Kazinform reported on April 9, 2024, that in 2024, Kazakhstan attracted a record-high direct investment from Russia, with Russia surpassing the Netherlands for the first time to become the largest source of foreign direct investment in Kazakhstan. However, the overall foreign direct investment data of Kazakhstan showed a downward trend, drawing market attention to the country's investment environment and future prospects.

Russian Investment Surges to the Forefront, Setting a New Record

According to data from the analysis center of the Association of Financial Institutions of Kazakhstan, in 2024, Russian direct investment in Kazakhstan reached $4 billion, an increase of $1 billion compared to 2023, accounting for 23.6% of the total foreign direct investment of $17.1 billion throughout the year, making it the largest source of investment in the country. By comparison, the previous leading country, the Netherlands, invested $3.8 billion.

The analysis suggests that affected by Western sanctions, more and more Russian capital is turning to neighboring countries with relaxed policy environments. As a member of the Eurasian Economic Union, Kazakhstan enjoys simplified customs procedures and more convenient cross-border investment conditions, creating a favorable foundation for Russian capital inflows.

In addition, Russian investment is concentrated in the energy, infrastructure, and industrial sectors, driving employment and promoting economic growth in Kazakhstan. Analysts pointed out that compared to increasingly tightened Western capital channels, Russian capital has greater sustainability in a globally unstable environment.

Overall Investment Declines, Investment Structure Requires Optimization

Despite the new high in Russian investment, the overall situation of foreign direct investment is not optimistic. Data provided by the Kazakhstan National Investment Company (KAZAKH INVEST) shows that in 2024, the total amount of foreign direct investment in Kazakhstan fell by 28% year-on-year, decreasing from $23.9 billion in 2023 to $17.1 billion, while the net investment figure showed its first negative value at -$2.55 billion, marking the first occurrence since statistics began in 2005.

Kazakh Invest believes that this decline is not due to a decrease in Kazakhstan's investment attractiveness but is influenced by the following three aspects:

- Global trends: According to UNCTAD data, global actual FDI fell by 8% in 2024, with developing countries averaging a 2% decline and Asia seeing a 7% drop, with China experiencing a significant 29% decline.

- Completion of large projects: Some large raw material projects in Kazakhstan have entered their final stages, such as the completion of the expansion project of the Tengiz oil field, leading to a decline in investment in this sector.

- Decrease in reinvestment: In 2024, the amount of reinvested funds decreased by $7.1 billion, with some companies choosing to distribute profits as dividends rather than continue investing.

Emergence of High-Value Projects, Diversification Strategy Begins to Show Results

Despite short-term fluctuations, Kazakh Invest remains optimistic about the medium and long-term prospects. Data shows that in 2024, Kazakhstan signed several strategic investment agreements in high-value fields, including:

- Petrochemical complex project (total investment of $7 billion), involving Kazakhstan National Oil and Gas Company KazMunayGas (40%), Sinopec of China (30%), and Sibur of Russia (30%);

- Coal chemical project invested by China CHN Energy ($4 billion);

- Nonferrous metal deep processing industrial park invested by China Eastern Hope Group ($12 billion, expected to create 10,000 jobs);

- Natural gas processing and transportation infrastructure project in cooperation with Qatar (over $10 billion);

- New grain deep processing projects, such as the corn starch project invested by Singapore Darwin Biotech ($over $150 million) and the corn project initiated by China Fufeng Group in the northern region ($1 billion).

Data from the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) shows that Kazakhstan continued to rank first in North Asia and Central Asia with a new project investment amount of $15.7 billion, growing by 88% year-on-year.

National Policies Accelerate Reforms, Still Maintaining Advantage in Attractiveness

Kazakh Invest pointed out that Kazakhstan's current investment policies are shifting toward structural optimization and quality enhancement, focusing on processing manufacturing, export-oriented industries, and high-tech. Meanwhile, the government is promoting multiple institutional reforms to improve the overall investment environment:

- Launching a national digital investment platform, setting up an investor complaint registration system;

- Implementing differentiated regional investment policies to support non-resource-based economic development;

- Establishing complementary preferential mechanisms to combine policy tools according to project needs;

- Opening "green channels" for strategic projects to reduce administrative obstacles and expedite approval efficiency.

According to the Global Investment Attractiveness Index, Kazakhstan ranked 39th globally in 2024 and entered the top 35 most open foreign investment markets of the OECD, demonstrating strong institutional competitiveness.

In summary, although the total FDI in 2024 declined somewhat, Kazakhstan is actively promoting the transformation of its investment structure and enhancing the value of local industrial chains. With the launch of major new projects and continuous optimization of the policy environment, experts generally believe that Kazakhstan will likely reignite foreign investment enthusiasm in the medium to long term and strengthen its economic sovereignty and stability through multilateral cooperation.

Original article: https://www.toutiao.com/article/7491147625098527283/

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