The attraction of investment into the country is a well thought-through choice of economic development of Kazakhstan
Kasymzhomart Tokaev, Prime Minister of the Republic of Kazakhstan
Welcoming you to Kazakhstan, I would like to express our deep gratitude to you for responding to our invitation and for taking a most active part in the Eurasia Economic Summit.
Such a representative gathering is an extraordinary and unprecedented event not only for our country, but also for the whole of Central Asia. We are grateful to the directors of the Davos Forum, especially to Professor Klaus Schwab, for the wonderful organisation of the Summit.
The idea of holding such a Forum stems from the pressing need of the nations of Central Asia and Caucasus to integrate swiftly into the world economy and to attract foreign investment. The increasing role of our region’s states, the search for new forms of mutually beneficial trade, and of economic and investment co-operation in Eurasia, make this Forum of particular importance.
The two-days’ work of the parallel plenary sessions and the round tables has given us an opportunity to draw up a plan of joint action for the very near future and to review our region’s prospects for development. We have discussed important issues of co-operation in the spheres of finance and management, energy, transport and communications, and the oil and gas industry. We now have on our hands the big task of summing up the materials of the Forum and implementing the ideas and proposals made during the discussions.
The political and economic orientation of the states in our region is quite clear. The majority of these nations aim to create a democratic political system and a liberal market economy.
I would like to stress that President Nursultan Nazarbayev sees the further development of our country only via deep democratic reforms aimed at transforming Kazakhstan into an integral part of the world economy, which has entered the irreversible phase of globalisation.
The main goal of our Government is to secure the long-term sustainable development of the economy, the social sphere and the environment. Our state policy priorities are the political, economic and cultural modernisation of society, the adaptation of our population, which consists of more than 100 nationalities, to the requirements of civilisation, as well as active preventive diplomacy to enhance regional and international security.
During the past 9 years of independent development, Kazakhstan’s economy has been liberalised. This liberalisation of the economy is irreversible. Our Government Action Programme attaches the most serious attention to the development of the real sector of economy. We, therefore, plan to improve the economic environment for production and to establish economic freedom.
Our task of utmost importance is to increase the numbers of the middle class, which is going to become the bulwark of stability in Kazakhstan. We understand that we will have to carry out a great deal of economic and ideological work. But we have no other way forward.
Almost all the dimensions of economic reforms have already been bringing positive results. The financial sector is stable and is being improved year by year. We are optimising the banking system. Today the country has dozens of high class banks of the second level.
Since the beginning of the year 2000 we have seen positive trends in the economy, including the improvement of the most important data in the economy and in the social sphere.
Compared to the first quarter of 1999, real GDP has grown by 8%. One of the main growth factors has been an increase in the production of goods.
The low level of inflation is being followed by a slow increase in the money supply to the economy. The exchange rate of the tenge is being established at a real level, which is positively influencing the country’s payment and trade accounts. This year inflation is not expected to rise beyond 10%.
Preliminary estimates show that the volume of foreign trade in the 1st quarter of 2000, compared to the same period of last year, has grown by 33.6%. The foreign trade - GDP ratio exceeds 70%, which is convincing proof that our economy is open to the world.
This year we expect these positive trends to continue and annual GDP growth to reach 3-5%.
We have planned measures to stimulate savings in deposit accounts, to legalise capitals, to create conditions for the commercial banks’ crediting of the investment projects, and to reduce the level of indebtedness in the economy.
At present there is almost no deficit in finances in Kazakhstan. Banks have accumulated the impressive reserves that are meant to be invested in order to increase production. The Government is busy establishing interaction between the banks and enterprises who have to improve management and become the main place for attracting bank credits.
Kazakhstan was the first among the Newly Independent States to undertake a reform of its pension system, which is being successfully implemented today and is nearing completion.
Presently the Government is taking a set of drastic measures to improve the financial sector and to develop the stock market.
First, we are involving local capital reserves in the money turnover by attracting the population’s savings. We fully understand that the active participation of private savings in the real sector is not only one of the most important indicators of a market economy, but also a means of solving many social problems.
Second, in order to manage the attracted reserves we are creating non-banking financial institutes, namely investment funds.
Third, in order to broaden the opportunities for investment and to provide for a transparent stock market we are carrying out a diversification of the financial instruments.
We are paying particular attention to the introduction of notes and mortgage lending, to the creation of an effective market of corporate securities and to financial leasing.
Today it is important for us that the successes in the banking sector start serving the whole economy. Money and credit policy should become more appropriate to the problems of the real sector.
We are continuing to work on improving tax and customs legislation.
The main idea behind the tax policies is to improve tax administration and broaden the tax base. We are working on a new, considerably improved tax law. Tax legislation will become an instrument of direct appliance.
Kazakhstan intends to widen its markets actively and to broaden products and the geographic structure of its exports. This concerns the oil and gas industry, oil chemistry, ferrous and non-ferrous metallurgy, rare metals, heavy industry and grain.
In 1999 direct foreign investment in Kazakhstan totalled more than 1.5 billion US dollars. The bulk of investment (84%) has been poured into the oil and gas sector. Last year investors concentrated on non-ferrous metallurgy, the food industry, energy complex, and the financial sector.
At the same time capital has also been invested in other sectors of the economy, namely in the production infrastructure, the processing industry, housing, the social sphere, and tourism. We invite all of you to invest in other spheres, such as pharmaceutical production and light industry, as well as in agricultural production.
On our behalf we are most certainly doing our best in order to strengthen the favourable investment climate in the country. The existing legislation is capable of protecting investors.
Article 6 of the Law «On Foreign Investment» provides guarantees for the investors from changes in legislation which are harmful to their interests. We have been working on a system of insurance against political and regulative risks. We are currently negotiating with the World Bank on a guarantee line for the insurance of these risks.
The realisation of this project will enable the Government to improve the investment climate in the country.
In conclusion I would like to declare that the Government is wholeheartedly committed to co-operation with the entrepreneurial and financial circles of foreign countries. The attraction of investment into the country represents the well considered choice of our economic development. We will do our best to protect the lawful rights of foreign investors. Among those investing or intending to invest in the economy, we will recognise neither favourites nor outcasts. Our attitude towards all investors is equal. The only criteria of their work are the real deeds such as the production, employment, and social rights of employees.
I thank you for your part in the Forum and for your support of our Government. I am grateful for your ideas, proposals and recommendations. We will certainly use them in our every-day economic work.
Table of contents
The place and role of Eurasia in the Third Millennium Nursultan A. Nazarbayev
The attraction of investment into the country is a well thought-through choice of economic development of Kazakhstan Kasymzhomart Tokaev
Chairman of the Agency of the Republic of Kazakhstan on Investment, answers questions of our magazine Dulat Kuanyshev
Domestic policies and institutional reforms are key to sustained recovery in the Eurasia Region Johannes F. Linn
Economic Outlook for the Central Asian and Caucasus Region John Odliing-Smee
Preventing and rooting out corruption: factor determining a proper framework of private sector development Johannes F. Linn
Reforms and developments in Kazakhstan’s power sector Oraz Jandosov
NOVA ZINC DRIVES TO SUCCESS Mukhit Zhanasov
Kazakhstan’s Securities Market in 2000: Opportunities and Expectations Aidan Karibzhanov
It is necessary to study potential investment markets and make practical steps toward investors Banu Babaeva
New Labour Law Abylkhair Nakipov, Akhmetzhan Abdullayev