OECD Investment Policy Reviews: Kazakhstan 2017
This review, which was prepared in response to Kazakhstan's 2012 request to adhere to the Declaration on International Investment and Multinational Enterprises (OECD Declaration), analyses the general framework for investment as well as most recent reforms, and shows where further efforts are necessary. It assesses Kazakhstan’s ability to comply with the principles of openness, transparency and non-discrimination and its policy convergence with the OECD Declaration, including responsible business conduct practices. Capitalising on the OECD Policy Framework for Investment, this review studies other policy areas that are of key relevance to investment such as SME policy, infrastructure development, trade policy as well as anti-corruption efforts. Since the first review of Kazakhstan, in 2012, the authorities have made strides in opening the country to international investment and in improving the policy framework for investment as part of their efforts to diversify the economy to avoid continued overreliance on oil. Additional policy measures are nevertheless required to create a stimulating environment for investment if the government wants to fulfil its goal of economic diversification and sustainable development.
Foreign direct investment performance and Kazakhstan's economic development
In the light of the current global economic slowdown and stagnating commodity prices, attracting foreign direct investment (FDI) has proven increasingly difficult in Kazakhstan. FDI inflows have declined, on average, by 15% since 2011, and 52% in 2015 (reaching USD 4 billion in 2015). This marks a significant decrease compared to the average of USD 10 billion in annual FDI inflows over the past decade. Still, being a small and remote economy, Kazakhstan has performed well in overall FDI attraction relative to the region, with the share of its inward FDI stock to GDP (of USD 119.8 billion or 55%) being higher than in most neighbouring countries. The principal challenge remains to attract investment into sectors and activities other than natural resource extraction, which accounts for more than 70% of total FDI stock, as well as retain investors already present in the economy.