Workshop on Supporting Asia-Pacific LLDCs and Bhutan in Mobilizing Resources for the SDGs Development of green financing in Central Asia AIFC GREEN FINANCE CENTRE Aigul Kussaliyeva Thimphu, Bhutan December 12, 2018
AIFC The legal and regulatory framework commenced on January 1, 2018. 2018 NOW A FULLY-FLEDGED FINANCIAL CENTRE Astana Financial Services Authority, AIFC Court and International Arbitration Centre are successfully established. AIFC Authority signs the agreements with Shanghai Stock Exchange and Nasdaq Inc. to create a new stock exchange in Kazakhstan. AIFC Bureau for CPD and AIFC Expat centre are established to provide the favorable environment for the best talent. AIFC Management Council determines the AIFC development strategy and the structure of AIFC bodies. AIFC Authority provides the organisational support to other AIFC bodies. The Constitutional Statute of the Republic of Kazakhstan On the Astana International Financial Centre provides the legal basis for the establishment of the AIFC. The establishment of the AIFC is part of the 100 Concrete Steps Plan of the Nation aimed at delivering five institutional reforms. 2017 2016 2015 2
CORE PILLARS OF THE AIFC DEVELOPMENT Capital market Asset Management Private Banking Islamic Finance Financial Technologies Green Finance Increasing domestic Capital Market liquidity and attracting more foreign investments Asset management of private and state funds by established international asset management companies within AIFC Developing Private Banking expertise on the basis of based within AIFC international asset management companies Creating local Islamic Finance market supported by local, international Islamic banks & financial institutions The introduction and development of Financial Technology to companies improve efficiencies and decrease costs Promoting green financing instruments
KAZAKHSTAN Eastern Europe and Central Asia SDG 2. Zero hunger SDG16. Partnership for the goals 2.0% than region average SDG9. Industry innovation and infrastructure SDG12. Responsible consumption and production SDG Index and Dashboards Report 2018
LATENT VULNERABILITIES Nominal GDP growth relative to oil price, 2004-2017 Energy consumption per unit GDP, (PPP, 2005 US$) $/bbl Oil Price (lhs) GDP Growth (rhs) 120 % GDP 12% 18000 16000 100 80 60 40 10% 8% 6% 4% BTU per USD GDP 14000 12000 10000 8000 20 2% 0 0% 2004 2006 2008 2010 2012 2014 2016 Source: Energy Information Administration, National Bank of Kazakhstan 6000 4000 2005 2006 2007 2008 2009 2010 2011 Kazakhstan OECD Economy deeply entangled with fossil fuels High energy intensity negatively impacts competitiveness
CURRENT ASSESSMENT OF KAZAKHSTAN SDG DASHBOARD
STRATEGIC DOCUMENTS ON GREEN ECONOMY Environmental code Strategy for the development of the Republic of Kazakhstan until the year 2050 Concept on the transition of the Republic of Kazakhstan to a green economy Other sectoral programmes, strategies and plans AIFC Strategic documents on Green finance Concept of building a Green finance system in Kazakhstan Strategy of AIFC regional leadership in green finance until 2025
KAZAKHSTAN DEMAND FOR GREEN FINANCING Until 2030, up to US$155 billion in fully or partially green infrastructure investments needed to reach the NDC and GEC targets In recent years, green investment from climate investment funds and Global Environment Facility (GEF) has accounted for about one-third of green investments in Kazakhstan As climate finance needs increase significantly, domestic sources and international capital markets have to play a bigger role
APPETITE FOR GREEN FINANCE: SURVEY RESULTS Illustrative 104 interviews at Astana Economic Forum in 2017: 29 domestic, 75 international About 50% of investors already have experience with green investment in Kazakhstan, almost all are interested for future 13% say market appetite for green finance in Kazakhstan is high, 35% say moderate 50% mentioned green bonds as most attractive financial instrument Key barriers identified: regulatory risk insufficient policy incentives lack of green finance expertise immature financial markets
AIFC FACILITIES FOR DEVELOPING GREEN FINANCE High-tech platform of the Astana International Exchange Unique in the CA region AIX Green Bond Rules based on Green Bond Principles Favourable doing business conditions for the AIFC participants: tax exemption for financial services, England and Wales s law Green Finance Centre is created to promote and develop green finance in Kazakhstan and in the region
AIFC GREEN FINANCE CENTRE BUSINESS REVIEW Goals Introduction of new instruments of green financing Introduction of new facilities for green financing / investing Capacity building Encouragement and support of green finance market players Development of green market (production, finance, knowledge) Enhancement of KazETS Functions Drafting policies and amendments on green finance instruments to Kazakhstan s legislation Preparing reports, surveys, studies, researches on demand and supply of green finance in Kazakhstan and the region Training and certification of specialists Project support, starting from preparation of investment project up to post-issuance MRV
CORPORATE BOND MARKET OF KAZAKHSTAN Issuers and investors Number of issuers quasi-state companies private non-financial companies private financial companies Attracted funds from investors, bln. KZT** quasi-state companies private non-financial companies private financial companies Share of main categories of investors, % Other institutional investors Other legal entities Second tier banks Broker-dealers Individuals UAPF *excluding the program of financial support of the banking sector ** 1USD = 369,98 KZT, as of 07.12.2018, www.nationalbank.kz
CAPACITY BUILDING Annual Green Growth Forum Seminars and meetings - Sessions Trainings - AIFC Green Finance Advisory Council meetings - Green Finance Awards - Joint seminars and roundtables with partners to explain the process of the green bond issuance - World Investor Week - AIFC Bureau for CPD programs - CBI trainings
SEMINARS & MEETINGS
THANK YOU FOR YOUR ATTENTION Contacts: A.Kussaliyeva@aifc.kz 8 Kunayev street, Emerald Quarter BC B Block, Astana, Kazakhstan Call centre: 8 800 080 08 01 Fax: +7 (7172) 61 36 62 www.aifc.kz www.greenfinance.kz