Investment - The Times Of Central Asia

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Kazakhstan and Qatar to Implement Projects Worth $17.6 Billion

On March 20th the Prime Minister of Kazakhstan Olzhas Bektenov attended a meeting in Qatar with the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani. During discussions, Bektenov emphasized the importance of the two countries’ economic partnership in the Arab world and reported on the imminent implementation of large-scale and strategically significant investment projects worth an unprecedented amount of $17.6 billion. The governments of Kazakhstan and Qatar subsequently signed an agreement on establishing a long-term strategic partnership for the development of projects in priority sectors. Projects include the construction of gas processing plants in Kazakhstan at a cost of around $5.7 billion. The additional construction of a Aktobe-Kostanay gas pipeline and the second section of the Beineu-Bozoy-Shymkent gas pipeline for a total cost of around $7.7 billion, will develop gas supplies to Kazakhstan's northern regions. A further investment of around $2.7 billion will fund the construction of a combined cycle gas power plant with a capacity of 1,100 MW, and a hydroelectric power plant with a capacity of 350 MW, to ensure long-term energy security of Kazakhstan. With reference to agriculture, the Prime Minister declared Kazakhstan’s readiness to supply halal and organic products to Qatar, and stated that the two countries are on course to construct plants for the deep processing of wheat, peas and milk in Kazakhstan.

Share Offering Air Astana Investment

Air Astana: LSE’s largest IPO of 2024 Set to Test Appetite of Investors

Shares of Central Asia's largest airline Air Astana are now for sale to the public in London, with the company's global depositary receipts (GDRs) trading on the London Stock Exchange (LSE). The GDRs were priced for this month's IPO at $9.50 a piece last week when conditional dealings in began on the LSE and Kazakhstan's Astana International Exchange (AIX). Today, Air Astana's local shares trading on the Almaty's KASE bourse are up 6.1% to 1,241 tenge, whilst dollar-priced GDRs trading on Astana's AIX are down 1.1% to $10.08 at an intra-day volume of just under 30,000 GDRs. The LSE's largest IPO of 2024 to date is set to gauge the demand of frontier and emerging market equity investors for exposure to Central Asian stocks in the aftermath of Russia's 2022 attack on Ukraine. Companies like Air Astana, and notably its low-cost carrier unit Fly Arystan, have in some ways benefited from the disruptions caused by the war and its consequent matrix of international sanctions as people and goods are re-routed through Kazakhstan. Conversely, the threat of more instability in the region and the risks of higher inflation, fuel and operating costs will undoubtedly remain on the minds of potential investors. The IPO in London and Kazakhstan represents a meaningful step for the latter's sovereign wealth fund, Samruk Kazyna, which plans to continue putting the shares of state companies on public markets. According to one former IPO manager from a European bank who declined to be named as the IPO process was underway, Air Astana's offering is the "clearest test in the IPO market to date of investor belief in Kazakhstan’s continued economic development." He also noted that it's "positive to see that four of the nine directors are independent, with three of those independent directors being from outside Kazakhstan" in terms of corporate governance. Air Astana's results for the first nine months of 2023, which were published on December 12th, showed positive top-line growth in revenue, operating profit, and passenger-kilometers flown metrics versus 2022, though the carrier did see a 1% dip in EBITDAR margin (operating profit as a percentage of its revenue) to 28% which investors may focus on going forward.

Investment

USAID Helps Improve Kazakhstan’s Investment Legislation

On February 2nd in Astana the United States Agency for International Development (USAID) hosted a joint Investment Forum. The event was organized to propose changes to Kazakhstan’s investment legislation, and to highlight important achievements supported by the USAID Kazakhstan Rule of Law Program, run by the American Bar Association Rule of Law Initiative (ABA ROLI). The program has partnered with the Supreme Court of Kazakhstan and the company Kazakh Invest, overseen by the Ministry of Foreign Affairs. Over 50 participants, representing the government, judiciary, business community, investors, and local and international experts participated in the event. The forum was opened by the chairman of the Supreme Court, Aslambek Mergaliyev, who stressed the need for reform in order to attract investors. At the forum, the US Ambassador to Kazakhstan Daniel Rosenblum commented: “Today’s Investment Forum organized by the American Bar Association is yet another example of the long-term and very strong U.S.-Kazakhstan partnership in support of the rule of law, as it relates to economic policy, foreign investment, and the business climate. I am pleased that this forum will be repeated next year as well, providing an ongoing platform for discussions on issues that are important to foreign investors. We also mark the conclusion of the USAID Rule of Law Program in Kazakhstan, which over the past four years has helped improve the legal environment for protecting investments and strengthen the professional development and independence of Kazakhstan’s judiciary.”

Investment Trade

U.S.-Kazakhstan Relations: Trade Revenue Has Risen to Record Highs, But Investments From U.S. Side Have Fallen

According to Kazakhstan's Bureau of National Statistics, at the end of 2023 in Kazakhstan there were more than 50,000 enterprises with joint and foreign ownership. The number of legal entities and subsidiaries from the U.S. increased by 10.5% annually, with that number reaching 495 organizations. The lion's share falls to wholesale and retail trade, and parts for cars and motorcycles. Investors and businesses from the U.S. also open in Kazakhstan companies in the fields of professional, scientific and technical activity, as well as information technology and telecommunications. Slightly less activity is found in the financial, industrial, education and construction spheres. Most of the companies are located in the cultural capital of Almaty -- or the financial and political capital, Astana. Enterprises are also based in regions oriented towards extraction of energy and minerals, such as Atyrau, Karaganda and Mangistau. 2023 U.S.-Kazakhstan bilateral trade turnover reached a record high of $4bn, an increase of one-third over 2022. The main goods sent to the USA are oil, ferroalloys, sulfur, phosphorus, tantalum, lead, and uranium. Kazakhstan buys airplanes, cars and engines, medicines, as well as poultry meat and other products. Despite the positive trade figures, investments have decreased slightly. For 2023 they amounted to more than $3bn, which is half of what it was a year ago. The Kazakh Ministry of Foreign Affairs has reported that the U.S. is still among the three main investors in the Kazakh economy, along with the Netherlands and Switzerland. A special place in the relations between the two countries remains for international exchange programs. The most popular is Work & Travel, under which Kazakhstani students can go to the U.S. to work. Some end up staying for permanent residence. "My dream since childhood has been to go to America. And five years ago I took part in the Work & Travel program. I went to Wisconsin. I worked hard in order to earn as much as possible and then go to New York. I'll tell you right away, from the first day I was delighted. Of course, I was very tired, there were a lot of insurance costs and so on. But from the very first days I realized that I wanted to stay here. I like the high standard of living in the country. You can see it in medicine, culture. After the program ended, I really missed that life and travel. But I was able not only to realize my dream [of visiting], but even more -- to move. Now I have [received] my diploma, I work as an administrator in a medical center. A year ago I got married. I have big plans," said Indira Akhmetova, a former migrant worker. She has been living in the United States for seven years, got married and received American citizenship. A few issues that do weigh on Indira's American life are the expensive medical care and taxes compared to Kazakhstan. "It's scary to get sick here. If you don't have insurance, you have to pay for years...

Investment

Kyrgyzstan Gives “National Significance” Status to Strategic Energy Projects

The Deputy Chairman of the Cabinet of Ministers, Minister of Water Resources, Agriculture and the Processing Industry of the Kyrgyz Republic, Bakyt Torobaev on January 16th held a meeting of the governmental commission for the selection of national investment projects. The meeting considered giving certain undertakings the status of “projects of national significance,” which, according to Torobaev, will help increase their attractiveness to investors. This will contribute to socioeconomic development, job creation, the development of industry and agriculture in regions where such projects are implemented, Torobaev stated. The commission granted the status of “projects of national significance” to the construction of the Kambarata hydroelectric power plant-1, the Kazarman hydroelectric power plants cascade, and the Kemin-Torugart 500 kV power transmission line. With this status, companies interested in investing in these will be exempt from value added tax, sales tax, and income tax for a certain period. The Cabinet of Ministers expects that this step will help speed up the implementation of these strategic projects. Construction of the Kambarata hydroelectric power plant-1 and the cascade of the Kazarman hydroelectric power plants are two flagship projects aimed at introducing new power generating capacities to help Kyrgyzstan overcome its chronic electricity shortages, which are especially acute in the winter months.

Investment

IFC Appoints New Country Manager for Uzbekistan and Turkmenistan

According to the website of the International Finance Corporation (IFC), the organization, a member of the World Bank Group, on October 9 said it has appointed Neil McKain as Country Manager for Uzbekistan and Turkmenistan. McKain will spearhead IFC's strategy and operations to spur private sector development and drive sustainable, inclusive economic growth in these countries. McKain will be based in Tashkent, Uzbekistan and will lead efforts to grow IFC's investment and advisory programs, overseeing their operation across sectors, and managing key relationships with clients, partners, and governments. A British national, McKain brings over 20 years of private sector development experience to his new role. He most recently served as Adviser to the Vice President, Banking, at the European Bank for Reconstruction and Development (EBRD). Prior to that, McKain was regional head for the EBRD in the Kyrgyz Republic, Tajikistan and Turkmenistan, spending 14 years in senior positions in the Caspian Basin and Central Asia. "I welcome Neil to this important role. I know his technical and leadership skills and knowledge of the region will help expand IFC's impact, generate new partnerships to meet the countries' needs, and build a strong foundation for a dynamic and inclusive private sector," said Wiebke Schloemer, IFC Director for Türkiye and Central Asia. "Increased private sector investment is critical to help Uzbekistan and Turkmenistan grow and diversify their economies and better harness their immense potentials," said McKain. "I'm excited to take up my new role and work with our partners in these countries to amplify IFC's support through private sector-led solutions." Before joining the EBRD in 1998, McKain started his professional career with A.T. Kearney in Russia working on post-privatization restructuring. He holds an MBA from the University of Cambridge and an MA in Political Science from the University of Aberdeen. His new role took effect on October 2.