Almaty, Kazakhstan, February 26, 2004
—Lease finance for Kazakhstan enterprises is expected to increase thanks to amendments to the Law on Financial Leasing, the Civil Code, and the Economic Litigations Code, adopted by the Parliament in January. With the adoption of these amendments, Kazakhstan now has a progressive regulatory framework for leasing that meets worldwide standards for leasing.
The leasing legislative amendments were developed by the Association of Financiers and the Ministry of Agriculture and Agrarian Committee of the Parliament with the support of the USAID—IFC Central Asia Leasing Project. IFC is the private sector arm of the World Bank Group and has worked in Kazakhstan since its independence.
At a press conference held by the Association of Financiers, Daulet Simbaev, chairman of the Association, stated that the “new Kazakhstan leasing legislation is extremely forward-thinking and includes model clauses such as the development of secondary leasing, subleasing, and leaseback arrangements as well the traditional pillars of leasing such as leasing as a three party arrangement and IAS classifications of financial leasing.
Benefits of the Kazakhstan legislative framework for leasing include:
·
A leasing definition that conforms with International Accounting Standards.
·
Protection against tax losses if the leased equipment is repossessed in the first 36 months of the lease.
·
The ability to lease equipment repossessed from a first client to a second client.
·
Procedures for subleasing and leaseback arrangements.
·
Simpler non-court repossession rights for the lessor.
USAID representative Mike Fritz praised leasing as “particularly beneficial for small and medium-sized businesses – a strong engine for growth in transitional economies. USAID works throughout Central Asia to support the development of small and medium-sized business, based upon the Agency’s belief that private sector growth, in specifically SME growth, is an important aspect of economic and civil society development.
Christian Grossmann, director of IFC’s technical assistance programs in the former Soviet Union, noted that “the enactment of model leasing legislation in Kazakhstan will both bring in investment in Kazakhstan and will serve as an example to legislative efforts in other CIS countries. Kazakhstan has resolved issues which have hindered leasing throughout the whole region”.
With the enactment of these amendments in Kazakhstan, the entire Central Asia region now has parallel and equally progressive leasing legislations, all of which have been enacted in the past two years. “This is an important new development,” according to Gorton De Mond, Regional Representative for IFC in Central Asia. “Increased market integration and greater cooperation among Central Asian countries will create a regional market for investors, for the mutual benefit of all four countries. Harmonization of the leasing legislation in the region should make this sector more attractive for needed domestic and foreign investment.”
The USAID - IFC Leasing Project was launched in the Fall 2003 to increase the volumes of leasing transactions for small and medium-sized businesses. The project works closely with Kazakhstan’s parliament and government agencies to create an appropriate legislative environment. It provides training and consulting services to local enterprises and foreign investors interested in leasing. USAID and IFC have also launched a public education campaign to educate private enterprises, financial institutions, and regulatory agencies about leasing.
About IFC
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC’s committed portfolio at the end of FY03 was $16.8 billion.
IFC has long been a champion of leasing for developing and transitioning economies. IFC has advised 40 countries on leasing and has invested almost $1 billion dollars in leasing operations in 50 countries over the last 30 years.
About USAID
The U.S. Agency for International Development (USAID) has provided economic and humanitarian assistance worldwide for more than 40 years.
USAID Assistance to Central Asia helps increase opportunities to improve citizens' knowledge, livelihoods, participation, and dialogue in social, economic and political life. Opportunities are increased through:
· improved primary health care and energy and water management;
· broader-based, legitimate growth of enterprises and trade, particularly smaller-scale and in agriculture, including necessary policy reforms and deregulation;
· establishing sustainable microfinance institutions that provide credit and business development services to microentrepreneurs;
· expanded avenues of political participation in communities and local government through strengthened civil society, nongovernmental organizations, and greater linkages between citizens and their government; and
· broadened access to and widened dissemination of independent information so that a more informed population can effectively participate in civic life.
