Otkat

If you haven't heard this word in Russian, you are not doing business in Kazakhstan, Russia or other Russian-speaking country. I was amazed by the concept of "otkat" as I haven't seen it before I came back to Almaty in 2007. What is "otkat" you ask? Basically, it's a bribe, but very well hidden that even auditing companies such as Deloitte or Price will not be able to detect it. Let's say your company needs to buy 100 gadgets. You set up an RFP, get the list of companies making those gadgets which enter the bidding process. However, you want to make some extra money outside of your company and can make a deal with one of these gadget-producing companies which will pay you to buy their gadgets. Sounds weird, doesn't it? Let's say one gadgets costs $5. You then make a deal to buy it at $7 per each, but extra $2 will go into your pocket. This way you company bought 100 gadgets at $7 for 700, and you pocketed $200. Everybody is happy: your company for finding a good deal in the market (requires some convincing but easy to do), your supplier who sold gadgets at $5 as they wanted in the first place, and you who made extra $200 on nothing. Now, multiply this number by thousands or millions, and you get a new generation of sly businessmen, who are unlikely to make money other (read hard) way. Otkats are done in any industry requiring sales transactions: from oil to real estate, from agriculture to education. One can only imagine what effects this has on the economy: speculation, inflated prices, corruption, lack of true competition and so on.

If you have experienced this phenomenon in your country, I would be happy to hear your story.

Financial Crisis in Kazakhstan

Looks like the bank liquidity crisis which started in July 2007 will not be over until the end of 2009. Experts predict that it will worsen for local banks in September and thereafter this year when the time comes to return money to foreign banks. The domino effect that comes from inability of banks to give credit, especially mortgage loans, is clear in real estate and construction markets' low activity. Prices are falling and that is bad news for all the investors who started their development projects. Furthermore, there is a big stock of foreclosed real estate properties taken over by banks due to delinquency. If these properties will be damped into the market, the prices will fall even further.

More on Permanent Residence and Internet Access

Here is my e-mail conversation with a new friend Edward that some of you may find useful:

David,

I read your blog with advice to Indira about gaining permanent resident visa in Kazakhstan.

I have had a relationship with a Kazakh lady for over three years. I've decided that when I retire from my job next year, that I will live with my lady friend in Pavlodar with the view to marriage. I would have preferred her to join me in the UK but the authorities here will not give her her a visa.

I noted you spoke of a sum of $11,000 to be put into a bank account in Kazakhstan. That would be a problem for me to find as a lump sum (I aimed to live from monthly UK pension income). The last time I looked at the Kazakhstan Embassy London site it said that a three year residency visa was £360.

I asked my lady friend to make tentative inquiries with RK's authorities about the residency/ marriage situation and they told her it shouldn't be a problem, but that we should start an application much nearer the time of my intention to arrive as invitations had a short validity.

Any advice you could offer would be greatly appreciated.

Yours,

Edward Major

Hello, Mr. Major,

Yes, temporary visa would cost much less that a permanent residence card. The authorities require this amount to prove your "ability to pay" taxes, housing, etc. Many people simply borrow this amount from friends, deposit it into a local bank (Kazkommertsbank for example, has 9.8% interest on a three-year deposit with no penalty to early withdrawal after 3 months). My wife applied for it this year and the requirements are the same, but you may be in luck as your wife would be a Kazakh citizen. I think the best course of action for you would be to enter RK with a temporary visa based on invitation of your friend, and then as soon as you get married, apply for a permanent residence. That way you may not need this amount, but please check it for sure.

Best of luck!
David

David,

Thank you for your reply email to my inquiry about a resident visa. I don't wish to appear a nuisance but I was wondering what the internet service is like in Kazakhstan. I shall be residing in Pavlodar with my fiancée who has a fixed line telephone. Is the internet expensive and is it reliable, for example could it support web cam transmission? Also, how far advanced is GPRS data transmission over mobile phones in Kazakhstan? I can't really ask my fiancée about these things as she isn't into computers and doesn't understand these things.

Looking forward to your kind advice,

Ted (Edward) Major

Edward,

Internet access is expensive as it is controlled by a state monopoly - KazakhTelecom, and all other providers are simply buying bandwidth from them. It is expensive like most of the things in Kazakhstan. I pay around USD 30 per month, but my access is limited to 500 Mb (if you exceed it, you pay more) and the speed is 128 Kbps. GPRS data transmission is available through the mobile phones, but not very reliable. Also, our mobile services are most expensive in the CIS. And this service will cost more. In Almaty, some cafes and coffee shops and restaurants are offering free WiFi now, so if you have a laptop, you may want to bring it. I am not sure though how are things in Pavlodar. I hope this answer your questions.

All the best,
David

Business Lunch at Asian Wok Restaurant

Almaty is getting better with business lunch offers. One example is Asian Wok which is located on Dostyk Ave south of Khadzhi Mukan Street. The business lunch they offer is a 1,500-Tenge deal ($12.5) for an Indian/Chinese (with local influence) open buffet (all you can eat). The food was good with traditional Indian spices and sweets and local salads and main dishes. It looks like this place is pretty new as my colleagues and I were the only customers at 1pm. I also liked the friendly staff and interior design which looked like modern Asian fusion. I wonder how is this place at night. Please let me know if you have tried it.

Restaurant Entrecote

Restaurant Entrecote is located at intersection of Furmanov and Bogenbai Batyr (former Kirov) streets in Almaty. I went there on Wednesday with friends and liked it a lot. Its exterior and interior design style reminds of a European countryside. Once you enter, you will have to adjust to darkness of the hallway and main room which is divided by a separation wall. The left side is even darker as lights above each table dimmed to the max, probably, to provide more intimate environment for a romantic dinner, the right side is a bit brighter and suits more for bigger parties of business dinner. Dark wooden furniture and dark red leather on couches give an atmosphere of a gentleman's club. The restaurant has a small stage for life performances and a large flat screen TV in the background. Our water was a young Kazakh man, who was very attentive and polite without being annoying. The food was good with variations of Eastern and Western European dishes as well as some Kazakh influence. I tried a duck breast with oranges, which was pretty good. My friends ordered pepper stake, salmon and soup and all were happy with their orders. For drinks, they have a good variety of draft beer which we took advantage of without going over the top. Our bill came out to 7,000 Tenge per person (around $58). Bon Appetit!

Kok-Tube

Even though it was Monday, March 24th was a day off in Almaty as Kazakhstan was celebrating Nauryz - Eastern New Year. My wife and I decided to enjoy the beautiful Spring day and go outside to Kok-Tube a closest mountain park to Almaty. We took our British friend Jess with us who, like us, has not tried the cable way (funicular) to Kok-Tube.
To get there, first you will need to get to Abay/Dostyk intersection from which you can easily spot the cable line and its station. Ticket one way will cost you 500 Tenge (around $4). You can buy the way back ticket there as well or up on the mountain, which is weird like you have a choice in transportation on the way back. Cars are not allowed on Kok-Tube, but there is a parking lot at the bottom of the mountain which will also cost 500 Tenge. The shuttle will take you up and down to the parking lot, but most people hike to save money.
We left our car for free in the parking lot on Abay/Dostyk, bought our tickets and entered a rather small cable cart which fits 20 people. With all the people inside, we managed to see the view of Almaty. Most of the houses under the cable way are older ones with piles of scrap metal and trash in their tiny yards. The picture is rather grim to show it off, but once you passed it and get to the Kok-Tube, you'll see a better view of Almaty and its new development projects such as Nurly Tau and Esentai Tower (the highest building in Almaty).
Jess, being British was if for a surprise as Kok-Tube park has the only sculpture in Kazakhstan dedicated to guess who? The Beatles! Yes, I mean Paul, Ringo, George and John.
There are few restaurants and souvenir shops, kids play ground, a little zoo with pheasants and peacocks, and even a small roller coaster! We each enjoyed a cup of Cappuccino on the outside deck of a grill restaurant at the end of the park. The weather was perfect and over all it was a good experience. Enjoy the views!

'Time Out' Restaurant at Ritz Palace

I work very close to this awkward blue building called 'Ritz Palace' on Dostyk Ave. in Almaty. It is supposed to be a shopping center, but most of its shops like everywhere in Almaty are getting no traffic due to extremely high prices (more expensive than in Europe) and poor quality goods (mostly Chinese and Turkish knock-offs).
But, I still go there for business lunch called here 'complex' at 'Time Out' restaurant on the 4th floor. It is a sports bar at night with flat screens TVs all over the place and , but at lunch they are showing bad Russian music channel. The lunch is good though, as you get choices (which is rare) 2 for salad, 2 for soup, 4 for main dish and 4 for side dish. They also offer unlimited tea and 'kompot' (Soviet drink made of dried fruits boiled in water with sugar). The full 'complex' will cost you 1,000 Tenge - around $8.33. Desserts are extra 200 Tenge, and they only have apple pie which is not what you think, and sweet cheesecake made of baked cottage cheese. 'Complex' lunches are popular in Almaty as they offer busy professionals a quick solution when it comes to lunch with their preset menus. If you have your favorite place for business lunch, please feel free to share.