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Kazakhstan’s Construction Sector Pushes for Easier Access to Migrant Labor

The Chairman of the Union of Builders of Kazakhstan (UBK), Talgat Yergaliyev, has called for simplifying the hiring process for foreign labor in Kazakhstan’s construction industry, citing a severe workforce shortage. “Today, our young people prefer office jobs, and no one wants to work in production. Year after year, the number of workers in the labor market is shrinking, and even government agencies are facing staffing shortages. In the construction industry, this problem is even more pronounced,” Yergaliyev said during a joint press conference with the National Chamber of Entrepreneurs of Kazakhstan, Atameken. “That’s why we propose following Russia’s example by attracting foreign labor to the construction sector.” However, Yergaliyev noted that Kazakhstan lacks mechanisms to support the large-scale hiring of migrant workers. By comparison, Russian construction companies pay 80,000 rubles ($790) annually for a patent to hire foreign workers, while a similar permit in Kazakhstan costs construction firms nearly double—700,000 KZT ($1,300) or more. Yergaliyev also acknowledged that low wages are a significant factor deterring Kazakhs from working in construction. “To retain Kazakhstani workers on construction sites today, they must be paid between $800 and $2,000. Otherwise, they will move to other sectors where the work is less demanding,” he explained. The labor shortage in Kazakhstan's construction industry is reaching critical levels. According to The Times of Central Asia, there are currently about 111,000 unfilled vacancies in the sector, and authorities project that this deficit could double by 2030. Despite this growing need, Kazakhstan’s Ministry of Labor and Social Protection reduced the foreign labor quota in November, potentially exacerbating the issue. Yergaliyev's proposal underscores the urgent need to address the labor shortfall while balancing fair wages for local workers with the costs of hiring migrant labor.

economic Labour market Construction Industry

Kazakhstan Faces Doubling of Construction Industry Labor Shortage by 2030

Kazakhstan's construction sector is grappling with a significant labor shortage, with approximately 111,000 positions currently unfilled. Prime Minister Olzhas Bektenov warned at a recent government meeting that this figure is expected to double by 2030, forecasting a deficit of over 200,000 skilled workers in the industry. Bektenov highlighted that the most affected roles include plasterers, painters, welders, masons, and concrete workers - essential positions for the sector’s operations. While the construction industry ranks third among sectors facing workforce shortages, it holds a critical place in Kazakhstan’s economy. According to government forecasts, education leads in expected vacancies, with 331,000 unfilled positions projected by 2030, followed by trade at 228,000. Despite ranking behind these sectors in terms of unmet demand, construction contributes the most to Kazakhstan’s GDP among the three, accounting for 5.6% of the country’s total economic output, according to the Ministry of Industry and Construction. This looming shortage poses challenges to sustaining growth in a sector vital to the nation’s development and economic stability.

Finance Legislation Industry Tax State Budget taxes

Why Kazakhstan Wants to Change Subsoil User Taxation

Kazakhstan is considering a significant change in the taxation of subsoil users, with Minister of Industry and Construction Kanat Sharlapayev proposing the introduction of royalties to replace the current mineral extraction tax (MET) for licenses issued from January 1, 2026. According to Sharlapayev, this shift would attract more investors to Kazakhstan and encourage the domestic processing of raw materials. Why Investors Are Dissatisfied with MET The MET, introduced in 2008, is levied on subsoil users for every type of mineral, hydrocarbon, underground water, and therapeutic mud extracted in Kazakhstan. Each resource is taxed at a separate rate, calculated based on the volume of extracted raw materials rather than their actual sale or revenue. This has caused dissatisfaction among both local and foreign subsoil users. Over the years, discussions have intensified about replacing MET with royalties, which would calculate taxes based on the volume of products sold or profits earned. Sharlapayev stated during a recent government meeting that experts from the World Bank have recommended this change to make Kazakhstan’s mining sector more attractive to investors. “Globally, the most popular taxation model in the mining and metallurgical sector is based on the volume of products sold or profits earned. Kazakhstan, however, uses the mineral extraction tax. Introducing royalties tied to the sales value of minerals would be more transparent and familiar to international mining players,” Sharlapayev explained. Sharlapayev also emphasized that replacing MET with royalties would incentivize domestic production by imposing lower taxes on minerals processed within Kazakhstan compared to those exported without processing. He urged Prime Minister Olzhas Bektenov to instruct the Ministry of Finance and the Ministry of National Economy to include royalty provisions in the new Tax Code, expected to take effect in 2026. However, these changes would only apply to licenses issued from January 1, 2026. Concerns Over the Transition The Ministry of Finance has expressed reservations about the proposed shift, citing potential revenue losses. In September, Zhanybek Nurzhanov, Deputy Chairman of the State Revenue Committee, warned that transitioning to royalties could cost the state budget hundreds of billions of tenge. “We can switch to royalties only if there are no losses for the budget. If we simply introduce royalties and reduce business payments, it raises a serious question—how do we offset nearly half a trillion tenge in lost tax revenue?” Nurzhanov said. Additionally, Nurzhanov pointed out that determining the true value of exported raw materials would require the establishment of specialized laboratories, imposing financial burdens on both businesses and the state. This, coupled with the complexities of administering royalties, could deter subsoil users. Kazakh economist Galymzhan Aitkazin echoed these concerns, noting that MET’s fixed rates provide predictability for both businesses and the government, while royalties—tied to revenue or market prices—introduce variability. “The simplicity of flat MET rates allows companies to plan effectively and helps the government forecast revenues. By contrast, royalties linked to revenue or market prices could lead to payment variability, complicating financial planning for both parties,” Aitkazin explained. He also emphasized that MET’s straightforward...

Government Export/Import China Industry Automobile Industry Economic Cooperation

Uzbekistan Boosts Car Production and Expands Exports

Between January and October 2024, Uzbekistan produced 338,000 vehicles, generating $455 million in car exports, according to figures revealed during a government meeting chaired by President Shavkat Mirziyoyev on November 25. Next year, the country aims to manufacture 450,000 vehicles in 2025 and boost export revenues to $700 million. The automotive sector has become a cornerstone of Uzbekistan's industrial growth, accounting for 10 percent of the country’s total industrial output. Currently, the industry produces 1,400 types of automotive components and has achieved a 4 percent reduction in production costs. To strengthen domestic manufacturing further, the government plans to launch 63 projects worth $325 million, facilitating the production of an additional 700 types of automotive parts. Uzbekistan’s vehicle assembly incorporates major global brands, including Chevrolet (USA), as well as South Korean and Chinese manufacturers. The country’s commitment to innovation and green energy was underscored by the June opening of a BYD electric vehicle plant in Jizzakh, which marked a significant milestone for the industry. The new Jizzakh plant currently produces 50,000 electric vehicles annually during its first phase. Planned expansions include: Second phase: A $300 million investment to scale production to 200,000 electric vehicles per year. Third phase: A $500 million investment to increase capacity to 500,000 vehicles annually. These developments highlight Uzbekistan’s commitment to becoming a regional leader in electric vehicle production and innovation. The country’s automotive industry has demonstrated remarkable growth, fueled by strategic investments in local manufacturing and a focus on sustainable technologies. By prioritizing electric vehicles and expanding exports, Uzbekistan is positioning itself as a competitive player in the global automotive market.

Oil refinery LPG Motor fuel Industry Export/Import Oil & Gas

Kazakhstan Needs a Fourth Oil Refinery to Meet Its Growing Demand for Motor Fuel

Speaking in parliament on November 25, Kazakhstan’s Energy Minister Almasadam Satkaliyev announced that the country anticipates a shortage of motor fuel by 2036. To address this, he emphasized the need to design a new oil refinery with a capacity of 10 million tons per year by 2030, with construction slated to begin in 2032. According to Satkaliyev, the proposed refinery will ensure Kazakhstan’s fuel demands are met from 2040 to 2050 while also enabling exports to rapidly developing markets in Central, South, and Southwest Asia. Currently, Kazakhstan operates three oil refineries - located in Shymkent, Pavlodar, and Atyrau - which are sufficient to meet domestic demand for gasoline and diesel fuel. However, during seasonal shortages, Kazakhstan imports additional fuel from Russia. Satkaliyev provided details on the country’s fuel production and import figures for 2024. Kazakhstan plans to produce 10.9 million tons of fuel this year, including 5.1 million tons of gasoline, 0.6 million tons of aviation fuel, and 5.2 million tons of diesel. In addition, approximately 1 million tons of fuel will be imported from Russia, comprising 0.285 million tons of gasoline, 0.3 million tons of aviation fuel, and 0.45 million tons of diesel. By 2032, Kazakhstan’s annual fuel production is expected to reach 19 million tons, including 8.2 million tons of gasoline, 1.5 million tons of aviation fuel, and 9.3 million tons of diesel. This increase will not only eliminate the need for imports but also enable the country to export surplus fuel. Satkaliyev also addressed the domestic supply of liquefied petroleum gas (LPG), which is the most affordable and widely used automobile fuel in Kazakhstan. From January to October 2024, Kazakhstan produced 2.5 million tons of LPG, compared to 2.4 million tons in 2023. The Energy Ministry has set the planned production volume for 2024 at 2.9 million tons. To stabilize the LPG market, the ministry has banned its exports since November 2023. The domestic market requires 164,000 tons of LPG monthly, while the ministry distributes 130,000-140,000 tons. Looking ahead, the government aims to meet rising LPG consumption by introducing new production capacities, with plans to increase annual LPG production to 4.2 million tons by 2032.

Industry Germany Green economy Funding green projects International investment COP29

Uzbekistan and Germany Partner on Green Industrialization with €3 Million Grant

On November 13, at the 29th UN Climate Change Conference (COP29) in Azerbaijan's capital Baku, Uzbekistan's Ministry of Economy and Finance signed a memorandum with the German International Cooperation Society (GIZ) to secure additional funding for a project aimed at supporting the private sector in green industrialization. As part of the initiative, Germany has allocated €9 million to help Uzbekistan’s private sector transition to a green economy. The project is designed to assist the Uzbek government in implementing economic reforms and fostering sustainable economic development, focusing on enhancing the capacity of both the public and private sectors to adopt green industrialization practices. The initiative will also provide technical expertise in measuring and certifying greenhouse gas emissions, supporting Uzbekistan’s participation in international carbon trading mechanisms, and aligning with the European Union’s Cross-Border Adjustment Mechanism (CBAM). Additionally, it aims to promote resource-saving and sustainable production by encouraging the private sector to adopt green technologies, including circular economy practices and green industrial park models. To further bolster the project, a €3 million grant was approved during the conference. This funding will complement the ongoing initiative, titled “Support to the Private Sector and Advice on Economic Policy in Uzbekistan.”