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International Internet Magazine. Baltic States news & analytics Wednesday, 22.05.2019, 10:12

Kazakhstan augments its potential in terms of investment attractiveness

Nataly Krumina, BC, Astana/Riga, 14.02.2019.Print version
In "DoingBusiness" rating upon the criterion of "investment attractiveness" Kazakhstan takes the 36th place (according to 10 indicators) among 190 countries. And today, the Republic provides the most favorable treatment for the investors among all the countries of the former-Soviet region.

Since the moment Kazakhstan became independent, it has made a lot of efforts to become attractive for the foreign companies and transnational investors. The country has a variety of natural resources: reserves of oil, natural gas, uranium, 1225 kinds of mineral raw materials, rich deposits of ores of various metals, rare earth elements, as well as caustobioliths and non-metalliferous minerals. Kazakhstan ranks the 1st in the world for explored reserves of zinc, tungsten and barite, the 2nd – of silver, lead, uranium and chromite, the 3rd – of copper and fluorite, the 4th – of molybdenum, the 5th – of gold. The development of all these resources, and most importantly their processing requires a lot of finance, one of the main sources of which is foreign capital.


Of 264 billion dollars of direct investment in the economy of Kazakhstan over the past decade, the principal amount falls on the raw materials sector (mining). Recently, however, the country offers its partners to expand the investment format through the projects in the field of manufacturing industry and production.


Thus, a great emphasis is placed on the development of agroindustrial complex. At the same time, Kazakhstan is ready to provide huge preferences to project implementers in exchange for investments: from subsidy (investment and tarriff) to the preferences on taxes.


If an investor is ready not only to grow the products, but also to process them, the state is ready to provide him/her with the most favorable treatment.


Such a loyal investment climate would be unattractive if Kazakhstan did not guarantee the investors full and unconditional protection of their rights and interests. The political stability of the country and the inviolability of compliance with the terms of contracts make the Republic very attractive for the foreign partners.


However, Kazakhstan has always preferred to play "by the rules". Companies that have been working in Kazakhstan for many years were able to verify this: the stability and dynamics of the country's development (in economic and political terms) are predictable, and therefore do not bear risks.


Perhaps this factor, together with preferences, encourages the investors to invest in areas that the government of Kazakhstan calls of high priority for the development of its own economy.


That is why in recent years there has been an increase in interest of the investors in non-resource sectors. Thus, only in the first half of 2018 the volume of gross inflow of foreign direct investment increased by 15.4% and amounted to 12.3 billion US dollars, half of which was invested in the processing sector.


To synchronize the interests of the investors and the state in Kazakhstan there are a number of organizations working with foreign partners: The Council of Foreign Investors under the President of the Republic of Kazakhstan, the National Company "Kazakh Invest", the Ministry of Foreign Affairs (implementation of the state policy to attract investment), the Ministry of National Economy (formation of the state policy to attract investment), the Council for Improvement of Investment Climate under the Prime Minister of the Republic of Kazakhstan, the councils of investors under local governments of regions and districts, national institutes of development.


The National Company "Kazakh Invest" provides a full range of services to support investment projects from idea to implementation on “a window” principle and acts as a single coordination center for special economic zones of the Republic of Kazakhstan. It also acts as a single negotiator representing the interests of the government of Kazakhstan in discussing the prospects and conditions for the implementation of investment projects and a Single point of access to the system of public services delivery.


In 2018 27 investment projects with the participation of foreign capital for 3.1 billion US dollars were implemented in the Republic with the participation of "Kazakh Invest". In January 2019, the company's monitoring system includes 157 projects totaling 39.6 billion US dollars.


Today there are 11 special economic zones (SEZs) in Kazakhstan. The main set of benefits for them is standard and fixed by the Kazakh legislation. The participants of all SEZs are provided with exemption from corporate income tax; land tax; property tax.


When goods are sold in the territory of the special economic zone, their value added tax (VAT) is charged at zero rate. In addition, they are subject to exemption from customs duties and import VAT, exemption from import customs duties, and the return of investment costs.


In Kazakhstan, any investor is accompanied at all stages and assisted in solving all emerging problems: from setting up of business and during its further work, starting from visa processing to the state support.


A comprehensive system of state support for investment activities has been introduced in order to create a favorable climate for the development of the economy and to stimulate the inflow of foreign capital, to expand and update existing production facilities using modern technologies, to improve the skills of Kazakh personnel, and to protect the environment.


At the present time, the state grants the investor the right to invest in any objects and types of business activities.


In general, Kazakhstan provides the investors (regardless of their nationality) with several guarantees. The main thing of which is stability and compliance with the terms of contracts, regardless of changes in the legislation of the Republic of Kazakhstan.


In addition, the investor has the right to be compensated for damage caused to him as a result of the publication of the acts by state authorities that do not comply with the laws of the Republic of Kazakhstan, as well as illegal actions (inaction) of officials of these authorities.


If there is a need for nationalization or requisition, the investor shall be compensated in full for the losses caused, and the payment shall be made at the market value of the property.


Today, Kazakhstan is one of the highest-growth economies in the region and the former Soviet Union. A wide range of areas for investment, full support from the state, the most favored nation treatment at all stages of business and political stability of the country make Kazakhstan attractive for large corporations. Moreover, the country occupies a very favorable geopolitical position in the Center of Eurasia.

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