Saturday, September 16, 2006

Bringing in the Big Guns

Reports circulated earlier this week that President Nazarbaev offered the former head of the World Bank James Wolfenson to be a development adviser of the Regional Financial Center in Almaty (RFCA). The Kazakh government is pulling out all the stops to bring in top-name talent to jump start its ambitious plan to create a regional financial center in Almaty. This project could truly change the commercial landscape in the region if they pull it off. Or it could meet the fate of the Kazakh cluster initiative, for which Michael Porter served as an advisor, that began with a bang to boost competitiveness but seems to have fizzled out since. Now if they could only bring in Eliot Spitzer to clean up the graft and corruption...

Detail of the RFCA project:

According to Interfax-Kazakhstan, the idea of setting up a regional financial center in Almaty was first proposed in 2003. Boston Consulting Group, a U.S.-based consultancy, is working with the Kazakhstani government on the project. The RFCA is planned as special zone with a separate legal regime. Unlike existing special economic zones, the center will not have a clearly defined location. The RFCA's participants will observe the principle of the area by having an office within the city of Almaty. According to plans, foreigners arriving in Kazakhstan in order to work at the RFCA will receive an entrance visa upon their arrival at the Almaty International Airport. Visa prolongation and changing of visa status would be done by the RFCA's executive agency without the need to leave the republic. RFCA participants are expected to maintain documents and contracts in English, with decisions of the executive agency also being translated into English. Moreover, for convenience of the RFCA's participants, plans exist to establish a special court. In addition to broker-dealer organizations, included also at the RFCA will be issuers, investors and market-makers. The list of potential issuers includes large and mid-sized Kazakhstani companies, mid-sized companies from Russia, Ukraine and the Central Asian region, Kazakhstani banks, brokers of index funds and other securities, as well as foreign issuers. The RFCA is expected to draw investors from among Kazakhstani pension funds, mutual funds, insurance companies, Kazakhstani banks and companies, Russian and other regional banks, other large and mid-sized investors, foreign investors, and Muslim investors. Partial recovery of audit expenses depending on the issue volume, listing discount right down to a zero level of the listing cost during the first year of RFCA operation and exemption from RFCA registration fee are proposed as economic incentives to create favorable conditions for issuers. Tax control over RFCA participants will rest on tax reporting supported by an auditors' report. The 2006 republican budget allots over 1.5 bl tenge for RFCA creation.

No comments: