Supporting the Building of Kazakhstan 4.0

By Matthew Farmer, Mark Beer, and John Martin St. Valery

Kazakhstan is a country steeped in culture and history: The 9th biggest country in the world, with a land mass greater than Western Europe, humans have lived in this vast territory for over 800,000 years. Fast forward to modern times, and Kazakhstan has transformed from Empires of the Huns and the Mongols, as well as the Kazakh Khanate and Russian occupation (v 1.0), to the Soviet era (v 2.0), the era of the First President (v 3.0) and is now entering v 4.0, and the transition to the Fourth Industrial Revolution and a digital society serving the people, under the leadership and with the vision of President Kassym-Jomart Tokayev. This vision has seen many developments, with a strong focus on the economic development of Kazakhstan, and a desire to build on the foundations of what has come before, along with ambitious plans to build a ‘new’ and prosperous Kazakhstan. This article will touch on some of the plans for reform that the President has outlined, as well as some of the support which has been provided by various industries, as Kazakhstan stands on the verge of a new dawn.

President Tokayev has reiterated that Kazakhstan’s Government will continue with its plans for large-scale reforms to the political, economic, legal and media climate of Kazakhstan. These reforms aim to ensure the sanctity of investments in the country as well as further develop elements such as anti-corruption and the empowerment of a People’s Ombudsman reporting directly to the newly established Constitutional Court.

President Tokayev seeks to decentralise power, with reforms at a Constitutional level limiting the powers of his office and transferring that power to the Parliament and the citizens of Kazakhstan. Among the proposed political reforms are changes to the electoral system and a reduction in the number of officials that the President can appoint, seeking to ‘root out’ the overconcentration of powers with any one person. President Tokayev has said that these reforms should start from the review of the formation of the Senate (the upper house of Parliament) and the Mazhilis (the lower house of Parliament). There are also proposed changes which will allow for the creation of a multi-party system, with the number of people required to create a political party being reduced from 20,000 to 5,000. It has been said that a key goal of the modernisation of Kazakhstan’s political landscape is to increase the role of its citizens in the Government by means of the electoral process.

Accountability of his government is also something that President Tokayev values, which can be seen by his comments on the importance of a free media: He has said that the media can, and should, be raising pressing issues and adding that this should be done "with a great civic responsibility”.

While the political reforms are largely aimed at the decentralisation of power from the President and inviting greater involvement of the Kazakh people in Government, the President’s economic reforms are aimed at improving international relations and creating an environment which invites foreign direct investment, in collaboration with Kazakh businesses and individuals. There are various policies and reforms which the President has already put in place which are aimed at cementing Kazakhstan’s position as a secure environment for investment into Kazakhstan and the wider CIS region.

In a statement President Tokayev said that “Kazakhstan remains consistently open to multifaceted cooperation with the international community,” and further adding that “We will continue to strengthen close ties with partners to benefit our country and our people. Our investment policy of open doors also remains consistent,”. This is a policy which has certainly already seen positive development, with Kazakhstan having experienced a gradual increase in foreign direct investment throughout 2021, with an increase of 5.8%, following a year of severe decline in 2020 as a result of the pandemic. This is a clear indication of the important role that international relations plays in economic development.

In addition to the open-door, secure investment policy adopted by Kazakhstan, another element which invites confidence in investment is the Astana International Financial Centre (AIFC). The Centre provides an English language business environment, benefitting from laws and regulations which are both familiar and represent international best practice. It offers a safe harbour for investment that seeks the high returns available in the region, and offers one of the world’s leading English language commercial courts, led by Chief Justice The Rt Hon Lord Manse to help to resolve disputes.

The regulatory regime is the most advanced in the region, modelled on equivalent financial centres in Dubai, London and Singapore, offering institutions a safe and solid regulatory foundation for financial services. All that wrapped around an enabling and low tax business environment.

The final piece of this economic plan that the Kazakh government has adopted is an openness to work with international business leaders to use their knowledge and experience to adapt and develop the investor landscape to a world class standard. An example of this can be seen in the recently signed Memorandum of Understanding (MoU) by Kazakh Invest with the AIFC-based international law firm Seven Pillars Law and the Foreign investment specialist JacksonMSV. This MoU seeks to leverage the experience and network of Seven Pillars Law and JacksonMSV to bring in foreign investment.

While there are many important benefits that these reforms may bring about, there is none more so than the benefit to Kazakhstan and its people, through the creation of jobs, protection of human rights and effective leadership. As evident from the discussion above, these reforms and economic policies should improve the lives of the people of Kazakhstan, with greater involvement in the Government as a result of the political reforms and an improved economic position as a result of the opportunities created via the economic policies. However, this is not the only improvement which President Tokayev and his government look to bring to the lives of their people, as there is also significant focus being placed on the empowerment of citizens’ rights.

This is closely related to the political and constitutional reforms discussed above. These reforms extend to the independence and effectiveness of Courts and law enforcement agencies, with fresh measures to protect human rights, including the establishment of a Constitutional Court. President Tokayev has also signed “On further measures of the Republic of Kazakhstan in the field of human rights”, which he said represents an important step in the modernisation of the country. This decree includes measures designed to improve cooperation mechanisms with the UN Human Rights Council. Some of the stated priority areas include the elimination of discrimination against women, and boosting freedom of association and expression.

These political reforms, economic policies and development of Human Rights practices in the country are all positive developments. Since its independence 30 short years ago, Kazakhstan has built itself into the leader in the Central Asia region, and if President Tokayev is able to execute his vision, the citizens of Kazakhstan will no doubt be reaping the benefits for generations to come.

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About the Authors The article is authored by Matthew Farmer (photo), with support from Mark Beer OBE, and John Martin St. Valery OBE

Matthew works at the Leading Kazakh law firm Seven Pillars Law, head quartered in the AIFC and holds an Undergraduate law degree from the University of the Western Cape in South Africa and a Masters Degree in Intellectual Property law from the NTU (UK).

Mark Beer OBE, is Co-founder of Seven Pillars Law, visiting fellow at Oxford University, visiting professor at Shanghai University for Political Science and Law, and a member of the World Economic Forum’s Expert Network. Mark specialises in helping to resolve disputes, whether between Governments, companies or individuals. He also Chairs The Metis Institute, which advises Governments on the implementation of dispute resolution reform that promotes citizen-centric dispute resolution.

John Martin St.Valery OBE is a foreign direct investment specialist and Managing partner of JacksonMSV with offices in Dubai, London and AIFC, Nur Sultan. He is chair of the British Business Group for Dubai and Northern Emirates and works closely with the UK Government Department for International Trade. Assisting companies to enter new markets and scale is his speciality.

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