The largest country in Central Asia – Kazakhstan – is increasing its investment potential. In the rating of “DoingBusiness” by the criterion of “investment attractiveness,” the country ranks 36th (10 indicators) among 190 countries. And today, the republic provides the most favorable regime for investors among all states in the region and the CIS.
Since independence, Kazakhstan has made a lot of efforts to become attractive for foreign companies and transnational investors. The country has a variety of mineral resources: oil, natural gas, uranium reserves, about 1,225 types of mineral raw materials, rich deposits of ores of various metals, rare earth elements and combustible and non-metallic minerals. Kazakhstan is ranked 1st in the world in explored reserves of zinc, tungsten and barite, 2nd – silver, lead, uranium and chromites, 3rd – copper and fluorite, 4th – molybdenum, 5th – gold. The development of all these riches, and most importantly, their processing requires a lot of finance, the source of which is foreign capital.
Of the $ 264 billion in direct investment in the economy of Kazakhstan over the past decade, the bulk of it falls on the raw materials sector (mining). Recently, however, the country has been offering partners to expand the investment field through industrial and manufacturing projects.
Thus, a great emphasis was placed on the development of the agro-industrial complex. At the same time, Kazakhstan is ready to provide huge preferences to project implementers in exchange for investments: from subsidies (investment and tariff) to tax preferences.
If the investor is ready not only to engage in the cultivation of products, but also in their processing, the state is ready to provide them with the most favored regime.
Such a loyal investment climate would be unattractive if Kazakhstan did not guarantee investors full and unconditional protection of their rights and interests. The political stability of the country and the inviolability of compliance with the terms of contracts make the republic the most attractive for foreign partners.
However, in Kazakhstan always prefers to play “by the rules”. Companies that have been working in Kazakhstan for many years have been convinced of this: the stability and dynamics of the country’s development (on the economic and political plane) are predictable, and therefore do not bear risks.
Perhaps this factor, coupled with preferential opportunities, encourages investors to move into areas that the Government of Kazakhstan calls priority for the development of their own economies.
That is why in recent years there has been an increase in investor interest in the non-primary sectors. Thus, in just one half of 2018, the volume of gross inflows of direct foreign investment grew by 15.4% and amounted to $ 12.3 billion, half of which was invested in the processing sector.
To synchronize the interests of investors and the state in Kazakhstan, there are a number of bodies working with foreign partners: the Council of Foreign Investors under the President of the Republic of Kazakhstan, the National Company Kazakh Invest, the Ministry of Foreign Affairs (implementation of state policy on attracting investments), the Ministry of National Economy on attracting investments), Council for the Improvement of the Investment Climate under the Prime Minister of the Republic of Kazakhstan, Investor Councils under the Akims (heads) of the regions, and the national e-development institutions.
The national company “Kazakh Invest” provides a full range of services for the support of investment projects from idea to implementation on the principle of “one window” and acts as a single coordination center for special economic zones of the Republic of Kazakhstan. It also plays the role of a single negotiator representing the interests of the Government of Kazakhstan when discussing the prospects and conditions for the implementation of investment projects and the Single Point of Access to the system of public services.
In 2018, in the republic with the participation of “Kazakh Invest”, 27 investment projects with the participation of foreign capital worth $ 3.1 billion were put into operation. In January 2019, there are 157 projects in the monitoring system of the company for a total of $ 39.6 billion.
Today in Kazakhstan there are 11 special economic zones (FEZ). The main set of benefits for them is standard and is fixed by Kazakhstan legislation. Participants of all FEZs are provided with exemption from corporate income tax; land tax; property tax.
When goods are sold on the territory of a special economic zone, their value-added tax (VAT) passes at a zero rate. In addition, they are subject to exemption from customs duties and import VAT, exemption from import customs duties, and return on investment costs.
In Kazakhstan, an investor is accompanied at the stage of their entry into the country, assisting in the resolution of all arising issues: from starting a business and during its further work, starting from obtaining a visa to receiving state support.
A comprehensive system of state support for investment activities has been introduced in order to create a favorable climate for the development of the economy and stimulate the inflow of foreign capital, expand and update existing industries using modern technologies, improve the skills of Kazakhstani personnel, and protect the environment.
At present, the state provides the investor with the right to invest in any objects and types of business activities.
In general, Kazakhstan provides the investor (irrespective of their nationality) a number of guarantees. The most important of which is stability and compliance with the terms of the contracts, regardless of changes in the legislation of the Republic of Kazakhstan.
In addition, the investor is guaranteed the right to compensation for harm caused to them as a result of issuance of acts by state bodies that do not comply with the laws of the Republic of Kazakhstan, as well as illegal actions (inaction) of officials of these bodies.
In case of a need for nationalization or requisition, the investor shall be fully reimbursed for the losses incurred, and payment shall be made at the market value of the property.
Today, Kazakhstan is one of the fastest growing economies of the region and the post-Soviet space. A wide choice of areas for investment, full support from the state, the most favored nation regime at all stages of business and the political stability of the country makes Kazakhstan attractive for large corporations. Moreover, the country occupies a very favorable geopolitical position in the Center of Eurasia. /// nCa, 18 February 2019