Business is not an easy task and involves certain risks. As a rule, entrepreneurs are looking for reliable ways to develop and strengthen their business. Investment is a kind of long-term business plan, with the right approach, bringing a good income for many years.
Recently, more and more foreign businessmen prefer their money to “work” in Kazakhstan. We tried to figure out what the investment attractiveness of this state of Central Asia is, and which sectors of the economy are the most advantageous in this regard.
Back in 2011, Ernst & Young conducted a study of the investment attractiveness of Kazakhstan, interviewing more than 200 potential investors and working in the republic from 20 countries of the world.
Even then, 32% of respondents noted Kazakhstan as one of the three most attractive for investment CIS countries. Approximately the same number of research participants predicted an increase in the investment attractiveness of the republic.
Many experts say that after years the investment climate in the country has become much more favorable. In 2018, according to the “investment attractiveness” criterion, Kazakhstan in the Doing Business rating ranked 36th among 190 countries of the world. The figures indicate this: in the first half of 2018 alone, the volume of foreign direct investment in Kazakhstan amounted to more than 12 billion US dollars.
Recently, the Astana International Financial Center (AIFC) started operating in the country, which has become the main financial platform for attracting and protecting investments. According to the head of professional development, a member of the standards development department, the chief investigator of the Organization’s Code of Ethics for Accounting and Auditing for Islamic Financial Institutions (AAOIFI), Farhan Nur, in a few years this financial center will play a decisive role in the region.
Member of the panel of arbitrators at the AIFC International Arbitration Center, member of the AIFC Advisory Board on Islamic Finance, Sheikh Bilal Khan, lawyer at the senior courts of England and Wales, noted the appropriate time to create such a center in Kazakhstan. The fact is that the country is now moving away from energy dependence, seeking to diversify.
According to the expert, financial services are probably the most flexible sector to which attention can be paid. It is also noteworthy that the organizations of Great Britain, the United States and other countries are now buying through IPO part of the assets of such Kazakhstani giant companies as Samruk Kazyna, KazMunayGaz and Kazaktelecom.
Along with this, one of the major sectors for investment in Kazakhstan is agriculture: animal husbandry, crop production and grain production.
At the same time, there are actually many sectors and opportunities for investment in Kazakhstan: the same technologies, including financial ones, microfinance, small business, says Sheikh Bilal Khan, a lawyer at the senior courts in England and Wales.
By the way, about small business. The country pays great attention to young scientists and their ideas, so investing in startups is also one of the successful investment options. In addition, the development of such projects is very different: ecology, energy, social problems, finance, Internet of things, mobile applications, etc.
But the main sector of the economy to invest in Kazakhstan is still raw. A country that is rich in natural resources, all kinds of minerals, cannot in this plan not be interested in other states that have a raw material shortage.
For example, according to Forbes Kazakhstan, thanks to the Kazatomprom IPO, the interest of international investors in the uranium industry was revived, since uranium used in nuclear reactors for electricity production became one of the best commodities in 2018.
Over the past 12 years, 264 billion dollars of direct investment has been attracted to Kazakhstan. The Netherlands, the USA, France, Switzerland, Russia, and China invest most of all – mainly in the raw materials sector of the economy. Articles of exported goods of Kazakhstan include oil, copper, zinc, slags, ore, mineral fuels, ferrous metals, etc.
Here, experts note another nuance: in the presence of such a quantity of natural raw materials, the country exports most of it for processing, and then buys it again, but in the form of a finished product. In connection with this situation, opportunities are opening up for businessmen and investors in the form of construction of plants and companies for the processing of natural resources in Kazakhstan. This will reduce the cost of products for domestic buyers and improve their quality for export.
Kazakhstan also provides the investor with substantial guarantees. Among them – the full protection of rights and interests provided by the laws of the Republic of Kazakhstan and ratified international treaties; the stability of the terms of contracts concluded between investors and government agencies; in case of nationalization and requisition, the investor shall be fully compensated for the losses incurred; investors also have free access to all necessary information concerning their activities in the republic.
The state also provides investment preferences: exemption from customs duties and import VAT, state in-kind grants, investment subsidy, exemption from import customs duties, taxes in accordance with the legislation of the Republic of Kazakhstan.
In general, experts note an important component of the investment market in Kazakhstan – stability and confidence in the future, and this is one of the main indicators of the investment attractiveness of the country.