Kazakhstan is the largest state in the Central Asian region. And the richest in natural resources. In Kazakhstan last year, production was started at the largest field of recent years – Kashagan. But in addition to oil, Kazakhstan is ready to offer foreign business the numerous contracts in various fields: from subsoil use to agro-industrial complex.
Kazakhstan immediately after the collapse of the Soviet Union took a sharp start to the formation of a market economy. And, unlike the most post-Soviet states, Astana did not conduct experiments with the gradual transformation of the economy. Therefore, 25 years after gaining sovereignty, this country is considered one of the most liberal for business in the entire former USSR.
Over the past few years, Kazakhstan has embarked on a policy of industrialization of the economy. This was an attempt to get rid of the dependence of raw materials, which was most acutely felt during the recent economic crises. However, despite the very substantial financial resources accumulated in the country (63 USD billions of net reserves), the rate is aimed at attracting foreign investors. Moreover, as the country’s leadership claims, it should not only be about and not so much about financial investments as about attracting competitive technologies and innovations to Kazakhstan.
It should be noted that the integration processes in the post-Soviet space make Kazakhstan particularly attractive for investors. The market for the Eurasian Economic Area, which includes five countries (Kazakhstan, Russia, Belarus, Armenia and Kyrgyzstan) is about 180 million people. Including Russia, which, after the beginning of the sanctions wars, is closed to many companies from Europe and the United States. The free movement of goods, work and capital, as well as the absence of customs and other additional barriers within the framework of the EAEC is very important for the commodity producers, which for the most part are now targeting the Russian market.
There is another important nuance that attracts investors to the country – its geographical location. Kazakhstan, located in the center of the Eurasian continent, has a significant transit potential. Today the country is developing directions both North-South and West-East. The corridor is already actively used in the framework of the new Silk Road Western Europe-Western China. It allows you to ensure the delivery of goods from China to Europe and back for 14-15 days (against 45 days by sea). Last year, a new railway corridor, Kazakhstan-Turkmenistan-Iran, was launched.
This has become an important reason for the growth of investment in the republic in recent years. Only in the past 10 years, the size of foreign direct investment amounted to 327 billion dollars, of which 15 billion came into the country only in 2016. (That, amid the global crisis and the outflow of capital in emerging markets is a good indicator).
In addition, business in Kazakhstan attracts a number of advantages in comparison with neighboring states.
First, the spheres that the state is ready to open for investors are clearly defined here. These are machine building, agro-industrial complex, food industry, retail trade and chemical industry. For investors in these areas Kazakhstan provides a number of preferences.
The basic package is an advantage for investors – exemption from customs duties and full-time grants. For priority industries identified by the government, for investors with an investment volume of more than 13 USD million, an additional package of preferences is included: exemption from corporate income tax and land tax for 10 years, from property tax for 8 years. In addition, the Kazakh authorities guarantee the return of the cache to 30% of the capital expenditures spent on capital construction and purchase of equipment.
It should also take into account the presence in the country of 10 special economic zones, which also provide exemption from all major taxes for 10 years (including customs duties and CITs), as well as free of charge (for the entire period of the FEZ 25 years) provide land for construction with Infrastructure.
If the special economic zones are more oriented toward large-scale production, then the regional industrial zones represent sites and preferences for small and medium-sized businesses. The country has 42 such sites in all regions of Kazakhstan.
It should be taken into account that the stability of investment contracts, fixed at the time of their conclusion, is ensured in the country. That is, any subsequent changes in national legislation (including tax rates and preferences) will not affect the investment contract. Also, their stability is guaranteed, that is, at the time of conclusion of the investment contract with the government (the investment committee), the investor fixes those rates, those conditions that are stipulated for him at the time he signs the contract and further changes in the legislation regarding tax rates and preferences will not touch.
Kazakhstan also provides investors with the opportunity to attract their own (foreign) labor without special permits. Such employees may be involved in the construction of facilities and commissioning.
Since last year Kazakhstan has been practicing a visa-free regime for representatives of several countries. Nowadays citizens of 56 countries can enter the country for 30 days without obtaining a visa. At the same time, when choosing the states for visa cancellation, Astana chose not the political approach, but exclusively the volume of attracted investments. Initially, this list was formed from those countries that invested the most in Kazakhstan (the main donor countries are the Netherlands, the USA, China, France, the United Kingdom).
Such reforms to improve the creation of the investment climate allowed Kazakhstan to increase its position in the World Bank’s Doing Business ranking – last year the country ranked 35-th. Moreover, Kazakhstan took one of the leading places in the world on such indicator as «reforms».
Today Kazakhstan is one of the most open countries in the world. Attractive geographical position, huge opportunities for investing in a wide range of business areas, and full support of investors from the authorities gives a guarantee of successful development of entrepreneurship, both local and foreign. Kazakhstan intends to become one of the 30 most developed countries in the next two decades. And, repeating the great leap of Singapore, it is quite capable of doing this. Particularly focusing on investors who are ready to bring the technology of the future to the country. Here are all the conditions for this.