Global Trade Alert

On 9 January 2012 the Government of the Republic of Kazakhstan approved Law No. 534-IV. It expands the introduced by Law No. 135 of 25 March 2006 rules for state support of industrial innovative activities.
 The main novelties in the law are:

• Introduced definition for local content with respect to goods, works and services (without concrete percentage values);
• Reference to the concept 'priority sectors', defined in the State program for accelerated industrial-innovative development of Kazakhstan for 2010-2014. No. 534-IV explicitly states that only projects that are realised in these priority sectors are to receive innovation grants from the government.
• A key measure for state support defined in the old Law No. 135 are innovation grants that are allocated for research and development activities, as well as for activities related to creation of immaterial goods. Law No. 534-IV considerably expanded the measures for state support of industrial innovative activities. The main newly-introduced are:

1. Financing, including co-financing of projects, lease financing;
2. Provision of warranties and guarantees related to loans;
3. Lending through financial institutions;
4. Subsidised interest rates on loans issued by financial institutions, and coupon bonds rates;
5. Implementation of investments in authorised capital;
6. Guaranteed orders;
7. Provision of land plots and rights for subsoil use;
8. Support of the domestic market;
9. Attraction of foreign investments;
10. Development and promotion of exports of domestically-processed goods and services.

 
Since Law No. 534-IV creates only framework of rules on which basis is to be organised the concrete allocation of state support for industrial innovative activities, it has been coded by the GTA as amber. The priority sectors have been indicated as affected sectors.
 
Law No. 534-IV was superseded as of 1 January 2016 by the new Entrepreneurial Code of the Republic of Kazakhstan.
 
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.