World-class investment promotion agency could attract more foreign investors to Kazakhstan, says EBRD chief economist

Beata Javorcik, the chief economist of the European Bank for Reconstruction and Development (EBRD), advises Kazakhstan to establish a world-class agency focused on attracting foreign investments. In an interview with Kursiv.media, the expert emphasized that Kazakh Invest, the national export and investment agency in Kazakhstan, should raise the bar in its performance. The agency is already striving for its goal of becoming a «leading institution for attracting foreign investments in Central Asia, the Commonwealth of Independent States (CIS) and among countries with transition economies.»

«For a country like Kazakhstan, it would be important to have a world-class investment promotion agency. It can make a difference. It’s cheap. So, what does an investment promotion agency do? It informs the world that Kazakhstan is a good place to do business… The [goal] is to make it world-class, to make it one of the best in the world. How do you do it? You don’t say Kazakhstan is a great place to do business in everything. No. You focus on particular sector… When they want to come here, the agency needs to help them do all the bureaucratic requirements,» she said.   

As an example, Javorcik pointed to the success of state-owned agencies such as CzechInvest (the Czech Republic) in the 1990s and Saudi Arabia’s Ministry of Investment (MISA) today. According to the expert, if Kazakhstan could offer investors better and quicker service than its competitors, this would create a positive signal and increase interest in the country. Javorcik noted that the EBRD noticed only 60 new foreign investment projects in Kazakhstan in 2024. In comparison, the United Arab Emirates (UAE) reported 1,500 such projects last year.

«But what’s interesting is this growing interest from foreign investors. So, this is an opportunity,» she added.

Apart from Kazakh Invest, there is another public agency in Kazakhstan assigned to the same task – the Foreign Investors’ Council, assisted by the EBRD. It’s been operating since 1998. Essentially, it serves as a specialized platform where legislative issues, including barriers to business, are discussed. Many countries have a similar model of cooperation.

Commenting on the record-high decline in the net flow of foreign direct investment (FDI), which, according to Kazakhstan’s National Bank, saw a more than 32-fold drop in 2024, Javorcik noted that this figure includes the difference between incoming and withdrawn investments. However, according to her, this approach does not necessarily provide the full picture. She emphasized that when analyzing the country’s economy, it is important to look not only at the overall balance but also at individual projects launched by foreign investors.

«When you look at net flows, they tend to be more volatile from year to year. So, without seeing this aggregation of this information, it’s very hard to comment. But net flows tend to be more volatile because there are more factors that affect them. We are interested in projects coming in because projects coming in, FDI, that’s not just money, it’s also knowledge, it’s also technology and it’s an access to foreign markets,» she said.

Previously, Kazakh Invest described the sharp decline in the net flow of foreign investment to Kazakhstan (a drop from $2.3 billion to $72.9 million) as a «temporary event.» The company explained that the decline was driven by «objective economic reasons and cyclical factors,» including commodity market volatility and investors’ decisions on income distribution.

Kazakh Invest emerged in 2017 as a result of the reform of the former National Export and Investment Agency KAZNEX INVEST. The agency offers investors its consulting services, assists them in obtaining visas and public services, as well as facilitates business negotiations and resolves any other issues as they arise.

Kazakh Invest claims that it is still committed to attracting new investments. However, President Kassym-Jomart Tokayev believes that the country needs «an integral ecosystem» to attract «high-quality investments.»

In August 2023, analysts at the National Bank stated that the official FDI effectiveness indicator overlooks capital outflows, leading to a distorted picture of investment flows.