Kazakhstan has emerged as an important player in the global economy and an attractive investment destination. Due to political and economic stability in Kazakhstan, the abundance of natural resources, as well as high annual economic growth over the past several years, foreign investors continue invest in Kazakhstan and view it as a favorable place to do business.
The largest international trade corridors pass through the country thanks to the consistent efforts on infrastructure development and active involvement in the Belt and Road Initiative. The country’s location enables it to connect European, Asian and Middle Eastern markets, where 65% of the world’s GDP is generated.
Aiming to diversify its economy, Kazakhstan offers vast opportunities across various sectors. These include agriculture, petrochemistry, metallurgy, tourism and pharmaceuticals. Additionally, the Government continuously works to improve the investment climate. This primarily includes judicial reforms, digitalization, optimization of public services and the permit system, among other initiatives, as well as measures to ensure a favourable investment climate.
For example, 12 Special Economic Zones have been established offering tax incentives. In addition, KAZAKH INVEST supports investment projects as a one-stop shop. Furthermore, the Astana International Financial Centre (AIFC) has introduced English common law principles to the Central Asian region. As such, the country is currently ranked 25th in the World Bank’s Doing Business Index in line with continuous efforts on improving investment climate. Now, the country is aiming even higher.
The results so far have been promising. Accounting for approximately 75 percent of FDI inflow in Central Asia, Kazakhstan saw over $24 billion of investment in 2018.
Kazakhstan has attracted $330 billion in foreign direct investment (FDI) from more than 120 countries since its independence.
More than 50 percent of FDI in Kazakhstan was attracted from the European Union (EU), including 90.4 billion from the Netherlands, $25.8 billion from Switzerland, $16.1 billion from France, $8.7 billion from Italy, $7.6 billion from Belgium and $5.2 billion from Germany. In addition, 15 percent or $48.4 billion of FDI was attracted from the United States, and 5 percent from the United Kingdom and China each.
Kazakh President Kassym-Jomart Tokayev set foreign investment attraction as a priority in his Sept. 2 state-of-the-nation address.
Two hundred and thirty-five FDI projects worth $16.2 billion have been implemented since 2010, of which 133 projects have been implemented with the EU and Russia. Priority has been given to high-tech projects that involved technology transfer and job creation for people in Kazakhstan.
China has funded and implemented 15 projects worth $3.9 billion in Kazakhstan since 2015, which is approximately 6 percent of the total FDI projects implemented in the country since 2010. This has led to the creation of 3,828 jobs in mechanical engineering, chemical industry, alternative energy and agribusiness.
Furthermore, Kazakhstan has set up Coordinating Council for attracting foreign investments and it is now directly under the prime minister.
As well as, the Coordination Council adopted a roadmap to attract investment to Kazakhstan at the July 10 council meeting chaired by Kazakh Prime Minister Askar Mamin. The task for the Ministry of National Economy is to increase the annual gross inflow of foreign direct investment from $24 billion in 2018 to $34 billion by 2025.
The AIFC will become the operational centrepiece of the country’s new integrated ecosystem to attract FDI.
The government of Kazakhstan has prioritised attracting FDI as part of its vision of achieving sustainable development and handed the keys to the country’s FDI promotion strategy to the Astana International Financial Centre (AIFC).
The AIFC will become the working body of the Coordination Council and act as a one-stop shop coordinating the task of attracting FDI and promoting Kazakhstan’s investment image. The numerous bodies that so far have shared different investment promotion responsibilities, from national investment promotion agency Kazakh Invest to sovereign wealth fund Samruk Kazyna and national holding company Bayterek, will now fall under the coordination of the AIFC in their dealings with foreign investors.
Kazakhstan attracted 56 greenfield FDI projects worth an estimated $6.8bn in 2018, up from 25 projects worth $6.4bn a year earlier, according to greenfield FDI monitor fDi Markets.