Kazakhstan is looking to diversify its economy from traditional exports of gas and oil and foreign investment will be crucial in achieving that goal, Prime Minister Alikhan Smailov said at the 6th Kazakhstan Global Investment Roundtable (KGIR) on Friday, 17 November. Over 500 representatives of international companies and domestic businesses, investors, authoritative experts and opinion leaders gathered in Astana, Kazakhstan’s capital, for the event.
This year’s focus was on regional sustainable growth, covering four areas: investment in advanced technologies, development of regional clusters, transport and logistics potential, and food security. As the country is trying to diversify its economy from traditional oil and gas, Prime Minister Alikhan Smailov revealed that foreign investments will be the main drive to Kazakhstan’s economic growth. By 2029, the country plans to double its GDP and attract at least $150 billion in foreign direct investment (FDI).
“Attracting investments is the key factor of growth within the national investment policy, taking into account the ESG standards, Kazakhstan is interested in attracting no less than $150 billion in foreign investment. For that, we continue creating favourable conditions for investors, including improving investment support instruments”, said Smailov.
To make Kazakhstan more attractive to foreign investors, “we have established 14 special economic zones. Companies located in these zones receive preferential treatment, including exemptions from corporate income tax, land tax, property tax, VAT and customs duties for up to 25 years”, Deputy Minister of Foreign Affairs, Nazira Nurbayeva, explained. Moreover, this year alone, over 9,000 business registration requirements have been dropped from Kazakh law, with a plan to abolish 1,000 more by the end of the year, according to Smailov.
The measures have had visible effects. “Last year, the total volume of foreign direct investment increased by 18% and reached $28 billion. In the past six months of this year, approximately $14 billion more have been attracted to the national economy”, Smailov pointed out. The most foreign investment comes to Kazakhstan from the Netherlands, with $69.7 billion poured into the biggest Central Asian economy over the last decade, followed by the US, with $38.9 billion, Switzerland ($24.7 billion), China ($14.9 billion) and Russia ($13.8 billion).
One of the main areas for investment is renewable energy, as Kazakhstan has one of the largest solar and wind potentials in the region. Moreover, it has abundant reserves, amounting to 90% of Central Asia’s total, of critical raw materials, which are essential for the deployment of technologies like wind turbines (with rare earth magnets), batteries (lithium and cobalt) and semiconductors (polysilicon). In November 2022, the EU had already recognised Kazakhstan’s value for the green transition by signing a strategic partnership for the supply of critical raw materials, as well as green hydrogen.
Lastly, thanks to Kazakhstan’s geographical position between Europe and East Asia, 13 transit corridors currently cross the country, facilitating transportation and logistics across the Eurasian continent. Due to the necessity of avoiding Russia in transiting Eurasia since the invasion of Ukraine, the Middle Corridor might be the most important of the 13 corridors at the moment, providing more than just an alternative to the northern route. Next to the Middle Corridor, China’s expanding Belt and Road Initiative is also positioning Kazakhstan as a key link between East Asia and Europe.
“Considering the current geopolitical reality, our country’s geographical location opens up new, highly promising opportunities in the field of transportation and logistics”, said Nurbayeva. “Over the last 15 years, Kazakhstan has invested over $35 billion in the development of transportation and transit infrastructure and further substantial investments are planned in this sector. As a result, cargo transit reached around 27 million tonnes last year.”
