Author: Rainer Michael Preiss
Kazakhstan has emerged as a beacon of investment in recent years, capturing the attention of international businesses and investors alike. The nation’s strategic location, abundant natural resources, and forward-thinking policies have driven a surge in business activity, positioning Kazakhstan as a pivotal player in the global economy.
A Strategic Approach to Investment
Kazakhstan’s recent success in attracting investment is no accident. According to the head of Kazakh Invest, Mr Yerzhan Yelekeyev, the central Asia country has implemented a well-coordinated three-tier system designed to draw in investments from external, central, and regional levels. This strategic framework has not only stabilized Kazakhstan’s investment climate but has also enhanced its appeal on the global stage. The nation’s central position in Eurasia, coupled with its vast reserves of natural resources, including burgeoning renewable energy potential, has made it a focal point for international business. Companies worldwide are increasingly recognizing Kazakhstan's value, not just as a resource hub, but as a strategic entry point into the wider Eurasian market.
High-Value Investments in Processing and Renewables
Kazakhstan is not merely content with being a supplier of raw materials. Mr Yerzhan Yelekeyev underlines and emphasises that Kazakhstan is intent on adding value to its resources through strategic investments in high-tech industries. One of the primary areas of focus is the development of processing industries, particularly in the battery production sector. With critical minerals like lithium, nickel, and cobalt in abundance, Kazakhstan is well-positioned to become a key player in the global battery supply chain.
In the renewable energy sector, Kazakhstan is capitalizing on its resources by attracting investments aimed at producing components for solar and wind power plants. By integrating these high-value industries into global supply chains, Kazakhstan is ensuring that it doesn’t just extract resources but also adds significant value domestically, fostering long-term economic growth.
Moreover, the coal chemistry sector offers a unique opportunity for collaboration with German firms. Kazakhstan is inviting investments in the production of high-value-added chemicals derived from coal, such as synthetic fuels and fertilizers. By leveraging advanced German technologies, Kazakhstan aims to enhance efficiency and environmental sustainability in this traditionally carbon-intensive industry.
Significant Projects and Global Partnerships
According to data provided by Kazakh Invest, Kazakhstan's commitment to fostering a robust investment climate is evident in the successful completion of numerous projects with foreign participation. In 2023 alone, 47 new productions were commissioned, bringing in $1.1 billion in investments and creating over 4,500 jobs. These projects range from truck production by Sweden’s Scania to window profiles by Germany’s Rehau and mobile drilling rigs by China’s Shengyuan Technology.
Looking ahead, Kazakhstan continues to attract significant global interest, particularly in industries with intensive global value chains. From electronics and semiconductors to the burgeoning battery and automotive industries, Kazakhstan is becoming a key player. Notably, German company HMS Bergbau is spearheading a project focused on the exploration and processing of rare metal ores in East Kazakhstan, further cementing Kazakhstan's role in the global supply chain.
Supporting Sustainable Growth
Kazakhstan’s vision for the future is clear: the country aims to continue its upward trajectory by focusing on the implementation of new investment projects and attracting further foreign investment. A restructuring of the Investment Attraction Council is set to streamline efforts across central and local bodies, ensuring that systemic issues such as land allocation and infrastructure provision do not hinder progress. Furthermore, a planned three-year tax exemption for both foreign and domestic investors in the processing sector is expected to significantly boost the country’s manufacturing industry.
An Attractive Investment Destination
Kazakhstan’s allure as an investment destination lies in its unique combination of factors. Its central location in Eurasia, stable political environment, and well-established legal framework make it an ideal base for companies looking to access the broader regional markets. The long border with China, in particular, offers a gateway for Chinese companies to expand their reach into neighbouring regions.
While traditional investments in the oil and gas sector are declining, there is a growing focus on the manufacturing industry. This shift towards value-added production is crucial for retaining capital within the country and generating higher tax revenues. Kazakhstan’s approach of offering exclusive conditions through investment agreements ensures that large investors find mutual benefits, making the country an increasingly attractive proposition.
A Strengthening Partnership with Germany
Germany has long been a key partner for Kazakhstan within the European Union, and this relationship continues to deepen. Since 2005, German investments in Kazakhstan have exceeded $6.6 billion, predominantly in the manufacturing sector. Major German companies such as Linde, Claas, Knauf, and Siemens have established a strong presence in Kazakhstan, contributing to the country’s economic growth.
The opportunities for German companies in Kazakhstan are vast and varied. The mining and metallurgy sectors, in particular, present significant potential for exploration and processing, with Kazakhstan’s rich reserves of critical minerals like lithium and cobalt. Additionally, German engineering expertise is in high demand as Kazakhstan expands its infrastructure, with numerous projects requiring advanced technological input.
Kazakhstan’s stable political environment, favourable investment climate, and strategic location make it a prime destination for German companies looking to expand their global footprint. The mutual benefits of this partnership are clear, with both nations poised to reap the rewards of their collaboration.
In conclusion, Kazakhstan’s proactive approach to attracting high-value investments, its strategic use of natural resources, and its strengthening ties with global partners like Germany are driving a new era of economic growth. As the country continues to build on its successes as a middle power, it is well on its way to becoming a central hub in the global economy, offering unparalleled opportunities for investors and businesses worldwide.
Rainer Michael Preiss is Partner & Portfolio Strategist at Das Family Office in Singapore
