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The Times: Black gold feeds a taste for consumerism

The new business capitals: Almaty. Kazakhstan’s new-found oil wealth has made expensive cars a common sight in the city

October 18, 2007
By James Rossiter

Almaty is a city in a hurry. Today it serves as Kazakhstan’s financial centre, but the country’s President and his government have grand plans to transform it into the financial capital for the whole of central Asia – making it the largest trading hub between Dubai and Shanghai.

The city is already building its own Regional Financial Centre Almaty (RFCA), complete with stock exchange linked to the London Stock Exchange, to help to achieve its aim.

The Kazakh Government is “negotiating for a senior English commercial judge to move soon to Almaty” to help to oversee its internal court system for the RFCA, and model it on the English legal system. The Kazakh stock exchange, which has only a handful of listed companies, handles a mere 20 trades a day on average.

“Anything is possible in Kazakhstan,” Malcolm Eastwood, HSBC’s chief executive in the country, said. “It is said that you can achieve anything here within six months.”

The source of that self belief is oil – lots of it. Last year oil output rose nearly 5 per cent to 65 million tonnes, more than five times the output of 1995. All the production came from on-shore wells. Gross domestic product per capita has risen from $1,450 (£712) in 1997 to $7,000 this year. But over the next three years, as the huge Kashagan field in the Caspian Sea comes on stream, production, despite technical problems, is expected to double again to 130 million tonnes.

The wealth this new-found black gold has generated has percolated rapidly down the strata of Kazakh society and been invested in the three most readily available forms of conspicuous consumerism: new housing, designer clothes and cars. Few cities in the world can match Almaty for numbers of brand new four-wheel-drive vehicles and top of the range Mercedes and Lexus saloons. A drive in from Almaty airport to the city centre illustrates what Mr Eastwood has picked up from his time in charge of HSBC.

Every mile, there seems to be an underpass being dug out from under the six-lane highway to help ease the traffic. Flanking the road, scores of vast housing blocks and huge detached homes rise over Almaty’s traditional low-rise dwellings, marked out by their brightly painted window frames and corrugated iron roofs.

Most of the men are dressed in the latest tailor-made suits or designer-label casual attire that would look equally at home in Canary Wharf or New Bond Street. Among the dozens of commercial property developments under way, the biggest is the RFCA – Almaty’s answer to Canary Wharf.

It is the latest offering from the dominant local property developer, Capital Partners. In all, 60 new office blocks are planned on site, many rising more than 30 storeys, covering about 1.5 million square metres. Half the project has already been presold, according to Roger Holland, of Scot Holland CB Richard Ellis, the property agency.

The first phase should be ready by the end of this year. Among the new occupiers will be Deloitte, which has seen its Almaty workforce grow from 60 in 2003 to 500 today, on the back of an explosion in private enterprise.

A similar growth rate has been enjoyed at all the big four accountancy firms that have a presence here. Ernst & Young rivals Deloitte for size. KPMG last year formed a joint venture with a local Kazakh firm founded by Janat Berdalina, managing partner at KPMG, which at the time totalled just 67 professionals and has since grown to 300.

But Ms Berdalina complains that KPMG is still short of suitably experienced juniors to satisfy demand from government-related work, local industry and the likes of Total, British Gas and Shell. She wants immigration controls to be relaxed so that KPMG can hire professionals from neighbouring Uzbekistan and Kyrgyzstan.

Darryl Hadaway, Deloitte’s managing partner for the Caspian region, said: “There is a seed being planted and they are growing something big. We saw it in the Asian Tiger countries but the results were not so positive, with the wealth concentrated in the hands of too few.

“There is more money in people’s pockets here and it has gone out to a broader part of the community. The infrastructure projects under way will allow this society to grow and continue to share its wealth.”

Next year HSBC will launch a private banking and credit card business to capture the country’s growing middle class, Mr Eastwood said.

Judging by the appetite of the locals to splash out on clothes, cars and flats, HSBC can expect to be busy.

BA is handing the Heathrow-Almaty service to bmi. Air Astana, the Kazakh national airline, offers a direct service from Heathrow to Almaty

Ancient origins

Origin of name Dates to before 1000 BC. In Roman times Almaty grew into a city on Great Silk Road
Kazakhstan area 2,717,300 sq km
Population 15.5 million
Languages Kazakh, Russian; English to be third language
GDP (2005) $48 billlion, (2006) $77.9 billion
Natural resources Significant oil and gas reserves, the world’s largest reserves of barite, lead tungsten and uranium (19 per cent of world’s reserves)
Nuclear weapons First CIS member country to dismantle all nuclear weapons
Education 100 per cent literacy over 15 years old; 3,000 students paid by government to study each year in overeas universities.
Ethnic groups more than 100 including Kazakh (59%), Russian (26%) Ukrainian (3%) Uzbek (2.8%) Uighur, Tatar and German (1.5%)
Exchange rate £1 equals 245 tenge; $1 equals 120 tenge.
Visa regulation UK passport holders must obtain one-month multiple entry visa from the Kazakh embassy prior to arrival in Kazakhstan at a cost of £30. Visas granted 24 hours after application.
Time zone GMT plus six hours. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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