Page 391 – The Times Of Central Asia

11 Feb 2025

Central Asia, Business & Economy, Kazakhstan, Kazakhstan Business & Economy

Kazakhstan Announces Differentiated VAT Rates

February 11, 2025
By Dmitry Pokidaev

Kazakhstan’s Cabinet of Ministers has proposed a differentiated value-added tax (VAT) structure, with rates ranging from 0% to 16% and an intermediate rate of 10%. This announcement was made by Vice Minister of National Economy Azamat Amrin. The proposal comes after President Kassym-Jomart Tokayev rejected an earlier plan to increase the VAT rate to 20%.

“We propose the following mechanism: a general VAT rate of 16%, full exemption from VAT for agricultural producers, and an intermediate rate of 10% for certain industries. Thus, the government’s proposed differentiation consists of 16%, 10%, and 0% rates,” Amrin said during a meeting with business representatives in Astana.

The government plans to determine which industries will qualify for the 10% VAT rate following consultations with the business community. Amrin also noted that agricultural VAT exemptions currently apply to peasant farms (family-labor associations), while larger legal entities in the sector pay about a third of all applicable taxes due to existing tax incentives. Now, the government is ready to abolish VAT for these larger agricultural enterprises as well to enhance the competitiveness of Kazakhstan’s agricultural products.

Budget Implications of the VAT Reform

Kazakhstan’s current general VAT rate stands at 12%. The government expects that raising it to 16% will generate an additional 4 – 5 trillion KZT ($7.8 billion – $9.7 billion) in annual tax revenues.

In late January 2025, Minister of National Economy Serik Zhumangarin estimated that revising the VAT rate could bring in an additional 5 – 7 trillion KZT ($9.7 billion – $13.6 billion). At that time, authorities were considering a VAT increase to 20%, but late last week, President Tokayev publicly opposed such a sharp tax hike.

Tokayev Calls for a Balanced Approach

“It is necessary to explore different options, taking into account the specifics of various economic sectors,” Tokayev said during a meeting with representatives of Kazakhstan’s largest businesses.

“I have not previously commented on this matter, as every word I say can be interpreted as a direct order due to my official status. However, I now want to make my position clear: the VAT rate should be differentiated. The rate proposed by the government was still too high,” the president stated.

Tokayev emphasized the need for a balanced approach that supports businesses while also increasing budget revenues. “The state needs optimal solutions that, on the one hand, create favorable conditions and do not hinder business, and on the other hand, bring order to the tax system and ensure sustainable budget growth,” he added.

Following the president’s remarks on Friday, February 7, the government revised its VAT reform plan, announcing the new differentiated rates on Monday, February 10.

VAT Reform as Part of Kazakhstan’s Broader Tax Overhaul

As The Times of Central Asia previously reported, the draft of Kazakhstan’s new Tax Code, which includes the VAT reform provisions, also proposes a differentiated corporate income tax (CIT) rate for banks. The aim is to encourage business lending by making it more financially attractive than consumer lending or investments in government securities.

10 Feb 2025

Central Asia, Home, Uzbekistan, Tajikistan International Affairs, International Affairs, Tajikistan, Kyrgyzstan, Kyrgyzstan International Affairs, Kazakhstan, Kazakhstan International Affairs, Features, Uzbekistan International Affairs, Kazakhstan Featurees

Elon Musk Calls for Closure of RFE/RL and VOA: What Would It Mean for Central Asia?

February 11, 2025
By Andrei Matveev

Following recent discussions on the potential closure of USAID, which has already caused concern among journalists and public activists receiving its grants, Elon Musk has weighed in on more U.S.-funded institutions. The billionaire has called for the shutting down of Radio Free Europe/Radio Liberty (RFE/RL) and Voice of America (VOA) – media organizations funded by the U.S. government.

Musk criticized the outlets, labeling their employees as “radical leftist lunatics who talk to themselves while burning through $1 billion a year of American taxpayer money.”

However, in Central Asia, RFE/RL’s affiliates differ significantly from their European counterparts. They are far from being “radical leftists” and, in general, do not adhere to any particular ideology. Nonetheless, these branches have faced their own controversies and increasing government restrictions.

The headquarters of Voice of America, Washington, D.C.; image: Stierch

Allegations of Bias and Internal Controversy

Concerns about RFE/RL’s editorial independence in Central Asia are not new. In 2019, former Radio Azattyk (RFE/RL’s Kazakh Service) editor Asem Tokayeva publicly criticized the network’s leadership under Abbas Javadi, an Iranian journalist who headed the Central Asian division. Tokayeva accused Javadi and Azattyk editor Torokul Doorov of turning the outlet into a propaganda tool for then-President Nursultan Nazarbayev.

In response, Tokayeva published a series of allegations on Facebook in early 2019, and by April of that year, Javadi was dismissed. Around the same time, Radio Ozodi (RFE/RL’s Tajik service) director Sojida Jakhfarova was also removed from her position following public pressure from the Tajik opposition. Critics accused her of aligning the outlet’s editorial policies too closely with the government of President Emomali Rahmon.

Shortly after, the editor-in-chief of the entire RFE/RL media corporation, Nenad Pejic, was also dismissed.

Growing Government Restrictions

Beyond internal scandals, RFE/RL’s affiliates in Central Asia have faced increasing government-imposed limitations:

Tajikistan: Radio Ozodi has been periodically blocked in the country and has been inaccessible since 2021.
Uzbekistan: Radio Ozodlik has faced long-standing access difficulties.
Kyrgyzstan: In 2022, the Ministry of Culture officially blocked the Radio Azattyk website, citing content that was allegedly against state interests.
Kazakhstan: In early 2024, 36 Azattyk journalists were denied accreditation by the Ministry of Foreign Affairs due to alleged national security concerns. RFE/RL leadership had to intervene to resolve the issue.

RFE/RL’s Restructuring in Central Asia

In 2023, RFE/RL announced plans to restructure its Russian-language editorial operations in Kazakhstan. The media corporation confirmed that instead of maintaining separate Russian and national-language services in Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan, it would consolidate its efforts into a single Central Asian bureau.

“RFE/RL is fully committed to providing independent and impartial news to audiences across Central Asia in national languages and Russian,” said Karin Marie, Director of External Communications at RFE/RL. “We are working to strengthen our ability to cover the most important news in Russian, maximizing the efficiency and effectiveness of our internal structures and processes. We will pool our resources and talents to create a new regional unit covering all of Central Asia, including Kazakhstan. This will reduce duplication and channel additional investment into high-quality journalism.”

Whether these restructuring plans will be altered in response to Musk’s remarks remains uncertain.

10 Feb 2025

Central Asia, Environment, Kazakhstan Environment, Home, Kazakhstan, Features, Kazakhstan Featurees

Hope for the Northern Aral Sea as Restoration Efforts Continue

February 10, 2025
By Vagit Ismailov

Between October 2024 and January 2025, one billion cubic meters of water will be directed to the Northern Aral Sea – 100 million cubic meters more than initially planned. Agreements with Central Asian countries will further increase this figure to 1.6 billion cubic meters by March.

According to Kazakhstan’s Ministry of Water Resources and Irrigation, the current water volume in the Northern Aral Sea stands at 22.1 billion cubic meters, up from 18.9 billion cubic meters at the beginning of 2022. By the end of 2025, this volume is projected to reach 23.4 billion cubic meters. The reservoir’s surface area has also expanded, reaching 3,065 square kilometers – an increase of 111 square kilometers over the past two years.

The rising water levels have had a positive impact on the ecosystem: salinity has decreased, the population of 22 fish species has recovered, and the annual fish catch has reached 8,000 tons. Meanwhile, a project to preserve the Kokaral Dam and restore the Syr Darya River delta is nearing completion. Reconstruction work on dams between Lake Karashalan and the Syr Darya, the construction of the Tauir protective dam, and the renovation of the Karashalan-1 canal have already been completed. By the end of the year, the reconstruction of the Kokaral Dam is expected to be finished, further reducing salinity and stabilizing water levels in the Northern Aral Sea.

Efforts to improve water efficiency in Kazakhstan’s Kyzylorda region have also contributed to the sea’s recovery. The use of laser leveling technology on rice fields has saved 200 million cubic meters of water, which has been redirected to the Northern Aral. The leveling of 55,000 hectares of rice fields has also boosted crop yields, increasing harvests from 40-55 centners per hectare to 70-80 centners per hectare.

To encourage the adoption of water-saving technologies, the government has raised subsidies for infrastructure installation from 50% to 80% and increased compensation for irrigation water to as much as 85%, depending on the tariff.

Reforestation efforts in the Aral Sea basin are also ongoing. Between 2021 and 2024, 4.4 million seedlings were planted on the dried-up seabed of the Large Aral Sea, covering 475,000 hectares. In 2025, an additional 428,000 hectares will be greened, bringing the total afforested area to 1.1 million hectares.

Kazakhstan assumed the chairmanship of the International Fund for Saving the Aral Sea (IFAS) on January 1, 2024. As part of its leadership, the IFAS Executive Committee has approved a 2024-2026 work plan, which includes approximately 40 initiatives across 10 priority areas.

10 Feb 2025

Central Asia, Business & Economy, Kazakhstan, Kazakhstan Business & Economy

Kazakhstan to Build Fiber-Optic Highway for Internet Traffic

February 10, 2025
By Sergey Kwan

On February 6, Kazakhstan’s Ministry of Digital Development, Innovation, and Aerospace Industry signed a memorandum of cooperation with Freedom Telecom Holding Ltd. to construct a fiber-optic highway and data centers for the transit and storage of international internet traffic.

According to the ministry, the West-East national highway will significantly expand data transmission capacity and position Kazakhstan as a key hub for international internet traffic transit. The project aims to enhance connection speeds, improve data transfer efficiency, and establish an alternative route for internet traffic between Europe and East Asia.

The hyper-highway is scheduled for completion in 2026. It is expected to attract major international clients, including IT firms, telecommunications companies, and financial institutions seeking fast and secure data transit.

Kazakhstan views the hyper-highway and data center initiative as a strategic step toward strengthening its digital infrastructure. The project will boost Kazakhstan’s role in global internet traffic transit while establishing a robust and secure data storage network.

The development will be financed through private investment.

Freedom Telecom, a subsidiary of Freedom Holding Corp. (Kazakhstan), currently provides broadband internet access and open Wi-Fi in major cities across the country.

10 Feb 2025

Central Asia, Uzbekistan, Uzbekistan Business & Economy, Business & Economy

Uzbekistan Sets Digital Performance Targets for Ministers and Khokims

February 10, 2025
By Vagit Ismailov

Uzbek President Shavkat Mirziyoyev has instructed the government to establish individual key performance indicators (KPIs) for each minister and khokim (local governor) to accelerate digitalization reforms. According to presidential spokesperson Sherzod Asadov, officials will not only be assigned specific KPIs but will also be required to meet strict deadlines for task completion.

As an example, Mirziyoyev directed the State Committee for Tourism to develop a unified digital platform integrating hotel reservations, airline and rail tickets, museum and theater visits, and services for guides and interpreters. Another priority is expediting the issuance of electronic visas – the Ministries of Foreign Affairs and Justice have been tasked with reducing processing time to three days.

The president emphasized that competitiveness in the service sector is directly linked to the level of digitalization across industries. However, not all agencies are meeting their targets. For instance, the Ministry of Transport has failed to launch an online ticketing system for all types of passenger transport, despite more than six months of efforts. Similarly, the Cadastral Agency has been slow in developing a unified register of real estate addresses.

“Any leader who postpones digitalization acts against our policy of openness,” Mirziyoyev stated.

A key topic at the meeting was the optimization of state services. The president noted that, over the past three years, some functions have been transferred to the private sector, including conducting exams and awarding qualification categories to realtors and appraisers, issuing certificates to tour guides, and performing mandatory technical inspections of specialized and agricultural equipment.

This privatization trend will continue. By March 1 this year, 11 additional state services are expected to be handed over to private enterprises, followed by 18 more by October 1.

10 Feb 2025

Central Asia, Environment, Home, Kyrgyzstan Environment, Kyrgyzstan

Kyrgyzstan Aims to Develop Organic Agriculture

February 10, 2025
By Sergey Kwan

As Kyrgyzstan seeks to expand the production and export of environmentally friendly organic agricultural products, the country’s Ministry of Water Resources, Agriculture, and Processing Industry has drafted a Program for the Development of Organic Production in the Kyrgyz Republic for 2025-2029. The document has been submitted for public discussion.

The program aims to create favorable legal, economic, and social conditions for organic producers through state support.

Kyrgyzstan has natural advantages for developing organic agriculture, including a clean ecosystem, ecologically unpolluted soils and water in mountainous and foothill regions, traditional farming methods with minimal agrochemical use, rich biodiversity, and strong export potential.

According to the ministry, Kyrgyzstan currently has 63,000 hectares of certified organic farmland, accounting for 5.25% of the country’s total arable land. By 2029, this area is expected to triple to 200,000 hectares.

The program also seeks to increase organic production to 25% of total agricultural output and raise the share of organic exports to 25% of total agricultural exports.

To achieve these goals, the program proposes several key measures:

Pilot Project: Transition the Issyk-Kul and Naryn regions to fully organic farming methods.
Public Awareness Campaign: Conduct a large-scale information campaign on the benefits of organic production.
Infrastructure Development: Improve processing and logistics for organic exports.
Certification Standards: Establish laboratories for organic product certification.
Research and Innovation: Conduct scientific research and introduce advanced organic farming technologies.

If successfully implemented, the initiative could strengthen Kyrgyzstan’s position as a leading producer of organic agricultural products in the region.