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Kazakhstan to Expand Trade Cooperation with Chinese Provinces

On March 19th, Kazakhstan’s Minister of Trade and Integration Arman Shakkaliev met Ma Xingrui, Communist Party Secretary of China’s western Xinjiang Uyghur Autonomous Region (XUAR) to discuss strengthening Kazakh-Chinese trade cooperation and the opening of a Kazakh trade mission in XUAR’s main city of Urumqi. In 2023, trade turnover between Kazakhstan and China reached $31.5 billion, with the XUAR accounting for over 64% or $20.3 billion of the total. Referencing his country’s focus on trade cooperation with China, the Kazakh minister stated, “Targeted work is being carried out with each province and a joint action plan is being developed to increase trade and attract investment in projects in priority areas. Kazakh businesses are showing more and more interest in supplying products to the Chinese market. We very much appreciate the support of the XUAR leadership in resolving issues of access of Kazakh goods to China.” The minister further reported, “To increase trade between our countries, especially with the XUAR, the Kazakh Head of State has instructed the opening of a trade mission in Urumqi. The QazTrade organization, which is subordinate to the Ministry of Trade and Integration, will be involved in the activities of this representative office. In the future, it will become a conduit between our manufacturers and Xinjiang companies interested in purchasing products.” The parties also discussed prospective joint investment projects and in particular, interest from Kazakh businesses in Chinese investment in the construction of feedlots for cattle, the creation of meat processing facilities and processing of cereals.

Central Asia Kazakhstan Business & Economy Kazakhstan Business & Economy

EDB Boosts Investment in Kazakh Projects

In 2024, the Eurasian Development Bank (EDB) will invest no less than $1 billion in Kazakhstan, with priority sectors listed as transportation, industry, energy and environmental improvements, agribusiness, and the construction and modernization of social infrastructure. The announcement was made during a meeting on March 18th between Kazakhstan’s Prime Minister Olzhas Bektenov and Nikolai Podguzov, Chairman of the EDB Management Board. EDB is an international financial institution whose members include Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Podguzov reported that last year, the EDB financed several investment projects in various sectors of Kazakhstan’s economy, including the construction of a polypropylene plant, the procurement of diesel locomotives, and the development of wind farms in the Kostanay region. Kazakhstan’s share of the EDB’s annual investment surged from 48.5% in 2022 to 59% in 2023. The prime minister stressed the significance of investment in large-scale infrastructure initiatives recently listed by Kazakhstan’s president as the development of roads, housing construction, utility upgrades, and gasification of cities and villages. “The bank should prioritize major infrastructure projects,” stated Bektenov. “We are ready to enhance cooperation with the bank on mutually beneficial terms.”

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What Bank Loan Data Can Tell Us About Kazakh Business in 2023

After being severely tested by the pandemic in 2020-21, several thousand companies in Kazakhstan closed due to decreased demand and supply chain disruptions. Though the problems of local businesses began long before the pandemic, the two years of lockdown wiped out many good players and made those that survived more dependent on government orders and projects. Overall, Kazakhstan has a primarily commodity-driven economy (crude oil, metals and petrochemicals account for the majority of export earnings), and the country's economic fortunes have tracked the prices of a short list of major commodity exports. Thus, the government finds it hard to diversify the economy. Oil price volatility affects the national currency, and the ups and downs in the tenge exchange rate versus hard currencies make it difficult to be in a business with an investment cycle longer than one and a half to two years, as you have lower revenues amid dollar investments. This is one of the reasons why launching long-term projects in the country is difficult when there are no guarantees of sales, while currency risks can hit any project. The government has been active in attracting foreign investment, offering state support and protection, but only relatively recently did it begin to pay the same attention to the demands of domestic investors. However, this is only the beginning of a very long journey towards reducing dependence on imports and expanding the range of exports to stabilize the economy. A debt-driven economy The share of the private sector in Kazakhstan is difficult to measure. If we take SMEs (small to medium-sized enterprises) as the core of private business, in different years it fluctuates between a range of 20-30% of GDP. However, since state capitalism is entrenched in the country, even among SMEs there are contractors working for state and quasi-state structures, receiving funds from state companies and agencies. One-hundred-percent private companies that do not depend on government contracts finance their operations from their own or borrowed capital. This is why, in a transparent economy like Kazakhstan’s, looking at loan data can reveal the main trends in business and which niches have not yet been occupied and could be interesting for investment by both foreign and local players. It is best to look at the country's economy through the loan portfolio of banks that are subject to international banking regulation, whose indicators meet an easily understandable standard. There is a caveat: in Kazakhstan there is also the Development Bank of Kazakhstan, which is not included in the table below. It is technically not a bank, but rather a development institution financed from the quasi-public sector by Baiterek National Management Holding, which receives budgetary funds. In addition, most extractive-industry companies in Kazakhstan – due to their high capital expenditures and the shallowness of the country’s financial market – raise funds in the U.K., Switzerland, the U.S. and Russia. Chinese banks rarely lend to 100%-Kazakh companies, limiting themselves to trade credits (in the form of equipment) or loans to joint ventures with Chinese...

Central Asia Uzbekistan Uzbekistan Business & Economy Business & Economy

Uzbekistan to Increase Production and Export of Agricultural Produce

At a government meeting chaired by President Shavkat Mirziyoyev on March 18th, it was reported that in 2023, Uzbekistan produced 23 million tons of fruit and vegetables, but exports reaped just $2 billion, far short of the anticipated $5 billion. Over the past year, over ten new markets have opened for Uzbek agricultural exports, including Australia, New Zealand, Singapore, Colombia, and Indonesia, raising the number of countries importing agricultural products from Uzbekistan to 85. There are however, shortfalls in the sector. The potential of one million hectares of land previously used for grain and earmarked for the cultivation of fruit and vegetables is yet to be exploited. The same applies to 508,000 hectares of household plots plus a further 260,000 hectares of land lying barren. At the meeting, the head of state expressed his readiness to consider any steps necessary for increasing agricultural and food exports in the coming year: “Controlling inflation and ensuring currency stability are directly related to exports. If we do not expand the conditions for export along with an increase in production, the result will not meet expectations.” To that end, the head of state supported the proposal to boost agricultural exports by opening Uzbekistan’s trading houses in major port cities such as Nagoya, Mersin, Rotterdam, Qingdao, Klaipeda, and Doha. One of the most vital issues is the certification of Uzbek agricultural produce for export. Following the launch of the first private laboratory with international accreditation at the Agricultural Services Centre in Yukorichirchik, $8 million will be invested in similar modern laboratories in Zangiata, Fergana, and Samarkand this year. A reference laboratory will also be opened in Tashkent to ensure that private laboratories comply with international standards.

Central Asia Kazakhstan Local Politics Business & Economy Kazakhstan

Kazakhstan Bans LPG Export and Wheat Import

To prevent shortages in the domestic market, the government of Kazakhstan has extended the ban on export of liquefied petroleum gas (LPG) for six months. The ban on import of wheat by road, rail, and water has also been extended for another six months in a move to prevent ‘gray schemes’ for the import of wheat into Kazakhstan from Russia and its further re-export. The sole exceptions are rail deliveries to Kazakh flour mills and to poultry enterprises for fodder. In both cases, imported wheat can neither be sold on the domestic market nor re-exported. The Kazakh government has also announced a five-year extension of anti-dumping measures against manufacturers of bearings from China and electrodes from India to protect its country’s manufacture of similar goods.

Central Asia Business & Economy Kazakhstan Kazakhstan Business & Economy

EBRD Supports Expansion of Kazakhstan’s Salt Production

The European Bank for Reconstruction and Development (EBRD) has provided a convertible loan of up to KZT 5.5 billion (€11 million) to Araltuz, a leading Kazakhstan-based producer of table and low-grade industrial salt in Central Asia. The funds will be lodged with Salt Industry Ltd., a joint-stock company operating under the jurisdiction of the Astana International Financial Centre and a holding company of Araltuz. The loan will enhance the company’s investment program and support construction of new manufacturing facilities for Kazakhstan’s production of vacuum salt, also known as evaporated or culinary salt. It will also help Araltuz diversify and expand exportation to Europe, the Middle East and China, and implement a corporate governance action plan. With more than €10.1 billion invested in the country to date through 320 projects, Kazakhstan is the EBRD’s largest and longest-running banking operation in Central Asia.