This year, Kazakhstan is marking the 30th anniversary of its independence.
Since 1991, the country has risen from relative obscurity and placed itself firmly on the world stage, with a steady economy and – according to the IMF – GDP predicted to climb further over the next few years.
Modern-day Kazakhstan has little in common with its storybook past, when nomadic peoples swept across the vast steppes and its economy hinged on the ancient Silk Routes.
Now the economic powerhouse of Central Asia, accounting for more than half of the region’s GDP, the ninth-largest country in the world has been transformed thanks in part to its large mineral reserves and in part to a series of comprehensive reforms, and its capital, Nur-Sultan, has become a thoroughly modern metropolis.
Sustained, diversified and dynamic growth throughout the nation remains one of the core goals for the country, which hopes to become one of the 30 most developed countries in the world by 2050.
Attracting international investment
One of the former Soviet republics worst affected by the Union’s collapse, Kazakhstan set upon surprisingly bold and ambitious reforms in the early 1990s. These were designed and conducted by the first president Elbasy Nursultan Nazarbayev, to encourage European, American and Asian companies to invest in what at the time was a largely struggling economy.
Foreign companies were initially drawn to Kazakhstan for its mineral resources, but many have since branched out into other industries. Over the 30 years of independence, the country has attracted more than $380 billion in foreign investment, which makes it the largest per capita recipient among the CIS countries.
The ongoing repercussions of the COVID-19 pandemic have meant a dramatic global slowdown in transboundary investment flows – a decrease of 35 per cent worldwide in 2020 – but Kazakhstan’s figures have since bounced back, thanks to a stimulus package of $4,1 billion in 2020.
In the first half of 2021, foreign direct investment in the country amounted to $11,1 billion, a 30 per cent increase on the same period in 2020.
“The government prioritises supporting investors,” said Kazakhstan’s president Kassym-Jomart Tokayev in a recent meeting with leaders of international investment companies. “We provided tailored and wide-ranging support to each investor.”
In addition to the government’s anti-crisis measures, an important role was played by KAZAKH INVEST, a national company set up by the government in 2017, with a view to attracting major international corporations to the country. Its role is two-fold: to demonstrate Kazakhstan’s potential across a range of industries, and to support investors at every step of the journey.
In short, it operates as a single negotiator on behalf of the Kazakh government in discussing prospects and conditions for the implementation of investment projects. The company also promotes sustainable socio-economic development by attracting foreign investment in priority sectors.
As a one-stop shop for investors on the provision of public services, KAZAKH INVEST monitors and supports the progress of investment projects and serves as a hotline for investors, providing 24/7 service support.
The company’s remit is to provide operational help, including the prompt resolution of any administrative issues, such as those dealing with visas, migration, customs, advising on logistics and project implementation procedures. It is currently providing support and practical help to 466 projects, which have so far created more than 87,000 jobs. In 2021, 45 investment projects involving international collaboration have been commissioned. These have raised $3,5 billion and created around 4,800 jobs.
Multinationals taking part in these initiatives include Italian investor ENI, one of the top international investors in oil, gas and renewable energy in the country; French company Air Liquide, which has invested in the transfer of technology in the petrochemical industry; German investors Linde, who work in the sphere of technical gases, and many others.
Opportunities across a range of sectors
One of the objectives of KAZAKH INVEST is to showcase investment opportunities across a wide range of industries. As a huge country with a variety of terrains and a low population density, Kazakhstan has an immense number of agricultural resources. Thanks to the country’s strategic geographical location and an access to the markets of China, Russia and the Middle East, Kazakhstan has unique potential for agribusiness, including production and processing of both livestock and vegetables.
Tied to this, the government is injecting funds – via loans and tax incentives – into mechanical engineering, principally for the production of agricultural machinery and tractors. Engineering for the auto industry and electrical equipment has also been prioritised.
Kazakhstan’s petrochemical industry has gone from strength to strength in recent years, with the country’s oil reserves considered the 12th most important in the world. State support measures in the sector include state-regulated prices for industrial consumers.
Other regional industries already familiar to multinationals include mining and metallurgy (Kazakhstan ranks among the top countries for production of copper, gold, uranium, chromium, zinc and tungsten); infrastructure – the Belt and Road initiative creates an overland trade route between China and Europe, almost halving transit times – and trade.
State measures to simplify investment
During the COVID-19 pandemic, a legislative framework has been developed to exempt micro and small businesses from paying income tax for a period of three years, up to and including 2023. A legislative framework has been developed to exempt micro and small businesses from paying income tax for a period of three years, up to and including 2023.
Thirteen Special Economic Zones have been created, offering favourable taxation, and an ‘Investment Agreement’ has been introduced to provide special conditions for strategic investors. The country as a whole has seen changes to the law to help businesses, improvements in online services and an overhaul of the permit system.
International consulting companies, including the ‘Big Four’ (PwC, Deloitte, EY and KPMG) have been drafted in to help prepare investment proposals, and the Astana International Financial Centre (AIFC), which plays a major role in attracting financial investment, has English as its official language and provides the court system based on the principles of common law.
In order to promote these initiatives, Kazakh Invest held 10 online and offline investment events in 2021 for potential investors from the US, Switzerland, Belgium, Luxembourg, Spain, South Korea, the Netherlands, Saudi Arabia and other countries. President Kassym-Jomart Tokayev, Deputy Prime Minister - Minister of Foreign Affairs of Kazakhstan Mukhtar Tileuberdi, and others, chaired the events.