The Regulations, Permits And Laws

Co-authored by Zhanna Temirbayeva, Managing Consultant, Hill International (UK) Ltd

The ninth largest country in the world, Kazakhstan stretches from Eastern Europe to Asia across an area the size of Western Europe. It is rich in natural resources, with huge economic potential. Recent years have seen a series of economic reforms and privatizations, and the IMF's April 2016 World Economic Outlook report forecasts Kazakhstan's GDP growth to rise to 4.9% by 2021. On 30 November 2015, Kazakhstan became the 162nd member of the World Trade Organization (WTO), the culmination of a 20-year long negotiation of its accession terms. Unsurprisingly, Kazakhstan is attracting interest from international investors. So what are key issues for those wishing to do business there?

Business Culture

Essential for anyone wishing to do business in Kazakhstan is an understanding and recognition of the distinctive Kazakh business culture. It is strictly hierarchical, normally with just one key decision-maker, the most senior person in the company. Personal relationships are key, and while those in more subordinate positions can represent the business during meetings, they normally do not have the authority to make decisions unless stated in writing. The same will be assumed of company representatives negotiating with Kazakh entities—don't send someone junior to meet the CEO.

Construction

Construction activities are heavily regulated in Kazakhstan and require a number of permits and approvals. The main legislation regulating construction is the 2001 Law on Construction. Most stages of construction are subject to approval, in particular by the Agency for Construction, Housing and Utilities.

Like many business and professional activities in Kazakhstan, most construction activities are subject to mandatory licensing. The Law on Permissions and Notices of 16 May 2014 lists the construction activities affected. Licenses are obtained from the regional local executive bodies, which have a great deal of discretion in applying the regulations.

Employment, Local Content and the Environment

Kazakhstan has adopted a new labor code, which came into force on 1 January 2016. This updated code makes a number of new provisions governing the relationship between employers and employees. Among the noteworthy changes to the previous regime, the new labor code: (i) allows for non-competition agreements between employers and employees; (ii) allows a probationary period of up to six...