Prof. Van de Putte: the weakest link about cyber security is human beings

- Is the Forum critical to the AIFC, in general to Kazakhstan?

- It is critical. Let me first explain what the Astana International Financial Center is all about. What is our mission and why do we exist? As the financial center we sit in-between the capital markets and the real economy. So, our mission is to contribute to the sustainable economic development of Kazakhstan. To come to your question is this forum critical? Yes, because it brings the capital markets together with the real economy. Over the several days, in this unique forum there will be a variety of debates and panels on whether pre-IPO ad tech or legal issues, capital markets. This is the way actually we bring them together. Our mission is so critical for our success and this bridges the gap between the global capital markets and the real economy, the Kazakh economy. And this will have a positive impact on you. Why? Because it is a focus not only on the GDP but also on environmental, social and governance issues, including education, training, development in people.

- Let’s talk about the role of the Astana International Financial Center in investment attraction.

- Investment attraction is all about trust. So, what do we do with regards to trust? If the investor is going to say well here is x-million or x-billion to invest in Kazakhstan, they want to make sure that they are going to return their investments. One of the things that has been discussed here already is that ESG (environmental, social and governance) compliant investments have a higher return than non-ESG compliant investment. So, that is number one. Number two is that we have an independent court. Mr. Campbell-Holt is the CEO of the court, he is also the registrar and Lord Harry Woolf is the Chief Justice. This court is based on British Common Law and creates de facto trust in the legal environment. So, it is about trust and it is about positive investment returns. As a result, the focus on ESG-compliant investment.

- Being a new establishment, to what extent modern-day technologies are crucial to the work of the Astana International Financial Center?

- We have signed a partnership with the World Economic Forum Center for the fourth industrial revolution. So, these are fourth industrial revolution technologies. But I will be talking about typically what is relevant for us - blockchain, sometimes also called distributed ledger technologies. What is unique about blockchain is that none of the records can ever be deleted. So, that is one of the technologies we are looking at. Number two is artificial intelligence and machine learning. How do we make sense of all of that data? How do we read out the so-called noise of fake news? How do we make use of developing information? In order to make better decisions. And of course, for the AIFC it is about making better decisions for what happens in markets. Obviously, this can be applied also in other parts of the economy as well, it could be applied to logistics, could be applied in energy, in mining, in agriculture, and so on. Of course, with opportunities also come risks. And we talk about risks, we talk about cyber security for example. Everything can be hacked. So, at the BCPD (Bureau for Continuing Professional Development) we are establishing a Cyber Academy. Why is that important? It is not only about technologies, technologies are quite available, the weakest link about cyber security is human beings, you and me, our behaviour, the way we connect to the internet for example. We come to the airport the first thing we do we connect to the local Wi-Fi. We may have sensitive data on our laptops or our smart phones. The moment you connect the moment that data is potentially up for grasp. So, it is not just about technologies to protect you, it is also about the human behaviour in order to make sure that data is not compromised.

- Do you think is going public essential? Why?

- Going public has the pros and cons. Why do companies go public in the first place? It is not for previous investors to cash in. Of course, if we are talking about private equity firms who have invested in it, then yes, but not for the founders. The founders are actually interested in going public to grow the business, to find capital to grow the business beyond its initial success, that's number one. But with going digital there are risks here. There is scrutiny by the market. There is an important focus on compliance. Otherwise you could be fined, you could be potentially jailed as well in an unlikely event and it is still possible. For example, when transactions take place, there is very often a period that is blocked out for any transaction especially by people directly involved with the company and we typically talk about your father and mother, your brother or sister, your husband or wife, or your children. These are what we call the level one relationships. They could be considered as insiders. What is interesting is that there are companies that decide go back private. They are listed already but they say well is it really worth being public. I would say for emerging markets like Kazakhstan, yes. Because we still have to develop capital markets. But what we see in western Europe and especially in the United States that companies decide to go back private. And there are the reasons to do that. For example, management bias so what happens is that basically employees decide to amass capital and buy out and do reverse listing and take control of the company. They also take risks, control and risk go hand in hand. In general, I would say it is a good thing to go public at the right moment in time for companies that are prepared. The key is being prepared.

- Kazakhstan is moving away from the largely primary economy. Does it mean that Kazakh companies involved in the oil and gas industry, mining will be of less interest?

- No. This is often the confusing thing. I would say, and will to say President Tokayev that what we are about is about three things. Number one is doing things better which means we still focus on extraction industries but we make sure that we are doing it in an environmental, societal and more sustainable way. So, it is not like getting rid of the primary sector. Number two is doing things smarter, that means we capture value added. We do not purely export commodities but we basically integrate throughout the value chain. Number three is we gradually diversify away from the primary sector to capture the benefits of the fourth industrial revolution. It is about digital trade as opposed to digital physical trade. But it is not like we just wrap it, no. It is about doing things better, doing things smarter and actually capturing the opportunities of the future.

- So, what’s the role of small and medium-sized enterprises?

- It is also important in order to stimulate entrepreneurship that we are developing SME market. In London, the US, New York, Japan, around the world it is not only about big companies, it is about when you think of pre-IPO it could be a company that is 100 million dollars, not several billion dollars. So, in order to stimulate entrepreneurship, we need to focus on that SME market, small and medium-sized enterprises and actually provide them with assistance and opportunities for them to list. If we do that we will be able to drive economic growth and innovation because that is the key as big companies can innovate much more difficult than small companies. So, we want both, we want bigger companies because their connection with the market, we want smaller companies because they are dynamic innovative, they make the economy more agile, dynamic and competitive.

- Thank you for the interview!

Adlet Seilkhanov