Kazakhstan attractiveness survey 2014
The brand paves the way
47% of investors consider Kazakhstan the most attractive of the CIS countries.
49% expect energy to be the top growth sector for FDI.
44% want to see improvement in the regulatory environment.
41% call for advancement in training and education in new technologies.
57% of established investors report being successful in Kazakhstan.
30% plan to invest in Kazakhstan in the next year.
EY's 2014 Kazakhstan attractiveness survey reveals that the country’s “brand perception” is growing strong, while investor confidence in the country’s potential is also at an all-time high, compared with previous years.
Kazakhstan’s macroeconomic, social and political stability have become key factors in attracting investment to the country. Kazakhstan today presents lots of new opportunities and huge potential for both major players and mid-sized businesses.
Deputy Prime Minister of the Republic of Kazakhstan, Minister for Industry and New Technologies
A stable position in the CIS
Similar to our previous Kazakhstan attractiveness surveys, most respondents rank Russia as the leading CIS market for investment, followed by Kazakhstan. Many respondents established in Kazakhstan rank it first, while non-established investors rank it third.
A stronger brand in the FDI market
This year’s survey results show that investors’ awareness of Kazakhstan’s potential has increased, as evidenced by the decline in the “can’t say” responses to our survey questions. The percentage of “can’t say” responses to the question: “How do you see Kazakhstan in 2030?” was 19.8% in 2014, compared with 42% the year before.
This might be the result of various ongoing Government efforts, such as the EXPO 2017 campaign, regular international visits, road shows and forums, Kazakhstan’s active involvement in regional and international integration processes, as well as strengthening relations with its key trade partners.
Kazakhstan’s strengths and weaknesses
Top five most attractive features
Key advantages vary for established and non-established investors. Established investors place great value on the country’s high level of economic, political and social stability and its competitive corporate tax rate.
Those not presented in the country seem to be less aware of these factors, while they value the country’s local labor costs and entrepreneurial culture.
However, both established and non-established investors are drawn to Kazakhstan’s telecommunication infrastructure and domestic market.
Areas for improvement
- Transport and logistics infrastructure. Both established and non-established investors want to see improvements in the country’s transport and logistics infrastructure.
- Open and flexible trade policy. Kazakhstan’s strategic location between Europe and Asia gives it great transit and trade potential. But it needs a more open trade policy to reach its full potential.
- Administrative environment. Even with its stable political system, the country suffers from governance issues, such as corruption and bureaucracy.
- Labor law flexibility and a more favorable work-permit regime. Many investors want Kazakhstan to make it easier to bring foreign talent into the country, and they would like more flexibility regarding the hiring and dismissal of employees and the duration of their work.
Bright prospects for present and future investors
Plans and expectations
To a large extent, investors in Kazakhstan have created successful businesses in the country. Survey results indicate that large companies — those with revenue of US$2b (€1.5b) or more — are more successful in the country than smaller ones, while as high as 70.4% of industry and automotive respondents report success.
Investor confidence in Kazakhstan’s potential is also at an all-time high with 47.3% of respondents expecting Kazakhstan to become increasingly attractive over the next three years, compared with 41.4%, who thought so in 2013, and 43%, in 2012.
Kazakhstan has adopted a strategy that aims to position the country among the 30 most developed nations in the world by 2050. To achieve this, Kazakhstan is proactively defining new markets, building its innovation capacity, promoting sustainable private sector business development and creating a favorable investment climate.
Kazakhstan’s imminent WTO accession, and its improving links with China, Russia, as well as other Asian and European countries, will also enhance its trade potential and the opportunities for investment.
Has your company been successful in achieving its business objectives in Kazakhstan over the past five years?
Energy and beyond
Investors feel that the traditional energy sector will be the most attractive in the next three years. Many business leaders expect Kazakhstan to be a leading energy producer by 2030. High-tech, telecom infrastructure and the business services sector also demonstrate growth potential and can become an important source of revenue and jobs in the country.
Which business sectors will attract the most foreign investment projects in Kazakhstan over the next three years?
Action plan for success
Five areas for reform
Investors continue to point out the need for improvements in Kazakhstan’s business environment, infrastructure and human capital. They also draw attention to the need to strengthen the country’s judicial structure and to adopt a proactive investment policy.
Three investment enablers
Increasing links with the global economy, a higher innovation capacity and a greater focus on green energy, will have a positive impact on Kazakhstan’s investment appeal.
The country serves as an important link in what has been called the “new silk route,” which connects the East to the West, and positions Kazakhstan as a potential transportation hub for Europe and Asia. The construction of the Western Europe- Western China transportation corridor — a series of intercontinental highways — and of a number of large-capacity railway lines is also underway. Kazakhstan is set to become the transportation hub of Europe and Asia.