Kazakhstan – Crossroads of Corridors

Introduction

Kazakhstan, the land of wanderers, with its unique complex of history, archaeology, architecture and urban monuments, reflects the deep processes of interaction between the nomadic and settled farming cultures of Central Asia. As the historic Great Silk Road is revived, Kazakhstan assumes, once again, its strategic position in trade and commerce, linking the large and fast-growing markets of China, South Asia, and Russia with Western Europe by road, rail, air and the Caspian Sea.

The route along the Silk Road is a harmonious co-existence of ancient and modern traditions, untouched nature, and striking beauty, painting a unique picture for its growing number of visitors. Throughout history, many caravans have crossed these lands. From the second century BC to the end of the fourteenth century AD, a great trade route originating from present-day Xian in the east and ending at the Mediterranean in the west linked China with the Roman Empire. This ancient route circulated goods and exchanged the splendid cultures along the way. Today, many years later, the old roads make way for fast and reliable infrastructure.

Government

Having achieved its independence from the Soviet Union 25 years ago, thriving Astana became the capital city of Kazakhstan in 1997. The city is becoming increasingly ultramodern, boasting a skyline which grows more astonishing by the year as many modern skyscrapers and landmark buildings sprout in a variety of Asian, Western, Soviet and futuristic styles. Its fantasy architecture, mostly designed by leading international architects, supplemented with top class restaurants and hotels, establish Astana as the new jewel of Kazakhstan and Central Asia.

With an oil reserve that ranks as the ninth largest in the world and diversified investments in other sectors, Kazakhstan has transitioned into having an upper-middle-income status in less than two decades. Since 2002, its GDP per capita has raised six-fold, and the incidence of poverty has fallen sharply.

As a leader in Central Asia, the country is making a significant contribution to stability in the region. Chairing key institutions, such as the Organization for Security and Cooperation in Europe and the Organisation of Islamic Cooperation, it has been promoting valuable global initiatives, such as the establishment of a world free from nuclear weapons. In just over two decades, Kazakhstan became an economic and geopolitical success story.

Kazakhstan is a member of the Eurasian Economic Union along with Russia, Armenia, Belarus, and Kyrgyzstan. Within this organization, countries secure the free movement of goods, services, capital and labor force while coordinating policies in different sectors of the economy. Kazakhstan’s membership provides investors with access to the Russian market with more than 140 million people and a common market of the Union totaling more than 180 million consumers.

Kazakhstan also opens up access to the market of Western China with 21 million people, Central Asian markets of 49 million inhabitants, as well as markets of the countries bordering the Caspian Sea with 235 million consumers.

Over the years, Kazakhstan has demonstrated its strong commitment to global peace-building, security, and development, acting as an impartial, honest broker working for the common benefit. Heads of some of the biggest transnational corporations have acknowledged the prominent role of the President in ensuring Kazakhstan is an investment-attractive country.

Foreign investors welcome visa preferences, which provide opportunities for short-term business visits to Kazakhstan.  

The country is a member of the World Trade Organization, with a stable economy and decreasing unemployment. With a high efficiency of the labor market and an excellent system of protection of investors, it is no wonder that Kazakhstan attracts the largest number of foreign investments in Central Asia.

Kazakhstan’s progressive, pro-business laws support the growth of foreign investment and the economy in general. Doing business here becomes easier and more inviting for foreign investors each year.

Energy

Kazakhstan’s oil and gas complex remains the powerhouse of its economy.  Oil and gas areas occupy 62% of the country, with 172 oil fields, of which more than 80 are under development. Kazakhstan owns 3% of the world’s total oil reserves, being home to some of the world’s largest oil fields and major oil discoveries in the past century. It plans to increase its oil output to 130 million tons per year by 2020. The volume of oil and gas in Kazakhstan is expected to grow significantly in the following decades, due to a significant influx of investments, favorable world market conditions for crude production as well as the projected large-scale study of the subsoil areas in the Caspian and Aral Seas. 

In the early 1990s, President Nazarbayev had the foresight to create a fund, based on the Norwegian model, which preserved oil and gas revenues for its children and grandchildren. The “fund for future generations” has now accumulated close to US $50 billion and is the fundament in managing and preserving the country’s oil wealth.

The oil and gas sector represents a major dimension of the US-Kazakhstan bilateral partnership. In 1993, Chevron became the first major Western oil company to invest in Kazakhstan with the creation of TengizChevroil. Over the past twenty-two years, Western energy firms and their advanced technologies have been essential to fuelling the growth of Kazakhstan’s oil industry and uncovering some of the most challenging offshore, deep-sea energy deposits in the world.

Kazakhstan is deeply committed to diversifying its economy outside of the lucrative energy and mining sectors. There are numerous other areas where the country shows high growth potential and the government is actively supporting investment in them.

In June 2014, Kazakhstan announced that foreign investors in non-energy sectors would receive a 10-year tax break on corporate and land taxes.

Special Economic Zones allow for additional investment benefits, such as exemptions for corporate income taxes and rent-free land for ten years.

Committed to providing substantial benefits for the regional and global climate, health, and economy, Kazakhstan has long been a leader in the green revolution for Central Asia and serves as an example which other countries should follow.

Kazakhstan has made significant investments to develop a Green Energy sector. President Nazarbayev has pledged that 50 percent of Kazakhstan’s energy consumption will come from green sources by the year 2050.

The country has significant potential in the renewable energy sector with its low population density and abundance of sun, wind, and water.

The United Nations agencies estimate that the wind energy potential alone exceeds Kazakhstan’s current energy consumption by ten-fold. 

By 2020 the country should have 13 wind, 14 hydropower and four solar power plants, as well as a nuclear power plant.

The United Nations Conference on Sustainable Development adopted Kazakhstan’s Green Bridge Initiative. It aims to strengthen national and international governance, develop infrastructure, boost outreach, education and encourage green business and related technologies. It will introduce effective financial and economic mechanisms and unified standards for the “green economy.”

The Green Bridge targets conservation in five core sectors: mountainous and wetland ecosystems, sustainable energy, food security, transport, and adaptation to climate change.

Economy

The country’s progress is globally recognized, which is why Kazakhstan is the first country from the former Soviet Union chosen to host a major international exhibition.

From June to September 2017 Kazakhstan’s Astana will host the World’s Fair exhibition. Currently, more than 70 countries and 13 international organizations have officially confirmed their attendance. The hosts signed participation agreements with 26 countries, while 47 countries and international organizations have appointed their EXPO commissioners.
For the first time, EXPO will be dedicated to “Future of Energy,” facilitating discussion of the international community on innovation in energy and presentation of best practices in energy applications by experts. EXPO will make a significant contribution to the development and use of alternative energy sources globally, creating more environmentally-friendly economies and providing an impetus for Kazakhstan’s transition to a “green economy.”

In addition to the abundance of other resources, Kazakhstan ranks second only to Russia among the countries of the CIS in its quantity of mineral production. The mineral industry of Kazakhstan is one of the most competitive and fastest growing sectors of the country.

Mining accounts for almost a third the country’s GDP. This sector has tremendous potential, as nearly all elements of the periodic table can be found in Kazakhstan’s immense land. Its mineral and resources base consists of over five thousand fields with a net worth of US $46 trillion.

The fertile soil and climate provide ideal conditions for growing wheat, barley, rice, corn, millet, and buckwheat.

For a country with a long nomadic history, it is not surprising that stockbreeding is the traditional and dominant agricultural sector. No less than three-quarters of all agricultural land is used for grazing.

Transport and infrastructure

In promoting domestic products for export, Kazakhstan pays particular attention to the development of transit and transportation infrastructure, as well as marketing the country as a convenient international logistics hub.

Ideally located between Europe and Asia, Kazakhstan boasts a great transit potential as the fastest route which links Asian states to Russia and Europe by land. The country’s diverse landscape and availability of natural stone reserves enable free development of railways and automobile routes.

The “New Silk Road” is an infrastructure project expected to significantly accelerate and reduce the cost of goods delivery from China to Europe through Central Asia and the Caucasus. For this project, China has established a US $40 billion Silk Road fund, as well as the US $100 billion from the Asian Infrastructure Investment Bank.

In December 2012, President Nazarbayev introduced the “Kazakhstan 2050” strategy, a comprehensive state plan aimed at bringing the country into the ranks of the world’s 30 most developed economies by the middle of the century. Nazarbayev announced a series of milestone reforms in every aspect, calling for better governance, improvement of the welfare and tax systems, support for small and medium enterprises and further development of the country’s infrastructure.

To accomplish those goals, Kazakhstan will need to integrate its economy with global and regional environments by capitalizing on its transit potential and bolstering information technology capabilities. One such effort already underway is the construction of the Western Europe-Western China transportation corridor, a series of intercontinental highways and large capacity railway lines and terminals that will make Kazakhstan the transportation hub of Europe and Asia. These networks will link two of the greatest industrial regions and rapidly growing parts of the planet, the European Union, and China.

Kazakhstan’s Foreign Minister Erlan Idrissov called Nazarbayev’s speech “a powerful large-scale document for the future.” He said, “Kazakhstan 2050 is a call to the younger generation of the people of Kazakhstan to continue along the highway of our development, focusing on the establishment of a self-sufficient, modern, secular and democratic state with stable institutions and a strong economy.”

Kazakhstan’s 2020 Transit Plan seeks to develop all modes of transportation by 2020. Four international transport corridors cross the territory, based on existing transportation infrastructure. Thirty thousand kilometers of roads, 8,202 kilometers of railway and all the 302 railway stations will be renovated. Kazakhstan will build a new modern railway system to transport goods from China through Central Asia to their final destinations in the capitals of Europe. The project will double the traffic, integrate Kazakhstan into the international transport system and develop local infrastructure located outside of city centers. Within the project, Kazakhstan plans to invest in its transportation industry over US $20 billion by 2020.

In addition, the South-West Roads Project is a series of intercontinental highways and large capacity railway lines and terminals which are expected to be fully functional by 2018 and will cost US $2.5 billion.

Tourism industry

Kazakhstan is a unique region in the world, because of its history, geographical position and size. Being the world’s 9th largest country and located in the center of Eurasia, it is also the largest landlocked country in the world. The particular climate and the wonderful natural system of the country seem to absorb the most attractive landscapes from both continents. In addition, the rich history of the Kazakh people and the constant interaction of the nomadic lifestyle with the settled people in South Kazakhstan’s ancient cities, have lead to a unique and authentic culture of Kazakhstan. These peculiarities have created an opportunity to develop various and diverse offers in Kazakhstan travel and tourism industry. They include authentic cultural tourism, nature-based activities,  ecotourism and bird watching in national parks and protected areas. Skiing or trekking in the mountains, water sports, sunbathing and swimming in the lakes and rivers of Kazakhstan, are favorite pastime activities of increasing numbers of foreign and domestic tourists.

The vast territory with its mountains, rivers, steppes, deserts and the sea attracts many foreign visitors. In 2015, Kazakhstan introduced a 15-day visa-free regime for citizens of 19 countries.  As a result, the first tourists from Spain, France, and Japan arrived. In 2017 the visa-free regime will be extended to citizens of 44 countries. The United Arab Emirates will be in the list of the countries that will acquire the right for 15 visa – free day. The tourism market is a flourishing, especially during summer time, when the Emirates are scorching hot. Also, Kazakhstan will allow foreigners to obtain group visas during Expo 2017, which will help even more people to come to visit Expo and Kazakhstan.

Kazakhstan offers many exclusive and unique tourist attractions, such as the Medeo Sports Center, located near Almaty, Kazakhstan, which boasts the highest skating rink in the world and Baikonur Cosmodrome, the world’s oldest and largest operating space launch facility. Three of its cultural and two natural transnational sites are inscribed on UNESCO’s World Heritage List: the Mausoleum of Khoja Ahmed Yasawi; the Petroglyphs within the Archaeological Landscape of Tamgaly; the Saryarka – Steppe and Lakes of Northern Kazakhstan; Silk Roads: the Routes Network of Chang’an-Tianshan Corridor and Western Tien-Shan.

Conclusion

Kazakhstan welcomes the 25th anniversary of its independence as a real example of kaleidoscopic diversity, a unique combination of traditional and modern culture, and substantial economic growth and prosperity. With more than 120 different ethnic groups living within its borders, the country is committed to promoting peace and harmony amongst different religious and ethnic groups – both domestically and across the world. Finding new ways to further Kazakhstan’s aim for global peace and security will be a priority for the country as it takes its seat on the UN Security Council in January 2017.

The government’s strategies highlight Kazakhstan’s ability and potential as an economically dynamic and politically savvy partner for the neighboring world superpowers. Former National Bank chief Kairat Kelimbetov described Kazakhstan as “another Singapore in Central Asia, the most competitive economy among all post-Soviet nations.” This Central Asian country definitely has the potential to become an industrial powerhouse and future mediator between the East and the West.

As the transit zone of the New Silk Road and as a prospective bridge between Asia, Europe, Russia and its southern neighbors, Kazakhstan is a beacon of the global economy.