Overview of investment climate in Kazakhstan

Kazakhstan has made significant progress toward establishing a market economy, as well as political and social stability. Kazakhstan has attracted significant foreign direct investment since independence and would like to see more come into the country. Over the last 10 years total foreign investment in Kazakhstan reached $220 billion. Kazakhstan is widely considered to have the best investment climate in the region, and numerous international firms have established regional headquarters in this country. The majority of foreign investment is in the oil and gas sector, and the European Union is the leading source of investment capital with around $110 billion of FDI invested in Kazakhstan from 2005. EU-28 is also major trading partner of Kazakhstan with annual turnover of $31 billion. The government of Kazakhstan continues to make significant progress toward its goal of diversifying the country's economy away from an overdependence on the extractive industries by improving the business climate. Kazakhstan's efforts to improve investment legislation have reached good results. In the World Economic Forum's 2015-2016 The Global Competitiveness Report, Kazakhstan ranked 42 out of 140. The 2015 UNCTAD's World Investment Report ranked Kazakhstan as the first land-locked and second leading CIS market for investment. Kazakhstan announced in 2011 its desire to join the Organization of Economic Cooperation and Development. The Concept for Industrial and Innovative Development 2009-2019 and the government's plan for attracting foreign and domestic investments comprise an industrial strategy aimed at diversifying Kazakhstan's economy away from its overdependence on extractive industries. In order to facilitate the work of foreign investors, especially in targeted non-extractive industries, the government has announced a set of industries that feature tax waivers and simplified procedures for acquiring visas and work permits. The government maintains a dialogue with foreign investors through the Foreign Investors' Council under the president, the Council for Improving the Investment Climate chaired by the Prime Minister, and the Investment Ombudsman. A special subunit of the Ministry of Investment and Development, the Investment Committee, is a "one-stop-shop" service provider, which is responsible for addressing all investors' questions. The 2003 Law on Investments contains incentives and preferences for government-determined priority sectors, providing tax and customs duty exemptions and in-kind grants. President Nazarbayev himself has publicly pledged to create a favourable climate for foreign investors in order to spur domestic innovation and the use of new technologies. In 2014-2015 Nursultan Nazarbayev endorsed amendments to investment legislation that extends preferences to investors to develop the non-extractive sectors of Kazakhstan's economy. The government is ready to provide special incentives for investors putting more than $20 million into the machine building, mining, railway equipment, electrical equipment, chemical, construction, metallurgy, food processing and packaging, pharmaceutical, information and communication, electric power, wind, and solar energy industries. The country's world-class hydrocarbon and mineral reserves continue to form the backbone of the economy, and foreign investment continues to flow into these sectors. Greater investment potential is hidden in agriculture. The government has launched new infrastructure programme "Nurly Zhol" (Way to the Future) providing for better competitiveness of businesses by easing their access to financial resources, support of Kazakhstan's engineering industry and exports. In 2015 Kazakhstan has joined the World Trade Organization. Kazakhstan's government is optimistic that further integration with Armenia, Belarus, Kyrgyzstan and Russia through the Eurasian Economic Union will make the country more attractive to foreign investors by offering access to those countries' markets.

Keywords

Authors

References