Special Report – Belt and Road

Kazakhstan eager for business with China’s ‘Belt and Road Initiative’

Synergies with Nurly Zhol infrastructure programme expected to make implementation of initiative quicker than in other central Asian countries

PUBLISHED : Wednesday, 27 September, 2017, 3:48pm
UPDATED : Wednesday, 27 September, 2017, 3:47pm

Among countries in central Asia now turning their attention to the opportunities offered by China’s “Belt and Road (B&R) Initiative”, Kazakhstan has been notably fast out of the blocks.

The relevant authorities have been quick to seize on the possibilities, dispatching high-level delegations to introductory summits, initiating reforms to ease the way for international investors, and making it clear to all parties that the resource-rich country with a population of 18 million is open for business.

“The implementation of B&R-related plans is expected to be faster than in other participating countries due to substantial synergies with the Nurly Zhol [economic stimulus] programme announced by President Nursultan Nazarbayev,” says Dauren Tasmagambetov, head of the assets privatisation and restructuring department of Kazakhstan’s Samruk-Kazyna National Wealth Fund.

“The majority of Nurly Zhol projects may be considered as a part of a broader B&R framework, as they directly contribute to the improvement of the country’s infrastructure and EU-Asia transit potential.”

Since independence, he notes, Kazakhstan has taken steps to optimise the legal and regulatory environment for foreign investors, making it easier to do business. Special attention has been given to protecting minority rights, allowing exemptions from import customs duties for strategic projects, cutting corporate income tax, and making in-kind state grants for priority investments.

In principle, these grants - up to a maximum of 30 per cent of the total fixed-asset investment - can cover plots of land, buildings, machinery, equipment, computer hardware, control devices, and means of transport.

To help with involvement, local registration of large and medium-sized businesses adheres to a “one-stop shop” principle. All relevant documents can be submitted to a single state authority, one of the so-called public service centres. Assuming everything is in order, certificates of registration can generally be issued within one day. Documents can also be filed online via a government portal.

That said, it also makes sense for overseas investors to seek advice and listen to local expertise.

“Like anywhere else, it can sometimes be a challenge to find the right business partner,” Tasmagambetov says. “Success comes from building good relationships, and we can give assurances that Samruk-Kazyna pays great attention to its reputation and responsibilities as a strategic partner when working with foreign investors.”

The national wealth fund was established in 2008 as an investment holding company. Its prime mission is to support the modernisation of the economy through efficient management of its portfolio, promoting sustainable development, and supporting “catalytic” investments in priority sectors. The value of the fund’s assets stood at more than US$67 billion at the end of December 2016.

“The country’s programme of privatisation offers business and investment opportunities in nearly all sectors of the economy,” Tasmagambetov says. “We also want to extend access to new technologies and know-how through strategic partnerships with multinational companies.”

In terms of immediate potential, he points to the oil and gas industry, construction, agriculture, chemicals, heavy and light engineering, and the mining sector. There are also high hopes for the renewable energy sector as one for the future.

“Samruk-Kazyna is open for every investor and would be delighted to do business with Hong Kong- and China-based companies,” Tasmagambetov says.

“Total financing made available for the Nurly Zhol programme can be compared to the state’s annual budget. As a result, the overall lending and borrowing capacity of Kazakhstan’s banks is able to support new business initiatives. Of course, Asian banks are always welcome to participate, and we have long relationships with many of them already.”