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CORONA VIRUS - The situation in Kazachstan

1. General situation

On July 10, the Kazakhstani Ministry of Health has confirmed 61,755 cases of COVID-19.

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.

As of April 3, 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 executives  have introduced a number of restrictive measures, which mainly included:

1) restrictions on movement 

2) restrictions on certain commercial activities

3) reinforcement of penalties for violation of the requirements established during the state of emergency, such as:

  • prohibition for all public and family events, sports competitions, religious ceremonies
  • temporary suspension of operation of large sales outlets, all recreation and religious centers, including facilities with gatherings of peoples, such as shopping and entertainment malls, mosques, churches, cinemas, theatres, exhibitions, etc.
  • 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 to leave their homes without an excepted or 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 for schools and universities.

Certain organizations were exempted from this requirement, including state and local government, law enforcement agencies, healthcare organizations, media entities, grocery stores and pharmacies.

Meanwhile, authorities are disinfecting public spaces and residential complexes in Almaty and Nur-Sultan. Markets, playgrounds, pedestrian areas and areas around residential buildings will be treated with disinfectants. It is possible that these measures will be expanded to other regions. Residents of affected areas in Almaty may be informed by loudspeakers and written notices on doors. In Nur-Sultan, disinfection will take place overnight starting at 8:00 PM.

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.

Given the current situation in Kazakhstan and the proposal by the State Commission and experts, the President signed an order on the extension of the state of emergency until May 1 and then until May 11. On the May 11, Kazakhstan lifted the quarantine regime

As of May 4, the Prime Minister approved easing some restrictions previously in effect to prevent the spread of COVID-19. This includes permitting outdoor sports and physical training and opening additional domestic flights (see below). In addition to a previous order to reopen playgrounds; industrial, repair and construction enterprises; businesses in the financial sector, this order reopens 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

Air Astana will operate a special flight on Monday May 11 for foreign nationals seeking to leave Kazakhstan. The flight will originate in Almaty and stop in Nur-Sultan to pick up additional passengers before departing for Frankfurt. 

2. Preventive measures

In the first half of February, Kazakhstan suspended air links to China, due to COVID-19. 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 resolutions 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, 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 indefinitely. This has led to the cancellation of scheduled flights from these airports. Limited flight options may be available from other international airports operating in Kazakhstan. However, airlines may cancel these flights with little or no notice. For example, German airline Lufthansa has temporarily suspended flights to Kazakhstan from 11/03 till 24/04/2020.

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.

The Ministry of Industry and Infrastructural Development and JSC "Kazakhtelecom" developed an interactive map of the accessible transport networks (closed and open routes), which allows to track accessible routes online (https://www.ismet.kz/ru/infotransport).  

COVID-19 PCR based test services are available at the National Expertise Center under the Ministry of Health of Kazakhstan, the test costs KZT 11500 (24 euro) (https://nce.kz).  

The visa-free regime of entry, stay and departure from Kazakhstan has been suspended for foreign citizens until 01/11/2020 in accordance with the Resolution of the Government of the Republic of Kazakhstan.

Since June 10, Kazakhstan has seen a significant increase in pneumonia with a pronounced clinic COVID-19 and a negative PCR test. In late June, registration has reached 2,500 new cases of such pneumonia per day.

Subsequently, due to deterioration of the COVID-19 related situation in Kazakhstan, a 14-day quarantine regime has been imposed from July 5, which was extended by two weeks through August 2 in an effort to slow down the spread of the coronavirus infection.

Restrictive measures applied:

Transport

  • Maintaining international air traffic, without expanding the list of destination countries
  • Maintaining interregional air traffic, rail communication (with restrictions)
  • Suspension of interregional passenger bus traffic
  • Limitation of public transport timetables

Movement of citizens

  • Ban on entertainment, sports and other public events, as well as family and commemorative events
  • Authorization for individual outdoor training
  • Limit the movement of people in the streets, parks - no more than 3 people in a group
  • Strong recommendation to people over 65 to stay home

Suspension of following businesses:

  • Beauty and hair salons, gyms, fitness centers, swimming pools
  • Food and non-food markets, malls, 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.

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

International and domestic scheduled flights continue, public transport is limited.

At least 80% of employees of state-owned companies, government agencies, national companies are working remotely from home.

At the moment, Kazakhstan has a shortage of 1,152 doctors: there is a shortage of health workers in the Atyrau, Mangystau, Turkestan, Karaganda, East Kazakhstan, Kostanay, North Kazakhstan, Aktobe, West Kazakhstan regions and in Nur-Sultan which are short of 616 intensivists and anesthesiologists, 158 infection diseases doctors, 60 epidemiologists, 166 cardiologists, 68 pulmonologists and 84 recreational therapists. Over 108,000 nurses are currently working in the healthcare system, which is enough to meet today’s demand. The Health Ministry created a database of over 40,000 healthcare specialists who will provide consultations and other practical assistance to the regions that are short of health workers. In addition, over 60% of doctors working in private clinics were hired to provide healthcare services under the guaranteed free healthcare system.

Air communication between Turkey and Kazakhstan was resumed on June 20. However, following the worsening health situation in Kazakhstan in July, the Turkish authorities implemented a temporary ban on the entry of Kazakh citizens for 2 weeks (until July 19, 2020). However, air communication will continue to allow the return of Kazakh citizens who arrived in Turkey before the measure was adopted.

In addition, the national air company Air Astana has resumed international flights to / from South Korea: From July 1: Almaty - Seoul - Almaty.
It is advisable to consult the website for the timetable of flights, which are not yet operated on a regular basis. Passengers arriving in Kazakhstan on regular international flights undergo a health check procedure and are asked to complete a questionnaire.

3. Exit strategy

The State Commission made a number of decisions (in consultation with the regional Akims (mayors) and the Ministry of Healthcare):

1. The list of activities of business entities that will resume work in all regions from May 4, 2020, has been approved:

  • small non-food stores 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. The flights will be operated with higher sanitary standards, fewer passengers and adapted seating in the cabin. Akimats of the regions have to take appropriate measures and ensure tight control of sanitary and epidemiological safety at the reopened facilities.

4. Economy

a. Economic impact

Kazakhstani economy officially dipped by -1.7% in Jan-May 2020. Forecasts for the year 2020 vary from -0.5% (Moody’s) to -0.9% (KZ MinEcon), -2% (ADB), -3% (World Bank), -3.2% (EIU). The IMF cut its outlook for Kazakhstan from -2.5% in April to -2.7% in June, and the prognosis for the next year from +3.9% to +3%. Construction, oil/gas, and industrial output grew despite the pandemic. Oil sector risks include, inter alia, over 1,200 infected workers at the giant Tengiz field.

World Bank expects that the poverty rate ($5.5/person/day) could grow from 8.3% to 12.7% in the population of 18.7 million. The number of “temporarily unemployed” went down from 4.2 million in April to 700,000 in June, officially. Kazakhstan aims to employ 1.2 million people through state sponsored programs this year. More than 4.6 million adults received lost income allowance of $90/month (now discontinued) and over 1 million received food packages by June.

President Tokayev ordered cuts to non-essential expenses for the benefit of healthcare. Kazakhstan will build a biopharma plant (capacity 60 million doses/year) that could also produce vaccines. It has opened a production of ventilators with Turkey and China and will buy more abroad, aims to fully meet its demand for medical masks (up to 20 million/month) and ramp up the local production of protective suits to 800,000/month. Other goals: doubling the number of beds for COVID-19 patients by September (a moving target), boosting testing capacity. Separately, Kazakhstan said it needs                                €3.3 billion to address aging healthcare infrastructure, equip and repair medical facilities, and upgrade rural hospitals; this excludes investment in advanced health technologies.

In January-April, Kazakhstan foreign trade turnover dropped by -2.5%, to $28.2 billion: $18.4 billion exports (-1%) and $9.8 billion imports (-5%). Structure: most exports went to Italy (17.6%), China (16.3%) and Russia (7.7%); and imports came from Russia (39.2%), China (15.2%) and South Korea (5.8%). Crude oil accounted for 63.4% of total exports in Q1: 67% went to the EU compared to 75% in Q1 2019, while the share of Asia grew from 25% to 31%.

In February of this year, compared with February 2019, imports from China decreased by 11%, and its physical volume decreased by 27%. As a result, customs duties and taxes from importing goods from China decreased by 12%, or by 2.1 billion tenge ($5.49 million).

A decrease in the number of motor vehicles arriving from China by 24% and railway transport by 14% has been observed over the past two months.

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 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 $10 billion for anti-crisis measures throughout the country, excluding tax benefits and local support. $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 much as $469,2 million (191.9 billion KZT) has been allocated from the Government budget to combat the spread of COVID-19 in Kazakhstan (409.19 KZT /1$), according to the Ministry of Finances of Kazakhstan. Of these funds, $305,6 million (125 billion KZT) is part of the adjusted budget,                           $163,6 mln (KZT 66.9 billion) - from the Government reserve. Health Minister Alexei Tsoi said earlier that the Ministry received $280,7 million (114.8 billion KZT) to curb the spread of coronavirus.

The updated state budget of Kazakhstan for 2020 allocated $1,3 billion (532.8 billion KZT) to combat COVID-19 and support citizens and businesses during the pandemic.

b. Trade barriers

  • Kazakstan banned the export of masks on February 20. This measure is still active for the whole Covid-19 pandemic period.
  • Eurasian Economic Commission Board has made a decision to impose a temporary ban on exporting personal protective equipment, disinfectants and medical products from the customs territory of the Eurasian Economic Union amid the spread of COVID-19.
  • The list of goods prohibited for export from the customs territory of the EAEU includes cotton wool, gauze, bandages, medical masks, half masks, respirator masks, respirators, filters, goggles, disinfectants, shoe covers, certain types of clothes and accessories, gloves. (This order will be valid until September 30, 2020).
  • The Kazakhstani Government has introduced a ban on the import of certain types of cement from countries outside the Eurasian Economic Union for a period of six months (April 28, 2020 – October 27, 2020): portland cement, clinker, alumina cement and other types of hydraulic cement.
  • Temporary import ban on certain petroleum products from the Russian Federation delivered by railway, due to the COVID-19 pandemic (May 1, 2020 – August 1, 2020).
  • Temporary export ban on certain types of timber due to the COVID-19 pandemic (May 15, 2020 – November 15, 2020).

Botst u buiten de EU op handelsbelemmeringen of andere problemen op het vlak van markttoegang? Laat het ons weten via handelsbelemmering@fitagency.be. Wij analyseren uw aangifte en maken die via de geijkte kanalen over aan de bevoegde instanties.

c. Measures for economic relaunch

The project to create a national distribution system with 24 centres in 3 phases by 2022 will make it possible to store, process and distribute approximately 4.8 million tonnes of agricultural products. The aim of this infrastructure is to ensure the full preservation of the harvested crops and to minimise losses and grow the interest of agricultural producers in increasing production. Today, the shortage of grocery stores is 70%.

In 2020, five centres will be opened in the Pavlodar, Almaty and Turkistan regions, which will guarantee the storage of 600,000 tonnes of agricultural products. The head of the government mentioned that the development of these centres in all regions will solve the food shortage during the low season and the price increases. At the same time, a good distribution network and the introduction of digital technologies will make it possible to control the margin on each link and to eliminate unnecessary intermediaries.

On 25 June, the Asian Development Bank (ADB) approved a $1 billion loan in budget support for Kazakhstan pandemic response. It expects $750 million 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 €243.5 million to state owned Intergas Central Asia and Kaz TransGas Aimak, for restructuring, sustaining their cash flow, in support of transition from coal and reducing air pollution. The bank is also lending $ 40 million in local currency to KMF, the leading local microfinance organisation with over 225,000 customers.

d. 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 exportadvies-corona@fitagency.be.

16 juli 2020