NBK is responsible for the supervision of all the banks. In order to ensure that banks operate in accordance with international standards, new arrangements have been made regarding accounting, cash management, capital adequacy, detecting problem credits on time, restricting privileged transactions. Furthermore the conditions and permissions for the establishment of banks have been tightened up.   

While there had been 38 banks in the sector as of the end of 2003 this number has reached 35 in 2004. Within those 35 banks there are 34 commercial banks with assets exceeding 9 billion dollars and the public bank which is the Development Bank of Kazakhstan – DBK. 

The reason behind the fall in the number of banks is the increase in the minimum capital requirement by the Central Bank, the mergers of the institutions in the sector and the re-certification of some institutions as credit associations and partnerships. Together with the Central Bank’s policies of increasing the minimum capital requirement of the institutions which operate in banking the number of banks in the sector continues to decrease. The situation of the sector as of the year 2004 is totally different from 1993. While there were 35 banks in the sector by the year 2004, the number of the banks in the sector had been 200 in 1993, the subject banks’ capitals are below 1 million dollars.   

In the sector there are 15 banks with foreign capital. Development Bank of Kazakhstan - DBK has been established in April 2001 for the economic development of the sectors excluding petroleum and the exports of the country. The subject sectors when compared with the petroleum and gas sectors are quite unsuccessful in attracting foreign investments. DBK is not subject to the control of the Central Bank and is controlled by the State. The government plays an important role in the determination of the strategy of the bank.      

The 3 largest commercial banks in the sector Kazkommertsbank, Halyk Bank and Bank Turan-Alem control 60 percent of the total banking assets. The total banking system’s assets have reached 14,5 billion dollars as of June 2004. As of the end of 2004 the amount of the private deposit accounts has exceeded 3,11 billion dollars. 69 percent of the private deposits are in foreign currency. The private deposit accounts constitute 40 percent of the total deposits. Although the private deposits have shown a gradual increase (In the year 2000 private deposits had only a share of 32 percent in the total deposits) its ratio to Gross Domestic Product is still at a low level. The main reason for this is the lack confidence to the banking system and the low return of the deposits. Kazak population still preserves a cautious attitude towards the banks and the tax authorities. Consequently people keep their savings under their pillows.   

In order to increase the confidence in the banking sector and to attract the savings to the banking system the Central Bank has started the Savings Deposit Insurance Program in the year 2000 and has included in the program 16 banks that were displaying the best performance. Among the banks benefiting from this program there are 4 foreign banks. These banks are; ABN-AMRO Bank Kazakhstan, Citibank Kazakhstan, Demir Kazakhstan Bank and HSBC Bank Kazakhstan. As of June of the year 2003 there are 21 banks and 60 percent of the private deposits are included in the guarantee.  

Compared to 2001 the bank credits have shown an increase of 21 percent in 2002 and have reached the total of 4,5 billion dollars.  The majority of the credits are directed to gross and retail trade and petroleum, chemistry, construction, food and metal industries.  Although the private credits have shown an increase, they are at low level. The credit interest rates that are applied by Kazakh banks are high, has especially the effect of preventing small scaled entrepreneurs. 

Banking is concentrated in Almaty.  An alignment towards the new capital Astana is observed. There are plans of mowing the Central Bank to Astana. 

According to the present regulations foreign banks are not authorized to open branches in the country however permission is given to the establishment of subsidiaries, joint investment companies and representative offices. The foreign investors have equal rights and obligations as the Kazakh investors however their total share in the banking system should not exceed (excluding portfolio investments) 25 percent.

Money transfers from Western countries can be realized within 24 hours through the swift network. 

T.R. Ziraat Bank is operating under the name of KZI Bank (Kazakhstan-Ziraat Bank).

Distribution Channels
Within the last five year’s process the distribution channels have diversified and developed. According to the characteristics of the product to be marketed and the sector’s structure it is possible to use distribution channels of several alternatives.   It is possible to work with a countrywide distributor or agent; a regional distributor or an agent; or the direct sale of the products through a storehouse is possible. The distribution channels are still in the need of extensive training and service support.

The population of Kazakhstan has been concentrated in 2 geographical regions in the southeast and north of the country. The average income level in these regions is higher compared to other regions of the country. These regions are Almaty in the southeast, the regions of Southern Kazakhstan and Zhambyl and Akmola in the north/northeast, Karaganda, Kustanai, Northern Kazakhstan, Pavlodar and the eastern Kazakhstan regions.  The average income level in the mentioned regions is at a higher level compared to other regions. The cities in the western region which is rich in petroleum also show economic development.    

It is necessary to be extremely careful in the selection of a commercial partner who will be responsible for the distribution of the products. The reputation and their former works should be reviewed.  Until confidence is established between the parties it is deemed useful to cover the collection under an irrevocable letter of credit. 

Sales Techniques and Factors Influencing the Sales
Although at the highest level among other CIS countries, despite having low purchasing power in general the Kazakh consumers are very open to western products. The exporters targeting Kazakhstan should consider matters such as transportation costs, the pricing of the products, the relations to be established with the importer. The main cities of Kazakhstan are seen as markets having priority for consumer goods for reasons such as vicinity to the transportation system and their population having relatively high purchasing power. Because of the country’s lands that are as wide as the whole of Western Europe the distribution channels contain greater areas.  In order to ensure the continuous exportation of the products to the Kazakhstan market, a detailed market research and to obtain the necessary information for marketing is necessary. 

In the country, the western countries’ goods are more expensive compared to the products of Russia and South East Asian countries.  Russian and South Eastern Asian products are more purchasable for the average Kazakh consumer regarding price. Things that the Turkish companies should consider with care during exportation to the country can be enumerated as price variations, transportation costs, obligations regarding imports,(customs taxes and other payments related to customs, certificate charges) VAT and the high profit expectations of the importers/distributors. In addition to the Customs taxes the costs appearing during passage from the customs may cause greater problems compared to customs taxes. The frequent changes in the customs procedure also cause problems. The customs procedure, list of goods which are subject to obligatory permission and other technical matters are constantly being updated and the customs officials can implement the related regulations with a discriminatory and arbitrary approach.      

In the country, there is intensive competition of the Russian, South Eastern Asian and European goods. For companies that will export to Kazakhstan it will be more correct to establish a strategy accordingly and head to the market.   The consumers in the country attach importance primarily to the price and the quality of the goods. In the event that a price policy which is above the average pricing policy the service conditions, brand and other marketing activities should stand in the forefront.  

Another factor having influence on the prices and the competitive power of the products is the VAT rate despite being decreased from 20 percent to 16 percent.  

Packaging and Packing
The requirements of the Kazakh Government regarding tests, labels, brand and certificate show variations.