There are different areas for investment projects in each zone of Kazakhstan. Mostly preferred to buy foreign capital suppliers are oil and gas, manufacturing, trade, natural resources, and mining industries.
The highest FDI went to the mining and quarrying industries by industry in 2018 - USD 13.6 billion. Investments in the manufacturing, wholesale and retail sectors amounted to USD 3.4 billion and USD 3.3 billion, respectively. At the same period, financial and insurance operations ($ 1.3 billion), transport and warehousing ($ 786 million) were included in the TOP-5 industries.
Over the past years, the most lucrative industry for FDI has been oil and gas production. In addition, its share in the overall investment volume has risen - 17.6%; 26.9%; 45.9%; 49.8%
respectively - since 2015. Thus, the value of FDI in the oil and gas sector amounted to over
$12 billion at the end of 2018, which is 26% more than $9.6 billion a year earlier. Wholesale and retail trade is the second most attractive sector - 13.5% . Last year, the volume of FDI amounted to $3.27 billion, a rise of 4%. In 2017, the metallurgical industry took second position, which fell one line lower in 2018 - 11.3% and $2.75 billion combined.
For the past five years, the top 3 FDI recipients have remained unchanged. Therefore, in 2018, the gross inflow of FDI into the region of Atyrau oil and gas amounted to $ 10.02 billion (41.3% of the total volume) which is by 28.2% more than in 2017, in Almaty - $ 5.43 billion (22.4%), in the region of East Kazakhstan - $ 2.39 billion (9, 8% respectively). In addition, the indicator hit record values within five years in the first two areas. FDI in Nur-Sultan - $ 965 million, Pavlodar - $ 854 million and Karaganda area - $ 647 million also showed a five-year cap. The regions of Almaty, Zhambyl and North Kazakhstan earned the
least direct foreign investment - 94.4 million dollars, 94.7 million dollars and 1 million dollars respectively. Last year, FDI in North Kazakhstan increased by 7 times, but in terms of volume, this is still a low figure in Kazakhstan - $ 17.8 million, lower only in Kostanay region with an outflow of $ 120.3 million.
The government of Kazakhstan is working to diversify the economy aimed at reducing dependence on raw materials. The country's policy had a positive effect on investment flows:
in 2018, the share of investments in financial and insurance activities went from 1.9% to 5.4%, in the professional, scientific, and technical spheres from 0.9% to 2.8% , construction from 1.6% to 2.4%.
Figure 1: FDI inflow indifferent regions of Kazakhstan
Source: OECD, “Local Strategies Forming Links FDI & SMEs in Kazakhstan Final Report” by Stuart Thompson (Policy Analyst), OECD, André-Pascal, 75775 Paris Cedex 16, France, 2014.
For the first half of 2018 , the Atyrau region received the largest amount of foreign capital inflow: 5.7 billion US dollars, which was 47.3% of the country's total value. The share of the oil and gas sales area in the country's trade turnover rose from 30.9% in 2018 to 35.9% (1st place) in 2019. This is $26.68 billion, of which $23.73 billion comes from exports, or 43.1%
-2,000.0
FDI inflow in different regions of Kazakhstan (millions of USD)
2014 2015 2016 2017 2018 2019 Q1 2019 Q2
of the country's overall exports (1st place). According to the Financial Times14, one foreign project worth $ 51.6 million was announced in the Atyrau region, following the results of nine months of this year, with the creation of 40 jobs. “Blue Water”, a multinational shipping and logistics company from Denmark, is the project's investor. The Atyrau region is ranked sixth in the country in terms of ease of doing business in the World Bank's Doing Business report.
In terms of FDI inflows, Almaty ranks second: $ 2.5 billion, or 21 percent of the total. Almaty ranked first in the country in the World Bank's Doing Business 2019 classification in terms of ease of doing business, which is another reason for such high prices. According to the Financial Times, 5 international ventures in the megalopolis were announced in January-September of 2018 for a total of $ 296.9 million, with the development of 2600 jobs. The Carlsberg Kazakhstan and Phoenix Group ventures were the biggest ones (UAE). On 27th of November 2019, the “Almaty Investment Forum 2019” was held in Almaty, according to the Kazakh Invest press center. The forum's main objective is to increase Almaty's investment attractiveness. More than 700 members of business circles, of which foreign- 142, representatives of international companies in Kazakhstan - 126, have registered to participate in the forum. The forum signed 31 agreements and memorandums of cooperation and understanding between government bodies and business communities worth $ 2.3 billion. In general, 46 international projects in Kazakhstan were announced in January-September of this year, according to the Financial Times, with an investment volume of USD 2.1 billion.
There were 2.9 thousand jobs generated as a result.
The region of East Kazakhstan is among the top three in terms of FDI inflows: USD 1 billion, 8.4% of the Republic of Kazakhstan’s total FDI net inflows. Foreign direct investment inflows to the country amounted to $2.93 billion in 2017 which is third position after the region of Atyrau and Almaty, in grand total of 469.1 million (second in absolute growth after the region of Aktobe), or 19.1 percent, higher than the previous year.
14 FDI Intelligence
The TOP-5 regions in terms of foreign direct investment inflows also included the regions of West Kazakhstan and Aktobe: US$ 589.4 million and US$ 534 million, respectively. 85.9%
(US$10.4 billion) of all FDI in Kazakhstan was consolidated by the five regions listed. By 2018 the export share of the West-Kazakhstan region is 10.9 percent, the second largest after the Atyrau region. The city holds an 8.4 percent stake in the country's overall turnover and is fourth after the capital. The amount of trade rose by 29.6 percent over the year and reached
$ 6.25 billion, of which $ 5.98 billion was exported. Foreign direct investment inflows have decreased marginally over the year, from $1.2 billion to $1.17 billion, but this is the fifth highest after the Atyrau, Almaty, East Kazakhstan and Mangystau regions in terms of value.
Foreign investment amounted to nearly $ 1.53 billion in 2016 (4th place), but in June 2017, in the oil and gas condensate field "Karpovsky Severny" in FDI, the Hungarian MOL15 sold its 49% of shares to KMG16, decreasing FDI in the region to $ 1.2 billion. In 2017, for the first time, the region of West Kazakhstan reached the top 5 of the country's regions' competitiveness ranking. West Kazakhstan region's processing industry grew 14.3 percent in the five months of 2017 compared to the same span of the previous year - this is the best dynamic in the world. In the World Bank's Doing Business study, West Kazakhstan region is in 11th place in the country in terms of ease of doing business.
Actobe is the last in top 5 investment attractive regions’ list. In 2012, 430 billion tenge of investments were attracted to the Aktobe region, half of which is foreign direct investment.
74 projects worth 633.8 billion tenge have been introduced at the beginning of 2013, including the development of glass, rail and girder, gas processing and ferro-alloy plants because of foreign investment. The area is one of the three leaders in terms of fixed asset investments, showing a rise of 15% in 2013 compared to 2012. In 2016, in terms of foreign investment growth dynamics, the region ranked fourth: it grew from $367.3 million in 2015 to $1.1 billion. Regarding FDI growth in absolute terms, the region became the leader. Their volume rose by $ 631.2 million during the year. The FDI volume amounted to $ 1.8 billion in 2017, which is the fourth best result after the area of Atyrau, Almaty and East Kazakhstan.
15 Magyar Olaj és Gázipari Részvénytársaság LLC
16 KazMunaiGaz JSC
Capital city Nur-Sultan is not as popular as regions listed above, however it also showed great results in past 7 years. In 2016, the inflow of foreign investment decreased by 53.4%, from $ 424 million to $ 197.5 million (14th place), even though Gross Regional Product growth was 2.5% - the third result after the same Atyrau region and Almaty. In 2018, gross FDI inflows were $964 million (6th place), which is $377.4 million higher than in 2017. In terms of the growth of trade turnover, Nur-Sultan showed the best result in the country - 66%, its volume amounted to $ 6.93 billion, or 9.3% of the share of the country's total trade turnover.