Investor confidence in Kazakhstan’s potential reaches an all-time high

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  • Kazakhstan expected to be a leading energy producer by 2030.
  • Attractiveness will improve in the next three years according to nearly 50% of respondents, demonstrating growing investors’ confidence.

LONDON, 12 JUNE 2014: Kazakhstan’s international integration and innovation agenda is poised to enable growth, according to EY’s fourth Kazakhstan Attractiveness Survey. The survey of over 200 global business leaders from 28 countries interviewed in early 2014 highlights the perceived attractiveness of Kazakhstan by foreign investors. 

These developments are expected to enhance Kazakhstan’s appeal among investors and the Government’s efforts to position the country among the 30 most competitive nations worldwide by 2050, offering significant opportunities to companies in many different sectors. Furthermore, by 2015, Kazakhstan is set to have one of the highest GDP growth rates among the 25 leading rapid-growth markets (RGM).[1]

Investor confidence in Kazakhstan’s future prospects is also high — 47% of the respondents believe that the country’s attractiveness will improve in the next three years compared with 41% who thought so in 2013, and 43% in 2012. 

In addition, Kazakhstan’s stable macroeconomic and sociopolitical environment has continued to increase its appeal. However, over 50% of the investors surveyed still do not have any immediate plans to invest in the country. 

Erlan Dosymbekov, Managing Partner, Kazakhstan and Central Asia, EY comments:

“Investors are becoming increasingly aware of Kazakhstan thanks also to a number of ongoing government efforts. International integration, diversification initiatives and investment promotional activities have fostered a stronger positioning of the country within CIS countries and as one of the more appealing FDI markets. Nevertheless, Kazakhstan needs to continue its efforts to increase awareness among investors to continue its growth.” 

Key sectors and countries
Industry and automotive[2] respondents are the most likely sectors to report success , with 70% suggesting they had achieved their  business objectives following investment in Kazakhstan over the past five years. Among established investors, 57% say they have met their business objectives in the past five years. Investors feel that the traditional energy sector will be the most attractive for investment in the next three years, but high-tech, telecommunication infrastructure and the business services sector can offer significant potential.

Kazakhstan is set to become the transportation hub of Europe and Asia. In addition, as a transit route, it will gain from the increasing trade volume between the countries. Kazakhstan has defined six priority countries for inward FDI aligned to its innovative industrial agenda: France, Germany, Japan, South Korea, the UK and the US. 

Needed improvements to avert threats
According to the survey, 17% of respondents feel that Kazakhstan will be surpassed by more dynamic countries by 2030, up from 6% in last year’s survey. This means that prospects in other rapid-growth markets will intensify Kazakhstan’s competition for FDI. Investors continue to point out the need for improvements in Kazakhstan’s business environment, and they also draw attention to the need to strengthen the country’s judicial structure and to adopt a proactive investment policy.   

Erlan Dosymbekov says, “As investors’ confidence rise and Kazakhstan presents strong prospects for the present and the future, Kazakhstan needs to enhance the consistency of its business environment, invest in infrastructure, develop human capital and ensure judicial independence. Investors and the Kazakhstan Government will need to come together for a collaborative growth agenda. This could foster further investments in the country and lay a solid foundation for a sustainable long-term growth.”    

Future prospects: An energy leader in 2030
Although some anticipate stiff competition from other growing markets, Kazakhstan is expected to be a leading energy producer by 2030. Kazakhstan’s energy reserves will be the foundation for its development. Already strong in oil and gas, the energy sector is broadening its scope to include nuclear power and green energy. When asked about their vision of Kazakhstan in 2030, 4 out of 10 respondents said that they expect the country will be a leader in energy. 

Erlan Dosymbekov concludes: “Kazakhstan’s economy grew by 5.5% in 2013, supported by strong domestic demand, increased oil output and recovered crop production. The economy currently faces headwinds, as is the case with most rapid-growth markets, but 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, but its appeal has to be preserved.”

Notes to editors

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[1] Countries are listed within EY Rapid-Growth Markets Forecast, February 2014.

[2] Industry and automotive includes heavy industry; automotive; infrastructure (roads and highways and ports); real estate and construction; and logistics.