Tag Archives: Kazakhstan

Van Oord signs Kazakhstan contracts

DEC. 2 2015 (The Conway Bulletin) — Dutch marine engineering company Van Oord said it signed several contracts with Kazakhstan for a total value of $500m. Van Oord representatives accompanied the Dutch PM Mark Rutte during his official visit to Astana. One of the main projects will be to expand the port in the town of Prorva on the Caspian Sea coast near Atyrau in north-west Kazakhstan.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakhstan joins the WTO and pressures EEU import tariffs

NOV. 30 2015 (The Conway Bulletin) — After nearly two decades of negotiations Kazakhstan joined the World Trade Organisation (WTO), a move that pleased Kazakh president Nursultan Nazarbayev but also pressured the Eurasian Economic Union to cut its import tariffs.

It has been a long-held ambition of Mr Nazarbayev to secure WTO membership for Kazakhstan and he scheduled a state-of-the-nation address on the eve of the accession to hail it as “a milestone in the history of independent Kazakhstan.”

But Kazakhstan’s WTO membership will have wider implications.

Kazakhstan is the first member of the Eurasian Economic Union (EEU) to enter the WTO since the Kremlin- led trade bloc came into existence on Jan. 1. This means Kazakhstan’s bilateral agreement with the WTO will effect the entire EEU.

The EEU includes Russia, Armenia, Kyrgyzstan — which joined the WTO before the EEU existed — and Belarus which is not a WTO member.

The WTO accession document specified that the new rules to which Kazakhstan has committed should also apply to the rest of the EEU.

“There are 23 commitments which contain measures to be undertaken by Kazakhstan and/or the competent bodies of the EAEU (Eurasian Economic Union),” the WTO said in Kazakhstan’s accession documents.

This means that the EEU’s high import tariff regime will have to be lowered to meet the agreement that Kazakhstan signed up to.

Fortunately, complying with WTO rules appears to be in line with the EEU’s aspirations.

Russian President Vladimir Putin said in October 2014 that the EEU would adapt to work with the WTO and in October 2015 EEU heads of states said they wanted to harmonise their tariffs to Kazakhstan’s new commitments under the WTO.

Molly O’Neal, a professor at the Johns Hopkins University, said reducing the tariff gap between the WTO and the EEU was one of the most important implications of Kazakhstan’s WTO membership.

“Kazakhstan had already agreed [with the WTO] to binding its tariffs on certain products at levels below the common tariff of the EEU,” Ms O’Neal told the Bulletin.

WTO accession should also mean dropping domestic regulations that favour Kazakh companies. This is particularly important in Kazakhstan’s extractive sectors.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakhstan’s DevBank and Al Hilal sign agreement

DEC. 3 2015 (The Conway Bulletin) — The state-owned Kazakhstan Development Bank and Abu Dhabi-based lender Al Hilal signed an agreement on the development of Ijara, an Islamic banking financial instrument linked to leasing real estate. Earlier this week Kazakhstan’s Central Bank also said it is considering halving capital requirements for Islamic banks to 5b tenge ($16.2m).

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakhstan issues new (devalued) 20,000 tenge note

DEC. 1 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank issued its first 20,000 tenge note, depicting the Akorda presidential palace and a mock Arc de Triumphe in Astana and the Eli winged statue in Almaty’s central square.

When the idea of the blue, grey 20,000 tenge banknote was conceived in 2013, it would have been worth around $129.

Now, after two devaluations linked to the drop in oil prices and the fall of the Russian rouble, Kazakhstan’s 20,000 tenge is worth $65.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Currencies: Kyrgyzstan’s som, Tajikistan’s somoni

DEC. 4 2015 (The Conway Bulletin) — The Kyrgyz som continued its slump against the dollar and now trades at above 75.5/$1. The Central Bank chairman Tolkunbek Abdygulov said the exchange rate had changed because of a speculative attack and promised to continue to intervene to prop up the currency. The regulator said that local bank FinanceCredit was found guilty of speculative trading of the som. In addition, the Central Bank fined several exchange points across the country for speculating on currency rates.

In Tajikistan, the somoni was stable at 6.7/$1, after a rough week. On Nov. 30, media reported that Dushanbe residents had to pay around 7.5somoni for $1. The Central Bank reacted by drafting a decree that shut down the remaining private exchange bureaus in the country. Earlier in April, it had forced the closure of over 800 out of a total of 1,500 exchange bureaus because it said they were taking advantage of the unstable currency markets.

On Dec. 1, the Central Bank also reported the arrest of six employees of exchange bureaus for currency speculation. As with the Kyrgyz incidents, the details of these so-called speculative attacks have been difficult to pin down.

But none of this is surprising in Central Asia’s currency markets.

We witnessed a similar trend in Kazakhstan in 2014, when a devaluation of the tenge was followed by speculative attacks on the currency and interventions to keep the tenge from plummeting. This was repeated this year again in Kazakhstan.

It is likely that both Tajikistan and Kyrgyzstan will follow this trend and crack down on private exchange bureaus to strengthen their control over exchange rates.

In much of the rest of the region, currencies did not move. The exception was Uzbekistan. The Uzbek sum reached a new record trading low, officially, at 2,755/$1. In the last year, it lost almost 15% of its value.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakhstan opens $1.2b gas pipeline

DEC. 4 2015 (The Conway Bulletin) – Kazakhstan’s Kaztransgas, the state- owned pipeline monopoly, opened a third pipeline pumping gas to China, highlighting Chinese dominance over Central Asia’s energy resources.

Line C will bring the total capacity of the Kazakhstan-China pipeline to 55b cubic metres of gas a year. The Kazakhstan-China pipeline is part of

the 1,300km pipeline network that spans Central Asia. Its main purpose is to pump Turkmen gas to China, although Uzbekistan and Kazakhstan also contribute.

The pipeline cost $1.2b to build and was described by Kaztransgas as the biggest infrastructure project in independent Kazakhstan.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakhstan faces lowest GDP growth since 1990s

DEC. 3 2015 (The Conway Bulletin) – The World Bank predicted that Kazakhstan’s economy would grow at its slowest rate since the mid-1990s, four days after President Nursultan Nazarbayev tried to shrug off the worsening economic outlook by telling listeners during a state-of-the- nation speech that they have never had it so good.

Throughout the year economists at the World Bank have been down- grading growth rates in Kazakhstan but a new lower GDP growth estimate of 0.9% this year, smaller than growth rates in the 2008/9 global financial crisis, still came as a shock.

And worse was to follow. The World Bank said GDP growth would measure only 1.1% in 2016.

“The uncertain external outlook will dampen private investment, while the pass-through effect of the tenge depreciation will reduce house- hold consumption and public consumption will remain modest due to the ongoing fiscal adjustment.” the World Bank said in its report.

From 2017, the economic outlook would improve mainly thanks to the giant Kashagan oil field coming on- stream. But the warning signs are there.

If the World Bank’s outlook comes through, it’ll be the first time for over 20 years that growth in Kazakhstan has been so low for two consecutive years.

Three days earlier Mr Nazarbayev had tried to rally his countrymen in a televised state-of-the-nation speech that was filled with talk about toughing out the economic malaise.

He blamed factors outside his control for the economic downturn and then told his audience that they have never lived in such a prosperous period.

“Never before have our people lived as well as they do now,” he said. “We have achieved a lot.”

And Mr Nazarbayev needs to put a brave face on things. Inflation has jumped to around 10% and the value of the tenge currency has halved in the past 18 months.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

China signs deal on Kazakh refinery

NOV. 27 2015 (The Conway Bulletin) – China Petroleum Engineering & Construction signed a deal with Kazakhstan’s state-owned Kazmunaigas to modernise the oil refinery at Shymkent, south Kazakhstan. The upgrade will also mean the refinery’s capacity increases to 6m tonnes from 5.25m tonnes. Kazakhstan needs to increase its refinery capacity.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Kazakh businessman buys SAT shares

NOV. 30 2015 (The Conway Bulletin) — Kenes Rakishev, an increasingly prominent businessman in Kazakhstan, bought a stake in the Kazakh industrial conglomerate SAT &Co owned by former CEO Rollan Mussinov for an undisclosed amount. Now, Mr Rakishev, son-in-law of defence minister Imangali Tasmagambetov, and the owner of large chunks of Kazakhstan’s biggest companies owns 75.6% of SAT & Co, up from 52.4%.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)

Business comment: Transit rush in Eurasia

DEC. 4 2015 (The Conway Bulletin) — From Iran to Lithuania, several countries have tried to impose their agenda to lay out transit routes across the South Caucasus and Central Asia.

Iran, which will soon be no longer cut off from international trade by Western sanctions, said it wants to become a road and rail transport link between Pakistan and the South Caucasus.

The link, which would run through Afghanistan and Tajikistan, would also connect Central Asia to Azerbaijan, said Iranian minister of roads and urban development Abbas Akhoundi.

In Klaipeda, Lithuania, thousands of kilometres away from the region, representatives from Lithuanian, Kazakh and Georgian railway and maritime companies met with large transport companies — among which were Britain-based DBSchenker and Germany-based InterRail Logistics — to design a China-Europe Trans-Caspian International Transport Route.

Georgia and Turkey also want to be included in the project, which could compete with the EU- sponsored TRACECA corridors spanning from Central Asia to Europe and the Beijing-funded One

Belt One Road project from Eastern China to Western Europe.

In addition, because of the recent diplomatic row between Russia and Turkey, Azerbaijan has come forward and said it wants to become the transport hub for Turkish goods to Central Asia.

The growing links across the region will improve connectivity and cut back on transport times for westbound goods from China, South and Central Asia.

And its worth keeping in mind that stresses caused by the Russia- Turkey row may create opportunities for new trade routes.

ENDS

(News report from Issue No. 259, published on Dec. 4 2015)