Foreign Investment - The Times Of Central Asia

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Foreign Investment

Kazakhstan Takes Sixth Position in FDI Standout Watchlist

Kazakhstan is entering 2024 with significant investment momentum, as it secures the sixth position in the Foreign Direct Investment (FDI) Standouts Watchlist for 2024, released on December 11 by the fDi Intelligence service of the Financial Times. The country's robust macroeconomic performance and continuous reforms have played a key role in making Kazakhstan one of the top FDI destinations globally. The study conducted by fDi evaluates the macroeconomic and FDI trajectories of the world's top 50 FDI destinations. It uses data from the International Monetary Fund (IMF) and the FT’s cross-border investment monitor called fDi Markets. The purpose of this comprehensive analysis is to identify countries starting the new year with a strong macroeconomic performance and impressive FDI momentum. The International Monetary Fund (IMF) has forecasted a real gross domestic product (GDP) growth of 4.6 percent for Kazakhstan in 2024, which is closely aligned with the Fund’s November projection of 4.8 percent for the year 2023. The country has been grappling with inflationary pressures, which peaked at slightly over 21 percent year-on-year in February 2023. However, measures taken by the government have helped curb this surge, and inflation was projected to stabilize around 10 percent by the end of 2023. In its October 2023 report, the IMF highlighted Kazakhstan as an example where prioritizing governance reforms and strengthening the rule of law is instrumental in driving other reforms. The IMF noted that improved governance typically plays a crucial role in pushing forward reforms by building trust and confidence in public institutions and creating a conducive business climate. The IMF also noted how Kazakhstan’s GDP has benefitted from a strong domestic demand and increased oil production attributed to the easing operational constraints affecting the Caspian Pipeline Consortium and the Tengiz oil field expansion. In Central Asia, IMF has assessed that trade and financial inflows, particularly following Russia’s conflict with Ukraine, continue to support economic activity. However, supply-side disruptions linked to this conflict have also contributed to regional inflation. Kazakhstan's neighbor in the Caspian region, Azerbaijan, has secured the seventh position in the above-mentioned FDI watchlist for 2024 by fDi Intelligence.

Foreign Investment Green economy

Uzbekistan Plans to Attract Investment, Green Energy Development

On January 2nd, President Shavkat Mirziyoyev held a government meeting on attracting investments and developing green energy in 2024, at which it was stated that last year Uzbekistan attracted more than $22 billion in foreign investment, a 1.8-fold increase on the previous year. Mirziyoyev emphasized the importance of increasing the volume of foreign investment this year, with upmost attention to be paid to electrical and mechanical engineering, construction materials, pharmaceuticals, and the textile and leather industries. The meeting also discussed the development of green energy, with officials reporting that work is ongoing on 28 projects based on public-private partnerships for the construction of solar, wind, and hybrid power plants with a total capacity of 6.3 gigawatts. Of these, the first, with generating capacities of 2.6 gigawatts, were launched in 2023. Currently, work is underway on the construction of green power plants and energy storage systems together with companies from Saudi Arabia, the UAE, China, France, and Switzerland. In 2024, Uzbekistan plans to increase the total capacity of solar power plants to 2.6 gigawatts, wind farms to 900 megawatts, and launch energy storage devices with a capacity of 400 megawatts. At the meeting, instructions were relayed to study the possibility of introducing, based on international experience, agrovoltaics - the practice of agricultural producers installing solar panels on their fields to produce energy for their own needs or for sale, and for specific proposals to be drawn up for this area.

Foreign Investment

$10 Million Jewelry Factory to be Launched in Fergana

A jewelry factory will be created in the Fergana region together with Turkish businessmen. The project was discussed at a meeting of the regional khokim (administrative leader), Khairullo Bozorov, local businessman, Ulugbek Abdurakhimov, and Turkish partners, Ali Uyanik and Jezmi Shen, the press service of the regional khokimiyat reports. As of now, it is known that the plant will produce gold and silver jewelry. It is planned that a research department and a professional training center will operate at the plant. Its products will be targeted both at the domestic market and for export to Europe and America. The plant is set to create more than three hundred jobs.

Foreign Investment

EDB’s New Bond Issue to Help Finance Kazakhstan Projects

The Eurasian Development Bank (EDB) says it has placed a bond issue on the Kazakhstan Stock Exchange (KASE) with the proceeds to be used to invest in the Bank’s new projects in Kazakhstan. Headquartered in Almaty, the EDB is an international financial institution investing in Eurasia, with member countries including Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan. Arranged by Jusan Invest, this 3.5-year issue is valued at KZT 50 billion, with a coupon of 14.2% per annum, the Bank said on December 28th. This issue is the largest non-public offering in the market for 2023. “The proceeds will be allocated to projects in Kazakhstan. The country currently accounts for 56% of the EDB’s investment portfolio. We plan to further increase investment, including in infrastructure projects in Kazakhstan,” said Nikolai Podguzov, Chairman of the EDB Management Board. “We are proud to conclude this year with the EDB as a significant and reliable issuer. This issue has garnered substantial interest among investors, offering an appealing return over the medium term,” said Timur Salimov, Chairman of the Management Board at Jusan Invest. The EDB has implemented 104 projects across various sectors in Kazakhstan, worth US $5.6 billion. These include solar and wind power generation facilities, the modernization of manufacturing enterprises, initiatives in the chemical sector, co-generation plants, street lighting networks, railway fleet upgrades, the development of agricultural companies, and the construction of airports and a gas pipeline.

Economic Growth Foreign Investment

Kazakhstan Remains Regional Leader in Attracting Foreign Investment, Says PM

Despite the current global challenges, Kazakhstan remains attractive to foreign investors and is the leader in gross inflow of foreign direct investment in the Central Asian region. Last year, FDI in Kazakhstan grew by 18% and reached $28 billion - a record high for Kazakhstan over the past decade, Prime Minister Alikhan Smailov said in an interview with the 24KZ TV channel. In his words, $13.3 billion was attracted into the country’s economy in the first half of this year, and about $27 billion is expected by the end of the year. Smailov said this was largely possible thanks to the diplomacy of Kazakhstan's President Tokayev, who, in the face of complex geopolitical tensions, is consistently strengthening relations with a wide range of influential players including China, Europe, Russia, the U.S., Turkey, and the Arab world. The Prime Minister also spoke about measures the Government will take to double economic growth in the medium term. “The Government has been given a big task to double the national economy by 2029. In this regard, we will continue to work to stimulate economic activity in the country. We will further reduce inflation and ensure macroeconomic stability,” Smailov said. The Government also has designs on further improving the investment climate. “Every year, we plan to attract at least $25 billion of foreign direct investment. In the future, a nationwide pool of investment projects will be implemented. Thanks to this, more than 160,000 new jobs will be created,” said the Prime Minister. “All this will allow us to ensure economic growth in the medium term at a level of at least 6%. In general, the order of the Head of State to increase the volume of the national economy to $450 billion will be fulfilled,” Smailov concluded.

Russia Foreign Investment

Russian-Kyrgyz Development Fund to Finance Projects Worth $140 Million

The Russian-Kyrgyz Development Fund (RKDF) has said it will finance both new and existing projects in Kyrgyzstan totaling more than $140 million in 2024. The Fund will focus on strategic sectors of the economy: industry, infrastructure development in education and healthcare, logistics, agriculture and agro-processing, strengthening food security, and energy independence. Work in the country’s regions will continue and be expanded, for which the Fund’s Council approved financing of $1 million. “The strategic decision to approve the budget will allow the Fund to continue operating as usual. The RKDF has the necessary amount of resources, and we will continue to accept new applications. We hope that the number and quality of interesting, important and necessary projects for the country will grow, and the Fund, by financing them, will continue to contribute to the development of the economy,” stated Artem Novikov, Chairman of the Board of the RKDF. Member of the RKDF Council, and Minister of the Economy and Commerce of Kyrgyzstan, Daniyar Amangeldiev said that compared to the previous year, the Fund’s overall project portfolio in Kyrgyzstan will be increased by 50%.