How Kazakhstan is opening its doors to foreign business
Published on 21/07/2015
Kazakhstan has traditionally been almost solely reliant on Moscow for outside investment, but this is simply no longer the case. The republic has the largest economy in the Central Asian region, and is increasingly looking both east and west for trade and investment opportunities.
This approach is clearly paying dividends. Between 2005 and 2014, Kazakhstan attracted more than $208 billion in foreign direct investment (FDI), with total FDI exceeding the $21 billion mark every year from 2008 onwards.
Surprisingly, only a relatively small amount of this sum - just over $9 billion - came from Russia; in comparison, the UK and France each contributed more than $11 billion over the same period. Western European nations represent five of Kazakhstan's nine biggest foreign investors, with the Netherlands ($58.6 billion) the largest contributor.
But how has Kazakhstan succeeded in luring foreign investment? And what does it mean for businesses looking to export to the Kazakh market?
Kazakhstan's FDI-boosting measures
The Kazakh government has been keen to herald the many steps it has taken to encourage FDI.
One such measure is the recent decision to introduce a one-year unilateral visa-free regime for citizens of ten countries - Switzerland, Spain, Belgium, Hungary, Monaco, Singapore, Australia, Norway, Sweden and Finland - that are already active investors in Kazakhstan.
It is not the first time the Kazakh government has taken such a step. Unilateral visa-free travel was extended to the US, the Netherlands, the UK, France, Germany, Italy, Malaysia, the UAE, Korea and Japan 12 months ago.
Kazakhstan has also strived to create a positive climate in which businesses - both foreign and local - can thrive. World Bank figures show that the country is ahead of any of its Central Asian peers when it comes to ease of doing business. What's more, it has made progress in several key business-related areas over the past year, including registering property, enforcing contracts, resolving insolvency and cross-border trading.
Stable tax legislation has been made a key part of investment contracts, while laws on employing foreign workers are relaxed for building and reconstruction work.
Speaking to journalists, Yerlan Khairov, chairman of the Investment Committee of the Investment and Development Ministry, recently explained that many foreign investors have been given "attractive" offers to choose Kazakhstan over other markets.
"There is no secret that we initially focus on the countries whose representatives will not only make sound investments and bring effective management when entering the Kazakh market, but also introduce completely new technologies into production, which will make our industrial enterprises much more competitive," he was quoted by AzerNews as saying.
How does this benefit building materials suppliers?
The various steps taken by President Nursultan Nazarbayev and his government are not just benefiting the many nations, companies and individuals looking to invest in Kazakhstan.
Efforts have also been taken to encourage imports of key products and materials. Under Kazakh law, investors do not need to pay customs duty on a variety of imports, from equipment and spare parts to raw materials and supplies.
This, of course, is a huge help for building materials suppliers looking to export to the Kazakh market. According to the Observatory of Economic Complexity, top imports in 2012 included cement ($124 million), glazed ceramics ($122 million), building stone ($95 million) and bathroom ceramics ($38.3 million).
What's more, thanks to the country's efforts to bolster cross-border trading, it is becoming easier for overseas businesses to sell to Kazakhstan. All of which means the Central Asian nation is becoming an increasingly attractive market for building materials suppliers.