|
|
"Why YOU should do business in Almaty!"
(an abstract from the article on "ABC-net")
Geographical Significance - Kazakhstan, roughly four times the size of Texas, has a population of 17 million and encompasses 2.7 million square kilometres. Countries that border Kazakhstan are Russia to the north; China to the east; and the Central Asian republics of Kyrghyzstan, Uzbekistan, and Turkmenistan to the south. Lying to the west is the oil-rich Caspian Sea and beyond that Azerbaijan. Akmola (population of 250,000) is new capital of Kazakhstan, but the city of Almaty -- with its population of 1.4 million -- is still considered the political, financial, and cultural centre of the country.
Political/Economic Advantages - The Kazakhstani Government has taken several significant steps in its commitment to free-market reforms by privatising many state owned enterprises, creating a special "one-stop shop" - the State Investment Committee - for foreign investors, and introducing its own stock exchange. Prudent measures taken by Kazakhstani national Bank has kept inflation down and has created one of the most stable currencies in the successor states of the former Soviet Union.
Transportation Linkages - With direct flights to Amsterdam, Istanbul, Frankfurt, London, Islamabad, Vienna, Dubai, and many other destinations inside and outside of the former Soviet Union, the Almaty International Airport is truly an ideal hub for business travel from Europe and Asia. International Airlines serving Kazakhstan include: Austrian Airlines, British Airways, KLM, Lufthansa, Pakistan International Airlines, Turkish Airlines, and Transaero. Also, Kazakhstan's excellent railroad system makes for easy access to Russia, the Central Asian republics, and China.
Natural Resources in the Region - Kazakhstan is a major world source of coal, copper, iron ore, chromium, magnesium, lead, zinc, silver, and uranium. Kazakhstan has notable reserves of oil, gold, molybdenum, titanium, vanadium, beryllium, tungsten, manganese, rhenium, and gallium.
Important Industries/Production Capabilities - Kazakhstan's large agricultural sector centres around grain and livestock production. Kazakhstan's extensive oil resources are underdeveloped, with 9 billion barrels in recoverable deposits in the Tengiz field and an estimated 19 billion barrels of oil in the North Caspian oil basin.
Trade Investment Potential - Kazakhstan remains a minor oil producer with output of approximately 460,000 barrels a day, but the country possesses extensive undeveloped oil resources. Additional industry sectors with commercial opportunities for investment and trade include mining, environmental clean-up and control, agribusiness, food processing, electronics and computer products, telecommunications, and infrastructure development.
The American Business Centre in Almaty (e-mail) is co-located with the U.S. and Foreign Commercial Service office, which helps U.S. companies enter and expand their operations in foreign markets through business counselling, trade promotion, and advocacy.
Obtaining a Licence for the Recruitment of Foreign Workers in the Republic of Kazakhstan
an article from "Almaty Herald" by Kairat Serikpaev, Cameron McKenna, AlmatyWho needs a licence?
It is a well known fact that it is the policy of many countries to protect their internal work market and give priority to their own citizens over those from other countries. Since 1995, Kazakhstan has adopted a number of legislative acts to this effect. In accordance with the Presidential Decree dated 17 April 1995 "On Licensing" a licence must be issued for activity involving the recruitment of foreign workers. On a practical level, activity is taken to mean any recruitment of foreign citizens to work in Kazakhstan. As a result, such licence is required by all business enterprises which are registered in Kazakhstan as legal entities, including enterprises with foreign participation, individuals, and also branch and representative offices of foreign firms. The fact that foreign workers have been recruited to work in Kazakhstan is the determining factor. The obligation to obtain a licence rests on the enterprise or individual recruiting foreign citizens to work in Kazakhstan, regardless of the type of contract entered into with a worker. A licence may only be issued to enterprises which recruit foreign citizens who are over 25 years of age and who are not older than the pensionable age, as established by Kazakh law. At the present time the pensionable age in Kazakhstan is 61,5 years (the pensionable age is increasing at a constant rate every six months up to 2001). The recruitment of persons without citizenship is also probably subject to licensing, although the law makes no specific mention thereof
How to obtain a licence?
Licences are issued by the relevant local employment exchanges at the location of the applicant (location of main office or place of registration). Licences are issued in Almaty by the administration of the Akim of the City of Almaty
All the requisite documents for obtaining a licence must be submitted to above-mentioned bodies. The documents are verified by a commission created for this purpose, which then adopts the preliminary decision to issue a licence. Furthermore, the commission conducts an interview with a representative of the applicant, which is of a more formal nature and usually lasts at most 10 minutes. The list of documents necessary to obtain a licence consists of 11 different documents. For example, documents are required in respect of the applicant (founding and registration documents and details of the activity of the applicant etc.) and documents in respect of the worker recruited (a copy of the employment contract, medical insurance certificate, educational qualifications etc.). It should be noted that there are certain requirements as to the content of the documents. For instance, the medical insurance of the worker must contain a provision for the repatriation of his body in the event of his death, and the validity of the contract must not exceed the validity of the licence. Unfortunately, the licence-issuing process does not depend on the number of workers recruited. Virtually, the same amount of time and the same list of documents is required to receive a licence for a group of workers as it is for one worker
Estimated Amount of Time Required to Obtain a Licence
The law states that the decision to issue or to refuse to issue a licence must be taken within one month of the date on which the application was submitted. However, in practice it takes more than one month to prepare the necessary documentation and bring the documents into conformity with the requirements of the licensing body. A large amount of time is taken up with translation of certain documents into Russian or Kazakh and also the notarisation and legalisation thereof. The actual procedure for issuing a licence does not take a long time. The examination of documents by the employment exchange does not take longer than one week. Licences are issued for a period of one year, which means that they must be extended annually if the licensed worker remains in Kazakhstan longer than one year. Licences are extended at the place in which they were originally granted.
Payments
Payment for a licence is effected at the end of the document examination procedure, upon receipt of the decision of the commission and prior to the obtaining of the licence itself.
1. Licence Fee. The fee is the equivalent of 20 index factors (augmenting quarterly). As at 1 April 1999 the fee was 14,300 tenge or approximately 120 USD.
2. Pledge. The purpose of this payment is for the employer to make advance material provision for the return an employee to his country of residence. Return costs may be met from the pledged amount. The pledge is made by entering into a deposit agreement with any bank in Kazakhstan. The amount of the pledge is equal to the price of an economy-class ticket home augmented by 20%. The pledge is returned when the contract ends and when the worker is in possession of an exit visa. The pledge is not required if a foreign employee has a return ticket. In such case, it is sufficient to submit a photocopy of the ticket.
3. Deposit. The deposit is 1,000 USD for each licensed employee on the list. This type of payment ostensibly serves as a guarantee that an employee will leave the country on the expiry of the licence. The payment is recoverable by the applicant after the foreign citizen has left the country. To make this payment an applicant must enter into a deposit agreement with a local bank. Some banks pay interest on the deposit. If an employee is recruited to work in Kazakhstan without remuneration or is engaged in charitable work or is the head of a company in Kazakhstan, such payment is not required.
Formerly, compensation payments of approximately 15-20 USD per month for each employee were levied in addition to the above mentioned payments. Although these payments have not been revoked by law, the licensing bodies have stopped levying them of late.
Obligations of an Applicant under a Licence
Certain obligations arise for a licensee upon receipt of a licence. An applicant is obliged to inform the licensor within 10 days if a legal entity, branch or representative office is re-registered after receiving a licence, or if it changes its address, bank details and other data. An applicant is also obliged to provide the licensor on request with necessary information and documentation and also to permit access to work sites. An applicant is obliged to ensure that employees leave the country upon the expiry of the licence. Kazakh law also contains other obligations in respect of the recruitment of foreign workers.
What Happens if a Licence is not Obtained?
Breaches of the legal requirements regarding the licensing of foreign workers incur administrative and criminal liability both on the basis of engaging in business activities without a relevant licence and being in breach of the licensing requirements. The violation of the requirements of the administrative legislation may result in the imposition of fines on the chief executives of the employing entity, and breaches of criminal law, depending on the gravity thereof, may incur a fine or imprisonment.
On the basis of practical experience I can say that persons entering Kazakhstan without such licence may not be given a visa for longer than 3 months and may be refused an extension of their residence permits in Kazakhstan, which may in turn result in considerable fines being imposed on leaving the country.
Comments on the issue of licences for the employment of foreign workers
In spite its apparent simplicity, the issue of obtaining authorisation for the employment of foreign workers in Kazakhstan is becoming more and more of a problem and an increasing topic of discussion for foreign investors. This is coming about for a number of reasons, the main ones being the complicated procedure for the receipt of a licence and, as a consequence, the time that needs to be spent in obtaining one.
In attempting to understand the regulative procedure involved in the issuing of licences, it becomes clear that the complex nature of the licensing procedure results from the fact that there is a large number of loopholes in the employment licensing legislation which have, in turn, given rise to a regime of "free" practice.
In my view, the main lacuna in the legislation regulating the licensing of foreign workers is that the subject of licensing is not defined concisely enough. The Decree of the President of the Republic of Kazakhstan on licensing states that "activity relating to the recruitment of foreign workers" is subject to licensing. The wording and intent of this quote from the Decree On Licensing should be taken to mean the authorisation of business activity to recruit foreign citizens to work in Kazakhstan i.e., to provide services to search for and hire foreign employees to work in Kazakhstan, but by no means as authorisation of foreign workers in Kazakhstan. I assume that what was meant was the licensing of the employment of foreign workers but, following the letter of the law, the employment as such of foreigners to work in a company is not subject to licensing requirements.
Neither do the Regulations on the procedure and terms for the issuing of licences for activity relating to the recruitment of foreign workers in the Republic of Kazakhstan, and also the export of workers from the Republic of Kazakhstan, which were adopted by the Government on 4 June 1997, give an answer to the question as to which type of activity of business enterprise requires authorisation.
If licensed activity is taken to mean the activity of employing foreigners in Kazakhstan as workers, then how does this relate to the requirements contained in the Regulations that the personal data of employees, such as an employment contract, an aids certificate, a medical insurance certificate, a return ticket etc. must be submitted. In such case, what is taken as the basis when determining the one-year period of the licence? Is it a period that an employee works in Kazakhstan under contract or is it the validity period of the authorisation to employ foreigners? It would be more logical to revoke a licence or amend it in cases where there are staff replacements. What happens if workers are replaced on an ongoing basis and if there are more than 100 or 500 of them?
The Regulations state that the licence is a general licence. In accordance with the Decree On Licensing, a general licence confers the right to conduct a definite activity for an unstated period. A licence issued for activity relating to the recruitment of workers is limited to a period of 1 year, as has been already mentioned.
The Regulations also restrict the validity of a licence to a specific location. Are there not too many functions covered by one licence? There are the work permit for a specific employee and the work permit of this employee for a specific location and, in addition, a general permit issued to the applicant company for employment of foreign workers. Restrictions of this kind create additional difficulties for employers, especially where the activity involves a constant replacement of employees and their re-location throughout the country.
An analysis of the Regulations on the licensing of workers reveals that they can hardly be considered to be the law for the regulation of the licensing procedure. This document contains too many questions and gives too few answers.
Because the licensing procedure is not properly regulated the licensing bodies make additional demands which are not envisaged by the law, notwithstanding the fact that some of the demands of the licensing regulations are already a considerable burden for the applicant. The so-called instruction for the obtaining of a licence for activity relating to the recruitment of foreign workers, drawn up by the Almaty model employment centre, contains the requirements that information on the activity of the applicant company and a note from the tax authorities stating that there is no indebtedness to the budget should be submitted. These documents are not envisaged by the Regulations on the licensing of workers. The requirement concerning the latter document would seem to indicate that the Ministry of Labour of the Republic of Kazakhstan is performing functions which do not lie within its remit because the regulations of this government department state that tax collection or the procurement of tax collection does not lie within its powers.
The legality of the desire of employees of the Ministry of Internal Affairs of Kazakhstan to see a licence when examining an application for the issuing of multiple business visas is also open to doubt. As far as I am aware, the procedure for issuing entry visas to Kazakhstan envisaged by the law does not contain any requirements that a licence for the employment of a worker must be obtained for a foreign citizen wishing to receive a multiple visa. Furthermore, licences are issued in the name of the employer and not in the employee's name. Such licence may be held by the company, and employee wishing to obtain a multiple visa does not necessarily have to be on the list of employees that is submitted in order to obtain a licence. That is not to mention that a visa applicant does not have to be an employee of a licence holder.
In practice, licensing bodies require that a licence should be obtained for the employees of branch and representative offices of foreign enterprises. The regulations on the licensing procedure state that only Kazakh legal entities are subject to the licensing requirement. Branch and representative office of foreign enterprises are obviously not Kazakh legal entities. This is on the whole, a correct decision, since the objectives for which branch and representative offices are opened (to represent the interests of an enterprise) should allow them not to have Kazakh citizens on the payroll.
The representatives of many foreign companies doing business in Kazakhstan do not object to the fact that a permit system exists for the recruitment foreign workers and that payments are imposed for employing foreigners, but they do concur on one point, their desire to secure a clear and simple licensing procedure.
