3. Survey methodology and findings overview

This section introduces the business climate assessment survey (the “survey”) for Kazakhstan and outlines some general observations that emerge from the results. Section 3.2 outlines the methodology of the survey and details how it was administered, while section 3.3. details the business demography of the sample firms. Section 3.4 then provides additional information on firms’ perceptions of current economic trends, the impact of COVID-19 and Russia’s war in Ukraine on the business climate in Kazakhstan, and the perceived strengths and limitations of policy interventions to support them during these periods of disruption.

The survey was small but focused, addressing 27 firms active in Kazakhstan, with the majority being wholly or partly owned by entities based in the EU. It presented an opportunity to gather bottom-up, firm-level perceptions on issues relating to the business climate and private-sector development in Kazakhstan. In addition to the surveyed firms, the survey was also completed by four trade or business organisations from OECD countries active in Kazakhstan.

The survey was developed by the OECD and administered via an online platform to foreign businesses and their representatives in Chambers of Commerce (CCs) or Embassies. The consultation of primarily European businesses was designed to identify issues of particular importance to international firms, the attraction of which remains a priority for the government. Throughout this report, analysis of survey responses, unless otherwise indicated, is based on the responses of both the 27 individual firms and the four organisational respondents.

The characteristics of the 27 firms that took part in the survey were highly (Figure 3.1). Most respondent firms have been established in Kazakhstan for a relatively long time, perhaps indicative of a certain confidence in the country’s business climate. Half of respondents had been active for 20 years or more; 30% of respondents had been active for up to 10 years, meaning that a significant number of respondents were relatively new to the country; 22% of respondents had been active for 11-19 years.

The ownership and legal structure of the respondents was also varied. The ownership of almost two thirds of the surveyed firms (63%) was 100% based in the EU. The ownership of the remaining firms was either 50% American, 50% British, or from a different jurisdiction or combinations thereof (22%). The Netherlands accounted for the single largest share of respondents (10/37%), followed by Germany (4/15%). A similarly large plurality of firms had LLC status (63%), with the remaining firms having a range of different legal statuses, including representative offices (16%) or JSCs (7%).

The respondents represented a diverse range of sectors, but two of them were slightly more represented: machinery and equipment (8/30%) and agriculture (5/19%). Other sectors, such as mining, oil and gas, ICT, wholesale and retail, were almost evenly represented but with lower shares.

This section presents key insights from five sections of the survey: firms perceptions of the overall economic situation in Kazakhstan, of government support during the COVID-19 pandemic, of the impact of Russia’s war on Ukraine on the European business community in the country, of government measures to mitigate pressures on the business community arising due to war-related disruptions, and of the ongoing reform process.

A majority of respondents (58%) rated the health of the national economy as satisfactory. However, none of the firms reported that it was strong, while 42% said that it was weak. There was greater positivity from respondents when asked to assess the performance of the sector in which they were active or the performance of their own firm (16% weak for both items).

Firms remained positive about their businesses in the post-COVID context. Almost the half of respondents (48%) reported that they expected an increase in profits, with a further 39% reporting that they expected their performance to remain stable. Only 10% anticipated a decrease in profits for 2022. Only 3% (including trade associations and embassies representing several firms) anticipated that trade turnover (domestic and international) would decrease, whereas 23% of respondents expected international trade turnover to increase, and 42% expected domestic (wholesale and retail) trade turnover to increase.

The outbreak of COVID-19 created significant challenges for the business community in Kazakhstan, as it did throughout Central Asia and the OECD area. These challenges also created new expectations of government, which was called on to ensure the survival of viable businesses and prevent their unnecessary exit from the market. The design and implementation of policy interventions to this end required a high degree of agility from policymakers, who were required to make quick, effective decisions in a context of heightened uncertainty and fiscal constraints.

The Kazakh authorities intervened in different ways to protect the economy during the pandemic, including the issuance of state-guaranteed loans, tax deferrals, and direct compensation of certain business costs for firms. The type of support of offered by the government to the business community was similar to what was offered in OECD countries, albeit on a different scale. These interventions were widely discussed in a number of OECD reports throughout 2020-21, and the survey provided an opportunity to gauge how European firms assessed the effectiveness of government policies to stabilise and support the private sector throughout this period of significant disruption (OECD, 2020[1]) (OECD, 2021[2]).

Among the respondents, the single most popular measure taken by the government was the deferral of VAT and other tax payments (23% of firms approved). Direct wage subsidies were considered useful by 16% respondents, and the same figure considered useful the ability to receive cash payments to cover immediate fixed costs. Perhaps most striking, however, is that 45% of the surveyed firms considered none of the measures taken by the government that were mentioned in the survey to be useful, which suggests either that policy intervention was directed to areas where business needs were less pressing, or that the measures taken did not go far enough, or that foreign firms were not the targets.

Russia’s war in Ukraine delivered another significant shock to the business community in Kazakhstan, both in terms of its domestic and international firms, which was transmitted via the same channels as in many OECD countries: supply chain disruptions, rising prices for primary and intermediate goods, inflation, and a tightening in the global financial system that affected international and local borrowing costs. In addition, these impact channels were mapped onto local circumstances that were peculiar to the region: the particularly large importance of Russia as a trading partner and as a route for exports for Central Asian economies, the interconnectedness of Central Asian banking systems with Russia, the immediate impact of both low- and high-skilled immigration from Russia, the potential for a stagnant Russian economy to affect remittance levels, and the impact of turmoil in the Russian economy on local exchange rates. In Kazakhstan, where the vast majority of its hydrocarbon exports transit Russia, disruptions to trade routes through Russia were particularly challenging, and the possibility of additional disruptions remains a significant source of uncertainty as the war continues.

The survey indicates that one of the main issues that businesses had to face early on was related to the volatility of the Tenge and the instability of the foreign exchange market. Some 58% of respondents assessed its impact as serious for their operations, with a further 29% claiming that it had some effect on their operations. Firm concerns over currency volatility reflect a longer-standing challenge for the business climate in Kazakhstan, where macroeconomic uncertainty can erode business confidence and make it more difficult for firms to commit to investing in the country.

Supply-chain issues also threatened firms’ operations. Some 52% of respondents claimed that the disruptions due to logistical challenges had a serious effect on their operations, and 45% claimed that it has some effect. In addition, 48% of firms declared that disruptions in supply chains due to shortages had a serious effect on their activity, with a further 35% claiming that it had some effect. Finally, 48% of respondents claimed that complications arising from Russia’s disconnection from the SWIFT payment system had a serious effect on their businesses, with another 23% claiming it had some effect. This testifies to the significant degree of integration of international firms in Central Asia with the Russian economy. However, whilst Russia’s disconnection from the SWIFT system had a serious impact on the half of respondents, it also had no effect on 26%.

Input costs for raw materials such as energy as well as other intermediary inputs have risen. A large majority of respondents declared that they have been negatively impacted by rising commodity prices (84%), energy prices (81%) as well as non-commodity prices (77%). In other words, only a minority of firms were unaffected by price increases (less than 16% for each category).

The survey respondents outlined a number of possible responses to the challenges posed by Russia’s war in Ukraine for Kazakhstan’s business community. A majority of respondents demonstrated agility in meeting these challenges, with 55% claiming that they would partially pass on cost rises and reduce margins, 45% responding that they would change suppliers, and 45% claiming that they would find new payment mechanisms. A third of firms indicated that the crisis would encourage them to innovate, with 35% responding that they planned to offer new products or services. At the same time, 32% of respondents would rather stop some product and service offerings, and 32% responded that they would find new export routes. Only a small number of respondents indicated their intention to change production inputs (19%), and fewer still to stop investment (13%) or pass on 100% of cost increases (10%).

Respondents appeared committed to the Kazakh market, regardless of whether the war were to continue or not. Only 3% reported that they would suspend operations in the country until the situation improved, while 47% reported that they would adjust their operations to developments as they unfolded and another 23% claimed that they would continue with their current course of action regardless of a prolongation of the war (Figure 3.3) An additional 20% of respondents claimed that they would expand their activities in the country should the war continue, though it is not clear whether this was because of the war, or whether pre-existing expansion plans had simply not been derailed.

Interpretation of firms’ assessments of interventions from the Kazakh authorities to support the business sector must be qualified by the fact that, unlike the primarily retrospective assessment of the effectiveness of measures to support firms through the COVID-19 pandemic, the impact channels of Russia’s war in Ukraine on firms in Ukraine are still being defined, and the full effects remain unclear. Addressing the challenges faced by firms in Kazakhstan that have arisen due to Russia’s war will require the government to demonstrate the same agility and creativity as it did during the COVID-19 pandemic, but the policy areas requiring intervention will at times be very different (for example, measures to mitigate disruption in the banking sector, or labour market policies to integrate recent arrivals).

It is notable that approximately a quarter of respondents did not know or expressed no opinion on each of the measures listed in the survey. Otherwise, the strongest support was for de-bureaucratisation measures (52% very favourably and 19% somewhat favourably), as well as for measures to open new export routes (48% very favourably and 10% somewhat favourably). Two other measures were also supported by a majority of respondents, such as the support for agriculture, including price caps on energy (35% very favourably and 39% somewhat favourably), and the state purchase of agricultural products at forward prices (23% very favourably and 45% somewhat favourably). The last measure listed in the survey, concerning restrictions on the foreign exchange market to protect the national currency, was strongly approved by only 6% of the respondents but 45% were somehow favourable. The other half of respondents was either unfavourable (23%) or did not know/had no opinion (26%).

Only 43% of respondents considered that the measures implemented by the government to alleviate pressures on the business sector arising from the war were satisfying. For the remaining 57%, other measures should be considered, related to the tax system, banking and financial system and trade policies. Most of the measures proposed by the respondents are not always an answer to the war in Ukraine but rather structural, reflecting broader concerns about the business climate and framework conditions for firms. If the wish for a better regulation of the currency or the development of new transport routes (to the European Union, Middle East or China) might be seen as an answer to the war in Ukraine, the development of trade through new export routes is not only confined to such periods but can also help to diversify and enhance Kazakhstan’s economy in the longer term. Moreover, issues related to tax pressure and the stability of the tax system, or the desire to have easier access to finance, are measures that would be related to long-standing issues in the business climate of the country. Indeed, these issues have been much discussed in OECD work on the business climate in Kazakhstan and Central Asia more broadly (OECD, 2021[3]).

Calls from certain respondents to increase access to non-Russian goods through new trade routes reflect the importance of the Russian market for Kazakh firms, both in terms of finished and intermediate goods. The inability of firms to use Russian suppliers, whether due to sanctions or other logistical difficulties, invariably has an effect on Kazakh firms, but it is not necessarily a weakness of the local business climate so long as firms do not face policy barriers to sourcing inputs from other markets. It does, however, reflect the importance of questions such as infrastructure and trade facilitation as enablers of the local private sector. At the same time, respondents’ calls for the elimination of grey imports does suggest inconsistent implementation of customs procedures which could unfairly affect European firms in the country.


[2] OECD (2021), Beyond COVID-19: Prospects for Economic Recovery in Central Asia, OECD Publishing, Paris, https://www.oecd.org/eurasia/Beyond_COVID%2019_Central%20Asia.pdf.

[3] OECD (2021), Improving the Legal Environment for Business and Investment in Central Asia, OECD Publishing, Paris, https://www.oecd.org/eurasia/Improving-LEB-CA-ENG%2020%20April.pdf.

[1] OECD (2020), COVID-19 Crisis Response in Central Asia, OECD Publishing, Paris, https://read.oecd-ilibrary.org/view/?ref=129_129634-ujyjsqu30i&title=COVID-19-crisis-response-in-central-asia.

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