KAZAKHSTAN - Economy
Chairman, KAZNEX INVEST
Creating a positive image of Kazakhstan is indisputably important because it is not enough to simply be an investment-attractive economy. We need to convey the country’s advantages to foreign observers. Kaznex Invest is responsible for promoting the image of the country overseas. Our efforts have already led to positive outcomes. We are advertising with some of the reputable media outlets, as well hosting events. Doing this has allowed us to bolster our positive image, establish direct relations with foreign enterprises, and raise awareness of Kazakhstan among the investors. During events that we host, we provide detailed information on the investment climate and assistance that the government provides to the investors. The survey conducted in 2014 proved that the investors’ awareness of Kazakhstan is on the rise. Other indexes have also improved. Kazakhstan as a brand grew stronger, and confidence in the government’s consistent improvement of the investment climate went up. When asked, “How do you see Kazakhstan by 2030?”, the number of respondents who were uncertain dropped from 42% to 20%. Another optimistic development is a rise in the number of page views for investment-related resources on the internet. In 2014, the number of visitors doubled, compared to 2013, and tripled when compared to 2012. The number of inquiries from potential investors has grown by five fold. The major increases in traffic were from the USA (by 15 fold), Germany (by 10 fold), UK (two fold), France (by 21 fold), South Korea (by nine fold), Japan (by 20 fold).
The “Made in Kazakhstan” campaign is just starting and will introduce local products to the citizens and to stimulate their demand for them. Our export department assists exporters who are entering external markets. Expenses on certification and ad placement are partially reimbursed, as are trade missions and fairs. In 2015 Kaznex Invest is planning to launch a number of export rep offices that will promote Kazakhstani products in external markets.
The government realizes that SEZs will be points of growth of the country’s economy. SEZs provide investors with numerous benefits. Companies in SEZs are exempt from corporate VAT, land tax, customs tariffs, import tax, and other benefits. Now the agency is involved in promoting free economic zones, and by the end of the year we will be more involved in legislation and management of SEZs. The government is also trying to attract foreign asset management companies to develop in SEZs, and is hoping that SEZs will play major role in attracting investors who set up shop because of favorable taxation. These zones are all over Kazakhstan, there are economic zones in Astana, and more in the west and south of Kazakhstan.
Some amendments were recently made to the legislation allowing the government to sign investment agreements and provide benefits in line with them, such as a 30% reimbursement of capital costs. Quite a lot has been done to improve the investment climate. It is necessary to advertise these changes, and attract investors to Kazakhstan. We need to use these new amendments to the legislation, and to improve procedures further, especially regarding approval documents.
Kazakhstan is joining a large, 170-million person market. Kazakhstan’s companies get better export opportunities and attract talent without needing to obtain additional work permits. Membership in the union will make Kazakh enterprises more competitive. Of course the entry o Russian firms will increase competition from Russian companies. In such circumstances our companies need to become more competitive. More opportunities bring greater risks. That’s typical for any sort of integration processes.
There is an industrialization program under way in Kazakhstan which focuses on six sectors: oil processing; chemistry; metallurgy; machinery; food production; and construction materials production. These sectors were selected by the government based on expert scientific analysis. These will be the sectors focused on attracting FDI. Nurly Zholy program also implies development of the infrastructure and related production (bitumen, asphalt).
We will try to focus on large investors and assist in signing agreements between the government and foreign investors across all the sectors. The majority of our efforts will be in the prioritized sectors. We will support investment deals by the government and keep working on improving Kazakhstan’s image, conduct advertisement campaigns, and holding conferences. As for exports, we will be expanding sales markets and introducing trade financing together with Kazakhstan’s Development Bank. Regarding SEZs, we will work on improving the quality of management, increase the number of residents, total turnover, number of patents. 6
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