Kazakhstan Passes New Leasing Legislation to Support Growing Private Sector
In Washington:
Irina Likhachova
Phone: (202) 473-1813
Email: ilikhachova@ifc.org
In Almaty:
Rachel Freeman
Phone: +73 272 980 580
Email: Rfreeman@ifc.org
Almaty, Kazakhstan, February 26, 2004—Lease
finance for Kazakhstan enterprises is expected to increase thanks to amendments
to the Law on Financial Leasing, the Civil Code, and the Economic Litigations
Code, adopted by the Parliament in January. With the adoption of these
amendments, Kazakhstan now has a progressive regulatory framework for leasing
that meets worldwide standards for leasing.
The leasing legislative amendments were developed by the Association of
Financiers and the Ministry of Agriculture and Agrarian Committee of the
Parliament with the support of the USAID—IFC Central Asia Leasing Project.
IFC is the private sector arm of the World Bank Group and has worked
in Kazakhstan since its independence.
At a press conference held by the Association of Financiers, Daulet Simbaev,
chairman of the Association, stated that the “new Kazakhstan leasing legislation
is extremely forward-thinking and includes model clauses such as the development
of secondary leasing, subleasing, and leaseback arrangements as well the
traditional pillars of leasing such as leasing as a three party arrangement
and IAS classifications of financial leasing.
Benefits of the Kazakhstan legislative framework for leasing include:
· A leasing
definition that conforms with International Accounting Standards.
· Protection
against tax losses if the leased equipment is repossessed in the first
36 months of the lease.
· The ability
to lease equipment repossessed from a first client to a second client.
· Procedures
for subleasing and leaseback arrangements.
· Simpler non-court
repossession rights for the lessor.
USAID representative Mike Fritz praised leasing as “particularly beneficial
for small and medium-sized businesses – a strong engine for growth in
transitional economies. USAID works throughout Central Asia to support
the development of small and medium-sized business, based upon the Agency’s
belief that private sector growth, in specifically SME growth, is an important
aspect of economic and civil society development.
Christian Grossmann, director of IFC’s technical assistance programs in
the former Soviet Union, noted that “the enactment of model leasing legislation
in Kazakhstan will both bring in investment in Kazakhstan and will serve
as an example to legislative efforts in other CIS countries. Kazakhstan
has resolved issues which have hindered leasing throughout the whole region”.
With the enactment of these amendments in Kazakhstan, the entire Central
Asia region now has parallel and equally progressive leasing legislations,
all of which have been enacted in the past two years. “This is an
important new development,” according to Gorton De Mond, Regional Representative
for IFC in Central Asia. “Increased market integration and greater cooperation
among Central Asian countries will create a regional market for investors,
for the mutual benefit of all four countries. Harmonization of the
leasing legislation in the region should make this sector more attractive
for needed domestic and foreign investment.”
The USAID - IFC Leasing Project was launched in the Fall 2003 to increase
the volumes of leasing transactions for small and medium-sized businesses.
The project works closely with Kazakhstan’s parliament and government
agencies to create an appropriate legislative environment. It provides
training and consulting services to local enterprises and foreign investors
interested in leasing. USAID and IFC have also launched a public education
campaign to educate private enterprises, financial institutions, and regulatory
agencies about leasing.
About IFC
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956, IFC has committed more than $37 billion of its own funds and arranged
$22 billion in syndications for 2,990 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY03 was $16.8 billion.
IFC has long been a champion of leasing for developing and transitioning
economies. IFC has advised 40 countries on leasing and has invested almost
$1 billion dollars in leasing operations in 50 countries over the last
30 years.
About USAID
The U.S. Agency for International Development (USAID) has provided economic
and humanitarian assistance worldwide for more than 40 years.
USAID Assistance to Central Asia helps increase
opportunities to improve citizens' knowledge, livelihoods, participation,
and dialogue in social, economic and political life. Opportunities are
increased through:
· improved primary
health care and energy and water management;
· broader-based, legitimate growth of enterprises
and trade, particularly smaller-scale and in agriculture, including necessary
policy reforms and deregulation;
· establishing sustainable microfinance institutions
that provide credit and business development services to microentrepreneurs;
· expanded avenues of political participation
in communities and local government through strengthened civil society,
nongovernmental organizations, and greater linkages between citizens and
their government; and
· broadened access to and widened dissemination
of independent information so that a more informed population can effectively
participate in civic life.
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