Kazakhstan on the Move
In December, Kazakhstan will mark 20 years of independence. Under the leadership of President Nursultan Nazarbayev, the country has achieved remarkable results, despite gloomy predictions about its prospects in the immediate aftermath of the break up of the USSR: GDP per capita has increased from below US$700 in 1994 to over $9,000 in 2011 and the country has achieved an enviable degree of social harmony.
Larger than the whole of Western Europe and with a population of 16 million, Kazakhstan has developed a successful model for integrating a multi-ethnic and multi-confessional society with over 130 nationalities and over 40 religions. It has also conducted a successful foreign policy aimed at balancing its interests with China, Russia and the West. Rich in natural resources such as oil, gas and uranium, Kazakhstan has attractive investment opportunities and is pursuing a strategy of accelerated economic development.
The presidential election held in April showed overwhelming support for President Nazarbayev’s policies. The president won 95 per cent of the vote based on his considerable achievements in office and the prospect of further successful reforms. Competitive politics in Kazakhstan will develop over time. President Nazarbayev’s approach over the past 20 years has been to put the economy first, since democracy without a strong state was not an appetising prospect. History will judge this as the correct approach. The President is known to be an admirer of the British and American two/three-party political systems and wants to move the country in that direction.
In 2010 Kazakhstan entered the second decade of its long-term modernisation programme up to 2030, aimed at increasing industrial output, raising living standards, diversifying the economy for sustainable growth and driving regional economic integration. The government has targeted GDP growth of a minimum of 30 per cent by 2020 and wants to see 10 per cent growth in the share of foreign direct investment as a part of GDP. The share of small and medium businesses in the economy is set to increase dramatically. As the President announced in January, Kazakhstan has set its sights on being in the top 50 countries rated by the World Bank in its Ease of Doing Business Index (it is currently ranked 59 out of 183 countries) and being in the top third of Transparency International’s Corruption Perceptions Index (in 2010 it was 105 out of 178 countries).
Kazakhstan has a strong track record of attracting foreign investment. Since independence in 1991, the country has received over $120 billion in foreign investments due to its favourable tax climate and protections for investors, as well as its abundance of natural resources and proximity to the growing markets of China and Russia. It also aims to become a leading oil exporter over the next ten years. The Kashagan oilfield in the Caspian Sea is the world’s largest discovery of reserves in 30 years. Oil production over the past decade has more than doubled and is expected to double again by 2020 from 1.6 million barrels per day in 2010. This will make Kazakhstan the second largest oil producer in the region after Russia. Kazakhstan also plans to consolidate its position as the world’s leading uranium producer by raising production and boosting reserves to 2.5 million tonnes. The country also remains a leading global producer of bauxite, chrome ore, coal, copper and zinc.
From now until 2020, Kazakhstan will focus on long-term investments, raising the competitiveness of the economy, increasing productivity levels, investing in infrastructure and improving living standards for the population. Reforms in the area of healthcare and education remain a priority – domestic and foreign investment outside the natural resource sector is set to grow by a minimum of 30 per cent during this period. The share of exports outside the natural resource sector, meanwhile, is set to increase by a minimum of 45 per cent. In short, the economy will develop rapidly, based on new growth and an abundance of exciting opportunities for foreign investors, particularly in the area of new technologies and increased production outside the natural resources sector. Today, around 8,000 companies with foreign capital operate in Kazakhstan, including 270 ‘Fortune 500’ companies such as BG, Chevron, Coca-Cola, Danone, Microsoft, General Electric, Henkel, Shell and Siemens.
In addition to attractive economic prospects, foreign investors are set to benefit from continued political stability in Kazakhstan, as well as its peaceful relations with neighbours. Since independence Kazakhstan has avoided social tensions and disturbances that a number of its neighbouring countries have suffered from, notably in Kyrgyzstan where there have been two violent revolutions in the space of five years. These have mainly been a result of poor living standards, unemployment and a pervading sense of hopelessness linked to a lack of economic growth. This is not to say that Kazakhstan does not face challenges – it certainly does. Weaknesses in the banking system need to be addressed, while capital markets require strengthening. The country must also avoid over-reliance on the export of natural resources.
Kazakhstan’s energetic foreign policy is set to continue. After its successful chairmanship of the 56-member Organisation for Security and Co-operation in Europe (OSCE) in 2010 – the first ever by a former Soviet state – Kazakhstan will take over the chairmanship of the Organisation of the Islamic Conference (OIC) in June, an organisation with 57 member states in four continents. This will be a further chance for Kazakhstan to demonstrate to the world community its credentials as a country that can act as a mediator between East and West. One of the major achievements of Kazakhstan’s OSCE chairmanship was to revitalise the organisation and extend the definition of European security to include Central Asia.
As the engine of global growth shifts to Asia, Kazakhstan finds itself well placed to take advantage of these developments. To do so, it will continue to conduct a balanced foreign policy and attract overseas investment.
The Embassy of Kazakhstan in the UK focuses its efforts on promoting strong political, economic and cultural relations between the two countries. Co-operation is fast expanding across several areas, including trade, international affairs, defence and culture. In recent years, we have had a vigorous programme of high-level political contact between our two countries. I am confident that this will continue to grow.
Today, British investments are mainly directed towards Kazakhstan’s financial sector, mining industry, manufacturing, business services, trade, construction, transport and communications. Trade and economic cooperation have become essential mechanisms of bilateral dialogue.
While there are 453 joint Kazakh-British companies registered in Kazakhstan, London remains a centre for the public offering of securities and investment for Kazakh issuers. Eight companies from Kazakhstan are listed on the Main Market and four companies have joined the Alternative Investment Market (AIM). More than a dozen Kazakh companies have placed their shares on the London Stock Exchange (LSE), while two of them are listed on FTSE 100, copper giant Kazakhmys and the Eurasian group ENRC.
The UK is also one of the most attractive countries for Kazakh students. There are currently more than 3,000 students studying in the country (and around 700 of them are state-funded Bolashak Programme fellows).
Today, the increasing interest in the British academic world in Kazakhstan is creating many valuable new contacts. In 2010 the Cambridge Central Asia Forum at Cambridge University’s Jesus College launched the Cambridge Kazakhstan Centre. Its main activities embrace the development of academic ties between Kazakh and British researchers and many other issues. This is just one example of the growing ties between the two countries. Ties which Kazakhstan hopes will continue to grow in coming years
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