Kazakhstan Looks To Strengthen Business Attractiveness, Develops e-Residency Program

Officials from Kazakhstan have announced the government’s intent to initiate an e-Residency program, which would allow foreign entrepreneurs starting their businesses from afar in what is Central Asia’s largest country and Caspian region’s third largest economy.

“Digital residence is an opportunity to do business without being in Kazakhstan, to create a company, manage this company, pay taxes, and enjoy services provided through the e-government,” Azamat Bukebayev, who chairs IT agency at the country’s Foreign Ministry, said on Monday.

“The project is at the development stage now, as we are developing a roadmap that will be coordinated with all government agencies,” he added.

After the launch of the project, the government of Kazakhstan will issue a smart card for each entrepreneur, which will use biometric data and a digital signature, and will allow its owner to make transactions and sign e-documents. While this card will be available at the embassies or representations of Kazakhstan throughout the world, the criteria for the issuance of e-residence are not yet defined. In addition, the E-residency service does not give its owner the right to enter Kazakhstan.

While the pilot project is planned to be implemented in 2018, the roll-out won’t happen until 2020, according to Bukebayev. It also a part of the government-backed program dubbed “Digital Kazakhstan,” which covers the period of 2018-2022 and provides for modernization of the country’s flagship industries.

The project developers used the experience of Estonia, the first country to launch such a service, as an example for success.

Initiated in 2014, e-residency of Estonia provides entrepreneurs with a range of services, including the launch of a company via the online registration platform, company management from anywhere in the world, opening of a bank account, online access to tax accounts via the e-tax board.

Over the last three years almost 30,000 virtual residents from 143 countries have created close to 3,000 companies via e-residency of Estonia. Following Deloitte’s auditors estimate, the e-residency program has brought the country nearly $17.6 million in income, including $1.7 million in net income and $15.9 million in net indirect socio-economic benefits.

“These very positive results validate our initial vision, which we hope is now shared by more people,” Kaspar Korjus, e-Residency’s managing director told Deutsche Welle late last year.

“It is totally unique that one nation decides to open its borders digitally to anybody in the world.”

Meanwhile, Kazakhstan has long been striving to create a favorable climate for foreign investors and to strengthen its economy at the same time.

In 1997, the government designed the bill “On State Support for Direct Investments” that has defined privileges for foreign businesses investing in priority sectors of Kazakhstan’s economy.

Following the document, those benefiting entrepreneurs are provided with state grants; are exempted from payment of land tax and property tax for a period of up to five years from the date of signing the contract; and are also fully or partially exempted from customs duties on imports of equipment, raw materials and materials necessary for the implementation of the investment project.

With a GDP of over $474 billion, Kazakhstan is Central Asia’s wealthiest economy, generating nearly 60 percent of the region’s gross domestic product (GDP) in terms of purchasing power parity, according to US government statistics. As the world’s tenth largest crude oil exporter and holding the 15th largest amount of proved natural gas reserves, the country’s wealth is primarily derived from hydrocarbons. It is also rich with deposits of uranium, iron ore, manganese, chromite, lead, zinc, copper, titanium, gold, and silver.

Over twelve years, from 2005 to 2016, the total gross inflow of foreign direct investment into Kazakhstan amounted to $243 billion. The Netherlands, the United States, Switzerland, China and Russia topped the list of its foreign investors in the period of 2016-2017.

While country’s oil and gas industry remains the leader in attracting foreign investments, non-oil spheres, including scientific and technical activities (23.6 percent) and manufacturing (18.4 percent) are also in demand.