Ministry of Foreign Affairs to Strengthen Investment Reliability
and Attractiveness of Kazakhstan
Since the first days of independence, Kazakhstan had a task to attract strategic investors to the country's economy through the continuous improvement of the investment climate and favourable and unique conditions, as foreign direct investment (FDI) plays a key role in national development.
New investors in the market mean not only new industries, but also extra funds to the budget, new jobs for our citizens, capacity-building, new technology, know-how, etc.
During the years of independence, the government carried out large-scale reforms to improve the investment climate of the country. Thus, the World Bank's 2019 Doing Business Report ranks Kazakhstan 28th among 190 countries, showing improvement by eight positions.
Today, investors are attracted to Kazakhstan by investment potential, stable legal framework, comprehensive measures of state support, the largest market of the Eurasian space, active development of transit and transport routes passing through the country, etc.
We have become proactive; we approach investors and we do not wait for them to get interested in Kazakhstan. The Government has clearly identified priority areas: where to attract investments from and how and where to direct them. Thus, we focus on specific countries and companies and conduct targeted activities to attract large investors to the priority sectors of the Kazakh economy. As a result, despite the decline in investment activity in the world, Kazakhstan has been a leader in attracting FDI to Central Asia for several years in a row. Thus, in 2018, the investment indicator showed a high growth compared to previous years; gross inflow of foreign direct investment in Kazakhstan increased by 15.8 percent compared to 2017 and amounted to $24.3 billion.
The main investor countries of 2005-2018 are the Netherlands ($85.2 billion), the USA ($36.3 billion), Switzerland ($23.2 billion), China ($17 billion) and France ($15.1 billion). In general, such positive dynamics of foreign investment inflow improve the rates of economic growth of Kazakhstan.
Far from resting on our laurels, we continue to improve the investment climate. Since the beginning of the year, measures have been taken to use new tools to attract investment, as well as to completely reformat the existing system of raising capital.
The Ministry has built a three-level system, which includes the external, central and regional levels. Each level has its own specific area of responsibility.
1.At the external level, the investor receives advice on priority sectors – how to work and with whom to cooperate. This, first of all, implies the embassies of the Republic of Kazakhstan abroad, which received an expanded mandate to work with potential foreign investors.
2.The central level is represented by the Ministry of Foreign Affairs and Kazakh Invest, which is a one-stop shop for investors. Addressing the company, the investor receives all permits, all necessary assistance, access to all information and measures of state support.
3.The regional level is represented by special deputy governors of the regions. Kazakh Invest also has its representatives in the regions.
This February, heads of diplomatic missions of the Foreign Ministry have been brought together to discover a new format of investment encouragement. Each embassy now has specific tasks and performance indicators with the following criteria:
- statistics-based indicators (volume of gross FDI inflows, turnover, number of registered joint ventures);
- encouragement of new investors (meetings with foreign companies, organisation of visits to Kazakhstan, promotion of projects, investment activities);
- work with existing investors (monitoring investor sentiments in order to stimulate reinvestment).
In addition, a Direct Investment Fund has been established. The fund's activities are related to the implementation of targeted and precise investments in the most promising and popular industries and support for major breakthrough projects.
Road show on Kazakh investment opportunities with the participation of a Kazakh delegation led by Deputy Foreign Minister Yermek Kosherbayev.
Madrid (Spain), March 19-20
Private equity fund-based principle, proven to be an effective development institution in many countries of the world, involves the search for promising projects, their financing by co-investors (private, corporate, foreign) and assistance in further business promotion.
We have also developed a comprehensive ecosystem to encourage investment. As part of the ecosystem development, we have studied all steps the investor has to go through: starting from discovering Kazakhstan to implementation of the project, their expectations and challenges that they face during these stages.
Taking into account the ecosystem and the new tasks, we, together with the Ministry of National Economy, developed the National Investment Strategy and the concept of the investment climate bill, providing for a number of changes in the following areas: rule of law, access to infrastructure, currency regulation, improvement of migration legislation and reduction of requirements for investment preferences.
In addition, 40 priority countries have been identified to attract investment from. The main emphasis will be made on Germany, Japan and the USA.
A large number of investment events are held annually, including business forums and roundtables. As part of foreign visits, the Foreign Ministry holds forums to discuss the main areas of investment cooperation. We hold roundtables with foreign business captains and leaders, where we present prospects and opportunities of doing business in Kazakhstan.
This year, the ministry has held 16 investment-raising events with China, Egypt, Finland, France, Germany, Hungary, Jordan, Poland, South Korea, Spain, Switzerland, the United Arab Emirates (UAE), the USA, Uzbekistan, Zimbabwe and the international investment forum called Kazakhstan Global Investment Roundtable (KGIR) 2019.
At the same time, we have adopted additional mechanisms to coordinate activities at the national level. A Coordination Council chaired by the Prime Minister has been established, which includes heads of key state bodies, national companies and representatives of the judiciary and law enforcement agencies. The council will consider and decide on the issues of large and medium-sized investors.
This will help us to quickly promote issues to bring large strategic investors.
The measures taken have already had a positive impact on increasing the interest of foreign investors in Kazakhstan. For example, as a result of the meetings initiated by foreign missions with about 650 new companies, we have identified 78 projects with strong potential for their implementation. These include the following areas: production of irrigation machines (USA), implementation of renewable energy projects (Spain), construction of a meat processing plant (France), production of prefabricated units (Turkey), production of electrolytic manganese (China), production of armored vehicles (Canada), production of coal briquettes (the United Kingdom (UK)), implementation of mining projects (Qatar), etc.
Generally speaking, in terms of foreign investment, we act as a link between our domestic companies and foreign businesses. It should be noted that we won't stop there. The new approaches to improve the investment climate, adopted with regard to the best practices of developed countries and Organisation for Economic Co-operation and Development (OECD) recommendations, will bear fruit for Kazakhstan and will ensure the most comfortable conditions for the current investors and new foreign partners.
ABOUT THE AUTHOR. Yermek Kosherbayev − Deputy Minister of Foreign Affairs of the Republic of Kazakhstan.
Since 1988, he has worked in the Foreign Ministry of the Kazakh SSR and later in Kazakhstan's Ministry of Foreign Affairs. He has served as First Secretary of the Embassy of the Republic of Kazakhstan in the Swiss Confederation, Head of the Asian Security Division of the Multilateral Cooperation Department, Assistant Prime Minister, Deputy and First Deputy Akim (Governor) of the East Kazakhstan Region, Vice Minister of Agriculture and Executive Secretary of the Ministry of Agriculture and the Ministry of Foreign Affairs of Kazakhstan.
He has a diplomatic rank of First Class Counselor.
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