brought to life in Almaty, and it is for this reason Norway needs an Honorary Consul in Almaty. The Government of Kazakhstan is striving to attract foreign investors, and Norway supports this by assisting its citizens with their work here, improving the investment climate and contributing to the development of the economy. Both Kazakhstan and Norway support the idea of strong, independent women. In Mr. Bjørnøy’s view, Aigoul Kenjebayeva fits the description. She has contributed considerably to the economic development of the country and is a vital asset. On behalf of the Minister of Foreign Affairs of Norway, Mr. Bjørnøy thanked Ms.Kenjebayeva for accepting the title of the Honorary Consul of Norway in Almaty. “I will do my best to promote further cooperation between our countries in Almaty and the Almaty region,” said Aigoul Kenjebayeva. “I will also support the efforts of the Embassy of Norway and Norwegian companies operating in Kazakhstan to develop relations in the country’s economy. Kazakhstan is a young independent state, and I'm excited to see the way it is developing diplomatic relations with so many countries around the world. Norway and Kazakhstan are very far from each other, but at the same time they are very close. I am confident that we can work together and in this way contribute to the cause of peace and friendship throughout the world.” #62/2014 Morgan Lewis Opens Second Office in Central Asia Firm Formalizes Existing Operations in Capital of Kazakhstan Morgan Lewis has opened a new office in the Kazakhstan capital of Astana, formalizing its existing presence in the Central Asian country. The firm has operated and served its global clients in the region from Morgan Lewis’s Almaty office since 2012. Morgan Lewis lawyers in Kazakhstan handle a wide variety of corporate, investment, energy, finance, telecommunications, utilities and other business transactions—both within the country and the broader Central Asia and Caspian region—with an emphasis on energy, banking and capital markets projects. The firm recently served as English, U.S. and Kazakhstan legal adviser to Intergas Central Asia, the operator of Kazakhstan’s national natural gas pipeline system on a successful consent solicitation involving $600 million in Notes. “Our presence in Astana allows us to provide important support for our clients and facilitates our interaction with the Kazakhstan government agencies that drive many of their projects,” said Firm Chair Jami McKeon. The office will be under the leadership of Aset Shyngyssov, who is also the Managing Partner of the firm’s Almaty office and will initially host three resident lawyers. Mr. Shyngyssov has more than 15 years of experience handling complex transactions in a wide range of industries throughout Kazakhstan and Central Asia, and his presence in both offices enables their seamless cooperation and integration. “Although we have been working with our clients in Astana for years, a permanent office in the capital brings us closer to many of them, further enhancing our ability to serve both our existing and future clients,” Mr. Shyngyssov said. Both offices in Kazakhstan offer local and international clients access to a full range of legal services, with a focus on significant mergers and acquisitions, joint ventures, corporate finance, debt and equity capital markets transactions, and disputes. Morgan Lewis lawyers also advise on matters involving intellectual property, real property, tax, environmental law, competition law, anti-bribery compliance, and corporate governance, among other matters. Morgan Lewis’s Astana office is located at: Kaskad Business Center Floor 7, Office #72/1 6/1 Kabanbai Batyr Avenue Astana 010000 Kazakhstan 37 NEW MEMBERS WELCOME ADDITIONS TO THE CHAMBER ABBOTT LABORATORIES ABBVIE BIOPHARMACEUTICALS KAZAKHSTAN CORPORATE A CORPORATE A Marek Edris General Manager Khan-Tengri 2 Business Center 117/6 Dostyk Avenue Almaty 050059 Kazakhstan Telephone: 7 (727) 244 75 44 Fax: 7 (727) 244 76 44 Email: [email protected] Website: www.abbott.com Abbott Laboratories is an American pharmaceuticals and healthcare products company operating in over 130 countries worldwide with 90,000 employees. Company headquarters are locted in North Chicago. The company was founded by Chicago physician Wallace Calvin Abbott in 1888. In 2010 Abbott Laboratories revenues were over $35 billion. It is traded on the NYSE under ABT and is a component of the S&P 500. The representative office of Abbott Laboratories in Kazakhstan was opened in 2008 and contains two units: Abbott Established Products (EPD) and Abbott Diagnostics. The Abbott Established Products Division (EPD) is a leader in therapeutic areas such as gastroenterology, women's health and immunology. The company's portfolio contains internationally recognized brands Creon, Heptral, Duphalac, Duphaston, IRS 19, Immudon, Influvac and others. Abbott also produces a range of medical devices, nutritional supplements, animal health products, and performs diagnostics services. Its in-vitro diagnostics business performs blood screening, and its diagnostic instrument systems are used worldwide by hospitals, laboratories, blood banks, and physicians' offices Abbott is among the top ten pharmaceutical companies in Kazakhstan. 38 AVIS RENT A CAR CORPORATE A Ronald Beno CIS Regional Manager Tengyz Towers Business Center 30A/1 Satpayev Street, Office 97 Almaty 050000 Kazakhstan Telephone: 7 (727) 222 14 18 Fax: 7 (727) 398 94 88 Email: [email protected] Website: www.abbvie.com AbbVie Biopharmaceuticals is a global research-based specialty biopharmaceuticals company spun off from Abbott Laboratories in January 2013. It is officially listed on the NYSE under the ticker symbol ABBV. The company currently employs 250,000 people in approximately 170 countries. For the second consecutive year, Science Magazine has named AbbVie a top employer in the biotechnology, pharmaceutical and biopharmaceutical industries. Abbvie’s products are used to treat chronic auto-immune diseases ranging from rheumatoid arthritis to psoriasis and from HIV to Parkinson’s disease. The Illinois-based firm generates the bulk of its revenue from its anti-inflammatory drug Humira, used to treat arthritis, and from AndroGel, a topical testosterone replacement therapy (TRT) drug. AbbVie posted net earnings of $4.13 billion in its first year independent of Abbot. Sales from its top product, Humira, are expected to reach $12 billion in 2014. A pipeline of AbbVie drugs awaits approval, including a combination therapy treatment for hepatitis C. The company also is developing new drugs for blood cancers and other diseases. Ali Erem Erturan Country Manager 240/46 Furmanov Street Almaty 050000 Kazakhstan Telephone: 7 (727) 262 24 53 Fax: 7 (727) 262 24 53 Email: [email protected] Website: www.avis.com.kz AVIS Kazakhstan launched its operations as a branch of Avis Turkey in 2014. Avis Turkey, founded 40 years ago as part of Turkey’s largest corporate conglomerate, Koç Holding, manages a total park of 28,000 vehicles for both short- and long-term rental. AVIS has 86 offices in 4 countries (Turkey, Azerbaijan, Northern Iraq and Kazakhstan). Avis Kazakhstan provides long-term and short-tem car rental service from a fleet size of 300 vehicles. Avis Kazakhstan offers brand new vehicles, 4WD’s, pick-ups and buses in accordance with customer needs and requirements, with or without drivers. As a company oriented towards customer satisfaction, Avis provides its customers with effective car rental solutions - such as 7/24 road assistance, car and tire replacement, maintenance, insurance, and fuel management. Avis Kazakhstan’s headquarters are located in Almaty and it operates throughout Kazakhstan. AVIS Kazakhstan has the goal of being the leading company in the rental car sector, always providing new applications and services to meet increased customer expectations, as well as developing the car rental market in Kazakshtan. #62/2014 WELCOME ADDITIONS TO THE CHAMBER NEW MEMBERS TELE2 CASPIAN MOTORS CORPORATE B CORPORATE A Pietari Kivikko Chief Executive Officer 101 Tole bi Street Almaty 050012 Kazakhstan Telephone: 7 (727) 356 95 95 Fax: 7 (727) 355 47 07 Email: [email protected] Website: www.tele2.kz Tele2 is one of the fastest growing European telecommunications operators, offering its services to customers at a low price. The company serves over 13 million customers in nine countries around the world. Tele2 offers mobile voice and broadband services, fixed broadband and telephony, data network, cable TV and content services. Tele2 was one of the first operators to launch 4G services. Since the company was established by Jan Stenbeck in 1993, Tele2 has challenged monopolies, both public and private. Tele2 has been listed on the NASDAQ OMX Stockholm since 1996. In Kazakhstan, Tele2 entered the market in 2010 upon completing the acquisition of the local operator. After the company's integration into the Tele2 business group, a complete upgrade of equipment compatible with the latest 3G HSPA+ technology and, update of the product portfolio and marketing platform, the network was re-launched under the Tele2 brand. The key advantages of the new brand include good quality and low prices. Across Kazakhstan, services under the Tele2 brand are provided by Mobile TelecomService. #62/2014 Yevgeniy Kuznetsov General Manager 161A Suyunbay Avenue Almaty 050016 Kazakhstan Telephone: 7 (727) 380 73 21 Email: [email protected] Website: www.rmagroup.net Caspian Motors is the Kazakhstan subsidiary of RMA Group, a leading international specialized vehicles and power equipment supplier to emerging markets for over 25 years. Caspian Motors has been importing and distributing Ford vehicles and RMA/GFS modified vehicles in Kazakhstan since 2010, through 3 retail outlets (Astana, Almaty and Atyrau) and a dealer network. For the past 5 years Caspian Motors has been the official dealer for Jaguar Land Rovers through its dealership in Astana and Almaty. The company employs about 150 Kazakhstani staff. Since 2011 RMA Group has provided SDMO power generator supply and servicing since through another local subsidiary, RMA Kazakhstan. RMA Group is a global company with operations in 21 countries employing 8,000 staff. Headquartered in Bangkok, Thailand, RMA provides customer-driven, tailored solutions in automotive, infrastructure, engineering, financing services, and food service sectors for customers in emerging markets through to fully developed markets. RMA Group is the only Approved Vehicle Modifier for Land Rover vehicles and a Qualified Vehicle Modifier for Ford vehicles in Asia, bringing to customers tailor-made solutions for the mining industry, industrial sites, military purpose, utility vehicles and ambulances. COMMERCIAL RE GROUP CORPORATE B Bagdat Akhmetov Chief Executive Officer 240V Furmanov Street Almaty 050059 Kazakhstan Telephone: 7 (727) 313 25 25 Fax: 7 (727) 356 40 24 Email: [email protected] Website: www.cregroup.kz Commercial RE Group is the fastest growing property management company in Kazakhstan. Since 2009 its professional team has leased and managed 200,000+ square meters of class A and B office buildings and retail spaces in Almaty and Astana. Commercial RE international tenants include a mix of start-ups, acquisitions and Fortune 500 companies. Because of the Group's exclusive range of properties, it can offer high-end facilities to suit various budgets. The goal of our team is to listen to the clients so that we can provide the right space to fit any requirements and at the same time delivering high-quality property management services including knowledgebased maintenance and dedication to superior customer expectations. Commercial RE property and tenant managers have a leader-oriented mentality for responsibilities they perform and the decisions they make in favor of clients. They are fully committed to the effort and take ownership for both the success and challenges in their managed properties. While always attentive to new opportunities, Commercial RE professionals also understand the urgency of immediate issues and respond promptly with innovative solutions. 39 NEW MEMBERS WELCOME ADDITIONS TO THE CHAMBER ESENTAI APARTMENTS LONDON-ALMATY INSURANCE COMPANY CORPORATE B CORPORATE B Eldar Serkebayev Chief Executive Officer Yergali Begimbetov Chairman of the Board Esentai Complex 72/1 Al Farabi Avenue Almaty 050000 Kazakhstan Nurly Tau Business Center 19/1 Al-Farabi Avenue Almaty 050000 Kazakhstan 38B Shashkina Street Almaty 050040 Kazakhstan Telephone: 7 (727) 328 77 77 Telephone: 7 (727) 311 07 77 Fax: 7 (727) 311 07 77 Telephone: 7 (727) 264 28 88 Fax: 7 (727) 264 63 64 Email: [email protected] Website: www.esentaiapartments.com Email: [email protected] Website: www.laic.kz Email: [email protected] Website: www.ghrcca.columbia.edu Esentai Apartments is the final stage in the Esentai Park Complex, consisting of the Esentai Tower, Esentai Mall, The RitzCarlton, Almaty and Haileybury School. Designed by Skidmore, Owings, and Merrill (SOM), a Pritzker Prize-winning New York architecture firm in collaboration with Leslie Robertson Associates, Esentai Apartments is a new landmark in luxurious living suited to Almaty's modern and business lifestyle in the city's most prestigious location. It consists of 3 luxury residential apartment towers: Tower A is a condominium tower with ownership vested in the individual unit owners, and Towers B and C are apartments belonging to KUSA KKB-2. All 3 Towers together offer various types of apartments and duplexes (80 sq.m. up to 500 sq.m.) priced from $500,000 to $4 million. The apartments can be purchased designready. The Bulthaup kitchens contain topof-the-line Gaggenau and Miele appliances, granite countertops, and the bathrooms are finished in marble with Villeroy&Boch and Dorndracht fittings. Teak terraces offer stunning panorama views of Almaty and the Tien Shan Mountains soaring above the city. Residents have full access to all thoughtfully designed facilities and services of Esentai Park, along with the privilege of exclusive services from The Ritz-Carlton, Almaty. Concierge service in the lobby of Esentai Apartments will graciously take care of an array of tasks. Founded in 1997, the London-Almaty Insurance Company is a subsidiary of BTA Bank. It provides vehicle, property, accident, and travellers insurance for individuals, and vehicle, property, cargo, civil liability, and accident insurance, as well as water, railway, and air transport insurance for companies. The Company is committed to quality and to a daily improvement of its internal processes and services. London-Almaty appreciates the importance of customer satisfaction in maintaining and growing its business, and thus strives to exceed its clients’ expectations. Teamwork is critical to the results achieved daily at London-Almaty Insurance Company, and it is encouraged through a work environment that provides employees with ample opportunities for professional development and realization of their ideas. This fosters the development of attractive business projects that cater to the comfort and objectives of the company’s clients. The Global Health Research Center of Central Asia (GHRCCA) integrates a multidisciplinary team of faculty, scientists, researchers, and students to advance solutions to health and social issues in Central Asia and the region. The Center’s core activities are designed to improve the health and well-being of vulnerable populations in the region. About 10 years ago, Columbia University established GHRCCA with a branch office in Almaty. The Center has Regional Representatives in Tajikistan and Kyrgyzstan. Research: GHRCCA brings together faculty, scientists, researchers, and students from different disciplines and fields from Columbia University and other universities in Central Asia and worldwide to generate scientific and innovative solutions to public health and social challenges. Education and Training: Using an interdisciplinary approach, GHRCCA aims to advance knowledge, scholarship, and curriculum on health and social challenges in Central Asia and Mongolia. GHRCCA provides educational exchanges and programs for faculty, scientists, researchers, and students from the region. Policy and Dissemination: GHRCCA collaborates with government, international and local non-governmental organizations to implement evidence-based, sustainable solutions into policies, programs, and systems of care. GLOBAL HEALTH RESEARCH CENTER OF CENTRAL ASIA NON-PROFIT 40 Dr. Nabila El-Bassel Director #62/2014 INFORMATION AND MEMBERSHIP APPLICATION ABOUT THE CHAMBER Registered in Kazakhstan as a non-profit organization in March of 1999 with 36 charter members, the American Chamber of Commerce in Kazakhstan currently represents over 200 member companies including US, multinational, and local businesses in 30 industry sectors. Their collective investment in Kazakhstan's economy is several billion USD. The Chamber in Kazakhstan is a member of the US Chamber of Commerce in Washington D.C. and has working relationships with many regional business associations. BENEFITS OF MEMBERSHIP 33 Chamber members participate in an organization existing solely to serve members 33 Chamber actively advocates for reform of the business environment with Kazakhstan Government at senior levels 33 Members may attend 15 Working Groups in 4 cities 33 Monthly speaker luncheons with senior government and business leaders are reserved for members 33 Seminars, conferences, monthly social networking events and charitable activities are organized for Chamber members 33 Chamber membership contact lists are available exclusively to Chamber members 33 Economic, political, legal, social, charitable and business development information is distributed to members 33 Member companies provide exclusive discounts on products and services to other Chamber members 33 Access to the Members' Only section on the AmCham Website 33 Publishing opportunities are available in the Chamber magazine, Investors' Voice, and in the annual Membership Directory MEMBERSHIP APPLICATION Company Name Industry Area CEO Name, Signature, Email Contact Individual Title(s) Address Tel. Fax: E-mail Please include us in the following Working Groups: Almaty (6) Foreign Investment Human Resources Tax Corporate Social Responsiblity Technology and Innovation Trade and Customs Atyrau (4) Aktau (3) Astana (2) Corporate Social Responsiblity Human Resources Trade and Customs Tax Human Resources Trade and Customs Tax Foreign Investment Tax WORKING GROUPS Working Groups made up of representatives from our member companies provide comment, discussion and submission of positions and represent the united interests of the business community in Kazakhstan by identifying challenges faced by investors and proactively addressing them. Each group meets regularly, providing a forum for networking and the exchange of information. Groups are formed on an as-needed basis at the request of our membership. OFFICE GOVERNANCE The Chamber is governed by a Board of Directors elected annually from and by the membership. Directors currently and in the past have included individuals from the following company members: AES AIG Insurance Baker & McKenzie Bracewell & Giuliani BG Group Citibank Conoco Phillips Coca-Cola Dechert Deloitte DUCAT EBRD Ernst & Young GE International Halliburton Honeywell HSBC Hyatt Hotel Intercontinental Almaty Hotel KIMEP KPMG LeBoeuf, Lamb, Greene & MacRae Nestle PetroKazakhstan PricewaterhouseCoopers Philip Morris Raytheon Scot Holland CBRE Tengizchevroil USAID Visor Capital White & Case Rixos Almaty Hotel Office Tower, 8th floor 506/99 Seifullin Street/Kabanbay Batyr 050012 Almaty Kazakhstan Tel.: +7 (727) 330 92 50 Fax: +7 (727) 330 92 51 www.amcham.kz Doris Bradbury Executive Director [email protected] Rimma Kazhemyakina Finance Director [email protected] Adam Grode Working Group Manager [email protected] Almas Serikuly Government Relations Coordinator [email protected] Dinara Tolebayeva Events / New Membership Coordinator [email protected] Saniya Yergaliyeva Publications / Communications Coordinator [email protected] Madiya Orazkhan Administrative Assistant [email protected] Lida Golovko Accountant [email protected] Izabel Safadi Marketing Intern [email protected] Anatoly Konovalov Technical Support Chamber IP provided by Beeline Business TM www.b2b.beeline.kz REGIONAL REPRESENTATIVES David MacInnis Resident Representative, Atyrau [email protected] Robert Bosworth Resident Representative, Astana [email protected] MEMBERSHIP CATEGORIES AND ANNUAL FEES Corporate A (Worldwide revenues in excess of 100 million USD) Corporate В (Worldwide revenues between 2-100 million USD) Corporate С (Worldwide revenues not exceeding 2 million USD) Non-Profit Individual** $5,000 USD $3,800 USD $2,700 USD $1,500 USD $500 USD Corporate membership entitles a company to delegate 3 individuals as Chamber voting members. The number of persons from each company participating in working groups, forums, and business roundtables is usually not limited. **lndividual memberships are available only under special circumstances, for persons not associated with a company. All applications for membership must be approved by the Board of Directors of the American Chamber of Commerce in Kazakhstan. For further information about membership benefits, the application process, or Investors' Voice magazine, please contact: [email protected] AVIS DIFFERENCE AND QUALITY IN KAZAKHSTAN. We are awaiting for you at our Avis Kazakhstan office to get the quality and advantages of Avis long–term car rental service. Furmanov Street 240 Office 246 Almaty Republic of Kazakhstan Phone: +7 727 262 24 53 [email protected] | www.avis.com.kz