Nearly a decade after the 2008 global financial crisis, the global economy is improving. The most recent International Monetary Fund (IMF) forecast, issued in July, projected global growth at 3.5 percent this year and 3.6 percent in 2018, up from 3.2 percent in 2016. Unemployment in the world’s biggest developed economies has been falling. Despite the positive outlook, however, risks remain. Just last week, the World Economic Forum (WEF) warned that the global economy is at risk of a fresh crisis and is also ill-prepared for the likely disruption from the digital and robot age.
Kazakhstan, as an open and outward-looking nation, is not immune to any potential shocks to the global economic system. That is why the government has been securing future benefits by actively enhancing Kazakhstan’s competitiveness. Since our independence, major improvements have been made to our economic and investment environment. According to the WEF Global Competitiveness Index, Kazakhstan has decent labour market efficiency and technological readiness. In addition, there are some reasonable investment incentive packages in place, including a visa-free regime for citizens of all Organisation for Economic Co-operation and Development (OECD) and European Union (EU) member states and exemption from custom duties for equipment and raw materials and from land and corporate tax. Of course, there is always room for more progress. According to WEF, there is a need to improve access to financing and continue eliminating corruption.
Astana understands the importance of creating a more favourable investment climate and attracting foreign direct investment. This is why in August the Kazakh government approved a national investment strategy for 2018-2022, which seeks to increase foreign investments by 26 percent in five years. Obviously, Kazakhstan’s economy is currently dependent on natural resources, especially oil, ferrous and non-ferrous metals and uranium, and they will undoubtedly continue to play an important role in the growth of Kazakhstan’s economy.
But the government made a decision that the new investment strategy should also centre on attracting foreign direct investment in non-resource sectors focused on exports. This makes sense, as there is no denying that diversifying Kazakhstan’s economy is essential to its long-term prosperity, especially with relatively low oil prices.
To facilitate the diversification away from the resource sector, the Ministry for Investment and Development of Kazakhstan, together with the World Bank, has identified priority sectors which are considered the most important to attract new investments. The first group includes industries such as food production (agriculture), mechanical engineering and deep processing of oil, gas and other natural resources. The second group includes sectors such as IT, tourism and finances.
Kazakhstan’s agricultural sector deserves special attention as it is about to undergo an impressive transformation. Some of the world’s most innovative technologies and practices that will soon be introduced in Kazakhstan’s agricultural sector were presented during EXPO 2017 in Astana. These include state of the art agricultural machinery and equipment.
In addition, the Ministry of Agriculture recently established the centre for transfer and commercialisation of agricultural technologies, which will actively study the use of new technologies. The agricultural sector has already played an important role in Kazakhstan’s economy. Now, it is likely to expand even further. The Ministry of Agriculture provides food producers with inexpensive equipment and favourable lease terms, making farming a favourable sector for investment.
Despite Kazakhstan’s size and geostrategic location, many foreign businesspeople are unaware of the investment potential and business opportunities in Kazakhstan. Steps have been taken to rectify this. The government, as part of its new investment strategy, established Kazakh Invest together with a network of its international representative offices and domestic regional branches. This national company promises to become a major player in facilitating the attraction of investment by establishing links between local companies and foreign investors and providing a full range of services on the principle of a “one-stop shop” to support investment projects from the idea to the implementation stage.
There are clear signs Kazakhstan is becoming a competitive force in the global market. The fact that Kazakhstan ranks 35th out of 189 countries in the World Bank Ease of Doing Business index demonstrates that at least some of the government initiatives are paying off. With the launch of the Astana International Financial Centre in January and the ongoing privatisation programme, it seems more may be coming.
