Business & Economy - The Times Of Central Asia

Viewing results 691 - 696 of 2401

Tax

Kazakhstan’s PM Bektenov Gives Major Construction Firms Tax Ultimatum

Kazakhstan’s Prime Minister, Olzhas Bektenov, has accused the country’s two largest construction companies, Bazis and BI Group, of tax evasion. The State Revenue Committee later substantiated these claims, notifying the firms of additional taxes amounting to KZT 16.5 billion (over $32 million). Business Fragmentation The allegations against the developers emerged during a meeting between Bektenov, National Economy Minister Serik Zhumangarin, and Finance Minister Madi Takiyev. Takiyev explained that many Kazakhstani businesses exploit legal loopholes by dividing their operations into multiple legal entities to minimize tax obligations. He cited examples from the hospitality industry, where bars, kitchens, and karaoke sections within a single venue are registered as separate businesses, or where each floor of a hotel is owned by different individual entrepreneurs. This practice enables businesses to evade value-added tax (VAT). Once a company’s revenue reaches the KZT 78 million ($155,500) VAT registration threshold, it ceases operations and is replaced by a new legal entity. “To reduce payroll taxes, businesses remove employees from their staff, register them as individual entrepreneurs, and then contract them as external service providers. This lowers tax liabilities, shifts social responsibility from the employer to the entrepreneur, and significantly reduces payroll tax contributions,” Takiyev explained. According to his figures, Kazakhstan currently has 2.3 million registered taxpayers, but only 8% (137,000) are VAT payers due to this loophole. Additionally, 81% of all businesses operate under a simplified tax regime, with 85% of them reporting an annual income below KZT 15 million ($29,900). “An analysis has shown that transactions between these tax schemes doubled over the past year, from KZT 5 trillion to KZT 10 trillion. In other words, while generating hundreds of billions in revenue, these businesses pay negligible taxes,” Takiyev stated. He noted that such schemes are prevalent not only in the service sector but also in real estate development. Final Warning Bektenov explicitly named companies under scrutiny. “We have a complete list of major businesses employing these tactics. Among them are well known construction giants such as BI Group and Bazis, as well as popular restaurants, fitness clubs, and other companies across various industries,” he said. Bektenov issued a two-week ultimatum for these businesses to settle their tax arrears. “If they fail to act, the government will use all available fiscal and law enforcement mechanisms. The conversation will be tough, but we are open to dialogue, if businesses are prepared to act fairly toward the state,” he warned. By the end of last week, tax authorities had formally notified Bazis and BI Group of their outstanding obligations. Bazis was instructed to correct tax filings for an undeclared KZT 4.6 billion ($9.2 million), while BI Group was found to have understated its taxable base and income by KZT 11.9 billion ($23.8 million). The companies have been given an opportunity to amend their tax reports and pay the additional amounts before formal inspections begin. So far, neither developer has publicly responded to the accusations. As previously reported by The Times of Central Asia, Kazakhstan is set to reform...

Hydropower

Turkish Company to Build Hydropower Plants in Kyrgyzstan and New Heat and Power Plant for Bishkek

Kyrgyzstan’s Ministry of Energy and Turkish open joint-stock company Orta Asya Investment Holding signed a protocol of intent on February 27 to construct the Kazarman cascade of hydroelectric power plants (HPP) on the Naryn River, with a total capacity of 912 MW. New Hydropower Projects According to the Ministry of Energy, the agreement includes preparations for an investment agreement and a feasibility study for the project. Orta Asya Investment Holding has expressed interest in constructing three hydropower plants in the cascade: Ala-Buga HPP - 600 MW Kara-Bulun-1 HPP - 149 MW Kara-Bulun-2 HPP = 163 MW Together, these HPPs will generate 3.746 billion kWh of electricity annually, significantly contributing to Kyrgyzstan’s growing energy demands. New Heat and Power Plant for Bishkek On the same day, the Ministry of Energy and Orta Asya Investment Holding discussed the construction of a 250 MW natural gas-fired combined heat and power plant (CHPP-2) in Bishkek. The project is estimated to take 2 - 4 years, with a budget of $443 million. Orta Asya Investment Holding has committed to investing approximately 3 billion KGS (about $34 million) in the project. The Ministry and the company have agreed to finalize a feasibility study for Bishkek CHPP-2 within three months and then begin implementation. Once completed, CHPP-2 will: Increase the country’s energy capacity. Ensure stable electricity and heat supply for residents and businesses. Improve Bishkek’s environmental situation by using natural gas, a cleaner energy source. CHPP-2 will be Bishkek’s second power plant, reducing reliance on the city’s aging Thermal Power Plant (TPP). Power Shortage in Bishkek Bishkek, home to over one million residents, currently relies on a single power plant for both electricity and heating. The Bishkek TPP produces approximately 13% of Kyrgyzstan’s total electricity output, with the remainder coming from hydropower plants. The TPP also provides heat and hot water to nearly two-thirds of the capital. However, the aging plant has suffered two major accidents in recent years: January 2018 - A breakdown left the city without heating for three days in freezing temperatures. February 2, 2024 - An explosion seriously injured three people and forced authorities to impose hot water and heating restrictions in some parts of the city. Following the 2024 accident, the government prohibited newly built high-rise residential buildings from connecting to the existing TPP heating system. Once completed, Bishkek CHPP-2 is expected to meet the city’s growing heating needs and reduce the risk of energy shortages.

Metallurgy

Chinese Company to Build Metallurgical Plant in Kazakhstan

Chinese metallurgical company Fujian Hengwang Investment Co., Ltd. will build a 3-million-ton capacity steel plant in the Zhibek Zholy special economic zone in Kazakhstan’s Zhambyl region. The project was discussed during a February 27 meeting between Kazakhstan’s Prime Minister Olzhas Bektenov and Fujian Hengwang Investment Chairman Zeng Zhaoqiang. $1.2 Billion Investment and Job Creation Fujian Hengwang Investment plans to invest $1.2 billion in the project, which is expected to create 2,500 jobs. Construction Timeline and Production Capacity April 2025 - Construction is scheduled to begin. 2027 (Phase 1) - The plant will have an initial production capacity of 1 million tons of steel. 2029 (Phase 2) - Capacity will expand to 3 million tons of steel. Use of Domestic Resources The project will utilize Kazakhstani raw materials, including natural gas and iron ore sourced from the Karaganda, Kostanay, and Ulytau regions. The plant will manufacture wire rod, reinforcement steel, steel for pipe production, and angle and profile steel. Planned Power Plant As part of the second phase, a 350 MW gas turbine power plant will be built to supply energy to the metallurgical facility. Government Support Prime Minister Bektenov emphasized the strategic importance of the project, noting that it will: Boost Kazakhstan’s metallurgy sector Enhance the country’s export potential The Kazakh government has pledged full support for the initiative.

Sanctions

Kyrgyzstan Pushes to Lift U.S. Sanctions on Keremet Bank

The National Bank of Kyrgyzstan is negotiating with the U.S. Treasury Department to lift sanctions imposed on Keremet Bank, according to National Bank Chairman Melis Turgunbaev. The U.S. authorities sanctioned Keremet Bank over alleged ties to Promsvyazbank, a Russian financial institution under sanctions. In response, the National Bank of Kyrgyzstan has formally petitioned for the sanctions to be lifted. Efforts to Lift Sanctions “We have submitted a formal request, provided the necessary information, and are actively engaging with U.S. officials. Typically, cases like this are reviewed within 30 to 45 days. Sanctions on Keremet Bank are set to take effect on March 1, and we are doing everything possible to reverse this decision before then,” Turgunbaev stated. According to him, this window allows the bank to manage its international assets and keep clients informed. Keremet Bank’s Response Keremet Bank has welcomed the government’s efforts to challenge the sanctions. “The bank operates in full compliance with national and international laws, adhering to principles of transparency and responsibility. We have submitted an appeal to OFAC (the U.S. Office of Foreign Assets Control) disputing the allegations against us,” the bank told The Times of Central Asia. Growing Time Pressure and UK Sanctions Despite optimism from Kyrgyz authorities, time is running short for a resolution. Keremet Bank has warned its clients that Visa payment cards issued by the bank will stop working on February 28. In a further setback, the United Kingdom has also imposed sanctions on Keremet Bank, designating it as a foreign financial institution supporting Russia. Previously, the National Bank of Kyrgyzstan instructed commercial banks to tighten control over financial transactions in response to increased enforcement by OFAC.

Nuclear Power

Kazakhstan Finalizes Sites for Second and Third Nuclear Power Plants

Kazakhstan’s Energy Ministry has identified the regions of Balkhash, Kurchatov, and Mangistau as potential sites for the country’s second and third nuclear power plants, Energy Minister Almasadam Satkaliyev has announced. The first plant is set to be built in Almaty region. New Construction Sites Initially, Kazakhstan planned to build a single nuclear power plant by 2035 to address potential energy shortages. However, President Kassym-Jomart Tokayev later instructed the government to explore the construction of at least two additional plants. Following an Energy Ministry board meeting on Wednesday, Satkaliyev told reporters that three locations are under consideration for the second and third nuclear plants: Balkhash - a city in southeastern Kazakhstan. Kurchatov - a city in the Abai region that previously served the Semipalatinsk nuclear test site during the Soviet era. Aktau - the regional center of Mangistau, where an experimental nuclear reactor operated during the Soviet era. “We plan to build at least three nuclear power plants in Kazakhstan in the medium term. The government has identified promising sites for the second and third plants based on regional development needs, electricity demand, and diversification of the national power grid. The Balkhash site is highly promising, with the capacity for up to four 1,200 MW units. Kurchatov is suitable for two 1,200 MW units. The Mangistau site also offers significant advantages, including the potential for a medium-capacity plant,” Satkaliyev stated. Timeline and Contractors for the First Plant The government has approved the Zhambyl district of Almaty region, near the village of Ulken, as the site for the first nuclear power plant. However, the final decision will depend on engineering surveys in the region. Four companies are in contention to construct Kazakhstan’s first nuclear plant: Rosatom (Russia) KHNP (South Korea) CNNC (China) EDF (France) “In the first half of 2025, we plan to announce the configuration for the first nuclear power plant,” Satkaliyev said. The Energy Ministry has sent a list of 207 questions covering 19 key aspects of construction and operation to all four bidders. Responses were received last week and are now under review by an interdepartmental commission. “It is too early to determine a frontrunner. The final decision on the contractor will be made after a thorough review, possibly even earlier than expected,” Satkaliyev noted. A referendum held on October 6, 2024, showed that 71.12% of voters approved the construction of a nuclear power plant in Almaty region.

Agriculture

Kazakhstan to Launch Production of 1,000 Sprinkler Irrigation Machines Per Year

Kazakhstan has begun domestic production of sprinkler irrigation machines under the SU BEREKE brand, with the ADAM Group of Companies manufacturing 30 units in 2024, according to the Ministry of Agriculture. Sprinkler irrigation systems help distribute water evenly across fields, reducing consumption by 30% to 40%. This year, ADAM plans to scale up production. By April, the company will open a second plant in East Kazakhstan, increasing output to 1,000 sprinkler machines annually. The new facility is expected to reduce Kazakhstan’s dependence on imported equipment. Locally manufactured sprinklers will also be exported to neighboring Central Asian countries. President Kassym-Jomart Tokayev has previously criticized the slow adoption of water-saving practices in Kazakh agriculture, citing annual water losses of up to 40% in some regions. He has set a national target to introduce water-saving technologies on 150,000 hectares of land each year. To support this initiative, the Ministry of Water Resources and Irrigation and the Ministry of Agriculture raised subsidies for farmers investing in water-saving irrigation systems from 50% to 80% in 2023. Additionally, the government increased subsidies for farmers using such technologies, covering 85% of irrigation water costs. Kazakhstan’s agricultural land spans 23.3 million hectares, of which 1.9 million hectares are irrigated, primarily in the arid southern regions. However, the adoption of water-efficient technologies remains limited. In 2023, only 17% of irrigated land (312,000 hectares) used these systems, with drip irrigation covering just 84,000 hectares.