Investments in Kazakhstan: Prospects and Risks
Kazakhstan is seeing its best time in inviting foreign investments today. Since its independence, Kazakhstan has adopted several measures to attract foreign investors. As per the World Investment Report, the FDIs in the country measured $3.1 billion, in 2019. The country is the second largest receiver of foreign investments in Central Asia. It owes this to its reserves of oil and natural resources. As the country’s economy still reels from the impacts of the Covid 19 pandemic, this is the prime time to go ahead and invest in the many avenues offered by Kazakhstan to grasp maximum profit and capitalize on the country’s developing economy.
There is nothing the government isn’t doing to attract more investors. Kazakhstan will offer investment residency status and a five-year multi-entry Visa to foreign dignitaries who invest more than $60,000 in the country. Besides the obvious and popular choice of oil, petroleum and natural gas, there are plenty of options for new investors to choose from. Many people are moving towards investments in food processing and mining, along with IT, tourism, insurance and pharmaceutical industries. Kazakhstan is the most important up-and-coming real estate destination in Central Asia. Kazakhstan is a rapidly growing economy, and one of the main aims of the government is to build houses. Astana is a prime choice for those looking to invest, with its growing population, and impending development. The IT market in Kazakhstan yielded 932 billion tenges (about $2 billion) in 2019. The internet penetration rate in the country is a whopping 81.9%, quite a lot more than other Asian countries. The telecommunication industry has seen massive growth in the past few years. This makes it a prime option for future investments. Recently, Turkey has made significant investments in this area. Besides this, the government also actively encourages foreign investment in infrastructure. Data centers are also a new and growing area of interest for stakeholders. There are currently 5 data centers in the country, but none have modernistic and advanced technology, which is something future investors can look into.
While Kazakhstan is being estimated as the next biggest investment site in Central Asia in the coming decade, there are still several risk factors to analyze before making a discussion. Many foreigners face considerable problems in tax registration, banking, and Visa requirements. There are several discrepancies between corporate and labor laws. Very few world-recognized banks exist in Kazakhstan, and getting accounts there can prove to be very hard. Currency control rules in Kazakhstan are extremely stringent. Banks are required to approve all transactions, and the rules for residents are different from that of non-residents. Besides this, though the liberalization policy in the country is not new, the government still practices a policy of interventionism. The authoritarian regime has led to instability in the future of foreign investments and the legal process is not transparent. The Kazakhstan economy is quite dependent on the developments in the economy of Russia.
Kazakhstan can prove to be a highly vital investment destination. Prospects in real estate, telecommunication, oil and petroleum, and manufacturing are high and profitable. However, several risk factors can affect the overall future of the country’s FDIs.