“At present, many companies in Kazakhstan are reluctant to use cloud services. Most of them attribute this to the limitations imposed on the use of personal data and the ambiguity of the current legislation on other types of data. To address this issue, Kazakhstan needs to introduce innovative technologies, including those involving cloud solutions as this is what it lacks for a more dynamic development of digitalization in the country.” commented Dinara Tanasheva

Nowadays we are increasingly talking about digital technologies of the future, including artificial intelligence, Blockchain, Big Data and the Internet-of-Things. As a general rule all of these technologies are associated with the cloud. The effectiveness of cloud services became evident during the pandemic, which is to say that cloud services were used in almost all areas of the economy, such as in healthcare – to provide medical care remotely and in education – to conduct classes for school children and students. The financial, trade and logistics sectors have also revised their business processes and introduced cloud services. Most companies have used cloud services to reduce the risks of business downtime, allowing employees to perform their duties remotely and interact with colleagues through virtual meetings. International experience shows that not only private companies, but also public sectors have actively switched to cloud technologies.

In 2021, EY together with SAP conducted a survey on the opportunities and benefits of deploying cloud technologies in Kazakhstan. The survey involved 1,666 respondents from various sectors of the economy, including private companies (55% of participants) and the public sector. It was established as a result that only 31% of respondents actually employ cloud technologies while 50% don’t, with most of them having no plans to implement cloud services in the near future. The survey participants consistently brought up lack of clarity in the current legislation, not allowing businesses in Kazakhstan to fully unlock the potential of modern cloud. At the same time, respondents indicate that they would be prepared to switch to cloud services upon the removal of constraining factors. More specifically, while the current legislation generally allows using cloud services, there are several regulatory restrictions, such as localization requirements for servers and electronic databases, as well as many other industry specific restrictions in the financial, telecom, and subsurface use sectors.

EY actively participates in digital working groups of prominent business associations, such as the Foreign Investors’ Council under the President of the Republic of Kazakhstan, EUROBAK and others. To this end, EY is leading the implementation of the Cloud First/Smart Policy at the legislative level. We have analyzed and shared best practices in regulating cloud services in the UAE, Qatar, Singapore, USA, UK, EU, as well as discussed with companies how certain restrictions in the use of cloud services were removed thanks to the activities of such companies in various jurisdictions. As a result, we issue specific recommendations to the current legislation on personal data.

Dinara Tanasheva
Partner, Head of EY Central
Asia Tax & Law practice

Nargiz Suleimenova
Senior Associate, EY Central
Asia Tax & Law practice