 Kazakhstan-
the best place to invest in Central Asia and
CIS |
Kazakhstan is the politically most stable country
in Central Asia, with a rather cheap but well
educated labour force. Strong GDP growth combined
with constant improving purchasing power -through
a more even distribution of wealth- won from natural
resources, particularly oil and gas, make the
Kazakh market more attractive for investors.
The legal framework, which guarantees protection
to foreign investors ensures a favourable investment
climate and an open economy in Kazakhstan.
Achievements of Kazakhstan might be comparable
with that of Eastern Europeean countries and is
therefore a very attractive place for investors
to come. At the same time Kazakhstan provides
good returns on equity. Since 1993 up to 2002
Kazakhstan has attracted about USD 18 billion.
The most favorable situation was reported in 2001
when for the period of nine months gross direct
investments reached USD 3, 205 million. That was
16 per cent more than for the whole year of 2000.
In 2002 Kazakhstan expects USD 4.5 billion of
investment.
"Talking about investment climate today, we
need to determine its four main factors. First of
all, it is a political stability. The next is progressive
reforms in legislature. The third factor is the
possession of rich natural resources. The last,
forth factor is a state policy directed to promotion
of investments in Kazakhstan," President
of Kazakhstan investment promotion center, Mr. Batalov
said about the investment climate in Kazakhstan.
"If we talk about competition for foreign investments,
we can say that Kazakhstan now is competing with
countries of Eastern Europe. Currently, 74% of all
investments come from mineral resources sector.
Once it was decided by the Government of Kazakhstan
that the mineral resources sector would serve as
a motive for further development of the country.
Today, infrastructure and construction are developed
around gas and oil sites," he added.
"The investment rating of Kazakhstan has been
raised. Kazakhstan used to be and is still currently
considered as a very reliable partner in the external
market. It always fulfills its responsibilities
on former obligations and leaves no doubts on fulfilling
the current or perspective obligations in the frameworks
of partnerships," Minister
of economy and trade of Kazakhstan, Mr. Yessenbayev
said in interview.
Agip Kazakhstan North Caspian Operation Company
(Agip KCO) which is performing exploration drilling
operations in the Kazakhstan sector of the Caspian
Sea, plans to invest alone $US 1.5 billion to
the economy of the country. In addition to that,
the Karachaganak Integrated Organization, which
is developing the Karachaganak gas condensate
field, is expected to invest another $US 1 billion,
and Tengizchevroil, which is developing the Tengiz
oil field - $US 850 million.
Kazakhstan's national companies, including Kazmunaigas
oil and gas company, and Kazakhstan Temir Zholy
railway carrier, also intend to reinvest significantly
into the economy of Kazakhstan.
By 2003, foreign investments are expected to reach
$US 5 billion dollars. For today, 40 countries
are investing into Kazakh economy. Among the countries-donors,
the USA is the leader, the main investment flow
of which are directed into hydrocarbons extracting,
contributing USD 5, 424 million or 34, 5 per cent
of overall investment. It is followed by Great
Britain, which invested USD 2, 093 million then
Italy, Netherlands, China and Russian Federation.
There are several parameters for international
investors - transparency of company activities,
compliance with the international accounting standards,
good profitability levels, growth and future growth
prospects, quality management, and clear strategy.
"The Russian investments last year reached
a figure of almost US$1,5bn. Of course, it is not
very close to the figure of, for example, the US
investments, which is, if I am not mistaken, something
like US$6bn, but still a very respectable figure
in my opinion, because if we compare the investments
of the companies, we can see that here a lot of
trans-national giants, US oil companies are working.
From the Russian side at least for the moment only
LUKOIL is rather active in the oil field of the
Kazakh economy," Ambassador
of Russian Federation, Mr. Merzlyakov said Russian
investments.
Ambassador
of China to Kazakhstan, Mr. H.E. Yao Peisheng
said about cooperation "As a newly independent
country, Kazakhstan needs advanced technology and
foreign investment into the economy, and this the
investment and the advanced technology we can give
them. That, as a basis, makes us complementary."
This year the biggest Malaysian oil company "Petronas"
was invited to operate and invest into the oil sector
of Kazakhstan. 51% of Central Asia Cement is owned
by a Malaysian company, the other 49% by Kazakhstan
Investment Fund, which is actually owned by an American
company. "I think we are the largest company
in terms of services we produce - 600 thousand of
cement. In 1999 we had 260 thousand, in 2000 - 384
thousand and in 2001 - 540. There is a big growth,"
General
Director, Central Asia Cement, Mr. Ng Bee Kok
said.
Turkey makes big inputs in Kazakh economy and cooperates
in many fields with Kazakhstan, in sectors such
as construction (Okan
Holding), transport (Turkish
airlines), and many others.
Moody's Investors Service, International Rating
Agency, gave the first credit rating "BAA-3",
with stable prognosis. It is worth to mention
that Kazakhstan was the first among the CIS countries
that has received such rating. State policy on
effective usage of the invested resources, high
support and defense of investors' rights, creating
of favorable investment climate - all these factors
became the reasons for such success.
European Union and the USA recognized Kazakhstan
as a country with a market economy indeed it can
be referred to as a vivid example of favorable
investment climate in Kazakhstan. And once again
Kazakhstan was the first among the countries of
the former Soviet Union to be recognized as a
country with a market economy.
The analysis of investments flows shows that 86
percent of the whole direct investments were directed
to the mining industry and only 6 per cent to
the processing one. The new project of "Law
on Investments", based on the previous two
laws, was worked out in order to improve the investment
policy and the investment climate for foreign
and kazakh investors. It will be applied from
beginning of 2003.Today's current operating laws
are" Law on investments" from December
27, 1994 and "On state support for direct
investments" from February 28, 1997.
This project keeps all the positive articles,
which proved their efficiency in the past. Among
them the guarantees on profits usage, control
implementing, guarantees to the foreign investors
while nationalization and expropriation processes.
Also the international experience on investments
stimulation and support were taken into account
while composing the "Law on Investments".
Additional preferences may be established for
direct investments in priority areas of the economy
and social sphere, the list of which shall be
approved by the government. Besides the preferences
the new project envisages state grants in kind
of fixed assets, land plots, buildings, machinery,
conveyor devices, equipment, tools, and other
items given on free basis. All the changes are
directed to the transfer form the quantity to
the quality of attracted investments.
The offered changes and amendments will provide
more transparency and will assist new investment
flows and help develop a favorable investment
climate.
now on it will be possible to talk about a qualitatively
new level of concluding contracts, where state
measures on supporting investments achieve the
shape of selectivity. Investors in their turn
are responsible for the obligations they have
taken on.
During 2002 the foreign trade turnover of the Republic
of Kazakhstan amounted USD 210 million. Within five
months of 2002 big companies - importers concluded
import substitute agreements for delivery of goods
and services for sum equal USD 473 million. It means
that the practical implementation of the governmental
program on import substitution from 2002 already
began. |
By
many indexes of social-economical development,
Kazakhstan is the leader among the CIS countries.
And of course one of the reasons for positive
indexes in economy is the dynamic attracting of
foreign investments.
"We have held on the privatisation of the state
property quite fast, which afforded us to attract
sufficient investment to the economy of our country,
as well as modern western management. And those
privatised enterprises served as examples for arranging
conditions, including political ones, for the expansion
of the presence of foreign investors. I would like
to emphasize that in Kazakhstan there is a quite
efficient legislation, protecting foreign investments
and also stimulating domestic investments,"
Deputy
Prime Minister and Ex-Minister of finance, Mr. Pavlov
said.
republic occupies the first place among the CIS
countries by the volume of attracted investments
and the third among countries of Eastern Europe
and Baltic countries (after Poland and Hungary).
"For example, in terms of foreign direct capital,
Kazakhstan is leading in the CIS, and is on the
2nd or 3rd place in the post-socialist countries,
after Slovenia and Hungary," State secretary
- the Minister
of foreign affaires, Mr. Tokayev said in interview.
"This situation has been created due to systematic
and consistent work in the course of reforms that
have been conducted first of all in the field of
finance and crediting, also in the field of tax
budget, in the course of conducting the pension
reform, also in the field of reforms at the regional
level, in particular, in reforming the energy sector
and residential and utility sectors," Minister
of economy and trade, Mr. Yessenbayev commented.
There are other five sectors of economy that are
priorities for Kazakhstan economy. They have state
support in different forms of subsidies and preferences
like tax exemption. This is possible for those
investors that invest in refining sector, infrastructure,
agriculture, social sector and construction of
new capital Astana .
Astana is a major industrial centre, its core
comprising 60 large facilities and more than 6,000
medium and small-sized ones. On 13 March 2001,
President Nazarbayev approved a State Socio-Economic
Development Programme for Astana, aiming to make
the city a business, scientific and cultural centre
of independent Kazakhstan. In 1997-2000 Astana's
infrastructure received about $1 billion of private
and public investment.
Private
sources, both Kazakh and international, contributed
more than half the total capital investments in
2000. As is expected, direct investments in shops,
cafes, restaurants, leisure facilities and petrol
stations will total $130 million in the near future.
A
special economic zone titled 'Astana - the New'.
has been founded on the left bank of the Ishim,
within the municipal boundary of Astana, in line
with a presidential decree. The SEZ is intended
to provide an impetus for development in this
part of the city through attracting investments,
applications of state-of-the-art technology, and
infrastructure building. A special tax regime
has been established in the SEZ. Additionally,
the SEZ will enjoy the status of a free customs
zone, with respective preferential customs duties.
"According to the mainstream directions of
the Programme and the Master Plan of the development
of Astana city, in the not far future the administrative,
business, social and economic, scientific and educational
centres will be built, which will bring the capital
to the international standards of the capitals of
the developed countries. In the view of the above
mentioned, it is especially important and necessary
to ensure a good climate for attraction of local
and foreign investments into high priority objects
of the social infrastructure of Astana city,"
Mayor
of Astana city, Mr. Dzhakishev said about perspectives
of Kazakh capital.
"At
that time we had a Special Economic Zone. Among
tasks of Astana Finance we the administration
of city, development of infrastructure, support
of enterprises and industrial companies, and,
of course, attraction of investors," Chairman
of "Astana Finance" company, Mr.
Islamov said in interview.
"They
would like to build the nice, clean pure capital
city with a diplomatic environment. The new capital
is going to show modern Kazakhstan," Mr.
Elibol, General manager of Okan Intercontinental
said about Astana perspectives. Okan Holding was
the first foreign company which has come to Astana.
The group built the Presidential residence, the
Residential complex and then a five star hotel.
Okan Holding is quite a wealthy, big and well
established company in Turkey, represented in
almost every sector of Turkey: hotels, a flour
factories, producing semolina and pasta, exporter
on that, a textile factory, produce raw, medical,
have a bank, a construction division.
One
more Special Economic Zone to highlight in Kazakhstan
is in Aktau city, "This year, with the special
order of the President of Kazakhstan, Aktau acquired
the status of the Special Economic Zone. It will
start operating under the new status from Jan
2003 for 5 years. Now we are considering projects
of companies and organizations that would like
to work in our Zone,"
Mayor of Aktau city, Mr. Ospanov said.
Almaty
is the so named south capital of Kazakhstan. Historically
Almaty is financial, scientific-industrial social-cultural
center of Kazakhstan. There are 166 middle scale
and big companies and 1200 small companies in
different industries operating in the city. The
share of manufacturing industry is 89% of all
issuing production. There are 2000 foreign companies
and 34 second level banks. Investment volume for
base capital in 2001 was USD 425. 5 mln.
Almaty
in the last years obtained the highest investments
all Kazakhstan. For effective use of loan facilities,
new loans distribution and management by debts
is developed annually. The investment strategy
of Almaty is worked out till 2005.
"In view of Almaty's advantageous location
as the most important commercial centre in Central
Asia, retailing industry has been on the priority
list for many years. Furthermore, telecommunications
and information technologies are also potential
areas for foreign investment," Ambassador
of South Korea, Mr. Choi Seung-hoh said about
investment potentials of Almaty.
Kazakhstan's potentials can be highlighted through
its regions. Eastern Kazakhstan is rich in varied
minerals and raw materials. Mining and processing
of ores of non-ferrous metals, lumber and wood working
industry developed on this base, and large potential
was accumulated in machine building and light industry.
The leading industry in the region is non-ferrous
metallurgy. Its output constitutes about 60 per
cent of industrial output of the region. "We
work with foreign investors - mining and non-ferrous
metallurgy, JSC Kazzink. A part of shares was given
to foreigners. We were quite successful. Titano-magnesium
combinat was in a very difficult situation, it represents
the middle point in production chain. The inputs
are imported and our products are also exported.
Due to the work of foreign investors our work is
considered to be quite successful," Mayor
of Ust-Kamenogorsk city administration, Mrs. Suchorukova
said.
The
West Kazakhstan region is rich in large natural
resources, mainly oil and gas, has favorable geographical
location, forked economical conditions. The main
resources are concentrated at the Karachaganak
oil and gas condensate field. Today the enterprises
of the region cooperate with 80 foreign companies.
"In Kazakhstan, there are two regions that
have access to Caspian Sea. They are Atyrau and
Mangystau regions. However, comparing to Atyrau,
our region is located a bit lower and our part
of Caspian Sea never freezes. We have unique port
in Aktau, which complies with international standards.
They have oil terminals, wheat and oil cargos,"
Governor of Mangistau, Mr. Palymbekov said
about western part of Kazakhstan.
The Southern Kazakhstan region is rich in uranium.
48 per cent of national uranium reserves are concentrated
there. "The economy of our region is represented
with industry and agriculture, manufacturing plants,
light industry, tire factory. Tg100 bln. of production
is produced every year.
Agriculture is very developed. The value of agricultural
output is considered to be Tg50 bln. Entrepreneurship
also is very developed; about 35% of population
is involved there, more than 20% of their revenues
go to the budget," Governor
of Southern Kazakhstan, Mr. Zhylkyzhiev B.A,
said about the wealth of Southern Kazakhstan.
Northern
Kazakhstan is rich in diamonds, rare metals and
gold ores. Karaganda region is rich in manganese.
100 per cent of manganese ore, 35. 9 per cent
of copper, 54. 2 per cent of zink, etc.
But
still the biggest share of foreign direct investment
is flown into oil and gas sector. This is probably
connected with the more favorable investment environment
that prevails in the oil and gas sector, as opposed
to the mining and smelting sector. This is why
the greatest part of investments, including investments
in fixed capital, has been directed towards the
hydrocarbon industry. It is common knowledge that
the availability of important reserves of oil,
gas and gas condensate represents a more inviting
business opportunity for foreign investors. However
only one-third of the resources have been exposed
to production operations in the previously developed
oil and gas fields.
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