Kazakhstan: Emerging Business hub in Central Asia.

Zaman Bajwa

Overall dynamics of this world is changing so rapidly due to globalization. Business is a key factor of this change. Doing a business is not an easy task; it involves a lot of risks. The medium level entrepreneurs and investors are always looking for reliable ways and ventures for business to gain reasonable profit in return.

Central Asian Countries are gaining attention of foreign investors due to their business friendly environment and Kazakhstan is one of these leading business countries in this region.

According to a study by Ernst & Young (2011) on “Investment Attractiveness of Kazakhstan,” 32% of respondents declared Kazakhstan as one of the three most attractive destination of investment in CIS countries. Approximately the same number of research participants predicted an increase in the investment attractiveness. More than 200 potential investors from 20 countries took part in this research study.

Kazakhstan brings a rapid change in business sector. Kazakhstan improved in Ease of Doing Business (EODB) score, including enforcing contracts, starting businesses and trading across borders. Kazakhstan ranked 4th overall in enforcing contracts, improving its place to two points compared to last year. The contract process was simplified by the expansion of court automation.

In starting new businesses, Kazakhstan improved from 41th to 36th place. Kazakhstan simplified the process to start a new business by cutting post-registration procedures, such as tax registration, social security registration and licensing. In turn, this reduced the time spent on opening a business from nine to five days. The figures also indicate this in the first half of 2018 alone the volume of foreign direct investment in Kazakhstan amounted to more than 12 billion US dollars.

In international trading, Kazakhstan improved from 123rd to 102nd place. The world’s largest landlocked country introduced the ASTANA-1 IS electronic customs declaration system and reduced customs administrative fees, making trade across borders easier. The changes reduced the time and costs of border and documentary compliance for export.

Recently, the Astana International Financial Center (AIFC) started operating in the country, which has become the main financial platform for attracting and protecting investments. According to the head of professional development and the chief investigator of the Organization’s Code of Ethics for Accounting and Auditing for Islamic Financial Institutions (AAOIFI), Farhan Nur, the financial center will play a decisive role in the region in next few years.

Similarly, member of the panel of arbitrators at the AIFC International Arbitration Center Sheikh Bilal Khan, explains that this is appropriate time to create such a center in Kazakhstan. It is due to the fact that the country is now moving away from energy dependence towards seeking to diversify.

According to the expert, financial services are probably the most flexible sector to which attention can be paid. It is also noteworthy that the organizations of Great Britain, the United States and other countries are now buying through IPO part of the assets of Kazakhstani giant companies, such as Samruk Kazyna, KazMunayGaz and Kazaktelecom.

Kazakhstan pays a great attention to their young generation. Investing in scientific research and startups is also one of key opportunity. Mobile applications and Internet services are another option of investment.

Kazakhstan has a large potential in energy sector, coke and all the    products resulting from oil refining, products and derivatives of metallurgy, agriculture, food products and fishing. Similarly; electrical, gas, steam and conditioned air as well as renewable energy are other areas of investment. However; the main sector of the economy to invest in Kazakhstan is still raw.

According to Forbes Kazakhstan, the interest of international investors in the uranium industry has revived since uranium used in nuclear reactors for the production of electricity has become one of the best commodities in 2018.

Over the past 12 years, 264 billion dollars of direct investment has been attracted to Kazakhstan. The investment from Netherlands, the USA, France, Switzerland, Russia, and China has a major portion in the raw materials sector. Articles of exported goods of Kazakhstan include oil, copper, zinc, ore, mineral fuels and ferrous metals, etc.

Kazakhstan exports its raw material for processing and imports the finished products due to the lack of local Industrial processing units. In connection with this situation, opportunities are opening up for businessmen and investors in the form of construction of plants and companies for the processing of natural resources in Kazakhstan. This will reduce the cost of products for domestic buyers and improve their quality for export.

Kazakhstan also provides the investor with substantial guarantees. Among them the full protection of rights and interests under laws of the Republic of Kazakhstan and ratified international treaties. The stability of the terms of contracts concluded between investors and government agencies. In case of nationalization and requisition all losses are reimbursed to the investor and investors also have free access to all necessary information concerning their activities in the republic.

The state also provides investment preferences, exemption from customs duties and import VAT in accordance with the legislation of the Republic of Kazakhstan. Due to the Business friendly laws and political stability, Kazakhstan is emerging as Business leader in the region and attracting more and more investors to invest in country.

The writer is Islamabad based Human Rights Activists and freelance Journalist; he can be reached at zeebajwa@gmail.com  Twitter @zamanbajwaa 

About Arif Qureshi

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