Kazakhstan Business & Economy - The Times Of Central Asia

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OpenAI

OpenAI Registers as a Taxpayer in Kazakhstan

OpenAI, the U.S.-based developer of the ChatGPT chatbot, has officially registered as a taxpayer in Kazakhstan and will now pay value-added tax (VAT), according to the State Revenue Committee (SRC) of the Ministry of Finance. The announcement comes as part of the government’s ongoing efforts to ensure equitable taxation of foreign digital service providers operating in the country’s market. Kazakhstan introduced its digital services tax, commonly referred to as the “Google tax”, in 2022, becoming one of the first countries in Central Asia to do so. The policy aims to bring major international tech firms into the national tax framework. “As part of improving interaction with global digital platforms, in May 2025, OpenAI, L.L.C., a leading American organization in the field of artificial intelligence and widely known as the developer of the ChatGPT intelligent system, was conditionally registered. Now, for providing services to individuals in Kazakhstan, the chatbot will pay VAT in accordance with tax legislation,” the SRC said in a statement. ChatGPT is based on the GPT (Generative Pre-trained Transformer) language model. It can understand and respond to user queries, assist with translations, compose letters, generate code, and support learning and research tasks. The digital services tax has become a significant revenue stream for Kazakhstan. In 2022, it contributed 16.4 billion KZT (approximately $32.1 million) to the state budget. Revenues increased to 26.3 billion KZT ($51.4 million) in 2023 and reached 26.4 billion KZT ($51.6 million) in 2024. To date, around 100 international companies, including Google, Apple, Netflix, and Amazon, are registered as VAT payers under the digital services tax regime. The registration process for foreign companies has been streamlined to facilitate compliance. As previously reported by The Times of Central Asia, OpenAI also registered as a taxpayer in Uzbekistan in April.

Digitalization

Central Asian and Pakistani Leaders Showcase Digital Future at GSMA Summit in Tashkent

The second day of the GSMA M360 Eurasia conference, held on May 21 in Tashkent, delivered a resounding message of partnership, innovation, and forward-looking digital strategies. Leaders from Kazakhstan, Uzbekistan, and Tajikistan, alongside delegates from other countries, shared insights on fostering resilient digital economies through collaboration and technology. Kazakhstan: Digital Leadership and AI Strategy Kazakhstan’s Minister of Digital Development, Innovation and Aerospace Industry, Zhaslan Madiyev, highlighted his country’s digital advancements. Over the past decade, Kazakhstan has ascended into the global top ten for online service quality and now ranks 24th in e-government development. “More than 90% of transactions are cashless,” he noted, “and over 35 personal documents are exclusively digital. Digital documents now carry the same legal weight as paper ones.” Citizens can even travel domestically using only a digital ID on their phones. Madiyev spotlighted Astana Hub, Kazakhstan’s primary IT cluster, which hosts over 1,600 startups and global tech firms, with outposts in Silicon Valley, Singapore, Saudi Arabia, and the UK. “We recently signed an agreement with Uzbekistan’s IT Park,” he said, “and we will soon open a joint mobile lab with Tcell in Uzbekistan.” He emphasized that cross-border collaboration enables startups to access global markets. Artificial intelligence (AI) featured prominently in Madiyev’s address. He announced the formation of a national AI committee and the adoption of a five-year strategy that includes ethical guidelines, product labeling, and a public AI platform. A newly acquired supercomputer, boasting two exaflops of processing power, will soon support universities, startups, and companies. Kazakhstan also plans to train one million individuals over five years, spanning schoolchildren to government employees. Madiyev invited Uzbekistan to join a regional AI collaboration centered around the forthcoming International Center of AI in Astana, which will host labs, exhibits, hackathons, and workspaces for startups and major tech firms. Uzbekistan: Building a 5G Future In an interview with The Times of Central Asia, Dmitriy Shukov, CEO of Perfectum, the first stand-alone 5G mobile network operator in Uzbekistan, discussed the company’s vision. Perfectum primarily serves the business sector with advanced network solutions. “We focus on B2B clients and will continue to develop cutting-edge services for a fast-growing economy,” Shukov stated. On expanding 5G access nationwide, Shukov pointed to device compatibility. “People need access to 5G stand-alone service. We hope GSMA can facilitate discussions with handset manufacturers to unlock all 5G features here,” he said, underscoring that broader access is essential for digital inclusivity. Perfectum’s pioneering role in the region sets a benchmark for others. Discussing Uzbekistan’s telecom infrastructure, Shukov expressed optimism. “Our population grows by 700,000 annually. Sixty percent are under 30, demanding high-speed, low-latency services. And the regulatory environment is now very favorable to investors,” he said. These dynamics, he concluded, set a strong foundation for the next three years. Tajikistan: Rethinking Telecom Models Tcell CEO Ozodkhon Davlatshoev, whose company serves over two million customers and is Tajikistan’s largest mobile operator, addressed the pressures facing the sector. “Our market share is about 14%, growing 7% annually, but with just 2% population...

Air Routes

Kazakhstan to Launch New Flights to 15 Foreign Cities

Kazakhstan will open 15 new international air routes this year, operated both by domestic carriers and by new foreign low-cost airlines entering the market. The announcement was made by Minister of Transport Marat Karabaev during a government session in the Senate, the upper house of Kazakhstan’s parliament. “The new destinations include cities such as Munich, Budapest, Shanghai, Guangzhou, and others,” Karabaev stated. Most of these routes will be serviced by Kazakh airlines Air Astana and SCAT. Karabaev also highlighted the entry of five new low-cost carriers from India, Thailand, and South Korea, following the implementation of Kazakhstan’s open skies regime. The additional eleven destinations are Cairo, Da Nang, Abu Dhabi, Hurghada, Busan, Osh, Mumbai, Kulja, Rome, Gazipaşa, and Samarkand. The incoming low-cost carriers include SpiceJet (India), Thai AirAsia X (Thailand), Eastar Jet and T’Way Air (South Korea), and Air Arabia Abu Dhabi (UAE). The open skies regime eliminates all restrictions on the number of flights operated by foreign carriers on international routes not served by domestic airlines. It currently applies to 15 airports across Kazakhstan: Astana, Almaty, Shymkent, Aktau, Aktobe, Karaganda, Ust-Kamenogorsk, Pavlodar, Kokshetau, Taraz, Petropavlovsk, Semey, Turkestan, Kostanay, and Uralsk. Introduced in 2022, the policy has been extended through the end of 2027. Karabaev noted that the increased presence of low-cost airlines is fostering greater competition within the domestic aviation market. He also addressed the development plans of VietJet Kazakhstan, formerly known as Qazaq Air. The airline, now under the ownership of Vietnam’s SOVICO Group, aims to expand its operations beyond Vietnam by launching additional routes between Kazakhstan and neighboring Russia. As previously reported by The Times of Central Asia, SOVICO Group is also considering the acquisition or management of an airport in Kazakhstan. Currently, VietJet Kazakhstan operates 14 domestic routes, four of which receive state subsidies, and four international destinations. The airline has reportedly been offered an option to manage an airport in the Kyzylorda region.

Agriculture

Kazakhstan’s Record Sugar Beet Harvest Exposes Processing Industry Failures

Kazakhstan’s sugar industry saw a record sugar beet harvest in 2024, but the processing sector was unprepared to handle the influx. The gap between agricultural production and industrial capacity has once again underscored systemic weaknesses in the sector. A detailed analysis by Energyprom.kz highlights these ongoing challenges. Record Harvest, Limited Processing According to the National Statistics Bureau, sugar beet cultivation reached an all-time high in 2024, with 25,000 hectares sown, a 34% increase from the previous year. Enhanced government support spurred the expansion: farmers received 25 tenge per kilogram of beets delivered for processing (up from 15 tenge), and transport subsidies were raised from 25 to 45 tenge per kilometer. These incentives encouraged investment in farm equipment and modern technologies, lifting average yields to 507 centners per hectare. This translated into a gross harvest of nearly 1.3 million tons of beets, 2.5 times more than in 2023. However, only slightly more than half of the crop was processed. Senators in Kazakhstan’s Parliament reported that just 58.3%, approximately 700,000 tons, was processed. The remainder was either left to rot or exported, primarily to Kyrgyzstan. The Ministry of Agriculture offered a slightly higher figure, reporting that 989,000 tons had been processed. Even so, this left hundreds of thousands of tons unutilized. Responding to parliamentary concerns, Prime Minister Olzhas Bektenov acknowledged the issue, citing “high credit burdens” on processing enterprises and “dumping” by neighboring countries as key obstacles. Aging Infrastructure and Unrealized Potential Kazakhstan currently has four operational sugar factories, but only three are equipped to process sugar beets. These facilities are in a state of significant disrepair: the Koksu plant is 93 years old, Merken is 91, and Taraz is 88. Although hopes had been pinned on modernizing the Taraz facility to process up to 600,000 tons annually, the planned upgrades did not materialize. As a result, sugar production dropped despite the record harvest. In 2024, Kazakhstan produced 164,400 tons of sugar, a 25% decrease from the previous year. Meanwhile, exports surged: 143,000 tons of sugar were exported, a 7.5-fold increase. Nonetheless, imports continue to dominate the domestic market, covering 74.1% of consumption. Crop Reductions and Financial Risks Facing processing bottlenecks, the Ministry of Agriculture has announced plans to scale back sugar beet cultivation. In 2025, the planted area will be reduced to 18,400 hectares, a 25% decrease. The Zhambyl region will see its sugar beet area halved, while Zhetysu will experience a 20% cut. The decision has drawn strong criticism from farmers and lawmakers. Many producers had invested heavily based on previous state projections, purchasing machinery and training personnel. “What will happen to farmers who took out loans, bought equipment, and are now faced with a revision of the state strategy? This could lead to mass bankruptcies and negate years of support for the industry,” senators warned in an appeal to the prime minister. Strategic Setback and Future Uncertainty Kazakhstan’s sugar industry development plan for 2022-2026 envisioned expanding cultivated areas to 38,000 hectares, boosting production to 1.8 million tons of beets...

Aging Population

By 2050, Nearly One-Fifth of Kazakhstan’s Population Will Be Over 60

Kazakhstan is on the cusp of a significant demographic transition. A recent report by the Unified Accumulative Pension Fund (UAPF), the agency overseeing the country’s pension system, projects that by 2050, 19% of Kazakhstan’s population will be of retirement or pre-retirement age. The study, published on the UAPF website, reveals that as of January 1, 2025, Kazakhstan's population had surpassed 20.3 million. Of this total, 42.8% — approximately 8.7 million people — were under the age of 25. Another 48% (around 9.7 million) were between 25 and 65, while 9.2%, or about 1.9 million people, were over 65 and currently classified as pensioners. Overall, individuals aged 60 and older now make up 13.9% of the total population. According to UAPF forecasts, the national population is expected to grow to 26.3 million by the end of 2050. However, this growth will be accompanied by an aging trend. “This means that by 2050, on average, one in five Kazakhs will be aged 60 or older,” the report notes. This shift mirrors a broader global pattern of aging populations and declining birth rates. Life expectancy in Kazakhstan, which had declined during the COVID-19 pandemic, has rebounded significantly. It rose from 70.23 years in 2021 to 75.44 years in 2024. At the same time, the Total Fertility Rate (TFR) has decreased from 3.32 children per woman in 2021 to 2.80 in 2024, with projections indicating a further drop to 2.42 by 2050. “With the gradual decline in birth rates and increased life expectancy, fewer people are entering the labor market, and the imbalance between pensioners and the working-age population continues to grow,” UAPF analysts stated. The report also predicts a neutral migration balance by 2050, meaning the number of people emigrating will roughly equal those immigrating for permanent residence. This marks a shift from earlier decades of net inward migration. Since 1991, over 1.15 million ethnic Kazakhs born abroad have moved to Kazakhstan permanently, according to data previously reported by The Times of Central Asia. As Kazakhstan confronts these demographic realities, policymakers will need to consider long-term strategies to ensure the sustainability of its pension system and the vitality of its labor force.

Transportation

Kazakhstan’s Terminal in Xi’an Drives Surge in China-Europe Freight

Kazakhstan’s logistics terminal in Xi’an, a major transportation hub in China’s Shaanxi Province, has catalyzed a dramatic surge in container traffic along the Trans-Caspian International Transport Route (TITR), boosting Kazakhstan’s position as a critical player in regional trade. According to Kazakhstan Temir Zholy (KTZ), the national railway operator, freight volume from China via this corridor increased 33-fold in 2024. Operational since February 2024, the terminal has become a linchpin in cross-continental trade, enhancing the flow of goods between China and Europe through Kazakhstan. Xi’an hosts China’s largest dry port and is a pivotal launch point for freight to Europe. Over 30% of all container trains departing China for the European Union originate from Xi’an, while about 40% of China's imports from the Commonwealth of Independent States (CIS), which includes Kazakhstan and Russia, are routed through the city. The Kazakhstan terminal in Xi’an currently has an annual handling capacity of 133,000 twenty-foot equivalent units (TEU). In 2024, it processed over 276,000 tons of cargo, equivalent to approximately 23,000 TEU. In the first four months of 2025 alone, the terminal handled 10,524 TEU (or 126,288 tons). Plans are in place to expand throughput to 83,000 TEU annually by 2030. The terminal predominantly facilitates the shipment of vehicles and auto parts from top Chinese manufacturers including BYD, Geely, Chery, and Hongqi. It also processes large volumes of electronic goods, metal products, and consolidated cargo. This development underscores Kazakhstan’s growing strategic role in the TITR, a route increasingly seen as a vital alternative to the Northern Corridor passing through Russia. As trade dynamics shift, Kazakhstan continues to assert itself as a central transit hub connecting China with Central Asia and Europe.