U bent hier
CORONA VIRUS - The situation in Kazachstan
1. General situation
According to the Decree on the State of emergency of March 15, the capital of Kazakhstan, Nur-Sultan, and the largest commercial hub, Almaty, were put into quarantine and lockdown on March 16 due to the spread of the infection into Kazakhstan through these cities’ borders. The Decree imposes substantial restrictions on movement of people and certain commercial activities.
As of April 1, all international flights to Nur-Sultan and Almaty Airports were suspended indefinitely. This has led to the cancellation of scheduled flights from these airports.
The President, in the Decree on the State of emergency, the special State Commission (created to deal with the public health emergency), the Chief Sanitary Inspector and local executive bodies have introduced a number of restrictive measures, which mainly included:
- restrictions on movement and assembly;
- restrictions on certain commercial activities;
- reinforcement of penalties for violation of the requirements established during the state of emergency such as:
- prohibition for all public and family events, sporting competitions, religious ceremonies;
- temporary suspension of operation of large sales outlets, all recreation and religious centers, including facilities with mass gatherings of peoples, such as shopping and entertainment malls, mosques, churches, cinemas, theatres, exhibitions, etc., are temporarily suspended;
- all restaurants, bars, coffee houses and other food and beverage places are temporarily closed, although these businesses are allowed to offer home-delivery services (subject to compliance with all health regulations);
- close public spaces, such as parks and pedestrian areas;
- prohibition for residents from leaving their homes without an excepted and essential purpose, such as visiting a nearby store or pharmacy. Phased restriction of public transport;
- prohibition of meetings on the streets and in other public places by groups of more than three people (with the exception of family members);
- a ban on the movement of minors unaccompanied by adults;
- remote education at schools and universities.
Certain organizations were exempted from this requirement, including state and local government bodies, law enforcement agencies, healthcare organizations, media entities, grocery stores and pharmacies.
Meanwhile, authorities have been disinfecting public spaces and residential complexes in Almaty and Nur-Sultan. Markets, playgrounds, pedestrian areas, and areas around residential buildings were treated with disinfectants.
Kazakhstanis, who lost their income, were entitled for payment of KZT 42,500 allowance (80 euro) during the period of the state of emergency. To date, 4,25 mln people have received the financial support.
As of May 4, the Prime Minister approved easing some restrictions previously in effect to prevent the spread of COVID-19. This included permitting outdoor sports and physical training and opening additional domestic flights (see below). In addition to a previous order reopening courtyard playground; industrial, repair, and construction enterprises; and businesses in the financial sector, this order reopened the following businesses:
- small non-food stores until 5:00 pm
- photo shops and flower stalls
- hair salons, barbers, medical centers, and dental clinics (all by appointment)
- real estate companies, advertising agencies, lawyers, and notaries
- microfinance organizations, insurance companies, pawnshops, and exchange offices
- information and communications technology companies.
Starting from August 17, the Interdepartmental Commission made a decision to ease quarantine in Kazakhstan.
Starting from September 14, the work of business facilities was eased:
- beauty and hair salons, gyms, fitness centers, swimming pools
- food and non-food markets, malls (except food courts)
- theaters, museums, exhibitions, conference halls, cinema theaters
- leisure and entertainment centers, pre-schools, children's health camps, all public entertainment facilities (karaoke, billiard rooms, computer clubs, bowling centers)
- places of worship
- banquet halls for weddings and special events (still banned public events, as well as family and commemorative events)
- medical centers, pharmacies, grocery stores, outdoor markets continue to operate
The following facilities and businesses remain open (with respect for the reinforced sanitary disinfection regime):
- outdoor public catering venues
- construction sites
- industrial production lines
- agricultural and livestock farms
- car washes, car repair shops
- household appliance maintenance centers
- commercial banks
Ease quarantine measures:
- public transport in Almaty returns to normal operation from 6 am to 11 pm
- international flights were gradually resumed starting: in accordance with the decision of the Interdepartmental Commission to Prevent the Emergence and Spread of Corona virus Infection in Kazakhstan dated June 11, 2020 (taking into account the recommendations of the Ministry of Health of Kazakhstan and the level of the epidemiological situation according to the map of the WHO), international flights were gradually resumed starting from June 20, 2020 to Turkey, China, South Korea, Thailand, Georgia and Japan; and from August 17, 2020 to the United Arab Emirates, the Republic of Belarus Germany, Netherlands, Egypt, Ukraine and the Russian Federation.
According to the Decree N61 of the Chief Sanitary Doctor of Kazakhstan, from October 27, 2020 any person, regardless of citizenship, arriving to Kazakhstan on a regular, charter or private flight, transit, or for a long period, regardless of age, social status and diplomatic status is obliged at the border control to present a certificate with a negative PCR test result for COVID-19, valid for no more than 72 hours at the time of crossing. The certificate must be obtained in the country from which the passenger is arriving.
Non-Kazakhstan citizens including those with residence permit in the Republic of Kazakhstan: without a negative PCR test, these passengers will not be allowed on board at the departure airport.
As of November, air company Air Astana has resumed international flights to / from: Seoul, Dubai, Frankfurt, Amsterdam, Kiev, Istanbul, Antalya, Tashkent, Bishkek and Moscow. Air Astana announced the launch of a new flight Almaty – Male (Maldives) from 5 December.
It is advisable to consult its website for the timetable of flights. Passengers arriving in Kazakhstan on regular international flights undergo a thermometry procedure and are asked to complete a questionnaire.
Visa regime of Kazakhstan for foreign citizens:
Until May 1, 2021, the visa-free regime for citizens of 57 countries has been suspended. And until January 1, 2021, a 72-hour visa-free stay in Kazakhstan for transit passengers from China and India has been suspended. It is advisable to check up the Ministry of Foreign Affairs of Kazakhstan website for the visa issues.
The Head of Government noted that, depending on the curve of new cases, the quarantine measures could be tightened.
2. Preventive measures
In the first half of February, Kazakhstan suspended air links to China, due to the COVID-19 situation in that country. Suspension or reduction of air links to several other Asian locations followed.
From late February to early March, Kazakhstan's Chief State Sanitary Doctor issued a number of binding resolutionsi applicable to all persons, both Kazakhstani citizens and foreigners, entering Kazakhstan from certain countries. These resolutions set forth different categories of countries, and, for each category, they set forth certain consequences (such as mandatory quarantine in a medical facility for 14 days, self-isolation with daily checks by medical personnel, daily checks by phone without self-isolation, etc.). However, the number of categories (subcategories) of countries, the designation of certain countries to a particular category and the consequences of falling in a particular category changed several times.
Since 27 January, Kazakhstan postponed its visa free transit regime for Chinese citizens which allowed them to transit through Kazakhstan for up to 72 hours.
According to reports, Kazakhstan has limited the entry of citizens of China, South Korea, Italy and Iran since early March.
Also, since early March, Kazakhstan reportedly has not been issuing visas or work permits to citizens of countries in Categories 1a, 1b and 2 of the categories established by the resolutions of the Chief State Sanitary Doctor. According to the most recent list at the time of issuance of this Alert, those countries include (among others): China, Italy, Spain, Germany and Netherlands. (The U.S. and U.K are in Category 3).
As of April 1st, all international flights to Nur-Sultan and Almaty Airports were suspended (temporarily). This has led to the cancellation of scheduled flights from these airports. Limited flight options are available from other international airports operating in Kazakhstan. However, airlines may cease operating these flights with little or no notice. For example, German airline Lufthansa has temporarily suspended flights to Kazakhstan from March 11th, 2020.
To avoid panic and to counter disinformation, the President instructed the Ministry of Information and Public Development to deliver daily briefings. To reinforce these messages the website www.coronavirus2020.kz has been set up to inform the population of the Government’s actions in the fight against the pandemic.
Ministry of Industry and Infrastructural Development jointly with JSC "Kazakhtelecom" developed an interactive map of the accessible transport networks (closed and open routes), which allows to track online accessible routes (https://www.ismet.kz/ru/infotransport).
3. Exit strategy
The State Commission, having considered the proposals of regional Akims (mayors), as well as the position of the Ministry of Healthcare, made a number of decisions:
1. The list of activities of business entities that resumed work in all regions from May 4, 2020:
- non-food stores up to 500 m2 until 5 p.m. (all types);
- photo shops, flower stalls; hairdressing salons (by appointment);
- medical centers (by appointment);
- dental clinics (by appointment);
- real estate companies, advertising agencies, lawyers, notaries;
- microfinance organizations, insurance companies, pawnshops, exchange offices; information and communications technology companies.
2. From May 4, sports and outdoor training are allowed.
3. A decision was made to resume flights from Nur-Sultan and Almaty to Kyzylorda, Petropavlovsk, Ust-Kamenogorsk and Semey from May 4, 2020. Flights are carried out with enhanced sanitary standards, fewer passengers and special remote seating in the cabin. Akimats of the regions were instructed to take appropriate measures and ensure tight control of sanitary and epidemiological safety at facilities whose activities will resume.
a. Economic impact
The COVID-19 crisis hit Kazakhstan both through the consumption channel, resulting from the nationwide and global lockdown, and the revenue side with the sharp decline in oil prices. Overall, GDP is estimated to have contracted by 3% in January-August 2020, investments dropped by 5.2%, and inflation increased due to both supply disruptions and currency depreciation. Unemployment has risen by 0.2% to 5% in July according to official statistics and is expected to increase to above 6% by the end of 2020. If growth is expected to recover moderately in 2021, Kazakhstan’s economy remains vulnerable to a new deterioration of the sanitary situation that would severely affect business activity and employment.
Forecasts for the 2021-year real GDP should rebound and grow by around 3.0% (Moody’s), 2.8% (KZ MinEcon), from 3.6% to 3.4% (ADB), 2.5% (World Bank), 3.4% (EIU), 3.3% (IMF). The IMF outlook for Kazakhstan GDP is -2.7% in October. Construction, oil/gas, and industrial output grew despite the pandemic.
World Bank expects that the poverty rate (USD 5.5/person/day) could grow in Kazakhstan from 8.3% to 12.7%.
Unemployment rate forecasted to be 6.1% until the end of 2020, the measures taken by the Government to restore the economy, with an emphasis on ensuring employment of the population, stabilize the situation on the labor market from July. The unemployment rate in the second quarter of this year in Kazakhstan was 10.8%. There has been a decrease in the use of working time. The number of people who work more than 36 hours per week had been decreased by 542 thousand people. The number of people who work less than 36 hours per week had been grown by 100.4 thousand people. In case of a second wave of COVID-19 outbreak and the adoption of the restrictive measures 2.2 million people may need financial and provisional support. According to the forecast, almost half of the employed population, which is 4 million people, will be able to maintain their working hours. Basically, these are people employed in agriculture, construction, industry and healthcare. According to the forecasts of the Minister of Labor and Social Protection of the Population of Kazakhstan, almost a third or 2.5 million people can switch to remote work. Perhaps the working hours of 2 million people will be reduced, and they will be able to go on unpaid or paid vacations. These are the workers in the fields of trade, transport, accommodation and food. According to some estimates, 162 thousand people can become unemployed.
Following the results of eight months of this year, Kazakhstan's foreign trade turnover decreased by 12% compared to January-August last year, amounting to USD 55.6 billion. Of these, 57.3% (USD 31.85 billion) accounted for exports and 42.7% (USD 23.78 billion) for imports. The downward trend is observed both in exports (by 15.7%) and in imports (by 6.4%) following the results of eight months, the main trade partners were: Russia (with a 20% share in Kazakhstan's trade), the volume of mutual trade amounted to USD 11.1 billion; China (17.8%) - trade turnover amounted to USD 9.9 billion; Italy (9.4%) - trade turnover amounted to USD 5.3 billion; Republic of Korea (7.9%) - trade turnover amounted to USD 4.4 billion; Netherlands (4%) - trade turnover amounted to USD 2.2 billion. In the structure of Kazakhstan's exports, the EAEU countries occupy 10.5%, the share of third countries is 89.5%.
Another revenue loss factor Kazakhstan’s budget was a decline in prices in foreign markets, the copper fell by 6%, aluminum by 5%, zinc by 10% and lead by 3%.
Kazakhstan, which is oil production country with about 90 million tons of oil produced in 2019, also received less revenues because of declining oil prices due to COVID-19 and problems with oil export from Kazakhstan to China, which was actually stopped due to contamination of the pipeline with organochlorine.
This also caused problems on other export routes. According to Reuters, Kazakhstan reduced the March plan for exporting crude oil from the Russian port of Ust-Luga in the Baltic from 800,000 tons to 600,000. In February, Kazakh producers exported only 500,000 tons through Ust-Luga. The reason is that the Chinese company CNPC-Aktobemunaigas, in the oil of which an excess of organochlorine compounds was detected, still has not restored the pre-crisis production level. For the same reason, part of the export volumes of Kazakhstan’s Energy Ministry was redistributed for processing at domestic refineries. The common border of Kazakhstan with China is 1,460 kilometers.
The Government also took economic measures to protect certain groups who will be affected more drastically than others. Those most at risk are families who have lost their sources of income and have no economic ‘safety net’. The payment of principal and interest on all loans of those affected by the crisis will be suspended. In addition, large families, people with disabilities and other socially vulnerable groups will receive free groceries, consisting primarily of domestic products.
To further support this, the President announced initiatives to regionally monitor the levels of socially significant goods in order to protect the population from price spikes. Governors will coordinate the inter-regional flow of such goods to eliminate local deficits and prevent the panic-buying of essential goods.
The Government has also put forward concrete measures to support the financial sector. The President announced that Kazakhstan will allocate USD 10 billion for anti-crisis measures throughout the country, excluding tax benefits and local support. USD 740 million will go towards measures to boost employment.
Bonus payments worth one-month salary will be made to doctors, police officers and other specialists involved in the fight against coronavirus, as well as to people who have lost income due to the state of emergency.
To support enterprises, the Head of State ordered a standstill on bank loan repayments by small and medium-sized businesses for the duration of the state of emergency, as well as a deferral of payment of all types of taxes and other obligatory payments for a period of three months.
As of October, Finance Minister Yerulan Zhamaubayev presented a draft Law on clarifying the state budget for 2020 at a government meeting. He explained that the task of the second clarification is to continue the implementation of measures to combat COVID-19 and support the real sector of the economy. An additional 238.7 billion KZT (549 mln USD) has been allocated for measures to combat COVID-19 infection. 261.7 billion KZT (60 mln USD) is allocated to finance priority expenditures to support the economy and social security of law enforcement agencies. At the expense of these funds, it is planned to implement a number of measures and projects aimed at stimulating production, while improving the quality of life and increasing the income of the population. At the same time, the financial support of the activities of the state programs "Nurly Zhol", "Nurly Zher", the development of the agro-industrial complex, etc. remains a priority area of the budget.
b. Trade barriers
Kazakhstan banned export of masks on February 20. This measure is still active for the whole Covid-19 pandemic period.
May 10: the export ban for certain types of textile materials and the restrictions on exports of disinfectants has been lifted. Disinfectants can be exported with authorization. March 24: A temporary ban has been introduced on the export of personal protective equipment, protective and disinfectants, medical supplies and materials from the EAEU to non-EAEU countries - period: 2020/03/24 - 2020/09/30.
A temporary ban on the export of certain types of food products from the Eurasian Economic Union (EAEU) countries, including Kazakhstan, to non-EAEU countries: onions, garlic, turnips, rye, rice (except if originating from Kazakhstan), buckwheat, millet, cereals, whole meal flour and cereal grain granules, hulled buckwheat, prepared buckwheat foods, crushed and uncrushed soybeans, and sunflower seeds - period: 2020/03/31 - 2020/06/30.
The Kazakhstani Government has introduced a ban on the import of certain types of cement from countries outside the Eurasian Economic Union: portland cement, clinker, alumina cement and other types of hydraulic cement - period: 2020/04/28 - 2020/10/27.
May 15: export quotas on food products (cereals, flour, etc.) were lifted from June 1. March 22: Kazakhstan bans export of buckwheat, white sugar, potatoes, carrots, turnips and whipped cabbage - period: 2020/03/22 - 2020/06/01.
Import ban on Chinese fruits - period: 2020/03/02 - 2020/04/22.
Temporary import ban on certain petroleum products from the Russian Federation delivered by railway, due to the COVID-19 pandemic - period: 2020/05/01 - 2020/08/01.
Temporary export ban on certain types of timber, due to the COVID-19 pandemic - period: 2020/05/15 - 2020/11/15.
Botst u buiten de EU op handelsbelemmeringen of andere problemen op het vlak van markttoegang? Laat het ons weten via email@example.com. Wij analyseren uw aangifte en maken die via de geijkte kanalen over aan de bevoegde instanties.
c. Measures for economic relaunch
The government of Kazakhstan reacted rapidly to the pandemic, designing an anti-crisis package of USD 10 bn (KZT 4.4 trn or about 9% of GDP) to augment the social safety net and support businesses, in particular SMEs. Kazakhstan started deconfining in May, while developing new support and recovery measures. A joint action plan of the government and the National Bank included an additional series of support measures on taxation, digitalisation, public-private partnerships (PPPs), and reforms of the regulatory environment for investments. A "Comprehensive Economic Growth Recovery Plan" was also developed during the summer, providing for an expansion of business financing and concessional lending, together with extensions to the Employment Roadmap. As a second wave threatens the country, a new medium-term growth agenda has been presented, and the creation of a Supreme Council for reforms under the President and an Agency for Strategic Planning and Reforms was announced in September. The country is now adopting a new series of containment measures at regional levels, including lockdowns and mobility restrictions.
According to official statistics, support programs so far have provided employment to over 750 000 people, and direct income support to about 4.6 million. As of September, banks have granted KZT 160 bn (USD 386 m) in preferential loans to SMEs, while more than 1.6 million people and 11 000 SMEs have received deferral on loan payments (about KZT 360 bn or USD 870m). Tax incentive measures have benefited more than 270 000 companies and individual entrepreneurs. The DAMU Fund alone has supported more than 7000 entrepreneurial projects for a total of KZT 566 bn (USD 1.3 bn) during the COVID-19 crisis.
On 25 June, the Asian Development Bank (ADB) approved a USD 1bn loan in budget support for KZ pandemic response; it expects USD 750 mln co-financing from the Asian Infrastructure Investment Bank. ADB will continue supporting key structural reforms, access to finance for small businesses, support green finance, and agriculture.
On 12 June, the EBRD approved two senior loans of up to EUR 243.5 mln to state owned Intergas Central Asia and KazTransGasAimak, for restructuring, sustaining their cash flow, in support of transition from coal and reducing air pollution. The bank is also lending USD 40 mln in local currency to KMF, the leading local microfinance organisation with over 225,000 customers. The EBRD extended KZT 10 billion to the Industry Development Fund (formerly BRK-Leasing, a subsidiary of the Development Bank of Kazakhstan, and part of the Baiterek National Managing Holding) to supply ambulances for Kazakhstan’s healthcare system. The funds were provided as part of the EDB’s support to combat the COVID-19 pandemic and its consequences in the Bank’s member countries – Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan. The agreement envisions the opening of two five-year loan facilities to purchase state-of-the-art vehicles made in Kazakhstan, which will be supplied to all regions of the country. On 10 September, Kazakhstan’s Ministry of Healthcare and the EBRD signed a memorandum of understanding and cooperation.
This and next year Kazakhstan plans roadshows in Huston, London, Singapore and Dubai aiming to attract more than EUR 2.2 bn foreign investment for geological exploration over the next five years. It plans spending EUR 340 mln of its own public funds for early stage exploration.
d. Economic outlook
Real GDP is expected to contract by 4% in 2020 before growing by 3% in 2021. The upturn next year will be supported by recovery of private consumption and higher oil prices, but significant downside risks remain, notably a possible resurgence of the pandemic which would likely keep oil prices depressed in the short term.
e. Long term opportunities
This and next year Kazakhstan plans roadshows in Huston, London, Singapore and Dubai aiming to attract more than €2.2 billion foreign investment for geological exploration over the next five years. It plans spending €340 million of its own public funds for early stage exploration.
5. Useful links
6. Dossier Coronavirus
Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.
FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.
In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.
Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij firstname.lastname@example.org.