Kazakhs were gripped by live streams of a murder trial that has broken down some long standing barriers in the country. The trial was about domestic violence but it quickly became politically significant as it kept viewers hooked and mobilised formerly stagnant sectors of society. The drama in the courtroom provoked cross generational discussions on gender equality, the justice system and accountability. But, and more importantly, it should be marked as the pivotal point when belief in promises to end corruption and cronyism were fully restored, and confidence in the government and President Tokayev was boosted by leaps and bounds. This will be useful moving forward making future policy and legislation changes easier.
China. Chinese Foreign Minister Wang Yi met with Tokayev on the edge of the Shanghai Cooperation Organization meeting held in Astana in May. After the talks, Wang said his country would “firmly support Kazakhstan’s efforts to defend its independence, sovereignty, and territorial integrity.” This message is obviously aimed at Russian ears in response to rumours coming out of the Kremlin that Kazakhstan will be Putin’s next target as fighting continues in Ukraine. Wang’s message echoes his boss, Chinese leader Xi Jinping, who in recent years has consistently backed its north eastern neighbour. We still say that Russia is just sabre rattling and trying to intimidate Tokayev into staying in line. Putin is much too busy in trying to take ground in Ukraine to fight on another front but that won’t stop the leaked threats and hinted strategies. China understands that completely and has clearly positioned itself beside Kazakhstan should a face-off be needed.
Diplomacy. Tokayev became the first Kazakh premier to visit Singapore in more than 20 years. On a State Visit to the island nation, he met with President Tharman Shanmugaratnam. Currently, 140 Singaporean companies and joint ventures work in Kazakhstan bringing Singapore’s investments into the country to more than USD1.7 billion. Six memorandums of understanding (MOUs) were signed during the visit. The countries have agreed to cooperate in security, economic integration, intellectual property protection, enterprise standards, legal dispute resolution and higher education. Anticipate that this will quickly push Singapore’s investment above USD2 billion.
Arrest. The General Prosecutor’s Office has detained a former high-ranking police officer, Yerlan Turgumbayev. The former minister of internal affairs was in charge during the violent crackdown on civil unrest and political protests in January 2022 that left 238 people dead. He is charged with “abuse of power and official authority resulting in grave consequences”. Turgumbayev has worked in law enforcement agencies since 1984. In 2019 he became Minister of Internal Affairs, a position he was reappointed to three times before being relieved of it in in February 2022. He then became Advisor to the President. He was stripped of that position too in August.
Legislation. The legislature has passed a law that criminalizes domestic violence. The law comes into force on 15th June. Widely known as “Saltanat’s Law” it is named after the murdered wife of a former top official in Kazakhstan, Kuandyk Bishimbayev. He was found guilty and sentenced to 24 years in prison. Kazakhstan is coming late to the table on the subject of domestic violence but it seems that social change has now begun. Back in November, after the killing of Saltanat Nukenova, which was filmed on CCTV, Tokayev said, “Everyone should be equal before the law … A just Kazakhstan is a country where law and order triumph.” This was the first time the high level of violence against women and girls has really been acknowledged. 80% of women in the country say they have been victims of domestic abuse yet few report it. The Ministry of Internal Affairs, report that in 2023 the police handled 99,026 complaints related to family violence with 67,270 people receiving sentences. With a weak history on women’s rights and equality, we feel that is beginning to change. A cultural shift is now on the cards.
Floods. A compensation scheme to support families impacted by flooding which started in March has begun. Last month we warned this would be expensive and we were right. So far, 29,625 families have received a lump-sum payment costing the government more than KZT10.7 billion. The expenses don’t stop there however. At the time of writing, 356 families have been re-homed and the construction of 1,472 new dwellings is underway with a further 700 being planned. A budget of approximately KZT 5.2 billion has been allocated for the repair of almost 1,400 homes. Compensation for material losses and damage has reached KZT657 million, a figure that will only continue to rise. Farmers have also been compensated for the loss of livestock costing the government an additional KZT 1.6 billion. This will seriously impact the federal budget in other areas moving forward but it is an issue that could not be ignored as 10 of the 17 regions of the country reached crisis point. The inaugural Kazakhstan Grand Prix has been postponed to allow the government to fully address the impact of the floods. It had been scheduled to be held 14th to 16th June. In a statement MotoGP said “it would not be responsible for MotoGP to add any additional burden on the authorities or services as they work to help the tens of thousands of people affected across the country.” The event may be put back in the race calendar later in the year if a suitable slot can be found by organisers. This is a blow to Kazakhstan who had hoped that hosting the event would do for it what hosting the Formula 1 had done for Azerbaijan in global awareness.
Trade. Plans are already being made to make up the cash shortfalls created by the flood-induced state of emergency. One such scheme aims to boost non resource exports up to USD37.7 billion in 2024 and USD 41 billion by 20025. We expect the government to focus mainly on reaching these numbers by increasing food and organic product exports to EU markets. We also see a major push to increase exports to China, further strengthening the friendship between the two countries. China and the EU have been testing a transit road transportation route that travels through Kazakhstan. The China to Kazakhstan to Azerbaijan to Georgia route sends shipments through the seaports of Kuryk and Baku. Sea freight from China to Europe typically takes around 52 days. Shipping times by rail are up to 22 days. Using road transportation will significantly reduce transit time to just 12 days which could massively boost trade and further cement Kazakhstan’s role as a major hub in the region. Work is also planned to increase throughput capacity of the Aktau and Kuryk ports by 50%. In the first four months of 2024, the total volume of transited goods stood at 10.7 million tons, an increase of 1% on last year. If the EU/China road test is successful expect this number to increase significantly. Revenue from the tourist sector is also expected to increase. In the latest World Economic Forum’s Travel and Tourism Development Index, Kazakhstan ranked 52 out of 119 nations up from 66th in 2021. We expect when revenue reports for this sector are released we will see a significant growth in earnings – especially if the Grand Prix is given the green light to go ahead in the near future.
Numbers. At the end of 2023, inflation had dropped to9.8%. The base interest rate too fell to 15.25%. It currently sits at 14.75%. The National Fund increased to USD60 billion, up by USD4.3 billion. Return on assets was 11.38%. All this came in the midst of geopolitical angst and turmoil which bodes well for the rest of this year. Today, inflation sits at 8.7% and we are sure it will continue to fall ending the year in the 5% range aimed for by the government. A survey of banks has shown that the more favourable interest rate has seen small businesses’ loan applications increase to 786,000 in the first quarter of this year – a 6% increase. An on-going increase in demand for credit from large and medium-sized businesses in the next quarter is anticipated but do not yet expect to see a massive change in the number of small business loans.
Crypto. Binance in Kazakhstan’s General Manager, Zhaslan Madiyev, has been appointed Minister of Digital Development, Innovation and Aerospace Industry. Previously Madiyev was Vice Minister for the same Ministry before moving to a management position in Binance in October 2022. Anticipate that his appointment will bring with it clearer crypto regulations and digital development as the country continues its push for crypto expansion. We also anticipate that he will push for the rules on electricity consumption by mining entities to be relaxed. Earlier in May, Binance announced on social media that it had “been awarded the ISO 27001 and ISO 27701 certifications” in Kazakhstan. These are globally recognised certifications relating to privacy, information management and information security governance. Binance obtained its permanent license in Kazakhstan in October 2023 then launched a local trading platform in June 2024.
Kazakhstan has been cracking down on illegal migration as part of increased security measures. The International Organization for Migration statistics reports that almost 725,000 foreign nationals migrated to Kazakhstan between 2020 and 2023. A security sweep in Ulytau saw 16 Tajik and Uzbek nationals arrested for failing to have the correct work authorization. They were later deported. Kazakhstan has traditionally attracted large numbers of guest workers from neighbouring countries, particularly Uzbekistan. Foreign nationals entering Kazakhstan should be prepared for heightened security measures and checks. This monitoring of migrants comes in tandem with a law enforcement programme of security inspections. Officers have been auditing shopping malls, markets, schools, universities and other large capacity venues to assess their ability to deal with any possible terror attack. The Ministry of Internal Affairs has said “inspections are not limited to just identifying deficiencies. Police officers determine the level of knowledge and skills of personnel, as well as security of objects, on actions in various emergency situations and conduct training.”
Tokayev’s hard work to shore up the infrastructure of the financial market along with the improved effectiveness of his implemented economic policies is now visibly paying off. Despite the unplanned spending the flooding has provoked, the economy was in the best condition it could be at the time to take the strain. Even so, there will be some money juggling going on in the background to ensure bills are paid and obligations met but … Kazakhstan continues to be the darling of the region. Improved financial management, transparent regulations and simpler investment procedures should guarantee that international interest and investment continues. The make-over of the nation continues and it is morphing into a very attractive prospect indeed.