On the eve of the Kazakhstan Global Investment Roundtable (KGIR) scheduled for tomorrow, Deputy Foreign Ministers Nazira Nurbayeva and Roman Vassilenko provided insights into Kazakhstan’s foreign direct investment (FDI) profile, discussed government initiatives aimed at enhancing the investment climate, and highlighted key collaborative projects with foreign participation during a Nov. 16 press briefing at the Ministry of Foreign Affairs.
KGIR on Nov. 17 will bring together over 500 representatives from leading global companies, foreign and domestic businesses, and industry ministries.
Regional Development and Economic Growth
Kazakhstan, the ninth-largest country globally with a population exceeding 20 million, has positioned itself as Central Asia’s economic powerhouse. According to Nurbayeva, the country boasts a diverse economy beyond natural resources and has set an ambitious goal to double its GDP by 2029.
“Through the accelerated development of non-resource sectors of the economy, creating clusters that will maximize the use of local resources, in our opinion, will contribute to achieving this goal,” she said.
Nurbayeva said this year’s roundtable will focus on regional development, mirroring global trends where more than 50% of economies have embraced the cluster approach.
Nurbayeva emphasized that the Kazakh government presents various incentives to enhance the investment climate. These include 14 Special Economic Zones, where companies receive preferential treatment, such as exemptions from corporate income tax, land tax, property tax, and customs duties. The Astana International Financial Centre (AIFC) also offers tax and financial benefits. She added that establishing the Kazakh Invest national company further underscored the country’s dedication to facilitating investment activities and promoting specific projects.
Kazakhstan’s comprehensive approach resulted in an 83% increase in net FDI flows, reaching $6.1 billion despite a sharp decrease in global investment flows in 2022. Nurbayeva noted that Kazakhstan is leading in attracting FDI among post-Soviet Central Asian countries, securing a 61% share. The Netherlands, United States, Switzerland, China, and Russia are the top five investors. Kazakhstan’s credit ratings and competitive business environment contribute to its attractiveness to multinational companies.
“Multinational companies operate across diverse sectors. Currently, approximately 45,000 companies with foreign involvement are conducting business in Kazakhstan. We will do our best to ensure there is more to come,” she said.
Among the most popular sectors for investors, Nurbayeva highlighted mining, agriculture, machinery building, and transit logistics. She emphasized Kazakhstan’s strategic geographical position, providing access to the Commonwealth of Independent States (CIS) and Central Asia markets, as a significant factor in attracting investors.
The Middle Corridor: A Historical Concept with Modern Challenges
Kazakhstan’s status as the largest transit hub in Central Asia, with 13 transit corridors and over $35 billion invested in transportation and transit infrastructure in the last 15 years, contributes to its investment attractiveness. Deputy Minister Vassilenko emphasized that the Middle Corridor (Trans-Caspian International Transport Route) that starts from Southeast Asia and China, runs through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and further to European countries is not a new concept, and takes its roots in the ancient Silk Road.
Vassilenko noted work is underway among Kazakhstan and participating countries to remove bottlenecks and expand the route’s capacity. The establishment of a joint venture and the implementation of plans for infrastructure development underline the commitment to making the Middle Corridor a vital link between Asia and Europe.
“Three countries – Kazakhstan, Azerbaijan, and Georgia – have now decided to establish a joint venture called Middle Corridor Multimodal Ltd., to be domiciled at the AIFC. It will work on organizing transit and cargo traffic, along this route in our three countries, beginning with fixing the tariffs,” he said.
Vassilenko also stated that investing in the Caspian Sea tanker fleet and container hubs is crucial for enhancing the corridor’s efficiency. Kazakhstan’s continuous investments in infrastructure, for example, launching the construction of 1,300 kilometers of new railways, including bypasses such as the one around Almaty, will significantly enhance traffic flow. The Almaty 130-km bypass, whose construction began Nov. 14, will, for example, result in a 40% reduction of the workload of the very busy Almaty node thus expediting the travel time for cargoes. All of these developments demonstrate the nation’s commitment to maximizing its transit potential, he said. Infrastructure development and collaboration with international partners will be key in realizing the corridor’s potential.
“We see that all of these initiatives such as China’s Belt and Road Initiative, the European Union’s Global Gateway Initiative, and the G7’s Partnership for Global Infrastructure and Investment, are complementary, as far as we are concerned. All of them serve one goal: maximizing the transit potential in the heart of Eurasia, which is Kazakhstan and other Central Asian countries, so that we can reconnect Asia and Europe through the New Silk Road of the 21st century, if you will,” he said.
EU-Kazakhstan Investor Relations: A Dynamic Evolution
Vassilenko emphasized that Kazakhstan’s ties with the EU have seen a significant boost, mainly because of the situation in Ukraine. He reiterated that European leaders have recognized Kazakhstan as a nation that respects international law, upholds the principles of the United Nations Charter, and offers substantial opportunities for economic collaboration. Vassilenko mentioned that the Enhanced Partnership and Cooperation Agreement, in force since 2020, covers 29 areas of cooperation, making Kazakhstan the only Central Asian country with such an agreement. He highlighted the EU’s status as the largest investor in Kazakhstan, contributing $170 billion in FDI out of more than $400 billion in total FDI. Furthermore, the EU accounts for nearly 30% of the country’s total trade, indicating a robust economic partnership.
“Yet, we still found new promising areas of cooperation in the past year and a half. Specifically areas such as rare earth metals, green hydrogen, and transport and logistics. It is on these three particular areas that both Kazakhstan and the European leaders and European companies are now focusing their attention,” he said.
According to Vassilenko, energy cooperation, a key focus during recent visits by European leaders such as France’s Emmanuel Macron and Federal President of Germany Frank-Walter Steinmeier, underscores the diversification and depth of the partnership. The Deputy Minister also stressed that the collaboration is not limited to economic aspects but extends to political engagement. Both parties have agreed to hold EU-Central Asia summits, with the first scheduled in Uzbekistan next year. This signifies a commitment to strengthening political ties and fostering a comprehensive partnership.
Vassilenko expressed optimism about prospects, including an upcoming investors’ forum in Brussels in January 2024. The forum aims to identify business opportunities for implementing the study presented earlier this year by the European Bank for Reconstruction and Development (EBRD), also commissioned by the European Commission.
“The study identified transportation via Kazakhstan as the most sustainable East-West transit option in Central Asia. The EBRD called that route the Central Trans-Caspian Transportation Network. It enters Kazakhstan from China in Khorgos, traverses the southern Kazakhstan, and ends in Aktau,” said Vassilenko.
Source : Astanatimes