Kazakhstan FDI and Ukraine War

Kazakhstan’s FDI: 

The Republic of Kazakhstan is an “ideal destination” for Foreign Direct Investments (FDIs) in the Central Asian Region. It is again getting “momentum” after the successful holding of a referendum in the country in which numerous necessary legislations have been promulgated in the new constitution to further foster its macro-economy. Moreover, Kassym-Jomart Tokayev’s constant structural reforms have proved “reagent”.

Kazakhstan has now emerged as an important player in the global economy and an attractive investment destination. The BRI provides the largest international trade corridors pass through the country because of constant structural reforms and world-class infrastructural development in the country. The country’s geography enables it to connect European, Asian, and Middle Eastern markets, where 65 percent of the world’s GDP is generated.


Political Reforms: 

In this connection, most recently, the Prime Minister of Kazakhstan, Alikhan Smailov said that the political reforms, initiated by the President, Mr. Kassym-Jomart Tokayev triggered deep economic transformations. Moreover, he termed that political stability and economic sustainability have further strengthened Kazakhstan’s status as a gateway to the largest world markets with a volume of more than 1 billion potential consumers, including the Eurasian Economic Union and China, and considered it a transit hub in Central Asia.


According to Kazakhstan’s official statistics (June 2022), Kazakhstan has attracted 390 billion USD of foreign direct investments, most of which were attracted in the last 10 years since its inception. In 2021, the inflow of FDI was projected at 24 billion USD, which was 38 percent higher than in 2020. Interestingly, massive diversification of the national economy paid off and the share of investments in oil and gas in 2021 substantially decreased to 28 percent which was 50 percent during 2018-2019.

Kazakhstan blesses with significant natural resources which enables it an important supplier to global commodity markets. Moreover, Kazakhstan ranks 6th in the world in terms of agricultural land. The government of Kazakhstan is providing favorable conditions and support to investors to invest in the country which would provide befitting propositions and win-win situations for all the investors.

Kazakhstan the heaven for investors and businessmen has the biggest number of special economic zones in the entire Central Asian Region. Currently, 13 special economic zones and 36 industrial zones are operating and fully functional in different parts of Kazakhstan, which ensures a Preferential Investment Regime (PIR).

Astana International Financial Center: 

Furthermore, the Astana International Financial Center (AIFC) shares and facilitates possible information about the government’s investment policies, programs, and projects and always showcases the real economic and investment potential of the country through the holding of numerous forums, seminars, conferences, Investment Road Shows (IRSs) and strategic dialogues.

In this context, Kazakhstan is the sovereign guarantor of all the FDIs which always secures investments.

Read More: https://youthdiplomacyforum.com/2022/07/06/moscow-angry-after-putin-macron-call/

Most recently, while sharing the Investment Policy Concept (IPC 2026) the first vice Minister of National Economy Timur Zhaksylykov shared that the level of investment in fixed capital is expected to reach 25.1 percent of GDP, while the inflow of FDI will account for $25.5 billion in 2026.

It was formulated and finalized under the vision of Kazakh President Tokayev which would definitely further promote investment flows to the different sectors of the macroeconomy. It includes 45 systemic measures aimed at creating an appropriate environment for all investments. It comprises three pillars environment, social, and corporate governance.

Hopefully, the new growth strategy will attract investments in agricultural, transport, logistics, services, fin-tech, green energy, rare and rare-earth metals industries, etc.


It seems that the manufacturing industry will be a key driver in increasing the overall competitiveness of Kazakhstan. The government will set New Rules of the Game (NRG) and initiate integrated efforts to further enhance labor productivity, high volumes of exports, developing new productive channels and facilities for higher value-added products, and the gradual localization of production to provide essential economic, human and industrial supports to all the potential investors and businessmen in the country.

Interestingly, Kazakhstan is the leading country in terms of FDIs, GDP, and GNP. It attracts 46 percent of total FDI in the region. Its main investor countries are the Netherlands, the USA, Switzerland, Russia, China, Belgium, the United Kingdom, South Korea, Turkey, and France.

To streamline, systemized, and further strengthened its FDI potential in April 2022, the government built a single pool of all investment projects implemented in the country, which now consists of 765 projects worth 24.4 trillion tenges (US$53 billion).

Thus the potential of FDI is huge and diversified in Kazakhstan. According to official data (June 2022), for five months of 2022, the volume of investments in fixed capital reached 4.1 trillion tenges (US$9 billion) increasing by 2.5 percent, and achieving the pre-pandemic level of investment growth. In this regard, Akmola Region, Shymkent, and Almaty witness high investment growth, while the Turkestan and Karaganda Regions are lagging behind.

Read More: https://www.worldbank.org/en/country/kazakhstan/overview

Increase in FDI: 

Kazakhstan’s Foreign Direct Investment (FDI) increased by US$2.9 billion in Mar 2022, compared with an increase of US$537.1 million in the previous quarter. On the other hand, the National Bank of Kazakhstan claims that the FDI flows into the Kazakh economy have rebounded to pre-pandemic levels reaching $23.7 billion and growing 37.7 percent compared to 2020.

In terms of the industries, mining is leading in terms of investments attracting US$9.7 billion in 2021. In 2020, the figure was US$8.2 billion. Last year, investment in the manufacturing industry, the second-largest sector in terms of FDI, grew a record 65.4 percent reaching US$5.2 billion.

Investment Growth: 

Kazakhstan has a land area equal to that of Western Europe but one of the lowest population densities globally. Strategically, it links the large and fast-growing markets of China and South Asia and those of Russia and Western Europe by road, rail, and a port on the Caspian Sea.

Kazakhstan has transitioned from lower-middle-income to upper-middle-income status in less than two decades. Thus the new economic challenges also bring not only risks but also opportunities for investment growth.

For the further strengthening of FDIs inflows in Kazakhstan, I may submit the following suggestions:-


  1. The investment policy should be further “intensified” and “incentivized”. The investment climate should be further made “beneficial” and friendly. Judicial reforms, digitalization, further development of e-commerce, e-government, optimization of public services, and the permit system, among other initiatives, should be further made easy and smooth.
  2. The government should introduce New Productive Innovations (NPIs) in all the main sectors of the macroeconomy which will further enhance the potential for FDIs in the region.
  3. The role of “KAZAKH INVEST” should be further strengthened through coordinated efforts and holistic policies among the different ministries and stakeholders. It is involved in more than 216 investment projects and initiatives worth $42.5 billion that will create around 47,000 jobs.
  4. There is an urgent need to create balance and remove undue overlapping among all the stakeholders in the country. That is why transferring investment attraction functions to the Ministry of Foreign Affairs, establishing the Coordinating Council on Investment Attraction under the chairmanship of the Prime Minister, and the Foreign Direct Investment Fund with a capitalization of $1 billion used for the most promising export-oriented projects should be further revisited and collaborated.
  5. There is an urgent need to further plug in the regional economic disparities pertaining among the different regions and equally foster industrial growth. The pattern of economic growth in the South-North should be further narrowed through better management skills by building necessary infrastructural projects and providing necessary incentives.
  6. The tally of special economic and industrial zones should be increased in all the country.
  7. There is an urgent need to further develop the Middle Corridor to connect the various regions/countries and continents, especially after the outburst of the Russia-Ukraine Conflict.
  8. The integrated Transport System (ITS) should be further developed in Kazakhstan to make it connecting hub.
  9. Smart economy and smart living should be the mantra of the Kazak government to attract more and more inflows of FDIs into the country.
  10. There is a need to shift the focus of attracting investments in social, education, tourism, and housing sectors in the country which would provide necessary diversification of the economy, investment, production, and utility in the days to come.
  11. Diversification of exports mix is the need of the hour. Joint ventures, the opening of reciprocal Trade Houses, direct air-links, easy and smooth facilities, and banking & finances should be further streamlined.
  12. Qualitative human capital may be one of the biggest assets for attracting more and more inflows of FDI in the country.
  13. Huge but still unutilized landscapes may be offered to potential investors for modern agriculture, tourism, horticulture, cattle farming, fisheries, many cash crops, etc. According to the latest reports (April 2022), the Ministry of Agriculture attracted US$2.01 billion of fixed capital investments (108.4 percent of the plan), the Ministry of Industry and Infrastructure Development US$13.5 billion (100.3 percent of the plan), and the Ministry of Digital Development, Innovations and Aerospace Industry US$531.8 million (98.7 percent of the plan).
  14. The government should create the most optimal conditions for investors to attract more and more FDIs to the country. It is necessary to expand the sources of financing for investment projects in non-resource sectors of the economy. Joint ventures in non-traditional sectors of the national economy may also be showcased for potential investments.
  15. The green energy transition is a must to transform Kazakhstan’s macro-economy up to the next level. Special efforts must be coordinated to attract more and more FDIs inflows in solar, wind, waste management, and electric production.
  16. There is an urgent need to further enhance Capacity Building Measures in health and pharmaceuticals.

This Article is written by Dr. Mehmood Ul Hassan Khan, Director at the Center For South Asia and International Studies Islamabad. He is a regional expert on Kazakhstan and CIS. 

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