Shadow Economy - The Times Of Central Asia

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Jewelry Industry

Kazakhstan’s Jewelry Market Faces New Rules on Gold and Hallmarking

Kazakhstan produces and exports billions of dollars’ worth of gold, yet officially recorded domestic jewelry production amounted to just $7.2 million in 2025. The government now plans to tackle the gray areas of the market, from the origin of gold used by workshops to scrap from pawnshops and mandatory hallmarking of jewelry. According to the Ministry of Industry and Construction, the domestic jewelry market was worth about $168 million last year, up 3.4% from 2024. But market participants say that a significant share of trade in precious metals and jewelry remains outside the formal economy. The contrast is particularly striking given Kazakhstan’s position as a major gold producer and exporter. According to international trade statistics for 2025, Switzerland imported more than $1.1 billion worth of unwrought and semi-manufactured gold from Kazakhstan, the United Kingdom about $561 million, and Azerbaijan about $262 million. Together, those three destinations alone accounted for nearly $2 billion. Kazakhstan’s own reported export figures under the same trade category were considerably lower, highlighting a substantial discrepancy between the two sets of customs data. The path gold takes from extraction to a local jewelry workshop remains one of the industry’s weak points. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said jewelers need a legal and affordable source of raw material. “We have major jewelry centers, and it is important to preserve this heritage and bring as much of the industry as possible into the legal economy,” Zhumangarin said, citing the importance of giving jewelers access to legally sourced gold. Pawnshops are another part of the gray market. In 2025, they sent about 3.2 metric tons of precious-metal scrap and waste to Tau-Ken Altyn for processing, down from 3.8 tons a year earlier. Tau-Ken Altyn operates a major precious-metals refinery in Astana. Refining involves purifying mined or recycled metal to a high degree of purity. The government is now considering requiring jewelry scrap and waste to be transferred to refiners. The authorities also want to revise the rules governing its acceptance and subsequent sale. The exact size of the shadow market is unknown. In 2024, Kaysar Zhumagaliyev, head of Kazakhstan’s League of Jewelers, said as much as 99% of the market was operating in the shadows. The association estimated the gray market at approximately $850 million to $960 million a year, using the average exchange rate for 2024. Zhumagaliyev linked it to underground workshops, smuggling, and gold purchases outside official channels. The government’s latest figures offer a more cautious picture, but they clearly illustrate the gap between registered businesses and the control system. In 2024, only 45 market participants submitted jewelry for mandatory hallmarking. In 2025, that number rose to 959. Tax authorities count 3,520 taxpayers working with jewelry, meaning that about 27% of them submitted products for mandatory hallmarking last year. A hallmark certifies the fineness of the precious metal and indicates that a piece has passed through the legal control system. The procedure therefore provides the authorities with one of the few measurable indicators...

Shadow Economy

Kazakhstan Targets Further Reduction in Shadow Economy With AI-Driven Monitoring

Kazakhstan’s government has approved a 2026–2028 Action Plan to reduce the shadow economy through greater use of artificial intelligence and the digital tenge. The plan also calls for further digitalization in sectors most vulnerable to informal economic activity. The government hopes that the measures will reduce the shadow economy's share of GDP from 16.7% in 2025 to 13.8% by 2028, a decline of nearly three percentage points over the next three years. According to the Prime Minister's Office, Kazakhstan has already modernized 20 government information systems in recent years, dismantled the financial infrastructure supporting illegal online casinos with a turnover of approximately $4.2 billion, and prevented unjustified public spending totaling around $765 million. Officials said these efforts helped reduce the shadow economy’s estimated share of GDP from 24% in 2019 to 16.7% in 2025. "The main objective of the Action Plan is to reduce the shadow economy, ensure fair competition, increase business transparency, and boost budget revenues without imposing new obligations on entrepreneurs," the government said. A unified AI-powered monitoring platform will be central to the strategy. The system will combine data from government agencies to identify signs of hidden economic activity and flag risks in real time. Officials say this will help prevent violations before they cause budget losses. The plan contains 53 measures focused on improving economic transparency and accelerating digitalization in sectors with elevated risks of informal activity. The government has identified trade, construction, transport, agriculture, healthcare, and education as priority sectors for the new system. Retail trade will be another focus. The government plans to continue developing the Digital Bazaar, an electronic platform launched in late 2024 to bring Kazakhstan’s traditional markets and trading venues online. More products will be added to the mandatory digital-labeling system, while the National Product Catalogue will be extended. These measures are intended to make supply chains more transparent and curb counterfeit goods. They are also expected to create fairer conditions for businesses. Controls over excise goods and socially important products will be further automated. The government also plans tighter oversight of e-commerce platforms and online marketplaces, along with closer integration of state information systems. In the social sector, digital tools will be used to monitor the quality of services and track prices. They will also help authorities oversee public spending. The government plans to increase the use of the digital tenge, Kazakhstan’s central bank digital currency. It is already being used in selected government programs to improve the traceability of public funds. As previously reported by The Times of Central Asia, the digital tenge officially became a legally recognized form of Kazakhstan's national currency on July 18, providing the legal foundation for its broader use in government payments and public finance.

Tax Policy

Uzbekistan Bank Data Plan Sparks Privacy and Tax Debate

A draft government resolution that would establish unified rules for information sharing between banks and tax authorities has triggered widespread public debate in Uzbekistan, with supporters describing it as a necessary step to combat the shadow economy while critics warn it could weaken constitutional protections for banking privacy. The proposal, published for public discussion by Uzbekistan’s State Tax Committee, aims to regulate how banks provide information to tax authorities. According to the committee, the document does not introduce new powers for tax officials or abolish bank secrecy. Instead, it seeks to define the procedures, deadlines, formats, and electronic methods for exchanging information already permitted under existing legislation. The proposal attracted significant attention after some media reports suggested it would allow tax authorities to gain broad access to citizens’ bank accounts and deposits. Responding to the growing discussion, the State Tax Committee issued a public explanation, arguing that these interpretations do not accurately reflect the draft’s content. “The draft does not grant tax authorities new powers, does not abolish bank secrecy, and does not provide free access to the bank accounts of citizens or businesses,” the committee said. It stressed that banks would continue to provide information only in cases established by law. The committee pointed to Article 134 of the Tax Code and the Law on Bank Secrecy, which already allow banks to share information related to taxation with state tax authorities under specific legal procedures. It also emphasized that any information received by tax authorities is itself protected as tax secrecy and cannot legally be disclosed or used for purposes other than tax administration. Officials further argued that similar information-sharing mechanisms exist in many countries, including members of the Organisation for Economic Co-operation and Development (OECD). Uzbekistan has also joined the Global Forum on Transparency and Exchange of Information for Tax Purposes, requiring the country to develop clear and transparent rules in this area. Despite these assurances, the proposal quickly became one of the country’s most discussed regulatory initiatives. One of the most controversial provisions concerns peer-to-peer (P2P) transfers. Under the draft, banks would report cases where an individual’s bank card or electronic wallet receives transfers totaling at least 500 times the base calculation amount during a calendar month from people other than close relatives. The measure is intended to identify cases where personal bank cards are allegedly being used for unregistered commercial activity. Economist Otabek Bakirov criticized the proposal, arguing that it contradicts constitutional guarantees protecting banking secrecy. Referring to Article 41 of Uzbekistan’s Constitution, he noted that the confidentiality of bank operations, deposits, and accounts is guaranteed by law. Bakirov also recalled that previous attempts to introduce similar monitoring of P2P transactions had been abandoned following constitutional reforms. “I hope this attempt will also fail,” he wrote, calling on parliament, the Central Bank, the Ministry of Justice, the Ministry of Economy and Finance, journalists, and the public not to remain silent during the discussion. Public comments submitted during the consultation have echoed many of these concerns. According...

Income Growth Plan

Opinion: Kazakhstan’s New Income Growth Plan – Administrative Measures Against Market Realities

Kazakhstan’s government has unveiled a Comprehensive Plan to Increase Household Incomes for 2026-2029. The Ministry of National Economy says it contains 59 measures. The stated goals include higher wages and lower inflation. The plan also aims to ease household debt. The full text of the plan has not yet been published in open access. First Vice Minister Azamat Amrin presented its main provisions at a Government press conference on June 11. The central contradiction lies in the fact that guaranteed income growth applies to only a small segment of the population. The plan creates fundamentally different conditions for the public and private sectors. It provides for mandatory salary indexation for civil servants. Their wages will be revised every three years based on accumulated inflation. According to labor market data, this category includes about 85,000 to 90,000 people less than 1% of the country’s total workforce of around 9.3 million. It is this narrow group that receives a reliable long-term mechanism of financial protection. Indexation is also planned for employees of national companies and natural monopolies. This group includes around 700,000 to 800,000 people, or 8-9% of the labor market. Employees in the social sector, teachers, doctors, and others, receive their salaries directly from the state budget. This category numbers around 1.2 million to 1.3 million people, or 13-14% of the workforce. Under Kazakhstan’s law on public service, these workers are not considered part of the state administrative apparatus. The plan does not introduce automatic three-year indexation for them; their incomes are raised through separate government decrees, usually on an annual basis depending on budgetary capacity. More than 7 million people work in the competitive private sector, small and medium-sized businesses, as well as the self-employed, accounting for more than 75% of the workforce. For this dominant category, the plan offers no direct mechanisms for income growth. Instead of financial guarantees, the document proposes using an administrative lever: officials will hold talks with private business owners to encourage them to raise wages. The only basic indicator directly affecting the incomes of low-paid private sector workers is the minimum wage. However, the government has postponed revising the minimum wage until August 2026. Private business bears the main market risks and forms the country’s tax base. It is these taxes that finance guaranteed incomes in the public sector, which in total accounts for around a quarter of the labor market, while the overwhelming majority of working citizens, about three-quarters, have no comparable protection. Economist Murat Temirkhanov, an adviser to the chairman of Halyk Finance who took part in expert discussions of the government’s plan, says this approach distorts market relations. A directive requirement to raise wages could push businesses away from formal hiring and into the shadow economy to cut costs. In his view, the plan ignores the only real source of income growth: higher labor productivity. The document devotes only one point to this factor, even though international institutions such as the International Monetary Fund and the World Bank have directly recommended...

Gold Mining

Kazakhstan Registers Five New Gold Deposits as Jewelers Seek Raw Materials

Citing World Gold Council data, Azamat Panbayev, chairman of the Industrial Committee at Kazakhstan’s Ministry of Industry and Construction, said Kazakhstan ranked 14th globally in gold production last year. He was speaking at the VII Forum of Gold Producers of Kazakhstan held as part of the international Astana Mining & Metallurgy Congress 2026. “The gold mining industry remains one of the strategically important sectors of industry and makes a significant contribution to the country’s economic development,” Panbayev said. “Kazakhstan has a substantial mineral resource base: 374 gold deposits with total reserves of 2,369 tons are currently listed on the state balance sheet. Last year alone, five new deposits with reserves of around 98 tons of gold were added to the state register.” According to the Ministry of Industry and Construction, Kazakhstan produced 71.2 tons of refined gold in 2025, while investment in precious metals production reached $202.6 million, up 38% from the previous year. Gold refining in Kazakhstan is carried out by Tau-Ken Altyn LLP, the country’s only specialized state refinery and a subsidiary of National Mining Company Tau-Ken Samruk JSC. The Astana-based plant purchases doré, a semi-refined alloy containing gold and silver, from gold mining companies and sells gold refined to 99.99% purity. However, only 5% of the raw materials purchased by jewelers in Kazakhstan come from the Astana refinery, said Kanat Baitov, executive director of the Dragnet Association. He estimated that more than 50% of the industry’s raw materials market remains in the shadow economy. “We mine 70 tons of gold every year. If even 20 tons, or at least 5 tons, of that were used for jewelry production, the industry would have real potential,” Baitov said. Kazakhstan has introduced a VAT exemption for jewelers purchasing granulated gold from the state refinery, according to Baitov. “They are ready to supply not only granulated gold but, over time, if volumes increase, they are also prepared to supply alloys to the domestic market and could produce ready-made assay standards for jewelers,” he said, referring to Tau-Ken Altyn. He noted that jewelers would only be able to benefit from the new tax incentives for purchasing raw materials from the state plant if they increased procurement volumes. Currently, by his estimate, purchases do not exceed 30 kilograms per year. He added that such practices could eventually raise questions from the state regarding the origin of the raw materials used by jewelers in Kazakhstan. Zhaniya Dabyr, co-owner of the jewelry company Kazakhyuvelir, said the industry faces several challenges. These include high raw material costs, limited access to financing, the shadow market, insufficient government support, weak promotion in foreign markets, and limited tax incentives. “We propose expanding the mechanism for selling gold to domestic manufacturers and introducing a more flexible system of installment payments, fixing the gold price on the purchase date, as well as considering discounts for domestic producers and additional preferences for export-oriented companies,” Dabyr said. Kazakhyuvelir also proposed creating a digital accounting system for the jewelry market that would cover manufacturers...

SMEs

Small Businesses in Kyrgyzstan Struggle With Expensive Loans and Border Delays

Small and medium-sized businesses now account for more than half of Kyrgyzstan’s economy, but entrepreneurs continue to face high borrowing costs, logistical bottlenecks and rising operating expenses, according to First Deputy Chairman of the Cabinet of Ministers Daniyar Amangeldiev. According to Amangeldiev, the share of small and medium-sized enterprises (SMEs) in the national economy has reached 51.7%, making the sector one of the country’s key drivers of employment and domestic demand. “The main obstacle at the moment is access to financing,” he said during a press conference in Bishkek. Amangeldiev noted that average lending rates in Kyrgyzstan remain at around 19-20%, while the profitability of many businesses does not exceed 15%. As a result, borrowed capital becomes prohibitively expensive, limiting companies’ ability to expand. The government is currently negotiating with the banking sector to reduce loan costs and has already allocated approximately $3.4 million to support small and medium-sized businesses. Authorities have also introduced interest-rate subsidies to expand entrepreneurs’ access to financing. In addition to expensive credit, businesses continue to face logistical and customs-related difficulties. According to Amangeldiev, delays in certification procedures and border clearance disrupt supply chains and reduce trade turnover. “While cargo remains stalled at the border, entrepreneurs’ financial resources are effectively frozen together with the goods,” he said. The government is placing particular emphasis on the agricultural sector, which remains one of the country’s largest employers. The Cabinet of Ministers has instructed financial institutions to accelerate loan issuance for agricultural producers, noting that the speed of capital turnover is critical for agribusiness operations. The Kyrgyz authorities are continuing efforts to bring more businesses out of the shadow economy. In 2024, the government abolished part of the voluntary patent-based trading system and required entrepreneurs, including small traders and some tax-exempt businesses, to use cash registers and digital fiscal systems. The reforms triggered resistance among some entrepreneurs. However, authorities argue that increasing transparency in trade is necessary to broaden the tax base and modernize the economy.