For Press

06/12/2017

KEYNOTE SPEECH at «Kazakhstan Global Investment Roundtable»

Dear Ladies and Gentlemen, 

I welcome you at the first international round table dedicated to the issues of investing into Kazakhstan’s economy.

We are grateful that representatives of more than 100 international companies, financial organizations, embassies, NGOs and foreign mass media accepted our invitation.

Kazakhstan’s Government is always open to your proposals and new ideas. Therefore for the whole day my colleagues, ministers, representatives of public and private sectors as well as the country’s leading businessmen, will be working with you. 

Such a dialogue will foster exchange of opinions on your investment proposals and business prospects in Kazakhstan. We are hopeful that the suggested format of Kazakhstan International Business and Investment Dialog will become regular.

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The main goal of the Government is to form large-scale and sustainable strategy of fostering the process of attracting a “new generation” investments to Kazakhstan.

We view today’s meeting as a crucial step in this direction.

Why is Kazakhstan attractive for investments? 

What specific benefits and opportunities the investors will gain by developing their businesses in Kazakhstan? 

 

Firstly, the country’s economy started to stabilize after a difficult period of global changes between 2014-2016.

Thanks to the adopted measures the GDP growth in the 10 months of 2017 reached 4%. Private investments and the population’s consumer activity are recovering.

Thus the country as a whole has adjusted itself to new global realities. We are starting on the path of economic growth. 

Secondly, our country is entering a new stage of its development.

In the beginning of 2017, the President announced the Kazakhstan’s Modernization 3.0. Its objective is  to support the implementation of the Strategy “Kazakhstan – 2050” and five institutional reforms of President Nursultan Nazarbayev as well as to facilitate the country’s accession to the top 30 most developed nations of the world in the new environment.

Extensive work is launched in three areas: (1) political democratization (constitutional reform was implemented), (2) modernization of collective consciousness and improvement of the quality of human capital, (3) creation of the new model of economic growth, reduction of government’s role in the economy through privatization and deregulation to incentivize theprivate sector, technological upgrade and digitalization, and improvement of global competitiveness.

The Government adopted a Strategic Action Plan-2025 that includes detailed road maps for all key areas of socio-economic policy. It is currently being reviewed by the Head of State.

For effective change management and rising systemic risks, project–based management was introduced.  

The priority is given to 8 basic sectors of the economy as well as to the following cross-cutting measures:

  • Creation of new jobs in promising fields of economy;
  • Development of widespread entrepreneurship;
  • Technological upgrade and digitalization. 

Currently project-based management is being introduced at the regional level.

All the activities on project-based management are championed by Deputy Prime Minister, Yerbolat Dossayev.

Project-based management in the area of digital transformation is championed by another Deputy Prime Minister, Askar Zhumagaliyev.

Thus, we have done extensive preparatory work; \\ we know what to do and how to do it.

Thirdly, great opportunities to investors are offered by our policy of developing state-of-the-art knowledge-intensive manufacturing and upgrading basic sectors of economy and agro-industry, which will all become recipients of large-scale investments under the umbrella of Kazakhstan’s Modernization 3.0.   

We continue diversifying the economy and invite investors in the sectors of metallurgy, oil processing, chemicals and machine building.   

There are a lot of projects in Kazakhstan in the field of design and development of production of copper, gold, rare metals and rare-earth elements, including lithium and vanadium, phosphate raw material, and many others.  

For further development of manufacturing industry we are interested in investments in geological exploration, new technologies for enrichment and processing of raw materials.

 We have started a large-scale modernization of the agro-industrial complex. Kazakhstan is one of the global leaders in the production of wheat flour. We are strengthening this advantage, but we are also carrying out structural reform of the agrarian sector, diversifying the crop acreage in accordance with market demand.

The scientific, technical and technological re-equipment of the entire industry has begun, which include the introduction of the latest advances in the field of fertilizers, bioadditives, and selection.

All of these unleash great opportunities for investment in the food industry.

Along with the works carried out by the Government to renounce trade restrictions with China and other neighboring markets this will make the sector of intensive and export-oriented agribusiness particularly attractive.

Fourth, Kazakhstan today has become an investment-attractive country for  infrastructure development, logistics, andtransport and related services.

Over the past three years, we have carried out large-scale construction of infrastructure and created a short and economically feasible transport and logistics "leg" to enter the key world markets.

The construction of almost 3 thousand kilometers of the Kazakhstan section of the "Western Europe - Western China" International Transit Corridor has been completed, which will shorten the time of cargo transportation from the port of Lianyungang in China to St. Petersburg in Russia to 10 days.

A new "Kazakhstan - Turkmenistan - Iran" railroad corridor with a total length of about 900 km has been constructed to connect the Central Asian countries with the Persian Gulf and the Bandar Abbas port in the south of Iran.

The construction of the second railroad track of the Almaty-Shu section was completed, which increased the capacity of one of the busiest transit line sections on the "China - Central Asian countries" route by four times.

We had built a "Khorgos - Eastern Gate" dry port on the border with ChinaThis is the first land port in Kazakhstan and the largest logistics park in Central Asia.

The Aktau port of the Caspian Seawest Kazakhstan, was expanded. A new Kuryk port with a system of new ferry complexes was builtSuch measures will increase the loading capacity of Kazakhstan's ports to 24.5 million tons yearly.

These steps remove infrastructure constraints, shorten cargo transportation time from north to south and from east to west - and are profitable for business!

Our strategic goal is to make Kazakhstan a major transport and logistics hub in Central Asia.

In the nearest two or three years (by 2020), the Government plans to increase its traffic in transit to 2 million containers and receive revenues from transit up to 5 billion USD.

All transport and logistics infrastructure of Kazakhstan and our "Nurly Zhol" state program are associated with the Chinese mega-projects on creating the "Silk Road Economic Belt" and "One Belt and One Road", covering the greater part of Eurasia.

We invite investors to contribute in transport and logistics, to grow and earn with us!

Fifth, thanks to major investments of our state in the innovative industrialization of the country - and this is the policy we have been purposefully conducting for 8 years already - industrial enterprises of Kazakhstan have the opportunity to introduce advanced technologies, elements of Industry 4.0, automation and robotic production.

This year, together with German partners - the Fraunhofer Institute for Applied Research, we assessed the readiness of 500 enterprises of the processing and mining sectors for such modernization and prepared a roadmap for technological upgrade and digitization of the basic sectors of the economy.

Just yesterday during the meeting of the Government we had adopted a “Digital Kazakhstan” state program which is submitted for consideration of the Head of State.

We have confidently embarked on the path of digitalization and we offer you comprehensive cooperation in this field!

Sixth, due to its location in the center of the overland trade bridge between Europe and Asia, and our policy on good-neighborhood and reduction of trade barriers, Kazakhstan has access to the largest markets - the EAEU, Russia, China, and Central Asia.

Significant prospects for our investors are revealed by integration processes within the Eurasian Economic Union.

This is a unified customs borders-free market \\ with a volume of about $4 trillion \\ and \\ with a capacity of more than 180 million people.

We are located in close proximity to China and India.

Constant work is carried out to reduce customs and certification barriers for trade development in all foreign economic areas.

 

Seventh, we offer investors a completely new mechanism - the Astana International Finance Center.

Its main goal is to stimulate innovative activities and create conditions for attracting investments.

We created the finance center as a modern financial tool for integration with international exchanges. For its participants we offer concessional tax, visa and labor regimes.

The AIFC will operate in accordance with principles and norms of British law and with the court procedures carried out in English. The International Arbitration Center will operate on its territory in order to settle disputes.

It is of fundamental importance that from January 1, 2018, this Arbitration Center will operate under the extraterritoriality principle. Any investor can apply there regardless of the place of implementation of a project in the territory of the country.

Only few countries in the world can offer such financial services!

 

Eighth, the second large-scale "wave" of privatization, which is being conducted in Kazakhstan, gives great opportunities for investors.

The Government is implementing a policy of denationalizing the economy. About 900 companies (902) will move to a competitive environment.

The most attractive ones are 65 top companies of state property and quasi-public sector (57 companies of national holding companies).

I invite you to take part in the privatization.

I believe this is the most advantageous time for investors.

 

Dear Ladies Gentlemen!

In a short while, you are going to have a specialized “round table” and briefings where you can have detailed talks with members of the Kazakh Government about issues of your concern.

I am convinced that the measures and projects we propose could be of interest and advantage for international business.

In order to successfully implement our plans we need to attract new investments.

We already have a foundation to fulfill this task.

  • Today, according to the reports of PriceWaterhouseCoopers and the World Bank Kazakhstan takes 18th place among 189 countries on the tax climate level.

In addition, Kazakhstan takes 36th place on a strong note among 190 countries in the World Bank’s Doing Business. We have progressed on all 10 indicators of the rating. We are the first on “Protection of minority investors” indicator and sixth place on “Enforcing contracts”.

Currently the Government is working on further promotion within the Doing Business rating.

To this end, in 2018 we will prepare a new, already 7th package of legislative amendments to improve conditions for businesses at the national and subnational levels.

At the same time, we understand that in the conditions of increased global competition for investment, our country has no choice but to actively fight for each investor.

And we are ready!

Today the Government of Kazakhstan declares its commitment to the policy of creating the most favorable conditions for investors!

If you ask me what the Government has done to improve the investment climate, I can say with certainty that there are concrete solutions and you can rely on them!

I will focus on the main ones.

  • In order to stimulate investment inflow, we have developed a new national investment strategy and started to implement it.

A national company destined to attract investments called Kazakh Invest, with a network of foreign and regional structures, has been established. It will act as a "single negotiator" for foreign investors on behalf of the Government.

In addition, we will appoint special advisors of Ambassadors on investments in the key embassies of Kazakhstan. All of them will be available to you!

  • A special export strategy has been developed, aimed at removing barriers, developing external and internal infrastructure to support export producers. Your partner in this regard is the new "Kazakh Export" national company.
  • We have radically changed the legislation in the field of entrepreneurship and investment in two important areas.

The first is a frontal cost reduction for business and the deregulation reform, primarily in energy, transport, logistics and housing and communal services. We reduced the requirements for the inspections of small and medium-sized businesses almost by 60%. The number of licenses and permits has been reduced by more than 3 times. Planned inspections of tax authorities have reduced by 40%

The second direction is the reduction of red-tape and the increase of electronic public services through the E-government web portal.

  • The Government has drafted and submitted to the Parliament a draft of the new Tax Code, philosophy of which is aimed at protecting the interests of a bona fide taxpayer and encouraging subsoil users. All ambiguities and inaccuracies will be interpreted in favor of taxpayers.
  • In addition, a new code on subsoil and subsoil use, based on the principle of "first come, first served", was developed. It will introduce an international system for calculating reserves and provide free access to geological information. The measures taken will shorten the time for granting subsoil use rights from 18 months to 10 days for solid minerals.
  • A new Customs Code has been prepared, designed to provide a significant impetus to business development. The priority is placed on the electronic form of filing declarations. As a result, the time of release of goods will be reduced by six times, to 4 hours.
  • A draft law has been developed that improves the regulation of free economic and industrial zones.

As you know, our country hosts 12 special economic and 22 industrial zones. The new draft law simplifies the authorization procedures, gives new additional advantages and opportunities for investors.

Thus, the terms for obtaining land plots have been reduced to 1 month, while the need to address akimats is removed.

  • Tax concessions for property and land tax will now be introduced from the moment of registration of the enterprise as a participant in the SEZ, and not after putting it into operation as it is done now.
  • All participants of the SEZ will have the opportunity to conclude investment contracts providing for exemption from payment of customs duties. Now this norm is valid only for enterprises registered before 2012.
  • All these important for investment laws have already been discussed in the Majilis, and after consideration in the Senate will soon be submitted for signature to the Head of State. We plan that all of them will come into effect starting from 2018.
  • The Government recognizes that in many respects the investment climate depends on the actions of local authorities. Therefore, from this year we have introduced a new rating on assessing the regions for ease of doing business.

The main emphasis will be placed on strengthening the protection of investors' rights, ensuring transparency in the procedure for issuing land plots for industrial facilities.

  • We liberalized our approaches to attract foreign labor. This is an important question. During the years of Independence, we generally solved the problem of training workers.

At the same time, the tasks to be accomplished within the framework of the Third Modernization of Kazakhstan require highly qualified personnel on the professions of the "new generation", possessing the most modern skills and abilities for working in high-tech production.

That is why we make it easier to attract foreign labor. Citizens of more than 60 countries can already come to Kazakhstan on a visa-free regime.

The requirements for knowledge of the state language, local content requirements in personnel, experience of work within a particular foreign legal entity are simplified.

  • A big issue of concern for all investors is public-private partnership. We have simplified all procedures for project planning.

We have approved standard bidding documents in the fields of education, health, sports, housing, agriculture, environmental protection, energy and transport. We also optimized the examination of draft contracts and bidding procedures.

We have also increased the consumption guarantees up to three years or more.

To increase awareness and exchange of experience, we have created a unified database of successfully implemented PPP projects. Now it is available to you.

By the way, today, our investment forum will be marked by signing of a memorandum on the Big Almaty Ring Road project.

I want to congratulate our Turkish and Korean partners. The process has gone! This is the "first fruit" within the framework of the updated PPP mechanism and a good signal for all investors.

Dear Ladies and Gentlemen! 

The government of Kazakhstan has always followed and will follow international principles and standards for working with investors.

The key points of our work are ensuring the inviolability of private property, the rule of law. Since 2018, we will provide access to the settlement of possible disputes on the rules of English law.

Kazakhstan was and remains an open country. We are transparent, we follow our commitments, above all in the framework of the WTO.

We purposefully became the 48th country to join the OECD Declaration on International Investment and Multinational Enterprises and joined the Investment Committee of the organization.

The Government of Kazakhstan has drafted a special Roadmap on the implementation of the recommendations, standards and practices of OECD countries in national legislation.

Today I would like to emphasize the Government's determination to create not just good, but the best conditions for business.

First, we will strengthen advisory services for investors. The response for each of your requests to the state and local executive bodies will be provided within ten working days in English.

Personal responsibility for this will be borne by the first heads of central and local state bodies.

Second, we will gradually start providing public services to foreign investors in English starting from 2020.

Public service centers, state clinics, schools, pre-school education organizations, migration and tax authorities will specially recruit employees with knowledge of English.

Third, all key regulatory and legal acts for investors will also be published in English on the websites of the ministries of justice, foreign affairs and the website of the national company "Kazakh Invest".

Fourth, we will continue improving the conditions for entry into the country for foreign investors, primarily the processes of introducing an electronic visa, crossing borders, migration accounting and security issues.

Each authorized body will conduct the necessary works on all these four areas. I reserve the control functions for myself.

Dear friends!

 

I hope that today's event will promote close cooperation and highlight new opportunities and prospects for business partnerships.

We are ready to promptly resolve problems through continuous dialogue with investors. The Council of Foreign Investors, chaired by President Nursultan Nazarbayev, is operating to face strategic issues at the highest level.

At the level of the Government, we are ready for a constant dialogue through the Council on improving the investment climate and the work of the European Business Association of Kazakhstan.

The Investment Ombudsman for the protection of the rights of foreign investors is also available to you.

The Republic of Kazakhstan has already proved its standing among investors as a reliable business partner.

Over the past 10 years alone, about $ 250 billion of foreign direct investment in various sectors of the economy has been attracted.

We are grateful to every investor who has come to Kazakhstan to implement projects. We hope that their example and our conversation today will inspire you to reach new business heights in Kazakhstan!

Seizing the opportunity to invite everyone to the Industrialization Day - tomorrow in the Congress Center of EXPO, where you will explore course of the forced industrialization of our country in real time, find out with success stories, live business projects with Kazakhstani and foreign investors working in our country.

 

Kazakhstan invites!