Kazakhstan is at the forefront of investment attractiveness in the Eurasian region, while the overall picture of global foreign direct investment (FDI) in 2023 shows mixed results, El.kz reports citing Finprom.
Globally, FDI reached an estimated $1.37 trillion in 2023, marking a modest 3% year-on-year increase. This growth exceeded initial expectations, given the easing of recession fears at the beginning of the year and the strong performance of financial markets. However, the bulk of this increase came from several European countries. Excluding these regions, total world FDI declined by 18 per cent, indicating an overall decline in investment inflows.
Although global FDI inflows are declining, Kazakhstan continues to demonstrate positive dynamics in this direction. In 2022, the country recorded a significant increase in gross foreign direct investment inflows of 17.7%, reaching a decade-high of $28 billion.
By the end of the third quarter of 2023, FDI inflows in Kazakhstan amounted to almost $20 billion, and this figure is expected to exceed the annual average by the end of the year.
The largest inflow of FDI in Kazakhstan continues to be in the mining industry, where it amounted to $8.6 billion in the first nine months of 2023. Significant investments were also made in manufacturing ($3.9 billion), trade ($3.8 billion), transport and warehousing ($854.9 million), financial and insurance activities ($725.3 million) and construction ($412.7 million).
An important factor in the development of the communications industry last year was the launch of a large-scale project to deploy a 5G network, largely financed by the domestic resources of the country and major market participants, including Kazakhtelecom JSC. During the first nine months of 2023, this telecom operator invested 342 billion tenge in the development and modernization of the network and the construction of 5G.
Among the main countries investing in Kazakhstan were the Netherlands ($4.6 billion), the United States ($3.1 billion), Switzerland ($1.9 billion), Russia ($1.8 billion) and China ($1.4 billion), as well as South Korea, Belgium, France, Germany and the United Kingdom.
Among the regions of the country, the greatest activity in attracting FDI was shown by:
• Almaty — $6 billion. USA (an increase of 0.6% compared to the same period in 2022);
• Atyrau region — $5.5 billion. USA (26.2% decrease);
• East Kazakhstan region — $1.6 billion. USA (a decrease of 25.1%);
• Astana — $1.2 billion. USA (up 52.3%);
• West Kazakhstan region — USD 880.1 million. USA (up 4.4%).
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The high investment attractiveness of the Republic of Kazakhstan is also confirmed by international development institutions. For example, the Eurasian Development Bank's (EDB) report "EDB Mutual Investment Monitoring 2023" notes that Kazakhstan is the most attractive country for investment in the Eurasian region in terms of mutual FDI.
Kazakhstan's share as a recipient of mutual FDI in the Eurasian region increased from 21.7% in 2017 to 27.2% in 2023, the highest in the region.
Kazakhstan also leads in terms of net FDI inflows among the 15 countries of the post-Soviet space and Central Asia, occupying 61% of the share. Other countries include: Uzbekistan attracted $2.5 billion, Lithuania $2.2 billion, Belarus $1.6 billion, Latvia $1.5 billion, Estonia $1.2 billion, Turkmenistan $936 million, Ukraine $848 million, Moldova $587 million, Armenia $998 million, Kyrgyzstan $291 million, Tajikistan $174 million, and Azerbaijan $4.4 billion
Various measures are being taken to stimulate the investment attractiveness of Kazakhstan. For example, on December 5, 2023, President of Kazakhstan Kassym-Jomart Tokayev signed a decree on improving the efficiency of attracting investment. In the document, the President granted certain powers to the Investment Promotion Council.
On November 17, 2023, Prime Minister Alikhan Smailov called on foreign companies to invest in the economy of Kazakhstan at the KGIR-2023 roundtable. He noted the stable growth of the country's economy, despite global challenges, and pointed to Kazakhstan's share of 70% of foreign investment in Central Asia.
Kazakh President Kassym-Jomart Tokayev has set an ambitious goal for the government to double the size of the economy to $450 billion by 2029.
By 2029, Kazakhstan plans to attract at least $150 billion in foreign investment. An important element in this process is the development of new technologies. For example, Altel has been actively deploying a 5G network since last year, and 5G coverage areas of this operator are already operating in 18 cities of Kazakhstan. Especially intensive development of the 5G network is observed in the largest cities of the country: 244 base stations have been installed in Astana, 284 in Almaty, and 117 in Shymkent.