Country risks in Kazakhstan and Franum's project assessement

Résumé du document

In this report we will firstly make an overview on Kazakhstan's business perspective by analyzing its economic, political, and financial and business country risks.
In the second part we will point out and assess some main risks based on the firm Franum's project which consists of selling its product on the country's market by different ways of proceeding and suggest how to cover these risks and if necessary, make recommendations to minimize and contain these last ones.
Nowadays Kazakhstan is viewed as a stable and prosperous country with a sustainable and rapid growth from 2000. Just like other Central Asia countries, Kazakhstan suffered from URSS's fall and went through a difficult path for a short period (economic recession), at the time when many non-Kazaks population left the country. But the country recovered itself quickly and became one of the fasted economic growth countries, which is pulled by mega projects of extractive sector.

Extraits

[...] Companies operating in the zone of The Innovation Technology Park are eligible for a 100% reduction in corporate income tax, exemptions from land and property tax and VAT and have access to a customs free zone. Companies from the Sea Port of Aktau enjoys exemptions from corporate tax, land tax and property and have an access to a free customs zone for companies that generate at least 90% of their income from and equipment. President Noursoultan Nazarbaïev years old, has been in power since 1991. Despite a separation of powers Nazarbaïev wields considerable control over all three branches of government and dictates national policy priorities. [...]

[...] Recommendation: This risk must be covered otherwise Franum will not be able to sell its products. The Intertek Moody Group The Intertek Moody Group The Intertek Moody Group Market context risks: • Risk of competition: The local machinery Kazakh market has not many barriers for foreign companies to enter as the government introduced the law that encourages foreign investors to do business in the region. So, following the example of Franum, other foreign companies can begin to commercialize their high-end machines and it may create competitors that can take the market share. [...]

[...] It is not allowed to export these products. Enterprise risks: • Failure at obtaining licenses: Officially, foreign legal entity can obtain licenses if they meet the requirements or qualification (Issue date 15 working days) but due to Kazakhstan's weak rule and vagueness of the law, foreign entities may have difficulties to obtain licenses, in this case the transaction done may be considered as a void or illegal. Solutions: -Consult KazNexInvest and the Foreign Investors' Council in Kazakhstan to facilitate the procedure. [...]

[...] Old–fashioned Kazakhstan's court and arbitration system. F. Business affairs environment 1. Telecommunication Infrastructure 2. Investment incentives G. Major risks 1. Transport and logistic 2. Health and medical 3. Terrorism and criminal acts H. Business practices III. [...]

[...] Solutions: -Adjust the production capacity by anticipating market fluctuation -Adopt responsive pricing strategy based on the market's demand and customer's taste changing. —Capacity to exit the market in the worst scenario. —Financial strength (cash flow) to resist the impact. Recommendation: Franum can keep the risk, as Franum's export activities represent 15% of his sales, the impact will be acceptable. • Quality risk: The local company must have necessarily technological capacities to follow Franum's procedures and assure the same quality level of product. [...]