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Economic and Industrial Modernization are Driving Economic Growth in Kazakhstan

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In the two decades since gaining independence from the former Soviet Union, Kazakhstan has emerged as the most attractive destinations for foreign direct investment and joint venture expansion in Central Asia. Located in the heart of the Eurasian continent in the ancient Silk Road of Antiquity, Kazakhstan is an emerging market with significant natural resources, a stable political regime and an improving investment climate. When Kazakhstan gained independence from the Soviet Union in December 1991, the country lacked a modern banking system, contained a handful of universities and a national infrastructure network oriented towards satisfying the demands of Moscow. Today, Kazakhstan possesses a modern financial system to support its internationally engaged businesses. The tenge is a freely convertible currency. The national airline, Air Astana, is partly owned and managed by Sir Lord Byron and provides regular air services to Frankfurt, Istanbul, New York, as well as cities within Kazakhstan. The Spanish, high-speed light rail between Almaty and Astana compresses a train ride that previously took over twenty hours to twelve hours:leaving one city at 7:30 PM and arriving the other at 7:30 AM the next day.

Economic Resources

Kazakhstan is rich with natural resources, including oil, gas, and heavy rare earth metals (HRE). Ninety-nine out of the 110 elements in the Periodic Table of Elements have been discovered in Kazakhstan, 70 of which have been explored and 60 are being recovered. It is the third largest producer of titanium, seventh for zinc, eighth for lead, thirteenth for iron ore, fifteenth for copper and thirty-fifth for steel. According to the World Nuclear Association, Kazakhstan contains 15% of the world's uranium resources. Kazakhstan's national uranium company, Kazatomprom, is engaged in Joint Ventures (JV) with Cameco, Areva, Rosatom, Uranium One, the China Guangdong Nuclear Power Company and the China National Nuclear Corporation (CNNC), among other firms. These JV arrangements have helped position Kazakhstan as a major player in the international uranium and nuclear fuel market.

In 2009, Kazakhstan overtook Canada and Australia to become the world's largest producer of uranium, supplying 28% of the market in 2009, 33% in 2010, and 35% in 2011. The application of in-situ leaching (ISL) technology in mining uranium helps explain Kazakhstan's rise in this field. ISL technology reduces the environmental disturbances, and is a more cost effective and efficient extraction technique. Thanks to ISL technology, from 2000 to 2012, Kazakhstan's share of global uranium production increased from 6% to 30%.

Regional Stability

As a signature to the Nuclear Non-Proliferation Treaty as a Non-Nuclear Weapons State, Kazakhstan supports the use of nuclear technology for peaceful purposes. In fact, Kazakhstan is China's single largest supplier of uranium. President Nursultan Nazarbayev asserted that Kazakhstan has the potential to satisfy 40% of the needs of China's nuclear power stations. In 2002, Kazakhstan became a member of the Nuclear Suppliers Group. Kazakhstan has also volunteered itself to host the IAEA nuclear fuel bank.

Kazakhstan contains an estimated 30 billion barrels in proven oil reserves and 85 trillion cubic feet in proven natural gas reserves. While Kazakhstan has benefited from increased oil revenues, Astana recognizes the dangers associated with an economy based on a single commodity and seeks to establish a green economy. As stipulated in the Kazakhstan 2050 National strategy, Nazarbayev seeks to provide the country with a solid economic foundation for renewable energy resources. Between 2013 and 2020, the renewable energy plan targets the generation of 1,040 MW of renewable energy annually through 13 wind farms, 14 hydroelectric stations and four solar stations. Given that the contracts for these projects have not yet been awarded,now is the time to engage in business in Kazakhstan.

The Samruk-Kazyna National Sovereign Wealth Fund is believed to control $77.5 billion in assets, amounting to 55.5% of Kazakhstan's GDP in 2010. Samruk-Kazyna's portfolio includes the national oil company, KazMunaiGaz, Kazatomprom, Kazakhstan TemirZholy (railway), among others. And many of these companies will be floated to public markets

Kazakhstan's most valuable resource, however, is its people. All Kazakhstanis learn Russian, Kazakh and English in school beginning in first-grade, with the average literacy rate in the population of 99%. Kazakhstan's educated and bilingual workforce is ready to work.

Land-Linked, not Land-Locked

Kazakhstan has a stated goal of becoming the Eurasian land bridge, a "land-linked" rather than a "land-locked" country. With a population of 16 million inhabiting the world's ninth largest country - a territory that spans some 2.7 million km square - Kazakhstan itself presents ample investment opportunities. Yet, by virtue of geography, Kazakhstan borders the Caspian Sea, Russia, China, Kyrgyzstan, Uzbekistan and Turkmenistan, and is linked to a common Central Asian market of some 72 million customers. When considering the untapped market opportunities in Central and South Asia, thereby including Afghanistan, Pakistan and India, this is a total population of over one billion people.

Already, Kazakhstan is economically connected to its neighboring states. Kazakhstan does not have a self-standing electricity grid for the entire country, but contains two: a northern one that links to Russia and a southern grid that connects to the Central Asian grid. Kazakhstan is linked to three main pipeline routes: the Atyrau-Samara and the Caspian Pipeline Consortium to Russia, as well as the Atasu-Alashankou pipeline to China. Kazakhstan also transports oil on tanker ships across the Caspian sea, from the port of Aktau, providing the country with flexibility in its delivery and pumping schedules. In fact, the Transportation and Logistics Center (TLC) in the Aktau Sea Port is considered a key link in the United States' Northern Distribution Network (NDN), a military supply route leading to Afghanistan. There are plans to expand the port of Aktau into a multi-model transit hub, which would enhance Kazakhstan's position as a "land-linked" state.

Multi-Vectored Foreign Policy vis-à-vis International Organizations

Kazakhstan pursues a "multi-vectored foreign policy" that is based on the principle of friendly relations with all nations. In that effort, Kazakhstan has pursued membership in various international organizations. In 2010, Kazakhstan was the first Central Asian state to secure the leadership of the Organization for Security and Cooperation in Europe (OSCE), hosting the December 2010 summit in Astana. That year, Kazakhstan chaired the Organization for Islamic Conference. In 2012, Kazakhstan was elected to the United Nations Human Rights Council.

Perhaps the most exciting development in Kazakhstan's multi-vectored foreign policy is its long-anticipated admission into the World Trade Organization (WTO). According to WTO Director General Pascal Lamy, Kazakhstan is at an "advanced stage of its accession negotiation" and is expected to join the WTO by the end of 2013. Kazakhstan is already a member of the Eurasian Customs Union with Russia and Belarus. Along its eastern border, through the border crossing point at Korgas, shuttle traders, finished goods, and precious metals regularly cross the border.

Since 1991, Kazakhstan's economic and political evolution is nothing short of remarkable. The country is now at a pivotal moment in its young history in that it is ready and eager to engage with international investors in embarking on the next step of its societal and economic modernization.