ASTANA – In recent years, Kazakhstan has showcased significant investment potential attributed to its strategic location, favorable business environment, effective investor rights protection, diverse incentives, political stability, and abundant resource base, reported Kazpravda.kz.
According to Vice Minister of National Economy Bauyrzhan Kudaibergenov, the gradual adoption of the Organization for Economic Cooperation and Development (OECD) standards and joining the Committee on Investments underlines Kazakhstan’s commitment to providing a fair and transparent environment for international investments.
Strong investment performance
After gaining its independence, Kazakhstan signed the multilateral (the Eurasian Economic Union) and 50 bilateral intergovernmental agreements on the encouragement and protection of mutual investment.
The country has attracted over $400 billion in foreign direct investments (FDI), leading among post-Soviet and landlocked nations, according to the United Nations Conference on Trade and Development (UNCTAD).
For the first half of the last year, the gross FDI inflow reached $13.3 billion, with a net inflow of $4.1 billion, marking an 87% increase compared to the same period in 2022.
Investments in fixed capital for the past 11 months grew by 14.6%, reaching 15.2 trillion tenge ($34.1 billion).
Fitch and Standard & Poor’s international rating agencies affirmed Kazakhstan’s sovereign credit rating as stable in November 2023, while Moody’s upgraded the outlook to positive, confirming the state’s investment-grade rating.
“This indicates the country’s strong positions in complex rating models, particularly in fiscal stability and macroeconomic resilience,” said Kudaibergenov.
In the IMD World Competitiveness Ranking, Kazakhstan has risen by six points compared to the 2022 ranking, securing the 37th position out of 64 countries. Factors such as foreign direct investment, business efficiency, and business legislation contributed to this achievement.
Kudaibergenov highlighted that Kazakhstan possesses a robust and continually evolving investment legislative framework, aligning with global standards and emphasizing the creation of a strong and competitive business environment.
Government support measures
Kudaibergenov emphasized that both foreign and domestic investors enjoy equal conditions, with the registration of businesses in Kazakhstan now possible remotely.
Substantial legislative revisions last year abolished over 10,000 unnecessary business requirements, aiming to reduce entrepreneur inspections by half from 2024.
Visa-free regimes for investors from 83 countries facilitate business operations, fostering unhindered development and knowledge exchange.
Various government support measures, including customs duty exemptions, tax incentives, and in-kind grants, are provided under investment legislation.
Kudaibergenov noted that large investors signing investment agreements for projects around $50 million in priority sectors have special conditions and tax exemptions outlined.
“Six agreements were signed last year, covering renewable energy, green hydrogen production, modern irrigation systems, agricultural yield management, alloy production, lightweight metal packaging materials, broiler meat production, and railway locomotive manufacturing,” he said.
To support major taxpayers, an investment tax credit agreement allows a 100% reduction in tax payments, with staged payments and a deferred payment period of up to three years. This period, free of corporate income tax and property tax, can be utilized to stabilize financial positions and business development.
Since 2022, the investment commitment agreement guarantees tax legislative stability for ten years in exchange for investments exceeding approximately $500 million. Six such agreements have been signed for projects related to solid minerals extraction and/or processing.
The enhanced model contract grants a 20-year tax exemption for complex projects beginning from the export phase. Within this, it facilitates dispute resolution through arbitration, allowing the subsoil user to choose either outside Kazakhstan or within the territory of the Astana International Financial Centre (AIFC). Currently, three similar contracts have been concluded.
“All these mechanisms will ensure an influx of investments and create additional employment opportunities. When attracting investments, particularly foreign ones, a broader perspective is necessary. Investments encompass not only capital but also bring in new technologies, skills, expertise, training, and other advantages. Investors will always seek places to deploy their funds, and Kazakhstan must be ready to offer favorable conditions,” said Kudaibergenov.
Broadening prospects for growth
In his opinion, the AIFC offers unprecedented business conditions, providing an alternative legal jurisdiction based on common law. Tax holidays, flexible labor rules, and permission for transactions in any currency are established on this financial platform.
To align with new trends, including Environmental, Social, and Corporate Governance (ESG) standards, the country adopted the Investment Policy Concept until 2026, which aims to raise the share of investments in fixed capital to 25.1% of gross domestic product by 2026.
The government is taking additional measures to enhance investment activity, including the implementation of a national pool consisting of 1,011 projects worth 32.4 trillion tenge ($72.7 billion) and the formation of a list of around 15 major projects for the development of export-oriented and import-substituting deep processing clusters.
Efforts continue to relocate foreign companies, with 39 structures successfully moving. To expedite investment project implementation, authorities are developing a National Digital Investment Platform, ensuring the integration of all government bodies into a unified online system for attracting, implementing, and monitoring investment projects.
A fast track system, known as a green corridor, will streamline projects from enterprise registration and permit issuance to the launch of industrial production.
The article was originally published on Kazpravda.kz