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 KAZAKHSTAN International Business Magazine №1, 2002
 Foreign Investment in the Economy of Kazakhstan: Basic Figures
Foreign Investment in the Economy of Kazakhstan: Basic Figures
Editorial Review
From 1993 to October 2001, the economy of Kazakhstan attracted US$15,742.2 million of gross foreign direct investment. Over nine months of 2001 alone, gross FDI accounted for US$ 3,201.2 million, which is 16% above the level of the whole of 2000. Due to the favourable situation on the world primary goods markets, increased production and greater profits, Kazakhstani joint ventures were able to clear their liabilities to their holding companies, which amounted to US$ 1,256 million during nine months of 2001 (for the same period of 2000, the liabilities were US$ 921 million). Therefore, by October 2001, the amount of net investment reached nearly US$ 2 billion (US$ 1,336.2 million in 2000). Thus, from 1993 to October 2001, Kazakhstan attracted US$11.3b in net investment.
Over the last ten years, investment trends in our country have hardly changed. As in previous years, the USA is the undisputed leader in terms of FDI encouraged, accounting for US$ 5,424.6 million, or 34.5% of the total FDI from 1993 to October 2001. The second major donor country is Great Britain, which has invested US$ 2,093.6 million (13%) in the economy of Kazakhstan. These countries are engaged in investment activities connected with the development of the country’s oil and gas sector. Major oil companies, such as ChevronTexaco, ExxonMobil, BritishGas and others, are currently running successful businesses in Kazakhstan. Also, Korea is another leader in terms of FDI made, coming to US$ 1,622.3 million (10.3%) in 1993-October 2001. In 1995-1997, Korean companies made the bulk of their total investment in Kazakhstan’s copper industry. Despite that in 1993-October 2001 Italian companies made only 4% of the total FDI, Italian business had proved to be notably brisk in Kazakhstan over the last two years. It has attracted US$ 712.2 million, which can be mainly attributed to the successful activities of the Italian ENI Concern. As regards the CIS countries, their contribution to the total FDI is small (US$ 158.2 million in 2001).     
The favourable investment climate and high prices for crude in the world market have facilitated an intensive FDI influx into Kazakhstan’s oil and gas sectors. Foreign investment in these sectors has increased notably since 1995, and tends to grow regardless of fluctuations in world crude oil prices. Whereas previously the FDI amounts in various sectors of the Kazakhstani economy were comparable, nowadays the undisputed leadership has been assumed by the oil and natural gas sectors. For instance, while 1995 investment in ferrous- and non-ferrous metallurgy reached 16% of the total FDI, and in the oil and natural gas sectors it was 20%, in 2001 these figures turned out to be 0.6% and 77%, respectively. Metallic ore mining saw similarly dramatically reduced investments, that is from 29% in 1995 to 0.3% in 2001.
Currently, the Government of Kazakhstan is becoming aware of the need for diversified investment flows. Great efforts are being made to concentrate financial resources in the critical sectors of the country’s economy. Primarily, we are talking about direct investment being focused on the introduction of new technology, filling the domestic market with high quality goods and services, creating new jobs, and tackling environmental problems.
Today, the government’s economic policy aimed at improving the transport infrastructure has already produced positive results. Over the last three years, investment in this sector of the economy has grown by five times, amounting to 3% of total investments in 2001.
However, the favourable investment terms (including tax incentives and preferences, guarantees against changed legislation) have failed to contribute to any intensified investment growth in agriculture, construction, consumer services and other sectors. Currently, there are imbalances in development between the various industries of the Kazakhstani economy, and these are tending to increase. These industrial imbalances are badly affecting the development of the regions in Kazakhstan. Amendments to Kazakhstani legislation are necessary in order to facilitate the growth of investment activities in farming, manufacturing and other sectors of the economy.
Many experts have pointed out the growing competition among countries for the attraction of FDI. Undoubtedly, Kazakhstan has achieved good results in this sphere, for its leadership is indisputable in the Central Asian region. The position of the country with other CIS countries is somewhat weaker, being ranked second behind Russia. As regards the countries of Eastern Europe, which, like our country, have experienced all the difficulties of the transition period, Kazakhstan can not compete either with Poland nor with the Czech Republic yet. And although Eastern Europe lacks huge mineral reserves, foreign investors prefer to set up their businesses in these countries in particular, thus helping the region integrate into the world’s economic system.

Table of contents
Eurasia Economic Summit 2002  Thierry Malleret 
Phases in the Development of Arbitration in Kazakhstan  Peter Greshnikov, Igor Greshnikov 
Kazakhstan's Hospitality Industry: Problems and Outlook  Rosa Rayeva, Rashida Shaikenova 
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