Interview for our magazine has been given by the Counsellor of the Embassy of the Federal Republic of Germany
Mr. Jorg G. Metger
Could you please highlight the priorities and the outlook for economic co-operation between Kazakhstan and Germany?
Germany is an important trade partner for the country, accounting for 6% of Kazakhstan’s import and export transactions. Bilateral trade between the countries tripled from 1996 to 1999. In 1999, commercial transactions increased by 15.7%, reaching DM1.6 billion. In that year, Kazakhstan’s transactions with Germany exceeded the anticipated amount by DM600 million for the first time. This year, experts are expecting a sharp growth in bilateral trade. The growth trend in Germany, coupled with the expanded export potential of Kazakhstan, all give grounds to expect an increase in the prices and sales of major Kazakhstani export goods, such as oil and metals. On the other hand, the need for machinery and equipment, which has arisen from the modernisation of Kazakhstani industry and infrastructure, is providing good opportunities for German businesses to sell these commodities, which are the main exports from Germany to Kazakhstan.
Against this background of positive developments in trade relations between companies in both countries, there is a need to search for new, intensive long-term projects in economic co-operation. The governments have created a reliable foundation for such co-operation by concluding a number of bilateral agreements, including the agreement on the encouragement and protection of investment, and the agreement on the avoidance of double taxation. Over the recent months, entrepreneurs from both countries have had meetings at various information forums. Therefore, there is a firm information base for potential co-operation between Kazakhstan and Germany.
How do German industrial and financial structures evaluate the investment climate in Kazakhstan? The Government of the Republic of Kazakhstan pays a lot of attention to attracting direct foreign investment into the country’s economy. Germany, however, invested only $191.4 million from 1993 to 1999, which is 20 times less than investment by other countries. Could you give your explanation for the low activity of private German capital in our country?
German investors are still careful in the Kazakhstani market. It should be remembered, though, that globalisation allows companies oriented towards foreign trade relations to choose from numerous interesting investment alternatives and countries to establish an enterprise in. This is why Kazakhstan is in stiff competition for investment. To make a decision on investment, companies (not only in Germany) thoroughly analyse the market and use ratings from the largest international agencies. Such companies include the Central European Economic Review, which rates Kazakhstan twelfth among 27 Eastern European countries and the CIS states in terms of the business and investment climate. So, Kazakhstan has a higher rating that Russia and other Central Asian countries. The political stability and the firmness of the national currency have played a great role in this positive evaluation. I believe that the rating will be taken into consideration by German companies.
German businessmen intensively engaged in investment abroad constantly point out the fact that Kazakhstan, since its independence, has passed a lot of modern laws oriented towards a market economy. The procedures for their fulfilment, however, are not transparent for foreign companies. There are problems with fulfilling the terms and conditions of long-term contracts already agreed upon.
German entrepreneurs also realise that Kazakhstan has not yet completed its transition to a market economy. They are carefully watching the efforts by the Kazakhstani Government in improving the investment climate for foreign and local companies. German companies also have a high regard for the work of the Council of Foreign Investors under the President of the Republic of Kazakhstan, in which Germany is represented by Deutsche Bank.
What interests German businessmen in Kazakhstan? How is German investment distributed among the branches of the Kazakhstani economy?
At present, around 100 German companies have their representative offices in Almaty. In fact, this number must be much higher, for many German companies work through their subsidiaries in Russia, Turkey and other countries. The breakdown of representative offices in terms of economic branches reflects the whole range of the German export economy.
Forty of the most active German companies are represented in the German Economic Club in Almaty. The second day of German economy to be held on 17th October 2000 will demonstrate the trust of German enterprises in the development of the Kazakhstani economy, and their willingness to make a contribution to a further expansion of bilateral economic relations. Among the event’s participants are large German companies, except for those engaged in the oil sector.
What is the economic potential for German-Kazakhstani co-operation in the oil and gas sector? Are there any real plans for the implementation of German oil projects in Kazakhstan, Azerbaijan and other Caspian countries? Please tell us about the expansion of sources and ways of transporting hydrocarbons to the German market. Does Germany need Kazakhstani oil, and how much?
Everybody knows that Germany has no large oil companies. The country depends on international markets in terms of oil and natural gas. To avoid a one-sided dependence after the oil crisis of the 1970s, Germany has been systematically diversifying its energy sources. From this aspect, Kazakhstani oil, like oil from other countries of the region, may be of great significance. This is why the Government of Germany supports EEG-BERLIN, RWE/DEA, VEBA and PREUSSAG represented in Kazakhstan. At the moment, Germany welcomes Kazakhstan’s efforts to represent its products in the world market on beneficial terms. The German Government, however, cannot influence decisions on the participation of individual German companies in production and transportation consortiums.
What do our countries need to do to improve the situation in economic co-operation?
The potential for German-Kazakhstani co-operation is very high. Kazakhstan has huge natural resources which need to be supplied to the world market. The expected proceeds will allow the financing of developments in the major infrastructure. This will also increase the purchasing capacity of the Kazakhstani population. These are good medium-term perspectives.
Thanks to the unification of Germany, its economy has accumulated great experience in implementing projects during a transition period. German consumer goods are highly appreciated by Kazakhstani consumers for their high quality.
In principle, Germany’s export-oriented economy is ready to invest in Central Asia. Creative solutions must be found to the financial issues. Kazakhstan’s consolidated financial sector offers good opportunities.
Kazakhstani foreign trade organisations will only benefit from sharing information on opportunities for mutually beneficial co-operation with German companies, medium-sized businesses in particular, using all the means possible to communicate with the German economy.
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Interview for our magazine has been given by the Counsellor of the Embassy of the Federal Republic of Germany Jorg G. Metger