Extraordinary meeting of the Foreign Investors’ Council under the President of Kazakhstan was held via videoconference. The online meeting was attended by the leadership of the Presidential Administration, the Government, representatives of state bodies, multinational and national companies.
The participants made several proposals to improve the country’s investment attractiveness, paying special attention to enhancing human capital potential and introducing the ESG principles in the economy and investment policy.
Opening the event, the Head of State drew attention to the tragic “January events”, noting that thanks to timely and decisive measures the situation in the country has been completely stabilised.
Kassym-Jomart Tokayev said the investigation is underway in strict compliance with international principles. However, he said that the “January events” have brought some degree of uncertainty to investors.
“As President of this country, I want to assure you that the open door policy to foreign investment remains our strategic priority. The state shall fulfil its obligations and guarantees to our partners and investors to the full extent. The January crisis had no effect on our adherence to the market economy, rule of law, honoring international and domestic commitments. On the contrary, it became a trigger for further improvement," he said.
The Head of State shared with investors his plans for the further transformation of the country. He said that the rule of law and its equal application to all without exception will become a fundamental pillar of the new course.
“From now on, the principal idea behind economic reforms is not abstract figures of GDP growth and place in global rankings but increase of income and living standards of our people. Of course, this objective is not achievable without forming a new class of entrepreneurs as well as inflows of high-quality investment. Our promise to the people and honest businesses to end favoritism, special interests and entitlements of the elite, corruption and oligopolies, will be implemented to the fullest extent,” the leader of Kazakhstan said.
Kassym-Jomart Tokayev noted that all international rating agencies consistently confirm the investment reliability of the country. According to him, the events of January, despite their tragic nature, showed the strength of the country’s political and economic system.
“I am confident that the early official release of all the information will convincingly prove that our actions were absolutely justified and were aimed exclusively at preserving the country’s integrity and protecting the lives and property of our citizens and businesses. I believe that for you, friends of our country who have been working in Kazakhstan for a long time, this is obvious. The truth about the context of the events and the real picture of those days is extremely important,” the Head of State said.
Addressing the members of the Council, President Tokayev noted that their recommendations would be of a great support for Kazakhstan and the course of the ongoing reforms.
“I believe that you are no less interested in genuine reform of Kazakhstan and the emergence of greater economic freedom in it than domestic entrepreneurs. Therefore, I suggest that you take an active part in the transformation and renewal of the economic life of the country. By jointly building new, fairer and more effective rules of the game, transparent and stable regulation, we will be able to create a truly attractive investment climate. It is in our mutual interests,” President Tokayev believes.
The Kazakhstan leader named the development of competition, the eradication of corruption, the construction of effective public administration and the cultivation of high-quality human capital as a mandatory component to achieve these goals. Based on this, he focused on a number of urgent tasks.
In particular, the Head of State noted that the basis for building a strong economy and a decent business climate is a fair and impartial judicial system. In his conviction, it should become the main guarantor of the legitimate interests and rights of investors. In the context of resolving investment disputes, the President called for the full use of the independent AIFC Court and the International Arbitration Centre (IAC).
Kassym-Jomart Tokayev considers the development of fair competition to be another important priority of the new course.
“The historical dominance of oligopolies in key sectors of the economy has stifled the development of markets and industries. We are decisively changing this situation from both legislative and practical points of view. The law on competition development signed this year provides for important initiatives. This includes equal access of market participants to limited resources, lowering the entry barriers to markets and eliminating the negative impact of monopolies on neighboring markets. An overhaul of the Samruk-Kazyna Fund’s operations is underway. Companies that have received contracts at the expense of administrative resources are deprived of their privileges and contracts. The Fund's package of investment projects is about 3.5 trillion tenge. Now, all projects will be implemented transparently, with the involvement of international companies on a competitive basis. If this is not actually happening, please inform me directly, as this is a very important issue in my work as President,” he stressed.
The Head of State said that the current clampdown on monopolies and artificial barriers to entry into the markets has begun, which presents opportunities for investors to diversify their participation in the country's economy.
“About 35% of FDI is currently in the mining sector. Significant opportunities are being missed in realising the potential of competitive sectors such as agribusiness, tourism, manufacturing and transport. The advantages are obvious here: there are huge consumer markets of the Eurasian Economic Union and China. I invite you to actively participate in the development of these industries,” the President said.
In this regard, President Tokayev highlighted his recent visits to China and Russia.
“There have been very productive talks with the leaders of these countries. All my talks were mainly focused on the development of trade, economic and investment cooperation. I reiterate again, the prospects are great,” the Head of State said.
The President also drew investors’ attention to Kazakhstan’s potential in the transport and logistics sector, noting that 83% of land transit traffic along the China–Europe corridor passes through Kazakhstan.
“A large-scale Dostyk - Moiynty railway project will be implemented. This will increase the throughput capacity fivefold. The new branch of the Darbaza -Maktaral railway will boost the development of transit traffic from Russia to Central Asia. There are plans to build a high-speed railway between Turkestan - Shymkent - Tashkent,” he said.
The Kazakhstan leader also spoke about the prospects of implementing investment projects in nuclear power, green hydrogen and digitalisation based on the ESG principles. In addition, he stressed the importance of continuing work on reforming the quasi-state sector, including privatisation and IPOs of state-owned enterprises and holdings.
At the same time, the Head of State spoke about the effectiveness of investment projects.
“We know that currently formalism and lengthy internal approval processes continue to exist at all stages of attracting investments. As a result, investors have to wait months or even years for the appropriate decisions. Consequently, they simply postpone the implementation of investment projects or go to other countries. There are examples when international agreements get stuck in the offices of government agencies, thereby the ratification of agreements is delayed for many years. This was an issue in the past, and I believe it is happening now, even though similar agreements are signed in a couple of months in other countries. We need a clear and understandable algorithm for supporting investment projects. I ask the Council to work with the Government on this matter,” the President said.
Kassym-Jomart Tokayev called the transformation of the KazakhExport national company an additional mechanism for supporting investors, which will now be able to subsidize loans to foreign buyers of domestic products, as well as guarantee export transactions.
In addition, the Head of State also touched upon the issue of strengthening the work on removing administrative barriers, improving regulatory and fiscal policies.
“We confirm that our tax legislation will be improved. It will be based on the principles of stability and simplicity, taking into account the balance of interests of the state and business. At the same time, I understand the demands and requests of investors regarding the stability of the tax regime. The task that the Government faces is not to get carried away with changing tax legislation, but to approach this issue very thoughtfully so that the tax regime retains its stability and predictability,” the Kazakhstan leader said.
The President instructed the Government to improve approaches to the implementation of the strategic investment agreement, making this document more flexible and freer. He pointed out the need to create a high-quality legal environment for investment protection, instructing to continue comprehensive work with partner countries to conclude agreements on mutual protection and investment promotion.
In his speech, the President once again spoke about the creation of the social fund “Qazaqstan halkyna” (For the people of Kazakhstan).
“Some foreign investors have questions about the mandatory transfer of contributions to the Fund. I would like to note that the contributions are voluntary,” he said.
Summing up the results of the extraordinary meeting, President Tokayev noted that along with the ongoing reforms in the country, the Council should also update its approaches in its work.
“I am ready to help proactively and to make informed decisions. In fact, the work on creating a favorable investment climate in Kazakhstan is of significant priority for me. I expect more initiatives and proposals from the Council members. The Council should become a real and practical tool for interaction, economic diversification, and improving the well-being of citizens,” the leader of Kazakhstan said.
The Head of State concluded by announcing the agenda for the next 34th plenary session of the Council. It will focus on the decarbonisation of the economy and the introduction of low-carbon technologies.
At the end of his speech, the President answered several timely questions of foreign investors concerning their activities in our country.
Minister of Economy Alibek Kuantyrov, heads of major international financial and business institutions, such as the Asian Development Bank, European Bank for Reconstruction and Development, Citigroup, EY, ExxonMobil, Chevron, Total Energies, Shell, Eni S.p.A., CNPC, Cameco, ArcelorMittal, General Electric, and others also spoke at the event. Erlan Dosymbekov, Chairman of the Board of the Kazakhstan Foreign Investors' Council Association, moderated the meeting.
