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Attracting individual investors to foster dev't of Trans-Caspian Int'l Transport Route – NC KAZAKH INVEST

14 November 2022 10:48 (UTC+04:00)
Attracting individual investors to foster dev't of Trans-Caspian Int'l Transport Route – NC KAZAKH INVEST

By Trend

Kazakhstan continues to offer a stable investment climate to foreign investors, Deputy Chairman of the Management Board of NC KAZAKH INVEST JSC Jandos Temirgali said in an interview with Trend.

According to the International Monetary Fund (IMF), the global economy is facing massive and sharper slowdowns than experts predicted. Rising energy prices, high inflation rates, tighter monetary conditions in most regions, geopolitical conflicts, sanctions, and the protracted COVID-19 pandemic have had a strong impact on the long-term outlook.

Following the IMF expectations, global economic growth will almost halve this year (from six percent in 2021 to 3.2 percent in 2022) and will decrease to 2.7 percent in 2023. This is the lowest since 2001, except for the global financial crisis (GFC) and the acute phase of the COVID-19 pandemic.

“Despite the recent world events, Kazakhstan keeps providing a favorable investment climate to foreign investors. The country remains attractive for foreign direct investment (FDI) and is the largest recipient of FDI in Central Asia,” Temirgali stated.

As he noted, in July 2022, the Government of Kazakhstan approved a new Investment Policy Concept until 2026, which is aimed at revising approaches and creating good conditions for existing and new investors.

“Furthermore, in recent years the country has introduced new mechanisms for supporting investors and is improving the existing supportive measures to establish a legislative and legal basis,” he said.

Following the Kazakh National Bank's data for 2021, Temirgali emphasized that investment flows to the country exceeded the 2020 figures by 38.9 percent and amounted to $23.8 billion, which is almost the same as the pre-crisis 2019 level.

“In total, over the 30-year independence, gross FDI inflows into Kazakhstan's economy rose above $400 billion,” Temirgali added.

According to him, growing investment in a number of economic sectors in 2021 should also be highlighted.

"For instance, the investment growth in the manufacturing industry made up 65.4 percent, in construction – 37.8 percent, in transport and warehousing – 11.7 percent against 2020," he said.

Temirgali also said the manufacturing industry's share in the FDI inflow structure increased to 22.2 percent in the total gross inflow of direct investment. This figure was 14.2 percent in 2019 and 18.5 percent in 2020.

“Against the backdrop of the difficult geopolitical situation, in the first half of 2022, the gross FDI inflow in Kazakhstan increased by 28.2 percent compared to the first half of 2021. This demonstrates the continuing investment attractiveness of Kazakhstan,” he noted.

Temirgali added that the highest growth in investments is observed in information and communication – 5.4 times, construction – 3.9 times, agriculture, forestry, and fisheries – 2.9 times, and manufacturing – by 48 percent.

“We clearly see that investors have started to pay more attention to non-commodity sectors,” he said.

Temirgali noted that following UNCTAD data, the business environment and investment climate have radically changed this year as the world is facing an unprecedented crisis.

“This is characterized by food shortages, rising energy prices, higher interest rates in major economies, lower announced new projects, disruption of established supply chains, regionalization of economy, etc.,” he said.

As Temirgali stated, the global FDI outlook remains negative in 2022 due to multiple geopolitical and economic crises.

“Tighter monetary conditions and heightened investor uncertainty are seen in declining monthly trends in new project announcements. Global FDI flows are likely to move on a downward trajectory in 2022, at best remaining at the level of 2021,” he noted.

Nevertheless, Temirgali pointed out the Kazakh government's clear vision of investment development.

“Thus, the investment attraction policy has been reviewed given ESG principles, a global energy, and technological transition. The government has set key performance indicators that determine how investors are achieving an objective of Kazakhstan's Investment Policy Concept. First of all, the task was set to ensure a total inflow of direct investment worth at least $123.8 billion over the period 2023-2026, as well as to maintain investment in fixed assets at the level of 25.1 percent of GDP by 2026,” he said.

Commenting on the potential areas for strengthening Kazakhstan-Azerbaijan cooperation, Temirgali outlined that firstly, this is the development of transport and logistics infrastructure for further increasing cargo traffic within the Trans-Caspian International Transport Route (TITR).

“It would be reasonable to attract individual international investors to foster TITR's development. This will ensure uniform conditions for the harmonious operation of ports, thus facilitating freight transportation. In this regard, there is a highly practical sense of creating a comprehensive investment proposal for foreign investors to accelerate the development of the ports of the two countries,” he said.

Moreover, Temirgali underscored that the Heads of the Member States of the Organization of Turkic States decided to establish the Turkic Investment Fund at the Summit at the end of 2021.

“This year, the organization's members have been working on the agreement, and the establishment of the union is scheduled for 2023. As part of the fund's work, we have the opportunity to finance strategically important infrastructure facilities, as well as to promote the development of cooperation between states,” he said.

Meanwhile, bilateral cooperation has development prospects within the special economic zone (SEZ) with a special 'Turan' status, launched in Turkistan, one of the key spiritual centers of the Turkic world.

“The region is a crucial transport hub that has the potential to become a major trade and logistics center. The Turkistan region of Kazakhstan is integrated into the 'One Belt, One Road' (OBOR) initiative, by which the European and Asian markets are being closely tied. The new SEZ provides for investment partnership, an industrial cluster, including the processing of agricultural products, mechanical engineering, the production of electrical equipment, tourism, and educational clusters,” he added.

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