ASTANA – Kazakhstan’s foreign direct investment (FDI) is undergoing a major shift, moving from solely raw material extraction to projects focused on domestic processing, said Yernar Serik, an expert on trade and investment policy and the author of Tradereport.kz analytical Telegram channel.
Yernar Serik. Photo credit: senate.parlam.kz
During the expanded government meeting on Jan. 28, President Kassym-Jomart Tokayev emphasized the importance of economic diversification and the development of industrial sectors. While the country continues its diversification efforts, FDI fell by 36% in the first nine months of 2024 compared to the previous year.
Speaking to The Astana Times, Serik explained that this decline in gross FDI is mainly due to the completion of large commodity projects.
“This is primarily due to a drop in FDI in the mining industry due to the completion of the investment phase of the large expansion project construction. Until 2024, projects in the mining sector accounted for the bulk of FDI attracted to the economy,” said Serik.
“At the same time, a positive trend was also observed in 2024: FDI inflows into manufacturing projects are growing. If we exclude the traditional metallurgical sector from the statistics, foreign investments in processing exceeded $2 billion for the second year in a row. Foreign investment is actively flowing into non-traditional sectors for Kazakhstan, such as the chemical industry, rubber and plastic products, machine building, oil refining, and food processing,” he added.
Investors are increasingly interested in sectors where Kazakhstan has raw materials but previously lacked processing.
“This indicates a clear paradigm shift: whereas previously investors came for raw materials to be extracted or exported in their raw form, now they are more attracted to projects focused on processing raw materials domestically,” said Serik.
A multitude of catalysts, including free economic zones, stable macroeconomic and tax policies, and a predictable business climate, can help drive new private investments, according to Serik.
“External work is active; the President promotes the country as an attractive destination for capital, but without eliminating internal problems, Kazakhstan will have difficulty attracting and retaining investors,” said Serik.
However, he acknowledged specific barriers persist. To maintain this positive trajectory, Kazakhstan should address internal barriers by improving infrastructure, simplifying regulatory procedures, strengthening coordination between government agencies, and transitioning from manual management to systemic support for investors.
Serik suggests the key problem is not the lack of mechanisms for attracting investors but their practical implementation.
“It is also important to build up the country’s infrastructure capacity. I fully support the construction of a nuclear power plant in the country, which will give the economy an additional impetus for development and ensure energy security,” said Serik.
